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| Datum : | 13.05.2014 |
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DGAP-News: Prime Office AG with good letting results. Funds from operations amount to EUR 10.2 million in Q1/2014 |
| Meldung : | DGAP-News: Prime Office AG / Key word(s): Quarter Results Prime Office AG with good letting results. Funds from operations amount to EUR 10.2 million in Q1/2014 13.05.2014 / 07:50 --------------------------------------------------------------------- Prime Office AG with good letting results. Funds from operations amount to EUR 10.2 million in Q1/2014 - Integration of Prime Office REIT-AG and OCM German Real Estate Holding AG is proceeding faster than anticipated and is almost completed - Good letting performance with lettings of about 46,300 sqm or approximately 4.9% of the total lettable area - Leverage (LTV) improves significantly by 3.6 percentage points to 55%; average weighted interest rate of 3.7% with further improvement potential - Rental income of EUR 24.8 million and FFO of EUR 10.2 million in line with expectations - EPRA earnings of EUR 10.1 million - Net asset value per share of EUR 4.39 - The company confirms guidance and plans to distribute a dividend of 40% to 45% of FFO for financial year 2014 Cologne, 13 May 2014. Prime Office AG, a leading office property company with a focus on German metropolitan regions presents its results for the first quarter of 2014 after the successful merger of Prime Office REIT-AG into OCM German Real Estate Holding AG. The integration is proceeding faster than anticipated and is by now largely completed. The property management contract of Prime Office REIT-AG has been renegotiated early and concluded at attractive conditions, which will lead to about EUR 0.4 million in savings already in H2/2014; the closure of the Munich office, which had originally been planned for the end of the year, will already be concluded on 30 June 2014. Results characterized by non-recurring and special effects from the merger Profitability in Q1/2014 was characterized by merger-related non-recurring and special effects: transaction costs and particularly the real estate transfer tax payable in connection with the merger detracted about EUR 23.2 million from net income over the quarter. Conversely, the initial consolidation of Prime Office REIT-AG into the Group generated about EUR 115.4 million in income from the merger. Since Prime Office REIT-AG was first consolidated on 21 January 2014, the numbers for Q1/2014 do not reflect Prime Office REIT-AG's contribution to income in January 2014 with net rental income of about EUR 2.1 million. In addition, the number of properties in the Prime Office Group portfolio declined by seven due to disposals in 2013 and at the beginning of 2014 respectively and net rental income declined accordingly by EUR 5.0 million. Finally, the properties in both Dusseldorf (Xcite) and Frankfurt (Kastor) had been almost fully occupied in Q1/2013, which led to a EUR 3.8 million year-on-year decline in net rental income in Q1/2014 after the anchor tenants vacated the premises last year as planned. With rental income of EUR 24.8 (pro forma Q1/2013: EUR 36.1) million, Prime Office generated net rental income of EUR 21.9 (pro forma Q1/2013: 33.4) million in the first quarter of 2014. After special effects, which were shown under other operating expenses (EUR 23.8 million) and other operating income (EUR 116.0 million) in Q1/2014, and the financial result of EUR -10.6 million, net income in the first quarter of 2014 amounted to EUR 101.3 (pro forma Q1/2013: 4.6) million. Adjusted by special effects from the merger with Prime Office REIT-AG, Prime Office AG generated pre-tax earnings of EUR 9.1 million in Q1/2014. The adjusted pro forma EPRA earnings of Prime Office amounted to EUR 10.1 (pro forma Q1/2013: 12.3) million in the reporting period. The funds from operations (FFO) of EUR 10.2 (pro forma Q1/2013: 13.4) million were in line with expectations, down compared to the year-on-year pro forma numbers as a result of property sales and higher vacancies in the portfolio. Operating business Letting performance was good in Q1/2014 with lettings of about 46,300 sqm or approximately 4.9% of the total rentable space. At the reporting date on 31 March 2014, the company generated annual net rents of EUR 111 million, which translates into a running gross yield of about 5.9%. The portfolio's EPRA net yield amounted to 5.0% reflecting the current vacancy of 20%. It will further improve over time if vacancy is successfully brought down. Prime Office also continued to optimise its portfolio in the first quarter. The company sold a building in Stuttgart/Fellbach for about EUR 34 million in February 2014. In addition, three other property sales, two in Leipzig and one in Frankfurt, for a total EUR 24.8 million, were notarially certified on 30 April and 12 May 2014 respectively. The transactions generated net profits of about EUR 1 million. The disposals will reduce vacancy in the portfolio by about 3,500 sqm and the vacancy rate by about 20 basis points. The company expects to conclude additional leases particularly for the properties in Frankfurt and Dusseldorf as the year progresses. The objective is to significantly reduce the current vacancy level of close to 20% until year-end, inter alia by exploring alternative concepts for use particularly in Frankfurt similarly to the property sold recently in Gutleutstraße, Frankfurt. Refinancing leads to significant balance sheet quality improvements Prime Office used the proceeds from property sales and a sizeable portion of the cash capital increase, which was successfully completed in February 2014, to repay loans. The company also successfully refinanced the Homer and Herkules portfolios at attractive financing conditions in February 2014. Leverage (net LTV) improved by 3.6 percentage points to 55% as a result of loan repayments and the refinancing of the Homer and Herkules portfolios even though the value of the Westend-Ensemble in Frankfurt was adjusted by EUR 25.9 million. Today, Prime Office has an attractive financing structure: the weighted average interest over a weighted time to maturity of 5 years is 3.7%, i.e. below the originally anticipated ca. 4%. Overall, these factors led to a significant improvement of the financial result already in the first quarter of 2014. The executive board expects that it will be able to reduce the average weighted interest to 3.5% in Q2/2014. Prime Office confirms guidance 2014 Based on the results of the first quarter of 2014, Prime Office confirms the guidance for the financial year 2014 with expected rental income from investment properties of between EUR 112 to 114 and FFO of between EUR 44 to 46 million. The company also envisages distributing a dividend of between 40 to 45% of the FFO to shareholders for the financial year 2014. The quarterly report of Prime Office AG is available for downloading from the website of Prime Office AG on http://prime-office.de. Contacts Prime Office AG Richard BergOff Head of Investor Relations & Corporate Communications Email richard.berg@prime-office.de Telephone +49 (0)221 - 888 29 160 ? About Prime Office AG Prime Office AG is a leading office property company with a focus on German metropolitan regions. As of March 31, 2014 the geographically diversified commercial real estate portfolio contains 57 properties with a total rentable space of about 950,000 square metres and an attractive and broad tenant base. As at 31 March 2014 the properties had a total market value of about EUR 1.9 billion. The business model of Prime Office AG relies on the return-oriented management of assets and particularly of office properties in German metropolitan regions. This strategy is complemented by the selective pursuit of value-add investments and attractive buying opportunities in locations with a proven track record of significant value increases. Additional information on Prime Office AG is available in the Internet on: www.prime-office.de End of Corporate News --------------------------------------------------------------------- 13.05.2014 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------- Language: English Company: Prime Office AG Maarweg 165 50825 Köln Germany Phone: +49 (0)221 88829 100 Fax: +49 (0)221 88829 299 E-mail: info@prime-office.de Internet: www.prime-office.de ISIN: DE000PRME020 WKN: PRME02 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, München, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 267960 13.05.2014 |
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