Sparkassen Immobilien AG: Successful operating performance in the first three quarters of 2010
- S IMMO Share up 10%
- EBIT increased to EUR 45.5m (Q3 2009: EUR -54.1m)
- Inner value of stock (NAV) higher again – EUR 8.27 per share
- Successful project completions and development land bank secure growth
- New S IMMO logo for stronger international market presence
Stock exchange listed Sparkassen Immobilien AG (Bloomberg: SPI:AV, Reuters: SIAG.VI) has three successful operating quarters to report on. “We have done a great deal in the last three months: in Vienna’s Inner City we have opened the residential and office development Neutor 1010 and we have completed the Galvaniho 4 office building in Bratislava. Sparkassen Immobilien AG’s is progressing as planned. Major performance indicators are up and the response of the capital markets has been very gratifying. With our new S IMMO logo, we are creating a more immediately recognisable uniform presence in the international capital markets“, says Friedrich Wachernig, Member of Sparkassen Immobilien AG’s Management Board, summing up the achievements.
S IMMO Share shows an increase of more than 10%
S IMMO Share has significantly outperformed the ATX and stood at EUR 5.54 per share at 30 September 2010, an improvement of 10.8% over the first nine months of 2010. The difference between the closing share price of EUR 5.53 on 24 November 2010 and the net asset value was some 33%.
Holger Schmidtmayr, Member of Sparkassen Immobilien AG’s Management Board, comments, “We are confident that the capital markets will recognise our operating successes and we are working hard to close the gap between the current market price and the inner value of the share. We enjoy the trust of our core shareholders, Erste Group and Vienna Insurance Group, and with the numerous analysts’ buy recommendations we are optimistic about our future in the capital markets as well.”
Vigorous operating growth
“Year on year, all major indicators we use to measure our performance are up: rental income, operating profit and the inner value of our share have all risen. And our successful property sales – all at above the most recent valuations – underline the quality of our portfolio,” Ernst Vejdovszky, Member of Sparkassen Immobilien AG’s Management Board, summarising the stable performance of the Company.
Rental income of EUR 75.5m for the first nine months was up 13.4% compared with the EUR 66.6m posted for the same period last year. The excellent performance of the European hotel market had a positive effect on Sparkassen Immobilien AG’s revenues from hotel operations, which rose by 3.7% to EUR 27.1m for the first three quarters of 2010 (Q3 2009: EUR 26.1m).
Between January and September 2010 Sparkassen Immobilien AG sold a total of seven properties: six were residential properties in Vienna and Berlin, and one was an office building in Vienna. All of the disposals were at prices higher than the most recent valuations. Within the Neutor 1010 project, 27 of the 34 luxury apartments have been successfully sold at top prices. Proceeds from the successful sales amounted to EUR 81.2m, generating gains on disposal amounting to EUR 6.8m. Writedowns on property valuations for the first three quarters of 2010 amounted to EUR 2.2m, compared with writedowns of EUR 96.5m for the same period last year.
Steady improvement in all major indicators
EBITDA of EUR 55.0m for the first three quarters was up a satisfactory 11.4% compared with the EUR 49.4m reported for the same period last year. Operating performance (EBIT) improved significantly from a loss of EUR 54.1m in the first nine months of 2009 to a EUR 45.5m profit this year. Higher borrowings meant that net financial expense rose from EUR 30.8m to EUR 32.9m. Profit before tax (EBT) of EUR 4.5m for the first three quarters was significantly better than the losses of EUR 73.5m for the same period last year. The net profit for the period amounted to EUR 1.3m compared with losses of EUR 71.6m for the first three quarters of last year.
Funds from operations (FFO) climbed to EUR 14.5m, almost double the EUR 7.7m achieved in the first nine months of 2009. As a result of the increased rental income, net operating income (NOI) was 5.6% higher at EUR 57.5m (Q3 2009: EUR 54.4m).
Operating cash flows for the first quarter of 2010 were EUR 15.3m and for the first half EUR 33.2m. By the end of the third quarter they had reached EUR 46.8m. EPRA NAV, the inner value of the share, rose once again in the third quarter, to EUR 8.27 per share (31 December 2009: EUR 8.13 per share).
Top quality property portfolio
Sparkassen Immobilien AG’s property portfolio at 30 September 2010 comprised 249 properties with a market value of EUR 1,850.8m (31 December 2009: EUR 1,900.8m). The properties were 31.1% office space, 30.3% retail space, 25.1% residential space and 13.5% hotels. At 30.2% and 24.8% respectively, the properties in Germany and Austria made up the largest part of the portfolio. The properties in SEE (Bulgaria, Romania and Croatia) made up 23.9%, while CEE (the Czech Republic, Slovakia and Hungary) constituted 21.1%.
The German part of Sparkassen Immobilien AG’s portfolio is located mainly in Berlin and Hamburg while properties in Austria, CEE and SEE are predominantly situated in the countries’ capitals. The occupancy rate is a stable 90%. The overall rental yield for the three quarters ended 30 September 2010 was a satisfying 6.7%.
Development projects completed on schedule
On 12 October 2010 Sparkassen Immobilien AG and Immorent AG opened their recently completed residential and office property, Neutor 1010. Situated in Vienna’s Inner City, the “Jewel in the City” provides a total of 11,000 m² of usable space, together with 133 underground parking places. The total investment amounted to around EUR 55m. Galvaniho 4 – an almost fully let six-floor office building in Bratislava with total space of
23,700 m² – was also completed on schedule in the autumn of 2010. The tenants include famous names such as Samsung, Oracle und Bosch-Siemens. The volume invested totalled some EUR 45m.
Economic recovery at varying speeds
The economic trends we noted in the first half year are largely unchanged in the last three months. The course of European post-crisis recovery differs from country to country – Austria, Germany and most of the CEE countries have successfully left recession behind them, while economic revival in Romania and Bulgaria has been markedly slower. Government measures there – such as raising VAT and cutting public sector wages and salaries – have seriously impacted domestic demand and purchasing power.
Basis of future growth assured
With the completion of its development projects under construction this year, Sparkassen Immobilien AG will have completed the bulk of its current capital investment. The successfully completed projects and the development land in EU capitals in Central and Eastern Europe are the basis of the Group’s further growth. A hotel and office complex, for example, is foreseen for Bucharest’s inner city Grivitei district, and planning permission has just recently been granted. Construction on individual projects can begin as soon as requirements are met and local market conditions permit.
In the coming quarters, Sparkassen Immobilien AG will concentrate on optimising the Group’s portfolio structure, while taking advantages of market opportunities as they arise. “Our current predictions are for continuing stable growth in Austria and Germany where market developments promise excellent opportunities, especially in the residential segment. But we are also investigating new projects and acquisitions. A well balanced portfolio and a corporate strategy geared towards sustainability ensure that Sparkassen Immobilien AG is excellently positioned for the future,” explains Friedrich Wachernig.
New S IMMO logo for stronger international market presence
The new S IMMO logo and the associated new market presence are designed to make the Group’s positioning more readily recognisable and to standardise it’s branding internationally. It should also help to communicate corporate values such as transparency and closeness to the customer to the outside world more clearly. Holger Schmidtmayr sums it up: “The new logo is shorter, more memorable, and more easily understood internationally. With the new logo we are merely adopting the familiar name that investors, analysts and journalists have always used for us – from now on, you`re encouraged to call us S IMMO.”
Consolidated income statement for the nine months ended 30 September 2010
EUR m / fair value basis
01 January – 30 September 2010
01 January – 30 September 2009 1
|Rental income|| |
|Revenues from service charges|| |
|Revenues from hotel operations|| |
|Other operating income|| |
|Expenses directly attributable to |
|Hotel operating expenses|| |
|Revenues less directly |
|Income from property disposals|| |
|Carrying values of property disposals|| |
|Gains on property disposals|| |
|Management expenses|| |
|Earnings before interest, tax, |
depreciation and amortisation (EBITDA)
|Depreciation and amortisation|| |
|Losses on property valuation|| |
|Operating result (EBIT)|| |
|Finance costs|| |
|Participating certificates result|| |
|Net income before taxes (EBT)|| |
|Taxes on income|| |
|Net income / (loss) for the period|| |
| of which attributable to shareholders |
in parent company
|of which attributable to minority interests|| |
|Earnings per share (EUR)|| |
30 September 2010
Total usable space
Number of plots