Vienna (pta011/08.04.2021/07:30) - *
Results from property valuation at plus EUR 39.1m
* Rental income improved by 3.3% to EUR 123.3m
* EPRA NAV per share at EUR 24.32 as of 31 December 2020
The listed real estate investment company S IMMO AG generated a profit of EUR 56.9m for the financial year 2020, closing the year well in the black despite the COVID-19 crisis. Bruno Ettenauer, new CEO of S IMMO AG since 15 March 2021, added: "Over the past year and with the reported results, S IMMO again demonstrated how robust its business model is. The diversified portfolio combined with a healthy liquidity base and a team of national and international experts form a solid foundation for continued success. The existing portfolio is a source of regular income, selected acquisitions and project developments facilitate growth, and the land bank offers great potential for the future. We intend to continue on this course."
Friedrich Wachernig, Member of S IMMO AG's Management Board, noted: "The year 2020 was certainly one of the most challenging periods that I have experienced in my time on the Management Board of S IMMO. But we had effective responses to these challenges and can look back on a very successful year despite the difficult circumstances. We saw clearly positive results from property valuation of EUR 39.1m, and also saw a 3.3% year-on-year increase in rental income due to acquisitions and the prudent management of our portfolio properties."
Increased rental income, decline in hotel income due to COVID-19
The rental income for the 2020 financial year totalled EUR 123.3m and was 3.3% higher than the prior-year level of EUR 119.4m. In the midst of the crisis and the related rental losses, this increase can be attributed to the diversified portfolio, prudent management of the portfolio properties, and property acquisitions.
Property management expenses rose by around 9.5% to EUR 66.8m (2019: EUR 61.0m) as a result of effects from acquisitions as well as due to an increase in write-downs and impairment charges on trade receivables in the amount of EUR -4.4m (2019: EUR -0.5m) that were made necessary by the pandemic. The lower occupancy levels during the pandemic were also used to complete maintenance work, which pushed maintenance expenses from EUR 14.7m to EUR 17.0m.
The decline in income from hotel operations (income from the Vienna Marriott Hotel and Budapest Marriott Hotel, which are operated under management agreements) that resulted from the pandemic was significantly compensated by the reduction in expenses from hotel operations, so that the gross profit from hotel operations of minus EUR 0.3m was almost at break-even (2019: EUR 16.9m). The gross profit, which includes the operating performance of the rented properties and of the owner-operated hotels, retreated to EUR 91.5m. (2019: EUR 109.7m). The gross profit without owner-operated hotels was nearly unchanged in annual comparison and came to EUR 91.9m (2019: EUR 92.9m).
Real estate investments
Considerably more acquisitions were conducted than disposals in the 2020 financial year, as was the case in the previous year. In addition to the continuation of purchases in the Germany segment, an office property in Zagreb and a property in Bratislava were also added to the portfolio. The disposals totalled EUR 46.9m (2019: EUR 58.8m) and were thus well below the average value for the last five years.
Reduction in administrative costs, property valuation gains
Administrative costs declined from EUR 22.7m in the 2019 financial year to EUR 20.4m. This further mitigated the impact of the pandemic on EBITDA. EBITDA came to EUR 71.1m at the end of the year (2019: EUR 87.0m).
The results from property valuation were clearly positive at EUR 39.1m (2019: EUR 192.7m) despite the COVID-19 pandemic, but also reflect the uncertainty surrounding the crisis. Germany accounted for EUR 52.7m (2019: EUR 122.1m) of this, Austria for EUR 8.7m (2019: EUR 29.5m) and CEE for minus EUR 22.3m (2019: EUR 41.1m). The value declines in the CEE segment stemmed primarily from hotel and retail properties.
Overall, EBIT remained above the 100-million mark, coming in at EUR 101.0m (2019: EUR 271.4m). The financial result amounted to minus EUR 29.4m (2019: minus EUR 20.0m) and was driven by lower dividend earnings because no dividend was distributed by IMMOFINANZ AG, a reduction in the result from companies measured at equity, lower expenses for bonds, and positive year-on-year effects from derivative valuations.
Earnings per share
S IMMO's profit for the pandemic year 2020 was clearly positive at EUR 56.9m (2019: EUR 213.3m), but declined substantially in comparison to the exceptionally strong previous year above all due to lower property valuation effects. The earnings per share also retreated accordingly to EUR 0.79 (2019: EUR 3.21).
The S IMMO share was unable to escape the effects of the market distortions and suffered substantial losses at times before moving sideways for the most part into autumn 2020. Despite a strong fourth quarter in which increased interest in the share allowed the price to make up lost ground, the S IMMO share closed the year at EUR 16.96, which equates to a decline of 23.95%. This loss is roughly equivalent to that of the IATX, which represents the Austrian real estate shares.
Outlook for 2021
The first quarter of 2021 was again dominated by the COVID-19 pandemic. Based on current developments, S IMMO anticipates that the conditions will improve gradually starting in the summer. Bruno Ettenauer, CEO of S IMMO AG, noted: "We are confident that the efforts to overcome the COVID-19 pandemic will lead to clear improvements in the economic conditions in the near future, and that this will bring a corresponding upturn on the capital markets. Our investment activities will continue to focus on Germany and CEE. We currently have around 2.5 million square meters in property reserves among over 30 individual sites in the Berlin commuter belt. And we are continuing to evaluate investment opportunities in up-and-coming German cities and in capitals in CEE. We are currently working on an office development in Budapest."
Consolidated income statement for the period 01 January 2020 to 31 December 2020
in EUR millions / fair value method
|thereof rental income||123.3||119.4|
|thereof revenues from operating costs||32.9||32.0|
|thereof revenues from hotel operations||17.8||59.1|
|Other operating income||2.5||2.5|
|Property operating expenses||-66.8||-61.0|
|Hotel operating expenses||-18.1||-42.3|
|Income from property disposals||46.9||58.8|
|Book value of property disposals||-46.9||-58.8|
|Results from property disposals||0||0|
|Depreciation and amortisation||-9.2||-8.3|
|Results from property valuation||39.1||192.7|
|Operating income (EBIT)||101.0||271.4|
|Net income before tax (EBT)||71.6||251.4|
|Taxes on income||-14.7||-38.1|
|Consolidated net income||56.9||213.3|
|thereof attributable to shareholders in parent company||56.5||212.8|
|thereof attributable to non-controlling interests||0.4||0.5|
|Earnings per share (in EUR)||0.79||3.21|