Good morning and welcome to One United Properties' conference call for presenting the Q1 2025 results. My name is Zuzanna Kurek, and I'm Investor Relations Manager at One United Properties. I am joined in this call by Victor Căpitanu, Executive Board Member and Co-founder of One United Properties, and Cosmin Samoilă, CFO at One United Properties. Before we begin, I would like to mention that this call is being recorded, and the recording of this call will be uploaded on our website later today. As stated in the call invite, by joining this video conference, you automatically and implicitly consented to being recorded. If you do not consent to being recorded, please leave the call. In terms of organizational aspects, let me present to you the setup of the call.
Firstly, we will share with you the financial and operational highlights from the first quarter of 2025, which will be presented by our Co-founder, Victor Căpitanu, CFO Cosmin Samoilă, as well as myself. During the presentation, feel free to type any of the questions you might have in the chat window, and we will answer them during the Q&A. After the presentation is over, we will start the Q&A session. Please note that all the participants are put on mute. Therefore, if you want to ask a question, please type it in the chat window. I will be moderating the Q&A session, and therefore, for the sake of those who will be rewatching the replay of this teleconference, I will be reading all the questions out loud before addressing them. Your questions today will be answered by Victor Căpitanu, Cosmin Samoilă, or myself.
Finally, I would like to mention that we might be making forward-looking statements today during this call regarding future performance of One United Properties and that actual results may differ materially. We encourage you to review the disclaimer that we have included in the presentation, which you can right now see on the screen. This disclaimer applies equally to all the statements made in today's call. Thank you for your patience, and I would like to now kick off the call and invite Victor Căpitanu to share with you the key highlights of One United Properties' performance in Q1 2025.
Welcome, and thank you for joining our call for the results for the first quarter of 2025. I would like to give you some high-level updates on our performance. First, regarding the turnover, our consolidated turnover reached RON 352 million in the first quarter of 2025, down 16% year-on-year. Now, I have to explain this: this is not a real decrease in turnover. This is just because in the first quarter last year, we decided to keep a portfolio of apartments for rental. The full impact is due to the reclassification of these apartments as investment property, rental properties, in the first quarter last year. This amount impacts fully the decrease in turnover and then decrease in the profit in the first quarter of the year. Without this, the activity would be more or less at the same level.
On the residential side, it's important to see that despite the context, which was very challenging for the industry and for our company, the residential sales were stable, growing 1%. The residential net margin was 35.9%, in line with our targets, and the net income from residential property decreased 5% to EUR 22.3 million due to the majority of units being sold in developments under construction as opposed to finalized developments, which have higher margins. This is purely because at this stage, we have a very limited number of finalized units for sales, and we have seen in the last six months increased interest for the finalized units. We have less and less finalized units in our stock. On the commercial division, we saw stability with a headline rent of 3% and solid leasing and renewal activity totaling 16,500 sq m in the first quarter.
We are happy to see that since five years when we started our rental portfolio from zero, we are now to—we have managed now to reach almost full occupancy. Up to the end of the year, we hope even to be fully leased, which is quite a rare place to be for companies in our sector. Regarding the commercial developments under construction, we have two large assets: One Technology District and One Gallery. One Technology District is already leased out 100% for the next 15 years to Infineon Technologies. We are building for them a state-of-the-art technology research and development and laboratory center for Central Eastern Europe, completely unconnected to the grid. The most technologically advanced building in Romania and in the region, it will be completely off-grid, not connected to the network.
One Gallery is already leased at 76%, and we expect being fully leased out before delivery. We saw an improvement this quarter in our cost structure. Administrative expenses decreased 8% as we continue our group-wide cost optimization program. In terms of EBITDA, we had RON 120 million with a gross profit of RON 112 million, both showing lower levels compared to the first quarter 2024 due to the reclassification of rental apartments, which amounted to RON 72.5 million last year, but fully aligned with our expectations and budget for the first quarter of the year. Importantly, these figures are underpinned by strong continued operational performance, particularly in residential sales and tenant leasing, which is our main business. This level of stability in a subdued market environment sends a clear signal of trust and resilience, both financially and operationally.
Looking at our pipeline, both under construction and in planning, under design, One United Properties remains the leader in both residential and commercial real estate development in Romania. We have 665,000 sq m under construction. We have a strong mix of developments under construction and a robust operating rental portfolio, which is covering now more than a quarter of the profit of the company. We want, over the long term, to have always a good balance between profit from developments and rental profits. I would like to mention that our focus on the first quarter of 2025 was on execution, not on expansion, finalizing units, maintaining high pre-sales, and ensuring construction timelines and costs were met with discipline. As you can see on this slide, today we manage more units under construction than we have completed in all prior years combined.
This is why our priority for this year is our finalization and delivery of units to our clients. This needs to be read in conjunction with the fact that as of March 31, 2025, on the residential side, we achieved a 77% pre-sales rate, one of the highest in our history, and a strong signal of continued demand and our clients' trust. Basically, all the costs for all the developments under construction are already covered by the pre-sales, and whatever sales we still have to achieve are just profit for the company. The market context has been complex politically and economically, but we've remained disciplined and consistent in execution, which reinforces our confidence in our long-term strategy. In this sense, we must look at the balance sheet. Our cash position grew to RON 491 million, 14% up from the year-end, driven by robust collections and pre-sales.
This supports our ability to self-finance and further strengthens our balance sheet. With a loan-to-value ratio of 28%, one of the lowest between our peers across Europe, our financial position remains solid and conservative, an important signal of resilience, especially in today's macro climate. Looking ahead, 2025 is a milestone year for us. We're set to deliver as many units as in the entire past decade combined, with the strong visibility we have on contracted developments, and the strong visibility we have on contracted developments gives us full confidence in achieving this. Thank you. Thank you very much, and I'll let my colleagues, Cosmin and Zuzanna, take it from here. Thank you.
Good morning. Thank you, everyone, for participating to our Quarter 1 2025 call on the financial results. On the key financial figures, we have the consolidated turnover decreased 16%, reaching RON 352.1 million in Q1 this year compared to Q1 last year, as mentioned earlier also by Mr. Căpitanu. As you will see in the main indicators of profit and loss account, the decrease is strictly attributable to the fact that this quarter we did not have any events in our balance sheet that led to certain properties to be appraised to market value, as we had in Q1 last year. Last year, it was generated a gain from fair value adjustment in properties that we reclassified from residential properties to residential properties for rental purposes. While this year, not having such result, we have these differences. The turnover included revenues from apartment sales.
Most of the turnover is from this area, RON 309.1 million. Rental and tenant services revenues, RON 39.5 million, and other operating income. Gross result reached RON 112.3 million, a 39% decrease compared to last year, first quarter, and a net profit of RON 96.2 million, down 39% year-over-year. As I mentioned, if we exclude this effect of fair value adjustments, the net profit last year was RON 97 million. Basically, this quarter, we have around the same profit as last year. On the next slide, we see the residential segment revenue from residential properties growing 1% to RON 309.1 million. Net income from residential property sales decreased 5%. This slight decrease is due to less units being sold in finalized developments. Basically, in this quarter, most of our units were sold in properties under construction.
As a result, also the net margin, the relative net margin also had a slight decrease to 35.9% comparative to 38.2%, the margin that we had in first quarter last year. As you know, this value reflects very well our target and strategy of the company that each development of residential reaches at least a net margin of 35%. On the commercial segment, rental income and revenues from the commercial division reached RON 39.5 million, increasing 3% compared to last year. We see this quarter is a quarter of stabilization of the rental revenues. We have 97% lease rate in average on all the properties and 91% tenants already occupying the space and paying rental revenues. Net rental income slight decrease of 5% to RON 24.7 million.
This slight decrease is temporary due to the vacancy we have in Bucur Obor, where we are doing now refurbishment and reorganization of spaces. We have a temporary vacancy, which led to a slight decrease in revenue of this property. On the administrative expenses, this has decreased 8% to RON 15.6 million. The decrease is due to an enhanced cost optimization program that we carry across the group. Other operating expenses increased 25% to RON 4.7 million. Out of this amount, RON 1 million is related to CSR activities, and this amount we are expected to deduct from profit tax. The result from operating activity, RON 120.5 million, 38% decrease, as mentioned earlier, is primarily due to lack of gains from fair value adjustments. As you know, we are doing the property revaluations twice a year.
In the end of the year for all the properties, in the half of the year in June for properties that are having a development process or for properties that have high value in the portfolio. In Q1 and Q3, we do appraisals only if there are reclassifications between categories or if we do acquisition or if there are other exceptional events. As mentioned, this quarter, we didn't have such exceptional events. Last year, we had RON 72.5 million in gains. This year, we didn't have such amount recognized. In terms of balance sheet, current assets increasing 6% up to RON 2.7 billion. The increase is generated by increasing trade receivables, increasing cash and cash equivalents, and slight decrease in inventories. Decreasing inventories is because we continue sales and recognizing revenues and cost of goods sold. Also, we have finalized units that we continuously hand over to clients.
In this quarter, we have no new developments added to the sales portfolio. We see the variation aligned with the residential sales dynamics in the first quarter of this year. On the commercial and land bank segment, non-current assets remain stable, up to RON 3 billion. RON 2.8 billion from this segment is attributable to investment properties. In terms of evolution under this category of investment properties, we have increases in One Technology District and One Gallery due to the fact that these two properties are under construction, and we are adding each month construction works to the value of these properties. We had a 17% decrease in the residential units for rental because part of the residential units for rental were sold during the quarter. Except these variations on all the other properties, no major variations in this quarter.
On the liability side, total liabilities remained constant up to RON 2.1 billion. Long-term liabilities growing 5% and short-term liabilities decreasing 7%. Increase in non-current liabilities was due to loans and borrowings amounting to RON 975.5 million. Mainly, the increase was due to new drawdowns in One North Loft and One Lake Club. Decrease in current liabilities primarily due to the decrease in trade and other payables and also decrease in advance payments from customers. In terms of maturity left for the outstanding loans, as of March, we had 6.9 years for bank loans related to investment property assets in value of RON 161.4 million and 2 years for bank loans related to development of residential property assets in total EUR 44.5 million. The average interest margin over during both three months was between 1.5%-3% in this quarter.
In terms of the cash positions, due to the good sales and pre-sales activity, cash position increased 14% up to RON 491.2 million. This increase is despite robust development activity. We have currently 13 active construction sites where we are investing funds to bring the construction to its completion. Also, the loan-to-value remained low compared to our peers in Europe, with a slight increase of 1 percentage point to 28%. Net debt also remained quite low, RON 583.6 million, only 10% from total assets, which reached RON 5.7 billion. In terms of cash inflows, in the first quarter, we received from residential sales EUR 36.8 million. The contractor cash flows, the amounts that we have to receive under signed pre-sales agreement that were concluded as of 31 March, amount in total to EUR 349.3 million in additional cash.
You see we have EUR 140 million to receive in 2025 based on contracts that are already signed as of now, as of March, EUR 201 million to receive in 2026, and EUR 35 million to receive in 2027. We see in 2026, based on the sales that we already have contracted, it seems that it will be a record year in terms of cash inflows from residential sales. Also, of course, this amount will further increase based on the sales that we are doing in the next periods. This was the details of the financial performance of the company, and I kindly ask my colleague Zuzanna to continue with the business highlights. Thank you.
Thank you very much, Cosmin. A few highlights from the trading update that we have published at the end of April. As you saw already also in our report, the residential sales and pre-sales in the first quarter of 2025 decreased 21% to EUR 45.1 million. What is important is that the total surface sold and pre-sold decreased only 7% to approximately 15,000 sq m. The top performing developments, the best sellers of the first quarter, remained One Lake District, Phase 2. This is the seventh consecutive quarter that One Lake District is the top selling development, proving the attractivity of this development. Now that most of the units in Phase 1 are sold, Phase 2 took the spot. We sold 41 units there in the first quarter of 2025, and the pre-sale has reached 380 out of 867.
The second place was One High District, where the level of pre-sale is higher, so 665 total units sold as of the end of March 2025 out of 840 units to be developed, 34 units sold in Q1 2025. If we look at the trends, you will see that, as Victor mentioned, the majority of the sales were done in the developments under construction. However, we also had 14 units sold, 7 at One Verdi Park, already delivered, and 7 at One Cotroceni Park. You will see that as of March 31, 77% of available apartments under development and delivered were sold out, and our sales team had available for sale and pre-sale 1,405 residential and commercial units. If we talk about the commercial segment, right here, you can see the consolidation of the commercial segment after multiple quarters of growth.
As Victor mentioned, this division was basically started five years ago. Today, we have the percentage of lease and pre-lease for the standing commercial developments at 97%, while 91% of tenants are already moved in. Here is the impact of Bucur Obor upgrades to that development, which are temporary. At the level of the portfolio under construction, One Technology District is 100% leased to Infineon Technologies, while One Gallery, which is due this year, has reached the pre-lease level of 76%. Last slide, but definitely important. Last month, especially in April 2025, we witnessed several important legal developments that will have a positive impact on the Romanian real estate market and our operations. I would like to briefly detail them to you because maybe some of you are not aware of them.
Firstly, on April 9th, the Romanian Constitutional Court issued a key ruling confirming that a legally issued building permit remains valid even if the related Zonal Urban Plan, what we call PUZ, is later annulled. This restores a fundamental principle, the protection of acquired rights, and eliminates a significant source of legal uncertainty for developers and investors, and we very much welcome this decision. Not mentioned on the slide, but we did discuss this in our Q1 report. The Zonal Urban Plan for Bucharest Sector 2 was reinstated following a procedural court decision. This allows developers to resume permitting processes in this very much in demand area and looking at potential projects in that zone. Finally, at the end of the month, the Romanian government adopted a major legislative reform introducing a principle of tacit approval.
This means that if a public authority fails to respond within a legal time frame, the approval is granted automatically. The reform eliminates cascading approvals and imposes strict 15-day deadlines and limits clarifications to a single round. The expected result is a drastic reduction in permitting times from years to just 4-6.5 months as it was estimated. Altogether, these measures definitely contribute to greater legal clarity and a more predictable investment climate. They will support faster urban development and directly inform our ability to execute medium and long-term plans. This concludes the first part of our call, and we will open the floor for questions. If you have a question, please type it in the chat window. To give you some time, we will first address questions that were sent to us via email by our analyst.
We have three questions, and I will go ahead and read them out loud. Do you expect faster development timeline for your projects after the April 30th ruling on the acceleration of the permit process? Which projects for One United are affected, and would you also see reduced costs over the project lifetime due to the ruling?
Hello, thank you for the question. This is for sure that time to get a building permit will decrease significantly. This is a major breakthrough for the development generally in Romania. All our developments are affected positively, of course. Probably there might be also a positive impact in cost due to the time value of money for the capital employed. Thank you.
Thank you very much. The next question is, what impact do you expect on One United Properties, in particular regarding the reinstatement of the Zonal Urban Plan for Sector 2? Are there any direct effects on your development plans?
Look, the direct effect is that we can issue building permits again on the PUZ of Sector 2, on the zoning of Sector 2 for any plot existing in Sector 2. To give an example, One City Club is a development that we are very close to permitting. It's in Sector 2, and now with the zoning reinstated, it's easier to get immediate building permit. Also, what is a positive impact is that we can get easier bank finance for any development in Sector 2 based on this zoning. Basically, the impact is very positive and helps both in getting more permits and in easier bank finance. Thank you.
What does the change in legislation back to original rule regarding the annulment of building permits imply for One Modrogan? Do you expect to be able to sell the project now in due course?
Look, so basically, this is a clarification from the Constitutional Court of Romania that says if the zoning is annulled, the building permit is still valid, which is obvious, and this is the case in all the Western countries, but was not clarified here. Because of this, there were a lot of litigations against zoning, which were targeting the building permit. Now, because of these clarifications, it's obvious that all our building permits are legal and valid, are not affected by any litigation on zonings. This means that we can finish One Modrogan according to the building permit. In terms of selling, the development is already 75% or more pre-sold, so it's not an issue of selling. The issue was just to resume construction. Now we wait for the legal term and for the judge's decision so we can resume works.
If we resume works at the buildings, the sale is not an issue. Anything not sold yet is anyway just part of the profit, is not part of the cost. Cost is already long ago covered by the existing pre-sales. Thank you.
Thank you very much, Victor. I see we do not have any questions in chat. If you'd like to ask us any other question, please type it right now. We can hold on the line for one more minute. Thank you. I see we have received the question from one of our analysts. As regards the net margin from residential sales, do you expect a decrease in the coming quarters? As you said, the inventory of finished units is low.
Yes, but I understand your question. Thank you. The inventory of finished units is low and is becoming lower. We see increased interest for the finished units. This year, we are also delivering a lot of units. I expect by the end of the year, the inventory of finished units to be much bigger than it is today. I do not see an impact on margin. I will ask also Cosmin to address this question because maybe he sees better from the registration point of view of accounting. From my point of view, I do not see a decrease this year in the margin. Cosmin? Cosmin is not here anymore. Sorry for that. We will remain with my answer then. Thank you.
Thank you very much. In the meantime, if Cosmin reconnects, but I see we do not have any other questions. From our side, we thank you all for joining us. The next time we are going to hear each other is going to be after 28th of August. We're going to release in the morning the results for the first half of 2025. We have scheduled the analysts and investors call for 1st of September 2025. We would like to also mention that on 11th of September, we'll be hosting Capital Markets Day in Bucharest, and we will be sending in due time in advance invitations to all of you. We hope you will be able to join us either in person or online. Just like last year, we're also going to be organizing property tours together with the management presentations.
Therefore, if you'd like to see some of our landmark developments and how they have progressed since last year, we invite you and we look forward to welcoming you in Bucharest. Other than that, for any other questions, you can always reach out to us at investors@one.ro. Thank you very much for joining us today, and we wish you an excellent day.
Thank you very much and have a great day. See you soon.