MLP Group records 29% revenue growth, with 2024 set to be harvesting time

MLP Group records 29% revenue growth, with 2024 set to be harvesting time
• Revenues amounted to PLN 360.8 million (+29% YoY), EUR 79.7 million (+34% YoY),
• Value of investment properties reached PLN 4 541.5 million (+2% vs. 31 December 2022), EUR 1 044.5 million (+11% vs. 31 December 2022),
• Net Assets Value (NAV) reached PLN 2 395.6 million (-4% vs. 31 December 2022), EUR 551.0 million (+3% vs. 31 December 2022),
• NAV per share: PLN 99.8 (-4% vs. 31 December 2022), EUR 23.0 (+3% vs. 31 December 2022),
• EBITDA without revaluation amounted to PLN 178.7 million, (+32% vs. 31 December 2022), EUR 39.5 million (+37% vs. 31 December 2022),
• FFO amounted to PLN 93.3 million (+8% vs. 31 December 2022), EUR 20.6 million (+11% vs. 31 December 2022),
• Net loss: PLN 52.1 million (EUR 11.5 million),
• Lease agreements signed in 2023 amount to 276 thousand sqm (incl. binding LOI for 13.3 thousand sqm),
• BREEAM/DGNB: almost 80% of the portfolio certified with Very Good or Excellent level.

In 2023, MLP Group delivered an excellent set of results, both from the operational and financial point of view, driven by strong leasing performance on warehouse space across all its markets. MLP Group is the fastest growing logistics platform in Europe, combining conservative tenants’ acceptance criteria with rapid business growth.

In the past year, consolidated revenue rose by 29% YoY, to PLN 360.8 million, driven by an increase in the space leased to tenants combined with higher rental rates. Rental income from investment properties increased by 31.4%, to PLN 200.9 million. The value of investment properties rose by 2%, to more than PLN 4.5 billion (EUR 1.04 billion). At the same time, the Group’s EBITDA (without revaluation of investment properties) improved by 32%, to PLN 178.7 million (EUR 39.5 million). MLP Group maintained a very good financial standing and safe capital structure, enabling the implementation of long-term strategic goals.

The results are much better than we expected, despite highly volatile economic conditions and soaring inflation. Our FFO (funds from operations) amounted to PLN 93.3 million, an increase of 8% year on year and EUR 20.6 million, an increase of 11% year-on-year. We saw strong like-for-like rental growth of 7.7% during the year across our portfolio. Last year, we also recorded a 29% year-on-year improvement in consolidated revenue, to PLN 360.8 million and in EUR 79.7 million a 34% increase year-on-year, having signed leases for 276 thousand sqm. We have one of the best and most modern pan-European industrial warehouse portfolio with approx. 70% of assets developed within the recent five years, said Radosław T. Krochta, President of the MLP Group S.A. Management Board.

Strong leasing performance

MLP Group is developing its operations in Poland, Germany, Austria and Romania, where it currently operates 23 logistics parks. Its strategic goal remains to expand the warehouse portfolio by developing Big-Box facilities and Urban logistic projects.

Lease agreements signed by MLP Group in 2023 amount to approx. 276 thousand sqm (including binding LOI for 13.3 thousand sqm). New completions with a total area of 106 thousand sqm were located in Poland. At the end of last year, the Group had a total of 1.1 million sqm of built space, with 95% occupancy across all assets. With approximately 200 tenants, MLP Group has a wide and diversified international tenant base, consisting of blue-chip companies with strong credit ratings. MLP Group’s top 10 tenants provide  36% of annual rental income.. At the end of 2023, new space under development amounts to 182 thousand sqm. The development potential of the existing landbank is close to 1.9 million sqm. In addition, the Group has reservation agreements to purchase new plots with an area of some 200 hectares, allowing it to develop another 800 thousand or so sqm of new space. In 2023, strong like-for-like rental growth of 7.7% was recorded during the year

Growing share of Urban/City logistics projects

Occupier demand for warehouse space across all markets where we operate, is robust and the combination of near-shoring, influx of Asian investors, enhancing resilience of supply chains are expected to further drive the demand. We expect this contrast between positive demand and limited supply to drive further growth in rental levels. 2024 will see the launch of a number of our flagship projects, spanning Urban logistics (MLP Business Park) in Vienna, Schalke (Gelsenkirchen), Łódź and Poznań, and Big-Box developments in Poznań, Idstein (Frankfurt am Main), and Berlin-Spreenhagen. Those projects shall significantly contribute not only to our rental income but also to NAV in 2024. In previous years, we were focusing on the preparation of those projects and 2024 will be the harvesting year, noted MLP Group’s CEO.

In 2024, MLP Group’s capital expenditure (CAPEX) will amount to approximately EUR 190 million, of which approximately 25% will be allocated to plots’ purchases. We plan to lease approx. 200-300 thousand sqm of the new warehouse space. During the period, the Group plans to lease approx. 200-300 thousand sqm of the new warehouse space. Further rapid development on the German market is seen as a key point of MLP Group’s strategy. It plans to strengthen and expand its presence in the regions where it has already established a foothold, i.e. the Ruhr area, Brandenburg and Hessen land.

Key challenges for 2024 are related to starting new Big-Box projects (with an area of approx. 200 thousand sqm) to be deployed on plots held in Wrocław, Łódź, Zgorzelec, Poznań, Pruszków and Idstein.

Another focus in the current year and beyond will be on Urban/City logistics projects (MLP Business Park) as products with strong growth potential, high profitability and resilience to economic downturns. The target is to equalise value of Urban logistics with Big-Box projects by 2028. Urban logistics projects currently in the pipeline or under construction in Poznań, Łódź, Vienna and Schalke will deliver total space of some 165 thousand sqm.

Excellent financial standing enables further strong growth

MLP Group benefits from a solid liquidity position to fund its growth ambitions, with a fixed cost of debt and conservative repayment profile. Considering the current geopolitical situation and high volatility in the economy, the Group is very well prepared for the current challenges.

100% of its lease agreements are automatically indexed with CPI. All rentals are denominated in EUR or are directly expressed in EUR, which significantly reduces exposure to the currency risk. Almost 80% of loans are hedged with IRS for the next 4 years, resulting in limited interest rates’ exposure. MLP Group also maintains a strong cash-flow position. LTV (loan-to-value) last year was at 38.6%, with interest coverage ratio at 2.3 x ICR. FFO (funds from operations) amounted to PLN 93.3 million (+8% YoY), EUR 20.6 million (+11% YoY).

In keeping with its build & hold strategy, MLP Group retains completed logistics parks in its portfolio and manages them. All projects undertaken by MLP Group are distinguished by very attractive locations of the logistics parks, application of built-to-suit solutions, and support given to tenants during the lease term.

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