S IMMO AG: Strong first quarter of 2017
- FFO I up by 13.5%
- Financial result improved by over EUR 10m
- Strong performance of S IMMO share
- EPRA NAV increased to EUR 14.95 per share
The first three months of 2017 were once again very successful for S IMMO. Total revenues saw a slight increase despite the sales in the previous year, the financial result was improved significantly and FFO rose sharply. 2016 was an outstanding record year with a total valuation gain of EUR 194m. The operating key indicators remained at the level of the previous year, while EBIT and net income for the period were down, as expected. However, these figures were much higher than in 2015, which was itself a very successful year. Ernst Vejdovszky, CEO of S IMMO AG, remarked: "We enjoyed a very strong start to the year. Compared with the first quarter of 2015, we more than doubled our net income for the period. This proves that our strategy is working and our success is sustainable."
Strong operating performance
In 2016, S IMMO sold part of its Germany portfolio for a sizeable profit. Despite these sales, total revenues remained up on the previous year at EUR 46.5m (Q1 2016: EUR 46.3m). The operating indicators such as gross profit of EUR 23.4m (Q1 2016: EUR 24.0m) and EBITDA of EUR 19.5m (Q1 2016: EUR 20.3m) were also almost on a par with the previous year. The strong performance is particularly apparent from funds from operations (FFO). FFO I, which is a key indicator for the operating performance of a property company and does not include sales of portfolio properties, rose by 13.5% year-on-year to EUR 9.9m (Q1 2016: EUR 8.8m). FFO II, which includes gains on property sales and valuation gains on properties sold in the current year, came to EUR 10.1m (Q1 2016: EUR 9.3m).
Significant improvement of the financial result
Another very pleasing valuation gain was achieved in this quarter, albeit below last year's record figure. EBIT for the first quarter of 2017 amounted to EUR 27.2m (Q1 2016: EUR 55.3m).
The financial result including the participating certificates result improved by around EUR 11.5m year-on-year to EUR -9.2m (Q1 2016: EUR -20.7m). This significant improvement is chiefly attributable to positive effects from derivatives valuation and to lower current expenses for financing. The optimisation of the financing structure can also be seen in the development of the cost of funding (financing costs not including bonds or participating certificates), which fell from 3.14% as at 31 March 2016 to 2.94%.
EBT amounted to EUR 17.9m (Q1 2016: EUR 34.7m). As a result of the effects described above, net profit for the period reached EUR 16.2m (Q1 2016: EUR 27.6m).
Successful property transactions
In the first three months of 2017, S IMMO was active mainly as a buyer, focussing on residential properties in medium-sized German cities. For instance, the first quarter saw closing for the acquisition of five German residential properties at a total purchase price of just over EUR 12m. In addition, contracts for the purchase of a further 14 properties with a total transaction volume of around EUR 44.8m were concluded by mid-May. A small property in Vienna was also sold in the first quarter.
S IMMO share posts strong gains
On 05 April 2017, S IMMO published the best net income in the company’s history. The impressive results were also reflected by the share price performance. The S IMMO share closed up 12.40% at EUR 11.24 on 31 March 2017. It thus significantly outperformed both the ATX and the IATX once again. Trading volumes for the S IMMO share also showed a pleasing increase. On 26 May 2017, the share was listed at EUR 12.50. EPRA NAV per share stood at EUR 14.95 on 31 March 2017. Compared with 31 March 2016, when EPRA NAV amounted to EUR 12.24 per share, a pleasing increase was also attained here.
Friedrich Wachernig, member of S IMMO AG’s management board, is highly optimistic for the current financial year: "We are currently benefiting from the positive economic trend, low interest rates and the associated high price levels on the property markets. We are taking advantage of this latter aspect for attractive sales as part of our cycle-oriented strategy. Purchases of existing properties are only being made very selectively at present, with a focus on economically up-and-coming German cities."
Alongside investments in the existing portfolio, S IMMO is currently concentrating on its project developments: In Vienna, the company is involved in the Quartier Belvedere Central development at the central station as an investor. In Siebenbrunnengasse in Vienna’s fifth municipal district, work is under way on a residential and office property. In Berlin, there are a number of projects where renovation and refurbishment work is being carried out. The first phase of the conversion at the Sun Plaza shopping centre in Bucharest is complete. Up to 40 new shops will be opened until spring 2018. The office project The Mark is also under construction in the Romanian capital. In Bratislava, the modern office project Einsteinova, which is geared towards the highest green building standards, is being developed and 85% of the property is already pre-let.
Consolidated income statement for the period from 01 January 2017 to 31 March 2017
in EUR million/fair-value method
|thereof rental income||28.9||29.2|
|thereof revenues from operating costs||10.1||9.9|
|thereof revenues from hotel operations||7.4||7.2|
|Other operating income||0.5||0.5|
|Expenses directly attributable to properties||-16.5||-16.1|
|Hotel operating expenses||-7.2||-6.8|
|Income from property disposals||1.7||1.4|
|Book value of property disposals||-1.7||-0.8|
|Gains on property disposals||0||0.5|
|Earnings before interest, tax, depreciation and amortisation (EBITDA)||19.5||20.3|
|Depreciation and amortisation||-2.1||-1.9|
|Results from property valuation||9.8||36.9|
|Operating result (EBIT)||27.2||55.3|
|Participating certificates result||-0.7||-1.4|
|Net income before tax (EBT)||17.9||34.7|
|Tax on income||-1.8||-7.1|
|Consolidated net income for the period||16.2||27.6|
|of which attributable to shareholders in parent company||13.7||27.0|
|of which attributable to non-controlling interests||2.4||0.6|
|Earnings per share (in EUR)||0.21||0.40|