"We anticipate strong growth for the real estate sector, particularly in Bucharest. Government forecasts suggest Romania's GDP will hit €350 billion by 2024. With Bucharest historically contributing over 28% to the national GDP, we expect the capital's economic output to be approximately €98 billion in the same year. This projection underscores the exceptional growth potential of our city - a potential that aligns with the ambitious objectives we have set for One United Properties. Our aim is to double our business by 2030 and quadruple it by 2035, capitalizing on Bucharest's favorable development trajectory and our dedication to delivering high-quality, sustainable housing. The ambitious targets we have set for 2024 serve as critical milestones on this path," stated Andrei Diaconescu, co-CEO at One United Properties.
The revenues from residential property sales are targeted to reach €285 million in 2024, a 25% increase compared to the 2023 result. The net income from residential property is expected to surge by 68% to €107.1 million, with the net margin on residential sales projected to improve by approximately 10 percentage points to 37.6%. This growth is attributed to strong sales performance and the progression towards completion of current development projects, in line with the revenue recognition policy applied by the Group.
As of January 1st, 2024, One United Properties' sales team had 1,415 units available for sale or pre-sale. Depending on sales progress and demand, an additional 1,181 units in One Lake District and approximately 1,300 units in One Cotroceni Towers could be added to the portfolio.
Rental revenue, including income from tenant services, is estimated to reach €35.3 million in 2024, a 36% increase from the previous year. This growth rate is more moderate than in previous years due to the sale and pre-sale of four non-core rental assets in 2023, aligning with the company's strategy to concentrate on large-scale mixed-use developments.
In support of its growth ambitions in Bucharest, One United Properties is exploring potential equity and debt transactions over the next three years. At the forthcoming General Shareholder Meeting, to be held on April 25th, the shareholders will vote on a proposal to remove preferential rights for a share capital increase of up to 20%. This move aims to facilitate potential Accelerated Bookbuilding (ABB) transactions to raise new capital that will fuel further development.
"Our sustained low leverage, alongside the growth of our development portfolio, is a testament to our operational prowess, robust financial foundation, and prudent management. We take pride in the fact that, since our IPO, the market has recognized this distinct advantage, rewarding our shareholders with a total return of 27% in EUR terms. This achievement is particularly notable as it contrasts with the 37% decline in the EPRA index, a downturn attributed to the rising cost of capital. As a result, we have managed to outperform the broader European real estate market by a substantial 64%. Moving forward, we are open to the idea of raising new capital, but only under favourable market conditions and if it aligns with the best interests of our shareholders. We believe the timing for such a move is approaching, supported by the improving investor sentiment towards real estate and growing global interest in the Romanian capital market, driven in part by Romania's anticipated reclassification from a frontier to an emerging market by MSCI," shared Victor Capitanu, co-CEO of One United Properties.
Additionally, the company is considering raising debt, with the Board of Directors proposing a potential bond issuance of up to €300 million over the next three years. This strategy aims to optimize financing costs and potentially refinance existing debt with corporate bonds issued at more favourable terms, contingent upon a decrease in interest rates.
In 2023, One United Properties achieved a 30% increase in consolidated turnover, reaching €308.1 million, a record for the group. This growth was driven by a robust residential market, with sales up by 46% year-on-year to €228.5 million, and a 62% increase in rental income, totalling €25.9 million. The gross profit for the year stood at €107.5 million, an 11% increase on a normalized basis from the previous year.
The balance sheet as of December 31st, 2023, reflects One United Properties operational stability and strength, with total assets reaching an all-time high of €1 billion. This includes real estate assets valued at €746.5 million and a solid cash position of €84.6 million. The gross loan-to-value ratio remained stable at 28% at the end of 2023, stable since 2022, proving solid financials and low leverage of the Group compared with the European peers.
For 2023, One United Properties proposes to distribute a total gross dividend of €15.2 million. A first tranche of gross dividends amounting to €7.6 million was already distributed to shareholders on January 31st, 2024. For April 25th General Meeting of Shareholders, the Board of Directors has proposed approval of a second tranche amounting to €7.6 million.
