conwert Immobilien Invest SE

conwert sees positive operating stimuli in first half 2014

Business news for the stock market

Vienna (pta029/26.08.2014/21:20) - - + Like-for-like rental income rises by 2.6% + Personnel expenses fall by 18.3% and other operating expenses decline by 7.5% + Net finance costs hampered by negative non-cash effects of EUR31.9 mn + FFO I at EUR15.4 mn in first half 2014, guidance for 2014 at over EUR30 mn and EUR40 mn for 2015

conwert Immobilien Invest SE, listed on the Austrian ATX, managed to achieve further operating stimuli in the first half 2014.

Rental revenue rose by 7.1% to EUR121.2 mn (1-6/2013: EUR113.2 mn). A key factor in this sharp rise was the consolidation of the residential portfolio acquired from GE Capital Real Estate Germany in the third quarter 2013. On a like-for-like basis, however, rental revenue also rose by 2.6%. In addition, net rental income (NRI) increased from EUR73.0 mn to EUR74.4 mn; however, the NRI margin decreased to 61.4% (1-6/2013: 64.5%) owing to higher property expenses. The net initial yield was 6.3% at the reporting date following on from 6.1% in the reporting period the previous year. The total vacancy rate was 10.2% at the reporting date, thereby representing a decrease of 15% against the comparable period 2013 (1-6/2013: 12.0%).

Sales revenues in the first half 2014 were characterised by the sale of individual residential and commercial units and amounted to EUR36.3 mn (1 6/2013: EUR145.6 mn). The consequent IFRS margin was therefore 19.1% and the IFRS profit on properties sold amounted to EUR5.8 mn. However, conwert is maintaining its guidance for sales revenues of EUR150-200 mn as management is currently involved in advanced sales negotiations with potential purchasers for the Czech and Slovakian portfolio. This necessitated a negative fair value adjustment for individual properties in the Czech Republic and Slovakia. Furthermore, conwert also reduced the fair value of a conwert-owned office property in the Ukraine. These developments resulted in negative fair value adjustments totalling EUR7.1 mn.

Personnel expenses fell by 18.3% in relation to the comparable period to EUR13.8 mn; other operating expenses declined by 7.5% to EUR8.5 mn. Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at EUR54.9 mn (1-6/2013: EUR65.2 mn), owing to the planned reduction of sales volumes and the concentration on selected service mandates.

As in the first quarter 2014 as a result of the historically low interest rates, net finance costs were hampered by negative non-cash effects totalling EUR31.9 mn and amounted to EUR(73.0) mn 1-6/2013: (EUR(34.1) mn). There was a slightly positive effect last year from the interest rate curve development. The increase in 2014 was mainly due to the decline in the interest rate curve in the first and second quarter 2014 and the consequent change in the market value of swaps which conwert originally concluded in the years 2007-2010 to hedge borrowed capital liabilities against interest rate fluctuations. This resulted in EBT of EUR(25.8) mn (1-6/2013: EUR29.6 mn), hampered by non-cash effects, and the loss for the period was EUR(22.9) mn, following on from a profit of EUR19.1 mn in the previous year.