Quarterly business update for three months to 31st March 2023

Peter Pecník, CFO of HB Reavis Holding S.A., comments on the quarterly business update for three months to 31st March 2023:

We entered 2023 accompanied by continuing challenging macroeconomic environment caused by persistent inflationary pressures, high interest rates and lack of liquidity on capital markets. All these factors are expected to be present throughout the year 2023 and the economy of two of our key markets, UK and Germany, is expecting full-year contraction in course of 2023. Despite that the demand for high-quality, energy efficient office space in superb location remains, overall attitude of investors towards the office sector is cautious and highly selective. As reaction to these factors, our construction and development activities has been reduced, focusing on completion of Worship Square project in the UK. Development of recently announced acquisitions in Berlin and Warsaw is expected to regain pace later in 2024/2025. We continue in divestments of our non-core assets, on the markets we announced to be leaving, aimed to use the proceeds from those divestments on reduction of our leverage. In line with the reduced development pipeline, the Group right sizes its organization to support its current and future activities.

Completions and development progress

Occupancy permit for our project Apollo Nivy in Bratislava (formerly referred to as Nove Apollo) has been received and the anchor tenant, IBM, moved in in May this year. Apollo Nivy is designed with the highest ESG credentials of BREEAM outstanding. Thanks to its design, Apollo Nivy reached an area of almost 8,000 square meters per floor, making it the building with largest floor plate in CEE. Altogether, it offers more than 55,000 square meters of leasable area on eight floors.

Worship Square project in London, UK is the sole project under construction where we have funding fully secured until the practical completion and see significant interests from tenants. The construction progress on the site continues without any interruptions with aim to reach practical completion in 1Q 2024.

Construction works on our PLTFRM.Berlin project in Berlin has decelerated to minimum required activities as we currently focus on Worship Square delivery.

We are also conducting development activities related to the fit-out work of recently completed projects, some of which are part of the separated investment portfolio.

Leasing update

We have signed more than 6 thousand sq. m of GLA in our office buildings in the first quarter of 2023 with annual passing rent of €3.9 million, most of which being signed for Worship Square in London and Apollo Nivy in Bratislava.

Financing

We have repaid €9.5 million and utilized new drawdowns of €25.6 million. At the end of the quarter, total debt was €1,005.5 million.

Divestments

We have successfully completed divestment of almost 15 thousand sq m of land plots in Bratislava’s new business district Nivy to Alto Real Estate. Negotiations for further non-core land plots in non-core markets are ongoing.

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Forward-Looking Statements

Certain statements contained in this release are “forward-looking”, based on current view on our markets, activities and prospects and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. In addition, we, through our management, from time to time, make forward-looking public statements concerning our expected future operations and performance and other developments. All forward-looking statements included in this release are made only as of the date hereof and no representation, assurance, guarantee or warranty is given in relation to them and HB Reavis assumes no obligation to update any written or oral forward-looking statements made by us or on our behalf as a result of new information, future events or other factors. 

Important notice

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. This announcement is not for publication or distribution, directly or indirectly, in or into the United States. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy, securities to any person in any jurisdiction, including the United States, Australia, Canada or Japan. The securities of the Company have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”), or under any applicable securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, transferred or delivered, directly or indirectly, in the United States unless registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, such registration requirements and in accordance with any applicable securities laws of any state or other jurisdiction of the United States. No public offering of any securities discussed herein is being made in the United States. 

This announcement contains or may contain forward looking statements regarding the Company and its subsidiaries and its future business. Such statements are not historical facts and may include opinions and expectations about management confidence and strategies as well as details of management’s expectations of new and existing programs, technology and market conditions. Although the Company believe their opinions and expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, not all of which will be exhaustively explored in this announcement or elsewhere. Accordingly, the recipients should not regard such statements as representations as to whether such anticipated events will occur nor that expected objectives will be achieved. The recipients are reminded that all forward-looking statements in this announcement are made as of the date hereof and for the avoidance of doubt the Company does not undertake to update any such statement made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For the avoidance of doubt, the Company does not accept any liability in respect of any such forward-looking statements.