Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pandox AB (PNDXF, Financial) reported a 5% increase in like-for-like total revenue and a 3% increase in total net operating income for the third quarter, reflecting a more normalized hotel market.
- The company successfully acquired three modern and highly profitable apart hotels in central London, expected to contribute around £34 million in revenue and £17 million in net operating income annually.
- Pandox AB (PNDXF) has a high-quality project pipeline expected to accelerate organic earnings and value growth from 2024 to 2026 and beyond.
- The company maintains strong and positive lender relationships with low refinancing risk, supported by bank financing only.
- Pandox AB (PNDXF) has ambitious ESG targets, including a substantial climate transition program with high ROI, enhancing its sustainability profile.
Negative Points
- The Swedish regional market, excluding Stockholm, continues to struggle due to significant capacity inflow in Gothenburg, leading to a market rate decrease of close to 15%.
- Finland's regional market experienced slower development due to challenging comparable growth rates.
- The company's LTV will increase to 46.5% following the acquisition of Doubletree by Hilton in Edinburgh, moving it closer to the higher end of its policy range.
- Despite positive growth, the occupancy increase in Europe is relatively modest at 1%, indicating potential challenges in fully recovering pre-pandemic levels.
- Geopolitical uncertainties remain a significant risk factor for future growth projections in the hotel market.
Q & A Highlights
Q: How are occupancy and RevPar developing in the portfolio? Has it improved or is RevPar still driven by price? Please elaborate on submarkets.
A: It's relatively balanced between occupancy and price across our portfolio. In the UK, growth is more price-driven, while in the Nordic capitals and Germany, occupancy is increasing from lower levels. Overall, it's about half price, half occupancy.
Q: What will the extra raised equity from the issue be used for, and in which markets are you looking to invest?
A: We are looking for value-accretive additions to the Pandox portfolio, focusing on the UK, Nordic, and Germany. Recent acquisitions in London and Edinburgh had a yield of over 7%, which is what we are targeting.
Q: Can you provide insights on the financing climate and your refinancing strategy?
A: The financing climate has improved, and we refinanced approximately 8 billion at lower credit margins. We continue to increase sustainability-linked loans and have strong bank relationships for future refinancing.
Q: What are the expectations for rental growth in the hotel market for 2024 and beyond?
A: We expect some rental growth in 2024, supported by developments in the first nine months. For 2025, we anticipate further growth, although it's early to determine the exact level. Geopolitics remains a key uncertainty.
Q: How is the European hotel market performing, and what are the future projections?
A: The European hotel market is in a good position, with occupancy levels growing and average rates increasing. We expect steady but unspectacular growth in the coming years, similar to pre-pandemic trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
