From the Chairman:
The mother of all crises

Calling 2020 an exceptional year is no exaggeration. For Pandox and the entire hotel industry the year unfolded in a way that we could not have predicted at the start of the year. The worries and concerns we had back then seem entirely insignificant today in light of the historic social crisis we are now living through and that has hit so many people so hard.

Considerable experience from previous crises...
As I describe Pandox’s response to the challenges in the hotel industry, I’m reminded of the Company’s history. Pandox was founded in 1995 with a small portfolio of hotel properties acquired from Securum, which was one of the Swedish Government’s debt recovery companies during the banking crisis in Sweden in the early 1990s. Pandox’s
management, including Anders Nissen who is still the Company’s CEO, had previously worked at Securum for a number of years on debt recovery and restructuring a large portfolio of distressed assets in the travel and hospitality industry.

It was a tough and often thankless job, but one that provided unique insights and experience of the course of a difficult crisis. Pandox’s experiences from the early years have since been frequently added to and the lessons learnt from multiple significant external crises have enabled the Company to successfully advance its position in the hotel property market. The continuity that Pandox has had – both in executive management and on the Board – have enabled the Company to constantly build on past experience and quickly mobilise the organisation in the right direction, no matter what issue the Company was facing. Continuity is also one explanation for Pandox’s clear identity and strong corporate culture.

...has created the conditions for fast transition
As I mentioned earlier, Pandox’s handling of the Covid-19 crisis is based on significant experience from previous crises. This was evident back in March of last year when the Company quickly switched from attack to defence. Important focus areas then and now are the tenants’ ability to pay, our inter-nal cost levels, the value of hotel properties, relationships with lenders and, not least, internal and external communication.

One area in which the Board has actively supported executive management during the year is in banking and financial matters through a designated Financial Committee consisting of myself, Jon Rasmus Aurdal, Bengt Kjell and executive management in the form of CEO Anders Nissen and CFO Liia Nõu, as well as Pandox’s financial department.

Multiple interests to take into account in the ongoing crises
Pandox is a pan-European hotel property company interfacing with many different stakeholders in multiple countries. In a crisis of this magnitude there are many difficult decisions that must be made, not least in balancing tough discussions on rent in the short term with constructive dialogue on continuing profitable partnerships in the longer term. We have great respect and understanding for the difficult position that Pandox’s business partners are in because we share the same market. Through its business model, with a majority of revenue-based leases and the hotels we operate our-selves, Pandox has direct exposure to the hotel market. Through its hotel properties Pandox plays an important role in the infra-structure of the tourism and travel industry where our fixed and minimum rents cover the capital cost of the hotel properties, which in turn is essential in order to be able to operate hotels.

Realism and optimism for the future
We have worked through the crisis with a great deal of realism and determination. At the same time, we have tried to create hope and faith in the future, which is particularly important when we are in our darkest hour. One thing to be happy about is all of the new shareholders that came to Pandox in 2020, reinforcing an already strong ownership structure. Pandox holds a strong position in the hotel property market, which means there are good opportunities to be part of the future growth that we know is coming to this market. I both hope and believe that once the hotel market recovers Pandox will be able to generate substantial value for share-holders and other stakeholders.

I would like to express my gratitude to Pandox’s employees, shareholders, the Nominating Committee, the Board and our business partners for all of the combined efforts made in 2020. I look forward to a brighter 2021.

Oslo, March 2021
Christian Ringnes