Corporate News

13/08/2009 | Corporate News

Fair Value REIT-AG improves H1 results

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• Consolidated net income doubles to € 1.7 million (previous year: € 0.8 million)
• Funds from operations total € 2.1 million (previous year: € 1.3 million)
• NAV up to € 8.28 (December 31, 2008: € 8.16)
• Forecast for year as a whole confirmed

Munich, August 13, 2009 – Fair Value REIT-AG published its H1 results for fiscal year 2009 today. Fair Value recorded a net rental result of € 4.0 million (IFRS) after deducting property-related operating expenses. The previous year’s figure of € 5.3 million is only comparable to a limited extent as a result of the premature termination of a general rental agreement against receipt of compensation payment in the previous year. In the first half of 2009 Fair Value REIT-AG was able to improve its cost structure and cut its administrative costs by 13% compared to the first six months of the previous year.

As of June 30, 2009 the properties’ valuation result totaled around € -0.1 million. In the current year these comprise the calculatory reduction in overrents and conversion activities that have been written off. In the previous year, the net valuation result according to an external market valuation of the properties in the middle of the year totaled € -2.2 million. As a result, the EBIT in H1 2009 totaled € 2.6 million (previous year: € 1.5 million). In addition to rental income from directly held properties, Fair Value REIT-AG generated additional income from its majority and minority participations in a total of thirteen closed-end real estate funds. The income from minority interests is carried under the group’s income from participations. During the period under review, income from the current total of eight real estate funds increased by 4% to around € 1.7 million. After deducting the financial result of € -2.6 million (previous year: € 2.2 million), this resulted in consolidated net income of € 1.7 million. Fair Value REIT-AG was thus able to record earnings per share of € 0.18 in the first six months (previous year: € 0.08). As a result of the positive consolidated net income, net asset value increased slightly to € 8.28 per share in circulation (December 31, 2008: € 8.16).

Fair Value REIT-AG’s operating earnings power becomes particularly obvious when looking at the adjusted consolidated earnings. Without considering extraordinary factors such as the market valuation of interest rate hedges and of real estate, the company recorded consolidated net income of € 2.8 million (previous year: € 3.0 million) as of June 30, 2009. As a result, the adjusted consolidated earnings after the first six months are higher than the published forecast. The Managing Board has thus confirmed the anticipated IFRS consolidated earnings of € 4.2 to € 4.5 million for 2009 as a whole, prior to the consideration of changes in the market value of the real estate and interest rate swaps.

This is supported by the successes the group has enjoyed in its operating business: A large number of lease extensions and new leases have caused the proportion of rental agreements up for negotiation in 2009 to fall to 2.8% of the total contractual rent. At the end of fiscal year 2008, the figure for 2009 still totaled 6.7%. At the same time, the portfolio’s rental level increased slightly to 95% (December 31, 2008: € 94.9%).

Compared with December 31, 2008, total assets fell from € 198.2 million to a current figure of € 190.7 million. This downturn was caused by a redemption of VAT- and current financial liabilities. Due to the prolongation of a loan the non-current financial liabilities were increased to 94% from 83%. This has allowed Fair Value REIT-AG to create a financing structure which is stable over the long term, as underscored by the equity ratio of 52.9% of the immoveable assets as of June 30, 2009 within the meaning of Section 15 of the REITG.

Frank Schaich, the company’s CEO, believes that the results confirm Fair Value REIT-AG's business model: “Our portfolio is based on broad foundations of 80 high-margin properties, which means that our risks are highly diversified. The funds from operations (FFO) that we have recorded also underscore our earnings strength. We lifted this figure significantly in the first six months.” In the first six months of the current fiscal year, the company increased its FFO by 60% to around € 2.1 million (previous year: € 1.3 million) which was primarily due to an increase in net cash provided by minority interests. The CEO also highlighted the letting successes. “Despite the tense economy, we have already been able to conclude new leases and lease extensions that were up for negotiation,” Frank Schaich explained. “We believe that this proves a good relationship with our tenants, which pay off especially in difficult markets.”

The full 2009 H1 report is available online at www.fvreit.de in the Investor Relations section.

 

 

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2009

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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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