In the first quarter of 2017 the net operating income generated by Griffin Premium RE.. exceeded EUR 5.9 million, an increase of 3% year-on-year. The value of funds from operations (FFO) — a key indicator which is the basis for payment of a dividend — was over EUR 3.2 million, up more than 18% from a year before.
The business of Griffin Premium RE.. N.V., a REIT-like company that owns nine attractive office and high street mixed-use properties in Poland, is characterized by stable rental income from these properties, as is confirmed by the published results for the 1st quarter of 2017. The net operating income (NOI) earned in this period was over EUR 5.9 million (about PLN 25.5 million), meaning growth of 3% from the same period of 2016.
The average occupancy rate for the properties in the portfolio of Griffin Premium RE.. rose from 84.4% (89.4% including letters of intent) at the end of 2016 to 88.4% (91.0% including letters of intent) at the end of the 1st quarter of 2017.
Dorota Wysokińska-Kuzdra, CEO of Griffin Premium RE.., commented: “Higher occupancy rate will have a positive impact on rental income in subsequent quarters. It should also be borne in mind that we have income guarantees in place from the original shareholders. Beginning from the Company’s debut on the WSE in April this year, they guarantee the income from the office space that is not leased and full income from the retail space, for up to 5 years. This means that the income from our real estate portfolio will be at the same level as if it were 100% let. This solution ensures income predictability and stability over the longer term.”
At the level of the net result, in the 1st quarter of 2017 Griffin Premium RE.. generated an accounting loss of EUR 5.1 million, mainly as a result of movements in exchange rates, i.e. the strengthening of the Polish zloty (functional currency) against the euro (presentation currency). During the period, the Company recognized a negative result in its profit or loss statement from revaluation of real estate (EUR 22.5 million), while recognizing significance financial income from revaluation of financial obligations denominated in euro (EUR 15.9 million). According to Rafał Pomorski, CFO of Griffin Premium RE..: “What is important, the revaluation of assets and liabilities was of a non-cash nature. The revaluation of euro-denominated items does not affect the value of FFO (funds from operations), the key indicator for the Company and shareholders that is the basis for payment of dividends.”
In the 1st quarter of 2017 FFO exceeded EUR 2.3 million, while FFO adjusted¹ in the same period amounted to EUR 3.2 million, as against EUR 2.7 million in 1Q 2016, an increase of 18% year-on-year.
When publishing the results for the 1st quarter, the management board of Griffin Premium RE.. maintained the forecast for FY 2017 and the plans for payment of a dividend for the period in the projected amount.
Under its adopted dividend policy, the Company plans to pay out a regular dividend equal to about 65% of FFO. FFO adjusted for 2017 is projected to be in the range of EUR 20 - 22 million, with approximately EUR 17 million in the 2nd through 4th quarters of this year which will be the basis for payment of the dividend.
About Griffin Premium RE..
Griffin Premium RE.. is the first REIT-type company listed on the Warsaw Stock Exchange. REIT (real estate investment trust) is an entity that generates income mainly from letting real estate and regularly pays out its profit to shareholders in the form of a dividend.
The company was founded in December 2016 through a carve-out of nine existing attractive properties from a portfolio created and managed by Griffin Real Estate, a leading and rapidly growing investor on the commercial property market in Poland.
Griffin Premium RE.. has a geographically diversified portfolio with a well-balanced tenant base. It currently comprises six pure office projects and three high street mixed-use office and retail buildings, with a total GLA of more than 170,000 m2. They are all in prime locations in the city centre or on the main streets of the largest Polish cities: Warsaw, Wrocław, Łódź, Kraków and Katowice.
The experienced management team at Griffin Premium RE.. oversees a high-quality diversified tenant base for the properties in the company’s portfolio, representing a wide array of industries and sectors. Long-term business relations with key tenants translate into long-term lease contracts and stable rental income for the company.
¹ Adjustments comprise of one-off non-recurring reorganization cost of EUR 0.9m
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