Warimpex: Losses from write-downs in H1 2009 indicators show stabilizing hotel market (DE)

The first half of the year for Warimpex Finanz- und Beteiligungs AG brought a loss in the amount of €98.6 million because of impairment write-downs, and also in part serious declines in occupancy levels and room rates.

Warimpex was not able to escape the effects of the adverse overall market environment, and was hit especially hard by the virtual freeze on the transaction market that led to rising discount margins and therefore to changes in the valuation of the Group's properties as at the reporting date.

In contrast, the company also saw clear recovery tendencies on the hotel market towards the end of the reporting period, and a series of positive events – first and foremost the opening of the two showcase andel's hotels in Berlin and Lodz.

There are also clear signs that the transaction market will recover at the end of 2009.

"The hotel industry is also generally early cyclical, and therefore reacts differently to changes on the market than office properties. Compared to 2008, the numbers at our hotels in May, June and July were already notably better than in February and March. These gains can be attributed above all to good business in the tourism segment.

"Now, the most important factor will be the month of September, when the corporate market picks back up and the room rates for 2010 are negotiated. Advance reservations for conferences and seminars are already higher this year than at this point in 2008. All of this makes up optimistic that we have the most difficult times behind us in the Hotels & Resorts segment," says Franz Jurkowitsch, CEO of Warimpex.

In the Development & Asset Management segment, which comprises our property development and sales activities, our development projects are under construction and proceeding according to schedule. Conditions for selling properties remained difficult in the second quarter of 2009, but the sale of the newly renovated Csogolany office building in Budapest at good terms at the end of June was very encouraging.

Falling interest rates and rising yields for properties in Central and Eastern Europe are attracting increased attention to the region among institutional real estate investors.

Franz Jurkowitsch: "Because of this change, I expect that the volume of real estate transactions will begin rising again at the end of 2009. If the banks are willing to provide the necessary financing, we may see very high-quality properties change hands already in the second half of 2009."

In spite of the turbulence on the market, Warimpex was able to continue and complete its development projects according to schedule. The andel's in Berlin opened in the first quarter already and is now one of the largest conference hotels in the area.

The andel's in Lodz followed in May 2009. A textile mill from the 19th century with typical industrial architecture and that is under protection as a historical monument was converted into a highly modern, four-star design hotel. The andel's is the first four-star hotel in Lodz and achieved an occupancy rate of roughly 50% in its first months of business, surpassing the expectations and getting off to a very good start for a new hotel.

Financial result
Consolidated sales were down by 15% from €44.3 million to €37.8 million in the first six months of the 2009 financial year. Revenues from hotel operations fell from €41.6 million in the first half of 2008 to €34.9 million in the reporting period. The majority of this decline can be attributed to Prague, where sales in the five-star segment declined by as much as 40% in annual comparison. Sales also contracted, considerably in some cases, in the four-star segment in the Czech Republic and on other markets. In contrast, revenues from the letting of offices and the provision of development services increased by 6% to €2.9 million.

The operating profit before write-downs (EBITDA) fell from €19 million in the first six months of 2008 to € - 1,9 million, and the operating profit (EBIT) decreased from €12.8 million at June 30, 2008 to € -82.6

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