Echo prepares PLN 300 mln bond issue

The company is planning to issue the first tranche of bonds as part of a public offer detailed in a prospectus approved by the Financial Supervision Authority on May 26th. The bonds could also be issued in euros.

“We are being advised by the brokerage house of PKO BP for this process. The first tranche is likely to be issued before the end of the month. We will want to place no more than PLN 100 mln at one go. I think these could be four-year securities,” announced Maciej Drozd, the deputy CEO of Echo Investment responsible for finance.

The company issued bonds worth PLN 200 mln in 2014. The company’s gross margin on its residential projects amounted to app. 30–35 pct in Q1, when it was carrying out 17 projects (13 in Q1 2016) with 1,841 apartments (1,461 in Q1 2016). The company is now working on 21 projects with 3,355 apartments (19 projects and 1,958 apartments a year earlier). Echo sold 259 apartments in the first quarter and handed over 90 (147 and 46 in Q1 2016) apartments. This year the company will complete the construction of 976 apartments in its five key markets: Warsaw, Poznań, Kraków, Łódź and Wrocław. The scale of its office development operations, however, is has declined. In Q1 2016 Echo built 110,000 sqm and this year’s figure is 86,800 sqm (down by 21 pct). In Q1 new leases and extensions amounted to 25,300 sqm (17,200 sqm in the Q1 2016). The developer is currently engaged with the construction of 87,000 sqm of office space (45 pct is located in Wrocław, 44 pct in Kraków and 11 pct in Łódź). The company is preparing to build 180,000 sqm (49 pct of which will be in Warsaw including: Taśmowa, Browary Warszawskie and Targowa 22; 26 pct in Katowice, 17 pct in Gdańsk and 8 pct in Łódź).

Echo Investment, as a pure developer, is also working on the sale of its completed projects. Nicklas Lindberg has revealed that he is in advanced negotiations over the sale of Sagittarius in Wrocław, which is to be completed at the end of this year and is 82 pct leased, to EY and BNY Mellon. EPP has the first purchase rights to the property. The developer is also working on new retail projects: the commercialisation of Libero in Katowice and Galeria Młociny in Warsaw as well as the preparation of its Towarowa 22 centre. Echo is also focusing on adding to its land bank. Its current land bank will enables it to develop projects until 2020. Furthermore, the company is planning to dispose of land irrelevant to its operations. This includes properties in Romania (where the Korona Brașov centre had been planned), 7 ha in Słupsk and 4 ha in Koszalin.