The first financial year as an independent, stock exchange listed company has come to a close. On 31 August 2015, BUWOG AG published its annual report 2014/15, looking back on a highly successful financial year.
Following the profitable expansion into Germany, and in particular the first-time consolidation of the German DGAG / Apollo real estate portfolio with around 19,400 units in total, the operating result increased by around 63%.
Recurring FFO, one of the most important company performance indicators in that it represents the effective cash profit of the business available for reinvestment, and also for dividend distributions to shareholders, increased by 32.5% compared to the prior year to EUR 91.7 million. This equates to EUR 0.92 per share, which means from a financial perspective there is nothing to prevent a renewed dividend distribution in the amount of EUR 0.69 per share subsequent to the annual general meeting at Wiener Stadthalle on 13 October 2015.
Subject to the approval of the annual general meeting, BUWOG can this year once again distribute the dividend payment to Austrian private investors without a withholding tax deduction. Our shareholders therefore benefit from a dividend yield of around 3.9% based on the EPRA NAV per share of EUR 17.79.
We are particularly pleased about the success for our shareholders – the committed work of a highly engaged team over the course of the entire year ultimately underlies the published results.
As a consequence our largest business area, Asset Management, generated a result of approximately EUR 128 million. The annualised in-place rent rose by approximately EUR 75 million to EUR 198 million, while the portfolio – not least as a result of the acquisition of the DGAG / Apollo portfolio which was closed in July 2014 – grew to around 52,000 units with a fair value of EUR 3.6 billion.
The Property Sales business likewise closed the 2014/15 financial year with a record result of approximately EUR 42 million. This was primarily due to the sale of 617 individual apartments with an average margin of 59% over book value. In the Block Sales area, while 604 units were sold, significantly less than in the prior year, the margin stood at a respectable 26% above the fair value, which speaks for the quality of the BUWOG real estate portfolio and demonstrates the value that is being created.
The Property Development area more than doubled its result from the previous year, to around EUR 13 million. During the past financial year, 369 units were completed and there are currently a further 844 units under construction. In total, BUWOG’s development pipeline comprises around 5,000 units with a total investment volume of approximately EUR 1.4 billion – and we are active in the market to acquire additional attractive sites in the capital cities of both Vienna and Berlin and successfully further expand our new construction business.
There is also positive news to report with respect to the Financial Result: Due to the re-financing of the EUR 260 million convertible bond issued prior to the spin-off with mortgage loans from two Austrian banks, the average interest rate on financial liabilities of EUR 2.1 billion was lowered from 2.45% to 2.14%, thereby sustainably reducing pressure on the annual Financial Result. At the same time, the risk of dilution for BUWOG AG shareholders was removed as a result of the repayment of the convertible bond in January 2015. The high negative value reported under Financial Results in the amount of approximately EUR -217 million does not reflect the actual extent of the burden. Ongoing cash interest costs amounted to approximately EUR -47 million only, whereas around EUR -171 million amounted to only non-cash valuation effects from financial liabilities and derivatives and additional one-off effects, in particular in connection with the re-financing of the convertible bond.
We are particularly pleased that our endeavours in the capital markets in the past year were also rewarded. Our shareholders benefited from a return, including dividend distribution, of around 44%. BUWOG AG is now the only Austrian real estate company whose shares trade in the market at a premium to the EPRA NAV per share – and, in addition to the ATX, we are included in the Austrian Real Estate Index, the EPRA NAREIT Developed Europe and the Austrian Sustainability Index VÖNIX.
We have spared no efforts along the way to this success and have, during the course of around 230 meetings in Europe and North America as well as in conference calls and property tours, conducted constructive, challenging and always interesting dialogues and discussions with investors from all over the world about the strategy and development of BUWOG AG, in which we also explained our conviction and values with respect to transparency and equal treatment of all shareholders. Equally interesting meetings took place in the past financial year at a two-day private investor roadshow held at our “Penzinger Strasse” development project in Vienna. Within the framework of this event in April 2015, we invited our private investors to a constructive exchange of ideas with the Board and business executives, which received a very positive response. We intend to continue and further intensify this constructive dialogue with our private investors in the new financial year.
With the successes of the past financial year behind us, the Executive Board and the BUWOG AG team are pleased to continue on the path on which we have embarked in the current financial year, and to further increase the benefits to our shareholders. In a market environment that we anticipate will continue to be positive, we expect to increase recurring FFO to EUR 98 million – EUR 100 million in the 2015/16 financial year, once again setting the basis for an attractive dividend.
More details can be found in our annual report, which can be downloaded via the link http://www.buwog.com/en/investor-relations/financial-reports.
Please be also advised that at BUWOG “after the numbers means before the numbers”: The results for the first quarter of the current financial year will be released on 29.09.2015.
I would like to thank my team in the Investor Relations & Corporate Finance area for the committed pioneer work, with many hours and great dedication in the first year of the stock exchange listing of BUWOG AG – likewise, my thanks to the colleagues from the operational business areas, without whose work there would be “nothing”, and the always approachable colleagues in the specialist departments in head office, with whom we have overcome many challenges and have grown together with into a large team.
But above all we thank you, our shareholders and potential investors, for your trust and support and look forward to continuing to work with you in the future.
With best regards,
Holger Lüth
