Preliminary annual financial statements for the 2015 financial year
Company continued to grow successfully
- All key performance indicators improved significantly
- Revenues more than doubled
- Funds from operations (FFO) more than tripled
- Net asset value (NAV) increased by a third
Berlin, 14 March 2016: In the 2015 financial year, Westgrund AG continued the success story of the past few years, once again improving all key performance indicators. “2015 was the best year of our company’s history. The extensive acquisitions made over the past year were also reflected fully in earnings for the first time,” said Arndt Krienen, CEO of Westgrund AG. “The takeover by ADLER Real Estate AG, which took place in the middle of last year, also prompted us to focus our attentions even more keenly on our operating business. This, too, has paid off, allowing us to raise rents and reduce the existing vacancy rate. What makes us particularly proud is the fact that this also allowed us to increase the value of our company by around a third – also in view of our new parent company, which contributed in a number of ways to this success and which – as the majority shareholder – naturally benefits the most from it.”
Real estate portfolio extended further
Westgrund AG extended its portfolio of investment properties further in 2015. This growth was the result of acquisitions that had already been signed before the takeover by ADLER Real Estate AG. At the end of the financial year, there were a total of 18,778 residential and commercial units included in the item “Investment properties” in the balance sheet – up 16.6 percent on the previous year, when the portfolio comprised 16,104 units.
Revenues more than doubled
Revenues, which are largely identical to rental revenues, more than doubled, increasing by EUR 44.7 million to EUR 80.5 million. This increase is related primarily to the properties acquired in 2014 fully contributing to revenues for the first time in 2015. Another positive contribution to revenues resulted from September onwards when the rights and obligations of a further real estate portfolio comprising a total 2,781 residential and commercial units were transferred to Westgrund. However, rental revenues would have increased slightly even without the additional properties, since the vacancy rate was lowered by around one percentage point and the average rents per square metre were raised by around 2 percent to an average EUR 4.83/m2 in the existing portfolio.
In 2015, earnings amounting to EUR 72.0 million resulted from the valuation of investment properties, the second significant component in overall performance. This equated to EUR 6.9 million less than in the previous year (EUR 78.9 million).
The 42.2 percent rise in overall performance to EUR 169.4 million (previous year: EUR 119.2 million) is thus predominantly attributable to growth in revenues.
Earnings improved considerably
After taking into account all items of operating expense, the operating result amounted to EUR 106.2 million in 2015 based on the still preliminary figures. This equated to EUR 14.0 million more than in the previous year (EUR 92.2 million). This result includes income from the disposal of properties amounting to EUR 4.4 million, which was generated mainly from the sale of a small portfolio in Berlin in the middle of the year.
Net interest result also improved significantly, although interest-bearing external financing increased by almost EUR 50 million. Net interest result was reduced from minus EUR 21.4 million in 2014 to minus EUR 14.2 million. Interest charges decreased, mainly because the one-off expenses that had been incurred in 2014 due to interim financing were not recurring in 2015.
Earnings before taxes (EBT) of EUR 91.3 million constituted a significant improvement on the previous year (EUR 71.6 million). The consolidated net result likewise increased from EUR 60.2 million in 2014 to EUR 75.0 million.
FFO I more than tripled
Funds from operations not including profit from real estate sales (FFO I) reached EUR 19.2 million – a figure more than three times as high as the previous year (EUR 5.6 million). FFO is typically used as a cash-flow-oriented earnings indicator in real estate companies to measure current business operations. Therefore, it mainly reflects success in the operation of residential property, which is just as attributable to the growing real estate portfolio as it is to successful management of the existing portfolios.
Net asset value (NAV) increased by a third
The assets side of Westgrund AG’s consolidated balance sheet mainly relates to investment properties. As at 31 December 2015, investment properties accounted for 93.5 percent of total assets at EUR 888.1 million – which is EUR 176.1 million or 24.7 percent higher than previous year. Almost a third of this increase in value resulted from the valuation of investment properties that already belonged to Westgrund the year before.
The value increase of investment properties also drove net asset value, the most important indicator for assessing the value of Westgrund AG as a company, up by around a third to EUR 418.7 million (previous year: EUR 313.5 million). As at 31 December 2015, this resulted in undiluted NAV of EUR 5.27 per share (previous year: EUR 4.24 per share).
Financing structure (LTV) improved
Westgrund AG maintained its conservative financing structure in 2015. The acquisition of new properties was financed using a large share of own funds, whereas the borrowing of funds was limited to approximately EUR 70 million. The robustness of the financing structure is reflected in loan to value (LTV), which at 50.1 percent was one percentage point lower in 2015 than the comparative figure for the previous year. The average interest rate on borrowed funds declined from 2.6 percent in the previous year to 2.3 percent in the reporting year.
The complete annual financial statements are expected to be available at the end of March on the website of Westgrund AG. Since Westgrund AG has been majority owned by the ADLER Group since June 2015, the figures published here are also fully included in ADLER’s consolidated financial statements.
|Consolidated income statement|
|Overall performance (EUR million)||169.4||119.2||42.2|
|Of which revenues (EUR million)||80.5||35.9||124.5|
|Of which valuation of investment properties (EUR million)||72.0||78.9||-8.8|
|Operating result (EUR million)||106.2||92.2||15.2|
|EBT (EUR million)||91.3||71.6||27.5|
|Consolidated net result (EUR million)||75.0||60.2||24.6|
|Funds from operations I (EUR million)||19.2||5.6||241.9|
|Funds from operations II (EUR million)||22.1||6.1||259.9|
|FFO I / share (undiluted) (EUR)||0.25||0.19||31.6|
| Consolidated balance sheet (as at 31 December)
|Investment properties (EUR million)||888.1||712.0||24.7|
|Equity (EUR million)||379.6||287.6||32.1|
|Equity ratio (%)||40.0||35.5||+ 4.5 PP|
|Non-current debt (EUR million)||518.0||456.4||13.4|
|Total assets (EUR million)||950.0||809.4||17.4|
|Net asset value (NAV) (EUR million)||418.7||313.5||33.6|
|NAV / share (undiluted) (EUR)||5.27||4.24||24.5|
|LTV||51.1||50.1||+ 1.0 PP|
| Portfolio (investment properties as at 31 December)
|Number of units||18,769||16,104||16.6|
|Of which residential units||18,478||15,874||16.4|
|Of which commercial units||291||230||26.5|
Dr Rolf-Dieter Grass
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