Warimpex has ambitious plans despite losses

The preliminary financial results revealing a loss of EUR 35.3 mln for 2014, which were published at the beginning of April, have now been confirmed by the data from its report for the last financial year. The company claims that this result is mostly due to changes in valuations and currency exchange fluctuations in Russia.

However, the company’s operations outside Russia in 2014 were positive, as was particularly reflected in its growth on these markets, by 12 pct in terms of the Net Operating Profit (NOP) index per available hotel room (NOP increased by 2 pct in its entire portfolio). However, the results for hotels generally visited by Russian and Ukrainian guests reflect the effects of the Russian crisis and the decline in the value of the ruble – which has mostly seriously impacted the performance of the group’s hotels in Ekaterinburg and Petersburg. With unchanged occupancy levels, these still suffered a 10 pct decrease in sales revenue compared to 2013, due to the lower prices of the rooms as a result of the cheaper ruble. At the same time, the crisis has also affected those hotels outside Russia mostly visited by Russian and Ukrainian guests. The Dvořák hotel in Karlovy Vary in the Czech Republic was the most affected, suffering a 20 pct drop in revenue. In terms of valuations, the falling values of the group’s office properties as most evident in Russia. The company’s financial operations result also slid down, due to the falling ruble.

“Our losses due to currency fluctuations have not affected our cash flows and so they are only temporary. Together with the now growing value of the currency, which can now be seen, our results will also improve respectively,” explains Franz Jurkowitsch, the president of Warimpex. “The successful sale of a section of Airportcity St Petersburg, after the balance day, proves that even at such difficult times successful transactions are possible in Russia,” he adds.

Warimpex also has ambitious investment plans. “Our goal for this year is the continuation of our current development projects in Berlin, Kraków, Budapest and Petersburg as well as concluding one or two sales transactions. For example, in April we managed to sign a letter of intent with an international investor to sell a property (Andel’s hotel in Berlin – editorial note). At the same time, we are continuing to work on the strengthening of our financial foundations, improving the terms of our financing and the further optimisation of the ongoing cash flow from our assets,” insists the president of the company.

Warimpex is the owner of the Chopin Office project at ul. Przy Rondzie 2 (next to the Chopin hotel) in Kraków, where a 21,000 sqm office building is to be built. The design work is in progress and the project should be ready in 2016/17. Warimpex is also planning to demolish a nearby office building at ul. Mogilska 43, where a new office building under the name of Mogilska Office with an area of app. 20,000 sqm is to be built. The design work is also in progress for this project. “We are in negotiations with a large tenant interested in the lease of office space in Kraków,” says Alexander Jurkowitsch, a board member at Warimpex.

In Białystok, Warimpex owns a 1 ha development plot purchased in 2006, where it would be possible to build 25,000–30,000 sqm. “The plot in Białystok is interesting in terms of hotel, retail or office development,” claims Alexander Jurkowitsch. However, the company has not ruled out selling the site under favourable market conditions.

Meanwhile, in Budapest the company is revitalising the Erzsébet Office complex. The work is likely to finish in mid-2015, when the office complex is due to be handed over to a tenant. In Russia, construction work is in progress at Airportcity St Petersburg on the Zeppelin office building (15,800 sqm and a multi-storey car park (app. 20,000 sqm), but is unlikely to be completed this year. The company still holds some land reserves for future stages of the project.