A bit of a told you so blog today. Back in August 2016, I suggested that readers keep a close eye on what was at the time a largely under-researched East European property business called Globalworth. It’s shares were then trading at around 500 c (Euro). The column is here – https://www.ft.com/content/168daba2-5242-11e6-9664-e0bdc13c3bef
Flash forward just under two years and the shares are up 68% over two years and just under 24% over the last year and now trade at 925c per share – with the dividend yield at 4.8%. The ordinaries currently trade at a premium of 4% whereas two years ago, investors were labouring under a big discount.
Crucially the transition into a diversified quality property owner in Eastern Europe is almost complete. As reported below Globalworth is now running a very diversified portfolio of assets in both Poland and Romania. Next stop maybe the Czech Republic or Slovakia?
Anyway, Liberum reports this morning that
” Globalworth acquired Spektrum Tower in Warsaw through Globalworth Poland (GPRE). The total transaction consideration (including repayment of existing debt in the company owning the asset) is €101m. This will be funded from GPRE’s existing cash resources. Spektrum Tower is a high-rise office building in the heart of the Warsaw Central Business District with a gross leasable area of 29,500 sqm, annual contracted rental income of c.€6.3m, occupancy of c.93% and a weighted average lease length of c. 5 years. The project underwent extensive refurbishment in 2015 when it was converted into a multi-tenanted building, and today hosts over 60 companies.
Globalworth focuses on quality revenue streams, backed by long-term euro-denominated, inflation linked leases. The company acquires assets with asset management and value-add potential. Globalworth’s multi-tenant / campus leasing model reduces exposure to any particular tenant. The diversified asset base comprises of blue chip global tenant base with strong turnover growth and no large single tenant exposure. It targets markets with strong macro-economic fundamentals.
With the acquisition of Spektrum Tower, the combined value of the company’s portfolio is now broadly split between Romania and Poland, after the Board lifted related restrictions in the investing policy. Poland has become a major outsourcing hub for multinational and financial institutions with high quality office portfolio and mixed-use properties. Globalworth has completed c. €350 million of acquisitions completed in the first half of 2018.
I repeat my long-held view that Globalworth is an excellent way to buy into quality property assets in fast expanding East Europe. It’s clearly well run and although it has taken on extra debt, its producing high levels of cash to back that more than a decent dividend. As its market cap is now well over 1 billion Euros (1.2 to be precise), its now coming on the radar of many index tracking funds and I also suspect that its growth will have drawn the attention of the likes of WeWork and Amazon, both of whom are prodigious buyers of new, purpose-built, prime property (both logistics and office space).