The information communicated within this announcement is deemed to constitute inside information for the purposes of Article 7 of Regulation (EU) No 596/201 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement, this information is considered to be in the public domain.

25 March 2022

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Audited Results for the year ended 31 December 2021,

Posting of Annual Report and

Notice of AGM

Globalworth, the leading office investor in Central and Eastern Europe, announces that further to the publication on 4 March 2022 of its Condensed Unaudited Financial Results, it is pleased to release its Annual Report and Audited Consolidated Financial Results for the year ended 31 December 2021 ("2021 Annual Report").

Operational Highlights

·    Total combined portfolio value up by 3.9% to €3.2 billion.

·    Focused development program in select high-quality projects.

o  Romania; delivered a class "A" office comprising 29.2k sqm of GLA, with 5 logistics facilities under development which are expected to have a total GLA of 98.9k sqm

o  Poland; two mixed-use properties under refurbishment/repositioning.

·    Acquired two high-quality logistics facilities in Romania with a total area of 27.0k sqm for €17.9 million.

·    Overall standing portfolio net increase of 2.4% to 1.3m sqm of GLA in 66 standing buildings.

·    Leasing transactions of 285.5k sqm of commercial space at an average WALL of 4.6 years, registering our second highest yearly volume to date.

o  Best year in office leasing with 214.5k sqm of spaces taken up or extended

·    Average standing occupancy of 88.5% (88.7% including tenant options), lower by 2.3% compared to 31 December 2020.

·    Total annualised contracted rent up by 0.2% to €183.7m, of which 91.4% from office and industrial properties.

·    Rate of collections invoiced and due remained high at 99.2% for 2021.

·    Sustainability:

o  €2.7 billion in 55 green certified properties

o  Several green initiatives completed or in progress to improve our footprint.

o  Issued the third sustainable development report and our inaugural Green Bond Report.

o  Maintained "low-risk" rating by Sustainalytics and improved our MSCI rating to "A".

o  Contributed €1.0 million to support over 20 initiatives in Romania and Poland.

·    The consortium of CPI Property Group S.A. and Aroundtown SA (through Zakiono Enterprises Limited) became the controlling shareholders of Globalworth with 60.6% of the share capital.

Financial Highlights

·    Net Operating Income was lower by 8.3% compared to 2020 at €144.3 million.

·    EPRA earnings decreased by 28.2% to €59.1 million (2020: €82.3 million), partially impacted by the exceptional one-off costs associated with the cash offer for Globalworth's shares initiated in May 2021.

·    Adjusted normalised EBITDA decreased by 8.1% to €130.2 million (2020: €141.6 million), due to lower NOI, as offset by the positive impact of the €1.6 million (10.2% lower compared to 2020) savings in recurring administrative expenses¹.

·    Net profit significantly improved to €47.5 million (2020: net loss of €46.8 million) due to marginal revaluation losses of €5.7 million in 2021 compared to the €116.2 million revaluation losses in 2020.

·    Total Accounting Return of +3.0% compared to -1.4% for FY2020.

·    EPRA Net Reinstatement Value (NRV) of €1.9 billion, or €8.66 per share, a marginal decrease from €8.68 at 31 December 2020 mainly due to dividends paid, lower operating performance and non-recurring costs, offsetting the positive impact of lower revaluation losses (by €110.4 million compared to 2020).

·    Dividends declared and paid for FY2021 of 28 cents per share, representing an amount of at least 90% of the EPRA Earnings for the first and second six months of the year, as stipulated by our articles of incorporation.

·    High liquidity of €418.7 million (vs €527.8 million at 2020 year-end) plus €215 million in undrawn RCF facility, and an LTV at 40.1% at 31 December 2021 (vs 37.8% at 2020 year-end).

·    Maintained investment grade rating by all three major rating agencies, improving our outlook to "Stable" (from "Negative) by Moody's.

¹ Recurring administrative expenses for 2021 exclude €11.5 million exceptional and non-recurring costs incurred in connection with the cash offer for Globalworth shares, made by CPI Property Group S.A. and Aroundtown SA (through Zakiono Enterprises Limited) in May 2021 (non-recurring expenses for 2020: €2.3 million).

Availability of 2021 Annual Report and Notice of AGM

The 2021 Annual Report is available on Globalworth's website, www.globalworth.com under the Financial Reports and Presentation section.

The Annual General Meeting of the Company ("AGM") will be held on 22 June 2022 at 10.00am British Summer Time at Anson Court, La Route des Camps, St Martin, Guernsey GY4 6AD. The notice of this year's AGM will be included in a separate circular to shareholders, will be issued to shareholders and notified via RNS at least 10 clear days before the meeting, and will also in due course be available on the Company's website in accordance with AIM Rule 20.

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

Enquiries

Stamatis Sapkas                                                                                           Tel: +40 732 800 000

Deputy Chief Investment Officer

Panmure Gordon (Nominated Adviser and Broker)                              Tel: +44 20 7886 2500

Alina Vaskina

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 240 professionals across Cyprus, Guernsey, Poland and Romania, a combined value of its portfolio is €3.2 billion, as at 31 December 2021. Approximately 95.9% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 660 national and multinational corporates. In Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice, while in Romania its assets span Bucharest, Timisoara, Constanta, Pitesti, Arad and Oradea.

For more information, please visit www.globalworth.com and follow us on Facebook, Instagram and LinkedIn.

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.

CHIEF EXECUTIVE'S REVIEW

NAVIGATING THROUGH CHALLENGING MARKETS WITH THE RIGHT STRATEGY IN PLACE

"2021 left us with mixed emotions, as our operational successes and business growth in another year of very challenging market conditions due to the COVID-19 pandemic have only partially been reflected in our annual results.

We firmly believe, however, that we are implementing the right strategy to address the present and future challenges, and reinforce our position as THE landlord of choice in our home markets of Poland and Romania."

Overview

We believe that we have used this year wisely, taking steps towards returning to normal life, focusing on our key strategic priorities to ensure that we are able to reinforce our position as THE landlord of choice in our home markets in Poland and Romania.

This included investments in existing and new high-quality properties, managing our portfolio to preserve and improve our operational performance, and maintaining an efficient and flexible capital structure, resulting in a resilient overall performance. All this while at the same time providing a safe and healthy environment for our people, tenants and communities to work, visit and be part of.

Looking back at the very challenging market due to the ongoing COVID-19 pandemic, I am very pleased to have succeeded in the majority of the goals we set out to do. I also believe that we have taken the proper steps to achieve those that may not have been fully achieved to date, in the future.

At this point, I would like to thank every member of our team of dedicated professionals, whose positive attitude, resilience, commitment, and efficiency, and who have been responding remarkably since the beginning of the pandemic, working under challenging circumstances.

Support from our shareholders, partners and communities has been very encouraging and greatly appreciated.

Our Market

Overall, the uncertainty caused by the COVID-19 global pandemic outbreak has had an impact on demand for office space in the second half of 2020, which has persisted in 2021 in both Poland and Romania.

Market conditions are expected to remain uncertain in 2022 as several companies keep reassessing their occupational plans (extensions, expansions, relocations, release of spaces etc.), both due to the lasting effects of the pandemic as well as due to the recent outbreak of the war in Ukraine.

Having said the above, although uncertainties remain ahead in the near term, we continue to be optimistic about the medium and long-term prospects of our home office markets in Poland and Romania. We expect that multinationals sooner rather than later will start implementing the expansion plans that were halted as a result of the pandemic. In addition, we have seen a significant reduction in future planned office development projects, which should translate into a rebalancing of demand / supply dynamics in favour of office investors in the next 12-18 months.

Investment in Our Portfolio

We are present in seven of the eight largest office markets in our countries of focus and in some of Romania's most attractive logistic/ light-industrial hubs. Our growing portfolio at year-end 2021 accounted for 45 investments with a combined value at €3.2 billion, recording a 3.9% annual increase by value.

Our combined standing portfolio increased by 31.0k sqm to 1.3 million sqm of high-quality GLA in 39 investments.

In 2021 we successfully delivered Globalworth Square, our new class "A" office in Bucharest. We also completed our first purchases of standing properties since our decision in 2020 to suspend new acquisitions due to COVID-19.

These two high-quality logistic/light-industrial facilities, located in the western part of Romania, offer a total area of 27.0k sqm, were acquired for €17.9 million and are 100% let to two multinational tenants on 15-year lease agreements.

We prioritised the development of other new high-quality logistics/light-industrial facilities in Romania (98.9k sqm) and the refurbishment/ repositioning of two mixed-use properties in Poland aiming at increasing their class "A" office space and improving their retail/ commercial offering, in response to current market conditions.

In our effort to improve the quality of our services to our partners, we continued to internalise the property management of our portfolio, kept (re) investing in our properties, maintained and, where required, improved the quality of our buildings. Overall, we internally manage 962.6k sqm of high-quality office and mixed-use space in Poland and Romania with an appraised value of €2.5 billion, accounting for 96.8% of office and mixed-use standing properties.

Our Leasing

In addressing the current challenging market conditions, we firmly believe in the need to provide safe and healthy environments for people to work in, tailored leasing solutions to tenants, allowing them more occupational flexibility, providing modern properties which are easily accessed and centrally located within their respective sub-markets.

2021 was our best year in office leasing with 214.5k sqm of spaces taken up or extended, contributing to our second-best year overall with 285.5k sqm of commercial spaces agreed at an average WALL of 4.6 years. We expect all these leases, signed with 232 tenants, to generate rental income of €187.5 million in the future of which 81.2% will be from office leases.

Most of our leasing success involved contract renewals, accounting for 54% (from 74% in 2020) of our total leasing activity. However, the increased level of new leases signed, 46% in 2021 from 26% in 2020, is an encouraging sign for our ability to attract new tenants to our standing properties and developments. This increased level of new take-up was due to several of our development projects being delivered over the past 18 months or are under construction, and they are in their respective lease-up phases.

Headline rents were marginally affected in 2021, as the impact of COVID-19 was offset by lower new supply in the market and inflation pressures. However, the increased competition between landlords and developers to secure high-quality tenants is evident in the higher costs involved in renting spaces which we occurred in this period, increasing from 21% in 2020 to 29% in 2021.

City Offices

The benefits of being able to sign lease agreements with such high-quality national and multinational tenants, which has been our longstanding strategy, and establishing long-term partnerships with them, thus ensuring sustainable cash-flow generation, could not be more evident than during a period of the pandemic, where we have been able to maintain a high rate of collection with over 99.2% of the rents invoiced being received in line with their regular cycle. Also the level of claims received by tenants was limited to 1.6% (vs 6.1% in 2020) of our annualised contracted rents.

Our Occupancy

The average occupancy of our combined standing commercial portfolio was as of 31 December 2021 was 88.5% (88.7% including tenant options), 2.3% lower over the past 12 months.

It is important to emphasise that the like-for-like occupancy rate in 60 of our 61 standing properties remained effectively unchanged at 90.8% at year-end 2021 (91.0% at 31 December 2020), increasing to 91.0% when including the two fully let industrial facilities acquired during the year.

However, two sizable offices with an average occupancy of 41.8% negatively impacted our overall standing occupancy. The two offices were Globalworth Square in Bucharest, delivered in June this year and is in its lease-up phase and Warta Tower (22.7% occupied) in Warsaw where its principal tenant relocated in December and we are assessing alternative asset management initiatives.

Our Financial Results

Our operational successes and business growth have only partially been reflected in our annual results.

Net Operating Income for the 12 months of 2021 was lower by 8.3% to €144.3 million compared to 2020.

Our initiatives to improve operational efficiency were somewhat offset by the one-off costs associated with the cash offer by the consortium of CPI Property Group S.A. and Aroundtown SA to acquire the entire issued and to be issued share capital of Globalworth in May 2021, thus resulting in EPRA earnings decreasing by 28.2% to €59.1 million, as compared to the same period in 2020.

Adjusted normalised EBITDA decreased by 8.1% to €130.2 million, due to lower NOI, offsetting the positive impact from the €1.6 million savings in recurring administrative expenses.

Finally, our Net profit more than tripled to €47.5 million due to marginal revaluation losses of €5.7 million in 2021 compared to the €116.2 million revaluation losses in 2020.

During the year, we paid the second interim dividend of €0.15 per share in respect to the 2020 financial year and €0.15 per share in respect to the first interim dividend of 2021. In addition, on 10 March 2022, we announced the second interim dividend for 2021 of €0.13 per share, resulting in a total dividend for the 2021 financial year of €0.28 per share. Both 2021 dividends represented at least 90% of the EPRA Earnings for the first and second six months of the year, as stipulated by our articles of incorporation.

Liquidity has always been a key area of focus and, especially since the COVID-19 pandemic outbreak, we have taken several steps to ensure that we have sufficient cash in this period while investing in our portfolio. At 31 December 2021 our liquidity included €418.7 million in cash and cash equivalents (vs €527.8 million at 2020 year-end) plus €215 million in an undrawn RCF facility, and an LTV at 40.1% (vs 37.8% at 2020 year-end).

In addition we maintained our "BBB -" rating and "Stable" outlook from S&P and Fitch, while Moody's re-affirmed our "Baa3" rating and improved our outlook to "Stable" from "Negative" in November.

Our Sustainable Development

Our approach to sustainable development centres around "People, Places and Technology". We are committed to delivering environmentally friendly and safe buildings that meet the needs of our occupiers and make a positive contribution to the communities we are an integral part of.

In 2021, together with Globalworth Foundation, we supported over 20 initiatives with over €1.0 million in Romania and Poland.

Furthermore, consistent with our commitment to energy-efficient properties, we certified or recertified 38 properties with BREEAM Very Good or higher certifications. At the end of 2021, we owned 55 green-certified properties valued at €2.7 billion. We are particularly delighted that at the beginning of 2022 our Globalworth Square received BREEAM Outstanding accreditation, with 99% scoring, placing our class "A" office in the 3rd place worldwide.

In addition, in December, we received WELL Health-Safety Ratings for 15 (of our 16) office buildings in Romania, further demonstrating that our properties provide safe and healthy places for corporates to operate and for people to visit and work in. We are currently performing the same process for our properties in Poland and Globalworth Square in Romania.

Also, we secured that 100% of the energy used in our Polish properties and our Romanian office portfolio to be generated from renewable sources. This initiative is part of our broader preparatory actions for nZEB, involving other steps, including introducing intelligent metering and implementing FORGE for monitoring.

Finally, we are firm believers that we can support and properly manage our ESG performance through robust performance monitoring and reporting. This year, I am pleased that we have improved our reporting by publishing our third annual sustainability report (for the FY2020), our inaugural Green Bond allocation report and the Globalworth Foundation Annual report.

Our Governance

Our Board of Directors was further reshaped in 2021 because of the shareholder change of control. As a result, Mr G. Miller, Mr J. Whittle and Ms A. Petreanu stepped down from their positions, with Mr A. Tautscher, Mr P. Olendski, Mr F. Stelian and Mr D. Malkin being appointed new members on the Board.

I would like to personally thank parting members for their significant contributions to the Board and successful tenure to the new members. I look forward to working closely with them and the rest of the Board in steering Globalworth in the future.

In January 2022, it was announced that the CFO of Globalworth, Mr A. Papadopoulos, made a decision to step down from his role at the end of April 2022, which he had held since 2014. I have worked closely with Andreas over the past eight years, and we are very sorry to see him leaving the team. We are very thankful for and appreciative of his invaluable contribution and unwavering commitment over the past years and wish him all the very best for the future.

Our Shareholders

As mentioned above, CPI Property Group S.A. and Aroundtown SA formed a consortium and, via Zakiono, made a cash offer for the entire issued and to be issued share capital in the Company at €7.00/share. The offer was initiated in May 2021 and successfully completed in July 2021. The consortium now holds 60.6% of the share capital via Zakiono, thus being the largest and controlling shareholder of Globalworth.

The fact that Globalworth is now controlled by two very sizeable, financially strong, and reputable European real estate institutional investors is a vote of confidence by them in the quality of the team, the Company and its portfolio. We are confident that with their support and closer cooperation, Globalworth will be even more successful in the future.

Outlook

For 2022, our primary focus will remain the active management of our portfolio of high-quality properties, as we continue operate in an uncertain market underpinned by the lasting effects of the COVID-19 pandemic and of the war between Russia and Ukraine which commenced at the end of February. We don't have direct exposures to related parties and/ or key customers or suppliers from those countries, however at this point it is too early to assess the impact that this war will have in the overall economy and our markets of interest.

At the same time, investing in our prime developments will remain a priority, and we are also ready to act quickly if new attractive opportunities become available.

Although the office of the future may need to be adjusted to potentially offer greater flexibility or alternative space planning arrangements, I firmly believe that its importance will not diminish. Many companies are also publicly confirming the view that the office environment increases productivity, promotes creativity, innovation, consistency, and fosters relationships and corporate culture, which are essential for their businesses' long-term sustainability and growth.

Hoping for a peaceful resolution to the Ukraine war the soonest possible, we are very well-placed to continue to address ongoing challenges successfully, and I firmly believe that we can achieve new levels of success in the future.

Hope for peace!

Dimitris Raptis

24 March 2022

STANDING PORTFOLIO REVIEW

OPERATING BEST-IN-CLASS REAL ESTATE SPACE

We own and manage high-quality standing properties in 12 major real estate sub-markets in Poland and Romania and we offer to our investors an efficient gateway to the two largest markets in Central and Eastern Europe.

In 2021, we added two high-quality logistic/light-industrial facilities in regional Romania and a new class "A" office in Bucharest to our standing portfolio, with Supersam our mixed-use property in Katowice (Poland) being reclassified as it is going through partial refurbishment/repositioning.

Overall, our combined portfolio of high-quality standing properties at the end of 2021, comprised 39 standing investments (37 at 31 December 2020) with 66 buildings (64 at 31 December 2020).

We own 30 class "A" office investments (with 50 properties in total) and a mixed-use investment (with five 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).

In addition, we fully own in Romania two logistic/light-industrial parks with five facilities in Timisoara and three modern warehouses in Pitesti, Arad and Oradea, and have a 50% ownership through Joint Venture in two other industrial parks (with two standing facilities) in Bucharest and Constanta. We also own part of a residential complex in Bucharest.

Globalworth Combined Portfolio: Key Metrics

(*)       Including tenant options.

The total gross leasable area of our combined standing commercial portfolio increased by 33.0k sqm or 2.7% in 2021 to reach 1,272.0k sqm, with the overall combined standing portfolio GLA increasing 2.4% to 1,302.3k sqm.

This net increase was mainly attributed to the addition of three new properties in our portfolio in Romania with a total of 56.2k sqm of GLA, which was partially offset by the reclassification of the Supersam mixed-use property to development, the remeasurement of certain spaces in our properties, and the sale of 19 units in our Upground residential complex.

Globalworth Combined Standing Portfolio: 2021 GLA Evolution

The appraised value of our combined standing portfolio as at 31 Dec 2021 was €2.9 billion, with the overall increase mainly attributed to the addition of new properties, through acquisition and completion. Value of like-for-like properties remained effectively unchanged, 0.6% higher at year-end 2021 compared to same period in 2020, while the reclassification of Supersam in Katowice to developments and sales of units in the Upground complex decreased our standing portfolio value by €53.0 million (additional information can be found in the "Asset Management Review").

Globalworth Combined Standing Portfolio: 2021 Evolution

(*)       Like-for-Like change represents the changes in GAV of standing properties owned by the Group at 31 December 2020 and 31 December 2021.

(**)     Includes GAV adjustments (redevelopment capex, reclassification).

Standing Properties Operation, Renovation and Upgrade Programme

Offering best-in-class real estate space to our business partners is 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, as well as offering best-in-class real estate space to our business partners.

Over the past few years, real estate has been gradually moving away from "static" bricks and mortar buildings to more vibrant environments where people and businesses can flourish, and as such the ability to quickly adapt to trends and customise spaces is becoming an increasingly important factor for success, which has been accelerated by COVID-19 pandemic and the shifting format towards a more flexible/hybrid-ecosystem with less desk space and more collaborative areas.

In order to be able to provide spaces for our current and future business partners requirements, we continue to internalise the asset management of our portfolio, keep (re)investing in our properties, maintain and, where required, improve the quality of our buildings and of our services.

We are pleased that all our properties in Poland are now internally managed by the Group, with the latest addition being the Green Horizon class "A" office in Lodz, and in Romania, almost all our offices (with the exception of one) are internally managed. Overall, we internally manage 962.6k sqm of high-quality office and mixed-use space in Poland and Romania with an appraised value of €2.5 billion. Of our total standing commercial portfolio, our internally managed properties account for 90.6% by value (96.8% of office and mixed-use standing properties) as at 31 December 2021.

Our Renovation and Upgrade Programme was significantly scaled back in 2020 due to COVID-19, but in 2021 gradually returned to a more normalised state and is expected to further intensify in the short-medium term as we aim to maintain and further improve the quality of our properties.

Overall, in 2021, €24.0 million were invested in our standing portfolio and the two mixed-use properties which are under refurbishment/ repositioning. As a result of our ongoing in-house initiatives and properties additions, 47 of our standing commercial properties, accounting for 71.8% by GLA and 74.3% by commercial portfolio value, were delivered or significantly refurbished in or after 2014.

In 2021 we commenced the refurbishment/repositioning project of two of our mixed-use properties in Poland.

-         Renoma (Wroclaw): works in this landmark property involve the conversion of certain retail/commercial spaces to class "A" office, as well as the reallocation of certain commercial uses within the property. Works are in progress and expected to be completed by the end of H1-2023.

-         Supersam (Katowice): works will be focusing on the redevelopment of the entire first level from commercial/retail space to class "A" office and reconfiguring part of the first underground level to high-quality retail & commercial spaces (food court and entertainment). Works are estimated to cost €5.6 million and are expected to be completed in H2-2022.

Finally, we are pleased that tenant fitout works have not been affected during this period, as well that both properties have maintained their green certification status.

Properties Under Refurbishment / Repositioning

*          Estimated CAPEX to Go partially excludes tenant contributions which are subject to tenant 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.

DEVELOPMENTS REVIEW

FOCUSED ON DEVELOPMENT AND REPOSITIONING OF HIGH-QUALITY PROPERTIES WHILE ADAPTING TO MARKET CONDITIONS

Developing high-quality properties in which businesses can grow has been a key feature in the evolution of Globalworth. Since our inception, we have delivered 386.0k sqm of high-quality office and logistics / light-industrial spaces in Romania (95%) and Poland. It is our firm belief that offering such spaces allows us to meet current and future tenant needs and achieve higher risk-adjusted returns on our capital deployed.

Although the COVID-19 pandemic has made us reprioritise our pipeline focusing on properties with lower risk-adjusted profile, such as projects with significant pre-lets or high tenant interest which are developed in phases, or at advanced levels of construction, our development programme has remained very active with 9 properties offering 191.2k sqm developed (completed or in progress) in the period.

The depth of our existing income-producing properties and strong balance sheet allows us to simultaneously engage on several different projects. It gives us optionality over which schemes to progress and their timing.

In 2021 we delivered a class "A" office with 29.2k sqm in Bucharest, increasing our total high-quality GLA developed by the Group to 386.0k sqm since 2013. In addition, we made progress in several other industrial projects, which are at various stages of development across Romania.

Overall, during the year, we invested €46.4 million in our development projects and have €17.3 million for the completion of the properties under construction at the end of 2021. 

CASE STUDY - GLOBALWORTH SQUARE

Class "A" Office in the New CBD of Bucharest

In June 2021, we delivered the Globalworth Square development in the New CBD of Bucharest. This class "A" office features several new technologies that target lowering energy/occupational costs and improving efficiencies in the property.

It is located between our own Globalworth Plaza and Green Court B class "A" offices, extending over 15 floors above ground and three underground levels, offering 29.2k sqm of high-quality GLA and 451 parking spaces.

Green Certification: Globalworth Square, at year-end, was under the green certification process, which it successfully received in Q1-2022, becoming our first BREEAM Outstanding green property in Romania. With 99% scoring, the building was ranked in the 3rd place worldwide.

Tenants: As of 31 December 2021, the property was 63.8% leased to seven tenants, including Wipro, a leading multinational company delivering innovation-led strategy, technology and business consulting services.

Furthermore, to allow for the highest level of "customisation" of the available spaces for future tenants in the property, the available spaces have remained in a core and shell design.

DEVELOPMENTS UNDER CONSTRUCTION AND FUTURE DEVELOPMENTS

Review of Current and Future Developments

In 2021, in addition to Globalworth Square, we started the development of new logistic / light-industrial facilities in 4 locations in Romania.

At the end of the year, we had five such high-quality facilities under construction, all representing subsequent phases of development in existing projects. These facilities we own directly or through JV partnerships, and together, on completion, are expected to further increase our footprint by 98.9k sqm of high-quality GLA and provide an average yield on development of 8.7%.

In addition, we hold interests on other land plots in prime locations in Bucharest, regional cities in Romania and Poland, covering a total land surface of 1.2 million sqm (comprising 2.7% 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 in total a further 776.8k sqm of high-quality GLA to our standing portfolio footprint.

These projects, which are classified for "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.

Right of First Offer

Globalworth has invested in Warsaw's two-phase My Place (formerly Beethovena) project.

The Group continues to own a 25% economic stake in the second phase of the project, with the right to acquire the remaining interests once certain conditions have been satisfied.

My Place II (formerly: Beethovena II) is the second phase of Class "A" office project in the South of Warsaw comprising two four-floor offices, offering 17.2k sqm of GLA. The property was delivered in Q4-2020 and is 60% leased to tenants such as Ars Thanea and Networks.

DEVELOPMENTS - UNDER CONSTRUCTION

FUTURE DEVELOPMENTS

(*)       50:50 Joint Venture; figures shown on 100% basis.

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

ASSET MANAGEMENT REVIEW

ACTIVELY MANAGING OUR PORTFOLIO & MINIMISING THE IMPACT OF COVID-19

Leasing Review

We are present in six of the seven largest office markets in Poland, the largest office market and in some of the most attractive logistic/light-industrial hubs of Romania.

Our office markets provide corporations with the necessary infrastructure for them to operate and offer people interesting opportunities for them to grow professionally and personally, while our logistic/light-industrial properties benefit from locations that are easily accessible, on or next to major road arteries, connecting our facilities to major hubs in Romania and abroad.

The COVID-19 pandemic has created uncertainty impacting the Polish and Romanian economies, as well as the way we live and work, however, modern, high-quality, and easily accessible office spaces continue to have a competitive advantage in the market.

Corporates have used remote working more extensively over the past 18-24 months, however, we expect them to adopt a more balanced approach in the future, as well as to seek to occupy spaces through a mix of fixed and flexible and short-term leases, enabling them to operate more efficiently and react quicker to market changes, thus increasing their potential to stay in business and achieve sustainable growth.

As such, we firmly believe that the need for safe and healthy environments to work in, tailored leasing solutions to tenants, allowing them more occupational flexibility, provided in modern properties which are easily and centrally located within their respective sub-markets, will continue to be in demand from corporate tenants in the future.

New Leases

Our primary focus in 2021 was to maintain and gradually improve our portfolio's occupancy. Following 2020, a record year in leasing dominated with lease prolongations. This year was more even with lease prolongations, and new take-up accounting for 54% (74% in 2020) and 46% (26% in 2020) of the total area leased, respectively.

The increased level of new take-up was due to several development projects being delivered over the past 18 months or in progress, which are in their lease-up phase and our ongoing effort to improve the net take-up in our portfolio.

However, the theme observed since the COVID-19 pandemic outbreak, with signing of new leases, typically for large multinational and national corporates, is taking longer in the current market environment of higher uncertainty, as existing and potential tenants continue to re-assess their future occupational plans.

Overall, in 2021, we successfully negotiated the take-up or extension of 285.5k sqm of commercial spaces in Poland (60.0% of transacted GLA) and Romania (40.0% of transacted GLA), with an average WALL of 4.6 years. More importantly office leases accounted for 214.6k sqm of our total leasing activity, representing our best to date.

Leases were renewed for a total of 153.8k sqm of GLA with 121 of our tenants, at a WALL of 3.8 years, with the most notable extensions involving Infosys (25.5k sqm) in Green Horizon, Rockwell (12.9k sqm renewal plus 6.7k sqm expansion) in A4 Business Park, Intel (9.8k sqm) in Tryton, Baxter (8.0k sqm) in Nordic Park and EY (6.0k sqm) in TCI, while 78.2% of the renewals by GLA signed were for leases expiring in 2022 or later.

We signed our new leases with 89 tenants for 105.8k sqm of GLA at a WALL of 6.0 years. The majority were in properties delivered by the Group over the past 18 months or currently under construction, accounting for 61.8% of new GLA signed. New leases for office and retail/commercial spaces were 55.9% of the total spaces signed, with the remainder involving logistic/light-industrial and storage spaces.

The largest new leases in this period were with HAVI Logistics, for a total of 20.6k sqm in two logistic/light-industrial facilities in Bucharest, Heineken (8.6k sqm) in Podium Park I in Krakow, Caroli Foods (6.7k sqm) in Pitesti, and Wipro (6.1k sqm plus 4.7k sqm expansion) in the newly 2021 delivered Globalworth Square. In addition, in 2021 we signed 25.9k sqm of expansions with 50 tenants, at an average WALL of 5.4 years.

Summary Leasing Activity for Combined Portfolio in 2021

*          Number of individual tenants.

Occupancy

The average occupancy of our combined standing commercial portfolio as of 31 December 2021 was 88.5% (88.7% including tenant options), representing a 2.3% decrease over the past 12 months (90.9% as of 31 December 2020 / 91.7% including tenant options).

Our annual like-for-like occupancy rate in 60 (of our 61) standing properties, following the reclassification of our Supersam mixed-used property in Poland to a property under refurbishment/redevelopment, has remained effectively constant at 90.8% at year-end 2021 (91.0% at 31 December 2020). Standing occupancy increases to 91.0% with the two fully let industrial facilities acquired this year.

However, two sizable offices with average occupancy of 41.8% have negatively affected our overall standing occupancy. The Globalworth Square (occupancy rate: 63.8%) in Bucharest, which was delivered in June this year and is in the lease-up phase, and Warta Tower (occupancy rate: 22.7%) in Warsaw where its principal tenant relocated from its premises in December and we are currently contemplating alternative (sale and other) options.

We are encouraged by our annual leasing performance and resulting occupancy of our combined standing portfolio when considering the challenging market conditions. We remain confident that we will be able to lease the available spaces in our portfolio in the future as business conditions return to a more normalised state.

Across our combined portfolio, at the end of 2021, we had 1,194k sqm of commercial GLA leased to approximately 660 tenants, at an average WALL of 4.7 years. National and multinational corporates, well-known within their respective markets, occupy the majority of the leased spaces in our properties.

Approximately 94.3% of the spaces leased are in standing properties. In addition, we have 7 properties, like Renoma and Supersam in Poland, which are undergoing a partial refurbishment/repositioning or are at the final stages of construction like TIP II (Phase B), PIP (Phase B), Chitila Logistics Hub (Phases B and C) and Constanta Business Park (Phase B) which are let or pre-let. As of 31 December 2021, these properties had an average occupancy rate of 41.5%.

Occupancy Evolution 2021 (GLA 'k sqm) - Commercial Portfolio

*          Includes the reclassification of Supersam mixed-use property (Katowice) from standing to under refurbishment (24.3k sqm of GLA).

**        Renewals are neutral to the occupancy calculation.

***      Includes the reclassification of occupied GLA in Supersam from standing to under refurbishment (22.6k sqm of occupied GLA). Other lease expirations, renewals, or new take-up in relation to Supersam are excluded from the table.

Rental Levels

Headline market rental levels have remained relatively stable in our portfolio, despite the uncertainty in the market and the cautious approach of tenants, reflecting the quality of our properties, our active asset management initiatives since the outbreak of the pandemic, and our approach to sustainable development.

At the end of December 2021, our average headline rents in our standing properties for office, retail/commercial and industrial spaces were €14.0/sqm/month (€14.2 at YE-2020), €13.9/sqm/month (€14.5 at YE-2020) and €3.8/sqm/month (€3.7 at YE-2020) respectively.

Rental levels can vary significantly between type of spaces, buildings and submarkets. Leases signed in 2021 were at 1.6% lower rents than their prevailing group averages.

Our overall commercial GLA take-up during the year was at an average rent of €12.1/sqm/month (€10.9/sqm/month for FY2020). Office leases were at an average rent of €13.9/sqm/month, industrial spaces at €3.9/sqm/month, while retail spaces were at €12.7/sqm/month.

Contracted Rents (on annualised basis)

Total annualised contracted rent in our real estate portfolio marginally increased by 0.2% to €183.7 million compared to year-end 2020, due to new additions and leases signed on properties under refurbishment/ repositioning or development.

Total annualised contracted rents in our standing commercial portfolio were €174.5 million on 31 December 2021, lower by 1.8% compared to the same period last year. Total rental income increases to €175.4 million when including the income from renting 183 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 decreased by 3.3% to €168.5 million at the end of 2021 compared to 31 December 2020, as the increase in rents (0.5% on average) due to indexation was outweighed primarily by the lower occupancy in Warta Tower. Excluding Warta Tower, the adjusted like-for-like annualised commercial contracted rents were marginally lower by 0.7% at €167.3 million.

Annualised Contracted Rent Evolution 2021 (€m)

*          Supersam mixed-use asset (Katowice) was reclassified under redevelopment in 2021

Combined Annualised Commercial Portfolio Contracted Rent Profile as at 31 December 2021

Note: Commercial Contracted Rent excludes c.€0.9 million from residential spaces as at 31 Dec 2021

Annualised Contracted Rent by Period of Commencement Date as at 31 December 2021 (€m)

Annualised Commercial Portfolio Lease Expiration Profile as at 31 December 2021 (€m)

Our rent roll across our combined portfolio is well diversified, with the largest tenant accounting for 5.1% of contracted rents, while the top three tenants account for 10.7% and the top 10 account for 26.2%.

Cost of Renting Spaces

The headline (base) rent presents the reference point, 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 landlord incurs. These incentives can vary significantly between leases and depend on market conditions, type of lease (new take-up or lease extension), space leased (office, other commercial, etc.), 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 2021, we successfully negotiated the take-up (including expansions) or extension of 285.5k sqm of commercial spaces in our portfolio. The overall weighted average effective rent for these new leases was €12.1/sqm/month, signed at an average lease term of 4.6 years. Industrial leases completed in the period, which accounted for 16.1% of the total leasing activity, were agreed at an average of €3.9/sqm/month, thus decreasing the average headline and effective rent achieved.

Weighted Average Effective Rent (€/sqm/m) - 2021

Note: Certain casting differences in subtotals/totals are due to figures presented in 1 decimal place.

The difference between headline (base) and effective rents in 2021 was on average 29.2%, a discount higher compared to the FY2020 (average of 21.0%) due to the continuing challenging market conditions and the type of leases signed.

In total, new leases signed in this year will generate a future rental income of €187.5 million, with leases from office properties accounting for 81.2% of future rental income.

Tenant Demands/Claims Review

Tenant demands/claims decreased in 2021 as the business community has been absorbing the initial shock from the COVID-19 pandemic, and restrictions imposed by the authorities that directly and/or indirectly impacted certain businesses and industries have been easing in Poland and Romania since the beginning of the year.

The majority of our portfolio comprises office premises and industrial properties or essential retail businesses (supermarkets, pharmacies, convenience stores etc.), none of which were impacted by measures taken by the authorities since the beginning of the pandemic in our countries of focus. In February 2021, restrictions on non-essential or stationary retail were significantly eased in Poland, limited only by the number of customers in stores. However, higher uncertainty remains in our markets of interest and globally.

Of our €183.7 million of total contracted rent on the last day of December, office rent accounted for 85.1% (including parking rent), with retail/commercial, industrial and other spaces accounting for 6.0%, 6.3% and 2.5%, respectively.

Overall, for the 12 months of 2021, we have estimated the value of the tenant demands/claims received at c.€3.0m million, reflecting 1.6% of our contracted annual rent, with the majority of them, mainly awarded to tenants of retail/commercial spaces in our properties which were impacted by restrictive measures/closures in the first part of the year.

Our approach towards these tenant demands/claims was to continue considering each case separately, rather than applying a horizontal or vertical approach, aiming to identify the optimal solution for our tenants and Globalworth. Some of the solutions implemented have been to award rent-free months or replace fixed rent with turnover rent for retail tenants for certain periods of tenant leases which in certain cases resulted in lease extensions.

We expect the level of claims to decrease in the future as an increasing number of people return to the office.

Collections Review

The ability to collect - cash in - contracted rents is a key determinant for the success of a real estate company.

Our rate of collections of rents invoiced and due in 2021 remained high at 99.2% (99.0% for 2020FY), due to the long-term partnerships we established with high-quality national and multinational tenants since the inception of the Group and continue to cultivate since which have helped us minimise the impact on rent collections in this period of higher economic uncertainty and ensure sustainable cash flow generation.

More specifically, considering the current market environment, rent to be collected in 2021 was classified as:

-         Rent eligible for invoicing: Includes rents invoiced to tenants per the terms of their lease agreements. Such rents were either collected or subject to collection; and

-         Rent impacted by measures imposed by the authorities: Such rent was to be collected based on the contractual agreements in place, however, due to measures taken by the authorities in Poland and Romania, tenants were excluded from paying, and as such, no invoices were issued by the Group.

Under normal conditions, the Group during the period would have had €154.0 million of rent be invoiced and due, however, €1.2 million was not invoiced due to measures taken by the authorities. This is a significant improvement to 2020, where c.1.8% of rent to be invoiced and due was not invoiced.

Portfolio Valuation

Our entire portfolio in Poland and Romania was revalued, by independent appraisers, three times in 2021.

-         The first valuation was for the benefit of the independent committee of the Group responsible for assessing the cash offer for the entire issued and to be issued share capital of Globalworth, with effective date the 31 March 2021; and

-         The second and third valuations were performed, as of 30 June and 31 December 2021, per our policy of revaluing our properties twice a year.

The valuations were performed by CBRE and 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 31 December 2021).

Our portfolio since the inception of the Group has been growing due to new additions through acquisition or development of high-quality properties in Poland and Romania, our asset management initiatives, and the performance of the real estate markets in which we operate, resulting in healthy investor interest and contracting yields, as well as healthy tenant demand leading to stable or growing rental levels and lowering tenant incentives.

Overall, our total combined portfolio value increased from €0.1 billion in 2013 to €3.0 billion in 2019, remaining effectively unchanged in 2020 as the impact of the COVID-19 pandemic was reflected at our year-end independent valuation appraisal of our properties, and marginally increasing (+3.9%) at the end December 2021 to €3.2 billion.

Portfolio growth in 2021, is mainly attributed to the acquisition of two high-quality logistic/light-industrial properties in Romania and the net positive impact from our developments (delivered, in progress or under refurbishment). The like-for-like appraised value of our standing commercial properties was €2.7 billion at the end of the period, 0.7% higher than 31 December 2020.

In valuing our properties, the key market indicators used by the four independent appraisers, although vary, considering factors such as the commercial profile of the property, its location and the country in which it is situated, have remained consistent with those of year-end 2020, with ERVs, yields and/or discount rates remaining stable with only a few exceptions, where positive adjustments were made to reflect improvements in operating performance.

It has to be noted that since 30 June 2020, independent valuations, yields and/or discount rates used by appraisers have remained stable or improved, which for the majority of our office and mixed-use properties, were 10 - 50bps wider compared to December 2019.

Combined Portfolio Value Evolution 31 December 2021 (€m)

(*)       Properties held through joint ventures are shown at 100%, Globalworth owns 50% stake in the respective joint ventures

FINANCIAL REVIEW

MODEST DECLINE IN RENTAL INCOME IN 2021 DESPITE CONTINUED IMPACT FROM COVID-19 AND STABILISATION IN PROPERTY PORTFOLIO VALUATION

OVERVIEW

1          See Glossary (pages 182-184) for definitions.

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

3          See note 23 of the consolidated financial statements for calculation.

4          See page 48 for further details.

5          See note 25 of the consolidated financial statements for calculation.

NOI and Adjusted normalised EBITDA impacted negatively by the continued effects of COVID-19, which also impacted occupancy. In addition, the EPRA earnings and IFRS earnings were significantly impacted by the exceptional and non-recurring administrative costs. The COVID-19 impact on portfolio valuation was marginal in 2021 thus stabilising the decline in EPRA NRV and turning the Total Accounting Return into a positive rate of 3.0%, compared to the negative rate in 2020 of -1.4%.

NOI declined by 8.2% in 2021 compared to 2020, reaching €144.3 million (2020: €157.3 million).

Adjusted normalised EBITDA decreased by 8.1% to €130.2 million from €141.6 million in 2020, reaching to the 2019 level prior to the COVID-19 pandemic, due to lower NOI by 8.2%, as offset by the positive impact of the €1.6 million (10% lower compared to 2020) savings in recurring administrative expenses.

Dividends declared in respect to 2021 of 28 cents per share, as compared to 34 cents for 2020, a 17.7% decrease, resulting from management's policy to preserve a high level of liquidity from the outset of the COVID-19 pandemic.

EPRA Net Reinstatement Value (NRV) of €1.9 billion, or €8.66 per share, a marginal decrease from €8.68 at 31 December 2020 mainly due to dividends paid, lower operating performance and non-recurring costs, offsetting the positive impact of lower revaluation losses (by €110.4 million compared to 2020). Combined with dividends paid in 2021, this resulted in a positive Total Accounting Return of 3.0% (versus a negative TAR of -1.4% in 2020).

The Open Market Value ("OMV") of the portfolio increased by €0.2 billion, an increase of 3.9% to €3.2 billion (31 December 2020: €3.0 billion), being the net impact of the increase due to value accretive development CAPEX, and the acquisition of two new logistics properties during the year.

LTV at 31 December 2021 amounted to 40.1%, increasing marginally from 37.8% at 31 December 2020, but still within the long term 40% threshold set by Management.

Revenues and Profitability

Consolidated revenues of €219.4 million in 2021 down by 1.8% compared to 2020 (€223.3 million), primarily as a result of a 6.3% decline in rental income to €150.3 million (2020: €160.5 million), which was partly compensated by a 9.9% increase in other revenues, consisting of service charge income and property development services income (€69.0 million in 2021 compared to €62.9 million in 2020).

The main drivers for the decrease in rental income were:

-         a 7.7% reduction (€5.7 million) in underlying rental income derived from standing properties in Poland, and a 4.5% drop from standing properties in Romania (€3.1 million);

-         a 31% decline (€2.3 million) connected with the refurbishment programme of two mixed used properties in Poland during 2021;

-         a 8.4% (€0.9 million) decline in rental income connected with Warta Tower which is a property held for sale, following the signing in September 2021 of a pre-SPA for its disposal, together with other four smaller properties in Poland; and

Revenue Share by Country 2021

Revenue Share by Country 2020

-         an offsetting impact resulting from an additional rental income of €1.8 million, in Romania, recognised in 2021 following the acquisition of two new logistics facilities and the transfer of GW Square, a newly completed offices property, from development to standing/completed stage after 1 January 2021, representing a 1.1% increase in total rental income.

EPRA NRV / Total Accounting Return⁶

6          Total accounting return is the growth in EPRA NRV per share plus dividends paid, expressed as a percentage of EPRA NRV per share at the beginning of the year.

NOI Share by Country 2021

NOI Share by Country 2020

Net Operating Income

Net Operating Income of €144.3 million in 2021, a 8.3% decrease over 2020 (€157.3 million), influenced by the decrease in consolidated revenues but, more importantly, by the significant increase in operating expenses, by 13.7% against 2020, resulting from the significant increase in utility prices and increase in vacancy during the year.

NOI was split 55% Poland / 45% Romania, compared to 57% Poland / 43% Romania in 2020.

Adjusted normalised EBITDA amounted to €130.2 million, a decrease of 8.1% over 2020 (€141.6 million), which correlates to the net effect of the decrease in NOI of 8.2% (€13 million), which was partly offset by the 10% reduction in recurring administrative expenses (by €1.6 million).

IFRS EPS to EPRA EPS (€ cents per share)

Finance costs increased by 8.6% in 2021 mainly due to the full-year impact of the new €400 million Bond, which was issued in July 2020, the higher negative interest rate charge on current and deposits accounts denominated in Euro and higher finance costs on the unwinding of the lease liability related to the right of usufruct of leasehold land underlying some investment properties. The negative impact on finance costs was partly offset by the reduction in interest expense due to the repayment of the RCF facility in August 2020 (which was drawn for a few months during 2020).

IFRS earnings were positive at €47.5 million (21 cents per share), resulting mainly from a modest decline of €5.7 million in the fair value of investment property in December 2021 as compared to €116.2 million fair value loss in 2020. However, excluding the impact of investment property valuations, the profit after tax declined by 23.3% to €53.2 million from €69.4 million in 2020, resulting from the decline in NOI of €13.0 million, increase in total administrative expenses of €7.6 million (mainly related to the €11.5 million exceptional and non-recurring costs associated with the offer for Globalworth shares initiated in May 2021), a €5.0 million increase in finance costs, as partly offset by an increase of €3.1 million in contribution from the share of joint ventures' profits compared to 2020, reduction in other non-operating costs of €4.7 million and income tax expense of €1.8 million.

IFRS Earnings to EPRA earnings bridge (€ million)

EPRA earnings weakened to €59.1 million, a decrease of 28.2% compared in 2020 (€82.3 million). The NOI contraction of €13.0 million and exceptional, non-recurring administrative costs of €11.5 million were the key drivers for such weakness. Similarly in terms of EPRA earnings per share, there was a 10 cents decrease (from 37 cents per share in 2020) to 27 cents per share.

Balance Sheet

The OMV of the portfolio increased by a considerable €0.2 billion, an increase of 3.9%, to €3.2 billion (31 December 2020: €3.0 billion). There was a marginal net loss on fair value of investment property of €5.7 million (9.4 million loss on standing assets and €3.4 million gain on properties under development/refurbishment), as compared to €116.2 million fair value losses in 2020. The property portfolio in Romania showed a positive valuation uplift by €25.4 million as compared to drop of €31.3 million in Poland.

The growth in OMV was mainly supported by the acquisition of two logistics facilities for €18.0 million, the incidental costs related to new leases and/or prolongation of existing lease contracts of €19.3 million, and value accredit additional CAPEX on standing and under development/ refurbishment properties of €20.7 million and €32.6, respectively, as well as the increase in fair value of JV properties to €86.7 million from €51.2 million in 2020, after incurring €23.3 million development CAPEX on new logistics facilities.

Evolution in Portfolio Value (€ million by location)

Total assets at 31 December 2021 amounted to €3.63 billion virtually unchanged from 31 December 2020 (€3.63 billion). Similarly, EPRA NRV decreased by only €6.0 million to €1.917 billion at 31 December 2021, a decrease of 0.3% on 31 December 2020 (€1.923 billion), while EPRA NRV per share decreased by 0.2% to €8.66 per share (31 December 2020: €8.68 per share). Reflecting the dividend distributions made during 2021 of 30 cents per share, the adjusted EPRA NRV per share on 31 December 2021 would be €8.96 per share, representing a positive total accounting return of NAV growth and dividend return for 2021 of 3.0% (2020: -1.4%).

EPRA NRV per share bridge from 31 December 2020 to 31 December 2021 (€)

Evolution of EPRA NRV/share and OMV by semester

Cash Flows

Cash flows from operating activities before working capital changes declined to €119.4 million from €136.1 million in 2020 due to the NOI contraction by €13.0 million and significant increase of €7.6 million (by 42.5% compared to 2020), in total administrative costs in 2021 due to the exceptional and non-recurring expenses incurred. Furthermore, operating expenses increased by €9.1 million, reflecting a 13.7% increase on 2020, and the decline in headline rental income along with additional new tenant incentives impacted the working capital changes substantially (by €21.9 million) thus reducing the overall cash flows from operating activities to €65.3 million (from €105.2 million in 2020), representing a 37.9% decrease.

In the absence of any new drawdown from existing or new debt facilities or prepayment of outstanding debt facilities, the cash flows from financing activities mainly decreased as a result of the dividend payments in 2021 of €66.3 million (in respect of the six-month periods ended 31 December 2020 and 30 June 2021), compared with the significant drawdown of three secured bank loan facilities and part repurchase of the 2022 Bond along with issuance of a new 2026 Bond in 2020.

Regarding investing activities, during 2021 the Group acquired two logistics facilities for €18.0 million, further invested €15 million in two logistics joint venture properties under development, and incurred capital expenditure on advancing development/refurbishment projects (two under development in Poland and one completed in Romania) of €32.7 million and on standing assets of €39.2 million.

Cash and cash equivalents at 31 December 2021 decreased to €418.7 million, €109.1 million lower than 31 December 2020 (€527.8), as influenced by the net cash outflows from financing and investing activities during the year.

FINANCING AND LIQUIDITY REVIEW

DEBT STRUCTURE & LIQUIDITY

In the context of the ongoing COVID-19 pandemic, the Group's focus during 2021 was to preserve the available cash liquidity and to protect its revenues and cash flows in order to mitigate the economic impact over its businesses.

Dividends

In March 2021 the Company paid an interim dividend of 15 cents per share (c.€33.1 million) in respect of the six-month period ended 31 December 2020, while in October 2021 it paid an interim dividend of 15 cents per share (c.€33.2 million) in respect of the six-month period ended 30 June 2021. In addition, another interim dividend of 13 cents per share (c.€28.8 million) will be paid in April 2022 in respect of the six-month period ended 31 December 2021.

Debt Summary

The Group's debt remained largely unchanged at 31 December 2021 compared to 31 December 2020.

The total debt portfolio of the Group at 31 December 2021 of €1.63 billion (31 December 2020: €1.63 billion) comprises short to medium and long-term debt, denominated entirely in Euro with the first debt maturity in June 2022, out of which €1.27 billion represents Eurobond and €361 million bank loans.

The Group has continued in 2021 its strategy over the last few years of keeping a reduced weighted average interest rate. At 31 December 2021, the weighted average interest rate remained at 2.73%, same as at 31 December 2020, while the average period to maturity of 3.5 years maintained the same trend (4.5 years at 31 December 2020), as presented in the chart below:

Servicing of Debt During 2021

In 2021, we repaid in total €2.8 million of loan capital and €44.6 million of accrued interest on the Group's drawn debt facilities, including €37.6 million in relation to the full annual coupon for the Eurobonds of the Company.

Liquidity & Loan to value ratio

The Group's aim is to maintain at all times sufficient liquidity to have the flexibility to react quickly at the moment when attractive new investment opportunities may arise.

As at 31 December 2021, the Group had cash and cash equivalents of €418.7 million (31 December 2020: €527.8 million) out of which an amount of c.€7.7 million was restricted due to various conditions imposed by the financing Banks. On top of this, the Group had available liquidity from committed undrawn loan facilities amounting to €215 million.

The Group's loan to value ratio at 31 December 2021 was 40.1%, compared to 37.8% at 31 December 2020. This is consistent with the Group's strategy to manage its long-term target LTV of around or below 40%, whilst pursuing its strong growth profile.

Debt Structure as at 31 December 2021

Debt Structure - Secured vs. Unsecured Debt

The majority of the Group's debt at 31 December 2021 is unsecured: 77.9% (31 December 2020: 77.7%), with the remainder secured with real estate mortgages, pledges on shares, receivables and loan subordination agreements in favour of the financing parties.

Loans and borrowings maturity and short-term / long-term debt structure mix

The Group has at 31 December 2021 credit facilities and Eurobonds with different maturities, most of them medium and long-term, as presented in the chart below:

Weighted average interest rate versus debt duration to maturity

Maturity by year of the principal balance outstanding at 31 December 2021 (€ million)

It is worth noting that for the short-term debt due in June 2022, the Company is currently analysing its options, including to at least partly refinance it, and will take a decision in due course. 

Debt Denomination Currency and Interest Rate Risk

Our loan facilities are entirely Euro denominated and bear interest based either on one month's or three months' Euribor plus a margin (8.5% of the outstanding balance compared to 8.7% at 31 December 2020), or at a fixed interest rate (91.5% of the outstanding balance compared to 91.3% at 31 December 2020).

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.

Debt Covenants

The Group's financial indebtedness is arranged with standard terms and financial covenants, the most notable as at 31 December 2021 being the following:

Unsecured Eurobonds and Revolving Credit Facility

-         the Consolidated Coverage Ratio, with minimum value of 200%;

-         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 only for the RCF).

Secured Bank Loans

-         the debt service cover ratio ("DSCR") / interest cover ratio ("ICR"), with values ranging from 120% to 350% (be it either historic or projected); and

-         the LTV ratio, with contractual values ranging from 60% to 83%.

There have been no breaches of the aforementioned covenants occurring during the period ended 31 December 2021.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2021

The financial statements were approved by the Board of Directors on 24 March 2022 and were signed on its behalf by:

Andreas Tautscher

Director

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021