Grand City Properties - comment

As expected, GCP have continued to bolster their liquidity, with €110m new bank facilities and €20m additional disposals since last reporting. This results in €1.1bn of cash and liquid assets, sufficient to meet debt maturities until Q2 2026. LTV is static at 36%, based on June valuations. Management expect further devaluations of c.5% in the year-end accounts.  

The Company has confirmed guidance for FY23. We had expected dividends would recommence in FY24. Despite the confirmation of the Company’s dividend policy of 75% of FFO, it is looking unlikely one will be paid.  FFO is after revaluation/devaluation and given the outlook on valuations plus interest rates environment, management currently admits a dividend does not look probable. On the new bank financing, the margin is steady at 140bps and the average term is 7.5 years. However, the process for new bank financing is lengthening. This is the first time the Company have highlighted the risk that the capacity in the German market could be reduced due to the stress in the overall German secured property loan market.