Remon Vos, general director of CTP

What is the breakdown of CTP’s current holdings?

By year end we’ll have in our portfolio roughly 2.8 million sqm in Czech Republic, 500,000 sqm in Romania, and 250,000 sqm in each of Slovakia and Hungary; we also have some property in
Germany and Poland, and we have a building in Austria and Netherlands. Across the entire portfolio, 85% of this lettable area is warehouse or industrial space. The balance is composed of offi
ces, particularly in projects such as Spielberk, retail space, and, more recently, hotels.

You stated a goal of reaching 4 million sqm by the end of 2016. How much growth is CTP seeing?

We’ve grown every year, and even more so in recent years. According to our latest quarterly report, in terms of rental income we’ve seen a jump from EUR 200 million in 2015 to EUR 231 million
in 2016. Looking at lettable area, from 2010 to 2014, we actually doubled; from 2014 to 2017 we’ve grown from 2.3 million to 4.2 million sqm, so again (in less time) we’ve almost doubled. So
we’ve already reached that goal. But our bigger plans are to continue to grow to 5 million sqm by 2018, which we’ve revised from 2020. Our report shows that if the market remains strong, and assuming just organic growth, we’ll grow by then to 5.3 million sqm.

Which countries have been most active for CTP in terms of development this year?

The most development has been in Romania; demand has been strongest there this year and we’ve done about 260,000 sqm, followed by CR where we’ve done about 180,000 sqm. After that it would be Hungary and Slovakia. In total this year CTP has developed over 450,000 sqm. But we also have fresh news that in Poland we are now growing – we just signed in November with IAC, one of our long-term term clients in the automotive sector, to build a factory in Opole. We actually bought more land there, so this is just the fi rst property we’ll be building. This example actually shows how we do it – our developments in diff erent regions are always driven by the requirements of existing clients.

CTPark Teplice (ČR). Developer: CTP.

Where has CTP made its most recent acquisitions? Are more planned?

The last two years have been busy in terms of acquisitions for CTP. We grew signifi cantly in the new markets of Slovakia, Hungary and especially Romania where CTP is currently constructing
various A-class industrial properties in Bucharest and regional cities with the plan to grow the portfolio to 1 million sqm of lettable area by 2018. In November, we just completed an acquisition in Hungary of WestLog Distribution Centre, an 82,000 sqm facility located just outside Budapest. We entered the Hungarian market through acquisitions at the end of 2015 and
have grown mainly through acquisitions, though we now have some 50,000 sqm under construction for various clients there. In the CEE market as a whole, there is simply not a lot available to
buy, but we remain interested in selected opportunities which match our portfolio profile.

What led you to build business in Romania? Growth has been particularly rapid there…

Although we entered the Romanian market in 2007, we only started to develop in 2014. The fi rst project we did was for Fränkische, a German automotive business and one of our long-term clients. We built them a facility in CR and they asked us if we had something for them in Romania, because their clients, such as Daimler, are located there. We off ered them the existing site we bought in 2007 south of Cluj, and that’s how it started. We then saw the market pick up, all the recovery, the potential: if you compare Romania to other European countries, you’ll see that per 1,000 inhabitants there’s only 120 sqm of industrial property compared to maybe 400 sqm in CR or Slovakia. So for a country of 22 million inhabitants, there is an undersupply. We started making acquisitions at the end of 2014, beginning with a park from Prologis with 100,000 sqm lettable area and 30 ha of land just outside of Bucharest. There’s a neighbouring site which we then purchased from Robert Neale of Portland Trust. We continued through the next year or more to acquire throughout the country – properties from ING Bank, Volksbank, Heitman and others. And
at the same time we started constructing, so our business really grew in Romania in a short time. It’s also at that same time when the project – now famous – for Amazon in Brno fell through. I’m a big fan of Brno as you know – we’ve spent a lot of money there and are continuing to develop a further 700,000 sqm. But this was for us a moment to consider whether we should be doing
projects outside the country – so it factored in as one of the reasons.

CTPark Voderady (Slovakia)

What types of clients do you have and in what sectors?

Two thirds of everything we do is for existing clients. They come from various fi elds. Some are in the pharmaceutical or medical industry, others are in logistics and distribution. We’ve got
many who do R&D, especially in Brno, and we have companies in the plastics industry. Then there are companies in retail and those which are e-commerce related. And of course there are a lot of manufacturers and some involved in automotive supply. That’s why we have parks like Ostrava, to accommodate suppliers to Hyundai and Kia. Across the border in Žilina we have a site right next to the Kia factory; and in Slovakia we have CTPark Bratislava next to the VW/Audi plant; and we are in Nitra and Trenčín. In Romania we have a site in Piteşti, where Renault and Dacia build cars. In this sector our tenants are very diverse as are their needs – we have companies like Brembo, an Italian brakes system producer. Their newest factory we built for them in Ostrava even includes an aluminum foundry and an anodizing bath. In Brno we have a turbo test lab for Honeywell; even Ferrari out of Maranello are shipping their turbos to get them tested. Of course in CTP Bratislava you’ll fi nd many suppliers to Škoda or VW/Audi – or supplying to Győr, Hungary from there. We have sites there next to the Audi factory where we are currently building a plant for a German automotive company and we also have sites in Tatabánya. So you can trace the route of automotive hotspots from CR to Romania.

What demand more specifi cally do you see from retail or e-commerce?

We have several companies involved in furniture, supplying for example to IKEA; BJS in Humpolec is a good example. In the food sector we did a project for Lidl in Plzeň and we are doing
a hall for Metro in Prague on the D8. Retail for us now is very e-commerce related, as shown by companies such as Primark or even Tech Data, both in CTPark Bor, or smaller fi rms. We built
a distribution centre for Primark which supplies their stores in Germany. But we prepared their facility for shipping straight to the consumer – which is their next step. We see the trend to buy more online from other retailers as well, such as Humanic.

We have some 47,000 people working in our parks. And e-commerce is very labour intensive, so that’s why we’re so keen on providing shuttle bus and public transportation services – but also
on-site restaurants, accommodation or medical service. What we’ve done for instance in Bor is built an accommodation centre: phase I is 400 beds, so people travelling from a farther distance
can stay on-site. We do all that just to make sure people like to work in our parks – because without staff , there is no way to develop.

What were your biggest leasing transactions across the region this year?

I would defi nitely highlight the handover of CTP premises to IBM in June 2016 at Ponávka. As you might know, Ponávka is an innovative, mixed- -use, modern business park in downtown Brno. It off ers state-of-the-art offi ce design and modern, effi cient offi ce layouts of approx. 2,500 sqm. CTP built the IBM R&D center for up to 300 people in an A-Class offi ce building which was a former brownfi eld area close to Brno city center. We also successfully closed a big deal with Yanfeng at Planá nad Lužnicí and Coloplast in Hungary.

What is the loan status of CTP now? New loans and consolidations are frequently announced…

It’s part of the company’s growth story. We are privately owned and 35% of our investment is equity; we borrow the remaining 65%. We now have appx. EUR 1.7 billion borrowed and we partner with certain banks, such as Erste, Société Générale or KBC – these are banks which are active throughout the region. This is a very good thing for us, as we work with the same clients and the same banks in Romania as we do in Humpolec.

Do you have any plans to sell part of the portfolio or business?

There was discussion about it in previous years but there are currently no plans to sell, in terms of property or in terms of any change in ownership.

Will you enter new markets? What are CTP’s plans for the next two years or beyond?

By 2018 it’s projected that the company will develop a further 600,000 sqm in CR and 400,000 sqm in Romania, along with similar in Slovakia and Hungary. For the foreseeable future, we are concentrating on the four core markets, but also have plans in Poland. In particular, we want to stay market leaders in CR and Romania. However, we like to plan, so looking even further ahead, we’re also thinking of where we’ll go once we hit the 5 million sqm mark; naturally it’s a question between there and, say, going to 10 million sqm. It’s being discussed among the top 20 people in CTP. Maybe in the future…

Source: BUILDING WORLD magazine, December 2016

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