Steady increase in rental revenues in 2023

Q4 2023 results

12 April 2024

  • Revenues from renting and managing properties have risen 12.7% to BGN 8mln. BREF had lost some clients at the end of 2022, but were able to find new ones and fill up some of the vacancies in the newly constructed Synergy Tower. The Total Revenues account dropped more than 22% to BGN 22.6mln. This, however, was the result of 2 opposing effects- first it was the decline due to the base effects of an outsize gain in Q2 2022 when they sold their Bricolage Varna property for BGN 13.3mln and a land plot in Mladost district in Sofia for BGN 0.7m. The second was the gain from the increase in value of the newly operational Synergy Tower.
  • As a result of the above disinvestments, operating expenses fell considerably (67%) to BGN 5.2mln. This resulted also in a 24% decrease in expenses to the servicing company to BGN 1.2mln.
  • In the past year, total expenses decreased by 63.1% compared to the previous reporting period. Again, this was mainly due to the sale of the Bricolage property. That also prompted the decrease in other accounts, such as Operational expenses of assets, expenses to the servicing company and other expenses.
  • Net profit was BGN 16.5mln, reflecting a 31.6% increase compared to the previous year. The increase in the value of the Synergy Tower project, as well as the increase in rent and property management revenue played a major role here.
  • Total assets grew YoY by 10.4%, while net debt decreased by 12%. The company reduced its long-term debt by 14.4%, or BGN 4.53mln to reach BGN 27.3mln.
  • The decline in cash from BGN 11.5mln to BGN 4.2mln is explained by the continuing finishing works on the Synergy Tower project. The company expects that cash will be used further in the following trimesters for the same purpose and cash reserves will be further decreased.

Notable events:

  • For their Synergy Tower 3 new tenant agreements were reached in Q4:
  • “Stage Coworking” OOD for 2,763.98 sqm for 10 years. The company expects that the tenant will be offering services to already existing tenants, as well as outside clients.
  • “Bianor Holding” AD for 660.93 sqm for 5 years.
  • INSAIT – extension to the existing rental agreement with 660.08 sqm for the booming IT and AI department of Sofia University.
  • After 31.12.2023 the following tenant agreement was reached:
  • MSG Global Solutions Bulgaria – a 5 year agreement for 662.31 sqm at their Synergy Tower location. With that, total occupancy there stands at 53.79%.

Ivaylo Valchev
Equity Analyst
Tel.: +359 2 937 9862
e-mail: valchev@sis.bg

Svetozar Abrashev
Senior Managing Partner
Tel.: +359 2 937 9869
e-mail: abrashev@sis.bg

Sofia International Securities
Sofia 1000,
140 G. S. Rakovski Str.
Tel.: + 359 2 937 98 65
e-mail: info@sis.bg

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Sofia International Securities AD is a member of Bulgarian Stock Exchange (BSE) and the Central Depository of Bulgaria. The company provides brokerage, investment banking, equity research, portfolio management and other services. Sofia International Securities AD is regulated by the Financial Supervision Commission of Bulgaria.

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The value estimate(s) stated in this report is (are) valid only in light of the valuation methods used to derive this estimation. The use of other or more comprehensive approaches could result in other estimates of value that could diverge substantially from the results presented herein. With regard to the above, when making our conclusions about the intrinsic value of the Company’s share capital, we have not considered or evaluated any possible tax, legal or other effects that might arise from engaging in transaction(s) with the shares of the company. The document should not be regarded by recipients as a substitute for the exercise of their own independent judgment and they should seek and obtain independent investment advice is necessary. Any facts and/or information stated in this document are subject to change without notice and Sofia International Securities is not under any obligation to update or keep current the information contained herein. Any opinions expressed herein are only correct as of the stated date. Past performance is not indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security.

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