In the first 9 months, CTP delivered 545,000 sqm at a Yield on Cost (“YoC”) of 10.1% and 95% let at completion, bringing the Group’s standing portfolio to 12.6 million sqm of GLA, while the Gross Asset Value (“GAV”) increased by 11.8% to €15.2 billion. EPRA NTA per share increased by 10.1% in the first half of the year to €17.52.

Company specific adjusted EPRA earnings increased by 13.2% y-o-y to €269.8 million. CTP’s Company specific adjusted EPRA EPS amounted to €0.60, an increase of 11.7%. The Group confirms its €0.80 – €0.82 Company specific adjusted EPRA EPS guidance for 2024.

As at 30 September 2024, projects under construction totaled 1.9 million sqm, with a potential rental income of €142 million when fully leased and an expected YoC of 10.4%. A substantial part of which will be delivered in 2024, as CTP expects to deliver between 1.2 – 1.3 million sqm this year.

The Group’s landbank increased to 27.1 million sqm, of which 20.9 million sqm is owned and on-balance sheet, and secured substantial future growth potential for CTP. With its industry-leading YoC, CTP expects to be able to continue to generate double-digit NTA growth in the years to come.

Remon Vos, CEO, comments: “We leased 1.5 million sqm in first 9 months of 2024, 4% more than in the same period last year. This illustrated the continued strong demand in CEE and the robust nature of the business-smart region in Europe. As the supply–demand balance remains healthy, we realised robust rental growth in the first half of the year. Looking ahead, we also signed more HoTs than last year, and have with that a strong lead-list for leasing into the fourth quarter of 2024 and into 2025. Those leasing levels allow us to continue to develop over 10% of new GLA per year and continue to win market-share.
The annualised rental income amounted to €702 million, illustrating the strong cash flow generation of our standing portfolio with a rent collection rate of 99.8%. While the next growth phase is already locked in with our 1.9 million sqm of GLA under construction and a landbank of over 27 million sqm, we will continue to generate double-digit NTA growth. In addition to the pre-letting for the current pipeline, we had another 177,000 sqm of leases signed for future projects, which we plan to start shortly.

Demand for industrial and logistics real estate in the CEE region is driven by structural demand drivers, such as the professionalization of supply chains by 3PLs, e-commerce, and occupiers nearshoring and friend-shoring, as the CEE region offers the best-cost location in Europe. We have now over 10% of our portfolio leased to Asian tenants which are producing in Europe for Europe, making up around 20% of our overall leasing activity in 2024.”

 
Continued strong tenant demand drives rental growth

During the first 9 months of 2024, CTP signed leases for 1,495,000 sqm, an increase of 4% compared to 9M-2023, with contracted annual rental income of €100.9 million, and an average monthly rent per sqm of €5.63 (9M-2023: €5.60). Adjusting for the difference in country mix, the rents increased on average by 3%.

Around two-thirds of those leases were with existing tenants, in line with CTP’s business model of growing with existing tenants in existing parks.

Cashflow generation through standing portfolio and acquisitions

CTP’s average market share in the Czech Republic, Romania, Hungary, and Slovakia increased to 28.5% as at 30 September 2024 and it remains the largest owner and developer of industrial and logistics real estate assets in those markets. The Group is also the market leader in Serbia and Bulgaria.

With over 1,000 clients, CTP has a wide and diversified international tenant base, consisting of blue-chip companies with strong credit ratings. CTP’s tenants represent a broad range of industries, including manufacturing, high-tech/IT, automotive, e-commerce, retail, wholesale, and third-party logistics. The tenant base is highly diversified, with no single tenant accounting for more than 2.5% of its annual rent roll, which leads to a stable income stream. CTP’s top 50 tenants only account for 33.4% of its rent roll and most are in multiple CTParks.

The Company’s occupancy came to 93% (Q3-2023: 93%). The Group’s client retention rate remains strong at 91% (Q3-2023: 92%) and demonstrates CTP’s ability to leverage long-standing client relationships. The portfolio WAULT stood at 6.5 years (Q3-2023: 6.6 years), in line with the Company’s target of >6 years.

Rent collection level stood at 99.8% in 9M-2024 (9M-2023: 99.8%), with no deterioration in the payment profile of tenants.

Rental income amounted to €488.4 million, up 15.9% y-o-y on an absolute basis. On a like-for-like basis, rental income grew 4.4%, mainly driven by indexation and reversion on renegotiations and expiring leases.

The Group has put measures in place to limit service charge leakage, which resulted in the improvement of the Net Rental Income to Rental Income ratio from 95.5% in 9M-2023 to 97.4% in 9M-2024. Consequently, the Net Rental Income increased 18.2% y-o-y.

9M-2024 developments delivered with a 10.1% YoC and 95% let at delivery

CTP continued its disciplined investment in its highly profitable pipeline. In the first 9 months, the Group completed 545,000 sqm of GLA (9M-2023: 566,000 sqm), slightly below last year when several projects came online that were postponed during the year 2022 due to the higher construction costs. The developments were delivered at a YoC of 10.1%, 95% let and will generate contracted annual rental income of €33.0 million, with another €2.0 million of expected income when these reach full occupancy.

Some of the main deliveries during the first 9 months of 2024 were: 169,000 sqm in CTPark Warsaw West (Poland), 48,000 sqm in CTPark Zabrze (Poland), 37,000 sqm in CTPark Budapest Ecser (Hungary), 37,000 sqm in CTPark Novi Sad East (Serbia), 30,000 sqm in CTPark Weiden (Germany), 26,000 sqm in CTPark Bucharest West (Romania), 27,000 sqm in CTPark Katowice (Poland) and 23,000 sqm in CTPark Arad West (Romania).

While average construction costs in 2022 were around €550 per sqm, in 2023 and 9M-2024 they came to €500 per sqm. CTP expects them to stay around this level through 2024. This allows the Group to continue to deliver its industry-leading YoC above 10%, which is also supported by CTP’s unique park model and in-house construction and procurement expertise.

As at 30 September 2024, the Group had 1.9 million sqm of buildings under construction with a potential rental income of €142 million and an expected YoC of 10.4%. CTP has a long track record of delivering sustainable growth through its tenant-led development in its existing parks. 76% of the Group’s projects under construction are in existing parks, while 15% are in new parks which have the potential to be developed to more than 100,000 sqm of GLA. Planned 2024 deliveries are 64% pre-let. CTP expects to reach 80%-90% pre-letting at delivery, in line with historical performance. As CTP acts in most markets as general contractor, it is fully in control of the process and timing of deliveries, allowing the Company to speed-up or slow-down depending on tenant demand, while also offering tenants flexibility in terms of building requirements.

In 2024 the Group is expecting to deliver between 1.2 – 1.3 million sqm, depending on tenant demand. The 177,000 sqm of leases that are currently signed for future projects, construction of which hasn’t started yet, are a further illustration of continued occupier demand.

CTP’s landbank amounted to 27.1 million sqm as at 30 September 2024 (31 December 2023: 23.4 million sqm), which allows the Company to reach its target of 20 million sqm GLA by the end of the decade. The Group is focusing on mobilising the existing landbank, while maintaining disciplined capital allocation in landbank replenishment. 60% of the landbank is located within CTP’s existing parks, while 30% is in, or is adjacent to, new parks which have the potential to grow to more than 100,000 sqm. 23% of the landbank was secured by options, while the remaining 77% was owned and accordingly reflected in the balance sheet.

Assuming a build-up ratio of 2 sqm of land to 1 sqm of GLA, CTP can build over 13 million sqm of GLA on its secured landbank. CTP’s land is held on balance sheet at around €50 per sqm and construction costs amount on average to approximately €500 per sqm, bringing total investment costs to approximately €600 per sqm. The Group’s standing portfolio, excluding the older former Deutsche Industrie REIT portfolio, is valued around €1,000 per sqm.

Monetization of the energy business

CTP continues with its expansion plan for the roll-out of photovoltaic systems. With an average cost of ~€750,000 per MWp, the Group targets a YoC of 15% for these investments.

During the first 9 months, the Group installed an additional 19 MWp on the roof, which are currently being connected to the grid. The total installed capacity now stands at 119 MWp.

In 9M-2024 the revenues from renewable energy came to €6.0 million, up 10% y-o-y.

CTP’s sustainability ambition goes hand in hand with more and more tenants requesting green energy from photovoltaic systems, as they provide them with i) improved energy security, ii) a lower cost of occupancy, iii) compliance with increased regulation iv) compliance with their clients’ requirements and v) the ability to fulfil their own ESG ambitions.

Valuation results driven by pipeline and positive revaluation standing portfolio

Investment Property (“IP”) valuation increased from €12.0 billion as at 31 December 2023 to €13.4 billion as at 30 September 2024, driven mainly by the transfer of completed projects from Investment Property under Development (“IPuD”) to IP, accretive acquisitions and positive revaluations.

IPuD increased by 18.9% to €1.6 billion as at 30 September 2024, driven by progress on developments with most of the projects to be delivered in the fourth quarter of the year, as usual.

GAV increased to €15.2 billion as at 30 September 2024, up 11.8% compared to 31 December 2023.

For the Q1 and Q3 results, only the IPuD projects are revalued. The Q3-2024 revaluation was €167.4 million, which brings the revaluation in the first 9 months to €604.1 million, driven by the positive revaluation of IPuD projects (+€351.2 million), landbank (+€26.1 million), and the standings assets (+€226.9 million).

The Group’s portfolio has conservative valuation yields, with 80bps of reversionary yield widening in the last two years, bringing it to 7.2%. CTP expects yields to have peaked in the Industrial & Logistics sector in the CEE region. With the larger yield movements in Western European markets, the yield differential between CEE and Western European logistics is back to the long-term average. CTP expects the yield differential to decrease further overtime, driven by the higher growth expectations for the CEE region.

CTP expects further positive ERV growth on the back of continued tenant demand, which is positively impacted by the secular growth drivers in the CEE region. CEE rental levels remain affordable; and despite the strong growth seen, they have started from significantly lower absolute levels than in Western European countries. In real terms, rents in many CEE markets are still below 2010 levels.

EPRA NTA per share increased from €15.92 as at 31 December 2023 to €17.52 as at 30 September 2024, representing an increase of 10.1%. The increase is mainly driven by the revaluation (+€1.29), Company specific adjusted EPRA EPS (+€0.60), partly offset by the dividend paid out (-€0.28).

Robust balance sheet and strong liquidity position

In line with its proactive and prudent approach, the Group benefits from a solid liquidity position to fund its growth ambitions, with a fixed cost of debt and conservative repayment profile.

During first 9 months of the year, the Group raised €1.8 billion.

During the year CTP also completed two bond tender offers, buying back €750 million of short-dated bonds, realizing a capital gain of €31.9 million, reducing 2025 and 2026 debt maturities and proactively extending its maturity profile.

The Group’s liquidity position stood at €1.8 billion, comprised of €1.3 billion of cash and cash equivalents, and an undrawn RCF of €550 million.

CTP’s average cost of debt stood at 2.73% (31 December 2023: 1.95%), with 99.7% of the debt fixed or hedged until maturity. The Group doesn’t capitalise interest on developments, therefore all interest expenses are included in the P&L. The average debt maturity came to 5.0 years (31 December 2023: 5.3 years).

The Group’s first material upcoming maturity is a €272 million bond due in June 2025, which will be repaid from available cash reserves.

CTP’s LTV came to 44.9% as at 30 September 2024, down from 46.2% at 30 June 2024, thanks to the ABB. CTP expects the LTV to trend lower, as the revaluations of the Group’s developments are fully booked.

The Group’s higher yielding assets, thanks to their gross portfolio yield of 6.5%, lead to a healthy level of cash flow leverage that is also reflected in the normalised Net Debt to EBITDA of 9.0x (31 December 2023: 9.2x), which the Group targets to keep below 10x.

The Group had 59% unsecured debt and 41% secured debt as at 30 September 2024, with ample headroom under its Secured Debt Test and Unencumbered Asset Test covenants.

As pricing in the bond market rationalised, the conditions are now more competitive than the pricing in the bank lending market, which will allow the Group to re-balance more towards unsecured lending.

In Q3-2024, both Moody’s and S&P confirmed, respectively, CTP’s Baa3 and BBB- credit rating with a stable outlook.

Dividend and Guidance confirmed

Leasing dynamics remain strong, with robust occupier demand, and decreasing new supply leading to continued rental growth.  CTP is well positioned to benefit from these trends. The Group’s pipeline is highly profitable, and tenant led. The YoC for CTP’s pipeline increased to 10.4%, thanks to decreasing construction costs and rental growth. The next stage of growth is built in and financed, with 1.9 million sqm under construction as at 30 September 2024, with a target to deliver between 1.2 – 1.3 million sqm in 2024.

CTP’s robust capital structure, disciplined financial policy, strong credit market access, industry-leading landbank, in-house construction expertise and deep tenant relations allow CTP to deliver on its targets. CTP expects to reach €1.0 billion rental income in 2027, driven by development completions, indexation and reversion, and is on track to reach 20 million sqm of GLA and €1.2 billion rental income before the end of the decade.

The Group confirms its €0.80 – €0.82 Company specific adjusted EPRA EPS guidance for 2024, which due to the increase in shares following the ABB in September is expected towards the lower end.

CTP’s dividend policy is to pay-out 70% – 80% of the Company specific adjusted EPRA EPS. The default dividend is scrip, but shareholders can opt for payment of the dividend in cash.