Globalworth released its interim report and unaudited consolidated financial results for H1 2018. The company continued to expand heavily in its core markets, Poland and Romania.
Dimitris Raptis, Deputy Chief Executive Officer and Chief Investment Officer of Globalworth, commented: "Globalworth has continued to demonstrate strong momentum in 2018, led by its strategic expansion into Poland. We are delighted with the acquisitions we have made, which include two of the five largest office transactions in the Polish market so far this year, and we continue to assess further pipeline opportunities under attractive market conditions. The significant step-up in our financial results reflects the considerable expansion of our footprint over the past 12 months and the proactive management of our capital structure. In line with our ambition, we continue to establish Globalworth as the leading institutional office landlord in the CEE through our activities in Romania and Poland and we seek to be the partner of choice for the wide variety of high-quality tenants which are either present or seeking a presence in the region."
Operational highlights
- The Group had an active first half, with the acquisition of three office buildings in the key Polish cities of Krakow, Warsaw and Wroclaw, and three land plots for future office developments in Bucharest. In total, €276.2 million was invested, predominantly in acquisitions and our development programme. In addition, the Group made a further acquisition in Warsaw for €101 million in July 2018. The Company is also delighted to have established collaboration with Mindspace, a global operator of coworking space. Besides extending business relationships in Romania, with three new locations to be opened at Globalworth properties in Bucharest, Globalworth made a €8.6 million equity investment in Mindspace to support their ongoing growth.
- Within its development programme, the Company completed Tower 2 of its Globalworth Campus project in Q2 2018 and has now commenced the construction of the 34,800 sqm third and final tower, which is due for completion in Q4 2019. Development at the Company's 42,300 sqm Renault Bucharest Connected joint venture is progressing well and is set for completion in Q1 2019. In addition, plans are being progressed for a further 130,000 sqm of new office projects in Bucharest and up to c.175,000 sqm of light-industrial and logistics projects in Timisoara.
- Globalworth's combined real estate portfolio was valued at €2,129.5 million at 30 June 2018 (31 December 2017: €1,815.4 million), comprising €1,197.2 million in Romania and €932.4 million in Poland via Globalworth Poland. The total GLA of the Group's combined real estate portfolio was 923,600 sqm at 30 June 2018.
- During H1 2018, the Group negotiated the take-up or extension of 60,500 sqm of commercial space in Romania and Poland, resulting in 879,300 sqm of commercial space being let or pre-let as at 30 June 2018 to some 510 tenants, of which over 77% is to multinational corporates, with a weighted average lease length of 5.4 years.
- Occupancy of the commercial standing portfolio was 94.6% (96.4% including tenant expansion options) at 30 June 2018, compared to 93.3% (95.4% including tenant expansion options) at 31 December 2017. Like-for-like occupancy of the portfolio improved by 2.1% over the first six months to 95.2%. Total annualised contracted rental income for the combined portfolio stood at €141.1 million (31 December 2017: €115.9 million), including pre-leases on developments, an increase of 21.7% compared to 31 December 2017.
H2 2018 investments
In July 2018, Globalworth completed the acquisition of the Class A office known as Spektrum Tower for a total consideration of €101.0 million. Spektrum Tower is a high-rise office building in the heart of the Warsaw's Central Business District, offering 29,500 sqm of GLA and 318 parking spaces over 33 floors above ground and five underground levels. It was completed in 2003 and underwent extensive refurbishment in 2015, when it was converted into a multi-tenanted building. The property benefits from high occupancy (92.5%), which we are confident can be increased in the near-term. Spektrum is leased to over 60 national and international corporates and is thus well suited to our asset management-led approach. It has an annual contracted rental income of c.€6.3 million and a weighted average lease length of 5.1 years, as at 30 June 18.
