Half-year Report

Click on, or paste the following link into your web browser, to view the full announcement text: 

http://www.rns-pdf.londonstockexchange.com/rns/3290F_1-2024-9-23.pdf

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

24 September 2024

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Interim Results for the six months ended 30 June 2024

Globalworth, a leading office investor in Central and Eastern Europe, announces the release of its Interim Report and Unaudited Consolidated Financial Results for the six-month period ended 30 June 2024 (the "Interim Report").

The Interim Report is also available on Globalworth's website at: https://www.globalworth.com/investor-relations/reports-presentations/ 

For further information visit www.globalworth.com or contact: 

Enquiries 

About Globalworth / Note to Editors: 

Globalworth is a listed real estate company active in Central and Eastern Europe, quoted on the AIM-segment of the London Stock Exchange. It has become the pre-eminent office investor in the CEE real estate market through its market-leading positions both in Poland and Romania. Globalworth acquires, develops and directly manages high-quality office and industrial real estate assets in prime locations, generating rental income from high quality tenants from around the globe. Managed by over 250 professionals across Cyprus, Guernsey, Poland and Romania the combined value of its portfolio is €2.7 billion, as at 30 June 2024. Approximately 97.3% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 650 national and multinational corporates. In Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice, while in Romania its assets span Bucharest, Constanta, Targu Mures and Craiova.

IMPORTANT NOTICE: This announcement has been prepared for the purposes of complying with the applicable laws and regulations of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom. This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, the Company disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement.

GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

INTERIM REPORT AND UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 JUNE 2024

FINANCIAL HIGHLIGHTS: H1 2024

CHIEF EXECUTIVE'S REVIEW

Dear Stakeholders,

2024 has the potential to become the turning point after a volatile and uncertain start of the decade, first with the Covid pandemic that swept across the globe starting with March 2020, followed by the break-out of Russo-Ukrainian conflict two years later. Although international environment remains a mix of still high capital costs and geopolitical tensions, the CEE countries' economies are expected to gain momentum in 2024 - 2025.

The European Commission May'24 forecasts show the EU GDP improving by 1.0% in 2024 and 1.6% in 2025 with Poland and Romania expected to outperform EU average and have a growth of 2.8% and 3.3% in 2024 followed by 3.4% and 3.1% in 2025, respectively.

Globalworth's performance throughout the business remained resilient, despite global and sectorial challenges, as we continued to implement our "local landlord" approach, with an increasing focus on sustainability.

Starting with the last months of 2023 and during the first semester of this year, considering the two significant bond maturities in 2025 and 2026, we have embarked on a complex refinancing process which was successfully completed in the second quarter of the year resulting in a significant strengthening of our debt maturity profile. Furthermore, in line with our focus on deleveraging and liquidity enhancing we have successfully divested our non-core logistic / light industrial portfolio in Romania during May and July.

Considering this, I would like to express my gratitude to all our team members for their positive attitude, dedication, and commitment, as well as extend our appreciation to our shareholders, partners, and communities for their unwavering support in helping us achieve these results.

Our Portfolio

Our portfolio predominantly consists of Class "A" office spaces. Having this in mind, during the first half of 2024, we have made important steps aimed at deleveraging and improving liquidity by divesting from several of our non-core assets.

Consequently, during May, we have successfully completed the sale of our fully owned logistic portfolio to CTP INVEST SPOL S.R.O, one of the leading logistic developers in Europe, for net proceeds amounting to c. €72.4 million after customary adjustments and deductions. The sold portfolio encompassed 7 industrial parks with 14 facilities offering 267.7k square meters of high-quality industrial spaces having an average occupancy of 90.4% by the end of December 2023.

Post June, we have sold our interests in the remaining of our standing logistic portfolio, which was owned through Joint Venture agreements, consisting of 3 logistic parks with a total Gross Lettable Area (GLA) of 136.4k square meters having an average occupancy of 94.8% as of June 2024. The buyer was Warehouses De Pauw (WDP), a Belgian-based logistic developer, with net proceeds to Globalworth amounting to c. €57.0 million.

By the end of June 2024, we had one built-to-suite logistic facility under construction in Craiova, Romania, with an estimated GLA of 5.9k square meters which was fully pre-leased to Returo SGR and subsequently delivered in August, while in Poland we were on course of finishing the refurbishment works in Renoma, our mixed-use property in Wroclaw.

Also, during the first six months of 2024, considering market context and the rising demand for flex offices, we have launched our own version of flexible office concept in several of our regional Polish properties. This concept is addressing tenants looking for smaller but high-quality spaces, usually for short and medium term, spaces that offer all the amenities they seek to attract and retain talents and that relate to their corporate identity.

Considering all the above, our overall total combined portfolio value decreased during the first half of 2024 by 8.3% to €2.7 billion mainly as an effect of non-core disposals in the period while the like for like decrease of our standing commercial assets owned throughout the period stood at 0.8%, commercial valuations still being impacted by high discount rates and general market context.

Our Leasing and Occupancy

The leasing of spaces within our portfolio constitutes a pivotal determinant of our business's success. It brings me satisfaction to report that during the initial half of 2024, we managed the leasing of 90.1k square meters of commercial spaces, with a Weighted Average Lease Length (WALL) of 4.8 years. This achievement is particularly noteworthy considering the persistently demanding market conditions.

As of June 30, 2024, the average occupancy rate across our combined commercial portfolio stood at 86.1%, decreasing in comparison to the year-end 2023, which stood at 88.3%. However, the like for like average occupancy in our standing commercial properties owned throughout the first six months of 2024 only marginally decreased by 0.5% from 87.1% to 86.6%.

In both the Polish and Romanian markets, we see persistent higher construction costs and interest rates which have led to a reduction in development activity and significantly constrained new supply. Consequently, we anticipate witnessing a diminished availability of top-tier office spaces in prime locations, below the average levels witnessed in previous periods, potentially driving higher tenant demand for existing properties.

Furthermore, the divergence between A-grade properties of robust environmental, social and governance (ESG) credentials and B-grade properties has been growing, both from an investment and leasing perspective. This development is poised to generate benefits to our portfolio of high-quality properties in the future.

Headline rental rates in our portfolio have started displaying a slight upward trend, influenced also by recent years' inflation, which, combined with the reduced supply and improving economic outlook is anticipated to serve as a strong buffer against the adverse impact of a decline in tenant demand due to sectorial trends like hybrid work.

Our total annualised contracted rent experienced a 4.4% decrease, reaching €192.3 million compared to the year-end 2023 figures (€201.2 million) driven mainly by the disposal of non-core assets during first part of 2024. Like-for-like annualised commercial contracted rents within our standing commercial portfolio exhibited a 3.1% upswing, to €182.6 million by the close of the first half of 2024.

Our Financial Results

Gross rental income increased with €1.3 million compared to the first half of last year as an effect of indexation that partially offset by the reduced rates at which existing leases were renewed for extended period or new leases were signed. However, on a net basis rental income declined with €1.6 million when accounting for lease incentives amortisation during the period.

Furthermore, net service charge result is €0.4 million lower than in prior period of last year, compensated by increase in fit-out margin and other income by €0.7 million thus Net Operating Income is €72.4 million, or €1.3 million lower, when compared to H1 2023.

Our adjusted normalised EBITDA reached €63.6 million, after deducting recurring administrative and other expenditure categories.

Undesirably, our net result for the initial half of 2024 amounted to a net loss of €65.3 million. This result is triggered primarily by fair value loss recorded on investment property, loss on sale of assets and impairment on investments in joint ventures.

Dividend

During March 2024, we announced the second interim dividend of €0.11 per share in respect of the twelve-month financial period ended 31 December 2023 with a scrip dividend alternative at a reference price of €1.96 per scrip aimed at preserving liquidity. Approximately 98.7% of the shareholders elected to receive scrip dividend shares thus resulting in only €0.4 million cash dividend outflow.

Also, in August 2024, we announced the payment of an interim dividend in respect of the six-month ended 30 June 2024 of €0.10 per ordinary share (which will be paid on 18 October 2024) and offers a scrip dividend alternative to the Interim Dividend. As communicated in scrip circular, the Company has received irrevocable undertakings from approximately 92.5% of the shareholders to elect the Scrip Dividend alternative shares in respect of all of their full cash entitlement to the Interim Dividend.

Balance Sheet

We are also executing our liability management strategy by extending near-term facilities and progressively arranging new secured facilities with local and regional banks in our markets. Our strong presence in the two capital cities, Bucharest and Warsaw, with several commercial office buildings having occupancy above 85% and high ESG credentials, provides us with a unique strength in sourcing additional secured facilities in the short term.

The first half of 2024 had several notable events in terms of financing, that lead to a decrease in total debt, as:

We exchanged our existing €850 million Notes with New €640 million Notes through an exchange exercise, we repaid €142.9 million from 18/25 Notes and €66.6 million from 20/26 Notes.

Subsequently to the exchange, we redeemed additional €65 million unsecured debt (24/29 New Notes €45 million and 24/30 New Notes €20 million).

Derecognized €97.5 million secured loans consequently to the disposal of subsidiaries holding industrial properties.

Following above corporate actions, the average debt maturity period improved to 5.2 years (3.7 years as of 31 December 2023) This brought down our leverage ratio to 39.9% (42.2% as of 31 December 2023) despite a 1% decline in the value of our like-for-like standing commercial portfolio. This is consistent with the Group's strategy to manage its long-term target LTV of around or below 40%.

It is important to note that Globalworth has no material debt maturing until 2027. Additionally, as of 30 June 2024, we have €210 million in cash and cash equivalents, which was further strengthened by the additional sale proceeds from JV logistics in July. We also have a further €187 million in undrawn debt facilities, out of which €50 million is available to draw until December 31, 2025.

The EPRA Net Reinstatement Value (NRV) as of 30 June 2024 was €1.66 billion, or €6.24 per share. This represents an 10% decrease from €6.94 per share on December 31, 2023. The decrease was primarily due to the issuance of a €13.9 million scrip dividend shares in April 2024, which diluted the NRV per share as well as a valuation loss on the property portfolio in H1-2024. This was partially mitigated by rental growth from indexation.

Fitch Ratings re-affirmed, in July 2024, Globalworth's investment grade rating and improved the outlook to stable following the annual review of our ratings. S&P Global Ratings maintained throughout the period our BB+ with negative outlook credit ratings.

Environmental and social

We maintained our A-rating by MSCI and a low-risk rating by Sustainalytics. We issued our sixth Sustainable Development Report during the period.

We continued investing in our green portfolio and, during the first six months of 2024, we certified or recertified 14 properties. At the end of June 2024, we had 47 green-certified properties valued at €2.2 billion.

We remain committed to our environmental target to reduce GHG emissions intensity by 46% by 2030 versus our baseline 2019 levels (for Scope 1 and 2), a target validated by the globally recognised Science Based Targets initiative (SBTi).

Outlook

As we move forward, many of the persistent headwinds that previously challenged the market have begun to dissipate. Inflation is increasingly under control, and interest rates are approaching central bank targets, providing a more stable economic backdrop. While geopolitical uncertainty remains a factor, key macroeconomic indicators point to continued strengthening in both financial and real estate markets.

The market fundamentals in our focus countries remain notably stronger than those of Western Europe. We are benefiting from a healthy supply-demand balance, with occupier demand being driven by solid economic growth and an encouraging return to the office. Within our capital-city markets, constrained supply continues to push rents and occupancy rates higher, reinforcing the sector's overall strength. Anecdotal evidence of rising tenant demand and declining vacancy rates in our core markets underscores the resilience and attractiveness of our properties. However, challenges remain in certain regional Polish markets, where we continue to monitor conditions closely to ensure we adapt to local dynamics. Nevertheless, as one of the largest and most integrated players in the region, we are well-positioned to capitalise on these broader market trends and further enhance our leadership.

Over the past year, we have remained committed to operational efficiency, while our robust liquidity position following our successful bond exchange, ensures we are well-prepared to navigate any remaining uncertainties. This financial strength also affords us the flexibility to selectively pursue investment opportunities that align with our strategic objectives. The reopening of the bond market for real estate issuers is also a positive development, easing concerns around the refinancing of maturing debt and creating a more favourable outlook for long-term growth.

Looking ahead, our strategy remains clear. We will continue to capitalise on our scale, expertise, and integrated model to deliver stable cashflows. We remain fully committed to delivering long-term value for our stakeholders, responding swiftly to market dynamics, and pursuing opportunities that support our growth ambitions.

Dennis Selinas

Chief Executive Officer

24 September 2024

MANAGEMENT REVIEW

REAL ESTATE ACTIVITY

Disposal of non-core assets

As of May 31^st, we have sold to CTP the fully owned logistics portfolio comprising five logistic / light-industrial parks with ten facilities in Timisoara, Arad, Oradea and Pitesti as well as a majority stake in two small business units' projects in Bucharest. The disposal is in line with our focus on enhancing liquidity, and reflective of the fact that logistic properties are considered non-core assets of the Group's portfolio. Net proceeds to Globalworth amounted to €72.4 million excluding working capital, minority interest and following the deduction of €95.8 million secured bank loans associated with the disposed portfolio.

Data as of 31 December 2023

Furthermore, in July, we have disposed of our 50% interests in logistic assets in Romania which were owned via joint venture companies (the "JV Portfolio") for a total net consideration to the Company estimated to €57.0 million.

Data as of 30 June 2024, figures shown on 100% basis

Also, in the first months of the year, considering our deleveraging and liquidity enhancement strategy, we have sold Bliski Centrum, located in Warsaw, with a total GLA of 4.9k sqm, which, due to its relatively small size was not considered as a core asset by us.

Launching of Globalworth operated flex office concept

During the first semester of 2024, considering the evolution of hybrid work model across our markets of interest, especially in Poland, we have decided to meet the requests of our current and potential tenants by launching our own version of flexible office concept in Poland, which will be operated through a special group entity, GW Flex Sp. Z.o.o., who will be leasing spaces in our properties. This concept is addressing tenants looking for smaller but high-quality spaces, usually for short and medium term, spaces that offer all the amenities they seek in order to attract and retain talents and that relate to their corporate identity.

As of June 30^th, we had 5.4k sqm of GLA in our flex office portfolio across five properties in regional Polish cities with an average occupancy of 54.1%.

Review of Developments

At the beginning of the year, we had two logistic projects under construction, of which Stefanesti Business Park was delivered and sold to CTP in the first semester while Craiova Logistic Park was subsequently delivered in August. From the two mixed-use properties under refurbishment at the start of the year, we have completed the works in Supersam, with Renoma remaining to be delivered until year end.

Current Developments & Refurbishment / Repositioning Projects

As of June 30th, we had one logistic property under development in Romania, Craiova Logistic Hub, our first property in Craiova, which, as of completion in August 2024, has added another 5.9k sqm of high quality GLA to our portfolio. This built to suite facility is 100% pre-leased to Returo SGR based on a 20-year lease.

In Poland the refurbishment of our iconic Renoma mixed-use asset is expected to be finalized in the following months with the repositioning of the property now offering a more attractive food court and an increase in office GLA compared to pre-refurbishment status.

* Estimated CAPEX to Go partially excludes tenant contributions which are subject to negotiation and may impact the final yield on Completion of the Project.

** Estimated Rental Value increase versus current Contracted rent + ERV on vacant spaces divided by total Development CAPEX.

Future Developments

We own, directly or through JV partnerships, other land plots in prime locations in Bucharest and Constanta, Romania and in Krakow, Poland, covering a total land surface of 0.9 million sqm (comprising 2.6% of the Group's combined GAV), for future developments of office, industrial or mixed-use properties. When fully developed, these land plots have the potential to add a total of a further 620.5k sqm of high-quality GLA to our standing portfolio footprint.

These projects, which are classified as "Future Development", continue to be reviewed by the Group, albeit periodically, with the pace at which they will be developed being subject to tenant demand and general market conditions.

(*) Part of the JV portfolio disposed in July 2024; figures shown on 100% basis.

(**) Initial preliminary development budgets on future projects to be revised prior to the permitting.

ASSET MANAGEMENT REVIEW

Leasing Review

New Leases

Our principal focus continues to be the prolongation of leases with existing tenants in our portfolio and the take-up of available spaces in standing properties and developments.

In the first six months of 2024, the Group successfully negotiated the take-up (including expansions) or extension of 90.1k sqm of commercial spaces in Poland (66.5% of transacted GLA) and Romania (33.5% of transacted GLA), with an average WALL of 4.8 years. Between 1 January and 30 June 2024, our leasing activity involved new take-up of available spaces, with such leases accounting for 47.6% of our total leasing activity signed at a WALL of 5.6 years, while renewals were signed at a WALL of 4.0 years.

The office leasing market continues a challenging path, albeit a clear differentiation can be seen between capital cities compared to regional cities and between grade A and grade B properties. CEE economies are starting to pick up, with inflation easing and interest rates expected to follow suit, while hybrid work model was mostly acknowledged and incorporated by our markets of interests.

In total, we signed new take up for 42.9k sqm of GLA, with 56.1% involving spaces leased to new tenants, and the remaining areas being taken up by existing tenants which were expanding their operations.

New leases (new tenants) were signed with 25 tenants for 24.1k sqm of GLA at a WALL of 6.5 years. The majority were for office spaces, accounting for 83.1%, with the remainder involving industrial (12.7%) and retail/other commercial spaces. The largest new leases in this period were with Clever Media Network (2.0k sqm) in BOC Tower (Bucharest), Jaral (1.9k sqm) in Silesia Star (Katowice), Kinstellar (1.9k sqm) in Globalworth Tower (Bucharest) and MDPI Poland (1.7k sqm) in Podium Park (Krakow).

In addition, 27 tenants signed new leases, expanding their operations by 18.8k sqm at an average WALL of 4.6 years.

We renewed leases for a total of 47.2k sqm of GLA with 45 of our tenants at a WALL of 4.0 years. The most notable extensions involve FMC Technologies (6.9k sqm) in Podium Park, Maracana (5.8k sqm) in Constanta Business Park, Infor (4.9k sqm) in Retro Office House and Solid Group (3.3k sqm) in Batory Building while c.37% of the renewals by GLA signed were for leases that were expiring in 2025 or later.

Rental Levels

Starting with last year, headline rental levels started to display a slight upward pressure mostly influenced by indexation, but also by the limited new supply of high-quality spaces coming into the market. We expect this trend to continue, despite challenges in the market, but with different impact depending on the location, ESG credentials and office asset class.

Most of our leases typically adjust annually in the first quarter of the year and, in the first half, eligible leases were indexed at an average of 5.3%. However, this positive impact was partly offset by the rates at which leases were renewed or new leases signed throughout the period.

At the end of June 2024, our average headline rent in our standing properties for office, retail/commercial and industrial spaces were €15.8/sqm/month (€15.0 at YE-2023), €16.7/sqm/month (€16.7 at YE-2023) and €4.2/sqm/month (€4.3at YE-2023) respectively.

Office leases signed in the first half of the year were at an average rent of €15.7/sqm/month, industrial spaces at €4.1/sqm/month, and retail spaces at €12.1/sqm/month. The overall commercial GLA take-up during the first six months of 2024 was at an average rent of €13.9/sqm/month.

Contracted Rents (on annualised basis)

Total annualised contracted rent across our portfolio in Poland and Romania decreased by 4.4% to €192.3 million compared to year-end 2023 (€201.2 million), driven mainly by disposal of non-core assets in the first half of 2024 and, in a lesser extent, by indexation and net leasing activity in our projects.

Total annualised contracted rents in our standing commercial portfolio were €185.8 million on 30 June 2024, down by 3.0% compared to 31 December 2023, increasing to €186.2 million when including rental income generated by renting 92 residential units and other auxiliary spaces in Upground, the residential complex in Bucharest which we partially own.

Like-for-like annualised commercial contracted rents in our standing commercial portfolio increased by 3.1% to €182.6 million at the end of the first half of 2024 compared to 31 December 2023, mainly as an effect of rent indexation.

The Group's rent roll across its combined portfolio is well diversified, with the largest tenant accounting for 3.7% of contracted rents, while the top three tenants account for 9.5% and the top 10 account for 23.1%.

Cost of Renting Spaces

The headline (base) rent presents the reference point, which is typically communicated in the real estate market when a new lease is signed. However, renting spaces typically involves certain costs, such as rent-free periods, fitouts for the space leased, and brokerage fees, which the landlords incur. These incentives can vary significantly between leases and depend on market conditions, type of lease (new take-up or lease extension), space leased (office, industrial, other), contract duration and other factors.

In calculating our effective rent, we account for the costs incurred over the lease's lifetime, which we deduct from the headline (base) rent, thus allowing us to assess the profitability of a rental agreement.

Overall, in the first half of 2024, we successfully negotiated the take-up (including expansions) or extension of 84.5k sqm of commercial spaces in our portfolio, excluding leases signed with group entity for flexible office spaces. The weighted average effective rent for these new leases was €9.9/sqm/month with a WALL of 4.8 years. Industrial leases signed in the period accounted for 14.0% of the total leasing activity resulting in the lower average headline and effective rent.

The difference between headline (base) and effective rents in the first half of 2024 was, on average, 28.9%, which is higher than for FY2023 (average of 26.2%) as market conditions remained challenging.

In total, new leases signed in the first six months of the year will generate a future headline rental income of €77.7 million (including auxiliary spaces and revenues from GW flex offices), with leases from office properties accounting for 88.2% of future headline rental income.

Portfolio Valuation

In line with our practice of biannual valuations, our entire portfolio in Poland and Romania was revalued as at 30 June 2024.

The valuations were performed by Knight Frank for our properties in Poland, with Colliers and Cushman and Wakefield valuing our properties in Romania (more information is available under note 4 of the unaudited interim condensed consolidated financial statements as of and for the period ended 30 June 2024).

Assigning the appraisal of our portfolio to independent and experienced service providers makes the process of determining the value properties transparent and impartial. Through our oversight, we ensure that a consistent methodology, reporting, and timeframe are respected.

Our portfolio, since the inception of the Group, has been growing to reach €3.2 billion as of 31 December 2022, following series of acquisitions and development of high-quality office and logistic / light industrial assets in Poland and Romania. Starting with the Covid pandemic, the office market begun a visible transformation characterized by the rise of hybrid work while differentiation between class A and class B properties became more obvious.

Therefore, our focus has switched to preserving the value of our core assets through selective investments, while also considering the disposal of non-core assets aimed at deleveraging and liquidity enhancing. Consequently, during the first seven months of 2024, we have successfully sold to reputed logistic investors our interests in the logistic / light industrial portfolio that we owned at the end of 2023.

As such, the portfolio's third-party appraised value on 30 June 2024 was estimated at €2.7 billion, impacted by the sale of assets worth €228.1 million and the like-for-like decrease (€18.9 million / 0.8%) in the appraised value of our standing commercial properties, leading to an overall decrease of 8.3% compared to the end of 2023.

In valuing our properties, the key market indicators used by our independent appraisers, although they vary, consider factors such as the commercial profile of the property, its location and the country in which it is situated. These factors have remained consistent with year-end 2023, with ERVs displaying selective upward pressure, especially in prime locations and for class A assets, while yields have seen a marginal decompression in secondary locations.

(*) Joint Venture Portfolio, which was disposed in July 2024, is shown at 100%; Globalworth owned 50% stake as of June 30^th,2024.

STANDING PORTFOLIO REVIEW

Standing Portfolio Evolution

The footprint of our standing commercial portfolio decreased during the first half of 2024 following the successful disposal of our fully owned logistic portfolio. We consider these assets, together with a small office building located in Warsaw, which was sold in the first months of the year, as non-core assets, therefore the divestment decision was made having in mind our deleveraging and liquidity enhancement strategy.

Overall, our standing portfolio is predominantly focused on 28 Class "A" office (48 properties in total) and two mixed-use investments (with six properties in total) in central locations in Bucharest (Romania), Warsaw (Poland) and five of the largest office markets/cities of Poland (Krakow, Wroclaw, Katowice, Gdansk and Lodz), which account for 95.0% of our standing portfolio by value.

In addition, in Romania, we had 50% ownership through joint venture agreements in three other logistics/business parks (with four standing facilities) in Bucharest, Constanta and Targu Mures (the JV Portfolio, which was subsequently disposed in July) and we own part of a residential complex in Bucharest.

As of 30 June 2024, our combined standing portfolio comprised 34 investments (41 on 31 December 2023) with 59 buildings (71 on 31 December 2023) in Poland and Romania.

During the period, our standing commercial portfolio's total GLA decreased by 233.5k sqm or 17.1% to reach 1,133.9k sqm at the end of June. This evolution was attributable to the sale of the fully owned logistic portfolio (254.3k sqm of standing GLA as of 31 December 2023), the sale of Bliski Centrum in Warsaw (4.9k sqm of GLA) and the completion of refurbishment works in Supersam, our mixed-use asset in Katowice, Poland (26.7k sqm of GLA).

The appraised value of our combined standing portfolio as of 30 June 2024 was €2.6 billion (more than 99% in commercial properties) which was 6.4% lower compared to 31 December 2023, the overall decrease being mostly due to divestments completed during the period. The value of like-for-like standing commercial properties marginally decreased by 0.8% as of 30 June 2024 compared to 31 December 2023.

Globalworth Combined Portfolio: Key Metrics

(*) Like-for-Like change represents the changes in GLA or GAV of standing properties owned by the Group at 31 December 2023 and 30 June 2024.

(**) Includes impact in areas (sqm) from the remeasurement of certain properties and other GAV adjustments (redevelopment capex, reclassification).

Standing Portfolio Occupancy

Our standing commercial portfolio's average occupancy as of 30 June 2024 was 86.1%, representing a decrease of 2.1% over the past six months (88.3% as of 31 December 2023), however this was impacted by the divestment of non-core assets having occupancy better than portfolio average and the addition of newly refurbished mixed-use property of Supersam (Katowice, Poland) which, as of 30 June 2024 had an occupancy of 65.5%. Like for like standing commercial occupancy, adjusted for the non-core assets disposed in the period (the fully owned logistic portfolio from Romania and Bliski Centrum office property in Warsaw, Poland) and for the mixed-use asset delivered in the period, decreased marginally by 0.5% from 87.1% to 86.6%. Across the portfolio, at the end of the first half of 2024, we had 976.6k sqm of commercial GLA leased to more than 630 tenants at an average WALL of 4.6 years, the majority of which is let to national and multinational corporates that are well-known within their respective markets.

In addition, we had 27.5k sqm leased in Renoma mixed-use property (Wroclaw, Poland) which was under refurbishment/repositioning as of 30 June 2024 and 5.9k sqm pre-let in our built to suit logistic project being developed in Craiova, Romania, which are not included in our standing portfolio metrics.

* Renewals are neutral to the occupancy calculation.

Standing Properties Operation and Upgrade Programme

Offering best-in-class real estate space to our business partners remains a key component of our strategy at Globalworth.

We believe that through a "hands-on" approach with continuous active management and investment in our portfolio, we can preserve and enhance the value of our properties, generate long-term income, and offer best-in-class real estate space to our business partners.

To be able to provide spaces for our current and future business partners' requirements, we keep (re)investing in our properties, maintain and, where required, improve the quality of our buildings and our services.

We are pleased that all our properties in Poland are now internally managed by the Group. In Romania, we manage all but one of our offices in-house. Overall, we internally manage 955.3k sqm of high-quality commercial spaces with an appraised value of €2.4 billion. Of our total standing commercial portfolio, internally managed properties account for 93.1% by value (96.6% of office and mixed-use standing properties) as of 30 June 2024.

In the first half of 2024, we invested €15.8 million in select improvement initiatives in our standing commercial portfolio. As a result of our ongoing in-house initiatives and property additions, we hold a modern portfolio with 43 of our standing commercial properties, accounting for 81.1% by GLA and 79.2% by commercial portfolio value, having been delivered or significantly refurbished since 2014.

SUSTAINABLE DEVELOPMENT UPDATE / OTHER INITIATIVES

Green Buildings

Consistent with our commitment to energy-efficient properties, during H1-2024 we certified or recertified 14 properties in our portfolio with BREEAM Very Good or higher certifications.

Overall, as of 30 June 2024, our combined standing portfolio comprised 47 green-certified properties, accounting for 85.3% of our standing commercial portfolio by value. BREEAM-accredited properties account for 79.3% of our green-certified standing portfolio by value, with the remaining properties being holders of other certifications (LEED Gold or Platinum).

At Globalworth, we are aiming for 100% of our portfolio to be green-accredited. We are currently in the process of certifying or recertifying 8 other properties in our portfolio, principally targeting BREEAM certifications.

Furthermore, as part of our overall green initiatives, we kept our policy of securing 100% of the energy used in our Polish and Romanian properties from renewable sources.

In addition, as of 30 June 2024, 49 of our standing commercial properties had a WELL Health-Safety Rating, with a total value of €2.3 billion accounting for 95.5% of our standing office and mixed-use properties by value. Overall, 95.7% of our office and mixed-use portfolio by value (including Renoma) is rated for WELL Health-Safety, standing as further evidence of the quality of our portfolio.

Social Initiatives

In the first half of 2024, Globalworth and the Globalworth Foundation continued with their very active social programme, contributing €140k to over 13 initiatives in Romania and Poland.

Initiatives to which we contributed included:

For the love of heart

An initiative organized for Globalworth's tenant community, which aims to popularize preventive examinations and care for a healthy lifestyle; over 500 People took part in the examinations

Through Wola District for autism

The aim of the initiative is to work together for the benefit of people on the autism spectrum and their families, and to raise funds to support the activities of the SYNAPSIS Foundation

Open Your Heart to Children's Heart

This aims to encourage and support donations to the Children's Heart Association / Asociația Inima Copiilor, to help children with heart conditions.

In addition to these we had several campaigns within our communities among which it is noteworthy to mention:

Tree planting in Văcărești National Park

We gathered as a team to take care of the tree barrier in Văcărești National Park, the first urban natural park in Romania

Șona AIR Residency

Șona AIR offers the perfect environment for creators and artists to zero in on their work. It's a place where they can step away from everyday life and focus on exploration, reflection and the development of long-term projects. This program fosters collaboration, creating a dynamic and vibrant community of creativity where artists can flourish. By providing space, time and resources, Șona AIR sustains the next generation of artists to push the boundaries of their practice. Globalworth Foundation supports Șona AIR residency program together with Fundația Ștefan Câlția

Galeria Posibilă

The Globalworth Foundation and Galeria Posibilă partnered up to amplify the voice of emerging artists. We're dedicated to empowering up-and-coming artists, sparking conversations and connecting communities through our collaboration as gallery partners in this year's editorial program.

Brave Cut

At Globalworth, we understand the challenges faced by oncology patients undergoing cytostatic treatments, especially the emotional toll of hair loss. Our partnership with the Fundatia Renasterea pentru Sanatatea Femeii in the "Vieți împletite" initiative aimed to recognize women's individuality and their role in society. By offering personalized natural hair wigs, we aim to empower patients with more than just a cosmetic solution - it's about restoring their confidence and resilience throughout their journey.

Reporting

As part of our effort to improve disclosure in relation to our sustainable development strategy, initiatives and performance, we published Globalworth's "2023 Sustainable Development Report".

This is the sixth report published by the Group and has been prepared in accordance with the GRI Standards: Core option and with the European Public Real Estate Association's Sustainability Best Practice Reporting Recommendations (EPRA sBPR).

PORTFOLIO SNAPSHOT

Our real estate investments are in Poland and Romania, the two largest markets in the CEE. As at 30 June 2024, our portfolio was spread across 10 cities, with Poland accounting for 52.3% by value and Romania 47.7%.

CAPITAL MARKETS UPDATE

Equity Capital Markets and Shareholder Structure Update

The first half of 2024 was characterised by a gradual recovery after almost two years of continued high inflation which drove interest rates to their highest levels in a decade. With inflation returning into the lower single digits area, we expect capital costs to follow a similar dynamic, however we keep an eye on the continuation of geopolitical risks, as they have the potential to greatly disturb economic cycles and induce volatility and uncertainty in the capital markets.

Real estate valuations have continued to be impacted in H1-24 by the high capital costs and a more cautious approach of investors in what regards office industry, with the higher risk premia demanded by investors being reflected in the resulting valuation yields as of 30 June 2024.

As of 30 June 2024, FTSE EPRA Developed Europe and the FTSE EPRA Global indices recorded a performance of -5.8% and -2.9%, respectively, for the six months starting on 1 January 2024 which is close to the Globalworth share price evolution which was at -5.8%, however we must underline the limited free float of our shares.

Globalworth's share price in this period has been trading consistently below its last reported 31 December 2023 EPRA NRV level of €6.94 / share, reaching its lowest closing price on 17 June 2024 at €2.38 per share and its highest price on 16 Jan 2024 at €3.07 per share.

Zakiono Enterprises Ltd, which is jointly and equally owned by CPI Property Group S.A. ("CPI") and Aroundtown SA ("Aroundtown"), holds 60.8% of the share capital of the Group, followed by Growthpoint Properties Ltd with 29.5%.

Bonds Update

We finance ourselves through a combination of equity and debt, and we compete with many other real estate companies for investor trust to support our initiatives.

To issue Eurobonds efficiently and benefit from market opportunities, we have established a Euro Medium Term Notes (EMTN) programme in 2018, allowing the Group to issue up to €1.5 billion of bonds. From this programme, €950 million was raised through bonds issued in March 2018 and July 2020 (inaugural green bond), with maturities in 2025 and 2026.

At the beginning of the year, our two Eurobonds outstanding in total of €850 million, together with the €85 million unsecured facility granted by IFC in June 2022 made most of our debt structure.

Faced with high interest rates, investor risk aversion and the two significant bond maturities, we had embarked on a complex refinancing and deleveraging process at the end of last year. The successful negotiation and implementation of the bond exchanges, completed in H1-2024, were crucial in resolving near-term debt maturities and enhancing the company's financial position.

As a result, we have exchanged our outstanding €450 million notes due in 2025 and €400 million notes due in 2026 with €307 million green notes due in 2029 and €333 million green notes due in 2030 at a coupon of 6.25%, therefore repaying €2210 million to our bondholders from our own cash sources. Furthermore, following the completion of sale of our fully owned industrial portfolio, we have redeemed at par an additional €65 million in accordance with the terms and conditions of our new outstanding bonds.

Post-June 2024, continuing its deleveraging path, GWI launched an offer to buy back up to €60 million of the outstanding bonds, amount which was further increased and successfully settled in July by accepting €83 million, resulting in the aggregate value of our two outstanding bonds decreasing to €492 million.

This proactive approach to managing debt and liquidity underscores GWI's commitment to maintaining financial health and strategic flexibility in an evolving market landscape.

Globalworth is rated by two of the three major agencies, with Fitch maintaining their investment credit rating following their July review of the Group while improving the outlook to stable and S&P maintaining the group's corporate credit rating to BB+ with a negative outlook, the S&P rating being reviewed prior to the completion of our bond exchange and subsequent repayments.

FINANCIAL REVIEW

Introduction and Highlights

We commenced the financial year with an average debt maturity of 3.7 years and €450 million Notes set to mature into short-term debt over the following quarters. In the first half of 2024, we focused on strengthening our capital structure and deleveraging the balance sheet through the disposal of non-core assets. We successfully exchanged €850 million of existing Notes for new 5-year and 6-year Notes with a combined value of €640 million. Additionally, we repaid €276 million in debt, disposed of investment properties valued at €229 million, and maintained a strong liquidity position of €397 million, including €187 million in undrawn secured and revolving credit facilities (RCF).

We continue to invest in our standing assets, prioritising ESG initiatives focused on energy efficiency and tenant comfort. Our commitment to responsible financial management remains unwavering.

To effectively communicate our performance, we rely on a range of metrics widely recognized in the real estate sector. These include consolidated figures, incorporating our joint ventures, which best reflect the way we manage our portfolio and operations. In addition, we report like-for-like metrics and adopt standards set by EPRA, aimed at enhancing transparency and ensuring comparability across the European real estate industry.

1. See Glossary for definitions.

2. See note 12 of the unaudited condensed consolidated financial statements for calculation.

3. See note 20 of the unaudited condensed consolidated financial statements for calculation.

4. See note 17 of the unaudited condensed consolidated financial statements for calculation.

2.     Revenues and Profitability

We generated total consolidated revenue of €125 million in the first half of 2024, reflecting a 5% increase over the same period in 2023 of €119.1 million.

Our core revenue stream, gross rental income, recorded a slight increase of 1.3% to €96.5 million in H1 2024, compared to H1 2023. Properties in Romania showed a 7% increase in gross rental income generated by indexation, higher occupancies in offices segment, €1.1 million early termination fees which offset €0.7 million lower rental income from industrial sale in May 2024. In Poland we recorded a 4% decline in gross rental income mainly due to vacancies in regional properties.

When accounting for tenant incentives, which are amortized during the life of the lease, the net rental income decreased with 2%, by €1.6m, to €78.9 million, with 5% net increase in Romania and 9% net decrease in Poland.

The overall consolidated revenue increased by €5.9 million, the decline in net rental income was compensated by an increase with €7.1 million in fit out income and €0.4 million (or 1%) increase in our service charge income to €37.3 million (from €36.9 million in H1 2023).

Overall, our revenues remained relatively evenly split between our two markets of operation, with Poland accounting for 45% (49% in H1-2023) and Romania 55% (51% in H1-2023).

Our Net Operating Income ("NOI"), after considering property and fit out costs, was €72.4 million, lower by 1.8% compared to H1 2023. Overall operating expenses in our portfolio increased by €7.3 million to €52.7 million, out of which €6.5 million increase in fit out costs and €0.8 million, or 1.9% in operating costs. Most of the operating expenses, c.83% (c. 84% in H1 2023) were reinvoiced to tenants as the majority of our leases are triple net.

Adjusted normalised EBITDA lower by 3.6% to €63.6 million from H1-2023 (€66.0 million) resulted from €1.4 million decrease in NOI and €1.1 million increase in administrative expenses representing high inflationary environment in first half.

We recorded in H1 2024, finance costs of €48.4 million (€27.9 million in H1 2023), with €20.4 million additional cost. Most of the increase is generated by:

€11.9 million higher debt issue costs amortisation, primarily from the one-off debt close-out cost related to bond exchange exercise in April 2024, of €12.8 million

€0.6 million increase in fixed rated bonds interest and

€7.9 million increase in interest expense recorded for secured loans from the new secured facilities drawn down in later half of 2023 or during first of 2024 and due to higher Euribor base rates for like-for-like loans carrying variable interest rate.

Finance income was lower by €10.7 million, however, after excluding the one-off gain recorded in H1 2023 related to the bond buyback, of €15.8 million, finance income recorded an increase of €5.1 million:

€3.8 million from the deposit income from short-term and overnight placement with banks and

€1.3 million interest income on loans receivable from the joint ventures, deferred consideration for Warta receivable.

Our share from joint ventures is €13.2 million loss in H1 2024 (gain of €2.6 million H1 2023). The loss includes €15.2 million valuation loss recorded on investment properties held by the joint venture companies, thus aligning the total amount of the consideration received from the disposal of joint venture investments in July 2024.

Earnings before tax reached to €65.1 million loss for H1 2024 (€44.3 million loss in H1 2023), the increase in net finance cost plus the one-off loss recorded from sale of wholly owned industrial properties of €24.1 million and the loss recorded from joint ventures was compensated by lower revaluation loss compared to similar period in 2023. We recorded in current period of €50.5 million valuation loss (€102.9 million in H1 2023).

EPRA earnings for the first six months of 2024 were €29.8 million (or 11 cents per share), lower by €4.3 million. EPRA earnings per share decline is amplified by the increase in weighted average number of shares being of 259.8 million in H1 2024 (228.4 million in H1 2023) following the issue of scrip dividend shares in October 2023 and April 2024.

IFRS earnings per share of negative 25 cents (€65.3 million loss) in H1 2024 (11 cents negative in H1 2023 or €24.6 million loss). The corporate income tax largely remained similar to prior period at €3.5 million with a €0.3 reduction, however deferred tax income seen significantly decline compared to H1- 2023 when we recorded €23.5 million lessen deferred tax liability.

3.     Balance Sheet

Real estate comprises the majority of our assets, with investment properties and cash equivalents exceeding 95% of our total value as at 30 June 2024.

Our combined market value of the investment property portfolio is €2,735 million decreased by €260.2 million (31 Dec. 2023: €2,995 million), out of which €2,618 million is wholly owned investment property and €117 million (31 Dec. 2023: €129 million) represents the 100% value of the properties owned by the two joint ventures in which we own a 50% stake.

As of 30 June 2024, the balance sheet value of our investment property (freehold and properties held for sale) is €2,618 million, €248 million lower compared to year-end 2023. The reduction is due to properties disposed during the period with a value of €229 million (comprising of wholly owned logistics portfolio in Romania of €207 million, a held for sale property in Poland of €12.4 million and €9.0 million from the sale of non-core residential apartments) and the fair value losses of €50.5 million (representing 65% in Poland and 35% in Romania) which was partly mitigated with value accretive capital expenditure of €31.8 million on development and standing properties.

The logistics portfolio comprised of five logistics / light-industrial parks with ten facilities in Timisoara, Arad, Oradea and Pitesti as well as a majority stake in two small business units in Bucharest which was sold to CTP INVEST SPOL S.R.O.

Further breakdown of our capital expenditure in detail can be found in the below pie chart:

In the first six months of 2024, we exchanged our 2025 and 2026 Notes with an early repayment of €210 million (€142.9 million from 18/25 Notes and €66.6 million from 20/26 Notes) with five year and six-year Notes maturity in 2029 and 2030 respectively at 6.25% coupon under new terms and conditions of the new issued Notes. Furthermore, subsequently after the disposal of wholly owned logistics properties, we redeemed further Notes for an amount of €65 million at par (24/29 Notes: €45 million and 24/30 Notes: €20 million). 

We closed the first half of 2024 with cash position to €210.3 million (€396.3 million at 31 December 2023) with €187 million additional liquidity available from the undrawn facilities.

Total assets at the end of the period were €3,002 million, lower by 12.9% compared to 31 December 2023 (€3,445 million).

EPRA NRV was €1,660.3 million as of 30 June 2024, lower by 5.2% compared to 31 December 2023 (€1,750.6 million). As a result, EPRA NRV per share also decreased to €6.24 per share (31 December 2023: €6.94 per share) by 10.1%. The EPRA NRV decline was driven by €50.5 million negative effect of fair value gains on the portfolio, loss recorded from sale of investment properties, share of loss from joint venture investment and increase in the fully diluted number of shares.

4.     Dividends

Globalworth distributes bi-annually at least 90% of its EPRA Earnings to its shareholders. During the first half of 2024, the distributions included the option to a scrip dividend alternative so that qualifying shareholders can elect to receive new ordinary shares in the Company instead of cash in respect of all or part of their entitlement to the dividend. Qualifying shareholders who validly elect to receive the Scrip Dividend Alternative become entitled to a number of Scrip Dividend Shares in respect of their entitlement to the Dividend that is based on a price per Scrip Dividend Share calculated on the basis of a discount of 20% to the average of the middle market quotations for the Company's shares on the five consecutive dealing days from and including the Ex-Dividend Date, the "Reference Price".

The dividend declared for the six-month period ended 31 December 2023 was 11 cents per share. Following the election of scrip dividend 13.9 million new shares were issued in April 2024, while the Group paid in total €0.4 million as cash dividend, resulting in 98.6% shareholders opting to reinvest in the Company.

The results for the period are set out in the consolidated statement of comprehensive income on page 31.

5.   Financing and Liquidity Review

Following the recent successful liability management exercise by refinancing of unsecured and secured debt in first half of 2024, the Group's focus shifted toward maintaining liquidity and optimising financing costs. Our key priorities included building cash reserves, managing debt maturities falling due in next twelve months, reduction in weighted average cost of debt and ensuring access to revolving credit facilities for unexpected needs.

We close monitor our cost of debt with strategies like hedging or adjusting the fixed versus floating rate debt mix to protect against rising rates. Additionally, regular compliance checks with debt covenants and exploring opportunities for further cost of debt reduction is crucial to maintaining financial flexibility. To enhance the balance sheet, we are focused on disposing of none core and underperforming assets to improve liquidity, while redeploying funds into higher-yielding projects.

Debt Summary

The total debt of the Group at 30 June 2024 was €1,248 million (31 Dec. 2023: €1,603 million) comprising mainly of medium to long-term debt, denominated entirely in Euro, comprising of €84 million unsecured loans, €573 million New unsecured Notes and €591 million secured loans.

The first half of 2024 had several notable events in terms of financing, that lead to a decrease in total debt, as:

During the existing Notes exchange exercise, we repaid €142.9 million from 18/25 Notes and €66.6 million from 20/26 Notes;

Subsequently to the exchange, we redeemed additional €65 million unsecured debt (New 24/29 Notes €45 million and 24/30 New Notes €20 million);

Derecognized €97.5 million secured loans consequently to the disposal of subsidiaries holding industrial properties.

In addition, we performed several events in order to increase the liquidity of the Group:

We drew €25 million twelve-year term secured debt facility which was signed with Libra Bank.

We entered into two new seven-year term secured loans agreement with Erste Group partially in May and June for a total amount of €137 million with both facilities available to draw within 6 months from the signing date.

The Group continuously strives to maintain a low weighted average interest rate cost, which as of 30 June 2024 was 5.10% (3.7% as of 31 December 2023), while the average maturity period improved to 5.2 years (3.7 years as of 31 December 2023), as depicted in the chart below. The changes are a consequence of the bond exchange exercise that led to the New Notes being issued under the current market conditions.

In this high inflation and interest rate environment, it is important to note that at the end of the period, Globalworth had a total of c.86% of its debt issued originally in credit facilities carry a fixed interest rates (75.3%) or at floating interest rates which are however it was hedged (10.3%).

Liquidity & Loan to value ratio (LTV")

Managing our financial and operational resources has been a key area of focus for the Group, especially since the COVID-19 pandemic outbreak, and this careful management has carried on throughout this period of higher volatility and uncertainty.

As of 30 June 2024, the Group had cash and cash equivalents of €210.3 million (31 December 2023: € 396.3 million) of which an amount of €18.1 million was restricted due to various conditions imposed by the financing Banks. In addition, the Group had available liquidity from committed undrawn loan facilities of €187million.

The Group's loan to value ratio on 30 June 2024 was 39.9% (42.2% as of 31 December 2023). This is consistent with the Group's strategy to manage its long-term target LTV of around or below 40%.

Debt Structure as at 30 June 2024

Debt Structure - Secured vs. Unsecured Debt

The majority of the Group's debt on 30 June 2024 is unsecured: 52.7% (31 December 2023: 58.4%), with the remainder secured with real estate mortgages, pledges on shares, receivables and loan subordination agreements in favour of the financing parties.

Debt Denomination Currency and Interest Rate Risk

Our loan facilities are entirely Euro denominated and bear interest based either on one month, three months or six months Euribor plus a margin (14.5% of the outstanding balance compared to 18.3% as of 31 December 2023), or at a fixed interest rate (75.3% of the outstanding balance compared to 76.1% as of 31 December 2023).

The high degree of fixed interest rate debt ensures a natural hedging to the Euro, the currency in which the most significant part of our liquid assets (cash and cash equivalents and rental receivables) is originally denominated and the currency for the fair market value of our investment property. Based on the Group's debt balances on 30 June 2024, an increase of 100 basis points in the EURIBOR will result in an increase of interest expense of €1.8 million per annum.

Debt Covenants

As of 30 June 2024, the Group is in compliance with all of its debt covenants.

The Group's financial indebtedness is arranged with standard terms and financial covenants, the most notable as of 30 June 2024 being the following:

Unsecured Eurobonds, Revolving Credit Facility and IFC loan

the Consolidated Coverage Ratio, with minimum value of 150% (covenant value was aligned for all debt facilities).

the Consolidated Leverage Ratio, with maximum value of 60%.

the Consolidated Secured Leverage Ratio with a maximum value of 30%, and

the Total Unencumbered Assets Ratio, with minimum value of 125% (additional covenant applicable for the Revolving Credit Facility and IFC loan).

Secured Bank Loans

the debt service cover ratio ('DSCR') / interest cover ratio ('ICR'), with values starting from 120% (be it either historic or projected), and

the LTV ratio, with contractual values ranging from 45% to 83%.

6.   Principal Risks and Uncertainties

The key risks which may have a material impact on the Group's performance, together with the corresponding mitigating actions, are presented on pages 63 to 69 of the Annual Report for the year ended 31 December 2023, which is available at www.globalworth.com.

These risks comprise the following:

Market conditions and the economic environment, particularly in Romania and Poland

Changes in the political or regulatory framework in Romania, Poland or the European Union

Inflation in Romania and Poland

Execution of investment strategy

Valuation of the portfolio

Inability to lease space

Counterparty credit risk

Sustainable portfolio risk and response to climate change

Lack of available financing and refinancing in interest environment

Breach of loan covenants

Changes in Interest and Foreign Exchange Rates, and

Compliance with fire, structural, health and safety, or other regulations

There have been no new risks identified during the six-month period ended 30 June 2024, and the identified risks are expected to continue to remain relevant during the second half of 2024.

7. Going Concern

The Directors have considered the Company's ability to continue to operate as a going concern based on the Management's cash flow projections for the 15 months subsequent to the date of approval of the unaudited interim condensed consolidated financial statements. The Directors believe that the Company would have sufficient cash resources to meet its obligations as they fall due and continue to adopt the going concern basis in preparing the unaudited interim condensed consolidated financial statements as of and for the six months ended 30 June 2024.

GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2024

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024

The IFRS earnings per share as at 30 June 2023 have been restated following the IAS 33 'Earnings per share' requirements regarding accounting for scrip dividend shares issued in the period of 01 January 2023 to 30 June 2024.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024

The financial statements were approved by the Board of Directors on 23 September 2024 and were signed on its behalf by: Andreas Tautscher,

Director

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2024