BUWOG (BWO): Results of the first nine month 2015/16 - raport 8
UNI - EN REPORT No8/2016
BUWOG AG: Results for the first nine months of 2015/16
• Results of operations: EUR 112.7 million
• Recurring FFO: EUR 66.0 million
• Net profit: EUR 163.5 million
• EPRA Net Asset Value per share rises to EUR 19.21
• Increased focus on Property Development through successful land purchases and expansion of over 40% in the development pipeline
• Recurring FFO: forecast of EUR 98 million to 100 million in 2015/16 confirmed
BUWOG AG continued its solid operating development during the first nine months of 2015/16 and, at the same time, expanded its development pipeline by over 40% to a total investment volume of approx. EUR 1.9 billion, or roughly 6,500 units, through the purchase of additional land reserves. The standing investment portfolio of the BUWOG Group included 51,340 units with approx. 3.6 million sqm of total floor area and a fair value of approx. EUR 3.7 billion at the end of the reporting period on 31 January 2016.
Net in-place rent amounted to EUR 148.5 million in the first three quarters of 2015/16, for an increase of 10.1% over the EUR 134.9 million recorded in the comparable prior period. The results of operations totalled EUR 112.7 million as of 31 January 2016 (9M 2014/15: EUR 117.4 million). Earnings before tax (EBT) equalled EUR 207.2 million and net profit EUR 163.5 million for the nine-month reporting period.
The main indicator used to evaluate the development of BUWOG’s operating business – Recurring FFO – equalled EUR 66.0 million for the reporting period (9M 2014/15: EUR 71.3 million). The year-on-year decline was influenced by the results from Property Development, which were lower as of the balance sheet date. In this business area, the BUWOG Group expects a strong improvement in operating results during the final quarter of the current financial year due to the planned completion of projects in Berlin and Vienna.
Based on the company’s steady and solid operating development and the expected fourth quarter contribution of the Property Development business area to results of operations, the Executive Board of the BUWOG Group confirms its forecast for Recurring FFO of EUR 98 million to EUR 100 million in 2015/16.
The favourable business and market trends were also reflected in the positive development of EPRA NAV per share, which rose to EUR 19.21 as of 31 January 2016 (30 April 2015: EUR 17.79). As in the previous financial year, the company met its most important earnings and asset targets during the reporting period from 1 May 2015 to 31 January 2016 due to its broad operating base and fully integrated business model.
Daniel Riedl, CEO of BUWOG AG, commented: “Results for the first nine months of 2015/16 confirm the continuation of the BUWOG Group’s successful course and the creation of a solid foundation to reach the strategic goals announced at the initial listing in April 2014. In addition to continuous work on our property portfolio, our activities during the past months were focused, above all, on the expansion of our development pipeline. That will give us an added earnings potential for the future, also in a market phase where the price level has made the expansion of the portfolio through large property acquisitions much more difficult. In this way, we can combine BUWOG‘s further growth with the constant solidity of our core operating business.“
Asset Management, which forms the core of the BUWOG Group’s business model, generated results of operations totalling EUR 103.4 million during the reporting period. That represents a year-on-year increase of 8.2%. Operating results in the Property Sales and Property Development business areas amounted to EUR 27.3 million and EUR –0.2 million, respectively. The development of earnings in the Property Development business area is, naturally, much more cyclical than in Asset Management with its focus on the standing investment portfolio. The year-on-year earnings decline was influenced by a high-margin project sale prior to completion in 2014/15 (approx. EUR 6 million) as well as a high number of expected completions during the fourth quarter of the current financial year combined with initial start-up costs for future projects.
The BUWOG Group has intensified its focus on the Property Development business area since the start of the current financial year. The development pipeline was expanded by roughly 55%, in particular through the purchase of land reserves in Berlin, with the investments in new residential construction rising by EUR 720 million to approx. EUR 2.1 billion to date. A total of 787 units in Vienna and 479 in Berlin were under construction as of 31 January 2016, for a year-on-year increase of approx. 83%.
The quarterly valuation of the BUWOG Group’s property portfolio as of 31 January 2016 led to revaluation results of EUR 153.4 million, which reflect the ongoing very positive development of the transaction and rental markets.
Financial results equalled EUR -45.5 million for the reporting period and were influenced primarily by cash interest expense of EUR -33.2 million.
The average interest rate for the financial liabilities equalled 2.14% as of 31 January 2016 and is very low in peer group comparison, especially in view of the long average maturity of 16 years and average interest commitment period of roughly 14 years. The loan-to-value ratio, which equalled 48.2% as of 31 January 2016, documents the conservative balance sheet structure of the BUWOG Group.
Andreas Segal, Deputy CEO and CFO der BUWOG AG, explained: “The success of the BUWOG Group’s three pillar model is evident, especially in a market phase where continuous growth cannot be expected through the acquisition of large portfolios. Our business model supports the generation of high increasing income from the management of our standing investment portfolio, but also allows us to make use of the opportunities that arise in the areas of Property Sales and Property Development. With this combination of operating strengths, a very conservative financing structure and low external financing costs, the BUWOG Group offers the capital market both reliability and growth potential.“
Detailed information is provided on the Report on the First Three Quarters of 2015/16, which is available for download under https://www.buwog.com/en/investor-relations/financial-reports
About BUWOG Group
BUWOG Group is the leading German-Austrian full-service provider in the residential property business and now looks back on 65 years of expertise. The company‘s property portfolio covers roughly 51,300 units which are distributed equally between Austria and Germany. The entire value chain in the residential sector is covered by BUWOG’s activities in the areas of Asset Management (sustainable portfolio management and administration), Property Sales (profitable sale of individual apartments and portfolios) and Property Development (planning and construction of new buildings with a focus on Vienna and Berlin). The BUWOG share has been listed on the stock exchanges in Frankfurt and Main, Vienna and Warsaw since the end of April 2014.
