Archicom enters two new markets

The construction of the next office building is to start in a year’s time. Kraków was chosen as its second market because the expected margins are likely to be similar to those generated in Wrocław. “We are planning to develop in Kraków, a city with a similar potential and market structure as Wrocław,” Rafał Jarodzki, the vice-president of the board of Archicom, has announced. The large-scale estates developed by the company include nursery schools, crèches, fitness clubs and other facilities, which all add to the high margins obtained by the developer. “A buyer wants to pay for what they get from us – and because of their size our estates offer everything. It is the effect of scale that counts,” claims Paweł Ruszczak, the member of the board at Archicom responsible for financial issues. Its gross sales profitability amounted to 39.3 pct in 2015. “In Warsaw land is twice as expensive as in Wrocław. It would be difficult for us to achieve the desired margins there,” Rafał Jarodzki informs us. “So far we are not planning to expand onto new markets,” reveals Dorota Jarodzka-Śródka, the president and co-founder of Archicom. Archicom has also decided to enter the Warsaw stock exchange. The Financial Supervision Authority has approved Archicom’s prospectus and the maximum price of shares offered is PLN 20 mln. A shares allocation on March 16th is to be followed by an IPO before the end of that month. Only new securities of the company are to be floated and will constitute 20 pct of the company’s share capital as well as a 15.8 pct share in the voting rights. Its current shareholders are the president of the company Dorota Jarodzka-Śródka, co-founder Kazimierz Śródka and Rafał Jarodzki, the vice-president of the board, through the companies DKR Investment and DKR Invest. They will keep the shares they already own. The funds raised from the issue are mostly to be employed in land purchases. Archicom’s land bank currently totals 29 ha and is worth PLN 123.1 mln. “We purchased all the land for PLN 89 mln,” reveals the president of the company. “We are use the land we own, but we will still be replenishing our land bank,” adds Rafał Jarodzki. The company is to invest PLN 60 mln raised from the flotation in acquiring new plot. The majority of this, PLN 40 mln, is to be spent in Wrocław, while PLN 20 mln will go to Kraków. The company is currently selling 1,000 apartments and has a land bank where 2,800 apartments could be built – or 30,000 sqm gla. It holds enough land for the construction of 73 pct of the company’s pipeline projects. Archicom plans to buy the rest that is needed. The company has already signed a preliminary contract for the purchase of 4.3 ha in Ołtaszyn district in Wrocław, where a useable and residential area of 16,000 sqm can be built. The company is also negotiating the purchase of six plots with a combined area of 16.8 ha (for a useable and residential area of app. 152,000 sqm) in Wrocław’s Ołtaszyn, Krzyki, Śródmieście and Psie Pole districts. The eventual choice and purchase of the other plots required are expected to take place in Q1 and Q2 2016. In Kraków the company has identified and is analysing or negotiating the purchase of five plots with an area of 10.1 ha (for a useable and residential area of 122,000 sqm) located in the Podgórze, Krowodrza and Stare Miasto districts. This land is to be chosen and purchased before the end of this year. The company is also planning to continue the construction of social housing. The remainder of the funds from the share offer will contribute to the financing of five development projects being carried out by Archicom in Wrocław, along with loans taken out for the projects. “We currently have a low level of debt. So financing projects is not a problem for us,” claims Rafał Jarodzki. In the 2012–2015 period, Archicom developed 1,369 apartments. Around 2,000 more are to be built this and next year, 48 pct of which have already been reserved (as of February 29th, 2016). Since the beginning of the year the company has sold as many as 127 apartments. “This year more apartments will certainly be sold compared to the 611 sold last year. In 2015 we handed over almost 500 new homes,” says the vice-president of the board.