REG - Globalworth Real Est - Half-year Report
24/09/2024 07:00
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RNS Number : 3290F Globalworth Real Estate Inv Ltd 24 September 2024
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
24 September 2024
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Interim Results for the six months ended 30 June 2024
Globalworth, a leading office investor in Central and Eastern Europe,
announces the release of its Interim Report and Unaudited Consolidated
Financial Results for the six-month period ended 30 June 2024 (the "Interim
Report").
The Interim Report is also available on Globalworth's website
at: https://www.globalworth.com/investor-relations/reports-presentations/
(https://www.globalworth.com/investor-relations/reports-presentations/)
For further information visit www.globalworth.com (http://www.globalworth.com)
or contact:
Enquiries
Rashid Mukhtar Tel: +40 732 800 000
Group CFO
Panmure Liberum (Nominated Adviser and Broker) Tel: +44 20 7886 2500
Atholl Tweedie
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 250 professionals across Cyprus,
Guernsey, Poland and Romania the combined value of its portfolio is €2.7
billion, as at 30 June 2024. Approximately 97.3% of the portfolio is in
income-producing assets, predominately in the office sector, and leased to a
diversified array of over 650 national and multinational corporates. In Poland
Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice,
while in Romania its assets span Bucharest, Constanta, Targu Mures and
Craiova.
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.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
INTERIM REPORT AND UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
30 JUNE 2024
FINANCIAL HIGHLIGHTS: H1 2024
Combined portfolio open market value Shareholders' equity EPRA NRV per share
€2.7bn
€1.5bn €6.24
-8.7% on YE-23 -4.1% on YE-23 -10.1% on YE-23
LTV Adjusted normalised EBITDA Net Operating Income
39.9% €63.6m €72.4m
42.2% at 31 Dec-23 -3.6% in H1-23 -1.8% in H1-23
IFRS Earnings per share EPRA Earnings per share Dividends paid in H1-24
-25 cents 11 cents 11 cents
-11 cents in H1-23 14 cents in H1-23 15 cents in H1-23
CHIEF EXECUTIVE'S REVIEW
Dear Stakeholders,
2024 has the potential to become the turning point after a volatile and
uncertain start of the decade, first with the Covid pandemic that swept across
the globe starting with March 2020, followed by the break-out of
Russo-Ukrainian conflict two years later. Although international environment
remains a mix of still high capital costs and geopolitical tensions, the CEE
countries' economies are expected to gain momentum in 2024 - 2025.
The European Commission May'24 forecasts show the EU GDP improving by 1.0% in
2024 and 1.6% in 2025 with Poland and Romania expected to outperform EU
average and have a growth of 2.8% and 3.3% in 2024 followed by 3.4% and 3.1%
in 2025, respectively.
Globalworth's performance throughout the business remained resilient, despite
global and sectorial challenges, as we continued to implement our "local
landlord" approach, with an increasing focus on sustainability.
Starting with the last months of 2023 and during the first semester of this
year, considering the two significant bond maturities in 2025 and 2026, we
have embarked on a complex refinancing process which was successfully
completed in the second quarter of the year resulting in a significant
strengthening of our debt maturity profile. Furthermore, in line with our
focus on deleveraging and liquidity enhancing we have successfully divested
our non-core logistic / light industrial portfolio in Romania during May and
July.
Considering this, I would like to express my gratitude to all our team members
for their positive attitude, dedication, and commitment, as well as extend our
appreciation to our shareholders, partners, and communities for their
unwavering support in helping us achieve these results.
Our Portfolio
Our portfolio predominantly consists of Class "A" office spaces. Having this
in mind, during the first half of 2024, we have made important steps aimed at
deleveraging and improving liquidity by divesting from several of our non-core
assets.
Consequently, during May, we have successfully completed the sale of our fully
owned logistic portfolio to CTP INVEST SPOL S.R.O, one of the leading logistic
developers in Europe, for net proceeds amounting to c. €72.4 million after
customary adjustments and deductions. The sold portfolio encompassed 7
industrial parks with 14 facilities offering 267.7k square meters of
high-quality industrial spaces having an average occupancy of 90.4% by the end
of December 2023.
Post June, we have sold our interests in the remaining of our standing
logistic portfolio, which was owned through Joint Venture agreements,
consisting of 3 logistic parks with a total Gross Lettable Area (GLA) of
136.4k square meters having an average occupancy of 94.8% as of June 2024. The
buyer was Warehouses De Pauw (WDP), a Belgian-based logistic developer, with
net proceeds to Globalworth amounting to c. €57.0 million.
By the end of June 2024, we had one built-to-suite logistic facility under
construction in Craiova, Romania, with an estimated GLA of 5.9k square meters
which was fully pre-leased to Returo SGR and subsequently delivered in August,
while in Poland we were on course of finishing the refurbishment works in
Renoma, our mixed-use property in Wroclaw.
Also, during the first six months of 2024, considering market context and the
rising demand for flex offices, we have launched our own version of flexible
office concept in several of our regional Polish properties. This concept is
addressing tenants looking for smaller but high-quality spaces, usually for
short and medium term, spaces that offer all the amenities they seek to
attract and retain talents and that relate to their corporate identity.
Considering all the above, our overall total combined portfolio value
decreased during the first half of 2024 by 8.3% to €2.7 billion mainly as an
effect of non-core disposals in the period while the like for like decrease of
our standing commercial assets owned throughout the period stood at 0.8%,
commercial valuations still being impacted by high discount rates and general
market context.
Our Leasing and Occupancy
The leasing of spaces within our portfolio constitutes a pivotal determinant
of our business's success. It brings me satisfaction to report that during the
initial half of 2024, we managed the leasing of 90.1k square meters of
commercial spaces, with a Weighted Average Lease Length (WALL) of 4.8 years.
This achievement is particularly noteworthy considering the persistently
demanding market conditions.
As of June 30, 2024, the average occupancy rate across our combined commercial
portfolio stood at 86.1%, decreasing in comparison to the year-end 2023, which
stood at 88.3%. However, the like for like average occupancy in our standing
commercial properties owned throughout the first six months of 2024 only
marginally decreased by 0.5% from 87.1% to 86.6%.
In both the Polish and Romanian markets, we see persistent higher construction
costs and interest rates which have led to a reduction in development activity
and significantly constrained new supply. Consequently, we anticipate
witnessing a diminished availability of top-tier office spaces in prime
locations, below the average levels witnessed in previous periods, potentially
driving higher tenant demand for existing properties.
Furthermore, the divergence between A-grade properties of robust
environmental, social and governance (ESG) credentials and B-grade properties
has been growing, both from an investment and leasing perspective. This
development is poised to generate benefits to our portfolio of high-quality
properties in the future.
Headline rental rates in our portfolio have started displaying a slight upward
trend, influenced also by recent years' inflation, which, combined with the
reduced supply and improving economic outlook is anticipated to serve as a
strong buffer against the adverse impact of a decline in tenant demand due to
sectorial trends like hybrid work.
Our total annualised contracted rent experienced a 4.4% decrease, reaching
€192.3 million compared to the year-end 2023 figures (€201.2 million)
driven mainly by the disposal of non-core assets during first part of 2024.
Like-for-like annualised commercial contracted rents within our standing
commercial portfolio exhibited a 3.1% upswing, to €182.6 million by the
close of the first half of 2024.
Our Financial Results
Gross rental income increased with €1.3 million compared to the first half
of last year as an effect of indexation that partially offset by the reduced
rates at which existing leases were renewed for extended period or new leases
were signed. However, on a net basis rental income declined with €1.6
million when accounting for lease incentives amortisation during the period.
Furthermore, net service charge result is €0.4 million lower than in prior
period of last year, compensated by increase in fit-out margin and other
income by €0.7 million thus Net Operating Income is €72.4 million, or
€1.3 million lower, when compared to H1 2023.
Our adjusted normalised EBITDA reached €63.6 million, after deducting
recurring administrative and other expenditure categories.
Undesirably, our net result for the initial half of 2024 amounted to a net
loss of €65.3 million. This result is triggered primarily by fair value loss
recorded on investment property, loss on sale of assets and impairment on
investments in joint ventures.
Dividend
During March 2024, we announced the second interim dividend of €0.11 per
share in respect of the twelve-month financial period ended 31 December 2023
with a scrip dividend alternative at a reference price of €1.96 per scrip
aimed at preserving liquidity. Approximately 98.7% of the shareholders elected
to receive scrip dividend shares thus resulting in only €0.4 million cash
dividend outflow.
Also, in August 2024, we announced the payment of an interim dividend in
respect of the six-month ended 30 June 2024 of €0.10 per ordinary share
(which will be paid on 18 October 2024) and offers a scrip dividend
alternative to the Interim Dividend. As communicated in scrip circular, the
Company has received irrevocable undertakings from approximately 92.5% of the
shareholders to elect the Scrip Dividend alternative shares in respect of all
of their full cash entitlement to the Interim Dividend.
Balance Sheet
We are also executing our liability management strategy by extending near-term
facilities and progressively arranging new secured facilities with local and
regional banks in our markets. Our strong presence in the two capital cities,
Bucharest and Warsaw, with several commercial office buildings having
occupancy above 85% and high ESG credentials, provides us with a unique
strength in sourcing additional secured facilities in the short term.
The first half of 2024 had several notable events in terms of financing, that
lead to a decrease in total debt, as:
We exchanged our existing €850 million Notes with New €640 million Notes
through an exchange exercise, we repaid €142.9 million from 18/25 Notes and
€66.6 million from 20/26 Notes.
Subsequently to the exchange, we redeemed additional €65 million unsecured
debt (24/29 New Notes €45 million and 24/30 New Notes €20 million).
Derecognized €97.5 million secured loans consequently to the disposal of
subsidiaries holding industrial properties.
Following above corporate actions, the average debt maturity period improved
to 5.2 years (3.7 years as of 31 December 2023) This brought down our leverage
ratio to 39.9% (42.2% as of 31 December 2023) despite a 1% decline in the
value of our like-for-like standing commercial portfolio. This is consistent
with the Group's strategy to manage its long-term target LTV of around or
below 40%.
It is important to note that Globalworth has no material debt maturing until
2027. Additionally, as of 30 June 2024, we have €210 million in cash and
cash equivalents, which was further strengthened by the additional sale
proceeds from JV logistics in July. We also have a further €187 million in
undrawn debt facilities, out of which €50 million is available to draw until
December 31, 2025.
The EPRA Net Reinstatement Value (NRV) as of 30 June 2024 was €1.66 billion,
or €6.24 per share. This represents an 10% decrease from €6.94 per share
on December 31, 2023. The decrease was primarily due to the issuance of a
€13.9 million scrip dividend shares in April 2024, which diluted the NRV per
share as well as a valuation loss on the property portfolio in H1-2024. This
was partially mitigated by rental growth from indexation.
Fitch Ratings re-affirmed, in July 2024, Globalworth's investment grade rating
and improved the outlook to stable following the annual review of our ratings.
S&P Global Ratings maintained throughout the period our BB+ with negative
outlook credit ratings.
Environmental and social
We maintained our A-rating by MSCI and a low-risk rating by Sustainalytics. We
issued our sixth Sustainable Development Report during the period.
We continued investing in our green portfolio and, during the first six months
of 2024, we certified or recertified 14 properties. At the end of June 2024,
we had 47 green-certified properties valued at €2.2 billion.
We remain committed to our environmental target to reduce GHG emissions
intensity by 46% by 2030 versus our baseline 2019 levels (for Scope 1 and 2),
a target validated by the globally recognised Science Based Targets initiative
(SBTi).
Outlook
As we move forward, many of the persistent headwinds that previously
challenged the market have begun to dissipate. Inflation is increasingly under
control, and interest rates are approaching central bank targets, providing a
more stable economic backdrop. While geopolitical uncertainty remains a
factor, key macroeconomic indicators point to continued strengthening in both
financial and real estate markets.
The market fundamentals in our focus countries remain notably stronger than
those of Western Europe. We are benefiting from a healthy supply-demand
balance, with occupier demand being driven by solid economic growth and an
encouraging return to the office. Within our capital-city markets, constrained
supply continues to push rents and occupancy rates higher, reinforcing the
sector's overall strength. Anecdotal evidence of rising tenant demand and
declining vacancy rates in our core markets underscores the resilience and
attractiveness of our properties. However, challenges remain in certain
regional Polish markets, where we continue to monitor conditions closely to
ensure we adapt to local dynamics. Nevertheless, as one of the largest and
most integrated players in the region, we are well-positioned to capitalise on
these broader market trends and further enhance our leadership.
Over the past year, we have remained committed to operational efficiency,
while our robust liquidity position following our successful bond exchange,
ensures we are well-prepared to navigate any remaining uncertainties. This
financial strength also affords us the flexibility to selectively pursue
investment opportunities that align with our strategic objectives. The
reopening of the bond market for real estate issuers is also a positive
development, easing concerns around the refinancing of maturing debt and
creating a more favourable outlook for long-term growth.
Looking ahead, our strategy remains clear. We will continue to capitalise on
our scale, expertise, and integrated model to deliver stable cashflows. We
remain fully committed to delivering long-term value for our stakeholders,
responding swiftly to market dynamics, and pursuing opportunities that support
our growth ambitions.
Dennis Selinas
Chief Executive Officer
24 September 2024
MANAGEMENT REVIEW
REAL ESTATE ACTIVITY
· In line with our focus on deleveraging and liquidity enhancing we
have successfully divested our non-core logistic / light-industrial portfolio
located in Romania
· In May we have sold our fully owned logistic portfolio to CTP, one of
Europe's largest publicly traded industrial and logistics property developers
· The 50% share in logistic assets which was owned via joint venture
companies was sold in July to WDP, a leading developer and investor in
logistics real estate in Romania
· Romania:
· In February we have delivered the final 2 phases in Business Park
Stefanesti, the fully delivered project being subsequently sold in May to CTP
· As of June 30th, we had one logistic / light industrial facility
under construction in Craiova which, as of completion in August 2024, has
added another 5.9k sqm of high quality GLA to our portfolio
· Poland:
· In the first months of the year we have sold Bliski Centrum, an
office building located in Warsaw offering a total GLA of 4.9k sqm
· We have finalized the refurbishment / repositioning of Supersam
mixed-use asset, while Renoma refurbishment is expected to be completed in the
following months
Disposal of non-core assets
As of May 31(st), we have sold to CTP the fully owned logistics portfolio
comprising five logistic / light-industrial parks with ten facilities in
Timisoara, Arad, Oradea and Pitesti as well as a majority stake in two small
business units' projects in Bucharest. The disposal is in line with our focus
on enhancing liquidity, and reflective of the fact that logistic properties
are considered non-core assets of the Group's portfolio. Net proceeds to
Globalworth amounted to €72.4 million excluding working capital, minority
interest and following the deduction of €95.8 million secured bank loans
associated with the disposed portfolio.
Fully Owned Logistic Portfolio (disposed in May 2024)
Timisoara Industrial Park I Timisoara Industrial Park II Industrial Park West Arad Industrial Park West Oradea Pitesti Industrial Park Business Park Chitila Business Park Stefanesti TOTAL
Location Timisoara Timisoara Arad Oradea Pitesti Bucharest Bucharest Romania
No. of facilities 4 2 1 1 2 1 3 14
Globalworth share 100% 100% 100% 100% 100% 75% 75% > 50%
GLA (k sqm) 103.7 37.0 20.1 6.9 75.2 7.1 17.7 267.7
GAV (€m; incl. lands) 68.6 31.2 17.7 6.7 59.2 7.3 15.9 206.6
Occupancy (%) 100.0% 54.4% 100.0% 100.0% 100.0% 98.1% 51.0% 90.4%
100% Rent (€ m) 5.0 1.8 1.3 0.5 4.6 0.6 1.3 15.0
Data as of 31 December 2023
Furthermore, in July, we have disposed of our 50% interests in logistic assets
in Romania which were owned via joint venture companies (the "JV Portfolio")
for a total net consideration to the Company estimated to €57.0 million.
JV Portfolio (disposed in July 2024)
Chitila Logistics Park Constanta Business Park Targu Mures Logistics Hub TOTAL
Location Bucharest Constanta Targu Mures Romania
No. of facilities 1 2 1 4
Globalworth share 50% 50% 50% 50%
GLA (k sqm) 77.0 41.1 18.3 136.4
GAV (€ m, incl. lands) 47.6 55.1 17.2 119.9
Occupancy (%) 90.9% 99.8% 100% 94.8%
100% Rent (€ m) 4.1 2.7 1.5 8.4
Data as of 30 June 2024, figures shown on 100% basis
Also, in the first months of the year, considering our deleveraging and
liquidity enhancement strategy, we have sold Bliski Centrum, located in
Warsaw, with a total GLA of 4.9k sqm, which, due to its relatively small size
was not considered as a core asset by us.
Launching of Globalworth operated flex office concept
During the first semester of 2024, considering the evolution of hybrid work
model across our markets of interest, especially in Poland, we have decided to
meet the requests of our current and potential tenants by launching our own
version of flexible office concept in Poland, which will be operated through a
special group entity, GW Flex Sp. Z.o.o., who will be leasing spaces in our
properties. This concept is addressing tenants looking for smaller but
high-quality spaces, usually for short and medium term, spaces that offer all
the amenities they seek in order to attract and retain talents and that relate
to their corporate identity.
As of June 30(th), we had 5.4k sqm of GLA in our flex office portfolio across
five properties in regional Polish cities with an average occupancy of 54.1%.
Globalworth Flex Office Portfolio
Tryton Quattro Business Park Retro Office House Silesia Star Supersam
Location Gdansk Krakow Wroclaw Katowice Katowice
GLA (k sqm) 0.5 1.5 1.2 1.0 1.2
Occupancy (%) 69% 0% 75% 50% 100%
Review of Developments
At the beginning of the year, we had two logistic projects under construction,
of which Stefanesti Business Park was delivered and sold to CTP in the first
semester while Craiova Logistic Park was subsequently delivered in August.
From the two mixed-use properties under refurbishment at the start of the
year, we have completed the works in Supersam, with Renoma remaining to be
delivered until year end.
Current Developments & Refurbishment / Repositioning Projects
As of June 30th, we had one logistic property under development in Romania,
Craiova Logistic Hub, our first property in Craiova, which, as of completion
in August 2024, has added another 5.9k sqm of high quality GLA to our
portfolio. This built to suite facility is 100% pre-leased to Returo SGR based
on a 20-year lease.
Developments
Craiova Logistic Park
(delivered in August 2024)
Location Craiova
GLA (k sqm) 5.9
Occupancy (%) 100%
Development Cost (€ m) 4.5
GAV (€ m) 5.0
Contracted Rent (€ m) 0.4
100% Rent (€ m) 0.4
Estimated Yield on Development Cost 8.2%
In Poland the refurbishment of our iconic Renoma mixed-use asset is expected
to be finalized in the following months with the repositioning of the property
now offering a more attractive food court and an increase in office GLA
compared to pre-refurbishment status.
Properties Under Refurbishment / Repositioning
Renoma
Location Wroclaw
Status Refurbishment / Repositioning
Expected Delivery H2-2024
GLA - on Completion (k sqm) 48.3
CAPEX to 30 Jun 24 (€ m) 22.9
GAV (€ m) 111.0
Estimated CAPEX to Go (€ m)* 6.4
ERV (€ m) 9.4
Estimated Yield on Completion of Project** 9.0%
* Estimated CAPEX to Go partially excludes tenant contributions which are
subject to 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.
Future Developments
We own, directly or through JV partnerships, other land plots in prime
locations in Bucharest and Constanta, Romania and in Krakow, Poland, covering
a total land surface of 0.9 million sqm (comprising 2.6% 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 a
total of a further 620.5k sqm of high-quality GLA to our standing portfolio
footprint.
These projects, which are classified as "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.
Future Developments
Podium Green Court D Globalworth West Constanta Business Park (Phased)* Luterana
Park III
Location Krakow Bucharest Bucharest Constanta Bucharest
Status Postponed Postponed Postponed Planned Planned
GLA (k sqm) 17.7 17.2 33.4 525.8 26.4
CAPEX to 30 Jun 24 (€ m) 8.5 2.5 5.2 12.3 7.4
GAV (€ m) 7.1 7.4 6.2 37.2 12.3
Estimated CAPEX to Go (€ m)** 29.7 23.9 38.5 243.6 39.7
ERV (€ m) 3.1 3.6 5.8 27.7 6.7
Estimated Yield on Development Cost 8.1% 13.6% 13.3% 10.8% 14.1%
(*) Part of the JV portfolio disposed in July 2024; figures shown on 100%
basis.
(**) Initial preliminary development budgets on future projects to be revised
prior to the permitting.
ASSET MANAGEMENT REVIEW
· 90.1k sqm of commercial space taken-up or extended at an average
WALL of 4.8 years with Poland accounting for 66.5% of leases signed in the
first six months of 2024
· New leases (including expansions) accounted for 47.6% of our
leasing activity at a WALL of 5.6 years, with renewals signed at a WALL of 4.0
years.
· Total annualised contracted rent decreasing by 4.4% to €192.3
million compared to year end 2023 influenced by the sale of the fully owned
logistic portfolio and of one small office asset in Warsaw
· Like-for-like annualised contracted rent from our standing commercial
assets owned throughout the first 6 months of the year increased by 3.1% to
€182.6 million (€177.1 million as of Dec'23)
· Total combined portfolio value decreased by 8.3% to €2.7
billion, mainly due to disposal of non-core assets and negative revaluation
adjustments.
· Like-for-like appraised value of standing commercial properties
slightly decreasing to €2.5 billion (0.8% lower compared to 31 December
2023).
Leasing Review
New Leases
Our principal focus continues to be the prolongation of leases with existing
tenants in our portfolio and the take-up of available spaces in standing
properties and developments.
In the first six months of 2024, the Group successfully negotiated the take-up
(including expansions) or extension of 90.1k sqm of commercial spaces in
Poland (66.5% of transacted GLA) and Romania (33.5% of transacted GLA), with
an average WALL of 4.8 years. Between 1 January and 30 June 2024, our leasing
activity involved new take-up of available spaces, with such leases accounting
for 47.6% of our total leasing activity signed at a WALL of 5.6 years, while
renewals were signed at a WALL of 4.0 years.
The office leasing market continues a challenging path, albeit a clear
differentiation can be seen between capital cities compared to regional cities
and between grade A and grade B properties. CEE economies are starting to pick
up, with inflation easing and interest rates expected to follow suit, while
hybrid work model was mostly acknowledged and incorporated by our markets of
interests.
In total, we signed new take up for 42.9k sqm of GLA, with 56.1% involving
spaces leased to new tenants, and the remaining areas being taken up by
existing tenants which were expanding their operations.
New leases (new tenants) were signed with 25 tenants for 24.1k sqm of GLA at a
WALL of 6.5 years. The majority were for office spaces, accounting for 83.1%,
with the remainder involving industrial (12.7%) and retail/other commercial
spaces. The largest new leases in this period were with Clever Media Network
(2.0k sqm) in BOC Tower (Bucharest), Jaral (1.9k sqm) in Silesia Star
(Katowice), Kinstellar (1.9k sqm) in Globalworth Tower (Bucharest) and MDPI
Poland (1.7k sqm) in Podium Park (Krakow).
In addition, 27 tenants signed new leases, expanding their operations by 18.8k
sqm at an average WALL of 4.6 years.
We renewed leases for a total of 47.2k sqm of GLA with 45 of our tenants at a
WALL of 4.0 years. The most notable extensions involve FMC Technologies (6.9k
sqm) in Podium Park, Maracana (5.8k sqm) in Constanta Business Park, Infor
(4.9k sqm) in Retro Office House and Solid Group (3.3k sqm) in Batory Building
while c.37% of the renewals by GLA signed were for leases that were expiring
in 2025 or later.
Summary Leasing Activity for Combined Portfolio in H1-2024
GLA (k sqm) No. of Tenants* WALL (yrs)
New Leases (incl. expansions) 42.9 51 5.6
Renewals / Extensions 47.2 45 4.0
Total 90.1 87 4.8
*Number of individual tenants
Rental Levels
Starting with last year, headline rental levels started to display a slight
upward pressure mostly influenced by indexation, but also by the limited new
supply of high-quality spaces coming into the market. We expect this trend to
continue, despite challenges in the market, but with different impact
depending on the location, ESG credentials and office asset class.
Most of our leases typically adjust annually in the first quarter of the year
and, in the first half, eligible leases were indexed at an average of 5.3%.
However, this positive impact was partly offset by the rates at which leases
were renewed or new leases signed throughout the period.
At the end of June 2024, our average headline rent in our standing properties
for office, retail/commercial and industrial spaces were €15.8/sqm/month
(€15.0 at YE-2023), €16.7/sqm/month (€16.7 at YE-2023) and
€4.2/sqm/month (€4.3at YE-2023) respectively.
Office leases signed in the first half of the year were at an average rent of
€15.7/sqm/month, industrial spaces at €4.1/sqm/month, and retail spaces at
€12.1/sqm/month. The overall commercial GLA take-up during the first six
months of 2024 was at an average rent of €13.9/sqm/month.
Contracted Rents (on annualised basis)
Total annualised contracted rent across our portfolio in Poland and Romania
decreased by 4.4% to €192.3 million compared to year-end 2023 (€201.2
million), driven mainly by disposal of non-core assets in the first half of
2024 and, in a lesser extent, by indexation and net leasing activity in our
projects.
Total annualised contracted rents in our standing commercial portfolio were
€185.8 million on 30 June 2024, down by 3.0% compared to 31 December 2023,
increasing to €186.2 million when including rental income generated by
renting 92 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 increased by 3.1% to €182.6 million at the end of the
first half of 2024 compared to 31 December 2023, mainly as an effect of rent
indexation.
Annualised Contracted Rent Evolution H1-2024 (€m)
Poland Romania Group
Rent from St. Comm. Props ("SCP") 31 Dec 2023 86.4 105.1 191.5
Less: Assets sold (1.1) (13.2) (14.4)
Rent from SCP Adj. for Properties sold 85.3 91.8 177.1
Less: Space Returned (6.2) (2.1) (8.3)
Plus: Rent Indexation 3.3 3.1 6.5
Plus/Less: Lease Renewals (net impact) & Other 0.0 (0.0) 0.0
Plus: New Take-up 4.0 3.4 7.3
Total L-f-L Rent from SCP 30 Jun 2024 86.4 96.2 182.6
Plus: Standing Commercial Properties Acquired During the Period - - -
Plus: Developments Completed During the Period 3.1 - 3.1
Total Rent from Standing Commercial Properties 89.5 96.2 185.8
Plus: Residential Rent - 0.4 0.4
Total Rent from Standing Properties 89.5 96.6 186.2
Plus: Active and Pre-lets of Space on Projects Under Development / 5.7 0.4 6.1
Refurbishment
Total Contracted Rent as at 30 Jun 2024 95.2 97.0 192.3
Combined Annualised Commercial Portfolio Contracted Rent Profile as at 30 June
2024
Poland Romania Group
Contracted Rent (€ m) 95.2 96.6 191.8
Tenant origin - %
Multinational 66.5% 81.1% 73.8%
National 32.2% 17.3% 24.7%
State Owned 1.3% 1.7% 1.5%
Note: Commercial Contracted Rent excludes c.€0.4 million from residential
spaces as at 30 June 2024
Annualised Contracted Rent by Period of Commencement Date as at 30 June 2024
(€m)
Active Leases H2-2024 H1-2025 H2-2025 >2025 Total
Standing Properties 177.4 8.6 0.2 - - 186.2
Developments 6.0 0.1 - - - 6.1
Total 183.4 8.7 0.2 - - 192.3
Annualised Commercial Portfolio Lease Expiration Profile as at 30 June 2024
(€m)
Year H2-2024 2025 2026 2027 2028 2029 2030 2031 2032 >2032
Total 7.0 12.3 17.5 28.7 26.7 31.7 28.7 18.2 5.3 15.7
% of total 3.6% 6.4% 9.1% 15.0% 13.9% 16.5% 15.0% 9.5% 2.8% 8.2%
The Group's rent roll across its combined portfolio is well diversified, with
the largest tenant accounting for 3.7% of contracted rents, while the top
three tenants account for 9.5% and the top 10 account for 23.1%.
Cost of Renting Spaces
The headline (base) rent presents the reference point, which is 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 landlords incur.
These incentives can vary significantly between leases and depend on market
conditions, type of lease (new take-up or lease extension), space leased
(office, industrial, other), 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 the first half of 2024, we successfully negotiated the take-up
(including expansions) or extension of 84.5k sqm of commercial spaces in our
portfolio, excluding leases signed with group entity for flexible office
spaces. The weighted average effective rent for these new leases was
€9.9/sqm/month with a WALL of 4.8 years. Industrial leases signed in the
period accounted for 14.0% of the total leasing activity resulting in the
lower average headline and effective rent.
The difference between headline (base) and effective rents in the first half
of 2024 was, on average, 28.9%, which is higher than for FY2023 (average of
26.2%) as market conditions remained challenging.
In total, new leases signed in the first six months of the year will generate
a future headline rental income of €77.7 million (including auxiliary spaces
and revenues from GW flex offices), with leases from office properties
accounting for 88.2% of future headline rental income.
Weighted Average Effective Rent (€ / sqm / m) - H1-2024
Poland Romania Group
Headline Commercial Rent 15.6 10.8 13.9
Less: Rent Free Concessions (2.6) (1.3) (2.1)
Less: Tenant Fitouts (2.1) (0.5) (1.5)
Less: Broker Fees (0.7) (0.2) (0.5)
Effective Commercial Rent 10.2 8.9 9.9
WALL (in years) 4.3 6.0 4.8
Portfolio Valuation
In line with our practice of biannual valuations, our entire portfolio in
Poland and Romania was revalued as at 30 June 2024.
The valuations were performed by 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 30 June
2024).
Assigning the appraisal of our portfolio to independent and experienced
service providers makes the process of determining the value properties
transparent and impartial. Through our oversight, we ensure that a consistent
methodology, reporting, and timeframe are respected.
Our portfolio, since the inception of the Group, has been growing to reach
€3.2 billion as of 31 December 2022, following series of acquisitions and
development of high-quality office and logistic / light industrial assets in
Poland and Romania. Starting with the Covid pandemic, the office market begun
a visible transformation characterized by the rise of hybrid work while
differentiation between class A and class B properties became more obvious.
Therefore, our focus has switched to preserving the value of our core assets
through selective investments, while also considering the disposal of non-core
assets aimed at deleveraging and liquidity enhancing. Consequently, during the
first seven months of 2024, we have successfully sold to reputed logistic
investors our interests in the logistic / light industrial portfolio that we
owned at the end of 2023.
As such, the portfolio's third-party appraised value on 30 June 2024 was
estimated at €2.7 billion, impacted by the sale of assets worth €228.1
million and the like-for-like decrease (€18.9 million / 0.8%) in the
appraised value of our standing commercial properties, leading to an overall
decrease of 8.3% compared to the end of 2023.
In valuing our properties, the key market indicators used by our independent
appraisers, although they vary, consider factors such as the commercial
profile of the property, its location and the country in which it is situated.
These factors have remained consistent with year-end 2023, with ERVs
displaying selective upward pressure, especially in prime locations and for
class A assets, while yields have seen a marginal decompression in secondary
locations.
Combined Portfolio Value Evolution 30 June 2024 (€m)
Poland Romania Group
Total Portfolio Value at 31 Dec 2023 1,474.8 1,520.0 2,994.8
Less: Properties Held in Joint Venture (*) - (129.0) (129.0)
Total Investment Properties at 31 Dec 2023 1,474.8 1,391.0 2,865.8
Plus: Transactions (12.4) (215.7) (228.1)
o/w New Acquisitions - - -
o/w Disposals (12.4) (215.7) (228.1)
Plus: Capital Expenditure 6.8 13.6 20.4
o/w Developments 2.7 2.7 5.4
o/w Standing Properties 4.1 10.9 15.0
o/w Future Developments - - -
Plus: Net Revaluations Adjustments (31.9) (8.5) (40.3)
o/w Developments (4.1) (0.0) (4.1)
o/w Standing Properties (27.8) (8.2) (36.0)
o/w Lands, Future Developments & Acquisitions - (0.2) (0.2)
Total Investment Properties at 30 Jun 2024 1,437.3 1,180.4 2,617.7
Plus: Properties Held in Joint Venture (*) - 129.7 129.7
o/w Capital Expenditure & Acquisitions - 0.8 0.8
o/w Net Revaluation Adjustments - (0.1) (0.1)
Total Portfolio Value at 30 Jun 2024 1,437.3 1,310.1 2,747.4
(*) Joint Venture Portfolio, which was disposed in July 2024, is shown at
100%; Globalworth owned 50% stake as of June 30(th),2024.
STANDING PORTFOLIO REVIEW
· Standing portfolio footprint decreasing to 1,146.5k sqm valued at
€2.6 billion as of 30 June 2024, following the disposal of the fully owned
logistic portfolio.
· Average standing occupancy of our combined commercial portfolio
of 86.1%, lower vs. year-end 2023 (88.3%)
· Like for like average commercial standing occupancy slightly declined
by 0.5% to 86.6% as of 30 June 2024 (compared to 87.1% at year-end 2023).
· Total contracted rent of €186.2 million in our standing
properties (over 89% coming from standing office properties).
· All our properties in Poland are now internally managed,
resulting in 93.1% of our combined standing commercial portfolio by value
(96.6% of office and mixed-use standing properties) being internally managed
by the Group.
Standing Portfolio Evolution
The footprint of our standing commercial portfolio decreased during the first
half of 2024 following the successful disposal of our fully owned logistic
portfolio. We consider these assets, together with a small office building
located in Warsaw, which was sold in the first months of the year, as non-core
assets, therefore the divestment decision was made having in mind our
deleveraging and liquidity enhancement strategy.
Overall, our standing portfolio is predominantly focused on 28 Class "A"
office (48 properties in total) and two mixed-use investments (with six
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), which account for 95.0% of our standing
portfolio by value.
In addition, in Romania, we had 50% ownership through joint venture agreements
in three other logistics/business parks (with four standing facilities) in
Bucharest, Constanta and Targu Mures (the JV Portfolio, which was subsequently
disposed in July) and we own part of a residential complex in Bucharest.
As of 30 June 2024, our combined standing portfolio comprised 34 investments
(41 on 31 December 2023) with 59 buildings (71 on 31 December 2023) in Poland
and Romania.
During the period, our standing commercial portfolio's total GLA decreased by
233.5k sqm or 17.1% to reach 1,133.9k sqm at the end of June. This evolution
was attributable to the sale of the fully owned logistic portfolio (254.3k sqm
of standing GLA as of 31 December 2023), the sale of Bliski Centrum in Warsaw
(4.9k sqm of GLA) and the completion of refurbishment works in Supersam, our
mixed-use asset in Katowice, Poland (26.7k sqm of GLA).
The appraised value of our combined standing portfolio as of 30 June 2024 was
€2.6 billion (more than 99% in commercial properties) which was 6.4% lower
compared to 31 December 2023, the overall decrease being mostly due to
divestments completed during the period. The value of like-for-like standing
commercial properties marginally decreased by 0.8% as of 30 June 2024 compared
to 31 December 2023.
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 31 Dec. 2022 31 Dec. 2023 30 Jun. 2024
Number of Investments 41 41 34
Number of Assets 71 71 59
GLA (k sqm) 1,405.6 1,386.0 1,146.5
GAV (€ m) 2,893.6 2,736.4 2,561.2
Contracted Rent (€ m) 182.0 192.0 186.2
Of which Commercial Properties 31 Dec. 2022 31 Dec. 2023 30 Jun. 2024
Number of Investments 40 40 33
Number of Assets 70 70 58
GLA (k sqm) 1,383.2 1,367.4 1,133.9
GAV (€ m) 2,850.3 2,700.0 2,535.4
Occupancy (%) 85.6% 88.3% 86.1%
Contracted Rent (€ m) 181.3 191.5 185.8
Potential rent at 100% occupancy (€ m) 211.6 217.7 213.4
WALL (years) 4.4 4.9 4.6
Evolution of Combined Standing Portfolio over H1-2024
31 Dec. 2023 LfL Change* New Acquisitions Sales New Deliveries Reclass. 30 Jun. 2024
& Other Adj**
GLA (k sqm) 1,386.0 - - (265.3) 26.7 (0.9) 1,146.5
GAV (€ m) 2,736.4 (20.3) - (205.4) 50.6 - 2,561.2
(*) Like-for-Like change represents the changes in GLA or GAV of standing
properties owned by the Group at 31 December 2023 and 30 June 2024.
(**) Includes impact in areas (sqm) from the remeasurement of certain
properties and other GAV adjustments (redevelopment capex, reclassification).
Standing Portfolio Occupancy
Our standing commercial portfolio's average occupancy as of 30 June 2024 was
86.1%, representing a decrease of 2.1% over the past six months (88.3% as of
31 December 2023), however this was impacted by the divestment of non-core
assets having occupancy better than portfolio average and the addition of
newly refurbished mixed-use property of Supersam (Katowice, Poland) which, as
of 30 June 2024 had an occupancy of 65.5%. Like for like standing commercial
occupancy, adjusted for the non-core assets disposed in the period (the fully
owned logistic portfolio from Romania and Bliski Centrum office property in
Warsaw, Poland) and for the mixed-use asset delivered in the period, decreased
marginally by 0.5% from 87.1% to 86.6%. Across the portfolio, at the end of
the first half of 2024, we had 976.6k sqm of commercial GLA leased to more
than 630 tenants at an average WALL of 4.6 years, the majority of which is let
to national and multinational corporates that are well-known within their
respective markets.
In addition, we had 27.5k sqm leased in Renoma mixed-use property (Wroclaw,
Poland) which was under refurbishment/repositioning as of 30 June 2024 and
5.9k sqm pre-let in our built to suit logistic project being developed in
Craiova, Romania, which are not included in our standing portfolio metrics.
Occupancy Evolution H1-2024 (GLA 'k sqm) - Commercial Portfolio
Poland Occupancy Romania Occupancy Group Occupancy
Rate (%) Rate (%) Rate (%)
Standing Available GLA - 31 Dec. 23 508.5 859.0 1,367.4
Sold GLA (4.9) (254.3) (259.3)
Acquired GLA - - -
New Built GLA 26.7 - 26.7
Remeasurements, reclassifications 0.0 (0.9) (0.9)
Standing Available GLA - 30 Jun. 24 530.2 603.7 1,133.9
Occupied Standing GLA - 31 Dec. 23 403.4 79.3% 803.5 93.5% 1,206.9 88.3%
Sold Occupied GLA (4.8) (237.3) (242.1)
Acquired/Developed Occupied GLA 17.5 - 17.5
Expiries & Breaks (33.1) (13.9) (47.0)
Renewals* 36.0 9.3 45.3
New Take-up 20.3 20.8 41.1
Other Adj. (relocations, remeasurements, etc) 0.0 0.1 0.1
Occupied Standing GLA - 30 Jun. 24 403.4 76.1% 573.2 94.9% 976.6 86.1%
* Renewals are neutral to the occupancy calculation.
Standing Properties Operation and Upgrade Programme
Offering best-in-class real estate space to our business partners remains 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, and offer best-in-class
real estate space to our business partners.
To be able to provide spaces for our current and future business partners'
requirements, we keep (re)investing in our properties, maintain and, where
required, improve the quality of our buildings and our services.
We are pleased that all our properties in Poland are now internally managed by
the Group. In Romania, we manage all but one of our offices in-house. Overall,
we internally manage 955.3k sqm of high-quality commercial spaces with an
appraised value of €2.4 billion. Of our total standing commercial portfolio,
internally managed properties account for 93.1% by value (96.6% of office and
mixed-use standing properties) as of 30 June 2024.
In the first half of 2024, we invested €15.8 million in select improvement
initiatives in our standing commercial portfolio. As a result of our ongoing
in-house initiatives and property additions, we hold a modern portfolio with
43 of our standing commercial properties, accounting for 81.1% by GLA and
79.2% by commercial portfolio value, having been delivered or significantly
refurbished since 2014.
Internally Managed Commercial Portfolio as at 30 June 2024 Poland Romania Group
Internally Managed GLA (k sqm) 530.2 425.1 955.3
% of Commercial GLA 100% 70% 84%
% of Office and Mixed-Use GLA 100% 91% 96%
Internally Managed GAV (€ m) 1,319.2 1,040.8 2,360.0
% of Commercial GAV 100% 86% 93%
% of Office and Mixed-Use GAV 100% 93% 97%
SUSTAINABLE DEVELOPMENT UPDATE / OTHER INITIATIVES
14 properties were certified or recertified with BREEAM Very Good or higher
certifications in our portfolio in H1-2024
Overall, 47 green certified properties in our portfolio valued at €2.2
billion accounting for 85.3% from our combined standing commercial portfolio
value.
95.7% of our office and mixed-use properties by value have a WELL
Health-Safety rating, further demonstrating the quality of our portfolio
Issued the sixth sustainable development report for the Group for FY 2023
Globalworth maintained its low-risk rating by Sustainalytics at 11.1 and A by
MSCI
c.€140k donated to over13 initiatives in Romania and Poland.
Green Buildings
Consistent with our commitment to energy-efficient properties, during H1-2024
we certified or recertified 14 properties in our portfolio with BREEAM Very
Good or higher certifications.
Overall, as of 30 June 2024, our combined standing portfolio comprised 47
green-certified properties, accounting for 85.3% of our standing commercial
portfolio by value. BREEAM-accredited properties account for 79.3% of our
green-certified standing portfolio by value, with the remaining properties
being holders of other certifications (LEED Gold or Platinum).
At Globalworth, we are aiming for 100% of our portfolio to be
green-accredited. We are currently in the process of certifying or
recertifying 8 other properties in our portfolio, principally targeting BREEAM
certifications.
Furthermore, as part of our overall green initiatives, we kept our policy of
securing 100% of the energy used in our Polish and Romanian properties from
renewable sources.
In addition, as of 30 June 2024, 49 of our standing commercial properties had
a WELL Health-Safety Rating, with a total value of €2.3 billion accounting
for 95.5% of our standing office and mixed-use properties by value. Overall,
95.7% of our office and mixed-use portfolio by value (including Renoma) is
rated for WELL Health-Safety, standing as further evidence of the quality of
our portfolio.
Social Initiatives
In the first half of 2024, Globalworth and the Globalworth Foundation
continued with their very active social programme, contributing €140k to
over 13 initiatives in Romania and Poland.
Initiatives to which we contributed included:
For the love of heart
An initiative organized for Globalworth's tenant community, which aims to
popularize preventive examinations and care for a healthy lifestyle; over 500
People took part in the examinations
Through Wola District for autism
The aim of the initiative is to work together for the benefit of people on the
autism spectrum and their families, and to raise funds to support the
activities of the SYNAPSIS Foundation
Open Your Heart to Children's Heart
This aims to encourage and support donations to the Children's Heart
Association / Asociația Inima Copiilor, to help children with heart
conditions.
In addition to these we had several campaigns within our communities among
which it is noteworthy to mention:
Tree planting in Văcărești National Park
We gathered as a team to take care of the tree barrier in Văcărești
National Park, the first urban natural park in Romania
Șona AIR Residency
Șona AIR offers the perfect environment for creators and artists to zero in
on their work. It's a place where they can step away from everyday life and
focus on exploration, reflection and the development of long-term projects.
This program fosters collaboration, creating a dynamic and vibrant community
of creativity where artists can flourish. By providing space, time and
resources, Șona AIR sustains the next generation of artists to push the
boundaries of their practice. Globalworth Foundation supports Șona AIR
residency program together with Fundația Ștefan Câlția
Galeria Posibilă
The Globalworth Foundation and Galeria Posibilă partnered up to amplify the
voice of emerging artists. We're dedicated to empowering up-and-coming
artists, sparking conversations and connecting communities through our
collaboration as gallery partners in this year's editorial program.
Brave Cut
At Globalworth, we understand the challenges faced by oncology patients
undergoing cytostatic treatments, especially the emotional toll of hair loss.
Our partnership with the Fundatia Renasterea pentru Sanatatea Femeii in the
"Vieți împletite" initiative aimed to recognize women's individuality and
their role in society. By offering personalized natural hair wigs, we aim to
empower patients with more than just a cosmetic solution - it's about
restoring their confidence and resilience throughout their journey.
Reporting
As part of our effort to improve disclosure in relation to our sustainable
development strategy, initiatives and performance, we published Globalworth's
"2023 Sustainable Development Report".
This is the sixth report published by the Group and has been prepared in
accordance with the GRI Standards: Core option and with the European Public
Real Estate Association's Sustainability Best Practice Reporting
Recommendations (EPRA sBPR).
PORTFOLIO SNAPSHOT
Our real estate investments are in Poland and Romania, the two largest markets
in the CEE. As at 30 June 2024, our portfolio was spread across 10 cities,
with Poland accounting for 52.3% by value and Romania 47.7%.
Combined Portfolio Snapshot (as at 30 June 2024)
Poland Romania Combined Portfolio
Standing Investments((1)) 18 16 34
GAV((2)) / Standing GAV (€m) €1,437m / €1,319m €1,310m / €1,242m €2,747m / €2,561m
Occupancy 76.1% 94.9% 86.1%
WALL((3)) 4.0 years 5.3 years 4.7 years
Standing GLA (k sqm)((4)) 530.2k sqm 616.3k sqm 1,146.5 sqm
Contracted Rent (€m)((5)) €95.2m €97.0m €192.3m
GAV Split by Asset Usage
Office 80.8% 86.0% 83.3%
Mixed-Use 19.2% 0.0% 10.0%
Industrial 0.0% 7.4% 3.5%
Others 0.0% 6.5% 3.1%
GAV Split by City
Bucharest 0.0% 93.3% 44.5%
Constanta 0.0% 5.0% 2.4%
Targu Mures 0.0% 1.3% 0.6%
Craiova 0.0% 0.4% 0.2%
Warsaw 42.8% 0.0% 22.4%
Krakow 20.5% 0.0% 10.7%
Wroclaw 17.3% 0.0% 9.0%
Katowice 11.5% 0.0% 6.0%
Lodz 4.2% 0.0% 2.2%
Gdansk 3.7% 0.0% 1.9%
GAV as % of Total 52.3% 47.7% 100.0%
1. Standing Investments representing income producing properties. One
investment can comprise multiple buildings. e.g. Green Court Complex comprises
three buildings or one investment
2. Includes all property assets, land and development projects valued at 30
June 2024
3. Includes pre-let commercial standing and development/re-development assets.
WALL of standing commercial properties in Poland, Romania and the Combined
portfolio are 4.0 years, 5.3 years and 4.6 years, respectively.
4. Including 12.6k sqm of residential assets in Romania
5. Total rent comprises commercial (€185.8 million) and residential (€0.4
million in Romania) standing properties, rent in assets under redevelopment
(€5.7 million in Poland) and development pre-lets (€0.4 million in
Romania).
Note: Occupancy of standing commercial properties adjusted with the active
leases related to our ESG-commitments (3,460 sqm in BOB Tower, Bucharest,
signed with social assistance authority) and with the available area of the
spaces leased to GW Flex Sp. Z.o.o, our group entity overseeing the
implementation of flex offices concept in our portfolio, was 75.4%, 94.5% and
85.6% as of 30 June 2024 for Poland, Romania and at group level, respectively.
CAPITAL MARKETS UPDATE
Inflation returning to single digits in the last year is expected to generally
benefit capital markets, but geopolitical risks remain high with the potential
to bring back high volatility and uncertainty across the globe.
Globalworth's share price in this period continued to trade consistently below
our last reported EPRA NRV, but historically this is also attributable to the
limited free float of our shares.
We have successfully exchanged our €850 million aggregate bonds outstanding
at the beginning of the year with maturities in 2025 and 2026 by replacing
with €640 million new bonds maturing in 2029 and 2030 followed by €65
million mandatory redemption and a €83 million buyback in July, thus
significantly improving our financial profile.
Fitch re-affirmed the investment grade rating following their July review of
Globalworth andimproved the outlook to stable, while S&P maintained the
group's corporate credit rating to BB+ with a negative outlook.
Equity Capital Markets and Shareholder Structure Update
The first half of 2024 was characterised by a gradual recovery after almost
two years of continued high inflation which drove interest rates to their
highest levels in a decade. With inflation returning into the lower single
digits area, we expect capital costs to follow a similar dynamic, however we
keep an eye on the continuation of geopolitical risks, as they have the
potential to greatly disturb economic cycles and induce volatility and
uncertainty in the capital markets.
Real estate valuations have continued to be impacted in H1-24 by the high
capital costs and a more cautious approach of investors in what regards office
industry, with the higher risk premia demanded by investors being reflected in
the resulting valuation yields as of 30 June 2024.
As of 30 June 2024, FTSE EPRA Developed Europe and the FTSE EPRA Global
indices recorded a performance of -5.8% and -2.9%, respectively, for the six
months starting on 1 January 2024 which is close to the Globalworth share
price evolution which was at -5.8%, however we must underline the limited free
float of our shares.
Globalworth's share price in this period has been trading consistently below
its last reported 31 December 2023 EPRA NRV level of €6.94 / share, reaching
its lowest closing price on 17 June 2024 at €2.38 per share and its highest
price on 16 Jan 2024 at €3.07 per share.
Zakiono Enterprises Ltd, which is jointly and equally owned by CPI Property
Group S.A. ("CPI") and Aroundtown SA ("Aroundtown"), holds 60.8% of the share
capital of the Group, followed by Growthpoint Properties Ltd with 29.5%.
Globalworth Shareholding
30 June 23 30 June 24
CPI Property Group Together: Zakiono Enterprises 60.7% 60.8%
Aroundtown
Growthpoint Properties 29.4% 29.5%
Oak Hill Advisors 5.3% 5.3%
Others 4.6% 4.4%
Basic Data on Globalworth Shares (Information as at 30 June 2024)
Number of Shares 266.1m plus 0.8m shares held in treasury
Share Capital €1.8bn
WKN / ISIN GG 00B979FD04
Symbol GWI
Free Float 7.6%
Exchange London AIM
Globalworth Share Performance
H1-2023 H1-2024
Market Capitalisation (€ million) - 30 June 715 649
30-June Closing Price (€) 3.03 2.44
52-week high (€) 5.05 3.07
52-week low (€) 2.41 2.05
Dividend paid per share (€) 0.15 0.11
Globalworth H1-2024 Share Price Performance
Bonds Update
We finance ourselves through a combination of equity and debt, and we compete
with many other real estate companies for investor trust to support our
initiatives.
To issue Eurobonds efficiently and benefit from market opportunities, we have
established a Euro Medium Term Notes (EMTN) programme in 2018, allowing the
Group to issue up to €1.5 billion of bonds. From this programme, €950
million was raised through bonds issued in March 2018 and July 2020 (inaugural
green bond), with maturities in 2025 and 2026.
At the beginning of the year, our two Eurobonds outstanding in total of €850
million, together with the €85 million unsecured facility granted by IFC in
June 2022 made most of our debt structure.
Faced with high interest rates, investor risk aversion and the two significant
bond maturities, we had embarked on a complex refinancing and deleveraging
process at the end of last year. The successful negotiation and implementation
of the bond exchanges, completed in H1-2024, were crucial in resolving
near-term debt maturities and enhancing the company's financial position.
As a result, we have exchanged our outstanding €450 million notes due in
2025 and €400 million notes due in 2026 with €307 million green notes due
in 2029 and €333 million green notes due in 2030 at a coupon of 6.25%,
therefore repaying €2210 million to our bondholders from our own cash
sources. Furthermore, following the completion of sale of our fully owned
industrial portfolio, we have redeemed at par an additional €65 million in
accordance with the terms and conditions of our new outstanding bonds.
Post-June 2024, continuing its deleveraging path, GWI launched an offer to buy
back up to €60 million of the outstanding bonds, amount which was further
increased and successfully settled in July by accepting €83 million,
resulting in the aggregate value of our two outstanding bonds decreasing to
€492 million.
This proactive approach to managing debt and liquidity underscores GWI's
commitment to maintaining financial health and strategic flexibility in an
evolving market landscape.
Globalworth is rated by two of the three major agencies, with Fitch
maintaining their investment credit rating following their July review of the
Group while improving the outlook to stable and S&P maintaining the
group's corporate credit rating to BB+ with a negative outlook, the S&P
rating being reviewed prior to the completion of our bond exchange and
subsequent repayments.
Rating
S&P Fitch
Rating BB+ BBB-
Outlook Negative Stable
Basic Data on the Globalworth Bonds
GWI bond 24/29 GWI bond 24/30
ISIN XS2809858561 XS2809868446
Segment Euronext Dublin Euronext Dublin
Minimum investment amount €100,000 and €1,000 thereafter €100,000 and €1,000 thereafter
Coupon 6.250% 6.250%
Issuance volume €307.1 million €333.4 million
Outstanding 30 June 2024 €262.1 million €313.4 million
Maturity 31 March 2029 31 March 2030
Performance of the Globalworth Bonds
H1-2024
GWI bond 24/29
30 June closing price 96.66
Yield to maturity at 30 June 7.49%
GWI bond 24/30
30 June closing price 93.55
Yield to maturity at 30 June 7.98%
FINANCIAL REVIEW
Introduction and Highlights
We commenced the financial year with an average debt maturity of 3.7 years and
€450 million Notes set to mature into short-term debt over the following
quarters. In the first half of 2024, we focused on strengthening our capital
structure and deleveraging the balance sheet through the disposal of non-core
assets. We successfully exchanged €850 million of existing Notes for new
5-year and 6-year Notes with a combined value of €640 million. Additionally,
we repaid €276 million in debt, disposed of investment properties valued at
€229 million, and maintained a strong liquidity position of €397 million,
including €187 million in undrawn secured and revolving credit facilities
(RCF).
We continue to invest in our standing assets, prioritising ESG initiatives
focused on energy efficiency and tenant comfort. Our commitment to responsible
financial management remains unwavering.
To effectively communicate our performance, we rely on a range of metrics
widely recognized in the real estate sector. These include consolidated
figures, incorporating our joint ventures, which best reflect the way we
manage our portfolio and operations. In addition, we report like-for-like
metrics and adopt standards set by EPRA, aimed at enhancing transparency and
ensuring comparability across the European real estate industry.
Revenues NOI1
€125.0 €72.4m
+5.0% on H1-2023 -1.8% on H1-2023
IFRS Earnings per share(2) Combined Portfolio Value (OMV)1
-25 cents €2.7bn
-11 cents in H1-2023 -8.7% on 31 Dec. 2023
EPRA NRV(1,3) EPRA NRV per share(1,3)
€1,660.3m €6.24
-5.2% on 31 Dec. 2023 -10.1% on 31 Dec. 2023
Adjusted normalised EBITDA(1) EPRA Earnings per share(1,2)
€63.6m 11 cents
-3.6% on H1-2023 14 cents in H1-2023
LTV1,4 Dividends paid in H1-2024 per share
39.9% 11 cents
42.2% at 31 Dec. 2023 15 cents in H1-2023
1. See Glossary for definitions.
2. See note 12 of the unaudited condensed consolidated financial statements
for calculation.
3. See note 20 of the unaudited condensed consolidated financial statements
for calculation.
4. See note 17 of the unaudited condensed consolidated financial statements
for calculation.
2. Revenues and Profitability
We generated total consolidated revenue of €125 million in the first half of
2024, reflecting a 5% increase over the same period in 2023 of €119.1
million.
Our core revenue stream, gross rental income, recorded a slight increase of
1.3% to €96.5 million in H1 2024, compared to H1 2023. Properties in Romania
showed a 7% increase in gross rental income generated by indexation, higher
occupancies in offices segment, €1.1 million early termination fees which
offset €0.7 million lower rental income from industrial sale in May 2024. In
Poland we recorded a 4% decline in gross rental income mainly due to vacancies
in regional properties.
When accounting for tenant incentives, which are amortized during the life of
the lease, the net rental income decreased with 2%, by €1.6m, to €78.9
million, with 5% net increase in Romania and 9% net decrease in Poland.
The overall consolidated revenue increased by €5.9 million, the decline in
net rental income was compensated by an increase with €7.1 million in fit
out income and €0.4 million (or 1%) increase in our service charge income to
€37.3 million (from €36.9 million in H1 2023).
Overall, our revenues remained relatively evenly split between our two markets
of operation, with Poland accounting for 45% (49% in H1-2023) and Romania 55%
(51% in H1-2023).
Our Net Operating Income ("NOI"), after considering property and fit out
costs, was €72.4 million, lower by 1.8% compared to H1 2023. Overall
operating expenses in our portfolio increased by €7.3 million to €52.7
million, out of which €6.5 million increase in fit out costs and €0.8
million, or 1.9% in operating costs. Most of the operating expenses, c.83% (c.
84% in H1 2023) were reinvoiced to tenants as the majority of our leases are
triple net.
Adjusted normalised EBITDA lower by 3.6% to €63.6 million from H1-2023
(€66.0 million) resulted from €1.4 million decrease in NOI and €1.1
million increase in administrative expenses representing high inflationary
environment in first half.
We recorded in H1 2024, finance costs of €48.4 million (€27.9 million in
H1 2023), with €20.4 million additional cost. Most of the increase is
generated by:
€11.9 million higher debt issue costs amortisation, primarily from the
one-off debt close-out cost related to bond exchange exercise in April 2024,
of €12.8 million
€0.6 million increase in fixed rated bonds interest and
€7.9 million increase in interest expense recorded for secured loans from
the new secured facilities drawn down in later half of 2023 or during first of
2024 and due to higher Euribor base rates for like-for-like loans carrying
variable interest rate.
Finance income was lower by €10.7 million, however, after excluding the
one-off gain recorded in H1 2023 related to the bond buyback, of €15.8
million, finance income recorded an increase of €5.1 million:
€3.8 million from the deposit income from short-term and overnight placement
with banks and
€1.3 million interest income on loans receivable from the joint ventures,
deferred consideration for Warta receivable.
Our share from joint ventures is €13.2 million loss in H1 2024 (gain of
€2.6 million H1 2023). The loss includes €15.2 million valuation loss
recorded on investment properties held by the joint venture companies, thus
aligning the total amount of the consideration received from the disposal of
joint venture investments in July 2024.
Earnings before tax reached to €65.1 million loss for H1 2024 (€44.3
million loss in H1 2023), the increase in net finance cost plus the one-off
loss recorded from sale of wholly owned industrial properties of €24.1
million and the loss recorded from joint ventures was compensated by lower
revaluation loss compared to similar period in 2023. We recorded in current
period of €50.5 million valuation loss (€102.9 million in H1 2023).
EPRA earnings for the first six months of 2024 were €29.8 million (or 11
cents per share), lower by €4.3 million. EPRA earnings per share decline is
amplified by the increase in weighted average number of shares being of 259.8
million in H1 2024 (228.4 million in H1 2023) following the issue of scrip
dividend shares in October 2023 and April 2024.
IFRS earnings per share of negative 25 cents (€65.3 million loss) in H1 2024
(11 cents negative in H1 2023 or €24.6 million loss). The corporate income
tax largely remained similar to prior period at €3.5 million with a €0.3
reduction, however deferred tax income seen significantly decline compared to
H1- 2023 when we recorded €23.5 million lessen deferred tax liability.
3. Balance Sheet
Real estate comprises the majority of our assets, with investment properties
and cash equivalents exceeding 95% of our total value as at 30 June 2024.
Our combined market value of the investment property portfolio is €2,735
million decreased by €260.2 million (31 Dec. 2023: €2,995 million), out of
which €2,618 million is wholly owned investment property and €117 million
(31 Dec. 2023: €129 million) represents the 100% value of the properties
owned by the two joint ventures in which we own a 50% stake.
As of 30 June 2024, the balance sheet value of our investment property
(freehold and properties held for sale) is €2,618 million, €248 million
lower compared to year-end 2023. The reduction is due to properties disposed
during the period with a value of €229 million (comprising of wholly owned
logistics portfolio in Romania of €207 million, a held for sale property in
Poland of €12.4 million and €9.0 million from the sale of non-core
residential apartments) and the fair value losses of €50.5 million
(representing 65% in Poland and 35% in Romania) which was partly mitigated
with value accretive capital expenditure of €31.8 million on development and
standing properties.
The logistics portfolio comprised of five logistics / light-industrial parks
with ten facilities in Timisoara, Arad, Oradea and Pitesti as well as a
majority stake in two small business units in Bucharest which was sold to CTP
INVEST SPOL S.R.O.
Further breakdown of our capital expenditure in detail can be found in the
below pie chart:
In the first six months of 2024, we exchanged our 2025 and 2026 Notes with an
early repayment of €210 million (€142.9 million from 18/25 Notes and
€66.6 million from 20/26 Notes) with five year and six-year Notes maturity
in 2029 and 2030 respectively at 6.25% coupon under new terms and conditions
of the new issued Notes. Furthermore, subsequently after the disposal of
wholly owned logistics properties, we redeemed further Notes for an amount of
€65 million at par (24/29 Notes: €45 million and 24/30 Notes: €20
million).
We closed the first half of 2024 with cash position to €210.3 million
(€396.3 million at 31 December 2023) with €187 million additional
liquidity available from the undrawn facilities.
Total assets at the end of the period were €3,002 million, lower by 12.9%
compared to 31 December 2023 (€3,445 million).
EPRA NRV was €1,660.3 million as of 30 June 2024, lower by 5.2% compared to
31 December 2023 (€1,750.6 million). As a result, EPRA NRV per share also
decreased to €6.24 per share (31 December 2023: €6.94 per share) by 10.1%.
The EPRA NRV decline was driven by €50.5 million negative effect of fair
value gains on the portfolio, loss recorded from sale of investment
properties, share of loss from joint venture investment and increase in the
fully diluted number of shares.
4. Dividends
Globalworth distributes bi-annually at least 90% of its EPRA Earnings to its
shareholders. During the first half of 2024, the distributions included the
option to a scrip dividend alternative so that qualifying shareholders can
elect to receive new ordinary shares in the Company instead of cash in respect
of all or part of their entitlement to the dividend. Qualifying shareholders
who validly elect to receive the Scrip Dividend Alternative become entitled to
a number of Scrip Dividend Shares in respect of their entitlement to the
Dividend that is based on a price per Scrip Dividend Share calculated on the
basis of a discount of 20% to the average of the middle market quotations for
the Company's shares on the five consecutive dealing days from and including
the Ex-Dividend Date, the "Reference Price".
The dividend declared for the six-month period ended 31 December 2023 was 11
cents per share. Following the election of scrip dividend 13.9 million new
shares were issued in April 2024, while the Group paid in total €0.4 million
as cash dividend, resulting in 98.6% shareholders opting to reinvest in the
Company.
The results for the period are set out in the consolidated statement of
comprehensive income on page 31.
5. Financing and Liquidity Review
Following the recent successful liability management exercise by refinancing
of unsecured and secured debt in first half of 2024, the Group's focus shifted
toward maintaining liquidity and optimising financing costs. Our key
priorities included building cash reserves, managing debt maturities falling
due in next twelve months, reduction in weighted average cost of debt and
ensuring access to revolving credit facilities for unexpected needs.
We close monitor our cost of debt with strategies like hedging or adjusting
the fixed versus floating rate debt mix to protect against rising rates.
Additionally, regular compliance checks with debt covenants and exploring
opportunities for further cost of debt reduction is crucial to maintaining
financial flexibility. To enhance the balance sheet, we are focused on
disposing of none core and underperforming assets to improve liquidity, while
redeploying funds into higher-yielding projects.
Debt Summary
The total debt of the Group at 30 June 2024 was €1,248 million (31 Dec.
2023: €1,603 million) comprising mainly of medium to long-term debt,
denominated entirely in Euro, comprising of €84 million unsecured loans,
€573 million New unsecured Notes and €591 million secured loans.
The first half of 2024 had several notable events in terms of financing, that
lead to a decrease in total debt, as:
During the existing Notes exchange exercise, we repaid €142.9 million from
18/25 Notes and €66.6 million from 20/26 Notes;
Subsequently to the exchange, we redeemed additional €65 million unsecured
debt (New 24/29 Notes €45 million and 24/30 New Notes €20 million);
Derecognized €97.5 million secured loans consequently to the disposal of
subsidiaries holding industrial properties.
In addition, we performed several events in order to increase the liquidity of
the Group:
We drew €25 million twelve-year term secured debt facility which was signed
with Libra Bank.
We entered into two new seven-year term secured loans agreement with Erste
Group partially in May and June for a total amount of €137 million with both
facilities available to draw within 6 months from the signing date.
The Group continuously strives to maintain a low weighted average interest
rate cost, which as of 30 June 2024 was 5.10% (3.7% as of 31 December 2023),
while the average maturity period improved to 5.2 years (3.7 years as of 31
December 2023), as depicted in the chart below. The changes are a consequence
of the bond exchange exercise that led to the New Notes being issued under the
current market conditions.
In this high inflation and interest rate environment, it is important to note
that at the end of the period, Globalworth had a total of c.86% of its debt
issued originally in credit facilities carry a fixed interest rates (75.3%) or
at floating interest rates which are however it was hedged (10.3%).
Liquidity & Loan to value ratio (LTV")
Managing our financial and operational resources has been a key area of focus
for the Group, especially since the COVID-19 pandemic outbreak, and this
careful management has carried on throughout this period of higher volatility
and uncertainty.
As of 30 June 2024, the Group had cash and cash equivalents of €210.3
million (31 December 2023: € 396.3 million) of which an amount of €18.1
million was restricted due to various conditions imposed by the financing
Banks. In addition, the Group had available liquidity from committed undrawn
loan facilities of €187million.
The Group's loan to value ratio on 30 June 2024 was 39.9% (42.2% as of 31
December 2023). This is consistent with the Group's strategy to manage its
long-term target LTV of around or below 40%.
Debt Structure as at 30 June 2024
Debt Structure - Secured vs. Unsecured Debt
The majority of the Group's debt on 30 June 2024 is unsecured: 52.7% (31
December 2023: 58.4%), with the remainder secured with real estate mortgages,
pledges on shares, receivables and loan subordination agreements in favour of
the financing parties.
Debt Denomination Currency and Interest Rate Risk
Our loan facilities are entirely Euro denominated and bear interest based
either on one month, three months or six months Euribor plus a margin (14.5%
of the outstanding balance compared to 18.3% as of 31 December 2023), or at a
fixed interest rate (75.3% of the outstanding balance compared to 76.1% as of
31 December 2023).
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. Based
on the Group's debt balances on 30 June 2024, an increase of 100 basis points
in the EURIBOR will result in an increase of interest expense of €1.8
million per annum.
Debt Covenants
As of 30 June 2024, the Group is in compliance with all of its debt covenants.
The Group's financial indebtedness is arranged with standard terms and
financial covenants, the most notable as of 30 June 2024 being the following:
Unsecured Eurobonds, Revolving Credit Facility and IFC loan
the Consolidated Coverage Ratio, with minimum value of 150% (covenant value
was aligned for all debt facilities).
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 for the Revolving Credit Facility and IFC loan).
Secured Bank Loans
the debt service cover ratio ('DSCR') / interest cover ratio ('ICR'), with
values starting from 120% (be it either historic or projected), and
the LTV ratio, with contractual values ranging from 45% to 83%.
6. Principal Risks and Uncertainties
The key risks which may have a material impact on the Group's performance,
together with the corresponding mitigating actions, are presented on pages 63
to 69 of the Annual Report for the year ended 31 December 2023, which is
available at www.globalworth.com (http://www.globalworth.com/) .
(http://www.globalworth.com/)
These risks comprise the following:
Market conditions and the economic environment, particularly in Romania and
Poland
Changes in the political or regulatory framework in Romania, Poland or the
European Union
Inflation in Romania and Poland
Execution of investment strategy
Valuation of the portfolio
Inability to lease space
Counterparty credit risk
Sustainable portfolio risk and response to climate change
Lack of available financing and refinancing in interest environment
Breach of loan covenants
Changes in Interest and Foreign Exchange Rates, and
Compliance with fire, structural, health and safety, or other regulations
There have been no new risks identified during the six-month period ended 30
June 2024, and the identified risks are expected to continue to remain
relevant during the second half of 2024.
7. Going Concern
The Directors have considered the Company's ability to continue to operate as
a going concern based on the Management's cash flow projections for the 15
months subsequent to the date of approval of the unaudited interim condensed
consolidated financial statements. The Directors believe that the Company
would have sufficient cash resources to meet its obligations as they fall due
and continue to adopt the going concern basis in preparing the unaudited
interim condensed consolidated financial statements as of and for the six
months ended 30 June 2024.
GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD
ENDED 30 JUNE 2024
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
SIX-MONTH PERIOD ENDED 30 JUNE 2024
30 June 2024 30 June 2023
Unaudited Unaudited
Note €'000 €'000
Revenue 7 125,034 119,050
Operating expenses 8 (52,652) (45,306)
Net operating income 72,382 73,744
Administrative expenses 9 (9,287) (7,755)
Fair value loss on investment property 3 (50,527) (102,884)
Share-based payment expense 21 (167) (167)
Loss on disposal of subsidiary 24 (24,111) (164)
Depreciation and amortisation expense (404) (289)
Other expenses (1,204) (1,182)
Other income 1,162 2,215
Foreign exchange loss (249) (569)
Profit/(Loss) from fair value of financial instruments at fair value through 1,368 (121)
profit or loss
Loss before net financing cost (11,037) (37,172)
Finance cost 10 (48,386) (27,945)
Finance income 10.1 7,528 18,224
Share of (loss)/ profit of equity-accounted investments in joint ventures 22 (13,198) 2,613
Loss before tax (65,093) (44,280)
Income tax (expense)/ income 11 (154) 19,701
Loss for the period (65,247) (24,579)
Items that will not be reclassified to profit or loss
Gain on equity instruments designated at fair value through other
comprehensive income
90 -
Other comprehensive income for the period, net of tax 90 -
Total comprehensive income for the period (65,157) (24,579)
Loss attributable to: (65,247) (24,579)
- ordinary equity holders of the Company (65,292) (25,078)
- non-controlling interests 45 499
Total comprehensive income attributable to: (65,157) (24,579)
- ordinary equity holders of the Company (65,202) (25,078)
- non-controlling interests 45 499
Restated*
Earnings per share
- Basic 12 (25) (11)
- Diluted 12 (25) (11)
The IFRS earnings per share as at 30 June 2023 have been restated following
the IAS 33 'Earnings per share' requirements regarding accounting for scrip
dividend shares issued in the period of 01 January 2023 to 30 June 2024.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE
2024
30 June 31 December
2024 2023
Unaudited Audited
Note €'000 €'000
ASSETS
Investment property 3 2,610,785 2,843,085
Goodwill 12,039 12,039
Advances for investment property 5 6,682 7,175
Investments in joint ventures 22 57,096 70,098
Equity investments 7,993 7,844
Other long-term assets 1,997 1,780
Other receivables 14.1 22,479 21,182
Prepayments 129 448
Financial assets at fair value through profit or loss 3,576 -
Deferred tax asset 11 1,736 1,423
Non-current assets 2,724,512 2,965,074
Financial assets at fair value through profit or loss - 197
Trade and other receivables 14 21,389 23,122
Contract assets 4,801 6,985
Guarantees retained by tenants 55 99
Income tax receivable 78 1,084
Prepayments 5,238 2,002
Cash and cash equivalents 15 210,283 396,259
241,844 429,748
Investment property held for sale 3.3 35,500 50,352
Total current assets 277,344 480,100
Total assets 3,001,856 3,445,174
EQUITY AND LIABILITIES
Issued share capital 18 1,796,809 1,769,456
Treasury shares 21.1 (4,773) (4,797)
Fair value reserve of financial assets at FVOCI (5,379) (5,469)
Retained earnings (251,098) (158,066)
Equity attributable to ordinary equity holders of the Company 1,535,559 1,601,124
Non-controlling interests - 1,411
Total equity 1,535,559 1,602,535
Interest-bearing loans and borrowings 13 1,130,192 1,574,771
Deferred tax liability 11 121,921 139,299
Lease liabilities 3.2 23,598 20,482
Deposits from tenants 3,693 3,774
Guarantees retained from contractors 2,664 2,902
Trade and other payables 399 78
Non-current liabilities 1,282,467 1,741,306
Interest-bearing loans and borrowings 13 118,281 28,609
Guarantees retained from contractors 4,540 5,594
Trade and other payables 35,350 36,051
Contract liability 2,352 3,289
Other current financial liabilities - 1,311
Current portion of lease liabilities 2,191 1,956
Deposits from tenants 17,746 18,018
Income tax payable 242 807
180,702 95,635
Liabilities directly associated with the assets held for sale 3.3 3,128 5,698
Total current liabilities 183,830 101,333
Total equity and liabilities 3,001,856 3,445,174
The financial statements were approved by the Board of Directors on 23
September 2024 and were signed on its behalf by: Andreas Tautscher,
Director
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024
Issued share capital Share- based payment reserve Fair value reserve of financial assets at Non- controlling interests
Treasury shares FVOCI Retained earnings Total Total Equity
Note €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
As at 1 January 2023 1,704,476 (4,859) 156 (5,469) (37,798) 1,656,506 862 1,657,368
Interim dividends paid in cash and scrip dividend 18,19 65,134 62 - - (66,272) (1,076) - (1,076)
Transaction costs on issuance of shares for cash 18 (154) - - - - (154) - (154)
Transfer from reserve to retained earnings - - (156) - 156 - - -
Shares issued in subsidiary with non-controlling interest - - - - - - 237 237
Total comprehensive income for the period - - - - (54,152) (54,152) 312 (53,840)
As at 31 December 2023 1,769,456 (4,797) - (5,469) (158,066) 1,601,124 1,411 1,602,535
Interim dividends paid in cash and scrip dividend 18,19 27,364 24 - - (27,740) (352) - (352)
Transaction costs on issuance of shares for cash 18 (11) - - - - (11) - (11)
Settlement of fair value reserve of equity instruments designated at FVOCI in - - - 90 - 90 - 90
cash
Non-controlling interest component of subsidiaries disposed - - - - - - (1,456) (1,456)
Total comprehensive income for the period - - - - (65,292) (65,292) 45 (65,247)
As at 30 June 2024 1,796,809 (4,773) - (5,379) (251,098) 1,535,559 - 1,535,559
Issued share capital Share- based payment reserve Fair value reserve of financial assets at Non- controlling interests
Treasury shares FVOCI Retained earnings Total Total Equity
Note €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
As at 1 January 2023 1,704,476 (4,859) 156 (5,469) (37,798) 1,656,506 862 1,657,368
Interim dividends paid in cash and scrip dividend 18,19 32,617 32 - - (33,247) (598) - (598)
Transaction costs on issuance of scrip dividend shares (138) - - - - (138) - (138)
Total comprehensive income for the period - - - - (25,078) (25,078) 499 (24,579)
As at 30 June 2023 1,736,955 (4,827) 156 (5,469) (96,123) 1,630,692 1,361 1,632,053
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024
30 June 30 June 2023
Note 2024 €'000
€'000
Loss before tax (65,093) (44,280)
Adjustments to reconcile profit/(loss) before tax to net cash flows
Fair value loss on investment property 3.4 50,527 102,884
Loss on sale of investment property 756 97
Share-based payment expense 21 167 167
Depreciation and amortisation expense 404 289
Net movement in allowance for doubtful debts 16.2 277 769
Foreign exchange loss 83 569
Loss/(gain) from fair valuation of financial instrument (1,368) 121
Loss on disposal of subsidiary 3.5, 24 24,111 164
Share of profit/(loss) of equity-accounted joint ventures 22.4 13,198 (2,613)
Net financing costs 10, 10.2 40,858 9,721
Operating profit before changes in working capital 63,920 67,888
Decrease/(increase) in trade and other receivables (3,569) 4,951
Decrease in trade and other payables (3,988) (2,346)
Interest paid (40,697) (24,625)
Interest received 4,983 1,168
Income tax paid (2,924) (3,278)
Interest received from joint ventures 407 173
Cash flows from operating activities 18,132 43,931
Investing activities
Expenditure on investment property completed and under development or (28,927) (29,102)
refurbishment
Proceeds from disposal of subsidiary 68,985 4,000
Proceeds from sale of investment property 21,314 2,278
Proceeds from sale of financial assets through profit and loss 3,322 -
Payments for equity investments (182) (108)
Investment in and loans given to joint ventures 22 (3,332) (8,360)
Proceeds from joint ventures for loans given 22 3,727 7,135
Receipt from equity investments held at FVOCI 123 -
Payment for purchase of other long-term assets (614) (232)
Cash flows used in investing activities 64,416 (24,389)
Financing activities
Payment of transaction costs on issuance of scrip dividend shares (11) (138)
Proceeds from interest-bearing loans and borrowings 13 25,975 96,500
Payments of interest-bearing loans and borrowings 13 (276,953) (146,554)
Payment of interim dividend (net of scrip) 18 (352) (598)
Payment for lease liability obligations 3.2 (1,779) (2,079)
Payment of bank loan arrangement fees and other financing costs (15,605) (1,206)
Cash flows from financing activities (268,725) (54,075)
Net decrease in cash and cash equivalents (186,177) (34,533)
Effect of exchange rate fluctuations on cash and bank deposits held 201 1,311
Cash and cash equivalents at the beginning of the period 15 396,259 163,767
Cash and cash equivalents at the end of the period 15 210,283 130,545
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SECTION I: BASIS OF PREPARATION
Basis of Preparation
Corporate Information
Globalworth Real Estate Investments Limited ('the Company' or 'Globalworth')
is a company with liability limited by shares and incorporated in Guernsey on
14 February 2013, with registered number 56250. The registered office of the
Company is at PO Box 336, Fourth Floor, Plaza House, Admiral Park, St Peter
Port, Guernsey, GY1 3UQ. Globalworth, being a real estate Company, has had its
ordinary shares admitted to trading on AIM (Alternative Investment Market of
the London Stock Exchange) under the ticker "GWI" since 2013.
On 23 July 2021 Zakiono Enterprises Limited, a company wholly owned by Tevat
Limited, become a controlling shareholder by holding 60.6% share capital of
the company through public offer. Tevat Limited is a joint venture between CPI
Property Group S.A. and Aroundtown SA.
The Company's Eurobonds have been admitted to trading on the official List of
the Irish Stock Exchange in April 2024. The main country of operation of the
Company is Guernsey. The Group's principal activities and nature of its
operations are mainly investments in real estate properties, through both
acquisition and development, as set out in the Strategic Report section of the
2023 Annual Report.
Directors
The Directors of the Company are:
Dennis Selinas, Executive, Group Chief Executive Officer
Martin Bartyzal, Independent Non-Executive, Chair of the Board, Member of the
Remuneration Committee
Norbert Sasse, Non-Executive, Member of the Investment Committee
Richard van Vliet, Independent Non-Executive, Member of the Audit & Risk
Committee and Remuneration Committee
Andreas Tautscher, Senior Independent Non-Executive, Chair of the Audit and
Risk Committee, Member of Nomination Committee
David Maimon, Independent Non-Executive, Member of the Audit & Risk
Committee and Investment Committee
Piotr Olendski, Independent Non-Executive, Chair of the Remuneration Committee
Daniel Malkin, Independent Non-Executive, Chair of the Nomination Committee,
Member of the Audit & Risk Committee
Favieli Stelian, Independent Non-Executive, Chair of the Investment Committee,
Member of the Remuneration Committee
Panico Theocharides, Non-Executive, Member of the Nomination Committee
Basis of Preparation and Compliance
The interim condensed consolidated financial statements of the Group (or
'financial statements' or 'consolidated financial statements') as of and for
the six-months period ended 30 June 2024 have been prepared in accordance with
International Accounting Standard (IAS) 34 "Interim Financial Reporting".
These consolidated financial statements are prepared in Euro ("EUR" or "€"),
rounded to the nearest thousand, being the functional currency and
presentation currency of the Company.
These financial statements have been prepared on a historical cost basis,
except for investment property, financial assets at fair value through profit
or loss and financial assets at fair value through other comprehensive income
which are measured at fair value.
These financial statements are prepared on a going concern basis. The
Directors have considered the Company's ability to continue to operate as a
going concern based on the Management's cash flow projections for the 15
months subsequent to the date of approval of the unaudited interim condensed
consolidated financial statements. The Directors believe that the Company
would have sufficient cash resources to meet its obligations as they fall due
and continue to adopt the going concern basis in preparing the unaudited
interim condensed consolidated financial statements as of and for the six
months ended 30 June 2024.
Accounting policies
These consolidated financial statements apply the same accounting policies,
presentation and methods of calculation as those followed in the preparation
of the Group's consolidated financial statements for the year ended 31
December 2023, which were prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union ('EU') and the
Companies (Guernsey) Law 2008, as amended. The interim condensed consolidated
financial statements included in this Interim Report do not include all the
information and disclosures required in the annual financial statements and
should be read in conjunction with the consolidated financial statements for
the year ended 31 December 2023.
Basis of Consolidation
These condensed consolidated financial statements comprise the financial
statements of the Company and its subsidiaries ('the Group') as of and for the
period ended 30 June. Subsidiaries are fully consolidated (refer to note 23)
from the date of acquisition, being the date on which the Group obtains
control, and continues to be consolidated until the date when such control
ceases. The financial statements of the subsidiaries are prepared for the
period from the date of obtaining control to 30 June, using consistent
accounting policies. All intra-group balances, transactions and unrealised
gains and losses resulting from intra-group transactions are eliminated in
full. Non-controlling interest represents the portion of profit or loss, other
comprehensive income and net assets not held by the Group and is presented
separately in the income statement and within equity in the consolidated
statement of financial position, separately from net assets and profit and
loss attributable to the equity holders of the Company.
Foreign Currency transactions and balances
Foreign currency transactions during the period are initially recorded in the
functional currency at the exchange rates approximating those ruling on the
date of the transaction. Monetary assets and liabilities denominated in
foreign currencies other than functional currency of the Company and its
subsidiaries are retranslated at the rates of exchange prevailing on the
statement of financial position date. Gains and losses on translation are
taken to profit and loss. Non -monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange rates at
the date when the fair value was determined.
2. Critical Accounting Judgements, Estimates and Assumptions
The preparation of consolidated financial statements in conformity with IFRS
requires management to make certain judgements, estimates and assumptions that
affect reported amounts of revenue, expenses, assets and liabilities, and the
accompanying disclosures and the disclosures of contingent liabilities.
Selection of Functional Currency
The Company and its subsidiaries used their judgment, based on the criteria
outlined in IAS 21 "The Effects of Changes in Foreign Exchanges Rates", and
determined that the functional currency of all the entities is the EUR. In
determining the functional currency consideration is given to the denomination
of the major cash flows of the entity e.g., revenues and financing.
As a consequence, the Company uses EURO (€) as the functional currency,
rather than the local currency Romanian Lei ("RON") for the subsidiaries
incorporated in Romania, Polish Zloty ("PLN") for the subsidiaries in Poland
and Pounds Sterling ("GBP") for the Company and the subsidiary incorporated in
Guernsey.
Further additional critical accounting judgements, estimates and assumptions
are disclosed in the following notes to the financial statements.
Investment Property, see note 3 and Fair value measurement and related
estimates and judgements, see note 4;
Commitments (operating leases commitments - Group as lessor), see note 6;
Taxation, see note 11;
Trade and other receivables, see note 14;
Share-based payment reserve, see note 21;
Investment in Joint Ventures, see note 22; and
Investment in Subsidiaries, see note 23.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SECTION II: INVESTMENT PROPERTY
This section focuses on the assets on the balance sheet of the Group which
form the core of the Group's business activities. This includes investment
property (both 100% owned by the Group and by the Joint Ventures), related
disclosures on fair valuation inputs, commitments for future property
developments and investment property-leasehold and related lease liability
recognised for the right of perpetual usufruct of the lands.
Further information about the property portfolio is described in the
Management Review section of the Interim Report.
3. Investment Property
Investment property - freehold
Completed investment property Investment property under refurbishment Investment property under development Land for further development Sub-total Investment property leasehold- Right of usufruct of the land TOTAL
Note €'000 €'000 €'000 €'000 €'000 €'000 €'000
1 January 2023 2,699,554 152,381 29,450 40,200 2,921,585 23,875 2,945,460
Land acquired during the period - - 435 - 435 - 435
Subsequent expenditure 40,618 8,584 1,569 33 50,804 - 50,804
Net lease incentive movement 4,886 3,035 (43) - 7,878 - 7,878
Capitalised borrowing costs 6 - 144 - 150 - 150
Transfer to completed investment property 15,740 - (4,000) - 11,740 - 11,740
Disposal during the year (6,792) - - (7,000) (13,792) - (13,792)
Fair value loss on investment property (155,394) (1,000) (385) (2,233) (159,012) (578) (159,590)
31 December 2023 2,598,618 163,000 27,170 31,000 2,819,788 23,297 2,843,085
Subsequent expenditure 16,893 1,441 2,762 57 21,153 - 21,153
Net lease incentive movement 9,167 46 59 - 9,272 - 9,272
Capitalised borrowing costs 10 1 - - - 1 - 1
Disposal during the year 24 (193,709) - (11,726) (11,016) (216,451) - (216,451)
Transfer to completed investment property 50,610 (50,610) - - - - -
Additions of right of usufruct of the land 3.2 - - - - - 3,559 3,559
Fair value gain /(loss) on investment property (45,900) (2,917) 35 (341) (49,123) (711) (49,834)
30 June 2024 2,435,680 110,960 18,300 19,700 2,584,640 26,145 2,610,785
3.1 Investment Property - Freehold
Judgements
Classification of Investment Property
Investment property comprises completed property, property under construction
or refurbishment and land bank for further development which are not occupied
substantially for use by, or in the operations of, the Group, nor for sale in
the ordinary course of business, but are held primarily to earn rental income
and for capital appreciation. The Group considers that, when the property is
in a condition which will allow the generation of cash flows from its rental,
the property is no longer a property under development or refurbishment but an
investment property. If the property is kept for sale in the ordinary course
of the business, then it is classified as inventory property.
Disposal of Investment Property not in the Ordinary Course of Business
The Group enters into contracts with customers to sell properties that are
complete. The sale of completed property is generally expected to be the only
performance obligation and the Group has determined that it will be satisfied
at the point in time when control transfers. For unconditional exchange of
contracts, this is generally expected to be when legal title transfers to the
customer. For conditional exchanges, this is expected to be when all
significant conditions are satisfied. The recognition and measurement
requirements in IFRS 15 are applicable for determining the timing of
derecognition and the measurement of consideration (including applying the
requirements for variable consideration) when determining any gains or losses
on disposal of non-financial assets when that disposal is not in the ordinary
course of business.
Other Disclosures Related to Investment Property
Interest-bearing loans and borrowings are secured on investment property
freehold, see note 13 for details. Further information about individual
properties is disclosed in the asset management review section in the Interim
Report.
3.2 Investment property - Leasehold
Right of Perpetual Usufruct of the Land (the "RPU") or "right-of-use assets"
Under IFRS 16, right-of-use assets that meet the definition of investment
property are required to be presented in the statement of financial position
as investment property. The Group has the right of perpetual usufruct of the
land (the "RPU" or "right-of-use assets") contracts for the property portfolio
in Poland which meet the definition of investment property under IAS 40.
Therefore, the Group has presented its 'Right-of-use assets' in the statement
of financial position under the line item "Investment property" along with the
investment property - freehold in the statement of financial position. The
corresponding lease liabilities are presented under the line item 'Lease
liabilities' as non-current and the related short-term portion are presented
in the line item "Current portion of lease liability".
3.3 Assets Held for Sale
Judgements and Assumptions Used in the Classification of Investment Properties
as Held for Sale
In 2021, the Group entered into a preliminary agreement to sell the properties
held by Dolfia sp. z o.o., Ebgaron sp. z o.o., Lamantia sp. z o.o., Nordic
Park Offices sp. z o.o. and Warta Tower sp. z o.o., for a total consideration
of €125.2 million. In July 2023 Warta Tower sale was concluded and
terminated the original SPA for remaining four properties and in March 2024 we
sold Bliski, the property held by Ebgaron sp. z o.o. for a total consideration
of €12.4 million.
At 30 June 2024, there are two buildings classified as held for sale for which
the Group is committed to sell and is actively looking for negotiating with
the buyers. The properties classified as held for sale were valued at €35.5
million.
All the assets under the held for sale group are available for immediate sale
in their present condition subject only to terms that are usual and customary
for sales of such assets. The management has an active disposal programme with
appropriate approvals from the Board and is planning to complete the sale in
the near future by signing a new SPA with a new buyer(s).
The carrying values of investment properties held for sale at 30 June 2024 are
fair valued after taking into account the existing SPA and management's
intention to actively market these assets for sale at a price that is
reasonable in relation to its current fair value under present market
conditions. Therefore, the Group continues to classify the carrying value of
these investments under investment property held for sale and disclose
separately the liabilities directly associated with the assets held for sale.
Note 31 December CAPEX Fair value loss Disposal during the year Movement during the period 30 June
2023 2024
Completed Investment property 3.1 45,900 145 (615) (12,390) (12,860) 33,040
Investment property - leasehold 3.2 4,452 - (78) (1,914) (1,992) 2,460
Investment property held for sale 50,352 145 (693) (14,304) (14,852) 35,500
Lease liabilities 3.2 4,319 - - - (1,916) 2,403
Deferred tax liability 11 1,379 - - - (654) 725
Liabilities directly associated with the assets held for sale 5,698 - - - (2,570) 3,128
Net assets held for sale 44,654 145 (693) (14,304) (12,282) 32,372
3.4 Investment property - Fair value gain/(loss)
30 June 2024 30 June 2023
Note €'000 €'000
Fair value loss on investment property (50,527) (102,884)
- Related to investment property -freehold 3.1 (49,834) (97,854)
- Related to investment property -held for sale 3.3 (693) (5,030)
3.5 Sale of investments property
In May 2024, the Group successfully closed the sale for part of its logistics
portfolio with the properties disposed having a total value of €207 million.
The portfolio comprised of five logistics / light-industrial parks with ten
facilities in Timisoara, Arad, Oradea and Pitesti as well as a majority stake
in two small business units in Bucharest and was sold to CTP INVEST SPOL
S.R.O.
For further information please refer to note 24 Disposal of subsidiaries.
4. Fair Value Measurement and Related Estimates and Judgements
Investment Property Measured at Fair Value
The Group's investment property portfolio for Romania was valued by Colliers
Valuation and Advisory SRL and Cushman & Wakefield International Real
Estate Advisor Ltd and for Poland by Knight Frank Sp. z o.o.. All independent
professionally qualified valuers hold a recognised relevant professional
qualification and have recent experience in the locations and segments of the
investment properties valued using recognised valuation techniques.
Our Property Valuation Approach and Process
The Group's investment department includes a team that reviews twice in a
financial year the valuations performed by the independent valuers for
financial reporting purposes. For each independent valuation performed, the
investment team along with the finance team:
verifies all major inputs to the independent valuation report.
assesses property valuation movements when compared to the initial valuation
report at acquisition or latest period end valuation report; and
holds discussions with the independent valuer.
The fair value hierarchy levels are specified in accordance with IFRS 13 Fair
Value Measurement. Some of the inputs to the valuations are defined as
"unobservable" by IFRS 13 and these are analysed in the tables below. Any
change in valuation technique or fair value hierarchy (between level 1, level
2 and level 3) is analysed at each reporting date or as of the date of the
event or variation in the circumstances that caused the change. As of 30 June
2024 (2023: same) the values of all investment properties were classified as
level 3 fair value hierarchy under IFRS 13 and there were no transfers from or
to level 3 from level 1 and level 2.
Valuation Techniques, Key Inputs and Underlying Management's Estimations and
Assumptions
Property valuations are inherently subjective as they are made on the basis of
assumptions made by the valuer. Valuation techniques comprise the discounted
cash flows, the sales comparison approach, and the residual value method.
The Group has based its assumptions and estimates on the parameters available
when the unaudited interim condensed consolidated financial statements were
prepared, including the amendments or possible amendments of the current lease
contracts, delays to non-committed capital expenditure, cost-cutting
initiatives and delays in construction activity. The key assumptions concern
the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next reporting period.
However, all such assumptions or estimates are sensitive to change due to the
current market environment. The climate-related risks are embedded in the
determination of future cash flows that are used for the fair value of
investment properties. Further information is disclosed in Operational Review
and Strategic Review sections of the 2023 Annual report. Such uncertainty is
reflected in the assumptions used for the valuation and the Group disclosed
below the sensitivity to different key inputs to overall valuation.
Key information about fair value measurements, valuation technique and
significant unobservable inputs (Level 3) used in arriving at the fair value
under IFRS 13 are disclosed below:
Fair value
Class of property 30 June 2024 31 December Valuation Country Location Input 30 June 2024 31 December 2023
2023
€'000 €'000 Technique
Completed 501,270 517,960 DCF Poland Warsaw Rent per sqm €11.50 - €22.50 €11.50 - €22.50
Investment property Discount rate 5.58%-10.85% 5.72%-9.10%
Exit yield 5.80%-7.90% 5.70%-7.75%
Completed held for sale (33,040) (45,900) Poland Warsaw
653,460 671,060 DCF Poland Regional Rent per sqm €12.50 - €15.50 €11.50 - €15.25
Discount rate 6.92%-14.14% 6.43%-10.07%
Exit yield 6.65%-10.00% 6.50%-7.50%
164,490 115,670 DCF Poland Mixed - used Rent per sqm €13.50 - €24.00 €14.00 - €24.00
Discount rate 5.93%-8.37% 5.64%-7.12%
Exit yield 5.63%-6.92% 5.47%-6.50%
1,113,500 1,109,500 DCF Romania Office Rent per sqm €2.00 - €35.00 €2.00 - €35.00
Discount rate 8.30% - 9.1% 8.25% - 9.5%
Exit yield 6.75% - 7.65% 6.5% - 7.65%
- 183,900 DCF Romania Industrial Rent per sqm - €2.91 - €9.00
Discount rate - 8.5% - 9.25%
Exit yield - 6.75% - 7.25%
10,200 10,100 DCF Romania Residential Rent per sqm €7.72 - €24.20 €7.72 - €24.20
Discount rate 9.75% - 9.75% 9.75% - 9.75%
Exit yield 7.75% - 7.75% 7.75% - 7.75%
25,800 36,328 SC Romania Residential Sales value (sqm) € 1,500 € 1,500
Sub-total 2,435,680 2,598,618
Investment 6,200 15,900 RM Romania Office Rent per sqm €13.00 - €15 €11.50 - €18
property under development Discount rate 9.50% - 9.50% 8.50% - 9.50%
Exit yield 7.75% - 7.75% 6.75% - 7.75%
Capex (€m) € 0.00 € 75.68
5,000 11,700 DCF Romania Industrial Rent per sqm €4.35 - €4.35 €5.20 - €9.70
Discount rate 9.00% - 9.00% 9.00%
Exit yield 7.25% - 7.25% 7%
7,100 7,070 DCF Poland Mixed - used Rent per sqm €15.00 -€15.00 €13.50 -€13.50
Discount rate 6.96% - 8.26% 6.87% - 8.25%
Exit yield 6.69%-6.69% 6.61%-6.61%
Capex (€m) € 0.00 € 0.00
Investment 110,960 163,000 DCF Poland Mixed - used Rent per sqm €15.00 -€15.00 €13.50 -€13.50
property under refurbishment Discount rate 6.96% - 8.26% 6.87% - 8.25%
Exit yield 6.69%-6.69% 6.61%-6.61%
Capex (€m) € 0.00 € 0.00
Land bank - for further - 9,500 SC Romania Industrial Sales value (sqm) €27 - €27 €27
development 19,700 14,000 RM Romania Industrial Rent per sqm €16.00-€20.00 €3.25-€20.00
Exit yield 6.75% - 7.2% 7.15% - 8.25%
TOTAL 2,584,640 2,819,788
Income approach: Discounted Cash Flows ('DCF'), Residual Method ('RM')
Market approach: Sales Comparison ('SC')
All classes of property portfolio were categorised as Level 3 under the fair
value hierarchy. The fair value movement on investment property recognised, as
loss, in the income statement includes an amount of €50.5 million (June
2023: loss of €102.9 million) for fair value measurements as of the
statement of financial position date related to investment properties
categorised within Level 3 of the fair value hierarchy. In arriving at
estimates of market values as at 30 June 2024 and 2023, the independent
valuation experts used their market knowledge and professional judgement and
did not rely solely on comparable historical transactions. In these
circumstances, there was a greater degree of uncertainty in estimating the
market values of investment properties than would have existed in a more
active market.
Sensitivity Analysis on significant estimates used in the valuation
The assumptions on which the property valuations have been based include, but
are not limited to, rent per sqm (per month), discount rate, exit yield, cost
to complete, comparable market transactions for land bank for further
development, tenant pro file for the rented properties, and the present
condition of the properties. These assumptions are market standard and in line
with the International Valuation Standards ('IVS'). Generally, a change in the
assumption made for the rent per sqm (per month) is accompanied by a similar
change in the rent growth per annum and discount rate (and exit yield) and an
opposite change in the other inputs.
A quantitative sensitivity analysis, in isolation, of the most sensitive
inputs used in the independent valuations performed, as of the statement of
financial position date, are set out below:
€0.5 change in rental value per month, per sqm1 25 bps change in market yield 5% change in Capex €50 change in sales prices per sqm2 2.5% change in vacancy in Perpetuity3
Investment property Year Country Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Completed 2024 Poland 34,440 (34,420) (54,570) 59,100 - - n/a n/a (29,500) -
2024 Romania 22,400 (22,600) (40,200) 42,700 - - 700 (800) (11,700) 10,100
2023 Poland 31,730 (37,030) (57,730) 57,070 - - - - (32,150) -
2023 Romania 28,200 (27,900) (46,700) 50,700 - - 1,100 (1,100) (12,500) 10,100
Under 2024 Poland - - - - - - - - - -
development 2024 Romania 1,700 (1,700) (1,900) 2,000 (2,300) 2,200 - - - -
2023 Poland - - - - - - - - -
- 2023 Romania 3,000 (3,000) (3,600) 3,900 (3,500) 3,500 - - (200) 100
Under 2024 Poland 3,300 (3,310) (4,780) 5,150 - - n/a n/a (2,730) -
refurbishment 2023 Poland 3,510 (6,860) (8,700) 5,910 - - - - - (6,070) -
Further 2024 Romania 2,100 (2,200) (3,200) 3,500 (3,200) 3,200 - - - -
development 2023 Romania 2,100 (1,900) (2,000) 2,300 (2,000) 2,200 400 (500) - -
The quantitative sensitivity analysis was computed as €0.25 change in rental
value per month, per sqm for four industrial properties in 2023.
The quantitative sensitivity analysis was computed as €1.5 change in sales
price per sqm for industrial properties portfolio in 2023.
The vacancy in perpetuity sensitivity analysis is not followed for the Polish
properties portfolio as this factor is considered in the valuation methodology
as part of yields and not a variable in isolation.
4.1 Investment properties owned by Joint Ventures
Completed investment property Investment property under development Land for further development TOTAL
Note €'000 €'000 €'000 €'000
1 January 2023 73,700 8,400 36,900 119,000
Subsequent expenditure 7,037 - 382 7,419
Net lease incentive movement 251 - - 251
Transfer to completed investment property 8,400 (8,400) - -
Fair value gain/(loss) on investment property 2,412 - (35) 2,377
31 December 2023 91,800 - 37,247 129,047
Subsequent expenditure 1,897 - 10 1,907
Net lease incentive movement 446 - 1 447
Transfer to completed investment property - - - -
Fair value gain/(loss) on investment property 22.3 (4,595) - (9,966) (14,561)
30 June 2024 22.2 89,548 - 27,292 116,840
Sensitivity analysis on significant estimates used in the valuation of
investment properties owned by the joint venture
As disclosed in note 22, the Group also has investments in three joint
ventures where investment properties were valued at fair value under the
similar Group accounting policies by Colliers Valuation and Advisory SRL.
The table below describes key information about the fair value measurements,
valuation technique and significant unobservable inputs (Level 3) used in
arriving at the fair value under IFRS 13.
Carrying value Range
Class of Joint Venture 30 June 2024 31 December 2023 Valuation technique Country Input 30 June 31 December 2023
property 2024
€'000 €'000
Completed 89,548 91,800 DCF Romania Rent per sqm €2.00 - €10.00 €2.00 - €10.00
Investment Discount rate 8.50% - 9.00% 4.28% - 4.52%
property Exit yield 7.00% -7.25% 7.00% - 7.25%
Land bank - for
further development 27,292 37,247 SC Romania Sales value sqm €30.00 - €70.00 €30.00 - €70.00
TOTAL 116,840 129,047
Income approach: DCF: Discounted Cash Flows, Market approach: SC: Sales
Comparison\
A quantitative sensitivity analysis (for properties owned by joint ventures),
in isolation, of the most sensitive inputs used in the independent valuations
performed, as of the statement of financial position date, are set out below.
Generally, a change in the assumption made for the estimated rental value is
accompanied by a directionally similar change in the rent growth per annum and
the discount rate (and exit yield), and an opposite change in the long-term
vacancy rate.
€0.25 change in rental value per month, per sqm 25 bps change in market yield 5% change in capex €1.5 change in sales prices per sqm 2.5% change in vacancy in perpetuity
Joint ventures Increase Decrease Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Investment Property Year Country €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
- Completed 2024 Romania 3,000 (2,900) (2,900) 3,200 - - - - (1,200) 1,100
2023 Romania 2,400 (2,400) (3,300) 3,200 (1,400) 1,000
- Further 2024 Romania - - - - - - 2,200 (2,200) - -
development 2023 Romania - - - - - - 1,400 (1,400) - -
The Group is committed to responding to the effects of climate change and its
Sustainability Policy covers the impact of the Group's operations and
processes, the long-term environmental performance of the properties owned and
developed, as well as the reduction of energy consumption and greenhouse gas
emissions. The Group, therefore, actively invests in properties which are
either certified as environmentally friendly or have the potential to be
classified as such following our own initiatives.
The Company conducted a climate change transition and physical risks and
opportunities assessment, across its value chain, in alignment with TCFD
recommendations (i.e. Task Force on Climate-Related Financial Disclosures).
Climate analysis indicates that the probability of floods to occur is very
likely across RCPs climate scenarios (2.6, 4.5 and 8.5 W/m 2) for several
locations in Poland and likely in Romania, where construction operations are
in progress. As Globalworth considers that extreme precipitation and flood
events will increase and that direct operations might be compromised, it is
investing in solutions that will provide business continuity. Already, we are
implementing procedures and flood protection has been purchased for the
majority of the properties, as we consider flooding to be one of the main
natural hazards occurring in Poland and Romania, which, in certain
circumstances, may take the form of a disaster.
Click on, or paste the following link into your web browser, to view the rest
of the announcement in full text:
http://www.rns-pdf.londonstockexchange.com/rns/3290F_1-2024-9-23.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3290F_1-2024-9-23.pdf)
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