Boost in Deutsche Euroshop dividend as Böge bows out

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Claus-Matthias Böge, the long-time CEO of Hamburg-based Deutsche Euroshop (DES), is doubtless pleased that the listed shopping centre investor has just booked record figures for the full-year 2014, enabling him to step down from the company on a high note.

Throughout the crisis Deutsche Euroshop was the most resilient of all the German listed real estate companies on the stock market, thanks to its predictable and stable business model. The share moved sideways for several years, as other listed shares collapsed. With the recovery, DES has now also surged ahead, and the company has consistently delivered strong results. Last year was the best yet, with all key figures improving.

Consolidated revenue was up 6.8%, from €188.0 million to €200.8 million, largely thanks to a positive contribution from the Altmarkt-Galerie Dresden, which was fully consolidated for the first time this year (eight months in 2013). Rental income from portfolio properties increased by 2.3% compared with the previous year.

EBIT climbed 7.0%, from €165.8m to €177.5m. At €214.7m, earnings before taxes (EBT) were 14.4% up on the previous year (€187.6m). Taxes on income and earnings amounted to €37.2m compared to €16.6m in 2013.

Valuation gains were up €21.0m year-on-year at €77.0 million (2013: €56.0m). The value of Group properties increased by 3.0% on average. Net asset value (EPRA NAV) as at 31st December 2014 was €1,789.4m (+8.4%), or €33.17 per share. At a current share price of about €46.00 the stock is trading at a solid premium to NAV.

Funds from operations (FFO) improved by 7.6% to €120.5m, or €2.23 per share, up from €2.08 in 2013, and the board is proposing to the AGM in hamburg in June to pay a dividend of €1.30 per share, up 5 cents, for a dividend yield of 3.59%.

Böge said that this year the company is expecting only moderately higher revenue (target €204m) and for 2016 (target €206m), with earnings expected to slow (+2%) along with FFO (+1.3%). This is because of the one-off effect of boosting its ownership in the Dresdner Altmarkt-Galerie to 100%, rather than the 67% previously. “No one should be disappointed if, in this environment of very low inflation, the company grows just a little more slowly this year”, he said by way of a parting shot.