Half-year Report Quartiers Properties – January to June 2019

Quartiers Properties AB (publ) (“Quartiers Properties” or “the company”) has today published the company’s half-year report for the January to June 2019 period. 

Summary of the period 

• Net sales totalled SEK 56,389 thousand (SEK 3,242 thousand). The significant increase in net sales in the first half of the year was mainly due to sales of completed projects, which totalled SEK 49,234 thousand (0) during the period. In addition, revenues from the rental business also increased compared with the previous year.
• Operating profit excluding changes in value was SEK 212 thousand, compared with SEK 
  -10,723 thousand in the same period last year. 
• Income after tax was SEK -3,764 thousand (SEK 1,683 thousand). Last year’s earnings included changes in value of SEK 18,850 thousand on the company’s investment properties. This year’s earnings instead include realised gains of SEK 11,833 (0) and no revaluations have been made as, in line with IFRS, the company’s investment properties have been reclassified as operating properties. Reclassification of the apartments as operating properties was made according to IFRS because the company has taken over their operation. Since Quartiers took over their operation, revenues have risen, costs have decreased and control and quality of the business have increased.
• No external valuation of the property portfolio has been undertaken at 30/06/2019. The Board’s assessment, which is based on the external valuation at 31/12/2018, sales and investments completed in the first half of 2019 and exchange rate changes, is that total property values at 30/06/2019 amount to SEK 721,881 thousand, compared with 
  SEK 680,460 thousand at 31/12/2018.
• Basic earnings per share for the period totalled SEK 0.17 (SEK 0.39).  
• Equity totalled SEK 378,079 thousand (SEK 360,675 thousand). 
• The company’s net asset value is SEK 478,350 thousand (SEK 425,500 thousand), corresponding to SEK 7.56 per share.

Significant events in the first half of the year

• Refurbishment of the Boho Club project has started in earnest. 
• Loans of EUR 4.5 million have been raised with Spanish investment bank Arcano Partners in order to finance the completion of the refurbishment of Boho Club. 
• In March, the majority of shares were acquired in the operating company Boho Club, which will operate a hotel and restaurant on part of the Centro Forestal Sueco property. The company’s operating partner remains an owner, with 20% of the shares. Quartiers thus owns the remaining 80%, and 100% of the property where the business will be operated. 
• Quartiers took over operation of the apartment complex in Benahavís on 1 January. The apartment complex comprises 101 apartments that were previously leased to an external operator. 
• Financing for the Amapura project has been secured through a financing agreement with Strandängen Bostäder i Bunkeflostrand AB. Further information is provided under Related-party Transactions in this report.

Significant events after the end of the period

• Refurbishment of the first part of the Boho Club project was completed in July, resulting in a planned opening of the restaurant in August.
• In July, the previous short-term loan of EUR 1.5 million from property fund Frux was refinanced, along with an additional EUR 1.5 million line of credit. Prior to the extension of the loan the company had repaid EUR 1.0 million of the EUR 2.5 million of the original loan.

Message from the CEO

Sales for the first six months of 2019 were SEK 56.4 million, compared with SEK 3.2 million for the same period last year. Operating profit excluding changes in value also improved, to SEK 0.2 million compared with SEK -10.7 million for the same period in 2018. The major change between the two years is clearly positive in financial terms. For me, however, what is most important is that it signals that the company has now entered a new phase in which we have started realising the value we have created. 

As you can read more about in this report, we have made significant progress in our work on Boho Club. Refurbishment of the restaurant is now complete, with the opening expected in August. The hotel will also soon be ready and is anticipated to open this autumn (2019).

The next major project on the horizon is Ocean View, with 60 new apartments in the Benahavís premium segment. We have completed the design phase and are working on producing the final technical drawings before we start procuring construction services after the summer and also launch the project for sale, as scheduled. 

The macro fundamentals remain strong and indicate rising demand in the region, both in terms of apartment sales and tourism. Digitalisation and lower travel costs due to cheap flights are allowing more and more people to spend time in the region without losing touch with family, friends and work at home. As before, we are seeing the market fluctuate owing to short-term trends such as weather, rapid changes in exchange rates and, in particular, stock exchange movements. Last year we experienced a cautious apartment-buying market between May and July, and the same has been noted this year. If the trend is the same as last year, however, we can expect the market to warm up between September and November. 

We provide a detailed assessment of the market below and note that the supply of holiday apartments has increased considerably over the past two years, with numerous projects for sale being launched over the past year. We are seeing increased awareness and requirements from our international buyers. Service, quality and design are becoming increasingly important in the choice of residential property, and we are continuing to differentiate ourselves from other property developers in the region by always emphasising our Scandinavian approach to construction quality, customer service and style. This is something that we note is lacking on the Costa del Sol but we know is appreciated by clients in the premium segment on which we are focused. 

When it opens in autumn 2019, I hope that as many of you as possible will take the opportunity to experience the comprehensive approach to customer service and quality that we will be providing at our new hotel on Marbella’s Golden Mile. 

We look forward to seeing you in Marbella and at Boho Club!

Marcus Johansson Prakt
Interim CEO Quartiers Properties 

Please direct any questions to:

Quartiers Properties 

Marcus Johansson Prakt, Interim Chief Executive Officer
Email: marcus.prakt@quartiersproperties.se
Phone: +46 72 018 59 98

The company in brief
Quartiers Properties is a Swedish property development company with operations on the Spanish Costa del Sol. The company was founded in 2014 and has since built up a property portfolio of investment properties and project properties. The company develops, sells and leases property.

Mangold is the company’s certified adviser. Mangold can be contacted on +46 (0)8-503 015 50 or by emailing ca@mangold.se.

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Quartiers Properties AB (publ) is required to disclose this information under the EU Market Abuse Regulation. This information was provided for publication through the agency of the contact person above on 31 July 2019 at 8.45 a.m.