12/05/2011 | Corporate News
Fair Value REIT-AG closes Q1 2011 successfully and raises forecasts
57- IFRS consolidated net income increases by 50% to € 1.8 million (previous year: € 1.2 million)
- Adjusted consolidated net income (EPRA-Earnings) at € 1.3 million, 25% above quarterly related forecast
- Significant increase in forecasts for 2011 and 2012
Munich, Germany, May 12, 2011 – Fair Value REIT-AG reports a very successful start to 2011. The group ended the first quarter of the year with a consolidated net income of € 1.8 million or € 0.20 per share, a considerable increase on the figures of € 1.2 million and € 0.13 per share for the same period in the previous year. The increase compared to the previous year is primarily the result of an income effective market value increase of cash flow hedges in the equity accounted participations.
The consolidated earnings adjusted for market value changes and other, non-operative effects (EPRA-Earnings) amounted to € 1.3 million or € 0.14 per share (previous year € 1.5 million or € 0.16 per share), which was 25% higher than forecast for 2011 on a quarterly basis.
The operating income of € 1.2 million was in line with expectations and was 40% lower than the previous year’s figure of € 2.0 million, mainly because of re-letting related expenses. In contrast, the results of the equity accounted associated companies more than doubled, increasing by € 1.0 million to € 1.9 million. Of this increase, 20% is attributable to an increase in net rental revenues and 80% to an improved valuation of derivative financial instruments, as recorded in the respective profit and loss statements.
On the balance sheet date, the group’s equity capital amounted to € 77.8 million (31 December 2010: € 74.6 million). The balance sheet net asset value (NAV) per share in circulation thus increased by 4% to € 8.35 (31 December 2010: € 8.00). Taking into account the minority holdings in the subsidiaries, the equity ratio as defined in section 15 REITG (German REIT Law) increased to 51.3% of the immovable assets (31 December 2010: 49.6%).
Frank Schaich, CEO of Fair Value REIT-AG, considers the basis for the pleasing performance of the group to be a stable earnings base and a positive market environment: “An occupancy rate in our proportionate real estate portfolio of approximately 93% and an average remaining lease term of 6 years continues to provide us with a good level of planning confidence, and the stable market environment helps us achieve lease renewals and new leasing agreements. As a result of the turnaround in the development of interest rates, the market value of our cash flow hedges has also increased. This has had a positive effect on the consolidated net income as well as contributing to an increase in the consolidated equity, without affecting net income.“
At the end of April 2011, a loan held by an associated company, that had originally been fixed until December 31, 2014, was replaced by a new, variable interest rate property loan with a term of 5 years and by an interest rate cap. The result is that, already from 2011, the relevant associated company will make savings of more than 50% on the previous interest payments. This has a corresponding positive effect, expected to amount to approximately
€ 0.6 million per annum, on the Fair Value REIT-AG proportionate IFRS earnings from equity accounted participations.
“It was possible to negotiate a relatively small prepayment penalty. Already from May 2011 we can thus utilise the reduction of more than 50% in the interest payments in order to generate a significant improvement in earnings,“ explains Frank Schaich, who continues: “Taking into account results from the first quarter, we have raised our forecasts for the current financial year and also for next year. For 2011 we are now expecting an increase in the adjusted consolidated net income from € 4.3 million to € 5.0 million (€ 0.54 per share), and in 2012 we are expecting an increase from € 5.1 million to € 5.7 million (€ 0.61 per share).
The report for the first quarter of 2011 is now available at www.fvreit.de, in the Investor Relations area.
2011
