Good morning and welcome to One United Properties' conference call for presenting the preliminary 2023 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 that the recording of this call will be updated on One United Properties' 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 the organizational aspects, let me present to you the setup of this call.
Firstly, we will share with you the financial and operational highlights of 2023, which will be presented by our co-founders, Victor Căpitanu and Andrei Diaconescu, together with the CEO of Residential Division, Beatrice Dumitrașcu, and CEO of Office Division, Mihai Păduroiu. During their presentation, feel free to type any of the questions you might have in the chat window and we'll 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. If you want to ask a question, please type it in the chat window. I will be moderating this session and therefore, for the sake of those who will be watching the replay of this teleconference, I will be reading all of the questions out loud before addressing them.
Your questions today will be answered by Victor Căpitanu, our CFO, Cosmin Samoilă, or by myself. Please note that today's presentation is focusing only on the preliminary 2023 results and therefore we will not be answering any questions related to our 2024 budget or annual targets. Consequently, we kindly ask you to refrain from putting such questions forward during this call. One United Properties' 2024 budget will be published via current report later this month by March 25th. We will also be hosting a dedicated event, Capital Markets Day, on April 4th in Bucharest to comment in more detail on our medium-term strategy as well as business objectives. If you would like to receive details about our CMD, please do not hesitate to contact us at investors@one.ro.
Finally, even though I just stated we'll be refraining from commenting on our 2024 budget, I would like to mention that we might be making forward-looking statements today during this call regarding the 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 see right now on the screen. This disclaimer applies equally to all the statements made in today's call. Thank you all for your patience. I would like now to kick off this call and invite you to watch the highlights of One United Properties' performance in 2023.
Good morning. I am Victor Căpitanu, Co-Founder of One United Properties. Today we will present the financial results for 2023, a year full of challenges but also significant achievements. One United had an exceptional performance in 2023 considering that the real estate sector in Europe faced significant challenges. We recorded a 30% increase in turnover compared to 2022, reaching EUR 326 million. This performance highlights our ongoing efforts to expand and strengthen our presence in the real estate market. In the residential segment, we reached revenues of EUR 226 million, marking a significant increase of 46% compared to the previous year. This figure represents an absolute record for One United, being the first time when revenues from the residential segment exceeded EUR 200 million. This was possible thanks to the diversification of our residential offering and the quality of our developments, which attracted an increasing number of clients.
However, the profit margin of this segment decreased to 27% compared to 41% in 2022. This is due to our revenue recognition accounting, as between the fourth quarter of 2022 and the third quarter of 2023 we added three new developments in the early stages of construction to our sales portfolio, recognizing the cost of land acquisition, which impacted the margin. One United Properties firmly maintains its target of achieving a minimum margin of 35% on each residential development. In the rental segment we have a solid increase. Revenues, including services for our tenants, grew by 63%, reaching EUR 26 million, demonstrating the efficiency of our strategy to expand our commercial portfolio and improve services offered to tenants. These revenues will continue to grow as more and more tenants move into offices of the second phase at One Cotroceni Park.
In addition, we leased 34,000 sqm of office and commercial spaces, confirming our partners' trust in the quality and potential of our portfolio. Also in 2023, One exited the commercial developments One Herăstrău Office, One Nordgate, the Lidl store at One Verdi Park, and the portfolio of rented apartments at One Mircea Eliade, with a total value of EUR 41,700,000, generating a 5x multiple of the capital invested by the company, and a yield between 30% and over 60% per year. The company's total assets reached the historical milestone of EUR 1 billion.
Regarding the land bank, as of December 31st, 2023, One United owned or had pre-contracted over 265,000 sqm of land for future developments in very good locations, with total above-ground gross building rights of over 865,000 sqm, on which the company intends to build approximately 6,000 apartments, community services, and 163,000 sqm of commercial buildings for rent. In the commercial buildings portfolio, 117,000 sqm will host offices, and the rest of 46,000 sqm are located in buildings that will be restored, among which is One Gallery, the largest private investment in a protected building in Romania. The gross development value of the restoration portfolio is currently estimated at EUR 239 million.
The gross development value of the projects delivered and under construction in 2023 reached a remarkable total of over EUR 1.5 billion, while for the acquired lands and the developments that have not yet started, this figure is over EUR 2 billion. My colleague Beatrice will further detail the key aspects of 2023 from the residential segment.
Good morning. I am Beatrice Dumitrașcu, CEO of Residential Division at One United Properties. As Victor mentioned, 2023 was a very good year for the residential segment. Last year, One United Properties managed to sell and pre-sell 953 apartments with a total area of 80,757 sqm and 1,584 parking spaces, generating total revenues of EUR 274,900,000, a 63% increase compared to 2022. A notable aspect of our performance in 2023 was the ability to counteract the trend of the real estate market in Bucharest, which recorded a 16% decrease in residential sales compared to the previous year. Despite this context, One United Properties recorded a 59% increase in the number of residential units sold, an achievement that underscores the attractiveness and quality of our diversified residential offering. By the end of 2023, 71% of the available apartments in development and those delivered had already been sold.
77 units remain available for purchase from the completed stock at One Verdi Park, One Herăstrău Towers, One Floreasca Vista, One Timpuri Noi, and One Cotroceni Park, representing only 4.1% of the total units of these developments. The amounts owed under contracts concluded with clients as of December 31st, 2023, are EUR 295 million in additional cash by 2025. More than half of the apartments sold by One in 2023 were one-bedroom units with a total sellable area of 33,691 sqm. The demand for this type of apartment increased by 50% compared to 2022, the highest being at One Lake District, where we sold 307 units. One Lake District will have a total of 1,967 apartments, with the next phase of the project to be released on sale this year.
The second top-selling development was One High District, with 251 units sold, followed by One Lake Club with 145 units. In 2023, we completed 1,430 residential units at One Verdi Park, One Floreasca Vista, One Timpuri Noi, and One Cotroceni Park, surpassing the total number of units completed in all previous years in a single year. This demonstrates our continuous commitment to delivering high-quality housing and responding to the increased demand in the market. In conclusion, 2023 was a year of expansion and success for the real estate segment of One United Properties. We have consolidated our position in the market, offering high-quality real estate products that meet the needs and expectations of our clients. Next, my colleague Mihai will talk about the performances recorded in the commercial segment.
Hello. I am Mihai Păduroiu, CEO of the Commercial Division at One United Properties. In 2023, we continued to consolidate our leadership position in the office market, leasing and pre-leasing over 34,000 sqm of office and retail spaces, compared to over 31,000 sqm in 2022. Our office portfolio, as of December 31st, 2023, totals 117,000 sqm of gross leasable area, including landmark projects such as One Tower with 24,000 sqm, fully leased, One Cotroceni Park Phase 1 with 46,000 sqm leased at 88%, One Cotroceni Park Phase 2 with 35,000 sqm leased at 75%, and One Victoriei Plaza with 12,000 sqm fully leased. Together with the retail component, the commercial portfolio of One United Properties, which includes also Bucur Obor, exceeds 142,000 sqm of gross leasable area.
On November 14th, 2023, we announced the conclusion of an MOU with Ennismore Group, one of the most important lifestyle hotel operators in the world, for the opening of the Mondrian Hotel in Bucharest. The acquisition of the building that will host the Mondrian Hotel, located on Georges Clemenceau Street near the Romanian Athenaeum, is part of One United Properties' commitment to the regeneration of the city center and the protection of Bucharest's cultural heritage. Bringing the Mondrian brand to Bucharest marks One United Properties' debut in the hospitality industry. In this context, in February 2024, we welcomed Riad Abi Haidar, a leader with international experience in the hospitality field, as partner and CEO of One United Properties' Hotels Division. Also, on December 15th, 2023, we announced the completion of the acquisition of the former Ford factory, a historical landmark that our company will transform into a commercial development, One Gallery.
Upon completion, One Gallery will have a gross leasable area of approximately 14,000 sqm and 314 parking places distributed across two underground levels. The estimated value of the development upon completion is over EUR 90 million. Also this year, we signed a record-breaking contract with Infineon Technologies, worth EUR 57 million, for the 15-year lease of 20,000 sqm of office and terrace spaces within a new sustainable campus named One Technology District, which will be specially developed by One for Infineon. These achievements underline not only our growth and expansion but also our commitment to innovation and excellence. We are pleased to have among our tenants remarkable companies such as Stripe, one of the largest payment processors in the world, Infineon Technologies, among the largest semiconductor manufacturers globally, CBRE, Ford Motors, Siemens Energy, McCann, or the prestigious law firm CMS.
As industry leaders, we continue to shape the urban real estate landscape, bringing added value to the communities we operate in and contributing to the sustainable development of the city of Bucharest. Next, Andrei Diaconescu, Co-Founder of One United Properties, will talk about the company's impact on the community in 2023.
Hello everyone. We are proud that this year One United successfully managed nine construction sites in parallel, delivering 4,350 residential units and over 15,000 sqm of commercial and office spaces, with a gross development value of EUR 1.2 billion. Over 21,000 people worked on our sites in Bucharest. Beyond the positive impact on the local economy, 2023 was the year when we demonstrated our capacity to execute multiple developments in parallel, fulfilling the promise made to our clients to develop and deliver on time. On the other hand, our four office developments host almost 10,000 employees, contributing to an estimated EUR 3 billion in turnover, according to financial reports from our tenants. The total number of new jobs generated in buildings owned by One is approximately 2,100, including new positions launched on the local market by global giants such as Siemens Energy, Ford, Stripe, or BlueTwig.
We continue to pursue our goal of building and developing communities by constructing high-quality and energy-efficient buildings. In the next five years, we want to completely eliminate the use of gas in all of our buildings. One Technology District developed at Infineon is our first step in this direction. We have completely eliminated gas use, marking a key moment in our sustainability and innovation strategy. All these things were achieved by our team, which counts over 100 employees who share One's vision of transforming Bucharest into a city that is loved by its residents and also an attractive destination for the business environment. I thank all of them for their contribution.
In conclusion, we ended 2023 with solid financial performance, a diversified portfolio, and a dedicated team who further implements the One vision of building sustainable communities. We look forward to the future with confidence and optimism, committed to keep delivering exceptional developments and generate as much value as possible for shareholders, the One community, and especially for Bucharest, a capital that is developing and growing more and more every day. Thank you for your trust in One United Properties. We are excited about what the future holds and are dedicated to continuing our journey of innovation and sustainable growth.
This concludes the first part of our call. We will now open the floor for questions. If you have any questions, please type them in the chat window. We will be addressing all of the questions in chronological order. I see we haven't yet received any questions, therefore we are going to hold for two minutes to give you time to type. Thank you. Thank you very much. We will start with the first question that we have received, which is about One Băneasa Air Park. I understand that you bought around 1.5 hectares of land and 7,000 sq m of building at an auction at the beginning of February for around EUR 4 million, on which you want to make a mixed industrial and office development called One Băneasa Air Park. When do you expect to complete the refurbishment, construction of the properties, and what are the estimated costs?
What GLA will it have, how many sqm industrial and how many of office, as well as what rent per square meter do you want to have on each component, industrial and office? I will invite Victor to start with answering this question. Thank you.
Good morning, and thank you for joining our call. Regarding One Băneasa Air Park, this is a land of 1.5 hectare and old buildings of 7,000 sqm, including a hangar and some offices, that we bought in auction from Hidroelectrica, who foreclosed a debt from Roma ero. On this site, we plan to develop office, so it's not an industrial development, it's an office commercial development. We are still working on the business plan, on the potential rent, but the most important thing is that the acquisition cost is very low for this size of property, it's EUR 3.0 million, so I think the premise is very good for a successful development. We have interested tenants from the aviation industry, logistics, transportation, maybe defense, so I think this will be quite an exciting development, is the largest private-owned, probably the largest private-owned opening directly to Băneasa Airport.
Thank you very much for the question.
Thank you. The next question: when do you expect to receive the permit for One North Lofts, and I will invite Cosmin Samoilă, our CFO, to answer this question.
Thank you for the question. Our expectation is that we will receive the building permit during this first half of the year, documentation is submitted, and also as a comment to connect this information with the preliminary results and the financial statements, even if we had sales already in this development. Up to the moment we don't have the building permit, we didn't recognize any revenue or profit from the sales of apartments in this development. So this recognition will follow this first half of the year once we get the building permit. Thank you.
Thank you, Cosmin. The next question: is it safe to assume that the residential gross margin will improve in 2024? I will also like to invite Cosmin to share a little bit more details about the revenue recognition method applied by One United Properties, as well as some background on what can we expect from the gross margin in 2024.
Thank you for the question. Indeed, if you are following in detail our revenue recognition methodology, it's not only safe to consider this, but it's also mathematically that all the sales that are in development in the first part of the construction have a lower margin because the land cost has a higher weight in the total cost incurred. Once the construction progresses and the construction costs start to be more in the total cost, more weight in the total cost, also the revenue from the sales is starting to increase and the margin naturally is starting to increase. And if you everyone can look retroactively in our financial statements, and there was all the time a link between the progress of the construction of the developments and the relative margin recognized from the sales of residential units.
Thank you, Cosmin. We have a next question: what was the average total development, land and construction, investment made to complete One Cotroceni Park, total and per square meter? What were the total and per square meter revenues from the project? I will start by inviting Cosmin to provide approximate values since it's a very, very detailed question.
Yes, indeed, it's a very, very detailed question. What I can say is that our expectation for the final results of this development is in line with our strategy to have a margin above 35%, and this is now right on track. I can say now if we are going to the average, it depends on what we are considering the average because the surface is also above ground surface, we have also two levels of underground, so it's quite a big portion of surfaces that can be included in this average. So I wouldn't give some precise numbers on this question. Thank you for the question. I would like to also add to Cosmin that One Cotroceni Park is our largest development to date, it was finalized in less than three years.
It has 81,000 sqm GLA of office, it has 20,000 sqm of commercial and 900 apartments and three underground floors, and this is only the first phase of One Cotroceni Park. The second phase, called One Cotroceni Towers, will start most probably in the second quarter of this year. Regarding the profitability, as Cosmin said, this is at least in line with our target, probably a bit more. I will ask Cosmin to prepare the detailed information and send it to you, Jaco, because I think maybe it will be easier to clarify on email, and we can put a note to the recording of this call where is the detailed explanation of the cost-profit and per sqm ranges. Thank you very much for the question.
Thank you very much. We continue with the next question: do you expect sales and presales to recover from the relatively low number as compared to previous quarters of Q4 2023 when you sold 158 units? Thank you. I will invite Victor Căpitanu to address this question.
Thank you for this question. You know, sales of units, especially, are not linear. For us, more important is the value of the sales and the profit we are making, and they will vary from quarter- to- quarter. I think last year it was a peak in the third quarter. Every year is a bit different, but if you look to the trend, at least for the last three years, but I think more, we have been growing constantly. If you look to the average of three quarters, let's say, or quarter- to- quarter, year- by- year. So I think sales are very strong. This year started very well. So I think we are very positive with the business and the selling of our units. Thank you.
Thank you. What was the evolution of the cost of construction materials in the past months, and how does this impact One going forward? Perhaps we will start with Cosmin addressing generally this question from the financial point of view, and then Victor can provide more color.
Okay, so from the financial side, I can say that it was the lowest increase in the last three to four years in terms of construction costs. We are updating the budgets already, and we see many developments that are in progress right now on which we didn't change the budget, so we remain in the same budget like the year before. And somewhere there are some minor deviations, only a few % changes in the total cost compared to the year before. So I would say that it was pretty stable. You all know also the energy prices started to cool down, and the pressure on the cost was one of the lowest in the last years. Thank you for the question. In 2023, the costs didn't increase so much, so stayed almost flat.
So this allowed us to make only a limited increase in the selling prices, which increased a lot of the affordability for our clients because the purchase power of employees in general and of our clients increased much more than the increase in costs or increase in selling price in 2023. So I think this also has a good impact in our sales and in the demand for our product. Thank you.
Thank you very much, Victor and Cosmin. Please type any remaining questions that you might have in the chat box, otherwise we will be concluding this call. Thank you in advance. But before that, and also to give you one more minute, I would like to mention that we will be organizing Capital Markets Day on April 4th in Bucharest, and the whole event is going to take place over two days. So we are going to have property tours on April 4th during the day, main conference on April 4th in the evening, as well as the same property tours repeated again on April 5th. This is in order to accommodate your business schedules, be it if you're flying in on the 4th or you would like to come earlier and leave earlier, we have the full flexibility.
We have sent today a newsletter to all of you with a formal invitation where you can confirm your participation. If you haven't received the invite today, please email us at investors@one.ro, and I will be happy to share the invite with you. Other than that, we are going to be holding the general meeting of shareholders on April 20, 2025. As always, one month prior to the general meeting of shareholders, you are going to be able to find all of the related documentation, including the budget, the audited financial statements, as well as the board of directors report on our website available to be reviewed. The next call is going to take place in May after we publish our Q1 2024 financial results. I see that we have not received any more questions, therefore we are ready to conclude this call.
Thank you all very much for joining us today.
Thank you very much for your participation and for your questions, and hope to see you all on April 4th for our Investor Day. Have a great day. Thank you. For your participation, and we are eager to meet you again at our next calls and events in the next period. Thank you.