Sparkassen Immobilien AG: successful first half year

  • Continuing excellent operating performance
  • All major performance indicators up
  • EBIT increase to EUR 30.1m (HY1 2009: EUR 23.8m)
  • Neutor 1010 and Galvaniho 4 projects opening shortly

Differing economic climates

The first half year saw gradual macroeconomic improvements in the Group’s markets, although the pace of recovery was very varied. While recovery is best advanced in Germany, Austria, the Czech Republic and Slovakia, and the performance of these economies on a year-on-year basis is excellent, Hungary, Romania and Bulgaria have not yet returned to growth.

Top quality property portfolio

As at 30 June 2010, Sparkassen Immobilien AG’s property portfolio consisted of 251 residential, office, commercial and hotel properties with a total value of EUR 1,853.7m (31.12.2009: EUR 1,900.8m). The occupancy rate was a steady 90%, and the gross rental yield was an excellent 6.8%. Rental income for the first half of 2010 increased by EUR 3.5m and amounted to EUR 48.2m (HY1 2009: EUR 44.7m).

Earnings increase

Sparkassen Immobilien AG sold a total of five residential properties in the first half of 2010, three of them in Vienna and two in Berlin. All the properties were sold above their estimated value. The resulting gains on disposal came to EUR 2.6m (HY1 2009: EUR 0.3m). EBITDA, at EUR 36.8m, was 10% up on the comparable period last year (HY1 2009: EUR 33.5m). Operating profit (EBIT) rose to EUR 30.1m in the period under review, which is a significant improvement (HY1 2009: 23.8m).

Higher borrowings meant that net financial expense in the first half of 2010 changed from EUR 15.0m to EUR 18.5m. Profit before tax (EBT) compared with the same period last year climbed 73.2% to EUR 6.6m (HY1 2009: EUR 3.8m). The net profit of EUR 5.0m for the period was up an impressive 57.5% (HY1 2009:  EUR 3.2m).

Positive key performance indicators

“The key earning figures used to monitor the progress of the business confirm our satisfactory performance in the first half of 2010,” says Ernst Vejdovszky, member of Sparkassen Immobilien AG’s Management Board.

Operating cash flow improved slightly to EUR 33.2m (HY1 2009: 33.0m). Funds From Operations (FFO) in the period increased from EUR 11.3m to EUR 11.4m. Net Operating Income (NOI) compared with the same period last year improved by 17% to EUR 38.7m (HY1 2009: EUR 33.0m) due to increased rental income. EPRA NAV (Net Asset Value measured by EPRA standards) rose from EUR 8.13 at 31 December 2009 to EUR 8.23 per share at 30 June 2010.

Quality strategy ensures successful progress of development projects

Sparkassen Immobilien AG’s biggest development projects so far, the shopping centres Sun Plaza in Bucharest and Serdika Center in Sofia, were completed on schedule and opened successfully in February and March. Both sites are almost fully let, and are now generating regular income streams for the Group.

The Neutor 1010 project, an office and residential development with 11,000 m² of usable space in Vienna’s Inner City, is in the final stages of completion and will be opened on schedule in the autumn of 2010. Three quarters of the commercial space has already been let long-term. The upper floors consist of 34 luxury apartments, of which 27 have already been sold before completion. In Bratislava, the Galvaniho 4 office building is in the process of being completed and is already three-quarters let.

Outlook

“We assume that as the business climate becomes more favourable, the situation in the capital markets will also improve and investor confidence in the inner value of our stock will strengthen. Operationally, we are concentrating on completing and opening our two ongoing development projects, Neutor 1010 in Vienna and Galvaniho 4 in Bratislava. Both properties are in prime locations, so we are optimistic that we shall be successful in letting or selling the premises not yet spoken for,” is how Friedrich Wachernig sees the second half of 2010.

Sparkassen Immobilien AG aims to more than double its operating cash flow from EUR 49.0m in 2009 to over EUR 100m within the next two years. “Sustainable yields and long-term growth will continue to be the core of Sparkassen Immobilien AG’s strategy in the years to come,” sums up Ernst Vejdovszky.