GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

Earnings Release • Aug 30, 2024

National Storage Mechanism | Additional information

RNS Number : 2310C

Globalworth Real Estate Inv Ltd

30 August 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

30 August 2024

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Notice of Interim Results & Preliminary Interim Financial Information

Globalworth plans to publish its Interim Report and Financial Statements for the six months ending 30 June 2024 during the week commencing 23 September 2024. In advance, we are releasing unaudited preliminary financials.

Key Highlights for the period ended 30 June 2024

·    Portfolio Value: The total combined portfolio value dropped by 8.3% to €2.7 billion, primarily due to the disposal of non-core assets (which led to a decrease of 7.6% of Combined Portfolio Value) and small negative revaluation adjustments.

·    Commercial Properties : Like-for-like appraised value of standing commercial properties slightly decreased to €2.5 billion, down 0.8% from 31 December 2023.

·    Divestments: Several sales of non-core assets were completed with the objective to reduce debt and boost liquidity:

-       In Q1, we sold Bliski Centrum in Warsaw, a 4.9k sqm office property, which we deemed a non-core asset due to its smaller size.

-       In May, we sold our fully owned Romanian logistics portfolio to CTP for net proceeds of €72.4 million (after standard adjustments).

-       Post-June, we sold our remaining Romanian logistics interests, held through joint ventures, to WDP, for net proceeds of €56.0 million (after standard adjustments).

·    Portfolio Footprint: Net reduction of 239.5k sqm, bringing our standing-portfolio footprint down to 1.1 million sqm across 59 properties.

·    Leasing: 90.1k sqm of commercial space leased or extended, with an average WALL of 4.8 years, despite tough market conditions.

·    Occupancy: The average occupancy of our combined commercial portfolio dropped to 86.1%, down 2.1pps from year-end 2023, impacted by:

-       The sale of non-core assets having average occupancy higher than portfolio average.

-       The addition of newly refurbished property of Supersam (Katowice, Poland).

-       A like-for-like occupancy decrease by 0.5pps, mainly due to excess supply in Regional Polish submarkets.

·    Contracted Rent: Annualised contracted rent fell by 4.4% to €192.3 million, driven by asset disposals.

-       95.0% of the rent comes from office and mixed-use properties.

-       95.3% of contracted rent is active, with the remainder to commence

·    Rent Increases: Like-for-like annualised commercial rents in our standing portfolio rose by 3.1% to €182.6 million by the end of H1-2024.

·    Credit Ratings: In July 2024, Fitch reaffirmed Globalworth's investment grade rating and upgraded the outlook to stable. S&P maintained our BB+ rating with a negative outlook throughout H1-2024.

·    Debt Management: Net debt was reduced by €354.9 million, funded by the Company's cash reserves:

-       In April 2024, we successfully refinanced €450 million 2025 Notes and €400 million 2026 Notes with new 6.25% Notes due in 2029 (€307 million) and 2030 (€333 million) via an Exchange Offer and Consent Solicitation.

-       As part of the exchange, we repaid €143 million of 2025 Notes and €67 million of 2026 Notes in cash.

-       Following the sale of our fully owned Romanian industrial portfolio to CTP, €97.5 million secured loans and €65 million loan notes (€45 million from 2029 Notes and €20 million from 2030 Notes) were repaid.

-       The Company drew down €25.5 million of asset-secured financing on our Romanian portfolio.

·    Operating Income: Net Operating Income decreased by 1.8% year-on-year to €72.4 million.

-       Like-for-like net operating income, excluding disposals, fell by 2.0% to €67.5 million, reflecting lower occupancy in our Regional Polish submarkets.

·    Finance Costs: Increased by €20.4 million year-on-year, including €12.8 million in non-recurring costs related to the refinancing of the 2025 and 2026 Notes in April 2024.

·    Earnings: EPRA earnings dropped by €4.4 million to €29.8 million (H1-2023: €34.2 million), impacted mainly by asset disposals and higher finance costs.

·    EBITDA: Adjusted normalised EBITDA decreased by 3.6% to €63.6 million (H1-2023: €66.0 million).

·    Equity: Loss attributable to equity holders rose to €65.3 million (H1-2023: loss of €25.1 million), driven by:

-       A fair value loss of €50.5 million on investment property.

-       A €24.1 million loss from subsidiary sales and a €13.2 million share of loss from joint venture investments.

-       In 2023, we recorded a one-off finance gain of €15.8 million from bond buybacks at a discounted price.

·    Dividends: Scrip Dividend Shares covering 98.65% of total share capital were issued in April 2024, with an interim cash dividend of €0.4m (€0.11 per share) paid to the remaining shareholders in H1-2024.

·    Valuation: Preliminary EPRA Net Reinstatement Value (NRV) stands at €1.7 billion (€6.24 per share), a 10% decrease per share from €6.94 as of 31 December 2023. This reduction is due to revaluation losses on the property portfolio, losses from joint venture investments, and the dilutive impact of €0.18 from the 13.9 million new scrip dividend shares issued in H1-2024.

·    Earnings per Share: IFRS Earnings per share was -25 cents in H1-2024 (H1-2023: -11 cents).

·    Liquidity: We maintained a strong cash balance of €210.3 million as of 30 June 2024 after net debt reduction of €354.9 million which was partly funded from the existing cash resources of €396.3 million at 31 December 2023 and further disposal proceeds during H1-24.

·    LTV: Improved to 39.9% as of 30 June 2024 (from 42.2% on 31 December 2023) following divestments aimed at deleveraging and enhancing liquidity.

·    Sustainability:

-       €2.2 billion invested in 47 green certified properties within our portfolio.

-       14 properties certified or recertified with BREEAM Very Good or higher in the first six months of the year.

-       Issued the Group's sixth sustainable development report.

-       Maintained our "low-risk" rating by Sustainalytics at 11.1 and "A" rating by MSCI.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 20 24

	30 June  2024 Unaudited	30 June 2023 Unaudited
	€'000	€'000
Revenue	125,034	119,050
Operating expenses	(52,652)	(45,306)
Net operating income	72,382	73,744
Administrative expenses	(9,287)	(7,755)
Fair value loss on investment property	(50,527)	(102,884)
Share-based payment expense	(167)	(167)
Loss on disposal of subsidiary	(24,111)	(164)
Depreciation and amortisation expense	(404)	(289)
Other expenses	(1,204)	(1,182)
Other income	1,162	2,215
Foreign exchange loss	(249)	(569)
Gain/ (Loss) from fair value of financial instruments at fair value through profit or loss	1,368	(121)
Loss before net financing cost	(11,037)	(37,172)
Finance cost	(48,386)	(27,945)
Finance income	7,528	18,224
Share of (loss)/ profit of equity-accounted investments in joint ventures	(13,198)	2,613
Loss before tax	(65,093)	(44,280)
Income tax (expense)/ income	(154)	19,701
Loss for the period	(65,247)	(24,579)
Items that will not be reclassified to profit or loss
Gain on equity instruments designated at fair value through other comprehensive income	90	-
Other comprehensive income for the period, net of tax	90	-
Total comprehensive income for the period	(65,157)	(24,579)
Loss attributable to:	(65,247)	(24,579)
-      ordinary equity holders of the Company	(65,292)	(25,078)
-      non-controlling interests	45	499
Total comprehensive income attributable to:	(65,157)	(24,579)
-      ordinary equity holders of the Company	(65,202)	(25,078)
-      non-controlling interests	45	499

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 20 24

	30 June 2024 Unaudited €'000	31 December 2023 Audited €'000
ASSETS
Investment property	2,610,785	2,843,085
Goodwill	12,039	12,039
Advances for investment property	6,682	7,175
Investments in joint-ventures	57,096	70,098
Equity investments	7,993	7,844
Other long-term assets	1,997	1,780
Other receivables	22,479	21,182
Prepayments	129	448
Financial assets at fair value through profit or loss	3,576	-
Deferred tax asset	1,736	1,423
Non-current assets	2,724,512	2,965,074
Financial assets at fair value through profit or loss	-	197
Trade and other receivables	21,389	23,122
Contract assets	4,801	6,985
Guarantees retained by tenants	55	99
Income tax receivable	78	1,084
Prepayments	5,238	2,002
Cash and cash equivalents	210,283	396,259
Current assets	241,844	429,748
Investment property held for sale	35,500	50,352
Total current assets	277,344	480,100
Total assets	3,001,856	3,445,174
EQUITY AND LIABILITIES
Issued share capital	1,796,809	1,769,456
Treasury shares	(4,773)	(4,797)
Fair value reserve of financial assets at FVOCI	(5,379)	(5,469)
Retained earnings	(251,098)	(158,066)
Equity attributable to ordinary equity holders of the Company	1,535,559	1,601,124
Non-controlling interests	-	1,411
Total equity	1,535,559	1,602,535
Interest-bearing loans and borrowings	1,130,192	1,574,771
Deferred tax liability	121,921	139,299
Lease liabilities	23,598	20,482
Deposits from tenants	3,693	3,774
Guarantees retained from contractors	2,664	2,902
Trade and other payables	399	78
Non-current liabilities	1,282,467	1,741,306
Interest-bearing loans and borrowings	118,281	28,609
Guarantees retained from contractors	4,540	5,594
Trade and other payables	35,350	36,051
Contract liability	2,352	3,289
Other current financial liabilities	-	1,311
Current portion of lease liabilities	2,191	1,956
Deposits from tenants	17,746	18,018
Income tax payable	242	807
Current liabilities	180,702	95,635
Liabilities directly associated with the assets held for sale	3,128	5,698
Total current liabilities	183,830	101,333
Total equity and liabilities	3,001,856	3,445,174

COMBINED CONSOLIDATED PORTFOLIO SNAPSHOT

AS AT 30 JUNE 2024

Our real estate investments are in Poland and Romania, the two largest markets in the CEE. As at 30 June 2024, our portfolio was spread across 10 cities, with Poland accounting for 52.3% by value and Romania 47.7%.

Combined Portfolio Snapshot (as at 30 June 2024)
	Poland		Romania		Combined Portfolio
Standing Investments(1)	18		16		34
GAV(2) / Standing GAV (€m)	€1,437m / €1,319m		€1,310m / €1,242m		€2,747m / €2,561m
Occupancy	76.1%		94.9%		86.1%
WALL(3)	4.0 years		5.3 years		4.7 years
Standing GLA (k sqm)(4)	530.2k sqm		616.3k sqm		1,146.5 sqm
Contracted Rent (€m)(5)	€95.2m		€97.0m		€192.3m
GAV Split by Asset Usage
Office	80.8%		86.0%		83.3%
Mixed-Use	19.2%		0.0%		10.0%
Industrial	0.0%		7.4%		3.5%
Others	0.0%		6.5%		3.1%
GAV Split by City
Bucharest	0.0%		93.3%		44.5%
Constanta	0.0%		5.0%		2.4%
Targu Mures	0.0%		1.3%		0.6%
Craiova	0.0%		0.4%		0.2%
Warsaw	42.8%		0.0%		22.4%
Krakow	20.5%		0.0%		10.7%
Wroclaw	17.3%		0.0%		9.0%
Katowice	11.5%		0.0%		6.0%
Lodz	4.2%		0.0%		2.2%
Gdansk	3.7%		0.0%		1.9%
GAV as % of Total	52.3%		47.7%		100.0%
1. Standing Investments representing income producing properties. One investment can comprise multiple buildings. e.g. Green Court Complex comprises three buildings or one investment.
2. Includes all property assets, land and development projects valued at 30 June 2024.
3. Includes pre-let commercial standing and development/re-development assets. WALL of standing commercial properties in Poland, Romania and the Combined portfolio are 4.0 years, 5.3 years and 4.6 years, respectively.
4. Including 12.6k sqm of residential assets in Romania.
5. Total rent comprises commercial (€185.8 million) and residential (€0.4 million in Romania) standing properties, rent in assets under redevelopment (€5.7 million in Poland) and development pre-lets (€0.4 million in Romania).

Note: Occupancy of standing commercial properties adjusted with the active leases related to our ESG-commitments (3,460 sqm in BOB Tower, Bucharest, signed with social assistance authority) and with the available area of the spaces leased to GW Flex Sp. Z.o.o, our group entity overseeing the implementation of flex offices concept in our portfolio, was 75.4%, 94.5% and 85.6% as of 30 June 2024 for Poland, Romania and at group level, respectively

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

Enquiries 

Rashid Mukhtar Group CFO	Tel: +40 732 800 000
Panmure Liberum (Nominated Adviser and Broker) Atholl Tweedie	Tel: +44 20 7886 2500

About Globalworth / Note to Editors: 

Globalworth is a listed real estate company active in Central and Eastern Europe, quoted on the AIM-segment of the London Stock Exchange. It has become the pre-eminent office investor in the CEE real estate market through its market-leading positions both in Poland and Romania. Globalworth acquires, develops and directly manages high-quality office and industrial real estate assets in prime locations, generating rental income from high quality tenants from around the globe. Managed by over 250 professionals across Cyprus, Guernsey, Poland and Romania the combined value of its portfolio is €2.7 billion, as at 30 June 2024. Approximately 97.3% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 650 national and multinational corporates. In Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice, while in Romania its assets span Bucharest, Constanta, Targu Mures and Craiova.

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

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