conwert Immobilien Invest SE: conwert at record high after nine months

Vienna (pta010/23.11.2016/08:10 UTC+1) -
+ FFO I up by 62.0% to a nine-month record of EUR 61.8 mn
+ Net earnings rise by 45.4% to EUR 99.7 mn
+ Sales in the non-core sector of more than EUR 500 mn expected for the full year
+ FFO I guidance for 2016 increased to around EUR 80 mn

conwert Immobilien Invest SE (conwert), traded on the Austrian ATX, has achieved record values for every relevant key indicator in the first nine months of 2016. FFO I (funds from operations before sales and one-off items), the most important operational indicator for conwert, underwent a rise of 62.0% against the previous year to EUR 61.8 mn (1-9/2015: EUR 38.1 mn). conwert improved its group earnings after tax (net profit) by 45.4% to EUR 99.7 mn (1-9/2015: EUR 68.6 mn). Revenues also grew by 18.1% to EUR 347.9 mn (1-9/2015: EUR 294.6 mn). This thriving development was driven by the ongoing strong operating performance, major progress in the sale of non-core assets, and fair value gains for the property portfolio.

CEO Wolfgang Beck expressed his satisfaction with the results: "The record figures for the first nine months show that we are making excellent progress with implementing our strategy. Proactive asset management has allowed us to increase our average rents and reduce vacancies. In terms of costs, we have achieved further savings in the operating business and with regard to financing. With the recent sale of a commercial property portfolio, we are also ahead of schedule in selling off our non-core properties, whereby we will significantly surpass our own sales targets for the full year. We expect 2016 to be a record-breaking year and we have raised our FFO I guidance to around EUR 80 mn".

Significant improvements in the operating business
conwert has continued to profit from a strong operating performance. In the residential core, vacancy rates fell by 4.5% yoy to 3.4%. On a like-for-like basis in the core portfolio, rental income underwent a rise of 2.7% against the previous year. These improvements led the Net Rental Result (NRR) of EUR 107.0 mn to broadly hold steady at the value of the previous year (1-9/2015: EUR 111.8 mn), despite the sales-related smaller property portfolio. The NRR margin rose to 66.8% (1-9/2015: 65.7%); on an adjusted basis it even increased to 89.5% (1-9/2015: 87.4%).

The operating success in asset management and fundamentally positive market growth led to net gains from the fair value changes in the property portfolio of EUR 112.7 mn (1-9/2015: EUR 57.0 mn). Earnings before interest and taxes (EBIT) climbed by 32.7% to EUR 189.6 mn (1-9/2015: EUR 142.9 mn).

The strong rise in revenues was driven by the consistent optimisation of the portfolio. In the period under review, conwert generated sales proceeds of EUR 182.2 mn (1-9/2015: EUR 118.9 mn). Of this total, EUR 166.7 mn (1-9/2015: EUR 97.5 mn) was from the non-core portfolio. Rental income slipped back slightly in the first nine months to EUR 160.3 mn (1-9/2015: EUR 170.2 mn) because of sales.

Balance-sheet structure significantly strengthened, liabilities reduced
In the first nine months of 2016 the balance-sheet structure and the financing terms were significantly strengthened. This led to a decrease in cash-effective financing costs from EUR (46.8) mn in the same period of the previous year to EUR (23.5) mn at present. The cash-effective interest rates fell sharply to stand at just 2.06% (1-9/2015: 3.55%). In contrast, the financial result was temporarily hampered by non-cash effects from the remaining swaps and totalled EUR (62.6) mn (1-9/2015: EUR (59.0) mn).

The loan to value (LTV) - debt in relation to property projects - underwent a further reduction and stood at 43.1% at 30 September 2016 (31/12/2015: 49.2%). The equity ratio rose sharply to 48.7% (31/12/2015: 43.7%). These positive developments in the balance-sheet structure were achieved by reducing borrowed-capital liabilities and by converting a convertible bond.

Outlook: record year expected
conwert will consistently continue with the optimisation of the portfolio management, enhancing potential in the rental business, and achieving further reductions in vacancies in the fourth quarter of 2016. In light of the sale of a large part of the commercial property portfolio in Austria and Germany that has already been agreed for the end of 2016, conwert assumes that the original guidance of EUR 300-350 mn in property sales from the non-core portfolio will be significantly exceeded, with sales revenue likely to surpass EUR 500 mn. Thanks to this strong operating performance, conwert expects a new record year and has specified the outlook in concrete terms: the guidance for FFO I (before sales and one-off items) has been increased from more than EUR 75 mn to around EUR 80 mn.

conwert is currently reviewing the takeover offer published by Vonovia on 17 November 2016 in accordance with takeover regulation. The Administrative Board is expected to issue its final recommendation on 1 December 2016.

The interim financial report 1-9/2016 of conwert Immobilien Invest SE is available on the website http://www.conwert.com.

Key performance indicators		1-9/2016	1-9/2015	Change	1-12/2015
Rental income	EUR mn	160.3	170.2	-5.8%	226.1
Proceeds from sale of properties	EUR mn	182.2	118.9	53.3%	272.6
Revenues from property services	EUR mn	5.4	5.5	-2.8%	7.7
Total revenue	EUR mn	347.9	294.6	18.1%	506.4
EBITDA	EUR mn	78.2	86.9	-10.0%	116.6
EBIT	EUR mn	189.6	142.9	32.7%	181.3
EBT	EUR mn	127.0	83.9	51.3%	100.7
Group earnings after tax 1)	EUR mn	99.7	68.6	45.4%	83.3
Funds from operations before sales income (FFO I) 2)	EUR mn	61.8	38.1	62.0%	53.4
Funds from operations after sales income (FFO II) 3)	EUR mn	60.6	43.4	39.6%	64.8
Net Rental Result (NRR)	EUR mn	107.0	111.8	-4.2%	148.8
NRR margin	%	66.8	65.7	1.1 pp	65.8
Adjusted NRR margin 4)	%	89.5	87.4	2.1 PP	87.2
Basic earnings per share 5)	EUR	1.00	0.77	29.5%	0.95
Diluted earnings per share 5)	EUR	0.94	0.69	37.3%	0.85
FFO I 2) per share 5)	EUR	0.67	0.46	45.5%	0.64
Financial result	EUR mn	(62.6)	(59.0)	6.2%	(80.6)

1) Retrospective adjustment of the equity breakdown to majority and minority shareholders due to the reallocation of a capital reserve according to IAS 8.41
2) FFO I: Earnings before tax (EBT) - difference between sales and carrying amount of sold properties + operating expensesof sales result -/+ revaluation result + depreciation and impairment + non-cash components of financial result and othernon-cash costs + one-off charges - cash taxes on rental business
3) FFO II: FFO I + difference between sales and carrying amount of sold properties - operating expenses of sales result
4) Adjusted NRR margin: margin on net rental income (rental income less running costs charged to tenants)
5) based on average number of shares outstanding, less treasury shares

Balance sheet indicators		30/09/2016	31/12/2015 restated 1)	Change
Total assets	EUR mn	2,917.7	2,886.1	1.1%
Non-current loans and borrowings	EUR mn	982.7	1,028.2	-4.4%
Current loans and borrowings	EUR mn	228.5	246.3	-7.2%
Equity	EUR mn	1,419.8	1,260.6	12.6%
Equity ratio	%	48.7	43.7	11.4%
Gearing	%	62.2	107.8	-42.3%
Basic EPRA NAV per share	EUR	15.92	15.61	1.9%

1) Retrospective adjustment of the equity breakdown to majority and minority shareholders due to the reallocation of a capital reserve according to IAS 8.41

Property portfolio		30/09/2016	30/09/2015	Change	31/12/2015
Rental units	No.	27,902	29,663	-5.9%	27,494
Parking spaces	No.	10,654	12,346	-13.7%	11,386
Total usable space	sqm	2,140	2,338	-8.4%	2,175,867
Property assets	EUR mn	2,752.9	2,802.2	-1.8%	2,692.3
Vacancy rate	%	6.7	8.7	-22.6%	6.6
ø Rent	EUR/sqm/m	6.37	6.39	-0.4%	6.42
Like-for-like rental growth
(% yoy)	%	0.3	1.4	-78.6%	1.4

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