Building permit for Galeria Północna in the autumn

It is possible construction work on the shopping centre could start by the end of this year. “When we receive the building permit, which we expect in the autumn, the commercialisation of Galeria Północna should reach 50 pct. This will be enough to start the construction process. The date depends on the authorities, of course, but we can see that everything is going to plan. If this stays the same way we could start the construction process this year and plan to finish before the Christmas period of 2016,” Thomas Kurzmann, the new president of the board at GTC, told us. He also revealed that the developer would be ready to apply for a building permit for Galeria Wilanów within the next few weeks. “As far as the schedule is concerned, the mall in Wilanów is app. half a year behind the Galeria Północna centre, but both projects are heading in the right direction. We are satisfied with the situation,” remarked Mr Kurzmann. He also added that as far as Warsaw is concerned, it is a significant retail market for GTC, in contrast to other cities in Central and Eastern Europe where the company is focusing more on the office market. He indicated that the difficult markets, such as the capital cities of Romania, Hungary and Serbia, were particularly interesting to the developer. “We are in negotiations with investors who invested in Budapest and Bucharest in 2006 and 2007 and are now in trouble. So we are looking for opportunities for ourselves and we think that this is a very good moment to buy. We are interested in properties with high vacancy levels or other problems. We are not planning to take over fully leased and ‘boring’ buildings,” he revealed. In H1 the company generated revenue of EUR 55 mln from the leasing of office and retail space and services, slightly down from the figure of EUR 56 mln recorded for H1 2013. Its lease margin increased from 71 pct to 74 pct over this period, while its net base operating profit increased to EUR 11 mln from EUR 8 mln in H1 last year. The net loss resulting from asset value adjustments and the loss of value of its investment and residential properties, now valued at EUR 67 mln (EUR 70 mln in H1 2013), also had an impact on its H1 results. “The decrease in expected leasing levels and the lack of investor interest in Southern and Eastern Europe, particularly Croatia and provincial cities in Romania, has resulted in a considerable reduction in the market value of the retail assets and plots held by GTC, which we intend develop over the long term,” insisted Mr Kurzmann. The company’s net asset value (NAV) per share decreased from EUR 1.9 (on December 31st 2013) to EUR 1.7. The debt to property value ratio currently stands at 54 pct (compared to 59 pct on December 31st 2013). The company has app. EUR 125 mln funds available for investment, EUR 90 mln of which is cash and EUR 35 mln is held in deposits. The developer is also considering disposing of a number of properties, including the Pascal office building in Kraków, which has an area of 5,500 sqm and is fully leased.