The listed real estate investment company S IMMO AG can look back on three successful quarters with net income for the period of €99.1 million. Herwig Teufelsdorfer, Management Board member at S IMMO AG, comments: “Despite the challenging conditions, our key performance indicators remain stable. Total revenues as of 30 September 2022 were more than €40 million higher than in the prior year period. This was, next to the newly acquired objects, in large part due to the considerable increase in revenues from hotel operations. Now, we are in the process of realising value increases through the sale of residential properties in Germany as well as sustainably boosting our cash flow through the acquisition of high-yield properties.”
Increase in revenues and gross profit
Total revenues rose from €142.9 million in the prior-year period to €185.1m thanks to acquisitions of rented properties, good like-for-like performance as well as revenues from hotel operations. Rental income came to €112.7 million (Q3 2021: €97.3 million) while revenues from hotel operations nearly doubled from €19.9 million in the first three-quarters of 2021 to €38.3 million. The gross profit thus rose by more than 23 percent to €99.7 million (Q3 2021: €81.1m).
Lower EBIT due to decreased revaluation surplus
Administrative expenses rose from €19.6 million in the prior-year period to €23.3 million. Among other things, this increase was driven by costs relating to a digitalisation offensive and one-off effects relating to staff costs. Due to the strong operating performance, EBITDA rose by more than 24 percent to €76.4 million (Q3 2021: €61.5 million), despite the increase in administrative costs.
Due to market conditions, the result from property valuation of €27.3 million (Q3 2021: €145.3 million) was less high than in the previous year, but clearly positive and led to a lower EBIT of €96.4 million (Q3 2021: €199.6 million) despite the positive operating development.
Net income for the period and earnings per share
Due to positive, largely non-cash valuation effects stemming primarily from interest rate derivatives, the financial result improved to €15.5 million (Q3 2021: minus €8.3 million). All in all, the net income for the period came to €99.1 million (Q3 2021: €160.5 million), with earnings per share of €1.40 (Q3 2021: €2.25).
Capital market and takeover bid
Conditions in the international capital markets remained difficult in the third quarter as well. The Austrian benchmark index ATX continued its downtrend with a year-to-date performance of minus 30.3 percent while the sector index IATX closed on 30 September 2022 at minus 20.7 percent. Supported by the takeover bid of CPI Property Group S.A., the S IMMO share posted a year-to-date performance of 4.4 percent as of 30 September 2022. After the expiry of the additional acceptance period for the takeover bid on 18 November 2022, CPI Property Group S.A. announced that it held a total of 88.37 percent of S IMMO directly and indirectly through IMMOFINANZ AG. On 25 November 2022, the closing price was 16.86.
Strategy update and acquisitions
After the intention to realise value increases in the German residential property portfolio in the near future was announced, the first disposals were successfully initiated in the third quarter. The proceeds will be reinvested in high-yield properties, currently with a focus on the Hungarian market. Office properties and a plot of land were purchased from CPI Property Group at the beginning of November, which is expected to bring roughly €16 million in additional rental income per year from November 2022 on.
Turbulent macroeconomic conditions and geopolitical events such as the war in Ukraine, international interest rate policy, inflation, and further COVID-19 developments continue to make concrete predictions difficult.
Holger Schmidtmayr, Management Board member at S IMMO AG, notes: “Our business model, which has proved to be highly crisis-resistant in the past, and the fact that we are part of a large international property group are both sources of new growth potential. We are focusing on continuity in our core business: purchasing, letting and managing high-yield properties to boost cash flow on a lasting basis.”