DGAP-News: Prime Office REIT-AG: Nine-month results dominated by one-time and special effects DGAP-News: Prime Office REIT-AG / Key word(s): Quarter Results Prime Office REIT-AG: Nine-month results dominated by one-time and special effects 06.11.2013 / 07:30 --------------------------------------------------------------------- Nine-month results of Prime Office REIT-AG dominated by one-time and special effects - Rental and lease revenues decline to 38.7 million Euro as a result of vacancies and property sales in the nice-month period - Special and one-time effects in connection with the planned merger and the property valuation result in a loss of -86.0 million Euro for the period - FFO of -3.3 million Euro on the back of one-time effects and vacancies are in line with expectations - NAV declines to 380.2 million Euro or 7.32 Euro per share due to the property fair values - Significant decline of liabilities in connection with the continuing early repayment of loans: total liabilities fall to 554.5 million Euro, LTV down to 59.2% - Successful lettings in Stuttgart and Heilbronn: long-term lease with Daimler AG in Stuttgart/Moehringen for an overall 15,400 square metres. Long-term lease signed with the land registry of the city of Heilbronn for about 14% of the property's lettable space - Executive board confirms revenue guidance of between 51 and 53 million Euro for the full year and adjusts the FFO guidance to a range between -3 and -6 million Euro Munich, 06 November 2013. Prime Office REIT-AG ('Prime Office'), a leading listed property company with REIT status focused on investments and management of prime office properties in Germany, presents the results for the first nine months of fiscal year 2013. In the reporting period, the development of the operating business was influenced to a large degree by various special and one-time effects in connection with the planned merger with OCM German Real Estate Holding AG ('OCM'), the current vacancies in the portfolio and particularly the related adjustment of the property portfolio's fair value. Consequently, the adjustment of the portfolio's fair value by about -78.3 million Euro to 805.6 (31 December 2013: 883.9) million Euro as at 30 September 2013 resulted from the overall shorter remaining terms of lease, delays in the letting processes, the current vacancy ratio and a slightly more cautious market outlook for individual properties. By mid-year, the adjustment of the property fair values had amounted to an overall 57.3 million Euro; the third quarter of 2013 accounted for about 21 million Euro. In addition, the due diligence process carried out over the first nine months of fiscal year 2013 in connection with the planned merger with OCM led to a significant increase of legal and advisory costs. After the positive votes of the shareholders of Prime Office and OCM on their respective general meetings and the clearance of the planned merger by the German cartel office, the two companies expect to implement the merger in the first quarter of 2014. The discharge of the CEO on 28 June 2013 gave rise to another one-time effect. Cost-related liabilities in the amount of about 1 million Euro were created in the reporting period in connection with the termination of the employment. 'Over the first nine months of this fiscal year, the business development of our company was dominated largely by special and one-time effects from the merger with OCM and the adjustment of the fair values in our property portfolio. However, the impending merger with OCM in particular makes us confident for the future, because - together with OCM - we will become a leading, high earning and high dividend paying real estate company able to generate sustainable value for our stakeholders,' says Alexander von Cramm, CEO of Prime Office REIT-AG. The rental and lease revenues declined by 29.2% year on year to 38.7 (Q1-Q3/2012: 54.7) million Euro during the first nine months of fiscal year 2013 on the back of the current vacancy of 18% and the completed property sales. This resulted in rental and lease income of 29.2 (Q1-Q3/2012: 46.8) million Euro, which was down compared with the first nine months of the previous year. The operating earnings before valuation effects fell to 20.0 (Q1-Q3/2012: 42.1) million Euro over the first three quarters of this fiscal year due to the described effects in connection with the adjustment of the portfolio property fair values, the occupancy and the higher advisory and due diligence costs in connection with the merger with OCM. The adjustment of the portfolio property's fair value also affected operating earnings before interest and taxes (EBIT), which amounted to -62.8 (Q1-Q3/2012: 31.5) million Euro in the reporting period and were also down year on year. Special and one-time effects in connection with the planned merger with OCM and the property valuation resulted in a loss of -86.0 (Q1-Q3/2012: 7.3) million Euro in the first three quarters of fiscal year 2013. Consequently, earnings per share declined year on year in the reporting period and amounted to -1.66 (Q1-Q3/2012: 0.14) Euro. Similarly the 'EPRA earnings', i.e. the result for the period adjusted by the effects from the fair valuation of the property portfolio and the derivative financing instruments, were significantly impacted by the implications of the vacancies and the various one-time and special effects. The 'EPRA earnings' for the first nine months of this fiscal year 2013 amounted to -2.8 (Q1-Q3/2012: 15.6) million Euro or -0.05 (Q1-Q3/2012: 0.30) Euro per share. Funds from operations (FFO) of Prime Office fell year on year in the first nine months of fiscal year 2013 to -3.3 (Q1-Q3/2012: 19.6) million Euro on the back of higher vacancies and the above mentioned one-time effects and non-recurring charges. The FFO per share amounted to -0.06 (Q1-Q3/2012: 0.38) Euro per share. At the beginning of August 2013, Prime Office signed a long-term lease for an overall 11,315 square metres of office and storage space and 220 passenger car parking spaces in the office compound 'emporia' in Stuttgart/Moehringen with Daimler AG, Stuttgart. The lease contained an option for Daimler to rent additional spaces. The company exercised this option in October 2013 and will rent about 4,100 square metres of additional space in the office compound 'emporia'. With this extension of spaces to now about 15,400 square metres rented by Daimler AG, the building reaches full occupancy. Furthermore, the real estate company signed a contract on the sale of the office property in Hufelandstraße 13, 15 in Munich with WealthCap in August 2013. The rights and obligations in connection with the property, which has a total rental space of 8,224 square metres, transferred upon payment of the agreed purchase price of 20.5 million Euro on 4 September 2013. As at the reporting date on the 30 September 2013, Prime Office could again substantially reduce its total liabilities compared to 31 December 2012 (642.5 million Euro) thanks to the early repayment of loans and special payments in connection with the optimisation of the financing structure. The sum of current and non-current debts of the real estate company amounted to 554.5 million Euro at the reporting date, 88.0 million Euro below the level at year-end 2012. Similarly, the loan-to-value (LTV) of Prime Office fell from 60.2% on 31 December 2012 to 59.2% on the reporting date of 30 September 2013. The significantly lower LTV will continue to take further pressure off the financial result going forward. In the reporting period, the equity of Prime Office suffered both from one-time effects that were dilutive to earnings and, as in the past, from the financial and euro crisis and the continually low interest rate environment. Particularly the relatively low interest rates depressed the valuation of the long-term, derivative hedging instruments (interest rate swaps) for the property financings. Owing to the above-mentioned factors, the REIT equity ratio amounted to 39.8% on 30 September 2013, still below the minimum equity ratio of 45% required under the REIT law. Prime Office needs to meet this criterion by year-end 2013 in order to retain its status as a REIT joint stock corporation. The executive board has made lifting the REIT equity ratio to at least 45% a top priority. The executive board expects to at least meet the REIT equity ratio through property sales by year-end 2013. The net asset value (NAV) of Prime Office amounted to 380.2 million Euro as at 30 September 2013, down compared to 31 December 2012 (468.4 million Euro) as a result of the fair value adjustments. The NAV per share declined accordingly to 7.32 (31 December 2012: 9.02) Euro per share on the reporting date for the period. The executive board of Prime Office also continues to expect a largely stable development of the economic environment and hence of the German office property market. Still, the property company's operating business in this fiscal year will be dominated by the fair value adjustments of the portfolio properties, temporary vacancies in the properties in Frankfurt, Dusseldorf and Stuttgart and the planned refurbishment measures in the Stuttgart and Dusseldorf properties. Based on these assumptions, the executive board anticipates revenues (including operating cost prepayments) of 51 to 53 million Euro and FFO of between -3 and -6 million Euro for the fiscal year 2013. Key financial ratios of Prime Office REIT-AG (in mm EUR) 01/01-30/09/2013 01/01-30/09/2012 Delta (in %) Rental and lease revenues 38.7 54.7 (29.2) Rental and lease income 29.2 46.8 (37.5) Operating income (EBIT) (62.8) 31.5 (299.3) Financial result (23.2) (24.2) 4.2 Income for the reporting period (86.0) 7.3 (1,283.8) Income per share (in Euro) (1.66) 0.14 (1,283.8) Funds from operations (FFO) (3.3) 19.6 (116.7) FFO per share (in Euro) (0.06) 0.38 (116.7) (in mm EUR) 30/09/2013 31/12/2012 Delta (in %) Total assets 875.2 1,031.6 (15.2) Equity 320.6 389.1 (17.6) REIT equity ratio (in percent) 39.8 42.9 (7.1) Leverage (in percent) 60.2 57.4 4.9 Net asset value (NAV) 380.2 468.4 (18.8) NAV per share 7.32 9.02 (18.9) Contacts Prime Office REIT-AG Richard Berg Director Investor Relations / Corporate Communications Hopfenstraße 4 80335 Munich Telephone +49. 89. 710 40 90 40 Facsimile +49. 89. 710 40 90 99 Email email@example.com End of Corporate News --------------------------------------------------------------------- 06.11.2013 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. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: Prime Office REIT-AG Hopfenstraße 4 80335 München Germany Phone: +49 (0)89 7104090 40 Fax: +49 (0)89 7104090 99 E-mail: firstname.lastname@example.org Internet: www.prime-office.ag ISIN: DE000PRME012 WKN: PRME01 Indices: SDAX Listed: Regulierter Markt in Frankfurt (Prime Standard), München, Stuttgart; Freiverkehr in Berlin, Düsseldorf End of News DGAP News-Service --------------------------------------------------------------------- 238103 06.11.2013
DGAP-News: Prime Office REIT-AG: Nine-month results dominated by one-time and special effects
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