Appeninn Nyrt. expects further revenue growth and profit improvement this year mainly from the development of its core business real estate portfolio and new acquisitions - says the renewed business strategy of the Company, which is also published on the website of the Budapest Stock Exchange. Appeninn Nyrt. will create the conditions for expansion by acquiring high-yielding, high-quality office buildings in Hungary and in the CEE and SEE regions, which it intends to raise mainly through the sale of project companies in its tourism portfolio.

Increasing turnover, improving results

Appeninn Nyrt. expects further growth in rental income and continued improvement in EBITDA this year. According to the new business strategy of our company, the revenue from real estate rental is expected to increase from EUR 7.4 million in 2020 to EUR 9.2 million last year and EUR 9.8 million this year. At the same time, EBITDA - calculated without revaluation - could rise from €4.3 million in 2020 to €4.8 million last year and €5.2 million this year, following €4.3 million in 2020. Appeninn Plc's asset value could increase to as much as €225 million this year compared to €172.4 million in 2020. The figures for 2021 will be published after the audit as required by law, so they are subject to change during the year-end closing and audit. 

Focus on the office and commercial property market

Appeninn Plc decided to review and amend its business strategy on 10 February. In June 2018, the company adopted its 5-year business strategy, which it considers to be the basic strategy to follow. Thus, the new strategy has also identified the office building market as the primary target segment: Appeninn Nyrt. will drive further growth by acquiring high yielding, high quality office buildings, primarily in Budapest and the CEE and SEE region and region. 

The other strategic target segment is retail. Here Appeninn Nyrt. intends to continue to expand its portfolio with the help of industry experts, based on careful return on investment calculations, complemented by a presence in the Central, Eastern and Southern European markets.

Appeninn Nyrt.'s core leasable portfolio area is already close to 80,000 square metres, with an occupancy rate of 92 percent last year. The company also intends to strengthen shareholder value creation by divesting elements with lower yields or which will later turn productive, which may also affect tourism developments started since 2019.

As a real estate investment company, Appeninn Nyrt. makes decisions on its projects based solely on financial and business considerations. Following these criteria, our Company aims to sell the project companies in its tourism portfolio at the optimal time and risk point for development, with an appropriate profit margin.

Increasing efficiency and regional expansion

Further improvements in the energy efficiency of Appeninn Plc's real estate portfolio could help to further improve its operating results. The funds freed up by the sale of the tourism portfolio will allow for the development of the existing core portfolio in line with ESG criteria, as well as the acquisition of additional elements that fit into this portfolio. A related objective is to enter the markets of Central Eastern and Southern Europe. The pandemic situation and the resource requirements of development projects have made regional opening more difficult, but the strategy change will create the opportunity for this. 

In the region, there are more mature markets with lower yields but lower risk, such as Poland and Slovakia, and, conversely, more immature markets with higher yields but high risk, such as Serbia, Croatia, Romania and Bulgaria. It is envisaged that a well-selected element of each of these two types of markets will be Appeninn Plc's target markets abroad.

Our company believes that regional expansion should start with a careful selection of the right local professional partners, so that there is a realistic chance of building a real estate portfolio of a size that has significant business potential.

Stable funding

On the financing side, our Company successfully participated in the Growth Bond Programme (NKP) in 2019 with an issue value of HUF 20.1 billion, and has continued to seek long-term fixed-rate financing solutions. Scope Ratings GmbH has changed the rating of the Company's NKP bond in2021 , but the achievement of the objectives set out in the revised business strategy will allow for the reparation of the original rating. 

Another important step towards further improving the financial position of the company was the successful refinancing agreement with MFB Zrt. at the end of 2021, for the redemption of its previous loans totalling EUR 25.5 million. This will provide Appeninn Plc with a more balanced liquidity management in the medium and long term and an efficient use of the funds from the NKP to achieve its further strategic goals.