S IMMO AG: Second-best result in company’s history

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  • Record-high EPRA NAV of EUR 17.63 
  • Strong revaluation result of EUR 127.6m
  • FFO I (cash surplus) up significantly to EUR 42.7m
  • Dividend of EUR 0.40 planned


Following the record result last year, the listed real estate investment company S IMMO AG achieved the second-best result in the company’s history in the 2017 financial year. Consolidated net income totalled EUR 133.5m, which brought the EPRA NAV per share to EUR 17.63 as of 31 December 2017. Ernst Vejdovszky, CEO of S IMMO AG, had the following comment: “During the 2017 financial year, we profited from investment decisions that we had already made years ago. The sale of two major properties and another extremely positive revaluation result were the primary drivers of the excellent results. At the same time, the highest FFO I in the company’s history shows that we were also highly successful from an operational standpoint.”

 

Development of gross profit

Revenues for the 2017 financial year totalled EUR 191.4m (2016: EUR 198.8m). The rental income included in this figure came to EUR 112.0m (2016: EUR 118.2m). The drop in rental income due to the sales in the 2016 and 2017 financial years was partially offset by a positive like-for-like performance and ongoing acquisitions in Germany. Revenues from hotel operations (revenues from the Vienna Marriott and Budapest Marriott Hotels, both operated under management agreements) rose to EUR 46.0m (2016: EUR 42.9m). The consolidated gross profit was EUR 98.2m (2016: EUR 106.0m).

 

Successful property purchases and sales

In the 2017 financial year, S IMMO sold the Hoch Zwei and Plus Zwei office buildings in Vienna, the Serdika Center shopping centre along with the associated office building in Sofia, two properties in Berlin and a property in Austria. These high-volume disposals were in line with the cycle-oriented strategy of the group and made it possible to realise cash profits.

At the same time, S IMMO was also active in terms of acquisitions in 2017. German properties representing a transaction volume of around EUR 64m were added to S IMMO’s portfolio in the reporting period. 

Management expenses remained at roughly the same level in year-on-year comparison at EUR 19.0m (2016: EUR 18.6m). EBITDA for the 2017 financial year decreased to EUR 89.6m (2016: EUR 92.5m), mainly due to sales covering a total volume of more than EUR 700m in 2016 and 2017.

 

Positive revaluation results in all regions

The revaluation result developed very positively once again, coming in at EUR 127.6m (2016: EUR 194.0m), the second-highest level in the company’s history. This was due in large part to the asset management activities aimed at increasing the value of properties and the persistently positive overall development on the German property market. The Germany segment accounted for EUR 70.0m (2016: EUR 136.7m) of the revaluation result, the Austria segment for EUR 37.1m (2016: EUR 38.1m) and CEE for EUR 20.5m (2016: EUR 19.2m). In comparison to the record year of 2016, EBIT of EUR 208.1m (2016: EUR 278.7m) mainly reflects the difference in the revaluation result.

 

Further improvements in financial result

The financial result including participating certificates improved to EUR -47.4m (2016: EUR -62.2m). In particular, ongoing interest payments fell due to favourable refinancing options and the restructuring of the derivatives portfolio. EBT came to EUR 160.7m (2016: EUR 216.5m). Tax expenses amounted to EUR -27.3m (2016: EUR -12.1m). All in all, net income totalled EUR 133.5m (2016: EUR 204.3m), the second-highest level in the company’s history.

 

Record-high operating result

FFO I, an important metric for the development of operational cash flow, increased by more than 6% compared with the record result in the prior year and came to EUR 42.7m (2016: EUR 40.1m). This development can be attributed primarily to significant improvements in financing costs as well as an excellent operational property performance. 

 

S IMMO share delivers strong gains

S IMMO once again had an extremely successful year on the capital market, with a closing share price of EUR 16.15 and an annual performance of 61.5%. The EPRA NAV improved from EUR 14.62 in the previous year to EUR 17.63 per share. In addition, the company continued its long-term dividend policy in 2017 and paid a dividend of EUR 0.30 per share plus a special dividend of EUR 0.10. Management plans to propose a dividend of EUR 0.40 per share for the 2017 financial year at the Annual General Meeting on 03 May 2018.

Along with the direct real estate investments, S IMMO purchased shares in the real estate companies CA Immo and Immofinanz in the 2017 financial year – the management sees tremendous potential for both companies. 

 

Outlook 

S IMMO is benefiting from the positive economic developments in all of its markets, the low-interest environment and the high price levels in many real estate markets. S IMMO took advantage of these conditions to complete sales in 2017 and also made purchases in German cities such as Leipzig, Rostock and Kiel. These cities offer a great deal of potential due to their demographic and economic conditions. From an operational standpoint, S IMMO will concentrate on project developments and investments in portfolio properties.

“Given the current market conditions, we are placing stronger emphasis on project developments and already opened the renovation at our Sun Plaza property in Bucharest in the first quarter of this year. We are currently working on additional exciting project developments in Vienna, Berlin, Bratislava and Bucharest. With these projects and the ongoing intensive work on our portfolio properties, we are increasing the value of our portfolio over the long term and securing earnings for the future,” said Friedrich Wachernig, member of S IMMO AG’s Management Board.

Consolidated income statement for the period from 01 January 2017 to 31 December 2017

in EUR million/fair-value method 

01–12/201701–12/2016
Revenues191.4198.8
thereof rental income112.0118.2
thereof revenues from operating costs33.437.7
thereof revenues from hotel operations46.042.9
Other operating income2.93.4
Expenses directly attributable to properties-59.9-64.2
Hotel operating expenses-36.2-32.0
Gross profit98.2106.0
Income from property disposals470.3229.9
Book value of property disposals-459.9-224.7
Gains on property disposals10.35.1
Management expenses-19.0-18.6
Earnings before interest, tax, depreciation and amortisation (EBITDA)89.692.5
Depreciation and amortisation-9.0-7.8
Results from property valuation127.6194.0
Operating result (EBIT)208.1278.7
Financing costs-41.4-55.3
Participating certificates result-6.0-6.9
Net income before tax (EBT)160.7216.5
Taxes on income-27.3-12.1
Consolidated net income for the period133.4204.3
of which attributable to shareholders in parent company130.1198.5
of which attributable to non-controlling interests3.45.9
Earnings per share (in EUR)1.972.98