Corporate News

08/08/2013 | Corporate News

Fair Value REIT-AG boosts earnings further in the first half of 2013

  • IFRS consolidated net income of EUR 3.36 million (previous year: EUR 1.95 million)
  • Adjusted consolidated net income in accordance with EPRA / FFO at EUR 2.85 million (+3%)
  • REIT equity ratio increases to 55% 


Munich, August 8, 2013 – Fair Value REIT-AG recorded successful development in the first half of 2013. Consolidated net income according to IFRS came in at EUR 3.36 million, or EUR 0.36 per share. The significant increase of 72% compared to the previous year's figure of EUR 1.95 million resulted from lower net interest expenses within the Group, higher other operating earnings and a substantially improved sales and valuation result. In addition, income from participations improved significantly. The considerably higher consolidated net income for the first half of 2013, however, should be viewed in the context that the previous year figure was burdened by a valuation loss totalling around EUR 1.0 million.


The Fair Value Group's consolidated net income, adjusted for extraordinary effects, (EPRA earnings or FFO) totalled EUR 2.85 million in the first half of 2013, some 3% higher than in the prior year period (EUR 2.78 million). This corresponds to FFO of EUR 0.31 per share (previous year quarter: EUR 0.30).


Net sales in the first half of 2013 totalled EUR 6.21 million and were therefore EUR 0.24 million or 4% down on the corresponding amount from the previous year. This fall is largely attributable to the reduction in rental income and ancillary income due to the sale of properties. The occupancy rate of the real estate managed by the Group and its associated companies calculated on a proportional basis in relation to Fair Value increased from 94.4% to 94.6%. The remaining terms of the lease agreements averaged 5.6 years as of the reporting date June 30, 2013.


On the back of property sales and higher property-related expenses relating to new lettings, net rental income in the first half of 2013 amounted to EUR 3.39 million, representing a fall of some EUR 0.79 million or 19% compared with the corresponding period in the previous year (EUR 4.18 million). However, the operating result improved by EUR 0.44 million or 22% from the previous year total of EUR 2.0 million to EUR 2.44 million. This improvement came on the back of higher other operating income as well as a substantially improved sale and valuation result.


In addition, the lower net rental income was more than offset by a substantial fall in net interest expenses, which also led to higher income from equity-accounted participations. Income from participations at associated companies totalled EUR 3.41 million and was therefore 32% up on the first half of the previous year (EUR 2.58 million). The improvement of EUR 0.82 million was 55% attributable to the valuation of interest rate hedges effective in profit or loss, 33% to the lower net interest expenses and 12% to other earnings improvements as well as a gain from the sale of a property.


Net interest expenses in the Group were down by 21% in the first six months of 2013 to EUR 1.83 million, with this figure totalling EUR 2.32 million in the previous year period. After minority interests in the result, the Fair Value Group concluded the first half of 2013 with consolidated net income of EUR 3.36 million.


Group equity totalled EUR 81.71 million as of June 30, 2013. This means that the balance sheet net asset value per share in circulation increased by 5% to EUR 8.76 per share in the first six months of the year (December 31, 2012: EUR 8.33²). The equity ratio pursuant to Paragraph 15 of the German REIT Act increased to 55.0% of immovable assets (December 31, 2012: 52.6%). 


Frank Schaich, CEO of Fair Value REIT-AG, commented on business development in the first half of the year as follows: "The highly pleasing results from the first half of 2013 form a solid basis for further positive development in the second half of the year. That is why we are reiterating our forecast for adjusted consolidated net income (FFO) of EUR 5.3 million, or EUR 0.57 per share, for 2013 as a whole."


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A REIT – Higher Return for Investors

REIT stands for Real Estate Investment Trust. The assets of these listed companies in Germany consist mainly of real estate and investments in other real estate companies.


At the international level, REITs have been established for many years. On 1 January 2007, they were introduced in Germany as well.


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