The Warimpex Group reported a positive operating performance for its office properties and hotels in the first half of 2022. Revenues from office property rental and from hotel operations improved in annual comparison. Two transactions were also successfully closed in June, one being the sale of the B52 office building in Budapest with over 5,200 sqm of net floor space under a share deal. The other was Warimpex’s purchase of Red Tower in Łódź with over 12,400 sqm of lettable space. Plans are in place to renovate the office tower and to expand it with a co-working zone and conference rooms. Around 40 percent of the space at the building is occupied at the moment. In total, this resulted in a profit for the Warimpex Group in the first half of 2022 of €13.4 million, up from €1.7 million in the previous year.
“We are very pleased with the positive development of our business operations. But the general economic conditions are still being impacted by the conflict in Ukraine, the western sanctions against Russia, and Russia’s reactions to these sanctions. After falling substantially at the end of February, the rouble stabilised starting in April 2022 and strengthened considerably in June 2022 – including in annual comparison,” noted Franz Jurkowitsch, Warimpex’s CEO.
Substantially improved profit for the period
The financial metrics for the Warimpex Group in the first half of the year were as follows: Revenues from the rental of office properties rose from €9.7 million to €14.7 million in the first six months of this year. This was primarily due to the inclusion of the revenues from the Jupiter office towers at AIRPORTCITY St. Petersburg, which has been fully consolidated in the Group since the end of 2021, as well as to the substantially stronger rouble. Hotel revenues grew from €2.2 million during the first half of 2021, a weak period due to the coronavirus, to €3.8 million. Total revenues improved from €12.8 million to €20.1 million while the expenses directly attributable to revenues advanced from €4.4 million to €7.2 million. This equates to gross income from revenues of €12.9 million versus €8.4 million in the prior year.
EBITDA doubled from €5.0 million to €10.7 million. This increase was driven primarily by the better gross income from revenues and the sale of the B52 Office in Budapest with an earnings contribution of €2.8 million. EBIT improved from €5.9 million to €16.7 million due to the higher EBITDA and the positive result from property valuation.
The financial result (including joint ventures) went from minus €3.6 million to plus €0.9 million. This includes currency translation gains of €5.9 million (2021: gains of €0.7 million) and losses from the measurement of derivatives held for interest rate hedging purposes and currency hedging purposes in the amount of €0.7 million.
This results in a profit for the period for the Warimpex Group of €13.4 million compared with a profit of €1.7 million in the previous year.
New office buildings under construction or in the planning phase
In terms of development projects, efforts in the first half of the year were focused primarily on moving forward with construction and planning work. In Krakow, progress is being made on the construction of Mogilska 35 Office, which will offer roughly 12,000 sqm of lettable space. The project is scheduled to be completed in 2023. Building permits have been issued for both the Chopin office building in Krakow with around 21,200 sqm of lettable space and the MC 55 office building in Białystok with about 38,500 sqm of lettable space. In line with Warimpex’s strategy, construction will start on both projects as soon as an appropriate level of tenant interest has been secured. In the German city of Darmstadt, the planning for the West Yard 29 office building with roughly 13,800 sqm of space is already at an advanced stage.
At AIRPORTCITY St. Petersburg, the building shell for Avior Tower 1, which will offer roughly 16,900 sqm of space, has been completed. “In Russia, Warimpex owns a 100 percent stake in the project companies responsible for AIRPORTCITY St. Petersburg, which are stable and self-sufficient. The properties are financed through local banks in local currency, have a solid capital base, and cover their liquidity needs themselves. This means that our Russian subsidiaries can act autonomously and independently of the support of the parent company. At present, it is possible to continue operational activities in Russia without significant restrictions. Naturally, we are monitoring the economic and legal developments very closely in order to be able to react quickly to current events if necessary,” Jurkowitsch explained.
The company’s operational focus for the second half of 2022 will remain on making preparations for construction, obtaining building permits, and continuing ongoing construction. Energy efficiency, the use of renewable energy sources, and reducing carbon emissions are core considerations in the construction and refurbishment of buildings. Warimpex is striving to obtain certifications for its portfolio in this area by implementing sustainability concepts at the properties.
“Although the situation surrounding the conflict in Ukraine and our investments in Russia remains difficult, we are still well equipped for the current and coming challenges with our experienced, crisis-tested team,” Jurkowitsch concluded.
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