Immofinanz's results of operations rose by nearly 60% year-on-year to €180.4 million in Q1-Q3 2021 and even substantially exceeded the comparable 2019 pre-crisis level (+29% versus Q1–3 2019). Net profit turned clearly positive at €295.7 million and also surpassed the pre-crisis level in 2019 (Q1–3 2019: €202.6 million).
Key results
- Strong Group results with a net profit of €295.7 million
- Successful crisis management leads to substantial improvement in results of operations by roughly 60% to €180.4 million
- Occupancy rate remains high at 94.1%
- Portfolio expansion to roughly €6 billion planned for 2022
- FFO 1 before tax of more than €135 million projected for 2022
Immofinanz delivered strong results for the first three quarters of 2021, even though the markets generally remained under the influence of the COVID-19 pandemic. An increase in the results of asset management, significant improvement in the earnings from property sales and property development as well as cost savings led to a substantial increase of 59.5% in the results of operations to €180.4 million. The progress of vaccination campaigns and the related economic upturn supported the recovery of part of the crisis-related property write-downs from the previous year. Results from the revaluation of standing investments equalled €54.0 million, compared with €-144.8 million in the first three quarters of 2020. Financial results improved to €91.8 million despite a higher financing volume and increased results from equity-accounted investments. Immofinanz generated net profit of €295.7 million in the first three quarters of 2021 (Q1-3 2020: €-98.3 million). FFO 1, which does not include revaluation results, basically reflected the previous year at €90.7 million (Q1–3 2020: €93.6 million). This slight decline is attributable, above all, to an increase in financing costs as a result of the higher financing volume.
“Immofinanz is again moving rapidly from one strong quarter to the other after the corona year in 2020, despite the ongoing effects of the pandemic on our business activities. Even though we are seeing a substantial rise in infections in many of our core countries, we are very optimistic over results for the full 2021 financial year. Sound performance in the first three quarters and a positive outlook for the remainder of the year prove that we took the right steps during the crisis. We are emerging stronger from this pandemic and have built the foundation for future-value creating growth. Our sustainable success is based on a clear portfolio strategy with crisis-resistant brands and flexible and innovative offers“, explained Dietmar Reindl, COO of Immofinanz. “Based on our very good market position, we are planning to expand the portfolio with our STOP SHOP and myhive brands from the current volume of €5 billion to roughly €6 billion in 2022.“
Stefan Schönauer, CFO of Immofinanz added: “This growth, the further development of the portfolio and our solid financial structure represent a strong foundation for future FFO growth and our sustainable dividend policy. For the coming 2022 financial year, we expect FFO 1 before tax of more than €135 million – assuming hopefully moderate COVID-19 effects – and we want to distribute roughly 70% of FFO 1 as dividends to our shareholders.“ Immofinanz’s financial policy remains unchanged: Leverage expressed by net LTV, which currently equals a very conservative 36.6%, is targeted to remain below 45% over the medium-term and the investment-grade rating will be protected. With regard to the valuable investment in S IMMO, Immofinanz is still keeping all options open.
Crisis-resistant portfolio and waiting lists for flexible office products
Immofinanz’s property portfolio totalled approximately €5.0 billion at the end of September 2021. Of this total, approximately 63% are attributable to the office business and 36% to the retail business. The roll-out of the flexible myhive office products has continued in 2021. The demand for these short-term bookable, flexible office solutions is developing very well, and there are currently waiting lists at several locations.
In the retail business, COVID-19 containment measures resulted in the temporary shutdown of roughly 15% of Immofinanz’s retail space at the end of November but this space is expected to re-open before Christmas. The earlier waves in the COVID-19 pandemic were followed by the very rapid recovery of visitor traffic in the retail parks after the end of the lockdowns as well as an increase in the turnover per visit. In the first nine months of 2021, in the STOP SHOP properties, retail turnover was 10.0% higher than the comparable period in 2020. Footfall in the STOP SHOPs was 3.2% lower than the previous year during the months from January to September 2021 – including the COVID-19-related shutdown days. For the VIVO! shopping centres, footfall was 13.8% higher, while retail revenues rose by 25.0%. This sizeable increase is attributable, above all, to the four VIVO! shopping centres in Romania, which were affected by extensive shutdowns in the previous year up to mid-June 2020.
Q1-3 2021 results in detail
Rental income rose slightly to €216.4 million (Q1–3 2020: €215.8 million) and led to an improvement of 2.6% in the results of asset management to €163.1 million (Q1–3 2020: €158.9 million). This increase resulted, above all, from a reduction in property expenses, which improved by 11.5% to €-43.4 million (Q1–3 2020: €-49.1 million). Property expenses still exceeded the pre-crisis level due to the effects of the pandemic – but the write-off of rents receivable included in this position, which represent support by Immofinanz for its tenants during the lockdown periods, were substantially lower than the previous year and totalled €-10.9 million (Q1–3 2020: €-19.2 million).
The results of property sales more than doubled to €24.1 million (Q1–3 2020: €9.5 million). The sale of the Cluster Produktionstechnik office building in Aachen for €124.0 million was responsible for the largest positive effect. In line with the corporate strategy, properties with a total volume of €259.6 million were sold during the first three quarters of 2021. Included here are the building in Aachen and, above all, older and non-strategic office properties in Warsaw and Budapest. The results of property development also turned strongly positive at €24.1 million (Q1–3 2020: €-21.0 million), chiefly due to positive valuation effects from an office development project in Düsseldorf.
Other operating expenses improved by 9.8% to €-32.3 million (Q1–3 2020: €-35.8 million), above all due to the absence of non-recurring effects from the previous year. The results of operations, therefore, rose by a solid 59.5% to €180.4 million (Q1–3 2020: €113.1 million). Results from the revaluation of standing investments equalled €54.0 million, compared with crisis-related write-downs in the previous year to reflect the adverse effects of the COVID-19 pandemic (Q1–3 2020: €-144.8 million). The revaluations are related chiefly to office properties in Austria and Germany and reflect the ongoing dynamic market environment. Operating profit (EBIT) therefore improved significantly to €234.4 million (Q1–3 2020: €-31.7 million).
Financing costs totalled €-61.9 million (Q1–3 2020: €-55.7 million) and reflect a year-on-year increase of roughly 12% in the financing volume. Average financing costs, including hedging, equalled 1.92% per year (31 December 2020: 1.99%). The other financial results of €20.3 million (Q1–3 2020: €-13.4 million) resulted primarily from the positive valuation of interest rate derivatives (Q1–3 2021: €14.8 million) following an increase in long-term interest rates. The share of results from equity-accounted investments increased to €131.5 million (Q1–3 2020: €9.4 million). Of this total, €128.0 million are attributable to S IMMO (revaluation of €85.3 million to the investment due to the increase in the share price and a proportional earnings share of €42.8 million). Financial results totalled €91.8 million (Q1–3 2020: €-60.5 million).
Profit before tax improved significantly to €326.2 million (Q1–3 2020: €-92.2 million) and also exceeded the comparable pre-crisis period in 2019. After the deduction of €-30.5 million (Q1–3 2020: €-6.0 million) in income taxes, net profit amounted to €295.7 million (Q1–3 2020: €-98.3 million and Q1–3 2019: €202.6 million).
