by Property Forum | Report

S Immo generated a profit of €56.9 million for the financial year 2020, closing the year well in the black despite the COVID-19 crisis.

Bruno Ettenauer, new CEO of S Immo since 15 March 2021, added: “Over the past year and with the reported results, S Immo again demonstrated how robust its business model is. The diversified portfolio combined with a healthy liquidity base and a team of national and international experts form a solid foundation for continued success. The existing portfolio is a source of regular income, selected acquisitions and project developments facilitate growth, and the land bank offers great potential for the future. We intend to continue on this course.”

Friedrich Wachernig, Member of S Immo’s Management Board, noted: “The year 2020 was certainly one of the most challenging periods that I have experienced in my time on the Management Board of S Immo. But we had effective responses to these challenges and can look back on a very successful year despite the difficult circumstances. We saw clearly positive results from property valuation of €39.1 million, and also saw a 3.3% year-on-year increase in rental income due to acquisitions and the prudent management of our portfolio properties.”

Increased rental income, decline in hotel income due to COVID-19

The rental income for the 2020 financial year totalled €123.3 million and was 3.3% higher than the prior-year level of €119.4 million. In the midst of the crisis and the related rental losses, this increase can be attributed to the diversified portfolio, prudent management of the portfolio properties, and property acquisitions.

Property management expenses rose by around 9.5% to €66.8 million (2019: €61.0 million) as a result of effects from acquisitions as well as due to an increase in write-downs and impairment charges on trade receivables in the amount of €-4.4 million (2019: €-0.5 million) that were made necessary by the pandemic. The lower occupancy levels during the pandemic were also used to complete maintenance work, which pushed maintenance expenses from €14.7 million to €17.0 million.

The decline in income from hotel operations (income from the Vienna Marriott Hotel and Budapest Marriott Hotel, which are operated under management agreements) that resulted from the pandemic was significantly compensated by the reduction in expenses from hotel operations so that the gross profit from hotel operations of minus €0.3 million was almost at break-even (2019: €16.9 million). The gross profit, which includes the operating performance of the rented properties and of the owner-operated hotels, retreated to €91.5 million (2019: €109.7 million). The gross profit without owner-operated hotels was nearly unchanged in annual comparison and came to €91.9 million (2019: €92.9 million).

Real estate investments

Considerably more acquisitions were conducted than disposals in the 2020 financial year, as was the case in the previous year. In addition to the continuation of purchases in the Germany segment, an office property in Zagreb and a property in Bratislava were also added to the portfolio. The disposals totalled €46.9 million (2019: €58.8 million) and were thus well below the average value for the last five years.

Reduction in administrative costs, property valuation gains

Administrative costs declined from €22.7 million in the 2019 financial year to €20.4 million. This further mitigated the impact of the pandemic on EBITDA. EBITDA came to €71.1 million at the end of the year (2019: €87.0 million ).

The results from property valuation were clearly positive at €39.1 million (2019: €192.7 million ) despite the COVID-19 pandemic, but also reflect the uncertainty surrounding the crisis. Germany accounted for €52.7 million (2019: €122.1 million ) of this, Austria for €8.7 million (2019: €29.5 million ) and CEE for minus €22.3 million (2019: €41.1 million ). The value declines in the CEE segment stemmed primarily from hotel and retail properties.

Overall, EBIT remained above the 100-million mark, coming in at €101.0 million (2019: €271.4 million ). The financial result amounted to minus €29.4 million (2019: minus €20.0 million ) and was driven by lower dividend earnings because no dividend was distributed by IMMOFINANZ AG, a reduction in the result from companies measured at equity, lower expenses for bonds, and positive year-on-year effects from derivative valuations.

Capital market

The S Immo share was unable to escape the effects of the market distortions and suffered substantial losses at times before moving sideways for the most part into autumn 2020. Despite a strong fourth quarter in which increased interest in the share allowed the price to make up lost ground, the S Immo share closed the year at €16.96, which equates to a decline of 23.95%. This loss is roughly equivalent to that of the IATX, which represents the Austrian real estate shares.

Outlook for 2021

The first quarter of 2021 was again dominated by the COVID-19 pandemic. Based on current developments, S Immo anticipates that the conditions will improve gradually starting in the summer. Bruno Ettenauer, CEO of S Immo, noted: “We are confident that the efforts to overcome the COVID-19 pandemic will lead to clear improvements in the economic conditions in the near future, and that this will bring a corresponding upturn on the capital markets. Our investment activities will continue to focus on Germany and CEE. We currently have around 2.5 million sqm in property reserves among over 30 individual sites in the Berlin commuter belt. And we are continuing to evaluate investment opportunities in up-and-coming German cities and in capitals in CEE. We are currently working on an office development in Budapest.”