IMMOFINANZ reveals positive first quarter net profit

Rental income totaled 57.1 million euro for the reporting period, compared with 58.2 million euro in Q1 2016.
The slight decline of 1.9 percent resulted primarily from portfolio adjustments involving the retail sector in Austria. After an adjustment for new acquisitions, completions and sales (like-for-like), rental income rose by 3.7 percent to 49.7 million euro in the starting quarter of 2017. Results of operations equalled 17.8 million euro (Q1 2016: 57.2 million euro). The company indicated that its financial results improved substantially to 93.0 million euro (Q1 2016: -37.3 million euro), above all due to positive valuation effects from the investments in CA Immo and BUWOG.
The results of discontinued operations totaled -21.0 million euro (Q1 2016: -101.4 million euro) and represent the discontinued core market Russia. The rental income from Russia amounted to 22.2 million euro in the first quarter of 2017 (Q1 2016: 19.0 million euro), in particular due to a year-on-year improvement in the rouble exchange rate. Group net profit equalled 80.7 million euro for the reporting period (Q1 2016: -240.7 million euro).

“IMMOFINANZ again has grown stronger in recent months: the occupancy rate in our Group’s portfolio rose to nearly 92 percent, and our cost structures improved significantly – in both the financing and personnel areas. The refinancing arranged in January of this year will reduce our financing costs by more than 21.0 million euro annually over the medium-term. Our investment in CA Immo has also developed well in the past months, and this has had a positive effect on financial results. Our CA Immo shares are recorded on our books at 630.7 million euro based on a market-related valuation at the end of March, but – based on the EPRA NAV – were worth roughly 693.0 million euro. This represents a substantial increase over the original purchase price of 603.7 million euro,“ said Oliver Schumy, CEO of IMMOFINANZ. “Following the recent commercial court approval of the settlement to terminate the legal proceedings over the review of the exchange ratio applied to the 2010 merger of IMMOEAST and IMMOFINANZ, we have now also ended the last historical legal dispute at the shareholder level.”

Financing costs fell by 7.6 percent to -26.7 million euro, among others due to the interest savings which resulted from the incentivised conversion of 43.4 percent of the convertible bond 2018 (coupon: 4.25 percent) at the beginning of the year and the issue of the new convertible bond 2024 (coupon: 2.0 percent). Personnel expenses (excluding Russia) amounted to -9.3 million euro (Q1 2016: -11.5 million euro) and were reduced by more than 19.0 percent.

The occupancy rate in the IMMOFINANZ portfolio (excluding Russia) rose to 91.9 percent as of 31 March 2017 (31 December 2016: 89.6 percent). The occupancy rate in the office properties improved to 89.2 percent (31 December 2016: 87.3 percent) and, at 95.7 percent, the retail properties are essentially fully rented (31 December 2016: 93.0 percent). The occupancy rate in the Retail Moscow properties increased to 88.3 percent as of 31 March 2017 (31 December 2016: 87.7 percent).

The IMMOFINANZ properties in Romania represent 21.2 percent of the company’s total portfolio (excluding Russia), including 72 properties (17 standing investments, three developments, eight real estate inventories sapartments that are intended for sale after completiont and 44 pipeline projects) with a carrying amount of 845.4 million euro. The expected fair value after completion of the current Group’s development projects in Romania amounts to 71.5 million euro. During the first quarter of the 2017 financial year the occupancy rate of the Romanian portfolio increased to 96.5 percent (31 December 2016: 95.8 percent). At the end of the first quarter of the 2017 financial year, rental income in Romania totals 12.2 million euro, which accounts for 21.4 percent of the Group’s total rental income.

The company estimates that the separation of the Russian retail properties through sale or spin-off should be completed, as previously announced, by the end of 2017. The forecast remains intact for the factors underlying the medium-term growth in sustainable FFO 1 which were discussed during the presentation of results for 2016A. Plans call for the payment of a dividend for the 2017 financial year.