Globe Trade Centre S.A. (“GTC”) released its third quarter and nine months 2014 results today. The results have been prepared in accordance with the International Financial Reporting Standards (IFRS) and are presented in euro.

Q3 & 9M 2014 Financial Highlights

  • Rental and service revenues maintained at €27m in Q3 and €82m in 9M (€28m in Q3 2013 and €83m in 9M 2013); rental margin improved to 75% in Q3 and 74% in 9M (74% in Q3 and 72% in 9M 2013)
  • Selling, administrative and finance costs, down to €12m in Q3 and €43m in 9M (€14m in Q3 and €43m in 9M2013)
  • Underlying profit before tax up to €9m in Q3 and €22m in 9M (€6m in Q3 2013 and €14m in 9M 2013)
  • Revaluation loss of €1 in Q3 and €68m in 9M (€16 in Q3 and €86 in 9M 2013)
  • Net profit at €5m in Q3 and net loss of €67 in 9M (loss of €2m in Q3 2013 and €77 in 9M 2014)
  • Loan to value improved to 54% (59% as of 31 December 2013) as a result of debt repayment
  • Cash flow from operations increased to €33m (€19m in 9M 2013)
  • Cash and deposits of €130m after repayment of bonds and related hedges (€88m as of 31 December 2013)

9M 2014 Operating Highlights

  • Commencement of construction of Fortyone office building in Belgrade (10,300 sq m) with 60% pre-lease
  • Significant 24% pre-lease in Galeria Wilanów and 25% pre-lease in Galeria Północna

“In the third quarter of 2014, we are showing continuous improvement in our operating results. Occupancy was maintained at high level and efficient operations enabled GTC to achieve 75% gross margin on rental activities. Lower financial costs allowed to generate €33m of cash from operations. We have also started our new office investment Fortyone in Belgrade with 60% pre-leased space already a year before completion.” – said Thomas Kurzmann, GTC Chief Executive Officer. “ Now we have to concentrate on future growth. Our two commercial projects in Warsaw, Galeria Wilanów and Galeria Północna, attracted further sizeable tenants including Carrefour, LPP Group and H&M. But that is not all, we are analysing various investment and development opportunities in CEE and SEE and look forward for shareholders` support to seize these opportunities. We remain optimistic on expanding our commercial real estate portfolio in CEE and SEE regions.” – added Thomas Kurzmann.

Financial overview

Rental and service revenues kept virtually unchanged at €27m in Q3 2014 and €82m in 9M 2014 compared to €28m in Q3 2013 and €83m in 9M 2013. Margin on rental activities was improved to 75% in Q3 2014 and 74% in 9M 2014 (74% in Q3 2013 and 72% in 9M 2013). As of 30 September 2014, GTC`s completed buildings were leased in 91%, therefore further rental revenue growth is probable.

Revenues from sale of residential properties increased to €4m in Q3 2014 and €13m in 9M 2014, mostly due to improved sale of residential units in Romania and Poland.

Gross profit from operations was €21m in Q3 2014 and €61m in 9M 2014 compared to €21m in Q3 2013 and €60m in 9M 2013.

Selling expenses remained at the level of €0,7m in Q3 2014 and €2m in 9M 2014.

Administrative expenses, excluding provision for stock based program, declined to €2m in Q3 2014 and €9m in 9M 2014.

Net loss on revaluations of investment property and residential projects was €1m in Q3 2014 and €68m in 9M 2014. The nine months result is mostly a result of a devaluation of retail properties in Croatia and Romania following a decrease of expected rental values and expansion of yields and devaluation of long-term pipeline land plots in light of limited liquidity.

Finance expenses net were at the level of €9m in Q3 2014 and €31m in 9M 2014.

Net result was a profit of €5m in Q3 2014 and a loss of €67m in 9M 2014, which is attributable mainly to loss on revaluation of investment properties and residential projects.

Total debt of €941m as of 30 September 2014 includes bonds issued in March 2014 of €48m as well as the loan from Galeria Kazimierz of €62m. The average debt maturity was 4.4 years and the average cost of debt was 4.3% p.a. Loan to value ratio was at the level of 54% as at 30 September 2014. Interest coverage improved do 2.23 as at 30 September 2014 from 1.68 as at 31 December 2013.

NAV per share stood at €1.7 as at 30 September 2014 compared to €1.9 as at 31 December 2013. EPRA NAV per share was also €2.1 while EPRA NNNAV/per share was €1.7.

Cash flow from operations went up to €33m in 9M 2014 (€19m in 9M 2013).

Key non-financial highlights

Commencement of construction of Fortyone office project in Belgrade

On 1st October 2014, GTC conducted an official ground breaking ceremony for its newest project in Serbia – the class-A Fortyone office.

Fortyone office complex will add over 27,000 sq m of class A office space to the market, in three separate phases. The first building will offer its tenants approx. 10,300 sq m. The building, featuring raised floors and offering flexible floor division, will allow its tenants to efficiently plan their office space and to create comfortable work environment for their employees. Phase one of the investment is planned for completion in the third quarter of 2015.

Fortyone will be located in the prominent corner of New Belgrade, at the intersection of Milutina Milankovica Boulevard and Umetnosti Boulevard, a place both close to center of the city and the airport, as well as one conveniently connected with the main highway. For the convenience of the tenants, the building will offer close to 500 ground and underground parking places. Each of the buildings will include retail facilities to improve the working environment of the its tenants.

Application for building permit for Galeria Północna filed

Administrative proceedings for both shopping mall projects in Warsaw reached their final stages, with application for building permit for Galeria Północna, at Warsaw`s Białołęka, district submitted in August 2014 and accepted for further proceeding by the City of Warsaw authorities.

Significant pre-leases in Galeria Północna

During 2014, GTC achieved a significant, 25% pre-lease level of Galeria Północna signing lease contracts with major anchor tenants including:

  1. LPP Group, with the whole range of LPP`s clothing brands: House, Mohito, CroppTown and Sinsay, as well as Home&You, a popular interior decoration and home accessory chain. LPP decided to open a flagship Reserved store with more than 2,100 sq m of retail space in each of the malls.
  2. Carrefour hypermarkets will provide a strong, modern and high quality food offering in on its new shop located on 9,300 sq m.
  3. H&M with the whole range of the clothing products.

Significant pre-leases in Galeria Wilanów

During 2014, GTC achieved a significant, 24% pre-lease level of Galeria Wilanów signing lease contracts with major anchor tenants including:

  1. LPP Group, with the whole range of LPP`s clothing brands: House, Mohito, CroppTown and Sinsay, as well as Home&You, a popular interior decoration and home accessory chain. LPP decided to open a flagship Reserved store with more than 2,100 sq m of retail space in each of the malls.
  2. Carrefour hypermarkets will provide a strong, modern and high quality food offering.
  3. H&M with the whole range of the clothing products.
  4. Rossmann with it cosmetic and chemical offer.