Ado Properties sees FFO rise, bullish outlook for Berlin residential

The Berlin listed property investor Ado Properties saw its key FFO1 figure rise by 41.7% last year on the strength of a strong increase /6.0%) in like-for-like rents, as demand for Berlin residential property remains buoyant.

The company said its average actual achieved rent is now at €6.11 (per sqm per month), while over the full year it lowered its vacancy rate from 4.0% to 2.5 %. With acuisitions and valuation gains, the residential portfolio grew from 14,856 to 18,800 units, boosting its value by €824mn to €2.33bn.

Combined with lower interest costs, this increased operative earnings (FFO 1) by 41.7% to 43.5m or €1.11 per share. The dividend will increase by nearly 30 % to €0.45 per share from last year's €0.35 per share. The Net Asset Value of the portfolio amounted to €1,591 million or €36.08 per share as of 31 December 2016 (the current share price is about €33, up 14% in the past year). For full-year 2017, the company is targeting FFO of €60mn.

Since the beginning of this year, Ado has bought a further 581 residential and commercial units for €123.2m, or €2,645 per sqm. Its financial structure remains conservative, with an LTV of 31.4% at year-end, and an average interest rate of 2.1% on its borrowings, nearly all of which have fixed rates or are hedged, and with an average maturity of 5.3 years. The LTV is expected to rise to up to 45% after the company's next wave of acquisitions, it said in its annual report.

According to Rabin Savion, CEO, “We anticipate further growth and value increases for ADO Properties. We expect our 2017 year-end FFO1 run rate to be at least €60 million after investing our cash position of around €150 million. For the business year 2016 we have recommended a dividend of €0.45 per share, a close to 30% increase compared to the previous year.

"The fundamentals of Berlin support our outlook. They are solid and getting stronger each year. Berlin continues to attract newcomers of all ages who appreciate the city’s cosmopolitan culture. The resulting population growth drives an ongoing housing shortage in Berlin which will remain for many years to come. Therefore the macro economic outlook for residential investments stays very positive."