The Hungarian real estate development firm CORDIA INTERNATIONAL Plc., member of the Futureal Group, has published its Management Report for 2020, a year when the company managed to expand further.
2020 proved to be a challenging year and Cordia International ZRt’s business model was put to the test. On one hand, the VAT increase on residential apartments in Hungary impacted the market negatively, on the other hand, the global pandemic outbreak caused economic turmoil and uncertainty. As a holding company, Cordia could have been effected directly by these unfavourable developments through its subsidiaries, but the Group’s diversified business model has proven to be rock solid, and we even managed to continue expanding the business further.
Due to the outbreak of the global pandemic, the company's priority was to protect the health of its clients and employees in its subsidiaries. The Group has coped well with this challenge, introducing a number of new procedures and guidelines consisting in minimizing direct contacts by providing employees with the possibility of remote work, online meetings and compliance with health and safety rules. Our sales offices remained open for remote sales, and construction work was progressing without major set-backs.
Regarding the business, Cordia International Zrt, as a typical holding company, has completed a number of significant investments as well as financing transaction.
These new corporate acquisitions focused mainly on launching Cordia’s new business line of residential rentals in certain growing European cities. This has strong strategic fit, provides a permanent operating income, enjoys long term secular demand from tenants and offers Cordia Group downside protection. The rapidly changing customer attitudes (millennials) accelerate the demand for rentals and for professional management.
As a first step in establishing the new residential rental business line, in March 2020 Cordia International Zrt. has acquired a 20.6% stake in Argo Properties N.V. for 34,4m EUR, further boosting its stake by 3m EUR in the August capital increase (after which its stake was reduced to 18% due to dilution). This investment establishes the Group’s presence in Germany, Europe’s strongest resi-for-lease market. Argo’s focus is on growing cities of Dresden, Leipzig and Magdeburg. Efficient scale, experienced local management and institutional co-investor partners provide hands-on risk mitigation for Cordia Group.
The international business was further expanded in August 2020 in the United Kingdom thanks to the acquisition of a local property developer in Birmingham, BlackSwan LTD and the establishment of Cordia’s arm and local platform in the UK, Cordia BlackSwan. These new investments, beyond the residential-for-sale developments, will supply built-to-rent (BTR) projects and target to become a best-in-class BTR developer and operator in the region. The acquisition allows BlackSwan to deliver a GBP 550 million project pipeline across the West Midlands. As an addition to Cordia’s resi-for-rent business, in September 2020, the Group has acquired Finext Global 1 Real Estate Sub-fund for about EUR 10m. This portfolio of residential apartments in Budapest generates rental income
and can also increase in value over the long term.
The Polish business was also expanded significantly in 2020 by the acquisition of Polnord SA, a publicly listed company on the Warsaw Stock Exchange with a significant land bank. Cordia first acquired a close to 66% stake mainly by purchasing newly issued shares in December 2019, and helped to recapitalise Polnord SA, that had significant liquidity problems at that time. After the registration of the newly issued shares in February 2020, Cordia launched two tender offers in February and December 2020, and a squeeze-out of minority shareholders in February 2021, bringing its stake to 100% in Polnord SA. On the back of this, Polnord SA has applied to the Polish Financial Authority for the de-listing of shares from the Warsaw Stock Exchange. This will allow Cordia Group to fully integrate Polnord SA into our operations In the subsequent period the Group has expanded its investment portfolio in several transactions strengthening its BTR segment further.
Among others, Cordia invested further EUR 3 million in ARGO during its capital increase and IPO and retained a 15.9% stake in the company post-money.
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