One United Properties H1 earnings: Consolidated turnover of €171 million and a gross profit of €69.8 million
One United Properties (BVB: ONE), the leading Romanian green developer of residential, mixed-use and office real estate, posts a consolidated turnover of 171 million euros in H1 2023, a 26% increase compared to H1 2022.
The gross profit reached 69.8 million euros, a 17% increase (excluding the one-off gain from Bucur Obor’s bargain purchase recognized in H1 2022 in amount of 19 million euros).
The net profit amounted to 58.2 million euros, an increase of 13% compared to H1 2022 (a 17% year-on-year decrease if including the gain impact).
The Company ended the quarter with a significant cash position of 80.2 million euros, down 30% since the beginning of the year due to major development activity carried out in H1 2023 as well as payment of the second tranche of the 2022 dividend.
The amounts to be received under contracts concluded with customers as of June 30th, 2023, reached the historically high amount of 281 million euros in additional cash by 2025.
The gross loan-to-value indicator improved by 3pp, going down to 25% as of June 30th, 2023, while the net of cash loan-to-value was 14%.
“One United Properties delivered outstanding results in the first half of the year. Despite a double-digit drop in Bucharest’s residential sales, our team nearly tripled new unit sales versus first half of 2022, highlighting our developments’ unique appeal and an accelerated flight to quality. We have reached a historical record of 152.4 million euros in new residential sales in H1 2023.
This accomplishment is a testament to our distinct position in the market and the demand for our developments. The decline of the net margin of the residential segment can be attributed to our revenue recognition approach.
From Q4 2022 to H1 2023, we initiated a considerable number of new construction sites. Typically, the cost trajectory of a development construction is not linear; early stages incur elevated costs due to excavation, foundation-laying, and infrastructure development.
However, across all our residential development activity, we maintain our target to achieve gross profit margins in excess of 35%, allowing us to deliver consistent returns to our shareholders,” said Victor Capitanu, co-CEO at One United Properties.
The increase in turnover was supported by a 57% increase in revenues from residential property sales, which reached 122.5 million euros in H1 2023 versus 78.2 million euros in H1 2022.
The increase was driven by enlarged and more diverse residential offering, particularly at One Lake District and One Lake Club, where sales launched this year.
The net income from residential property decreased 4% YoY, reaching 36.1 million euros due to the revenue recognition applied by the Group, as a significant number of new developments where construction started in 2023 was added to the sales portfolio, while the units at One Verdi Park and One Floreasca Vista were completed and handed over to the clients.
Regardless of the payment method chosen by the client, the Group recognizes the revenues from sales of all residential developments in line with the construction progress. Consequently, the net margin of the residential segment decreased from 48.2%, as recorded for H1 2022, to 29.5% for H1 2023.
In H1 2023, One United Properties sold and pre-sold 466 apartments (+179% YoY) with a total surface of 39,082 sqm (+146% YoY) and 794 parking spaces and other unit types (+89 YoY) were sold and pre-sold for a total of 152.4 million euros in the first six months of 2023 (+129% YoY).
As of June 30th, 2023, 65% of all available apartments were sold out, with One High District being the most desired development in H1 2023, with 214 units sold.
„Our historical challenge has been meeting the overwhelming demand that often eclipsed our supply. Today, thanks to a well-planned land acquisition strategy, even with 65% of the units at our developments being already sold out, by June 30th, we still had 1,762 units available for sale and pre-sale and an additional 2,573 units in permitted developments that are currently awaiting construction and sales kick-off.
We can fully adapt our sales portfolio to meet client demand by adding these new units. Moreover, apart from a rich residential pipeline in progress, our commercial segment promises to deliver sustained quarterly growth.
Our strategic business approach focused on the best locations paired with unparalleled quality assures a steady influx during the construction phase and forecasts predictable future earnings. This makes us an ideal investment option for those in pursuit of predictable but accelerated growth,” said Andrei Diaconescu, co-CEO at One United Properties.
The rental income, which includes the income generated by the commercial division and the revenues from the tenant services, registered a 119% increase, reaching 12.7 million euros.
The effect has been driven by the revenues from the entire portfolio, particularly from tenants at the largest developments: One Tower, One Cotroceni Park 1, One Victoriei Plaza, and the impact of the results generated by Bucur Obor, consolidated under the retail division.
The rental revenues will continue to grow in H2 2023 due to the delivery of One Cotroceni Park 2 in Q1 2023, once the fit-outs are completed.
As of the end of H1 2023, the Company’s office portfolio GLA totals 118,000 sqm, including One Tower, One Cotroceni Park Office Phase 1 and Phase 2, and One Victoriei Plaza.
Along with the retail component, One United Properties’ commercial portfolio, that includes Bucur Obor and One Gallery, will reach a GLA of approximately 160,000 sqm.
For 2023, One United Properties targets a turnover of 290.2 million euros and a net profit of 125.9 million euros, in line with the budget published at the beginning of the year.
Consistent with the Company’s dividend strategy, the Board of Directors intends to propose a distribution of the 2023 half-year dividend to the shareholders in the upcoming period. This proposal will be subject to approval at the semi-annual General Meeting of the Shareholders.
In H1 2023, ONE was the 7th most traded stock on the Bucharest Stock Exchange in terms of absolute liquidity and the 6th most traded by liquidity to free-float.
The market capitalization as of June 30th, 2023, was approximately 700 million euros. In H1 2023, ONE shares grew 9.23%, surpassing the performance of the BET index, which increased 7%, while the total return for ONE amounted to 10.4% vs. 10% for BET-TR.
As of June 1st, 2023, ONE shares were included in the MSCI Frontier Markets Small Cap index and MSCI Romania Small Cap index. On August 10th, 2023, MSCI announced that effective August 31st, 2023, ONE shares will be promoted from the Small Cap to the Mid Cap category, becoming part of the MSCI Frontier and MSCI Romania indices, which exclusively feature Mid Cap and Large Cap companies.