We kept our word and [ ] achieved another record result in 2020 ”, Reinhold Knodel, PANDION AG | message
BOND MAGAZINE: Please explain the key data of your bond.
Dumpling: The bond has a target volume of EUR 30 million. We have a coupon of 5.50% p.a. and the subscription period runs from January 22nd to 29th, 2021.BOND MAGAZINE: What area is PANDION active in?
Dumpling: We are active in upscale condominium construction. We started with this in 2002 and from the start we concentrated on the A cities – along the Rhine: Cologne, Bonn, Düsseldorf. We then also opened a branch in Munich. Our core business is condominiums in the upper mid-range in A-cities. We map the entire value chain – from obtaining building permits to planning, implementation and sales. We only do sales with our own employees. We develop urban quarters, at a certain size this is mixed use. Because the trend to develop pure living or just offices was not a good trend. It has been found that mixed neighborhoods have a higher quality of life and stay. We also develop offices that often have higher margins than residential projects. The same applies to offices as to living: We only develop in A-cities and in good locations.BOND MAGAZINE: Residential projects make up about 2/3 of your project pipeline, office projects 1/3?
Dumpling: Yes, that’s correct after investment costs.
BOND MAGAZINE:What has happened at PANDION in the past few months?Dumpling: The months since October have been characterized by strong demand for our apartments, so that we even exceeded our sales revenue forecast for the fourth quarter. In addition, the capital market environment has stabilized despite stricter corona restrictions – accompanied by a significant reduction in investor uncertainty regarding the further development of the real estate markets. Investors gain confidence in solid real estate values, because the latest market data confirm sustained positive trends for the residential sector with rising prices and still high volumes.
BOND MAGAZINE: Three months ago you had planned a coupon of 5.50–5.75%, now it is 5.50%. What makes you so positive?
Dumpling: We are particularly positive about the feedback from investors. We have kept our word and, as announced at the investor roadshow in October, achieved another record result in 2020. Our annual surplus is expected to reach more than EUR 47 million – and thus almost EUR 18 million above the record result of 2018. Accordingly, we feel very comfortable with the terms we have now chosen for the bond. We were also encouraged by the fact that a group of anchor investors has now clearly signaled their willingness to invest in the PANDION bond.
BOND MAGAZINE: The lockdown rules have just been tightened. What effects does this have on PANDION?
Dumpling: We already demonstrated our crisis resistance during the first lockdown and only felt the effects of the pandemic on our business to a minor extent. We quickly caught up with the temporary decline in demand – especially in the crisis months of April and May 2020 – in the second half of the year and are seeing high demand for apartments at pre-Corona level and even above until recently. We are therefore optimistic that the effects will be limited this time too, especially since – unlike in the spring of last year – the end of the pandemic is in sight with the vaccines now available.
BOND MAGAZINE: You develop around 1/3 office properties. The demand for office space was higher in 2019 than ever before. The trend is probably broken. In what way have the requirements for office projects changed and what effects do you expect on the demand for space and prices?
Dumpling: You are right, the trend of strong and regionally broad demand for office properties with record numbers in 2019 has only been broken for the time being. However, we assume that the demand for office space in the core locations we focus on in German A-cities will rise again in the medium term. And this is exactly where we build our commercial space after a selective selection process. If at all, offices in B and peripheral locations will have to cope with a decline in demand. I am convinced that in the medium term we will not see fewer offices, but instead new office concepts. In particular, the demand for new and modern office properties, which, unlike many old existing properties, enable flexible space concepts, will increase in the future. In addition, we are in advanced negotiations with some of our commercial projects with very well-known addresses. In this respect, we are not worried and expect the office market to normalize after the boom years.
BOND MAGAZINE: Thank you for the interview.
The interview was conducted by Christian Schiffmacher, www.fixed-income.org
Source: fixed-income.org – The platform for investors and issuers in the bond market.