conwert Immobilien Invest SE: conwert achieves success in operating business and increases FFO I in first quarter 2016

Vienna (pta007/30.05.2016/08:13 UTC+2) -
+ FFO I up by 42.6% to EUR 18.2 mn
+ Rental income rises by 2.9% across entire portfolio
+ Total vacancy rate falls by 23.0% to 7.2%
+ FFO I guidance for 2016 increased to EUR 70 mn

conwert Immobilien Invest SE (conwert), listed on the ATX, has further increased profitability in operating business in addition to achieving a significant increase in FFO I for the first quarter of 2016.

In the first quarter of 2016 conwert's revenues underwent a decline against the first quarter of 2015, as expected, by 13.7% from EUR 106.9 mn to EUR 92.3 mn. The decrease is due to lower sales revenue in the first quarter of 2016 as well as the focus on the core assets in the portfolio. This led to a fall in proceeds from the sale of properties in the first quarter of this year of 23.8% to EUR 38.2 mn (1-3/2015: EUR 50.1 mn). However, in the course of streamlining the portfolio, sales worth around EUR 145 mn have already been signed or completed. This means that conwert is right on track to achieve its target of EUR 300 - 350 mn in sales proceeds from portfolio streamlining in 2016.

Despite the reduction in the portfolio by the end of the reporting period of 9.0% to 27,473 rental units (31.3.2015: 30,180 rental units), rental income only slipped back slightly by 4.6% to EUR 52.6 mn (1-3/2015: EUR 55.2 mn) and the net rental result (NRR) declined by just 4.9% to EUR 36.1 mn (1-3/2015: EUR 38.0 mn). As a key indicator of operating efficiency, the NRR margin of 68.7% held steady at the level of the previous year (1-3/2015: 68.9%). The adjusted NRR margin - rental income less running costs charged to tenants - even improved slightly by 1.3% to 88.8% (1-3/2015: 87.7%).

On a like-for-like basis conwert managed to realise an increase in rents of 2.9% across the whole portfolio and of 3.1% in the core portfolio. In the core residential portfolio the average monthly rents in Austria rose from EUR 6.09/sqm/m to EUR 6.28/sqm/m (+3.2%) and in Germany from EUR 5.60/sqm/m to EUR 5.77/sqm/m (+2.9%). The average vacancy rate across the entire portfolio was reduced by a total of 23.0% to 7.2% as of the reporting date (31.03.2015: 9.4%). This was facilitated by the sale of properties with higher vacancy rates as well as the proactive management of portfolio properties.

FFO I (funds from operations before sales and one-off effects) - a key performance indicator for conwert - increased significantly in line with the operating improvements by 42.6% to EUR 18.2 mn in the first quarter of 2016 (1-3/2015: EUR 12.7 mn). FFO II (FFO I plus sales income) stood at EUR 19.4 mn, following on from EUR 14.5 mn in the comparable period of the previous year.

The financial result improved by 4.2% to EUR (24.7) mn, even though it was severely influenced by non-cash effects from derivatives of EUR 15.5 mn. In 2015 conwert sharply reduced its derivative volumes; however, owing to the ongoing sharp declines in interest rates, there was a decrease of EUR 9.1 mn in the ineffective market value of derivatives in the first quarter of 2016. A further EUR 6.4 mn derived from the ongoing close-out of the cash flow hedge reserve related to derivatives that have already been terminated and/or restructured.

The adjustment to derivative volumes and the renegotiation of mortgage loans led to a sharp fall in cash effective financing costs to EUR (7.9) mn (1-3/2015: EUR (16.1) mn), while the cash effective interest rate after hedging fell to 2.2% (1-3/2015: 3.9%).

The lower sales proceeds, the reduction in rental income as a result of sales, and the one-off effects in the eventful first quarter of 2016 resulted in a yoy decline in conwert's EBIT to EUR 25.1 mn (1-3/2015: EUR 32.5 mn). Impacted by non-cash effects on net finance costs in the first quarter of 2016, EBT stood at EUR 0.4 mn (1-3/2015: EUR 6.7 mn). Group earnings after tax totalled EUR (4.0) mn (1-3/2015: EUR 2.5 mn).

The loan to value (LTV) - debt in relation to property assets including cash and cash equivalents - underwent a further reduction and stood at just 47.2% at 31 March 2016 (at 31.12.2015 the LTV still stood at 49.2% taking the conversion of the 5.25% convertible bonds into account which expired in January 2016 and were almost fully converted). The equity ratio was up slightly to 45.7% at 31 March 2016 (31.12.2015: 43.8%).

The consistent efforts to optimise the management of the portfolio, increase rental income and sell off non-core properties will continue in 2016.

For the full year 2016 conwert expects an increase in FFO I (before sales income and one-off effects) to EUR 70 mn, partly as the result of operating improvements. In 2015 the FFO I stood at EUR 53.4 mn. The restructuring that began in 2015 will be completed in 2016 and will subsequently contribute to reducing material and personnel costs.

Wolfgang Beck, conwert CEO, on the interim results: "In the first quarter of 2016 conwert has achieved further, sustainable improvements in its operating performance. The progress made in increasing rents, reducing vacancies, cutting costs and streamlining the portfolio have given us the confidence to increase our FFO I guidance from EUR 65 mn to EUR 70 mn".

CFO Thomas Doll added: "In the first quarter of 2016 conwert managed to achieve a further fall in interest costs with an impact on cash to 2.2%, whereby we see further room for improvement in 2016".

The interim report 1-3/2016 of conwert Immobilien Invest SE is available on the website http://www.conwert.com.

Key performance indicators		1-3/2016	1-3/2015	Change	1-12/2015
Rental income	EUR mn	52.6	55.2	-4.6%	226.1
Proceeds from the sale of properties	EUR mn	38.2	50.1	-23.8%	272.6
Revenues from property services	EUR mn	1.5	1.6	-6.7%	7.7
Total revenue	EUR mn	92.3	106.9	-13.7%	506.4
EBITDA	EUR mn	24.1	29.9	-19.4%	116.6
EBIT	EUR mn	25.1	32.5	-22.9%	181.3
EBT	EUR mn	0.4	6.7	NM	100.7
Group earnings after tax	EUR mn	(4.0)	2.5	NM	83.3
Funds from operations before sales income (FFO I) *)	EUR mn	18.2	12.7	42.6%	53.4
Funds from Operations after sales income (FFO II) **)	EUR mn	19.4	14.5	33.9%	64.8
Net rental result (NRR)	EUR mn	36.1	38.0	-4.9%	148.8
NRR margin	%	68.7	68.9	-0.3%	65.8%
Adjusted NRR margin ***)	%	88.8	87.7	1.3%	87.2%
Basic earnings/share	EUR	(0.05)	0.02	NM	0.95
Diluted earnings/share	EUR	(0.05)	0.02	NM	0.85
FFO I *)/share	EUR	0.20	0.15	28.6%	0.64
Financial result	EUR mn	(24.7)	(25.8)	-4.2%	(80.6)

*) 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 interests of associates + restructuring costs/one-off costs
**) FFO II: FFO I + difference between sales and carrying amount of sold properties - net sales income expenses
***) Adjusted NRR margin: margin on net rental income (rental income less running costs charged to tenants

Balance sheet indicators		31.03.2016	31.12.2015	Change
Total assets	EUR mn	2,863.2	2,888.5	-0.9%
Non-current loans and borrowings	EUR mn	1,066.0	1,028.2	3.7%
Current loans and borrowings	EUR mn	162.0	246.3	-34.2%
Equity	EUR mn	1,307.7	1,264.8	3.4%
Equity ratio	%	45.7	43.8	4.3%
Gearing	%	93.7	107.3	-12.7%
Diluted EPRA NAV/share	EUR	15.72	15.72	0.0%

Property portfolio		31.03.2016	31.03.2015	Change	31.12.2015
Rental units	No.	27,473	30,180	-9.0%	27,494
Parking spaces	No.	11,199	12,739	-12.1%	11,386
Total usable space	sqm	2,164,386	2,409,272	-10.2%	2,175,867
Property assets	EUR mn	2,677.2	2,776.9	-3.6%	2,692.3
Vacancy rate	%	7.2	9.4	-23.0%	6.6%
ø Rent	EUR /sqm/m	6.44	6.29	2.4%	6.42
l-f-l NCR growth
(% yoy)	%	2.9%	2.1*)	38.1%	1,5%

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This release contains forward-looking 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 realized at a later date, may differ from the forecasts presented here for a variety of reasons.

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