DGAP-News: Prime Office REIT-AG presents positive net income in 2011: Funds from operations exceed target and dividend at the upper end of the guidance
(firmenpresse) - DGAP-News: Prime Office REIT-AG / Key word(s): Final Results
Prime Office REIT-AG presents positive net income in 2011: Funds from
operations exceed target and dividend at the upper end of the guidance
22.03.2012 / 07:50
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Substantial net income in spite of one-off effects and IPO charges
Prime Office presents positive net income in 2011: Funds from operations
exceed target and dividend at the upper end of the guidance
- Substantial annual net income: 17.6 million Euro after -10.3 million Euro
in the previous year
- FFO with 21.8 million Euro exceed target; adjusted by one-off effects,
FFO amount to 26.1 million Euro
- Proposed dividend of about 12 million Euro or 0.23 Euro per share at the
upper end of the guidance
- Significant decrease of net leverage by 27.2 percent to 561.5 million
Euro; leverage down to 57.8 percent
- REIT equity ratio as at 31 December 2011 at 43.1 percent, slightly below
the 45 percent threshold due to negative swap market values; Executive
Board aims to comply with the REIT criterion already over the course of
2012
- Total letting performance of about 50,000 square metres is testament to
the successful asset management activities
- Market value of the property portfolio increases by 1.8 million Euro to
971.6 million Euro in spite of negative effects
Munich, 22 March 2012. Prime Office REIT-AG ('Prime Office'), a leading
property firm focused on investments and management of prime office
properties in Germany, looks back on a successful fiscal year 2011 and is
presenting its results over the reporting period.
'2011 has been both eventful and successful for us with the IPO, the
ensuing transformation into a REIT joint-stock company and the fast
inclusion in the FTSE/EPRA NAREIT Global Real Estate Index Series as well
as the SDAX. We generated a substantial annual net income of 17.6 million
Euro in spite of one-off effects from our IPO, which affected earnings, and
the difficult general environment', says Claus Hermuth, CEO of Prime
Office.
At 75.3 million Euro, rental and lease revenues in fiscal year 2011
remained largely on prior year level (FY 2010: 75.1 million Euro). Due to
the marketing costs for properties that required re-letting and the
construction and reconfiguration costs for newly let spaces, rental and
lease expenses grew slightly by 0.4 million Euro or 3.6 percent to 11.4 (FY
2010: 11.0) million Euro. Lower other rental and lease revenues meant that
rental and lease income amounted to 64.9 million Euro, a 0.7 million Euro
or 1.1 percent decrease compared to the previous year (FY 2010: 65.6
million Euro).
The asset management performance of Prime Office should be viewed in this
context: In fiscal year 2011, Prime Office let about 50,000 square metres
or about 13 percent of the portfolio's total lettable space. New leases and
early lease prolongations enabled the company to keep the portfolio's
weighted average lease term effectively stable at 6.8 years compared to the
previous year (FY 2010: 6.9 years). The temporary vacancies in Stuttgart
and Heilbronn brought the portfolio's occupancy rate to 96.1 (FY 2010:
99.7) percent. The overall occupancy rate is still high, however.
The costs related to the preparation and execution of the Prime Office IPO,
which amounted to 4.3 million Euro, led to a substantial 4.5 million Euro
increase in other operating expenses to 7.5 (FY 2010: 3.0) million Euro
during the reporting period. Due to these factors, Prime Office generated
55.8 million Euro in operating income before valuation income, which fell
short of the result achieved in the previous year (FY 2010: 61.6 million
Euro).
Over the reporting period, Prime Office registered valuation gains in its
portfolio of high quality properties, benefiting particularly from
successful lettings and the generally positive development of the German
property market. Factors such as re-letting requirements or the increase of
the real estate property transfer tax in North-Rhine Westphalia and
Baden-Wuerttemberg, however, weighed negatively on valuations. In addition,
the company sold subordinated partial spaces of residential and office
buildings in the Opernplatz compound in Essen at a selling price of 1
million Euro. Overall, the market value of the Prime Office property
portfolio increased by 1.8 million Euro or 0.2 percent to 971.6 (FY 2010:
969.8) million Euro as at 31 December 2011. Due to the overall positive
evaluation result, operating earnings before interest and taxes (EBIT) grew
by 2.8 million Euro or 5.0 percent year on year to 58.7 (FY 2010: 55.9)
million Euro in spite of the negative effects related to the IPO.
Finance expenses in fiscal year 2011 were substantially reduced year on
year by 16.0 million Euro or 23.5 percent to 52.0 (FY 2010: 68.0) million
Euro. In fiscal year 2011, Prime Office REIT-AG generated a substantial
annual net income of 17.6 (FY 2010: -10.3) million Euro in spite of the
one-off effects related to the IPO. Income per share grew accordingly to
0.50 (FY 2010: -0.59) Euro.
Furthermore, Prime Office managed to again increase funds from operations
(FFO) in the fourth quarter of fiscal year 2011. Over the reporting period,
the company generated FFO of 21.8 million Euro, which exceeded the target.
Overall however, non-recurring items and one-off effects in connection with
the IPO weighed on the FFO, pushing them below the previous year's level of
26.3 million Euro. Adjusted by the IPO-related expenses, which affected
earnings, the FFO would have amounted to 26.1 million Euro in the reporting
period.
Due to the IPO-related capital increase, the equity of Prime Office grew
substantially in fiscal year 2011 to 418.0 (FY 2010: 221.0) million Euro.
The unexpected interest rate development over the reporting period affected
the market values of the existing interest rate hedges (swaps) for property
financings, however, leaving the REIT equity ratio per 31 December 2011 at
43.1 percent, slightly below the 45 percent threshold for REIT joint-stock
companies. Even though the REIT law provides for a two-year remedy period
without sanctions, the Executive Board of Prime Office aims to again
achieve an equity ratio of at least 45 percent already over the course of
the year 2012.
In terms of its assets and financial situation, Prime Office substantially
reduced its net debt over the reporting period. Net proceeds from the IPO
and the partial repayment of liabilities towards credit institutions
decreased net leverage from 770.8 million Euro as at the end of 2010 to
561.5 million Euro as at 31 December 2011, bringing down leverage to 57.8
(31/12/2010: 79.6) percent.
As a listed REIT joint-stock company, Prime Office distributes at least 90
percent of its annual net income determined pursuant to the German
Commercial Code as a dividend to its shareholders. The Executive Board and
the Supervisory Board of Prime Office will therefore propose distribution
of 0.23 Euro per share for fiscal year 2011 during the company's annual
general shareholders' meeting on 10 May 2012. With approx. 12 million Euro,
the total amount of dividend distributions will be at the upper range of
the guidance the Executive Board issued last fiscal year. Based on the
dividend of 0.23 Euro per share and the closing price of the Prime Office
share on 31 December 2011 (4.35 Euro), the dividend yield for shareholders
amounts to5.3 percent, the Executive Board said.
'As a REIT joint-stock company, Prime Office seeks to ensure direct and
long-term shareholder participation in the success of the company. With a
dividend of 0.23 Euro per share proposed by the Executive Board, we offer
our shareholders a dividend yield of about 5.3 percent', Alexander von
Cramm, CFO of Prime Office explains.
In fiscal 2012, the Executive Board of Prime Office assumes the economic
environment in Germany to continue to progress steadily and the office
property market in Germany to improve further. The executive board's
efforts focus on a sustainable elimination of the discount to the NAV. The
Executive Board anticipates revenues (including operating cost prepayments)
of 72 to 74 million Euro and FFO of 17 to 19 million Euro. Adjusted for
one-off effects in connection with planning, reconstruction and marketing
of the properties in Stuttgart, Frankfurt and Dusseldorf, the FFO would
amount to 24 to 26 million Euro. A dividend of 9 to 12 million Euro for
fiscal year 2012 is planned in spite of reconstruction and vacancy effects
in 2013.?Key financial ratios of Prime Office REIT-AG
(in mm EUR) 01/01-31/12/2011 01/01-31/12/2010 Delta (in %)
Rental and lease revenues 75.3 75.1 0.3
Rental and lease income 64.9 65.6 (1.1)
Operating earnings (EBIT) 58.7 55.9 5.0
Finance expenses (52.0) (68.0) (23.5)
Income for the
reporting period 17.6 (10.3) n.a.
EPRA Earnings 15.3 10.2 50.0
Income per share (in EUR) 0.50 (0.59) n.a.
EPRA Earnings per share (in EUR) 0.44 0.58 (24.1)
Funds from operations (FFO) 21.8 26.3 (17.1)
FFO per share (in EUR) 0.62 1.51 (58.9)
(in mm EUR) 31/12/2011 31/12/2010 Delta (in %)
Total assets 1,131 1,002 12.8
Equity 418.0 221.0 89.1
REIT equity ratio (in percent) 43.1 22.8 n.a.
Leverage (in percent) 57.8 79.6 n.a.
Net asset value (NAV) 471.6 249.4 89.1
NAV per share (in EUR) 9.08 14.30 (36.5)
Key portfolio figures 31/12/2011 31/12/2010 Delta (in %)
Number of properties 14 14 0.0
Market value according
to CBRE (in mm EUR) 971.6 969.8 0.2
Lettable space (in m2) 383,440 385,212 (0.5)
Occupancy rate (in %) 96.1 99.7 n.a.
Vacancy rate (in %) 3.9 0.3 n.a.
EPRA-vacancy rate (in %) 3.0 0.3 n.a.
Gross Initial Yield (in %) 6.7 6.9 n.a.
Net Inital Yield (in %) 6.0 6.2 n.a.
EPRA-'Topped-Up'-
Net Inital Yield (in %) 6.0 6.2 n.a.
Weighted Average
Lease Term (in years) 6.8 6.9 (1.4)
Average value per m2 (in EUR) 2,533.90 2,517.57 0.6?Contact details
Prime Office REIT-AG
Richard Berg
Director Investor Relations / Corporate Communications
Hopfenstrasse 4
80335 Munich
Telephone +49. 89. 710 40 90 40
Facsimile +49. 89. 710 40 90 99
Email richard.berg(at)prime-office.de
About Prime Office REIT-AG
Prime Office REIT-AG (Symbol: PMO, ISIN DE000PRME012) with headquarters in
Munich is a leading property firm focusing on investments in high quality
office buildings in Germany as well as their facility and property
management. The company's portfolio consists of 14 office properties in
central locations across major cities and conurbations in Western Germany
with a total useable area of approximately 385,000 square metres. According
to a valuation performed by the property surveyor CB Richard Ellis, the 14
properties had a total market value of approximately 972 million Euro asat
31 December 2011. The property portfolio of Prime Office consists
exclusively of individual buildings in premium locations. All holdings are
select modern office properties with an attractive architecture and high
building quality. The portfolio is broadly diversified across locations and
tenants. The properties are rented long-term to high credit-quality
tenants. Prime Office REIT-AG intends to generate stable long-term rental
income using a return-oriented approach to managing the existing portfolio
based on broad property, location and tenant diversification. Rental income
is also expected to grow consistently through the addition of suitable
individual properties. The company plans to become a leading specialised
REIT for prime office properties in Germany.
For additional information on Prime Office REIT-AG please visit us on the
Internet on: www.prime-office.de
End of Corporate News
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22.03.2012 Dissemination of a Corporate News, transmitted by DGAP - a
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Language: English
Company: Prime Office REIT-AG
Hopfenstraße 4
80335 München
Germany
Phone: +49 (0)89 7104090 40
Fax: +49 (0)89 7104090 99
E-mail: richard.berg(at)prime-office.ag
Internet: www.prime-office.ag
ISIN: DE000PRME012
WKN: PRME01
Indices: SDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard), München,
Stuttgart; Freiverkehr in Berlin, Düsseldorf
End of News DGAP News-Service
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Datum: 22.03.2012 - 07:50 Uhr
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News-ID 127338
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