Letter to shareholders
In the past fiscal year 2017, we successfully continued with our strategic portfolio streamlining,saw positive developments in the rental sector and achieved the operating (FFO) targets.
The Fair Value Group further expanded its operational strength in 2017 and can report on a positive fiscal year 2017. All key earnings indicators were improved considerably in 2017 compared to the previous-year period: The operating result (EBIT) increased to €23.6 million compared to €15.5 million in the previous year, at around €12.6 million, group net profi t increased signifi cantly compared to the previous-year figure of €6.9 million and funds from operations (FFO) after non-controlling interests also increased to €6.8 million compared to €6.3 million in the previous year. This corresponds to €0.48 per share currently outstanding compared to €0.45 in the previous year.
Thanks to its active asset management, fiscal year 2017 saw the Fair Value Group further optimise its real estate portfolio, which currently comprises 30 properties with a market value of around €291 million. Despite sales of properties in the past, at €22.1 million we more or less kept the rental income (previous year: €22.5 million) as well as at €15.9 million the net rental income (previous year: €16.1 million) at the previous-year level. As of 31 December 2017 the weighted average lease term (WALT) at 5.1 years remains above 5 years.
The occupancy rate was slightly increased from 90.6% as of 31 December 2016 to 91.5%; or 92.3% if the lease agreements already entered into for vacant space that is shortly to be handed over to tenants are taken into account. Thus Fair Value is building on the high figures of previous years.
As of 31 December 2017, the net asset value (NAV) amounted to €127.6 million (previous year: €120.6 million). This is an increase in the net asset value to €9.09 per share compared to €8.60 as of 31 December 2016. As of the reporting date, the REIT equity ratio increased significantly from 62.7% of immovable assets as of 31 December 2016 to 65.9% as of the reporting date.
The past fiscal year 2017 was thus highly satisfactory. On account of the increase in net profit for the year according to German GAAP, we will propose to the Annual General Meeting to distribute a dividend of €0.34 per share for fiscal year 2017, that is around €4.8 million. This proposed dividend corresponds to a distribution rate of around 91% of the net profit for the year pursuant to German GAAP.
Outlook for 2018
Based on the existing portfolio, we expect funds from operations (FFO) before non-controlling interests of €8.7 million to €9.3 million for 2018. Without a further increase in the share of properties directly held by the group and a concomitant decrease in the non-controlling interests in group earnings, we expect FFO after non-controlling interests to range between €5.1 million and €5.5 million in 2018. This corresponds to FFO of between €0.37 and €0.39 per share currently outstanding. The target dividend for 2018 is €0.15 per share for all shares currently outstanding. This corresponds to a distribution rate of between 38% and 41% of FFO or 90% of the planned net profit for the year under German commercial law.
