Warimpex to build three Polish office buildings

In Poland the company is preparing for the implementation of three buildings. In Łódź, Ogrodowa Offices is to be built as well as Mogilska Office and Chopin Office in Kraków. The company has also sold its stake in the Warsaw office project Parkur Tower. Ogrodowa Offices is to be constructed at ul. Ogrodowa 8 in Łódź and will comprise 26,000 sqm of office space. It will consist of seven above-the-ground floors and two underground floors with a car park for 370 vehicles. Each floor will have an area of 4,700 sqm. The plot was acquired in a tender organised by the city and a building permit has been issued.

“At present, archaeological work is being carried out on the plot, but we do not anticipate any difficulties. The construction will start in the second half of 2016,” says Alexander Jurkowitsch, a member of the management board of Warimpex. The project has been scheduled for completion at the end of 2017. This year the company will start the construction of the Mogilska Office building, which will be situated at ul. Mogilska 43 in Kraków and is due to open in 2017. It will have 12,500 sqm of office space (20,000 sqm of total space) with nine above-ground floors and three underground, including 243 parking underground parking spaces. The areas of floors will range from 1,300 sqm to 1,700 sqm. The investment funds designated for the projects due to get underway this year, i.e. Ogrodowa Offices and Mogilska Office, will come to around EUR 30 mln per building. Chopin Office, whose opening is scheduled for 2018, will also be built in Kraków, at ul. Przy Rondzie 2. It will have 21,500 sqm of office space in total (a total area of 26,000 sqm). Chopin Office will consist of nine above-ground and three underground floors. Each level will have an area of 2,600 sqm. In Q1 2016 Warimpex also sold its 50 pct stake in Parkur Tower in Warsaw to UBM, leaving the latter as the sole proprietor of the building. The company has not disclosed the value of the transaction. In addition to this, the developer owns a plot in Białystok designated for a hotel or office development.

“We are in negotiations with operators interested in opening a three-star hotel,” reveals Alexander Jurkowitsch. In 2015 the sales income of the group fell by 16 pct to EUR 61.9 mln. In connection with sales profits or exclusion of some real estate from the consolidation, in 2014 EBITDA index increased by 71 pct from EUR 17.1 mln to EUR 29.3 mln. Depreciation and losses on the valuations of Russian real estate, amounting to EUR 39.2 mln, caused the decrease of EBIT index from minus EUR 5.2 mln to EUR -9.9 mln. The financial result, including joint ventures, fell from minus EUR 31.6 mln to minus EUR 31.9 mln due to cashless exchange losses in connection with fluctuating exchange rates. This figure includes the results from joint ventures, which have increased – thanks to the profit from the sale of the Andel’s Berlin hotel – from EUR 1.5 mln to EUR 9.6 mln. The effect was a negative financial net result of minus EUR 2.3 mln. The net result for shareholders of the parent company, in turn, increased from minus EUR 20.7 mln to minus EUR 17.8 mln, compared to the previous year.

“The negative financial result is mainly due to losses on the value of real estate, unrelated to cash flow, and exchange losses also unrelated to cash flow. However, this trend is only temporary and may turn at any moment in our favour, as soon as the Russian economy bounces back,” says Franz Jurkowitsch, the president of the management board of Warimpex. In 2015 the results of Warimpex hotels outside Russia showed an increase in bookings and room rates. Hotels in Petersburg and Yekaterinburg, however, registered a decline in turnover – by 32 pct lower in comparison with 2014. “Regardless of whether the improved situation [in Russia] will lead to an increase in our valuation or not, we own a valuable asset with growing potential and an attractive location in Airport City Saint Petersburg,” adds Franz Jurkowitsch. Currently, the construction work is in progress on a fully-leased, multi-level car park, with an area of about 20,000 sqm, located in Airport City Saint Petersburg. Warimpex has sold two Russian hotels, Angelo and Liner, and the two Jupiter office buildings located near Airport City Saint Petersburg. In June the second stage of the construction of the Zeppelin office building, also in St Petersburg, will be completed. The building is fully leased. Warimpex has also completed a project in Budapest: the revitalisation of building ‘A’ of the Erzsébet Office complex.