S IMMO: earnings more than doubled in the first half of 2011
Net income for the period doubled to EUR 10.1m.
- Net income for the period doubled to EUR 10.1m
- EBIT up by 70.6% to EUR 51.3m
- Operating cash flow up by 81.9%
- Occupancy rate at impressive 91.2%
Stock exchange listed S IMMO AG (Bloomberg: SPI:AV, Reuters: SIAG.VI) has excellent results to report for the first half of 2011. Compared with the same period last year, rental income, gross profit and EBIT have all increased significantly.
Gross profit up by more than 30% compared with the first half of 2010
Rental income for the first half of 2011 was more than satisfactory at EUR 61.7m (first half of 2010: EUR 48.2m). The buildings in Vienna’s Viertel Zwei, acquired last December, contributed fully to earnings for the first time. The growth in rental income was also partly attributable to income from development projects that were completed during the last financial year.
The continuing positive trend in hotel business in Vienna and Budapest was reflected in the performance of S IMMO’s hotels. Income from hotel operations increased from EUR 17.0m to EUR 19.6m. Despite a slight increase in expenses of hotel operations, profits in the first half of 2011 were up by 25% to EUR 4.2m. Overall, gross profit for the first half of 2011 rose 30.5% to EUR 54.5m compared with EUR 41.8m in the same period last year.
EBIT up by more than 70%
In the first half of 2011, S IMMO disposed of four properties in Vienna and Berlin as well as four apartments in the mixed residential and office building Neutor 1010 in Vienna. The gains on property disposal amounted to EUR 3.9m and were a major contribution to raising the EBITDA from EUR 36.8m to EUR 49.5m, an increase of 34.7% compared with the same period last year. EBIT was up by 70.6% to EUR 51.3m (first half of 2010: EUR 30.1m).
As at 30 June 2011, financing costs amounted to EUR 32.0m, including a non-cash foreign exchange loss of EUR 3.4m. The loss was a result of the decline of the EURO against currencies in Central and Southeastern Europe (Romanian leu, Hungarian forint, Czech crown and Croatian kuna). The overall net income for the period doubled compared with the same period last year and amounted to EUR 10.1m.
Operating cash flow up by 81.9%
Compared with the first half of 2010, S IMMO achieved a significant increase in funds from operations (FFO), which jumped 31.6% to EUR 21.6m. The Group’s excellent performance was also reflected in improved NOI, which rose from EUR 38.7m to EUR 50.2m. Operating cash flow for the first half year was EUR 51.3m, an increase of 81.9% compared with the same period last year.
EPRA NAV, the net asset value of the share calculated in accordance with the guidelines of the European Public Real Estate Association, was also up again to EUR 8.54 per share, compared with EUR 8.34 per share at the end of 2010.
244 properties: portfolio worth more than EUR 2bn
As at 30 June 2011, the Group owned a total of 244 properties – mostly in European Union capitals and large German cities. At balance sheet date, the property portfolio had a market value of EUR 2,005.9m with total let floor space of over 1,400,000 m². The portfolio is diversified by region as well as by property use type, with approximately 60% of the property portfolio in Western Europe and the remaining 40% in Central and Southeastern Europe. A detailed breakdown by region shows that 31.5% of the portfolio is in Austria, 28.3% in Germany, 21.1% in SEE and 19.1% in CEE. By property use type, the portfolio is made up of office properties (35.7%), retail properties (26.5%), residential properties (23.9%) and hotels (13.9%). Rental yield is a very satisfactory 6.6%.
Successes in asset management and focus on development projects
S IMMO’s active asset management also proved effective in the first half of 2011. Despite the extremely difficult economic environment in some countries, S IMMO achieved outstanding letting successes in the first half of this year. For example, the Company was able to acquire renowned companies such as H&M and Diesel as tenants for the shopping centres Sun Plaza and Serdika Center. The overall occupancy rate of the portfolio is at a very satisfying 91.2%.
For development projects, the Company’s focus in the second half of 2011 continues to be on preparing the development sites for construction. Currently, the process of acquiring zoning permissions is underway, including permission for the new urban development, Quartier Belvedere. This will be located at the new Vienna Central Station, where one of Europe’s largest inner city development projects is taking shape. A unique office, residential and retail quarter is to be built on a total area of 550,000 m². In cooperation with Erste Group Immorent and PORR Solutions, S IMMO is developing a prominent sub-project. The working title for the project, with 136,000 m² of gross floor space, is “Quartier Belvedere Central”. The development will comprise a mix of offices, hotels and retail space, and will be constructed in several stages. Zoning permission is expected to be granted for the beginning of 2012, and the construction permit later in the same year.
S IMMO Share trading at far below NAV
S IMMO Share closed at EUR 4.632 at the end of the first half of 2011 and did not escape the effect of stock exchange developments of recent weeks. At the same time the traded volume has doubled a reflection of the markets’ volatility. The poor performance of the S IMMO Share is clearly the result of the upheavals in international capital markets, however, the Management is anything but satisfied with the Share’s current discount to net asset value.
Continuing to stress obvious upside potential of S IMMO Share as well as achieving Share inclusion into the relevant industry indexes and simplifying the capital structure are on the agenda for the next months. The Group therefore started another repurchase programme for S IMMO INVEST participating certificates, and since the beginning of the year has repurchased approximately 8.5% of the certificates.
S IMMO’s operating performance is completely in line with plans, and at this time Management expects the second half of the year to be equally successful. The Group will continue its building refurbishment programme in Germany, where over the last twelve months the occupancy rate rose from 86% to 90% and rental income grew by 3.3% in spite of disposals. S IMMO will also leverage the potential for growth in SEE countries, in particular, as soon as these countries have fully recovered from the economic crisis. The economic growth predicted for this region over the next few years is very encouraging.
Consolidated income statement for the six months ended 30 June 2011
EUR m / fair value basis
|01 - 06/2011||01 - 06/2010|
|Revenues from service charges||21.0||14.1|
|Revenues from hotel operations||19.6||17.0|
|Other operating income||4.3||3.1|
|Expenses directly attributable to properties||-36.7||-26.9|
|Hotel operating expenses||-15.4||-13.7|
|Revenues less direct expenses||54.5||41.8|
|Income from property disposals||18.3||57.7|
|Carrying values of property disposals||-14.4||-55.1|
|Gains on property disposals||3.9||2.6|
|Earnings before interest, tax, depreciation and amortisation (EBITDA) ||49.5||36.8|
|Depreciation and amortisation||-4.8||-5.0|
|Gains / Losses on property valuation||6.6||-1.7|
|Operating result (EBIT)||51.3||30.1|
|Participating certificates result||-6.8||-5.0|
|Net income before taxes (EBT)||12.5||6.6|
|Taxes on income||-2.4||-1.5|
|Net income for the period||10.1||5.0|
of which attributable to shareholders in parent company
|of which attributable to non-controlling interests||2.8||-1.2|
|Earnings per share (EUR)||0.11||0.09|
|Property indicators ||30 June 2011|
|Total let floor space||m2||1,440,837|
|Gross rental yield||%||6.6|