Transformation from being the owner of standing assets to pure developer, considerable acceleration of development and leasing activity, high growth in apartment sales and focus on delivering return to shareholders – these are Echo Investment’s 2016 highlights. The company successfully implemented the strategy of profitable growth and it is ready to establish a long-term dividend policy.
One of the major pillars of the profitable growth strategy is to accelerate capital turnover. The results are proven by numbers. Last year Echo Investment started projects of nearly 200,000 sqm of office, residential and retail space, and completed almost 170,000 sqm. That is twice as much as in 2015. The leasing teams increased the leased area by 80 percent in the office sector and by 30 percent in retail. Residential sales teams encouraged clients to buy 925 apartments, which is 56 percent more as compared to the previous year.
“In 2016, Echo Investment became a pure developer,” says Nicklas Lindberg, Echo Investment CEO. “Based on our standing assets, we created Echo Polska Properties, attracted a respectable co-investor to the new company and successfully listed it on Luxembourg and Johannesburg stock exchanges. Later, we sold Q22 to Invesco Real Estate and three office buildings to EPP, at a total price of €397 million. Sales of almost the entire commercial property pipeline for 2017 and 2018 have already been secured by preliminary agreements with the ultimate owners. This gives us very stable outlook for future business growth and return delivering.”
Echo’s pipeline of projects for 2017 is impressive. The company intends to launch construction of projects with combined office, retail and residential area totalling 182,000 sqm, and to complete over 150,000 sqm. of space in these sectors.
“Echo Investment is a stable and experienced company, and has the ability to develop projects in retail, office and residential sectors, including big-scale, mixed-use investments like Browary Warszawskie or Galeria Libero in Katowice. Such projects fit our strategy as well as help to accelerate capital turnover and optimise our resources,” added Nicklas Lindberg. The company’s pipeline secures projects to be started until 2019, but Echo continues negotiations regarding new plot acquisitions.
“Since the beginning of 2016, we have bought several plots, which will be used to develop 123,000 sqm of residential, office and retail space. We are also well advanced in negotiations regarding acquisitions of areas with potential to build over 500,000 sqm. These activities, together with Towarowa 22 and Galeria Młociny projects that we are going to develop with EPP, secure the implementation of our investment plan for the next few years,” adds Nicklas Lindberg.
Last year was very profitable also for the company’s shareholders. For the first time in its history Echo Investment shared profits with its investors. The total return on Echo’s shares in 2016 amounted to 62 percent, together with the share price and dividends paid or declared.
“Having secured the sale of almost all projects in the pipeline, the management board decided to adopt the dividend policy. For 2017 profit, Echo Investment will pay the shareholders PLN 0.5 per share, and after that – up to 70 percent of the net profit will be shared. The remaining amount of the profit will become a foundation for the company future growth. We want Echo Investment to be a stable and attractive investment target,” concludes Maciej Drozd, Echo Investment CFO.
In 2016, Echo Investment Group generated PLN 480 million revenue, PLN 605 million operating income, and PLN 388 million net profit. The assets value amounted to PLN 3.4 billion. The Group debt ratio is very low. Net debt / total assets less cash ratio decreased to 24 percent as compared to 50 percent in 2015.
Consolidation of the residential business, maintaining a high rental level in all completed Resi4Rent projects, starting new “destination” projects – this is a summary of the operational activities of...