HB Reavis accelerates profitable growth in 2014
HB Reavis Group (the “Group”) reported a 26% growth in consolidated net profit to EUR 89 million in the year to 31 December 2014 according to its recent annual financial statements. The improvement was a direct result of a strategic decision to increase the share of developments on the Group’s balance sheet, in combination with an enlarged exposure to higher margin projects and markets.
Key financial highlights:
- 26% increase in net profit to EUR 89.1 million from EUR 70.8 million in 2013.
- 29% growth in operating profit to EUR 132.6 million from EUR 103 million in 2013.
- Significant improvement in return on shareholders’ equity at 10.8% vs 5.7% in 2013.
- 18% growth in total assets to EUR 1.8 billion with a total shareholder equity reaching EUR 933 million.
- Decrease in net debt leverage ratio from 29.8% at the end of 2013 to 26.5% at the end of 2014.
- Cash reserve as at the end of 2014 amounted to EUR 155 million, or 8.6% of the total balance sheet.
Key business highlights:
- Record leasing activity across all markets with agreements signed for c.139,000 sqm
of gross lettable area (“GLA”), representing an increase of 28% compared to 2013.
- Completion of three office projects in three capital cities with aggregate GLA of almost 95,000 sqm.
- Eight office projects and one retail scheme in four countries under construction at the end of 2014, with a target gross development value in excess of EUR 1 billion.
- Continued strengthening and diversification of the development pipeline through the acquisition of three development plots in London, Prague and Budapest with targeted gross development value exceeding EUR 470 million.
- Disposal of completed investment properties for an aggregate consideration
of EUR 282 million during the period under review.
- New or extended financing raised in aggregate volume in excess of EUR 310 million.
“The strategic repositioning of our balance sheet by increasing the level of development activities since 2012 is generating improved results. We feel at home in the capital cities of Central Europe and three quarters of our operating profit now comes from activities outside of Slovakia. Our strategy to focus on a differentiated value proposition and high-quality delivery is being recognized by the real-estate community and by our tenants in particular. Our projects and relationships with existing and potential clients resulted in the record breaking lease up across the whole portfolio. With an enhanced number of projects under construction at the end of 2014, we look forward to a strong delivery in the course of the next two years,” said Pavel Trenka, CEO of the HB Reavis Group.
Last year HB Reavis Group completed three large-scale, high-quality office projects in three countries. By completing Vaci Corner Offices in Budapest, River Garden Office II/III in Prague and Gdański Business Center A/B in Warsaw, the Group delivered 95,000 sqm of commercial space with a future market value of EUR 295 million. In the reporting period, the Group entered into lease agreements for c.139,000 sqm of GLA across all property segments, recording a 28% growth compared to 2013.
The Management Board of the HB Reavis Group expects the robust growth trend to persist. “We ended last year with 230,000 sqm of GLA under construction across nine projects with a gross development value of over EUR 1 billion. We expect to complete four of these projects in 2015 and start construction of four new projects in the same period”, states Pavel Trenka. “Last year we divested four income-producing properties and one plot of land in the Czech Republic and Slovakia for a total of EUR 282 million and recycled the released proceeds into new acquisitions, including 20 Farringdon Street in the City of London, Vinohradska Street in Prague and land plots for a new landmark project in Budapest, all of them very centrally located in their respective business districts. With our net debt leverage ratio at its lowest in the last three years and strong cash reserve of EUR 155 million, we are poised to deploy substantial investments into new opportunities”, he adds.