Press Release
Strong real estate markets drove substantial growth in the Net Asset Value of the company
- Result 2018: Revenues of EUR 193.2 m and FFO of EUR 114.7 m
- Strong operating performance: 203,300 sqm letting volume driving avg. rent per square meter to EUR 12.25
- Value accretion: EPRA NAV up by 19.1% to EUR 15.14 per share
- Financial debt on historic low: Net LTV down to 30.4%, net debt/EBITDA of 8.3
- Attractive dividend yield of 4.3%: Management proposes dividend of EUR 0.52 per share
Hamburg, Feb. 27, 2019 - alstria office REIT-AG (symbol: AOX, ISIN: DE000A0LD2U1) announces its result for the financial year 2018.
Efficient operations: Leasing drives rent per m2 and FFO margin to new record level
The strong demand for high quality office space in Germany's major economic centres led to another successful year for alstria. Revenues amounted to EUR 193.2 million (guidance: EUR 190 million) and therefore matched prior years' level. The loss of rental income following the planned vacation of 74,600 sqm that were transferred into alstria's development pipeline were fully compensated by the rental income from new leases and rent increases of existing contracts. Due to lower financing costs (avg. cost of debt: 1.8%) the company's FFO grew slightly to EUR 114.7 million (2017: EUR 113.8 million), reflecting an FFO margin of 59.4% (2017: 58.8%). Due to the strong German real estate investment market, alstria's portfolio experienced a EUR 399 million valuation uplift (after capex), pushing the company's consolidated profit up by 77.6% to EUR 527.4 million.
Strong balance sheet: EPRA NAV per share up by 19.1% to EUR 15.14 and net debt/EBITDA down to 8.3
The strong consolidated net profit combined with the capital increase in January 2018 and the conversion of the convertible bond drove alstria's IFRS equity to EUR 2,684 million, representing an increase of EUR 729 million in 2018. The EPRA NAV per share amounted to EUR 15.14 and was up by 19.1% year-on-year (December 31, 2017: EUR 12.71). alstria's net LTV improved further to 30.4% (2017: 40.0%) and the net debt/EBITDA multiple improved from 9.1 the year before to 8.3. The Interest Coverage Ratio (ICR) stood at 5.7. alstria's G-REIT equity ratio stood at 67.2% (2017: 57.1%), underlining the company's balance sheet quality. alstria is rated BBB by Standard & Poor's.
Investment properties of EUR 3.9 bn
The value of alstria's investment properties amounted to EUR 3,939 million as per December 31, 2018 and grew by 18.2% (EUR 607 million) in the course of 2018. The valuation yield stood at 4.9% and was down by 100 basis points compared to the prior year period. The current valuation of EUR 2,525 per sqm (incl. land value) is still well below replacement costs. In the course of 2018, alstria successfully completed two developments ("Momentum" and "Bieberhaus") leading to a value increase of the assets of EUR 59.5 million (EUR 0.34 per share). Using the strong investment market, alstria continued to actively recycle capital in 2018 and sold six assets, mainly located in secondary locations, for a total consideration of EUR 78.5 million. The disposed assets were sold at an average book gain of 30.1% compared to the year-end valuation 2017. In parallel, alstria bought six buildings in its core markets for EUR 107.3 million, which offer substantial rent reversion potential.
Strong letting result: EPRA like-for-like rental growth of 3.6%
alstria's leasing activities remained at the core of alstria's operations in 2018. The supportive German letting market allowed alstria to lease up 203,300 sqm (thereof 110,800 m2 of new leases), which is around 13% of alstria's total portfolio (1.6 million m2). The EPRA vacancy rate was down to 9.7% in the fourth quarter of 2018. The EPRA like-for-like rental growth amounted to 3.6%. In 2018 alstria invested a total of EUR 86.4 million into its own portfolio to improve the quality and appeal of its assets. The higher quality standard offers the potential for higher rents.
Dividend proposal: EUR 0.52 per share
The Management will propose to the Annual General Meeting a dividend payment of EUR 0.52 per share, representing a 4.3% dividend yield based on a 2018 VWAP (volume-weighted average price) of EUR 12.14. The EUR 0.52 of dividend corresponds to a pay-out ratio of 80% of the FFO.
Outlook 2019: Revenues of EUR 190 million, FFO of EUR 112 million
Based on the current portfolio and the contractually agreed rent, alstria expects revenues of EUR 190 million and funds from operations (FFO) of EUR 112 million for FY 2019. The guidance reflects a rental growth of 2.8% (around EUR 3 million) as well as lower income of EUR 6 million following the disposal of properties. The FFO margin is expected to remain broadly stable at around 59%.
"We have been taking advantage of the very strong letting and investment markets that existed in Germany in the last few years to bring alstria's balance sheet to the strongest position it has ever been", said Olivier Elamine, CEO of alstria. "We will continue to use the market opportunities to constantly improve the overall quality of our portfolio. We will be achieving that target by investing in our assets, increasing our leasing performance and pursuing the disposal process of our weaker assets."
Invitation to the telephone conference on February 28, 2019
The alstria management board, CEO Olivier Elamine and CFO Alexander Dexne, will present the 2018 financial results in a telephone conference at 10:00 am (CET) which will also be webcasted on our website (www.alstria.com). The full Annual report (Company report and Audited Financial Statements) will also be available for download on our website.
Please use one of the following dial-in numbers:
Germany: +49 69 2017 44 220
UK: +44 20 3009 2470
PIN: 816 25 127#
Contact:
alstria office REIT-AG
Ralf Dibbern
Head of IR & PR
Steinstrasse 7
20095 Hamburg
Germany
T +49 40 22 63 41-329
F +49 40 22 63 41-229
rdibbern@alstria.de
About alstria:
alstria office REIT AG is the leading real-estate operator focusing solely on German office property in selected German markets. Our strategy is based on the ownership and an active management of our properties throughout their entire life cycle, strong added-value services to our customers and deep knowledge of the markets in which we operate. alstria strives for sustainable long-term value creation while taking advantage of short-term arbitrage of inefficiencies in the real estate markets. The portfolio comprises 118 buildings with a lettable area of 1.6 million sqm and a total portfolio value of EUR 4.0 billion.
Disclaimer:
This release constitutes neither an offer to sell nor a solicitation of an offer to buy any shares. As far as this press release contains forward-looking statements with respect to the business, financial condition and results of operations of alstria office REIT-AG (alstria), these statements are based on current expectations or beliefs of alstria's management. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those reflected in such forward-looking statements. Apart from other factors not mentioned here, differences could occur as a result of changes in the overall economic situation and the competitive environment - especially in the core business segments and markets of alstria. Also, the development of the financial markets and changes in national as well as international provisions particularly in the field of tax legislation and financial reporting standards could have an effect. Terrorist attacks and their consequences could increase the likelihood and the extent of differences. alstria undertakes no obligation to publicly release any revisions or updates to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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