Ghelamco sees debts rising despite profits in the second half of the year

Thanks to a good second half of the year, Ghelamco limited its losses in 2023. But the Gheysens family’s real estate company sees its debts rise further.

The Belgian real estate sector is experiencing difficult times due to rising interest rates. But one of the country’s best-known real estate firms, Ghelamco, nevertheless saw its turnover increase. The project developer, which is active in Belgium, France, the United Kingdom and Poland, achieved a turnover of 137 million euros last year, a third more than in 2022. This is evident from the annual results that the company published on Thursday morning.

Last year, Ghelamco was one of the few real estate companies that managed to sell several large buildings. In September, the Gheysens family sold the Blue Towers in Ghent to the Reactr fund for 80 million euros, good for a significant return of 8 percent. The Federal Pension Service purchased part of the Copernicus office project at Antwerp Central. And Ghelamco lost a hotel in Warsaw for 69 million euros.

The results are negatively affected by an impairment of 54 million euros that Ghelamco had to implement, mainly in Poland, as a result of rising return demands from investors. At the same time, Ghelamco recorded 68 million euros in value increases. The company does this on the basis of the planned sale of three projects for which Ghelamco signed ‘binding sales agreements’. This includes the Nexus data center in Zellik and the Antwerp office building Nova One. The three deals, which Ghelamco wants to complete in the coming months, should generate gross revenues of 160 million euros.

The planned sales are remarkable since large institutional investors are currently not interested in real estate. But Ghelamco considers its new, almost fully rented ‘prime’ projects, such as the office project The Wings in Diegem, ‘ready for sale’ given the scarce supply of ‘Paris-proof’ buildings, which retain their value better. “What can you sell: that is the question today,” says owner Paul Gheysens. ‘We have top products, but everything runs a little slower.’

While competitor Immobel does not expect the market to pick up until 2025 at the earliest, Ghelamco expects a renewed appetite for top projects in the second half of this year. “Institutional investors no longer compromise on ESG (sustainability, ed.), but they also understand that the supply will be rather limited in the coming years,” says son Michael Gheysens, responsible for the Belgian market.

Ghelamco wants to use the proceeds from the sales to reduce its debts. Because the company saw its net financial debt rise again last year to 1.34 billion euros. The debt ratio rose from 55 percent at the end of 2022 to 59.5 percent, which Ghelamco calls ‘healthy’. While long-term liabilities fell sharply, short-term financial liabilities (with a maximum term of 1 year) doubled to 895 million euros.

Hans Van Audenaerde, head of investor relations, points out that Ghemaco is actively working on reducing and refinancing these short-term debts. ‘We have already repaid EUR 70 million today and will repay another EUR 77 million in the next three months. In addition, we have already extended 200 million euros in loans for more than twelve months. So 350 million euros have already been covered. The main focus of the repayments of the other short-term loans will be in the fourth quarter of 2024.’

At the end of this year, Ghelamco must repay two bonds in Belgium and Poland, together worth approximately 120 million euros. The company was very active on the Polish bond market last year. Ghelamco, a big name in Warsaw, placed bonds worth the equivalent of 178 million euros to small investors. Ghelamco used the majority of the proceeds to repay previous bond rounds before maturity.

Part of the new bonds were issued at an interest rate of ‘Wibor 6M (Warsaw Interbank Offer Rate at six months) + 5 percent’, which at the then Wibor interest rate means a rate of 12 percent. But according to Ghelamco, this interest rate is not excessive, because the bonds are quoted in zloty and inflation is high in Poland.

Owner Paul Gheysens responds laconically to rumors in the Belgian real estate sector about the dire financial situation of his company. “He who chats behind your back stands behind you,” he says. ‘Ghelamco is in much better shape than some people claim.’