conwert Immobilien Invest SE: conwert generates record earnings in 2016

Vienna (pta022/20.03.2017/16:57 UTC+1) - + FFO I up by 49.7% to a record value of EUR 80.0 mn
+ Net profit improves by 51.1% to EUR 124.1 mn
+ Sales of EUR 286.7 mn concluded - EUR 617.6 mn including the HanseMerkur commercial package, which closed in early 2017
+ Net revaluation gains more than triple to EUR 206.9 mn
+ Lower FFO I expected for 2017 due to sales

conwert Immobilien Invest SE (conwert), listed on the Austrian ATX, achieved improvements in practically every key indicator in the 2016 business year. FFO I (Funds from Operations before sales and one-off items), an important indicator of the property company's operating performance, saw a year-on-year rise of 49.7% to EUR 80.0 mn (2015: EUR 53.4 mn). EBIT grew by 64.2% to EUR 297.8 mn (2015: EUR 181.3 mn). Below the line, conwert increased its consolidated earnings after tax (net profit) by 51.1% to EUR 124.1 mn, following on from EUR 82.1 mn in the previous year. The strong operating performance and positive market environment led to a significant increase in net revaluation gains to EUR 206.9 mn (2015: EUR 66.0 mn).

Revenues held steady at EUR 505.3 mn (2015: EUR 506.4 mn). Here sales proceeds climbed to EUR 286.7 mn (2015: EUR 272.6 mn), mainly because of sales from the non-core portfolio. The strategic sale of non-core properties meant that the IFRS gains on sale of EUR 14.2 mn were 25.0% lower than the previous year (2015: EUR 18.9 mn). The IFRS margin declined by 2.3 percentage points year-on-year and stood at 5.2% in 2016. The previously announced sale of a commercial property portfolio for around EUR 331 mn to HanseMerkur closed after year-end 2016. As expected, rental income slipped back - as the result of the streamlined portfolio - to EUR 211.2 mn (2015: EUR 226.1 mn).

Strong operating performance
conwert achieved significant improvements in its operating business: vacancy rates in the core residential sector fell from 3.1% in the previous year to 2.8%. On a like-for-like basis, rental income in the core portfolio underwent a 2.9% rise year-on-year. The smaller property portfolio meant that the Net Rental Result (NRR) of EUR 139.2 mn was below the value of the previous year (2015: EUR 148.8 mn). The NRR margin held steady at 65.9% (2015: 65.8%); on an adjusted basis it was 87.2% (2015: 87.2%).

Balance sheet structure strengthened, liabilities reduced
conwert significantly improved its balance sheet structure and financing terms in the 2016 business year.

The loan to value (LTV) - debt in relation to property assets - was decreased still further and stood at 40.8% at 31 December 2016 (31.12.2015: 51.0%). The equity ratio rose sharply to 48.6% (31.12.2015: 43.7%). These positive developments in the balance sheet structure were achieved through the reduction in borrowed-capital liabilities and the increase in the share capital resulting from the conversion of the 5.25% and 4.5% convertible bonds.

The average cash-effective interest rates had fallen significantly as of the reporting date to just 1.97% (2015: 2.32%). Even though the financial result was burdened by non-cash effects from derivatives, it still improved to EUR (70.4) mn (2015: EUR (80.6) mn).

Outlook
In 2017 conwert will continue to focus on developing its residential property portfolio in the core markets. Property in the non-core portfolio should be sold off where possible. The goal is to generate sales volumes of around EUR 400-450 mn in the course of the full year. The sale of a large commercial property portfolio, initiated in 2016 and closed at the start of 2017, means that a significant share of the planned volume has already been fixed. Acquisitions and the related portfolio growth depend on the market availability of attractive portfolios.

In 2016 financing costs were reduced to such a level that they even seem attractive in light of the generally low interest rate environment. Successful portfolio streamlining means that LTV is set to fall to below 40% in 2017.

Following on from conwert more than doubling FFO I in the past two business years, conwert expects an FFO I between EUR 64 mn and EUR 74 mn in 2017. This decline is primarily due to the decrease in usable space resulting from the sale of large parts of the portfolio on non-core markets in 2016 and early 2017.

The 2016 Annual Report of conwert Immobilien Invest SE will be published on 29 March 2017 on the website http://www.conwert.com.

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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.

Key performance indicators		2016	2015	Change
Rental income	EUR mn	211.2	226.1	-6.6%
Proceeds from sale of properties	EUR mn	286.7	272.6	5.2%
Revenues from property services	EUR mn	7.4	7.7	-3.4%
Total revenue	EUR mn	505.3	506.4	-0.2%
EBITDA	EUR mn	92.8	116.6	-20.4%
EBIT	EUR mn	297.8	181.4	64.2%
Financial result	EUR mn	(70.4)	(80.6)	-12.7%
EBT	EUR mn	227.5	100.7	-
Group earnings after tax	EUR mn	124.1	82.1 1)	51.1%
Funds from Operations before sales income (FFO I) 2)	EUR mn	80.0	53.4	49.7%
Funds from Operations after sales income (FFO II) 3)	EUR mn	80.5	64.8	24.3%
Net Rental Result (NRR)	EUR mn	139.2	148.8	-6.5%
NRR margin	%	65.9	65.8	0.1 PP
Adjusted NRR margin 4)	%	87.2	87.2	0.0 PP
Basic earnings per share 5)	EUR	1.24	0.93	32.4%
Diluted earnings per share 5)	EUR	1.19	0.84	42.2%
FFO I 2) per share 5)	EUR	0.85	0.64	32.5%

1) Retrospective adjustment of the equity breakdown to majority and minority shareholders due to the reallocation of a capital reserve according to IAS 8.41
2) FFO I: Earnings before tax (EBT) - difference between sales and carrying amount of sold properties + operating expenses of sales result -/+ revaluation result + depreciation and impairment + non-cash components of financial result and other non-cash costs + one-off charges - cash taxes on rental business
3) FFO II: FFO I + difference between sales and carrying amount of sold properties - operating expenses of sales result
4) Margin on net rental income (rental income less running costs charged to tenants)
5) Based on the average number of shares outstanding, less treasury shares of EUR 94.6 mn in 2016 and EUR 83.7 mn in 2015

Balance sheet indicators		31.12.2016	31.12.2015 restated 1)	Change
Total assets	EUR mn	2,987.3	2,886.1	3.5%
Non-current loans and borrowings	EUR mn	838.4	1,028.2	-18.5%
Current loans and borrowings	EUR mn	294.8	246.3	19,7%
Equity	EUR mn	1,452.6	1,260.6	15.2%
Equity ratio	%	48.6	43.7	11.3%
Gearing	%	58.8	107.8	-45.4%
Basic EPRA NAV per share	EUR	16.89	15.61	8.2%

1) Retrospective adjustment of the equity breakdown to majority and minority shareholders due to the reallocation of a capital reserve according to IAS 8.41

Property indicators		31.12.2016	31.12.2015	Change
Rental units	No	26,711	27,494	-2.8%
Parking spaces	No	10,042	11,386	-11.8%
Total usable space	1,000 sqm	2,042	2,176	-6.1%
Property assets	EUR mn	2,784.5	2,692.3	3.4%
Vacancy rate	%	5.2	6.6	-21.9%
ø Rent	EUR/sqm/m	6.44	6.42	0.2%
Like-for-like rental growth (yoy)	%	2.4	1.5	-

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