Conwert Announces Strong Growth in Revenues in the First Quarter of 2011

Published: May 20, 2011; 10:32 · (Vindobona)

The Vienna-based real estate company records a good business development and a 24% increase in EBIT.

Conwert Announces Strong Growth in Revenues in the First Quarter of 2011 / Picture: © Vindobona.org

conwert Immobilien Invest SE, which is listed on the Vienna Stock Exchange, reported strong operating growth in the first quarter of 2011. In comparison to the prior-year reference quarter, revenues increased by 37% to € 126.8m, earnings before interest and taxes improved by 24% to € 27.6m, and earnings before interest, taxes, depreciation and amortization rose by 21% to € 30.2m. In the sales business, attractive prices and a profit margin of more than 11% were realized. Proceeds on the sale of properties were 44% higher than in the comparable prior-year quarter. FFO (including sales) amounted to € 14.9m after € 13.0m in the prior year reference period.

The property assets of conwert totaled € 3,197.2m as of 31 March 2011 (versus € 2,533.2m in Q1/2010). Overall, conwert owned 1,790 objects at 31 March 2011, 21 less than at 31 December 2010, which was due to increased sales activities.

At 31 March 2011, the company’s equity amounted to € 1,351.6m and was € 21.5m higher than at the end of 2010 (€ 1,330.1m). The equity ratio rose to 38.4% (12/2010: 37.5%). Cash and cash equivalents equaled € 80.5m at the end of the period, thus significantly exceeding the figure of € 66.2m at year-end 2010. Net assets per share (book value (NAV)/share) increased from € 15.56 at year-end 2010 to € 15.90. Therefore the current share price is roughly 28% below the NAV.

On a like-for-like basis, rental income rose by 4.17%, thus significantly exceeding the inflation rate. Net rental income (NRI) improved by 40% to € 32.4m, which corresponds to an improved NRI margin of 60%. At 31 March 2011, rental income amounted to € 53.9m, up 37% on the prior-year quarter (€ 39.2m). The average contractual rent amounted to € 6.41 at the end of the first quarter of 2011 (previous year: € 5.82). Thanks to strong demand for residential properties, the vacancy rate dropped from 17.3% in the first quarter of 2010 to 15.9%. Vacancies in the residential property portfolio fell significantly by 23% to 13.4% compared to the previous year.

Service revenues from third parties declined slightly by 6% to € 7.7m due to the takeover of the ECO portfolio. Adjusted to the commissions for the management of the ECO portfolio, service revenues increased by 10% year-on-year (from € 7.0m at 31 March 2010).

In the first quarter of 2011, conwert started to optimize the property portfolio and sold properties totaling € 65.3m. As a result, proceeds on the sale of properties were 44% higher than in the first quarter of 2010. The company is thus pursuing the new strategy, which in addition to sales in Austria and Eastern Europe provides for optimizing and strengthening business in Germany.

In Berlin conwert acquired a property portfolio containing a total of 1,689 residential and 160 retail units in sought-after locations in the western part of Berlin. The portfolio, which consists of 125,805 sqm, was acquired with an initial yield of 7.9% before vacancies. It is a value added portfolio with disproportionately high growth potential. To deploy the equity in the most efficient way, a joint-venture with an equity partner is intended while current negotiations are taking place.

Against the background of the good operating results in the first quarter of 2011, the planned further portfolio optimization and the positive outlook for the developments in the German and Austrian rental markets, conwert expects the earnings before interest and taxes to increase by 15% not considering fair value adjustments of the real estate portfolio. The improved earnings should be the basis for a dividend-payment on last year`s level. The NAV-growth should result in 2.5 – 3% increase without calculating any extraordinary evaluation effects.

The company forecasts organic growth in rental income of 4 to 5%. In the sales segment, conwert plans to part with 15% of the total portfolio realizing positive profit margins. Sales amounting to € 99.3m, which will have an effect on revenues of the second quarter, have already been concluded. Further sales transactions are currently in progress.

As of the newly implemented strategic orientation and in view of the good economic development, conwert expects a reduction of the vacancy rate in the residential property portfolio to less than 10% by the end of the year.

The increased focus on residential properties in Germany and Austria will be consistently implemented in the course of the year. The company will gradually sell commercial properties. Another focus will be the extended cooperation with institutional investors in Germany and Austria in the service business segment.

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