Historical annual result for R8 Property
2019 was a significant and historic year in many ways for the growing real estate company, R8 Property AS. The company invested almost NOK 300 million in large and extensive projects such as Eeks Gård and Arkaden in Skien and Powerhouse Telemark, Comfort Hotel Porsgrunn, and the commercial building Kammerherreløkka in the neighboring city Porsgrunn.
The result of the high activity is a historically good financial result of NOK 76.6 million before tax.
"We are very pleased with 2019, which was an outstanding year for R8 Property. In today's market where the economic outlook is uncertain, it is good to have a solid year behind us ", says CEO and largest shareholder Emil Eriksrød, and adds that he expects a demanding period in the time to come.
Does not pay dividends
Although the annual report shows nice, black figures, it has been decided that no dividend will be paid to shareholders for 2019. "We completed a successful share issue last autumn, where we raised NOK 130 million. Together with the entire annual result, this capital will remain in the company to form a solid foundation for the challenging time to come," says Eriksrød.
Neither he or Chairman of the Board George Aubert hides that the corona pandemic will significantly impact the result for the current year and that some segments will be hit harder than others, especially in the hotel and service industry.
"2019 was an exciting and eventful year for us in many ways. Perhaps the biggest highlight was the opening of the new quarter at Kammerherreløkka, with Comfort Hotel Porsgrunn and the commercial building on the neighboring plot, which together make up a workplace for about 100 people. The hotel delivered far above its own expectations, and it is sad to see how hard they are hit now ", says Aubert.
Coworking and prop-tech
Every crisis offers new opportunities and is a good opportunity to look at untapped potential, something Emil Eriksrød and his team are concerned about. They have found a niche in the market, which will be a great opportunity in the future. "We believe that coworking and prop-tech are two of the keys to succeed as a real estate player in the future. That is why we bought 50% of the coworking company Evolve Business Space last year and established R8 Technology this year ", says Emil Eriksrød. The responsibility for building up the technology company has been assigned to Wasim Rashid and Daniel Bentes. Both came from DNB at the turn of the year and have for many years worked closely together in large companies such as Schibsted and Telia.
Last week, Orbit Technology was pre-launched. Their first project is similar to Airbnb for commercial real estate. "Orbit was actually to be launched this autumn, but as a result of the corona pandemic, it was important for us to offer both our own and other tenants the opportunity to use corona-safe temporary premises," says Eriksrød. The solution has been well received, and premises through Evolve are ready for use in Oslo, Porsgrunn, Skien, Tønsberg, Fredrikstad, and Akershus.
When the first three quarters of last year were over, everyday life looked good for R8 Property. The company had established R8 Home as an investment in the housing market, they had entered into a partnership with Norner to build the global research center Polymer Exploration Center in Porsgrunn, they had opened a new hotel and commercial building, bought into coworking, acquired their first property in Oslo, and had several major projects underway. Then it right. Immediately after the successful stock issue was completed Finansavisen wrote a large and comprehensive article aimed at the company and Emil Eriksrød in particular.
"This was undoubtedly our biggest crisis management to date," says Eriksrød and receives an appreciative nod from board chairman George Aubert, who says: "It was a tough strain for everyone involved, especially our employees and board members. But in retrospect, we see that we came out of this process strengthened, even though it created more work for us. Financial partners, banks, and shareholders had to carry out further research and carry out new due diligence, etc. They had to make sure that they didn't fund a castle in the sky, which was the impression in the article. All partners and shareholders are still involved, and some have even bought up further. We are very grateful for this."
R8 Property's tenants have an average contract length of 7.3 years. The portfolio also has an even distribution with regard to industries and owners. "25% of our portfolio is public tenants such as the Tax Administration, NAV, and the Prison and Probation Service. Besides, we have several solid tenants such as banks and insurance companies, which gives us extra security now in these trying times ", says Emil Eriksrød. R8 Property was also awarded first place for the fifth year in a row in the national survey Norwegian Tenant Index, which indicates that most tenants are well satisfied with their landlord. "Yes, it is important for us to do what we can to take care of our tenants, especially now that many are struggling and feeling insecure. As a result, we offer all our tenants in Telemark, free of charge Corona-safe space in Porsgrunn Næringspark until the summer of 2021," says Eriksrød.
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