REG - Globalworth Real Est - Posting of Annual Report and Date of AGM
25/03/2022 07:16
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RNS Number : 9862F Globalworth Real Estate Inv Ltd 25 March 2022
The information communicated within this announcement is deemed to constitute
inside information for the purposes of Article 7 of Regulation (EU) No
596/201 as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement,
this information is considered to be in the public domain.
25 March 2022
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Audited Results for the year ended 31 December 2021,
Posting of Annual Report and
Notice of AGM
Globalworth, the leading office investor in Central and Eastern Europe,
announces that further to the publication on 4 March 2022 of its Condensed
Unaudited Financial Results, it is pleased to release its Annual Report and
Audited Consolidated Financial Results for the year ended 31 December 2021
("2021 Annual Report").
Operational Highlights
· Total combined portfolio value up by 3.9% to €3.2 billion.
· Focused development program in select high-quality projects.
o Romania; delivered a class "A" office comprising 29.2k sqm of GLA, with 5
logistics facilities under development which are expected to have a total GLA
of 98.9k sqm
o Poland; two mixed-use properties under refurbishment/repositioning.
· Acquired two high-quality logistics facilities in Romania with a
total area of 27.0k sqm for €17.9 million.
· Overall standing portfolio net increase of 2.4% to 1.3m sqm of GLA in
66 standing buildings.
· Leasing transactions of 285.5k sqm of commercial space at an average
WALL of 4.6 years, registering our second highest yearly volume to date.
o Best year in office leasing with 214.5k sqm of spaces taken up or extended
· Average standing occupancy of 88.5% (88.7% including tenant options),
lower by 2.3% compared to 31 December 2020.
· Total annualised contracted rent up by 0.2% to €183.7m, of which
91.4% from office and industrial properties.
· Rate of collections invoiced and due remained high at 99.2% for 2021.
· Sustainability:
o €2.7 billion in 55 green certified properties
o Several green initiatives completed or in progress to improve our
footprint.
o Issued the third sustainable development report and our inaugural Green
Bond Report.
o Maintained "low-risk" rating by Sustainalytics and improved our MSCI
rating to "A".
o Contributed €1.0 million to support over 20 initiatives in Romania and
Poland.
· The consortium of CPI Property Group S.A. and Aroundtown SA (through
Zakiono Enterprises Limited) became the controlling shareholders of
Globalworth with 60.6% of the share capital.
Financial Highlights
· Net Operating Income was lower by 8.3% compared to 2020 at €144.3
million.
· EPRA earnings decreased by 28.2% to €59.1 million (2020: €82.3
million), partially impacted by the exceptional one-off costs associated with
the cash offer for Globalworth's shares initiated in May 2021.
· Adjusted normalised EBITDA decreased by 8.1% to €130.2 million
(2020: €141.6 million), due to lower NOI, as offset by the positive impact
of the €1.6 million (10.2% lower compared to 2020) savings in recurring
administrative expenses(1).
· Net profit significantly improved to €47.5 million (2020: net loss
of €46.8 million) due to marginal revaluation losses of €5.7 million in
2021 compared to the €116.2 million revaluation losses in 2020.
· Total Accounting Return of +3.0% compared to -1.4% for FY2020.
· EPRA Net Reinstatement Value (NRV) of €1.9 billion, or €8.66 per
share, a marginal decrease from €8.68 at 31 December 2020 mainly due to
dividends paid, lower operating performance and non-recurring costs,
offsetting the positive impact of lower revaluation losses (by €110.4
million compared to 2020).
· Dividends declared and paid for FY2021 of 28 cents per share,
representing an amount of at least 90% of the EPRA Earnings for the first and
second six months of the year, as stipulated by our articles of incorporation.
· High liquidity of €418.7 million (vs €527.8 million at 2020
year-end) plus €215 million in undrawn RCF facility, and an LTV at 40.1% at
31 December 2021 (vs 37.8% at 2020 year-end).
· Maintained investment grade rating by all three major rating
agencies, improving our outlook to "Stable" (from "Negative) by Moody's.
(1) Recurring administrative expenses for 2021 exclude €11.5 million
exceptional and non-recurring costs incurred in connection with the cash offer
for Globalworth shares, made by CPI Property Group S.A. and Aroundtown SA
(through Zakiono Enterprises Limited) in May 2021 (non-recurring expenses for
2020: €2.3 million).
Availability of 2021 Annual Report and Notice of AGM
The 2021 Annual Report is available on Globalworth's website,
www.globalworth.com (http://www.globalworth.com) under the Financial Reports
and Presentation section.
The Annual General Meeting of the Company ("AGM") will be held on 22 June 2022
at 10.00am British Summer Time at Anson Court, La Route des Camps, St Martin,
Guernsey GY4 6AD. The notice of this year's AGM will be included in a separate
circular to shareholders, will be issued to shareholders and notified via RNS
at least 10 clear days before the meeting, and will also in due course be
available on the Company's website in accordance with AIM Rule 20.
For further information visit www.globalworth.com or contact:
Enquiries
Stamatis Sapkas
Tel:
+40 732 800 000
Deputy Chief Investment Officer
Panmure Gordon (Nominated Adviser and Broker)
Tel: +44 20 7886 2500
Alina Vaskina
About Globalworth / Note to Editors:
Globalworth is a listed real estate company active in Central and Eastern
Europe, quoted on the AIM-segment of the London Stock Exchange. It has become
the pre-eminent office investor in the CEE real estate market through its
market-leading positions both in Poland and Romania. Globalworth acquires,
develops and directly manages high-quality office and industrial real estate
assets in prime locations, generating rental income from high quality tenants
from around the globe. Managed by over 240 professionals across Cyprus,
Guernsey, Poland and Romania, a combined value of its portfolio is €3.2
billion, as at 31 December 2021. Approximately 95.9% of the portfolio is in
income-producing assets, predominately in the office sector, and leased to a
diversified array of over 660 national and multinational corporates. In Poland
Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice,
while in Romania its assets span Bucharest, Timisoara, Constanta, Pitesti,
Arad and Oradea.
For more information, please visit www.globalworth.com
(http://www.globalworth.com) and follow us on Facebook, Instagram and
LinkedIn.
IMPORTANT NOTICE: This announcement has been prepared for the purposes of
complying with the applicable laws and regulations of the United Kingdom and
the information disclosed may not be the same as that which would have been
disclosed if this announcement had been prepared in accordance with the laws
and regulations of any jurisdiction outside of the United Kingdom. This
announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"targets", "believes", "estimates", "plans", "projects", "anticipates",
"expects", "intends", "may", "will" or "should" or, in each case, their
negative or other variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions. These forward
looking statements include all matters that are not historical facts and
involve predictions. Forward-looking statements may and often do differ
materially from actual results. Any forward-looking statements reflect the
Company's current view with respect to future events and are subject to risks
relating to future events and other risks, uncertainties and assumptions
relating to the Company's business, results of operations, financial position,
liquidity, prospects, growth or strategies and the industry in which it
operates. Forward-looking statements speak only as of the date they are made
and cannot be relied upon as a guide to future performance. Save as required
by law or regulation, the Company disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements in
this announcement that may occur due to any change in its expectations or to
reflect events or circumstances after the date of this announcement.
CHIEF EXECUTIVE'S REVIEW
NAVIGATING THROUGH CHALLENGING MARKETS WITH THE RIGHT STRATEGY IN PLACE
"2021 left us with mixed emotions, as our operational successes and business
growth in another year of very challenging market conditions due to the
COVID-19 pandemic have only partially been reflected in our annual results.
We firmly believe, however, that we are implementing the right strategy to
address the present and future challenges, and reinforce our position as THE
landlord of choice in our home markets of Poland and Romania."
Overview
We believe that we have used this year wisely, taking steps towards returning
to normal life, focusing on our key strategic priorities to ensure that we are
able to reinforce our position as THE landlord of choice in our home markets
in Poland and Romania.
This included investments in existing and new high-quality properties,
managing our portfolio to preserve and improve our operational performance,
and maintaining an efficient and flexible capital structure, resulting in a
resilient overall performance. All this while at the same time providing a
safe and healthy environment for our people, tenants and communities to work,
visit and be part of.
Looking back at the very challenging market due to the ongoing COVID-19
pandemic, I am very pleased to have succeeded in the majority of the goals we
set out to do. I also believe that we have taken the proper steps to achieve
those that may not have been fully achieved to date, in the future.
At this point, I would like to thank every member of our team of dedicated
professionals, whose positive attitude, resilience, commitment, and
efficiency, and who have been responding remarkably since the beginning of the
pandemic, working under challenging circumstances.
Support from our shareholders, partners and communities has been very
encouraging and greatly appreciated.
Our Market
Overall, the uncertainty caused by the COVID-19 global pandemic outbreak has
had an impact on demand for office space in the second half of 2020, which has
persisted in 2021 in both Poland and Romania.
Market conditions are expected to remain uncertain in 2022 as several
companies keep reassessing their occupational plans (extensions, expansions,
relocations, release of spaces etc.), both due to the lasting effects of the
pandemic as well as due to the recent outbreak of the war in Ukraine.
Having said the above, although uncertainties remain ahead in the near term,
we continue to be optimistic about the medium and long-term prospects of our
home office markets in Poland and Romania. We expect that multinationals
sooner rather than later will start implementing the expansion plans that were
halted as a result of the pandemic. In addition, we have seen a significant
reduction in future planned office development projects, which should
translate into a rebalancing of demand / supply dynamics in favour of office
investors in the next 12-18 months.
Investment in Our Portfolio
We are present in seven of the eight largest office markets in our countries
of focus and in some of Romania's most attractive logistic/ light-industrial
hubs. Our growing portfolio at year-end 2021 accounted for 45 investments with
a combined value at €3.2 billion, recording a 3.9% annual increase by value.
Our combined standing portfolio increased by 31.0k sqm to 1.3 million sqm of
high-quality GLA in 39 investments.
In 2021 we successfully delivered Globalworth Square, our new class "A" office
in Bucharest. We also completed our first purchases of standing properties
since our decision in 2020 to suspend new acquisitions due to COVID-19.
These two high-quality logistic/light-industrial facilities, located in the
western part of Romania, offer a total area of 27.0k sqm, were acquired for
€17.9 million and are 100% let to two multinational tenants on 15-year lease
agreements.
We prioritised the development of other new high-quality
logistics/light-industrial facilities in Romania (98.9k sqm) and the
refurbishment/ repositioning of two mixed-use properties in Poland aiming at
increasing their class "A" office space and improving their retail/ commercial
offering, in response to current market conditions.
In our effort to improve the quality of our services to our partners, we
continued to internalise the property management of our portfolio, kept (re)
investing in our properties, maintained and, where required, improved the
quality of our buildings. Overall, we internally manage 962.6k sqm of
high-quality office and mixed-use space in Poland and Romania with an
appraised value of €2.5 billion, accounting for 96.8% of office and
mixed-use standing properties.
Our Leasing
In addressing the current challenging market conditions, we firmly believe in
the need to provide safe and healthy environments for people to work in,
tailored leasing solutions to tenants, allowing them more occupational
flexibility, providing modern properties which are easily accessed and
centrally located within their respective sub-markets.
2021 was our best year in office leasing with 214.5k sqm of spaces taken up or
extended, contributing to our second-best year overall with 285.5k sqm of
commercial spaces agreed at an average WALL of 4.6 years. We expect all these
leases, signed with 232 tenants, to generate rental income of €187.5 million
in the future of which 81.2% will be from office leases.
Most of our leasing success involved contract renewals, accounting for 54%
(from 74% in 2020) of our total leasing activity. However, the increased level
of new leases signed, 46% in 2021 from 26% in 2020, is an encouraging sign for
our ability to attract new tenants to our standing properties and
developments. This increased level of new take-up was due to several of our
development projects being delivered over the past 18 months or are under
construction, and they are in their respective lease-up phases.
Headline rents were marginally affected in 2021, as the impact of COVID-19 was
offset by lower new supply in the market and inflation pressures. However, the
increased competition between landlords and developers to secure high-quality
tenants is evident in the higher costs involved in renting spaces which we
occurred in this period, increasing from 21% in 2020 to 29% in 2021.
City Offices
The benefits of being able to sign lease agreements with such high-quality
national and multinational tenants, which has been our longstanding strategy,
and establishing long-term partnerships with them, thus ensuring sustainable
cash-flow generation, could not be more evident than during a period of the
pandemic, where we have been able to maintain a high rate of collection with
over 99.2% of the rents invoiced being received in line with their regular
cycle. Also the level of claims received by tenants was limited to 1.6% (vs
6.1% in 2020) of our annualised contracted rents.
Our Occupancy
The average occupancy of our combined standing commercial portfolio was as of
31 December 2021 was 88.5% (88.7% including tenant options), 2.3% lower over
the past 12 months.
It is important to emphasise that the like-for-like occupancy rate in 60 of
our 61 standing properties remained effectively unchanged at 90.8% at year-end
2021 (91.0% at 31 December 2020), increasing to 91.0% when including the two
fully let industrial facilities acquired during the year.
However, two sizable offices with an average occupancy of 41.8% negatively
impacted our overall standing occupancy. The two offices were Globalworth
Square in Bucharest, delivered in June this year and is in its lease-up phase
and Warta Tower (22.7% occupied) in Warsaw where its principal tenant
relocated in December and we are assessing alternative asset management
initiatives.
Our Financial Results
Our operational successes and business growth have only partially been
reflected in our annual results.
Net Operating Income for the 12 months of 2021 was lower by 8.3% to €144.3
million compared to 2020.
Our initiatives to improve operational efficiency were somewhat offset by the
one-off costs associated with the cash offer by the consortium of CPI Property
Group S.A. and Aroundtown SA to acquire the entire issued and to be issued
share capital of Globalworth in May 2021, thus resulting in EPRA earnings
decreasing by 28.2% to €59.1 million, as compared to the same period in
2020.
Adjusted normalised EBITDA decreased by 8.1% to €130.2 million, due to lower
NOI, offsetting the positive impact from the €1.6 million savings in
recurring administrative expenses.
Finally, our Net profit more than tripled to €47.5 million due to marginal
revaluation losses of €5.7 million in 2021 compared to the €116.2 million
revaluation losses in 2020.
During the year, we paid the second interim dividend of €0.15 per share in
respect to the 2020 financial year and €0.15 per share in respect to the
first interim dividend of 2021. In addition, on 10 March 2022, we announced
the second interim dividend for 2021 of €0.13 per share, resulting in a
total dividend for the 2021 financial year of €0.28 per share. Both 2021
dividends represented at least 90% of the EPRA Earnings for the first and
second six months of the year, as stipulated by our articles of incorporation.
Liquidity has always been a key area of focus and, especially since the
COVID-19 pandemic outbreak, we have taken several steps to ensure that we have
sufficient cash in this period while investing in our portfolio. At 31
December 2021 our liquidity included €418.7 million in cash and cash
equivalents (vs €527.8 million at 2020 year-end) plus €215 million in an
undrawn RCF facility, and an LTV at 40.1% (vs 37.8% at 2020 year-end).
In addition we maintained our "BBB -" rating and "Stable" outlook from S&P
and Fitch, while Moody's re-affirmed our "Baa3" rating and improved our
outlook to "Stable" from "Negative" in November.
Our Sustainable Development
Our approach to sustainable development centres around "People, Places and
Technology". We are committed to delivering environmentally friendly and safe
buildings that meet the needs of our occupiers and make a positive
contribution to the communities we are an integral part of.
In 2021, together with Globalworth Foundation, we supported over 20
initiatives with over €1.0 million in Romania and Poland.
Furthermore, consistent with our commitment to energy-efficient properties, we
certified or recertified 38 properties with BREEAM Very Good or higher
certifications. At the end of 2021, we owned 55 green-certified properties
valued at €2.7 billion. We are particularly delighted that at the beginning
of 2022 our Globalworth Square received BREEAM Outstanding accreditation, with
99% scoring, placing our class "A" office in the 3rd place worldwide.
In addition, in December, we received WELL Health-Safety Ratings for 15 (of
our 16) office buildings in Romania, further demonstrating that our properties
provide safe and healthy places for corporates to operate and for people to
visit and work in. We are currently performing the same process for our
properties in Poland and Globalworth Square in Romania.
Also, we secured that 100% of the energy used in our Polish properties and our
Romanian office portfolio to be generated from renewable sources. This
initiative is part of our broader preparatory actions for nZEB, involving
other steps, including introducing intelligent metering and implementing FORGE
for monitoring.
Finally, we are firm believers that we can support and properly manage our ESG
performance through robust performance monitoring and reporting. This year, I
am pleased that we have improved our reporting by publishing our third annual
sustainability report (for the FY2020), our inaugural Green Bond allocation
report and the Globalworth Foundation Annual report.
Our Governance
Our Board of Directors was further reshaped in 2021 because of the shareholder
change of control. As a result, Mr G. Miller, Mr J. Whittle and Ms A. Petreanu
stepped down from their positions, with Mr A. Tautscher, Mr P. Olendski, Mr F.
Stelian and Mr D. Malkin being appointed new members on the Board.
I would like to personally thank parting members for their significant
contributions to the Board and successful tenure to the new members. I look
forward to working closely with them and the rest of the Board in steering
Globalworth in the future.
In January 2022, it was announced that the CFO of Globalworth, Mr A.
Papadopoulos, made a decision to step down from his role at the end of April
2022, which he had held since 2014. I have worked closely with Andreas over
the past eight years, and we are very sorry to see him leaving the team. We
are very thankful for and appreciative of his invaluable contribution and
unwavering commitment over the past years and wish him all the very best for
the future.
Our Shareholders
As mentioned above, CPI Property Group S.A. and Aroundtown SA formed a
consortium and, via Zakiono, made a cash offer for the entire issued and to be
issued share capital in the Company at €7.00/share. The offer was initiated
in May 2021 and successfully completed in July 2021. The consortium now holds
60.6% of the share capital via Zakiono, thus being the largest and controlling
shareholder of Globalworth.
The fact that Globalworth is now controlled by two very sizeable, financially
strong, and reputable European real estate institutional investors is a vote
of confidence by them in the quality of the team, the Company and its
portfolio. We are confident that with their support and closer cooperation,
Globalworth will be even more successful in the future.
Outlook
For 2022, our primary focus will remain the active management of our portfolio
of high-quality properties, as we continue operate in an uncertain market
underpinned by the lasting effects of the COVID-19 pandemic and of the war
between Russia and Ukraine which commenced at the end of February. We don't
have direct exposures to related parties and/ or key customers or suppliers
from those countries, however at this point it is too early to assess the
impact that this war will have in the overall economy and our markets of
interest.
At the same time, investing in our prime developments will remain a priority,
and we are also ready to act quickly if new attractive opportunities become
available.
Although the office of the future may need to be adjusted to potentially offer
greater flexibility or alternative space planning arrangements, I firmly
believe that its importance will not diminish. Many companies are also
publicly confirming the view that the office environment increases
productivity, promotes creativity, innovation, consistency, and fosters
relationships and corporate culture, which are essential for their businesses'
long-term sustainability and growth.
Hoping for a peaceful resolution to the Ukraine war the soonest possible, we
are very well-placed to continue to address ongoing challenges successfully,
and I firmly believe that we can achieve new levels of success in the future.
Hope for peace!
Dimitris Raptis
24 March 2022
STANDING PORTFOLIO REVIEW
OPERATING BEST-IN-CLASS REAL ESTATE SPACE
We own and manage high-quality standing properties in 12 major real estate
sub-markets in Poland and Romania and we offer to our investors an efficient
gateway to the two largest markets in Central and Eastern Europe.
In 2021, we added two high-quality logistic/light-industrial facilities in
regional Romania and a new class "A" office in Bucharest to our standing
portfolio, with Supersam our mixed-use property in Katowice (Poland) being
reclassified as it is going through partial refurbishment/repositioning.
Overall, our combined portfolio of high-quality standing properties at the end
of 2021, comprised 39 standing investments (37 at 31 December 2020) with 66
buildings (64 at 31 December 2020).
We own 30 class "A" office investments (with 50 properties in total) and a
mixed-use investment (with five properties in total) in central locations in
Bucharest (Romania), Warsaw (Poland) and five of the largest office
markets/cities of Poland (Krakow, Wroclaw, Katowice, Gdansk and Lodz).
In addition, we fully own in Romania two logistic/light-industrial parks with
five facilities in Timisoara and three modern warehouses in Pitesti, Arad and
Oradea, and have a 50% ownership through Joint Venture in two other industrial
parks (with two standing facilities) in Bucharest and Constanta. We also own
part of a residential complex in Bucharest.
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021
Number of Investments 37 37 39
Number of Assets 61 64 66
GLA (k sqm) 1,213.7 1,271.3 1,302.3
GAV (€ m) 2,844.7 2,805.5 2,866.3
Contracted Rent (€ m) 184.4 178.7 175.4
Of which Commercial Properties 31 Dec. 2019 31 Dec. 2020 31 Dec. 2021
Number of Investments 36 36 38
Number of Assets 60 63 65
GLA (k sqm) 1,180.1 1,238.9 1,272.0
GAV (€ m) 2,783.1 2,745.9 2,810.3
Occupancy (%) 94.7% (95.0%*) 90.9% (91.7%*) 88.5% (88.7%*)
Contracted Rent (€ m) 183.3 177.7 174.5
Potential rent at 100% occupancy (€ m) 195.9 199.2 201.2
WALL (years) 4.5 4.5 4.7
(*) Including tenant options.
The total gross leasable area of our combined standing commercial portfolio
increased by 33.0k sqm or 2.7% in 2021 to reach 1,272.0k sqm, with the overall
combined standing portfolio GLA increasing 2.4% to 1,302.3k sqm.
This net increase was mainly attributed to the addition of three new
properties in our portfolio in Romania with a total of 56.2k sqm of GLA, which
was partially offset by the reclassification of the Supersam mixed-use
property to development, the remeasurement of certain spaces in our
properties, and the sale of 19 units in our Upground residential complex.
Globalworth Combined Standing Portfolio: 2021 GLA Evolution
Total Standing YE 20220 1,271.3k sqm
of which Standing Commercial YE 2020 1,238.9k sqm
GW Square/class "A" office in Bucharest (RO) development completed +29.2k sqm
IPW Arad/logistics facility in Arad (RO) standing facility acquired +20.1k sqm
IPW Oradea/logistics facility in Oradea (RO) standing facility acquired +6.9k sqm
Supersam/mixed-use property in Katowice (PL) reclassified to development (24.3)k sqm
Net remeasurement adjustments & other (RO & PL) +1.1k sqm
Standing Commercial YE 2021 1,272.0k sqm
Upground residential in Bucharest (RO)(*) +30.3k sqm
Total Standing YE 2021 1,302.3k sqm
The appraised value of our combined standing portfolio as at 31 Dec 2021 was
€2.9 billion, with the overall increase mainly attributed to the addition of
new properties, through acquisition and completion. Value of like-for-like
properties remained effectively unchanged, 0.6% higher at year-end 2021
compared to same period in 2020, while the reclassification of Supersam in
Katowice to developments and sales of units in the Upground complex decreased
our standing portfolio value by €53.0 million (additional information can be
found in the "Asset Management Review").
Globalworth Combined Standing Portfolio: 2021 Evolution
GAV - 31 December 2020 €2,805.5m
Like for Like Change(*) +€17.7m
Acquisitions of Properties +€21.8m
Delivery of Properties +€74.4m
Reclassification of Properties €(48.4)m
Sales (& Other Adjustments)(**) €(4.6)m
GAV - 31 December 2021 €2,866.3m
(*) Like-for-Like change represents the changes in GAV of standing
properties owned by the Group at 31 December 2020 and 31 December 2021.
(**) Includes GAV adjustments (redevelopment capex, reclassification).
Standing Properties Operation, Renovation and Upgrade Programme
Offering best-in-class real estate space to our business partners is a key
component of our strategy at Globalworth.
We believe that through a "hands-on" approach with continuous active
management and investment in our portfolio we can preserve and enhance the
value of our properties, generate long-term income, as well as offering
best-in-class real estate space to our business partners.
Over the past few years, real estate has been gradually moving away from
"static" bricks and mortar buildings to more vibrant environments where people
and businesses can flourish, and as such the ability to quickly adapt to
trends and customise spaces is becoming an increasingly important factor for
success, which has been accelerated by COVID-19 pandemic and the shifting
format towards a more flexible/hybrid-ecosystem with less desk space and more
collaborative areas.
In order to be able to provide spaces for our current and future business
partners requirements, we continue to internalise the asset management of our
portfolio, keep (re)investing in our properties, maintain and, where required,
improve the quality of our buildings and of our services.
We are pleased that all our properties in Poland are now internally managed by
the Group, with the latest addition being the Green Horizon class "A" office
in Lodz, and in Romania, almost all our offices (with the exception of one)
are internally managed. Overall, we internally manage 962.6k sqm of
high-quality office and mixed-use space in Poland and Romania with an
appraised value of €2.5 billion. Of our total standing commercial portfolio,
our internally managed properties account for 90.6% by value (96.8% of office
and mixed-use standing properties) as at 31 December 2021.
Our Renovation and Upgrade Programme was significantly scaled back in 2020 due
to COVID-19, but in 2021 gradually returned to a more normalised state and is
expected to further intensify in the short-medium term as we aim to maintain
and further improve the quality of our properties.
Overall, in 2021, €24.0 million were invested in our standing portfolio and
the two mixed-use properties which are under refurbishment/ repositioning. As
a result of our ongoing in-house initiatives and properties additions, 47 of
our standing commercial properties, accounting for 71.8% by GLA and 74.3% by
commercial portfolio value, were delivered or significantly refurbished in or
after 2014.
In 2021 we commenced the refurbishment/repositioning project of two of our
mixed-use properties in Poland.
- Renoma (Wroclaw): works in this landmark property involve
the conversion of certain retail/commercial spaces to class "A" office, as
well as the reallocation of certain commercial uses within the property. Works
are in progress and expected to be completed by the end of H1-2023.
- Supersam (Katowice): works will be focusing on the
redevelopment of the entire first level from commercial/retail space to class
"A" office and reconfiguring part of the first underground level to
high-quality retail & commercial spaces (food court and entertainment).
Works are estimated to cost €5.6 million and are expected to be completed in
H2-2022.
Finally, we are pleased that tenant fitout works have not been affected during
this period, as well that both properties have maintained their green
certification status.
Properties Under Refurbishment / Repositioning
Renoma Supersam
Location Wroclaw Katowice
Status Refurbishment / Repositioning Refurbishment / Repositioning
Expected Delivery H1-2023 H2-2022
GLA - on Completion (k sqm) 48.8 26.2
CAPEX to 31 Dec 21 (€ m) 6.8 0.6
GAV (€ m) 109.3 46.7
Estimated CAPEX to Go (€ m)* 17.8 5.0
ERV (€ m) 9.4 4.2
Estimated Yield on Completion of Project** 9.1% 10.6%
* Estimated CAPEX to Go partially excludes tenant
contributions which are subject to tenant negotiation and may impact the final
yield on Completion of the Project.
** Estimated Rental Value increase versus current Contracted
rent + ERV on vacant spaces divided by total Development Capex.
DEVELOPMENTS REVIEW
FOCUSED ON DEVELOPMENT AND REPOSITIONING OF HIGH-QUALITY PROPERTIES WHILE
ADAPTING TO MARKET CONDITIONS
Developing high-quality properties in which businesses can grow has been a key
feature in the evolution of Globalworth. Since our inception, we have
delivered 386.0k sqm of high-quality office and logistics / light-industrial
spaces in Romania (95%) and Poland. It is our firm belief that offering such
spaces allows us to meet current and future tenant needs and achieve higher
risk-adjusted returns on our capital deployed.
Although the COVID-19 pandemic has made us reprioritise our pipeline focusing
on properties with lower risk-adjusted profile, such as projects with
significant pre-lets or high tenant interest which are developed in phases, or
at advanced levels of construction, our development programme has remained
very active with 9 properties offering 191.2k sqm developed (completed or in
progress) in the period.
The depth of our existing income-producing properties and strong balance sheet
allows us to simultaneously engage on several different projects. It gives us
optionality over which schemes to progress and their timing.
In 2021 we delivered a class "A" office with 29.2k sqm in Bucharest,
increasing our total high-quality GLA developed by the Group to 386.0k sqm
since 2013. In addition, we made progress in several other industrial
projects, which are at various stages of development across Romania.
Overall, during the year, we invested €46.4 million in our development
projects and have €17.3 million for the completion of the properties under
construction at the end of 2021.
CASE STUDY - GLOBALWORTH SQUARE
Class "A" Office in the New CBD of Bucharest
In June 2021, we delivered the Globalworth Square development in the New CBD
of Bucharest. This class "A" office features several new technologies that
target lowering energy/occupational costs and improving efficiencies in the
property.
It is located between our own Globalworth Plaza and Green Court B class "A"
offices, extending over 15 floors above ground and three underground levels,
offering 29.2k sqm of high-quality GLA and 451 parking spaces.
Green Certification: Globalworth Square, at year-end, was under the green
certification process, which it successfully received in Q1-2022, becoming our
first BREEAM Outstanding green property in Romania. With 99% scoring, the
building was ranked in the 3rd place worldwide.
Tenants: As of 31 December 2021, the property was 63.8% leased to seven
tenants, including Wipro, a leading multinational company delivering
innovation-led strategy, technology and business consulting services.
Furthermore, to allow for the highest level of "customisation" of the
available spaces for future tenants in the property, the available spaces have
remained in a core and shell design.
Property Overview
GLOBALWORTH SQUARE
Location: Bucharest New CBD
Type: Class "A" office
GLA: 29.2 k sqm
Parking Units: 451
Layout: 3UG+GF+14+TF
Typical Floor Plate: 2.1k
Access: Metro, tram and bus
Green Accreditation: BREEAM Outstanding
(achieved in January 2022)
Key Investment Highlights
Ownership 100%
Occupancy: 63.8%
Passing Rent: €4.4m
Potential Rent at 100% Occupancy €5.6m
Est. Yield on Development Cost 9.8%
DEVELOPMENTS UNDER CONSTRUCTION AND FUTURE DEVELOPMENTS
Review of Current and Future Developments
In 2021, in addition to Globalworth Square, we started the development of new
logistic / light-industrial facilities in 4 locations in Romania.
At the end of the year, we had five such high-quality facilities under
construction, all representing subsequent phases of development in existing
projects. These facilities we own directly or through JV partnerships, and
together, on completion, are expected to further increase our footprint by
98.9k sqm of high-quality GLA and provide an average yield on development of
8.7%.
In addition, we hold interests on other land plots in prime locations in
Bucharest, regional cities in Romania and Poland, covering a total land
surface of 1.2 million sqm (comprising 2.7% of the Group's combined GAV), for
future developments of office, industrial or mixed-use properties. When fully
developed, these land plots have the potential to add in total a further
776.8k sqm of high-quality GLA to our standing portfolio footprint.
These projects, which are classified for "Future Development", continue to be
reviewed by the Group, albeit periodically, with the pace at which they will
be developed being subject to tenant demand and general market conditions.
Right of First Offer
Globalworth has invested in Warsaw's two-phase My Place (formerly Beethovena)
project.
The Group continues to own a 25% economic stake in the second phase of the
project, with the right to acquire the remaining interests once certain
conditions have been satisfied.
My Place II (formerly: Beethovena II) is the second phase of Class "A" office
project in the South of Warsaw comprising two four-floor offices, offering
17.2k sqm of GLA. The property was delivered in Q4-2020 and is 60% leased to
tenants such as Ars Thanea and Networks.
DEVELOPMENTS - UNDER CONSTRUCTION
Timisoara Chitila Pitesti Constanta
Industrial Park II Logistics Hub Industrial Park Business Park
(Phase B) (Phases B and C)* Phase B (Phase B)*
Location Timisoara Bucharest Pitesti Constanta
Status Under construction Under construction Under construction Under construction
Expected Delivery 2022 2022 2022 2022
GLA (k sqm) 19.0 54.1 6.7 19.0
CAPEX to 31 Dec 21 (€ m) 6.8 18.9 5.1 6.2
GAV (€ m) 7.7 17.2 5.7 7.0
Estimated CAPEX to Go (€ m)** 1.5 11.7 0.9 3.2
ERV (€ m) 0.8 2.5 0.6 0.8
Estimated Yield on Development Cost 9.7% 8.2% 9.5% 9.0%
FUTURE DEVELOPMENTS
Constanta Timisoara Industrial Luterana Green
Business Park Park I & II Court D
(Phased)* (Phased)
Podium Globalworth
Park III West
Location Krakow Bucharest Constanta Timisoara Bucharest Bucharest
Status Constr. Postponed Constr. Postponed Planned Planned Planned Planned
GLA (k sqm) 17.7 33.4 526.2 156.8 26.4 16.2
CAPEX to 31 Dec 21 (€ m) 8.5 5.2 11.5 6.4 7.4 2.5
GAV (€ m) 9.6 7.9 35.6 10.4 14.3 6.3
Estimated CAPEX to Go (€ m)** 29.7 38.5 243.6 63.5 39.7 23.9
ERV (€ m) 3.1 5.1 27.8 6.5 5.8 3.0
Estimated Yield on Development Cost 8.1% 11.5% 10.9% 9.2% 12.3% 11.4%
(*) 50:50 Joint Venture; figures shown on 100% basis.
(**) Initial preliminary development budgets on future projects to be
revised prior to the permitting.
ASSET MANAGEMENT REVIEW
ACTIVELY MANAGING OUR PORTFOLIO & MINIMISING THE IMPACT OF COVID-19
Leasing Review
We are present in six of the seven largest office markets in Poland, the
largest office market and in some of the most attractive
logistic/light-industrial hubs of Romania.
Our office markets provide corporations with the necessary infrastructure for
them to operate and offer people interesting opportunities for them to grow
professionally and personally, while our logistic/light-industrial properties
benefit from locations that are easily accessible, on or next to major road
arteries, connecting our facilities to major hubs in Romania and abroad.
The COVID-19 pandemic has created uncertainty impacting the Polish and
Romanian economies, as well as the way we live and work, however, modern,
high-quality, and easily accessible office spaces continue to have a
competitive advantage in the market.
Corporates have used remote working more extensively over the past 18-24
months, however, we expect them to adopt a more balanced approach in the
future, as well as to seek to occupy spaces through a mix of fixed and
flexible and short-term leases, enabling them to operate more efficiently and
react quicker to market changes, thus increasing their potential to stay in
business and achieve sustainable growth.
As such, we firmly believe that the need for safe and healthy environments to
work in, tailored leasing solutions to tenants, allowing them more
occupational flexibility, provided in modern properties which are easily and
centrally located within their respective sub-markets, will continue to be in
demand from corporate tenants in the future.
New Leases
Our primary focus in 2021 was to maintain and gradually improve our
portfolio's occupancy. Following 2020, a record year in leasing dominated with
lease prolongations. This year was more even with lease prolongations, and new
take-up accounting for 54% (74% in 2020) and 46% (26% in 2020) of the total
area leased, respectively.
The increased level of new take-up was due to several development projects
being delivered over the past 18 months or in progress, which are in their
lease-up phase and our ongoing effort to improve the net take-up in our
portfolio.
However, the theme observed since the COVID-19 pandemic outbreak, with signing
of new leases, typically for large multinational and national corporates, is
taking longer in the current market environment of higher uncertainty, as
existing and potential tenants continue to re-assess their future occupational
plans.
Overall, in 2021, we successfully negotiated the take-up or extension of
285.5k sqm of commercial spaces in Poland (60.0% of transacted GLA) and
Romania (40.0% of transacted GLA), with an average WALL of 4.6 years. More
importantly office leases accounted for 214.6k sqm of our total leasing
activity, representing our best to date.
Leases were renewed for a total of 153.8k sqm of GLA with 121 of our tenants,
at a WALL of 3.8 years, with the most notable extensions involving Infosys
(25.5k sqm) in Green Horizon, Rockwell (12.9k sqm renewal plus 6.7k sqm
expansion) in A4 Business Park, Intel (9.8k sqm) in Tryton, Baxter (8.0k sqm)
in Nordic Park and EY (6.0k sqm) in TCI, while 78.2% of the renewals by GLA
signed were for leases expiring in 2022 or later.
We signed our new leases with 89 tenants for 105.8k sqm of GLA at a WALL of
6.0 years. The majority were in properties delivered by the Group over the
past 18 months or currently under construction, accounting for 61.8% of new
GLA signed. New leases for office and retail/commercial spaces were 55.9% of
the total spaces signed, with the remainder involving
logistic/light-industrial and storage spaces.
The largest new leases in this period were with HAVI Logistics, for a total of
20.6k sqm in two logistic/light-industrial facilities in Bucharest, Heineken
(8.6k sqm) in Podium Park I in Krakow, Caroli Foods (6.7k sqm) in Pitesti, and
Wipro (6.1k sqm plus 4.7k sqm expansion) in the newly 2021 delivered
Globalworth Square. In addition, in 2021 we signed 25.9k sqm of expansions
with 50 tenants, at an average WALL of 5.4 years.
Summary Leasing Activity for Combined Portfolio in 2021
GLA (k sqm) No. of Tenants* WALL (yrs)
New Leases (incl. expansion) 131.7 131 5.8
Renewals/Extensions 153.8 121 3.8
Total 285.5 232 4.6
* Number of individual tenants.
Occupancy
The average occupancy of our combined standing commercial portfolio as of 31
December 2021 was 88.5% (88.7% including tenant options), representing a 2.3%
decrease over the past 12 months (90.9% as of 31 December 2020 / 91.7%
including tenant options).
Our annual like-for-like occupancy rate in 60 (of our 61) standing properties,
following the reclassification of our Supersam mixed-used property in Poland
to a property under refurbishment/redevelopment, has remained effectively
constant at 90.8% at year-end 2021 (91.0% at 31 December 2020). Standing
occupancy increases to 91.0% with the two fully let industrial facilities
acquired this year.
However, two sizable offices with average occupancy of 41.8% have negatively
affected our overall standing occupancy. The Globalworth Square (occupancy
rate: 63.8%) in Bucharest, which was delivered in June this year and is in the
lease-up phase, and Warta Tower (occupancy rate: 22.7%) in Warsaw where its
principal tenant relocated from its premises in December and we are currently
contemplating alternative (sale and other) options.
We are encouraged by our annual leasing performance and resulting occupancy of
our combined standing portfolio when considering the challenging market
conditions. We remain confident that we will be able to lease the available
spaces in our portfolio in the future as business conditions return to a more
normalised state.
Across our combined portfolio, at the end of 2021, we had 1,194k sqm of
commercial GLA leased to approximately 660 tenants, at an average WALL of 4.7
years. National and multinational corporates, well-known within their
respective markets, occupy the majority of the leased spaces in our
properties.
Approximately 94.3% of the spaces leased are in standing properties. In
addition, we have 7 properties, like Renoma and Supersam in Poland, which are
undergoing a partial refurbishment/repositioning or are at the final stages of
construction like TIP II (Phase B), PIP (Phase B), Chitila Logistics Hub
(Phases B and C) and Constanta Business Park (Phase B) which are let or
pre-let. As of 31 December 2021, these properties had an average occupancy
rate of 41.5%.
Occupancy Evolution 2021 (GLA 'k sqm) - Commercial Portfolio
Poland Occupancy Romania Occupancy Group Occupancy
Rate (%) Rate (%) Rate (%)
Standing Available GLA - 31 Dec. 20 566.2 672.7 1,238.9
Acquired GLA - 27.0 27.0
New Built GLA - 29.2 29.2
Remeasurements, reclassifications* (24.1) 1.0 (23.2)
Standing Available GLA - 31 Dec. 21 542.1 729.9 1,272.0
Occupied Standing GLA - 31 Dec. 20 506.4 89.4% 619.2 92.0% 1,125.6 90.9%
Acquired/Developed Occupied GLA - 45.6 45.6
Expiries & Breaks (62.9) (45.4) (108.3)
Renewals** 118.0 27.9 145.9
New Take-up 41.4 42.7 84.1
Other Adj.*** (relocations, remeasurements, etc) (20.8) (0.0) (20.8)
Occupied Standing GLA - 31 Dec. 21 464.1 85.6% 662.1 90.7% 1,126.2 88.5%
* Includes the reclassification of Supersam mixed-use
property (Katowice) from standing to under refurbishment (24.3k sqm of GLA).
** Renewals are neutral to the occupancy calculation.
*** Includes the reclassification of occupied GLA in Supersam from
standing to under refurbishment (22.6k sqm of occupied GLA). Other lease
expirations, renewals, or new take-up in relation to Supersam are excluded
from the table.
Rental Levels
Headline market rental levels have remained relatively stable in our
portfolio, despite the uncertainty in the market and the cautious approach of
tenants, reflecting the quality of our properties, our active asset management
initiatives since the outbreak of the pandemic, and our approach to
sustainable development.
At the end of December 2021, our average headline rents in our standing
properties for office, retail/commercial and industrial spaces were
€14.0/sqm/month (€14.2 at YE-2020), €13.9/sqm/month (€14.5 at YE-2020)
and €3.8/sqm/month (€3.7 at YE-2020) respectively.
Rental levels can vary significantly between type of spaces, buildings and
submarkets. Leases signed in 2021 were at 1.6% lower rents than their
prevailing group averages.
Our overall commercial GLA take-up during the year was at an average rent of
€12.1/sqm/month (€10.9/sqm/month for FY2020). Office leases were at an
average rent of €13.9/sqm/month, industrial spaces at €3.9/sqm/month,
while retail spaces were at €12.7/sqm/month.
Contracted Rents (on annualised basis)
Total annualised contracted rent in our real estate portfolio marginally
increased by 0.2% to €183.7 million compared to year-end 2020, due to new
additions and leases signed on properties under refurbishment/ repositioning
or development.
Total annualised contracted rents in our standing commercial portfolio were
€174.5 million on 31 December 2021, lower by 1.8% compared to the same
period last year. Total rental income increases to €175.4 million when
including the income from renting 183 residential units and other auxiliary
spaces in Upground, the residential complex in Bucharest, which we partially
own.
Like-for-like annualised commercial contracted rents in our standing
commercial portfolio decreased by 3.3% to €168.5 million at the end of 2021
compared to 31 December 2020, as the increase in rents (0.5% on average) due
to indexation was outweighed primarily by the lower occupancy in Warta Tower.
Excluding Warta Tower, the adjusted like-for-like annualised commercial
contracted rents were marginally lower by 0.7% at €167.3 million.
Annualised Contracted Rent Evolution 2021 (€m)
Poland Romania Group
Rent from Standing Commercial Properties ("SCP") 31 Dec 2020 97.0 80.7 177.7
Less: Properties reclassified(*) (3.4) - (3.4)
Rent from SCP Adj. for Properties Reclassified 31 Dec 2020 93.6 80.7 174.3
Less: Space Returned (12.8) (4.4) (17.2)
Plus: Rent Indexation 0.3 0.5 0.8
Plus/Less: Lease Renewals (net impact) & Other (0.7) (0.3) (1.0)
Plus: New Take-up 7.6 4.0 11.6
Total L-f-L Rent from SCP 31 Dec 2021 87.9 80.6 168.5
Plus: Standing Commercial Properties Acquired During the Period - 1.5 1.5
Plus: Developments Completed During the Period - 4.4 4.4
Total Rent from Standing Commercial Properties 87.9 86.6 174.5
Plus: Residential Rent - 0.9 0.9
Total Rent from Standing Properties 87.9 87.5 175.4
Plus: Active and Pre-lets of Space on Projects Under Development/Refurbishment 6.8 1.5 8.3
Total Contracted Rent as at 31 Dec 2021 94.7 89.0 183.7
* Supersam mixed-use asset (Katowice) was reclassified under
redevelopment in 2021
Combined Annualised Commercial Portfolio Contracted Rent Profile as at 31
December 2021
Poland Romania Group
Contracted Rent (€ m) 94.7 88.0 182.8
Multinational 72.6% 88.6% 80.3%
National 25.8% 10.1% 18.3%
State Owned 1.6% 1.2% 1.4%
Note: Commercial Contracted Rent excludes c.€0.9 million from residential
spaces as at 31 Dec 2021
Annualised Contracted Rent by Period of Commencement Date as at 31 December
2021 (€m)
Active Leases H1-2022 H2-2022 H1-2023 H2-2023 >2024 Total
Standing Properties 169.0 6.0 0.2 0.3 - - 175.4
Developments 7.4 0.9 - - - - 8.3
Total 176.4 6.9 0.2 0.3 - - 183.7
Annualised Commercial Portfolio Lease Expiration Profile as at 31 December
2021 (€m)
Year 2022 2023 2024 2025 2026 ≥2027 Total
Total 18.8 16.1 30.3 17.4 20.7 79.3 182.8
% of total 10.3% 8.8% 16.6% 9.5% 11.3% 43.4% 100%
Our rent roll across our combined portfolio is well diversified, with the
largest tenant accounting for 5.1% of contracted rents, while the top three
tenants account for 10.7% and the top 10 account for 26.2%.
Cost of Renting Spaces
The headline (base) rent presents the reference point, typically communicated
in the real estate market when a new lease is signed. However, renting spaces
typically involves certain costs, such as rent-free periods, fitouts for the
space leased, and brokerage fees, which the landlord incurs. These incentives
can vary significantly between leases and depend on market conditions, type of
lease (new take-up or lease extension), space leased (office, other
commercial, etc.), contract duration, and other factors.
In calculating our effective rent, we account for the costs incurred over the
lease's lifetime, which we deduct from the headline (base) rent, thus allowing
us to assess the profitability of a rental agreement.
Overall, in 2021, we successfully negotiated the take-up (including
expansions) or extension of 285.5k sqm of commercial spaces in our portfolio.
The overall weighted average effective rent for these new leases was
€12.1/sqm/month, signed at an average lease term of 4.6 years. Industrial
leases completed in the period, which accounted for 16.1% of the total leasing
activity, were agreed at an average of €3.9/sqm/month, thus decreasing the
average headline and effective rent achieved.
Weighted Average Effective Rent (€/sqm/m) - 2021
Poland Romania Group
Headline Commercial Rent 13.7 9.7 12.1
Less: Rent Free Concessions (2.7) (0.9) (2.0)
Less: Tenant Fitouts (1.4) (0.7) (1.1)
Less: Broker Fees (0.4) (0.3) (0.4)
Effective Commercial Rent 9.1 7.7 8.5
WALL (in years) 4.0 5.8 4.6
Note: Certain casting differences in subtotals/totals are due to figures
presented in 1 decimal place.
The difference between headline (base) and effective rents in 2021 was on
average 29.2%, a discount higher compared to the FY2020 (average of 21.0%) due
to the continuing challenging market conditions and the type of leases signed.
In total, new leases signed in this year will generate a future rental income
of €187.5 million, with leases from office properties accounting for 81.2%
of future rental income.
Tenant Demands/Claims Review
Tenant demands/claims decreased in 2021 as the business community has been
absorbing the initial shock from the COVID-19 pandemic, and restrictions
imposed by the authorities that directly and/or indirectly impacted certain
businesses and industries have been easing in Poland and Romania since the
beginning of the year.
The majority of our portfolio comprises office premises and industrial
properties or essential retail businesses (supermarkets, pharmacies,
convenience stores etc.), none of which were impacted by measures taken by the
authorities since the beginning of the pandemic in our countries of focus. In
February 2021, restrictions on non-essential or stationary retail were
significantly eased in Poland, limited only by the number of customers in
stores. However, higher uncertainty remains in our markets of interest and
globally.
Of our €183.7 million of total contracted rent on the last day of December,
office rent accounted for 85.1% (including parking rent), with
retail/commercial, industrial and other spaces accounting for 6.0%, 6.3% and
2.5%, respectively.
Overall, for the 12 months of 2021, we have estimated the value of the tenant
demands/claims received at c.€3.0m million, reflecting 1.6% of our
contracted annual rent, with the majority of them, mainly awarded to tenants
of retail/commercial spaces in our properties which were impacted by
restrictive measures/closures in the first part of the year.
Our approach towards these tenant demands/claims was to continue considering
each case separately, rather than applying a horizontal or vertical approach,
aiming to identify the optimal solution for our tenants and Globalworth. Some
of the solutions implemented have been to award rent-free months or replace
fixed rent with turnover rent for retail tenants for certain periods of tenant
leases which in certain cases resulted in lease extensions.
We expect the level of claims to decrease in the future as an increasing
number of people return to the office.
Collections Review
The ability to collect - cash in - contracted rents is a key determinant for
the success of a real estate company.
Our rate of collections of rents invoiced and due in 2021 remained high at
99.2% (99.0% for 2020FY), due to the long-term partnerships we established
with high-quality national and multinational tenants since the inception of
the Group and continue to cultivate since which have helped us minimise the
impact on rent collections in this period of higher economic uncertainty and
ensure sustainable cash flow generation.
More specifically, considering the current market environment, rent to be
collected in 2021 was classified as:
- Rent eligible for invoicing: Includes rents invoiced to
tenants per the terms of their lease agreements. Such rents were either
collected or subject to collection; and
- Rent impacted by measures imposed by the authorities: Such
rent was to be collected based on the contractual agreements in place,
however, due to measures taken by the authorities in Poland and Romania,
tenants were excluded from paying, and as such, no invoices were issued by the
Group.
Under normal conditions, the Group during the period would have had €154.0
million of rent be invoiced and due, however, €1.2 million was not invoiced
due to measures taken by the authorities. This is a significant improvement to
2020, where c.1.8% of rent to be invoiced and due was not invoiced.
Portfolio Valuation
Our entire portfolio in Poland and Romania was revalued, by independent
appraisers, three times in 2021.
- The first valuation was for the benefit of the independent
committee of the Group responsible for assessing the cash offer for the entire
issued and to be issued share capital of Globalworth, with effective date the
31 March 2021; and
- The second and third valuations were performed, as of 30
June and 31 December 2021, per our policy of revaluing our properties twice a
year.
The valuations were performed by CBRE and Knight Frank for our properties in
Poland, with Colliers and Cushman and Wakefield valuing our properties in
Romania (more information is available under note 4 of the unaudited interim
condensed consolidated financial statements as of and for the period ended 31
December 2021).
Our portfolio since the inception of the Group has been growing due to new
additions through acquisition or development of high-quality properties in
Poland and Romania, our asset management initiatives, and the performance of
the real estate markets in which we operate, resulting in healthy investor
interest and contracting yields, as well as healthy tenant demand leading to
stable or growing rental levels and lowering tenant incentives.
Overall, our total combined portfolio value increased from €0.1 billion in
2013 to €3.0 billion in 2019, remaining effectively unchanged in 2020 as the
impact of the COVID-19 pandemic was reflected at our year-end independent
valuation appraisal of our properties, and marginally increasing (+3.9%) at
the end December 2021 to €3.2 billion.
Portfolio growth in 2021, is mainly attributed to the acquisition of two
high-quality logistic/light-industrial properties in Romania and the net
positive impact from our developments (delivered, in progress or under
refurbishment). The like-for-like appraised value of our standing commercial
properties was €2.7 billion at the end of the period, 0.7% higher than 31
December 2020.
In valuing our properties, the key market indicators used by the four
independent appraisers, although vary, considering factors such as the
commercial profile of the property, its location and the country in which it
is situated, have remained consistent with those of year-end 2020, with ERVs,
yields and/or discount rates remaining stable with only a few exceptions,
where positive adjustments were made to reflect improvements in operating
performance.
It has to be noted that since 30 June 2020, independent valuations, yields
and/or discount rates used by appraisers have remained stable or improved,
which for the majority of our office and mixed-use properties, were 10 - 50bps
wider compared to December 2019.
Combined Portfolio Value Evolution 31 December 2021 (€m)
Poland Romania Group
Total Portfolio Value at 31 Dec 2020 1,610.1 1,422.8 3,032.9
Less: Properties Held in Joint Venture (*) - (51.2) (51.2)
Total Investment Properties at 31 Dec 2020 1,610.1 1,371.6 2,981.7
Plus: Transactions - 14.6 14.6
o/w New Acquisitions - 17.9 17.9
o/w Disposals - (3.3) (3.3)
Plus: Capital Expenditure 7.4 24.6 32.0
o/w Developments 7.4 24.6 32.0
o/w Standing Properties - - -
o/w Future Developments - - -
Plus: Net Revaluations Adjustments (4.7) 42.0 37.3
o/w Developments (2.9) 18.4 15.5
o/w Standing Properties (1.8) 18.4 16.6
o/w Lands, Future Developments & Acquisitions - 5.3 5.3
Total Investment Properties at 31 Dec 2021 1,612.8 1,452.8 3,065.6
Plus: Properties Held in Joint Venture (*) - 86.7 86.7
o/w Capital Expenditure & Acquisitions - 21.9 21.9
o/w Net Revaluation Adjustments - 13.6 13.6
Total Portfolio Value at 31 Dec 2021 1,612.8 1,539.5 3,152.3
(*) Properties held through joint ventures are shown at 100%,
Globalworth owns 50% stake in the respective joint ventures
FINANCIAL REVIEW
MODEST DECLINE IN RENTAL INCOME IN 2021 DESPITE CONTINUED IMPACT FROM COVID-19
AND STABILISATION IN PROPERTY PORTFOLIO VALUATION
OVERVIEW
2021 2020
NOI €144.3m €157.3m
IFRS Earnings per share(2) 21 cents -21 cents
EPRA Earnings(1) €59.1 m €82.3m
OMV(1) €3.2 bn €3.0 bn
EPRA NRV per share(1,3) € 8.66 € 8.68
EPRA Earnings per share(1,2) 27 cents 37 cents
Adjusted normalised EBITDA(1,4) €130.2 m €141.6m
Total Accounting Return(1) 3.0% -1.4%
Dividend per share 28 cents 34 cents
LTV(1,5) 40.1% 37.8%
1 See Glossary (pages 182-184) for definitions.
2 See note 12 of the consolidated financial statements for
calculation.
3 See note 23 of the consolidated financial statements for
calculation.
4 See page 48 for further details.
5 See note 25 of the consolidated financial statements for
calculation.
NOI and Adjusted normalised EBITDA impacted negatively by the continued
effects of COVID-19, which also impacted occupancy. In addition, the EPRA
earnings and IFRS earnings were significantly impacted by the exceptional and
non-recurring administrative costs. The COVID-19 impact on portfolio valuation
was marginal in 2021 thus stabilising the decline in EPRA NRV and turning the
Total Accounting Return into a positive rate of 3.0%, compared to the negative
rate in 2020 of -1.4%.
NOI declined by 8.2% in 2021 compared to 2020, reaching €144.3 million
(2020: €157.3 million).
Adjusted normalised EBITDA decreased by 8.1% to €130.2 million from €141.6
million in 2020, reaching to the 2019 level prior to the COVID-19 pandemic,
due to lower NOI by 8.2%, as offset by the positive impact of the €1.6
million (10% lower compared to 2020) savings in recurring administrative
expenses.
Dividends declared in respect to 2021 of 28 cents per share, as compared to 34
cents for 2020, a 17.7% decrease, resulting from management's policy to
preserve a high level of liquidity from the outset of the COVID-19 pandemic.
EPRA Net Reinstatement Value (NRV) of €1.9 billion, or €8.66 per share, a
marginal decrease from €8.68 at 31 December 2020 mainly due to dividends
paid, lower operating performance and non-recurring costs, offsetting the
positive impact of lower revaluation losses (by €110.4 million compared to
2020). Combined with dividends paid in 2021, this resulted in a positive Total
Accounting Return of 3.0% (versus a negative TAR of -1.4% in 2020).
The Open Market Value ("OMV") of the portfolio increased by €0.2 billion, an
increase of 3.9% to €3.2 billion (31 December 2020: €3.0 billion), being
the net impact of the increase due to value accretive development CAPEX, and
the acquisition of two new logistics properties during the year.
LTV at 31 December 2021 amounted to 40.1%, increasing marginally from 37.8% at
31 December 2020, but still within the long term 40% threshold set by
Management.
Revenues and Profitability
Consolidated revenues of €219.4 million in 2021 down by 1.8% compared to
2020 (€223.3 million), primarily as a result of a 6.3% decline in rental
income to €150.3 million (2020: €160.5 million), which was partly
compensated by a 9.9% increase in other revenues, consisting of service charge
income and property development services income (€69.0 million in 2021
compared to €62.9 million in 2020).
The main drivers for the decrease in rental income were:
- a 7.7% reduction (€5.7 million) in underlying rental
income derived from standing properties in Poland, and a 4.5% drop from
standing properties in Romania (€3.1 million);
- a 31% decline (€2.3 million) connected with the
refurbishment programme of two mixed used properties in Poland during 2021;
- a 8.4% (€0.9 million) decline in rental income connected
with Warta Tower which is a property held for sale, following the signing in
September 2021 of a pre-SPA for its disposal, together with other four smaller
properties in Poland; and
Revenue Share by Country 2021
Poland Romania
2021 53% 47%
Revenue Share by Country 2020
Poland Romania
2020 56% 44%
- an offsetting impact resulting from an additional rental
income of €1.8 million, in Romania, recognised in 2021 following the
acquisition of two new logistics facilities and the transfer of GW Square, a
newly completed offices property, from development to standing/completed stage
after 1 January 2021, representing a 1.1% increase in total rental income.
EPRA NRV / Total Accounting Return(6)
2017 2018 2019 2020 2021
EPRA NRV / Share € 8.84 9.04 9.30 8.68 8.66
Total Accounting Return 5.7% 7.8% 9.2% -1.4% 3.0%
6 Total accounting return is the growth in EPRA NRV per
share plus dividends paid, expressed as a percentage of EPRA NRV per share at
the beginning of the year.
NOI Share by Country 2021
Poland Romania
2021 55% 45%
NOI Share by Country 2020
Poland Romania
2020 57% 43%
Net Operating Income
Net Operating Income of €144.3 million in 2021, a 8.3% decrease over 2020
(€157.3 million), influenced by the decrease in consolidated revenues but,
more importantly, by the significant increase in operating expenses, by 13.7%
against 2020, resulting from the significant increase in utility prices and
increase in vacancy during the year.
NOI 2020 Change in NOI (Poland) Change in NOI (Romania) NOI 2021
157.3 (10.5) (2.5) 144.3
NOI was split 55% Poland / 45% Romania, compared to 57% Poland / 43% Romania
in 2020.
Adjusted normalised EBITDA amounted to €130.2 million, a decrease of 8.1%
over 2020 (€141.6 million), which correlates to the net effect of the
decrease in NOI of 8.2% (€13 million), which was partly offset by the 10%
reduction in recurring administrative expenses (by €1.6 million).
All amounts in €'m 2021 2020
Profit before net finance cost 110.9 16.4
Depreciation and amortisation expense 0.5 0.5
Acquisition costs - 2.7
Fair value loss on investment property 5.7 116.2
Share based payment expense 0.5 1.1
Other expenses 1.9 2.6
Other income (1.0) (0.5)
Foreign exchange (gain)/loss (0.2) 0.4
Loss from fair valuation of financial instrument 0.4 0.0
Exceptional and / or non-recurring expenses 11.5 2.3
Adjusted normalised EBITDA 130.2 141.6
IFRS EPS to EPRA EPS (€ cents per share)
IFRS EPS FV loss on properties FV gain on financial instruments Deferred tax JVs & Others EPRA EPS
21 3 0 5 (2) 27
Finance costs increased by 8.6% in 2021 mainly due to the full-year impact of
the new €400 million Bond, which was issued in July 2020, the higher
negative interest rate charge on current and deposits accounts denominated in
Euro and higher finance costs on the unwinding of the lease liability related
to the right of usufruct of leasehold land underlying some investment
properties. The negative impact on finance costs was partly offset by the
reduction in interest expense due to the repayment of the RCF facility in
August 2020 (which was drawn for a few months during 2020).
IFRS earnings were positive at €47.5 million (21 cents per share), resulting
mainly from a modest decline of €5.7 million in the fair value of investment
property in December 2021 as compared to €116.2 million fair value loss in
2020. However, excluding the impact of investment property valuations, the
profit after tax declined by 23.3% to €53.2 million from €69.4 million in
2020, resulting from the decline in NOI of €13.0 million, increase in total
administrative expenses of €7.6 million (mainly related to the €11.5
million exceptional and non-recurring costs associated with the offer for
Globalworth shares initiated in May 2021), a €5.0 million increase in
finance costs, as partly offset by an increase of €3.1 million in
contribution from the share of joint ventures' profits compared to 2020,
reduction in other non-operating costs of €4.7 million and income tax
expense of €1.8 million.
IFRS Earnings to EPRA earnings bridge (€ million)
IFRS Earnings FV loss on properties FV gain on financial instruments Deferred tax JVs & Others EPRA Earnings
47.5 5.7 (0.2) 10.3 (4.2) 59.1
EPRA earnings weakened to €59.1 million, a decrease of 28.2% compared in
2020 (€82.3 million). The NOI contraction of €13.0 million and
exceptional, non-recurring administrative costs of €11.5 million were the
key drivers for such weakness. Similarly in terms of EPRA earnings per share,
there was a 10 cents decrease (from 37 cents per share in 2020) to 27 cents
per share.
Balance Sheet
The OMV of the portfolio increased by a considerable €0.2 billion, an
increase of 3.9%, to €3.2 billion (31 December 2020: €3.0 billion). There
was a marginal net loss on fair value of investment property of €5.7 million
(9.4 million loss on standing assets and €3.4 million gain on properties
under development/refurbishment), as compared to €116.2 million fair value
losses in 2020. The property portfolio in Romania showed a positive valuation
uplift by €25.4 million as compared to drop of €31.3 million in Poland.
The growth in OMV was mainly supported by the acquisition of two logistics
facilities for €18.0 million, the incidental costs related to new leases
and/or prolongation of existing lease contracts of €19.3 million, and value
accredit additional CAPEX on standing and under development/ refurbishment
properties of €20.7 million and €32.6, respectively, as well as the
increase in fair value of JV properties to €86.7 million from €51.2
million in 2020, after incurring €23.3 million development CAPEX on new
logistics facilities.
Evolution in Portfolio Value (€ million by location)
Romania Poland Total
Investment Property - Dec 20 1,371.5 1,610.1 2,981.6
JV and others - Dec 20 51.2 - 51.2
OMV Dec 20 1,422.7 1,610.1 3,032.8
CAPEX 40.6 34.0 74.6
Fair value loss 25.4 (31.3) (5.9)
Disposals (3.2) - (3.2)
Asset acquisition 18.0 - 18.0
JV's CAPEX & Uplift 35.5 - 35.5
OMV Dec 21 1,539.0 1,612.8 3,151.8
JV and others (86.7) - (86.7)
Investment Property - Dec 21 1,452.3 1,612.8 3,065.1
Total assets at 31 December 2021 amounted to €3.63 billion virtually
unchanged from 31 December 2020 (€3.63 billion). Similarly, EPRA NRV
decreased by only €6.0 million to €1.917 billion at 31 December 2021, a
decrease of 0.3% on 31 December 2020 (€1.923 billion), while EPRA NRV per
share decreased by 0.2% to €8.66 per share (31 December 2020: €8.68 per
share). Reflecting the dividend distributions made during 2021 of 30 cents per
share, the adjusted EPRA NRV per share on 31 December 2021 would be €8.96
per share, representing a positive total accounting return of NAV growth and
dividend return for 2021 of 3.0% (2020: -1.4%).
EPRA NRV per share bridge from 31 December 2020 to 31 December 2021 (€)
EPRA NRV Dec-20 8.68
EPRA Earnings 0.27
Non- EPRA Earnings 0.02
FV loss on Property portfolio (0.02)
Dividends (0.30)
Others 0.01
EPRA NRV Dec-21 8.66
Evolution of EPRA NRV/share and OMV by semester
EPRA NRV per share (€) EPRA NRV (€m) OMV (€m)
Dec 19 9.30 2,069 3,045
Jun 20 8.80 1,957 3,013
Dec 20 8.68 1,923 3,033
Jun 21 8.61 1,903 3,040
Dec 21 8.66 1,917 3,152
Cash Flows
Cash flows from operating activities before working capital changes declined
to €119.4 million from €136.1 million in 2020 due to the NOI contraction
by €13.0 million and significant increase of €7.6 million (by 42.5%
compared to 2020), in total administrative costs in 2021 due to the
exceptional and non-recurring expenses incurred. Furthermore, operating
expenses increased by €9.1 million, reflecting a 13.7% increase on 2020, and
the decline in headline rental income along with additional new tenant
incentives impacted the working capital changes substantially (by €21.9
million) thus reducing the overall cash flows from operating activities to
€65.3 million (from €105.2 million in 2020), representing a 37.9%
decrease.
In the absence of any new drawdown from existing or new debt facilities or
prepayment of outstanding debt facilities, the cash flows from financing
activities mainly decreased as a result of the dividend payments in 2021 of
€66.3 million (in respect of the six-month periods ended 31 December 2020
and 30 June 2021), compared with the significant drawdown of three secured
bank loan facilities and part repurchase of the 2022 Bond along with issuance
of a new 2026 Bond in 2020.
Regarding investing activities, during 2021 the Group acquired two logistics
facilities for €18.0 million, further invested €15 million in two
logistics joint venture properties under development, and incurred capital
expenditure on advancing development/refurbishment projects (two under
development in Poland and one completed in Romania) of €32.7 million and on
standing assets of €39.2 million.
Cash and cash equivalents at 31 December 2021 decreased to €418.7 million,
€109.1 million lower than 31 December 2020 (€527.8), as influenced by the
net cash outflows from financing and investing activities during the year.
FINANCING AND LIQUIDITY REVIEW
DEBT STRUCTURE & LIQUIDITY
In the context of the ongoing COVID-19 pandemic, the Group's focus during 2021
was to preserve the available cash liquidity and to protect its revenues and
cash flows in order to mitigate the economic impact over its businesses.
Dividends
In March 2021 the Company paid an interim dividend of 15 cents per share
(c.€33.1 million) in respect of the six-month period ended 31 December 2020,
while in October 2021 it paid an interim dividend of 15 cents per share
(c.€33.2 million) in respect of the six-month period ended 30 June 2021. In
addition, another interim dividend of 13 cents per share (c.€28.8 million)
will be paid in April 2022 in respect of the six-month period ended 31
December 2021.
Debt Summary
The Group's debt remained largely unchanged at 31 December 2021 compared to 31
December 2020.
The total debt portfolio of the Group at 31 December 2021 of €1.63 billion
(31 December 2020: €1.63 billion) comprises short to medium and long-term
debt, denominated entirely in Euro with the first debt maturity in June 2022,
out of which €1.27 billion represents Eurobond and €361 million bank
loans.
The Group has continued in 2021 its strategy over the last few years of
keeping a reduced weighted average interest rate. At 31 December 2021, the
weighted average interest rate remained at 2.73%, same as at 31 December 2020,
while the average period to maturity of 3.5 years maintained the same trend
(4.5 years at 31 December 2020), as presented in the chart below:
Servicing of Debt During 2021
In 2021, we repaid in total €2.8 million of loan capital and €44.6 million
of accrued interest on the Group's drawn debt facilities, including €37.6
million in relation to the full annual coupon for the Eurobonds of the
Company.
Liquidity & Loan to value ratio
The Group's aim is to maintain at all times sufficient liquidity to have the
flexibility to react quickly at the moment when attractive new investment
opportunities may arise.
As at 31 December 2021, the Group had cash and cash equivalents of €418.7
million (31 December 2020: €527.8 million) out of which an amount of
c.€7.7 million was restricted due to various conditions imposed by the
financing Banks. On top of this, the Group had available liquidity from
committed undrawn loan facilities amounting to €215 million.
The Group's loan to value ratio at 31 December 2021 was 40.1%, compared to
37.8% at 31 December 2020. This is consistent with the Group's strategy to
manage its long-term target LTV of around or below 40%, whilst pursuing its
strong growth profile.
Debt Structure as at 31 December 2021
Debt Structure - Secured vs. Unsecured Debt
The majority of the Group's debt at 31 December 2021 is unsecured: 77.9% (31
December 2020: 77.7%), with the remainder secured with real estate mortgages,
pledges on shares, receivables and loan subordination agreements in favour of
the financing parties.
Loans and borrowings maturity and short-term / long-term debt structure mix
The Group has at 31 December 2021 credit facilities and Eurobonds with
different maturities, most of them medium and long-term, as presented in the
chart below:
Weighted average interest rate versus debt duration to maturity
Jun.19 Dec.19 Jun.20 Dec.20 Jun.21 Dec.21
Weighted average interest rate versus debt duration to maturity 2.85% 2.83% 2.52% 2.73% 2.73% 2.73%
Weighted average duration to maturity (years) 4.9 4.3 4.2 4.5 4.0 3.5
Maturity by year of the principal balance outstanding at 31 December 2021 (€
million)
2022 2023 2024 2025 2026 2027 2028 2029
Bonds 323.13 550.00 400.00
Bank Loans 2.83 2.87 35.82 112.27 2.55 64.81 2.55 137.89
It is worth noting that for the short-term debt due in June 2022, the Company
is currently analysing its options, including to at least partly refinance it,
and will take a decision in due course.
Debt Denomination Currency and Interest Rate Risk
Our loan facilities are entirely Euro denominated and bear interest based
either on one month's or three months' Euribor plus a margin (8.5% of the
outstanding balance compared to 8.7% at 31 December 2020), or at a fixed
interest rate (91.5% of the outstanding balance compared to 91.3% at 31
December 2020).
The high degree of fixed interest rate debt ensures a natural hedging to the
Euro, the currency in which the most significant part of our liquid assets
(cash and cash equivalents and rental receivables) is originally denominated
and the currency for the fair market value of our investment property.
Debt Covenants
The Group's financial indebtedness is arranged with standard terms and
financial covenants, the most notable as at 31 December 2021 being the
following:
Unsecured Eurobonds and Revolving Credit Facility
- the Consolidated Coverage Ratio, with minimum value of 200%;
- the Consolidated Leverage Ratio, with maximum value of 60%;
- the Consolidated Secured Leverage Ratio with a maximum value
of 30%; and
- the Total Unencumbered Assets Ratio, with minimum value of
125% (additional covenant applicable only for the RCF).
Secured Bank Loans
- the debt service cover ratio ("DSCR") / interest cover ratio
("ICR"), with values ranging from 120% to 350% (be it either historic or
projected); and
- the LTV ratio, with contractual values ranging from 60% to
83%.
There have been no breaches of the aforementioned covenants occurring during
the period ended 31 December 2021.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
31 December 31 December
2021 2020
Note €'000 €'000
Revenue 7 219,350 223,309
Operating expenses 8 (75,098) (66,031)
Net operating income 144,252 157,278
Administrative expenses 9 (25,622) (17,986)
Acquisition costs - (2,689)
Fair value loss on investment property 3 (5,738) (116,153)
Share-based payment expense 20 (532) (1,071)
Depreciation and amortisation expense (536) (466)
Other expenses (1,851) (2,565)
Other income 1,051 494
Foreign exchange gain/(loss) 214 (395)
Loss from fair value of financial instruments at fair value through profit or 14 (386) (47)
loss
Profit before net financing cost 110,852 16,400
Finance cost 10 (55,539) (51,140)
Finance income 1,749 2,383
Share of profit of equity-accounted investments in joint ventures 22 5,010 1,897
Profit/(loss) before tax 62,072 (30,460)
Income tax expense 11 (14,583) (16,335)
Profit/(loss) for the year 47,489 (46,795)
Other comprehensive income - -
Total comprehensive income for the year 47,489 (46,795)
Profit/(loss) attributable to equity holders of the Company 47,489 (46,795)
Earnings per share
- Basic 12 21 (21)
- Diluted 12 21 (21)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
2021 2020
Note €'000 €'000
ASSETS
Investment property 3 2,966,080 3,013,014
Goodwill 12,349 12,349
Advances for investment property 5 3,436 4,215
Investments in joint ventures 22 48,908 28,358
Equity investments 12,109 10,369
Other long-term assets 2,083 2,148
Prepayments 338 432
Deferred tax asset 11 151 786
Non-current assets 3,045,454 3,071,671
Financial assets at fair value through profit or loss 16 7,324 7,695
Trade and other receivables 18 16,208 16,025
Contract assets 13 6,106 2,819
Guarantees retained by tenants 885 894
Income tax receivable 117 931
Prepayments 2,104 2,227
Cash and cash equivalents 19 418,748 527,801
451,492 558,392
Investment property held for sale 3.3 130,537 -
Total current assets 582,029 558,392
Total assets 3,627,483 3,630,063
EQUITY AND LIABILITIES
Issued share capital 21 1,704,476 1,704,374
Treasury shares 24.5 (4,917) (12,977)
Share-based payment reserve 20 156 6,184
Retained earnings 38,914 57,783
Total equity 1,738,629 1,755,364
Interest-bearing loans and borrowings 14 1,285,641 1,604,043
Deferred tax liability 11 150,713 144,843
Lease liabilities 3.2 18,762 27,324
Guarantees retained from contractors 2,661 2,235
Deposits from tenants 3,844 3,449
Trade and other payables 956 692
Non-current liabilities 1,462,577 1,782,586
Interest-bearing loans and borrowings 14 348,279 26,051
Guarantees retained from contractors 3,361 4,032
Trade and other payables 39,788 40,209
Contract liability 13 1,940 2,088
Other current financial liabilities 261 875
Current portion of lease liabilities 3.2 1,303 1,765
Deposits from tenants 16,068 16,245
Provision for tenant lease incentives - 46
Income tax payable 550 802
411,550 92,113
Liabilities directly associated with the assets held for sale 3.3 14,727 -
Total current liabilities 426,277 92,113
Total equity and liabilities 3,627,483 3,630,063
The financial statements were approved by the Board of Directors on 24 March
2022 and were signed on its behalf by:
Andreas Tautscher
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
2021 2020
Note €'000 €'000
Profit/(loss) before tax 62,072 (30,460)
Adjustments to reconcile profit /(loss) before tax to cash flows from
operating activities
Fair value loss on investment property 3 5,738 116,153
Loss on sale of investment property 471 387
Share-based payment expense 24 532 1,071
Depreciation and amortisation expense 536 466
Net increase in allowance for expected credit losses 20.2 1,134 1,152
Foreign exchange (gain)/loss (214) 395
Loss from fair valuation of financial instrument at fair value through profit 16 386 47
or loss
Share of (profit) of equity-accounted joint ventures 27 (5,010) (1,897)
Finance income (1,749) (2,383)
Financing cost 10 55,539 51,140
Operating profit before changes in working capital 119,435 136,071
(Increase)/decrease in trade and other receivables (4,513) 16,696
(Decrease) in trade and other payables (3,872) (3,149)
Interest paid (44,641) (40,958)
Interest received 267 1,048
Income tax paid (1,949) (4,746)
Interest received from joint ventures 536 199
Cash flows from operating activities 65,263 105,161
Investing activities
Expenditure on investment property completed and under development or (68,846) (77,028)
refurbishment
Refund of advances given for property acquisition - 24,000
Payment for acquisition of investment property (18,011) -
Proceeds from sale of investment property 3,010 2,870
Investment in financial assets at fair value through profit or loss 16 (143) (671)
Proceeds from sale of financial assets through profit and loss 85 16,517
Payments for investment in equity investments 17 (1,740) (529)
Investment in and loans given to joint ventures 27 (23,354) (16,555)
Repayment of loan from joint ventures 27 8,111 8,485
Payment for the acquisition of controlling stake in a joint venture - (2,000)
Payment for purchase of other long-term assets (468) (1,123)
Cash flows used in investing activities (101,356) (46,034)
Financing activities
Proceeds from issuance of share capital 24.1 100 -
Purchase of own shares - (8,345)
Proceeds from interest-bearing loans and borrowings 14 - 737,353
Repayment of interest-bearing loans and borrowings 14 (2,796) (430,200)
Payment of interim dividend to equity holders of the Company 22 (66,286) (108,324)
Payment for lease liability obligations 3.2 (1,659) (1,771)
Payment of bank loan arrangement fees and other financing costs 15 (2,168) (11,614)
Cash flows (used in)/from financing activities (72,809) 177,099
Net (decrease)/increase in cash and cash equivalents (108,902) 236,226
Effect of exchange rate fluctuations on cash and bank deposits held (151) (119)
Cash and cash equivalents at the beginning of the year 19 527,801 290,694
Restricted cash reserve 19 - 1,000
Cash and cash equivalents at the end of the year 19 418,748 527,801
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Equity attributable to equity holders of the Company
Note Issued share Treasury Share-based Retained Total Equity
capital shares payment earnings €'000
€'000 €'000 reserve €'000
€'000
As at 1 January 2020 1,704,374 (8,379) 5,571 213,101 1,914,667
Shares issued to the Executive Directors and other senior management employees - 392 (392) - -
Interim dividends - 271 (72) (108,523) (108,324)
Share-based payment expense under the subsidiaries' employees share award plan - - 1,071 - 1,071
Shares vested under the subsidiaries' employees share award plan - 540 (540) - -
Shares purchased with cash by the Company - (8,345) - - (8,345)
Cash-based portion of deferred annual bonus plan converted to deferred shares - - 1,025 - 1,025
settlement
Deferred annual bonus plan reserve for the year - - 2,065 - 2,065
Shares vested under the deferred annual bonus incentive plan - 2,544 (2,544) - -
Total comprehensive income for the year - - - (46,795) (46,795)
As at 31 December 2020 1,704,374 (12,977) 6,184 57,783 1,755,364
Shares issued to the Executive Directors and other senior management employees 24.2 - 339 (339) - -
Interim dividends 22 - 72 - (66,358) (66,286)
Share-based payment expense under the subsidiaries' employees share award plan 24.3 - - 532 - 532
Shares vested under the subsidiaries' employees share award plan 24.3 - 1,253 (1,253) - -
Shares issued for cash under Executive share option plan 24.1 102 - (2) - 100
Cash-based portion of deferred annual bonus plan converted to deferred shares - - (79) - (79)
settlement
Shares issued for long term plan termination and employees incentive plan 24.5 - 1,476 33 - 1,509
Shares vested under the deferred annual bonus incentive plan 24.4.1 - 4,920 (4,920) - -
Total comprehensive income for the year - - - 47,489 47,489
As at 31 December 2021 1,704,476 (4,917) 156 38,914 1,738,629
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