Results from property valuation that were clearly positive in all regions and a record profit for the period and earnings per share confirm the steep upward trajectory of the listed real estate investment company S IMMO AG. Bruno Ettenauer, CEO of S IMMO, commented: “Despite the challenges presented in 2021 above all by the takeover offer from IMMOFINANZ and the continued pandemic, we resumed our growth and were back at pre-crisis levels at the halfway point of the year. Our multi-asset approach and focus on holding properties over longer periods proved their worth, and our total return saw double-digit growth. We intend to continue on this successful course in 2022.”
Substantial increase in gross profit
The rental income for the 2021 financial year totalled €131.3 million and was 6.5 percent higher than the prior-year level of €123.3 million. This increase in times of crisis can be attributed to property acquisitions, prudent management of the portfolio properties, and the high quality of the portfolio. Property management expenses amounted to €66.8 million (2020: €66.8 million), remaining largely unchanged despite property acquisitions and associated increases in operating costs. This was due above all too substantial improvements in the write-off and revaluation of receivables.
The gross profit from hotel operations improved considerably over the prior year to €7.5 million (2020: € -0.3 million). However, it was still substantially lower than before the onset of the pandemic (2019: €16.9 million) due to the negative impacts of COVID-19. It remains to be seen how city tourism will develop in the coming quarters. The gross profit for the entire property holdings, which reflects the operating performance of the rented properties and of the owner-operated hotels, increased substantially to €109.5 million (2020: €91.5 million) and was thus at around the same level as in 2019 (€109.7 million).
Significant improvement in the valuation and financial result
Management expenses rose from €20.4 million in 2020 to €28.2 million primarily due to a series of one-off effects, including outlay relating to the takeover offer by IMMOFINANZ AG and changes in the Management Board.
At €198.7 million, the result from property valuation saw substantial improvement (2020: €39.1 million). Germany accounted for €156.0 million (2020: €52.7 million) of this, Austria for €31.8 million (2020: €8.7 million) and CEE for €10.9 million (2020: € -22.3 million). This lent weight to the uptrend of the first half of the year, and all regions also posted a positive net valuation result, unlike in the prior year.
EBIT improved more than 2.5 times in annual comparison and came to €270.3 million (2020: €101.0 million). The financial result advanced to €0.7 million (2020: €-29.4 million). This can be attributed to the dividend earnings from the investments in CA Immobilien Anlagen AG and IMMOFINANZ AG as well as to the positive net valuation effects for derivatives and the mandatory convertible IMMOFINANZ AG bond until it was converted into shares.
Record profit for the period and earnings per share
Due to the aforementioned effects, the profit for the period more than quadrupled in annual comparison and reached the best level recorded in the company’s history at €230.6 million (2020: €56.9 million). The earnings per share also rose in line with this to €3.24 (2020: €0.79).
The S IMMO shares performed well over the course of the year and ended in 2021 at a closing price of €21.75. With a gain of 28.24 percent through the end of the year, the company’s shares outperformed some international indices but lagged behind the ATX, which turned in the strongest result in the international capital market, advancing by 38.9 percent. From a shareholder perspective, the past year was altogether turbulent with the takeover offer submitted by IMMOFINANZ and then rescinded at the end of June. The previously largest shareholder in our company, IMMOFINANZ AG, was acquired by CPI Property Group S.A. at the beginning of 2022, the latter now holding 42.55 percent of the S IMMO shares in total. In terms of the dividend for this year, the Management Board intends to propose a disbursement of €0.65 per share at the Annual General Meeting based on the very successful performance over the last financial year.
S IMMO received a request from CPI Property Group on 14 April 2022 to convene an extraordinary shareholders’ meeting. The proposed resolution is the complete elimination of the voting rights cap, with the effect of the resolution being contingent upon merger control approval. CPI Property Group also announced its intention to submit a mandatory takeover offer to the shareholders of S IMMO after entry of the amendment of the articles of incorporation in the Austrian trade register. The Management Board and Supervisory Board of S IMMO AG will review the request for the convening of an extraordinary shareholders’ meeting and decide on further steps.
Focus on core business
After the sale of the equity holdings in CA Immobilien Anlagen AG in 2021 and in IMMOFINANZ AG in 2022, S IMMO is now concentrating fully on its core business of leasing and the operation of profitable assets in Germany, Austria and Central and Eastern Europe and the acquisition of properties with high earnings potential. By acquiring the two office buildings Campus 6.2 and 6.3 in Bucharest as well as BudaPart Gate in Budapest, S IMMO already added top properties to its portfolio in 2021. The next very successful acquisition took place at the beginning of April 2022 with the signing of the Expo Business Park in Bucharest. Herwig Teufelsdorfer, CIO of S IMMO AG, noted: “Our investment strategy not only increases the quality of our portfolio but also its earnings generation and sustainability. The recently acquired properties all boast high user quality and environmental standards and make substantial contributions to our bottom line. We have a strong liquidity base and will continue to pursue our investment aims.”
Outlook for 2022
Even though adverse economic and geopolitical effects such as the COVID-19 pandemic and the war in Ukraine are beyond the influence of S IMMO, the company is optimistic about the coming months. Friedrich Wachernig, COO of S IMMO, added: “The results for the reporting period are clear evidence of how robust and successful our business model is even in times of crisis, and reinforces our confidence that S IMMO continues to be well-positioned. Acquisitions, project developments and the ongoing intensive work on our portfolio form the basis for continued, profitable long-term growth.”
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