Deutsche Wohnen 2013 Profit Rises 68% After Home PurchasesDalia Fahmy
Deutsche Wohnen AG, Germany’s second-largest residential landlord by market value, said 2013 profit rose 68 percent after the company took advantage of cheap financing to buy more homes.
Funds from operations excluding divestments, a measure of a property company’s ability to generate cash, climbed to 114.5 million euros ($157 million) from 68.2 million euros a year earlier, Deutsche Wohnen said in a statement today. The Berlin-based company had forecast 110 million euros. FFO this year will be at least 210 million euros, according to the statement.
“We’re saying 210 million euros minimum, we want to have more,” Chief Executive Officer Michael Zahn said on an analyst call. “We are ahead of schedule and therefore we are quite optimistic we’ll have a better situation at the end of this year.”
Deutsche Wohnen has been buying apartments to take advantage of rising rents, its ability to raise capital on the stock market at favorable terms, and low interest-rate loans. The company owns about 150,000 apartments in German cities including Berlin and Frankfurt, after almost doubling its holdings in the past year. It’s on track to complete its acquisition of GSW Immobilien AG, making it Germany’s second-largest apartment owner after Deutsche Annington Immobilien SE.
FFO climbed to 65 cents a share. Analysts expected earnings of 66 cents, the average of seven estimates compiled by Bloomberg.
The company plans to pay a 2013 dividend of 34 cents a share, in line with its forecast to pay out 50 percent of FFO, according to the statement. It reiterated a plan to pay a 2014 dividend of about 60 percent of FFO, or 42 cents a share.
Net income increased to 212.4 million euros, or 1.20 euros a share, from 145.5 million euros, or 1.15 euros, a year earlier. That compares with an estimate of 190 million euros according to an average of 8 analysts surveyed by Bloomberg.
Profit from Deutsche Wohnen’s main business of renting apartments climbed to about 292.3 million euros from 194.4 million euros.
The company has a market value of 4.4 billion euros compared with Deutsche Annington’s 4.9 billion euros.
Deutsche Wohnen is considering applying for a credit rating to make getting financing easier, Deutsche Wohnen Chief Financial Officer Andreas Segal said on the call.
“It’s something we’ve been thinking about for months,” Segal said. “It’s great what Annington has done with regard to flexibility, with their European Mid-Term Note program they’re able to raise money quite quickly.”
Deutsche Annington, which has a Standard & Poor’s corporate credit rating of BBB, issued 2.5 billion euros of bonds in U.S. and European markets in the past year, becoming the first listed German residential company to issue corporate bonds.
Deutsche Wohnen is in talks to refinance about 1.7 billion euros of debt, maturing through 2017, ahead of schedule, Segal said.