Q3 results show stable operating performance
- Rental income up by 16% to EUR 112.7m
- EBITDA advanced by more than 24% to EUR 76.4m
- Net income for the period at EUR 99.1m
- EPRA NAV per share at EUR 29.59 as of 30 September 2022
The listed real estate investment company S IMMO AG can look back on three successful quarters with net income for the period of EUR 99.1m. Herwig Teufelsdorfer, Management Board member at S IMMO AG, comments: “Despite the challenging conditions, our key performance indicators remain stable. Total revenues as of 30 September 2022 were more than EUR 40m higher than in the prior year period. This was, next to the newly acquired objects, in large part due to the considerable increase in revenues from hotel operations. Now, we are in the process of realising value increases through the sale of residential properties in Germany as well as sustainably boosting our cash flow through the acquisition of high yield properties.”
Increase in revenues and gross profit
Total revenues rose from EUR 142.9m in the prior-year period to EUR 185.1m thanks to acquisitions of rented properties, good like-for-like performance as well as revenues from hotel operations. Rental income came to EUR 112.7m (Q3 2021: EUR 97.3m) while revenues from hotel operations nearly doubled from EUR 19.9m in the first three quarters of 2021 to EUR 38.3m. The gross profit thus rose by more than 23% to EUR 99.7m (Q3 2021: EUR 81.1m).
Lower EBIT due to decreased revaluation surplus
Administrative expenses rose from EUR 19.6m in the prior-year period to EUR 23.3m. Among other things, this increase was driven by costs relating to a digitalisation offensive and one-off effects relating to staff costs. Due to the strong operating performance, EBITDA rose by more than 24% to EUR 76.4m (Q3 2021: EUR 61.5m), despite the increase in administrative costs.
Due to market conditions, the result from property valuation of EUR 27.3m (Q3 2021: EUR 145.3m) was less high than in the previous year, but clearly positive and led to a lower EBIT of EUR 96.4m (Q3 2021: EUR 199.6m) despite the positive operating development.
Net income for the period and earnings per share
Due to positive, largely non-cash valuation effects stemming primarily from interest rate derivatives, the financial result improved to EUR 15.5m (Q3 2021: minus EUR 8.3m). All in all, the net income for the period came to EUR 99.1m (Q3 2021: EUR 160.5m), with earnings per share of EUR 1.40 (Q3 2021: EUR 2.25).
Capital market and takeover bid
Conditions in the international capital markets remained difficult in the third quarter as well. The Austrian benchmark index ATX continued its downtrend with a year-to-date performance of minus 30.3% while the sector index IATX closed on 30 September 2022 at minus 20.7%. Supported by the takeover bid of CPI Property Group S.A., the S IMMO share posted a year-to-date performance of 4.4% as of 30 September 2022. After the expiry of the additional acceptance period for the takeover bid on 18 November 2022, CPI Property Group S.A. announced that it held a total of 88.37% of S IMMO directly and indirectly through IMMOFINANZ AG. On 25November 2022, the closing price was 16.86.
Strategy update and acquisitions
After the intention to realise value increases in the German residential property portfolio in the near future was announced, the first disposals were successfully initiated in the third quarter. The proceeds will be reinvested in high-yield properties, currently with a focus on the Hungarian market. Office properties and a plot of land were purchased from CPI Property Group at the beginning of November, which is expected to bring roughly EUR 16m in additional rental income per year from November 2022 on.
Turbulent macroeconomic conditions and geopolitical events such as the war in Ukraine, international interest rate policy, inflation, and further COVID-19 developments continue to make concrete predictions difficult.
Holger Schmidtmayr, Management Board member at S IMMO AG, noted: “Our business model, which has proved to be highly crisis-resistant in the past, and the fact that we are part of a large international property group are both sources of new growth potential. We are focusing on continuity in our core business: purchasing, letting and managing high yield properties to boost cash flow on a lasting basis.”
Consolidated income statement for the period 01 January 2022 – 30 September 2022
in EUR m / fair value method
|thereof rental income||112,7||97,3|
|thereof revenues from operating costs||34,0||25,8|
|thereof revenues from hotel operations||38,3||19,9|
|Other operating income||1,1||2,3|
|Property operating expenses||-56,4||-49,0|
|Hotel operating expenses||-30,0||-15,2|
|Income from property disposals||0,04||4,3|
|Book value of property disposals||-0,04||-4,3|
|Result from property disposals||0||0|
|Earnings before interest, tax, depreciation and amortisation (EBITDA)||76,4||61,5|
|Depreciation and amortisation||-7,3||-7,2|
|Results from property valuation||27,3||145,3|
|Operating income (EBIT)||96,4||199,6|
|Earnings before taxes (EBT)||111,9||191,3|
|Taxes on income||-12,8||-30,8|
|Consolidated net income||99,1||160,5|
|thereof attributable to shareholders in parent company||98,9||159,9|
|thereof attributable to non-controlling interests||0,1||0,6|
|Earnings per share (in EUR)||1,4||2,25|