German REITs issue bullish forecasts on strong rents, low interest
Germany's two domestic REITS, Alstria Office AG and Hamborner REIT AG, both issued upbeat statements after the first half of 2017, and both raised their full-year FFO forecasts against a still very benign German economic background.
The Hamburg-based Alstria Office AG booked a solid gain of €23.3m on the sale of the prominent Kaisergalerie in Hamburg for €170m to AFIAA, in which it had a 49% share. This profit, plus lower financing costs, helped Alstria to boost its profit by 49% in 1H17.
In a press release the company said its rental revenues were down 9% at €93.3 mln, but this reflected the disposal of non-core properties in the second half of 2016, the company said in a press release. Despite lower revenues funds from operations (FFO) were down only slightly by 1.3% to €56.6m.
Alstria is a pure German office play, and is mainly active across northern and central Germany, where it owns and manages 199 office properties valured at €32.bn on July 1st, 2017.
Following the strong H1 performance, the company is upgrading its full-year forecast and now expects 2017 revenues of €193m (previous guidance: €185m) and FFO of €113m (previous guidance: €108m).
According to CEO Olivier Elamine, "In the first six months of 2017 we have been able to re-invest the proceeds from the sale of the Treptowers into a diversified portfolio offering a stronger risk-return profile. This, combined with strong lease-up results allows us to update our guidance to the 2016 levels. The investment market remains very competitive and it is our intention to continue to capitalize on its dynamic and crystalize the value creation as demonstrated by the recent sale of the Kaisergalerie in Hamburg."
Meanwhile, the Duisburg-headquartered Hamborner REIT, which primarily invests in higher-yielding retail properties in downtown locations across Germany as well as retail parks and medical practices, also raised its full-year FFO forecast by €1m to €44-45m, after a half-year in which it increased its rental income by 19.7% to €35.8m and its FFO by 28.1% to €22.1m.
Hamborner invested €108.8m in new properties in the period (the "market Oberfranken in Hallstadt/Bamberg and a Kaufland market in Berlin-Marzahn), and €216m in total including last year's acquisitions in Kiel, Hanau and Passau which it will fully own this year. It says it still has scope for acquisitions of up to €150m.
Hamborner's portfolio of 71 properties are valued at €1.2bn, with an overall vacancy rate, including agreed rent guarantees, of 1.5%. Its REIT equity ratio is 61.1% with an LTV ratio of 37.7%. The average interest rate of Hamborner's loans is 2.6%, down from 3.2% last year