Results for the year ended 31 December 2015

RNS Number : 1022A

Globalworth Real Estate Inv Ltd

03 June 2016

 

Globalworth Real Estate Investments Limited

Annual Audited and Consolidated Financial Results for the year ended 31 December 2015

3 June 2016

Globalworth Real Estate Investments Limited ("Globalworth" or the "Company") is pleased to release its Annual Audited and Consolidated Financial Results for the year ended 31 December 2015.

Highlights

•           Total investment undertaken during the year of c.€244 million, including the completion of the acquisition of four leased Class "A" office buildings in Bucharest, increasing our total investment since the Company's inception in February 2013 to c.€814 million

•             Appraised portfolio value increased to €931.1 million at 31 December 2015 (31 December 2014: €599.3 million)

•             EPRA NAV per share of €9.08 (31 December 2014: €8.09)

•             Net Operating Income of €28.4 million (2014: €12.9 million)

•             Gain on valuation of investment property €49.4 million (2014: €25.0 million)

•             EBITDA of €66.3 million (2014: €23.6 million)

Dimitris Raptis, Deputy Chief Executive Officer and Chief Investment Officer of the Company, commented: "In 2015, Globalworth became the largest owner of Class "A" office properties in Romania and continued to be one of the leading investors in the country's commercial real estate market. We are proud of the portfolio we have built to date and we will continue to be an active investor where we see we can create value. Our ability to secure the support of international real estate investors of the calibre of CPPIB is a testament to our track record and prospects, and a considerable endorsement of Globalworth, our local presence and our position in the Romanian market."

 

Operational update

•            Acquired four Class "A" office buildings in Bucharest for a total of c.€173 million

•            Expanded the TAP light industrial complex in Timisoara by pre-letting and developing two new facilities of c.53,900 sqm to Continental and Elster

•            Commercial standing GLA increased by c.77%, reaching 303,155 sqm

•            Improved the average occupancy of commercial standing GLA by c.7.9%, reaching

c.85.1% at 31 December 2015

•            c.310,730 sqm of commercial space let or pre-let with a WALL of c.6.9 years

•           Progressed with the construction of three Class "A" office development projects in Bucharest; Globalworth Tower delivered in Q1-16, offering c.54,700 sqm of Class "A" office space

•            Appraised portfolio value increased by €331.8m (c.55%) compared to the previous year end, reaching a total value of €931.1m

Corporate and Social Responsibility

•             Our social, environmental and economic principles continue to heavily influence the way we manage our business

•           We continued directly or indirectly to support numerous local communities, charities and hospitals in Romania,    and have donated more than €1.2m in charitable contributions since 2011

•          We hosted a number of local and international university gatherings at the Globalworth Tower site which, due to the complexity and manner of its construction, has raised significant interest and has been used as a case study for future engineers and universities

•       Continued to build a "greener" and more environmentally-friendly portfolio, by adding four "green" certified buildings to our portfolio (three in 2015 and one in 2016) and having six other under certification process.

o  UniCredit HQ building (BREEAM "Very Good") - 2015 addition

o  Green Court Building "A" (LEED Gold) - 2015 addition

o  City Offices (LEED Gold) - 2015 addition

o  Green Court Building "B" (LEED Gold) - 2016 addition

Financial update - as of and for the year ended 31 December 2015

•              Secured or extended a total of €277.4 million of financing from equity investors and debt providers

•              Cash and cash equivalents of €37.0 million (31 December 2014: €22.0 million)

•              Bank loans outstanding (nominal value) of €408.6 million (31 December 2014: €206.0 million)

•              Loan to Value of 43.9 per cent (31 December 2014: 34.4 per cent)

•         Weighted average cost of debt of 6.18 per cent (31 December 2014: 3.99 per cent) with a weighted average    maturity of 5 years (31 December 2014: 5.4 years)

•              IFRS NAV of €499.7 million (31 December 2014: €392.7 million)

•              IFRS NAV per share of €7.98 (31 December 2014: €7.32)

•              EPRA NAV of €568.3 million (31 December 2014: €434.1 million)

•              EPRA NAV per share of €9.08 (31 December 2014: €8.09)

•              Net Operating Income ("NOI") of €28.4 million (2014: €12.9 million)

•              Gain on valuation of investment property of €49.4 million (2014: €25.0 million)

•              EBITDA of €66.3 million (2014: €23.6 million)

 

Post 31 December 2015

·             Completed the construction of and delivered the Globalworth Tower landmark office building in Q1-16

·       Completed the structural frame and façade of the Gara Herastrau office building. Expect to complete the  construction works and deliver the building in Q2-16

·         Signed new lease contracts totalling c.37,000 sqm, increasing the total commercial area let or pre-let in our    portfolio to c.340,000 sqm.

·          Signed two long-term €29.1 million and €10.3 million debt facility agreements with Banca Comerciala Romana (Erste Bank Group) and Garanti Bank, respectively, for the refinancing or financing of the TAP and Gara Herastrau properties and their related development projects

·            Secured a €180 million three-year facility (the "Matisse Facility"). The Matisse Facility will be provided by Matisse Funding B.V. (an orphan SPV) which is expected to issue €180 million of senior secured Notes to Canada Pension Plan Investment Board ("CPPIB") (€150 million) and funds managed by Cairn Capital (€30 million). The proceeds of such issuance will be on-lent to the Group in order to refinance the €100 million corporate facility obtained in 2015 from funds managed by York Capital and Oakhill Advisors and three secured debt facilities at the level of three of its Romanian subsidiaries. Drawdown under the Matisse Facility is expected in June 2016. As a result of this new facility, the weighted average all-in cost of debt financing of the Company is reduced from 6.2% to 5.3% on a run rate basis

The Annual Audited and Consolidated Financial Results for the year ended 31 December 2015 are available on the Company's website at www.globalworth.com.

http://www.rns-pdf.londonstockexchange.com/rns/1022A_-2016-6-2.pdf 

For further information visit www.globalworth.com  or contact: 

Panmure Gordon (Nominated Adviser and Joint Broker)                 Tel: [phone]

Andrew Potts

Cantor Fitzgerald Europe (Joint Broker)                                                   Tel: [phone]

Rick Thompson

David Foreman

Milbourne (Public Relations)                                                                       Tel: [phone]

Tim Draper

About Globalworth:

Globalworth Real Estate Investments Limited is a real estate investment company founded by real estate investor and developer Ioannis Papalekas, currently focused on taking advantage of investment opportunities in Romania.  The Company's shares were admitted to trading on AIM in July 2013.

The Romanian market offers an attractive real estate investment proposition in the medium-to-long term. Globalworth believes that global investor capital flows will gradually move from markets considered as "safe havens" to more peripheral markets such as Romania in search of higher yielding investments. As a result, Romania should, in due course, become a more attractive destination for a wide investor audience. Globalworth anticipates holding an early mover advantage in and benefitting from this gradual shift in investor sentiment.

Chairman's statement

Our strategy of focusing our investment on both standing properties and developments in Romania has been supported by favourable market conditions and has positioned us to take advantage of existing and upcoming opportunities. In 2015, we continued to build a portfolio comprising attractive and well-located assets.

Globalworth undertook c.€244m of real estate investment in Romania over the year, increasing our total investment since the Company's inception in February 2013 to c.€814m and ranking us as one of the most active investors in the country over the period.

Our investment was concentrated on two sectors and locations in 2015: office space in Bucharest's new Central Business District ("CBD") and light-industrial space at Timisoara, both of which meet our key criteria of strong tenant demand, a high level of synergy with our existing portfolio and the potential for attractive risk-adjusted returns for our shareholders. We acquired four standing office properties in Bucharest, completed the development of two light-industrial facilities in Timisoara, and progressed with the construction of three other office developments in Bucharest, resulting in a €331.8m (c.55%) overall increase in the appraised value of our real estate portfolio compared to the previous year end, reaching a total value of €931.1m. 

Being in the right location, together with understanding the needs of our tenants and the overall demand trends in the market, is critical for the success of our business. At Globalworth we review every investment opportunity on its stand-alone merits and its strategic fit within our portfolio. The success of this strategy has been evidenced by our ability to negotiate the take-up or extension of a total c.174,300sqm over a 28-month period (starting in 2014) and achieve a high average occupancy rate for the standing commercial properties in our portfolio, which as of 31 December 2015 stood at c.85.1%. It should be noted that in the two locations where we have our highest concentration of assets, Bucharest New CBD and Timisoara, the respective occupancy rates of our standing commercial properties were 89.9% and 97.3%.

In October 2015, Globalworth successfully completed a third equity offering, raising a total of €53.8m at an issue price of €6.0 per share. The transaction was c.54% oversubscribed by equity investors, with the proceeds being used mainly to fund the construction of our development projects. The total appraised value upon completion of our portfolio as of 31 December 2015 was €1,083.8m.

The Company was also very active in accessing the debt capital markets. Over the course of 2015 we negotiated the roll-over or raised new debt totalling c.€214.5m from local and international debt providers. While in 2016, we continued to access the debt capital markets successfully concluding three facilities for c.€220m, with the highlight being the €180m bond transaction concluded with Canada Pension Plan Investment Board (CPPIB) and Cairn Capital.  We are proud and thankful for the validation and support of an international investor of CPPIB's size and reputation.

Our achievements for the year are all the more notable given that they were delivered by a relatively small team of highly skilled professionals. This team is responsible for all the operating activities of Globalworth including investment, development, leasing, and asset management operations.

Our continued focus on delivering attractive risk-adjusted returns for our shareholders has resulted in our EPRA NAV rising to €568.3m, up by 30.9% compared to 2014, with EPRA NAV per share increasing by a lesser 12.2% as a result of our latest equity capital raise. Given that the majority of the equity capital that we raised has been used to fund the developments from which we expect to achieve the highest returns, we believe that our shareholders will be well compensated for the discount at which the latest capital raise was concluded.

2015 was also the first full operational year for our extended Board of Directors, which is now made up of 8 members. We believe that good communication between management and the Board is key for the Company to operate effectively. During the course of the year, the management team and Board members met regularly to discuss the progress of the business and how shareholder expectations can best be met.

At Globalworth, we aim to do business while adhering to strict business ethics and corporate social responsibility, which we believe makes a difference and adds value to the Company, our shareholders, the community, and environment.

 We continue to focus on investing in environmentally friendly properties, adding four green certified buildings to our portfolio in 2015, and we are exploring the potential for similar accreditations for other properties in our portfolio, both standing and development projects.

We are also very proud to be able to give back to the community, notably via the active support of senior management and the rest of the team to charities predominantly focused on those in need, with particular attention given to young children, single mothers and those in need of palliative care.

Globalworth is well-positioned to take advantage of the favourable market conditions in Romania through a combination of its portfolio of high quality, income-generating properties and developments, strong cash flow potential supported by long-term leases and good quality credit, moderate financing exposure, and its committed team of experts.

2016 is expected to be another milestone year for Globalworth, with a number of its development projects under construction being delivered to market. I look forward to a very exciting 2016.

Geoff Miller

Chairman

2 June 2016

 

Chief Executive's STATEMENT

In 2015, Globalworth became the largest owner of Class "A" office properties in Romania and continued to be one of the leading investors in the country's commercial real estate market.

We are very proud to have been able to attract reputable international institutional investors since the Company's inception. The recent transaction we have concluded with an investor of CPPIB's calibre is a considerable endorsement of Globalworth and our position in the Romanian market.

During the year, we made significant strides in strengthening Globalworth's position as one of the leading real estate players in Romania and the wider SEE region. We continued to invest both in new real estate acquisitions and in own-developments of modern office and light industrial space. We also established new or improved existing relationships with our business partners, and invested in people and internal processes to enable us to run our operations more effectively and efficiently.

Essential to the success of our story is the environment in which we operate. Romania remains our primary focus and its real estate market continues to provide the right foundations for us to implement the strategy that we announced to investors during our IPO in July 2013 and have reiterated since.

The Romanian macro environment was again positive in 2015, resulting in Real GDP expanding by 3.7%, one of the highest growth rates in Europe. In addition, Romania has one of the lowest public debt to GDP ratios in the Eurozone (c.38.5%), and benefits from low unemployment (c.6.8%), an increasing rate of private consumption (+5.8%) and low inflation (c.-0.6%). Growth in Romania is also supported by its well-capitalised banking sector. During the course of the year, a renewed appetite to deploy capital led to increased competition among banks for good quality real estate projects and, as a result, to an improvement in financing terms. EU and national funds continue to be available to the country (more than €43bn to be provided over a 7-year period from 2014-2020) and are expected to further incentivise investment in Romania, thus underpinning its growth in the short to medium term.

The benefits of the favourable macro-economic environment have been reflected in the performance of Romania's real estate sector, with investment yields in all market segments continuing to contract. Office and industrial yields narrowed by 25 and 75 basis points in 2015, falling to 7.5% and 9.0% respectively in December 2015. As such, in order for Globalworth to achieve attractive risk-adjusted returns for its shareholders, we have invested in both standing, income-generating properties as well as properties to be developed by the Company. Typically, properties acquired from third parties are lower yielding than those developed by Globalworth, resulting in a blended, stabilised yield on capital invested of c.10%.

Across the market, total investment volume for the year was estimated at €800m, down from a post-crisis record of c.€1.1bn in 2014. Despite the reduction in volumes recorded, the total number of transactions completed in 2015 was similar to 2014, though more transactions targeting logistics and light-industrial properties were completed compared to retail transactions the year before.

Office and logistics space was again in strong demand in 2015, as the themes observed in 2014 continued to play out, and is expected to remain sought after in the short to medium term. Many corporates are further expanding their operations in Romania, benefiting from positive macroeconomic fundamentals, the stable tax system, a skilled workforce and the incentives available for investment and job creation in the country.

Being based on the ground and a direct beneficiary of this positive sentiment, in 2015 we continued to grow our portfolio and deployed c.€244m on 8 investments ranking us not only as the largest office investor but also one of the largest real estate investors in Romania for the year.

To help fund this investment programme, Globalworth successfully accessed the debt and equity capital markets, raising a total of €268.3m of additional funds in 2015. In March 2015, we put in place a c.€55.0m corporate facility, which in June 2015 was subsequently increased by c.€45.0m. In addition, during the course of the year we negotiated the roll-over or raised new debt totalling €114.5m, mainly from BCR (Erste Group) and UniCredit banks.

In September 2015, Globalworth announced its intention to raise a minimum of €35.0m of equity capital from the public markets. The offering was c.€19m oversubscribed by existing and new shareholders, as a result of which the Company successfully raised a total of c.€54m of new equity capital (October 2015), at an issue price of €6.0 per share. The offering was completed at a significant discount to our EPRA NAV, but as the proceeds from the raise were mainly targeted at funding our development projects, which we expect to achieve higher returns compared to our investment in income-generating properties, we believe that our shareholders will see an overall benefit from the transaction in the medium term. Our ability to access local and international debt and equity investors is testament to the quality of our portfolio, our track record to-date, and the future prospects of the Company.

During the year, we added 6 new standing commercial properties to our portfolio, of which four were new acquisitions in Bucharest and two were developed by Globalworth in Timisoara (part of the TAP light industrial complex). We currently own 100% of our 15 real estate investments, which were appraised at c.€931m ("As is") valuation as of December 2015.

Globalworth, in addition to the two light-industrial facilities constructed and delivered in 2015, has three other office developments projects under construction in Bucharest which, upon completion, will add c.124k sqm of GLA to our portfolio.

We are proud to announce that our flagship development project Globalworth Tower, was delivered in Q1-16, increasing our total standing office footprint to c.270k sqm and our overall commercial standing GLA to c.358k sqm. Our current pipeline of developments (excluding Globalworth Tower) includes four buildings of which two office properties are expected to be delivered in 2016, with the remaining office and light-industrial space coming on stream in 2017. On delivery, these developments (including Globalworth Campus Phase "B") will add an additional c.€153m of value to our portfolio ("On Completion" valuation of c.€1.1bn).

Total revenue generated by our portfolio increased to €44.8m (from €22.2m in 2014) following our investment in income-generating assets in 2014 and 2015 and as a result of increasing occupancy through active asset management. We have been very successful in retaining and indeed enhancing our tenant base, which now comprises more than 85 different national and multinational corporates and includes some of the best-known blue-chip corporates from over 15 different countries. As at 31 December 2015, our standing portfolio (excluding the Upground Towers residential complex) offered GLA of 303,155sqm and had an occupancy rate of 85.1%. As of the year-end, Globalworth had a combined total of c.310,730sqm of GLA leased in its standing and development projects. Since the beginning of 2016, we have managed to sign new lease contracts, increasing the total commercial area let or pre-let in our portfolio to c.340k sqm.

The increase in the total revenue for the Company was not reflected in the underlying EPS for year, which at €0.92 was down from €2.02 in 2014, impacted by the issue of c.9.0m new Ordinary Shares following the equity capital increase in October 2015.

Our EPRA Net Asset Value ("EPRA NAV") increased by 12% to €9.08 per share during the year as a result mainly of the new acquisitions and the revaluation of development projects, which were either delivered or whose construction made further progress in 2015. The appraised value for the remainder of our portfolio was, on a like-for-like basis, marginally changed on the year before. Overall, our EPRA NAV has grown by 65%, which compares to the weighted average equity contribution from Globalworth's share capital increases of €5.5 per share, representing significant value creation for shareholders.

In order to support the continued growth of the Company, we further enhanced our team of professionals which now comprises 67 people, the majority located in Bucharest. We also continued to invest in developing our in-house ERP software, which has already improved our overall operational effectiveness and efficiency and is expected to yield further benefits.

At Globalworth we remain committed to investing in environmentally friendly properties. In 2015, we increased the number of green properties in our portfolio following the acquisitions of the UniCredit HQ building (BREEAM "Very Good") and Green Court Building "A" (LEED Gold). During the year we received LEED Gold certification for our City Offices property, which was completely refurbished / repositioned at the end of 2014.  In 2016, we added to our total of 5 environmentally accredited buildings, with Green Court Building "B" (LEED Gold). In addition, we are exploring the potential for similar accreditations for other properties in our portfolio (standing and development projects).

2016 is going to be another milestone year for Globalworth, as we have already completed our flagship Globalworth Tower development project Q1-16 and we expect to deliver two new development projects during the course of the year. We also completed a landmark bond financing for the Romanian market, with the issue of a €180m bond, which was directly negotiated / subscribed by the Canada Pension Plan Investment Board (CPPIB) and Cairn Capital.  Securing the support of international real estate investors of the calibre of CPPIB is a huge endorsement of Globalworth and our position in the Romanian market. We remain positive about Romania and the real estate market in particular, where we believe the strong fundamentals will continue to support growth in the short to medium term, resulting in growing tenant demand and further market opportunities becoming available. Furthermore, our pipeline of exciting investment opportunities is expected to enhance the future growth of the Company.

We will continue to work hard to build on Globalworth's position as the premier real estate investment company in Romania and one of the largest in the wider SEE region.

Ioannis Papalekas

Chief Executive Officer

2 June 2016

 

Management Review

2015 was another milestone year for Globalworth, as we continued to execute the plan set out by the Company at the time of its IPO. Overall, we invested €244m in real estate during the year for either new acquisitions or developments and continued to build solid foundations to establish Globalworth as one of the dominant real estate companies both in our core Romanian market and in South-East Europe.

2015 was another intensive year for management in our work to establish Globalworth as one of the leading real estate players in Romania and the wider SEE region. In order to maintain our focus, we set a number of short to medium term objectives which we aim to meet every year.

Closing of Announced Transactions

One of Globalworth's primary objectives in 2015 was to finalise the acquisitions of Nusco Tower, UniCredit HQ and Green Court Building "A". All three transactions were announced by the Company in Q4-14 and, subject to the fulfilment of certain conditions, were to be concluded in 2015. All acquisitions involved standing Class "A" offices in Bucharest, which we believe provide a very good strategic fit with our existing portfolio in terms of the quality of both the properties and the tenants, and further improved the contribution of our standing properties compared to that of our development projects.

The Nusco Tower and UniCredit HQ properties were acquired in March 2015, followed by Green Court Building "A" in June 2015, for a total consideration of c.€129m. Management worked extensively together with its counterparties and financing banks (BCR and UniCredit) in order to achieve these milestone transactions and is very pleased to have been able to so within the agreed timelines.

Expand Real Estate Footprint through Selected Pipeline Acquisitions

Globalworth has an active pipeline of investments under consideration, from which Management, together with the Board of Directors, seeks to acquire those which provide the highest strategic and financial benefits to the Company.

In 2015 we reviewed numerous transactions in the local market and successfully completed the acquisition of Green Court Building "B", which we believed provided the greatest merits for Globalworth:

Strategic:

·   Ownership of two of the three buildings within the Green Court Complex, and specifically the ones situated at the front, facing Gara Herastrau and Barbu Vacarescu Streets

·   Further increases the footprint of the Company in the New CBD with the addition of a brand new Class "A" office building, certified with LEED Gold accreditation

·   Improved the tenant mix with the addition of international tenants such as Carrefour, Sanofi, Adecco, Colgate Palmolive and Ericsson

Financial:

·   Acquisition of a property with further upside potential as yields are expected to continue to contract in the short to medium term in the local market

·   Immediate cash flow generation for the Group, which as the property is now 100% leased (occupancy at c.82% at the time of acquisition), has improved further since its acquisition

Progress with Globalworth's Development Programme

At the start of 2015, Globalworth had five buildings under construction in Bucharest and Timisoara which, upon completion, will offer c.191k sqm of Gross Build Area ("GLA") and c.149k sqm of Gross Leasable Area. ("GLA") 

During the year, we successfully completed the construction and delivered two built-to-suit light industrial facilities offering total GLA of c.53,900sqm, which were majority leased to the high quality tenants Continental and Elster Rometrics (part of Honeywell Group) on long-term (+10 year) leases.

In addition, we completed the construction of our flagship Globalworth Tower Class "A" office development located in the new CBD of Bucharest, with the building registered with the authorities in Q1-16. 

Furthermore, we made significant progress with the construction of our Gara Herastrau and Globalworth Campus Tower "I" developments, which are expected to be delivered in Q2 and Q3-16 respectively.

We are very proud that all our developments have either been delivered on time or are on track to be completed within their respective expected delivery dates. Our ability to execute multiple projects simultaneously, within budget and on time, is a testament to our internal project management capabilities and our close collaboration with our partners responsible for the construction and other related activities of the development process.

Overall, in 2015 we invested c.€71m in the development and extraordinary maintenance of our real estate portfolio, c.94% of which was in our five projects under construction.

Optimise Capital Efficiency

Management is focused on allocating capital efficiently in terms of the types of assets we invest in and how we fund investments between equity and third-party debt.

We manage our mix of equity and debt financing in order to achieve a balance that allows for the rapid growth of the Company, enhances shareholder returns in the medium-term and manages the inherent risk associated with third-party debt. We have, indeed, funded a number of developments directly through equity to avoid slowing the speed of execution and refinanced them at attractive terms on completion.

In 2015 we raised c.€215m from debt financing providers at an average cost of 5.21% and c.€54m of new equity capital in October 2015. We are very pleased that our proposed equity offering was oversubscribed by existing and new shareholders by €18.8m, which resulted in the Company electing to increase the overall size of the offering.

Our primary measure of leverage is Loan to Value ("LTV") on a consolidated basis for the Company. We are committed to maintaining LTV below 60% at all times so that our financial position will not threaten the viability of the Company should property values fall.

We believe that values in the office and logistics sectors in which we primarily operate will continue to appreciate in the medium term, although we would not increase our leverage solely on the basis of an improvement in market yields or future expectations.

As of the 31 December 2015, we have maintained a moderate LTV of 43.9%, which adjusted for the re-financing of our TAP investment, the financing of our Gara Herastrau project and the €180m senior secured real estate bond facility increases to 45.8%. Our endeavour to optimise our capital structure is also reflected by the reduction of our weighted average cost of debt from 6.18% as at 31 December 2015 to 5.3% (when adjusted for the new facilities).

High Occupancy Rate in our Portfolio supported by High Quality Long-Term Lease

Our ability to lease space in our properties is one of the key strengths of our Company. We value highly each and every relationship that we have developed with our partners over the years, many of which have grown apace with us in recent times.

Since the beginning of 2014, Globalworth has successfully negotiated the take-up or extension of a total of c.174,300sqm of commercial gross leasable area within our buildings, ranking us as one of the most successful landlords in the Romanian real estate market.

At the end of 2015, the average occupancy rate of our standing commercial portfolio was 85.1%, while the average duration of our new commercial leases was 8.2 years, in line with our strategy to agree long-term lease contracts.

Over the past 18 months we have successfully signed a number of leases with some of Romania's best known national and multinational corporates, including Valeo (TAP) for c.13,500sqm, ADP (Gara Herastrau) for c.6,100sqm, Nestor Nestor Diculescu Kingston Petersen (Globalworth Tower) for c.5,800sqm, Honeywell (BOC) for c.4,800sqm, Deutsche Bank (BOB) for c.3,100sqm, Wipro (Globalworth Tower) for c.1,980sqm, Vodafone (Globalworth Tower) for c.1,950sqm, Ericsson (Green Court "B") for c.1,910sqm, and Bunge (Globalworth Tower) for c.1,785sqm.

Our portfolio boasts a diversified, high-quality tenant mix, comprising some 85 national and multinational corporates from more than 15 different countries.

2016 is an important year for us, as we are involved in a number of negotiations for the take-up of available space in our properties and developments, as well as negotiating extensions for some of our existing leases.

High Quality Team of Professionals Based in Bucharest

In 2015, we continued to grow our talent pool, which now totals 67 professionals, the majority located in Bucharest (58 in 2014).

Our local presence has allowed us to develop a broad network of relationships over the years among owners, occupiers, property specialists and community representatives, as well as domestic and international investors and capital providers.

These relationships and our local market knowledge give us an advantage in identifying and investing in opportunities as and when they become available (either publicly or off-market).

Investing in a team of skilled professionals, each specialising in their respective field, is critical in order to be able to react quickly when opportunities arise and to operate as efficiently and effectively as possible. Our team is responsible for all the operating activities of Globalworth including investment, development, leasing, finance and accounting, property and asset management operations, and sales.

During the year we took the strategic decision to further build our property and asset management team, as Globalworth had reached c.356k sqm of standing GLA at the end of 2015 and is expected to reach c.450k sqm by the end of 2016 (c.490k sqm by the end of Q3-17). As such, in order to be able to service our tenants more effectively and to improve economies of scale and the efficiency of our operations, we added four new members to our team who are dedicated to this role.

Dimitris Raptis

Deputy Chief Executive Officer and Chief Investment Officer

2 June 2016

 

2015 Key Goals vs. Achievements

Closing of Announced Transactions

·   In Q4-14, Globalworth announced the acquisitions of three Class "A" office properties in Bucharest, which, subject to the fulfilment of certain conditions, were to be concluded in 2015

·   All acquisitions were completed within their respective acquisition timelines

Expand Real Estate Footprint through Selected Pipeline Acquisitions
 

·   One of Globalworth's mandates is to build an active pipeline of real estate investments and prioritise those which provide the highest strategic and financial benefits to the Company

·   In Q4-15 Globalworth completed the acquisition of a second building within the Green Court complex development in Bucharest

·   Green Court Building "B" was acquired for €44.5m and provides a number of strategic and financial benefits to Globalworth

Progress with Globalworth's Development Programme

·   Globalworth had five buildings under construction in Bucharest and Timisoara at the start of 2015

·   We delivered two light-industrial facilities offering total GLA of c.53,900sqm

·   We completed the construction of our flagship Globalworth Tower Class "A" office development in Bucharest

·   Made significant progress with two other developments in Bucharest and engaged in the necessary preparatory activities for the development of a new tower

Optimise Capital Efficiency

·   Maintained moderate LTV of 43.9% as of year-end, in line with our commitment to keep LTV below 60%

·   Continued to build relationships with direct and indirect capital providers

·   Raised c.€215m from debt financing providers

·   Raised c.€54m of new equity capital in October 2015

·   Optimised trade-offs between the use of debt and equity capital and organisational flexibility

·   Signed the landmark €180m senior secured real estate bond financing in May 2016

·   Adjusted LTV for 2016 debt facilities of 45.8% as of 31 May 2016

·   Reduced the weighted average cost of debt from 6.2% as at 31 December 2015 to 5.3% as at 31 May 2016

Achieve and Maintain High Occupancy Rate in our Portfolio supported by High Quality Long-Term Leases

·   Signed c.174,300sqm of commercial space leases since 2014

·   Improved occupancy of our commercial standing portfolio to 85.1% at year-end 2015

·   Remaining weighted average lease length of our commercial leases of c.6.9 years (31 December 2015)

Enhance our High Quality Team of Professionals Based in Bucharest and Overall Effectiveness of the Company

·   Team of highly skilled professionals, the majority based in Bucharest, reached 67

·   Continued to invest in our people through internal and external training programmes

·   Added new members to our team and further built our asset and property management expertise

·   Continued building strong relationships with our tenants and partners who are key to Globalworth's success 

 

Investment Review

2015 was another strong year for Globalworth in terms of investment. We increased the number of standing properties in our portfolio by six - four in Bucharest and two in Timisoara - and further progressed with our three development projects located in Bucharest's new CBD. The Company invested a total of c.€244m over the course of the year, increasing its total investment in real estate to c.€815m since Globalworth was established.

We acquired four standing Class "A" office properties in Bucharest, including the three transactions announced in Q4-14, for a total of c.€173m. 

Our new office additions included:

·   the internationally acclaimed UniCredit HQ in Bucharest, developed by Bog'Art and ranked 17th on the list of the 30 most architecturally impressive bank headquarters in the world in 2013

·   buildings "A" and "B" of the award-winning Green Court complex developed by Skanska in 2014/2015

·   Nusco Tower, a high-rise Class "A" office property located at the entrance of the new CBD (opposite the Globalworth Tower)

In May 2015, we delivered Phase I of the TAP/Continental investment, which involved the development of a c.44,800sqm warehouse within our TAP complex in Timisoara. Subsequently, in August 2015, we expanded the complex by a further c.9,100sqm following the completion of a new light production facility, let principally to Elster. The complex will be further expanded with a fourth facility pre-let to Valeo, which is expected to be delivered within the next 18 months.

With the acquisition of UniCredit HQ and the delivery of the TAP (Continental) investment, we have now concluded all of the major investments set out in our April 2014 equity capital raise.

In addition to these investments, in 2015 Globalworth further progressed with the construction of three new office development projects, all located in Bucharest's new CBD. In total, as of year-end 2015, we had four office buildings with c.124k sqm of GLA under construction. Three of the office buildings are expected to be delivered to the market in 2016, of which our flagship 54,700sqm GLA, Globalworth Tower development, has already been delivered in Q1 2016. The Gara Herastrau and Tower "I" of the Globalworth Campus developments are expected to be completed in Q2 and Q3 2016 respectively.

Investment Capex (2015)
New Acquisitions	Developments - Delivered	Developments - Under Construction	Portfolio - Improvements
UniCredit HQ Nusco Tower Green Court A Green Court B	TAP - Continental TAP - Elster	Globalworth Tower Gara Herastrau Globalworth Campus	Other
c.€173.3m	c.€8.7m	c.€57.6m	c.€4.4m

 

Leasing REVIEW

Since the beginning of 2014, Globalworth has successfully negotiated the take-up or extension of a total of c.174,300sqm of commercial gross leasable area within our buildings, ranking it as one of the most successful investors and developers in the Romanian real estate market.

In 2015, we signed 18 leases for a total of c.28,250sqm of commercial space within our properties, which in addition to the acquisition/delivery of new properties either with high occupancy rates or fully let, resulted in a total average occupancy rate for our standing commercial portfolio of 85.1% (as of 31 December 2015). 2016 has started strongly, with lease contracts for c.37,000sqm of office and logistics space signed since the beginning of the year.

The WALL for the majority of the commercial leases signed between 2015 and May 2016 was 8.2 years. In line with our strategy, these new leases were signed typically with multinational corporate groups and financial institutions on long-term, euro-denominated, inflation linked, triple net leases.

In our overall commercial portfolio we have achieved a diversified tenant mix comprising some 85 different national and multinational corporates from over 15 different countries, including some of the most recognisable corporates in their respective industries.

The WALL remaining on the commercial lease space in our portfolio was 6.9 years at 31 December 2015.

Selected Tenants of our Portfolio
Tenant Origin:	% of Contracted Rent	Selected Tenants of Commercial Portfolio
Multinational	88.9%	Abbott Laboratories, Adecco, ADP, Bayer, BCR, Billa, BRD, Bunge, Carrefour, Cegeka, Clearanswer, Colgate-Palmolive, Continental, Credit Agricole Bank, Delhaize Group, Deutsche Bank, Deutsche Telekom, EADS, Elster Rometrics, EY, G4S, GfK, Honeywell, HP, Huawei, Intel, Mood Media, NBG Group, Nestlé, Oracle, Orange, Piraeus Bank, Sanofi, Schneider Electric, Securitas, Skanska, Snamprogetti, Starbucks, Stefanini, Subway, UniCredit, Valeo, Vodafone, Way Media, Wipro, Worldclass
National	5.5%	CITR, GlobalVision, Generalcom, Centrofarm, NNDKP, NX Data, RINF
State Owned Entities	5.6%	Hidroelectrica, Ministry of European Funds

 

Portfolio Review

Since 2013 Globalworth has been investing in a "best-in-class" real estate portfolio located at prime sites in Romania, with an appraised value upon completion of c.€1.1bn.

Since its inception, Globalworth has invested in "best-in-class" properties positioned in prime locations within their respective sub-markets. All of our real estate properties are currently located in two principal cities in Romania, Bucharest (the capital) and Timisoara (one of the largest logistics hubs of the country), where we focus primarily on managing and developing office properties (c.80.4% of appraised value as of 31 December 2015).

The highest concentration of our portfolio is in the new Central Business District ("CBD") of Bucharest, where 9 of our 15 real estate (standing and developments) investments are situated, offering a total of c.147,900sqm of standing commercial GLA and 435 residential units as of 31 December 2015.

The new CBD is the area in the northern part of Bucharest - around the Dimitrie Pompeiu, Calea Floreasca and Barbu Vacarescu Boulevards - which has seen the highest level of office investment in recent years as a result of its excellent accessibility and infrastructure (metro, tram, bus, road), its proximity to the Henri Coanda International Airport, and the availability of sizeable land plots.

With the completion of our flagship Globalworth Tower development, our footprint in the new CBD increased by c.54,700sqm in Q1-16 and is expected to extend further during the course of the year with an additional c.40,600sqm coming on stream with the delivery of the Gara Herastrau and the Globalworth Campus - Tower "I" buildings. In total, we expect to deliver a total of c.123,700sqm of new office GLA in the new CBD in 2016 and 2017, increasing our total standing commercial GLA to c.271,600sqm in the area.

The remainder of our Bucharest portfolio comprises Class "A" offices offering total GLA of c.74,000sqm and two land plots held for future development.  The properties are spread across the capital (centre, north and south), with each property occupying a prime location within its respective sub-market.

Following the delivery of Globalworth Tower in Q1-16, the Company owns the 2nd, 3rd and 5th tallest office towers in Bucharest and the two single largest office buildings (held by an institutional investor) in Romania.

We also own a light-industrial park comprising three facilities in Timisoara, one of Romania's principal peripheral industrial hubs. Our TAP industrial park is now ranked as one of the five largest industrial/logistics parks in the country, offering total GLA of 81,350sqm. The park is in the process of being further expanded with the addition of a fourth facility leased to Valeo, which will increase total GLA to c.94,900sqm by the end of Q3-17.

Property	Status	"As Is" Value (€ m)	Capex (€ m)	Mark to Market Uplift (€ m)	Value upon "Completion" (€ m)1	LTV %2
BOB	Completed	51.6	-	-	51.6	65
BOC	Completed	144.0	-	-	144.0	57
TCI	Completed	76.5	-	-	76.5	33
City Offices	Completed	62.1	-	-	62.1	23
Upground Towers	Completed	107.3	-	-	107.3	30
UniCredit HQ	Completed	52.6	-	-	52.6	43
Nusco Tower	Completed	57.7	-	-	57.7	49
Green Court "A"	Completed	50.1	-	-	50.1	54
Green Court "B"	Completed	50.2	-	-	50.2	40
TAP	Comp./Dev.	44.7	10.2	4.3	59.2	38
Globalworth Tower3	Development	139.5	15.0	0.6	155.1	-
Globalworth Campus	Development	57.6	98.8	16.5	172.9	-
Gara Herastrau	Development	19.0	7.3	-	26.3	-
Luterana	Land	12.4	-	-	12.4	-
Herastrau	Land	5.8	-	-	5.8	-
Total		931.1	131.3	21.4	1,083.8

1. Data based on debt levels as of 31 December 2015 and "As Is" value.

2. Per the consolidated financial statements as of 31 December 2015.

3. Globalworth Tower was delivered in Q1-16.

 

In 2015, Globalworth was one of the most active real estate investors in Romania, with a portfolio of high quality real estate properties offering total standing GLA of 355k+ sqm and 137k+ sqm under development.

Standing Properties

Our standing portfolio comprises 12 assets, valued at €695.1m (as of 31 December 2015). In Bucharest we own 8 office properties and a residential complex, while in Timisoara we own a light-industrial park comprising three facilities.

Our standing portfolio increased by c.131,000sqm in 2015 following the acquisitions of UniCredit HQ, Nusco Tower, Green Court Building "A", Green Court Building "B" and the delivery of two new light-industrial facilities in the TAP complex, (pre-) let to Continental and Elster. The total GLA of our standing portfolio attained c.355,500sqm as of 31 December 2015.

Like-for-like third-party valuation of our standing portfolio did not materially change during 2015, although the overall value of our standing portfolio increased by a total of c.€235m, mainly as a result of new additions.

All our properties are modern and have been completed or refurbished since 2008. Approximately 78% of our GLA and c.72% of our standing portfolio value has been delivered within the past c.6 years. It is worth noting that four of the six new additions in our standing portfolio include properties delivered to market in the past c.1½ years and, following the delivery of our development projects (Globalworth Tower - completed in Q1-16, Gara Herastrau and Globalworth Campus Phase "A"), the proportion of modern office stock in our portfolio will further increase by the end of 2016.

In 2015, and in line with our principles of managing our business in an environmentally friendly way, we continued to focus on "green" properties. The number of 'green' properties owned by the Company has risen during the year with the addition of the UniCredit HQ (BREEAM "Very Good"), Green Court Building "A" and City Offices (both rewarded LEED Gold in 2015) and Green Court Building "B" (rewarded LEED Gold in 2016). We are targeting similar certifications for other properties in the portfolio and hope to receive these in the next 12 months.

Commercial Properties	Q4 - 2014	Q4 - 2015
Number of Investments:	5	9
Number of Assets:	5	11
GLA (sqm):	171,263	303,155
Valuation (31 Dec):	€359.0m	€595.6m
Occupancy:	77.2%	85.1%
Contracted Rent:	€20.7m	€36.3m
WALL:	6.2 yrs	6.0 yrs

In addition to our commercial portfolio, we own 435 apartments at Upground Towers (31 December 2015), a modern two-tower residential complex offering a total of 571 apartments benefiting from fine views of the nearby Tei lake. The property is ideally situated in the new CBD and in close proximity to our commercial portfolio, allowing us to leverage its use and provide a complete package to many of our international tenants looking for turnkey solutions when relocating operations.

In Q2-15, underpinned by the gradual improvement in the residential investment market, we actively marketed residential units in Upground Towers and, as a result, sold 12 apartments between May and December 2015 at an average price per unit of €129,400. In addition, we currently have 201 apartments leased, generating c.€1.5m of annual rental income.

Total Standing Properties	Q4 - 2014	Q4 - 2015
Number of Investments:	6	10
Number of Assets:	6	12
GLA (sqm)(1):	224,479	355,513
Valuation (31 Dec)(2):	€460.0m	€695.1m

(1)          Includes c.53,217sqm and c.52,358sqm of residential space in 31 December 2014 and 31 December 2015 respectively.

(2)          Appraised valuations as of 31 December 2014 and 31 December 2015.

As a result of the ongoing efforts of our leasing team and the addition of new properties which either had high occupancy rates (eg Green Court "B" and TAP - Elster) or were fully occupied (eg Green Court "A", UniCredit HQ and TAP - Continental), our standing commercial portfolio has an overall average occupancy rate of 85.1%. Seven of our buildings had occupancy of over 90.0%, and we are in active discussions for the remainder with a number of tenants for the take-up of the vacant spaces in the respective properties. Since the beginning of 2016, the number of properties with occupancy of over 90.0% has increased to eight, as Green Court "B" became fully let in Q1-16.

Developments

Continental's Phase-I light industrial space and Elster's light production facility, part of our TAP complex in Timisoara, were both delivered in 2015. Further progress was also made with the development of our three office projects, all located in the new CBD of Bucharest. One of these, our flagship Globalworth Tower office tower development, was delivered at the beginning of 2016.

Timisoara

In May 2015, we delivered a c.44,800sqm light industrial space, let to the leading German automotive manufacturing company Continental Automotive, at our TAP complex in Timisoara. The complex was further expanded in August 2015 following completion of the construction of a c.9,100 sqm production facility let principally to Elster, a subsidiary of Honeywell and a leading global provider of gas, electricity and water meters and related communications, networking and software solutions.

At the end of 2015, the TAP complex comprised a total of c.81,349sqm of GLA. In February 2016, Valeo exercised its option to expand further in the park by adding a new c.13,500sqm facility. This will be the third time within a c.1½ year period that a tenant has decided to lease space in the park, demonstrating the appeal of TAP to high quality multinational tenants.

TAP has the potential for further development, reaching to a total GLA of c.123,400sqm as a result of the extensions  available to the existing tenants of the park.

Bucharest

Globalworth Tower, our flagship project located in the heart of Bucharest's new CBD, was effectively completed in December 2015 in line with the estimated timeline and became fully operational in Q1-16. The majority of the current tenants are scheduled to move into Globalworth Tower in Q2 and Q3-16.

As of 31 December 2015, the property was c.51.0% pre-let to high quality national and international tenants including Vodafone (telecoms), Nestor Nestor Diculescu Kingston Petersen (law), Huawei (telecoms), Delhaize / Mega Image (supermarket) and had a weighted average lease length of 10.9 years. In May 2016, the occupancy rate increased to 66.7%, mainly as a result of the take-up of an additional floor by Vodafone and of office space taken up by Wipro (IT), Bunge (agricultural) and Globalworth (real estate). We are in active negotiations with a number of other tenants for the full occupancy of the property.

Globalworth Tower has been pre-certified with the Green Certification of LEED Platinum. Once obtained, Globalworth Tower will be the first building in Romania and the broader SEE region having received the highest available Green accreditation. 

The development of the Gara Herastrau project is progressing well, with the structural frame now in place and the façade 100% complete (Q1-16). The property, which upon delivery is estimated to offer c.12,000sqm of GLA, lies adjacent to Green Court Building "A" and some 200 metres from Nusco Tower and Globalworth Tower. As of Q1-16, the Gara Herastrau development is 50.6% pre-leased to ADP. The development is expected to be completed in Q2-16.

Our Globalworth Campus project, which upon completion will offer three Class "A" office towers and total GLA of 88,700sqm, is being developed in two phases. Phase "A" will comprise two (side) towers facing Dimitrie Pompeiu Street (main street) with a total GLA of c.57,000sqm on completion, while Phase "B" will comprise one (the middle) tower, which on completion will contribute additional GLA of c.31,700sqm.

Phase I is currently under development, with construction of Building "A" having reached the 12th floor (Q1-16) and the façade is currently being fitted out, while the necessary preparations, including excavations, site preparation etc. have been completed in Building "B". Delivery of the two towers is scheduled for Q3-16 and Q1-17 respectively.

Development Projects - 31 December 2015	Under Construction1	Future Development2	Total Development
Number of Investments	3	2	5
Number of Assets to be Developed	4	3	7
GLA (sqm)1	123,645	73,757	197,402
"As Is" Valuation	€198.5 m	€19.3 m	€217.8 m
Estimated remaining development Capex	€81.1 m	€50.2 m	€131.3 m
"Completion" Valuation	€292.0 m	€78.5 m	€370.5 m
Occupancy	42.8%	-	26.8%
Contracted Rent	€10.1 m	-	€10.1 m
WALL	10.5 yrs	-	10.5 yrs

1 "Under Construction"; data as of 31 December 2015 comprises Globalworth Tower (completed in Q1-16), Globalworth Campus Phase "A", Gara Herastrau.

2 "Future Development"; data as of 31 December 2015 comprises Globalworth Campus Phase "B" and TAP extensions for Valeo and Continental in TAP.

We have adopted a number of environmentally friendly principles for the development of Gara Herastrau and Globalworth Campus and as such we will seek to achieve Green certifications similar to those of other assets in the existing portfolio for both investments.

 

Green Certified Properties
BOB:	·   BREEAM In-use / Excellent and LEED Gold certifications (for part of the property)
BOC:	·   BREEAM In-use / Excellent certification
UniCredit HQ	·   BREEAM Very Good certification
City Offices	·   LEED Gold certification
Green Court "A"	·   LEED Gold certification
Green Court "B"	·   LEED Gold certification

The appraised value of the Development Projects stands at €217.8m ("As Is" valuation 31 December 2015). On completion, the projects are expected to deliver c.197,400sqm of new office and light industrial space, with an appraised value of €370.5m ("Completion" valuation - 31 December 2015).

Land for Future Development

Globalworth owns land plots in two prime locations in Bucharest (Herastrau lake and the historical CBD) for future development. These plots represent further opportunities for office or mixed-use developments, which we intend to take advantage of in the future in order to further grow our real estate portfolio.

The total land size for future development in these two locations is c.9,767sqm and had an appraised value of €18.2m at 31 December 2015.

 

Corporate social responsibility

At Globalworth we believe that it is our duty to manage responsibly the social, environmental and economic impact of the way we do business and to contribute to the community in which we live and work.

Globalworth's key objective is to create value for its shareholders by acting consistently in an ethical and socially responsible manner. With this in mind, we aim to build a sustainable business and manage our financial goals and shareholder returns while respecting our social and environmental objectives.

In 2015, we were very pleased to have been able to continue to promote and foster a sustainable and ecologically-responsible approach as well as supporting a number of social and charitable initiatives.

Social Focus

"Going about our business in a way that positively impacts and improves the outlook for our local community is a key driver of Globalworth"

The Globalworth family, and its Founder in particular, have, directly or indirectly, supported numerous local communities, charities and hospitals in Romania over the past 10 years. We have predominantly focused on those in need, with particular attention given to young children, orphanages, under-privileged families, single mothers and those in need of palliative care at the initiative of Hospices of Hope.

Every year we try to give a little bit more to those in need and we are very proud that our Founder, the companies under his control, and Globalworth (since its inception) have donated more than €1.2m in charitable contributions since 2011. In addition, our employees are contributing to several charities in Romania by diverting part of their State income tax deductions to charitable service.

Our involvement in causes goes over and beyond the financial contributions that we are committed to making. By organising events and visiting selected charities throughout the year, we actively support a number of causes and those in need. In 2015, these included distributing 3,200 gifts to children between the ages of 1 and 18 over the Christmas period, organising our 2016 Children's Day, and providing space in one our properties to host a charity shop and an international meeting organised by the University of Architecture and Urbanism in Bucharest. In addition, we hosted a number of local and international university gatherings at the Globalworth Tower site which, due to the complexity and manner of its construction, has raised significant interest and has been used as a "case study" for future engineers and universities.

Overview		Selected Charities / Donations
·   Education/Social Assistance and Child Care ·   Health-related (Hospitals, Hospices etc) ·   Health-related operations for various individual cases		·   Foundation Hospice "Casa Sperantei" Bucharest ·   Foundation for the Hearing Impairment (Asociatia Procultura Surzilor) ·   Foundation Pro Vita for born and unborn, Valea Screzii, Prahova county ·   Foundation Together We are Overcoming Autism ·   Association for child and family protection "Ana and the Children" ·   Association for equal opportunities ("Un strop de fericire") ·   Special School No9 for children (Scoala Gimnaziala Speciala nr. 9) ·   "Sf Dimitrie" Foundation ·   Metropolis Foundation for children

Environmental Focus

At Globalworth, our vision is to build a "greener" and more environmentally-friendly portfolio, as we feel this is the best way to give back to local communities, our investors, our tenants, our partners and our staff who work in or live nearby our buildings.

Building a sustainable portfolio is also a commitment to our partners and our shareholders to create value for the long term.

In 2015, we dedicated our efforts to designing and building new developments with the aim of achieving LEED Gold or BREEAM Very Good or higher accreditations, to making sustainable acquisitions (three of our investments were Green certified class "A" offices), and to continuing to invest in properties in order to ensure an ongoing improvement in our sustainability performance.

Existing Properties		Developments / New Investments
·   Our portfolio includes 6 Class "A" office properties with LEED Gold or BREAM Very Good (or higher) certifications ·   We are in the process of certifying additional properties owned by Globalworth ·   City Office, which was refurbished in 2014, received LEED Gold accreditation in 2015 ·   New acquisition UniCredit HQ has been rewarded with BREEAM Very Good certification  ·   New acquisition Green Court "A" was rewarded with LEED Gold in 2015 ·   New acquisition Green Court "B" was rewarded with LEED Gold in 2016		·   Globalworth is designing its development projects to be energy efficient and sustainable, aiming to achieve LEED Gold or BREEAM Very Good or higher accreditations ·   The Globalworth Tower project, which was delivered in Q1-16, received LEED Platinum pre-certification while under construction, and we are in the process of formalising its Green accreditation in 2016 ·   When considering new investments, Globalworth is looking, insofar as is possible, for Green buildings or properties which have the potential to receive a Green classification

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015

	Note	2015 €'000	2014 €'000
Revenue	7	44,776	22,158
Operating expenses	8	(16,406)	(9,265)
Net operating income		28,370	12,893
Administrative expenses	9	(10,440)	(11,654)
Acquisition costs	23	(811)	(2,476)
Fair value gain on investment property	3	49,422	25,003
Bargain purchase gain on acquisition of subsidiaries	23	17,227	80,249
Gain on sale of subsidiary		-	198
Share based payment expense	21	(125)	(136)
Foreign exchange loss		(249)	(355)
		55,024	90,829
Profit before net financing cost		83,394	103,722
Finance cost	10	(21,407)	(8,322)
Finance income		526	327
Profit before tax		62,513	95,727
Income tax expense	11	(11,092)	(5,100)
Profit for the year		51,421	90,627
Other comprehensive income		-	-
Total comprehensive income for the year		51,421	90,627
Attributable to:
Equity holders of the parent	12	51,421	91,124
Non-controlling interests		-	(497)
		51,421	90,627
Earnings per share (basic and diluted)	12	€0.92	€2.02

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015

	Note	2015 €'000	2014 €'000
ASSETS
Non-current assets
Investment property	3	937,119	599,257
Goodwill	24	12,349	12,349
Advances for investment property	5	3,993	14,454
Other long-term assets		661	657
Other receivables	17	2,193	-
Prepayments		1,020	956
		957,335	627,673
Current assets
Trade and other receivables	17	13,193	17,029
Income tax receivable		583	299
Prepayments		1,638	1,738
Cash and cash equivalents	18	37,036	21,957
Investment property held for sale	3.1	10,353	-
		62,803	41,023
Total assets		1,020,138	668,696
EQUITY AND LIABILITIES
Total equity
Issued share capital	20	341,784	288,740
Share based payment reserve	21	2,655	180
Retained earnings		155,242	103,815
Equity attributable to ordinary equity holders of the parent		499,681	392,735
Non-controlling interests		-	6
		499,681	392,741
Non-current liabilities
Interest-bearing loans and borrowings	15	261,287	143,814
Deferred tax liability	11	70,413	47,111
Guarantees retained from contractors		957	1,052
Finance lease liabilities		5	23
Deposits from tenants		1,485	983
Trade and other payables	16	3,278	-
		337,425	192,983
Current liabilities
Interest-bearing loans and borrowings	15	143,024	61,187
Trade and other payables	16	35,552	21,309
Other current financial liabilities	19	3,935	-
Finance lease liabilities		18	20
Deposits from tenants		75	433
Income tax payable		428	23
		183,032	82,972
Total equity and liabilities		1,020,138	668,696
NAV per share	13	€7.98	€7.32
EPRA NAV per share	13	€9.08	€8.09

The financial statements were approved by the Board of Directors on 2 June 2016 and were signed on its behalf by:

John Whittle

Director

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015

		Equity attributable to equity holders of the parent
	Note	Issued share capital €'000	Share based payment reserve €'000	Retained earnings €'000	Total €'000	Non-controlling interests €'000	Total equity €'000
As at 1 January 2014		106,956	44	12,691	119,691	588	120,279
Shares issued for cash	20	78,735	-	-	78,735	-	78,735
Transaction costs on issue of shares		(2,595)	-	-	(2,595)	-	(2,595)
Shares issued for acquisition of subsidiaries		34,459	-	-	34,459	-	34,459
Shares issued for outstanding consideration payable for acquisition of subsidiary		5,225	-	-	5,225	-	5,225
Shares issued for mandatorily convertible debt		65,960	-	-	65,960	-	65,960
Fair value of option warrants issued for executive share scheme	21	-	136	-	136	-	136
Derecognised on sale of subsidiary		-	-	-	-	(85)	(85)
Profit for the year		-	-	91,124	91,124	(497)	90,627
As at 31 December 2014		288,740	180	103,815	392,735	6	392,741
As at 1 January 2015
Shares issued for cash	20	53,830	-	-	53,830	-	53,830
Transaction costs on issue of shares	20	(786)	-	-	(786)	-	(786)
Fair value of option warrants issued for executive share scheme	21	-	125	-	125	-	125
Reclassification from liabilities to equity	21	-	2,350	-	2,350	-	2,350
Acquisition of minority interest	25	-	-	6	6	(6)	-
Profit for the year		-	-	51,421	51,421	-	51,421
As at 31 December 2015		341,784	2,655	155,242	499,681	-	499,681

 

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2015

	Note	2015 €'000	2014 €'000
Profit before tax		62,513	95,727
Adjustments to reconcile profit before tax to net cash flows
Fair value gain on investment property	3	(49,422)	(25,003)
Bargain purchase gain on acquisition of subsidiaries	23	(17,227)	(80,249)
Gain on sale of subsidiaries		-	(198)
Share based payment expense	21	125	136
Depreciation on other long-term assets		174	129
Foreign exchange loss		249	355
Net financing costs		20,881	7,995
Operating profit before changes in working capital		17,293	(1,108)
Decrease in trade and other receivables		4,148	2,659
Decrease in trade and other payables		(2,896)	(26,578)
Interest paid		(15,158)	(6,698)
Interest received		78	143
Income tax paid		(447)	(745)
Cash flows from/(used in) operating activities		3,018	(32,327)
Investing activities
Expenditure on investment property under refurbishment and development		(69,729)	(56,108)
Advances for investment property	5	-	(9,251)
Payment for acquisition of subsidiaries less cash acquired	23	(114,406)	(27,683)
Proceeds from sale of subsidiary less cash disposed		-	126
Acquisition of other long-term assets		(162)	(60)
Cash flows used in investing activities		(184,297)	(92,976)
Financing activities
Proceeds from share issuance	20	53,830	78,735
Payment of transaction costs on issue of shares		(389)	(1,945)
Proceeds from interest-bearing loans and borrowings1		155,634	100,126
Repayment of interest-bearing loans and borrowings		(15,095)	(37,289)
Payment of loan arrangement fees		(3,622)	(1,873)
Cash flows from financing activities		190,358	137,754
Net increase in cash and cash equivalents		9,079	12,451
Cash and cash equivalents at the beginning of the year	18	21,957	9,506
Cash and cash equivalents at the end of the year	18	31,036	21,957

¹Net of the €6m cash reserve, see note 18.

 

END

 

 

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