WOOD Flash – GTC: announces exit from EUR 266m Belgrade office portfolio, at a small premium to book
GTC has announced that it has agreed the sale of its Serbian office portfolio, five office buildings in Belgrade, spanning 122k sqm, to Hungarian Indotek Group. The selling price of EUR 268m represents a c.EUR 2m premium to the book value. The sale should generate around EUR 107m of net proceeds, and should bring the LTV down from c.50%, to c.44%, on our estimates. While we viewed GTC’s Belgrade portfolio positively, and believe it may be difficult to find modern office assets in Warsaw or Hungary priced at a similar yield, we note that the significant reduction of the exposure to a non-EU country is likely to be viewed positively from a risk perspective, and it should help GTC move towards unsecured financing. Further, with the stock trading at nearly a 40% discount to NAV, we believe the sale, at a small premium to book value, should act as a strong signal regarding the level of GTC's valuations. We note that GTC plans to issue capital to finance further expansion, and boost liquidity in the stock. We believe the capital increase may be launched in the coming months, and we discuss the planned capital increase in more detail in our 1Q21 results flash note. We maintain our BUY rating on the stock.Globe Trade Centre is the parent company of the capital group, Globe Trade Centre (the Group). The Group is engaged in the development and rental of office and retail space and the development and sale of residential units. The Group is a real estate company in Central and Eastern Europe and South-eastern Europe, operating in Poland, Romania, Hungary, Croatia, Serbia, Bulgaria, and Slovakia. Additionally, it co-owns land in Ukraine and Russia and operates in the Czech Republic. The Group's portfolio comprises: completed office buildings and office parks as well as retail and entertainment centres; residential projects; and undeveloped plots of land and suspended projects.
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