Immofinanz recorded, in 2019, a clear improvement of 18.1 percent in rental income and 30.2 percent in FFO 1 from the standing investment business underscore the profitable growth of the portfolio to approximately EUR 5.1 billion.
Net profit rose by 61.9 percent to EUR 352.1 million and goes hand in hand with a solid financial position: Cash and cash equivalents total EUR 345.1 million. In order to strengthen this very good cash position, an unsecured revolving credit facility of EUR 100 million was concluded at the end of March 2020.
“The 2019 financial year marks a milestone in our company’s history. The occupancy rate in our properties continued to improve – from an already high level – and set a new record at 96.8 percent. This is a direct result of our clear brand policy with innovative office and retail solutions. Our net profit rose by more than 60 percent and, at EUR 352.1 million, reached the highest level recorded in many years. Through profitable property acquisitions and the completion of construction projects, our portfolio grew by nearly EUR 1 billion to EUR 5.1 billion in 2019 – which confirms that Immofinanz has now reached a relevant size as a player in the European real estate sector“, explained Dietmar Reindl, COO of Immofinanz. “All these factors confirm that Immofinanz is well-prepared to deal with the current challenges presented by the corona crisis and the related slowdown in global growth.“
The results of asset management improved by 19.1 percent to EUR 207.3 million (2018: EUR 174.0 million). The results of property sales amounted to EUR -5.1 million, in comparison with the previous year which included a substantial positive effect from the recycling of accumulated historical foreign exchange differences to the income statement (2018: EUR 27.2 million).
The results of property development totalled EUR -12.4 million (2018: EUR -4.3 million) and were influenced, among others, by higher construction costs for development projects and expenses for real estate inventories. Results from the revaluation of investment property and goodwill increased significantly to EUR 195.7 million (2018: EUR 6.0 million). This improvement was supported, above all, by the sound market development in Germany and Austria as well as positive trends on the other Immofinanz core markets in the CEE region. As a consequence, the operating profit (EBIT) more than doubled to EUR 345.6 million (2018: EUR 159.1 million).
Financing costs amounted to EUR -64.6 million and were 5.6 percent lower than the previous year (2018: EUR -68.4 million) in spite of the higher financing volume that resulted from property acquisitions. The share of profit/loss from equity-accounted investments amounted to EUR 78.4 million (2018: EUR 108.2 million). The S IMMO investment represented the main component in 2019 (EUR 76.9 million). Financial results were again positive and amounted to EUR 4.5 million (2018: EUR 44.2 million).
Net profit rose by 61.9 percent to EUR 352.1 million in 2019 (2018: EUR 217.5 million). Basic earnings per share equalled EUR 3.37 (2018: EUR 1.97) and diluted earnings per share EUR 3.03 (2018: EUR 1.80).
The development of sustainable funds from operations, an important profitability indicator for the real estate branch, underscores Immofinanz stronger earning power. FFO 1 from the standing investment business (before tax and including the dividend from S IMMO) rose by 30.2 percent to EUR 137.4 million (2018: EUR 105.6 million). With these results, Immofinanz exceeded the increased guidance for FFO 1 announced in August 2019 – which was set at more than EUR 128.0 million. FFO 1 per share (before tax) increased by 34.4 percent to EUR 1.29 (2018: EUR 0.96).
Record occupancy level
The real estate portfolio included 213 properties with a combined carrying amount of approximately EUR 5.1 billion as of 31 December 2019. Most of these properties – 92.7 percent or EUR 4.7 billion – are standing investments. Acquisitions and completions led to an increase of more than EUR 1.0 billion or 27.7 percent in the standing investment portfolio during the past year.
The occupancy rate reached a record level of 96.8 percent (31 December 2018: 95.8 percent). The gross return equalled 6.2 percent based on IFRS rental income and 6.5 percent based on invoiced rents.
Robust balance sheet indicators
Immofinanz has a robust balance sheet structure with an equity ratio of 46 percent (31 December 2018: 48 percent). Cash and cash equivalents totalled EUR 345.1 million (31 December 2018: EUR 632 million). The decline since the beginning of the year is attributable, among others, to the share buyback programme 2018/19 which was concluded in August 2019 and to the acquisition of several standing investments which include the Warsaw Spire and Palmovka Open Park office buildings.
The net-loan-to-value equalled 43 percent (12/2018: 37.3 percent) and was below the target value of roughly 45 percent. Average financing costs declined further to 1.91 percent per year including derivatives (31 December 2018: 2.14 percent). The hedging quota increased to 90.7 percent (31 December 2018: 73.8 percent), and the unencumbered asset pool (investment property and S IMMO shares) totalled EUR 1.9 billion or 33.8% (31 December 2018: EUR 749 million or 15.6 percent).
“The continuously changing developments make it impossible to estimate the full impact of the pandemic at the present time. However, we are taking all steps possible to minimise the potential negative effects on the group. We have already implemented cost reductions and postponed non-critical investments to later years. And we are in close contact with our tenants to find fair solutions“, indicated Stefan Schönauer, CFO of Immofinanz. “Covid-19 has created real headwinds for the global economy and our markets, but due to our operating performance and our solid liquidity position and financing structure, we are well-positioned for this phase.“