Immofinanz recorded a significant improvement in the results of operations and net profit during the first quarter of 2021, which was still heavily influenced by the COVID-19 crisis.
Rental income rose by 0.5% to €74.8 million in the first quarter. Property expenses were substantially higher during this three-month period due to a crisis-related increase in the write-offs of rents receivable from asset management. This, in turn, led to a 7.7% year-on-year decline in the results of asset management to €54.9 million. Positive results from property sales and property development, as well as cost savings, supported an improvement of 6.7% in the results of operations to €46.4 million. Financial results turned clearly positive at €79.7 million and include a revaluation of €85.3 million to the S IMMO investment following an increase in the S IMMO share price. Consequently, the net profit of €123.1 million is significantly higher than the first quarter of the previous year.
“The first quarter was still heavily influenced by the pandemic, but we generated strong performance with a substantial improvement in the results of operations and net profit. Almost all our retail properties are now fully opened, and we are also seeing promising trends in visitor frequency and retail turnover“, indicated Ronny Pecik, CEO of Immofinanz. “The progress of the EU-wide vaccination campaigns makes us optimistic concerning developments during the rest of this year, and we are continuing to work on value-creating expansion with our crisis-resistant real estate brands – as we recently showed with the acquisition of an office property at a top location in Bucharest and further acquisitions for our Stop Shop retail park format.“
FFO 1 from the standing investment business (before tax and including accrued interest for bonds) amounted to €34.5 million (Q1 2020: €40.0 million). This decline is attributable, above all, to the year-on-year, crisis-related increase in receivables write-offs from asset management, which represent an important contribution to supporting tenants during the pandemic.
Occupancy rate at high level
The real estate portfolio increased to 216 properties with a combined carrying amount of approximately €5.1 billion at the end of March 2021. Of this total, approximately 64% are attributable to the office business and 35% to the retail business. The occupancy rate is at a high 94.5% (31 December 2020: 96.0%) and equalled 91.3% in the office properties and 97.4% in the retail properties. The gross return equalled 5.8% based on IFRS rental income and 6.1% based on invoiced rents.
€1 billion of available liquid funds
Immofinanz has a robust balance sheet structure with an equity ratio of 46.3% (31. December 2020: 45.1%) and cash and cash equivalents of €900.0 million. Furthermore, a revolving credit line of €100.0 million is also available. The net loan to value remains at a conservative 39.5% (31 December 2020: 37.8%). The average remaining term of the financial liabilities is 4.0 years and the average financing costs equalled 1.98% per year including derivatives (31 December 2020: 1.99%). The hedging quota is a high 87.3%, and the unencumbered asset pool (investment property and S Immo shares at the EPRA NAV) totals €2.0 billion or 35.9% (31 December 2020: €2.0 billion or 34.9%).
Outlook
The first quarter of 2021 was still dominated by the pandemic and approx. 48% of the rented retail space remained temporarily closed at the end of March, but the situation improved significantly during the second quarter due to the progress of the EU-wide vaccination campaigns. At the end of May, only about 1% of the retail space was affected by shutdowns. This steady recovery is also visible in visitor frequency and turnover in the retail properties: As seen over the first four months of 2021, visitor frequency in the Stop Shops was 10.0% lower year-on-year (including the Covid-19-related shutdown days) but turnover rose by 15.9%. In the Vivo! shopping centres, visitor frequency increased by 1.0% year-on-year from January to April 2021 (including the COVID-19-related shutdown days) and retail turnover was 8.3% higher. Further recovery can also be expected, assuming the recently announced opening steps are not reversed.
In view of these developments, Immofinanz is confirming its current growth plans. Activities in the office business will include further expansion with the myhive brand in the capital cities of the core countries, for example through the recent acquisition of an office property at a prime location in Bucharest. The goals for the Stop Shop retail parks include an increase to roughly 140 locations over the coming years, whereby the country focus is on the Adriatic region, CEE and selected cities in Western Europe.
