The Grounds Real Estate Development AG remained on its growth track in 2022 in a more difficult market environment - positive outlook for 2023

The Grounds remained on its growth track in 2022 in a more difficult market environment - positive outlook for 2023

• Group sales increase as planned by above 16% to EUR 36.8 million (previous year: EUR 31.6 million)
• Group EBIT declines to EUR 3.4 million (previous year: EUR 9.2 million)
• Consolidated balance sheet total rises by more than 34% to EUR 138.3 million (previous year: EUR 102.9 million)
• Further group sales growth of at least 10% to between EUR 40 and 45 million, and EBIT improvement to EUR 4 to 5 million planned for 2023
• Operational focus is on implementing large-volume project developments

Berlin, 28 April 2023 – The Grounds Real Estate Development AG (The Grounds / ISIN: DE000A2GSVV5) maintained its growth course in the financial year 2022 despite a significantly more challenging market environment, and increased its consolidated sales revenues to EUR 36.8 million as planned. This corresponds to an increase of more than 16% compared to consolidated sales of EUR 31.6 million in the previous year.

The growth of The Grounds is also reflected in a significant expansion of the Group’s balance sheet total, which increased by more than 34% to EUR 138.3 million as of the balance sheet date of 31 December 2022 (previous year: EUR 102.9 million). Thus the balance sheet total of The Grounds has more than quadrupled within just three years.

In the property and portfolio development area, The Grounds was able to completely sell the “Terra Homes” project in Erkner near Berlin in a forward sale during fiscal year 2022. In addition, the residential units of the “Property Garden” and “LennéQuartier” projects in Magdeburg and the units in Berlin Pankow were sold in full.

The significant increase in sales was not reflected in a corresponding increase in earnings due to lower sales margins. Consolidated EBIT fell to EUR 3.4 million (previous year: EUR 9.2 million); consolidated earnings after taxes amounted to EUR 1.3 million (previous year: EUR 4.9 million). This corresponds to an earnings per share of EUR 0.07 (previous year: EUR 0.29).

Despite the continuous sale of inventory properties, inventories increased significantly to EUR 82.8 million (previous year: EUR 38.0 million), mainly due to the majority interest in a project development in Blankenfelde-Mahlow and the expansion of the interest in the Börde Bogen project development in Magdeburg. Financial investment property increased to EUR 35.8 million (previous year: EUR 31.1 million) due to acquisitions in Berlin-Lichtenberg (22 residential units) and Fehrbellin (24 residential units).

Commenting on the business development, Arndt Krienen, Management Board of The Grounds, says: “The market environment was increasingly characterised by challenges during 2022, with the changed interest rate landscape in particular leading to a pronounced reluctance to buy on the part of both institutional investors and private buyers of residential real estate. This also made itself noticeable for The Grounds through a slower pace of sales. Nevertheless, we were able to sell all residential units at fair value so far.” In addition to rising interest rates, other negative factors for the real estate market in the year under review were high inflation, in particular high construction and energy prices, worsened subsidy conditions, the banks’ reluctance to lend, and repeated new approaches to regulatory market interventions by politicians.

Jacopo Mingazzini, Management Board of The Grounds, explains: “On the acquisition side, we are reacting to the changed market conditions with an even stricter selection. Operationally, we focus primarily on bringing our project developments to sales maturity. In the reporting year, we took decisive steps forward in this respect at several locations. For example, we received the building permit for the Central Offices office project in Magdeburg at the end of 2022, and we submitted the first building application for the Börde Bogen project - also in Magdeburg - after the development plan was approved. For the terraced house project in Blankenfelde-Mahlow, we also expect a building permit soon. Currently, four projects are already under construction, two of them in Magdeburg, one in Erkner and one in Berlin.”

Based on the ongoing development of the projects, the Management Board expects to be able to increase Group revenue by at least 10% in the 2023 financial year, so it reaches a level in the range of EUR 40 to 45 million. An increase in Group EBIT to EUR 4 to 5 million is expected at the same time.

In conclusion, Jacopo Mingazzini says: “Irrespective of the many challenges posed by interest rate and price developments, but also in the political environment, high demand continues to meet far too little supply in the existing stock and too low a volume of new construction in the residential markets relevant to us. The strategic focus of The Grounds on Berlin and its surrounding area should enable us to continue to participate in the potential arising from this excess demand and its market-supporting effects. The increasing exodus of prospective tenants and buyers to the Berlin environs, together with the positive growth impulses from successful industrial settlements in Magdeburg, lead us to expect further growth potential both in the value development of residential properties and in the development of rents in these locations.”

The Business Report for the 2022 financial year is now available to download at https://www.thegroundsag.com/geschäftsberichte.html

Company contact:
The Grounds Real Estate Development AG
Arndt Krienen/Jacopo Mingazzini, Management Board Members
Charlottenstrasse 79-80, 10117 Berlin, Germany
Tel.: +49 (0) 30 2021 6866
Fax: +49 (0) 30 2021 6849
E-mail: info@tgd.ag
Web: www.thegroundsag.com

Investor relations:
UBJ GmbH
Ingo Janssen, Managing Director
Haus der Wirtschaft, Kapstadtring 10
22297 Hamburg, Germany
Tel.: +49 (0) 40 6378 5410
E-mail: ir@ubj.de
Web: www.ubj.de

Press contact:
RUECKERCONSULT GmbH
Peter Dietze-Felberg
Wallstrasse 16
10179 Berlin, Germany
Tel.: +49 (0) 30 284 49 87 62
E-mail: dietze@rueckerconsult.de
Web: www.rueckerconsult.de

About The Grounds
The Grounds Group implements residential projects in German metropolitan regions. The Grounds Group also holds a steadily growing residential portfolio in its fixed assets. The Grounds Real Estate Development AG is listed in the upper free market segment of Düsseldorf Stock Exchange’s primary market (ISIN: DE000A2GSVV5), and has its headquarters in Berlin and an office in Stuttgart.