Immofinanz recorded an increase in rental income and results of property sales in 2020 despite the COVID-19 crisis. FFO 1 (before tax and incl. the S Immo dividend) rose by 0.6% year-on-year to €126.1 million, supported by cost savings. Profit before tax equalled €-160.4 million (2019: €350.1 million). After the deduction of €-5.5 million (2019: €-2.5 million) in income taxes, net loss amounted to €-165.9 million (2019: €352.1 million).
Rental income rose by 3.1% to €288.6 million due to the strong growth in the portfolio during the second half of 2019, but a crisis-related increase in receivables write-offs from asset management led to substantially higher property expenses. The results of asset management totalled €206.4 million in 2020 and reflect the previous year despite these write-offs. The pandemic also had a negative influence on the valuation of investment property: revaluations totalled €-166.5 million, compared with clearly positive results in the previous year (2019: €193.3 million). This reduction represents roughly 3.2% of the total property portfolio. In addition, the continuing decline in the price of the S Immo share during 2020 led to a write-down of €-88.6 million in this investment to €363.6 million. Net loss for the 2020 financial year amounted to €-165.9 million.
“The pandemic and the related support for our tenants plus the crisis-related negative effects from the valuation are, unquestionably, reflected in our group result – but our occupancy rate remained unchanged at very high 96% and FFO 1, as the indicator for our operational earning power, even increased slightly. At the end of the year, we had more than a billion euros of liquid funds. That is a very strong foundation – to manage the ongoing crisis environment as well as the post-crisis recovery and growth phase. In this respect, we successfully closed the 2020 financial year from a position of strength“, commented Ronny Pecik, CEO of Immofinanz, on the company’s performance.
Occupancy rate stable at high level
The real estate portfolio included 209 properties with a combined carrying amount of approximately €5.0 billion at the end of December 2020. Of this total, approximately 64% are attributable to the office business and 34% to the retail business. The occupancy rate is nearly unchanged at a high 96.0% (31 December 2019: 96.8%) and equalled 93.7% in the office properties and 98.1% in the retail properties. The gross return equalled 6.2% based on IFRS rental income and 6.6% based on invoiced rents.
Outlook
The worldwide COVID-19 vaccination campaign is making steady progress, but the rate and spread of infections is expected to remain dynamic for the time being. From the current point of view, the end of the second quarter or second half of 2021 could bring a potential improvement in the pandemic – but for the moment, uncertainty remains high. Temporary restrictions, for example, as a result of government-imposed curfews, business shutdowns etc., can therefore continue to affect Immofinanz, its tenants, customers and suppliers. Approximately 20% of the retail space was temporarily closed as of 19 April 2021, but re-openings are expected in the coming weeks. It is impossible to conclusively assess the effects of these restrictions, and a forecast for the development of FFO 1 in 2021 will therefore not be issued at the present time. Immofinanz has already implemented a wide range of measures to minimise the potential negative effects of the pandemic on the Group.
The S Immo share lost 23.9% of its value during 2020 and closed the year at €16.96. The decline represented an impairment trigger and led to a write-down of €-88.6 million to the investment. As of 31 December 2020, the carrying amount of the S Immo investment equalled €363.6 million. The significant improvement in the price of the S Immo share since 31 December 2020 provided objective indications of an increase in the value at the end of the first quarter of 2021. Therefore, an increase in the carrying amount of the investment up to the realisable amount of €459.8 million (based on the closing price of €21.45 on 31 March 2021) is possible as of 31 March 2021.
Takeover offer for S Immo
Immofinanz announced a voluntary public takeover offer to acquire a controlling interest pursuant to § 25a of the Austrian Takeover Act for the purchase of all outstanding S Immo shares. The offer price was set at €22.25 per share on a cum-dividend basis. The completion of the offer will be subject, among others, to the condition that the annual general meeting of S Immo AG approve an amendment to the articles of association which cancels the maximum voting right. The specific terms of the offer will be published in the offer documents, whereby the final evaluation by the Austrian Takeover Commission is still outstanding. The offer documents will be published as soon as possible after the final evaluation by the Austrian Takeover Commission.
