REG - Globalworth Real Est - Posting of Annual Report and Date of AGM
24/03/2023 07:00
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RNS Number : 1405U Globalworth Real Estate Inv Ltd 24 March 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
24 March 2023
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Audited Results for the year ended 31 December 2022,
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 3 March 2023 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 2022
("2022 Annual Report").
Key Highlights for the year ended 31 December 2022
· Total combined portfolio value remained effectively unchanged at
€3.2 billion (0.2% higher compared to 31 December 2021).
o Combined standing commercial properties at year-end were appraised at
€2.9 billion. Like-for-like properties marginally lower at €2.8 billion
(1.3% decrease compared to 31 December 2021), with new facilities acquired or
completed in 2022 adding €75.5 million in standing commercial portfolio
value.
· Focused development program in select high-quality projects.
o Romania; delivered 6 new logistics facilities offering 104.4k sqm of GLA,
with 3 logistics facilities under development which are expected to have a
total GLA of 30.0k sqm.
o Poland; two mixed-use properties under refurbishment/repositioning.
· Acquired the first small business units logistic facility in
Romania (Bucharest), with a total area of 7.1k sqm.
· Overall standing portfolio footprint net increase of 103.3k sqm
(+7.9% compared to 31 December 2021) to 1.4m sqm of GLA in 71 standing
properties.
· Leasing transactions of 206.9k sqm of commercial space at an
average WALL of 4.4 years, despite continued challenging market conditions.
· Average standing occupancy of 85.6% (85.9% including tenant
options), 2.9% lower compared to 31 December 2021.
o Addition of 7 properties with an average occupancy of 54.2%, some of which
are in the lease-up phase, negatively impacted the overall combined standing
occupancy.
o Like-for-like standing occupancy adjusted for Warta Tower in Warsaw
(property held for sale and now effectively vacant), of 90.5% (+0.2% compared
to 31 December 2021).
· Total annualised contracted rent up by 3.0% to €189.2m
o Like-for-like annualised commercial contracted rents in our standing
commercial portfolio increased by 1.7% to €177.5 million at the end of 2022,
mainly as effect of rent indexation.
· Rate of collections invoiced and due remained high at 99.0% for
2022.
· Net Operating Income ("NOI") was lower by 3.2% compared to 2021
at €139.7 million.
· EPRA earnings increased by 21.2% to €71.6 million (2021:
€59.1 million), as prior year EPRA earnings were 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 3.2% to €126.0 million
(2021: €130.2 million), due to lower NOI, partially offset by the positive
impact of the lower recurring administrative and other non-operating expenses.
· Net loss of €16.1 million (2021: net profit of €47.5 million)
due to revaluation losses of €89.5 million in 2022 compared to the €5.7
million revaluation losses in 2021.
· Cash dividend paid to shareholders of €0.27 per share in 2022.
· Preliminary EPRA Net Reinstatement Value (NRV) of €1.8 billion,
or €8.29 per share, decreasing from €8.66 at 31 December 2021 mainly due
to revaluation losses on the property portfolio.
· High liquidity of €163.8 million (vs €418.7 million at 2021
year-end) plus available liquidity from committed undrawn facilities of
€300 million; LTV 42.7% at 31 December 2022 (vs 40.1% at 2021 year-end).
· Sustainability:
o €2.6 billion in 53 green certified properties.
o 45 properties were certified or recertified with BREEAM Very Good or
higher certifications during the year.
o Committed to reduce our carbon footprint based on a science-based approach
to align with a 1.5(o)C trajectory.
o Issued the third sustainable development report and our second Green Bond
Report.
o Maintained low-risk rating by Sustainalytics and our MSCI rating to "A".
o Contributed to over 25 social initiatives in Romania and Poland.
Availability of 2022 Annual Report and Notice of AGM
The 2022 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 19 June 2023
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
Chief Financial Officer
Panmure Gordon (Nominated Adviser and
Broker) Tel: +44
20 7886 2500
Dominic Morley
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 260 professionals across Cyprus,
Guernsey, Poland and Romania, a combined value of its portfolio is €3.2
billion, as at 31 December 2022. Approximately 96.4% of the portfolio is in
income-producing assets, predominately in the office sector, and leased to a
diversified array of over 690 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, Oradea and Targu Mures.
For more information, please visit www.globalworth.com
(http://www.globalworth.com) and follow us on Facebook, Instagram and
LinkedIn.
CEO Statement
Adapting our strategy to tumultuous macro and property markets
"At Globalworth we focus on providing our business partners with high- quality
spaces in Poland and Romania that are sustainable, technologically advanced,
and tailored to their unique needs. Our premium spaces and services are geared
towards ensuring the success of our tenants' and our business.
Dennis Selinas
Chief Executive Officer
Dear Stakeholders,
As we move forward, we remain committed to improving our services and
providing a platform for growth that is sustainable and at the forefront of
building technology. At Globalworth, we strive to offer our business partners
and their employees the best possible experience, and we are proud to be a
trusted partner for their ongoing success.
Navigating Our Business Through Challenging Market Conditions
The year 2022 began with a sense of hope that, after two years of the COVID-19
pandemic, the world was ready to start returning to normality. However, fresh
challenges soon surfaced, largely linked to macroeconomic/geopolitical risks
and the war in Ukraine. These hurdles have given rise to supply chain
disturbances, hikes in fossil fuel prices, increased costs for transportation
and construction materials, and higher levels of inflation and interest rates,
which have put a strain on consumer incomes and businesses. As a result, the
outlook for everyone has become more uncertain.
As a result, the economic outlook in our regions has been revised, with slower
growth predictions for 2022 and beyond than had been previously anticipated.
However, a recession in the Eurozone is not currently expected. Another
positive note is that inflation appears to be gradually returning to more
normalised levels over the next 18-24 months.
Amidst these challenging circumstances, Globalworth's performance demonstrated
remarkable resilience, as we adhered to our steadfast commitment to the "local
landlord" approach to managing our business. This involved undertaking a
series of carefully calibrated initiatives including:
· Strategic investments in existing and new high-quality properties
· Managing our portfolio to preserve and enhance operational
performance
· Maintaining a flexible capital structure that can adapt to evolving
market conditions
At the core of all our endeavours was an unwavering commitment to providing a
safe and healthy environment that nurtured both work and leisure for our
tenants and for our communities.
We are confident that the extensive work carried out by our team throughout
2022, while not fully reflected in this year's financial results, has served
to consolidate our position as the pre-eminent landlord in our home markets of
Poland and Romania and will set us to a trajectory towards even greater
performance as the markets gradually return to a more normalised state in the
future.
At this juncture, and despite my relatively short tenure at Globalworth, I
would like to extend my sincere gratitude to all of our team members for their
resolute and optimistic attitude, unwavering commitment and efficiency, as
well as our shareholders, partners and communities for their steadfast
support, all of which have enabled us to achieve results of which we can be
rightfully proud.
Evolving Real Estate Portfolio
Our portfolio predominantly comprises Class "A" offices. Nonetheless,
following the delivery of our Class "A" Globalworth Square office and in
response to changing market dynamics, we have in the past 12 months shifted
our development focus towards high-quality logistics facilities in Romania as
well as the ambitious redevelopment of two mixed-use properties in Poland.
Throughout the course of 2022, we successfully completed the construction of
six logistics facilities, which collectively encompassed 104.4k sqm of GLA.
Five of these facilities represent subsequent phases of development within
existing established projects which are owned directly by us, or through JV
partnerships.
In addition, we also established a new strategic partnership with an
experienced local developer with the aim of investing in the lucrative "small
business units" segment of the logistics and warehouse facilities market in
Romania. Under this partnership, in which we hold a controlling majority (75%)
stake, we acquired our first small-business-units project (standing) in the
north-western part of Bucharest, and we are in the process of developing a
second project which is executed in phases and is located in the north-eastern
part of the capital city.
As of 31 December 2022, Globalworth's high-quality combined standing portfolio
reached a total of 1.4m sqm. The Company anticipates continued growth in 2023,
with the finalisation of two mixed-use properties in Poland and two industrial
facilities in Romania, adding another 104.9k sqm of GLA.
Globalworth's investment programme has also included investment in existing
properties aimed at preserving and enhancing their value, generating long-term
income and offering best-in-class real estate space to our business partners.
As a result, the Company continues to (re)invest in all of its properties,
improving the quality of our buildings and services across the board.
Overall, the addition of new properties to Globalworth's standing portfolio
has resulted in a combined portfolio value of €3.2 billion as at 31 December
2022, representing a +0.2% increase compared to the end of 2021.
Our Leasing and Occupancy
The ability to lease spaces within our portfolio is a critical factor in both
our short- and long-term success. In 2022, despite the persistently
challenging market conditions, we were able to successfully negotiate the
take-up or extension of 206.9k sqm of commercial space, within an average WALL
of 4.4 years. It is worth noting that the majority (52.4% by GLA) of our
leasing activity involved new take-up of available spaces.
As at 31 December 2022, the standing occupancy of our combined commercial
portfolio was 85.6% (85.9% including tenant options), representing a 2.9%
decrease from the previous 12 months. However, this decline can be primarily
attributed to the addition of several new properties in our portfolio, most of
which are in their lease-up phase, and Warta Tower in Warsaw which is now
effectively vacant and is being sold.
· Like-for-like standing occupancy of our combined commercial portfolio
adjusted for Warta Tower was 90.5% (+0.2% compared to 31 December 2021).
Despite the uncertainty in the market and the cautious approach of tenants,
headline market rental levels across our portfolio remained relatively stable.
We attribute this to the quality of our properties, our active asset
management initiatives, and our commitment to sustainable development.
The total annualised contracted rent of our combined portfolio increased by
3.0% to €189.2 million, compared to year-end 2021, with like-for-like
annualised commercial contracted rents in our combined standing commercial
portfolio increasing by 1.7% to €177.5 million.
It is noteworthy that most of our tenants are large multinational or national
corporations and their operations within our portfolio had no significant
exposure to Ukraine or Russia. Therefore, our business has not been directly
impacted by the war. Nevertheless, it is important to recognise that no
business is entirely immune to the war's effects on the macro economy through
its impact on inflation and interest rate transmission mechanisms.
In both Poland and Romania, the COVID-19 pandemic has resulted in increased
construction costs and reduced office development activity thereby limiting
new supply. We anticipate that this will result in fewer new, high-quality
offices being available for lease in central locations over the next few
years.
Furthermore, the disparity between A-grade properties with robust ESG
credentials and B-grade properties has been growing from both an investment
and a leasing perspective. This trend is expected to work in favour of our
portfolio of high-quality properties in the future.
Given these factors, and the quality of our services and properties, we are
confident that we will be able to lease the available spaces in our portfolio
in due course.
However, it is important to note that competition between landlords for
high-quality tenants remains intense, particularly in regional cities in
Poland. This is likely to impact the level of effective rents achieved or
attainable in the market and in our portfolio.
Our Financial Results
In a year fraught with numerous challenges, our unwavering operational focus
and business expansion have been partly reflected in our annual results.
Despite market conditions, our rental income for the year remained virtually
unchanged compared to the previous year. The positive effect of our operating
initiatives and the addition of new standing properties were counterbalanced
by relatively higher amortisation expenses in 2022, active leases and
fluctuations in occupancy.
Moreover, our Net Operating Income and EBITDA decreased by 3.2% annually. This
decline was due to an increase in the cost of non-recoverable service charges
(including the impact of Warta Tower being effectively empty during the year)
and property operating costs covered by the Group as part of our ESG
commitment for spaces used in response to the Ukrainian refugee crisis.
Over the past 12 months, property values in our markets have come under
pressure, due to the challenging macroeconomic and geopolitical environment.
Furthermore, a combination of operating performance, expanding yields, higher
discount rates and capex invested in our portfolio, which are fully reflected
in valuations and operations, contributed to negative revaluations of €89.5
million in our consolidated portfolio as of 31 December 2022.
As a result, the Group recorded a net loss for the year of €16.1 million
(2021: €47.5 million gain). It is worth noting, however, excluding the
impact of revaluation and exceptional items, our net profit would be €72.9
million.
Dividend
Throughout the year, we disbursed two interim dividends, one in relation to
the 2021 financial year and the first interim dividend of 2022, amounting to
€0.13 per share and €0.14 per share respectively. In summary, dividends
paid to our shareholders during 2022 totalled €0.27 per share or €59.8
million. Both dividends were at least 90% of the EPRA Earnings for their
corresponding half-year periods, as stipulated by our Articles of
Incorporation.
Balance Sheet
Ensuring ample liquidity has always been a key area of focus for us, and we
are pleased to report that during the year, we were able to repay the
remaining €323 million of Globalworth's inaugural €550 million bond, which
had been due to mature in June 2022. As a result, Globalworth has no material
debt maturing until March 2025.
Additionally, we secured new financings for a total of €266 million during
the year, with the most noteworthy being:
· the six-year term loan agreement for €85 million with the
International Finance Corporation , which is a member of the World Bank; and
· the €160 million for two new facilities (secured and unsecured)
signed with the Erste Group (undrawn at the end of 2022)
In the context of negative revaluations and recently completed or ongoing
projects, which have yet to fully realise their value uplift, our LTV
increased from 40.1% to 42.7% at year-end. Furthermore, our EPRA Net
Reinstatement Value (NRV) at the end of the period was €1.8 billion, or
€8.29 per share, representing a 4.3% decline from €8.66 on 31 December
2021, mainly due to dividends paid that offset operating performance and
negative revaluations.
Despite these developments, we maintained a flexible liquidity position at
year-end, with €164 million in cash and cash equivalents, and a further
€300 million in undrawn debt facilities. Moreover, we maintained an
investment grade rating from all three rating agencies in the 2022 review.
However, the outlook was updated to negative, reflecting a higher
interest-rate environment, deteriorating real estate market conditions, future
refinancing considerations and a more negative outlook of rating agencies
towards the real estate sector. In March 2023 S&P updated their rating to
BB+ (stable outlook).
Sustainable Development
Our strategy for sustainable development revolves around the fundamental
tenets of "People, Places and Technology". We are committed to delivering
environmentally sound, safe buildings that cater to our occupiers'
requirements while ensuring that we continue to make positive contributions to
the communities we serve.
To that end, in 2022, we have accepted the challenge of proactively managing
the consumption and associated carbon emissions produced during the
construction and operation of our properties. This effort is aimed at further
reducing our carbon footprint throughout the value chain, from areas within
our control to those under the purview of our tenants.
Our environmental target is to reduce GHG emissions intensity by +40% by 2030
compared to our 2019 baseline levels (for Scope 1 and 2) and to commit to
measuring and reducing Scope 3 emissions.
We also certified or recertified 45 of our properties during the year, with
our green portfolio comprising 53 environmentally friendly properties valued
at €2.6 billion. I am delighted that 89.8% of our standing commercial
portfolio has been awarded high-level green certifications. Moreover, all of
the offices within our portfolio have received the WELL Health-Safety Rating,
and several other properties have received additional certifications.
However, sustainable development is not merely restricted to green buildings.
Our comprehensive approach to ESG was further acknowledged by Sustainalytics
where our "Low Risk" rating improved to 13.9 (compared to 14.8 last year and
16.0 two years ago) and MSCI, where we maintained our "A" rating.
Additionally, we continued to support our communities, where we supported over
15 initiatives in Romania and Poland.
Management Changes
In 2022, there was a change in executive leadership, wherein Mr D. Raptis and
Mr A. Papadopoulos relinquished their roles as CEO and CFO respectively.
Subsequently, Mr S. Sapkas and myself assumed these positions. I would like to
express my utmost appreciation to the departing individuals for their
invaluable contributions to the trajectory of Globalworth. As previously
communicated upon my appointment, I am eagerly anticipating the prospect of
progressive expansion, pioneering asset management innovation and an
unwavering commitment to improving our tenants' experiences, all while
delivering optimal returns to our esteemed shareholders.
Outlook
In 2023, we anticipate that macroeconomic developments, specifically the
trajectory of inflation and the response of central banks, will have the most
significant impact on the performance of the real estate market. Despite the
prevailing market uncertainty, our Company remains steadfast in its focus on
liquidity initiatives, which provide us with the resources we need to seize
emerging opportunities.
Our unwavering commitment to providing sustainable office space that is highly
appealing to the employees of our tenants, and adheres to the strictest
environmental standards, continues to be a top priority. We are confident that
this commitment, combined with the flexibility we offer our clients, will
enable us to maintain robust leasing activities in 2023, irrespective of any
challenges posed by the market's fluctuating conditions.
In conclusion, I have complete faith in the resilience of Globalworth in the
face of market turbulence, and I believe that our prospects are bright. Our
focus on liquidity and sustainability, coupled with the flexibility we offer
our clients, positions us well to navigate any challenges that may arise and
to continue to thrive. We look forward to the opportunities that the future
holds, and we are eager to achieve greater success in the coming years.
Dennis Selinas
23 March 2023
"At Globalworth, we strive to offer our business partners and their employees
the best possible experience, and we are proud to be a trusted partner for
their ongoing success."
Standing Portfolio Review
We operate best-in-class real estate spaces in Poland and Romania
Our high-quality standing portfolio grew by 103.3k sqm to 1.4m sqm, valued at
€2.9 billion at year-end 2022.
We provide our business partners with high-quality spaces in some of the most
important real estate markets in Poland and Romania, that are sustainable,
technologically advanced, and custom fitted to their requirements, offering
premium services to allow the businesses to succeed.
By effectively managing our real estate portfolio, we aim to offer our
investors an efficient gateway to the two largest markets in Central and
Eastern Europe.
Increased Our Footprint to 1.4m sqm
In 2022, our combined portfolio of standing properties grew by 103.3k sqm with
the addition of seven logistics facilities in Romania. Four facilities are in
Bucharest, including our first small business units facility acquired in
April, and three in regional cities of Romania (Pitesti, Constanta and
Timisoara).
Overall, our standing portfolio predominantly comprises 30 Class "A" offices
(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 in Poland (Krakow, Wroclaw, Katowice,
Gdansk
and Lodz), which in total account for 89.4% of our standing portfolio by
value.
· During the year, the size of our office and mixed-use portfolio
remained unchanged; however, we expect it to grow in 2023 following the
completion of the repositioning/redevelopment of two mixed-used properties in
Poland.
In addition, in Romania, we fully own two logistics/light-industrial parks
with six facilities in Timisoara, one industrial park in Pitesti (two
facilities), two modern warehouses in Arad and Oradea, and, since earlier this
year, we also own the majority stake (75% ownership) in a small business units
facility and another warehouse (delivered in November), both in the Bucharest
area. We have 50% ownership through a joint venture of two other
logistics/business parks (with three standing facilities) in Bucharest and
Constanta. We also own part of a residential complex in Bucharest.
During the year, our standing commercial portfolio's total GLA increased 8.7%
to reach 1,383.2k sqm at the end of December 2022 whilst our overall standing
portfolio (commercial and other) increased in GLA by 7.9% to 1,405.6k sqm due
to the sale of residential units in our Upground residential project.
Standing Portfolio Value at €2.9 billion
The appraised value of our combined standing portfolio as of 31 December 2022
was €2.9 billion (+1.4% in commercial properties). This overall increase is
mainly attributable to the addition of new properties through acquisition and
completion, partly offset by relatively small revaluation losses of properties
held throughout the period (like-for-like) and by the sale of certain units in
our Upground residential complex.
The value of like-for-like standing commercial properties decreased by 1.3% as
of 31 December 2022 compared to the prior year, as the reduction in value by
1.7% of our like-for-like standing office and mixed-use properties was offset
by the increase in value of our industrial properties.
Globalworth Combined Standing Portfolio: 2022 Evolution
GAV - 31 December 2021 €2,866.3m
Like for Like Change* -€34.6m
Acquisitions of Properties +€7.2m
Delivery of Properties +€68.3m
Sales -€13.7m
GAV - 31 December 2022 €2,893.6m
* Like-for-Like change represents the changes in GAV of standing properties
owned by the Group at 31 December 2021 and 31 December 2022.
Globalworth Combined Standing Portfolio: 2022 Evolution
Total Standing YE 2021 1,302.3k sqm
of which Standing Commercial YE 2021 1,272.0k sqm
Pitesti Industrial Park (Phase II) / logistics facility developed in Pitesti +6.7k sqm
(RO)
Chitila Logistics Hub (Phase B & C) / logistics facilities developed in +54.4k sqm
Bucharest (RO)
Constanta Business Park (Phase B) / logistics facility developed in Constanta +19.8k sqm
(RO)
Timisoara Industrial Park II (Phase B) / logistics facility developed in +19.0k sqm
Timisoara (RO)
Business Park Stefanesti (Phase A) / logistics facility developed in Bucharest +4.4k sqm
(RO)
Business Park Chitila / logistics and warehouse facilities acquired in +7.1k sqm
Bucharest (RO)
Net Remeasurement Adjustments & Other (RO & PL) -0.2k sqm
Standing Commercial YE 2022 1,383.2k sqm
Upground / residential complex in Bucharest (RO)* 22.4k sqm
Total Standing YE 2022 1,405.6k sqm
* In 2022, units with 7.9k GLA were sold in our Upground residential complex.
Like-for-Like Occupancy Marginally Changed in 2022
Our standing commercial portfolio's average occupancy as of 31 December 2022
was 85.6% (86.0% including tenant options), representing a 2.9% decrease over
the previous 12 months (88.5% as of 31 December 2021 / 88.7% including tenant
options).
This decrease is mainly attributable to the addition of seven industrial
properties (six deliveries and one acquisition), the majority of which are in
their lease-up phase and, consequently, at year-end had occupancy lower than
the Group average, thus negatively impacting the overall average standing
commercial occupancy rate across our portfolio. These facilities have a total
GLA of 111.5k sqm and on 31 December 2022 were 54.2% occupied.
On a like-for-like basis, occupancy marginally decreased by 0.2% to 88.4% at
the end of the year, mainly due to the expiration of certain ESG leases during
the year (from our efforts to help in the Ukrainian refugee crisis) and Warta
Tower in Warsaw now being effectively empty.
Like-for-like standing occupancy of our portfolio, adjusted for Warta Tower
which was in the process of being sold at year-end, was 90.5% (+0.2% compared
to 31 December 2021). We see this relative stagnation as a changing point
under normalising market conditions. Therefore, 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 balanced state.
Across our standing portfolio, at 31 December 2022, we had 1,184.6k sqm of
commercial GLA leased to more than 600 tenants at an average WALL of 4.4
years, the majority of which is let to national and multinational corporates
that are well-known within their respective markets.
Not included in our standing portfolio metrics are: 44.3k sqm leased in our
two mixed-use properties which are currently under
refurbishment/repositioning, and 4.8k sqm in our industrial properties which
are under development in Romania (Bucharest and Targu Mures).
Occupancy Evolution 2022 (GLA k sqm) - Commercial Portfolio
Poland Occupancy Romania Occupancy Group Occupancy
Rate (%) Rate (%) Rate (%)
Standing Available GLA - 31 Dec. 21 542.1 729.9 1,272.0
Acquired GLA - 7.1 7.1
New Built GLA - 104.4 104.4
Remeasurements, reclassifications 0.0 (0.3) (0.2)
Standing Available GLA - 31 Dec. 22 542.1 841.0 1,383.2
Occupied Standing GLA - 31 Dec. 21 464.1 85.6% 662.1 90.7% 1,126.2 88.5%
Acquired/Developed Occupied GLA - 60.4 60.4
Expiries & Breaks (56.8) (19.7) (76.5)
Renewals* 42.7 47.8 90.5
New Take-up 32.7 40.9 73.5
Other Adj. (relocations, remeasurements, etc) 0.6 0.0 0.6
Occupied Standing GLA - 31 Dec. 22 440.6 81.3% 743.7 88.4% 1,184.3 85.6%
Standing Portfolio Snapshot
As of 31 December 2022, our combined standing portfolio comprised 41
investments (39 on 31 December 2021) with 71 buildings (66 on 31 December
2021) in Poland and Romania. The appraised value of the portfolio was
€2,893.6 million, of which 88.4% was environmentally certified.
Globalworth Combined Portfolio: Key Metrics
Total Standing Properties 30 Dec. 2020 31 Dec. 2021 31 Dec. 2022
Number of Investments 37 39 41
Number of Assets 64 66 71(1)
GLA (k sqm) 1,271.3 1,302.3 1,405.6
GAV (€ m) 2,805.5 2,866.3 2,893.6
Contracted Rent (€ m) 178.7 175.4 182.1
Of which Commercial Properties 30 Dec. 2020 31 Dec. 2021 31 Dec. 2022
Number of Investments 36 38 40
Number of Assets 63 65 70
GLA (k sqm) 1,238.9 1,272.0 1,383.2
GAV (€ m) 2,745.9 2,810.3 2,850.3
Occupancy (%) 90.9% (91.7%(2)) 88.5% (88.7%(2)) 85.6% (86.0%(2))
Contracted Rent (€ m) 177.7 174.5 181.3
Potential Rent at 100% occupancy (€ m) 199.2 201.2 211.4
WALL (years) 4.5 4.7 4.4
1 Following the completion of the third phase of the Chitila Logistics
Hub, we have consolidated the three phases in one facility.
2 Including tenant options.
Our awards:
Poland
Golden Award - Marketing Event of the Year - Hala Koszyki
Investment of the Year - Retail Space Market - Renoma
Golden Award - The Best Food Hall in Poland - Hala Koszyki
Golden Award - PR & Employer Branding
Best Interior Concept for Uniqa Polska in WTT
Romania
Best Technology Driven Office Building award at the "The Readers' Choice
Realty Awards" gala - Globalworth Square
Office Developer of the Year award at the Real Estate Gala
Logistics Project of the Year at SEE Property Forum 2022 - Chitila Logistics
Hub
Best Green Development of The Year at CIJ Awards gala - Globalworth Square
Forbes Best Office Buildings - The New Way of Working Gala - Globalworth
Square.
Portfolio Development / Evolution
Investment activity principally focused on developing and repositioning of
178.6k high-quality GLA in Romania and Poland
"In 2022, we continued with our active investment programme focusing on
high-quality logistics/light-industrial facilities in Romania and the
refurbishment/repositioning of two mixed-use properties in Poland, investing
over €52.2 million in their acquisition and development during the year.
Dimitris Pergamalis
Group Head Globalworth Workplaces
Investment in Industrial Properties
Tenant demand for industrial properties, specifically for warehouses,
logistics and light-industrial buildings, has significantly accelerated in
recent years, supported by strong demand for e-commerce and last-mile
logistics.
In this market segment, we have been growing our footprint, especially since
the COVID-19 pandemic outbreak, where we have added over 180k sqm of
high-quality real estate spaces to our portfolio, most of which we developed
ourselves and the remainder added through select acquisitions.
Review of New Acquisitions
In April 2022, we formed a new strategic partnership with CATTED focusing on
the "small business units" segment in logistics and warehouse facilities in
Romania. As part of this partnership in which we own a majority (75%) stake,
we acquired our first small business units project in the north-western part
of Bucharest, close to our Chitila Logistics Hub. The project, developed by
CATTED, has been rebranded as "Business Park Chitila" and comprises 13 small
units, offering 7.1k sqm of GLA and was 98.2% occupied on 31 December 2022.
We also acquired a 45k sqm land plot in the north-eastern part of Bucharest
(Stefanesti) where, together with CATTED, we are currently constructing
"Business Park Stefanesti", also focused on small business units.
In addition, and to facilitate further the success and development of future
phases of the Constanta Business Park project, we acquired a 34.5k sqm plot to
secure a future railroad connection for the entire park.
Review of Developments
In 2022, we continued developing high-quality logistics/light-industrial
facilities in Romania. At the beginning of the year, we had five logistics
facilities under construction (98.9k sqm). In addition, we commenced the
construction of four other facilities with 34.4k sqm of GLA during the year.
The new facilities we commenced construction on in 2022 included:
· our first development of small business units facilities (three
phases) in the north-eastern part of Bucharest, and
· the first phase of the Mures City Logistics in the central northern
part of Romania.
Business Park Stefanesti, located in the north-eastern part of Bucharest,
offers easy access to the Bucharest ring road and allows for a quick
connection to the centre of Bucharest via the A2 motorway. The location is
considered very advantageous for housing small business units. The project
comprises three buildings to be delivered in phases with a total of 17.7k sqm
GLA, offering up to 24 units for rent, ranging from 500 to 1,500 sqm. As of 31
December 2022, the first building was already delivered and fully let to
Delivery Solutions SRL.
Mures City Logistics, located in the central northern part of Romania,
involves the development of a new facility which, on completion, will offer
16.7k sqm of high-quality space. Targu Mures is the seventh Romanian region we
have invested in, and we elected to expand in this sub-market due to its
strategic location and connectivity. The project is being developed with a
joint venture partner, and we own a 50% interest in the venture. As of 31
December 2022, the facility was partially pre-let to Friesland Campina, a
multinational holding the leading position in dairy products in Romania, on a
+10 years contract.
Projects Delivered
We delivered six new logistics facilities offering 104.4k sqm of GLA. All
facilities represented subsequent phases of development in existing
established projects which we directly own or through JV partnerships.
These new facilities are in Bucharest (58.8k) and three regional locations, in
Timisoara (19.0k sqm), Pitesti (6.7k sqm), and Constanta (19.8k sqm).
In Bucharest, deliveries were dominated by the completion of the second and
third (final) phase of the Chitila Logistics Hub, which now offers in total
77.8k sqm of high-quality last-mile logistics spaces close to the Bucharest
ring road, providing easy access to the capital. The first phase was delivered
in Q3-2020 and is 100.0% occupied, with the second and third phases delivered
in Q1 and Q3-2022, respectively and 90.7% and 23.8% occupied.
At the end of December 2022, the six facilities, some of which are in their
lease-up phase, were 51.2% contracted by multinational or large national
tenants like HAVI Logistics, Caroli, Linde, Phylosophy Design and Delivery
Solutions. They had a total annualised contracted rent of €3.2 million at an
average WALL of 7.5 years. Total annualised rent could increase to €5.7
million at full occupancy.
Developments in Progress
We currently have two projects under construction expected to be completed in
the first half of 2023, further expanding our industrial footprint by 30.0k
sqm of high-quality GLA and at full occupancy are expected to generate €2.4
million of annualised rent.
Developments - Delivered Developments - Under Construction
Pitesti Industrial Park (Phase II) Chitila Logistics Hub (Phases B and C)* Constanta Business Park Timisoara Industrial Park II Business Park Stefanesti Business Park Stefanesti(2) Mures City Logistics(1)
(Phase B)* (Phase B) (Phase A)
Location Pitesti Bucharest Constanta Timisoara Bucharest Bucharest Tg. Mures
GLA (k sqm) 6.7 54.4 19.8 19.0 4.4 13.2 16.7
Occupancy (%) 100.0% 43.9% 86.7% 6.1% 100.0% 4.4% 25.2%
Development Cost (€ m) / Estimated CAPEX to Go 5.9 28.3 9.4 8.3 3.0 9.4 / 1.5 11.6 / 1.9
GAV (€ m) 7.7 32.4 13.3 10.9 4.0 8.5 8.4
Contracted Rent (€ m) 0.6 1.2 1.1 0.1 0.3 0.0 0.4
100% Rent (€ m) 0.6 2.7 1.2 0.9 0.3 0.9 1.1
Estimated Yield on Development Cost 9.6% 9.6% 13.1% 11.0% 9.6% 9.7% 9.3%
* Joint venture in which Globalworth owns 50%; figures shown on 100%
basis.
1 50:50 joint venture; figures shown on 100% basis.
2 75% owned by Globalworth; figures shown on 100% basis.
Refurbishment/Repositioning of Mixed-Use Properties
Following the review back in 2020 of our portfolio and in response to market
conditions, we commenced refurbishing/repositioning two of our three mixed-use
properties in Poland. Aiming to increase their Class "A" office space and
improve their retail/commercial offering, work started at our Renoma landmark
property in Wroclaw in H2-2020 and our centrally located Supersam property in
Katowice in H2-2021.
· At Renoma, the refurbishment will increase the offer of Class "A"
office space on the higher floors. It will also reposition the property's
retail offer towards a more attractive food court and a selected fashion mix
on the ground floor and convenience facilities, including a supermarket, gym
and drugstore located on the -1 level.
· At Supersam, we are redeveloping the entire level 1 into an office
function. On level -1, we are repositioning selected retail modules into
high-quality retail and commercial spaces with food and entertainment.
In 2022 we invested €12.6 million in the two properties, and we expect to
deliver the properties within 2023.
Ongoing Investment & Upgrade Programme of Our Standing Properties
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 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, maintaining and, where
required, improving the quality of our buildings and our services.
We manage all our properties in Poland internally, and in Romania, we manage
all but one of our offices in-house. This translates to 968.2k sqm of
high-quality office and mixed-use space with an appraised value of €2.5
billion internally managed by our team.
Our Upgrade Programme has resumed at a more normalised pace since last year,
following its scaling back for part of 2020 due to COVID-19. In 2022, we
invested €35.2 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 53 of our standing
commercial properties, accounting for 77.1% by GLA and 76.2% by commercial
portfolio value, having been delivered or significantly refurbished in or
after 2014.
Also, in Q3-2022, we chose Honeywell Forge to help us lower maintenance costs
and reduce energy consumption in our portfolio.
Properties Under Refurbishment/Repositioning
Renoma Supersam
Location Wroclaw Katowice
Status Refurbishment/ Repositioning Refurbishment/ Repositioning
Expected Delivery Q2/Q3-2023 H1-2023
GLA - on Completion (k sqm) 48.2 26.6
CAPEX to 31 Dec 22 (€ m) 14.6 3.4
GAV (€ m) 108.0 44.4
Estimated Capex to Go (€ m)* 12.1 2.7
ERV (€ m) 9.8 4.2
Estimated Yield on Completion of Project** 9.9% 11.2%
* 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.
Internally Managed Commercial Portfolio as at 31 Dec. 2022
Poland Romania Group
GLA (k sqm) 542.1 426.1 968.2
% of Commercial GLA 100% 51% 70%
% of Office and Mixed-Use GLA 100% 92% 96%
GAV (€ m) 1,422.6 1,088.6 2,511.2
% of Commercial GAV 100% 76% 88%
% of Office and Mixed-Use GAV 100% 93% 97%
Future Developments
We own, directly or through JV partnerships, 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 2.8% 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 785.7k 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 subject to tenant demand and general market conditions.
Future Developments
Podium Green Court D Globalworth West Constanta Business Park (Phased)* Timisoara Industrial Park I and II (Phased) Luterana
Park III
Location Krakow Bucharest Bucharest Constanta Timisoara Bucharest
Status Constr. Postponed Constr. Postponed Constr. Postponed Planned Planned Planned
GLA (k sqm) 17.7 17.2 33.4 525.8 165.2 26.4
CAPEX to 31 Dec 22 (€ m) 8.5 2.5 5.2 12.3 7.0 7.4
GAV (€ m) 9.6 8.6 7.4 37.2 11.0 13.6
Estimated CAPEX to Go (€ m)** 29.7 23.9 38.5 243.6 63.5 39.7
ERV (€ m) 3.1 3.3 5.1 27.7 6.7 5.8
Estimated Yield on Development Cost 8.1% 12.6% 11.5% 10.8% 9.6% 12.3%
* 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
Continuing to actively manage our real estate portfolio
Leasing Review
We are present in six of the seven largest office markets in Poland, and in
the largest office market and some of the most attractive
logistics/light-industrial hubs of Romania too.
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 logistics/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 triggered a change in the way we work, and how business
is conducted, and, as our markets were recovering and absorbing these changes,
there was a further negative impact on the economic and business environment
from the Ukraine war, resulting in a more uncertain outlook. The changes in
market conditions became more apparent in the second half of 2022, impacting
our overall operating performance.
As such, signing new leases, typically for large multinational and national
corporates, is taking longer in the current market environment as tenants
continue to assess their future occupational plans and adapt to the new
conditions.
In both Poland and Romania, increased construction costs and reduced
development activity, mainly as a result of the COVID-19 pandemic, limited new
supply in these markets. This means that the supply of high-quality offices in
central locations in the coming years will be lower than the average levels
recorded in the past, which may result in higher tenant demand for such
properties.
In addition, we observed a widening gap between A-grade properties with strong
ESG credentials and B-grade properties, both from an investment and a leasing
perspective, which should benefit our portfolio in the future as we actively
manage our high-quality properties with the aim of improving our operational
metrics.
Headline rental levels have remained stable, and the combination of lower
supply and higher inflation should be a strong mitigant against the negative
effects of a potential slowdown in tenant demand as a result of the weakening
economic conditions.
New Leases
Our principal focus continued 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 12 months of 2022, the Group successfully negotiated the take-up
(including expansions) or extension of 206.9k sqm of commercial spaces in
Poland (42.3% of transacted GLA) and Romania (57.7% of transacted GLA), with
an average WALL of 4.4 years. Between 1 January and 31 December 2022, the
majority of our leasing activity, involved new take-up of available spaces,
with such leases accounting for 52.4% of our total leasing activity and were
signed at a WALL of 5.4 years, while renewals accounted for 47.6% signed at a
WALL of 3.8 years.
In total, we signed new leases for 108.5k sqm of GLA, with the majority
involving spaces (+65.0%) leased to new tenants, and the remaining areas being
taken up by existing tenants which were expanding their operations.
· New leases were signed with 82 new tenants for 75.2k sqm of GLA at a
WALL of 5.5 years. The majority were for office spaces, accounting for 61.3%,
with the remainder involving industrial (31.4%) and retail/other commercial
spaces.
· In addition, 52 tenants signed new leases, expanding their operations
by 33.2k sqm at an average WALL of 5.2 years.
Also, in response to the Ukrainian refugee crisis in this period, we offered
14.9k sqm (8.1k sqm already returned to us) of GLA in our properties in Poland
and Romania to local authorities and organisations, which we include in our
performance.
During 2022, 52 of our tenants expanded their operations, taking-up an
additional 33.2k sqm at an average WALL of 5.2 years.
We also renewed leases for a total of 98.4k sqm of GLA with 97 of our tenants
at a WALL of 3.8 years. It is important to note that c.68.1% (by GLA) of these
renewals were for leases that were expiring in 2023 or later.
Summary Leasing Activity for Combined Portfolio in 2022
GLA (k sqm) No. of Tenants* WALL (yrs)
New Leases (incl. expansions) 108.5 125 5.4
Renewals/Extensions 98.4 97 3.8
Total 206.9 198 4.4
* Number of individual tenants.
Selected New Leases Signed in 2022
City Property Use GLA
Phylosophy Design Bucharest (RO) Chitila Logistic Hub Industrial 10.8k
OVT Logisticzentrum Timisoara (RO) Timisoara Industrial Park II Industrial 5.8k
Delivery Solutions Bucharest (RO) Business Park Stefanesti Industrial 4.4k
Max Bet Bucharest (RO) City Offices Office 4.3k
Coherent Solutions Wroclaw (PL) Renoma, Retro Office House Office 3.8k
Selected Lease Extensions Signed in 2022
City Property Use GLA
Automatic Data Processing Romania Bucharest (RO) Gara Herastrau Office 8.3k
Litens Automotive Timisoara (RO) Timisoara Industrial Park I Industrial 8.1k
Carrefour Bucharest (RO) Green Court Complex Office 5.3k
Olympus Business Services Wroclaw (PL) Retro Office House Office 4.6k
Delivery Solutions Bucharest (RO) Globalworth Square Office 4.3k
Average Portfolio Headline Rents in Standing Portfolio (€/sqm/m)
31 Dec. 2022 31 Dec. 2021 Change (%)
Office 14.2 14.0 1.8%
Industrial 4.0 3.8 4.6%
Retail/Commercial 14.2 13.9 2.1%
Average Headline Rents of New Leases Signed (€/sqm/m)
31 Dec. 2022 31 Dec. 2021 Change (%)
Office 14.8 13.9 6.8%
Industrial 3.7 3.9 -4.9%
Retail/Commercial 14.1 12.7 11.0%
Average: 11.9 12.1 -0.9%
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. This reflects the quality of our properties, our active asset
management initiatives, and our approach to sustainable development.
Our leases typically adjust annually in the first quarter of the year, with
eligible leases indexed at an average of 3.8% in 2022. However, this positive
impact is not fully reflected in our averages, as the rates at which leases
were renewed or new leases signed were at their respective ERV rates.
Rental levels can vary significantly between type of spaces, buildings and
sub-markets. Leases signed in 2022 were at €11.9/sqm/m, 0.9% lower than
their prevailing group averages.
Contracted Rents (on annualised basis)
Total annualised contracted rent across our portfolio in Poland and Romania
increased by 3.0% to €189.2 million compared to year-end 2021, driven by
active asset management, indexation, a new acquisition and lease-up in our
development projects (completed or in-progress).
Total annualised contracted rents in our standing commercial portfolio were
€181.3 million on 31 December 2022, up by 3.9% compared to 31 December 2021,
increasing to €182.0 million when including rental income generated by
renting 147 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 also increased by 1.7% to €177.5 million at the end of
December 2022 compared to the same period in 2021, mainly as a result of rent
indexation.
Annualised Contracted Rent Evolution 2022 (€m)
Poland Romania Group
Rent from Standing Commercial Properties ("SCP") 31 Dec. 2021 87.9 86.6 174.5
Less: Space Returned (9.7) (2.0) (11.7)
Plus: Rent Indexation 2.5 2.6 5.2
Plus/Less: Lease Renewals (net impact) & Other 0.4 (0.3) 0.1
Plus: New Take-up 5.4 4.0 9.4
Total L-f-L Rent from SCP 31 Dec. 2022 86.6 90.9 177.5
Plus: Standing Commercial Properties Acquired During the Period - 0.6 0.6
Plus: Developments Completed During the Period - 3.2 3.2
Total Rent from Standing Commercial Properties 86.6 94.7 181.3
Plus: Residential Rent - 0.7 0.7
Total Rent from Standing Properties 86.6 95.4 182.0
Plus: Active and Pre-lets of Space on Projects Under Development/ 6.7 0.5 7.2
Refurbishment
Total Contracted Rent as at 31 Dec. 2022 93.3 95.9 189.2
Combined Annualised Commercial Portfolio Contracted Rent Profile as at 31 Dec.
2022
Poland Romania Group
Contracted Rent (€ m) 93.3 95.2 188.5
Tenant origin - %
Multinational 68.2% 86.4% 77.4%
National 30.6% 12.4% 21.4%
State Owned 1.1% 1.3% 1.2%
Note: Commercial Contracted Rent excludes c.€0.7 million from residential
spaces as at 31 December 2022.
Annualised Contracted Rent by Period of Commencement Date as at 31 Dec. 2022
(€m)
Active Leases H1-2023 H2-2023 H1-2024 H2-2024 >2024 Total
Standing Properties 177.4 4.2 0.5 0.0 - - 182.0
Developments 6.2 0.6 0.3 - 0.1 - 7.2
Total 183.6 4.7 0.8 0.0 0.1 - 189.2
Annualised Commercial Portfolio Lease Expiration Profile as at 30 June 2022
(€m)
Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 >2031
Total 20.2 28.8 19.0 19.6 25.7 19.0 13.8 27.9 4.1 10.4
% of total 10.7% 15.3% 10.1% 10.4% 13.6% 10.1% 7.3% 14.8% 2.2% 5.5%
The Group's rent roll across its combined portfolio is well diversified, with
the largest tenant accounting for 5.2% of contracted rents, while the top
three tenants account for 10.6% and the top 10 account for 24.8%.
Cost of Renting Spaces
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 signed (new take-up or lease extension), space
leased (office, industrial, other), contract duration and other factors.
Headline (base) rents present the reference point typically communicated in
the real estate market when referring to the level at which lease contracts
are expected to be signed or are signed. However, the effective rent is a more
useful indicator of a rental agreement's profitability.
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. To analyse the effective
rent more accurately in this period, we excluded ESG leases offered as
assistance to support Ukrainian refugee initiatives in Poland and Romania.
Overall, in 2022, we successfully negotiated the take-up (including
expansions) or extension of 191.0k sqm of commercial spaces in our portfolio
(excluding ESG leases). The weighted average effective rent for these new
leases was €8.8/sqm/month with a WALL of 4.4 years.
· Industrial leases completed in the period accounted for 24.7% of the
total leasing activity, resulting in the lower average headline and effective
rent.
The difference between headline (base) and effective rents in 2022 was, on
average, 26.1%, which is lower than for FY2021 (average of 29.2%) but reflects
the fact that market conditions continued to be challenging.
In total, new leases signed during the year will generate future rental income
of €128.9 million (including auxiliary spaces), with leases from office
properties accounting for 73.1% of future rental income.
Weighted Average Effective Rent (€ / sqm / m) - 2022
Poland Romania Group
Headline Commercial Rent 15.9 9.0 11.9
Less: Rent Free Concessions (2.3) (0.9) (1.5)
Less: Tenant Fitouts (2.2) (0.8) (1.3)
Less: Broker Fees (0.5) (0.1) (0.3)
Effective Commercial Rent 10.9 7.2 8.8
WALL (in years) 4.0 5.1 4.4
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 2022 remained high, at
99.3% (over 99% for FY2021). This is due to the long-term partnerships we have
established and maintained with high-quality national and multinational
tenants since the inception of the Group, which have helped us minimise the
impact on rent collections in this period of higher economic uncertainty and
ensure sustainable cash flow generation.
Portfolio Valuation
In line with our practice of biannual valuations, we valued our entire
portfolio in Poland and Romania as of 30 June and 31 December 2022.
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 audited annual
consolidated financial statements as of and for the period ended 31 December
2022).
Assigning the appraisal of our portfolio to four independent and experienced
service providers makes the process of determining the value of our properties
transparent and impartial. Through our oversight, we ensure that a consistent
methodology, reporting, and timeframe are respected.
The main drivers in the growth of our portfolio since the inception of the
Group have been:
· Acquisition or development of high-quality properties in Poland and
Romania,
· Active asset management of the properties, and
· The performance of the real estate markets in which we operate.
Overall, our total combined portfolio value was €3.0 billion at the end of
2019, and remained effectively unchanged in 2020 due to the impact of the
COVID-19 pandemic, increasing to €3.2 billion at 31 December 2021 due to
additions.
In valuing our properties, key market indicators used by the four 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.
As at 31 December 2022, third-party appraisals were impacted by higher
inflation and interest rates, increased market volatility and a more uncertain
outlook. This has led to the application of assumed (in several cases) yield
expansion and higher discount rates in determining the valuations. As such,
the portfolio's overall third-party appraised value on 31 December 2022 was
estimated at €3.2 billion, +0.2% higher compared to the end of 2021.
The completion of six high-quality industrial facilities in Romania, the
acquisition of a "small business units" facility and the net positive impact
from our developments (in progress or under refurbishment) added €75.5
million in portfolio value, which was offset by the like-for-like decrease
(€35.6 million/1.3%) in the appraised value of our standing commercial
properties compared to 31 December 2021.
Combined Portfolio Value Evolution 31 Dec. 2022 (€m)
Poland Romania Group
Total Combined Portfolio Value at 31 Dec. 2021 1,612.8 1,539.5 3,152.3
Less: Properties Held in Joint Venture * - (86.7) (86.7)
Total Investment Properties ** at 31 Dec. 2021 1,612.8 1,452.8 3,065.6
Plus: Transactions - (6.5) (6.5)
o/w New Acquisitions - 7.2 7.2
o/w Disposals - (13.7) (13.7)
Plus: Capital Expenditure 39.0 29.3 68.3
o/w Developments 8.1 13.0 21.1
o/w Standing Properties 30.9 16.3 47.2
o/w Future Developments - - -
Plus: Net Revaluations Adjustments (67.3) (20.5) (87.8)
o/w Developments (11.7) 4.8 (6.9)
o/w Standing Properties (55.6) (27.3) (82.9)
o/w Lands, Future Developments & Acquisitions - 2.0 2.0
Total Investment Properties ** at 31 Dec. 2022 1,584.5 1,455.1 3,039.6
Plus: Properties Held in Joint Venture * - 119.3 119.3
o/w Capital Expenditure & Acquisitions - 24.7 24.7
o/w Net Revaluation Adjustments - 7.9 7.9
Total Portfolio Value at 31 Dec. 2022 1,584.5 1,574.4 3,158.9
* Properties held through joint ventures are shown at 100%; Globalworth
owns 50% stake in the respective joint ventures.
** Excludes adjustments made to investment properties, for sale of real estate
assets following the year end.
Note: Certain casting differences in subtotals/totals are due to figures
presented to 1 decimal place.
Financial Review
Resilient performance despite global challenges
"Our strong operational focus and business expansion partly reflected in our
annual results, as we navigate through challenging market conditions.
Stamatis Sapkas
Chief Financial Officer
1. Introduction and Highlights
Our 2022 performance was resilient despite the global challenges, as we
continued implementing our "local landlord" approach in managing our business.
To help explain our performance, we use a number of measures typically
observed in our sector. These include quoting several measures on a
consolidated basis (including our joint ventures), as it best describes how we
manage our portfolio and overall business, like-for-like measures and measures
prescribed by EPRA.
The measures defined by EPRA are designed to enhance transparency and
comparability across the European real estate sector.
2. Revenues and Profitability
Our main source of revenue is rent that we receive from leasing spaces
available in our properties to our partners. We also receive other income
including that from service charges to cover the costs of communal or shared
spaces and services in our properties, however this income is netted off
against our total service charge cost.
Revenues
€239.3m
9.1% on 2021
IFRS Earnings per Share(2)
(8) cents
21 cents in 2021
EPRA NRV(1,3)
€1,835.5m
(4.3)% on 31 Dec. 2021
Adjusted Normalised EBITDA(1,4)
€126.0m
(3.2)% on 2021
LTV(1,5)
42.7%
40.1% at 31 Dec. 2021
NOI(1)
€139.7m
(3.2)% on 2021
Combined Portfolio Value (OMV)(1)
€3.2bn
0.2% on 31 Dec. 2021
EPRA NRV per Share(1,3)
€8.29
(4.3)% on 31 Dec. 2021
EPRA Earnings per Share(1,2)
32 cents
18.5% on 2021
Dividends Paid in 2022 per Share
27 cents
(10.0)% on 2021
1. See Glossary (pages 152-154) 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 46 for further details.
5. See note 25 of the consolidated financial statements for calculation.
Total Revenue & Net Operating Income
Year ended 31 Dec. 2022 2021
€'m €'m
Contracted rent 180.9 176.4
Adjustment for lease incentives (31.1) (26.1)
Rental income 149.8 150.3
Service charge income 86.9 63.2
Other income 2.6 5.9
Total Revenue 239.3 219.4
Operating Expenses (99.6) (75.1)
Net Operating Income 139.7 144.3
Globalworth generated total consolidated revenue of €239.3 million during
2022, up by 9.1% compared to €219.4 million generated during 2021.
Gross rental income which accounts for the majority of our revenue was
€180.9 million, 2.6% higher compared to the year prior. Decreasing however
to €149.8 million when accounting for costs associated of renting spaces in
our portfolio, and which are amortised during the life of the leases. As such
our year-on-year (net) rental income was marginally lower (0.3% lower)
compared to 2021.
Year ended 31 Dec. 2022 2021
€'m €'m
Office 126.9 128.7
Mixed-Use 10.4 10.6
Industrial 11.1 9.5
Other 1.4 1.4
Rental Income by Segment 149.8 150.3
Like-for-like rental income on standing properties decreased by 2.8%, or
€4.0 million, to €138.8 million in 2022. However, rental income from
standing properties owned in Romania by the Group throughout 2021 and 2022 was
higher by 2.7% at €68.1 million. In Poland, like-for-like rental income was
lower by 7.6% at €70.7 million; however, the majority of this decrease
(€5.2 million or 6.8%) was associated with Warta Tower (one of the
properties held for sale) where TUIR Warta, the principal tenant in the
building, vacated its premises at the end of 2021 and the building remaining
only partially occupied in 2022. Excluding Warta Tower, rental income on our
remaining Polish properties was marginally lower by €0.5 million or 0.8%.
Rental income received during the year from properties acquired or delivered
in 2021 and 2022 was €11.0 million. This income was received from
Globalworth Square, Supersam and Renoma (both under refurbishment) and three
industrial facilities which were added to our portfolio in 2021 and had only
partially contributed to the year prior, and three other industrial facilities
that were acquired or delivered in 2022.
In 2022, we recorded a service charge income of €86.8 million, 37.6% higher
compared to €63.1 million in 2021, due to the inclusion of new properties in
the portfolio and an increase in service charge rate per square metre of 19.5%
across our standing portfolio. This income is mainly linked to ancillary
expenses that are typically reimbursed by tenants as the vast majority of our
leases are triple-net, and include utility costs (energy, heating, water,
electricity, insurance, etc.) and charges for services provided to tenants
(cleaning, security, etc.).
In addition, we received €2.6 million for other services provided to tenants
and partners which included fit-out services, marketing fees and other.
Revenue Share per Country
Year ended 31 Dec. 2022 (€'m)
Poland Romania
2021 51.0% 49.0%
Revenue Share per Country
Year ended 31 Dec. 2021 (€'m)
Poland Romania
2021 52.6% 47.4%
Net Operating Income ("NOI"), for the 12 months of 2022 was €139.7 million,
after taking into account property and fit-out costs, lower by 3.2% compared
to 2021. Overall operating expenses in our portfolio increased by €24.5
million to €99.6 million of which 89.8% were re-invoiced to tenants. The
portion of our operating expenses not re-invoiced by tenants typically
involved spaces available to be leased.
Net Operating Income Build Up
Year ended 31 Dec. (€'m)
NOI - 2021 NOI Change - Poland NOI Change - Romania NOI - 2022
144.3 (8.6) 4.0 139.7
Net Operating Income Share per Country
Year ended 31 Dec. 2022 (€'m)
Poland Romania
2021 50.3% 49.7%
Net Operating Income Share per Country
Year ended 31 Dec. 2021 (€'m)
Poland Romania
2021 54.7% 45.3%
Adjusted Normalised EBITDA
We use Adjusted Normalised EBITDA as a key performance measure to evaluate our
recurring operational results. As such, we exclude from the calculation
non-operational and non-cash items including revaluation or capital gains,
exceptional income or costs and other adjustments.
Our Adjusted Normalised EBITDA was €126.0 million (excluding share of
minority interests EBITDA was €125.9 million), lower by 3.2% compared to
2021 (€130.2 million), as a result of lower NOI which was only partially
offset by lower administrative and other expenses.
Adjusted Normalised EBITDA
Year ended 31 Dec. 2022 2021
€'m €'m
Profit before net financing cost 35.4 110.9
Plus: Fair value loss/(gain) on investment property 89.5 5.7
Plus: Depreciation on other long-term assets 0.7 0.5
Plus: Other expenses 2.0 2.4
Plus: Acquisition costs 0.0 -
Plus: Other income (0.5) (1.1)
Plus: Foreign exchange (gain)/loss (0.9) (0.2)
Plus: Loss/(Gain) from fair valuation of financial instrument (0.2) 0.4
Plus: Non-recurring expenses - 11.5
Adjusted Normalised EBITDA 126.0 130.2
Share of minority interest (0.1) -
Adjusted Normalised EBITDA (excluding minority share) 125.9 130.2
Property Valuation
Over the past 12 months, property values in our markets have come under
pressure, given the challenging macroeconomic and geopolitical environment.
Also, operating performance, expanding yields, higher discount rates and capex
invested in our portfolio, which is fully reflected in valuations and
operations, further contributed to recording €89.5 million in negative
revaluations in our consolidated property portfolio on 31 December 2022.
Approximately 75.9% of the net fair value loss was in our office and mixed-use
properties in Poland, while in Romania €24.1 million (or 26.9%) of net fair
value loss in our standing portfolio was partially offset by 2.8% net fair
gains in our industrial properties.
Year ended 31 Dec. 2022 2021
€'m €'m
Fair value (loss) on investment property (89.5) (5.7)
Finance Costs and Income
Our finance costs mainly include net interest on bonds, bank loans and other
financing sources such as a Revolving Credit Facility. In 2022 our total
finance cost was €52.5 million, lower by €3.0 million compared to the
prior year, a result of net lower indebtedness following the repaying of the
remaining GW 17/22 bond in June, reducing the interest cost by €4.5 million,
which was partially offset by the increase in EURIBOR base rates particularly
in the second half of the year on existing and new financing facilities.
In addition, finance income was €2.7 million, higher by €1.0 million
compared to 2021. Higher interest received from shareholder loans provided to
finance our joint ventures and higher finance income (by 170% or €0.5
million) as a result of higher/positive interest rates collected on Euro,
Romanian Leu (RON) and Polish Zloty deposits and current accounts balances
were partially offset (€0.2 million) by changes in the fair value in
financial instruments during the year.
Overall, net finance costs were €49.8 million for the twelve months of 2022,
lower by 7.3% or €4.0 million compared to 2021.
Finance Cost & Income
Year ended 31 Dec. 2022 2021
€'m €'m
Finance Cost 52.5 55.5
Finance Income 2.7 1.7
Net Finance Cost 49.8 53.8
Share in Joint Venture
We hold interests in three joint ventures in Romania which principally focus
on developing and managing industrial parks. In 2022 the share of profit in
our joint ventures was €3.2 million, compared to €5.0 million in 2021,
mainly due to the negative impact of the properties' revaluation. We have to
note, however, that operating performance improved by €1.2 million, with
losses excluding revaluations recorded lower by €2.7 million, to €2.4
million for the year, as we continue to invest in the three joint ventures and
lease the available spaces in the facilities which are in their lease-up
phase.
IFRS and EPRA Earnings
To measure our profitability, we measure both IFRS and EPRA Earnings. The
latter, we consider as a more appropriate measure for real estate companies as
it excludes non-cash or non-recurring items such as revaluation, capital
gains, fair value adjustments and related deferred tax impact of adjustments
made to profit after tax.
We recorded negative IFRS Earnings of €16.1 million (-8 cents per share) for
2022, compared to positive earnings of €47.5 million (21 cents per share) in
2021. This decrease is mainly attributed to the €89.5 million of revaluation
losses recorded for the period compared to revaluation losses of €5.7
million in 2021.
Adjusting for revaluation losses with related deferred tax and the €11.5
million exceptional and non-recurring costs associated with the offer for
Globalworth shares initiated in May 2021, the adjusted IFRS profit after tax
for 2022 was marginally lower by €2.2 million compared to 2021, at €72.9
million for the year.
EPRA Earnings for 2022 were €71.6 million (or 32 cents per share), up by
21.2% from the prior year due to improved operating results, as lower
operating performance was offset from lower cost base, net finance costs and
income tax expenses (excluding deferred tax expense on investment property)
compared to the same period in 2021.
IFRS Earnings Vs EPRA Earnings
Total Per Share
€'m cents
IFRS Earnings (17.0) (8)
FV loss on properties 89.5 40
Losses on disposal of investment properties 1.9
FV gain on financial instrument (0.2) 0
Deferred Tax (1.0) 0
JVs & Others (1.6) 0
EPRA Earnings 71.6 32
3. Assets
Assets Note to the financial statements 31 Dec. 2022 31 Dec. 2021
€'m €'m
NCA - Investment property 3 2,945.5 2,966.1
CA - Investment property held for sale 126.0 130.5
Total Investment Property 3,071.5 3,096.6
NCA - Investments in joint ventures 27 68.0 48.9
Cash and cash equivalents 19 163.8 418.7
Other Assets 65.7 63.2
Total Assets 3,368.9 3,627.5
The two largest assets in our balance sheet are real estate/investment
property and cash and cash equivalents, which account for over 96% of our
total assets.
The balance sheet value of our investment property (freehold and properties
held for sale) was €3,071.5 million as of 31 December 2022, €25.1 million
or 0.8% lower compared to year-end 2021. This decrease was mainly due to the
negative revaluations of real estate properties (€89.5 million) and disposal
of residential units (€14.1 million), which offset the positive impacts
mainly from the acquisition of our first small business units project in the
north-west of Bucharest (€5.5 million), the purchase of land for future
development (€1.8 million), and investments made in properties under
development and other value accretive investments on standing properties
(€70.3 million).
IP Movement Freehold €'m
Poland Romania Total
€'m €'m €'m
OMV Dec 21 1,612.8 1,539.0 3,151.8
JV properties - 86.7 86.7
Investment property - Dec 21 1,612.8 1,452.3 3,065.1
CAPEX 38.97 29.29 68.256
Fair value loss (67.3) (21.6) (88.8)
Apartment Disposals - (14.1) (14.1)
Asset acquisition - 7.4 7.4
Investment Property - Dec 22 1,584.5 1,453.3 3,037.8
JV properties - Dec 22 - 119.0 119.0
OMV Dec 22 1,5845 1,572.3 3,156.8
Cash and cash equivalents at the end of the year were €163.8 million
(€418.7 million on 31 December 21), mainly as a result of the repayment of
the remaining €323.2 million of our inaugural €550 million bond at the end
of June and the distribution of €59.8 million of dividend to shareholders
during the year.
Our investment in joint ventures increased by €19.1 million, reaching
€68.0 million on 31 December 2022, due to an €8.4 million investment in a
new/third joint venture company mainly to finance the acquisition of new
standing investment facility and facilitate further development, and a €6.7
million further investment in two other companies mainly to finance subsequent
phases in the Constanta Business Park and Chitila Logistic Hub projects. In
addition, for 2022 our share of profit in our joint ventures was €3.2
million and we received €0.8 million of net interest income.
Other assets mainly comprised trade and other receivables and equity
investments (where we have a right of first offer) and accounted for 1.9%
(€65.7 million) of our total assets as of 31 December 2022.
Total assets at the end of the period were €3,368.9 million, lower by 7.1%
compared to 31 December 2021 (€3,627.5 million).
4. Liabilities
Liabilities Note to the financial statements 31 Dec. 2022 31 Dec. 2021
€'m €'m
NCL - Interest-bearing loans and borrowings 14 1,433.6 1,285.6
CL - Interest-bearing loans and borrowings 14 21.6 348.3
Total Interest-bearing loans and borrowings 1,455.2 1,633.9
Deferred Tax Liabilities (including liabilities associated with the assets 11.1 159.9 156.3
held for sale)
Other Current Liabilities 69.5 72.4
Other Non-Current Liabilities 26.8 26.2
Total Liabilities 1,711.5 1,888.9
Total Liabilities for the Group were €1,711.5 million at year-end 2022,
€177.4 million lower compared to 31 December 2021. This decrease is mainly
due to Interest-bearing Loans and Borrowings of the Group, which accounted for
85.0% of Total Liabilities, and were lower by €178.7 million on 31 December
2022.
Deferred Tax Liabilities were €159.9 million on 31 December 2022, €3.6
million higher compared to the prior year, mainly due to improved fiscal
profits and the transition of certain subsidiaries to a taxable profit
position.
Other Current and Non-Current Liabilities accounted for 5.6% of the Total
Liabilities and included items such as tenant deposits, lease liabilities, and
other trade and other payables. During the year, such amounts overall
decreased by €2.3 million.
5. Interest-bearing Loans and Borrowings
Overview and Select Initiatives
The total consolidated debt for the Group at 31 December 2022 was €1,455.2
million (31 December 2021: €1,633.9 million) comprising mainly of medium to
long-term debt, denominated entirely in Euro.
Our largest debt-related activity in 2022, involved the repayment from our own
cash resources of the remaining €323.2 million of our inaugural €550
million bond that was due to mature in June 2022, thus resulting in
Globalworth having no material debt maturing until March 2025.
In addition, during 2022 we:
· repaid the coupon on the 2022 bond and also the annual coupons of the
2025 and 2026 bonds,
· entered into a six-year term loan agreement for €85 million with
IFC,
· drew down on part of the RCF available to us until April 2024,
· entered into a 10-year term loan agreement for €110 million with
BCR/Erste Bank (both part of Erste Bank Group) for the refinancing of the
logistics portfolio, not drawn at end of year 2022. Out of this amount, the
Group is entitled to €95 million and the remainder will refinance one of our
joint venture companies, and
· entered into a three-year term new RCF for €50 million with Erste
Bank, not drawn until end of year.
Interest-bearing Loans and Borrowings Profile
The total consolidated debt for the Group on 31 December 2022 was €1,455.2
million (31 December 2021: €1,633.9 million).
Most of the debt remained in unsecured facilities, which accounted for 75.4%
(31 December 2021: 77.9%) of the total debt outstanding. Unsecured facilities
included the two bonds maturing in March 2025 and July 2026 accounting for
€950.0 million, the €85.0 million facility from the IFC, and €60.0
million from a Revolving Credit Facility. The remainder debt (24.6%) is
secured with real estate mortgages, pledges on shares, receivables and loan
subordination agreements in favour of the financing parties.
The weighted average interest rate cost for the Group remained low throughout
the year, despite the higher inflationary and interest rate environment, as
80.7% of our debt carries a fixed interest rate charge and 4.1% of debt
facilities are hedged through interest rates caps, therefore the weighted
average cost of debt on 31 December 2022 increased marginally by 16 basis
points to 2.89% compared to 2021 despite EURIBOR increasing by over 200 basis
points during the year.
The high level of fixed interest rate debt ensures 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 31 December 2022, an increase of 100 basis
points in the EURIBOR would result in a higher interest expense of €2.8
million per annum.
The average maturity period of our debt remained above 3.0 years at 3.3 years
(2021: 3.5 years), not including the 10-year term loan facility from BCR/Erste
Bank undrawn on December 2022.
· All our debt facilities are Euro denominated.
· Interest is based either on one month, three months or six months
EURIBOR plus a margin (19.3% of the outstanding balance compared to 8.5% at 31
December 2021).
During 2022, we repaid €2.8 million in bank debt principal amounts, the
entire remaining balance of the 2022 Eurobond (€323.1 million) and €45.7
million of accrued interest on the Group's outstanding debt facilities,
including €37.6 million in relation to the full annual coupon for the
Eurobonds of the Company.
Debt Covenants
As of 31 December 2022, the Group was 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 at 31 December 2022 being the
following:
Unsecured Eurobonds, Revolving Credit Facility and IFC loan
· the Consolidated Coverage Ratio, with minimum value of 200% (150%
applicable for the Revolving Credit Facility and IFC loan);
· 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 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 2022.
Weighted Average Interest Rate Versus Debt Duration to Maturity
30 Jun 20 31 Dec 20 30 Jun 21 31 Dec 21 30 Jun 22 31 Dec 22
Weighted average interest rate 2.52% 2.73% 2.73% 2.73% 2.55% 2.89%
Weighted average duration to maturity 4.2 4.5 4.0 3.5 3.8 3.3
Maturity Profile (by year) of the Principal Loan Outstanding at 31 Dec. 2022
(€ million)
2023 2024 2025 2026 2027 2028 2029
€'m €'m €'m €'m €'m €'m €'m
- 94,314,000 662,184,849 400,000,000 62,260,000 85,000,000 151,825,000
6. Liquidity & Loan-to-Value Ratio ("LTVî)
Managing our 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.
As of 31 December 2022, the Group had cash and cash equivalents of €163.8
million (31 December 2021: €418.7 million), of which €7.8 million was
restricted due to various conditions imposed by the financing banks.
In addition, the Group at year-end 2022 had undrawn €95.0 million (plus
€15.0 million undrawn to be allocated to joint ventures) in secured
committed debt facilities and a further €205 million in unsecured revolving
credit facilities.
The Group's loan-to-value ratio on 31 December 2022 was 42.7%, compared to
40.1% on 31 December 2021, mainly due to the impact of negative revaluations
in our standing properties, and capex invested in our portfolio which was not
fully reflected in valuations and operations.
7. EPRA NRV
The EPRA Net Reinstatement Value ("NRV") is a measure used to highlight the
value of a company's net assets on a long-term basis, on the assumption that
the entities do not sell their assets.
EPRA NRV was €1,835.5 million as at 31 December 2022, lower by 4.3% compared
to 31 December 2021 (€1,917.5 million). As a result, EPRA NRV per share also
decreased to €8.29 per share (31 December 2021: €8.66 per share).
The decrease in EPRA NRV over the 12 months of 2022 was largely due to the
negative revaluations of €89.5 million on our real estate property portfolio
and the €59.8 million of dividends paid during the year to shareholders
which offset the €12.5 million positive effect in our EPRA Earnings (€71.6
million for the year).
EPRA NRV per Share (€)
€
EPRA NRV Dec-21 8.66
Income statement
EPRA Earnings 0.32
FV loss on Property portfolio (0.40)
Non-EPRA Earnings 0.1
Changes in equity
Dividends (0.27)
JV and NCI adjustment (0.03)
EPRA NRV Dec-22 8.29
8. Cash Flows
Year ended 31 Dec. 2022 2021
€'m €'m
Operating Profit before Changes in Working Capital 126.4 119.4
Changes in Working Capital (63.3) (54.1)
Cash Flows from Operating Activities 63.1 65.3
Cash Flows used in Investing Activities (73.8) (101.4)
Cash Flows used in Financing Activities (243.9) (72.8)
Net Increase in Cash and Cash Equivalents (254.6) (108.9)
Cash and Cash Equivalents at Year End 163.8 418.7
Cash flows from operating activities before working capital changes during
2022 was €126.4 million, higher by €7.0 million or 5.8% compared to 2021.
Lower administrative expenses, also associated with the exceptional and
non-recurring expenses incurred in 2021, and lower finance interest cost due
to lower net lower indebtedness of the Group, which offset the lower net
operating income.
Overall, cash inflow from operations for the 12 months of 2022 was €63.1
million, lower by 3.4% (or €2.2 million compared to 2021 as a result of
higher interest and taxes paid by €1.2 million and negative changes in
working capital by of €1.0m.
During the year, cash used in investments was €73.8 million, €27.6 million
lower compared to €101.4 million in 2021. Despite a decrease in new
acquisitions by €12.4 million compared to 2021, investment in 100% owned
properties (standing and developments) reached €71.2 million (€2.4 million
higher compared to 2021). Proceeds from sales, mainly from non-core
residential units and ROFO assets, were €13.8 million higher compared to
2021, reaching €16.9 million for 2022.
Cash used in financing was €243.9 million in 2022 (€171.1 million higher
compared to 2021), mainly associated with the repayment of €323.2 million
for the 17/22 bond, the drawdown of €146.8 million from IFC and RCF
facilities in the second half of the year and reduction of dividend
distribution by €6.5 million to €59.8 million in 2022.
9. Dividends
Year ended 31 Dec. 2022 2021
€'m €'m
Dividends Paid - € m 59.8 66.3
Dividends Paid per Share - Cents 27 30
Globalworth distributes bi-annually at least 90% of its EPRA Earnings to its
shareholders. As a result, in March 2022, it paid an interim dividend of 13
cents per share (€28.8 million) in respect of the six-month period ended 31
December 2021. In addition, in September 2022, it paid the first interim
dividend in respect of the six-month period ended 30 June 2022 of 14 cents per
share (€31.0 million).
In total in 2022 the Group paid €59.8 million or 27 cents per share in
dividends.
The results for the period are set out in the consolidated statement of
comprehensive income on page 84.
EPRA Performance Measures Snapshot
Our performance under the EPRA guidelines
The European Public Real Estate Association ("EPRA"), is a widely recognised
market standard guidance and benchmark provider for the European real estate
industry.
The following performance indicators have been prepared in accordance with
best practices as defined by EPRA in its Best Practices Recommendations guide,
available on EPRA's website (www.epra.com (http://www.epra.com) ).
Figures in € million, unless otherwise indicated 2022 2021 Definition Purpose pgs
EPRA NRV 1,835.50 1,917.46 EPRA Net Reinstatement Value. Metric making adjustments to the NAV per the IFRS financial statements to 50
provide stakeholders with the most relevant information on the fair value of
the assets and liabilities of a real estate investment company, assuming that
entities never sell assets and aims to represent the value required to rebuild
the entity.
EPRA NRV per share (€) 8.29 8.66 EPRA Net Reinstatement Value per share. 50
EPRA Earnings 71.6 59.10 Earnings from operational activities. Metric measuring a company's underlying operating results and an indication of 47
the extent to which current dividend payments are supported by earnings.
EPRA Earning per share (€) 0.32 0.27 Earnings from operational activities per share. 47
EPRA Net Initial Yield ("NIY") (%) 5.2% 5.0% Annualised rental income based on the cash rents passing at the balance sheet A comparable measure for portfolio valuations. 149
date, less non-recoverable property operating expenses, divided by the market
value of the property, increased with (estimated) purchasers' costs.
EPRA Topped-up NIY (%) 5.8% 5.7% This measure incorporates an adjustment to the EPRA NIY in respect of the A comparable measure for portfolio valuations. 149
expiration of rent-free periods (or other unexpired lease incentives such as
discounted rent periods and step rents).
EPRA Vacancy (%) 14.0% 13.0% Estimated Market Rental Value (ERV) of vacant space divided by ERV of the A 'pure' (%) measure of investment property space that is vacant, based on 149
whole portfolio. ERV.
Financial statements
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Note 31 December 31 December
2022 2021
€'000 €'000
Revenue 7 239,251 219,350
Operating expenses 8 (99,571) (75,098)
Net operating income 139,680 144,252
Administrative expenses 9 (13,712) (25,622)
Acquisition costs (7) -
Fair value loss on investment property 3.4 (89,471) (5,738)
Share-based payment expense 24 - (532)
Depreciation and amortisation expense (673) (536)
Other expenses (2,013) (1,851)
Other income 524 1,051
Foreign exchange gain 851 214
Loss from fair value of financial instruments at fair value through profit or 16 222 (386)
loss
Profit before net financing cost 35,401 110,852
Finance cost 10 (52,532) (55,539)
Finance income 2,694 1,749
Share of profit of equity-accounted investments in joint ventures 27 3,219 5,010
Loss/profit before tax (11,218) 62,072
Income tax expense 11 (4,886) (14,583)
Loss/profit for the year (16,104) 47,489
Items that will not be reclassified to profit or loss
Loss on equity instruments designated at fair value through other (5,391) -
comprehensive income
Total comprehensive income for the year (21,495) 47,489
Note 31 December 31 December
2022 2021
€'000 €'000
(Loss)/profit attributable to: (16,104) 47,489
- ordinary equity holders of the Company (16,961) 47,489
- non-controlling interests 857 -
Total comprehensive income attributable to: (21,495) 47,489
- ordinary equity holders of the Company (22,352) 47,489
- non-controlling interests 857 -
Earnings per share (€ cents)
- Basic 12 (8) 21
- Diluted 12 (8) 21
Financial statements
Consolidated statement of financial position
As at 31 December 2022
Note 2022 2021
€'000 €'000
ASSETS
Investment property 3 2,945,460 2,966,080
Goodwill 12,349 12,349
Advances for investment property 5 4,393 3,436
Investments in joint ventures 27 67,967 48,908
Equity investments 7,521 12,109
Other long-term assets 1,784 2,083
Prepayments 226 338
Deferred tax asset 11.1 161 151
Non-current assets 3,039,861 3,045,454
Financial assets at fair value through profit or loss 16 3,554 7,324
Trade and other receivables 18 22,337 16,208
Contract assets 13 9,967 6,106
Guarantees retained by tenants 98 885
Income tax receivable 840 117
Prepayments 2,430 2,104
Cash and cash equivalents 19 163,767 418,748
202,993 451,492
Investment property held for sale 3.3 126,009 130,537
Total current assets 329,002 582,029
Total assets 3,368,863 3,627,483
Note 2022 2021
€'000 €'000
EQUITY AND LIABILITIES
Issued share capital 21 1,704,476 1,704,476
Treasury shares 24.5 (4,859) (4,917)
Fair value reserve of financial assets at FVOCI (5,469) -
Share-based payment reserve 24 156 156
Retained earnings (37,798) 38,914
Equity attributable to ordinary equity holders of the Company 1,656,506 1,738,629
Non-controlling interests 862 -
Total equity 1,657,368 1,738,629
Interest-bearing loans and borrowings 14 1,433,631 1,285,641
Deferred tax liability 11.1 154,866 150,713
Lease liabilities 3.2 19,861 18,762
Guarantees retained from contractors 1,995 2,661
Deposits from tenants 3,897 3,844
Trade and other payables 1,034 956
Non-current liabilities 1,615,284 1,462,577
Interest-bearing loans and borrowings 14 21,600 348,279
Guarantees retained from contractors 3,652 3,361
Trade and other payables 35,679 39,788
Contract liability 13 1,743 1,940
Other current financial liabilities 67 261
Current portion of lease liabilities 3.2 1,669 1,303
Deposits from tenants 17,477 16,068
Income tax payable 382 550
82,269 411,550
Liabilities directly associated with the assets held for sale 3.2, 3.3 13,942 14,727
Total current liabilities 96,211 426,277
Total equity and liabilities 3,368,863 3,627,483
The financial statements were approved by the Board of Directors on 23 March
2023 and were signed on its behalf by:
Andreas Tautscher
Director
Financial statements
Consolidated statement of cash flows
For the year ended 31 December 2022
Note 2022 2021
€'000 €'000
Profit/(loss) before tax (11,218) 62,072
Adjustments to reconcile profit/(loss) before tax to cash flows from operating
activities
Fair value loss on investment property 3.4 89,471 5,738
Loss on sale of investment property 1,851 471
Share-based payment expense 24 - 532
Depreciation and amortisation expense 673 536
Net increase in allowance for expected credit losses 20.2 44 1,134
Foreign exchange (gain)/loss (851) (214)
Loss from fair valuation of financial instrument at fair value through profit 16 (222) 386
or loss
Share of (profit) of equity-accounted joint ventures 27 (3,219) (5,010)
Finance income (2,694) (1,749)
Financing cost 10 52,532 55,539
Operating profit before changes in working capital 126,367 119,435
(Increase) in contract assets, trade and other receivables (10,547) (4,513)
(Decrease) in contract liabilities, trade and other payables (6,435) (3,872)
Interest paid (45,662) (44,641)
Interest received 723 267
Income tax paid (2,168) (1,949)
Interest received from joint ventures 797 536
Cash flows from operating activities 63,075 65,263
Note 2022 2021
€'000 €'000
Investing activities
Expenditure on investment property completed
and under development or refurbishment (71,235) (68,846)
Payment for land acquisitions (1,732) -
Advances for investment property 4,100 -
Proceeds from sale of land 502 -
Payment for acquisition of investment property (5,584) (18,011)
Proceeds from sale of investment property 12,411 3,010
Investment in financial assets at fair value through profit or loss 16 (38) (143)
Proceeds from sale of financial assets through profit and loss 4,030 85
Payments for investment in equity investments 17 (803) (1,740)
Investment in and loans given to joint ventures 27 (28,510) (23,354)
Repayment of loan from joint ventures 27 13,429 8,111
Payment for purchase of other long-term assets (371) (468)
Cash flows used in investing activities (73,801) (101,356)
Financing activities
Proceeds from issuance of share capital 24.1 - 100
Proceeds for issuance of new shares in subsidiary
from non-controlling interest 5 -
Proceeds from interest-bearing loans and borrowings 14 146,825 -
Repayment of interest-bearing loans and borrowings 14 (325,963) (2,796)
Payment of interim dividend to equity holders of the Company 22 (59,771) (66,286)
Payment for lease liability obligations 3.2 (2,289) (1,659)
Payment of bank loan arrangement fees and other financing costs 15 (2,725) (2,168)
Cash flows used in financing activities (243,918) (72,809)
Net (decrease) in cash and cash equivalents (254,644) (108,902)
Effect of exchange rate fluctuations on cash and bank deposits held (337) (151)
Cash and cash equivalents at the beginning of the year 19 418,748 527,801
Cash and cash equivalents at the end of the year 19 163,767 418,748
Financial statements
Consolidated statement of changes in equity
For the year ended 31 December 2022
Note Issued Treasury Share-based Fair value Retained Total Non-controlling interests Total
share capital shares payment reserve of earnings €'000 €'000 Equity
€'000 €'000 reserve financial assets €'000 €'000
€'000 at FVOCI
€'000
As at 1 January 2021 1,704,374 (12,977) 6184 - 57,783 1,755,364 - 1,755,364
Shares issued to the Executive Directors and other senior management employees - 339 (339) - - - - -
Interim dividends - 72 - - (66,358) (66,286) - (66,286)
Share-based payment expense under the subsidiaries' employees share award plan - - 532 - - 532 - 532
Shares vested under the subsidiaries' employees share award plan - 1,253 (1,253) - - - -
Shares issued for cash under Executive share option plan 102 - (2) - - 100 - 100
Cash-based portion of deferred annual bonus plan converted to deferred shares - - (79) - - (79) - (79)
settlement
Shares issued for long-term plan termination and employees incentive plan - 1,476 33 - - 1,509 - 1,509
Shares vested under the deferred annual bonus incentive plan - 4,920 (4,920) - - - - -
Total comprehensive income for the year - - - - 47,489 47,489 - 47,489
As at 31 December 2021 1,704,476 (4,917) 156 - 38,914 1,738,629 - 1,738,629
Interim dividends 22 - 58 - - (59,829) (59,771) - (59,771)
Shares issued in a newly acquired subsidiary - - - - - - 5 5
Settlement of fair value reserve of equity instruments designated at FVOCI in 17 - - - (78) 78 - - -
cash
Total comprehensive income for the year - - - (5,391) (16,961) (22,352) 857 (21,495)
As at 31 December 2022 1,704,476 (4,859) 156 (5,469) (37,798) 1,656,506 862 1,657,368
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