S Immo Records Profits Again

Published: November 25, 2010; 10:43 · (Vindobona)

Vienna-based Sparkassen Immobilien AG records a successful operating performance in the first three quarters of 2010 after the weak year 2009.

S Immo Records Profits Again / Picture: © S IMMO AG

Stock exchange listed Sparkassen Immobilien AG 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 has significantly outperformed the ATX and stood at € 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 € 5.53 on 24 November 2010 and the net asset value was some 33%.

Holger Schmidtmayer, 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.”

“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 € 75.5m for the first nine months was up 13.4% compared with the € 66.6m posted for the same period last year. The good 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 € 27.1m for the first three quarters of 2010 (Q3 2009: € 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 € 81.2m, generating gains on disposal amounting to € 6.8m. Writedowns on property valuations for the first three quarters of 2010 amounted to € 2.2m, compared with writedowns of € 96.5m for the same period last year.

EBITDA of € 55.0m for the first three quarters was up a satisfactory 11.4% compared with the € 49.4m reported for the same period last year. Operating performance (EBIT) improved significantly from a loss of € 54.1m in the first nine months of 2009 to a € 45.5m profit this year. Higher borrowings meant that net financial expense rose from € 30.8m to € 32.9m. Profit before tax (EBT) of € 4.5m for the first three quarters was significantly better than the losses of € 73.5m for the same period last year. The net profit for the period amounted to € 1.3m compared with losses of € 71.6m for the first three quarters of last year.

Funds from operations (FFO) climbed to € 14.5m, almost double the € 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 € 57.5m (Q3 2009: € 54.4m).

Operating cash flows for the first quarter of 2010 were € 15.3m and for the first half € 33.2m. By the end of the third quarter they had reached € 46.8m. EPRA NAV, the inner value of the share, rose once again in the third quarter, to € 8.27 per share (31 December 2009: € 8.13 per share).

Sparkassen Immobilien AG’s property portfolio at 30 September 2010 comprised 249 properties with a market value of € 1,850.8m (31 December 2009: € 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 %.

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 € 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 € 45m.

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.

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 Grivetei 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.

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.”

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