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

Good morning, and welcome to One United Properties conference call for presenting the results for the first half of 2025. My name is Zuzanna Kurek, and I am Investor Relations Officer at One United Properties. I am joined in this call by Victor Capitanu, Executive Board member and Co-Founder of One United Properties; and Cosmin Samoila, CFO at One United Properties. Before we begin, I would like to mention that this call is being recorded and that the recording of the call will be uploaded on our website later today. As stated in the call invite, by joining this videoconference, 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 teleconference. Firstly, we'll share with you the financial and operational highlights of the first half of 2025, which will be presented by Victor Capitanu, Cosmin Samoila, as well as myself. [Operator Instructions] I will be moderating this session. And therefore, for the sake of those who will be watching the replay of the 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 myself. Finally, 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 actual results may differ materially. We encourage you to review the disclaimer that we have included in the presentation, which you can see right now on the screen. This disclaimer applies equally to all the statements made in today's call. Thank you all for your patience, and we can now kick off the teleconference. And I would like to invite Victor Capitanu to share with you the key highlights of One United Properties performance in the first half of 2025.

Good morning, everybody. Welcome to our conference call. As you see in the first half of 2025, we managed to increase our turnover to a little bit more than RON 800 million with 16%, while increasing our consolidated gross profit to almost RON 300 million and EBITDA to RON 335 million. In the same period, the gains that we recorded from investment property were a bit less than in the first half of last year, 12% less. In the first half of last year, the gains from investment property were primarily from market value adjustment of rental apartments and in the first half of this year comes from market value adjustment of investment land where we plan to develop mixed-use development of One City District on the former ROCAR platform. Regarding our ongoing portfolio, what we have under construction. In terms of the residential segment, we have a gross development value of sites under construction, a bit more than EUR 1.2 billion in 9 construction sites, 8 in Bucharest, 1 in Mamaia, Constanta with 3,884 units under construction, out of which a big part of them will be delivered over the next 12 months. This is almost double than everything we've completed so far, which is a gross development value of almost EUR 700 million and almost 2,600 apartments. In the same time, we have under planning around EUR 1.2 billion -- EUR 1.9 billion in gross development value in various locations, mainly in Bucharest and more than 9,000 units under planning phase. So as you see, we are on the way to accelerate growth on the residential segment, especially with larger developments that cater for low to medium and medium income. On the rental property segment, which we developed mainly in the last 5 years, we managed to reach accounting value of around EUR 0.5 billion for 155 square meters of gross leasable area. And we estimate to double more or less these values over the next 5, 6 years by the end of 2030. Of course, in case we will decide to dispose any of the existing assets, these figures will be affected accordingly. Now I will give the -- I will let Cosmin, my colleague, the Group CFO, to give you a bit more details on the financial results of the first half of the year. Thank you.

Thank you, Victor. Good morning, everyone, and thank you for participating to our conference call related to the results of the first half of this year. In terms of the key financial indicators, we have the turnover increasing 16% compared to the same period of last year, up to RON 813.2 million. Turnover includes revenues from apartment sale. This is the main component of the turnover, RON 624.3 million. Rental and tenant service revenues, RON 80.2 million, gains from fair value adjustments of RON 85.3 million and also other operating income of RON 5.3 million. The gross result reached RON 299.7 million, 13% increase compared to the similar period of last year. And the net profit reached RON 248.4 million, 9% increase compared to first half of last year. In terms of the residential segment, the property sales and revenues accelerated with 23%, up to RON 642.3 million. This was supported by strong sales during the first 6 months, but also due to a very good progress of the construction sites that are open right now and in progress. And as a result, the net income from residential property sales increased 25%, up to RON 231.6 million. Also, the fact that construction is advancing on the entire sales portfolio, the net margin improved to 36.1% compared to 35.3% that was in the first half of last year. On the commercial segment, rental income, which also comprises the revenue from services to tenants reached RON 80.2 million, increasing 7% compared to the same period of last year. This moderate increase also reflects very well the fact that our commercial portfolio reached sub stabilization level, 98% lease rate in all our properties as of 30th of June and also 92% of the tenants are already moved in their spaces and they are generating rental income. And as a result, the rental income increased 2% up to RON 52.4 million. On the administrative expenses, this decreased 19% compared to similar period of last year, up to RON 31 million. This decrease is based on the cost optimization program that we carry around the entire group and which started at the beginning of this year and will continue also this year. Other operating expenses increased to RON 10.3 million. Out of this amount, RON 1.4 million are related to CSR sponsorships. And the result from operating activity totaled RON 335.8 million, 15% increase compared to the similar period of last year. On the cash position, we have a slight decrease compared to the end of the year with 13% up to RON 376.8 million. This decrease is based on the heavy construction and investment volume that we had in this first 6 months, where we are accelerating to deliver around 3,800 units in the next 12 to 24 months. And on the cash inflow in the first half of the year, EUR 71 million we received from contractual cash flows, residential sales. And we have to receive from the contracts that are signed as of now for sale of apartments, we have a receivable of RON 364.4 million, which are to be received in the next 2.5 years. If you look already from the sales that are signed as of June, we anticipate a level which is close to the level we achieved last year, RON 152 million to receive this year from existing sales. Of course, in the next months due to the new sales, this amount will increase. And also next year, from the sales that are already contracted as of now, we see an estimation of RON 198 million to collect, which is close to 2023 collection volume that was the historical highest collection volume of the company. Thank you, and I pass the floor to Zuzanna to continue with the other highlights.

Thank you, Cosmin. As already presented by Victor and Cosmin, in the first half of 2025, we maintained a high level of activity with solid results, both in residential and commercial segments. We continued sales at steady pace, achieved high occupancy across our office and retail portfolio and expanded through strategic land acquisitions. I will now briefly walk you through the main trends in residential and commercial areas. So in the first half of 2025, as we reported also in our trading update 3 weeks before the financial results, you could see we sold and presold 301 apartments and commercial units with a total surface of nearly 29,000 square meters worth EUR 95.4 million. Compared to the same period of last year, volumes are lower, but average sales price per square meter increased by 20%. This growth was driven by a sales mix, mainly units in advanced stages of construction such as One Lake Club, One High District and One Floreasca Towers. On the other hand, still the best-selling development for another consecutive quarter remains One Lake District, this time Phase 2, our most affordable development to date, where in the first half of 2025, there were sold 80 units. As of June 30, 2025, 79% of all available apartments both under construction and delivered were already sold. This provides us with a strong visibility on future cash flow -- cash inflows as Cosmin presented. At the same time, by the end of semester, our sales team had a portfolio of 1,250 residential units available for sale and presale across our diversified portfolio of residential developments, which means we still have a significant growth potential and a healthy pipeline of product on the market. On the commercial and office segment, you can see here the split of lease as well as the tenants moved in per development. We have reached percentage of lease and pre-lease on the standing assets of 98% with 92% of tenants already moved in. You can see there are still some very small spaces available at One Cotroceni Park. Contractual rent in the first half of the year was EUR 14.2 million, up 3% year-on-year. In this period, our colleagues from the office division leased and pre-leased 7,500 square meters and signed lease extensions for a total area of 19,000 square meters. So this concludes the first part of our call. We will now open the floor for questions.

[Operator Instructions] To give you some time, we will address the questions -- first address the questions that were sent to us via e-mail. The first question is, does One United Properties plan to issue bonds in the near future? If so, roughly, when and for what amount tentatively? I will invite Cosmin to take this question.

Thank you for the question. Regarding the bond topic, we have an approval from the shareholders that was issued in last year, in April, where we have an approval to issue bonds up to the median of EUR 300 million. And the approval is valid for 3 years. So we have this approval for until 2027 to go into a bond program. I can tell you that at the moment, we are analyzing very intense topic. However, we are looking for the right moment to do it. And at the moment, we don't have additional details. It's possible that we will share more details at the Investor Day that we have scheduled for 11th of September. Thank you.

Thank you, Cosmin. The next question, does One United Properties plan to get rated by major rating agencies in the near future? And if so, what is the planning in this respect?

Yes, of course, the bond process comes many times together also with rating. We engage with rating agencies. We finalize rating process. And we will be able to share with you the exact details and the outcome in the same Investors Day that we have scheduled for 11th September. Thank you.

Thank you. We can now move to the questions from the chat. How did the construction progress of residential development in the second quarter compared to expectations? Was it generally ahead of schedule, behind schedule or in line with projections?

I can say that the construction progress in the residential development was in line with our expectations. Most of the units that we have under construction right now are going to be delivered in the next 12 months. We already started deliveries in One Lake Club, the small phase. It's already under delivery. We will start very soon, I think this week with One Mamaia Nord, the second phase deliveries. And One North Lofts will start quite soon the delivery to the final client, One Herastrau Vista will start quite soon the delivery to final clients. And the construction was in line with our expectations.