Colonia Real Estate AG: Second quarter 2010 focus on reduction of vacancy rate
- 13.6% vacancy rate at beginning of the year reduced to 12.4% end of June 2010
- EBIT falls slightly to EUR 15.8 million due to increased portfolio investments (HY1 2009: EUR 16.6 million)
- Consolidated result of HY1 2010 with EUR 0.2 million slightly negative
- Cash flow from business operations at end of June 2010 continues positive trend at EUR 0.7 million
Colonia Real Estate AG (ISIN: DE0006338007; WKN: 633800) ended the first half of 2010 with slightly negative result of minus EUR 0.2 million. The second quarter of 2010 focused in particular on value-enhancing investments in the company's residential real estate portfolio and increasing the rental levels.
At EUR 14.1 million, net rental income (NRI) remained stable in the second quarter 2010. To improve the rentability of vacant residential properties, investments in the portfolio were significantly increased. In the second quarter of 2010 alone, Colonia Real Estate AG spent roughly EUR 4.0 million for maintenance and renovation of the residences. This resulted in a 0.6% reduction in vacancy rate to 12.4%, but also a reduction in EBITDA from EUR 8.4 million in the previous quarter to EUR 3.7 million in Q2 2010. EBITDA for the first six months of 2010 totaled EUR 12.1 million, a decline of EUR 3.2 million from the first six months of 2009. However, it should be noted that the company invested significantly less in the properties during the first six months of 2009.
As part of the regular market appraisements of our residential real estate as of June 30 and December 31 for each fiscal year, the value of the properties has continued to improve. Due to the previously mentioned value-enhancing measures that were implemented, the value of our residential real estate increased by EUR 4.0 million compared to the end of fiscal year 2009. This means the value of the entire residential real estate portfolio increased by 0.5 %. Net asset value (NAV) per share was virtually unchanged at EUR 10.10.
The value-enhancing measures also had a positive impact on the EBIT figure for the second quarter of 2010 which was EUR 7.6 million, a decrease of EUR 0.6 million compared to the prior quarter. For the first six months of 2010, EBIT also fell slightly year-on-year from EUR 16.6 After reporting a loss of EUR 1.1 million in the first six months of 2009, the Asset Management division showed a positive trend and closed the first half of 2010 with a result of EUR -0.05 million. After two positive quarters, the second quarter of 2010 ended with a loss of EUR 0.2 million, which can be traced primarily to one-off effects related to changes in the management team at the CRE Asset Management division. Revenues rose to EUR 3.4 million in the first half of 2010, a 17.6% increase over the previous year. As a result, we retain the target of returning the Asset Management division to profitability this fiscal year.
At EUR -8.0 million, the financial result for the second quarter was virtually unchanged (Q1 2010: EUR -7.9 million). When comparing the first six months of 2010 and 2009, it should be noted that in the first six months of 2009, the results (EUR -9.8 million) were positively impacted by a loan waiver of EUR 8.7 million. At EUR -15.9 million, the financial result for the first six months of 2010 do not include any one-off effects.
In commenting on the results, Colonia Real Estate AG CEO Stephan Rind said: "Although the extensive investments to improve our sustainable rental income and reduce vacancies had a negative impact on results in the short term, the cash flow and value of our real estate will improve over the long run. The positive impact of our measures can already be seen in the significant reduction of the vacancy rates in the first six months of 2010, a trend we expect will continue in the second half of the year."
The complete quarterly report will be available for downloading at 8:00 am by using this link: http://www.cre.ag/121/Investor_Relations/Reports_Presentations/Financial_Reports.htm
About Colonia Real Estate AG
CRE AG is one of the leading listed real estate investment and management groups in Germany with round about 19,000 residential units and EUR 2.1 bn Assets under Management. The CRE business model is based on two columns - the investment and service segment. The investment segment concentrates on highyield residential property portfolios held for the company's account and opportunistic real estate co- investments in commercial and residential properties together with institutional partners. The service segment comprises our CRE Asset Management and Residential Property Resale division. CRE Asset Management is specialized in tailormade solutions and the sustainable repositioning of complex residential and commercial real estate portfolios. The focus is on yield optimization and realizing longterm appreciation potential.