19.03.2014
IMMOFINANZ Group with increase in net profit – Five-year sales programme completed earlier than planned
KEY FIGURES (in MEUR) // 1 May 2013 - 31 January 2014 // Δ in % // 1 May 2012 - 31 January 2013
Rental income // 468.3 // -5.0% // 492.9
Results of asset management // 376.8 // -4.1% // 392.9
Results of property sales // 26.0 // -56.4% // 59.6
Results of property development // 11.6 // n.a. // -6.5
Expenses not directly attributable // -70.6 // -12.2% // -80.3
Results of operations // 358.7 // -7.2% // 386.3
Operating profit (EBIT) // 486.0 // 8.4% // 448.4
Net profit for the period // 225.8 // 7.1% // 210.8
Gross cash flow // 281.8 // -10.6% // 315.3
Sustainable cash flow (FFO) // 171.8 // -31.2% // 249.7
IMMOFINANZ Group recorded net profit of EUR 225.8 million in the first three quarters of 2013/14, for a year-on-year increase of 7.1%. Results of operations declined slightly due to numerous property sales and the delayed completion of the GOODZONE shopping center in Moscow.
Rental income was slightly lower year-on-year at EUR 468.3 million for the reporting period (Q1-3 2012/13: EUR 492.9 million). The results of property sales amounted to EUR 26.0 million (Q1-3 2012/13: EUR 59.6 million). The results of property development improved from EUR -6.5 million to EUR 11.6 million. Property sales during the first three quarters of 2013/14 led to a 7.2% decline in the results of operations to EUR 358.7 million (Q1-3 2012/13: EUR 386.3 million). However, the offsetting effects from the parallel reinvestment of the proceeds will only be realized in the 2014/15 financial year due to the delayed completion of the GOODZONE shopping center in Moscow.
“We sold properties with a value of EUR 863.1 million during the first three quarters of 2013/14. With these results, we met the target for the five-year, EUR 2.5 billion sales programme that was launched in 2010/11 – as expected – earlier than planned“, indicated Eduard Zehetner, CEO of IMMOFINANZ Group. Property sales from May 2010 to January 2014 totalled EUR 2.52 billion. “In the transaction area, IMMOFINANZ Group wants to maintain this speed for property sales in the future. We recently sold two office buildings for nearly EUR 29 million and above the book value: the Airport Office III in Düsseldorf and the Arbes in Prague. In both cases, the buyers were institutional investors“, added Zehetner.
In addition to sound operating development, positive effects from foreign currency translation and the valuation of derivatives were also responsible for the increase in net profit to EUR 225.8 million (Q1-3 2012/13: EUR 210.8 million). Gross cash flow fell from EUR 315.3 million in the comparable prior year period to EUR 281.8 million. This decline resulted mainly from an increase in taxes to EUR 28.6 million based on the property sales (Q1-3 2012/13: EUR 10.3 million) and a temporary increase in input VAT credits.
OUTLOOK:
The market recovery – above all on the stock exchanges – has been negatively influenced by the Crimean crisis. The extent of a potential effect on the commercial development of our target markets, above all Russia, cannot be estimated at the present time. “Although the weak Ruble has a short-term positive effect on results through the valuation of our properties, it represents a negative factor for the development of our business in Russia over the medium- and long-term. The rental income on our Russian retail portfolio is principally coupled to the Euro or US Dollar, and a change in the Rubel exchange rate therefore has no direct influence on our results from asset management. However, as the owner of shopping centers, we are dependent on the economic success of our tenants. A continuing decline in the value of the Rubel could lead to pressure on some of these tenants“, commented CEO Eduard Zehetner.
In the past, IMMOFINANZ Group has always handled exchange rate situations successfully and avoided any material economic damage. For example: IMMOFINANZ concluded special short-term arrangements with a number of tenants during the 2008/09 financial crisis as a means of reducing foreign exchange effects. That is also a possible scenario in the current situation.
“We do not believe that the so-called ‘sanctions’ implemented by various parties to date are capable of negatively influencing the Russian economy or the flow of goods and capital“, added Zehetner.
“Our Russian properties are financed in US Dollars and solely through Russian banks (Sberbank of Russia) or the Russian subsidiaries of international banks (e.g. Rosbank, Nordea). These loans have long remaining terms, with the respective property serving as collateral. Sufficient longterm financing is also available for our newly developed properties, such as the recently completed GOODZONE shopping center“, explained CFO Birgit Noggler.
I
MMOFINANZ Group expects further growth in the value of the company during the 2013/14 financial year. This development will be supported by the further optimisation of the portfolio, the continuation of the extremely successful sales programme and the intensification of development activities with a focus on Germany, Poland, Russia and Romania.
After the BUWOG spin-off, IMMOFINANZ will have a sharpened profile as a specialist for office, retail and logistics properties in Central and Eastern Europe, including Russia. This will underscore the Group’s leading position in these segments by portfolio volume and market capitalisation. The BUWOG spin-off will also lead to an improvement in key operating and financial indicators and significantly reduce the complexity of IMMOFINANZ Group’s structure. The future orientation will also create better opportunities for strategic transactions. In the operating business, IMMOFINANZ Group will continue to focus on the real estate machine – and on the optimisation of profitability along the entire value chain.
The report on the third quarter of IMMOFINANZ AG as of 31 January 2014 can be reviewed on the company’s website under
Rental income // 468.3 // -5.0% // 492.9
Results of asset management // 376.8 // -4.1% // 392.9
Results of property sales // 26.0 // -56.4% // 59.6
Results of property development // 11.6 // n.a. // -6.5
Expenses not directly attributable // -70.6 // -12.2% // -80.3
Results of operations // 358.7 // -7.2% // 386.3
Operating profit (EBIT) // 486.0 // 8.4% // 448.4
Net profit for the period // 225.8 // 7.1% // 210.8
Gross cash flow // 281.8 // -10.6% // 315.3
Sustainable cash flow (FFO) // 171.8 // -31.2% // 249.7
IMMOFINANZ Group recorded net profit of EUR 225.8 million in the first three quarters of 2013/14, for a year-on-year increase of 7.1%. Results of operations declined slightly due to numerous property sales and the delayed completion of the GOODZONE shopping center in Moscow.
Rental income was slightly lower year-on-year at EUR 468.3 million for the reporting period (Q1-3 2012/13: EUR 492.9 million). The results of property sales amounted to EUR 26.0 million (Q1-3 2012/13: EUR 59.6 million). The results of property development improved from EUR -6.5 million to EUR 11.6 million. Property sales during the first three quarters of 2013/14 led to a 7.2% decline in the results of operations to EUR 358.7 million (Q1-3 2012/13: EUR 386.3 million). However, the offsetting effects from the parallel reinvestment of the proceeds will only be realized in the 2014/15 financial year due to the delayed completion of the GOODZONE shopping center in Moscow.
“We sold properties with a value of EUR 863.1 million during the first three quarters of 2013/14. With these results, we met the target for the five-year, EUR 2.5 billion sales programme that was launched in 2010/11 – as expected – earlier than planned“, indicated Eduard Zehetner, CEO of IMMOFINANZ Group. Property sales from May 2010 to January 2014 totalled EUR 2.52 billion. “In the transaction area, IMMOFINANZ Group wants to maintain this speed for property sales in the future. We recently sold two office buildings for nearly EUR 29 million and above the book value: the Airport Office III in Düsseldorf and the Arbes in Prague. In both cases, the buyers were institutional investors“, added Zehetner.
In addition to sound operating development, positive effects from foreign currency translation and the valuation of derivatives were also responsible for the increase in net profit to EUR 225.8 million (Q1-3 2012/13: EUR 210.8 million). Gross cash flow fell from EUR 315.3 million in the comparable prior year period to EUR 281.8 million. This decline resulted mainly from an increase in taxes to EUR 28.6 million based on the property sales (Q1-3 2012/13: EUR 10.3 million) and a temporary increase in input VAT credits.
OUTLOOK:
The market recovery – above all on the stock exchanges – has been negatively influenced by the Crimean crisis. The extent of a potential effect on the commercial development of our target markets, above all Russia, cannot be estimated at the present time. “Although the weak Ruble has a short-term positive effect on results through the valuation of our properties, it represents a negative factor for the development of our business in Russia over the medium- and long-term. The rental income on our Russian retail portfolio is principally coupled to the Euro or US Dollar, and a change in the Rubel exchange rate therefore has no direct influence on our results from asset management. However, as the owner of shopping centers, we are dependent on the economic success of our tenants. A continuing decline in the value of the Rubel could lead to pressure on some of these tenants“, commented CEO Eduard Zehetner.
In the past, IMMOFINANZ Group has always handled exchange rate situations successfully and avoided any material economic damage. For example: IMMOFINANZ concluded special short-term arrangements with a number of tenants during the 2008/09 financial crisis as a means of reducing foreign exchange effects. That is also a possible scenario in the current situation.
“We do not believe that the so-called ‘sanctions’ implemented by various parties to date are capable of negatively influencing the Russian economy or the flow of goods and capital“, added Zehetner.
“Our Russian properties are financed in US Dollars and solely through Russian banks (Sberbank of Russia) or the Russian subsidiaries of international banks (e.g. Rosbank, Nordea). These loans have long remaining terms, with the respective property serving as collateral. Sufficient longterm financing is also available for our newly developed properties, such as the recently completed GOODZONE shopping center“, explained CFO Birgit Noggler.
I
MMOFINANZ Group expects further growth in the value of the company during the 2013/14 financial year. This development will be supported by the further optimisation of the portfolio, the continuation of the extremely successful sales programme and the intensification of development activities with a focus on Germany, Poland, Russia and Romania.
After the BUWOG spin-off, IMMOFINANZ will have a sharpened profile as a specialist for office, retail and logistics properties in Central and Eastern Europe, including Russia. This will underscore the Group’s leading position in these segments by portfolio volume and market capitalisation. The BUWOG spin-off will also lead to an improvement in key operating and financial indicators and significantly reduce the complexity of IMMOFINANZ Group’s structure. The future orientation will also create better opportunities for strategic transactions. In the operating business, IMMOFINANZ Group will continue to focus on the real estate machine – and on the optimisation of profitability along the entire value chain.
The report on the third quarter of IMMOFINANZ AG as of 31 January 2014 can be reviewed on the company’s website under
IMMOFINANZ – a publicly listed European commercial real estate group with focus on two asset classes: Office and retail in eight core markets.