conwert Immobilien Invest SE: conwert result 2012 burdened by extraordinary effects

related to the strategic repositioning

Vienna, 21 March 2013. (pta005/21.03.2013/08:10 UTC+1) -
+ Strategic focus as long-term portfolio manager of properties in Austria and Germany
+ Solid financing for further growth based on successfully completed refinancing
+ Reduction of vacancy rate by 26.2% in the overall portfolio
+ Positive outlook and increase in FFO

conwert Immobilien Invest SE, traded on the Austrian ATX, successfully completed the financial year 2012.

"In the past year, conwert set important strategic and operating milestones for further growth," said Johannes Meran, Chairman of the Administrative Board of conwert. "We cleaned up our balance sheet in the course of refocusing our strategy and created a solid basis for the further development as a portfolio manager of residential properties in Austria and Germany with a long-term view."

Taking into account extraordinary one-off effects and the positive effects from the revaluation of the residential property portfolio in Austria and Germany in the fourth quarter of 2012, conwert met the target EBT of EUR 50 million for the financial year 2012.

Revenues dropped by 26.7% year-on-year, from EUR 852.9 million to EUR 625.1 million, which was primarily attributable to the planned reduction of proceeds on property sales to EUR 409.6 million (2011: EUR 613.3 million). However, the margins realised amounted to an average of 9.2% and were above the IFRS carrying amount at the upper end of the target corridor of 5% to 10% for 2012. Rental income dropped by 10.4% from EUR 210.0 million to EUR 188.1 million as the portfolio was significantly smaller overall. However, management efficiency was improved further, causing the NRI margin (NRI: net rental income) to rise to 58.7% (2011: 56.7%). Service revenues, at EUR 27.3 million, fell slightly short of the prior-year figure of EUR 29.5 million due to reduced sales activities and commissions.

Adverse effects on result through one-off effects and portfolio revaluation
The decision made with the acquisition of KWG to focus on portfolio management in the future brings along a planned significant reduction of sales activities going forward. As goodwill is based especially on the sales margins expected in the future, the entire goodwill recognised in the balance sheet in the amount of EUR 114.8 million and customer and management relationships amounting to EUR 2.8 million were written down.

"The objective is for conwert to become less dependent on cyclical proceeds on property sales in the medium term, in order to become a sustainable dividend-paying security on the basis of stable rental income and service revenues in the long term," said Johannes Meran, Chairman of the Administrative Board of conwert.

In addition, properties which are not part of the core business were revalued in view of the sustained difficult market situation in parts of Europe. This led to negative fair value adjustments of roughly EUR 41 million for properties in CEE and Luxembourg (including ECO properties) and of roughly EUR 30 million for individual office properties of the ECO portfolio in Austria and Germany.

Taking into account negative extraordinary effects, earnings before tax amounted to EUR (154.6) million in the financial year 2012 (2011: EUR 23.6 million). conwert realised an operating result of EUR (58.5) million overall (2011: EUR 119.8 million). Funds from operations (FFO I before sales and one-off effects) amounted to EUR 20.7 million (2011: EUR 17.9 million), which corresponds to an increase by 15.6%.

Refinancing successfully completed
Despite a generally difficult environment for refinancing, conwert placed a corporate bond of an aggregate principal amount of EUR 65 million in June 2012 and extended the term of part of the existing convertible bonds for four years by issuing new convertible bonds of a volume of EUR 80 million. As interest hedges for borrowed capital were lowered, non-cash costs of EUR 5.4 million were incurred, which have a one-time effect on the financial results. However, in the medium term conwert will reduce its interest rate as a result of this measure.

"Since conwert's refinancing was successfully completed in the past months, conwert's refinancing requirements are now significantly lower and consist of smaller parts", said Thomas Doll, Executive Director of conwert. "This provides conwert with an excellent basis for the operational implementation of its strategic objectives today."

Following the successful placement of the corporate bond, the loan-to-value ratio (LTV) equalled 54.4% at 31 December 2012, thus slightly below the target of 55% (31.12.2011: 54.0%). The equity ratio declined slightly to approx. 36% due to the high unscheduled depreciation and amortisation (31.12.2011: 39.3%)

As of 31 December 2012, the value of the conwert portfolio totalled EUR 2,510.7 million (2011: EUR 2,828.6 million); the portfolio consisted of 1,502 objects (2011: 1,666) with total usable space of 1.92 million sqm (2011: 2.15 million sqm). The share of properties in Germany in the portfolio will amount to nearly 60% of the total portfolio after the consolidation of KWG. At the end of the year 2012 the vacancy rate in the portfolio overall amounted to 10.7% (2011: 14.5%). This positive development corresponds to an improvement by 26.2% und was to a great extent driven by the development and sales activities in the ECO portfolio.

Outlook 2013
With a view to the property portfolio, conwert plans to gradually expand the core business as a portfolio holder by targeted acquisitions of lucrative residential property portfolios with high appreciation potential in Austria and especially in Germany. Attention will be directed above all at portfolios in the German metropolitan regions in a range from EUR 50 to 200 million. In order to further define the strategic focus, conwert will sell the properties in the CEE countries and commercial properties, especially from the ECO portfolio, within the next one to two years.

In the financial year 2013, conwert aims to improve funds from operations (FFO) to EUR 25 million. Looking at the core portfolio in Germany and Austria, the objective is to further reduce the vacancy rate, which should be lower than 10% at the end of the current financial year.

The Executive Board and the Supervisory Board will propose not to pay out a dividend on the Annual General Meeting on 8 May 2013. However, in the follow-up to the capital decrease, which was initiated in 2012, a special dividend will be paid in the form of a capital distribution (without capital gains tax) in the amount of EUR 0.15 per share. The Management assumes to be able to propose a dividend of at least EUR 0.20 per share for the financial year 2013.

The annual report 2012 of conwert Immobilien Invest SE is available on the website http://www.conwert.at.

Company indicators

		2012	2011	Change in %
Rental income	mill. EUR	188.1	210.0	(10.4)
Proceeds on sale	mill. EUR	409.6	613.3	(33.2)
Service revenues	mill. EUR	27.3	29.Mai	(7.5)
Revenues	mill. EUR	625.1	852.9	(26.7)
Earnings before interest, taxes and depreciation (EBITDA)	mill. EUR	97.2	124.8	(22.1)
Depreciation, amortisation and other impairment charges	mill. EUR	(118.5)	(5.3)	-
Earnings before interest and taxes (EBIT)	mill. EUR	(58.5)	119.8	-
Funds from Operations I *) (excl. sales and one-off effects)	mill. EUR	20.Jul	17.Sep	15.Jun
Funds from Operations II **)	mill. EUR	43.0	81.3	(47.1)
Net Rental Income (NRI)	mill. EUR	110.5	119.1	(7.2)
NRI Marge	%	58.7	56.7	03.Mai
Non-diluted earnings/share	EUR	(2.06)	0.28	-
Diluted earnings/share	EUR	(1.61)	0.28	-
FFO I (excl. sales and one-off effects) *)/share	EUR	0.25	0.22	13.Jun

*) FFO I: Earnings before tax (EBT) - difference between sales and carrying amount of sold properties + operating expenses of sales result + deduction of revaluation gains + depreciation and valuation adjustments + non-cash part of financial result and other non-cash costs + one-off effects
**) FFO II: Earnings before tax (EBT) - net gain/loss from fair value adjustments + difference between cash gains on sale to IFRS gains on sale + depreciation + non-cash parts of financial result and other costs

Balance sheet indicators

		2012	2011	Change in %
Balance sheet total	mill. EUR	2,849.8	3,176.4	(10.3)
Non-current loans and borrowings	mill. EUR	921.1	1,005.9	(8.4)
Current loans and borrowings	mill. EUR	308.0	408.9	(24.7)
Equity	mill. EUR	1,025.0	1,248.3	(17.9)
Equity ratio	%	36.0	39.3	(8.4)
Gearing	%	146.9	137.2	7.1
EPRA NAV (non-diluted)/share	EUR	15.79	18.35	(14.0)

Property indicators

		2012	2011	Change in %
Number of properties	No.	1,502	1,666	(9.8)
Rental units*)	No.	20,479	22,923	(10.7)
Parking spaces*)	No.	10,795	11,213	(3.7)
Total usable space*)	sqm	1,924,433	2,210,247	(9.2)
Property assets	mill. EUR	2,511	2,829	(11.2)

*) As of 30 June 2012, units and usable space are shown excluding parking spaces. The comparative figures for the financial year 2011 were adjusted to the new system and are therefore not comparable with the annual report 2011.

This report contains forward-looking estimates and statements that were made on the basis of the information available at this time. Forward-looking statements reflect the point of view at the time they are made. We would like to point out that the actual circumstances and, consequently, the actual results realised at a later date may differ from the forecasts presented in this report for a variety of reasons.

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