Park Street A/S – Annual Report 2022

Park Street A/S – Annual Report 2022

Copenhagen, 5 April 2023

In 2022, the Group achieved an EBVAT (profit excluding value adjustments and tax) of DKK 42.9 million (2021:DKK 56.8 million), as compared to expectations of DKK 50 million (published in the Park Street Interim Report Half Year 2022 results announcement in Aug 2022), primarily driven due to reduction in number of assets from sale of properties, leading to lower  income, combined with an increase in financial expenses due to changes in interest rates. Furthermore there was an increase in new leasing adding to costs for marketing activity, and an increase in energy costs related to vacant units. 

We expect the EBVAT for 2023 to be DKK 55m in view of our expectations to close new leases in pipeline, launch of Pulse N and expected optimisation of operating costs offsetting higher finance costs. This outlook assumes the portfolio to remain same and could change with any significant sales or additions to properties. 

The evolution of the EBVAT is influenced by the following factors:

• Gross profit in 2022 is DKK 104.7 million (2021: DKK 117.4 million), equivalent to a decrease of DKK 12.7 million. The reduction in gross profit is primarily due to a reduction in rental income (- DKK 8 million) offset by an increase in income received from the hotels in the group (DKK 5.8 million), and an increase in Opex of DKK 7.8 million, driven in part by increased energy costs.
• The Group's overheads were DKK 31.8 million in 2022 against DKK 34.7 million in 2021. The decrease of DKK 2.9 million is caused by a savings in external advisor expenses.
• Net financial items amounts to DKK -29.9 million in 2022 against DKK -25.9 million in 2021, representing a negative change of DKK 4 million driven by an increase in interest costs due to an increase in the debt in 2021 with financial institutions including development loan for Pulse N.

The decrease in the Net Profit for the period from DKK 145.4 million in 2021 to DKK 55 million in 2022 is due to the following effects:

• Fair value adjustment in 2022 with a net of DKK 36.1 million while the fair value adjustment in 2021 had a net effect of DKK 128.9 million. In both periods an evaluation of the domicile and investment properties have been made adjusting the yield and the estimated profit and loss by the entire portfolio of Park Street A/S and subsidiaries.

The Group's equity as at 31 December 2022 was DKK 1,087 million, compared to DKK 1,217 million as at 31 December 2021. The decline in equity is due to the purchase of treasury shares.

Subsequent events after 31 December 2022

In January 2023, we have hedged the interest rate exposure on the floating rate non-mortgage debt through purchase of interest rate caps. These caps are now in the positive value.

Mortgage loans due for interest rate fixing in April 2023 have now been fixed as F3 loans.

From the balance sheet date until the date of presentation of this Annual Report no additional events have occurred other than the above mentioned which significantly affect the assessment of the annual report.

 

Management comments on the Annual report

In connection with Annual Report 2022, CEO Pradeep Pattem states the following:

“In 2022 at Park Street we made substantial progress in signing new leases, and disposal of assets noncore to our future operations. Our conversion of a floor of shopping center at Glostrup into an office with long-term lease showcases the prospects of creating long term value deploying capital and using the design, leasing, and development capacity of our team. We expect to continue to dispose assets in the regional centers of Denmark while deploying further capital in core Pulse Living strategy and large commercial assets in core locations (Spark strategy). Higher costs associated with financing and operations, primarily related to vacant units, combined with reduced top line from sale of assets reflects in the EBVAT of DKK 43 million which is below our expectations.

2023 is expected to be both a year of opportunities and challenges for us and the overall sector. Denmark as our base, is uniquely well positioned with its strong economy, governance to navigate the challenges of inflation and high interest rates. The real estate sector has relatively lower debt and direct participation of long-term capital which is expected to facilitate a smoother transition to a high rates environment. The changing landscape even more pushes us to retain the keen management focus on running a tightly managed operations, which building up liquid capital to deploy into core assets related to Pulse and Spark. We are exploring to accelerate the divestments of regional portfolio over the next 12 to 24 months while recycling the capital towards scaling up Pulse assets – both with the launch of Pulse Norrebro, development of Pulse Taastrup but also seek further selective acquisitions. Based on the current portfolio of assets, the company expects that the EBVAT for the year 2023 will be in the range of DKK 50 - 55 million."

Attached files

The Annual Report 2022 and the Statement of the mandatory review of Corporate Governance, cf. section 107b of the Danish Financial Statement Act, is attached to this announcement.

Copenhagen,

Anita Nassar Pradeep Pattem Chairman CEO

Further information

For further information please contact Pradeep Pattem, CEO at [email protected]

Company Website: www.psnas.com

Telephone Number: +45 33 33 93 03

Attachments

• Park Street Annual Report 2022
• Park Street Corporate governance statement - Annual Report 2022
• 213800VGJC18MRKMZC33-2022-12-31-en