25 November 2020, Road Town, Tortola, BVI
BUSINESS HIGHLIGHTS
-- In Q3 2020 the Company continued to expand its activity to Europe and
diversify its portfolio to ensure long-term capital preservation.
Following this strategy, in July 2020, the Company acquired 100% of
interest in the entity holding a hotel property in Salzgasse 4 in Dresden,
Germany. The property is located in the historic centre of Dresden, very
close to the main city attractions and Dresden Airport. It comprises an
area of 15,550 sqm. with a total of 180 rooms, 46 underground parking
spaces, a spa, restaurant, 261 sqm. of retail space and meeting rooms for
up to 230 people. The property and is occupied by 4-star Hotel Innside
Dresden of Melia Hotels & Resorts Group. The current lease runs till
December 2029.
-- The Company's rental properties continue generating sufficient cash to
cover the Company's operating expenses, service the debt and partially
finance its new acquisitions.
-- The Company successfully continued sales of Arbat premises in Moscow.
During 3rd quarter 2020 a few more apartments and parking lots have been
sold.
-- RUB and EUR, the major currencies in which the Group operates, continue
to be volatile and have an impact on the Company's operating result and
net asset value. RUB weakened against US$ by more than 26% since the
beginning of 2020. In average for the 9 months of 2020 RUB weakened by
11% as compared to the same period of 2019. EUR appreciated against USD
by 4% and 1%, accordingly.
-- The management of the Company is constantly monitoring the impact of
COVID-19 pandemic on the Company's rental income on an asset by asset
basis. As of today, the Management of the Company cannot judge on the
future potential negative impact of Covid-19 on the global economy and
major financial markets as well as on the Company's properties but as per
the most recent assessment, impacts on our portfolio are only considered
short-term with no material impact expected for the long-term.
FINANCIAL HIGHLIGHTS
The above key events led to the following main changes in the Company's
financial results for Q3 2020:
-- Acquisition of new hotel property in Dresden, SALZ 4, added US$ 60.52
million (EUR 51.5 million) to the value of the Company's investment
properties.
-- Further, during Q3 2020 the Group's additional investments in LASS 1, an
office property under refurbishment in Vienna, amount to approximately
EUR 15 million, resulting in its recognized value of US$ 103.70 million
as of 30 September 2020. The Group measures LASS 1 property at cost,
since its fair value is not reliably measurable in the refurbishment
stage, until its fair value becomes reliably measurable or construction
is completed (whichever is earlier).
-- The Group's borrowings increased due to the loan with a total value of
US$ 22 million (EUR 19 million) granted by Hypo Vereinsbank (member of
Unicredit Group) which was acquired together with the acquisition of SALZ
4 property. The loan matures in December 2029 and is payable through
monthly amortization payments with a balloon payment of EUR 9.76
million.
-- Apart from the impact of Q3 2020 acquisitions, the values of the Group's
properties and debt are influenced by the currency fluctuations between
RUR/EUR and US$.
-- Net rental income declined from US$ 56 million for 9 months of 2019 to
US$ 45 for 9 months of 2020. The decrease is mainly attributable to
Russian properties and caused especially by the compression of US$ values
of RUR-denominated revenues resulting from RUR depreciation, as well as
by revision of certain leases.
-- Properties acquired in the first 9 months 2020, STRAL 3 and SALZ 4,
contributed US$ 2 million and US$ 0,7 million, respectively, for the
period after acquisition by the Group (STRAL 3: 6 months, SALZ 4: 3
months).
-- For 9 months of 2020 foreign exchange gain recognised in the Company's
income statement was partially overlapped by negative change in currency
translation adjustment recognized directly in equity; so the overall gain
from exchange rate fluctuations in the reporting period is US$ 13
million.
Attachment
-- 201125 EPH Q3 2020 Financial update
https://ml-eu.globenewswire.com/Resource/Download/b5587056-4a22-4bba-995a-fcd0dc89be10
(END) Dow Jones Newswires
November 25, 2020 13:00 ET (18:00 GMT)