For the hotel in Brussels we signed a new lease with Citybox which will take effect in 2024 after renovations are completed. We have chosen to take advantage of these through the acquisition of NH Brussels Louise in Belgium and DoubleTree by Hilton Bath in the UK, for a total equivalent to around MSEK 900. Turbulence in the property market has created business opportunities for Pandox. Leveraging acquisition and divestment opportunities Higher market interest rates will, however, cause a further increase in Pandox’s interest costs in 2023. It is worth emphasising that Pandox’s only financing is through banks and that we have a good dialogue with our lenders on future refinancing. Measured from the end of 2019, before the pandemic, the average yield requirement increased by 0.18 percentage points. For the whole property portfolio, the average yield requirement increased by 0.14 percentage points to 5.74 percent at the end of 2022 compared with the same date in 2021. This was due to a higher expected cash flow with sustained higher average prices, which outweighed increased yield requirements. Normalisation of the hotel market was reflected during the year in higher valuations for our properties. But the combination of the higher starting level for the yield requirement and increased cash flows has up to now limited any negative effect on value for Pandox. Uncertainty regarding interest rates has resulted in higher financing costs, and this has also created a degree of upward pressure on the yield requirement in the hotel property market. Higher property valuation despite increasing yield requirement Adjusted for government grants, our total net operating income in 2022 was only slightly lower than in 2019. For the fourth quarter the increase was 54 and 44 percent respectively. For comparable units, net sales and total net operating income increased by 66 and 58 percent respectively in 2022 compared with 2021. For Pandox, the hotel market’s strong recovery resulted in a significant improvement in earnings – for both the full year and the fourth quarter.
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