The general meeting of Appeninn has decided to transform the listed company into an SZIT. We asked György Szűcs, CEO of Appeninn Holding Nyrt., about the significance of this decision and how this step fits into the company's strategy.

"In 2022, Appeninn's Board of Directors decided to put the Group on a new strategic footing. An important element of the transformation was the sale of the company's development projects and the strengthening of the structure of the real estate portfolio through new acquisitions. The most striking market feedback on the success of the change in strategy was the upgrade of Scope Ratings in April, but it is also reflected in our half-year figures this year: our first six months' revenue of around €9.1 million was double last year's figure, and our half-year operating profit, excluding the impact of revaluations, reached €4.7 million," said the CEO.

This is what the property portfolio looks like

Retail properties account for one third of Appeninn's €181.3 million real estate portfolio, with the vast majority of the other two thirds being office, and some industrial and residential properties. As part of a nearly two-year restructuring, the last of its tourism interests were sold in the second half of 2022 and early this year, and in February it acquired the Zone shopping centre in Székesfehérvár and Zalaegerszeg, respectively, and the Kanizsa Centrum shopping centre in Nagykanizsa, he added, stressing that they then acquired Dounby SP. Z O.O.

They are currently looking primarily at retail and office properties in Hungary and the Central European region, and since entering the Polish market, they have also been increasingly looking at investment opportunities there.

Dividend payment expectations

As a Regulated Real Estate Investment Trust (REIT) or a Pre-owned Enterprise (PEIE), the board of directors must propose to the general meeting of shareholders the payment of a dividend each year at least equal to the expected dividend. This is 90% of the annual profit for the year from the registration of the SZIT/SZIE until its deregistration. In the event that the amount of free funds is less than the amount of the expected dividend, the management proposes to pay a dividend of at least 90% of the amount of free funds.

"The year-end figures will show how the group has performed in terms of profitability, but this will only be made public when the accounts are published. However, our half-year results are already public, and they show a spectacular improvement in Appeninn's ability to generate earnings, even though the results of new projects will only be included in the consolidated figures from spring 2023, and the first half of the year was also burdened by specific transaction costs related to acquisitions." - highlighted Györgyi Szűcs

When analysing the figures, it is also worth noting that the consolidated figures of the group are always published on an IFRS basis, in euros, so there is always an operating profit and a profit due to the change in the euro exchange rate and the value of real estate. This is also an important aspect because, as a SZIT or SZIE, Appeninn and its project companies will be required to revalue their real estate on a quarterly basis.

Cover image source: Getty Images