Forecast and objectives for 2015
The management is predicting for the group at least 11 million euros as revenue and at least 1 million euros as net profit in 2015.
In addition to changes of the general economic environment, the achievement of the forecast in 2015 and the results of the group in 2015 – 2017 also depend on the following critical intermediate results.
(i) Final stabilisation of the Madrid Blvd loan and extension of important rent contracts. By the reporting date, the group has made the repayment of the principal in amount of 950 thousand euros, after which the loan balance dropped below 11 million euros and the loan agreement is prolonged until December 2017.
The main tasks for the next couple of years will be: 1) to keep stable rental income in amount of approx. 1 million euros and 2) sale of remaining apartments in Madrid Blvd building (as at 31 December 2014 the sellable area is 3,762 m2 ) at amount of approx. 1 million euros per year or
letting out with annual yield at least 6%.
(ii) Sell out of apartments in Manastirski AB block by the end of the year.
(iii) Finishing the construction of Manastirski D-block (final stage of the development project) in December 2015 and delivery and sale to the final customers in 2016.
(iv) Buying a new plot suitable for development in Sofia, with gross sellable area (GSA) of at least 7,000 m2, on which to build in 2016 and sell to customers in 2017.
(v) The completion of the construction project for Paldiski road 70c first stage and beginning construction in the fourth quarter 2015. The sellable volume of first stage is predicted to exceed 120 apartments and the gross sellable area (GSA) of apartments will be 8,000 m2.
The sales of remaining completed products in Latvia also influences the results to an extent, but the management board is not particularly optimistic about the outlook of new developments in Latvia.
The management board is the most optimistic about the real estate market in Sofia, which is indicating the strongest absolute demand, the increase of demand and the margins of the developer.
In Tallinn, the key issue is entering the market with a product which would exceed the customers’ expectations by its properties, the developed and added quality for apartment supply, and bring the using apartment usage costs lower.
Arco Vara does not need to bring more trees into the forest.
Moreover, Arco Vara needs to strengthen its ability to gather and analyse information about customers’ preferences and needs not fulfilled yet. It means, that the work on development of service division data processing capabilities will continue and second generation of Arco Vara information system (AVIS 2) will be launched during the year.
Arco Vara Strategy for 2014-2016 you can find here