• In Q1 2009 GTC recorded EUR 45.2m in revenues, a 183% increase y-o-y
• Profit for the quarter was EUR 4.4m
• Total equity was EUR 1.18bn
Globe Trade Centre S.A. (GTC S.A.) recorded EUR 45.2m in revenues and EUR 4.4m in profit in the first quarter of 2009. The total assets reached EUR 2.6 bn, while the total equity was EUR 1.18bn.
In Q1 2009 GTC showed strong top-line performance, with rental income growing by 47.5% y-o-y to EUR 21.5m and residential sales growing by 1,613% y-o-y to EUR 23.7m.
Income from rent increased mainly due to commencement of rental periods in newly completed buildings. Increased occupancy also resulted in improvement of operating margin on rental income to 76.5% (from 72.2% in Q4 2008).
Residential sales were boosted by delivery of houses in Osiedle Konstancja Phase 4 in Warsaw and apartments in Rose Garden in Bucharest and Park Apartments in Belgrade.
The gross margin on sales was 20% (vs. 19% in Q4 2008).
The total gross margin on operations was EUR 45.2m in Q1 2009, an 83% increase from Q1 2008.
Following implementation of amendments to IAS 40, GTC adjusted the fair value of Investment Property under Construction (IPUC). Progress in construction and leasing of Galeria Jurajska in Częstochowa and office buildings CB Kazimierz (Kraków), Spiral (Budapest), GTC Metro (Budapest) and City Gate (Bucharest) contributed the most to the increase in IPUC value. The total increase in Q1 2009 was EUR 37.2m.
On the other hand, further decompression of market yields resulted in decrease of value of completed investment properties by EUR 13m in Q1 2009. The average yields applied in valuations ranged from about 7% in Poland to 7.7% on average in other countries.
Low liquidity and reduced transaction volumes in the real estate investment markets result in a lack of clarity as to the pricing levels for completed assets, as well as low visibility of future trends. As a result there is less certainty with regard to the valuations, and market values can change rapidly due to the volatile market conditions.
However, the adverse impact of market conditions on GTC’s completed property can be mitigated by strong lease covenants and the high quality of tenants.
Profit for the period was EUR 4.4m vs. EUR 34.8m in Q1 2008.
One of the reasons for the decrease in quarterly profit was an increase in the deferred tax provision resulting from devaluation of Polish zloty vs. Euro. The total taxation amount was EUR 17m. This negative impact may be reversed if the trend of a strengthening zloty seen in April continues.
In the first months of 2009 GTC was very successful in leasing activity.
In Galeria Jurajska leases were signed with Peek & Cloppenburg (3,000 sqm), Zara and other Inditex brands (2,600 sqm), C&A (1,800 sqm) and H&M (1,830 sqm).
In Budapest, major office leases were concluded: 9,000 sqm in total with the Tax Authority and Hochtief in the Spiral Building, while the entire GTC Metro building (16,700 sqm) was leased to Budapest Bank (a subsidiary of GE Capital).
In GTC Square in Belgrade leases with Tetra Pak and Forma Ideale increased occupancy by more than 3,100 sqm.
In City Gate – a landmark office development in Bucharest – occupancy reached 80%, following signing of a 1,300 sqm lease with Autoitalia, a Maserati, Fiat, Alfa Romeo, Lancia and Abarth dealership.
Since the start of the year, a total of about 60,000 sqm was leased in GTC’s office and retail developments.