From the Chair: "A good year for Pandox"
Dear shareholders,
Despite all of the geopolitical challenges, 2024 was essentially a “normal” year. Inflation and interest rates fell, the hotel market grew, the banking market improved significantly, Pandox made good acquisitions and an improved valuation of the Pandox share made it possible to carry out a directed share issue on good terms. We raised the dividend for the 2023 financial year to SEK 4.00 per share and the total return on the share was 31 percent, which was higher than the relevant benchmark indices on Nasdaq Stockholm.
Important issues addressed by the Board and its committees were primarily:
• Acquisitions and divestments totalling around MSEK 5,100.
• Investments totalling around MSEK 1,000, including initiatives for our SBTi targets
• Directed share issue of around MSEK 2,000
• New bank loans and refinancing of existing ones totalling around MSEK 18,000
• Annual strategy review
• External evaluation of the Board of Directors
We have a strong position in the European hotel property industry and a good history of value creation. Now that the hotel and financing markets are functioning normally again, we can create value in a variety of ways through our business model. One important part of the model is acquisitions, since they generate short-term profit growth and also lay the foundation for longer-term value creation – for example, through shared investments with the tenants in the properties. Activity in the transaction market increased in 2024 and Pandox was more active than in the past. In total we acquired five hotel properties for a combined sum of around MSEK 4,500 in the UK and Norway.
In order to maintain a higher pace of acquisition, based on authorisation from the 2024 AGM we implemented a cash-based directed share issue in September, which raised proceeds of around MSEK 2,000 before transaction costs. The reason this took place without preferential rights for existing shareholders is that we are still a relatively small company operating in a large international market with capital-rich players. Moreover, as the supply of hotel properties is limited, immediate access to capital is a crucial competitive advantage. When the right opportunities arise we need to be able to act quickly and resolutely, and to be seen by the seller as offering a high degree of deal certainty. Otherwise there is a high risk that we will miss out on the deal to someone else. I would like to thank Pandox’s shareholders for their support in the new share issue.
Divestments are also an important source of capital and are particularly relevant when we see an opportunity to reinvest the capital in new properties or in investment projects with a higher yield. One example in 2024 is DoubleTree by Hilton Montreal, which we divested in February.
In the area of sustainability, we continued to map and invest in the properties. For Scope 1 and 2 the focus is on heat pumps and solar panels. Initiatives in Scope 3 include energy mapping of 38 properties in Germany, a country with a less favourable energy mix than the Nordic countries where the climate effect per invested krona (SEK) is higher. Overall we expect to be able to report improved climate effects in 2025. Another concrete and positive effect of our sustainability work is that we were able to increase the share of sustainability-linked loans from 6 to 45 percent during the year. We are also pleased that we were already able to report according to CSRD for 2024.
During the year an external evaluation of the Board of Directors was conducted. The conclusion is that the Board is composed of individuals with expertise that more than meets the strategic and operational needs of the Company and that the Board’s work is conducted in a professional and effective way.
Supported by a stable hotel market and a strong Pandox, I am happy to say that the Board can propose a dividend of SEK 4.25 per share for the 2024 financial year.
I would like to thank our CEO Liia Nõu and all of our employees for their valuable efforts during the year. I would also like to extend my gratitude to our shareholders and all other stakeholders for great cooperation.