conwert Immobilien Invest SE: Clear leap in earnings in first half 2015

Due to improved profitability and lower financing costs - new FFO I guidance

Vienna (pta027/25.08.2015/22:30 UTC+2) -
+ Net Rental Income (NRI) at EUR74.6 mn slightly above last year's results despite sales - NRI margin increased to 65.8% from 61.4% due to improved profitability
+ Operating expenses down 13.9% at EUR27.8 mn
+ Financial costs decreased by 55.8% owing to lowered interest cost and significantly reduced non-cash impact of swaps. Cash cost of debt improved by 14.5%
+ Turnaround: healthy consolidated profit at EUR24.5 mn
+ FFO I at EUR25.7 mn in first half 2015 (1-6/2014: EUR15.4 mn). Guidance for 2015 to be raised by 20% from EUR40 mn to EUR48 mn

conwert Immobilien Invest SE, listed on the Austrian ATX, was able to substantially improve its operative performance and significantly increase its profit owing to significantly higher operating profitability and lower financing costs.

During the first six months of the financial year, rental income fell by 6.4% to EUR113.5 mn (1-6/2014: EUR121.2 mn). This decline is due to property sales in the course of the portfolio streamlining as conwert continues to focus on residential property in metropolitan regions in Germany and Austria. On a like-for-like basis, however, rental income increased by 1.3% overall including rental income from commercial properties. Net rental income (NRI) was slightly above the previous year level at EUR74.6 mn (1-6/2014: EUR74.4 mn). This increase, which is owing to significantly improved operational efficiency, is also reflected by the NRI margin, which has increased sharply to 65.8% (1-6/2014: 61.4%) year-on-year. On an adjusted basis deducting costs charged to tenants from rental income in order to compare the NRI margin to the German residential peers it increased to 87.1% (1-6/2014: 83.2%).

At 8.9%, the vacancy rate has fallen below 9% for the first time. Compared to the same period of the previous year (1-6/2014: 10.2%) it has thus been reduced by 12.7%.

At EUR92.5 mn, sales revenues rose significantly as compared to the previous year (1-6/2014: EUR36.3 mn). Of this total, EUR55 mn are accounted for by commercial property sold in line with the strategy to focus on residential property in Germany and Austria. The portfolio streamlining programme implemented by the management in March 2015 is well on track. Management expects to sell between EUR150-200 mn of commercial properties in 2015.

Additional increased efficiency has been attained with regards to personnel and other operational expenses. Compared to the same period of the previous year, personnel expenses fell by 9.3% to EUR12.5 mn, while other operational expenses decreased by 17.5% to EUR15.3 mn.

Compared to the previous year, earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 7.8% to EUR59.2 mn (1-6/2014: EUR54.9 mn), owing to the significantly improved operative performance. At EUR61.5 mn, earnings before interest and taxes (EBIT) exceeded that of the previous year (1-6/2014: EUR47.1 mn) by 30.6%.

The financial result improved significantly during the reporting period to EUR(32.3) mn (1-6/2014: EUR(73.1) mn). While financial expenses had been negatively impacted by non-cash effects of swaps in the financial year 2014, the interest rate recovery resulted in a balanced effect of non-cash impacts in 1-6/2015. Moreover, also cash cost of debt decreased by 14.5% to EUR(31.9) mn from EUR(37.3) mn in the same period last year.

Significantly improved operative performance and decreased financial cost led to an EBT of EUR29.2 mn in the 2015 reporting period as compared to EUR(26.0) mn. Following a loss of EUR(23.1) mn in the previous year, the consolidated earnings increased to EUR24.5 mn, which is the second best half year result and the best operating result ever.

Loan to value (LTV), i.e. debt in relation to property projects minus cash and cash equivalents, further improved to 51.8% (31/12/2014: 53.6%). Assuming conversion of the in-the-money convertible bonds the LTV ratio improved to 45.4% (31/12/2014: 47.5%).

In line with increased operating performance, funds from operations before sales and one-off items (FFO I) rose sharply by 66.9% to EUR25.7 mn in 1-6/2015 (1-6/2014: EUR15.4 mn). FFO II (FFO I plus sales income) stood at EUR29.0 mn, following on from EUR18.7 mn in the comparable period.

Thomas Doll, conwert Executive Director and CFO, emphasizes the positive development of the company: "Figures for the first half of 2015 show that management-initiated projects to increase profitability and operational efficiency are indeed effective. conwert's leadership team has remained focused on our agreed strategy, producing a set of results which may be considered the best half year operational results so far achieved. We are also making good progress with the financial review aiming at strengthening the company's financial structure and reducing financial cost significantly."

For the 2015 financial year, conwert expects to be able to further progress towards higher profitability and sustainable profit growth. In the same vein, management expects the vacancy rate to fall below 8% while lowering expenses in 2015. Sales of commercial properties are forecast at a total of EUR150 mn to EUR200 mn in 2015 and at a similar level in 2016 in the course of the portfolio streamlining, which will have a decreasing effect on conwert's NRI. Management will raise FFO I guidance for 2015 on the back of increased operating efficiency and reduced financing cost by 20% from EUR40 mn to EUR48 mn.

The interim report on 1-6/2015 of conwert Immobilien Invest SE is available on the website http://www.conwert.com.

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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.

Key performance indicators		1-6/2015	1-6/2014	Change	2014
Rental income	EUR mn	113.5	121.2	-6.4%	237.3
Proceeds from sale of properties	EUR mn	92.5	36.3	154.8%	133.5
Revenues from property services	EUR mn	3.7	4.5	-17.7%	10.5
Total revenue	EUR mn	209.7	162.0	29.4%	381.2
EBITDA	EUR mn	59.2	54.9	7.8%	109.9
EBIT	EUR mn	61.5	47.1	30.5%	121.6
EBT	EUR mn	29.2	(26.0)	N.M.	(9.9)
Funds from operations before sales income (FFO I) *)	EUR mn	25.7	15.4	66.9%	34.8
Funds from operations including sales income (FFO II) **)	EUR mn	29.0	18.7	55.4%	39.0
Net rental income (NRI)	EUR mn	74.6	74.4	0.3%	150.7
NRI margin	%	65.8	61.4	7.1%	63.5
Adjusted NRI margin ***)	%	87.1	83.2	4.7%	85.0
Basic earnings per share	EUR	0.28	(0.30)	N.M.	(0.14)
Diluted earnings per share	EUR	0.27	(0.30)	N.M.	(0.14)
FFO I *) per share	EUR	0.31	0.19	63.2%	0.42

*) FFO I: Earnings before tax (EBT) - difference between sales and carrying amount of sold properties + operating expenses of sales income -/+ revaluation gains/losses + depreciation and value adjustments + non-cash components of financial income and other non-cash costs not including non-controlling interests + restructuring costs/one-off costs
**) FFO II: FFO I + difference between sales and carrying amount of properties sold - operating expenses of sales income
***) Adjusted NRI margin: Margin on net rental income (rental income less running costs charged to tenants)

Balance sheet indicators		30/06/2015	30/06/2014	Change
Total assets	EUR mn	2,925.6	2,974.0	-1.6%
Non-current loans and borrowings	EUR mn	975.9	1,120.4	-12.9%
Current loans and borrowings	EUR mn	294.3	221.3	33.0%
Equity	EUR mn	1,155.2	1,104.6	4.6%
Equity ratio	%	39.5	37.1	6.5%
Gearing	%	131.1	143.8	-8.8%
Basic EPRA NAV per share	EUR	15.82	15.23	3.9%

Property portfolio		30/06/2015	30/06/2014	Change	31/12/2014
Rental units	No.	29,896	31,451	-4.9%	30,385
Parking spaces	No.	12,340	14,011	-11.8%	13,573
Total usable space	1,000 sqm	2,363	2,561	-7.7%	2,473
Property assets	EUR mn	2,757.1	2,843.4	-3.0%	2,810.5
Vacancy rate	%	8.9	10.2	-12.7%	9.0
ø Rent	EUR/sqm/m	6.37	6.24	2.1%	6.27

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