Globe Trade Centre S.A. (GTC) released its 2011 results today. The results have been prepared in accordance with International Financial Reporting Standards (IFRS) and are presented in Euro.



 Rental and service revenues up to €129m (4% y-o-y) in 2011, despite the sale of Galeria Mokotów, resulting from new assets completions in 2010/2011 and increased occupancy

  • Non-cash negative revaluations and impairments of €296m mainly in Romania, Bulgaria, Croatia and Hungary as the Eurozone crisis adversely impacted real estate and credit markets in the region
  • Revaluation and impairment constitute 12% of the total pre devaluation value; post substantial write offs, the net book value is €744
  • Active asset management brought results
  • Sale of assets and refinancing increased liquidity
  • Renegotiations of loan covenants with banks have improved the structure of liabilities
  • Continued active approach to leasing activities resulted in increased occupancy
  • Newly opened shopping malls with high occupancy have contributed to the rental income


  • Development of two new, attractive, large retail projects in the strong Warsaw market will increase the portfolio value in the medium term
  • Total completed commercial space of 580,000 sq m valued at €1.3bn as at 31 December 2011
  • The Chairman of the Supervisory Board, Eli Alroy, announces his retirement



“Since the beginning of the crisis in 2008, GTC’s management team has been constantly monitoring all the projects of the company and has adjusted the pace of its development plan to market conditions. Our hands-on and pro-active approach resulted in stabilized cash flow and helped to avoid any breach of understandings with the banks we have been working with for many years. We could not avoid getting hit by the stormy environment though” said Eli Alroy, Chairman of the Supervisory Board of GTC S.A. “It mainly affected our performance in SEE countries. We could not foresee the market turmoil that led to the big write offs which we had to book mainly in the second half of 2011. There was no way to predict the magnitude of  the crisis in Greece and the pace of economic deterioration in countries such as Romania and Bulgaria” – added Eli Alroy.

Financial overview

Rental and service revenues increased by 4% to €129m in 2011 compared to 2010, despite the sale of Galeria Mokotów. The main contributors to the increased rental revenues were newly completed assets, including Galleria Stara Zagora, Avenue Mall Osijek and Platinium IV. As of December 2011, some of GTC’s properties were still not fully occupied or are still in rent free periods there is potential for further rental revenue growth. The margin on rental revenues was 72% in 2011.

Revenues from sale of residential properties decreased to €25m in 2011, resulting from a decrease in the number of residential properties sold as well as a decrease in the apartments prices, which was due to unfavourable economic conditions in Romania and Hungary. c This was partially offset by the sale of a number of residential properties in Warsaw, following the completion of 5th phase of Osiedle Konstancja project. The margin on the sale of residential properties in 2011 was 8%.

Gross profit from operations remained fairly stable at €95m in 2011 despite lower sales of residential properties.

Due to continued adverse market conditions in Romania, Bulgaria, Croatia and Hungary, revaluations of investment property and impairments of residential projects were negative and stood at €296m in 2011. The change in value is mainly attributable to lower estimated rental value and postponements of developments.

 Net loss amounted to €338m in 2011 and resulted primarily from a loss on the revaluation of investment property and impairment of land.

The value of the property portfolio was at the level of €2,020bn as at 31 December 2011 (including €134m of assets held for sale), after the revaluation and impairment loss that was recognized in 2011 and reflects the macroeconomic situation as at 31 December 2011. The next review of the value of properties and the land bank will be conducted as of 31 March 2012 by the management.

NAV per share stood at €3.2 as at 31 December 2011 compared to €4.8 as at 31 December 2010.

As a result of renegotiations of the loans and of certain covenants, close to 50% of GTC’s debt will mature in 2017 or later. The average cost of debt financing remains attractive at 5%. This provides the company with further comfort in realizing its development plan.
 Key achievements of 2011

Steps taken to improve liquidity

 Sale of Galeria Mokotów

 On 1 August 2011, after meeting the satisfaction of all the conditions set forth in the preliminary agreement, GTC signed an agreement for the sale of a 50% stake in its landmark development – Galeria Mokotów, based on the 100% asset value of €475m. The buyer was an affiliate of Unibail Rodamco S.E., which was the co-owner and manager of the shopping center. The net proceeds from the sale amounted to €110m.

Refinancing of loan agreements of €127m

 GTC has finalised the refinancing of loan agreements totaling €127m for its office projects developed in Bucharest and Belgrade. These refinancing transactions were among the largest concluded in Romania and Serbia last year, and demonstrated the continued strength of the company’s relationships with its lenders.

Renegotiation of covenants regarding loans totaling €97m loans

GTC has renegotiated  of covenants in relation to project finance loans totaling €97 million. The successful closing of renegotiations with  the lenders has resulted in the reclassification of €72 of these liabilities to long term liabilities as at 31 December 2011, which improved the Company’s cash flow profile.


 Avenue Mall in Osijek (Croatia) opened

 On 7 April 2011, GTC and the European Bank for Development and Reconstruction (EBRD) opened the Avenue Mall in Osijek, an entertainment and shopping centre parting Eastern Croatia.

Avenue Mall Osijek offers nearly 27,000 sq m net rentable area and 80 retail units. The mall is over 80% leased, with the remaining space being the subject of advanced negotiations. The development of Avenue Mall Osijek was co-financed by the EBRD and Raiffeisen. The EBRD is also a 20% shareholder in the investment.

Platinium IV (Warsaw) handed over to the tenant 100% let

The construction of the fourth building of Platinium Business Park in Warsaw (located at the intersection of Domaniewska and Wołoska streets) ended in May 2011, a record 13 months after obtaining its construction permit. The 12-storey building, with a net rentable area of 13,000 sq m has been entirely leased by the Aviva Group, which moved into the building in the summer of 2011.

 Galleria Arad (Romania) opened

 Galleria Arad is the eleventh shopping mall developed by the GTC Group in the CEE and SEE region. It was financed by the European Bank for Reconstruction and Development and Raiffeisen Bank.

Galleria Arad hosts a total of 100 shops in its 35,000 sq m net rentable area, including international and local retail brands. The mall is 95% leased. The mall is anchored by the CORA supermarket, a cutting edge, 8-screen multiplex Cinema City, as well as several fashion tenants from the Inditex Group (Zara, Bershka, Stradivarius and Pull&Bear) and the Peeraj Group (Mango, Oviesse, Piazza Italia, Vero Moda and Jack & Jones), and Pure Fitness, a fitness centre operator. Galleria Arad offers a wide choice of dining & entertainment options with 18 restaurants and cafes. The mall has an underground parking facility for 1,000 cars. Some local authority offices/departments of the Municipality of Arad also have their offices in Galleria Arad.

Corius (Warsaw) completed

 At the end of 2011, GTC completed the third office building at Okęcie Business Park in Warsaw. The Corius building offers 8,840 sq m of class A office space, of which more than 80% is already leased.

Okęcie Business Park is located on 17 Stycznia street, adjacent to Warsaw Chopin Airport. The first two buildings of the complex (Nothus and Zephirus) were completed in 2008 and currently are 100% let with major tenants such as Novo Nordisk, Avon, Moeller Electric and Mitsubishi. Offices of firms such as EGIS, Pandora A/S and YES Airways will open in the Corius building shortly.

New projects

Platinium V under construction

Construction of the 11-storey Platinium Business Park V, with a net rentable area of 11,000 sq m began in April 2011. It has already been 70% leased. Completion is scheduled for June this year.

Among the tenants of Platinium Business Park V that have already signed agreements with GTC are K2 Internet, Starcom, VeriFone Poland and Schrack-Seconet.

Galleria Burgas (Bulgaria) scheduled to be opened in May 2012

Galleria Burgas will provide approximately 36,500 sq m of net rentable area and 1,200 parking spaces. It will be the first modern centre of this type in Southern Bulgaria, as well as the first LEED certified retail centre in the country.

Galleria Burgas has attracted popular brands including H&M, the Inditex group (Zara and Bershka), a 10-screen Cinema City multiplex, Carrefour supermarket, Pure Fitness, Subway, Deichmann and Seven Hill. The mall is 60% let with advanced negotiations under way for the remaining space.

Focus on development of two shopping malls in Warsaw

Simultaneously with the preparations for the construction of a shopping mall in the Southern district of Wilanów, GTC plans to develop another modern shopping and entertainment centre the Northern part of Warsaw. The mall will be constructed on a 4,9 hectare site purchased in the Białołęka area. The value of the investment is estimated at approximately EUR 160m.

According to the local zoning plan, the whole site that belongs to GTC is designated for commercial services and large scale retail projects. Thanks to very good access to the public transport, the catchment area of the new centre will extend to the neighbouring districts. The total catchment area of GTC’s site is estimated at nearly 520,000 inhabitants.

Important leases

New significant lease agreements improve overall occupancy

During 2011, GTC signed a significant number of lease agreements for over 50,000 sq m, which will improve its overall occupancy and, as a result, have a positive impact on cash flow and the valuation of certain assets in its portfolio:

–         New tenants in office projects in Poland: Platinium Business Park and Okęcie Business Park (both in Warsaw), University Business Park (Łódz) and Francuska Office Center (Katowice)

–         Major lease agreements in other CEE and SEE countries, including, e.g. a lease contract for 29,000 sq m of office space in the Spiral building in Budapest

–         Increased occupancy of retail properties throughout the region (both existing and under construction).

Corporate events

Change on the position of Chairman of the Supervisory Board

After 18 years of leading GTC, on 28 February 2012, Eli Alroy resigned from his position of Supervisory Board Member of GTC effective as of 6 April 2012. He will be replaced in the position of Chairman of the Supervisory Board by Mr. Alain Ickovicks, a long time member of the Supervisory Board,.

“Leading GTC has been an amazing experience for me, being an active participant in the economic transition of the markets in the region. However, it also came with personal sacrifices. It meant being away from my home, over a very long period of time. It is the moment to give back this time to my family.. After so many years of very extensive travelling and around-the-clock commitment, I owe this change to my family and to myself.” – said Eli Alroy. “I am proud to leave GTC with an excellent management team in place, with great and dedicated country managers and teams on the ground, with top-notch professionals with vast experience throughout the organization. Their contributions have made  what GTC  is today: a brand name in real estate in Central and Eastern Europe, known for being a trend-setter and a pioneer. The management has the vision, the tools and the plan to lead the company for the years to come.” – added Eli Alroy.

Alain Ickovics holds a BSc. degree in industrial engineering from the Israel Institute of Technology, and an MBA degree from the Columbia University Graduate School of Business. In the years 1984–1990 Mr. Ickovics was at Citibank in New York where he held various positions in the real estate finance division, ending as a vice-President. From 1994–2002 he served as the President of the Management Board of GTC SA.  Since 2006,  Mr Ickovics has been and continues to be the Chairman of the management board of Kardan N.V.; he also sits on various supervisory boards of the Kardan Group. Mr Ickovics announced his intention to step down from Kardan N.V. management board two weeks ago.

Globe Trade Centre S.A.

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