The 2019 financial year was a record year for Warimpex Finanz- und Beteiligungs AG, with a consolidated profit of nearly EUR 67 million, which is the best result in the company’s more than 60-year history. This record result can largely be attributed to the sale of properties – first and foremost our two hotels in Paris – as well as accounting gains and the completion of office projects in Poland that delivered stable cash flows in 2019.
The medium- to long-term strategic course that was set in the years following the global financial and economic crisis was resoundingly confirmed last year. Under this strategy, Warimpex aimed to build up its property portfolio after the successful sale of hotel assets at optimal times; to strengthen its earning potential, particularly in the office property segment; to diversify its market and product portfolio; and to improve its equity ratio, which was 44 per cent as at the reporting date. On the whole, the distribution of the asset classes in our property portfolio has shifted heavily towards offices. As a result, the hotel segment, which is being drastically impacted by the corona crisis, now only accounts for 14 per cent of the portfolio, while office properties make up the lion’s share at 74 per cent.
From this standpoint, our record result also has to be considered in the context of the COVID-19 pandemic: At just the right time, we were able to solidify Warimpex’s financial base through hotel sales and thus increase our equity. Fortunately, we have a very experienced and crisis-tested team that has already proven in the past – for example, during the global financial and economic crisis – that the Warimpex business model is successful in even the most challenging times. Combined with our deep roots in our core markets and strong local networks and partners, Warimpex is therefore well equipped for the current and coming challenges.
Transactions and development projects
We successfully sold four real estate projects in 2019: the Vienna House Dream Castle and Vienna House Magic Circus hotels in Paris, the operating company for the Dvořák spa hotel in the Czech town of Karlovy Vary, and an office property in Budapest.
By contrast, Mogilska 43 Office in Krakow was completed in May 2019 and added to the property portfolio, as was a hotel including a property reserve that was acquired in the German city of Darmstadt. Warimpex has been active on the German market again since the property reopened in September 2019. The hotel is currently being converted to the new Accor eco-lifestyle brand “greet”and will be repositioned on the market. Modern coworking offices will be added to the hotel’s offerings in order to provide flexible office space with short contract periods in the future. The three-hectare hotel site also has property reserves for the development of additional premium office and commercial space.
We expanded our activities in the Russian city of St. Petersburg: Following the acquisition of a 35 per cent stake in the project company AO AVIELEN A.G., the operating company for AIRPORTCITY St. Petersburg, Warimpex now holds 90 per cent of the shares and started construction on another office tower (Avior Tower 1) with roughly 16,000 square metres of space in the third quarter of 2019.
Company performance in 2019
Naturally, the sale of hotels led to a decline in revenues in this segment to EUR 10 million, which represents a drop of 20 per cent versus the prior year. By contrast, revenues from the rental of office properties increased by 28 per cent year-on-year, improving to EUR 19.9 million. This can be attributed primarily to the purchase of the B52 office building in Budapest and the completion and opening of Ogrodowa Office in Łódź in 2018 as well as the completion and opening of Mogilska 43 Office in Krakow in May 2019. Total revenues rose to EUR 31.6 million, and expenses directly attributable to revenues advanced by 8 per cent to EUR 14.2 million. This results in gross income from revenues of EUR 17.5 million (up 3 per cent). A disposal result of EUR 28.9 million was generated due to successful transactions. EBITDA improved from EUR 4.3 million to EUR 29.9 million during the reporting period, primarily due to successful property sales. Depreciation, amortisation, and remeasurement fell from EUR 15.5 million in the prior year to EUR 14.9 million. EBIT increased from EUR 19.8 million to EUR 44.7 million as a result of gains on the sale of properties. The financial result (including earnings from joint ventures) rose from minus EUR 14.9 million to EUR 25.8 million. This includes an accounting gain of EUR 20.3 million on the purchase of loans of former minority shareholders of a Russian Group company as well as exchange rate gains in the amount of EUR 8.3 million (2018: exchange rate losses of EUR 11.5 million). The profit for the period increased from EUR 1.9 million in 2018 to EUR 66.5 million.