What were the key asset disposals in Romania, and why did Globalworth classify these assets as non-core?

In line with its strategic focus, Globalworth disposed of several non-core assets in Romania during the first half of 2024. The most notable transactions included the sale of its fully owned Romanian logistics portfolio to CTP in May, which netted Globalworth €72.4 million after standard adjustments.

This sale underscores Globalworth’s shift away from certain logistics assets to sharpen its focus on office and mixed-use properties that offer higher value over the long term.

Following this transaction, Globalworth also divested its remaining Romanian logistics interests, held through joint ventures, to WDP, securing an additional €57 million in net proceeds. By selling assets deemed non-core, Globalworth is concentrating on properties that align with its core strategy and meet the company’s goals for sustainable, high-growth investments within Romania.

How has Globalworth positioned itself in Romania’s commercial real estate sector?

Romania remains a cornerstone of Globalworth’s investment portfolio, particularly within the office segment. The company signed lease agreements with 87 tenants across 90.1k square meters of commercial space in H1-2024. This leasing activity, combined with Globalworth’s consistent property management efforts, brought the company’s standing commercial occupancy in Romania to a stable level, highlighting the demand for quality office spaces within the Romanian market.

While Globalworth’s overall annualized contracted revenue reached €192.3 million by mid-year, the Romanian portfolio remains a significant contributor, particularly as the company exits non-core segments like logistics to sharpen its focus on high-performing commercial properties.

Rental levels have trended upward over the past year, largely driven by indexation, despite market challenges and tenant caution around lease renewals. This rise reflects our properties’ quality and proactive asset management.

While further rent increases depend on tenants’ perceived value and economic conditions, our focus on long-term portfolio management and financial health enables us to navigate shifts and balance growth with tenant needs.

How has Globalworth sustained operational efficiency within its Romanian portfolio?

Operational efficiency has been critical to Globalworth’s Romanian strategy, where the company has increasingly internalized property management to maintain better oversight and quality control. As of mid-2024, approximately 97% of Globalworth’s office and mixed-use properties by value are managed in-house, a move that enhances operational transparency and efficiency, crucial in a market as dynamic as Romania.

Additionally, the company maintained a strong leasing base, with 95% of the annualized contracted rent sourced from office and mixed-use spaces and with 95.3% of leases being active. This internal management approach allows Globalworth to control costs, improve tenant engagement, and reinforce the quality of its Romanian assets, which remain key pillars in its regional portfolio.

What steps has Globalworth taken to strengthen its capital structure, especially in relation to its Romanian assets?

Globalworth made strides in strengthening its capital base during H1-2024, ensuring it is well-positioned to make further investments in Romania as opportunities arise. The company maintained a robust liquidity position of €397 million, including €187 million in undrawn secured and revolving credit facilities. This financial foundation allows Globalworth to reinvest in its Romanian assets and explore growth options within the country’s real estate sector.

Additionally, Globalworth refinanced €850 million of its existing notes, issuing new 5-year and 6-year notes totaling €640 million. By securing long-term financing, Globalworth ensures that its Romanian projects remain well-capitalized, even amidst fluctuating market conditions. The company’s financial stability was reinforced when Fitch reaffirmed Globalworth’s investment-grade rating with an improved stable outlook, while S&P maintained a BB+ rating.

What is Globalworth’s approach to sustainability within its Romanian portfolio?

Sustainability remains a core component of Globalworth’s strategy in Romania, where the company is committed to developing green-certified buildings and promoting health and wellness in the workplace. As of H1-2024, 85.3% of Globalworth’s standing commercial portfolio, including Romanian assets, is green-certified.

The Romanian properties, which form a significant part of this portfolio, are valued at €1.3 billion, underscoring Globalworth’s commitment to environmentally responsible development. Additionally, around 96% of Globalworth’s office and mixed-use properties hold a WELL Health-Safety certification, a testament to the company’s dedication to tenant wellbeing and high-quality building standards.

Globalworth’s emphasis on sustainability within Romania has earned the company a low-risk rating from Sustainalytics, with a score of 11.1%, and an “A” rating from MSCI, further validating its ESG commitment.

How has Globalworth’s Romanian portfolio contributed to the company’s financial performance in H1-2024?

Romania has been a strong contributor to Globalworth’s revenue, which reached €125 million in H1-2024, reflecting a 5% increase over the same period last year. Despite broader economic pressures, Globalworth’s Romanian assets continue to show resilience, especially within the office and mixed-use segments. Adjusted normalized EBITDA for the company stood at €63.6 million, a slight 3.6% decrease year-over-year, reflecting the impact of external economic conditions.

Globalworth’s Romanian portfolio, however, remains a high-performing segment within its overall holdings, contributing to stable cash flows and revenues. Additionally, in April 2024, the company issued Scrip Dividend Shares covering 98.6% of its total share capital, while also paying a cash dividend of €0.4 million (€0.11 per share) to remaining shareholders. These results highlight the Romanian portfolio’s role in underpinning Globalworth’s solid financial foundation.

What challenges does Globalworth face in Romania, and how is the company prepared to manage these risks?

Like many companies in the region, Globalworth faces risks from economic volatility, interest rate fluctuations, and geopolitical instability, all of which have the potential to impact asset values, leasing activity, and capital costs in Romania.

Nevertheless, Globalworth is well-equipped to navigate these challenges. With €397 million in liquidity and an improved debt profile, the company has the financial strength to withstand potential disruptions. Globalworth’s exit from non-core logistics assets in Romania has also allowed it to concentrate on its most profitable office and mixed-use properties, reducing exposure to more volatile segments.

Additionally, the company’s commitment to sustainability and tenant wellness enhances its appeal to tenants and investors, who increasingly prioritize environmentally responsible assets.

Through prudent financial management and a focused portfolio strategy, Globalworth is well-positioned to mitigate these risks and drive long-term growth within the Romanian market.