Fair Value REIT-AG

Earnings Release • Mar 3, 2015

News Details

Corporate | 3 March 2015 07:30

Fair Value REIT-AG further optimises portfolio in 2014 while substantially improving earnings

Fair Value REIT-AG / Key word(s): Preliminary Results

2015-03-03 / 07:30

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Fair Value REIT-AG further optimises portfolio in 2014 while substantially improving earnings

– EBIT up 12% to EUR 5.6 million in 2014 according to preliminary figures

– Further portfolio alignment – property sales totalling EUR 23 million

– Consolidated net loss reduced by EUR 4.9 million to EUR 0.3 million (previous year: consolidated net loss of EUR 5.2 million)

– Operating result (FFO) of EUR 4.4 million after EUR 6.4 million in the previous year (forecast: EUR 5.1 million); decline mainly due to property sales

– Dividend forecast for 2014 of EUR 0.25 per share confirmed

– REIT equity ratio increases to 49.2% (previous year: 46.9%)

– Future growth focussed on German office and retail properties in secondary locations

Munich, March 3, 2015 – Fair Value REIT-AG has successfully continued its planned portfolio adjustments in 2014 and sold further properties which were considered to be outside of its core portfolio. As a result, Fair Value REIT-AG closed the financial year 2014 with substantially improved earnings and considerably higher REIT equity according to preliminary figures.

The operating result (EBIT) was up 12% to EUR 5.6 million (previous year: EUR 5.0 million). This increase in earnings mainly resulted from the significantly lower valuation losses on properties, which at EUR 7.5 million were almost 50% lower than the previous year number of EUR 14.0 million. On the back of the property sales both in the reporting period and in 2013, Fair Value REIT-AG posted lower rental income in the financial year 2014 than in the previous year. In 2014, this item totalled EUR 23.9 million and was therefore around 19% down on the corresponding figure from the previous year (EUR 29.6 million). Non-allocatable real estate-related expenses came in at EUR 6.3 million, lower than the previous year figure of EUR 6.5 million.

A substantial reduction in interest expenses greatly contributed to an improved financial result. This expense item came in at EUR 5.9 million. The previous year expenses of EUR 11.7 million contained one-off costs for the cancellation and valuation of interest swaps totalling around EUR 4.0 million. The company anticipates a further decrease in the weighted average interest rate for financial liabilities, which was at 2.7% p.a. as of the balance sheet date. In the current financial year, around EUR 33 million or around 20% of financial liabilities are due for new terms, with these liabilities currently including a weighted bank margin of 350 bp.

The company significantly improved its consolidated net result according to preliminary figures, up by EUR 4.9 million to a consolidated net loss of EUR 0.3 million (previous year: consolidated net loss of EUR 5.2 million). Earnings per share came in at EUR -0.03 per share, compared with EUR -0.55 in the previous year.

Adjusted consolidated net income in accordance with EPRA (i.e. Funds from Operations – FFO), totalled EUR 4.4 million or EUR 0.47 per share, some EUR 0.7 million down on the forecast figure of EUR 5.1 million. In 2013, this figure came in at EUR 6.4 million. This difference largely results from property sales of EUR 23 million and corresponding lower rental income in the past financial year. Minority interests in the earnings of subsidiaries also contributed to this figure falling short of the forecast.

On the balance sheet date, consolidated equity totalled EUR 78.3 million according to preliminary figures (December 31, 2013: EUR 80.7 million). This corresponds with a balance sheet net asset value of EUR 8.39 per share in circulation (previous year: EUR 8.65). Taking into consideration the minority interests in subsidiaries of EUR 60.0 million, the equity ratio pursuant to Section 15 of the REIT Act rose to 49.2% of immovable assets totalling EUR 281 million (December 31, 2013: 46.9% of EUR 312 million).

Retained earnings reported in the financial statements of Fair Value REIT-AG under the German Commercial Code (HGB) came in at EUR 2.3 million (previous year: EUR 2.5 million). The Management Board is proposing to distribute these retained earnings in full. As in the previous year, this corresponds with a dividend of EUR 0.25 per share in circulation, or 53% of FFO. The published dividend target for the financial year 2014 is therefore being confirmed.

The convertible bond issued in January 2015 totalling EUR 8.46 million is mainly being used for the acquisition of minority shares in subsidiaries at present. These investments increase the balance sheet NAV of Fair Value REIT-AG due to favourable acquisition prices. Since issuing the convertible share, around 28% of the net proceed has already been used in this way. Around 6% of minority interests totalling EUR 60 million have been acquired in return for this amount. NAV growth to date from these acquisition totals around EUR 0.10 per share.

Fair Value REIT-AG intends to continue pursuing the recently announced growth strategy. The continued acquisition of minority interests in subsidiaries using the convertible net proceeds will allow Fair Value to further increase NAV. Moreover, the company strategy also encompasses the transition of previously indirectly-held properties into the directly-held portfolio. Given the current market environment, the Management Board in addition to that has identified good opportunities for investments in office and retail real estate with strong cash flows, particularly in Fair Value’s targeted secondary locations. The company therefore plans to accelerate growth, primarily through the acquisition of real estate.

The final results for the financial year 2014 will be published by Fair Value REIT-AG on

March 26, 2015 in the Financial Reports section of www.fvreit.de .

Selected financial key figures for Fair Value REIT-AG

	2014	2013
EPRA-Earnings / FFO	EUR 4.4 million	EUR 6.4 million
EPRA EPS	EUR 0.47	EUR 0.69
IFRS-Net loss	EUR (0.3) million	EUR (5.2) million
IFRS-EPS	EUR (0.03) EUR	EUR (0.56)
	12/31/2014	12/31/2013
Net asset value per share	EUR 8.39	EUR 8.,65
EPRA-NAV per share	EUR 8.49	EUR 8.86
Equity ratio within the meaning of section 15 of the REIT Act	49.2 %	46.9 %

**Contact

Fair** Value REIT-AG

Frank Schaich

Tel. +49 (0) 89-9292815-10

Fax +49 (0) 89-9292815-15

e-mail: schaich@fvreit.de

Corporate Profile

Fair Value REIT-AG, based in Munich, focuses on the acquisition, leasing, property management and sale of commercial properties in Germany. At the core of its investment activities are retail and office properties in German regional centres.

As of December 31, 2014, Fair Value’s share of the total portfolio of 43 properties (previous year 49 properties) amounted to around EUR 281 million (previous year EUR 312 million). This portfolio had an occupancy rate of 91.7% (previous year 93.3%). As of December 31, 2014, the weighted remaining term of the leases was 5.0 years, unchanged to December 31, 2014. Around 52% of the potential rent relates to retail floor space, 37% to office space and 11% to other types of use.

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Language:	English
Company:	Fair Value REIT-AG
	Leopoldstraße 244
	80807 München
	Germany
Phone:	+49 (0)89 9292 815-01
Fax:	+49 (0)89 9292 815-15
E-mail:	info@fvreit.de
Internet:	www.fvreit.de
ISIN:	DE000A0MW975
WKN:	A0MW97
Indices:	RX REIT All Share Index, RX REIT Index
Listed:	Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Munich, Stuttgart

End of News	DGAP News-Service

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328911  2015-03-03