WOOD Flash – GTC: 2Q22 in line, to raise EUR 150-250m of equity to fund pivot to tech parks, renewables and PRS

GTC’s 2Q22 results came in broadly in line with our estimates on the recurring lines. During the call, Mr. Fekete, GTC’s CEO, said that the company is looking to raise some EUR 150-250m of new equity in the coming weeks and months, to finance investments into innovation and technology parks, residential for rent (which is often abbreviated as PRS in Poland, short for Private Rental Sector), and renewables. Management is looking to spend around EUR 50m on green energy generation assets in the next 12M or so. On top of the capital increase, GTC is looking to raise around EUR 100m of funding from third-party investors into the residential for rent JV platform – combined with leverage, management believes this should enable it to assemble a portfolio of around 5-6k apartments in the main Polish cities, focusing chiefly on Warsaw, Krakow and Wroclaw, over time. GTC expects to contribute landbank to the residential JV, and does not believe that a substantial equity investment should be necessary in the initial phases. Earlier this month, GTC announced the purchase of a 25% stake in a JV that owns a light industrial and warehouse complex in Ireland. GTC expects that the company could receive a permit to redevelop the asset within the next 12-18 months, and believes that the substantial re-development and expansion could take some 5-7Y. Management did not share any details on the economics of the project yet. To offer a perspective, our brief analysis of similar projects for which we have found data suggests that high-end projects of a similar magnitude (it seems the plot could accommodate around 135k sqm of lettable area) could cost well over EUR 1bn. On the 1H annualised FFO, the stock is trading at an 8.3% yield. It is trading at a 0.63x price to the 2Q22 EPRA NTA. Going ex-dividend on 8 September, GTC is trading at a 4.1% dividend yield.