Quarterly Business Update for three months ended on 31th December 2021
HB Reavis has hereby published its Quarterly Business Update for three months ended on 31st of December 2021. You may read the full report below, or download it here.
Peter Pecník, Group CFO, comments on the business achievements for the year 2021 and current situation:
Last year presented us with continued challenges related to waves of Covid-19 pandemic that has consequences on our lives and various segments of the economy. Amongst others we have faced continuing supply chain constraints, high inflation, shifts in tenant behavior and lengthy decision making, as well as various restrictions related to Covid-19 pandemic impacting our daily operations. Thanks to great effort of our professional teams, we were able to navigate these challenges bravely and recorded several remarkable achievements.
Firstly, we completed 4 developments during the year with gross development value (GDV) of €1.1 billion which demonstrates the strength of our unique integrated development model. In fact, since the outbreak of the pandemic, we were able to complete 11 developments with a total GDV of about €2 billion across all markets of our operations despite challenging environment. It has been a stunning achievement considering the fact that projects in the development represented about half of our balance sheet.
In addition to that and thanks to our premium workspaces and services, we have achieved the best commercialization result within the past five years whereas we leased-up premises for overall 166 thousand sq m (including renewals and leases on behalf of HB Reavis CE REIF fund ) without compromising our targeted terms.
These remarkable accomplishments in challenging times gave us a confidence in our business model to deliver an outstanding product with unique desired location and highest ESG credentials for our clients. All of the recently completed projects were designed with certification of BREEAM excellent or higher. This confidence in our product allowed us to start construction of Worship Square in London, United Kingdom designed with highest BREEAM certification “Outstanding” and aspiring for net zero carbon including delivery phase. Also, we started construction of project Nove Apollo in Bratislava where we signed a lease with IBM for majority of the premises.
We continued to enjoy favour of our lenders and investors and during the year we issued bonds amounting to €106.5 million in Slovakia (€47.8 million) and in the Czech Republic (1.49 billion CZK). We ended the year with ample liquidity of cash position at €238.4million which gives us a strong starting position to the year 2022.
Quarterly business update for three months ended on 31th December 2021
The Group has finalised the acquisition of a plot located in central Berlin which shall allow us to build app. 27k sq m by the year end 2024.
Our leasing performance for the fourth quarter of 2021 was driven by a conclusion of three major deals in combined GLA of 34.9k sq m: a technology listed company signed 10.7k sq m at Bloom Clerkenwell project in the United Kingdom. After leases signed at our landmark project Varso Tower (Warsaw) in the previous quarter, we have continued strong trend with signing 15.6k sq m lease with Box, a technology company and 8.6k sq m lease with a public entity. Overall, we signed total leases for 41.4k sq m during the last quarter and almost 166k sq m for the full year 2021 which significantly overperformed year 2020 and was even higher than in years preceding the pandemic. This is great testament that premium product that we have delivered has strong resilience even in the challenging market environment.
We’ve leased 10 floors – almost 16,000 sq m – of Varso Tower to Box. The Silicon Valley-based cloud content management company will make the EU’s tallest building their largest Research and Development site out of the US.
For press release about Box lease click here.
Completions and developments progress
During the fourth quarter of 2021 we achieved significant construction progress on all of our projects. We were finishing the last touches to prepare the premises for the tenant Strato in the Neubau building of the DSTRCT.Berlin project before the handover of premises to tenant at the beginning of new year.
During the fourth quarter of 2021, HB Reavis has drawn down a total of €191.3 million of external debt financing, out of which €155.7 million was primarily linked to properties currently under construction and €35.7 was linked to general corporate purposes. The group has also repaid its bonds in Slovakia in the amount of €25 million and issued a new bond in the amount of €18.7 million with 5-year maturity. At the end of the quarter and year end, the Group had € 238.4million of liquid and reserved cash and cash equivalents in hand, €1.5 billion of bank financing along with €394.9 million of bond financing outstanding.
As part of HB Reavis intensified focus on core locations and pipeline deliverable in near term, the Group has agreed at the end of the year, a divestment of plots in Bratislava, Slovakia and Lodz in Poland where both of the transactions should conclude during the course of 2022.
HB Reavis portfolio
Income producing portfolio
As of the end of the last quarter, the Group held an income producing portfolio of 11 income producing office properties with a total of 412.6k sq m across five countries with operating income at full occupancy of €104.6 million. The portfolio includes the following projects:
- Bloom Clerkenwell in London, United Kingdom
- DSTRCT in Berlin, Germany
- Agora Tower and Agora Hub in Budapest, Hungary
- Nivy Mall, Nivy Tower, Apollo BC II in Bratislava, Slovakia
- Varso 1, Varso 2, Forest Campus in Warsaw, Poland
The overall market value of the portfolio totalled up to €1.80 billion as of 30th June 2021 based on management estimates.
Projects under construction
Projects currently in the phase of construction (or demolition) account for 194.3k sq m of future GLA in five buildings and estimated future gross development value of around €1.07 billion as of 31th December 2021 based on management estimates, all spread over four capital cities:
- Worship Square in London, United Kingdom
- Varso Tower & Forest Tower in Warsaw, Poland
- Nove Apollo in Bratislava, Slovakia
Information about the Reorganization of the HB Reavis Group
HB Reavis hereby notifies that it has taken steps with an intention of corporate reorganization aimed at consolidating part of the HB Reavis Group’s investment portfolio and separating a significant portion of its assets from the HB Reavis Group.
These assets include following projects: Bloom Clerkenwell in London, United Kingdom, Agora Hub a Agora Tower in Budapest, Hungary, DSTRCT in Berlin, Germany, Forest Campus, Forest Tower, Varso 1, Varso 2 and Varso Tower in Warsaw, Poland and Nivy Tower in Bratislava, Slovakia. HB Reavis notifies that the assets that will be separated from the HB Reavis Group are subject to internal discussion within the HB Reavis Group and may change.
The reorganization is of strategic significance for HB Reavis Group and is considered important for its further development.
There is a possibility that the implementation of the Reorganization may breach the terms and conditions of certain bonds issued by some issuers of the HB Reavis Group bonds. Therefore, respective issuers of the HB Reavis Group bonds have decided to repurchase such bonds. More detailed information will be provided by respective issuers to relevant bondholders at appropriate time. The HB Reavis Group plans to remain active on the capital markets in its existing jurisdictions.
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY LAW. THIS PRESS RELEASE CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION. THIS PRESS RELEASE AND THE INFORMATION CONTAINED HEREIN IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OF, OR THE SOLICITATION OF AN OFFER TO ACQUIRE OR DISPOSE OF SECURITIES IN ANY JURISDICTION, INCLUDING IN OR INTO THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA.
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.
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.