Pro Kapital's Management Report for Q3 2024
Real Estate Development Update
The ongoing construction and sales activities at Kalaranna 8 in Tallinn are making steady progress in 2024. This final phase of the project encompasses four residential buildings, yielding a total of 146 apartments and four commercial units. When finalized, the cumulative total of buildings at this site will reach twelve. As we enter the third quarter, internal finishing works are proceeding as planned, aligning with our established timelines. We anticipate delivering the first units from the initial two buildings by year-end 2024, followed by the completion of the remaining two by the first quarter of 2025.
As of this report, presales and signed reservations have reached approximately 55%, marking a notable achievement given the current market conditions and the location’s competitive pricing.
In the Kristiine City project, titled Uus-Kindrali, we have made substantial headway with three floors completed as of Q3 2024. Recent developments include the conclusion of public utility connections for water, sewage, and heating, alongside the launch of a new public road linking our project to the city’s infrastructure. Currently, we are at a presale rate of 44%, with AS LHV Pank providing the necessary construction funding.
Our projects in Riga have seen success as well, with all units at the River Breeze Residence sold out. Meanwhile, in Vilnius, five residential buildings at the S?altiniu? Namai Attico project were completed in 2019, with only one apartment left unsold. September marked the commencement of construction on the final stage, including 43 city villas and a residential-commercial building housing 15 units. As of Q3, the construction of the villas has reached the third floor, with around 80% of the structural work completed, while the commercial building has achieved its topping out. Expected completion dates are set for Q2 2025, with current sales reaching a 25% sellout threshold and record pricing in the market, funded by S?iauliu? Bank.
We are also advancing permitting for our latest acquisition located on Naugarduko Street. The site, previously a school, is planned to be transformed into a luxurious residential project featuring around 50 high-end apartments, providing stunning views of Vilnius’ old town. We aim to secure permits by year-end, setting the stage for construction to commence in early Q2 2025.
Hospitality Sector Recovery
The hotel operations are witnessing a significant rebound following two years of disruption in the global tourism industry. In 2023, our hotel saw remarkable performance, and we are pleased to report that the positive trend has continued into 2024, surpassing our budget expectations through Q3. If this momentum persists, we are on course to achieve a record Gross Operating Profit (GOP) by year-end.
This year, our main focus has shifted towards enhancing MICE (Meetings, Incentives, Conferences, and Exhibitions) activities, capturing more of the corporate market. The consistent performance exceeding budget projections in the first half of the year validates our strategic initiatives and operational excellence.
Financial Summary and Key Metrics
In terms of financial performance, the total revenue for the Group during the first nine months of 2024 reached €10.6 million compared to €20.0 million during the same period in 2023. The revenue for Q3 alone amounted to €3.7 million, a slight decrease from €3.9 million in Q3 2023.
Compared to the previous year, real estate revenue saw a decline due to the completion and subsequent sale of the final building of Kindrali Houses at the start of 2023. Most of our developed properties have been sold, with ongoing construction at Kalaranna District promising to deliver new units by early 2025.
Over the past nine months, we recorded a gross profit of €2.9 million, representing a 52% decrease, down from €6.0 million in 2023. Our operating result disclosed a loss of €1.7 million, contrasting with a profit of €1.7 million in the same period last year. The net result for this quarter reflects a loss of €4.1 million, compared to a loss of €1.0 million in the reference period.
Despite facing operating losses, we maintain a commitment to meticulous financial management and operational efficiency. Our diversified portfolio and well-thought-out strategies remain foundational to achieving sustained growth and reinforcing our market position in real estate.
Gratitude to Stakeholders
I would like to express my sincere gratitude to all our shareholders, employees, and partners whose ongoing support has been invaluable. We are well-equipped to capitalize on future opportunities while building upon the successes we’ve achieved together this year.
Ann-Kristin Kuusik
CFO
+372 614 4920
prokapital@prokapital.ee
Frequently Asked Questions
What are the main real estate projects Pro Kapital is working on?
Pro Kapital is focused on ongoing projects, including Kalaranna 8 in Tallinn and Uus-Kindrali in Kristiine City, along with developments in Vilnius and Riga.
How has the hotel sector been performing for Pro Kapital in 2024?
The hotel operations have seen a strong recovery in 2024, with continued performance surpassing budget expectations and a record Gross Operating Profit anticipated.
What challenges did Pro Kapital face in its revenue generation?
Revenue declined due to the completion and sale of previous properties, with most units already sold in the real estate portfolio.
What strategies is Pro Kapital implementing for growth?
The company is expanding its MICE activities and focusing on delivering quality real estate projects to reinforce its competitive advantage.
Who can I contact for more information about Pro Kapital?
For more information, contact Ann-Kristin Kuusik, CFO, at +372 614 4920 or via email at prokapital@prokapital.ee.
