GTC’s profit before tax and fair value adjustments increased to €21 million in Q3 2020 from €15 million in Q3 2019. For the January-September period, 2020’s results were slightly weaker at €52 million compared to the previous year’s €53 million.
“The third quarter of 2020 showed some improvement before we saw the second wave of COVID-19. The office sector remained resilient, while the retail sector was gradually returning to its pre-COVID state with tenants’ turnover achieving on average 87% of 2019 numbers. We kept our occupancy rate virtually unchanged as our team responded effectively to the challenges of COVID-19. On the financial side new completions during last 12 months allowed us to offset a decrease in revenues resulting from the pandemic situation and lead to a 5% increase in FFO underpinned with strong collection rates. We commenced Sofia Tower 2, a Class A office building above our Mall of Sofia shopping mall and we closed the sale of Spiral in October looking forward to the next opportunities in the region to grow further our office portfolio. All our efforts and healthy Groups situation were confirmed with investment grade rating BBB- by Scope Ratings which we did in preparation for green bonds issue on the Hungarian market,” commented Yovav Carmi, GTC’s President of the Management Board.
Financial highlights
- Rental and service revenues decreased by €3 million to €122 million from €125 million in Jan-Sep 2019. Rental revenues from the newly completed Ada Mall, Green Heart, ABC I and Matrix A of €9 million almost fully offset the decrease of €10 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 GTC White House in the third quarter of 2019 and Neptun Office Center in the fourth quarter of 2019 of €3 million.
- Gross margin from rental activity stood at €32 million in Q3 2020 (€33 million in Q3 2019) and at €91 million in Jan-Sep 2020 (€94 million in 2019), despite the impact of COVID-19 amounting to €2 million in Q3 and €10 million in the first nine months of the year.
Office portfolio highlights
- Occupancy in the office portfolio remained strong at 94% as at 30 September 2020 (95% in December 2019) with no collection problem recorded.
- New lease agreements for a total of 10,000 sqm were signed in Q3 2020.
Retail portfolio highlights
- Occupancy remained strong at 93%.
- Footfall stood at 76% in September 2020, down to 69% in October following the increased number of infections. September sales on average stood at 87% vs last year, down to 83% in October 2020 following the increased number of infections. Further decline is expected as Polish malls practically closed between 7 and 27 November 2020.
- The loss of rental revenues due to the impact of COVID-19 amounted to €10 million in the first nine months of 2020. The collection rate for the period stood at 92%.
- Temporary discounts in return for material extensions allowed to keep the WALT at 3.7 years as of 30 September 2020 (4.0 years at 31 December 2019).
