Corporate News

07/11/2013 | Corporate News

Fair Value REIT-AG increases consolidated net income by 40% for the first nine months of 2013

  • IFRS consolidated net income of € 5.30 million (previous year: € 3.68 million)
  • Adjusted consolidated net income in accordance with EPRA / FFO at EUR 3.98 
         million (-5%)
  • REIT equity ratio increases to 55.8%
  • Dividend forecast doubled to EUR 0.24 per share


Munich, November 7, 2013 – Fair Value REIT-AG Group has recorded pleasingly positive development over the first nine months of 2013. Consolidated net income for the first three quarters came in at EUR 5.30 million, or EUR 0.57 per share, representing an increase of 40% over the previous year figure of EUR 3.68 million. However, the previous year figure was impacted by valuation expenses totalling around EUR 1.0 million during the year, while positive market value changes to interest rate hedges of around the same amount influenced the figure in the current reporting period.


The Fair Value Group's operating result, adjusted for extraordinary effects (EPRA earnings or FFO) totalled EUR 3.98 million in the first nine months of 2013, some 5% lower than in the previous year period (EUR 4.19 million) due to the properties sold in the interim. This represents EPRA-earnings or FFO of EUR 0.43 per share (previous year period: EUR 0.45 per share).


Net sales in the first three quarters of 2013 amounted to a total of EUR 9.40 million and were therefore down EUR 0.53 million or 5.4% on the corresponding previous year period. This fall is attributable to the reduction in rental income and ancillary income due to the sale of properties. During the period under review, the proportionate occupancy rate of the real estate managed by the Group and its associated companies increased from 94.4% back to the long-term average of 95.0%. The average time to maturity of the lease agreements totalled 5.5 years as of the reporting date on September 30, 2013, close to the 5.7 years reported at the end of the previous year.


Due to increased letting-related reconstruction costs, net rental income in the first three quarters of 2013 fell by EUR 1.14 million or 17.8% to EUR 5.25 million (previous year period: EUR 6.39 million). However, the operating result fell by only EUR 0.07 million or 1.8% to EUR 3.82 million, which is attributable to the higher other operating income and substantially higher sale and valuation result.


The fall in net rental income was also more than offset by a substantial reduction in net interest expenses. This also led to higher income from equity-accounted participations. Income from participations at associated companies totalled EUR 4.99 million and was therefore 24.5% up on the first nine months of the previous year (EUR 4.01 million) due to income from the valuation of interest rate hedges. Net interest expenses in the Group fell by 21.8% in the reporting period to EUR 2.78 million, with this figure totalling EUR 3.56 million in the previous year period.


As of September 30, 2013, Group equity totalled EUR 84.02 million. As a result, the balance sheet net asset value per share in circulation increased by 8.2% to EUR 9.01 per share in the first nine months of the year (December 31, 2012: EUR 8.33). The equity ratio pursuant to section 15 of the German REIT Act increased to 55.8% of immovable assets (December 31, 2012: 52.6%).


Frank Schaich, CEO of Fair Value REIT-AG, comments on the business development over the first nine months: “The pleasing development over the first three quarters of 2013 reinforces our positive estimates for the full year 2013 and also for 2014. Given the property sales to date and future changes to assets in participations, the proportionate rental income will be reduced by more than 20% from 2014. However, the resultant lower proceeds will already be offset by future savings in net interest expenses. That is why we are reiterating our FFO forecasts for 2013 and 2014, and continue to anticipate adjusted consolidated net income (FFO) of EUR 5.3 million, or EUR 0.57 per share, for 2013 as a whole, as well as adjusted consolidated net income of EUR 5.6 million, or EUR 0.60 per share, for 2014. As already announced, we have been able to double our forecast for the dividend from the previous EUR 0.12 per share to EUR 0.24 per share on the back of the pleasing business development. This represents a likely dividend increase for the financial years 2013 and 2014 from the previous roughly 20% of FFO to around 40% of FFO per share.”



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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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