CTP obtained a net profit of 111 million euros in Romania and one billion euros in Europe

CTP exceeded its targets set at the IPO in March 2021 over nine months in its first year as a listed company and secured a total annual return of 47%, while the Gross Asset Value (GAV) of the portfolio rose 43% to €7.6 billion.

Remon Vos, CEO, said: “CTP reports its first set of annual Financial Results as a listed company under the dark cloud of the tragic events unfolding in Ukraine. We announced last week CTP’s commitment to help support Ukrainian refugees by providing significant financial support to UN refugee agency UNHCR and the Red Cross, as well as local relief agencies. We are also offering vacant warehouse space for emergency supplies and residential and hotel accommodation within our portfolio, and we will do more as the situation develops.
 CTP delivered solid financial results last year, with profits more than tripling to over €1.0 billion, due largely to the successful execution of our disciplined development strategy within CTP’s integrated full-service operating platform.  We increased our logistics and industrial real estate market share across CTP’s core CEE markets to well over a quarter of the entire sector, capturing pent-up occupier demand which is underpinned by robust fundamentals in these economies.  Looking forward, the Group will continue to capitalise on the highly attractive supply-demand dynamics of the CEE logistics and industrial market. Our capacity to do so has been reinforced by the steps we took last year to strengthen the foundations of our business, including making a substantial investment in our team across all areas of the business. We have almost one million sqm of prime GLA currently under construction and due to complete this year, further expanding our 7.6 million sqm high quality investment portfolio. The integration of the former DIR portfolio and the launch of CTP Germany, which immediately becomes our third largest market after the Czech Republic and Romania, is also well underway. While the impact of the Russian invasion and its unknown outcomes have injected a great deal of uncertainty into the European and global economic outlook, we are still confident that CTP will continue to build on the momentum we achieved in 2021. ”
 

Richard Wilkinson (Group CFO) said: “The sharp yield compression across CEE markets in 2021 provided a very positive backdrop to the organic tenant-led development growth generated across the portfolio in 2021. CTP continues to maintain yield-on-cost above the 10% target we have set ourselves and we are also on track to achieve 10 million square metres of GLA by the end of 2022, some 12 months earlier than originally anticipated, which will provide approximately €100 million to €125 million in new headline rent. This compares with the 7.6 million sqm of space in ten countries we currently manage.
The sharp yield compression across CEE markets in 2021 provided a very positive backdrop to the organic tenant-led development growth generated across the portfolio in 2021. CTP continues to maintain yield-on-cost above the 10% target we have set ourselves and we are also on track to achieve 10 million square metres of GLA by the end of 2022, some 12 months earlier than originally anticipated, which will provide approximately €100 million to €125 million in new headline rent. This compares with the 7.6 million sqm of space in ten countries we currently manage.
 
Our compelling investment story is being enacted and financed with the highest sustainability standards in the business. CTP is the only industrial and logistics developer and operator in Europe with a fully BREEAM-certified portfolio and we are now operationally carbon neutral. We were also the largest issuer of green bonds in the entire European listed real estate industry last year, sustainably improving our liquidity position, as well as reducing our cost of debt to the lowest absolute cost of debt in sector. We believe that these actions leave us well placed to continue to deliver attractive total financial and sustainable returns over the coming years”.

The Company increased the size of its investment portfolio to 7.6 million sqm GLA from 5.9 million sqm during the year, c. 500,000 sqm more than anticipated at IPO. CTP completed 900,000 sqm of development and acquired 835,000 sqm of strategic assets, which drove the growth in GLA and made a strong contribution to the 41% uplift in the value of investment property to €7,575 million (31 December 2020: €5,386 million).

The value of CTP’s strategically located and high specification industrial and logistics parks continued to increase during 2021 despite uncertainty caused by the ongoing pandemic. The portfolio’s end of year valuation, at an average valuation yield of 6.4% compared to 6.9% in 2020, reflected significant investor demand for industrial and warehouse assets across Europe.

CTP benefits from first mover advantage and established scale in its four core markets, which together represent 94% of the Group’s total GLA. It remains the largest owner of industrial and logistics real estate assets in the Czech Republic, Romania, Hungary, and Slovakia with a market share at the year-end of 27.5% (31 December 2020: 23.9%), as measured by in-place GLA.

CTP delivered a 27% increase in the Group’s annualised rental income which was €437 million at the year-end (31 December 2020: €344million) as a result of the growth in size of its investment portfolio and strong leasing activity.  Income growth secured in 2020, including a like-for-like increase in rent of 1.6%, as well as new rent commitments from completed developments, contributed approximately €50million of new effective annualised rent during the year. Completed acquisitions added a further €39million of annualised rent.

The long-term security of the Group’s income is evident in the weighted average unexpired lease term (WAULT) of its investment portfolio, which was 6.7 years at the period end, up from 6.0 years at the 31 December 2020. Most of this robust and diversified income stream also benefits from contracted annual growth. All of CTP’s new lease agreements, since early 2020, include a double indexation clause, which calculates annual rental increases as the greater of (i) a fixed increase of 1.5% – 2.5 per annum or (ii) local Consumer Price Index. Operational metrics such as client retention (flat at 92% year-on-year), WAULT (+0.6years to 6.6 years) and occupancy (+1% to 95%) all showed strong performance over 2021.

In 2021 demand from clients, either expanding operations within their current location or signing a new lease on space elsewhere in the CTPark network, represented 80% of new developments leases (by sqm) compared to 65% of new leases arising from existing clients in 2020.

CTP completed 900,000 sqm of high-quality developments during the period (31 December 2020: 585,000 sqm), of which 98% are let which was in line with expectations. The Group’s yield-on-cost remained strong at 11.0% for projects under construction, compared to 11.6% as at 31 December 2020, well exceeding its target of over 10% in spite of continued cost price inflation and shortages of construction materials. Over the full year 2021, yield-on-cost totalled 11.3% for all projects completed.

CTP’s increased GLA in its top ten parks by 14% to 3.6 million sqm and this enduring growth momentum is expected to continue with the Group on track to develop 1.5 million sqm GLA of industrial and logistics space in 2022. It had already started construction of c. 958,000 sqm of this target by the end of 2021.

CTP controls a prime landbank totalling 17.8 million sqm (at 31 December 2021) across all its markets, which offers development potential to more than double the current GLA of c. 8 million sqm. This scale leaves the Group well positioned to continue to meet the ongoing demand of its existing and potential new customer base (31 December 2020: 12.6 million sqm). This continued demand is underpinned by structural tailwinds, such as the growth of ecommerce, digitalisation and near- and onshoring as described in the market section of this report.

The Group responded to the acceleration of the structural drivers in its markets and invested €193 million to expand its landbank in 2021, focusing particularly on acquiring sites within its expansion and new markets. This compares to €  million of landbank acquisitions over the course of 2020. It made five land acquisitions of note purchasing 360,000 sqm of land adjacent to Schiphol Airport in the Netherlands, 99,000 sqm of land in Austria, two sites in Warsaw totalling 380,000 sqm and one plot of 180,000 sqm close to Poland’s western border with Germany.

CTP also selectively acquires income producing assets where it sees a significant value opportunity and to support its growth strategy. These acquisitions will either be in response to a customer requirement, adjacent to existing CTP properties, or to provide the Group with a foothold into a new country.

The Group accelerated its acquisition programme in 2021 in response to the positive market dynamics and purchased a total of 835,000 sqm of assets for €554 million. These acquisitions added scale to the business and are accretive to the Company’s existing investment property portfolio with an average yield of 7.1%, compared to CTP’s portfolio yield of 6.4% (at 31 December 2021).

 
CTP delivered its strongest financial performance to date in 2021, delivering profitable growth by developing its portfolio’s GLA to over 7.6 million sqm. It preserved healthy financial metrics, congruent with an Investment Grade credit rating and in line with its diligent approach to expansion.

Net rental income increased during the period by 16.5% to €326.9 million from €280.7 million in 2020, driven by the positive impact of development completions across all CTP markets, disciplined investment activity and like-for-like rental growth of 1.6%, derived from the portfolio’s contracted annual rental growth. In the Group’s core markets, Net Rental income grew by 15% to €314.7 million, whereas the expansion and new markets showed an increase of 88% to €12.5 million.

The COVID-19 pandemic did not materially impact the Group’s cashflow, with both rent collection rate and occupancy rate achieving record levels throughout 2021. Still, net operating income from hotel operations was negatively impacted by global restrictions on travel, which resulted in a loss of €2.6 million compared to a loss of €0.1 million in 2020. The Group’s net operating income from development activities within its industrial and logistics portfolio fell from €22.4 million in 2020, to €9.4 million in 2021. This reduction in operating income in 2021 is accounted for by the unusual sale of an asset in 2020, which generated a one-off return.

The profit after tax for the period increased by 306% to €1,025.9 million compared to €252.5 million in 2020.
Investment property increased by 40.6% from €5,386.2 million in 2020 to €7,575.1 million as at 31 December 2021. This growth in 2021 is driven by an increase in Group’s owned GLA to 7.6 million sqm, comprising 900,000 sqm of development completions and 835,000 sqm of strategic acquisitions. Another important factor was the accelerated yield compression that took place during 2021, which was reflected in the year-end valuation, with the portfolio’s average yield of the portfolios standing at 6.4% as at 31 December 2021, compared to 6.9% in 2020.

The total landbank value, as part of the investment property, increased from €295.2 million to €526.8 million following an active year from a transaction perspective. At 31 December 2021, the Group’s land comprised 17.8 million sqm, compared to 12.6 million sqm per year-end 2020. The Group invested €193 million in replenishing its landbank, in line with its accelerated approach to secure future pipeline potential and capitalise on the strengthening market fundamentals in 2021.