01 Driving Data Watch out, revolution ahead! Page 10 08 23 38 Meet Pitt Romania Mania Power Women Q&A with new Business and leisure The business case for CTP COO in the heart of the gender equality in the Carpathians workplace CEO WORD: MEET 2017–2018 PITT CEO Remon Vos lays Q&A with the down company results newest member and future plans, along of the Executive with some rubber Management team PAGE 02 GROUNDWORKS PAGE 08 FINANCE, BUSINESS & COMPANY NEWS REGIONAL FOCUS: UPDATE ROMANIA Facts, figures, and In-depth look into the project updates country, our parks and from around CEE plans, with a spotlight on CTPark Bucharest West PAGE 20 REGIONS PAGE 23 PLACES WHERE WE OPERATE SKETCHING POWER THE FUTURE WOMEN Architect Václav Hlaváček Research on workplace discusses the importance gender equality proves of ‘concept’ and ‘balance’ in strong returns for teams masterplan design and companies INSPIRATION PAGE 28 PAGE 38 THE WORLD AROUND US ROMANIAN CHANGING THE VACATION LANDSCAPE Need a break? Explore CTP Art Wall: the best of Romania: wild painting the largest mountains, hip beer halls, canvas in Europe romantic castles, and theme parks in places PAGE 44 A FUN STUFF you’d never expect D PAGE 34 RELAX & ENJOY WELCOME TO GRID Remon Vos inspects construction progress at new Raben premises at CTPark Prague East in his 1925 Vauxhall, December 2017 In 2017, we grew our portfolio by nearly 680,000 m2, and it now stands at 4.5 million m2. We expand- ed primarily from new construction —either new buildings or exten- sions—which resulted in the av- erage age of the buildings in our portfolio remaining stable at eight years. High client satisfaction led to strong lease renewals, positive- ly impacting overall WAULT, which now stands at seven years. We also significantly reduced our LTV from 56% to 51% during the year. The majority of portfolio expan- sion in 2017 took place in our newer markets of Romania and Hungary, which together made up 66% of overall portfolio growth. We contin- ued our expansion in Slovakia and began construction of two build- ings at CTPark Opole in Poland for two of our long-term clients. As in previous years, existing clients are our biggest asset, driving two- thirds of our growth. Due to the strong overall econom- ic performance of CEE markets in 2017, the industrial real estate sec- tor posted the highest occupancy rates on record. CTP core occupan- cy hit 97.7%. Low vacancy, cou- pled with strong new demand, has resulted in total rental income ris- ing to EUR 233 million for the year, and we expect this to increase 17% y-o-y in 2018. 02 03 e continue to be committed to im- plan to replicate at other large parks to better proving the quality of our build- serve our clients and their employees, who now ings and have introduced a num- number over 60,000 across our developments. At ber of new technologies into our Ponāvka, we launched the first housing project in ‘2020 Whitebook’—the standard Brno for students and young professionals, incor- specifications on which all of our porating best-in-class rooms, common areas and five property types are based. We amenities for residents. Wupgraded over 70 items in the specifications, in- CTPersonnel, which provides job-matching ser- cluding remote consumption metres for utilities, vices for our tenants, continues to grow. Through more efficient air handling units with a greater this personnel agency, we hire, train, and allocate heat recovery ratio, as well as our LED exterior workers to clients based on their workflow needs. lighting units, with even lower consumption In this way, clients can increase their workforce specifications than the previous generation. to meet seasonal demands without having to take In 2017, we continued with our ‘LED every- new people onto their payroll. Employees gain where’ efforts, and invested EUR 1.9 million to secure employment through CTPersonnel, while retrofit 34 buildings with low-energy consump- clients gain the benefit of flexibility. tion LED lighting covering 420,000 m² of space. As a long-term investor in our markets, we These energy consumption improvements are know the value of giving back to the community verified by local authorities and usually result in where we work and live. In 2017, CTP made chari- an upgraded energy certification (EPC) from C to table donations of EUR 1.8 million to support chil- B. We plan to continue this throughout 2018 and dren homes, education, and young adults. In Vod- beyond, upgrading at least 400,000 m² per year. erady, Slovakia, we helped build an extension to We also target smaller investments into HVAC the local kindergarten because many new families and Building Management Systems (BMS), which were moving to the area for work. We are pleased have a noticeable impact on building efficiency. to contribute to the further development of the This year we aim to upgrade 40 buildings from C needs of young families and their children. to B, which provides direct cost savings and long- Looking back over our nearly 20 years of ex- term value for our clients. perience in the region, it’s clear that our instincts As the region continues to attract a diverse were correct in identifying CEE as a market for mix of international companies, we see continued growth. At that time, companies chose to move to growth in 2018 as well as through the next five CEE primarily for low-cost production. Over time, years. To ensure enough space for future growth, they saw the benefits of the location: a highly ed- we have invested significantly into our land bank, ucated workforce with a long history of manufac- which now exceeds 700 hectares and can current- turing. These same companies are now moving ly accommodate another 3.5 million m² of A-class their design centres, R&D facilities, and other industrial space. value-add operations to the region. We expect To manage our growth and keep our clients this trend to continue, particularly in the e-com- satisfied, during 2017 we extended our platform merce, manufacturing, and ICT service sectors. of young, ambitious professionals to nearly 350 We look forward to accommodating our cli- people. The average age of our team is 36, and ents as they adapt to new market conditions, such we continue to seek young talent to constantly as industry 4.0, increasing automation, IOT, and improve our services. To encourage a healthy life- other new technologies. These trends will require style, we also sponsor our employees’ participa- smarter buildings, higher standards and great- tion in the Czech Doksy and Pálava half iron-man er customisation. CTP is uniquely suited to the competitions, and support any employee who challenge, with the right team, our dedication to wishes to take part in the many half- and full professionalism, our personal approach, and our marathons taking place thoughout the region. commitment to the high-quality, custom-built We continued to professionalise the company solutions that our clients need. and strengthen our top leadership team. Robert Pitt joined CTP in December as COO, and Rudolf Full Speed! Nemes joined as Country Head for Hungary. 10 These new additions have significantly improved our organisation and added depth and experience at key positions. We look forward to continuing our quarterly ‘top-30’ meeting, where executive management meets with our ‘top 30’ employees to share insight and feedback concerning on-go- Remon L. Vos, FRICS CEO ing projects and future plans. Not only have we improved our KPIs dur- ing the year, we also innovated on a number of fronts. In CTPark Bor in the Czech Republic, we built more worker housing and facilities for re- lated services, part of our pilot project that we 5 4.5 mil. 233 mil. 97.7% Rentable area (m2) Gross Rental Income (EUR) Occupancy Big Goals By 2022, we plan to double our speed of growth compared to the last four years, expanding our portfolio to EUR 10 million m2. 2.3 2014 2018 2022 04 05 PRELIMINARY FINANCIAL 68 % Czech Republic 39 % Romania 16 % Romania 27 % Czech Republic RESULTS:2017 6 % Slovakia 27 % Hungary 9 % Hungary 4 % Slovakia 1 % Poland 3% Poland Markets across CEE in 2017 continued to show growth as manufacturers and e-commerce occupiers took advan- 2017 was the first year in which we grew our portfolio tage of historically low interest rates. by more outside of our home market of the Czech Republic. While we grew in all markets, new construc- Regional Breakdown tion in Romania and Hungary made up the lion’s share Core Portfolio CTP also took advantage of this window, continuing our strat- of Core Portfolio, 2017 of portfolio expansion during the year. Growth, 2017 egy of refinancing major portions of our portfolio. Part of this strategy included forging new relationships with Western European banks to finance further expansion in CEE coun- tries. In four major transactions, we refinanced over EUR 590 million of debt and increased our outstanding loans to just 4.3 Value of assets (EUR billion) over EUR 2 billion. These new relationships bring the number 384 of our financial partners to 22, further diversifying our cred- Projected itor base and mitigating risk for all parties. Refinance negoti- 51% 327 ations resulted in improved terms and extended the residual LTV (Loan to value ratio) maturity of outstanding loans to beyond five years. 277 Raiffeisenbank In 2018, we plan to continue refinancing appropriately, with International Group KBC Group 7 12.1% 11.9% 233 the intent to release EUR 110–140 million of equity to strength- WAULT (years) en our cash-flow position.