Marian Herman
Strengthening
our recovery
with our second
best year ever
It gives me great pleasure to share that 2021 was a good year, by any standards – let alone one in the midst of the world’s reawakening from the COVID pandemic. As well as delivering four projects, we achieved our second strongest financial performance and second best leasing result in the history of the company.
This is very much a reflection of our people’s efforts across all our markets, as they balanced the demands of personal and family commitments with the drive and commitment to take our company forward.
Nivy Mall & Bus Station, Bratislava, Slovakia
Varso Tower, Warsaw, Poland
At 310 m, the newly completed Varso Tower in Warsaw is now the EU’s tallest structure. We also completed phase 1 of the Forest campus and topped out Forest Tower. The construction of New Apollo in Slovakia is progressing at pace, with the announcement of IBM as its anchor tenant taking 2/3 of the office space. In the UK, the opening of Bloom was followed by initial demolition works on Worship Square.
DSTRCT.Berlin, Berlin, Germany
Almost fully leased, DSTRCT.Berlin’s new building welcomed its first tenant, STRATO, just a few weeks ago, and the majority of space in the historic halls also have contracts in place. Put together, all of this good work meant we leased around 160,000 sq m in 2021, not only exceeding our ambitious 150,000 sq m leasing target, but also the 2nd strongest leasing performance ever and that all in a post-covid market environment.
Looking forward, the pipeline is also very strong. Slovakia and the UK are very stable, with the latter forging ahead with One Waterloo and Worship Square, which will be one of London’s first net zero carbon schemes. Berlin has its second HB Reavis project in the works. And in Germany, together with Poland and the UK, we are securing new opportunities to add to our portfolio.
Our Workspace-as-a-Service model continues to add value to our business. HubHub coworking spaces welcomed large numbers of new members during 2021, leading to a significant increase in the occupancy average. We consider 2021 to be a recovery year.
Qubes saw great interest from potential tenants – and helped us get the New Apollo-IBM deal over the line. In fact, the flexibility that comes with Qubes will likely often add value for tenants, who see the merit in having the scope to grow – at speed, on-site – without major investment.
The impact of all this is already showing in our financials. Recovering smoothly from the challenges of 2020, we have amassed financial liquidity of €240 million. And this progress is translating into confidence from our existing and potential financing partners.
One Waterloo, London, United Kingdom
Hence, as a result, in the course of 2022, we will transfer the vast majority of our income producing assets worth around €2.5 billion in gross development value into a REIT-type structure owned by the same UBO*, but managerially and financially independent of the development operations. This separation will ensure our UBO’s ability to secure appropriate long-term financing and holding of this asset portfolio in order to capitalise on future upside potential and the steady cashflow generation capacity of our income producing assets. The remaining development operations will be a pure-play development business with a substantial future pipeline (up to 1 million sq m of committed future GLA) and a substantial project acquisition appetite across our existing markets. In the future, the REIT-type vehicle will (subject to sufficient resources) aim to provide a natural offtake for all our future projects, once completed and commercially stabilised.
It’s also clear that ESG is becoming an ever more important differentiator for businesses. And by distilling all our experience and know-how into our well-established ESG framework, we have a well-structured scheme that guides our activities and puts both our buildings and services in a strong position over the coming years.
*Ultimate beneficial owner
World
returns to
their offices
Nivy Mall & Bus Station, Bratislava, Slovakia
As the world returns to their offices, we – not surprisingly – don’t plan to return to normal. Our evolution to a hybrid working model is also an area of expertise for us – both as consultants to others and through our first-hand experience.
This knowledge has helped us enhance our reputation as a thought leader, as we have ramped up our promotion of the best hybrid practices across all our marketing channels with initiatives like our #masterhybridwork blog series gaining strong traction, alongside a range of related podcasts and white papers.
Along the same lines, with the pandemic breathing down our necks, we developed the “Future of work” report. The document took a detailed look from different angles at the crisis and a range of solutions, and it was promoted by a targeted campaign to business leaders across industries – which won us a hugely respected Global Content Award.
This is not the only place where we’ve won the hearts and minds of experts.
Our recognition as the European Real Estate Brand of the Year by The European Real Estate Brand Institute was based on feedback from industry professionals.
Among a number of WELL and BREEAM certifications, Agora Budapest gained Hungary’s first BREEAM Excellent certificate. And our workspace in Bratislava in Twin City is now just one of 10 offices in Europe with a WELL Platinum certificate on the wall.
We entered 2022 with energy, having looked forward to see what we can achieve together in more settled times. However, unfortunately, after two years of the pandemic, we were shocked by the Russian military aggression against Ukraine. We immediately decided to support the Ukrainian people, especially those who have fled Ukraine to neighbouring countries – where we operate. As a company we have contributed substantially to helping Ukrainian refugees, funding humanitarian activities, providing accommodation and supporting refugee centres in Poland and Slovakia. But more importantly, our people are also committing their volunteering time and effort to personally help the refugees in their time of need, which fills me with an immense sense of pride for the HB Reavis people and with optimism for the future.
There is a lot of uncertainty in front of us, especially during the next few months regarding all personal, humanitarian and business narratives. Construction costs and inflation together with medium- to long-term supply chain disruptions caused by the war in Ukraine will present substantial challenges for our construction activities and development budgets. However, and like many times before, we believe that our drive, creativity, entrepreneurial spirit and fully‑integrated business model will help us navigate these challenges. Furthermore, given that our product is the crème de la crème of the market, as evidenced by our ability to commercialise it during the pandemic, I strongly believe that we are very well positioned to achieve premium pricing for our products, significantly offsetting the negative headwinds from the construction inflation.
Despite all of the uncertainty, I’ve seen for myself how our talented and dedicated teams have thrived during such an uncertain period. We are, as a group, wiser and more passionate than ever about the benefits our work provides – to businesses, employees and wider communities.
Marian Herman
We create
investment
value for
the future
Maarten Hulshoff
We at HB Reavis are experiencing interesting economic times. High employment, high negative interest rates and relatively strong post-COVID economies are balanced by a challenging energy transition period and high energy prices as a result of the war.
With three of the countries we operate in neighbouring Ukraine, we share the pain of all those still in the country, as well as the refugees seeking shelter elsewhere. Many of our staff are involved in finding them housing and support.
During the COVID crisis, we were faced with a decline in leasing demand and investors sitting on the fence as our clients dealt with uncertainties, declining margins and disruption to supply chains. Therefore, we’re pleased to report 2021 was a very good year for the Group. For the first time, our total property assets exceeded €3.5 billion, with around 75% of the portfolio split equally among our top three cities, Warsaw, London and Bratislava, with the remainder in Berlin and Budapest.
As a result of this, our executive team has been working to help the company ring-fence investment and development activities into separate organisations and legal structures. This reorganisation will take effect during the course of 2022.
We already have 11 income-producing offices. Totalling over 400,000 sq m and including our new 100,000 sq m mall in Bratislava, these are valued at €1.9 billion. Projects under development and construction now add up to 1 million sq m – and are worth around €1.6 billion. This shows we have a sound pipeline when compared with the total 1.5 million sq m we have developed since 1993. As a result, the investment portfolio has become a substantial part of our business, and today it represents 55% of our total.
Our mix of developments and standing properties will, in the medium term, substantially move towards investments in stable cash flow generating assets, reducing the Group’s risk profile.
The exceptionally high revaluation was also the result of progress in our construction activities – both with developments under construction and the winning of zoning approvals for new projects, including residential plans. Altogether, we invested €304.7 million in construction – 42% of which was focused in Bratislava, 29% in Warsaw, 16% in London and 9% in Berlin (remaining amount was invested mainly in Budapest).
We completed our Forest campus, Bloom Clerkenwell and DSTRCT.Berlin office projects. Almost fully leased, they feature our usual core client base of world-leading corporates.
This indicates strong leasing markets, but also highlights our high quality, sustainability standards and growing reputation for exceptional products.
We also completed Nivy Mall, a state-of-the-art development from both a design and retail mix point of view. Its highlights include a food market and a roof garden with a running track. Even with the aftermath of COVID, strong local competition and the increase in online shopping, footfall among shoppers is strong.
Our leasing staff showed a very strong performance over the year, adding some 160,000 sq m of new leases, 42% of which was in Bratislava and 30% in Warsaw.
Increasing inflation in all our markets is driving leasing rates higher. Low interest rates strengthen our business case too, as long as high negative interest rates are applicable. On the other hand, the trend to work from home, rising costs in building materials and uncertainty related to the Ukrainian war might put some pressure on our business.
Let me thank our dedicated staff, country management teams and the Executive Board for their high-energy contributions to the Group. People make the difference, and teamwork makes it happen.
Maarten Hulshoff
our financial performance outperformed our long-term target and increased robustly
In 2021, our financial performance exceeded our long-term target and improved robustly. It was primarily driven by both the post-pandemic rebound and the massive progress of our projects under development, all in addition to the ongoing positive trend in the investment market. Leasing activity climbed to 160,000 sq m GLA, the second highest in our history.
The Group generated a total comprehensive income of €318.5m (€-183.8m in 2020). This translates into a 27.1% return on shareholders’ equity (-11.6% in 2020). Our balance sheet grew to €4.016bn, and the adjusted net asset value reached around €1.897bn at the end of 2021. At 41.4%, the Group’s net debt leverage reached targeted levels.
Whilst the financial information in Section 2 Financial Highlights is based on the data in the financial statements, the information in Section 3 Key projects and below are deemed as a business presentation and utilise data from both the financial statements and our internal management reporting. In some cases, our view of the market gross development values and future estimated rental values is higher than that used by external valuers for the purposes of the financial statements. From Section 3 Key Projects onwards, we provide information in accordance with our internal management’s view.
Waterloo, London
Planned
2028
122,510 sq m
1,318,689 sq ft
€2.898bn
£2.435bn
AHMM
BREEAM Outstanding,
NABERS 5.5*,
WELL Platinum,
SmartScore Platinum,
WiredScore Platinum
One Waterloo, currently known as Elizabeth House, was officially granted planning consent following the completion of its Section 106 agreement, signalling the next phase for one of central London’s largest and most significant commercial developments.
One Waterloo will be an iconic and vibrant multi-purpose destination next to Waterloo Station in the heart of the South Bank.
The prominent scheme will be informed by connected themes: the neighbourhood, nature and health, sustainability and future workspace, all underpinned by experience and hospitality.
With a focus on health and wellbeing and targeting WELL Platinum, HB Reavis will create three acres of outdoor space within One Waterloo to support the office workers and the wider community. A publicly accessible 200m long garden promenade, elevated two floors above street level, will create a scenic journey from the concourse level at Waterloo Station directly into One Waterloo.
New public spaces, including Victory Arch Square, the unique covered approximately 840 sq m/9,000 sq ft Waterloo Square, as well as ‘The Curve’, a major new pedestrianised retail street lined with shops and cafés, will transform the public realm. The cascading terraces and gardens for office occupiers will offer a choice of outdoor spaces to find the right place to relax and rest. Additionally, an urban sky farm on the 16th floor terrace will offer ultra-fresh produce for the scheme’s occupiers.
With aspirations to be one of London’s most sustainable developments and net zero carbon in operation, One Waterloo’s office space will be fossil fuel-free, implementing low carbon solutions in all the project stages.
There will be more than 35% reduction in energy consumption through a “lean, clean and green” innovative building design. This will maximise efficiency through an all-electric solution combining integrated heat pumps and heat recovery, and 98.8% of the demolition waste will be diverted from landfills. These initiatives, among others, will support the building in achieving BREEAM Outstanding.
Clerkenwell, London
13,322 sq m
143,397 sq ft
John Robertson Architects
Delivered (2021)
€360m
£303m
WELL Platinum,
BREEAM Outstanding,
WiredScore Platinum
Bloom Clerkenwell is positioned within the vibrant neighbourhood of Clerkenwell in close proximity to the City of London. Situated adjacent to Farringdon Station, Bloom is one of London’s best connected office buildings, further enhanced with the opening of the Elizabeth Line.
John Robertson Architects designed the 13,300 sq m/143,000 sq ft building, which meets the highest standards of office wellbeing, catering for a variety of businesses that truly value the importance of having a well-designed and sustainable workspace where their employees can thrive. The design of the building reflects the rich and varied context of Clerkenwell and nearby Hatton Garden, with a uniquely coloured and glazed terracotta façade.
Bloom Clerkenwell offers direct access to London’s Cycle Superhighway, along with 243 cycle spaces, a 110 sq m/1,200 sq ft multifunctional training studio with health club-inspired changing and shower facilities, and a terrace to office ratio of 11%, one of the highest in London – helping to extend the working day beyond the desk. It is connected to the thriving neighbourhood in which it sits through a double height reception, a hotel style lounge and an activated ground floor public retail offer.
Testament to the quality of the building, Bloom will be among one of the first buildings in Europe to achieve a combination of BREEAM Outstanding, WiredScore Platinum and WELL Certified Platinum ratings. Its sustainability credentials are enhanced through its connection to the neighbouring district’s heating and cooling system, Citigen, which removes the need for high carbon energy-producing boilers and chillers on-site, enabling Bloom to be net zero carbon in operation.
Bloom Clerkenwell reached practical completion for both the shell and core and CAT A in 2021. 5 floors were pre-leased to a globally listed company that will benefit from the building being owner-operated. Concierge services, health and wellbeing classes, and a programme of events can be accessed and booked through the More app.
The majority of the new Ready to Work concept on the 1st floor of Bloom Clerkenwell is already under offer. Ready to Work provides 800 sq m/8,500sq ft of beautifully designed, managed and fully fitted space, with tech enhanced through the Symbiosy platform.
Net Zero Carbon
in construction
and operation
Net Zero Carbon
in construction
and operation
Shoreditch, London
12,832 sq m
138,122 sq ft
MAKE Architects
Under construction
€307m
£258m
WELL Platinum,
BREEAM Outstanding,
NABERS 5*,
WiredScore Platinum,
SmartScore Platinum
2024
Redefining the workplace, Worship Square is located in the heart of London’s bustling tech district, where creative minds want to work and where growing companies want to be.
From design through to construction and day-to-day operation, Worship Square will set a new benchmark for truly sustainable workspaces, proactively supporting businesses and employees in meeting environmental goals.
Worship Square is a true net zero carbon building in both construction and operation, designed to achieve a 5* NABERS rating and is targeting BREEAM Outstanding.
It is designed to reduce embodied carbon by more than 50% compared to current industry benchmarks - the equivalent of the average yearly carbon emissions for 3,000 homes and 18% better than the GLA 20301 target for commercial buildings. The building will also be net zero carbon in operation and free of single-use plastic, in addition to being fully electric. Operational energy use will be reduced through air source heat pumps, which will create efficient heating and cooling, smart modelling and photovoltaic cells on the roof to provide on-site renewable energy.
Targeting WELL Platinum, the highest certification for wellbeing, it will include a multifunctional fitness studio with classes tailored to employees, high-end changing facilities, 326 cycle spaces to support active commuters and free bookable Brompton bikes and e-scooters to facilitate active lifestyles. Enabling a positive daily experience, everyone working within the building will have access to HB Reavis’ More app, which will provide access to a personalised concierge service, environmental insights and a range of other services. The ground floor lobby will feature a café, a destination restaurant and breakout spaces, with an openable façade facing a new square that will host a programme of regular events, creating an engaging public space.
Over 3,200 plants from over 49 different species.
With over 3,200 plants from over 49 different species, Worship Square’s biophilic design begins on arrival with a ‘green heart’ living lobby and provides purer air whilst blurring the lines between outdoors and the inside space. The nature-led expansive terraces mean that working from the office doesn’t always have to be indoors. As well as increasing biodiversity and attracting pollinators, the large rooftop communal terrace will include urban allotments where employees can take gardening lessons to learn how to grow their own produce and a wormery to transform employees’ organic waste into compost for the terraces.
Smart tech forms the backbone of Worship Square, which has already received WiredScore Platinum and is one of only three schemes globally to achieve Smartscore Platinum. As well as the More app, businesses are able to monitor and report live energy use and water consumption data, helping to continually improve and be as energy efficient as possible. Diverse routes of power and Wi-Fi covering all the common areas, including the terraces and public square, ensure connectivity resilience to allow people to work anywhere, uninterrupted.
Through Symbiosy, businesses will benefit from workspace analytics, such as the monitoring of indoor air quality, temperature and room capacity with the ability to adjust settings as needed, allowing for full transparency of how the building is being used.
The building will provide around 12,800 sq m/138,000 sq ft of workspace and over 840 sq m/9,000 sq ft of terraces, designed to allow businesses to grow organically within the building. This includes a range of collaborative and flexible on-demand spaces from desks, studios and offices to meeting rooms, event spaces and an auditorium. Ready to Work will feature on the first floor for businesses looking for a fully fitted, managed and tech-enhanced working environment.
Due to be completed in early 2024 and with the construction programme already underway, Worship Square’s eye-catching looks and stunning blue façade designed by MAKE Architects will create a recognisable local landmark and give the building a distinct identity.
Landsberger Alee 104, Berlin
48,828 sq m
522,578 sq ft
Gewers & Pudewill
Under construction
€472m
£397m
WELL Core&Shell Gold
DGNB Gold
WiredScore Platinum
2022
There’s a new address tailor-made for Berlin’s creative and tech-led communities. Multipurpose DSTRCT.Berlin is nestled between vibrant Friedrichshain and Prenzlauer Berg. 20 million people annually travel through a major public transport hub yards away. It’s also only a few minutes from Alexanderplatz and downtown Berlin.
The new building’s modern curves complement the charm of the adjacent four historic halls. Their careful reconstruction will add a classical element to a multifaceted destination with a new approach to business.
Berlin is a city that supports active lifestyles and environmentally friendly commuting to work. This inspired us to include a cycle garage for over 800 bikes. And there are a number of other wellbeing features, including spaces with extensive greenery and healthy food options, which combine with the new offices to create a buzzing, cohesive district.
WiredScore Platinum certification reflects DSTRCT. Berlin’s superior tech capabilities, and WELL GOLD Precertification proves DSTRCT.Berlin’s sustainability credentials too. Both of these are in addition to the DGNB Gold precertification we received in the summer of 2021.
While construction was still in full swing during 2021, we managed to lease around 82% of the new building. Tenants include a mix of key players in the e-commerce and tech industries, as well as renowned engineering practices and health sector brands.
We’re welcoming new tenants with pleasure and looking forward to the full opening of DSTRCT.Berlin.
Varso Place is a mixed-use development consisting of offices, a hotel, an innovation hub and retail space – all in the heart of Warsaw.
Designed by the Warsaw-based studio HRA Architekci, the two lower Varso Place buildings have been completed and were fully leased in 2020.
Chmielna Street,
Central Business District, Warsaw
29,736 sq m
320,076 sq ft
HRA Architekci,
Benoy (lobby interior)
Delivered (2020)
€158m
£133m
BREEAM New Construction Outstanding,
WELL Gold,
WELL Health & Safety Rating,
Obiekt bez barier
Varso 1 (30,000 sq m/320,000 sq ft) is home to Poland’s first four-star NYX hotel, which offers a total of 331 rooms as well as a two-storey fitness club and a medical centre.
Chmielna Street,
Central Business District, Warsaw
44,187 sq m
475,625 sq ft
HRA Architekci,
Benoy (lobby interior)
Delivered (2020)
€289m
£243m
BREEAM New Construction Outstanding,
WELL Gold,
WELL Health & Safety Rating,
Obiekt bez barier
Varso 2 (44,000 sq m/476,000 sq ft) has attracted numerous Polish and international companies, including Bank Gospodarstwa Krajowego, Cambridge Innovation Center, Ørsted, Nvidia, Workday, the BSWW law firm, VISA and Ipsen. Several retail tenants also provide occupiers with food and beverage and other convenient offers on the ground floor.
Chmielna Street,
Central Business District, Warsaw
69,843 sq m
751,786 sq ft
Foster + Partners
Under construction
€499m
£420m
BREEAM New Construction Outstanding,
BREAM Core&Shell Gold,
WELL Health-Safety Rating,
Obiekt bez barier
2022
Designed by Foster + Partners, Varso Tower (70,000 sq m/752,000 sq ft) combines sustainable design with energy efficiency and is the final showpiece of Varso Place. It scored highly across all safety, energy and comfort metrics, which led to the tower earning the highest level of BREEAM and WELL certifications.
The skyscraper topped out at 230 metres and became the tallest building in Poland. With the assembly of its spire, Varso Tower also became the tallest building in the EU, with an architectural height of 310 metres.
The building is fully clad in 4-metre tall glass curtain walls, providing interiors with an abundance of natural light. Once completed, its tree-filled internal courtyard will encourage passersby to go inside and enjoy the lobby’s 10-metre high walls that will soon be covered with a handmade ceramic mosaic.
Panoramic lifts travelling at 8 m/s will then lead up to two public rooftop terraces with spectacular views of the city. Among the highest in Europe, they will look down on the Warsaw skyline from 205 metres and 230 metres – twice as high as the viewing gallery in the nearby Palace of Culture and Science.
Works continue at the top of the building and in the interiors. Half of the building’s office space has already been leased prior to completion, which is planned for the summer 2022. Varso Tower will be home to international law firms CMS and Greenberg Traurig, as well as cloud company Box
Panoramic lifts
travelling at
8 m/s
Burakowska, Wola district
23,594 sq m
253,964 sq ft
HRA Architects
Delivered (2021)
€95m
£80m
WELL Core&Shell Gold,
BREEAM New Construction Excellent,
BREEAM Communities Very Good,
WELL Health & Safety,
Obiekt bez barier
Forest is one of Warsaw’s greenest developments, with sustainability and respect for nature written in its DNA.
The campus building provides 23,600 sq m/254,000 sq ft of workspace, ground floor retail and restaurant opportunities. With the roofs featuring a community farm, relaxation zones and views of the lush plantings, it’s tailored for health and productivity. It also features two hundred trees and as many shrubs within its public courtyard and on the rooftop terraces.
Burakowska Street,
Wola district, Warsaw
55,755 sq m
600,138 sq ft
Under construction
€289m
£243m
2022
HRA Architekci,
Benoy (lobby interior)
WELL Core & Shell Gold,
BREEAM New Construction Excellent,
BREEAM Communities Very Good,
WELL Core & Shell Gold,
WELL Health & Safety,
Obiekt bez barier
Apart from a campus-style building, Forest includes an adjacent 120-metre tall tower (56,000 sq m/600,000 sq ft) that’s currently under construction. Designed according to the highest environmental standards and equipped with the latest smart tech, Forest’s commitment to sustainability has been rewarded by the Polish Green Building Council.
The BREEAM- and WELL-certified design by HRA Architekci employs environmentally friendly solutions to reduce its carbon footprint and maximise resources, including an energy-efficient facade and the re-use of rainwater. It’s also focused on boosting wellbeing through above-standard air quality, and energy-efficient windows deliver plenty of daylight and comfort. The Forest Tower and the development’s surrounding streetscape regeneration is to be completed in 2022.
Forest overview
Forest offers one of CEE’s largest floor plates (8,000 sq m/86,000 sq ft) and has attracted many climate-focused clients. Current tenants include the DIY retailer Leroy Merlin, Infor, PUMA, AmeriGas, Vorwerk, Sweco, Husqvarna, healthcare operator Enel-med, Ala ma kota kindergarten, Goraco Polecam bakery and HQ Bank Pekao, just to name a few.
Occupiers working in Forest also enjoy easy access to nearby tram and bus stops and the Warszawa Powązki commuter rail. Dworzec Gdański metro station is within a 10-minute walk too.
Prievozska, Bratislava
55,996 sq m
602,736 sq ft
Make Architects,
Siebert+Talas
Under Construction
€214m
£180m
BREEAM Communities ‘Excellent’
2023
BREEAM Outstanding,
WELL Platinum,
WELL Health & Safety Rating
A spacious lobby will be packed with landscaped plantings tailor-made to invigorate workers and visitors and improve wellbeing, and sustainability and ecology have been considered at every point of the build and the ongoing operational design.
Currently under construction, New Apollo is a nest for wellbeing and effectiveness. We are proud to promote its anchor tenant, tech giant IBM, which is taking almost 31,000 sq m/337,000 sq ft of the building’s 56,000 sq m/603,000 sq ft. With almost each floor offering an average 7,000 sq m/75,000 sq ft floorplate, it’s the city’s largest available floorplate.
The project will showcase a wide range of retail and services, including cycling facilities and a café at the Bikehub – part of New Apollo’s aim to support alternative commuting. New Apollo is scheduled to be completed in 2023.
In Q1 of 2022, New Apollo reached an important milestone – the completion of the structural works. The anchor tenant and all our contractors joined us as we placed our own version of a ‘glajcha’ on top of the building, a nod to the Slovak tradition of placing a green twig on top of a building when its rough construction is complete.
Mlynske nivy, Bratislava
31,682 sq m
341,022 sq ft
Delivered (2020)
€122m
£102m
Benoy,
Siebert+Talas
BREEAM New Construction ‘Outstanding’,
WELL Core Platinum,
WELL Health & Safety Rating,
Smart Building Certification
The tallest building in Slovakia, it’s now home to the likes of Krone, Danone and Thermo Fischer Scientific from the health sector, as well as tech leaders Rainside and Kempelen’s Institute of Intelligent Technology.
Bratislava’s 125 m architectural landmark offers innovation, breath-taking views and exceptional flexibility.
All the new tenants enjoy a direct link to the multifunctional Nivy Mall and bus station, which serves as a key travel hub. Smart technologies complement signature services such as workspace counselling, asset management and flexible leasing to make everyday life simpler for tenants and their people.
At the end of 2021, Nivy Tower was awarded the WELL Health & Safety Rating – proving its ability to reduce the risk of COVID and bolstering our own reputation for developing wellbeing‑centric workspaces.
A former brownfield area, New Nivy encompasses a number of separate developments. At its heart lies Nivy Mall, an inspirational new international bus terminal and shopping centre with a large public green roof – its opening was a true milestone for the whole region.
Mlynske Nivy Street,
New Nivy zone
104,586 sq m
1,099,641 sq ft
Benoy
Siebert+Talas
Delivered (2021)
€375m
£315m
BREEAM Communities Excellent
BREEAM New Construction Very Good
The mall’s design draws inspiration from our years of experience, feedback from clients and the latest retail trends. Bratislavians now have a new airport-style bus terminal, a breathtaking mix of lifestyle activities, over 250 retail outlets, a fully-fledged gastronomic zone with a fresh produce market, and a green roof for exercise and relaxation.
In total, it offers 70,000 sq m GLA of retail space with under contract leasing agreements already approaching 90% of the commercial area.
After opening in September and welcoming its millionth visitor in just a few weeks, Nivy Mall has helped the New Nivy district quickly become a Bratislava hotspot.
BREEAM
Communities
certification
The multinational clothing company, Inditex, has taken 10% of the retail area alone, opening stores for all of the brands in its portfolio. These include two newcomers to Slovakia, Oysho and Zara Home. The Polish fashion group LPP also brought all its concepts and has created a two-storey concept store for its flagship brand, Reserved.
Nivy Mall is a unique multifunctional concept that’s brought new possibilities to the area. It’s a place where families come to spend their free time and where friends and business partners meet.
A place where you can take care of all kinds of tasks thanks to the rich mix of shopping and services. And last but not least, the modern new bus terminal is a much-needed facility for the capital city.
As part of the wider New Nivy district, the mall is helping to create a new spirit and energy in the heart of Bratislava. Twin City is centred on its WELL Certified Twin City Tower, New Apollo is currently under construction and we also have residential projects in the design phase.
BREEAM Communities certification at the ‘Excellent’ level is a reflection of our focus on the impact of our work on the environment. There’s an emphasis on social responsibility too, as the certification recognises our ability to create people-centric districts and workspaces that enhance multiple communities.
Vaci Office Corridor
138,851 sq m
1,494,582 sq ft
Make Architects
Finta Studio
Tower & Hub Delivered,
Agora C in preparation
€615m
£517m
BREEAM 2016 New Construction ‘Excellent’ and ‘Outstanding’,
BREEAM Communities ‘Very Good’
Tower & Hub 2020,
Agora C in 2025
WELL Core and Shell Gold
We worked with world-class architects from London and Budapest to create this new business and lifestyle hub at one of Budapest’s busiest transportation interchanges.
Since its opening, Agora Budapest has offered a diverse variety of community‑focused facilities that are designed to improve both the productivity and health of everyone in and around the buildings, all in addition to making everyday life easier.
2021 saw many new tenants moving into the building, including the state-owned digital development company DFK and the telecommunication giant Huawei, who joined the likes of prestigious office anchors like Raiffeisen Bank and bp. Prominent retailers such as Vergano Café, AppInGym, My Hair salon and ‘Take it Easy’ automated bistro also opened stores there. Recently, we opened Qubes and HubHub locations, which are already providing unparalleled flexibility for smaller companies, and Symbiosy is playing a vital supporting role in optimising the working environment.
Agora complex
received BREEAM
Communities
recognition
Last year also brought other successes: Agora Budapest was shortlisted by a professional jury of BREEAM experts as one of the best 15 sustainable projects worldwide.
Agora Hub is now also Hungary’s first and only building with ‘Outstanding’ BREEAM certification, the highest possible level that can be reached. The wider Agora complex is the first local project to have received BREEAM Communities recognition. It’s also been awarded Well Gold Precertification.
| Country | No. of projects | Planned GLA sq m | Market value upon completion €m |
|---|---|---|---|
| Czech Republic | 2 | 100,547 | 349.2 |
| Office | 2 | 100,547 | 349.2 |
| Hungary | 3 | 66,998 | 320.8 |
| Office | 3 | 66,998 | 320.8 |
| Poland | 4 | 165,974 | 817.6 |
| Office | 4 | 165,974 | 817.6 |
| Slovakia | 4 | 496,836 | 1,933.0 |
| Residential | 6 | 82,302 | 392.0 |
| Office | 10 | 414,534 | 1,541.0 |
| Germany | 3 | 84,972 | 596.4 |
| Office | 3 | 84,972 | 596.4 |
| UK | 4 | 140,262 | 3,290.1 |
| Office | 4 | 140,262 | 3,290.1 |
| Total | 32 | 1,055,589 | 7,307.1 |
| Country | No. of projects | Planned GLA sq m | Market value upon completion €m |
|---|---|---|---|
| Slovakia | 6 | 271,282 | 810.6 |
| Office | 2 | 80,591 | 216.5 |
| Office (HBR IM) | 3 | 86,206 | 263.4 |
| Retail | 1 | 104,586 | 330.7 |
| Czech Republic | 1 | 22,741 | 82.2 |
| Retail (HBR IM) | 1 | 22,741 | 82.2 |
| Poland | 3 | 97,517 | 481.3 |
| Office | 3 | 97,517 | 481.3 |
| UK | 1 | 13,322 | 278.0 |
| Office | 1 | 13,322 | 278.0 |
| Hungary | 2 | 71,853 | 277.8 |
| Office | 2 | 71,853 | 277.8 |
| Germany | 1 | 39,875 | 324.9 |
| Office | 1 | 39,875 | 324.9 |
| Total | 14 | 516,691 | 2,254.8 |
From the Country CEO
2021 began during the third UK national
lockdown, a disheartening start after a difficult
2020, both professionally and personally.
Restrictions in one way or another remained in
place through the year until Q3 when life started
to return to something that resembled ‘normal’.
At the same time as diminishing demand for offices, we were faced with another crisis: a labour shortage and cost increas
During the lockdowns, over a million workers left the UK. In addition, delivery teams were impacted by social distancing, and teams were hit by COVID cases. We experienced first-hand the challenge of getting regular and reliable labour to site, as suppliers simply did not have the available workforce to complete their jobs on time, affecting many delivery programmes.
The press was reporting shortages of materials and the resulting inflation numbers, such as the price of steel going up by 75% due to high demand and rising energy costs. This made it impossible to accurately predict the price of production. The Department for Business, Energy and Industrial Strategy reported an overall average price rise of 24% for construction materials.
Steven Skinner
It’s fair to say that the impact of COVID since 2020 has been overwhelmingly negative for the commercial property sector. On the customer side, we saw office utilisation rates plummet to almost zero as “Work From Home” remained the default choice for many occupiers. The longdebated fundamental question of “why does anyone even need an office?” was constant. As a result, new leasing transactions dropped to the lowest level ever recorded, as many large companies put requirements on hold and smaller companies pulled out of office space altogether.
Yet despite all these challenges we faced, we achieved great success across all areas of our business.
Bloom Clerkenwell reached the important delivery milestone of base build practical completion in July and finalised the final CAT A practical completion in the first week of January. Over 10,700 sq m/115,000 sq ft were pre-leased at a significant premium to valuation to a globally listed company that prioritises employee wellbeing, sustainability and digital connectivity for its workspace. We implemented our new flexible workspace “Ready to Work” offer on the first floor with the majority of the space under offer by December, underlining our understanding of and response to the changing needs of our customers. The building is on track to be the first in the country to achieve BREEAM Outstanding, WELL Platinum, EPC A, WiredScore Platinum and to be net zero carbon in operation.
Bloom Clerkenwell
The successful leasing of Bloom demonstrates that there is a strong future for offices - and specifically for the type of offices we create, those that focus on the people that use them and their impact on the environment. There is currently a lack of supply of such offices to meet the rising demand.
At Worship Square we finalised our design changes, which crystalised significant value uplifts.
Demonstrating the value of our internal knowledge and enquiring mindset, we managed to optimise the scheme to secure additional net internal area, including a new 8th office floor, a communal terrace and enhanced end-of-trip amenities. The launch to the market at the end of the year pushed the benchmark for being a consumer-focused developer even further. We have designed what is already being referred to as a true building of the future and a pioneer in the London office market. As our company’s first net zero building in both construction and operation, it is targeting significantly better environmental standards than the 2030 targets, making Worship Square a true market leader. We made strong progress in securing the required permits to start on-site, and there has been excellent progress with the initial demolition and the procurement of many of the early key packages.
At One Waterloo we achieved one of our most significant milestones yet by securing full planning consent in April when we signed our section 106 agreement.
We now have a scheme that’s fully implementable and no longer subject to challenge or risk. We re-established an open retail parade in Elizabeth House to support a variety of social and charitable causes and have a positive impact on the area while the existing building still stands. Finally, by the end of the year, the S106 early enabling works that included the removal of a footbridge connecting York Road to Waterloo station were completed, as they were mandatory steps before demolition could commence. We are currently working through the required third-party agreements and approvals to be in a position to commence the major works during the next 12 months.
Market Review
2021 started with the third national lockdown
as a result of the COVID-19 pandemic, and
for the majority of the year, restrictions in
one form or another were in place, including
a work-from-home directive. By the end of
the year, we were facing the onset of the new
Omicron COVID variant.
Despite all of this, 2021 proved to be a remarkably resilient year for Central London office demand. Many of the businesses that had adopted a “wait and see” approach to their real estate needs during 2020 moved swiftly to secure the high-quality, flexible, healthy and sustainable office developments their staff were demanding as they returned to the workplace. As a result, take-up was 800,000 sq m/8.6 million sq ft, which was 93% higher than the levels seen in 2020 and only 12% below the five-year average of 908,000 sq m/9.77 million sq ft. The number of transactions also increased by 62% to 431.
Transaction sizes also recovered strongly. In 2020 there were only 10 leases signed above 4,600 sq m/50,000 sq ft, a majority of which were agreed upon before the COVID pandemic took hold in Q2. In contrast, 2021 saw 36 transactions over 4,600 sq m/50,000 sq ft (higher than the 5-year average) and 16 transactions over 9,000 sq m/100,000 sq ft.
Pre-leasing accounted for 31% of all the leasing activity in 2021 and totalled 214,000 sq m/2.3 million sq ft, a significant increase from the 102,000 sq m/1.1 million sq ft seen in 2020, but still about 30% below the long‑term average. We expect that the trend will continue for occupiers to pre-lease space in order to secure the very best workspace that’s reflective of their companies’ environmental, people-focused and flexible aspirations.
Further signs of momentum in the leasing market were seen with 277,000 sq m/ 2.98 million sq ft under offer at the end of the year, which was 25% ahead of the same point in 2020 and 1% ahead of the 5‑year average.
The availability of space stabilised during 2021 with around 2,230,000 sq m/24 million sq ft available, reflecting a vacancy rate of 8.27%, the highest level of vacancy since 2004. This was up slightly from the vacancy rate of 8.1% at the end of 2020. The high levels of vacancy were driven by a significant increase in tenant-controlled space coming to the market, with the vast majority of this space being in the sub- 900 sq m/10,000 sq ft bracket and of second-hand quality. This space peaked at the end of 2020 and has decreased by 22% to 604,000 sq m/6.5 million sq ft, reflecting 23% of all the available space.
One Waterloo
The availability of new space has increased to 632,000 sq m/6.8 million sq ft compared to 511,000 sq m/5.5 million sq ft at the end of 2020. This represents a healthy 49% of all space under construction already having secured tenants. The vast majority of this space will be completed in 2022 (279,000 sq m/3 million sq ft) and 2023 (288,000 sq m/3.1 million sq ft), as there are a group of developments that missed out on early pre-leasing during the 2020/2021 lockdowns that will now likely see leasing activity closer to completion. However, there are a few schemes still under construction that are planned for delivery in 2024 onwards with just 23,000 sq m/250,000 sq ft available. When analysing all the developments that could be delivered in 2024, this would still be below the long-term average of new building supply of 540,000 sq m/5.8 million sq ft.
Despite this backdrop of increasing supply, we witnessed prime rental growth during the course of 2021, showing a sharp rebound from the declines seen during 2020. Prime Central London rental values increased by 7.4% compared to a decline of 7.1% in 2020. We anticipate growth being strong during 2022 at close to 5% before reverting back to trend levels of around 2.5% thereafter.
In investment markets we have seen volumes recover back to the 2019 levels of £12.5 billion (€14.8 billion) compared to £7.5 billion (€8.9 billion) in 2020. At £12.5 billion (14.8 billion), this is 15% below the 5-year average
Yields remained stable during 2020 despite the uncertainty in leasing markets; in 2021 we witnessed yield compression across the London submarkets of around 25 bps.
This was driven by a lack of prime investment property for purchase and the narrowing of investors’ requirements, as they are targeting only the highest quality of sustainable buildings.
| HB Reavis Development UK |
GLA sq m |
Validation | ERV | GDV | Value Change | Investment |
||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | |||||||
| Projects completed | 13,222 | 164.3 | 278.0 | 14.4 | 360.5 | 113.6 | 27.2 | |
| Projects under construction | 12,832 | 66.1 | 88.2 | 12.3 | 360.5 | 22.2 | 9.6 | |
| Projects in preparation | 27,430 | 381.5 | 534.9 | 119.8 | 2,983.3 | 153.4 | 15.8 | |
| Total 2021 | 153,584 | 611.9 | 901.2 | 146.5 | 3,650.6 | 289.2 | 52.6 | |
| Total Pipeline for 2022 | 140,262 | 447.6 | 623.2 | 132.0 | 3,290.1 | 175.6 | 25.4 | |
Marcel Sedlak
From our CEO
2021 – What a year it’s been!
Looking back at what the team’s achieved in Berlin in 2021, I see great progress despite quite an unpredictable environment.
At the beginning of the pandemic, there were various discussions and questions about the future purpose of office space. However, as the months went by, the performance of the Berlin office market – and the lease-up of DSTRCT.Berlin – showed the physical office continues to be an important part of our clients’ corporate identity.
I’m thankful for and proud of our Berlin team. They’ve been outstanding on many fronts, not least taking us towards the final completion of our first German project. Our DSTRCT.Berlin campus comprises around 40,000 sq m GLA in a modern office building and about 9,000 sq m GLA of historical halls. Both have excelled. The new office building was 90% leased by the end of last year, with home24, WOW Tech and STRATO, among others, all set to move into their new spaces in 2022.
As a comparatively new team, it’s been strategically important to grow our development pipeline here – and we succeeded.
In 2021, we closed a new land plot acquisition in central Berlin East. The construction of around 27,000 sq m GLA of modern workspace should start in the second half of 2022, and we intend to acquire one or two more well-located office properties later this year.
Looking ahead at both the office market and our own business, we are optimistic. To attract and retain their people, clients continue to increase their focus on an area we specialise in: healthy workspace solutions. We aim to strengthen relationships with our business partners and local communities across all areas and project phases.
The German real estate investment market
reported a strong recovery in 2021 – investment
transaction volumes rose by more than 7% to
€64 billion in 2021. Office properties accounted
for the second-largest share at €30.5 billion
(up 11% year-on-year), 64% of which took place
in the top seven cities. Office take-up also rose by
a robust 23% to stand at 3.29 million sq m.
Investors primarily looked for core and core plus investments in prime locations. Top rents for office space rose accordingly – three of the top five cities reported an increase. Berlin saw the highest rise, with prime rents up by 6% to €41 sq m/ month. Munich rose 5% (€41.50) and Frankfurt am Main 3% (€45.50). In Hamburg and Düsseldorf, prime rents remained stable year-on-year at €32.50 and €28.50, respectively.
In 2021, the office market was dominated by leases from the public and TMT sectors (13% each). The financial sector accounted for 12% and manufacturing 10%.
Berlin was the most active office market, accounting for 817,000 sq m, a year-on-year increase of 17.5%. Munich followed with 643,900 sq m (+15%). Frankfurt recorded an increase of 32% to 436,800 sq m, and Düsseldorf rose 3% to 301,500 sq m. Although Hamburg only recorded the third largest take-up with 430,300 sq m, it dominated growth rates at 35%.
We expect the German market to continue its recovery throughout 2022. There are strong positive sentiments on the investor side, and the occupational market is estimated to perform strongly in tandem with the German economy. We agree with market analysts in assuming that inflation will have only a marginal or even no influence on real estate pricing. However, there may be an impact on construction costs and rental levels.
Pressemitteilung CBRE Immobilieninvestmentmarkt 2021
Pressemitteilung: JLL Bürovermietungsmarkt 2021
Pressemitteilung: CBRE Top-5-Bürovermietungsmärkte Q4 2021
Pressemitteilung: CBRE Büromarkt Berlin Q4 2021
BNP Paribas Germany Q4 investment market report
Economy
On one hand, the German economy in 2021 was
impacted by restrictions, make-up effects and
supply shortages. On the other, it benefited from
increases in consumer spending, economic output
and wage levels.
Alongside this was an increase in the risk of inflation thanks to factors including a VAT increase, a CO2 tax and energy prices. By the end of the year, inflation stood at around 5.3%, its highest level for almost 30 years.
GDP rose by 2.7%, below the forecast of 4% and 3.5%. This was in part due to a sharp fall of between 0.5% and 1% in Q4, mainly due to restrictions caused by COVID.
DSTRCT.Berlin
In the first half of the year, various lockdowns, restrictions, low customer frequencies and moves to online retailers affected the brick-and-mortar retail industry.
A modest recovery occurred in Q3 and Q4 (about 2.7%); however, retailers had to contend with ongoing pressure on earnings. As an example, increased expenses for security and a shortage of goods and supplies made procurement more difficult. The German automotive, electrical and mechanical engineering industries also suffered from shortages, particularly of microchips, components and raw materials.
These challenges were increasingly felt in falling retail rents – prime locations dropped by around 3%.
Unemployment stood at 5.1% in December, slightly down on the previous year’s 5.9%. And while the labour market grew stronger, based on the number of job advertisements in December, there are indications that short-time work could rise again. Even if the momentum slows due to the Omicron variant, most companies will likely try to retain employees to avoid shortages of qualified personnel.
Bulwiengesa Immobilienindex 2021 (https://www.bulwiengesa.de/sites/default/files/immobilienindex_2022.pdf)
https://www.tagesschau.de/wirtschaft/konjunktur/bip-deutschland-wachstum-konjunktur-101.html
https://www.destatis.de/DE/Themen/Wirtschaft/Konjunkturindikatoren/Arbeitsmarkt/arb210a.html
https://www.destatis.de/DE/Presse/Pressemitteilungen/2022/02/PD22_057_611.html
https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/Wirtschaftliche-Lage/2022/20220114-die-wirtschaftliche-lage-in-deutschland-im-januar-2022.html
Our performance
In 2021, our focus remained on DSTRCT.Berlin,
and we managed to deliver more than 14,500
sq m. STRATO has moved in over the past few
weeks, and we were proud to officially hand over
the space to our first tenant.
Of course, some things happened at DSTRCT itself – we were able to successfully implement various aspects of our wellbeing strategy. These include inner courtyards with green facades, which serve as places of relaxation and rest.
We have also nearly completed our bicycle garage, which means that over 800 parking spaces will soon be available to our tenants. In addition, we have installed thousands of sensors that will improve the work of our tenants through optimal lighting and air conditions. We’re proud to be in the final stretch of our project and to see how it elevates life around the area.
The year was also successful in terms of
acquisitions. We signed a land contract in the
east of Berlin, and we are already applying for
permits with the aim of starting construction later
this year. In turn, we managed to make progress
in Dresden, with work on the preliminary permit
continuing – which will hopefully bear fruit later
this year.
Even with all this activity, our search for new plots continues. We’re really at home now in the German market, and we are excited to be expanding our business here.
| HB Reavis Development DE |
GLA sq m |
Validation | ERV | GDV | Value Change | Investment |
||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | |||||||
| Projects completed | 39,875 | 200.9 | 324.9 | 12.1 | 385.1 | 124.0 | 55.1 | |
| Projects under construction | 8,953 | 39.4 | 63.4 | 2.8 | 87.5 | 24.0 | 6.5 | |
| Projects in preparation | 76,019 | 12.5 | 137.8 | 19.0 | 508.9 | 125.4 | 69.0 | |
| Total 2021 | 124,847 | 252.8 | 526.1 | 33.9 | 981.5 | 273.3 | 130.5 | |
| Total Pipeline for 2022 | 84,972 | 51.9 | 201.2 | 21.7 | 596.4 | 149.3 | 75.5 | |
From the CEO
Last year saw continued challenges due
to the various waves of COVID-19. This
presented huge consequences on both
our lives and segments of the economy.
Among others, we have faced continuing supply chain constraints, rising inflation, shifts in tenant behaviour and prolonged decision-making, as well as various restrictions impacting everyday operations.
Despite that, employers have clearly decided how they want to operate in the coming years. The year was marked with solid performance and impressive leasing deals, a strong sign that businesses still need space for direct interactions and to build their corporate culture.
Peter Pecnik
This new reality accelerated the desire for flexibility in the workspace: to foster a work style that involves greater mobility for remote work. The popularity of hybrid working has quickly proved that people still need offices to focus on work, boost productivity, interact with colleagues and collaborate in a user-friendly environment.
Regardless of how often the office is used, it remains the main stage for corporate events and a space to support information flow, ‘experience building’ and team building.
These changes in the work environment have shown that we were right to make health and wellbeing the focus of our strategy. Since we launched our operations in Warsaw, we’ve developed more than 350,000 sq m of space and closed some of the country’s largest-ever transactions. The Polish capital remains one of our key European markets, and we continue to search for new investment land that will further strengthen our presence here.
Market review
The market seems to be recovering after the
uncertainty of the pandemic in 2020. The
country’s stable pre-pandemic fundamentals, low
debt levels and central bank actions helped to get
the economy back on track1. In addition, despite
the ongoing COVID situation, Poland’s developed
economy remains an attractive investment for
global capital. However, while the outlook for
2022 is promising, the market is closely tied
to the changing economic scene.
The economy
Since Poland joined the EU, the local market
has matured and, in some segments, offers
a higher standard than in some more established
economies. Between the Brexit vote and the
pandemic, we have continued to see global
corporations entering Poland to weather major
labour market changes. Poland’s educated
workforce pool remains an asset for businesses,
however, the competition on the work market
continues to grow.
The economy continues to recover following the vaccination program rollout and a return-to-work campaign. In fact, Polish GDP has positively increased over the last few years, and it’s likely that annual GDP in 2021 will exceed 5.0% growth2 , as it is supported by the dynamic labour market and particularly strong services and industry sectors.
On the other hand, Poland has one of Europe’s highest inflation rates, and this sets the tone for a broader narrative. In December, inflation grew for the sixth month running to stand at 8.6%3 – driven by growing electricity and gas prices. Further rises are expected in Q1 2022 due to soaring food and energy costs, though the government is introducing a mitigation strategy.
Other macroeconomic indicators remain healthy. At the end of December, unemployment stood at 5.4%. The fiscal deficit is expected to be around 4-5% and is predicted to continue declining.4
1 CEE Investment Market 2021 Summary
2 Poland Real Estate Market Outlook 2022
3 Poland Real Estate Market Outlook 2022
4 Poland Real Estate Market Outlook 2022
The property market
Poland maintained its position among
CEE countries, generating 58% of total
investment transactions. Investment volumes in
2021 amounted to €6.4 billion, a 13% rise on
2020 and the country’s third best result ever.
Office investments totalled €1.7 billion for the
year, significantly down from the exceptional
levels of activity in 2018 and 2019, but close
to the ten-year average.5
It’s clear that tenants’ focus is on well-located, minimal risk, grade A buildings with secure long-term income and strong lease covenants.
Similar to markets across Europe, we saw increased activity from clients who had previously postponed lease negotiations or wanted to secure vacant premises located in central business districts.
The Warsaw office market grew by 324,600 sq m in 2021, and it now has close to 6.2 million sq m in total – with a further 330,000 sq m under construction. A looming supply gap in 2023-2024 and rising fit-out costs are driving growth in rents, which may lead tenants to secure more traditional, long-term contracts.
Office tenant activity in Warsaw amounted to almost 646,500 sq m, a 6% increase year on year. The pandemic-related slow in demand, juxtaposed with the considerable construction pipeline, led to a growing vacancy rate, which currently stands at 12.6%. New office stock was on average 69% pre-let, with vacant spaces concentrated in older buildings or due to recent relocations.6
Varso Tower
5 CEE Investment Market 2021 Summary
6 Poland Real Estate Market Outlook 2022
Our performance
In February 2021, Varso Tower reached its
architectural height of 310 metres, reigning as
the EU’s tallest building. We also planted sixteen
trees on one of its rooftops, creating the highest
sky garden in Poland. Later on, we announced
the delivery of Forest’s first campus building
(23,700 sq m) and topped out its 120-metre tall
office tower.
In 2021, we signed agreements totalling close to 48,500 sq m of office space in Warsaw, a significant leap over the previous year. Currently, more than half of Varso Tower is leased, including our biggest contract of 2021 – a nearly 16,000 sq m lease with Box, a cloud content management company that will create their largest research and development site outside of the US.
Other significant Varso Tower deals include two prestigious law firms, CMS (7,500 sq m) and Greenberg Traurig (5,000 sq m), and a government organization who will occupy another 8,600 sq m.
We also successfully signed agreements for
12,100 sq m of space at the Forest office campus.
Our second largest project in Warsaw, Forest is
a popular choice for companies with sustainability
at their core, including Puma, Sweco, AmeriGas,
Husqvarna and Vorwerk. We’re looking forward
to announcing more occupiers soon.
Our completed Varso Place buildings have won two Eurobuild Awards 2020 prizes as the best office building in Poland and the CEE region. They’ve also been accredited with WELL’s Health-Safety Rating, which focuses on reducing the transmission of infectious diseases and giving employees the confidence to go back to their office.
We recently took great pride in Varso Place being recognised the ‘Accessibility Leader’ by the Integracja Foundation and the Polish Society of Town Planners, organisations that distinguish projects based on the idea of universal and inclusive design.
At the close of the year, our teams were managing 125,000 sq m worth of construction across our two flagship Warsaw developments. Forest Tower will be completed in March 2022 and Varso Tower’s completion is expected in 3Q 2022.
| HB Reavis Development PL |
GLA sq m |
Validation | ERV | GDV | Value Change | Investment |
||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | |||||||
| Projects completed | 23,594 | 53.9 | 68.6 | 5.3 | 94.9 | 14.7 | 6.8 | |
| Projects under construction | 125,598 | 342.0 | 465.4 | 33.0 | 710.3 | 123.4 | 93.8 | |
| Projects in preparation | 40,376 | 8.9 | 9.7 | 7.0 | 107.3 | 0.8 | 0.1 | |
| Total 2021 | 189,568 | 404.8 | 543.7 | 45.3 | 912.5 | 138.9 | 100.7 | |
| Total Pipeline for 2022 | 165,974 | 350.9 | 475.1 | 40.0 | 817.6 | 124.2 | 93.9 | |
From the CEO
2021, a year still shaped by this unpredictable
pandemic, ended cheerfully for our Slovakia team.
Looking back, we managed to finish and move
forward with all our key projects.
Our biggest and most challenging event was the grand opening of Nivy Mall. And it wouldn’t be a lie to say it was a highlight for our company, if not the whole city.
Bratislava got a new, modern bus station with additional functions like a great public green roof, shops and services that are unique to the area – all in one space.
Not far away, we also started another major development within the New Nivy zone, New Apollo, and we were able to announce IBM as its anchor tenant. When complete, it will offer the largest floorplate in CEE and many other wellbeing and productivity features.
Rene Popik
To go a step further, we have also started something very special in terms of our business focus. We own the biggest landbank in Bratislava, and with the large space that temporarily housed the city’s bus station now free, we are adding another facet to New Nivy: a residential project.
This is a completely new experience for us. But with almost 30 years’ development expertise behind us and an experienced team dedicated solely to this project, it’s a hugely exciting challenge.
Last but not least, our office in Bratislava was awarded a prestigious WELL Platinum certificate. Our approach to wellbeing helped us navigate this most stringent process of certification. But equally important, it laid the foundation for success during these tough pandemic times, with people happy to return to our office as soon as they could, as they felt safe working here.
Economy
After a mild increase in the unemployment rate
in 2020 and the beginning of 2021 (up to 8%),
we saw a significant decrease to pre-COVID levels
(6.64% in November 2021). Unemployment at this
level tightens the local labour market, deterring
further industrial expansion in certain locations
and increasing pressure on the integration of
a foreign workforce in production facilities. Low
unemployment has had a positive effect on
wage growth, with the average national gross
monthly wage reaching €1,185 per month in 2021
(the average wage in the Bratislava region was
€1,429 in 2021).
Although the negative macroeconomic circumstances of 2021 slowed the GDP recovery, the assigned rating for the country from Fitch and S&P stayed unchanged at A / A+.
Based on the optimistic macroeconomic predictions, the year 2021 should have completely erased the GDP loss from COVID-affected 2020. These expectations were not fulfilled due to unexpected events such as increased prices of inputs, a shortage of semiconductors in the automotive industry, an increase in utility prices connected to a steep increase in inflation, and additional lockdowns due to the COVID-19 pandemic situation. Based on preliminary predictions, the estimated GDP increase for 2022 will amount to 4.2%. The actual performance and its outlook keep on developing, and the actual performance will depend on the occurrence of additional lockdowns, which are significantly dependent on the percentage of vaccinated inhabitants and the development of demand from export partners. The reason for high volatility in the GDP performance is the openness of the local economy, which is heavily dependent on external demand and the economic performance of its main economic partners, mainly Germany.
Nivy Tower
Market
Global supply chain disruptions from the
pandemic have affected industry, particularly car
production. More recently, this has also slowed
the recovery. This survey projects Slovakia’s GDP
to grow by 5.0% in 2022 and 4.8% in 2023,
after 3.2% in 2021. Consumer price inflation is
expected to pick up further to about 5.5% in 2022
before moderating to around 2.5% in 2023.
At the end of Q3 2021, the total office stock of Class A and B standard in Bratislava amounted to approximately 1.98 million square meters, of which 60% of the space is represented by Class A office space and 40% by Class B office space.
The stock of space is now spread among 5 office submarkets, namely the City Centre, the Inner City, the Outer City, the Central Business District and the South Bank. The largest office sub-market is the City Business District comprising 610,000 sq m, followed by the City Centre with 491,500 sq m, the Outer City market with 414,900 sq m, the Inner City market with 296,000 sq m and the South Bank market with 162,400 sq m.
Office developers’ activities were already showing signs of a cooldown. This was enhanced even more by the economic downturn in 2020, where we saw a decline in the future 3-year pipeline from around 250,000 sq m to approximately 130,000 sq m, which corresponds to projects already under construction.
The newly built office stock that was added to the market in 2021 comprises around 75,000 sq m. The pipeline under construction will most likely increase the stock by 9% until the end of 2023.
New office projects have high standards with modern fit-out solutions and should attract tenants from older buildings. We consider public sector organisations residing in obsolete Class C buildings to be a source of potential demand in the years to come, in addition to the expansion of existing tenants. Grade A vacancy on the Bratislava market reached 12.21% as of Q3 2021, and it stagnated throughout 2021 after an initial increase thanks to a lower number of completions in 2021.
As HB Reavis owns a significant landbank in Bratislava and the large space that temporarily housed the city’s bus station is now free, we are adding another city-forming function to New Nivy: a residential project on Bottova and Chalupkova Streets.
| Macroeconomic indicators | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|
| GDP growth (%) | 3.90 | 2.40 | -5.20 | 3.70 | 4.20 |
| Inflation (%) | 2.50 | 2.70 | 1.90 | 4.00 | 4.20 |
| Unemployment rate (%) | 5.00 | 4.90 | 7.60 | 6.64 | 6.20 |
| Government debt (% of GDP) | 49.40 | 49.30 | 59.50 | 60.50 | 61.70 |
Projects and performance
Nivy Mall, a multifunctional project with a leasable
retail area of 70,000 sq m, was delivered at the
end of September. It attracted a great number
of people despite the ongoing pandemic – and
welcomed its millionth visitor within the first
few weeks!
Our project in progress, New Apollo, has already seen a successful pre-lease. Anchor tenant IBM is one of the biggest players in the tech world and has agreed to take almost 31,000 sq m of the total 48,000 sq m of the office space – Slovakia’s biggest real estate deal of the year. Designed to BREEAM and WELL standards, the eight-storey office scheme is planned to be delivered in 2023.
We also continued to fill Nivy Tower with new
names. Slovakia’s tallest building became home to
Krone, Danone and Thermo Fischer Scientific from
the health sector, tech businesses like Rainside,
Epic Games and Keyence. In total, we leased
58,000 sq m of space across New Nivy in 2021.
We always look to create multifunctional zones where talent and a culture of opportunity collide. And the completion of Nivy Mall and the revitalisation of Mlynské nivy Street were important pieces of the New Nivy puzzle.
As well as the Twin City and New Apollo office
complexes, the addition of residences will
enhance the dynamism of this growing district.
Work, shop and play – with New Nivy fulfilling all
kinds of needs, it makes perfect sense to create
space for people to live here too.
| HB Reavis Development SK |
GLA sq m |
Validation | ERV | GDV | Value Change | Investment |
||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | |||||||
| Projects completed | 104,586 | 269.8 | 330.7 | 22.5 | 368.6 | 61.0 | 52.1 | |
| Projects under construction | 55,996 | 0 | 85.9 | 10.9 | 213.7 | 85.9 | 74.0 | |
| Projects in preparation | 440,840 | 142.1 | 220.4 | 39.8 | 1,719.3 | 78.3 | 1.2 | |
| Total 2021 | 601,422 | 411.9 | 637.0 | 73.3 | 2,301.6 | 225.1 | 127.3 | |
| Total Pipeline for 2022 | 496,836 | 142.1 | 306.3 | 50.8 | 1,933.0 | 164.2 | 75.2 | |
From the CEO
The pandemic has given all of us a whole new
understanding of the office environment. After
working from home for so long, the beginning of
2021 was marked by uncertainty. Employees only
gradually returned to the familiarity of physical
office space.
Despite the completely different market situation, we secured two new office leases in Hungary: DKF, a state-owned digital development company, took 2,500 sq m, and the telecommunications giant Huawei signed a contract for 7,700 sq m.
Agora also played a big role in Budapest’s reopening, with services such as AppInGym, Vergnano Café and My Hair salon. It’s also become the home of Hungary’s first automated bistro, where people can avoid queuing and grab a quick coffee or snack on-the-go.
Robert Kubinsky
With the successful introduction of Qubes and HubHub, we’ve broadened our portfolio to provide services for smaller companies with more flexible needs, as well as long-term traditional office tenants.
Qubes offers everything these tenants need from day one: a wide range of pre-fitted units that can be adapted at any time. Whether it’s the reception, community areas, meeting rooms or private phone booths, everything has the same purpose: to make work life easier.
Our More by HB Reavis service, launched in 2020 when Agora opened, continues to excel both in terms of asset management and client and employee satisfaction.
In parallel, to make our workspace experience more seamless, we launched Symbiosy. True to its name, it’s already delivering data that will help us create a real harmony between office users and their environment in Agora Hub – making the office more efficient, healthier and easier to work in.
Agora Budapest
Our achievements
Our main goal is to create the most inspiring
and healthy working environments and to keep
tenants satisfied. So it’s essential to have feedback
from both users and the wider real estate world.
Agora Budapest received several awards during 2021. The ‘Office Development of the Year’ award in the Construction & Investment Journal Awards Hungary 2020 was particularly pleasing as it was an online vote.
Agora Hub
In turn, our environmental credentials are very
important to us – they go beyond an industry
trend that saw green building investment rise by
10% to over 45% over the year. The 11th Real
Estate Awards, organised by the Office of the Year
Group, saw Agora Budapest win in the Greenest
Project and the 2020 Commercial Development of
the Year categories.
Our flexible office complex, Qubes, won the ‘Concept of the Year’ at the Portfolio Property Awards 2021, and it doesn’t end there: we won a gold medal in the ‘B2B Campaign of the Year’ category at this year’s Global Content Awards.
We’re extremely proud that Agora was shortlisted by the professional BREEAM jury, showing that it is one of the 15 best sustainable projects worldwide. Agora Hub is Hungary’s first and only building with the highest, Outstanding BREEAM certification, and the wider Agora complex is the first local project to receive BREEAM Communities recognition.
Challenges for the future
Overall, 2021 was a refreshing success. In
a difficult period of restrictions, we had to find
solutions both to stay connected at work and to
ensure that we could actually do our work.
Our growing range of smart services means we’re now prepared for all options as the current situation evolves.
| HB Reavis Development HU |
GLA sq m |
Validation | ERV | GDV | Value Change | Investment |
||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | |||||||
| Projects completed | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Projects in preparation | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Total 2021 | 66,998 | 53.2 | 55.4 | 16.0 | 320.8 | 2.2 | 0.4 | |
| Total Pipeline for 2022 | 66,998 | 53.2 | 55.4 | 16.0 | 320.8 | 2.2 | 0.4 | |
As of March 31, 2021.
As of March 31, 2022.
Last year saw a renewed focus
on succession planning, as it was
integrated into our ESG mission
with the aim of developing and
implementing succession planning
for executive management positions,
with at least one internal successor
identified for each position.
We’ve already targeted successors for
89% of our executive management roles.
Each individual has been assessed and
given development plans to further
hone their skills.
In 2021, the Executive Management
released direct control over our ESG
(environmental, social and governance)
strategy, giving the responsibility to
a separate internal committee.
The new oversight team will build on
the ESG strategy that was developed
by the Board of Directors in 2020,
continuing to develop organisational
structures, processes and policies that
foster transparency, professionalism
and accountability.
Surveys and conversations also took place across the business to determine our Company Mindset. The results contributed to our ‘Pay it Forward’ internal communications campaign, which illustrated the values we stand for at HB Reavis.
We’re all different: different backgrounds, different cultures, different languages, different personalities. Yet we drive our business with shared goals and a common mindset. We’re passionate, professional and creative. We build strong relationships with those around us. And we deliver the best results possible – for our company and the communities around us.
As well as championing our mindsets, the Executive Management is also the key promoter of our Code of Ethics. The HB Reavis Ethics Programme has been designed to set the standards we expect from our people, with guidelines around how to avoid unethical behaviour and detect any conflicts of interest or deviation from our code.
Our Company Mindsets
We’re passionate about what we create together, as one team. Our shared passion and dedication fuel our desire for excellence in everything we do. It gives us the energy to go the extra mile in both setting and delivering goals and maximising our potential.
We highly value personal integrity– because our words, actions and intentions should always be aligned. We do our best to deliver on our commitments to all our stakeholders – colleagues, clients, partners, investors and shareholders. We value other people’s time, take the time to communicate and always meet the standards of our Ethics Programme.
Our entrepreneurialism is reflected in our owner’s mindset and insistence on accountability. We recognise opportunities that others do not see and actively embrace them. We strive to achieve the best results possible while protecting company resources. We’re not afraid to consciously take calculated risks. We’re honest about our mistakes and learn from them so we can do better next time.
Creativity and innovation are part of our DNA and contribute to our competitive advantage. Our curiosity, ‘can-do’ attitude and love for what we do power our inventiveness. We encourage innovation through both breakthrough moments and the incremental improvements that come from challenging the status quo.
We build long-term business relationships based on mutual prosperity, trust and respect – both internally and externally. In every situation, we thoroughly assess the contributions, risks and benefits. We understand the needs of clients, users and investors, and we work hard to become their trusted partner.
We genuinely care about others, internally and externally. We all have different backgrounds and speak different languages. Yet we encourage straightforward and open communication whether we’re celebrating or dealing with a difficult situation – and always work together with mutual respect and an inclusive approach.
In 2021 we continued our efforts to fulfil HB Reavis’ strategic aspirations in the people leadership area that are embedded in our business, people and ESG strategy.
The main challenge was the continuous and unpredictable COVID situation that not only accelerated changes on the labour market, but also changed people’s expectations from their jobs and employers. This materialised in higher turnover, increased demand for a skilled workforce and longer recruitment cycles. These market challenges were underscored at the end of the year by booming inflation and aggressive labour market competition, especially in some of our core markets. It seems that all of these challenges will stay with us beyond 2021 and require even more discipline and focus in executing our strategic aspirations regarding people.
COVID-19 continued, and ongoing measures were taken at our workplaces across the group to keep the workplace and our teams safe.
The retention of critical employee groups with a focus on project delivery teams and the talent pool became the top priority. The group’s regretted attrition rate is <5%.
Talent acquisition activities in a heated talent market require greater efforts to attract talented individuals that fit our mindsets (120 positions were filled across the Group, including replacements, maternity covers and internships).
120 positions were filled across the group, including replacements, maternity covers and internships.
Monitoring the employee experience with a focus on leadership quality – 83% of employees rated the leadership behaviours of HB Reavis leaders positively (2021 HB Reavis Leadership Feedback Survey).
Focusing on people development by utilising internal resources and know-how with a mentoring programme & providing individual development budgets – the mentoring programme pilot materialised into 10+ mentor/mentee pairs at HQ/SK and identified the mentor/mentee pool in Poland. After initial encouraging feedback, the programme will be expanded in 2022 and continue in other group markets, including cross - border mentoring.
The hybrid working strategy was defined as a response to the organisational need to define the proper boundaries so as to respect both employee and business needs.
Depending on the market, the average preference of remote working ranges between 21 – 35% compared to self-reported real time spent working remotely, which ranges from 13 – 32% (2021 HB Reavis internal survey). The internal maximum limit for remote work was set at 6 days per month (the real application depends on the specific needs of functional areas that might have different operational needs, and it is in the hands of the people leaders who are held responsible for considering both the individual needs of people as well as business performance).
The second year of the global pandemic brought the flexible office industry new as well as ongoing challenges. But as many studies have shown, there’s now a real appetite among tenants for spaces that help them grow or shrink with ease.
Our coworking brand, HubHub, and serviced office solution, Qubes, are not just here to stay – they’re thriving.
HubHub, London
Membership across our HubHub locations increased impressively during 2021. Occupancy grew significantly in 2021, and according to the first results of Q1 2022, the occupancy has grown even further. The community has evolved into a hybrid operation too, with a rich variety of digital events providing members with high-quality business and educational content wherever they happen to be, including:
We also ran and supported a multitude of country-specific activities:
The 10th anniversary of FTRNW 2021 (FutureNow) was a hybrid event streamed from Bratislava. An inspirational set of innovative finalists shared the stage with senior figures from some of our leading partners. In fact, FTRNW 2021 had more than 34 partners across the V4 region, including Microsoft, O2, Slovak Business Agency, Taylor Wessing and Venture to Future Fund.
Over 100 people attended in person, more than 80 watched the live stream from our Prague, Warsaw and Budapest HubHubs, and a further 800 watched elsewhere online.
900
people
Our premium serviced office product is getting real traction in the market – proved by the more than 20 new clients we welcomed during 2021. Qubes is tailor-made for companies that outgrow HubHub and want a ready-to-work space or are waiting for fit-out finishes in Nivy or the Agora zone.
Its versatility and adaptability have added to the overall offer of Nivy Tower in Bratislava and Agora Budapest. In particular, the newly finished three-floor Qubes Agora Budapest sprawls over a 4,800 sq m suite of coworking offices, as well as furnished offices, flexible working options, refreshment/chillout zones and a 50-seat event space.
All these options are available on their own or as a combination, giving clients the flexibility to move in tandem with rapid market changes. It’s the perfect product for the ever-changing world we live in.
More reasons to enjoy work
There was no doubting the popularity of
the More service before COVID. But now,
with perceptions and expectations of the
workplace changed so dramatically, our
range of features and innovations has helped
employers prove they can deliver exactly what
their people need.
We re-purposed a number of workstreams to make the ‘return to the office’ enticing, evolving new services, offers (to help retailers as well as employees), and community and health activities.
There was a wider focus too, embracing new modes of working by offering hybrid online and in-person events, including yoga, functional training, bartending classes and more. Throughout, the team made a point of keeping dialogue open with tenants, ensuring they had the tools to meet their aims.
Not least was a renewed focus on health & safety. Disinfection routines included extra elements for specific surfaces, and social distancing was encouraged in lifts and common areas. Furthermore, as well as our standard ventilation and HVAC disinfection practices, we developed strict COVID procedures to handle any cases of people testing positive.
The integration of the Hi.Building app into our services has helped us add another dimension to everyday office life and wellbeing.
Now we can provide contactless journeys from entrance to desk across many of our sites.
With a wave of their phone, users can access buildings, parking lots, common areas and lifts. The app is linked to other services too, such as our concierge, free bike and e-scooter hire, news, yoga classes and special offers.
As well as removing the need for plastic cards, the solution combines hospitality with innovation – and since visitors can download and use it, it’s now easy for businesses to provide a state-of-the art guest experience.
Continuous innovation
We haven’t stood still. An NPS survey across
a number of our workspaces drew some
interesting responses – and drove important
changes. We’ve improved access to public
transport, cycle storage, taxi ranks and car sharing
pick up points. There are new eating and drinking
options, serving a wider range of diets, cuisines,
occasions and price points. And we’ve honed our
mixes of shops, services and amenities to better
suit clients’ needs.
Going forward, all our new projects will come with More services as standard. Clients will simply customise which features they want and enjoy the experience they provide.
Smart office tech is in greater demand than ever.
2021 was a pivotal year for Symbiosy. We redefined our strategy and role within the HB Reavis Group and saw a dramatic increase in appetite from the market.
Developed in-house, the Symbiosy Operating System (OS) harnesses technology and data to deliver connectivity, convenience and an exceptional building experience.
With every iteration the team improves and enhances its impact. Last year alone, a variety of workflow systems, algorithms and two‑way controls were implemented to improve the way the Virtual Workplace 3D model shows how a building is being used, outlines its wellbeing, energy and sustainability performance, and provides access to other facility management metrics.
As well as providing detailed analytical data, Symbiosy also has a new Desk Booking application that offers a range of features to support hybrid working.
We succeeded in all our core aspirations last year, including securing our intellectual property (IP), clearing a technical debt and preparing the company to work with partners outside the HB Reavis portfolio.
We also integrated the Tenant Experience Application (Hi.Building) into our application, developed closer ties with our sister workspace consultancy, Origameo, and boosted sales among HB Reavis clients. After breaking through the €1 million revenue mark, we’re now positioned to scale up our operations.
Strato
IT
BP
energy
Home24
e-commerce
AcrisureRE
reinsurance
Macquire
finance
NEXI
payment processing
Grunenthal
pharmaceutical
Bouygues
construction/facility
management
A big milestone last year was the introduction of our first physical presence in the UK. London has great potential for both strands of our business, even if it is a competitive place to be. And with that in mind, we also continue to promote the benefits of consulting in Poland.
Poland
As a result of the COVID pandemic, most
office companies switched to remote work,
reducing the demand for office space. So in
the first nine months of 2021, Warsaw tenants
leased 398,100 sq m, a 10% drop on the same
period in 2020.
The introduction of a simplified space planning service for tenants that takes less time than our full Origameo consultancy saw take-up from AmeriGas, NCBiR, TTMS and Ideas NCBiR.
Germany
A great relationship with our leasing
department led the team to support
78% of DSTRCT.Berlin’s leased space –
a significant over-delivery compared to
the original 20% target.
The majority of our efforts went into helping to lease the remaining areas around the development, establishing ongoing relationships with new DSTRCT.Berlin clients, upselling Symbiosy to clients and prospects, and supplying the next German project PLTFRM.Berlin with space planning materials.
Slovakia
Our best-performing operation helped
the Origameo network generate revenues
of €356,000 across four pilot projects with
a solid average margin of 20%.
A good number of businesses within our buildings took advantage of the complete Origameo end-to-end service, for example, Investment Services, You +, KRONE IT and Slavia Capital. And we also invested many hours into the retail fit out of Nivy Mall and the central bus station.
We still see space for growth in Slovakia despite this strong position. We signed external deals with companies like Innovatrics, SIA, Heimstaden and Asseco. And with a significant amount of space yet to be leased in Slovakia, our big objective going forward is to develop stronger relationships with asset management clients there.
Hungary
The team delivered €17,000 of external
workspace design and fit-out delivery
over the year. All test fits were arranged
in-house and were on time and within
budget. In particular, Raiffeisen Bank’s
construction was handed over ahead
of schedule.
The majority of our efforts went into helping to lease the remaining areas around the development, establishing ongoing relationships with new DSTRCT.Berlin clients, upselling Symbiosy to clients and prospects, and supplying the next German project PLTFRM.Berlin with space planning materials.
United Kingdom A completely new market for us, our first year in the UK saw us integrate into a combined workspace consultancy service alongside Symbiosy.
We also successfully hired our first UK workspace consultant in Q2. Moving forward, 2022 has already seen us prepare a new HubHub space for Worship Square in Q1, establish relationships with a variety of clients in cooperation with the leasing team, upsell Symbiosy to new clients and leads, and support space planning for Bloom.
We’ve always felt it’s our responsibility to deliver workspaces that meet the needs of their users and enhance their health and wellbeing while minimising their impact on the environment.
Our ESG strategy ties all our activities and know‑how together, from the moment of acquiring land through to design, development, construction – and finally the asset management of the building. It was developed with the people who use our premises in mind. It reflects their values and helps them achieve their responsibility goals
The strategy is supported across our business by a global governance structure that encompasses all parts of the business. It also cements our commitment to partnering with all stakeholders in innovative ways to achieve our shared ambitions for a sustainable future.
It stands on three key pillars: Environmental, Social and Governance. Each one includes areas we believe are real strengths for us as a company that help us have a huge impact on the industry.
Environmental
With respect to nature
Our processes, policies,
practices and the impact
we have on the natural
environment, applicable
to both our buildings
and our company.
Energy performance
Carbon reduction
Waste management
Water consumption
Green transport
Biodiversity
Carbon reduction
Green transport
Social
Focus on people
Health and wellbeing
Communities
Employee experience
Governance
The way we’re directed
Organisational structure,
transparency, measures,
protocols, procedures
and formalised
governing bodies, roles
& responsibilities defining
our business nature.
Corporate governance
Our mindsets
Business ethics
Speak up culture
Supply chain
management
Diversity and inclusion
Our mindsets
Supply chain
management
In 2020, we formally approved and published “Designing a Responsible Future”, which sets out our ESG strategy and targets.
It covers all the activities and initiatives we’ve been doing as a company for almost 30 years, tying a diverse set of workstreams together to address the current climate change and post‑pandemic challenges.
However, publishing a nicely polished strategy is not enough. We’ve since created a performance‑driven governance structure that will ensure its ethos continues to run through all our activities – with a member of the Board being given responsibility to ensure its agenda is overseen at the executive level.
Our ESG Governance Body includes senior representatives from relevant departments that contribute to the delivery of selected targets. Body members meet quarterly to report the progress, and that progress is reviewed against the ESG targets by the Board of Directors biannually. There’s also an ESG Steering Committee that ensures alignment across the Group, based on business and market expectations.
In terms of our products, the best proof that we’re meeting our ESG ambitions are the third-party certification systems we aspire to.
It has become a fundamental part of our projects to at least meet BREEAM Excellent level standards in addition to WELL standards at a Gold level or higher. In this post-pandemic world, the WELL Health-Safety rating also became a ‘must have’ for our new developments.
To list a few of our 2021 accomplishments, we achieved BREEAM In-Use for City Business Centre in Bratislava, had our whole portfolio certified in green building rating systems, and our office in Bratislava was awarded a Platinum seal by the International Well Building Institute – ranking it among Europe’s top 10 healthiest offices. Agora Hub in Budapest was also the first building in Hungary to achieve BREEAM’s Outstanding sustainability assessment standard.
To support our carbon ambitions, we’ve prepared “Straight to Zero”, a roadmap to delivering net zero carbon buildings and lowering our emissions as a company. A pilot case is already in progress in London, and we hope to then roll it out across the Group.
Environmental
Our project Forest in Warsaw, Poland, was awarded the Best Ecological Building by PLGBC.
Worship Square has achieved net zero carbon as defined by UKGBC in the design stages and aspires to be a carbon neutral building once delivered.
The UK business has committed to targets for achieving net zero carbon, stating, for example, that HB Reavis UK's corporate emissions will target a 35% reduction by 2030 compared to a 2019 baseline.
net
zero
carbon
Our office in Bratislava was awarded WELL Platinum certification, ranking it among the top 10 healthiest offices in Europe at that time.
3 projects - Varso 1, Varso 2 and Nivy Tower obtained a WELL Health-Safety seal, demonstrating our commitment to delivering workspaces in which we put people’s health and safety first.
492 employees participated in a survey that helped us define a hybrid working strategy - our own guidebook to maximising productivity via smart use of the hybrid model.
Social
Governance
We implemented an e-learning platform to ensure alignment with all the necessary compliance regulations across the company.
We have updated our values, the 6 mindsets that guide our daily conduct and its communication across the company, to better reflect our corporate culture.
90% of executeive management positions have identified their successor within the company.
90%
And what’s next?
The ESG agenda is a constant companion for us
as individuals and as a business. It leads our day‑to‑day
activities and keeps us on track towards
designing a healthy and sustainable future. It
officially became part of our strategy in 2020,
when it was more a description of activities and
initiatives already in operation. Then, in 2021,
we set up more detailed governance: we aligned
the ESG strategy with the wider company strategy
and defined KPIs that linked its key issues with
BAU practices.
We now continuously update the ESG strategy, priorities and targets to reflect evolving ESG challenges, keep up with clients and stay one step ahead of the market. And to make sure we continue to have the greatest impact – one that reflects our stakeholders’ values – we plan to complete an independent materiality assessment in 2022.
Current
issues
To effectively tackle climate change, it’s vital that we minimise our carbon footprint. We’re approaching this in two ways: by cutting CO2 emissions as a company and by designing buildings that create net zero greenhouse gases.
We’ve already commissioned external partners to assess our developments – Nabers UK for our London projects and LEED Zero Carbon in Germany. We also have a roadmap to becoming a net zero carbon business.
The past two years of the pandemic have proven that our commitment to designing user‑centric workspaces that enhance health and wellbeing was a shrewd strategic move. We will continue to prove our credentials through the likes of the WELL standard and by renewing our WELL Health-Safety Ratings.
The COVID pandemic has also accelerated the remote working trend. In response, we’ve developed our own internal flexibility and hybrid working strategy. Once it’s launched, we intend to use our knowledge and own experience to guide clients on how to use the hybrid model effectively.
Designing a responsible future is not solely in our hands. With close cooperation with employees, occupiers, business partners and suppliers, we can make a positive impact on our planet and the people and communities connected to our developments.
To that end, we will share the responsible business principles rooted in our Code of Ethics with key partners over the coming years – and openly communicate our ESG selection criteria to our suppliers.
Case studies
Our Warsaw development won ‘Best Ecological Building’ in the Green Building Awards 2021, a prestigious competition organised by PLGBC.
Forest is a campus composed of two connected buildings. It’s a unique workspace in Warsaw that offers space for relaxation – not only to the people working in the buildings, but also for the surrounding community.
A number of different solutions work together to reduce the building’s energy use. These include BMS controlled, motion-sensor triggered external lighting together with LED light fittings that reduce energy consumption up to 35% compared to fluorescent lamps. This is in addition to a layout that increases the amount of natural light throughout the building, reducing the need for artificial light.
Openable windows allow for natural ventilation and free cooling. Energy efficient elevators with regenerative drives use up to 20% less energy. And with 507 bicycle stands, changing rooms with showers and a bicycle repair point, the building encourages users to switch to more sustainable ways of commuting too.
Forest is an environment that invites you to spend time outdoors, with the equivalent of two football pitches’ worth of green spaces. More than a ‘green roof ’, the park on top of the building helps with insulation and boasts community gardens that are open to all, including people with limited mobility.
Altogether, around 200 trees and 200 shrubs help reduce the heat island effect and provide much needed shade on hot summer days. To support biodiversity, there are also two insect hotels and bird shelters.
Forest already holds a BREEAM Communities certificate and is WELL Precertified. We also hope it will achieve BREEAM at the Excellent level, WELL at the Gold level and the WELL Health & Safety Rating.
400trees
Case studies
12,832 sq m and in a prominent London location, Worship Square is our first fully net zero carbon scheme – full of solutions that help us reduce emissions both in construction and operation.
It’s set to meet the RIBA 2030 embodied carbon target. With construction underway, we’re diverting 100% of the demolition materials from landfills and recycling materials when possible to be used in the new building.
In fact, Worship Square’s design means we’ve kept the previous building’s foundations and used low carbon concrete in the new structure, which will feature cellular steel beams, high-grade steel, compact geometry and exposed ceilings.
net
zero
carbon
It's also all electric. As well as source heat pump (ASHP) technology, on-site photovoltaics and renewable electricity providers, a 67 sq m rooftop installation of PV panels will provide electricity equivalent to brewing 600 cups of tea a day.
A combination of electricity generating solar panels and efficient ASHPs will provide an estimated 25.67% reduction in annual CO2 emissions compared to a baseline energy‑efficient scheme. With its low energy design and sophisticated building management system, Worship Square will actually be 10% more energy efficient than the UKGBC ‘Base Building’ targets for 2030.
While we’ve reduced the carbon emissions of the design, development and operational phases, any residual emissions will be responsibly offset. However, rather than waiting until completion, we’ve already begun offsetting by restoring degraded forest reserves in Ghana and supporting wind power projects delivering zero emissions renewable electricity to the national grid in Nicaragua.
Worship Square is designed with the ambition of receiving 5* NABERS and BREEAM Outstanding certifications. It’s also aiming for a WELL Platinum rating, the highest certification for wellbeing – after already achieving two Platinums – the maximum levels of Wired and SmartScore certifications.
Case studies
We’re committed to designing workspaces centred on health and wellbeing. It’s a point proved by our office in Bratislava, which, with WELL Platinum Certification, is officially one of the 10 healthiest offices in Europe.
Throughout the 5,000 sq m space that is enjoyed by over 300 people, we’ve implemented almost 90 features that fall within the seven concepts of the WELL Building Standard: Air, Water, Nourishment, Light, Fitness, Comfort and Mind.
All the building materials are low VOC, and over 200 sensors constantly monitor the air quality. Every workstation has access to direct daylight, helping to support circadian rhythms. Tap water is constantly tested, and everyone has access to drinking water within 30 m of their desk.
Acoustic materials on the walls and ceiling absorb around 90% of all sounds and help to reduce ambient noise. The office is also dotted with complimentary fruit and vegetable baskets, and it has its own 50-seat dining area with a fully equipped kitchen so people can eat more mindfully. Human-focused design can positively affect the health and wellbeing of people and can even boost people’s efficiency. Pre- and post-occupational surveys have confirmed that our new workspace has increased the productivity of our employees by 10%.
Obtaining the WELL certificate is not the finale, but rather the start of a long journey. To make sure the workplace continues to operate at a high standard for people’s health and wellbeing, we’re required to report on environmental parameters and prove the standard of the facilities and the results of occupancy surveys to IWBI™ annually – and apply for re-certification every three years.
WELL
Platinum
certification
In the reporting year, we focused on both speeding up and growing the share of developments in the permitting stage as well as making progress with our projects in the construction phase.
Real estate development is a very complex business. If you’re an international workspace provider as we are, this brings even higher complexity. We make life even tougher for ourselves because our mission is to bring remarkable experiences to people through our real estate solutions.
We aim to set trends in office space solutions. We are happy to bring something more than what clients and communities expect from us, something that will differentiate us from others. We believe doing it this way creates greater value for our partners, clients and local communities, as well as for our shareholders. Our commercial achievements and robust results have confirmed we’re on the right track.
The development landscape
Looking at our portfolio, the share of
development in our total investment
property is 46%. Us being just below our
targeted 50/50 level has been brought
about by the completions of 4 major
developments, which were valued at
over €1bn at YE 2021.
During 2021, the portfolio value of core development property increased by €930.8m, while properties valued at €1,002.2m were completed and handed over to our asset management arm.
| New Apollo | IBM | 30,249 sq m | ||||||
| Varso Tower | Box | 15,575 sq m | ||||||
| DSTRCT.Berlin | Home24 | 13,453 sq m | ||||||
| Bloom Clerkenwell | Globally listed tech company | 10,743 sq m | ||||||
| Varso Tower | NCBiR | 8,572 sq m | ||||||
Note: Figures are based on external expert valuations and internal management reports.
During our history and through the delivery of around 1,037,000 sq m of leasable office space, we have accumulated significant knowledge and experience. We understand how important it is to talk to clients, identify their needs and wishes and, moreover, incorporate these into our product design process. We’ve been focused on the following areas:
We are bringing international expertise into our projects. This is why we retained the services of highly acclaimed architectural studios such as Benoy, Foster+Partners, Make Architects, John Robertson Architects and Allford Hall Monaghan Morris for some of our recent flagship and landmark projects.
We have transformed ourselves from a fully integrated but ‘standard’ real estate developer into a Workspace as a Service (WaaS) provider. This move is a perfect umbrella for our user‑centric related activities such as UX methodology, Origameo, HubHub, Symbiosy, Qubes and More.
Each project design is tested, focusing on the potential user experience in terms of daylight quality, interactions between dedicated office space and shared spaces (primarily on the ground floor and roof), and the effects of greenery, fresh air and thermal control.
We are elevating our sustainability standards and design goals to at least BREEAM ‘Excellent’, and we aspire to comply with WELL standards as soon as feasible.
Leasing and marketing
We’ve invested significant effort and resources
during recent years into building our leasing and
marketing teams across the Group. These teams
consistently and efficiently use the Group’s know‑how that has been accumulated over 28 years.
In terms of the numbers, it was a successful year.
Our leasing teams signed contracts for about
160,000 sq m GLA, over 3 times that of pandemic
impacted 2020. Despite the challenging situation
in some of our markets, we’ve recorded one of
our best leasing performances ever driven also by
beating our value targets on leased space due to
offering premium product and services.
| GLA sq m |
Validation | ERV | GDV | Value Change | Investment |
|||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | |||||||
| Retail | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Office | 1,110,450 | 1,711.0 | 2,586.0 | 336.6 | 7,886.2 | 875.0 | 411.1 | |
| Residential | 126,516 | 48.5 | 104.3 | 0 | 630.1 | 55.8 | 1.2 | |
| Total Development 2022 | 11,236,996 | 1,759.4 | 2,690.3 | 33.6 | 8,516.3 | 930.8 | 412.3 | |
| Additions to portfolio 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Completions 2021 | 181,377 | 688.9 | 1,002.2 | 54.4 | 1,209.2 | 313.3 | 141.1 | |
| Office | 828,073 | 1,022.1 | 1,583.8 | 282.3 | 6,677.0 | 561.7 | 270.0 | |
| Residential | 126,516 | 48.5 | 104.3 | 0 | 630.1 | 55.8 | 1.2 | |
| Total Pipeline for 2022 | 1,055,589 | 1,070 | 1,688.1 | 282.3 | 7,307.1 | 617.6 | 271.2 | |
Construction cost management
Efficient construction is a way of life at HB Reavis,
not least because it has the potential to
differentiate us in the market. We are consistently
and systematically focused on reducing costs by
collaborating with our specialised procurement
team and local construction management, all
without compromising the quality of projects.
Development portfolio structure
Geographically, the structure of our whole
development portfolio is continuously shifting
towards western countries, where the UK and
Germany represent 53% of the future value in our
pipeline. At year end 2021, the share of UK assets
represented 45% of the whole portfolio, Poland
11%, Czechia 5%, Slovakia 27%, Hungary 4% and
Germany 8%, all based on the expected gross
development value.*
As far as segments are concerned, during 2021 our strategic focus on office development reflects its 92% share of our development portfolio value, while residentials (only in Bratislava) accounts for 8% based on gross development value.*
Developments in the office segment continued to achieve growth, adding around €814m of value and reaching a total of €2,255m* (including completed properties before their transfer to use). In terms of the creation of net value of the required investment to achieve value growth, office properties contributed €328m* (net of the yield shift).
Performance of development activities
We successfully continued our robust
development programme that was started
in 2017 – 2019 and peaked at the beginning
of 2020. Driven by massive deliveries in 2021
(Nivy Mall, Bloom Clerkenwell, Forest Campus
and DSTRCT.Berlin), the share of our development
portfolio increased to 46% (2020: 75%).
Efficient
construction is
a way of life at
HB Reavis
There was no doubting the popularity of the More service before COVID. But now, with perceptions and expectations of the workplace changed so dramatically, our range of features and innovations has helped employers prove they can deliver exactly what their people need.
We re-purposed a number of workstreams to make the ‘return to the office’ enticing, evolving new services, offers (to help retailers as well as employees), and community and health activities.
There was a wider focus too, embracing new modes of working by offering hybrid online and in-person events, including yoga, functional training, bartending classes and more. Throughout, the team made a point of keeping dialogue open with tenants, ensuring they had the tools to meet their aims.
Hi.Building
The integration of the Hi.Building app into our services has helped us add another dimension to everyday office life and wellbeing.
Now we can provide contactless journeys from entrance to desk across many of our sites. With a wave of their phone, users can access buildings, parking lots, common areas and lifts. The app is linked to other services too, such as our concierge, free bike and e-scooter hire, news, yoga classes and special offers.
As well as removing the need for plastic cards, the solution combines hospitality with innovation – and since visitors can download and use it, it’s now easy for businesses to provide a state‑of‑the art guest experience
Not least was a renewed focus on health & safety. Disinfection routines included extra elements for specific surfaces, and social distancing was encouraged in lifts and common areas. Furthermore, as well as our standard ventilation and HVAC disinfection practices, we developed strict COVID procedures to handle any cases of people testing positive.
We haven’t stood still. An NPS survey across a number of our workspaces drew some interesting responses – and drove important changes. We’ve improved access to public transport, cycle storage, taxi ranks and car sharing pick up points. There are new eating and drinking options, serving a wider range of diets, cuisines, occasions and price points. And we’ve honed our mixes of shops, services and amenities to better suit clients’ needs.
Continuous
innovation
Going forward, all our new projects will come with More services as standard. Clients will simply customise which features they want and enjoy the experience they provide.
Note: The estimated GLA/GDV and delivery of the project are subject to the successful closing of acquisitions, permitting, construction delivery and commercialisation.
A campus-style environment, Forest promises around 79,300 sq m /854,000 sq ft of workspace, ground floor retail and restaurant opportunities – and a public courtyard filled with 200 trees. Perfect for corporate, creative and startup businesses, it will offer the city’s largest floor plate as well as astonishingly flexible office layouts and coworking spaces.
The roofs also feature a community garden, relaxation zones and views of the lush plantings – with the aim of improving the health, wellbeing and productivity of the people who work there.
It’s an approach that helped it become one of the country’s greenest offices, with BREEAM and BREEAM Communities certifications as well as WELL Precertification.
The first buildings were completed in Q1 2021, and the 120-metre tall Forest Tower will be ready in Q1 2022.
New
Buildings
The design maximises resources. Rainwater will be reused to irrigate the landscaping and improve Forest’s carbon footprint.
Location: Mlynske nivy, Bratislava
Status: Delivered
Delivery: September 30th, 2021
Key functions: Bus station,
shopping
centre,
food & fresh market,
green roof
(sport & relax)
GLA: 104,586 sq m/1,125,597 sq ft
Estimated GDV: €375m/£315m
Architects: Benoy, Siebert+Talas
Certifications:
BREEAM Communities,
BREEAM WELL
expected Q2/2022
Initial occupancy: 88%
Note: The estimated GLA/GDV and delivery of the project are subject to the successful closing of acquisitions, permitting, construction delivery and commercialisation.
A future-proofed destination, the Nivy centre’s location makes it a key transport hub. But it’s the breadth of the lifestyle activities offered in one location that elevates its role in the city, which is emphasised by the high traffic it gets. A million visitors visited the Nivy centre within only 24 days of it opening.
The design draws inspiration from our years of experience, feedback from clients and the latest retail trends. Bratislavians now have a new airport-style bus terminal, over 250 retail outlets, a fully-fledged gastronomic zone and fresh produce market, and a green roof for exercise and relaxation – all within a dynamically developing business and residential zone.
New
Buildings
4 office buildings
+ 1 shopping mall
with an average
lifetime of 4 years
HB Reavis’ investment management arm was founded eleven years ago and is a key pillar of our strategy. With a heritage in real estate, the team focuses on delivering exceptional long-term returns and superior client service for investors looking for value in European commercial real estate.
The business capitalises on its asset management capabilities and 29-year track record of leasing, asset management capabilities, property management and construction management. We believe that our active asset management, opportunistic trading approach and strategic decision making are the driving force behind the consistent returns we deliver to our investors.
The CE REIF fund has, since its inception in 2011, on average delivered excellent returns of 10% p.a., of which more than half has been distributed in cash to investors. These returns are the fruit of our diligent focus on maximising returns and enhancing the portfolio’s value through excellent lease management and hands-on asset management.
The total assets under management grew to €345 million with an increasing number of investors trusting us to manage their wealth and funds.
Workspace-as-a-Service and the increasing deployment of analytical data are leading the changes in real estate trends. Collaboration, flexibility in terms of space – as well as duration and technological advancement – are key tenant requirements for the way they use space.
These changes are forcing real estate players to adopt new business models, or at least new business lines involving higher complexity. They also present new challenges for financial strategies. We’re working hard to adopt a business model that addresses all these challenges in a proactive way and adjusting our financial strategy to support it.
At HB Reavis, we are constantly monitoring, anticipating and analysing market trends as well as adjusting the way we do business and reviewing our financial strategy to suit them. Our aim is to ensure our financial strategy is fit for purpose and allows us to maintain a healthy capital structure while ensuring the availability of both new debt and new equity to support the Group’s ambitions.
Occupancy trends are changing. Increasingly, tenants are looking for greater flexibility, driven primarily by the ever-shifting dynamics of their actual business models and new economy sectors. In competitive labour markets, tenants need attractive recruitment and retention packages, and it is no longer only about remuneration and monetary benefits. The actual working environment now plays an increasingly strong role in recruiting top talent.
Given this new reality, the notion of a tenant committing to a long-term and inflexible lease contract (the most attractive to traditional finance providers and investors) is being challenged. As a major player in leasing markets, we’re seeing a clear trend towards more occupational flexibility. This, together with the advent of another recent phenomenon in how tenants use space – the co-working platform – means there’s a growing need for more agile debt and equity funding.
Through a combination of divestments and external financing operations over the last couple of years, we accumulated cash at year end 2021 amounting to €238.7 million.
This will help us continue our robust development programme and support our growth both in an organic manner and potentially through acquisitions, should the opportunity come our way.
In 2021, dividends paid to our shareholders reached 1.84% of NAV, reflecting the challenges of the pandemic year and in line with our financial policy guidelines.
Our financial policy formalises the key financial measures:
Target Gross Debt to Total Assets at 40% and Net Debt to Total Assets at 35% with an appropriate mix of non-recourse project debt and Group-level debt.**
The initial maturity of project loan financing and issued bonds should commensurate with the length of our product development cycle.
A cash reserve target of at least 5% of total Group debt, with a special reserve build-up profile to cover future debt-bullet repayments well in advance.
Dividend pay-outs are in line with historical levels up to 4% of NAV.
Careful risk management aimed primarily at mitigating foreign exchange fluctuations for all known and estimated non-Euro exposure 12-months forward, and interest-rate risks covering 50 – 100% of total medium to long-term debt exposure, both associated with macroeconomic and property cycles.
Note: Data in the Financial review section are based on audited consolidated financial statements, external valuations and internal management reports. All valuations in the Business Review are based on external valuations and internal management reports before IFRS adjustments and excluded non-core properties. For segment information related to non-core segments, see Note 6 in the Consolidated Financial Statements. For balances presented in the Segmental Analysis in the Consolidated Financial Statements, see Note 6 of the Consolidated Financial Statements.
**In line with the announced Group’s intention aimed at consolidating part of the Group’s investment portfolio and prospective separation of portion of its assets from the Group, the Group’s leverage increased in course of 2021 as a result of higher proportion of income producing assets on the Group’s total assets.
€289m
NET PROFIT
€319m
TOTAL COMPREHENSIVE INCOME
€442m
EBIT
€34m
NET RENTAL INCOME
€497m
NET REVALUATION PROFIT*
€1.897bn
NET ASSET VALUE
€27.1%
SHAREHOLDERS’ RETURN
€41%**
NET DEBT LEVERAGE RATIO
*Note: Including impacts of translation reserve.
**In line with the announced Group’s intention aimed at consolidating part of the Group’s investment portfolio and prospective separation of portion of its assets from the Group, the Group’s leverage increased in course of 2021 as a result of higher proportion of income producing assets on the Group’s total assets.
How we performed In terms of overall performance, the 2021 financial results were strongly driven by re-activated leasing market, contributing to a revaluation gain of €497.4m (including translation of foreign operations to the presentation currency), up from a loss of €41.2m in 2020. At €34.1m, net operating income from investment property, in line with our expectations, increased slightly (2020: €27.8m).
In terms of the operating profit, the Group recorded €442.0m (2020: loss of €8.4m). The Group balance sheet increased to over €4.0bn. Adjusted net asset value reached €1.897bn. Our net debt leverage ratio was just above our targeted range of 35-40%, reaching 41.4%* (38.2% in 2020).
Bottom line:
We achieved a total
comprehensive
income of €318.5m
(2019: €-183.8m).
| €m | 2018 | 2019 | 2020 | 2021 | ||||
|---|---|---|---|---|---|---|---|---|
| Assets | 2,349.9 | 3,040.3 | 3,097.1 | 4,016.0 | ||||
| Cash | 173.8 | 122.6 | 192.7 | 238.7 | ||||
| Borrowings | 891.5 | 1,106.8 | 1,376.8 | 1,902.5 | ||||
| Net Debt Leverage Ratio | 26.8% | 30.5% | 38.2% | 41.4% | ||||
Net revaluation gain* The Net revaluation gain on investment property, including the impact captured by the translation of foreign operations to the presentation currency) resulted in €497.4m (2020: -41.2m). This represents a significant year-on-year shift, driven by the pandemic emergency of 2020 and related market lockdowns, leading to leasing activity fallouts and general development progress slowdown in 2020.
When adjusted for yield shift, the Group
achieved a €303.2m (2020: €26.7m) net
revaluation gain while the positive yield shift
contributed to overall profit by €194.2m
(2020: €-67.9m).
The average investment property portfolio
yield decreased by 29 basis points to 4.79%,
as we continued investments in lower-yielding
UK and German projects, while reducing
relative weight of the historically strong CEE
portfolio. Income producing assets, primarily
driven by higher yielding Slovak assets,
were valued at a 5.02% yield at the end of
2021. The average valuation yield of our
development properties, now more heavily
weighted to UK, Polish and German assets,
was also down by 26 basis points to 4.48%.
As our strategy in the medium term is to keep and manage our assets longer after they become mature, the growth potential for our net operating income is higher in the coming years.
How business lines contributed
In terms of contributions made by our business
lines to the overall return on shareholders’ equity,
leasing and revaluation drivers impacted the
development portfolio with a ROE of 57.9%
(2019: -14.1%), while income producing property
recorded a ROE of 0.9% (2019: 4.7%). The ROE of
our non-core portfolio lagged behind with -1%, as
did the cash at -1.1% at the end of 2021.
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Find out how we performed in previous years. Have a look at our
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The Group, its directors, employees, agents or advisers do not accept or assume responsibility
to any other person to whom this document is shown or into whose hands it may come and any such responsibility or liability
is expressly disclaimed. The Annual Report contains certain business, financial,
numerical or technical information and forward-looking statements with respect to the operations,
performance and financial condition of the Group. By their nature, these statements involve uncertainty
since future events and circumstances (such as successful closing of acquisitions, permitting, construction delivery,
commercialisation or actual market conditions) can cause results and developments to differ from those anticipated.
The forward-looking statements reflect knowledge and information available at the date of preparation of this Annual Report.
Nothing in this Annual Report should be construed as a profit forecast.
Whilst the Company has taken reasonable care to ensure that the information on this website (other than information accessed by hypertext link) is accurate at the time of last revision of the website, the Company accepts no liability for the accuracy or completeness or use of, nor any liability to update, the information contained on this website. It should not be construed as the giving of advice or the making of a recommendation and should not be relied on as the basis for any decision or action. In particular, actual results and developments may be materially different from any forecast, opinion or expectation expressed on this website. Certain information on this website is of a historical nature and may now be out of date. All historical information should be understood as speaking from the date of its first publication. Nothing on this website constitutes an invitation or offer to invest or deal in the securities of the Company. This website contains certain hypertext‑links to other websites. The Company has not reviewed, is not responsible for, and accepts no liability in respect of, any information or opinion contained on any such other website.
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