03/04/2014 | Corporate News
Fair Value REIT-AG increases operating result in 2013 and raises proposed dividend again
249· Operating IFRS consolidated net income (FFO) was up 8% year-on-year in 2013 to EUR 6.4 million and substantially higher than anticipated
· Proposed dividend raised to EUR 0.25 per share (previous year: EUR 0.10 per share)
· Full consolidation of all participations through the first-time adoption of IFRS 10
Munich, April 3, 2014 – Fair Value REIT-AG substantially exceeded its operating targets in the financial year 2013 and is able to offer a positive outlook for the years ahead. On the back of the strategic sale of properties and the termination of a participation as well as the full consolidation of all participations, the Group structure has become significantly simpler and more transparent. Consolidated net income adjusted for changes in market value and other one-off effects (funds from operations – FFO) totalled EUR 6.4 million. This was around 8% up on the previous year figure of EUR 5.9 million. This corresponds to EUR 0.69 per share, following EUR 0.63 per share in 2012. The previous forecast of EUR 5.3 million was therefore exceeded by 21% due to higher rental income than anticipated and lower than expected real estate-related expenditure.
The Management Board of Fair Value REIT-AG will therefore propose a dividend for 2013 of EUR 0.25 per share to the Annual General Meeting. A dividend of EUR 0.10 was disbursed for the financial year 2012. Most recently, the dividend forecast was raised in November 2013 from EUR 0.12 to EUR 0.24 per share. The basis for this is a substantially increased adjusted net income pursuant to HGB (the critical key figure for dividends) in 2013 of EUR 2.5 million, after EUR 1.0 million in 2012. The total portfolio was reduced from 65 to 49 properties in 2013.
Simplifying the Group structure through full consolidation
The accounting standard IFRS 10 was adopted for the first time in the consolidated financial statements 2013. This resulted in five former associated companies being fully consolidated, as they are de facto controlled by Fair Value REIT-AG based to the historical voting majorities. The change in the accounting of these participations has been made retroactively. This leads to adjustments in the opening balance sheet as of January 1, 2012, the previous end of year balance sheet as of December 31, 2012 as well as the items of the income statement for the financial year 2012.
Due to the expansion of the scope of consolidation, the Group’s total assets were doubled and rental income almost tripled. As all participations of Fair Value REIT-AG were fully consolidated as of the balance sheet date 2013, the comparability of Fair Value REIT-AG with other real estate companies has been substantially improved.
One-off effects influencing IFRS consolidated net income
In the financial year 2013, the extended Group achieved rental income of EUR 29.6 million (adjusted previous year figure: EUR 31.5 million). Net rental income for the Group came in at EUR 23.1 million (adjusted previous year figure: EUR 25.3 million). This fall was mainly the result of sales-related lower rental income as well as a rise in real estate-related expenses.
The operating result of EUR 5.0 million, following EUR 11.9 million in the previous year (adjusted figure), was greatly influenced by the valuation loss totalling EUR 14.0 million, following EUR 9.7 million in the previous year.
Income from participations of EUR 1.5 million was EUR 2.2 million higher than the adjusted loss of EUR 0.6 million reported in the previous year. The rise was around 60 percent due to the release of the market values of former interest hedging transactions recognised in profit or loss, as well as due to the valuation loss of the real estate at Fair Value REIT-AG’s only associated company. The limited partnership interest in this company was cancelled as of December 31, 2013 and has therefore been terminated in return for a settlement at fair market value.
Net interest expenses of EUR 12.7 million were EUR 1.8 million higher than in the previous year. It should be noted that expenses from the valuation and partial termination of interest hedging transactions recognised through profit or loss totalling EUR 4.0 million were incurred. Ongoing net interest expenses came in at EUR 8.7 million in 2013, around EUR 1.7 million down on the EUR 10.4 million reported in the previous year.
After deducting minority interests in the subsidiaries, this resulted in a consolidated net loss of EUR 5.2 million after a consolidated net loss of EUR 0.2 million in the previous year (adjusted figure).
Adjusted for changes in market value and other one-off effects (in line with EPRA), the adjusted consolidated net income (FFO) rose by around 8% to EUR 6.4 million. In the financial year 2013, the one-off effects after minority interests totalled EUR 11.6 million.
Group equity (NAV) increases to EUR 8.65 per share
The market values of effective interest rate hedging transactions recorded in the previous years with a negative impact on Group equity were reclassified in the consolidated income statement after the termination of the valuation unit with the underlying financial liability. The corresponding expenses therefore had no impact on Group equity.
On the balance sheet date, Group equity attributable to the shareholders of Fair Value REIT-AG (NAV = net asset value) therefore totalled EUR 80.7 million (adjusted figure as of December 31, 2012: EUR 80.4 million). The balance sheet net asset value per share increased slightly year-on-year from EUR 8.62 to EUR 8.65 per share.
Taking into consideration the minority interests in subsidiaries, the equity ratio pursuant to Section 15 of the REIT Act rose to 46.9% of immovable assets as of December 31, 2013 (certified previous year figure in line with previous accounting method: 52.6%). Cash and cash equivalents in the Group rose to EUR 17.4 million as of December 31, 2013, following EUR 14.2 million in the previous year.
Forecasts for 2014 and 2015
With a look to 2014, the Management Board is anticipating EPRA-Earnings (FFO) of EUR 5.1 million or EUR 0.55 per share given the realisation of expected business development and taking into account the expected letting. In 2015, an increase to EUR 5.7 million or EUR 0.61 per share is expected. The dividends should total 45% of the planned FFO, which represents EUR 0.25 per share in circulation for 2014 and EUR 0.28 per share for 2015. Moreover, in the case of new investments Fair Value REIT-AG will primarily focus on the direct acquisition of retail properties.
Frank Schaich, CEO of Fair Value REIT-AG, is happy with business development: “In the financial year 2013, we made the most of the positive market environment for achieving our operating and strategic targets. As a result, we are now able to sustainably raise the dividends for 2013 and the following years. The first-time adoption of the accounting standard IFRS 10 has resulted in the full consolidation of all participations. This increases the transparency of our business model and therefore the attractiveness of our share on the capital market.”
The Annual Report with the complete consolidated financial statements of Fair Value REIT-AG for the financial year 2013 is available from today in the Financial Reports section of www.fvreit.de.
2014
