9M 2016 HIGHLIGHTS

  • NOI increased by 10% to €65m (€59m in 9M 2015)
  • Revaluation gain of €39m (loss of €2m in 9M 2015) mainly driven by ongoing projects under construction
  • Profit after tax of €107m (€17m in 9M 2015), positively impacted by successful merger of GTC SA with its Dutch entities
  • 14% FFO improvement to €33m (€29m in 9M 2015)
  • €175m of new project financing raised
  • EPRA NAV increased by 8% to €837m (€779m as of 31 December 2015), corresponding to an EPRA NAV per share of € 1.82 [PLN 7.85] (€1.69 [PLN 7.29] as of 31 December 2015)

PORTFOLIO UPDATE

  • Total property value of €1,544m as of 30 September 2016 (€1,324m as of 31 December 2015)
  • 16% growth in income generating portfolio to €1,222m (€1,052m as of 31 December 2015)
  • Total investment volume of €221m (thereof €152m of acquisitions)
  • Disposal of non-core standing assets successfully executed; ongoing land bank disposal; total sales of €29m in 9M 2016
  • 106,000 sq. m NLA under construction in four projects with over 82,000 sq. m to be completed in 2017
  • 160,000 sq. m in planning stage and another 39,000 sq. m in pre-planning stage
  • 94,000 sq. m of new lettings and lease renewals for office and retail space
  • Stable occupancy rate at 91%

“We are very pleased to report solid results for Q3 2016. Several new acquisitions of value accretive office buildings over the last 9 months have contributed to our NOI and will further boost results in the quarters to come. GTC has over 106,000 sq. m of office and retail GLA under construction. These projects will contribute significantly to the NAV growth in 2017. Additional 200,000 sq. m of retail and office developments at the planning stage, guarantee further growth over the next 3 years to come. With our strong cash position, we are ready for more acquisitions within our target markets.” – Thomas Kurzmann, GTC’s CEO said.

“We completed the disposal of non-core assets with negative cash flow stabilizing our asset base. A major simplification in the structure of our non-Polish holding structure combined with refinancing activities further decreasing interest cost increase significant the efficiency and profitability of our operations.” – commented Erez Boniel, GTC’s CFO.

KEY OPERATING ACHIEVEMENTS IN 9M 2016
Growth of the income generating portfolio through accelerated acquisitions and completions In 9M 2016 GTC increased its income generating portfolio by expanding the company’s asset base by 16% to €1,222m through the investment of €152 million in value accretive office properties

GTC’s latest acquisitions successfully strengthened its position in the CEE and SEE regions

o Pixel, an iconic and unique office building located in Poznań (Poland),o Premium Plaza and Premium Point; two A-class office buildings in Bucharest (Romania)

o Neptun Office Center, a high-rise office building in Gdańsk (Poland)

o Sterlinga Business Center in Łódź (Poland) with 13,900 sq. m of leasable office
Growth of the property portfolio through accelerated development; Currently 106,000 sq. m under construction with over 82,000 to be completed in 2017, 160,000 sq. m in the planning stage and another 39,000 sq. m in the pre-planning stage Completion of University Business Park B, a modern A-class office building in Łódź

Completion of FortyOne II, a modern A-class office building in BelgradeConstruction of Galeria Północna progressing as planned with the opening scheduled for summer 2017 (commercialization at 75%)

Construction of FortyOne III progressing as planned with the opening scheduled for Q1 2017 (pre-leased at 70%)

Construction of Artico, a modern A-class office building in Warsaw, according to the initial plan. Opening is scheduled for Q3 2017 (pre-leased at 100%)

White House, a modern A-class office building, is expected to be launched in early at the beginning of Q1 2017 after the completion of the pre-construction works

Ada Mall, a modern shopping center in Belgrade, is in the permitting stage with building permit expected by the end of the year; commercialization has already started

Budapest City Tower, a modern A-class office building in Budapest, concept design and all related works in order to obtain a building permit currently ongoing

Green Heart, a modern A-class office building in Belgrade, concept design and zoning process have commenced

Galeria Wilanów is in the building permit procedure

“X”, a modern A-class office building in Belgrade, concept design is being prepared

Avenue Park, a modern A-class office building in Zagreb is undergoing a design refreshment, building permit in place
Ongoing letting activity Further improvement of overall occupancy currently exceeding 91%

During 9M 2016 newly leased or renewed 94,000 sq. m of office and retail space, including prolongation of 13,000 sq. m of Romtelecom lease in City Gate and 12,200 sq. m of IBM lease in Korona Office Complex
KEY FINANCIAL HIGHLIGHTS
Revenues Rental and service revenues increased by €6m to €85m in 9M 2016 due to the acquisitions of Duna Tower, Pixel, Premium Plaza, Premium Point, Sterlinga Business Center and Neptun Office Center
Net profit from revaluation and impairment €39m in 9M 2016 as compared to a loss of €2m in 9M 2015

Reflects progress in construction of Galeria Północna, University Business Park B and Fortyone II as well as profit from the revaluation of Galeria Jurajska and Galleria Burgas following an improvement in the respective operating results
Net financial expenses Decrease to €20m in 9M 2016 from €22m in 9M 2015 mainly due to refinancing activity, and the repayment of more expensive loans

Reduction also supported by change in hedging strategy that allowed to benefit from a low EURIBOR environment and therefore resulted in a decrease in the average borrowing cost to 3.2% in 9M 2016 from 3.4% 9M 2015
Taxation Non-cash reversal of tax provision recognized at €36m in 9M 2016, resulting mainly form a merger of GTC S.A. with GTC Real Estate Investments Ukraine B.V. and GTC RH B.V. which reversed the temporary tax differences related to Euro denominated loans granted by GTC S.A. to GTC RH B.V.
Net profit €107m in 9M 2016 compared to €17m in 9M 2015
Funds From Operations (FFO) Increased to €33m in 9M 2016 from €29m in 9M 2015 as a consequence of the NOI improvement and a decrease in interest and hedging expenses
Total property value At €1,544m as of 30 September 2016 (€1,324m as of 31 December 2015) due to acquisitions, investment into assets under construction and revaluation gain
EPRA NAV Up by 8% to €837m in 9M 2016 from €779m in 2015

Corresponding to an EPRA NAV per share of €1.82 [PLN 7.85] compared to €1.69 [PLN 7.29]
Financial liabilities At €827m as of 30 September 2016 compared to €717m as of 31 December 2015

Weighted average debt maturity of 3.9 years and average cost of debt of 3.2% p.a.

LTV at 45% on 30 September 2016 (39% on 31 December 2015) due to increase in loans of €175m related to acquired properties, construction and refinancing

Interest coverage at 3.6x on 30 September 2016 (3.0x on 31 December 2015)
Cash and cash equivalents Decreased to €107m as of 30 September 2016 from €169m as of 31 December 2015, due to investment activities partially offset by an increase in loans€28.9m of euro-denominated bonds issued on the Polish market in November 2016

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