DGAP-News: Prime Office REIT-AG reports stable nine months results and increases full-year FFO guidance
(firmenpresse) - DGAP-News: Prime Office REIT-AG / Key word(s): Quarter Results
Prime Office REIT-AG reports stable nine months results and increases
full-year FFO guidance
08.11.2012 / 07:30
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Prime Office reports stable nine months results and increases full-year FFO
guidance
- Strong funds from operations (FFO) in Q1-Q3/2012: substantial increase by
28.2 percent to 19.6 million Euro
- Financial result significantly improved to -24.2 million Euro
- Net income of 7.3 million Euro in spite of temporary vacancies and higher
rental and lease expenses
- Substantial improvement of the net income adjusted by valuation effects
('EPRA earnings') by 44.4 percent y-o-y to 15.6 million Euro
- Board increases FFO guidance for 2012: FFO of 20 to 22 million Euro
(previously 17 to 19 million Euro) based on revenues of 72 to 74 million
Euro
- Sale of Imtech Headquarters in Hamburg: Free cash of approx. 16 million
Euro inter alia used to repay existing financings early (future net
financial results will be relieved). Expected profit of 5.7 million Euro
according to the German Commercial Code (HGB) will be carried forward as
potential future dividends, strengthening the REIT equity ratio
Munich, 08 November 2012. Prime Office REIT-AG ('Prime Office'), a leading
listed property company with REIT status focused on investments and
management of prime office properties in Germany, reports stable results
over the first nine months of fiscal year 2012 and increases its FFO
guidance for the full year.
'The operating business of Prime Office proved stable over the first nine
months; however the financial and euro crisis affected the market valuation
of our derivatives interest rate and currency hedges. The strong increase
of our funds from operations over the first nine months enabled us to
increase our FFO guidance for the full year and confirm our revenue and
dividend targets,' says Claus Hermuth, the CEO of Prime Office REIT-AG.
Temporary vacancies in individual properties led to a year on year decline
of rental and lease revenues to 54.7 million Euro over the first nine
months of fiscal year 2012 (Q1-Q3/2011: 56.8 million Euro). Rental and
lease expenses increased by about 0.4 million Euro or 4.7 percent to 8.9
(Q1-Q3/2011: 8.5) million Euro due to intensive marketing activities for
the properties that require re-letting, temporary vacancies in individual
properties and planning costs mainly for the properties in Frankfurt and
Dusseldorf. This resulted in a slight decline of rental and lease income
over the reporting period compared to the first nine months of the previous
year to 46.8 (Q1-Q3/2011: 49.1) million Euro.
Other operating expenses over the first three quarters of fiscal year 2012
amounted to about 3.5 million Euro and were substantially down year on year
(Q1-Q3/2011: 6.4 million Euro). This development was driven by IPO-related
costs of 3.7 million Euro incurred over the first nine months of the
previous year. Overall, operating income before valuation effects over the
reporting period increased by 0.3 million Euro to 42.1 million Euro
compared to the first three quarters of the previous year (Q1-Q3/2011: 41.8
million Euro).
Operating earnings before interest and taxes (EBIT) over the first nine
months of fiscal year 2012 fell year on year to 31.5 (Q1-Q3/2011: 42.3)
million Euro. This was mainly due to the revaluation of the property
portfolio at market prices during this fiscal year, temporary vacancies in
individual properties and higher rental and lease expenses for the
properties that require re-letting.
The financial result as the balance of financial income and financial
expenses amounted to -24.2 million Euro in the reporting period, improved
substantially compared to the first three quarters of financial year 2011
(Q1-Q3/2011: -31.8 million Euro). This was expected since net debt declined
sustainably after the IPO. Interest expenses through the first nine months
of this fiscal year also fell by a substantial 8.8 million Euro or 22.3
percent to 30.7 (Q1-Q3/2011: 39.5) million Euro.
Prime Office generated 7.3 (Q1-Q3/2011: 10.6) million Euro in net income
over the reporting period in spite of slight adjustments of the property
portfolio's market value, temporary vacancies in individual properties and
higher rental and lease expenses incurred in connection with intensive
marketing activities for the properties that require re-letting. As a
consequence, income per share for an overall 51.9 million issued shares
amounted to 0.14 (Q1-Q3/2011: 0.36) Euro.
Conversely, EPRA earnings, which reflect the net income adjusted by one-off
and special effects from the fair valuation of the property portfolio and
the derivative financing instruments, increased by a substantial 4.8
million Euro or about 44.4 percent to 15.6 (Q1-Q3/2011: 10.8) million Euro
over the first nine months of this fiscal year. EPRA earnings per share
increased just as significantly from 0.21 Euro over the first three
quarters of 2011 to 0.30 Euro over the reporting period. Prime Office
generated 19.6 million Euro in funds from operations over the first nine
months of this fiscal year, which represents a sizeable year on year
increase (Q1-Q3/2011: 15.3 million Euro).
As before, the interest rate environment, which is dominated by the
on-going financial and euro crisis, dragged down the valuation of long-term
derivative interest and currency hedging instruments for the property
financings (interest rate and currency swaps) and negatively affected the
equity of Prime Office. The equity also declined as a result of the
on-schedule dividend payment of 11.9 million Euro in May 2012. Overall, the
equity of Prime Office amounted to 398.5 million Euro on 30 September 2012
compared to 418.0 million Euro on 31 December 2011. The equity ratio (41.5
percent) was slightly up on 30 September 2012 compared to 30 June 2012
(41.4 percent), however it still remained below the level on 31 December
2011 (43.1 percent) and as such still below the minimum equity ratio of 45
percent required for German REIT joint stock corporations. The German REIT
law grants the Company two years from 31 December 2011, when it first
failed to meet the REIT requirement, during which to return the equity to
the statutory minimum with impunity. This deadline expires on 31 December
2013.
Despite of 12.8 million Euro in loans repaid over the first nine months of
fiscal year 2012 net debt of Prime Office amounted to 576.3 million Euro on
30 September 2012, slightly up against 31 December 2011 (561.5 million
Euro). The increase results from the valuation of derivative hedging
instruments. These lock in interest rates over the term of the loans and
their market value is invariably zero at maturity, which leaves significant
value recovery potential over the remaining term of the loans and should
positively affect net debt. The leverage of the property company amounted
to 60.0 percent on 30 September 2012, slightly up compared to 31 December
2011 (57.8 percent). The loan-to-value ratio (LTV) changed only slightly in
the reporting period and amounted to 64.9 percent on 30 September 2012 (31
December 2011: 65.2 percent).
In November 2012, Prime Office sold the Imtech Headquarters in Hamburg. The
contract for the sale of the Imtech building in Hamburg was notarised on 02
November 2012. Economic ownership will be transferred to the buyer on 31
December 2012. Thanks to the sale of the modern property free cash of
approx. 16 million Euro is to be expected after deduction of rent, other
costs and repayment of financings. From this, a financing with an interest
rate of more than seven percent will be repaid early. As a consequence,
future net financial results will be relieved. The expected profit from the
sale of about 5.7 million Euro according to the German Commercial Code
(HGB) will be carried forward as potential future dividends. The sale of
the Hamburg property also strengthens the REIT equity ratio by about 2
percentage points.
In view of the substantial year on year increase of the FFO over the first
nine months of fiscal year 2012 and expected revenues of 72 to 74 million
Euro, the board revises its FFO guidance for the full year up by 3 million
Euro to 20 to 22 million Euro (previously: 17 to 19 million Euro). The
dividend guidance for the fiscal year 2012 is confirmed at 9 to 12 million
Euro in the interest of a stable corporate risk profile.
Key financial ratios of Prime Office REIT-AG
(in mm EUR) 01/01-30/09/2012 01/01-30/09/2011 Delta (in %)
Rental revenues 54.7 56.8 (3.7)
Net rental income 46.8 49.1 (4.6)
Operating income before valuation effects 42.1 41.8 0.7
Operating earnings (EBIT) 31.5 42.3 (25.6)
Financial result (24.2) (31.8) 23.7
Income for the reporting period 7.3 10.6 (31.6)
Income per share (in Euro) 0.14 0.36 (61.2)
EPRA earnings 15.6 10.8 44.4
Funds from operations (FFO) 19.6 15.3 28.2
FFO per share (in Euro) 0.38 0.29 28.2
(in mm EUR) 30/09/2012 31/12/2011 Delta (in %)
Total assets 1,119.7 1,130.5 (1.0)
Equity 398.5 418.0 (4.7)
REIT equity ratio (in percent) 41.5 43.1 (3.8)
Leverage (in percent) 60.0 57.8 3.7
Net asset value (NAV) 464.4 471.6 (1.5)
NAV per share 8.94 9.08 (1.5)
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 384,000 square metres. According
to a valuation performed by the property surveyor CB Richard Ellis, the 14
properties had a total market value of approximately 963.1 million Euro as
at 30 June 2012. The property portfolio of Prime Office consists
exclusively of individual buildings in special locations. All holdings are
select modern office properties with an attractive architecture and quality
fit-out. 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.
* Economic ownership of Imtech Headquarters, Hamburg, will be transferred
to the buyer on 31 December 2012
Additional information on Prime Office REIT-AG is available in the Internet
on:
www.prime-office.de
End of Corporate News
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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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192116 08.11.2012
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