Sparkassen Immobilien AG: successful first half year
Following a successful first quarter of 2010, stock exchange listed Sparkassen Immobilien AG (Bloomberg: SPI:AV, Reuters: SIAG.VI) has an equally satisfactory first half year to report
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 December 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).
Continuing excellent operating performance
The general increase in overnight stays and hotel occupancy rates in the first half year had a positive effect on income from hotel operations, which rose to EUR 17.0m (HY1 2009: EUR 16.2m). This was an increase of 5.2%, while expenses of hotel operations only increased by 3.4%, to EUR 13.7m.
According to property use type, commercial properties contributed the largest share of rental income, with 35.5%, followed by offices with 31.1% and residential properties with 28.4%. In the period under review the share contributed by hotels was 5%. The income of the hotels Vienna Marriott and Budapest Marriott – which are operated under management agreements – is disclosed as income from hotel operations.
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
Operating cash flow improved slightly to EUR 33.2m (HY1 2009: 33.0m). Funds From Operations (FFO) in the period increased from EUR 11. m 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.
Sparkassen Immobilien AG’s roughly 12-hectare land bank includes six plots of development land in the EU-capital cities of Central and South Eastern Europe. In Bratislava there is a site for which planning permission for offices has been granted. In the centre of Prague there is a site available for the development of a 150-room hotel. The Group also owns sites in Bulgaria and Romania with high development potential. An office project is planned in the centre of Sofia in conjunction with Immorent AG. A 40,000 m² specialist retail park is planned in the south of Bucharest, and at a prime location within the Grivitei district an office and hotel complex is projected. All projects are in the planning and approval stages and will be begun as soon as the economic climate permits.
Annual General Meeting 2010
The Annual General Meeting 2010 was held on 21 May 2010. Eight of the ten agenda items were adopted by a large majority. Only the motion for the conversion of participating certificates into ordinary shares and another motion in connection with the conversion failed to achieve the necessary 75% majority, the motion was approved by 56% of the votes. Sparkassen Immobilien AG continues to work for a simplification of the capital structure and towards a resolution of the issue that will be in the best interest of all its investors.
s IMMO share’s weighting in IATX doubled
Several mergers in the industry meant the amalgamation of a number of Austrian property stocks, and resulted in a narrowing of the base of the IATX, much to the benefit of the s IMMO share. Its weighting in the index doubled to 18.2%. The performance of the s IMMO share in the first half of 2010 was affected by overall developments in Europe. The weakness of the EURO and the debt crisis of several European economies resulted in sinking share prices. The s IMMO share also fell back slightly: its market price at 30 June 2010 was EUR 4.78, just under the EUR 4.95 quoted at 31 March 2010. Compared with the price a year earlier, however, its performance was more satisfactory – a gain of 11.5%. In comparison, the ATX, which reflects the performance of the Austrian stock market as a whole, increased by 8.5%.The current price of the s IMMO share is EUR 5.15 (closing price 30 August 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.
Consolidated income statement for the first half year ended 30 June 2010 EUR m / fair value basis
|01 January – 30 June 2010|| |
01 January – 30 June 2009 1
|Rental income||48.2|| |
|Revenues from service charges||14.1|| |
|Revenues from hotel operations||17.0|| |
|Other operating income||3.1|| |
|Expenses directly attributable to |
|Hotel operating expenses||-13.7|| |
|Revenues less directly |
|Income from property disposals||57.7|| |
|Carrying values of property disposals||-55.1|| |
|Gains on property disposals||2.6|| |
|Management expenses||-7.6|| |
|Earnings before interest, tax, |
depreciation and amortisation
|Depreciation and amortisation||-5.0|| |
|Gains / losses on property valuation||-1.7|| |
|Operating result (EBIT)||30.1|| |
|Finance costs||-18.5|| |
|Participating certificates result||-5,0|| |
|Net income before taxes (EBT)||6,6|| |
|Taxes on income||-1,5|| |
|Net income / loss for the period||5.0|| |
| of which attributable to shareholders |
of parent company
| of which attributable to minority |
|Earnings per share (EUR)||0.09|| |
|Property indicators|| |
30 June 2010
|Completed properties|| |
|Total usable space|| |
|Rental yield|| |
|Occupancy rate|| |
|Land bank|| |
Number of plots