GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

Earnings Release • Aug 29, 2023

National Storage Mechanism | Additional information

RNS Number : 7040K

Globalworth Real Estate Inv Ltd

29 August 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

29 August 2023

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Notice of Interim Results & Preliminary Interim Financial Information

Globalworth announces that it intends to publish its Interim Report and Financial Statements for the six-month period ended 30 June 2023 during the week commencing 18 September 2023. Ahead of this publication, the Company is today providing a preliminary release of its unaudited Consolidated Statement of Comprehensive Income and unaudited Consolidated Statement of Financial Position to 30 June 2023.

Key Highlights for the period ended 30 June 2023

·    Total combined portfolio value decreased by 2.5% to €3.1 billion, mainly due to revaluations and disposals

o  Like-for-like appraised value of standing commercial properties decreased to €2.8 billion (3.0% lower than 31 December 2022)

·    Developments focused on high-quality logistic / light-industrial facilities in Romania (13.3k sqm) and the refurbishment / repositioning of two mixed-use properties in Poland aiming at increasing their class "A" office space and improving their retail/commercial offering, in response to current market conditions

·    Completed the development of our first logistic / light-industrial project in Targu Mures adding 18.3k sqm of spaces to our portfolio

·    Overall, the standing-portfolio footprint increased by a net 17.3k sqm to 1.4m sqm of GLA in 72 standing properties

·    Leasing transactions for 181.0k sqm of commercial space taken-up or extended at an average WALL of 6.9 years were signed despite continued challenging market conditions

·    Average standing occupancy of our combined commercial portfolio of 85.5% (85.7% including tenant options), marginally lower vs. year-end 2022 of 85.6% (85.9% including tenant options)

o  Average commercial standing occupancy, adjusted for Warta Tower, which was sold in July and was vacant as of 30 June 2023, was 87.7% (87.8% including tenant options)

o  Like-for-like occupancy decreased marginally by 0.3% mostly reflecting excess supply conditions in our Regional Polish submarkets

·    Total annualised contracted rent increased by 6.8% to €202.2 million compared to year-end 2022, of which:

o  91.5% is contracted in office and industrial properties

o  94.1% is in active leases, with the remainder 5.9% of contracted annualised rent to commence in the future

·    Like-for-like annualised commercial contracted rents in our standing commercial portfolio increased by 5.4% to €191.0 million at the end of the first half of 2023 compared to 31 December 2022, mainly the effect of rent indexation

·    Fitch Ratings re-affirmed, in July 2023, Globalworth's investment grade rating and changed the outlook to negative following their 2023 annual review of Globalworth. S&P downgraded credit rating to BB+ with a stable outlook

·    Net debt reduction of €63.5m from the Company's cash resources:

o  buyback of €100m nominal value of GWI Bond 18/25 with cash consideration of €83.2m 

o  repayment of €60m of the RCF facility and

o  drawdown of €96.5m of asset-secured financing secured by the Company's Romanian logistics portfolio

·    Net Operating Income was higher by 5.6% compared to H1-2022 at €73.7 million

·    EPRA earnings decreased by 0.4% to €34.2 million (H1-2022: €34.3 million), partially impacted by the operating results due to higher administrative costs and higher income tax expense (excluding deferred tax expense on investment property) compared to the same period in 2022

·    Adjusted normalised EBITDA (including the share of minority interests) increased by 4.1% to €66.0 million (H1-2022: €63.4 million), due to an increase in NOI partially offset by higher administrative expenses

·    Loss attributable to equity holders of the Company of €25.1 million (H1-2022: profit of €32.6 million) mainly due to the fair value loss of €103 million on investment property, which were partially net of higher finance income and the decrease in the income tax expense

·    Scrip Dividend Shares issued for 98.1% of the total share capital in April 2023 and interim cash dividend paid to the rest of the shareholders of €0.15 per share (total of €0.6m) in H1-2023

·    Preliminary EPRA Net Reinstatement Value (NRV) of €1.8 billion, or €7.55 per share, an 8.9% per share decrease from €8.29 on 31 December 2022 mainly due to the revaluation losses on the property portfolio and the 14 million new scrip shares issued in H1 2023

·    IFRS Earnings per share of minus 11 cents in H1-2023 (H1-2022: 15 cents) as a result of the negative impact of the property revaluations recorded

·    Maintaining high levels of liquidity following the GWI 18/25 buyback at €130.5 million plus €265 million in undrawn RCF facilities

·    Maintained an LTV of 42.7 % same as that of 31 December 2022, despite the significant negative property revaluation during H1 2023

·    Sustainability:

o   €2.4bn in 52 green certified properties in our portfolio

o   15 properties were certified or recertified with BREEAM Very Good or higher certifications in the first 6 months

o   Issued the fifth sustainable development report for the Group

o   Maintained our "low-risk" rating by Sustainalytics and "A" rating by MSCI

o   Our environmental target to reduce GHG emissions intensity by 46% by 2030 versus our baseline 2019 levels (for Scope 1 and 2) was validated by the globally recognised Science Based Targets initiative (SBTi)

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2023
	30 June  2023 Unaudited	30 June 2022 Unaudited
	€'000	€'000
Revenue	119,050	116,551
Operating expenses	(45,306)	(46,696)
Net operating income	73,744	69,855
Administrative expenses	(7,755)	(6,484)
Acquisition costs	-	(7)
Fair value (loss)/gain on investment property	(102,884)	7,019
Share-based payment expense	(167)	-
Loss on disposal of subsidiary	(164)	-
Depreciation and amortisation expense	(289)	(309)
Other expenses	(1,182)	(720)
Other income	2,215	295
Foreign exchange (loss)/gain	(569)	307
(Loss)/Gain from fair value of financial instruments at fair value through profit or loss	(121)	73
(Loss)/Profit before net financing cost	(37,172)	70,029
Finance cost	(27,945)	(27,547)
Finance income	18,224	1,179
Share of profit of equity-accounted investments in joint ventures	2,613	2,012
(Loss)/Profit before tax	(44,280)	45,673
Income tax expense	19,701	(12,245)
(Loss)/Profit for the period	(24,579)	33,428
Items that will not be reclassified to profit or loss
Gain on equity instruments designated at fair value through other comprehensive income	-	36
Other comprehensive income for the period, net of tax	-	36
Total comprehensive income for the period	(24,579)	33,464
(Loss)/Profit attributable to:	(24,579)	33,428
-       ordinary equity holders of the Company	(25,078)	32,606
-       non-controlling interests	499	822
Total comprehensive income attributable to:	(24,579)	33,464
-       ordinary equity holders of the Company	(25,078)	32,642
-       non-controlling interests	499	822

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2023

	30 June 2023 Unaudited €'000	31 December 2022 Audited €'000
ASSETS
Investment property	2,864,290	2,945,460
Goodwill	12,349	12,349
Advances for investment property	6,102	4,393
Investments in joint-ventures	72,645	67,967
Equity investments	7,629	7,521
Other long-term assets	1,724	1,784
Prepayments	210	226
Deferred tax asset	5,888	161
Non-current assets	2,970,837	3,039,861
Financial assets at fair value through profit or loss	3,433	3,554
Trade and other receivables	21,919	22,337
Contract assets	4,598	9,967
Guarantees retained by tenants	99	98
Income tax receivable	371	840
Prepayments	6,679	2,430
Cash and cash equivalents	130,545	163,767
Current assets	167,644	202,993
Investment property held for sale	121,138	126,009
Total current assets	288,782	329,002
Total assets	3,259,619	3,368,863
EQUITY AND LIABILITIES
Issued share capital	1,736,955	1,704,476
Treasury shares	(4,827)	(4,859)
Fair value reserve of financial assets at FVOCI	(5,469)	(5,469)
Share-based payment reserve	156	156
Retained earnings	(96,123)	(37,798)
Equity attributable to ordinary equity holders of the Company	1,630,692	1,656,506
Non-controlling interests	1,361	862
Total equity	1,632,053	1,657,368
Interest-bearing loans and borrowings	1,365,191	1,433,631
Deferred tax liability	138,958	154,866
Lease liabilities	19,426	19,861
Deposits from tenants	2,894	3,897
Guarantees retained from contractors	2,834	1,995
Trade and other payables	78	1,034
Non-current liabilities	1,529,381	1,615,284
Interest-bearing loans and borrowings	24,078	21,600
Guarantees retained from contractors	4,625	3,652
Trade and other payables	32,013	35,679
Contract liability	2,126	1,743
Other current financial liabilities	50	67
Current portion of lease liabilities	2,313	1,669
Deposits from tenants	20,221	17,477
Income tax payable	468	382
Current liabilities	85,894	82,269
Liabilities directly associated with the assets held for sale	12,291	13,942
Total current liabilities	98,185	96,211
Total equity and liabilities	3,259,619	3,368,863

COMBINED CONSOLIDATED PORTFOLIO SNAPSHOT

AS AT 30 JUNE 2023

Our real estate investments are in Poland and Romania, the two largest markets in the CEE. As at 30 June 2023, our portfolio was spread across 13 cities, with Poland accounting for 49.8% by value and Romania 50.2%.

Combined Portfolio Snapshot (as at 30 June 2023)
	Poland	Romania	Combined Portfolio
Standing Investments(1)	19	23	42
GAV(2) / Standing GAV (€m)	€1,533m / €1,361m	€1,547m / €1,459m	€3,080m / €2,819m
Occupancy	74.7%	92.4%	85.5%
		(92.6% incl. tenant options)	(85.7% incl. tenant options)
WALL(3)	4.0 years	5.8 years	4.9 years
Standing GLA (k sqm)(4)	542.1k sqm	880.8k sqm	1,422.9k sqm
Contracted Rent (€m)(5)	€95.9m	€106.2m	€202.2m
GAV Split by Asset Usage
Office	81.8%	74.2%	78.0%
Mixed-Use	18.2%	0.0%	9.0%
Industrial	0.0%	18.5%	9.3%
Others	0.0%	7.2%	3.6%
GAV Split by City
Bucharest	0.0%	83.1%	41.7%
Timisoara	0.0%	6.5%	3.3%
Pitesti	0.0%	3.8%	1.9%
Constanta	0.0%	4.2%	2.1%
Arad	0.0%	1.1%	0.6%
Oradea	0.0%	0.4%	0.2%
Targu Mures	0.0%	0.9%	0.4%
Warsaw	44.9%	0.0%	22.4%
Krakow	19.8%	0.0%	9.8%
Wroclaw	16.6%	0.0%	8.3%
Katowice	11.0%	0.0%	5.5%
Lodz	4.1%	0.0%	2.1%
Gdansk	3.6%	0.0%	1.8%
GAV as % of Total	49.8%	50.2%	100.0%
1. Standing Investments representing income producing properties. One investment can comprise multiple buildings. e.g. Green Court Complex comprises three buildings or one investment.
2. Includes all property assets, land and development projects valued at 30 June 2023.
3. Includes pre-let commercial standing and development/re-development assets. WALL of standing commercial properties in Romania, Poland and the Combined portfolio are 5.8 years, 4.0 years and 5.0 years, respectively.
4. Including 21.1k sqm of residential assets in Romania.
5. Total rent comprises commercial (€192.5 million) and residential (€0.6 million in Romania) standing properties, rent in assets under refurbishment (€8.8 million in Poland) and development pre-lets (€0.3 million in Romania).

For further information visit www.globalworth.com or contact: 

Enquiries 

Rashid Mukhtar

Group Head of Finance                                                                                  Tel: +40 732 800 000

Panmure Gordon (Nominated Adviser and Joint 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 250 professionals across Cyprus, Guernsey, Poland and Romania the combined value of its portfolio is €3.1 billion, as at 30 June 2023. Approximately 96.9% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 700 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.

IMPORTANT NOTICE: This announcement has been prepared for the purposes of complying with the applicable laws and regulations of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom. This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, the Company disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement.

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