INCITY'S SEMI-ANNUAL GROUP RESULT IS -802 EUR K - MANAGEMENT BOARD CONFIRMS FORECAST FOR ENTIRE YEAR 2021
- Semi-annual result for the Group financial statements of EUR -0.8 m and for the single-entity annual financial statements of EUR 0.4 m
- Rate of payment remains very high - portfolio proves its value stability and crisis resilience
- Net asset value (NAV) of EUR 1.68 per share, unchanged from 31 December 2020
- Significant expansion of activities in the field of project development
Frankfurt am Main, 16 September 2021 - In its semi-annual financial statements for 2021 published today, InCity Immobilien AG ("InCity AG") reports a net loss of EUR -0.8 m at Group level and a net income of EUR 0.4 m at single-entity annual financial statement level as of 30 June 2021. The decrease compared to the results of the same period of the prior year (first half of 2020: EUR 3.6 m at Group and EUR 4.5 m at single-entity annual financial statement level) can be largely explained by the fact that the prior period was primarily influenced by the earnings contribution from the sale of the property at "Brönnerstrasse 13/15". "In view of the business development in the first half of 2021, we confirm the earnings forecast that was increased in June 2021 after notarisation of the contract of sale for IC Objekt 9 Berlin GmbH, and we expect net income between EUR 2.3 m and EUR 2.8 m for the entire year of 2021 at single-entity annual financial statement level. At Group level, we anticipate a net income for the year between EUR 0.1 m and EUR 0.6 m," says CFO Helge H. Hehl.
As of 30 June 2021, the InCity Group's portfolio included six residential and commercial buildings and two office properties in Berlin and Frankfurt am Main with an HGB carrying amount of approximately EUR 160 m.
Expanding the earnings base by increasing own project development activities
In the first half of 2021, InCity AG's activities focused on the further implementation of the rental concepts initiated in the previous years as well as the active management of the portfolio properties on the one hand and on the resumption of project management and development activities, as already announced in the past, on the other. "By increasing the InCity Group's own project development activities, we will add a further pillar to our earnings base in addition to the two business units 'portfolio properties' and 'asset management for third parties', and this will also further diversify our business," says Michael Freund, CEO of InCity AG. "We already took a major, concrete step in this direction shortly after the reporting date. In July 2021, the newly founded IC Bau GmbH, a wholly-owned subsidiary of InCity AG, was commissioned with the construction of a new office building in the immediate vicinity of the Berlin-Brandenburg (BER) airport as a general contractor. The contract volume is in the mid double-digit million euro range. As this concerns a neighbourhood development in an existing business park, we believe that there is a good chance that IC Bau GmbH will again be considered as a potential project developer for the park's further construction phases, which would allow us to tap the corresponding earnings potential in this field of business."
The prestigious new building with a gross floor area of approximately 12,000 square metres is being constructed for a third party outside the Group at an already established commercial location in Berlin-Schönefeld, and is expected to be completed at the end of 2023. After completion, the project is forecast to generate an earnings contribution with an effect on income at the level of the InCity Group in the low single-digit million range.
A portfolio with value stability and crisis resilience: Rate of payment just under 99%
In the first half of 2021, the ongoing COVID-19 pandemic continued to be a predominant topic associated with drastic restrictions of private and economic life, although significant progress was made in the pandemic response as the vaccination campaign got underway. Against the backdrop of this situation, the InCity Group's property portfolio proved its crisis resilience and value stability. Even in the second quarter of 2020, which was characterised by especially severe economic slumps, the rate of payment of all the existing tenants in InCity's properties was between 95.3 and 98.1%, and in the first half of 2021, it was 98.9% on average. This means that in the reporting period, the existing tenants paid just under 99% of both the contractually owed basic net rent and the advance payments on ancillary costs.
The Management Board sees these excellent figures as confirmation of its strategy of concentrating primarily on high-quality core properties with tenants with strong credit ratings in Berlin and on locations in Frankfurt am Main that are attractive in the long term. The further expansion of its own property portfolio will remain the focus of InCity AG's activities in future, and rental income from the portfolio properties will continue to represent an essential component of earnings. In view of the the continuing shortage of properties in conjunction with the strict purchase criteria and quality standards of InCity AG, only rather modest purchases are to be expected in the coming years.
Continued solid equity ratio based on HGB and stable NAV
In the first half of 2021, the EBITDA of the InCity Group amounted to approximately EUR 1.2 m, around EUR 4.5 m less than in the respective period of the prior year (approx. EUR 5.7 m) which was strongly influenced by the earnings contribution from the sale of the company holding the portfolio property at "Brönnerstrasse 13/15" in Frankfurt am Main in the amount of EUR 4.4 m. In addition, personnel expenses increased by around EUR 0.1 m compared to the prior year due to the increase of personnel resources necessary for the expansion of business activities. The absence of the prior year's earnings contribution from a property sale also had an effect on the single-entity financial statements.
InCity Immobilien AG's equity ratio was around 82% as of the reporting date on 30 June 2021, unchanged from 31 December 2020 (82%). At Group level, the equity ratio was around 47% as of 30 June 2021, also unchanged from the prior year's balance sheet date (31 December 2020: 47%). The net asset value (NAV) of InCity AG's shares remained stable at EUR 1.68 per share as of 30 June 2021 (31 December 2020: EUR 1.68 per share). In this context, it should also be noted that in the Group, the HGB result does not reflect the positive development of the market values of the properties held in the InCity Group's portfolio and, in addition, that the 2021 earnings forecast for the Group takes account of scheduled depreciation and amortisation (2021: around EUR 1.9 m expected) resulting from HGB accounting at amortised cost, which has a negative effect on the result.
CFO Helge H. Hehl comments as follows on the effects reflected in profit or loss of the notarised sale of all shares in IC Objekt 9 Berlin GmbH, holder of the portfolio property at "Werftstrasse 3" in Berlin, in June 2021: "As agreed, 15% of the shares in this property company were transferred to a third party in the reporting period, which led to a book profit of around EUR 0.4 m before taxes in InCity AG's single-entity annual financial statements, while the full consolidation of IC Objekt 9 Berlin GmbH had no effect on earnings at Group level. The transfer of the remaining 85% of the shares to the buyer is expected to take place by the end of September 2021. The resulting effects on earnings at Group and single-entity annual financial statement level have already been taken into account in our current forecast for the entire year 2021, but it does not include possible positive profit contributions from potential acquisitions or from further sales of portfolio properties."
Contacts for enquiries:
InCity Immobilien AG
60325 Frankfurt am Main, Germany
Phone: +49 (0)30 2844987-62
Helge H. Hehl, CFA
Phone: +49 (0)69 7191889-55
About InCity Immobilien AG
As a multi-disciplinary real estate company, InCity Immobilien AG (referred to in the following as InCity AG) is dedicated to creating and increasing the value of property portfolios and operates in the fields of asset management and project development. For its property portfolio, InCity AG focuses on the real estate markets of the two major cities Berlin and Frankfurt am Main and pursues a sustainable investment strategy. The decisive factors here are location, property quality and long-term value stability. Accordingly, the portfolio consists of high quality core properties with value stability in Berlin as well as properties in locations in Frankfurt that are attractive in the long term with investment volumes between EUR 5 m and EUR 50 m. In addition, InCity AG assumes comprehensive and individually developed asset management contracts for third parties. InCity AG also has partnership-model-based participations with regional project developers in residential and commercial property projects in selected German metropolitan areas. It significantly strengthened its project development business unit in July 2021 by undertaking a contract, as a general contractor, for the construction of a new office property in the immediate vicinity of the Berlin-Brandenburg (BER) airport, as well as adding its own project development activities.
Visit the website for further information about the company: www.incity.ag
16.09.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de