Pro Kapital's Q3 Report Reveals Exciting Real Estate Growth

Management Report: A Year of Growth

Real Estate Development

As we move through 2024, Pro Kapital continues to make significant strides in real estate development, particularly with the ongoing construction and sales of the final stage of Kalaranna 8, located in Tallinn. This final phase includes four residential buildings housing 146 apartments and four commercial units. These additions will increase the total count of buildings within the complex to twelve. Currently, we are focused on completing the finishing works internally and, based on the current progress, we are succeeding in adhering to our timelines. We anticipate delivering the first units from the initial two buildings by the end of the year while completing the remaining two by early 2025.

In Kristiine City, we have been making headway with our new project Uus-Kindrali, where, by the end of Q3, we successfully completed three floors and established the necessary public utility connections, including water, sewage, and heating systems. Additionally, we have implemented a new public road linking our development to the city’s road infrastructure. As of this report, we have achieved approximately 44% in presales and signed reservations, supported by financing from AS LHV Pank.

In Riga, we proudly report that all units in the River Breeze Residence have been sold out as of the third quarter, showcasing the success of our strategic sales initiatives.

Moving to Vilnius, we successfully completed the five residential buildings within the Šaltini? Namai Attico project in 2019, leaving us with just one apartment unsold. In September, we launched the construction for the final stage of this project, which comprises city villas (43 units) and a mixed-use building (15 units). The construction of the villas is nearing completion, currently at approximately 80% structural progress, while the mixed-use building has reached its maximum height, with expected completion set for Q2 2025. Sales efforts have recorded a remarkable 25% sellout rate, taking advantage of competitive pricing in the current market. The construction financing for this project has been arranged through Šiauli? bank.

We are also progressing with the permitting process for a recently acquired property on Naugarduko street, which was previously a school. We plan to transform this property into a premium residential location featuring around 50 luxury apartments that overlook the historical Vilnius old town. We hope to receive the necessary permits by year-end, allowing us to commence construction activities by Q2 2025.

Hotel Operations: Resilience and Recovery

Hotel Operations

Following two challenging years, the global tourism sector is witnessing a robust rebound, and we are pleased to report that our hotel operations have significantly improved. In the year 2024, our hotel has not only met but has also exceeded our budgeted goals through Q3, setting the stage for a record Gross Operating Profit (GOP) by year’s end.

This year, our focus has been on expanding MICE (Meetings, Incentives, Conferences, and Exhibitions) activities, thereby targeting a broader segment of the corporate market. Consistent performance above budget in the first half of the year emphasizes the effectiveness of our strategic initiatives and operational excellence.

Conclusion: Looking Forward

In conclusion, 2024 has represented a significant year of accomplishments across all our real estate projects and in the hotel sector. Our developments in Tallinn, Riga, and Vilnius are progressing well, complemented by impressive sales figures that underscore our dedication to quality and timely project execution.

The hospitality sector's resurgence, particularly our success in MICE, has surpassed our expectations, highlighting our competitive edge in the market. We remain optimistic that geopolitical stability will bolster ongoing growth and opportunity across our real estate ventures.

As we navigate these evolving market conditions, our commitment to financial prudence and operational efficiency remains unwavering. We believe that our diversified portfolio, coupled with our well-crafted strategies, will ensure consistent growth and reinforce our position as a leader in the real estate arena.

I would like to extend my heartfelt gratitude to our shareholders, employees, and partners for their unwavering support. Together, we are well-positioned to seize forthcoming opportunities and capitalize on this year’s successes.

Edoardo Preatoni
CEO

Key Financials

The Group’s total revenue for the first nine months of 2024 reached 10.6 million euros, a decrease from 20.0 million euros during the same period in 2023. The Q3 revenue amounted to 3.7 million euros compared to 3.9 million euros a year earlier.

Our real estate sales revenue is recognized at the moment the legal title is conveyed to the buyer, which means that sales revenue is intrinsically linked to our construction cycles and project completion rates.

The decline in real estate revenue for 2024 was primarily attributed to the earlier completion of the Kindrali Houses' final building in early 2023. Consequently, most of our finished properties have been sold. While we progress with the Kalaranna District’s final stage, we remain on track to complete and deliver the first units of the initial two buildings by the 2024 year-end and to complete the remaining two by the first three months of 2025.

The gross profit for the first nine months of 2024 was 2.9 million euros, down 52% from 6.0 million euros in 2023, with Q3 gross profit being 433 thousand euros compared to 1.5 million euros the previous year.

Our operating result for the first nine months indicated a loss of 1.7 million euros compared to a profit of 1.7 million euros during the same timeframe in 2023. The operating loss in Q3 was 873 thousand euros, contrasting with a profit of 167 thousand euros in Q3 2023.

By September 30, 2024, the net result for the Group was a loss of 4.1 million euros versus a loss of 1.0 million euros in the corresponding period last year, with Q3 showing a loss of 1.0 million euros compared to 732 thousand euros in the same period of 2023.

Cash utilized in operating activities for the first nine months of 2024 totaled 9.9 million euros, compared to 9.5 million euros generated during the corresponding period in 2023. Cash used in operating activities throughout Q3 was 5.4 million euros, as compared to 59 thousand euros generated in Q3 2023.

As of September 30, 2024, the net assets per share were valued at 0.91 euros compared to 0.96 euros the previous year.

Frequently Asked Questions

1. What are the major updates from Pro Kapital's Q3 report?

Pro Kapital has reported ongoing progress in real estate projects across Tallinn, Riga, and Vilnius, with significant sales achievements and a strong hotel performance recovery.

2. How has the real estate development segment performed in 2024?

The real estate segment has seen substantial growth, with notable advancements in construction schedules, presales, and overall project completions.

3. What challenges has Pro Kapital faced recently?

Challenges include decreased revenue attributed to prior completions and navigating a competitive market; however, Pro Kapital remains optimistic about future growth prospects.

4. How is the hotel division performing financially?

The hotel sector is witnessing a remarkable recovery, with improved demand and performance exceeding prior budget expectations, leading to projected record profits.

5. What are the future plans for Pro Kapital?

Pro Kapital aims to continue its construction momentum in existing projects and explore new opportunities, particularly in high-end residential developments and the MICE segment of the hotel industry.

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