MLP Group increased revenues by more than half

Key data for the first half of 2023:

• Operating revenue amounted to 185.7 million PLN, +51% y/y. 40.3 million EUR (+52% y/y)
• EBITDA excluding valuation updates: 97.2 million PLN (+ 63% vs 1H 2022), 21.1 million EUR (+ 64% vs 1H 2022);
• Value of investment properties: 4.3 billion PLN (- 3% vs December 31, 2022), 963.1 million EUR (+ 2% vs December 31, 2022);
• Net Asset Value (NAV): 2,394.3 million PLN (- 4% vs December 31, 2022), 538.0 million EUR (+ 1% vs December 31, 2022);
• NAV per share: 99.8 PLN (- 4% vs December 31, 2022), 22.4 EUR (+ 1% vs December 31, 2022);
• FFO: 58.0 million PLN (+ 57% vs 1H 2022), 12.6 million EUR (+ 58% vs 1H 2022);
• Net loss: -82.7 million PLN (-17.9 million EUR);
• Lease agreements signed in the first half of 2023 or in the process of being signed by September 2023: approx. 161 thousand sqm;
• BREEAM/DGNB certificates: by Q3 2023, 85% of the entire property portfolio will have obtained certificates at the Very Good level.

„In the first half of 2023, we adopted a very cautious approach in the face of economic uncertainty. Despite the challenging economic environment, we achieved excellent results in both operational and financial terms, mainly thanks to the effects of our property leasing business across Europe. In the first half of the year, we increased our revenue and FFO (funds from operations) by over 50% – this is a very important indicator for us, showing the great potential and also the operational stability of MLP Group. The value of our investment properties reached 4.3 billion PLN (an increase in EUR of 2%, a decrease in PLN of -3%). We see that the process of making final decisions by tenants has lengthened – most of the new MLP Group transactions will be concluded in the third and fourth quarters of 2023” – said Radosław T. Krochta, President of the Management Board of MLP Group S.A.

In the first half of this year, agreements for over 160 thousand sqm.

MLP Group is developing its business in the Polish, German, Austrian, and Romanian markets. The Group currently operates 21 logistics parks. The strategic goal remains to expand the warehouse offer as part of the development of Big Box buildings and urban logistics projects. Lease agreements concluded in the first half of this year or in the process of being signed by September of this year covered a total of approximately 161 thousand sqm. Due to the longer time taken by tenants to make final decisions, most leasing transactions will be concluded in the last two quarters of the year. The industrial and logistics sector in Europe benefits from structural demand factors, such as the need to further improve supply chains and growing interest in nearshoring and friendshoring projects.

In the first half of this year, MLP Group started speculative investments in the Polish and Romanian markets, covering a total of over 108 thousand sqm of space. 26% of the facilities under construction have already been leased, which confirms the high demand for new space. In the first half of 2023, MLP Group delivered a total of approximately 97 thousand sqm of new space for use. At the end of the last half-year, the Group had 1.07 million sqm of ready space, with a 97.4% occupancy rate for all assets. Nearly 122 thousand sqm were under construction and in preparation. The average duration of lease agreements is 7 years, and the retention rate reaches 100%.

A secure financial situation favors the achievement of goals

„We are using our solid liquidity position to finance ambitious development goals. Given the current geopolitical situation and high economic volatility, we are very well prepared for current challenges. 100% of lease agreements are indexed to the CPI for EUR without any limit (once a year in February). All rents are denominated in EUR or are directly expressed in this currency, which significantly reduces our exposure to currency risk. Almost 80% of loans are secured by IRS for the next 5 years, which protects us against interest rate changes. The greatest value is the potential of secured plots, which enables rapid development in the coming years in European markets” – emphasized Radosław T. Krochta.

MLP Group also maintains a strong position in terms of cash flow. The LTV (loan to value) ratio in the first half of this year was at the level of 35.7%, and the interest coverage ratio was 3.0x ICR (interest coverage ratio). There was a long debt maturity period of 4.3 years. In turn, FFO (funds from operations) amounted to 58 million PLN, which means an increase of 57% y/y.

ESG investments attract tenants

MLP Group consistently implements investments related to the use of renewable energy. The sustainable development strategy aligns with the expectations of tenants who demand greater energy security, lower operating costs, and the ability to achieve their own ESG-related goals. MLP Group has already installed photovoltaic systems with a total capacity of 4.67 MWp, and by the end of this year, it intends to increase it to 6.46 MWp. The goal is to install panels on every building, which is treated as a standard when constructing new facilities.

Great potential for further development

„In all the markets where we operate, tenant demand for warehouse space remains at a good level. We see strong demand from the light industry sector, which is related to the trend of companies moving production back to their home country (friend/nearshoring), which is consistent with the assumptions of the MLP Group strategy. We are constantly replenishing our land bank. In the past period, we increased the expansion potential of the MLP Poznań West and MLP Pruszków II parks. We are in the process of purchasing plots for new projects, MLP Berlin Spreenhagen and MLP Bieruń, and their acquisition will take place in the near future. In the second half of the year, in addition to implementing many ventures in the Polish and German markets, we will start urban logistics projects in Poznań, Łódź, and Vienna. We are continuing our development in Germany, where we are systematically increasing our project portfolio. We plan to strengthen and expand our presence in the Ruhr area, Brandenburg, and Hesse. Further development in the German market is a key point of our strategy. Capital expenditures (CAPEX) in 2023 will amount to approximately 100-150 million EUR, of which approximately 30% will be allocated to the purchase of new plots. Over the course of the whole year, we plan to lease approximately 200-300 thousand sqm of new warehouse space” – added Radosław T. Krochta.

In accordance with the „build & hold” strategy, MLP Group, after completing the construction of logistics parks, keeps them in its portfolio and manages them independently. All projects implemented by the Group are also distinguished by the very attractive location of the logistics parks, the use of built-to-suit solutions, and support for the tenant during the term of the lease agreement.

source: press materials