Quarterly Report Quartiers Properties – January to March 2021

Quartiers Properties AB (publ) has today published the company’s quarterly report for the period January–March 2021 period.

Summary of the period

• Net turnover amounted to SEK 10 614 (25 644) thousand. The decrease in turnover relates to both operating activities and the divestment of properties. The decline should be seen in the light of the fact that the company's hotel and restaurant business Boho Club was completely closed for two months due to extensive restrictions as a result of Covid-19. Since 25 March, the facility has been open again. Turnover from the sale of properties amounted to 6 457 and related to two apartment sales.
• The operating profit was SEK -8 539 (-10 908) thousand. Operating profit before depreciation and amortisation (EBITDA) amounted to SEK -5 186 (-7 759) thousand. The improvement in the operating result has been achieved through cost savings and lower personnel costs through support for temporary layoffs. However, Covid-19 has had a significant negative impact on earnings, as the company's revenues in a normal year would have been significantly higher and would subsequently also have improved earnings.
• Net financial income amounted to SEK -7 788 (-2 794) thousand. The deterioration in net financial income is mainly due to the refinancing carried out in July 2020 and exchange rate differences. The financing that the company raised in July 2020, and which has negatively impacted its results, was a consequence of Covid-19. Before the pandemic broke out, the company was in negotiations with several players, including Banco Sabadell, for long-term loan financing at a low bank rate. The company is currently working on ways to reduce its cost of capital. 
• Income after tax was SEK -15 599 (-11 560) thousand.
• Earnings per share were SEK -0.30 (-0.17). 
• Shareholders’ equity at 31 March 2021 was SEK 266 905 (336 469) thousand.
• The company’s net asset value on 31 March 2021 was SEK 304 155 (335 848) thousand, which equates to SEK 5.88 (6.93) per share.

Significant events in the first quarter of the year

• The first quarter has been marked by restrictions due to Covid-19, which has had a significant impact on the company's revenues and results.

Other events after the end of the period

• Boho Club has seen a rapid recovery, with satisfactory sales in both hotels and restaurants.

Message from the CEO

This is the first time we are publishing a quarterly report, as in the past we have only produced half-yearly reports. The timing of this change to quarterly reporting is timely, as we expect a big difference in sales between the first quarter and the second quarter, where we are now. The first three months have clearly been affected by restrictions and closures due to Covid-19, as well as a normally weak season for tourism and property purchases in Marbella. Boho Club, for example, was closed for most of the quarter, from 27 January to 25 March. Since reopening, we have experienced very strong demand and are pleased to report satisfactory sales at the start of the second quarter. This is despite the fact that the Spanish market has been limited due to domestic travel restrictions, and demand from one of our largest markets, the UK, has been almost non-existent. Throughout most of the pandemic, we have kept our operations more or less open, keeping costs down and maintaining a good level of service. So when we reopen, we do so more prepared than ever and with the best training a management team can get on how to drive sales in a creative and cost-effective way.

Although we are far from normal levels, much of the current restrictions are expected to be phased out during May, which in turn is expected to contribute to an overall increase in demand across our business. Therefore, those who like trends will hopefully note a strong positive one when we publish the report on 16 July for what looks to be a second quarter of recovery.

Our focus on the premium segment looks set to benefit us in the ongoing recovery phase. Our target audience, both for Boho Club and for buying apartments, villas and plots, has in many cases seen their fortunes grow over the last twelve months. Both equity markets and property markets in many of the countries where our clients are located have risen sharply over the past year, spurred by an unprecedented expansion of monetary and fiscal policy. We look set to benefit from this trend in several ways.

First of all, it means that our customers have had the opportunity to accumulate a larger travel fund which they will now spend on travel, hotel accommodation and restaurants. In addition, the fact that asset prices in many of our customers' home markets have risen sharply, not least in the form of real estate prices, is having an impact. It affects the willingness to spend more money on travel and hotel accommodation, which benefits us. Finally, it also provides an increased borrowing capacity and the possibility to refinance the primary residence in order to free up money to buy a holiday home in the Costa del Sol.

In addition to the sense of recovery that I have conveyed above, I would also like to take this opportunity to tell you about the work underway on the new master plan in Marbella, which is expected to have a hugely positive effect on Boho Club and the neighbouring properties that we own. During the quarter, we started working with HCP Architects in Malaga, one of the region's most experienced and reputable architectural firms. Together, we have developed sketches analysing the great potential of the project and how to strengthen the successful concept we have created at Boho Club by multiplying the number of square metres of building space with more restaurants, hotel rooms, public spaces, commercial spaces and sports facilities. The results are strikingly positive, and the potential of the property in the context of how we want to develop Boho Club on Marbella’s most exclusive street for hotels and restaurants is unique. In early 2020, the municipality presented a timetable for the completion and approval of the new master plan by mid-2023. The first part of the process was on schedule, and a vision plan was published in the summer of 2020. The next step is an initial approval of the plan, which is expected to be published in the second half of 2021. It is deemed to confirm that we will get back the square meters of building rights that we were entitled to in a previously approved but annulled general plan for the Marbella municipality, on which our business case for the development of the area is based.

Last but not least, I would like to highlight the teamwork that the whole Group has contributed. We have evolved as a company in many different ways, and despite the fact that we have been through the toughest period ever in the company's history, everyone has contributed, stood up and been understanding even when many have unfortunately had to leave their jobs or were temporarily laid off. Although the pandemic year has been costly in many ways, we are stronger today as a company than ever before, and we look forward to demonstrating this when demand returns to Marbella.

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 6 May 2021 at 8:30 a.m.

Please address questions to:

Quartiers Properties

Marcus Johansson Prakt, 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 that provides top-class design and quality, with operations on the Spanish Costa del Sol. The Company was founded in 2014 and has since built up a portfolio of investment properties and project properties. The Company develops, sells and rents out properties.

Quartiers Properties owns and manages Boho Club, which is a boutique resort in Marbella’s Golden Mile district with a restaurant and 30 hotel rooms. The project has won awards for its design and architecture, and since its launch in 2019 both the hotel and the restaurant have established themselves as leading venues in Marbella. Visit Boho Club’s website www.bohoclub.com to book a hotel room or reserve a table at the restaurant. The restaurant is open daily, serving breakfast, lunch and dinner.

Quartiers Marbella Apartments is an apartment complex in Marbella’s neighbouring municipality of Benahavís, where Quartiers runs apartment rental operations. The apartments are perfectly suited as short-term and long-term accommodation, and are popular among families as well as groups visiting Marbella for leisure purposes, fitness holidays or to play golf. Visit our website www.quartiersmarbella.com to book your apartment.

Hacienda Collection is an apartment project in Benahavís just outside Marbella, where Quartiers Properties is selling apartments that are ready for immediate occupancy. The apartments are located in a gated community boasting views of the Mediterranean. These apartments feature a large, open floorplan with big windows, high-end kitchen, separate laundry room and 2–3 bedrooms. The spacious terraces offer plenty of scope for spending time with family and friends. Please visit the website for further information and to book an online or in-person viewing:  www.haciendacollection.es.

Mangold is the Company’s Certified Adviser. Mangold can be contacted on +46 (0)8 503 015 50 or by emailing ca@mangold.se.