Q3 Trading Update and EPRA NAV

RNS Number : 1425X

Globalworth Real Estate Inv Ltd

17 November 2014

 



17 November 2014

Globalworth Real Estate Investments Limited

Q3 2014 Trading update and EPRA Net Asset Value

Globalworth Real Estate Investments Limited ("Globalworth" or the "Company") is pleased to announce its quarterly update for the third quarter and the nine months ended 30 September 2014.

Dimitris Raptis, Deputy Chief Executive Officer and Chief Investment Officer said: "We are pleased with the progress we have made in the third quarter. The Bucharest office real estate market continues to show signs of recovery, predominantly as a result of strong tenant demand mainly from multi-national companies".

Key FINANCIAL highlights FOR q3 2014

·      Portfolio Open Market Value ("OMV")^[1] of c.€554.9 million up c.6% as compared to H1 2014;

·      Bank loans outstanding of c.€179.0 million up c.3% as compared to H1 2014;

·      Loan to Value of 32.4 % down c.3% as compared to H1 2014;

·      EPRA^[2] NAV of c.€422.0 million up c.2% as compared to H1 2014;

·      EPRA NAV/share of €7.87 up c.2% as compared to H1 2014;

·      Net Operating Income (NOI) for 9 months ended 30 September 2014 of c.€7.7 million up c.98% as compared to H1 2014;

·      EBITDA for 9 months ended 30 September 2014 of c.€10.0 million up c.16% as compared to H1 2014;

·      Earnings before tax for 9 months ended 30 September 2014 of c.€83.5 million up c.9% as compared to H1 2014.

NET ASSET VALUE

In accordance with our valuation policy, the property portfolio was not subject to an external valuation at 30 September 2014. The unaudited net assets increased by c.€6.7 million as a result of the positive net operating result in Q3 2014 and a €7.4 million gain (bargain purchase gain as per IFRS 3 "Business Combinations") on the acquisition of the share capital of SEE Exclusive Development S.A., which owns the Timisoara Airport Park ("TAP") property.

NET OPERATING INCOME

The three months ended 30 September 2014 saw a significant increase in NOI of c.€3.8 million as compared to €3.9 million for the first six months of 2014. This is mainly as a result of the NOI generated by TCI Tower (c.€1.0 million), BOB Offices (c.€0.5 million) and BOC Offices (c.€2.2 million). The TAP property contributed NOI of c.€0.3 million from the date of acquisition.

KEY PORTFOLIO UPDATES

Acquisitions & Disposals

We completed the acquisition of TAP, a light industrial complex located to the northeast of Timisoara for consideration of €18.3 million. The complex is partially developed, with Valeo and Continental having let and pre-let respectively, an aggregate of c.72,835 sqm of light industrial space, both on long term leases, while both companies have expansion options in the property. Assuming the exercise of these options, TAP will offer a total GLA of c.113,340 sqm making it one of the largest industrial parks in the country.

We are in advanced negotiations with the 40% minority shareholders for the disposal to them of our 60% interest in Floreasca One.

In addition to the current portfolio, we have made and continue to make significant progress with the required due diligence and / or negotiations with the sellers of a number of other assets.

Leasing

Since 30 June 2014, we have signed commercial leases totalling c.30,500 sqm of GLA, predominantly related to the Globalworth Campus and Bucharest One development projects. Occupancy of the completed commercial assets of the portfolio has reached c.84% of GLA (2% L-f-L increase from H1 2014) and pre-leases for projects under construction total 60% of GLA.

The average passing rent for our office portfolio has remained constant at c.14.4 €/sqm (standing assets) and c.3.77€/sqm for industrial properties (standing assets).

Development

Construction of Bucharest One and the first phase of Continental in TAP (c.45,361sqm) are progressing according to the envisaged timeline schedule, and preparatory works for the construction of the Globalworth Campus have now commenced.

In Q3 2014 we incurred total capital expenditure of c.€12 million, including on Bucharest One (c.€5.1 million), City Offices (c.€4.2 million) and TAP-Continental (c.€2.7 million).

Financing

Following the quarter end, we closed a EUR 30 million debt financing facility with Banca Comerciala Romana (BCR), a member of Erste Group, secured on the TCI property.

NET ASSET VALUE ANALYSIS

The unaudited Net Asset Value (NAV) and EPRA Net Asset Value (EPRA NAV) as of 30 September 2014 is presented below in accordance with the stated intention of the Company to publish its estimated NAV on a quarterly basis.

	30 Sep. 2014		30 Jun. 2014		31 Mar. 2014		31 Dec. 2013
	(unaudited)		(unaudited)		(unaudited)		(audited)
	€		€		€		€
NAV attributable to ordinary equity holders	384,755,908		377,730,381		228,969,081		119,690,742
EPRA NAV	422,016,462		413,306,471		263,427,051		126,157,836
Number of ordinary shares for basic NAV per share[3]	53,405,468		53,122,839		28,300,207		20,905,637
Additional shares to be issued[4]	239,620		522,249		-		-
Number of ordinary shares for diluted NAV and EPRA NAV per share	53,645,088		53,645,088		28,300,207		20,905,637
Basic NAV per share	€7.20		€7.11		€8.09		€5.73
Diluted NAV per share3	€7.17		€7.04		€8.09		€5.73
EPRA NAV per share	€7.87		€7.70		€9.31		€6.03

FINANCIAL RESULTS	9 months to 30 Sep. 2014	6 months to 30 Jun. 2014	3 months to 31 Mar. 2014
	(unaudited)	(unaudited)	(unaudited)
	€	€	€
Net operating income (NOI)	7,746,962	3,906,379	824,410
Profit before financing cost	89,394,094	80,616,682	70,682,237
Earnings before tax	83,539,331	76,662,248	69,506,713
Profit for the period	82,235,080	75,579,658	69,547,909
Profit for the period attributable to equity holders	82,737,240	75,729,046	69,549,291
EBITDA[5]	9,951,418	8,577,257	(1,420,155)
Basic weighted average earnings per share[6]	€1.96	€2.06	€3.06
Diluted weighted average earnings per share[7]	€1.95	€2.05	€3.06

 

FINANCIAL POSITION

		30 Sep 2014		30 Jun 2014
		(unaudited)		(unaudited)
Assets		€		€
Investment property		554,850,184		521,278,500
Other non-current assets		16,414,177		16,772,910
Other current assets		20,133,120		14,142,772
Cash and cash equivalents		36,395,881		56,550,899
Property held for sale		3,600,000		-
Total assets		631,393,362		608,745,081
Equity
Equity attributable to ordinary equity holders of the parent		384,755,908		377,730,381
Non-controlling interests (NCI)		86,071		438,843
		384,841,979		378,169,224
Liabilities
Interest bearing loans and borrowings		179,237,044		173,568,982
Deferred tax liability		43,225,771		41,541,307
Other non-current liabilities		3,040,598		2,314,263
Other current liabilities		21,047,970		13,151,305
		246,551,383		230,575,857
Total equity and liabilities		631,393,362		608,745,081

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

Panmure Gordon (Nominated Adviser and Joint Broker)              Tel: [phone]

Andrew Potts

Cantor Fitzgerald Europe (Joint Broker)                                         Tel: [phone]

Rick Thompson

David Foreman

Milbourne (Public Relations)                                                            Tel: [phone]

Tim Draper

About Globalworth:

Globalworth Real Estate Investments Limited is a real estate investment company founded by real estate investor and developer Ioannis Papalekas to take advantage of investment opportunities in Romania and the broader SEE and CEE regions. The Company is Guernsey incorporated and has been declared by the Guernsey Financial Services Commission to be a registered closed-ended collective investment scheme. The Company's shares were admitted to trading on AIM in July 2013.

The Romanian market offers an attractive real estate investment proposition in the medium-to-long term. Globalworth believes that global investor capital flows will gradually move from markets considered as "safe havens" to more peripheral markets such as Romania in search of higher yielding investments. As a result, Romania should, in due course, become more attractive destinations for a wide investor audience. Globalworth anticipates holding an early mover advantage in these markets and benefitting from this gradual shift in investor sentiment.

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[1]Portfolio OMV is based on an external valuation at 30 June 2014, plus subsequent capital expenditure, which is mainly related to properties under development. The TAP property which was acquired after 30 June 2014 was also valued based on an external valuation as of 30 June 2014, plus subsequent capital expenditure in connection with the construction of the first phase of Continental.

[2]"EPRA" The European Public Real Estate Association is a non-profit association representing Europe's publicly listed property companies.

[3] Number of Ordinary Shares outstanding at period end, plus for the number of shares at 30 September 2014 and 30 June 2014 the minimum potential shares that would have been issued, assuming the holder of the mandatorily convertible debt had exercised his right of conversion at 30 September 2014 or 30 June 2014, respectively.

[4] The diluted NAV attributable to the ordinary equity holders of the parent includes the additional shares that would have been issued for conversion of mandatory convertible debt to equity, assuming that the debt will actually be converted at the mandatory conversion date of 18 December 2014 (total number of 11,999,962 Ordinary Shares).

[5] Calculated as profit before finance cost, depreciation, amortisation and bargain purchase gain on acquisition of subsidiaries.

[6] The number of shares used to calculate basic weighted average earnings per share as of 30 September 2014 were 42,255,894 (30 June 2014: 36,617,288, 31 March 2014: 22,735,769).

[7] The number of shares used to calculate diluted weighted average earnings per share as of 30 September 2014 were 42,421,784 (30 June 2014: 36,897,168, 31 March 2014: 22,735,769).

 

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