One United Properties SA (ONE) Earnings Call Transcript & Summary

Good morning, and welcome to One United Properties conference call for presenting the financial results for the first half of 2026. My name is Zuzanna Kurek, and I'm Investor Relations Manager at One United Properties, and I am joined in this call by Victor Capitanu, Executive Board member and Co-Founder of One United Properties; and Cosmin Samoila, the Chief Financial Officer at One United Properties. Before we begin, I would like to mention that this call is being recorded and that the recording will be uploaded on our website later today. As stated in the call invite, by joining this earnings call, you automatically and implicitly consented to being recorded. If you do not consent to being recorded, please leave the call. In terms of organizational aspects, let me present to you the setup of this call. Firstly, we will share with you the financial and operational highlights from the first half of the year, which will be presented by our Co-Founder, Victor Capitanu; CFO, Cosmin Samoila, as well as myself. During the presentation, feel free to type any of the questions you might have in the chat window, and we'll answer them during the Q&A. After the presentation is over, we will start the Q&A. [Operator Instructions] I will be moderating the Q&A session and therefore, for the sake of those who be rewatching the replay of this teleconference, I will be reading all the questions out loud before addressing them. Your questions today will be answered by Victor Capitanu, Cosmin Samoila or by myself. I would like to mention that we might be making forward-looking statements today during this call regarding the future performance of One United Properties and that the actual results may differ materially. We encourage you to review the disclaimer that we have included in this presentation, which you can see right now on the screen. This disclaimer applies equally to all statements made in today's call. This wraps up the introductory part. And now I would like to invite Victor Capitanu to share with you the key highlights from the first half of 2026. Victor?

Good morning, everybody, and thank you for joining us. Before we begin, I want to address the 2 points that attracted most likely the attention. In the first half of the year, reported turnover declined to RON 440 million and net profit declined to RON 79 million. We also expect full year net profit to be approximately 15% to 20% below the original budget. These are clearly disappointing numbers, and we are not trying to minimize them. During our first quarterly call this year, we expected to achieve the original budget based on the information that we had available at the time. Since then, the implementation of the new residential legislation has taken significantly longer than expected. In addition, we had a cyberattack in the National Agency for Cadastre and Land Registration. And this suspended the National Cadastre for the system for approximately 1 month. This delayed registrations, receptions, final contract collections and also profit recognition. These events were outside our control, but the forecast is our responsibility. Once the information changed, we updated the market immediately and transparently. We expect now that most of the impact is a shift of revenue and will move profit recognition in 2027. We are monitoring this closely, and we'll update the market if necessary. Importantly, the underlying business remains stronger than the reported accounting figures. Residential transactions increased 11%. Construction is progressing according to the plan and demand for our development remains solid. Now we have prepared a new metrics in which you can see the value of the company. Basically, what we do, we are publishing our adjusted net asset value because we feel the gap between accounting value and economic value has widened over time. We build this calculation conservatively asset by asset by adding the properties, land, receivables and cash and deducting debt and liabilities. We do this in the same way an individual or a family conservatively assess their own net worth. The adjusted net asset value attributable to the shareholders of One United Properties is EUR 1.24 billion. This translates to about RON 62 per share. The adjusted loan-to-value based on the total external debt to total assets is only 16.5%, which is extremely low compared to international peers. The main difference between IFRS accounting and adjusted net asset value, it has to be clear, is not in the rental properties because we carry them more or less at market value in the books. The significant difference comes from the residential assets, which are largely recorded at historic cost. From now on, we'll calculate this figure quarterly and intend to have the methodology reviewed by either European Real Estate Association, EPRA, reputable auditors or independent valuators. To be just clear, this is a management estimate. It is not an independent valuation, it's not audited and it's not a discounted cash flow valuation. We have just valued the assets as they exist today, and we have not included future profits or cash generation from the pipeline. Therefore, successful execution of the pipeline represents significant upside to the current net asset value. We have prepared another slide to show the complete calculation. We start with the estimated current value of the individual assets, and you can see the breakdown for different categories that we think it is relevant for our business, and we deduct deferred taxes, external debt, trade payables and customer advances. We have disclosed here the full breakdown, so investors can understand the assumptions, challenge them and form their own view. So basically, you can calculate here either the gross assets in our control or the gross assets only to One United Properties shareholders. And of course, the most important number, the net asset to One United Property shareholder. You can see also we adjusted the number of shares to make the calculation correct because we have more than 5 million shares in the treasury that they will be canceled in the next period, and this will increase the value with more than 5% for each shareholder. So basically, the percentage of each shareholder to One United Properties will increase with a bit over 5%. Coming back to the business, I will just repeat that our business has 2 main engines. Residential development generates development profit and cash for reinvestment. The rental portfolio provides long-term recurring income and reduces our dependence on the residential cycle. We have built both businesses with significant scale today. Our objective is not growth for its own sake, but disciplined capital allocation between the 2 segments based on the risk and expected returns. We prepared also a slide with the upcoming deliveries and pipeline. You can see that 2026 remains our largest delivery year-to-date by far. It was a challenging year, but we decided to prioritize completion of ongoing development. So basically, you will see this year One High District already was finished -- was delivered to the authorities. One Herastrau Vista, the same; One Lake Club, the same; One Lake District by the end of this year. So we have like thousands of units being delivered this year. You know the construction process is substantial, but some final contracts and related accounting recognition is taking longer because of these administrative delays. We also have a substantial pipeline, as you can see the numbers, but we remain selective and we will not build speculatively as we always did. We will launch new developments when permitting, demand, financing and expected returns are in place. In case of residential, we need to have the demand in place and the sales according to our plans. And in case of rental properties, we need to have strong pre-leases from the beginning. Very good examples for our strategy is, for example, our last office development is the headquarters of Infineon Technologies, where we had a full lease in place before we even acquired the land, a full lease in place for 15 years. And for residential, the best example is one Floreasca Sunset, which we launched earlier this year and was our most successful residential launch to date. I want to speak a bit also about the United States. Our approach there is very conservative, remains phased and very disciplined. We start with a pilot development in Nashville, and we are evaluating opportunities in Miami. But before committing significant capital, we want to demonstrate returns comparable to those achieved in Romania. For the development in U.S., we are also raising third-party equity from our region. For every euro that One United Properties will put from their own equity, we expect to attract another EUR 1, EUR 2 additional from limited partners. From what I've seen so far, investor interest in co-investing with us in U.S. has been stronger than initially expected. This structure allows us to build the platform while limiting the capital exposed to the new market. And this will create also an additional profit stream through the promote that we will charge on the profit of the limited partners. We will update the market when we have binding commitments or other material information. Just to conclude, the reported IFRS results are below our expectations, and we also have updated the outlook accordingly. However, construction progress, customer demand, the rental portfolio and the underlying asset base remains solid. Our responsibility now is to convert these assets into deliveries, cash and recognition profit while communicating progress transparently to the market. I will now let Zuzanna take you through the business update. Thank you.

Thank you, Victor. Before Cosmin will go through the numbers, I want to spend a couple of minutes on the piece of regulation that shapes almost everything you will see in this presentation, and you surely read in our results. So it's a little bit elaborated slide that we've also presented at Q1. And just as a reminder, since December 2025, the Romanian residential market has operated under a new legal framework. Under the previous rules, we used to sign a preliminary sale purchase agreement with the client once he was sure that he wants to purchase an apartment. And generally, at that moment, the client paid 30% of the apartment value. We didn't have the notion of reservations introduced at One United Properties. From that point where the client signed the presales agreement and paid the amount recognized value under IFRS 15 began according to the stage of completion. This was more or less a single step, as you can see on the slide. Under the new framework, there is an additional step in between. You can see it in gold. Before we can sign a preliminary sale purchase agreement, the development has to go through a process called preliminary unit subdivision, preapartamentare in Romania, which requires cadastral and notarial documentation for every individual unit within a development. Until that is done, a client can sign only a reservation agreement and pay a 5% reservation fee. And the reservation fee, while it is a real commitment from the client, it is not equal to preliminary sale purchase agreement. So it does not trigger revenue recognition under IFRS 15. So as you can see on the right side, the payment structure itself is now staged and linked to construction milestones as defined in the legislation. So clients pay 5% at reservation, 20% on structural works and then when the presale contract is signed, further 20% whilst the NEP milestone is reached and the remaining 55% on completion and delivery. Apart from the major legislative change for the whole market, it is important to mention that it had additional impact for us given that 2026, as Victor mentioned, is the biggest year of deliveries for us. It created a sort of trade-off because for developments completed -- completing in 2026, we had clients interested in those developments starting December 2025. But for us to be able to recognize the sales, we could either pause and complete the subdivision process first, which would have pushed back the completion and reception of those buildings for all the clients or we could prioritize finishing construction and take reservations in the meantime, which chose to protect the delivery timetable, and we selected the second option. That decision meant we collected only 5% reservation fee on the affected unit for now with the balance due with the final sale contract is signed after completion. So the effect that you will see in the half year results is -- there is a timing effect. What is important is that there is no evidence of material impact on customer demand or project economics to date for us. What we expect is that the impact of this lower normalize by 2027 as the cadastral and administrative procedures are completed across all our developments. As Victor mentioned, due to the cyberattack that was -- that took place between July and August, that got further postponed, unfortunately. But again, we expect this to normalize as our developments are finalized and reaching delivery and those that are being launched for sale are having the preapartamentarization process carried out. Now turning to commercial activity. For the first half, we recorded EUR 106.1 million of residential transactions in the first half of the year. So here are sales, presales and reservations combined. This corresponds to 229 residential and commercial units, just over 25,000 square meters and 396 parking and storage spaces. Out of that EUR 106.1 million, EUR 102.9 million sits in reservations, which tells you again how much of the period activity is in newly launched developments. And it also shows you this trade-off we had to make related to developments that are facing delivery in 2026, for which we couldn't sign -- for which we couldn't recognize sales for units that were sold after December 2025. So you can see an increase of 11% on the chart against the EUR 95.4 million that we reported in the first half of last year. I want to be clear also about this comparison. As we mentioned also in the report, these 2 periods are not directly comparable since we didn't have a notion of reservations last year. But we are showing you the last year's figure for reference and also to show you overall the steady demand that we see at One United Properties. The more meaningful number that I would like to draw your attention to is the price per square meter. So the average contracted price has reached approximately almost EUR 3,900 per square meter against EUR 3,100 per square meter a year earlier. That's a 24% increase. And this is driven by the launch of new high-end developments. You can see One Floreasca Sunset was our best seller in the first half of the year. We managed basically within 3 months to sell 73% of this development. It's one of the best launches in our history by far. And it accounted for 159 units out of 229 units contracted in the first half. The second best-selling development, there is no big change, One Lake District. Phase 2 continues to be our key development, further 35 units were reserved in the first half of the year. A very important slide that I want to point out to you. If there was one thing that -- the one number for you to take out of this slide is the EUR 445 million of cash contracted with customers and still to be collected that is running through to 2029. This is the highest level of contracted future cash inflows in our history, and it reflects only the units that were contracted as of the end of June 30 without taking into account any sales done as of July 1. On the left of the chart, you can also see our track record. So since the IPO, since now we're -- a little bit earlier, we celebrated 5 years since our IPO. Since the IPO, we've collected over EUR 800 million from residential sales and presales from our clients. And another important number, we current -- as of June 30, we had 3,939 units under construction with 2,552 to be delivered in 2026 and 1,400 to be delivered starting 2027. 3/4 of all units we currently have under construction were already contracted at the end of June. That leaves 1,000 units available across development still being built and further 158 units across the completed portfolio, of which only 36 units are located in developments that were finished before 2025. So you can see that the finished stock is genuinely limited. Regarding the delivery, I want to also add -- repeat what Victor mentioned a little bit earlier. We can tell you that One High District construction is completed. One Lake Club Phase 1 is targeted for finalization in the third quarter and the building reception process at One Lake District Phase 1 has begun. Looking forward, as mentioned by Victor, we plan to launch One City Club, One Cotroceni Towers, One Park Lane in Bucharest, One Riverfront in Sibiu, all subject to how quickly the authorities issue the building permit and of course, how we plan to face the sales launches. In terms of the rental, the recurring income side of the business, the part is completely unaffected by everything I described before that was related to revenue recognition and the impact of the Nordic Law. The standing portfolio generates an annualized headline net operating income of EUR 28.6 million. It comprises of around 152,000 square meters of gross lettable area that was 95% leased with 93% of tenants already moved in as of June 30. The weighted average unexpired lease term is 5.2 years. The portfolio will grow by roughly 28% before the end of the year by adding Gallery, Technology district and Mondrian Hotel, which will add approximately 43,000 square meters, taking us to around 195,000 square meters of office portfolio. All 3 are already 100% leased. So once those assets are in place, we have calculated annualized headline NOI rising to EUR 40.5 million and occupancy being across that extended portfolio at 96% and the WALT extending to 6.9 years. I will now pass over to Cosmin, who will take you through the IFRS consolidated results.

Thank you, Zuzanna. And thank you, everyone, for joining our first half financial results presentation. Related to the financial IFRS results, as mentioned earlier also by Victor and by Zuzanna, we are presenting this like-for-like comparison due to the fact that as of end of June, we had in balance EUR 103 million in reservations, which on the previous legislation, they were all eligible to be presales. Nevertheless, under the new legislation, we needed to sign reservations for this. This gap started to close mid of June when we finalized the subdivision of first development, subdivision of the apartments on first developments. It was temporarily suspended in July and August due to the cyberattack on the land registry, but it has now resumed in the last 2 weeks, and we are converting these reservations to presales or to final sales depending on the stage of the development. We are expecting by end of Q3, this gap to shrink. And most probably by the end of the year, there will be a minimal gap or even not at all, all the reservation should be converted into presales or sales, and we will not even need to report by the end of the year this like-to-like comparison. So in terms of turnover, we achieved RON 440 million in turnover, 47% below first half of last year. But if we would have considered the -- if we wouldn't have the effect -- the negative effect of this new legislation, the turnover would have been RON 742.5 million, only 10% below last year. On profit before tax, we achieved RON 96.5 million, which is 58% below last year. Again, if we wouldn't have the negative effect of the new legislation, the profit before tax would have been RON 214.2 million. On the next slide, we see the effect of the -- on the residential segment, which basically this was the only segment affected. And we had consolidated turnover of RON 440 million, as mentioned, and the net profit of RON 79.2 million. But like-for-like and without the negative effect of the new legislation, the net profit would have been 178.1%. The demand is still solid. As mentioned, sales reservations and presales were 11% more than last year to RON 106.1 million. Also, cash contracted is at the highest level in the history of the company. The consolidated results on residential, RON 230.5 million in residential revenue, 64% lower than last year. But again, on a like-for-like comparison, the decrease would have been only 17%. Net margin on residential also lower due to the effect of the legislation. And the net income from residential, RON 59.5 million, decreasing significantly compared to last year. But in the like-for-like comparison, this result would have been RON 177.2 million. On the rental properties, here, we are in line with the budget, we are in line with the expectation, and we are slightly above the results of last year as the effect of the portfolio that it has matured, it has almost full lease rate, 95%. And by the end of the year, this will receive additional properties, which will further increase the rental income in the next period. Rental income, including tenant service, RON 83.9 million, plus 3% compared to last year. And the net rental income, RON 56.8 million, it's 6% above the value of last year. On the general and administrative expenses and EBITDA, we have in the general and administrative expense value of RON 55.3 million. But very important out of this RON 20.7 million noncash expense related to the stock option plan without considering this noncash expense, the G&A expenses would have increased only 12% compared to last year. Basically, it's in line with the inflation, in line with the increase of the volume of activities in the company. So here, these expenses are very well monitored and controlled. EBITDA reached RON 157.2 million. And again, in a like-for-like comparison, the EBITDA would have been RON 274.9 million. This here is a summary of the profit and loss account, main position, as already discussed, turnover, general and administrative expenses and net profit. Very important, we have also these gains from fair value adjustment of investment property. Here, we have RON 104.1 million recognized during the first half, mainly coming from the development in the rental segment, One Gallery and One Technology District, the Infineon building. Both properties reached almost full completion. The technology district was reception in the third quarter and One Gallery is expected to be reception in the close next period in the next few months. And basically, this brought increase in fair value on the ground that there is no construction risk anymore on these properties. And this was translated in appreciation of the value of these properties. Balance sheet and debt profile. Total assets increasing with 4% to RON 6.9 billion. Equity mostly stable, RON 3.8 billion. Cash position decreased compared to last year to RON 371 million. This decrease is again due to the impact of the new residential legislation. And the net debt, RON 1.5 billion, it's only 22% from the total assets. The outlook for the remaining of the year and for the results of the year. The consolidated net profit was budgeted at RON 457.7 million. We are expecting a 15% to 20% downward deviation on this amount. Strictly, the deviation is the impact of the Nordic Law, this new legislation, how it's called the Nordic Law, which affected in the first quarter and the second quarter. And then also, we had this effect in July until mid of August from blocking the land registry activity, which again brought a delay in signing transactions. But very important, this is just a delay. It's not anything that was lost. It's just a shifting in the recognition for the next 2 quarters and for next year primarily. Thank you.

Thank you very much, Cosmin. Before we jump to Q&A session, I want to draw your attention that in 2 weeks -- less than 2 weeks, we're going to host our Capital Markets Day, our Annual Capital Markets Day 11 September 2026, 10:00 a.m. at Tower. So we're going to have first the main conference. You can see the detailed agenda at one.ro/cmd2026. We also published the current report about this today morning. So we invite you all to register and to see us in person as well as join the properties tour. So you can see how the developments have progressed. We're going to have visits to One Gallery, One Lake Club and One Height District. And this wraps up our formal part of the presentation. Before we go into the Q&A, I recommend you all to -- we're going to take 1 minute. So we're going to go on mute and we're going to wait for your questions. I see we already get some questions, but to go smoothly, we'd like to wait for the full set. Therefore, please type your questions now in the Q&A chat, and we will address them shortly. Thank you.

Perfect. I think we can begin the Q&A session. So the first question is, why didn't you finish the subdivision process for all developments under construction since the law changed 9 months ago?

Okay. Thank you. I will explain anybody? Okay. So basically, what happened with this new law. The new law by its intention and by what it does is not bad. It's a good law that links the payment of the clients to the stages of development, make sure that the money are used for the specific developments. So the law in itself is not bad. But when it passed, it didn't have like a period -- a clear period of implementation, and it didn't have the norms. So this transformed in 6 or 7 months until we were able to sign the first unit subdivision process, which we did in May, June after December, if you can imagine, for One Academic Club and for One Floreasca Sunset. And immediately after, we had the cyberattack, which blocked us to sign the sales. So basically, most of the year from December to today, we managed because of the law to sign only reservations with 5% down payment. So this, of course, had a huge effect on what we recognized in IFRS. This doesn't mean that we didn't do the sales, and we will not register the profit. We just postponed it. But also a very important aspect to understand is that once the new law came, we are put in place of a dilemma because for some of the developments that were more advanced like One Lake Club, One High District, One Lake District, which are also our largest developments, we had either to start the unit subdivision process and delay the formal reception with authorities. So this meant that we would have pushed the delivery of all these 3 huge developments into 2027, but we would have recognized better numbers, IFRS or we could have decided to finish them, and this is what we decided to finish them with priority this year without doing the unit subdivision process, understanding that we will not be able to record the amounts, but at least we have all the developments finished and the risk for the company is much lower with apartments instead of construction sites. So this is very important that we are faced with this dilemma, and we decided it's better to focus on the substance than on the form and focus to deliver the units this year, not focus on registering in the accounts of the company. So I don't know if I'm clear enough, but it's very important, these 2 aspects. First, that the norms of the new law were very poor, and we didn't have the time to implement it. And second, that we couldn't do both the unit subdivision and the finalization of the development with authorities in parallel. We had to choose. We have this dilemma. And me as a shareholder, I'm happy how we chose, even though we published poor IFRS results for the first half of the year. Thank you.

And if I can add to what Victor mentioned, it was also a blockage at the level of the institution because there were no clear norms on how to treat this subdivision, this preapartamentare under the new legislation. We finalized the first development, one for [indiscernible] with this subdivision in mid of June. And as we know, there were 2 developments at the level of the country, which were launched -- first 2 developments, which were launched with this subdivision, One of them was one for [indiscernible].

We can now go to the next question. What is the status of One Cotroceni Towers?

The status of One Cotroceni Towers is that we are waiting for the building permit to be issued by the authorities. And after we have the building permit, we start the sales, the unit subdivision process in order to collect money. And after the unit subdivision process is ready, and we have probably by that time around 2 months, 3 months of sales, we start the full-blown construction. So based on permitting, we might start even this year, but it's a bit stretched since it's already September. And if not, we start at the beginning of next year. This is a landmark development. We were extremely successful with One Cotroceni Park. This was our most profitable mixed-use development overall from all our portfolio from all matrices, total profit, return on equity. So basically, One Cotroceni Towers is just an extension of One Cotroceni Park, transforming what we call One Cotroceni City, 1.3 kilometer opening to Progressive Street. Also One Cotroceni Towers will have the tallest 2 tallest residential buildings in Romania. So this is a really, really amazing development. We are very excited to start it. But we are waiting already for longer than we estimated for the administration to issue the permitting. We feel that it's coming soon. So we feel it is now in the last moment. And I take this opportunity to say that 2026, except for the new Nordic Law, the new legislation and for the cadastral attack on the administrative point of view, like issuing permits and all kind of administrative procedures. We have to say that they are much faster than before. So it looks like on the bureaucracy level of approving the developments, the process has improved. And we hope this -- we will -- it will affect also positively One Cotroceni Towers. We cannot wait to start building it.

Thank you. The next question. Could you please provide some additional details on the approximately 1.6 million square meter land plot in [indiscernible] held by One Project 11. What is the group's current strategy regarding this asset?

For the time being, there is no public strategy. And when we'll have a plan and a strategy, we will make it immediately public. For the time being, it is just an investment.