News Article CEE financial report GTC Hungary office Poland report retail
by Property Forum | Report

GTC’s rental and service revenues decreased by €3.8 million to €37 million in Q1 2021 from €41 million in Q1 2020. Profit before tax and fair value adjustments for Q1 2021 reached €15 million, up from €13 million in Q1 2020. The company published its financial results for Q1 2021.

“The first quarter was extremely busy. As all the businesses around the world, we were focused on mitigating the COVID-19 impact but we already saw a more positive sentiment compared to 2020. Our office leasing activity improved significantly from 70,000 sqm in the whole of 2020 to almost 40,000 in the first quarter of 2021 itself. Also retail saw some significant lease agreements and openings. Additionally, we proceeded with our acquisition plans and invested €212 million in prime offices in Budapest, acquiring Váci Greens D, Ericsson HQ and Siemens Evosoft HQ, which are fully leased to blue-chip tenants and will contribute significantly to our annual NOI. Those acquisitions further complement and boost our green office portfolio in CEE and are a part of our strategy of refocusing more on Poland and Budapest. We financed the acquisitions with our own funds combined with bank financing and green bonds issued in late 2020 and early 2021,” commented Yovav Carmi, GTC’s President of the Management Board.

“On top of the acquisitions, we were also preparing GTC to change our financing structure and move from individual bank loans for particular projects to unsecured bond funding. We would like to tap the liquid bonds market for more flexible and hassle-free instruments, similarly to our regional peers who successfully approached the bond markets recently. We aim to issue the Eurobonds still prior to the summer,” commented Ariel Ferstman, GTC’s CFO and Member of the Management Board.

Q1 2021 financial highlights

  • Gross margin from rental activity at €27 million (€30 million in Q1 2020), despite the €2.4 million impact of COVID-19 in Q1 2021
  • Operating profit: profit before tax and fair value adjustments at €15 million (€13 million in Q1 2020)
  • FFO strong at €14 million (€18 million in Q1 2020)
  • Strong liquidity position with cash and cash equivalents at €254 million as of 31 March 2021
  • Green bonds issued in the amount of €54 million in March 2021 (25% oversubscription)

Q1 2021 office portfolio highlights

  • Leasing activity focused mostly on prolongations reached close to 40,000 sqm
  • Occupancy remained strong at 90% as of 31 March 2021 (90% in December 2020)
  • €212 million invested in Q2 2020 into fully leased offices in Budapest with long WAULT and blue-chip tenants will contribute €11.8 million p.a. to in-place rent

Q1 2021 retail portfolio highlights

  • COVID-19 still visible in Q1 2021 results however currently 100% of space operational
  • Lockdowns in Poland, Bulgaria and Serbia lead to an impact on gross margin of €2.4 million in Q1 2021
  • Occupancy improved to 96% as at 31 March 2021

Financial results in detail

Rental and service revenues decreased by €3.8 million to €37 million from €41 million in Q1 2020. The decrease mainly resulted from a decrease in rental revenues (€3.4 million) due to rent relief imposed by governments during the lockdown of shopping malls and rent concessions and discounts provided by the Group to the retail tenants across the portfolio due to the COVID-19 outbreak combined with a decrease in rental revenues following the sale of Spiral in the fourth quarter of 2020 (€1.2 million). The decrease was partially offset by an increase in the rental revenues due to the completion of Green Heart, Advance Business Center and Matrix (€0.9 million).

Gross margin from operations decreased by €2.4 million to €27 million from €30 million in Q1 2020, mostly resulting from a loss in rent and service revenues in shopping malls across the portfolio due to the COVID-19.