Having closed CEE’s largest ever real estate transaction this summer, CTP is carrying on with its ambitious development plan. Group CFO Richard Wilkinson talked to Property Forum about the company’s upcoming projects and the financing conditions industrial developers face.
This summer CTP closed the largest ever real estate transaction in CEE. Can you tell us more about the process that led to this announcement?
Putting all of our Czech industrial properties in one facility allowed us to consolidate over 40 loans financing over 200 properties which includes financing for our development pipeline of around 35 properties until the end of 2020. By putting the rental income generated by over 500 rental contracts into the same refinancing, we were able to reduce concentration risks for the banks, allowing them to offer us a very competitive financing package. In a second step, we will also be able to reduce the number of our SPV’s by over half, further simplifying our lives.
Richard Wilkinson
Group CFO
CTP
Was this a once-in-a-decade deal or do you expect to see more similarly sized transactions in the future?
The scale of this deal was unprecedented, so it will be some time before we would do another deal of this size.
Industrial is one of the most popular asset classes on a European level. Do you see banks in the region being more open to financing industrial property compared to other asset types?
We have always found the banks active in our region to be open to financing our premium industrial properties. They understand our business model, the closeness we have to our tenants and the very high quality of our construction, which is confirmed by us having BREEAM certification for our buildings in all the countries we develop in. Industrial property is certainly a hot topic in the investor community, with significant investment in the sector underpinned by the growth in e-commerce and demand for logistics space. I cannot talk to whether banks are more open or closed to industrial properties compared to other classes.
In your opinion, how has financing conditions in CEE changed in the past 12 months? What are your projections for the next 12 months?
Financing for good projects from experienced developers in the right location with strong tenants generating a stable cash flow has always been available and we expect it to continue to be available. Banks are now well capitalised and have strong liquidity, so remain keen to finance such projects. Whether conditions are a bit easier or a bit tighter depends on the specific market and each banks position within that market.
CTP has set ambitious goals for 2020. How’s the portfolio expansion coming along? Which countries and markets will see the largest growth?
We expect to grow by more than 13% in 2019, broadly in line with our mid-term expectations. We see strong demand from our existing tenants who drive over 70% of our growth. Our mid-term target is to grow our portfolio to 10 million square meters, we are very happy with our progress on that path. We will grow in all our countries this year, and we expect that to continue to be the case over the next years as CEE remains the strongest performing region in Europe.
You’ve recently entered a new market, Bulgaria. What are your plans there?
We opened our office in Sofia earlier this year and are looking into various options of how best to start investing and developing there.
Are there more markets in the region that you might enter in the coming period?
We are always looking at the opportunities available in various markets. When we go into another one, we will for sure let everyone know.
