News Article coronavirus development Globalworth investment Poland report Romania
by Property Forum | Report

Globalworth is significantly scaling back its construction and development programme and suspended new investment activity. The company posted an update on COVID-19’s implications for its operations.

  • Affected retail assets account for less than 5% of annual rental income
  • The company adopted a case by case approach in managing tenant relations
  • In certain cases, Globalworth has agreed near term rent concessions or incentives in exchange for an extension of the lease duration
  • The company is significantly scaling back its construction and development programme and suspended new investment activity

Country update

Poland and Romania each have around 10,000 confirmed COVID-19 cases with Romania registering over 500 deaths and Poland over 400 deaths. In the last several weeks the governments in both countries, in line with many other countries, have declared a state of emergency enabling them to adopt very restrictive measures in terms of movement of people and travelling, as well as enforcing the closure of all but essential retail premises.

They have also imposed emergency measures to protect affected businesses. Such measures have included rent reductions and/or suspensions for non-essential retail businesses for as long as the state of emergency applies. In both countries, non-essential retail premises have been ordered to close whereas certain types of restaurants are only allowed to operate a takeaway or delivery service. There has been no government measure in either country forcing the closure of office premises, logistics/light industrial assets or essential retail businesses (supermarkets, pharmacies, convenience stores etc.).

General portfolio update

Globalworth's portfolio is primarily focused on office real estate assets in prime locations in Poland and Romania. As of December 31st, 2019, the portfolio generated over €190 million of contracted annual rental income, of which office rental income accounts for more than 85%, with retail accounting for around 9%, logistics/light industrial for 5%, and other rental income for 1%. 

On the retail side, more than 50% of the related rental income is related to retail operations which have not been closed down or materially affected by the emergency legislation in both countries and we do not foresee any material rental income reductions from such tenants. On the remaining retail rental income (which includes non-closed but materially affected operations like restaurants/canteens etc.), Globalworth has received notifications from almost all affected tenants and is working closely with them to find appropriate solutions once their operations resume. The majority of the affected retail rental income comes from three mixed-use assets in Poland: Hala Koszyki, Renoma and Supersam.

On the office premises side, the company is yet to see a significant impact, although it is in discussions with several tenants which have seen their operations affected as a result of the crisis and the related measures. The most affected tenants relate to the co-working industry, which relates to close to 3% of annual rental income.

Globalworth is in constant communication with all its tenants and adopts an open and collaborative approach, which on one hand, targets to assist them to weather this crisis and on the other hand, protects the sustainability and longevity of its income. In certain cases, the company has agreed near term rent concessions or incentives in exchange for an extension of the lease duration. Globalworth is adopting a careful case by case approach rather than applying horizontal or vertical decisions without considering each situation.

Adopted measures

Globalworth has been implementing many significant measures with the aim to preserve cash flow and protect income and assets. Below are some of the more meaningful ones:

  • Asset/property management: Globalworth has been terminating and/or suspending or renegotiating supplier contracts, achieving significant savings. As lease agreements are triple net, and all these costs are part of the service charges paid by tenants, the company is now in the process of discussing with tenants the most efficient way to pass on these savings to them in the interim until it performs the final 2020 service charge reconciliation early next year, thereby assisting them during this very difficult period.
  • Building Capex: The company has substantially reduced its standing asset Capex programme to the absolute essential from a health and safety and maintenance standpoint. This has resulted in the suspension of over €12 million planned standing building Capex works for this year. This has no effect on tenant fit-out works which continue as normal, but at renegotiated prices with suppliers and/or contractors.
  • Developments: Globalworth is significantly scaling back its construction and development programme only to those projects which have significant pre-lets or construction is substantially completed or very advanced. In total the company was expecting over the next 12 months to spend more than €90 million in development projects. This has, so far, been reduced by €36 million to €54 million, through renegotiations with contractors, value-add engineering, scope reduction and works postponement.
  • New investments: New investment activity is currently suspended. Globalworth continues to monitor the investment market for investment opportunities and may decide at a later stage to pursue an investment with particularly attractive potential returns.
  • HR & administration: The company has been taking actions to reduce overhead and other costs, including employee-related ones. In this respect, the new Group annual remuneration policy was adjusted so that all bonuses for 2019 will now be paid in shares (rather than 50% cash and 50% shares). The mechanics of this are that for senior employees, bonuses will be paid 100% in shares in two parts (50% on March 31st, 2021 and 50% on March 31st, 2022) and for all others, 100% will be paid on March 31st, 2021. These shares will be transferred upon vesting at an already fixed value of €7.00 per share and with no further vesting period or lock up. A further announcement on this will be made in due course.

Financial position

Globalworth benefits from a strong balance sheet to overcome this challenging period, with low leverage (net LTV of close to 35% as of December 31st, 2019), widely diversified sources of revenues and long-dated lease income stream most of which comes from a top-tier multinational customer base. As of December 31st, 2019, the company reported a liquidity position of over €290 million, with ample room to comply with financial covenants and without any financial debt maturity until June 2022. Since the beginning of the year, Globalworth has further improved its liquidity to over €550 million of available cash currently, by drawing on various committed and new facilities, and through some of the aforementioned cost-cutting measures. We will continue to safeguard our liquidity position in order to be able to navigate through this period of significant uncertainty. 


The Globalworth Foundation is strongly involved in supporting the fight of the epidemic in both Romania and Poland. So far, the foundation has allocated €550,000 to assist hospitals and related staff in both countries who are in the frontline of this unprecedented fight putting their own health at risk.


Globalworth believes that given the nature of its portfolio and assets, its robust balance sheet and liquidity position, the early and drastic cost-saving measures, and the strength and ongoing commitment of all employees, its business is well-positioned. However, given the ongoing uncertainty over the duration and severity of the crisis being caused by COVID-19 and the severe and potentially long-lasting government measures, it is too early to give any meaningful guidance in relation to the eventual impact on our business. The company will continue to take all necessary measures to mitigate the impact as much as possible