S IMMO AG: third quarter results confirm successful business performance
Consolidated net income up to EUR 20m
• Proceeds of property sales totalling EUR 130.1m
• Earnings per share up from EUR 0.24 to EUR 0.29
• S IMMO Share: upwards trend in the capital market
For stock exchange listed S IMMO AG (Bloomberg: SPI:AV, Reuters: SIAG.VI) the first three quarters of the financial year 2012 have proved highly successful. The Company has achieved increases in key indicators such as consolidated net income and funds from operations.
Total revenues for the first three quarters of 2012 amounted to EUR 146.3m. The rental income continued at a satisfactory level in spite of the successful property sales – while the property portfolio decreased by 5.8%, rental income declined by only 2.5% to EUR 89.5m, compared with EUR 91.8m for the same period last year. Revenues from hotel operations (revenues from the Vienna and Budapest Marriott Hotels, both operated under management agreements) increased slightly, from EUR 29.3m to EUR 29.5m. The gross profit from hotel operations in the third quarter of 2012 came to EUR 6.2m, compared with EUR 6.9m in the third quarter of 2011. In total, gross profit for the first three quarters dropped slightly by 2.9% to EUR 77.8m, compared with EUR 80.1m in the same period last year.
Successful property disposals
As at 30 September 2012 the sale proceeds totalled EUR 130.1m, compared with EUR 40.5m for the same period last year. This means that by the end of the third quarter, S IMMO had already more than achieved its goal of disposing of properties to the value of EUR 100m in 2012. The gains on disposals came to EUR 9.7m. Despite the property sales, EBITDA fell by only 1.8%, to EUR 75.3m, compared with EUR 76.6m for the first nine months of 2011. Gains from property valuations for the first three quarters of 2012 came to EUR 5.5m (Q3 2011: EUR 4.3m) and were entirely attributable to the German property portfolio. At EUR 73.9m (Q3 2011: EUR 74.0m), EBIT for the period remained more or less unchanged.
Further increase in net profit for the period
Financing costs for the first three quarters of 2012 amounted to EUR 41.8m, compared with EUR 40.3m for the same period last year. The difference was partly due to a non-cash foreign exchange loss of EUR 2.0m, as opposed to a foreign exchange gain of EUR 3.3m for the first three quarters of 2011. The Group’s consolidated net income for the third quarter came to a very satisfactory EUR 20.4m, compared with EUR 20.3m for the same period last year, a slight increase of 0.7% despite the reduced portfolio.
Key indicators at very satisfactory levels
Funds from operations (FFO) rose by 7.7% in the first three quarters of 2012 to EUR 24.9m. The corresponding figure last year was EUR 23.1m. With S IMMO’s market capitalisation of EUR 324.9m at 30 September 2012, the FFO yield was a very satisfactory 10.2%. Because of property disposals, net operating income (NOI) fell by 3.1% to EUR 72.7m, compared with EUR 75.0m for the same period last year. However, the NOI margin improved by 0.3 percentage points to 49.7%. This is attributable to increases in efficiency and a reduction in property related costs. As at 30 September 2012 the balance sheet net asset value (NAV) stood at EUR 7.01 per share (31 December 2011: EUR 6.96 per share). The EPRA NAV, the inner value of the share calculated in accordance with the guidelines of the European Public Real Estate Association, was EUR 9.02 per share (31 December 2011: EUR 8.70 per share). Earnings per share increased to EUR 0.29 (Q3 2011: EUR 0.24).
Successful asset management
S IMMO has considerable successes to report in asset management: In Romania and Bulgaria – still the two most challenging markets – the Group was thrilled to welcome well-known companies such as Atos, Merck and Abbott as new tenants in its office developments. Sun Offices in Bucharest was awarded a Green Building Certificate by BREEAM. Further freehold apartments in S IMMO’s Vienna office and residential property Neutor 1010 were also disposed of, at very favourable prices. The extensive refurbishment activities of the past few years have had a positive effect on the German portfolio: In Munich and Berlin approximately 2,200 m² have been let to well-known tenants such as the Konrad-Adenauer-Stiftung.
Upwards trend in the capital markets
After some challenging quarters, over the past few months there have been definite signs of an upwards trend in the capital markets. Since the beginning of the year the S IMMO Share price has increased by 6.0%, to close the third quarter at EUR 4.77. On 21 November 2012 the S IMMO Share stood at EUR 4.91. This rise went hand in hand with an increase in trading volumes. In the coming months the Company will continue the repurchase programmes for the S IMMO Share and the S IMMO INVEST participating certificate as planned. S IMMO’s dividend distribution start in June 2012 represents a change in long-term strategy with the intention to continue to pay dividends in the years to come.
Outlook: in excellent shape for 2013
In the currently still challenging environment, S IMMO benefits from the diversification of its portfolio by region and property use type. In Germany, at present the most profitable of its markets, the Group is taking advantage of the current buoyancy of the residential market. The goal of disposing of around 5% of the portfolio for at least EUR 100m this year has already been achieved. S IMMO’s plan for 2013 is to do the same. The Group will use the proceeds of sale, among other things, to reduce the loan to value ratio from its current level of around 55% to under 50%.
Development activities over the next few years will be concentrated on the inner city Quartier Belvedere Central project around Vienna’s new Central Station. In the coming years, S IMMO and its partners will be developing a mixture of office, hotel and retail properties with gross floor space of around 130,000 m².
|01 – 09/2012||01 – 09/2011|
|Revenues from operating costs||27.3||30.8|
|Revenues from hotel operations||29.5||29.3|
|Other operating income||5.1||5.1|
|Expenses directly attributable to properties||-50.3||-54.5|
|Hotel operating expenses||-23.3||-22.5|
|Income from property disposals||130.1||40.5|
|Carrying value of property disposals||-120.4||-31.3|
|Gains on property disposals||9.7||9.2|
|Earnings before interest, tax, depreciation and amortisation (EBITDA)||75.3||76.6|
|Depreciation and amortisation||-6.8||-7.0|
|Gains on property valuation||5.5||4.3|
|Operating result (EBIT)||73.9||74.0|
|Participating certificates results||-9.4||-9.8|
|Net income before taxes (EBT)||22.7||23.9|
|Taxes on income||-2.3||-3.7|
|Consolidated net income||20.4||20.3|
|of which attributable to shareholders in parent company||19.3||16.7|
|of which attributable to non-controlling interests||1.1||3.6|
|Earnings per share (EUR)||0.29||0.24|