Analyst Group Comments on Movinn’s Long Term Lease Agreement

Movinn announced on August 14th, that the company (as operator and tenant) has signed a long-term lease agreement with AG Gruppen (as developer and owner) on 94 unit development in Copenhagen, Denmark (“the development”). The property is conceptually planned to have serviced apartments, a wellness area and shared workspace. The property lease and operations will be placed in a separate subsidiary fully owned by Movinn A/S and the commercial launch date is expected to be in late 2025 / early 2026.

The development is located within walking distance to the beach and short commute to the city center as well as the airport alike and will consist of a mix of studio, 1-bed and 2-bed apartments – each fully furnished and fitted with kitchen space as well as bathrooms. The development will have a full wellness area in the basement and in the ground floor there will be a shared workspace and meeting rooms for residents to use on request as the general concept is to create a holistic concept where guests and residents can combine health, wellness, working and living under one roof.

The commercial launch date is expected to be in late 2025 / early 2026 and as AG Gruppen will be the developer as well as owner, the lease agreement will not have any financial impact for Movinn in 2023 and 2024. The project is projected to generate annual revenues of DKK 20-22m as well as EBITDA of DKK 3-5m once commercialized and mature, measured in 2023-prices.

“At the end of Q1-23, Movinn had a total of 444 units in five markets, of which 280 in Copenhagen, why adding 94 more units is a large project. This is in line with Movinn’s strategy to take on larger projects in order lower its costs in connection with adding new units, as larger contracts are expected to be easier to negotiate, as well as a lower cost for maintenance as more units are in the same building, something that is estimated to lead to lower variable costs in relation to revenues.

The projected annual revenues of DKK 20-22m once commercialized in 2026 implies, given the middle of the interval, an annual revenue per unit of approximately DKK 223t, compared to the company’s guidance of DKK 180-225t in annual revenue per unit and Analyst Groups estimate of DKK 215t for the Danish units in 2026, when the units are expected to be commercialized. Regarding the projected EBITDA of DKK 3-5m annually, this implies, given the middle of the interval, an EBITDA margin of 19%, which is in line with the company’s guidance of a long-term EBITDA margin above 15% and slightly higher than Analyst Groups estimate of 18% in 2026. Thus, the development is expected to generate a high revenue per unit as well as a high margin compared to existing units, which is estimated to translate into improved cash flow for Movinn in the long run”, says the analyst at Analyst Group covering Movinn.