Portfolio expansion at the company progressed according to plan

Appeninn Nyrt. closed the first half of the year with buoyant acquisition activity and solid financial results, despite the global economic slowdown caused by the coronavirus epidemic. The company closed the first half of 2020 with real estate rental revenues of EUR 4.2 million (nearly HUF 1.5 billion) and EBITDA of EUR 11.4 million (more than HUF 4 billion). And the estimated value of the Group's total real estate assets increased to €161.9 million (nearly HUF 58 billion), an increase of more than €13 million (over HUF 4.5 billion) compared to the same period in 2019. In line with its growth strategy, the listed company continued its active acquisition activity in the first half of the year, adding nearly 7,000 sqm of leasable space to its real estate portfolio through the acquisition of two high-end office buildings and acquiring a majority stake in five large-scale tourism property development projects.

Appeninn Nyrt., listed in the Premium Class of the Budapest Stock Exchange, has published its financial results for the first half of the 2020 financial year. The report of the real estate company reveals that the company's EBITDA (earnings before interest, taxes, depreciation and amortization) for the first half of the year amounted to EUR 11.4 million (more than HUF 4 billion), while in the same period of the previous year the indicator closed at EUR 4.1 million. The significant improvement in EBITDA compared to the same period last year was also largely driven by the revaluation of the income-producing real estate portfolio. There was also a strong increase in the value of income-producing investment properties, with the estimated value of total assets rising to EUR 161.9 million (nearly HUF 58 billion), an increase of more than EUR 13 million (over HUF 4.5 billion) compared to the same period in 2019.

The real estate company's turnover in the first half of 2020 was EUR 4.2 million, equivalent to nearly HUF 1.5 billion. The impact of the coronavirus epidemic affected a small part of the tenant portfolio, and the occupancy rate of the property portfolio was still close to 90 percent in the first half of the year. The vast majority of the affected tenants have had their leases rescheduled. Part of the rental income from the rescheduling of leases will be realised in the second half of the year or early in 2021. The company has a significant liquidity reserve and is able to meet its financial obligations in a timely manner in the medium term, even with the expected temporary shortfall in revenues and restructuring. As regards direct costs, the large decrease compared to the same period last year is the result of a reduction in costs due to the rationalisation of operations on the one hand, and a lower level of operational services due to the situation caused by the coronavirus epidemic on the other. Appeninn Plc's profit before tax amounted to EUR 7.4 million (over HUF 2.6 billion) in the first half of the year, which, although lower than in the same period last year, it is important to note that the profit after tax for the first half of 2019 was adjusted upwards by the result of financial operations - a one-off item.

During the first half of 2020, Appeninn Plc. has been very active in acquisitions. In the first half of this year, the real estate company increased its Budapest office market capacity by a total of 6,763 sqm of leasable space through the acquisition of office buildings in the highly visible Montevideo Street in the III. district and Pauler Street in the I. district. Following the two acquisitions, the company now owns 38 properties with a total lettable area of more than 155,000 sqm.

In addition to real estate acquisitions, Appeninn Plc. has significantly expanded its portfolio in the field of tourism real estate development as a result of its business strategy updated this spring. In the first half of the year, the Group acquired a majority stake in Solum-Invest Kft., which owns the Balatonfüred port area, and Dreamland Holding Zrt., which is launching several rural projects, mainly focused on hotel development. Thus, three new large-scale hotel developments, an amusement park, two gastronomic centres, as well as a spa development and a new port development have also been acquired by the listed company. The projects will expand the future tourism portfolio beyond the north and south shores of Lake Balaton to the Visegrád area and Tokaj. The majority of the developments are scheduled for completion in 2022 and a smaller part in 2023.

In parallel to the acquisition activity, the company continued the previously initiated streamlining of its real estate portfolio in the first half of 2020, in the framework of which Appeninn Nyrt. sold assets outside its business focus areas: in the first half of this year, through a subsidiary of Appeninn Holding, it started the sale of VCT78 Ingatlanhasznosító Kft., which owns a car service station on Váci út, to AutoWallis Nyrt., which transaction was closed in July 2020.