Accommodating the masses

Founded in 1959 as a trading company, Warimpex is now expanding by entering the Viennese and Warsaw Stock Exchanges. The company is issuing six million shares in an IPO and an additional three million are being sold by the current shareholders. The price per share will range between EUR 8.5-13 (zł.32.7-50). This means the IPO may earn the firm between EUR 51-78 (zł.196-300) million and the total share offer could reach EUR 130 (zł.500) million.

Leading ambition

The group's objective is to become the leading hotel property group in the region, by rolling out successful projects and by expanding its portfolio through acquisitions and new developments.

Since 1982, when Warimpex entered the real-estate market, the company has completed numerous projects, whose total value amounts to EUR 850 (zł.3,271) million. It also has a number of projects on the drawing board, including plans for the recently purchased Sobieski Hotel in Warsaw.

Today, Warimpex owns or co-owns 11 hotels, with a total of around 2,200 rooms. This includes the five-star Intercontinental and the four-star Sobieski in Warsaw, and the three-star Chopin in Kraków. The company also operates one hotel near Paris. Office space owned by Warimpex amounts to some 40,000 sqm and its retail portfolio includes nine shopping centers. The firm's entire portfolio, including hotel assets, office and retail assets as well as projects currently under development, comes to around EUR 382 (zł.1,471) million.

The company also wants to develop several hotel chains. "Our goal is to set up a portfolio of four-star Andus hotels, three-or-more-star Angelo hotels and five-star La Palais hotels," says Franz Jurkowitsch, president of Warimpex.

Projects pending

Among the projects Warimpex wants to complete by the end of 2008 are a three-star Angelo hotel in Pilzen, a five-star Le Palais on Plac Grzybowski in Warsaw, an Andel and an Angelo hotel in Kraków, an Andel hotel in the ŁódŸ Manufaktura shopping and leisure center, an Angelo in Katowice and Munich, and an Andel in Berlin. The firm is also completing a retail center in Białystok. Longer-term plans see the expansion of the Sobieski in Warsaw, the Diplomat in Prague and the Chopin in Kraków, as well as the construction of a budget hotel in Janki on the outskirts of Warsaw.

"We are also hoping to finalize the acquisition of a hotel in Bucharest. Apart from that project, all the plots or buildings are already owned by Warimpex," says Jurkowitsch.

Within the next three to five years the company also wants to open a network of budget hotels in Poland, Hungary and the Czech Republic. Initially, there would be 20-30 locations, with plans for the number to eventually reach 100.

Going halves

Warimpex is currently in the process of negotiating with an international group to make this project a joint venture. "The idea is to set up a joint venture on a 50-50 basis - on the one hand for the ownership of the budget hotel, but also for the operation of the chain. In the first stage we want to invest some EUR 150 (zł.577.9) million, which represents between 20 and 30 budget hotels, with the idea of increasing it to a volume of EUR 300-500 (zł.1,155-1,925) million," says Christian Fojtl, who is responsible for the expansion in Poland.

The primary investments will be in Poland followed by those in the Czech Republic and Hungary. "We're also considering extending it to other countries such as Romania, Ukraine and Russia," adds Fojtl.

How is the company going to finance the projects? "Year by year we will sell one to two projects, so we will have additional funds to [supplement] the IPO. So together we think we can, for the next three years, finance our expansion plans. If we make a major acquisition of a chain, then naturally we will have to look for extra money," says Jurkowitsch, adding that he has no specific company in mind yet.

"We also finance our projects with debt," says Fojtl. "If we're going to extend the budget program to EUR 300 or d500 million, we would finance 70-75 percent of the development with bank loans."

Out on its own

The firm has little company in its sector on the WSE. The Warimpex Group specializes in the development, ownership, and operation of hotel properties. "If someone is looking to estimate the value of the company, they have to bear in mind [these] three pillars of the company," says Paweł Tamborski, managing director at CAIB, the firm handling the share issue.

The company's profits come from two main areas: property management and property sales. Over the course of the year the company's results may vary depending on whether it has just competed an investment or is starting a new one. Jurkowitsch assures that future shareholders will be granted a 25-percent dividend.

The debut will take place before the end of January. Arkadiusz Chojnacki, an analyst from Citigroup, says that despite the fact that there are no similar companies on the Warsaw bourse, the share prices are lower than those of real-estate developers or, for example, Orbis.

"Orbis was also planning to develop a network of hotels in Poland a few years ago. It will be interesting to see whether Warimpex will succeed," Chojnacki says.

Warimpex

CEO:   Franz Jurkowitsch

Strengths:

- Long experience in hotel management

- Wide portfolio of existing and planned hotels

Weaknesses:

- Market risks connected with the price of plots

- Only 25 percent of shares will float