Sparkassen Immobilien AG

EANS-Adhoc: Sparkassen Immobilien AG: final results 2008 Profit despite difficult environment

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annual report


Stock exchange listed Sparkassen  Immobilien  AG  (Bloomberg:   SPI:AV,  Reuters: SIAG.VI) closed 2008 - an  economically extremely difficult year - with a  clear profit despite devaluations, and boosted both revenues and rental income.

In comparison with the previous year Sparkassen  Immobilien  AG's   revenues  and rental income both grew by 14%, to  EUR109.2m  and   EUR85.7m  respectively.  The Group exceeded its revenue forecasts considerably. This positive performance  is attributable to additional property purchases  and  new  lettings.  Analysis  of rental income by region shows that the majority  of  rents  (71%)   continued  to come from Austria  and  Germany.  By  property  use   type,  rental  income  from residential property  has  shown  the   greatest  increase.  The  acquisition  of additional residential buildings in Germany, which are generally less  dependent on economic fluctuations, increased the proportion of residential rental  income from 22% in the previous year to 33% in the year under review.

Market turbulence and the general sector trends led to Sparkassen Immobilien  AG devaluing its portfolio by a  total  of  EUR101.7m.   The  German  portfolio  was devalued by 8% and the CEE portfolio by 13.5%. A major part of these  writedowns was made good by increases   in  value  elsewhere,  so  that  the  net  writedown amounted  to   EUR-30.7m.  The  valuation  gains  were  largely  the  result    of successful completion of the Gemini commercial and  office  property in  Prague and the consequent revaluation from at cost to current market value, as well  as profitable asset management activities, such as the conversion  of  the  Novotel hotel in Bucharest.

The sale of eight properties from the property portfolio in 2008   brought  gains of EUR8.3m. The assets were sold on average 19% in excess  of  the  most  recent estimated values.

EBITDA fell by 25%, from EUR78.9m to EUR59.2m.  The  target  EBIT   for  2008  of EUR36-48m was not attainable because of the marked deterioration in  the  market environment in the last quarter of the year. Actual EBIT for  2008  of  EUR23.8m was nonetheless still significantly positive (2007: EUR100m). The  decrease  was predominantly a consequence of valuation write-downs,  compared  with gains  of EUR41.1m in the previous year, leading to a  valuation   difference  of  EUR71.8m compared to the previous year. The net financing cost fell back  from  EUR-20.5m to EUR-9.6m, reflecting the greatly increased financing income in  the  form  of interest income, currency gains and income from interests.

EBT fell from EUR35.4m to EUR7.8m. The consolidated net profit for the year  was EUR5.7m. Sparkassen  Immobilien  AG's  net  operating   income  (NOI)  rose  from EUR64.5m to EUR67.9m, an increase of 5%. The NOI margin (NOI/revenues) stood  at 60%. Cash flow from operations  rose  from  EUR49.4m  to  EUR50.0m.  Funds  from operations (FFO) fell by  22%,  and  for  the  year  under  review   amounted  to EUR34.2m (2007: EUR43.8m).

Sparkassen Immobilien AG's property portfolio in financial 2008 grew by  9%  to 1,511,400 m2 and 263 properties, mainly  as  a  result  of the  acquisition  of 34 standing properties in Germany and six properties  in  Austria,  Croatia  and Slovakia. The value of the portfolio at the end of 2008, at EUR 1.78bn, was  15% higher than at the end of the previous year.  Development  projects,  which  are recognised at cost of construction, made up  16%  of  the  total   value  of  the portfolio.

Residential property made up 44% of the standing  portfolio,  with   the  balance consisting of office properties (28%), commercial properties (17%), hotels  (7%) and other properties (4%). More than half of the rental property is in  Germany, with 27% of the portfolio in Austria and the  remaining  22%  in  Slovakia,  the Czech Republic, Croatia, Romania and Hungary. With the  exception  of  a   single office property in EU candidate country Croatia, all Sparkassen Immobilien  AG's properties are in EU states.

The occupancy rate of the  rental  portfolio  at  balance  sheet   date  remained unchanged, at 91%. The average  gross  rental  yield   (rent  divided  by  market value) for all countries together at 31 December 2008 was 6.7%.

The accumulated investment in development projects at 31 December 2008  totalled EUR160.8m. The following are currently under   construction:  a  residential  and office building  on  Neutorgasse   (Vienna),  a  student  hall  of  residence  on Sechshauser  Strasse   (Vienna),  shopping  centres  Sun  Plaza  (Bucharest)  and Serdika Center (Sofia), an office building Galvaniho 4  (Bratislava)  and   Hotel Vysoká (Bratislava).

With a 74% loss over the course of  the  year,  s  IMMO  share  still performed better than the I-ATX, but the year  end  closing  price   was  down  to  EUR1.98 (2007: EUR7.73). The NAV (net asset value) at the end of  2008  was  EUR8.9  per share (2007: EUR9.7),  which   combined  with  the  lower  share  price  meant  a discount to NAV of 78% at balance sheet  date.  Earnings  per  share  fell  from EUR0.38 to EUR0.09. At EUR134.9m, market capitalisation was  down  73%  down on the value at the beginning of the year under review. Since the end of 2008,  the market price of s IMMO share has improved considerably, with a year-to-date  (as at 28 April 2009) performance of + 81.8%.

With Vienna Insurance Group, Sparkassen Immobilien AG gained a second important core  shareholder  alongside  Erste  Group  in  September   2008.  The  networks, expertise and integrity of  both  Companies  - two  of  the  largest  financial services institutions in the region -  strengthen  the  future  development  of Sparkassen Immobilien AG.

In the interests of a lean, easy-to-understand  management   structure,  in  2008 the most important management  functions  and   staff  were  brought  inside  the Company and integrated internally. In the process, the services provided by  the Group's external partner, Immorent AG, were re-negotiated and embodied in a  new management agreement. Bringing management in-house was entirely without cost  to Sparkassen Immobilien AG's shareholders.

Sparkassen Immobilien AG's strategic focus in 2009 will be  on   optimisation  of the existing portfolio, proactive asset management, completion  of  development projects under construction, and concentration on favourable  opportunities  for property purchases and sales.  The  property  portfolio  will  grow  to  roughly EUR2bn in 2010.

Consolidated income statement for the year ended 31 December 2008 EUR m / fair value basis

@@start.t2@@|01.01. - 31.12.  |01.01. - 31.12.    |Change %
                                                      |2008                    |2007

|Revenues                                      |109.2                    |95.9            |+ 14
|whereof rental income                 |85.7                      |75.0            |+ 14
|Revaluation of properties          |(30.7)                  |41.1            |
|Other operating income                |6.5                        |3.9              |
|Gains on property disposals        |8.3                        |12.6            |
|Operating revenue                        |93.3                      |153.5          |(39)
|Depreciation and amortisation    |(4.7)                    |(3.9)          |
|Other operating expenses            |(64.8)                  |(49.6)         |
|Operating profit (EBIT)              |23.8                      |100.0          |(76)
|Finance costs                              |(9.6)                    |(20.5)         |
|Expenses of Participating          |(6.4)                    |(44.2)         |
|Profit before tax (EBT)              |7.8                        |35.4            |(78)
|Taxes on income                          |(2.1)                    |(6,7)          |
|Consolidated net profit              |5.7                        |28.7            |(80)

Property information as at 31 December 2008

|Number of properties                                        |263                 |
|Total lettable space (m2)                                |1,511,400        |
|- Austria                                                         |339,900          |
|- Germany                                                         |602,700          |
|- CEE                                                                |568,800          |
|Property portfolio at fair value (EURm)         |1,778.0          |
|Occupancy rate                                                 |91%                 |
|Average rental yield                                        |6.7%                |@@end@@

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ots Originaltext: Sparkassen Immobilien AG
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Further inquiry note:
Investor Relations:
Rebecca Reichmann
Tel.: +43(0)50100-27402
Fax:  +43(0)05100-927402

Corporate Communications:
Bosko Skoko
Tel.: +43(0)50100-27522
Fax:  +43(0)05100-927522

Branche: Real Estate
ISIN:      AT0000652250
WKN:        065225
Index:    ATX Prime, Immobilien-ATX
Börsen:  Wiener Börse AG / official market

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