2018 has been a great year for Gmp as it has completed its strategic plan, which started in 2014, in a highly satisfactory way.
The evolution of the Company’s balance sheet, combined with the current capital structure, place Gmp in a very solid financial position.
The Company’s bet on quality, sustainable and people-driven management has led to high levels of occupancy and client retention.
The Gmp Foundation, which in 2018 celebrated its tenth anniversary, supported 49 organisations through 18 social initiatives, directly benefiting over 4,200 people with intellectual disability or acquired brain injury.
The Strategic Plan 2019 – 2023 focuses on differentiation through an ambitious CAPEX programme, innovation and digital transformation aimed at developing value-added products and services for our clients.
Dear shareholders, clients and collaborators,
I am delighted to share with you our key results from financial year 2018. I would like to begin by saying that this year has been a great year for Gmp during which our strategic plan, which started in 2014, has been finalized most satisfactorily. For this reason, first I wish to highlight the milestones of the last five years in this message, as they have enabled us to grow and lay solid foundations to face the future with confidence:
Our strategic alliance with GIC, the Singapore Government sovereign wealth fund, which acquired a shareholding in the Company in October 2014, has strengthened our market position, intensifying investment activity at the right point of the cycle. The acquisition of new assets worth €380m over the last five years, which is much higher than the initial target figure of €200m, principally comprises value-added offices like Eloy Gonzalo 10, Castellana 77, Titán 4, Condesa de Venadito 1 and Manuel Cortina 2. Further to this investment, the Company has focused on new developments on plots from its land bank such as Oxxeo in Las Tablas. In terms of scale and representativeness, special mention should also be made of the renovation work completed on the iconic building Castellana 81, after BBVA’s staggered exit in 2015 and 2017, transforming it into one of the most sustainable and cutting-edge properties on the market. I would like to take the opportunity to thank GIC for its valuable contribution and support. Our alliance was forged with long-term objectives in mind and the last five years of working together clearly demonstrates the success of the union and the desirability of continuing to leverage synergies in the future.
Refinancing our corporate debt in 2016 for €755m required extending the expiry date, as well as halving our yearly recurring financial expenditure to 1.97%. Aligned with this, in 2018 we renegotiated one of the tranches of our syndicated loan, amounting to €185m, with an extension of the repayment date to 2023 and decrease in costs from 1.90% to 1.60%. The evolution of the Company’s balance sheet, combined with its current capital structure, place Gmp in a very solid financial position. The value of our assets has nearly doubled, rising from €1.198 billion, at the close of 2013, to €2.192 billion at the end of 2018. Furthermore, over the same period, the group’s LTV has dropped significantly from 59% to 38.4%.
Our commitment to quality, sustainable and people-driven management has enabled us to achieve high occupancy and client retention levels. This has translated into an array of initiatives over the period, out of which I wish to highlight three in particular. First, carrying out extensive CAPEX planning at the buildings in our portfolio, aiming to achieve high standards in quality and technology and optimise client satisfaction, in the framework of an integrated management system for Quality, Environment and Risk Prevention in the Workplace, certified by the International Standards ISO 14001, 9001 and OHSAS 18001, which have been renewed in 2018 until 2021. Second, regarding environmental sustainability, setting in motion LEED certification in 2014 for buildings in our portfolio has led to substantial improvements in energy efficiency. Moreover, we have obtained top-rated LEED Platinum Core & Shell certification for three buildings: Castellana 81, Oxxeo and Castellana 77. Finally, as regards people-led management, at the end of 2017, in a pioneering initiative in Spain, Gmp initiated WELL certification process for the three buildings mentioned above, adopting a raft of measures focused on improving the health and wellbeing of users. Castellana 77 and Oxxeo expect to complete this process in 2019, while Castellana 81 became the first WELL certified office building in Spain and the fifth WELL Gold Core & Shell in Europe in 2018.
Turning now to our financial results for 2018, I would like to highlight that we have achieved record levels of revenues and EBITDA of €125m and €73m respectively, accompanied by year-on-year increases of 9.3% and 11.2%. Our consolidated net result rose to €187m, 39.9% up on 2017.
Our core property-owning business accounted for 76% of income, rising to €94.3m. This figure is up 12.1% on 2017, to which intense commercial activity carried out over the year has contributed, with renewals for a floor area of 36,000 m², new rental operations for 28,400 m² and an average increase in rents from renewed contracts of 21.4%. Moreover, the occupancy rate in 2018 was maintained at 90%, a similar level to the previous year. It is worth underscoring the lease of the whole building at Castellana 77 and 65% of the new development Oxxeo, where work was completed in April 2018.
It has also been a good year for our residential tourist resort located in south Alicante, Las Colinas Golf & Country Club, which has surpassed the record figure for EBITDA obtained in 2017 of €12m and reaching the figure of €13m. Las Colinas has consolidated its position since its launch in 2010, as one of the best international resorts for the quality of its facilities and the design of its properties. This is accredited by being ranked 33rd in the latest Top 100 Golf Resorts in Europe published by Golf World and the accolades it has won at the 2018 World Travel Awards and International Property Awards.
I wish to emphasize the boost Gmp gave to Corporate Social Responsibility in 2018 by setting up a CSR Committee steered by the Corporate Managing Director and comprising representatives responsible for the key areas in this field. The specific actions implemented in this area include the first green loan signed by a REIT in Spain; completing WELL certification at the building Castellana 81, mentioned above; and the extensive programme of social actions developed by the Gmp Foundation, which celebrated its tenth anniversary in 2018. Our foundation supported 49 organisations through 18 social initiatives, directly benefiting over 4,200 persons with intellectual disability or acquired brain injury.
Gmp faces the future with optimism. The outlook for Spain in 2019 is still positive, with growth estimates for the GDP of slightly above 2%, and the office sector is forecast to continue expanding. In this context, the Strategic Plan 2019 – 2023 focuses on differentiation through an ambitious CAPEX programme for our portfolio, innovation and digital transformation aiming to deliver value-added products and services to our clients. In addition, we will continue to invest selectively in new value-added buildings, as well as in developments from our land portfolio, while rotating non-strategic assets. Aligned with these goals, at the end of 2018 we began construction on a new development on one of our plots of land in Las Tablas, named ARQBÓREA, where work is expected to be completed in 2020, and in the first quarter of 2019 we have sold two non-strategic properties, Llano Castellano 51 and Traspaderne 29.
I would like to end by expressing my sincere gratitude to all the members of the Board of Directors for the support and confidence they have shown, and especially to the human team of the Company, whose professionalism and engagement build the day-to-day business of Gmp, which is celebrating its 40th anniversary in June 2019.
Francisco Montoro Alemán
Chairman – CEO