News Article coronavirus development Echo Investment financial report Hungary investment Poland Wing
by Property Forum | Investment

With the acquisition of another 10.4 percent stake, Wing's stake in Echo Investment has increased to 66 percent, the Hungarian investor-developer announced.

The acquisition was executed by Wing-owned Lisala, in accordance with Warsaw Stock Exchange rules, through a public offering. The offer was announced on 3 February at a price of PLN 4.65 / share.

Supporting Echo Investment’s long-term growth program, Wing entered as a strategic investor at the end of last year when it acquired a majority stake (56% of shares) in the company through Lisala. At the operational level, the two companies continue to operate independently.

Strong results for 2019

On Monday, Echo Investment announced that in 2019 it obtained a net profit of €65 million (PLN 300 million), resulting from the increase in the value of its office and retail projects, handover of 1,263 apartments, as well as the sale of office buildings Gatehouse Offices in Warsaw and O3 Business Campus III in Kraków.

Echo Investment is focused on developing multifunctional, ‘destination’ complex projects, which now constitute approx. 45% of the total sqm of projects under construction and projects in the pipeline. Today, the ongoing ‘destination’ projects are Warsaw Brewery and Fuzja in Łódź with the latter one being fully leased.

As a residential developer, Echo Investment improved its sale results in 2019, selling 1357 apartments and handing over the keys to 1263 apartments to its clients, which enabled it to achieve a 38% better score than in 2018.

“To develop our residential business, in 2019 and at the beginning of 2020, lands where over 8,000 apartments can be developed, were bought or secured. I am particularly satisfied with the acquisition of the Tesco shopping mall in Warsaw’s Kabaty which is going to be transformed into the new centre of the district. Another great deal was concluded at the beginning of 2020 where we secured three standing and working first-generation shopping malls belonging to the Tesco Group that enable us to develop around 240,000 sqm mixed-use area”, says Nicklas Lindberg, CEO of Echo Investment.

For Resi4Rent, the company’s residential for rent platform, 2019 was a breakthrough. Use permits were granted for the first projects – Rychtalska buildings in Wrocław and Wodna in Łódź, that together offer over 520 apartments. According to the ambitious growth plans of the platform, another 1,800 units for rent will be completed by the end of 2021.

Last year Echo Investment started construction of four office projects with a total leasable area of over 95,000 sqm, and has obtained the occupancy permit for two office buildings - Moje Miejsce I and Face 2 Face I. Its leasing team signed lease agreements for a total area of 96,000 sqm. Among the largest tenants secured last year were such companies as Grupa Żywiec in the Warsaw Brewery, CitySpace in React in Łódź and of course Fujitsu Poland Global Delivery Center in Łódź-based Fuzja.

In 2019 Echo Investment together with EPP opened Galeria Młociny in Warsaw. This multifunctional project combines 85,000 sqm of modern, well-designed retail and entertainment area, as well as approx. 6,000 sqm of office space.

Echo Investment enjoys a very stable financial situation and a low net asset-to-debt ratio, which as at 31 December 2019, was at 34%. The Group maintains a high cash balance: over PLN 490 million at the end of 2019.

“The value of our projects under construction increased over the last four quarters by 30%. This is in line with our strategy to achieve a dominant position on markets we operate in. This is why we constantly searching and buy land for further development. In 2019, we acquired land properties for over 170,000 sqm of residential and office space. Also, another land for 190,000 sqm is already secured with preliminary agreements – mainly for residential projects, including projects for Resi4Rent”, comments Maciej Drozd, CFO of Echo Investment.

COVID-19 statement

Last week, based on preliminary analysis, the Management Board of the Company announced that, according to its current knowledge and assessment, the coronavirus outbreak and subsequent government-imposed limitations related to them may, depending on their duration and intensity, significantly and adversely affect the operations and financial results of the company, in particular:

  • income generated by shopping centres (as the Company indirectly owns the following retail objects: Libero in Katowice and 30% of Galeria Młociny in Warsaw) due to the limitations imposed on shopping centres’ functioning, including cinemas and gastronomic establishments;
  • residential apartments’ sales volume, in particular in the event of potential tightening of the mortgage loan eligibility criteria by banks or other disruptions on the housing or banking market;
  • timely execution of projects and transactions undertaken by the Company or its related entities within a planned schedule, in particular, due to possible delays in construction works, caused by potential shortages of the construction personnel and/or interruptions in supplies of material and components;
  • timing of the sale of commercial projects and their prices that may be achieved; and
  • availability and terms of new financing if banks and other lenders are materially affected by the extended economic downturn.

The Management Board of the Company is implementing certain actions aimed at mitigating to the extent possible the adverse impact of the factors mentioned above, which, in particular, may be partially offset in the future by the potential decrease in costs of construction works resulting from the reduced demand.