Trei Real Estate has just presented its mid-year financials for 2023. Despite a difficult market environment for developers, Trei continues its developments of residential real estate in Germany, Poland and the United States as well as of retail real estate in Poland. The development pipeline amounted to a total value of €1.9 billion by 30 June 2022, which represents a drop of c. €100 million since 31 December 2022. The decline is essentially explained by the completion of three retail parks in Poland as well as by the completion and the highly successful sale of the “Atlantic Beach House” residential project in Charleston/South Carolina, whose disposal generated around 35 per cent IRR for Trei. Out of the total development pipeline of €1.9 billion, the residential use class accounts for €1.7 billion while retail developments in Poland account for €200 million.
The value of the assets under management (AuM), including the company’s own real estate portfolio, totalled €1.3 billion. Out of this total, c. €100 million worth of assets are managed on behalf of third parties, among them Patron Capital. Trei’s proprietary portfolio accounts for €1.2 billion. At the start of the year, the AuM still added up to €1.6 billion, which means that the sum total decreased by around 20 per cent until mid-2023. The dip is attributable primarily to the disposal of Trei’s national subsidiaries in Portugal, in the Czech Republic and in Slovakia, which were sold along with their respective real assets in the course of the first half-year.
To ensure the continuation of its development activities, Trei negotiated debt financing arrangements in a total amount of c. €171 million during the first half of 2023. This brings the company’s debt ratio up to 33 percent.
Pepijn Morshuis, the CEO of Trei Real Estate, commented: “Property developers are going through very challenging times at the moment. It is true that the availability of general contractors has improved lately, which in turn has brought down prices slightly. But this is not enough to offset the still relatively high construction and material costs or the interest rate hikes. With this in mind, I am particularly delighted that we find ourselves able to implement our expansion trajectory and our strategy without major delays. This is not least explained by our comparatively low debt ratio of currently 33 per cent. As a member company of the equity-rich Tengelmann Group, we operate with significantly less debt capital than many other developers. This privileged situation has allowed us to keep moving ahead with our plans and our expansion trajectory. During the first half of 2023, our focus was on activities in our core markets, meaning Germany, Poland and the United States, in addition to our developer business. In a parallel move, we disposed of our portfolios in Portugal, in the Czech Republic and in Slovakia.”
Overall, Trei has 16 retail parks in Poland and 5,900 residential units under development today. The residential developments break down into 1,400 units in Germany, another 2,200 in the United States and 2,300 in Poland. Morshuis commented: “In Poland, we managed to sell off nearly all units of our first two ownership apartment projects, these being ‘Kraft’ in Łódź and ‘Bacciarellego’ in Wrocław. Several rental housing developments are currently in preparation. In a parallel move, we expect to open six retail parks of the Vendo Park brand in Poland before the end of this year. In the United States, we are pushing ahead with our seven ongoing projects in the south-eastern states while also checking out additional investment opportunities.”
