GTC’s rental and service revenues decreased by €3 million to €79 million in H1 2020. The decrease mainly resulted from a decrease in income of approximately €8 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 on 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. The decrease was partially offset by an increase in the rental revenues due to completion of Ada Mall, Green Heart, ABC I and Matrix A.
“As restrictive measures on our markets eased, we have greater clarity on the consequences of the pandemic on our business. We completed renegotiations with the majority of our retail tenants affected by the COVID-19-crisis and granted tenant concessions which impacted our gross margin by €8 million in the first half. However, the collection of the retail rent was solid and stood at 91% in that period. We see momentum continuing towards pre-COVID-19 levels with footfall gradually returning and malls’ turnovers picking up. On the office side as an operator of well-connected CBD locations, we expect the losses caused by the COVID-19-pandemic to be minor and short-term. We continue our development portfolio encouraged by the strong interest in the office space in the CEE region,” commented Yovav Carmi, GTC’s Management Board Member.
Gross margin from operations decreased by €2 million to €59 million in H1 2020, mostly resulting from a lost on rent and service revenues in shopping malls across the portfolio due to the COVID-19 outbreak partially offset by newly completed and acquired properties net of sale of assets.
Profit before tax and fair value adjustments was €32 million. The net loss amounted to €34 million. This mostly resulted from recognition of loss from revaluation/impairment of assets in the amount of €68 million combined with higher foreign exchange differences loss by €3 million and a decrease in gross margin from operations resulting from COVID-19 outbreak, partially offset by the recognition of tax benefit of €1 million.
GTC closed H1 2020 with a cash balance of €142 million.
Within the office portfolio, occupancy remained strong at 95% and GTC reported no collection problems. 57,500 sqm of new office space is under construction on time and budget. The Spiral office building in Budapest is currently under sale negotiations with the value uplift of €10 million.
Occupancy within the retail portfolio remained strong at 92%. In the last week of July, footfall at 72% of the same week’s footfall in 2019. July sales on average stood at 86% compared to last year. The rent collection rate stood at 91% in H1 2020.
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