S IMMO AG announced a successful first half of the year 2022, as it significantly improved its vital operating figures during HY 2022. Bruno Ettenauer, CEO of S IMMO AG, commented: “Despite highly volatile market conditions, S IMMO made it through the first half of the year in good shape. The current half-year results once again confirm the robustness of our business model and the profitability of our property portfolio. By completing high-quality acquisitions and competently managing our buildings, S IMMO generates increasing cash flows that provide us with a secure basis and open up opportunities for us in view of the challenging circumstances.”
Increase in revenues and gross profit
In the first half of the year, total revenues increased year-on-year from EUR 91.1m to EUR 119.6m. This improvement is due to acquisitions of rented properties, good like-for-like performance and a significant increase in revenues from hotel operations, which amounted to EUR 23.7m (HY 2021: EUR 10.2m). While rental income rose from EUR 63.9m to EUR 73.0m, gross profit from hotel operations increased from EUR 2.2m in the first half of 2021 to EUR 5.2m. Despite a substantial rise in property management expenses to EUR 38.5m (HY 2021: EUR 31.9m) due to acquisitions and higher energy costs, gross profit advanced by more than 19 percent to EUR 63.4m (HY 2021: EUR 53.2m).
Increase in EBITDA, a positive valuation result
Administrative expenses amounted to EUR 14.5m for the first half of 2022 (HY 2021: EUR 13.6m), partially as a result of costs in connection with a digitalisation offensive and higher staff costs. According to Herwig Teufelsdorfer, CIO of S IMMO, “The investment in digitalisation represents a major contribution towards securing S IMMO’s future viability. The implementation of our digitalisation project makes potential savings evident and allows for smart portfolio management, enabling us to continue generating added value on a sustainable basis.” Thanks to the considerably higher gross profit, EBITDA rose by more than 23 percent to EUR 48.9m (HY 2021: EUR 39.6m).
Despite a significant decline, the result from property valuation was still positive at EUR 20.8m (HY 2021: EUR 131.5m). Due to lower property values, however, EBIT decreased from EUR 166.3m to EUR 64.8m despite the positive operating performance.
Net income for the period and earnings per share
The financial result improved to EUR 0.1m (HY 2021: EUR -2.2m) due to positive, mostly non-cash revaluation effects. However, the first half of 2021 was still influenced by dividend income for the shares in CA Immobilien Anlagen AG sold in the second half of 2021 in the amount of EUR 6.3m. Tax expenses essentially reflect the increase in deferred taxes in connection with the revaluation of properties and derivatives. Net income for the period amounted to EUR 61.9m in total (HY 2021: EUR 137.3m) while earnings per share came to EUR 0.88 (HY 2021: EUR 1.93).
Primarily due to the mandatory offer by CPI Property Group S.A., the S IMMO share largely remained unscathed by the downwards trend on the capital markets and was listed at EUR 22.75 as of 30 June 2022, with a positive year-to-date performance of 4.6 percent. After the shareholders of S IMMO voted by a clear majority at the Annual General Meeting on 01 June 2022 to revoke the cap on maximum voting rights, the stage was set for CPI’s mandatory bid. The offer documents were published on 15 July 2022. When the initial acceptance period expired on 12 August 2022, CPI, directly and indirectly, held a stake of 79.20 percent in S IMMO according to the investment notice published on 23 August 2022. The additional acceptance period for the bid ends on 18 November 2022.
Outlook for 2022
The macroeconomic environment is currently very volatile due to the war in Ukraine, the shape of international interest rate policy in connection with how inflation continues to develop and further developments regarding COVID-19 and the global supply bottlenecks, which makes it difficult to provide an outlook on this time. The fact that S IMMO has had a major shareholder since the middle of August, who holds a controlling interest of around 80 percent, also contributes to this. Friedrich Wachernig, COO of S IMMO, had the following comment: “The focus is on our core business – buying, managing and letting high-quality, high-yield properties. Due to the stagnating prices on the German residential property market, we are currently considering divestment options, which would allow for reinvestments in properties in CEE with solid returns.”