Quartiers Properties – Half-year report for January–June 2018

Mon, Jul 16, 2018 11:30 CET

Quartiers Properties AB (publ) (“Quartiers” or “the company”) has today published the company’s half-year report for the January–June 2018 period.

Summary of the period

Net sales amounted to SEK 3,242 thousand (SEK 5,232 thousand).
Operating earnings amounted to SEK 8,127 thousand (SEK -4,419 thousand).
Changes in the value of the company’s investment properties (99 apartments in Hacienda de Cifuentes) amounted to SEK 18,850 thousand (0), corresponding to 6.2 percent.
Profit after tax amounted to SEK 1,683 thousand (SEK -7,588 thousand).
Basic earnings per share for the period amounted to SEK 0.34 (SEK -0.28).
Equity amounted to SEK 360,675 thousand (SEK 270,043 thousand). Equity includes the estimated market value of the 99 apartments in Hacienda de Cifuentes. Other properties in the project portfolio have been recorded in the balance sheet at cost plus capitalised costs.

Significant events in the first half of the year

On 8 March, the company entered into an agreement to start a joint venture together with Ruben Otero, located in Puerto Banús. The joint company, 50 percent of which is owned by Quartiers, will manage the sales and marketing process for both parties’ projects and offer equivalent services to other developers and property owners.
On 27 March, the company signed an agreement with the Spanish bank BBVA regarding an unsecured corporate loan of EUR 1.0 million. The loan was granted to Quartiers Properties Holding SL.
On 4 April, 2018, the company signed an agreement with the Madrid-based property fund Frux Capital regarding a loan of EUR 2.5 million.
On 5 April, 2018, the company entered into an agreement on the acquisition of a plot of 3,781 square metres next to the company’s existing property Centro Forestal Sueco. The agreement is a call option that the company intends to exercise by 1 October 2018. Quartiers made a payment of EUR 200 thousand in connection with the signing of the option agreement. The total purchase price amounts to EUR 1,788 thousand, and it will be paid via annual instalments up until May 2022.
On 18 May, the company appointed its CFO, Marcus Johansson Prakt, to the post of Interim CEO.
On 30 May, the company entered into an operator and partnership agreement regarding the development and operation of a lifestyle hotel with restaurant at one of the properties referred to as Centro Forestal Sueco.
On 5 June, the company received a renovation loan of EUR 2.5 million from Spanish bank, Banco Sabadell.

Other disclosures

Extensive facade refurbishments in the area where the company’s investment properties are located have meant that the operator has been unable to make the properties available as per agreement, leading to rental discounts that have reduced rental income during the period.

Message from the CEO

As the new Interim CEO, it is a pleasure to publish my first CEO message in a company that is continuing to grow and now has more ongoing projects than ever before. During the period, we have observed successes both in relation to financing and the launch of new partnerships. At the same time, we are operating in Spain’s hottest property market, with growth in the Málaga region that in many respects exceeds that for both Madrid and other fast-growing regions in Spain.

We have taken several significant steps in the first six months of this year with regard to our second-largest investment, which is the development of our unique property in the Golden Mile district of Marbella, including bungalows, hotel rooms and restaurants.

The Boho Club hotel project at Centro Forestal Sueco is progressing apace, and we have now completed and actualised the proposed concept together with Stylt Trampoli, an award-winning European developer of hotel and restaurant concepts, and one of Marbella’s most successful restaurateurs. We believe very strongly in the new concept and in its considerable potential for launch at other destinations around the world, which is why we have also taken on 50-percent co-ownership in the operator company. We are currently working alongside the operator to finalise the last details ahead of September/October 2018, when work will start on refurbishment of the property.

Work is still very much underway on our single largest investment, the Hacienda del Señorio de Cifuentes apartment complex. Thanks to continued investments and extensive work to consolidate the complex as an established holiday resort, the value of the holding grew by an impressive 6.2 percent in the first six months of this year. At the time of writing, as I visit websites such as Booking.com and Tripadvisor I can see positive guest ratings of 9.1/10.0 and 4.5/5.0, which is proof of the significant efforts made every day in running the complex. The second half of 2018 will see the completion of ongoing renovations. A newly renovated complex and an influx of satisfied visitors suggests that there will be further increases in value in 2018.

In September, new owners will take up occupancy in the first stage of 22byQuartiers, which is a new project within Hacienda del Señorio de Cifuentes. The project is being sold and marketed by our co-owned sales company Quartiers Estates, based in Puerto Banús. Following the launch in late spring 2018, we have sold the first apartments, corresponding to 50 percent of stage one. We have seen a high conversion rate, which is the key figure purchase per viewing, compared with other projects nearby. This bodes well for sales over the forthcoming months, since the number of viewings is gradually increasing week on week as the project is marketed and word spreads among buyers and estate agents in the region.

Quartiers has made significant progress since the half-year report a year ago, and now has more ongoing projects than ever before. I am therefore delighted that we have also managed to establish an effective team on site in Marbella, where we recently appointed a new head of finance and a financial controller. Both have substantial experience of working with hotel and property development in Spain. We believe the appointments will further strengthen our internal controller function and efficiency, which will ultimately enable cost savings and coordination of several projects and investments.

Despite the many projects we are working on right now, we are continually looking for new projects and ways of financing our ventures. I therefore hope to have the opportunity to present new, exciting projects in 2018.

For further questions, please contact:

Interim CEO Marcus Johansson Prakt

Email: marcus.prakt@quartiersproperties.se Phone: +46 (0)-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.

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 16 July 2018 at 11.30 a.m.