Arco Vara: 2022 Annual Report of Arco Vara


The real estate market was clearly a rollercoaster this past year: the amount of capital being invested in real estate exceeded all expectations at the beginning of the year, the second half of the year was the clear opposite. And the volatility of construction prices fuelled the fire on top of everything else, which has settled down by now. Arco Vara did not remain untouched by these aspects.

In 2022, clients received 72 new homes in the Kodulahe Quarter in the Pagi 3 and 5 houses, where all apartments had been presold at the time of completing the buildings. The group had no products ready to be delivered in stock throughout 2022, illustrating what happened on the market in the first half of 2022. As at the end of Q3 of 2022, the Kodulahe Rannakalda development contained 11.0 million euros’ worth of contracts of presale, but only 1.7 million euros’ worth of contracts have been added in the half a year before publishing this report, a good example of the impact of increased interest rates starting in Q4 of 2022. However, the recovering number of inquiries and the increased number of applications for home loans in banks show positive signs, which also has the potential to be reflected in the presales of 2023 of Arco Vara.

The most important event in 2022 for us in Bulgaria was the decision to sell the office building of Madrid BLVD. As the group was not satisfied with the rental revenue of the building after several efforts, a contract of presale was concluded in Q4. The latest date for the transaction entering into force is in June 2023. The aim of Arco Vara is to direct the released 4.1 million euros into projects with a ROE of at least 20% per year.

Last year, the Bulgarian team commenced the construction of the first stage of the Botanica Lozen Residences. The development of the first stage, consisting of 16 homes, is continuing as expected. One house has been presold as at the time of this report. A project is being drawn up for stages 2 and 3 of Botanica Lozen, for the construction permit of the next stage to be issued in Q3 of 2023.

As a deeper look into financial indicators, the high equity-to-asset ratio of recent years has given the group a good position for entering the slower period. At the end of 2022, we obtained a new plot in the Kodulahe Quarter. The team of Arco Vara also continues the development activities of all stages of Kodulahe, Botanica Lozen, and Arcojärve, with the aim to transfer 200 homes per year to clients.

The development and construction teams of Arco Vara face new challenges in 2023 which cannot be likened to those experienced in 2021 and 2022. The risks of war and healthcare are distant today, but their potential unexpected impact, unpredictable in scope, needs to be kept in mind all the same.


The group’s revenue was 13,494 thousand euros, which is 16% more than the revenue of 11,613 thousand euros in 2021. In 2022, the Group’s operating profit (=EBIT) was 1,062 thousand euros and net profit 695 thousand euros. In 2021, the group made operating profit of 2,569 thousand euros and net profit of 2,071 thousand euros.

In 2022, 72 apartments were sold in projects developed by the group and a land plot in Latvia. In 2021, 63 apartments and 2 commercial spaces.

In 2022, the group’s debt burden (net loans) increased by 5,341 thousand euros up to the level of 14,662 thousand euros as of 31 December 2022. As of 31 December 2022, the weighted average annual interest rate of interest-bearing liabilities was 5.8%. This is an increase of 0.6 percentage points compared to 31 December 2021.


The revenue of the Group totaled 13,494 thousand euros in 2022 (in 2021: 11,613 thousand euros), including revenue from the sale of properties in the Group’s own development projects in the amount of 12,426 thousand euros (in 2021: 10,478 thousand euros).

Most of the other revenue consists of rental income from commercial and office premises in Madrid Blvd building in Sofia, amounting to 756 thousand euros in 2022 (in 2021: 810 thousand euros). By the time of publishing the present report, 2 offices remain vacant, but all commercial spaces, together with parking places, were rented out. 9% of the office is in renovation.

The Madrid building is in an ongoing sales process, which is expected to be completed in Q2 of 2023. There is no profit or loss from the sale of the building in 2023 because the discounts were recognized in 2022. The transaction is not reflected in the sales revenue, as it is the sale of a real estate investment. The deal is expected to free up 4.1 million euros worth of equity capital.

In 2022, the construction company Arco Tarc OÜ was established, which laid the foundation for a new business segment. The construction service is offered intra-group with a fixed profit margin of 4%.

The construction of the IV-V stage buildings in Kodulahe ended in 2022. Two residential buildings with 36 apartments were completed at Pagi 3 and Pagi 5. The income from the sale of buildings is reflected in the 2022 report, there are no unsold apartments.

The construction and sale of the Stage VI of Kodulahe project called Rannakalda at Lammi 8 started in February 2022 by Arco Vara’s own construction company Arco Tarc OÜ. The construction includes a pavilion, 4 commercial areas and 108 apartments (in three separate buildings), out of which many have sea view. One of the apartment buildings will be ready at the end of 2023, the ohter houses at the beginning of 2024. As at the date of publishing the annual report, 45 units out of the 113 have been presold.

A subsidiary of Arco Vara, Aktsiaselts Kolde, in 2021 signed an agreement for land acquisition beside Lake Harku, address Paldiski road 124b, Tallinn. More than 35,000 m2 of residential and commercial real estate (GBA) is planned for development. The project is called Arcojärve. The expected development period is 6 years with the start of construction planned for 2024.

In the Pirita Kuldlehe project, it is planned to build an exclusive and high-quality cluster house with 5 homes in 2023. The construction of roads and communications has been completed. The house will be completed within a year. The sale of the project has started.

The Botanica Lozen project foresees construction of 54 homes (houses) in three stages. The construction and sale of the first 16 buildings has started. Minimum construction period for the whole project is 2 years.

As of 31 December 2022, and the date of this report, 3 Marsili residential plots remained unsold in Latvia.


In thousands of euros 2022 2021
Revenue from sale of own real estate 12,426 10,478
Revenue from rendering of services 1,068 1,135
Total revenue 13,494 11,613
Cost of sales -10,913 -8,578
Gross profit 2,581 3,035
Other income 67 258
Marketing and distribution expenses -249 -200
Administrative expenses -1,118 -1,106
Other expenses -14 -76
Gain/loss on investment property -205 658
Operating profit 1,062 2,569
Financial income and costs -367 -390
Profit before tax 695 2,179
Income tax 0 -108

Net profit for the period

695 2,071
attributable to owners of the parent 695 2,071

Total comprehensive income for the period

695 2,071
attributable to owners of the parent 695 2,071
Earnings per share (in euros)
– basic 0.07 0.22
– diluted 0.07 0.22


In thousands of euros 31 December 2022 31 December 2021
Cash and cash equivalents 3,427 1,863
Receivables and prepayments 4,387 3,701
Inventories 22,511 15,761
Investment property held for sale 9,050 0
Total current assets 39,375 21,325
Receivables and prepayments 18 5
Investment property 82 9,943
Property, plant and equipment 284 154
Intangible assets 46 87
Total non-current assets 430 10,189
TOTAL ASSETS 39,805 31,514
Loans and borrowings 5,255 6,043
Payables and deferred income 3,681 2,368
Total current liabilities 8,936 8,411
Loans and borrowings 12,834 5,141
Total non-current liabilities 12,834 5,141
Share capital 7,272 7,272
Share premium 3,835 3,835
Statutory capital reserve 2,011 2,011
Retained earnings 4,917 4,844
Total equity attributable to owners of the parent 18,035 17,962
TOTAL EQUITY 18,035 17,962


Arco Vara 2022 ENG_with auditor report

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