- Revenue Growth Mixed: 9% overall revenue growth, but -4% excluding the German acquisition.
- High Financing Costs: EUR 28M loss vs. EUR 41M profit last year due to increased finance costs from German acquisition debt.
- Refinancing Activity: Issued EUR 455M new bonds (EUR 430M cash received) and repaid EUR 195M in outstanding bonds.
- German Portfolio Performance: 86% occupancy with EUR 24M annualizing rent, but high property expenses and need for occupancy improvement.
- Dividend Pause: No dividends in 2026; prioritizing deleveraging and asset sales to reduce LTV and interest expenses.
Financing Costs and Debt Repayment
GTC's profitability was impacted by significant financing costs related to the German acquisition. The company successfully refinanced its bonds, issuing EUR 455 million in new bonds, with EUR 430 million in cash received, and used EUR 195 million to buy back outstanding bonds. This move is part of the company's strategy to reduce its LTV and interest expenses through refinancing and debt repayment. The average weighted interest rate for 9 months is about 3.8%, highlighting the need for debt restructuring.
Portfolio Performance
The company's portfolio is 88% income-generating, with a majority in office, retail, and residential assets purchased in Germany. Office portfolio occupancy dropped in Hungary but increased in Poland, with a weighted average lease of 3.6 years. The retail portfolio is fully occupied, with potential for increased occupancy in Poland. The German portfolio showed a slight increase in occupancy to 86%, with an annualizing rent of EUR 24 million, indicating a stable performance.
Valuation and Outlook
With a P/E Ratio of 21.95 and an EV/EBITDA of 23.75, the stock seems to be pricing in a significant recovery. However, the Net Debt / EBITDA ratio of 18.61 raises concerns about the company's leverage. The company's focus on deleveraging, asset sales, and cost efficiency improvements is crucial to improving its financials. The dividend yield is currently 0.0%, and the company prioritizes finishing the refinancing journey and deleveraging assets over dividend payments. The ROE is 1.74%, and the ROIC is 2.15%, indicating a challenging environment for the company to generate returns.
Future Plans
GTC aims to finalize the extension of loans by the end of Q1 2026 and is working on increasing occupancy in Germany, with a current 86% occupancy rate. The company expects a decrease in property expenses in 2026, which will increase the Net Operating Income (NOI). GTC is also analyzing scenarios and strategies for selling part of its German portfolio to reduce the Loan-to-Value (LTV) ratio and financing costs, with a tactical approach to maximize returns for investors and lenders.