BUWOG (BWO): BUWOG AG: Results of the first nine month of 2016/17 - raport 5

UNI - EN REPORT No5/2017

• Year-on-year increase of 13.7% in Recurring FFO to EUR 85.4 million

• Fair value adjustments of EUR 277.2 million leads to Gross Rental Yield of 5.2%

• Improvement of 13.3% in EPRA net asset value per share to EUR 22.86 since 30 April 2016

• Reduction of average interest rate on financial liabilities to 1.76% – with an LTV of 44.7%

• Increase to approx. EUR 4.0 billion in fair value of standing investments

• Successful expansion of property development pipeline to over 10,500 units with a total investment volume of EUR 3.1 billion


• Forecast for Recurring FFO remains unchanged at a minimum of EUR 108 million in 2016/17

BUWOG AG continued its successful development during the third quarter of the 2016/17 financial year. This trend is confirmed by nine-month results, which were announced by the company today and again underscore the sustainability of its strategic approach. While in the Asset Management business area results were increased by 1.5%, the Property Sales business area recorded a significantly higher net operating income by 41.0%. At the same time activities in the Development business area were intensified. The purchase of new land plots during the reporting period further expanded BUWOG’s development pipeline, which now covers more than 10,500 units with a total investment volume of approx. EUR 3.1 billion and creates a significantly broader foundation for continued organic growth. Recurring FFO, which represents the Group’s central management benchmark, rose by 13.7% year-on-year to EUR 85.4 million. EPRA NAV (net assets per share as defined by the EPRA valuation guidelines) equalled EUR 22.86 as of 31 January 2017, which represents an increase of 13.3% since 30 April 2016, the end of the previous financial year (EUR 20.18).

“At the end of the first nine months, we are on target to meet our goals for the current financial year and can reconfirm our forecast for Recurring FFO of at least EUR 108 million in 2016/17“, indicated BUWOG CEO Daniel Riedl. “Our strategic positioning with three business areas – Asset Management, Property Sales and Development – has proven to be a reliable success model, even in an increasingly challenging market environment. That will allow us to work profitably, and also strengthen this profitability in the future. BUWOG’s activities in both the investment and project development areas also allow us to expand in times of substantially higher property prices by developing projects for our own portfolio, instead of buying at high prices on the market.“

Asset Management, the largest business area in the BUWOG Group, recorded a year-on-year increase of 1.5% in net operating income to EUR 114.1 million in the first nine months of 2016/17. Net operating income in the Property Sales business area rose by a sound 41.0% to EUR 38.6 million, whereby this growth was significantly influenced by Unit Sales of 514 apartments at a margin of 56% on fair value. The Development business area had 1,649 units under construction as of 31 January 2017, for an increase of approx. 70% over the end of the previous financial year on 30 April 2016. Net operating income in this business area was substantially higher in the first nine months of 2016/17 and amounted to EUR 7.5 million as of 31 January 2017. The Executive Board assumes the contribution by Development to Recurring FFO will increase to at least EUR 13 million for the full 2016/17 financial year.

The BUWOG Group generated EBITDA of EUR 128.9 million in the first nine months of 2016/17. The valuation of the German investment property by the independent appraisers at CBRE in combination with an internal revaluation of the Austrian investment property portfolio as per 31 January 2017 led to fair value adjustments of EUR 277.2 million for the reporting period. This reflects, in particular, the high yield compression as well as the rising market rents in core locations on the German market. The fair value of the standing investments has risen by 7.6% since the end of the 2015/16 financial year to approx. EUR 4.0 billion. Earnings before tax (EBT) for the first nine months of 2016/17 amounted to EUR 364.3 million and net profit equalled EUR 292.3 million.

Annualised net in-place rent rose by 3.0% from EUR 201 million at the end of the previous financial year to EUR 207 million. The like-for-like growth in rentals equalled 4.2% for the reporting period, and the vacancy rate as per 30 January 2017 remained at a low 3.8%.

The BUWOG Group took another important step during the reporting period to concentrate the Austrian part of its portfolio. On 7 December 2016 a contract was signed with an investment fund for the sale of the Tyrolian portfolio with 1,146 residential units and approx. 89,000 sqm of total floor area. The expected free cash flow of approx. EUR 90 million from this sale will be used for further growth in Germany.

In view of the rising property prices, BUWOG is working to make its standing investment portfolio less dependent on property acquisitions and has increased the construction of rental apartments for its own portfolio. Current plans call for the construction of 3,900 rental apartments for BUWOG’s portfolio in the core locations of Berlin, Hamburg and Vienna. The purchase of additional land parcels is expected to increase this cluster to approx. 5,000 rental apartments for BUWOG’s standing investment portfolio.

The BUWOG Group continued to pursue its conservative financing strategy during the third quarter of 2016/17 and further improved its financing structure. Since the end of the 2015/16 financial year on 30 April 2016, the average interest rate on financial liabilities was reduced substantially from 2.19% to 1.76% as per 31 January 2017. Key factors for this reduction were the EUR 300 million convertible bond issued in September 2016 – which BUWOG AG placed at a premium of approx. 56% to the last reported EPRA NAV on the issue date and at an interest rate of 0.00% – and other refinancing measures in the volume of EUR 550 million carried out in October 2016. The LTV declined further during the reporting period to only 44.7% as of 31 January 2017 (30 April 2016: 47.6%).

Andreas Segal, Deputy CEO and CFO of BUWOG AG, explained: “Results for the first nine months show the significant progress made during the current financial year, from both an operating and a financial standpoint which we intend to continue in the oncoming reporting period. We work highly focused to expand our development-to-hold pipeline, i.e. the development of apartments into our own investment portfolio, in order to create an even more efficient portfolio. This reflects our strategic plan to create shareholder value through an add-on strategy: By complementing our classic asset management business with a development strategy that comprises the development of condominiums for sale as well as apartments into our own portfolio we create cash effective profits as well as capital growth. In addition our transparency initiative appears to be appreciated by the capital markets. We aim to establish best-practice standards in capital markets communication by European residential developers and to assume a leading position through their implementation.“

The report by BUWOG AG on the first nine months of the 2016/17 financial year is available today on the company’s website under






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