TIDMGWI
RNS Number : 9862F
Globalworth Real Estate Inv Ltd
25 March 2022
The information communicated within this announcement is deemed
to constitute inside information for the purposes of Article 7 of
Regulation (EU) No 596/201 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon
the publication of this announcement, this information is
considered to be in the public domain.
25 March 2022
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Audited Results for the year ended 31 December 2021,
Posting of Annual Report and
Notice of AGM
Globalworth, the leading office investor in Central and Eastern
Europe, announces that further to the publication on 4 March 2022
of its Condensed Unaudited Financial Results, it is pleased to
release its Annual Report and Audited Consolidated Financial
Results for the year ended 31 December 2021 ("2021 Annual
Report").
Operational Highlights
-- Total combined portfolio value up by 3.9% to EUR3.2 billion.
-- Focused development program in select high-quality projects.
o Romania; delivered a class "A" office comprising 29.2k sqm of
GLA, with 5 logistics facilities under development which are
expected to have a total GLA of 98.9k sqm
o Poland; two mixed-use properties under
refurbishment/repositioning.
-- Acquired two high-quality logistics facilities in Romania
with a total area of 27.0k sqm for EUR17.9 million.
-- Overall standing portfolio net increase of 2.4% to 1.3m sqm of GLA in 66 standing buildings.
-- Leasing transactions of 285.5k sqm of commercial space at an
average WALL of 4.6 years, registering our second highest yearly
volume to date.
o Best year in office leasing with 214.5k sqm of spaces taken up
or extended
-- Average standing occupancy of 88.5% (88.7% including tenant
options), lower by 2.3% compared to 31 December 2020.
-- Total annualised contracted rent up by 0.2% to EUR183.7m, of
which 91.4% from office and industrial properties.
-- Rate of collections invoiced and due remained high at 99.2% for 2021.
-- Sustainability:
o EUR2.7 billion in 55 green certified properties
o Several green initiatives completed or in progress to improve
our footprint.
o Issued the third sustainable development report and our
inaugural Green Bond Report.
o Maintained "low-risk" rating by Sustainalytics and improved
our MSCI rating to "A".
o Contributed EUR1.0 million to support over 20 initiatives in
Romania and Poland.
-- The consortium of CPI Property Group S.A. and Aroundtown SA
(through Zakiono Enterprises Limited) became the controlling
shareholders of Globalworth with 60.6% of the share capital.
Financial Highlights
-- Net Operating Income was lower by 8.3% compared to 2020 at EUR144.3 million.
-- EPRA earnings decreased by 28.2% to EUR59.1 million (2020:
EUR82.3 million), partially impacted by the exceptional one-off
costs associated with the cash offer for Globalworth's shares
initiated in May 2021.
-- Adjusted normalised EBITDA decreased by 8.1% to EUR130.2
million (2020: EUR141.6 million), due to lower NOI, as offset by
the positive impact of the EUR1.6 million (10.2% lower compared to
2020) savings in recurring administrative expenses(1) .
-- Net profit significantly improved to EUR47.5 million (2020:
net loss of EUR46.8 million) due to marginal revaluation losses of
EUR5.7 million in 2021 compared to the EUR116.2 million revaluation
losses in 2020.
-- Total Accounting Return of +3.0% compared to -1.4% for FY2020.
-- EPRA Net Reinstatement Value (NRV) of EUR1.9 billion, or
EUR8.66 per share, a marginal decrease from EUR8.68 at 31 December
2020 mainly due to dividends paid, lower operating performance and
non-recurring costs, offsetting the positive impact of lower
revaluation losses (by EUR110.4 million compared to 2020).
-- Dividends declared and paid for FY2021 of 28 cents per share,
representing an amount of at least 90% of the EPRA Earnings for the
first and second six months of the year, as stipulated by our
articles of incorporation.
-- High liquidity of EUR418.7 million (vs EUR527.8 million at
2020 year-end) plus EUR215 million in undrawn RCF facility, and an
LTV at 40.1% at 31 December 2021 (vs 37.8% at 2020 year-end).
-- Maintained investment grade rating by all three major rating
agencies, improving our outlook to "Stable" (from "Negative) by
Moody's.
(1) Recurring administrative expenses for 2021 exclude EUR11.5
million exceptional and non-recurring costs incurred in connection
with the cash offer for Globalworth shares, made by CPI Property
Group S.A. and Aroundtown SA (through Zakiono Enterprises Limited)
in May 2021 (non-recurring expenses for 2020: EUR2.3 million).
Availability of 2021 Annual Report and Notice of AGM
The 2021 Annual Report is available on Globalworth's website,
www.globalworth.com under the Financial Reports and Presentation
section.
The Annual General Meeting of the Company ("AGM") will be held
on 22 June 2022 at 10.00am British Summer Time at Anson Court, La
Route des Camps, St Martin, Guernsey GY4 6AD. The notice of this
year's AGM will be included in a separate circular to shareholders,
will be issued to shareholders and notified via RNS at least 10
clear days before the meeting, and will also in due course be
available on the Company's website in accordance with AIM Rule
20.
For further information visit www.globalworth.com or
contact:
Enquiries
Stamatis Sapkas Tel: +40 732 800 000
Deputy Chief Investment Officer
Panmure Gordon (Nominated Adviser and Broker) Tel: +44 20 7886 2500
Alina Vaskina
About Globalworth / Note to Editors:
Globalworth is a listed real estate company active in Central
and Eastern Europe, quoted on the AIM-segment of the London Stock
Exchange. It has become the pre-eminent office investor in the CEE
real estate market through its market-leading positions both in
Poland and Romania. Globalworth acquires, develops and directly
manages high-quality office and industrial real estate assets in
prime locations, generating rental income from high quality tenants
from around the globe. Managed by over 240 professionals across
Cyprus, Guernsey, Poland and Romania, a combined value of its
portfolio is EUR3.2 billion, as at 31 December 2021. Approximately
95.9% of the portfolio is in income-producing assets, predominately
in the office sector, and leased to a diversified array of over 660
national and multinational corporates. In Poland Globalworth is
present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice,
while in Romania its assets span Bucharest, Timisoara, Constanta,
Pitesti, Arad and Oradea.
For more information, please visit www.globalworth.com and
follow us on Facebook, Instagram and LinkedIn.
IMPORTANT NOTICE: This announcement has been prepared for the
purposes of complying with the applicable laws and regulations of
the United Kingdom and the information disclosed may not be the
same as that which would have been disclosed if this announcement
had been prepared in accordance with the laws and regulations of
any jurisdiction outside of the United Kingdom. This announcement
may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may
be identified by the use of forward-looking terminology, including
the terms "targets", "believes", "estimates", "plans", "projects",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology, or by discussions of strategy, plans, objectives,
goals, future events or intentions. These forward looking
statements include all matters that are not historical facts and
involve predictions. Forward-looking statements may and often do
differ materially from actual results. Any forward-looking
statements reflect the Company's current view with respect to
future events and are subject to risks relating to future events
and other risks, uncertainties and assumptions relating to the
Company's business, results of operations, financial position,
liquidity, prospects, growth or strategies and the industry in
which it operates. Forward-looking statements speak only as of the
date they are made and cannot be relied upon as a guide to future
performance. Save as required by law or regulation, the Company
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements in this
announcement that may occur due to any change in its expectations
or to reflect events or circumstances after the date of this
announcement.
CHIEF EXECUTIVE'S REVIEW
NAVIGATING THROUGH CHALLENGING MARKETS WITH THE RIGHT STRATEGY
IN PLACE
"2021 left us with mixed emotions, as our operational successes
and business growth in another year of very challenging market
conditions due to the COVID-19 pandemic have only partially been
reflected in our annual results.
We firmly believe, however, that we are implementing the right
strategy to address the present and future challenges, and
reinforce our position as THE landlord of choice in our home
markets of Poland and Romania."
Overview
We believe that we have used this year wisely, taking steps
towards returning to normal life, focusing on our key strategic
priorities to ensure that we are able to reinforce our position as
THE landlord of choice in our home markets in Poland and
Romania.
This included investments in existing and new high-quality
properties, managing our portfolio to preserve and improve our
operational performance, and maintaining an efficient and flexible
capital structure, resulting in a resilient overall performance.
All this while at the same time providing a safe and healthy
environment for our people, tenants and communities to work, visit
and be part of.
Looking back at the very challenging market due to the ongoing
COVID-19 pandemic, I am very pleased to have succeeded in the
majority of the goals we set out to do. I also believe that we have
taken the proper steps to achieve those that may not have been
fully achieved to date, in the future.
At this point, I would like to thank every member of our team of
dedicated professionals, whose positive attitude, resilience,
commitment, and efficiency, and who have been responding remarkably
since the beginning of the pandemic, working under challenging
circumstances.
Support from our shareholders, partners and communities has been
very encouraging and greatly appreciated.
Our Market
Overall, the uncertainty caused by the COVID-19 global pandemic
outbreak has had an impact on demand for office space in the second
half of 2020, which has persisted in 2021 in both Poland and
Romania.
Market conditions are expected to remain uncertain in 2022 as
several companies keep reassessing their occupational plans
(extensions, expansions, relocations, release of spaces etc.), both
due to the lasting effects of the pandemic as well as due to the
recent outbreak of the war in Ukraine.
Having said the above, although uncertainties remain ahead in
the near term, we continue to be optimistic about the medium and
long-term prospects of our home office markets in Poland and
Romania. We expect that multinationals sooner rather than later
will start implementing the expansion plans that were halted as a
result of the pandemic. In addition, we have seen a significant
reduction in future planned office development projects, which
should translate into a rebalancing of demand / supply dynamics in
favour of office investors in the next 12-18 months.
Investment in Our Portfolio
We are present in seven of the eight largest office markets in
our countries of focus and in some of Romania's most attractive
logistic/ light-industrial hubs. Our growing portfolio at year-end
2021 accounted for 45 investments with a combined value at EUR3.2
billion, recording a 3.9% annual increase by value.
Our combined standing portfolio increased by 31.0k sqm to 1.3
million sqm of high-quality GLA in 39 investments.
In 2021 we successfully delivered Globalworth Square, our new
class "A" office in Bucharest. We also completed our first
purchases of standing properties since our decision in 2020 to
suspend new acquisitions due to COVID-19.
These two high-quality logistic/light-industrial facilities,
located in the western part of Romania, offer a total area of 27.0k
sqm, were acquired for EUR17.9 million and are 100% let to two
multinational tenants on 15-year lease agreements.
We prioritised the development of other new high-quality
logistics/light-industrial facilities in Romania (98.9k sqm) and
the refurbishment/ repositioning of two mixed-use properties in
Poland aiming at increasing their class "A" office space and
improving their retail/ commercial offering, in response to current
market conditions.
In our effort to improve the quality of our services to our
partners, we continued to internalise the property management of
our portfolio, kept (re) investing in our properties, maintained
and, where required, improved the quality of our buildings.
Overall, we internally manage 962.6k sqm of high-quality office and
mixed-use space in Poland and Romania with an appraised value of
EUR2.5 billion, accounting for 96.8% of office and mixed-use
standing properties.
Our Leasing
In addressing the current challenging market conditions, we
firmly believe in the need to provide safe and healthy environments
for people to work in, tailored leasing solutions to tenants,
allowing them more occupational flexibility, providing modern
properties which are easily accessed and centrally located within
their respective sub-markets.
2021 was our best year in office leasing with 214.5k sqm of
spaces taken up or extended, contributing to our second-best year
overall with 285.5k sqm of commercial spaces agreed at an average
WALL of 4.6 years. We expect all these leases, signed with 232
tenants, to generate rental income of EUR187.5 million in the
future of which 81.2% will be from office leases.
Most of our leasing success involved contract renewals,
accounting for 54% (from 74% in 2020) of our total leasing
activity. However, the increased level of new leases signed, 46% in
2021 from 26% in 2020, is an encouraging sign for our ability to
attract new tenants to our standing properties and developments.
This increased level of new take-up was due to several of our
development projects being delivered over the past 18 months or are
under construction, and they are in their respective lease-up
phases.
Headline rents were marginally affected in 2021, as the impact
of COVID-19 was offset by lower new supply in the market and
inflation pressures. However, the increased competition between
landlords and developers to secure high-quality tenants is evident
in the higher costs involved in renting spaces which we occurred in
this period, increasing from 21% in 2020 to 29% in 2021.
City Offices
The benefits of being able to sign lease agreements with such
high-quality national and multinational tenants, which has been our
longstanding strategy, and establishing long-term partnerships with
them, thus ensuring sustainable cash-flow generation, could not be
more evident than during a period of the pandemic, where we have
been able to maintain a high rate of collection with over 99.2% of
the rents invoiced being received in line with their regular cycle.
Also the level of claims received by tenants was limited to 1.6%
(vs 6.1% in 2020) of our annualised contracted rents.
Our Occupancy
The average occupancy of our combined standing commercial
portfolio was as of 31 December 2021 was 88.5% (88.7% including
tenant options), 2.3% lower over the past 12 months.
It is important to emphasise that the like-for-like occupancy
rate in 60 of our 61 standing properties remained effectively
unchanged at 90.8% at year-end 2021 (91.0% at 31 December 2020),
increasing to 91.0% when including the two fully let industrial
facilities acquired during the year.
However, two sizable offices with an average occupancy of 41.8%
negatively impacted our overall standing occupancy. The two offices
were Globalworth Square in Bucharest, delivered in June this year
and is in its lease-up phase and Warta Tower (22.7% occupied) in
Warsaw where its principal tenant relocated in December and we are
assessing alternative asset management initiatives.
Our Financial Results
Our operational successes and business growth have only
partially been reflected in our annual results.
Net Operating Income for the 12 months of 2021 was lower by 8.3%
to EUR144.3 million compared to 2020.
Our initiatives to improve operational efficiency were somewhat
offset by the one-off costs associated with the cash offer by the
consortium of CPI Property Group S.A. and Aroundtown SA to acquire
the entire issued and to be issued share capital of Globalworth in
May 2021, thus resulting in EPRA earnings decreasing by 28.2% to
EUR59.1 million, as compared to the same period in 2020.
Adjusted normalised EBITDA decreased by 8.1% to EUR130.2
million, due to lower NOI, offsetting the positive impact from the
EUR1.6 million savings in recurring administrative expenses.
Finally, our Net profit more than tripled to EUR47.5 million due
to marginal revaluation losses of EUR5.7 million in 2021 compared
to the EUR116.2 million revaluation losses in 2020.
During the year, we paid the second interim dividend of EUR0.15
per share in respect to the 2020 financial year and EUR0.15 per
share in respect to the first interim dividend of 2021. In
addition, on 10 March 2022, we announced the second interim
dividend for 2021 of EUR0.13 per share, resulting in a total
dividend for the 2021 financial year of EUR0.28 per share. Both
2021 dividends represented at least 90% of the EPRA Earnings for
the first and second six months of the year, as stipulated by our
articles of incorporation.
Liquidity has always been a key area of focus and, especially
since the COVID-19 pandemic outbreak, we have taken several steps
to ensure that we have sufficient cash in this period while
investing in our portfolio. At 31 December 2021 our liquidity
included EUR418.7 million in cash and cash equivalents (vs EUR527.8
million at 2020 year-end) plus EUR215 million in an undrawn RCF
facility, and an LTV at 40.1% (vs 37.8% at 2020 year-end).
In addition we maintained our "BBB -" rating and "Stable"
outlook from S&P and Fitch, while Moody's re-affirmed our
"Baa3" rating and improved our outlook to "Stable" from "Negative"
in November.
Our Sustainable Development
Our approach to sustainable development centres around "People,
Places and Technology". We are committed to delivering
environmentally friendly and safe buildings that meet the needs of
our occupiers and make a positive contribution to the communities
we are an integral part of.
In 2021, together with Globalworth Foundation, we supported over
20 initiatives with over EUR1.0 million in Romania and Poland.
Furthermore, consistent with our commitment to energy-efficient
properties, we certified or recertified 38 properties with BREEAM
Very Good or higher certifications. At the end of 2021, we owned 55
green-certified properties valued at EUR2.7 billion. We are
particularly delighted that at the beginning of 2022 our
Globalworth Square received BREEAM Outstanding accreditation, with
99% scoring, placing our class "A" office in the 3rd place
worldwide.
In addition, in December, we received WELL Health-Safety Ratings
for 15 (of our 16) office buildings in Romania, further
demonstrating that our properties provide safe and healthy places
for corporates to operate and for people to visit and work in. We
are currently performing the same process for our properties in
Poland and Globalworth Square in Romania.
Also, we secured that 100% of the energy used in our Polish
properties and our Romanian office portfolio to be generated from
renewable sources. This initiative is part of our broader
preparatory actions for nZEB, involving other steps, including
introducing intelligent metering and implementing FORGE for
monitoring.
Finally, we are firm believers that we can support and properly
manage our ESG performance through robust performance monitoring
and reporting. This year, I am pleased that we have improved our
reporting by publishing our third annual sustainability report (for
the FY2020), our inaugural Green Bond allocation report and the
Globalworth Foundation Annual report.
Our Governance
Our Board of Directors was further reshaped in 2021 because of
the shareholder change of control. As a result, Mr G. Miller, Mr J.
Whittle and Ms A. Petreanu stepped down from their positions, with
Mr A. Tautscher, Mr P. Olendski, Mr F. Stelian and Mr D. Malkin
being appointed new members on the Board.
I would like to personally thank parting members for their
significant contributions to the Board and successful tenure to the
new members. I look forward to working closely with them and the
rest of the Board in steering Globalworth in the future.
In January 2022, it was announced that the CFO of Globalworth,
Mr A. Papadopoulos, made a decision to step down from his role at
the end of April 2022, which he had held since 2014. I have worked
closely with Andreas over the past eight years, and we are very
sorry to see him leaving the team. We are very thankful for and
appreciative of his invaluable contribution and unwavering
commitment over the past years and wish him all the very best for
the future.
Our Shareholders
As mentioned above, CPI Property Group S.A. and Aroundtown SA
formed a consortium and, via Zakiono, made a cash offer for the
entire issued and to be issued share capital in the Company at
EUR7.00/share. The offer was initiated in May 2021 and successfully
completed in July 2021. The consortium now holds 60.6% of the share
capital via Zakiono, thus being the largest and controlling
shareholder of Globalworth.
The fact that Globalworth is now controlled by two very
sizeable, financially strong, and reputable European real estate
institutional investors is a vote of confidence by them in the
quality of the team, the Company and its portfolio. We are
confident that with their support and closer cooperation,
Globalworth will be even more successful in the future.
Outlook
For 2022, our primary focus will remain the active management of
our portfolio of high-quality properties, as we continue operate in
an uncertain market underpinned by the lasting effects of the
COVID-19 pandemic and of the war between Russia and Ukraine which
commenced at the end of February. We don't have direct exposures to
related parties and/ or key customers or suppliers from those
countries, however at this point it is too early to assess the
impact that this war will have in the overall economy and our
markets of interest.
At the same time, investing in our prime developments will
remain a priority, and we are also ready to act quickly if new
attractive opportunities become available.
Although the office of the future may need to be adjusted to
potentially offer greater flexibility or alternative space planning
arrangements, I firmly believe that its importance will not
diminish. Many companies are also publicly confirming the view that
the office environment increases productivity, promotes creativity,
innovation, consistency, and fosters relationships and corporate
culture, which are essential for their businesses' long-term
sustainability and growth.
Hoping for a peaceful resolution to the Ukraine war the soonest
possible, we are very well-placed to continue to address ongoing
challenges successfully, and I firmly believe that we can achieve
new levels of success in the future.
Hope for peace!
Dimitris Raptis
24 March 2022
STANDING PORTFOLIO REVIEW
OPERATING BEST-IN-CLASS REAL ESTATE SPACE
We own and manage high-quality standing properties in 12 major
real estate sub-markets in Poland and Romania and we offer to our
investors an efficient gateway to the two largest markets in
Central and Eastern Europe.
In 2021, we added two high-quality logistic/light-industrial
facilities in regional Romania and a new class "A" office in
Bucharest to our standing portfolio, with Supersam our mixed-use
property in Katowice (Poland) being reclassified as it is going
through partial refurbishment/repositioning.
Overall, our combined portfolio of high-quality standing
properties at the end of 2021, comprised 39 standing investments
(37 at 31 December 2020) with 66 buildings (64 at 31 December
2020).
We own 30 class "A" office investments (with 50 properties in
total) and a mixed-use investment (with five properties in total)
in central locations in Bucharest (Romania), Warsaw (Poland) and
five of the largest office markets/cities of Poland (Krakow,
Wroclaw, Katowice, Gdansk and Lodz).
In addition, we fully own in Romania two
logistic/light-industrial parks with five facilities in Timisoara
and three modern warehouses in Pitesti, Arad and Oradea, and have a
50% ownership through Joint Venture in two other industrial parks
(with two standing facilities) in Bucharest and Constanta. We also
own part of a residential complex in Bucharest.
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021
----------------------------------------- -------------- -------------- --------------
Number of Investments 37 37 39
Number of Assets 61 64 66
GLA (k sqm) 1,213.7 1,271.3 1,302.3
GAV (EUR m) 2,844.7 2,805.5 2,866.3
Contracted Rent (EUR m) 184.4 178.7 175.4
----------------------------------------- -------------- -------------- --------------
Of which Commercial Properties 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021
----------------------------------------- -------------- -------------- --------------
Number of Investments 36 36 38
Number of Assets 60 63 65
GLA (k sqm) 1,180.1 1,238.9 1,272.0
GAV (EUR m) 2,783.1 2,745.9 2,810.3
Occupancy (%) 94.7% (95.0%*) 90.9% (91.7%*) 88.5% (88.7%*)
Contracted Rent (EUR m) 183.3 177.7 174.5
Potential rent at 100% occupancy (EUR m) 195.9 199.2 201.2
WALL (years) 4.5 4.5 4.7
----------------------------------------- -------------- -------------- --------------
(*) Including tenant options.
The total gross leasable area of our combined standing
commercial portfolio increased by 33.0k sqm or 2.7% in 2021 to
reach 1,272.0k sqm, with the overall combined standing portfolio
GLA increasing 2.4% to 1,302.3k sqm.
This net increase was mainly attributed to the addition of three
new properties in our portfolio in Romania with a total of 56.2k
sqm of GLA, which was partially offset by the reclassification of
the Supersam mixed-use property to development, the remeasurement
of certain spaces in our properties, and the sale of 19 units in
our Upground residential complex.
Globalworth Combined Standing Portfolio: 2021 GLA Evolution
Total Standing YE 20220 1,271.3k sqm
of which Standing Commercial YE 2020 1,238.9k sqm
GW Square/class "A" office in Bucharest (RO) development completed +29.2k sqm
IPW Arad/logistics facility in Arad (RO) standing facility acquired +20.1k sqm
IPW Oradea/logistics facility in Oradea (RO) standing facility acquired +6.9k sqm
Supersam/mixed-use property in Katowice (PL) reclassified to development (24.3)k sqm
Net remeasurement adjustments & other (RO & PL) +1.1k sqm
-------------------------------------------------------------------------- ------------
Standing Commercial YE 2021 1,272.0k sqm
Upground residential in Bucharest (RO)(*) +30.3k sqm
-------------------------------------------------------------------------- ------------
Total Standing YE 2021 1,302.3k sqm
-------------------------------------------------------------------------- ------------
The appraised value of our combined standing portfolio as at 31
Dec 2021 was EUR2.9 billion, with the overall increase mainly
attributed to the addition of new properties, through acquisition
and completion. Value of like-for-like properties remained
effectively unchanged, 0.6% higher at year-end 2021 compared to
same period in 2020, while the reclassification of Supersam in
Katowice to developments and sales of units in the Upground complex
decreased our standing portfolio value by EUR53.0 million
(additional information can be found in the "Asset Management
Review").
Globalworth Combined Standing Portfolio: 2021 Evolution
GAV - 31 December 2020 EUR2,805.5m
---------------------------------- -----------
Like for Like Change(*) +EUR17.7m
Acquisitions of Properties +EUR21.8m
Delivery of Properties +EUR74.4m
Reclassification of Properties EUR(48.4)m
Sales (& Other Adjustments)(**) EUR(4.6)m
---------------------------------- -----------
GAV - 31 December 2021 EUR2,866.3m
---------------------------------- -----------
(*) Like-for-Like change represents the changes in GAV of
standing properties owned by the Group at 31 December 2020 and 31
December 2021.
(**) Includes GAV adjustments (redevelopment capex, reclassification).
Standing Properties Operation, Renovation and Upgrade
Programme
Offering best-in-class real estate space to our business
partners is a key component of our strategy at Globalworth.
We believe that through a "hands-on" approach with continuous
active management and investment in our portfolio we can preserve
and enhance the value of our properties, generate long-term income,
as well as offering best-in-class real estate space to our business
partners.
Over the past few years, real estate has been gradually moving
away from "static" bricks and mortar buildings to more vibrant
environments where people and businesses can flourish, and as such
the ability to quickly adapt to trends and customise spaces is
becoming an increasingly important factor for success, which has
been accelerated by COVID-19 pandemic and the shifting format
towards a more flexible/hybrid-ecosystem with less desk space and
more collaborative areas.
In order to be able to provide spaces for our current and future
business partners requirements, we continue to internalise the
asset management of our portfolio, keep (re)investing in our
properties, maintain and, where required, improve the quality of
our buildings and of our services.
We are pleased that all our properties in Poland are now
internally managed by the Group, with the latest addition being the
Green Horizon class "A" office in Lodz, and in Romania, almost all
our offices (with the exception of one) are internally managed.
Overall, we internally manage 962.6k sqm of high-quality office and
mixed-use space in Poland and Romania with an appraised value of
EUR2.5 billion. Of our total standing commercial portfolio, our
internally managed properties account for 90.6% by value (96.8% of
office and mixed-use standing properties) as at 31 December
2021.
Our Renovation and Upgrade Programme was significantly scaled
back in 2020 due to COVID-19, but in 2021 gradually returned to a
more normalised state and is expected to further intensify in the
short-medium term as we aim to maintain and further improve the
quality of our properties.
Overall, in 2021, EUR24.0 million were invested in our standing
portfolio and the two mixed-use properties which are under
refurbishment/ repositioning. As a result of our ongoing in-house
initiatives and properties additions, 47 of our standing commercial
properties, accounting for 71.8% by GLA and 74.3% by commercial
portfolio value, were delivered or significantly refurbished in or
after 2014.
In 2021 we commenced the refurbishment/repositioning project of
two of our mixed-use properties in Poland.
- Renoma (Wroclaw): works in this landmark property involve the
conversion of certain retail/commercial spaces to class "A" office,
as well as the reallocation of certain commercial uses within the
property. Works are in progress and expected to be completed by the
end of H1-2023.
- Supersam (Katowice): works will be focusing on the
redevelopment of the entire first level from commercial/retail
space to class "A" office and reconfiguring part of the first
underground level to high-quality retail & commercial spaces
(food court and entertainment). Works are estimated to cost EUR5.6
million and are expected to be completed in H2-2022.
Finally, we are pleased that tenant fitout works have not been
affected during this period, as well that both properties have
maintained their green certification status.
Properties Under Refurbishment / Repositioning
Renoma Supersam
------------------------------------------- ----------------------------- -----------------------------
Location Wroclaw Katowice
Status Refurbishment / Repositioning Refurbishment / Repositioning
Expected Delivery H1-2023 H2-2022
GLA - on Completion (k sqm) 48.8 26.2
CAPEX to 31 Dec 21 (EUR m) 6.8 0.6
GAV (EUR m) 109.3 46.7
Estimated CAPEX to Go (EUR m)* 17.8 5.0
ERV (EUR m) 9.4 4.2
Estimated Yield on Completion of Project** 9.1% 10.6%
------------------------------------------- ----------------------------- -----------------------------
* Estimated CAPEX to Go partially excludes tenant contributions
which are subject to tenant negotiation and may impact the final
yield on Completion of the Project.
** Estimated Rental Value increase versus current Contracted
rent + ERV on vacant spaces divided by total Development Capex.
DEVELOPMENTS REVIEW
FOCUSED ON DEVELOPMENT AND REPOSITIONING OF HIGH-QUALITY
PROPERTIES WHILE ADAPTING TO MARKET CONDITIONS
Developing high-quality properties in which businesses can grow
has been a key feature in the evolution of Globalworth. Since our
inception, we have delivered 386.0k sqm of high-quality office and
logistics / light-industrial spaces in Romania (95%) and Poland. It
is our firm belief that offering such spaces allows us to meet
current and future tenant needs and achieve higher risk-adjusted
returns on our capital deployed.
Although the COVID-19 pandemic has made us reprioritise our
pipeline focusing on properties with lower risk-adjusted profile,
such as projects with significant pre-lets or high tenant interest
which are developed in phases, or at advanced levels of
construction, our development programme has remained very active
with 9 properties offering 191.2k sqm developed (completed or in
progress) in the period.
The depth of our existing income-producing properties and strong
balance sheet allows us to simultaneously engage on several
different projects. It gives us optionality over which schemes to
progress and their timing.
In 2021 we delivered a class "A" office with 29.2k sqm in
Bucharest, increasing our total high-quality GLA developed by the
Group to 386.0k sqm since 2013. In addition, we made progress in
several other industrial projects, which are at various stages of
development across Romania.
Overall, during the year, we invested EUR46.4 million in our
development projects and have EUR17.3 million for the completion of
the properties under construction at the end of 2021.
CASE STUDY - GLOBALWORTH SQUARE
Class "A" Office in the New CBD of Bucharest
In June 2021, we delivered the Globalworth Square development in
the New CBD of Bucharest. This class "A" office features several
new technologies that target lowering energy/occupational costs and
improving efficiencies in the property.
It is located between our own Globalworth Plaza and Green Court
B class "A" offices, extending over 15 floors above ground and
three underground levels, offering 29.2k sqm of high-quality GLA
and 451 parking spaces.
Green Certification: Globalworth Square, at year-end, was under
the green certification process, which it successfully received in
Q1-2022, becoming our first BREEAM Outstanding green property in
Romania. With 99% scoring, the building was ranked in the 3rd place
worldwide.
Tenants: As of 31 December 2021, the property was 63.8% leased
to seven tenants, including Wipro, a leading multinational company
delivering innovation-led strategy, technology and business
consulting services.
Furthermore, to allow for the highest level of "customisation"
of the available spaces for future tenants in the property, the
available spaces have remained in a core and shell design.
Property Overview
GLOBALWORTH SQUARE
-------------------------- --------------------------
Location: Bucharest New CBD
Type: Class "A" office
GLA: 29.2 k sqm
Parking Units: 451
Layout: 3UG+GF+14+TF
Typical Floor Plate: 2.1k
Access: Metro, tram and bus
Green Accreditation: BREEAM Outstanding
(achieved in January 2022)
Key Investment Highlights
-------------------------- --------------------------
Ownership 100%
Occupancy: 63.8%
Passing Rent: EUR4.4m
Potential Rent at
100% Occupancy EUR5.6m
Est. Yield on Development
Cost 9.8%
-------------------------- --------------------------
DEVELOPMENTS UNDER CONSTRUCTION AND FUTURE DEVELOPMENTS
Review of Current and Future Developments
In 2021, in addition to Globalworth Square, we started the
development of new logistic / light-industrial facilities in 4
locations in Romania.
At the end of the year, we had five such high-quality facilities
under construction, all representing subsequent phases of
development in existing projects. These facilities we own directly
or through JV partnerships, and together, on completion, are
expected to further increase our footprint by 98.9k sqm of
high-quality GLA and provide an average yield on development of
8.7%.
In addition, we hold interests on other land plots in prime
locations in Bucharest, regional cities in Romania and Poland,
covering a total land surface of 1.2 million sqm (comprising 2.7%
of the Group's combined GAV), for future developments of office,
industrial or mixed-use properties. When fully developed, these
land plots have the potential to add in total a further 776.8k sqm
of high-quality GLA to our standing portfolio footprint.
These projects, which are classified for "Future Development",
continue to be reviewed by the Group, albeit periodically, with the
pace at which they will be developed being subject to tenant demand
and general market conditions.
Right of First Offer
Globalworth has invested in Warsaw's two-phase My Place
(formerly Beethovena) project.
The Group continues to own a 25% economic stake in the second
phase of the project, with the right to acquire the remaining
interests once certain conditions have been satisfied.
My Place II (formerly: Beethovena II) is the second phase of
Class "A" office project in the South of Warsaw comprising two
four-floor offices, offering 17.2k sqm of GLA. The property was
delivered in Q4-2020 and is 60% leased to tenants such as Ars
Thanea and Networks.
DEVELOPMENTS - UNDER CONSTRUCTION
Timisoara Chitila Pitesti Constanta
Industrial Logistics Hub Industrial Business Park
Park II (Phases B and Park (Phase B)*
(Phase B) C)* Phase B
------------------------------- ------------------ ------------------ ------------------ ------------------
Location Timisoara Bucharest Pitesti Constanta
Status Under construction Under construction Under construction Under construction
Expected Delivery 2022 2022 2022 2022
GLA (k sqm) 19.0 54.1 6.7 19.0
CAPEX to 31 Dec 21 (EUR
m) 6.8 18.9 5.1 6.2
GAV (EUR m) 7.7 17.2 5.7 7.0
Estimated CAPEX to Go
(EUR m)** 1.5 11.7 0.9 3.2
ERV (EUR m) 0.8 2.5 0.6 0.8
Estimated Yield on Development
Cost 9.7% 8.2% 9.5% 9.0%
------------------------------- ------------------ ------------------ ------------------ ------------------
FUTURE DEVELOPMENTS
Timisoara
Constanta Industrial
Business Park I &
Podium Globalworth Park II Green
Park III West (Phased)* (Phased) Luterana Court D
------------------- ---------- ----------- ---------- ----------- --------- ---------
Location Krakow Bucharest Constanta Timisoara Bucharest Bucharest
Status Constr. Constr.
Postponed Postponed Planned Planned Planned Planned
GLA (k sqm) 17.7 33.4 526.2 156.8 26.4 16.2
CAPEX to 31 Dec 21
(EUR m) 8.5 5.2 11.5 6.4 7.4 2.5
GAV (EUR m) 9.6 7.9 35.6 10.4 14.3 6.3
Estimated CAPEX to
Go (EUR m)** 29.7 38.5 243.6 63.5 39.7 23.9
ERV (EUR m) 3.1 5.1 27.8 6.5 5.8 3.0
Estimated Yield on
Development Cost 8.1% 11.5% 10.9% 9.2% 12.3% 11.4%
------------------- ---------- ----------- ---------- ----------- --------- ---------
(*) 50:50 Joint Venture; figures shown on 100% basis.
(**) Initial preliminary development budgets on future projects
to be revised prior to the permitting.
ASSET MANAGEMENT REVIEW
ACTIVELY MANAGING OUR PORTFOLIO & MINIMISING THE IMPACT OF
COVID-19
Leasing Review
We are present in six of the seven largest office markets in
Poland, the largest office market and in some of the most
attractive logistic/light-industrial hubs of Romania.
Our office markets provide corporations with the necessary
infrastructure for them to operate and offer people interesting
opportunities for them to grow professionally and personally, while
our logistic/light-industrial properties benefit from locations
that are easily accessible, on or next to major road arteries,
connecting our facilities to major hubs in Romania and abroad.
The COVID-19 pandemic has created uncertainty impacting the
Polish and Romanian economies, as well as the way we live and work,
however, modern, high-quality, and easily accessible office spaces
continue to have a competitive advantage in the market.
Corporates have used remote working more extensively over the
past 18-24 months, however, we expect them to adopt a more balanced
approach in the future, as well as to seek to occupy spaces through
a mix of fixed and flexible and short-term leases, enabling them to
operate more efficiently and react quicker to market changes, thus
increasing their potential to stay in business and achieve
sustainable growth.
As such, we firmly believe that the need for safe and healthy
environments to work in, tailored leasing solutions to tenants,
allowing them more occupational flexibility, provided in modern
properties which are easily and centrally located within their
respective sub-markets, will continue to be in demand from
corporate tenants in the future.
New Leases
Our primary focus in 2021 was to maintain and gradually improve
our portfolio's occupancy. Following 2020, a record year in leasing
dominated with lease prolongations. This year was more even with
lease prolongations, and new take-up accounting for 54% (74% in
2020) and 46% (26% in 2020) of the total area leased,
respectively.
The increased level of new take-up was due to several
development projects being delivered over the past 18 months or in
progress, which are in their lease-up phase and our ongoing effort
to improve the net take-up in our portfolio.
However, the theme observed since the COVID-19 pandemic
outbreak, with signing of new leases, typically for large
multinational and national corporates, is taking longer in the
current market environment of higher uncertainty, as existing and
potential tenants continue to re-assess their future occupational
plans.
Overall, in 2021, we successfully negotiated the take-up or
extension of 285.5k sqm of commercial spaces in Poland (60.0% of
transacted GLA) and Romania (40.0% of transacted GLA), with an
average WALL of 4.6 years. More importantly office leases accounted
for 214.6k sqm of our total leasing activity, representing our best
to date.
Leases were renewed for a total of 153.8k sqm of GLA with 121 of
our tenants, at a WALL of 3.8 years, with the most notable
extensions involving Infosys (25.5k sqm) in Green Horizon, Rockwell
(12.9k sqm renewal plus 6.7k sqm expansion) in A4 Business Park,
Intel (9.8k sqm) in Tryton, Baxter (8.0k sqm) in Nordic Park and EY
(6.0k sqm) in TCI, while 78.2% of the renewals by GLA signed were
for leases expiring in 2022 or later.
We signed our new leases with 89 tenants for 105.8k sqm of GLA
at a WALL of 6.0 years. The majority were in properties delivered
by the Group over the past 18 months or currently under
construction, accounting for 61.8% of new GLA signed. New leases
for office and retail/commercial spaces were 55.9% of the total
spaces signed, with the remainder involving
logistic/light-industrial and storage spaces.
The largest new leases in this period were with HAVI Logistics,
for a total of 20.6k sqm in two logistic/light-industrial
facilities in Bucharest, Heineken (8.6k sqm) in Podium Park I in
Krakow, Caroli Foods (6.7k sqm) in Pitesti, and Wipro (6.1k sqm
plus 4.7k sqm expansion) in the newly 2021 delivered Globalworth
Square. In addition, in 2021 we signed 25.9k sqm of expansions with
50 tenants, at an average WALL of 5.4 years.
Summary Leasing Activity for Combined Portfolio in 2021
GLA (k sqm) No. of Tenants* WALL (yrs)
----------------------------- ----------- --------------- ----------
New Leases (incl. expansion) 131.7 131 5.8
Renewals/Extensions 153.8 121 3.8
----------------------------- ----------- --------------- ----------
Total 285.5 232 4.6
----------------------------- ----------- --------------- ----------
* Number of individual tenants.
Occupancy
The average occupancy of our combined standing commercial
portfolio as of 31 December 2021 was 88.5% (88.7% including tenant
options), representing a 2.3% decrease over the past 12 months
(90.9% as of 31 December 2020 / 91.7% including tenant
options).
Our annual like-for-like occupancy rate in 60 (of our 61)
standing properties, following the reclassification of our Supersam
mixed-used property in Poland to a property under
refurbishment/redevelopment, has remained effectively constant at
90.8% at year-end 2021 (91.0% at 31 December 2020). Standing
occupancy increases to 91.0% with the two fully let industrial
facilities acquired this year.
However, two sizable offices with average occupancy of 41.8%
have negatively affected our overall standing occupancy. The
Globalworth Square (occupancy rate: 63.8%) in Bucharest, which was
delivered in June this year and is in the lease-up phase, and Warta
Tower (occupancy rate: 22.7%) in Warsaw where its principal tenant
relocated from its premises in December and we are currently
contemplating alternative (sale and other) options.
We are encouraged by our annual leasing performance and
resulting occupancy of our combined standing portfolio when
considering the challenging market conditions. We remain confident
that we will be able to lease the available spaces in our portfolio
in the future as business conditions return to a more normalised
state.
Across our combined portfolio, at the end of 2021, we had 1,194k
sqm of commercial GLA leased to approximately 660 tenants, at an
average WALL of 4.7 years. National and multinational corporates,
well-known within their respective markets, occupy the majority of
the leased spaces in our properties.
Approximately 94.3% of the spaces leased are in standing
properties. In addition, we have 7 properties, like Renoma and
Supersam in Poland, which are undergoing a partial
refurbishment/repositioning or are at the final stages of
construction like TIP II (Phase B), PIP (Phase B), Chitila
Logistics Hub (Phases B and C) and Constanta Business Park (Phase
B) which are let or pre-let. As of 31 December 2021, these
properties had an average occupancy rate of 41.5%.
Occupancy Evolution 2021 (GLA 'k sqm) - Commercial Portfolio
Occupancy Occupancy Occupancy
Poland Rate (%) Romania Rate (%) Group Rate (%)
------------------------------------------------- ------ --------- ------- --------- ------- ---------
Standing Available GLA - 31 Dec. 20 566.2 672.7 1,238.9
Acquired GLA - 27.0 27.0
New Built GLA - 29.2 29.2
Remeasurements, reclassifications* (24.1) 1.0 (23.2)
------------------------------------------------- ------ --------- ------- --------- ------- ---------
Standing Available GLA - 31 Dec. 21 542.1 729.9 1,272.0
------------------------------------------------- ------ --------- ------- --------- ------- ---------
Occupied Standing GLA - 31 Dec. 20 506.4 89.4% 619.2 92.0% 1,125.6 90.9%
------------------------------------------------- ------ --------- ------- --------- ------- ---------
Acquired/Developed Occupied GLA - 45.6 45.6
Expiries & Breaks (62.9) (45.4) (108.3)
Renewals** 118.0 27.9 145.9
New Take-up 41.4 42.7 84.1
------------------------------------------------- ------ --------- ------- --------- ------- ---------
Other Adj.*** (relocations, remeasurements, etc) (20.8) (0.0) (20.8)
------------------------------------------------- ------ --------- ------- --------- ------- ---------
Occupied Standing GLA - 31 Dec. 21 464.1 85.6% 662.1 90.7% 1,126.2 88.5%
------------------------------------------------- ------ --------- ------- --------- ------- ---------
* Includes the reclassification of Supersam mixed-use property
(Katowice) from standing to under refurbishment (24.3k sqm of
GLA).
** Renewals are neutral to the occupancy calculation.
*** Includes the reclassification of occupied GLA in Supersam
from standing to under refurbishment (22.6k sqm of occupied GLA).
Other lease expirations, renewals, or new take-up in relation to
Supersam are excluded from the table.
Rental Levels
Headline market rental levels have remained relatively stable in
our portfolio, despite the uncertainty in the market and the
cautious approach of tenants, reflecting the quality of our
properties, our active asset management initiatives since the
outbreak of the pandemic, and our approach to sustainable
development.
At the end of December 2021, our average headline rents in our
standing properties for office, retail/commercial and industrial
spaces were EUR14.0/sqm/month (EUR14.2 at YE-2020),
EUR13.9/sqm/month (EUR14.5 at YE-2020) and EUR3.8/sqm/month (EUR3.7
at YE-2020) respectively.
Rental levels can vary significantly between type of spaces,
buildings and submarkets. Leases signed in 2021 were at 1.6% lower
rents than their prevailing group averages.
Our overall commercial GLA take-up during the year was at an
average rent of EUR12.1/sqm/month (EUR10.9/sqm/month for FY2020).
Office leases were at an average rent of EUR13.9/sqm/month,
industrial spaces at EUR3.9/sqm/month, while retail spaces were at
EUR12.7/sqm/month.
Contracted Rents (on annualised basis)
Total annualised contracted rent in our real estate portfolio
marginally increased by 0.2% to EUR183.7 million compared to
year-end 2020, due to new additions and leases signed on properties
under refurbishment/ repositioning or development.
Total annualised contracted rents in our standing commercial
portfolio were EUR174.5 million on 31 December 2021, lower by 1.8%
compared to the same period last year. Total rental income
increases to EUR175.4 million when including the income from
renting 183 residential units and other auxiliary spaces in
Upground, the residential complex in Bucharest, which we partially
own.
Like-for-like annualised commercial contracted rents in our
standing commercial portfolio decreased by 3.3% to EUR168.5 million
at the end of 2021 compared to 31 December 2020, as the increase in
rents (0.5% on average) due to indexation was outweighed primarily
by the lower occupancy in Warta Tower. Excluding Warta Tower, the
adjusted like-for-like annualised commercial contracted rents were
marginally lower by 0.7% at EUR167.3 million.
Annualised Contracted Rent Evolution 2021 (EURm)
Poland Romania Group
--------------------------------------------------------------------------------- ------ ------- ------
Rent from Standing Commercial Properties ("SCP") 31 Dec 2020 97.0 80.7 177.7
Less: Properties reclassified(*) (3.4) - (3.4)
--------------------------------------------------------------------------------- ------ ------- ------
Rent from SCP Adj. for Properties Reclassified 31 Dec 2020 93.6 80.7 174.3
Less: Space Returned (12.8) (4.4) (17.2)
Plus: Rent Indexation 0.3 0.5 0.8
Plus/Less: Lease Renewals (net impact) & Other (0.7) (0.3) (1.0)
Plus: New Take-up 7.6 4.0 11.6
--------------------------------------------------------------------------------- ------ ------- ------
Total L-f-L Rent from SCP 31 Dec 2021 87.9 80.6 168.5
Plus: Standing Commercial Properties Acquired During the Period - 1.5 1.5
Plus: Developments Completed During the Period - 4.4 4.4
--------------------------------------------------------------------------------- ------ ------- ------
Total Rent from Standing Commercial Properties 87.9 86.6 174.5
Plus: Residential Rent - 0.9 0.9
--------------------------------------------------------------------------------- ------ ------- ------
Total Rent from Standing Properties 87.9 87.5 175.4
Plus: Active and Pre-lets of Space on Projects Under Development/Refurbishment 6.8 1.5 8.3
--------------------------------------------------------------------------------- ------ ------- ------
Total Contracted Rent as at 31 Dec 2021 94.7 89.0 183.7
--------------------------------------------------------------------------------- ------ ------- ------
* Supersam mixed-use asset (Katowice) was reclassified under redevelopment in 2021
Combined Annualised Commercial Portfolio Contracted Rent Profile
as at 31 December 2021
Poland Romania Group
------------------------ ------ ------- -----
Contracted Rent (EUR m) 94.7 88.0 182.8
Multinational 72.6% 88.6% 80.3%
National 25.8% 10.1% 18.3%
State Owned 1.6% 1.2% 1.4%
------------------------ ------ ------- -----
Note: Commercial Contracted Rent excludes c.EUR0.9 million from
residential spaces as at 31 Dec 2021
Annualised Contracted Rent by Period of Commencement Date as at
31 December 2021 (EURm)
Active Leases H1-2022 H2-2022 H1-2023 H2-2023 >2024 Total
-------------------- ------------- ------- ------- ------- ------- ----- -----
Standing Properties 169.0 6.0 0.2 0.3 - - 175.4
Developments 7.4 0.9 - - - - 8.3
-------------------- ------------- ------- ------- ------- ------- ----- -----
Total 176.4 6.9 0.2 0.3 - - 183.7
-------------------- ------------- ------- ------- ------- ------- ----- -----
Annualised Commercial Portfolio Lease Expiration Profile as at
31 December 2021 (EURm)
Year 2022 2023 2024 2025 2026 >=2027 Total
----------- ----- ---- ----- ---- ----- ------ -----
Total 18.8 16.1 30.3 17.4 20.7 79.3 182.8
----------- ----- ---- ----- ---- ----- ------ -----
% of total 10.3% 8.8% 16.6% 9.5% 11.3% 43.4% 100%
----------- ----- ---- ----- ---- ----- ------ -----
Our rent roll across our combined portfolio is well diversified,
with the largest tenant accounting for 5.1% of contracted rents,
while the top three tenants account for 10.7% and the top 10
account for 26.2%.
Cost of Renting Spaces
The headline (base) rent presents the reference point, typically
communicated in the real estate market when a new lease is signed.
However, renting spaces typically involves certain costs, such as
rent-free periods, fitouts for the space leased, and brokerage
fees, which the landlord incurs. These incentives can vary
significantly between leases and depend on market conditions, type
of lease (new take-up or lease extension), space leased (office,
other commercial, etc.), contract duration, and other factors.
In calculating our effective rent, we account for the costs
incurred over the lease's lifetime, which we deduct from the
headline (base) rent, thus allowing us to assess the profitability
of a rental agreement.
Overall, in 2021, we successfully negotiated the take-up
(including expansions) or extension of 285.5k sqm of commercial
spaces in our portfolio. The overall weighted average effective
rent for these new leases was EUR12.1/sqm/month, signed at an
average lease term of 4.6 years. Industrial leases completed in the
period, which accounted for 16.1% of the total leasing activity,
were agreed at an average of EUR3.9/sqm/month, thus decreasing the
average headline and effective rent achieved.
Weighted Average Effective Rent (EUR/sqm/m) - 2021
Poland Romania Group
------------------------------ ------ ------- -----
Headline Commercial Rent 13.7 9.7 12.1
Less: Rent Free Concessions (2.7) (0.9) (2.0)
Less: Tenant Fitouts (1.4) (0.7) (1.1)
Less: Broker Fees (0.4) (0.3) (0.4)
------------------------------ ------ ------- -----
Effective Commercial Rent 9.1 7.7 8.5
------------------------------ ------ ------- -----
WALL (in years) 4.0 5.8 4.6
------------------------------ ------ ------- -----
Note: Certain casting differences in subtotals/totals are due to
figures presented in 1 decimal place.
The difference between headline (base) and effective rents in
2021 was on average 29.2%, a discount higher compared to the FY2020
(average of 21.0%) due to the continuing challenging market
conditions and the type of leases signed.
In total, new leases signed in this year will generate a future
rental income of EUR187.5 million, with leases from office
properties accounting for 81.2% of future rental income.
Tenant Demands/Claims Review
Tenant demands/claims decreased in 2021 as the business
community has been absorbing the initial shock from the COVID-19
pandemic, and restrictions imposed by the authorities that directly
and/or indirectly impacted certain businesses and industries have
been easing in Poland and Romania since the beginning of the
year.
The majority of our portfolio comprises office premises and
industrial properties or essential retail businesses (supermarkets,
pharmacies, convenience stores etc.), none of which were impacted
by measures taken by the authorities since the beginning of the
pandemic in our countries of focus. In February 2021, restrictions
on non-essential or stationary retail were significantly eased in
Poland, limited only by the number of customers in stores. However,
higher uncertainty remains in our markets of interest and
globally.
Of our EUR183.7 million of total contracted rent on the last day
of December, office rent accounted for 85.1% (including parking
rent), with retail/commercial, industrial and other spaces
accounting for 6.0%, 6.3% and 2.5%, respectively.
Overall, for the 12 months of 2021, we have estimated the value
of the tenant demands/claims received at c.EUR3.0m million,
reflecting 1.6% of our contracted annual rent, with the majority of
them, mainly awarded to tenants of retail/commercial spaces in our
properties which were impacted by restrictive measures/closures in
the first part of the year.
Our approach towards these tenant demands/claims was to continue
considering each case separately, rather than applying a horizontal
or vertical approach, aiming to identify the optimal solution for
our tenants and Globalworth. Some of the solutions implemented have
been to award rent-free months or replace fixed rent with turnover
rent for retail tenants for certain periods of tenant leases which
in certain cases resulted in lease extensions.
We expect the level of claims to decrease in the future as an
increasing number of people return to the office.
Collections Review
The ability to collect - cash in - contracted rents is a key
determinant for the success of a real estate company.
Our rate of collections of rents invoiced and due in 2021
remained high at 99.2% (99.0% for 2020FY), due to the long-term
partnerships we established with high-quality national and
multinational tenants since the inception of the Group and continue
to cultivate since which have helped us minimise the impact on rent
collections in this period of higher economic uncertainty and
ensure sustainable cash flow generation.
More specifically, considering the current market environment,
rent to be collected in 2021 was classified as:
- Rent eligible for invoicing: Includes rents invoiced to
tenants per the terms of their lease agreements. Such rents were
either collected or subject to collection; and
- Rent impacted by measures imposed by the authorities: Such
rent was to be collected based on the contractual agreements in
place, however, due to measures taken by the authorities in Poland
and Romania, tenants were excluded from paying, and as such, no
invoices were issued by the Group.
Under normal conditions, the Group during the period would have
had EUR154.0 million of rent be invoiced and due, however, EUR1.2
million was not invoiced due to measures taken by the authorities.
This is a significant improvement to 2020, where c.1.8% of rent to
be invoiced and due was not invoiced.
Portfolio Valuation
Our entire portfolio in Poland and Romania was revalued, by
independent appraisers, three times in 2021.
- The first valuation was for the benefit of the independent
committee of the Group responsible for assessing the cash offer for
the entire issued and to be issued share capital of Globalworth,
with effective date the 31 March 2021; and
- The second and third valuations were performed, as of 30 June
and 31 December 2021, per our policy of revaluing our properties
twice a year.
The valuations were performed by CBRE and Knight Frank for our
properties in Poland, with Colliers and Cushman and Wakefield
valuing our properties in Romania (more information is available
under note 4 of the unaudited interim condensed consolidated
financial statements as of and for the period ended 31 December
2021).
Our portfolio since the inception of the Group has been growing
due to new additions through acquisition or development of
high-quality properties in Poland and Romania, our asset management
initiatives, and the performance of the real estate markets in
which we operate, resulting in healthy investor interest and
contracting yields, as well as healthy tenant demand leading to
stable or growing rental levels and lowering tenant incentives.
Overall, our total combined portfolio value increased from
EUR0.1 billion in 2013 to EUR3.0 billion in 2019, remaining
effectively unchanged in 2020 as the impact of the COVID-19
pandemic was reflected at our year-end independent valuation
appraisal of our properties, and marginally increasing (+3.9%) at
the end December 2021 to EUR3.2 billion.
Portfolio growth in 2021, is mainly attributed to the
acquisition of two high-quality logistic/light-industrial
properties in Romania and the net positive impact from our
developments (delivered, in progress or under refurbishment). The
like-for-like appraised value of our standing commercial properties
was EUR2.7 billion at the end of the period, 0.7% higher than 31
December 2020.
In valuing our properties, the key market indicators used by the
four independent appraisers, although vary, considering factors
such as the commercial profile of the property, its location and
the country in which it is situated, have remained consistent with
those of year-end 2020, with ERVs, yields and/or discount rates
remaining stable with only a few exceptions, where positive
adjustments were made to reflect improvements in operating
performance.
It has to be noted that since 30 June 2020, independent
valuations, yields and/or discount rates used by appraisers have
remained stable or improved, which for the majority of our office
and mixed-use properties, were 10 - 50bps wider compared to
December 2019.
Combined Portfolio Value Evolution 31 December 2021 (EURm)
Poland Romania Group
-------------------------------------------------- ------- ------- -------
Total Portfolio Value at 31 Dec 2020 1,610.1 1,422.8 3,032.9
-------------------------------------------------- ------- ------- -------
Less: Properties Held in Joint Venture (*) - (51.2) (51.2)
-------------------------------------------------- ------- ------- -------
Total Investment Properties at 31 Dec 2020 1,610.1 1,371.6 2,981.7
-------------------------------------------------- ------- ------- -------
Plus: Transactions - 14.6 14.6
o/w New Acquisitions - 17.9 17.9
o/w Disposals - (3.3) (3.3)
Plus: Capital Expenditure 7.4 24.6 32.0
o/w Developments 7.4 24.6 32.0
o/w Standing Properties - - -
o/w Future Developments - - -
Plus: Net Revaluations Adjustments (4.7) 42.0 37.3
o/w Developments (2.9) 18.4 15.5
o/w Standing Properties (1.8) 18.4 16.6
o/w Lands, Future Developments & Acquisitions - 5.3 5.3
-------------------------------------------------- ------- ------- -------
Total Investment Properties at 31 Dec 2021 1,612.8 1,452.8 3,065.6
-------------------------------------------------- ------- ------- -------
Plus: Properties Held in Joint Venture (*) - 86.7 86.7
o/w Capital Expenditure & Acquisitions - 21.9 21.9
o/w Net Revaluation Adjustments - 13.6 13.6
-------------------------------------------------- ------- ------- -------
Total Portfolio Value at 31 Dec 2021 1,612.8 1,539.5 3,152.3
-------------------------------------------------- ------- ------- -------
(*) Properties held through joint ventures are shown at 100%,
Globalworth owns 50% stake in the respective joint ventures
FINANCIAL REVIEW
MODEST DECLINE IN RENTAL INCOME IN 2021 DESPITE CONTINUED IMPACT
FROM COVID-19 AND STABILISATION IN PROPERTY PORTFOLIO VALUATION
OVERVIEW
2021 2020
--------------------------------- ------------ -----------
NOI EUR144.3m EUR157.3m
IFRS Earnings per share(2) 21 cents -21 cents
EPRA Earnings(1) EUR59.1 m EUR82.3m
OMV(1) EUR3.2 bn EUR3.0 bn
EPRA NRV per share(1,3) EUR 8.66 EUR 8.68
EPRA Earnings per share(1,2) 27 cents 37 cents
Adjusted normalised EBITDA(1,4) EUR130.2 m EUR141.6m
Total Accounting Return(1) 3.0% -1.4%
Dividend per share 28 cents 34 cents
LTV(1,5) 40.1% 37.8%
--------------------------------- ------------ -----------
1 See Glossary (pages 182-184) for definitions.
2 See note 12 of the consolidated financial statements for calculation.
3 See note 23 of the consolidated financial statements for calculation.
4 See page 48 for further details.
5 See note 25 of the consolidated financial statements for calculation.
NOI and Adjusted normalised EBITDA impacted negatively by the
continued effects of COVID-19, which also impacted occupancy. In
addition, the EPRA earnings and IFRS earnings were significantly
impacted by the exceptional and non-recurring administrative costs.
The COVID-19 impact on portfolio valuation was marginal in 2021
thus stabilising the decline in EPRA NRV and turning the Total
Accounting Return into a positive rate of 3.0%, compared to the
negative rate in 2020 of -1.4%.
NOI declined by 8.2% in 2021 compared to 2020, reaching EUR144.3
million (2020: EUR157.3 million).
Adjusted normalised EBITDA decreased by 8.1% to EUR130.2 million
from EUR141.6 million in 2020, reaching to the 2019 level prior to
the COVID-19 pandemic, due to lower NOI by 8.2%, as offset by the
positive impact of the EUR1.6 million (10% lower compared to 2020)
savings in recurring administrative expenses.
Dividends declared in respect to 2021 of 28 cents per share, as
compared to 34 cents for 2020, a 17.7% decrease, resulting from
management's policy to preserve a high level of liquidity from the
outset of the COVID-19 pandemic.
EPRA Net Reinstatement Value (NRV) of EUR1.9 billion, or EUR8.66
per share, a marginal decrease from EUR8.68 at 31 December 2020
mainly due to dividends paid, lower operating performance and
non-recurring costs, offsetting the positive impact of lower
revaluation losses (by EUR110.4 million compared to 2020). Combined
with dividends paid in 2021, this resulted in a positive Total
Accounting Return of 3.0% (versus a negative TAR of -1.4% in
2020).
The Open Market Value ("OMV") of the portfolio increased by
EUR0.2 billion, an increase of 3.9% to EUR3.2 billion (31 December
2020: EUR3.0 billion), being the net impact of the increase due to
value accretive development CAPEX, and the acquisition of two new
logistics properties during the year.
LTV at 31 December 2021 amounted to 40.1%, increasing marginally
from 37.8% at 31 December 2020, but still within the long term 40%
threshold set by Management.
Revenues and Profitability
Consolidated revenues of EUR219.4 million in 2021 down by 1.8%
compared to 2020 (EUR223.3 million), primarily as a result of a
6.3% decline in rental income to EUR150.3 million (2020: EUR160.5
million), which was partly compensated by a 9.9% increase in other
revenues, consisting of service charge income and property
development services income (EUR69.0 million in 2021 compared to
EUR62.9 million in 2020).
The main drivers for the decrease in rental income were:
- a 7.7% reduction (EUR5.7 million) in underlying rental income
derived from standing properties in Poland, and a 4.5% drop from
standing properties in Romania (EUR3.1 million);
- a 31% decline (EUR2.3 million) connected with the
refurbishment programme of two mixed used properties in Poland
during 2021;
- a 8.4% (EUR0.9 million) decline in rental income connected
with Warta Tower which is a property held for sale, following the
signing in September 2021 of a pre-SPA for its disposal, together
with other four smaller properties in Poland; and
Revenue Share by Country 2021
Poland Romania
------ ------- --------
2021 53% 47%
------ ------- --------
Revenue Share by Country 2020
Poland Romania
------ ------- --------
2020 56% 44%
------ ------- --------
- an offsetting impact resulting from an additional rental
income of EUR1.8 million, in Romania, recognised in 2021 following
the acquisition of two new logistics facilities and the transfer of
GW Square, a newly completed offices property, from development to
standing/completed stage after 1 January 2021, representing a 1.1%
increase in total rental income.
EPRA NRV / Total Accounting Return(6)
2017 2018 2019 2020 2021
------------------------- ----- ----- ----- ------ -----
EPRA NRV / Share EUR 8.84 9.04 9.30 8.68 8.66
Total Accounting Return 5.7% 7.8% 9.2% -1.4% 3.0%
------------------------- ----- ----- ----- ------ -----
6 Total accounting return is the growth in EPRA NRV per share
plus dividends paid, expressed as a percentage of EPRA NRV per
share at the beginning of the year.
NOI Share by Country 2021
Poland Romania
------ ------- --------
2021 55% 45%
------ ------- --------
NOI Share by Country 2020
Poland Romania
------ ------- --------
2020 57% 43%
------ ------- --------
Net Operating Income
Net Operating Income of EUR144.3 million in 2021, a 8.3%
decrease over 2020 (EUR157.3 million), influenced by the decrease
in consolidated revenues but, more importantly, by the significant
increase in operating expenses, by 13.7% against 2020, resulting
from the significant increase in utility prices and increase in
vacancy during the year.
NOI 2020 Change in NOI (Poland) Change in NOI (Romania) NOI 2021
--------- ----------------------- ------------------------ ---------
157.3 (10.5) (2.5) 144.3
--------- ----------------------- ------------------------ ---------
NOI was split 55% Poland / 45% Romania, compared to 57% Poland /
43% Romania in 2020.
Adjusted normalised EBITDA amounted to EUR130.2 million, a
decrease of 8.1% over 2020 (EUR141.6 million), which correlates to
the net effect of the decrease in NOI of 8.2% (EUR13 million),
which was partly offset by the 10% reduction in recurring
administrative expenses (by EUR1.6 million).
All amounts in EUR'm 2021 2020
------------------------------------------------- ----- -----
Profit before net finance cost 110.9 16.4
------------------------------------------------- ----- -----
Depreciation and amortisation expense 0.5 0.5
Acquisition costs - 2.7
Fair value loss on investment property 5.7 116.2
Share based payment expense 0.5 1.1
Other expenses 1.9 2.6
Other income (1.0) (0.5)
Foreign exchange (gain)/loss (0.2) 0.4
Loss from fair valuation of financial instrument 0.4 0.0
Exceptional and / or non-recurring expenses 11.5 2.3
------------------------------------------------- ----- -----
Adjusted normalised EBITDA 130.2 141.6
------------------------------------------------- ----- -----
IFRS EPS to EPRA EPS (EUR cents per share)
IFRS EPS FV loss FV gain on Deferred JVs & Others EPRA EPS
on properties financial tax
instruments
--------- --------------- ------------- --------- ------------- ---------
21 3 0 5 (2) 27
--------- --------------- ------------- --------- ------------- ---------
Finance costs increased by 8.6% in 2021 mainly due to the
full-year impact of the new EUR400 million Bond, which was issued
in July 2020, the higher negative interest rate charge on current
and deposits accounts denominated in Euro and higher finance costs
on the unwinding of the lease liability related to the right of
usufruct of leasehold land underlying some investment properties.
The negative impact on finance costs was partly offset by the
reduction in interest expense due to the repayment of the RCF
facility in August 2020 (which was drawn for a few months during
2020).
IFRS earnings were positive at EUR47.5 million (21 cents per
share), resulting mainly from a modest decline of EUR5.7 million in
the fair value of investment property in December 2021 as compared
to EUR116.2 million fair value loss in 2020. However, excluding the
impact of investment property valuations, the profit after tax
declined by 23.3% to EUR53.2 million from EUR69.4 million in 2020,
resulting from the decline in NOI of EUR13.0 million, increase in
total administrative expenses of EUR7.6 million (mainly related to
the EUR11.5 million exceptional and non-recurring costs associated
with the offer for Globalworth shares initiated in May 2021), a
EUR5.0 million increase in finance costs, as partly offset by an
increase of EUR3.1 million in contribution from the share of joint
ventures' profits compared to 2020, reduction in other
non-operating costs of EUR4.7 million and income tax expense of
EUR1.8 million.
IFRS Earnings to EPRA earnings bridge (EUR million)
IFRS Earnings FV loss FV gain on Deferred JVs & Others EPRA Earnings
on properties financial tax
instruments
-------------- --------------- ------------- --------- ------------- --------------
47.5 5.7 (0.2) 10.3 (4.2) 59.1
-------------- --------------- ------------- --------- ------------- --------------
EPRA earnings weakened to EUR59.1 million, a decrease of 28.2%
compared in 2020 (EUR82.3 million). The NOI contraction of EUR13.0
million and exceptional, non-recurring administrative costs of
EUR11.5 million were the key drivers for such weakness. Similarly
in terms of EPRA earnings per share, there was a 10 cents decrease
(from 37 cents per share in 2020) to 27 cents per share.
Balance Sheet
The OMV of the portfolio increased by a considerable EUR0.2
billion, an increase of 3.9%, to EUR3.2 billion (31 December 2020:
EUR3.0 billion). There was a marginal net loss on fair value of
investment property of EUR5.7 million (9.4 million loss on standing
assets and EUR3.4 million gain on properties under
development/refurbishment), as compared to EUR116.2 million fair
value losses in 2020. The property portfolio in Romania showed a
positive valuation uplift by EUR25.4 million as compared to drop of
EUR31.3 million in Poland.
The growth in OMV was mainly supported by the acquisition of two
logistics facilities for EUR18.0 million, the incidental costs
related to new leases and/or prolongation of existing lease
contracts of EUR19.3 million, and value accredit additional CAPEX
on standing and under development/ refurbishment properties of
EUR20.7 million and EUR32.6, respectively, as well as the increase
in fair value of JV properties to EUR86.7 million from EUR51.2
million in 2020, after incurring EUR23.3 million development CAPEX
on new logistics facilities.
Evolution in Portfolio Value (EUR million by location)
Romania Poland Total
--------------------- -------- ------------------------- --------
Investment Property
- Dec 20 1,371.5 1,610.1 2,981.6
JV and others - Dec
20 51.2 - 51.2
OMV Dec 20 1,422.7 1,610.1 3,032.8
CAPEX 40.6 34.0 74.6
Fair value loss 25.4 (31.3) (5.9)
Disposals (3.2) - (3.2)
Asset acquisition 18.0 - 18.0
JV's CAPEX & Uplift 35.5 - 35.5
OMV Dec 21 1,539.0 1,612.8 3,151.8
JV and others (86.7) - (86.7)
Investment Property
- Dec 21 1,452.3 1,612.8 3,065.1
--------------------- -------- ------------------------- --------
Total assets at 31 December 2021 amounted to EUR3.63 billion
virtually unchanged from 31 December 2020 (EUR3.63 billion).
Similarly, EPRA NRV decreased by only EUR6.0 million to EUR1.917
billion at 31 December 2021, a decrease of 0.3% on 31 December 2020
(EUR1.923 billion), while EPRA NRV per share decreased by 0.2% to
EUR8.66 per share (31 December 2020: EUR8.68 per share). Reflecting
the dividend distributions made during 2021 of 30 cents per share,
the adjusted EPRA NRV per share on 31 December 2021 would be
EUR8.96 per share, representing a positive total accounting return
of NAV growth and dividend return for 2021 of 3.0% (2020:
-1.4%).
EPRA NRV per share bridge from 31 December 2020 to 31 December
2021 (EUR)
EPRA NRV Dec-20 8.68
EPRA Earnings 0.27
-------
Non- EPRA Earnings 0.02
-------
FV loss on Property portfolio (0.02)
-------
Dividends (0.30)
-------
Others 0.01
-------
EPRA NRV Dec-21 8.66
-------
Evolution of EPRA NRV/share and OMV by semester
EPRA NRV EPRA NRV OMV (EURm)
per share (EURm)
(EUR)
Dec 19 9.30 2,069 3,045
----------- --------- -----------
Jun 20 8.80 1,957 3,013
----------- --------- -----------
Dec 20 8.68 1,923 3,033
----------- --------- -----------
Jun 21 8.61 1,903 3,040
----------- --------- -----------
Dec 21 8.66 1,917 3,152
----------- --------- -----------
Cash Flows
Cash flows from operating activities before working capital
changes declined to EUR119.4 million from EUR136.1 million in 2020
due to the NOI contraction by EUR13.0 million and significant
increase of EUR7.6 million (by 42.5% compared to 2020), in total
administrative costs in 2021 due to the exceptional and
non-recurring expenses incurred. Furthermore, operating expenses
increased by EUR9.1 million, reflecting a 13.7% increase on 2020,
and the decline in headline rental income along with additional new
tenant incentives impacted the working capital changes
substantially (by EUR21.9 million) thus reducing the overall cash
flows from operating activities to EUR65.3 million (from EUR105.2
million in 2020), representing a 37.9% decrease.
In the absence of any new drawdown from existing or new debt
facilities or prepayment of outstanding debt facilities, the cash
flows from financing activities mainly decreased as a result of the
dividend payments in 2021 of EUR66.3 million (in respect of the
six-month periods ended 31 December 2020 and 30 June 2021),
compared with the significant drawdown of three secured bank loan
facilities and part repurchase of the 2022 Bond along with issuance
of a new 2026 Bond in 2020.
Regarding investing activities, during 2021 the Group acquired
two logistics facilities for EUR18.0 million, further invested
EUR15 million in two logistics joint venture properties under
development, and incurred capital expenditure on advancing
development/refurbishment projects (two under development in Poland
and one completed in Romania) of EUR32.7 million and on standing
assets of EUR39.2 million.
Cash and cash equivalents at 31 December 2021 decreased to
EUR418.7 million, EUR109.1 million lower than 31 December 2020
(EUR527.8), as influenced by the net cash outflows from financing
and investing activities during the year.
FINANCING AND LIQUIDITY REVIEW
DEBT STRUCTURE & LIQUIDITY
In the context of the ongoing COVID-19 pandemic, the Group's
focus during 2021 was to preserve the available cash liquidity and
to protect its revenues and cash flows in order to mitigate the
economic impact over its businesses.
Dividends
In March 2021 the Company paid an interim dividend of 15 cents
per share (c.EUR33.1 million) in respect of the six-month period
ended 31 December 2020, while in October 2021 it paid an interim
dividend of 15 cents per share (c.EUR33.2 million) in respect of
the six-month period ended 30 June 2021. In addition, another
interim dividend of 13 cents per share (c.EUR28.8 million) will be
paid in April 2022 in respect of the six-month period ended 31
December 2021.
Debt Summary
The Group's debt remained largely unchanged at 31 December 2021
compared to 31 December 2020.
The total debt portfolio of the Group at 31 December 2021 of
EUR1.63 billion (31 December 2020: EUR1.63 billion) comprises short
to medium and long-term debt, denominated entirely in Euro with the
first debt maturity in June 2022, out of which EUR1.27 billion
represents Eurobond and EUR361 million bank loans.
The Group has continued in 2021 its strategy over the last few
years of keeping a reduced weighted average interest rate. At 31
December 2021, the weighted average interest rate remained at
2.73%, same as at 31 December 2020, while the average period to
maturity of 3.5 years maintained the same trend (4.5 years at 31
December 2020), as presented in the chart below:
Servicing of Debt During 2021
In 2021, we repaid in total EUR2.8 million of loan capital and
EUR44.6 million of accrued interest on the Group's drawn debt
facilities, including EUR37.6 million in relation to the full
annual coupon for the Eurobonds of the Company.
Liquidity & Loan to value ratio
The Group's aim is to maintain at all times sufficient liquidity
to have the flexibility to react quickly at the moment when
attractive new investment opportunities may arise.
As at 31 December 2021, the Group had cash and cash equivalents
of EUR418.7 million (31 December 2020: EUR527.8 million) out of
which an amount of c.EUR7.7 million was restricted due to various
conditions imposed by the financing Banks. On top of this, the
Group had available liquidity from committed undrawn loan
facilities amounting to EUR215 million.
The Group's loan to value ratio at 31 December 2021 was 40.1%,
compared to 37.8% at 31 December 2020. This is consistent with the
Group's strategy to manage its long-term target LTV of around or
below 40%, whilst pursuing its strong growth profile.
Debt Structure as at 31 December 2021
Debt Structure - Secured vs. Unsecured Debt
The majority of the Group's debt at 31 December 2021 is
unsecured: 77.9% (31 December 2020: 77.7%), with the remainder
secured with real estate mortgages, pledges on shares, receivables
and loan subordination agreements in favour of the financing
parties.
Loans and borrowings maturity and short-term / long-term debt
structure mix
The Group has at 31 December 2021 credit facilities and
Eurobonds with different maturities, most of them medium and
long-term, as presented in the chart below:
Weighted average interest rate versus debt duration to
maturity
Jun.19 Dec.19 Jun.20 Dec.20 Jun.21 Dec.21
Weighted average interest rate versus debt duration to maturity 2.85% 2.83% 2.52% 2.73% 2.73% 2.73%
------- ------- ------- ------- ------- -------
Weighted average duration to maturity (years) 4.9 4.3 4.2 4.5 4.0 3.5
------- ------- ------- ------- ------- -------
Maturity by year of the principal balance outstanding at 31
December 2021 (EUR million)
2022 2023 2024 2025 2026 2027 2028 2029
Bonds 323.13 550.00 400.00
------- ----- ------ ------- ------- ------ ----- -------
Bank Loans 2.83 2.87 35.82 112.27 2.55 64.81 2.55 137.89
------- ----- ------ ------- ------- ------ ----- -------
It is worth noting that for the short-term debt due in June
2022, the Company is currently analysing its options, including to
at least partly refinance it, and will take a decision in due
course.
Debt Denomination Currency and Interest Rate Risk
Our loan facilities are entirely Euro denominated and bear
interest based either on one month's or three months' Euribor plus
a margin (8.5% of the outstanding balance compared to 8.7% at 31
December 2020), or at a fixed interest rate (91.5% of the
outstanding balance compared to 91.3% at 31 December 2020).
The high degree of fixed interest rate debt ensures a natural
hedging to the Euro, the currency in which the most significant
part of our liquid assets (cash and cash equivalents and rental
receivables) is originally denominated and the currency for the
fair market value of our investment property.
Debt Covenants
The Group's financial indebtedness is arranged with standard
terms and financial covenants, the most notable as at 31 December
2021 being the following:
Unsecured Eurobonds and Revolving Credit Facility
- the Consolidated Coverage Ratio, with minimum value of 200%;
- the Consolidated Leverage Ratio, with maximum value of 60%;
- the Consolidated Secured Leverage Ratio with a maximum value of 30%; and
- the Total Unencumbered Assets Ratio, with minimum value of
125% (additional covenant applicable only for the RCF).
Secured Bank Loans
- the debt service cover ratio ("DSCR") / interest cover ratio
("ICR"), with values ranging from 120% to 350% (be it either
historic or projected); and
- the LTV ratio, with contractual values ranging from 60% to 83%.
There have been no breaches of the aforementioned covenants
occurring during the period ended 31 December 2021.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
31 December 31 December
2021 2020
Note EUR'000 EUR'000
----------------------------------------------------------------------------------- ---- ----------- -----------
Revenue 7 219,350 223,309
Operating expenses 8 (75,098) (66,031)
----------------------------------------------------------------------------------- ---- ----------- -----------
Net operating income 144,252 157,278
----------------------------------------------------------------------------------- ---- ----------- -----------
Administrative expenses 9 (25,622) (17,986)
Acquisition costs - (2,689)
Fair value loss on investment property 3 (5,738) (116,153)
Share-based payment expense 20 (532) (1,071)
Depreciation and amortisation expense (536) (466)
Other expenses (1,851) (2,565)
Other income 1,051 494
Foreign exchange gain/(loss) 214 (395)
Loss from fair value of financial instruments at fair value through profit or loss 14 (386) (47)
----------------------------------------------------------------------------------- ---- ----------- -----------
Profit before net financing cost 110,852 16,400
----------------------------------------------------------------------------------- ---- ----------- -----------
Finance cost 10 (55,539) (51,140)
Finance income 1,749 2,383
----------------------------------------------------------------------------------- ---- ----------- -----------
Share of profit of equity-accounted investments in joint ventures 22 5,010 1,897
----------------------------------------------------------------------------------- ---- ----------- -----------
Profit/(loss) before tax 62,072 (30,460)
----------------------------------------------------------------------------------- ---- ----------- -----------
Income tax expense 11 (14,583) (16,335)
----------------------------------------------------------------------------------- ---- ----------- -----------
Profit/(loss) for the year 47,489 (46,795)
----------------------------------------------------------------------------------- ---- ----------- -----------
Other comprehensive income - -
----------------------------------------------------------------------------------- ---- ----------- -----------
Total comprehensive income for the year 47,489 (46,795)
----------------------------------------------------------------------------------- ---- ----------- -----------
Profit/(loss) attributable to equity holders of the Company 47,489 (46,795)
----------------------------------------------------------------------------------- ---- ----------- -----------
Earnings per share
----------------------------------------------------------------------------------- ---- ----------- -----------
- Basic 12 21 (21)
- Diluted 12 21 (21)
----------------------------------------------------------------------------------- ---- ----------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
2021 2020
Note EUR'000 EUR'000
-------------------------------------------------------------- ---- --------- ---------
ASSETS
Investment property 3 2,966,080 3,013,014
Goodwill 12,349 12,349
Advances for investment property 5 3,436 4,215
Investments in joint ventures 22 48,908 28,358
Equity investments 12,109 10,369
Other long-term assets 2,083 2,148
Prepayments 338 432
Deferred tax asset 11 151 786
-------------------------------------------------------------- ---- --------- ---------
Non-current assets 3,045,454 3,071,671
-------------------------------------------------------------- ---- --------- ---------
Financial assets at fair value through profit or loss 16 7,324 7,695
Trade and other receivables 18 16,208 16,025
Contract assets 13 6,106 2,819
Guarantees retained by tenants 885 894
Income tax receivable 117 931
Prepayments 2,104 2,227
Cash and cash equivalents 19 418,748 527,801
-------------------------------------------------------------- ---- --------- ---------
451,492 558,392
-------------------------------------------------------------- ---- --------- ---------
Investment property held for sale 3.3 130,537 -
-------------------------------------------------------------- ---- --------- ---------
Total current assets 582,029 558,392
-------------------------------------------------------------- ---- --------- ---------
Total assets 3,627,483 3,630,063
-------------------------------------------------------------- ---- --------- ---------
EQUITY AND LIABILITIES
Issued share capital 21 1,704,476 1,704,374
Treasury shares 24.5 (4,917) (12,977)
Share-based payment reserve 20 156 6,184
Retained earnings 38,914 57,783
-------------------------------------------------------------- ---- --------- ---------
Total equity 1,738,629 1,755,364
-------------------------------------------------------------- ---- --------- ---------
Interest-bearing loans and borrowings 14 1,285,641 1,604,043
Deferred tax liability 11 150,713 144,843
Lease liabilities 3.2 18,762 27,324
Guarantees retained from contractors 2,661 2,235
Deposits from tenants 3,844 3,449
Trade and other payables 956 692
-------------------------------------------------------------- ---- --------- ---------
Non-current liabilities 1,462,577 1,782,586
-------------------------------------------------------------- ---- --------- ---------
Interest-bearing loans and borrowings 14 348,279 26,051
Guarantees retained from contractors 3,361 4,032
Trade and other payables 39,788 40,209
Contract liability 13 1,940 2,088
Other current financial liabilities 261 875
Current portion of lease liabilities 3.2 1,303 1,765
Deposits from tenants 16,068 16,245
Provision for tenant lease incentives - 46
Income tax payable 550 802
-------------------------------------------------------------- ---- --------- ---------
411,550 92,113
-------------------------------------------------------------- ---- --------- ---------
Liabilities directly associated with the assets held for sale 3.3 14,727 -
-------------------------------------------------------------- ---- --------- ---------
Total current liabilities 426,277 92,113
-------------------------------------------------------------- ---- --------- ---------
Total equity and liabilities 3,627,483 3,630,063
-------------------------------------------------------------- ---- --------- ---------
The financial statements were approved by the Board of Directors
on 24 March 2022 and were signed on its behalf by:
Andreas Tautscher
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
2021 2020
Note EUR'000 EUR'000
---------------------------------------------------------- ---- --------- ---------
Profit/(loss) before tax 62,072 (30,460)
Adjustments to reconcile profit /(loss) before tax to
cash flows from operating activities
Fair value loss on investment property 3 5,738 116,153
Loss on sale of investment property 471 387
Share-based payment expense 24 532 1,071
Depreciation and amortisation expense 536 466
Net increase in allowance for expected credit losses 20.2 1,134 1,152
Foreign exchange (gain)/loss (214) 395
Loss from fair valuation of financial instrument at fair
value through profit or loss 16 386 47
Share of (profit) of equity-accounted joint ventures 27 (5,010) (1,897)
Finance income (1,749) (2,383)
Financing cost 10 55,539 51,140
---------------------------------------------------------- ---- --------- ---------
Operating profit before changes in working capital 119,435 136,071
(Increase)/decrease in trade and other receivables (4,513) 16,696
(Decrease) in trade and other payables (3,872) (3,149)
Interest paid (44,641) (40,958)
Interest received 267 1,048
Income tax paid (1,949) (4,746)
Interest received from joint ventures 536 199
---------------------------------------------------------- ---- --------- ---------
Cash flows from operating activities 65,263 105,161
---------------------------------------------------------- ---- --------- ---------
Investing activities
Expenditure on investment property completed and under
development or refurbishment (68,846) (77,028)
Refund of advances given for property acquisition - 24,000
Payment for acquisition of investment property (18,011) -
Proceeds from sale of investment property 3,010 2,870
Investment in financial assets at fair value through
profit or loss 16 (143) (671)
Proceeds from sale of financial assets through profit
and loss 85 16,517
Payments for investment in equity investments 17 (1,740) (529)
Investment in and loans given to joint ventures 27 (23,354) (16,555)
Repayment of loan from joint ventures 27 8,111 8,485
Payment for the acquisition of controlling stake in a
joint venture - (2,000)
Payment for purchase of other long-term assets (468) (1,123)
---------------------------------------------------------- ---- --------- ---------
Cash flows used in investing activities (101,356) (46,034)
---------------------------------------------------------- ---- --------- ---------
Financing activities
Proceeds from issuance of share capital 24.1 100 -
Purchase of own shares - (8,345)
Proceeds from interest-bearing loans and borrowings 14 - 737,353
Repayment of interest-bearing loans and borrowings 14 (2,796) (430,200)
Payment of interim dividend to equity holders of the
Company 22 (66,286) (108,324)
Payment for lease liability obligations 3.2 (1,659) (1,771)
Payment of bank loan arrangement fees and other financing
costs 15 (2,168) (11,614)
Cash flows (used in)/from financing activities (72,809) 177,099
---------------------------------------------------------- ---- --------- ---------
Net (decrease)/increase in cash and cash equivalents (108,902) 236,226
Effect of exchange rate fluctuations on cash and bank
deposits held (151) (119)
Cash and cash equivalents at the beginning of the year 19 527,801 290,694
---------------------------------------------------------- ---- --------- ---------
Restricted cash reserve 19 - 1,000
---------------------------------------------------------- ---- --------- ---------
Cash and cash equivalents at the end of the year 19 418,748 527,801
---------------------------------------------------------- ---- --------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Equity attributable to equity holders of the Company
------------------------------------------------------------
Share-based
Issued share Treasury payment Retained
capital shares reserve earnings Total Equity
Note EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January 2020 1,704,374 (8,379) 5,571 213,101 1,914,667
------------------------------------------------ ------ ------------ -------- ----------- --------- ------------
Shares issued to the Executive Directors and
other senior management employees - 392 (392) - -
Interim dividends - 271 (72) (108,523) (108,324)
Share-based payment expense under the
subsidiaries' employees share award plan - - 1,071 - 1,071
Shares vested under the subsidiaries' employees
share award plan - 540 (540) - -
Shares purchased with cash by the Company - (8,345) - - (8,345)
Cash-based portion of deferred annual bonus plan
converted to deferred shares settlement - - 1,025 - 1,025
Deferred annual bonus plan reserve for the year - - 2,065 - 2,065
Shares vested under the deferred annual bonus
incentive plan - 2,544 (2,544) - -
Total comprehensive income for the year - - - (46,795) (46,795)
------------------------------------------------ ------ ------------ -------- ----------- --------- ------------
As at 31 December 2020 1,704,374 (12,977) 6,184 57,783 1,755,364
------------------------------------------------ ------ ------------ -------- ----------- --------- ------------
Shares issued to the Executive Directors and
other senior management employees 24.2 - 339 (339) - -
Interim dividends 22 - 72 - (66,358) (66,286)
Share-based payment expense under the
subsidiaries' employees share award plan 24.3 - - 532 - 532
Shares vested under the subsidiaries' employees
share award plan 24.3 - 1,253 (1,253) - -
Shares issued for cash under Executive share
option plan 24.1 102 - (2) - 100
Cash-based portion of deferred annual bonus plan
converted to deferred shares settlement - - (79) - (79)
Shares issued for long term plan termination and
employees incentive plan 24.5 - 1,476 33 - 1,509
Shares vested under the deferred annual bonus
incentive plan 24.4.1 - 4,920 (4,920) - -
Total comprehensive income for the year - - - 47,489 47,489
------------------------------------------------ ------ ------------ -------- ----------- --------- ------------
As at 31 December 2021 1,704,476 (4,917) 156 38,914 1,738,629
------------------------------------------------ ------ ------------ -------- ----------- --------- ------------
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(END) Dow Jones Newswires
March 25, 2022 03:00 ET (07:00 GMT)
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