Globalworth saw the value of its portfolio surge 85% to €1.8 bn last year from €997 mln in 2016, following the consolidation of Poland's Griffin Premium Real Estate (GPRE).
Globalworth focuses on office and logistics assets in Central and Eastern Europe and South Eastern Europe. Last year the London AIM-listed company moved beyond its domestic market in Romania with the acquisition of a 71.7% stake in Warsaw-based GPRE. The €146 mln investment to obtain majority control of GPRE added €680 mln of Polish office-led property to Globalworth's €1.13 bn of assets in Romania at end-2017.
Announcing its 2017 financial result, Globalworth said that it more than doubled its commercial standing GLA to 748,100 m2 compared to 370,000 m2 the year before. The 2017 figure includes the addition of 242,600 m2 through GPRE in Poland and the delivery of 51,000 m2 of developments. Two more development projects, comprising 70,000 m2, remain under construction in Romania, and further projects are in the pipeline.
Total annualised contracted rental income for the combined portfolio stood at €115.9 mln (31 December 2016: €49.5 mln), including pre-leases on developments, an increase of 134% compared to 31 December 2016.
Financial result
Globalworth booked a pre-tax profit of €26.2 mln for 2017, more than double (+114.6%) the €12.2 mln booked in 2016. The strong increase was supported by the growth in operational income and the contribution of about €28.9 million (unrealised) gain recorded on the GPRE stake acquisition and two other property acquisitions in Romania.
However, the company also chalked up significant costs associated with the increased investment and refinancing activities during 2017, including the full amortisation of unamortised debt issue costs of €16.1 mln.
Net operating income came to €51.1 mln, an increase of 17.3% over €43.6 mln for 2016, mainly as a result from new lease agreements signed, the addition of further properties, as well as a limited contribution from the investment in GPRE since it closed in December 2017. Earnings per share amounted to 26.40 cents, an increase of 50.3% over the 17.57 cents EPS in 2016.
Globalworth closed a €340 mln equity placing on 8 December 2017 with support from both existing and new shareholders, increasing the free float of the company’s shares. Combined with Globalworth’s debut €550 mln Eurobond in June 2017, the company raised €890 mln from the capital markets in 2017.
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Globalworth carried out €643 mln of new investments in 2017, with a strong focus on Poland. The Polish transactions were the acquisition of the 71.7% stake in GPRE and the subsequent acquisition by GPRE of five assets in the Polish cities of Wroclaw, Gdansk and Katowice from Echo Polska Property. That portfolio was purchased for €160 mln.
Globalworth spent a further €92.6 mln in Romania, where it completed the acquisition of two standing properties: a logistics warehouse leased to car maker Dacia from Elgan Group and Building C of Skanska's Green Court office development in Bucharest. Globalworth already owned the first buildings at the 3-property Green Court complex.
The company also entered into a joint venture with the Elgan Group for the development of Groupe Renault’s new headquarters in Bucharest, currently under construction, and acquired 30 hectares of light-industrial/logistics land in Timisoara.
Above-average growth prospects
Dimitris Raptis, Deputy CEO and chief Investment officer at Globalworth: 'These results highlight the significant progress achieved by Globalworth in 2017 across the business, with the strengthened capital structure placing us in a strong position going into 2018. Our two markets, Romania and Poland, continue to offer above-average economic growth prospects and we see a strong backdrop of tenant demand.
'By targeting the right sectors in the right markets, we believe we are well positioned to capitalise on the dynamic structural trends we are witnessing today. We are focused on our objective of establishing Globalworth as the region’s leading office landlord and to build on our ambition of being the partner of choice for the wide variety of high-quality tenants in the region.'
