GSW Immobilien profits from rising Berlin tide

It’s been a fairly steady stream of good news for both the company and shareholders of listed Berlin residential housing company GSW Immobilien since the company’s flotation on the stock market in 2011.

Pretty much a pure play on the city’s residential housing market, GSW Immobilien manages about 60,000 residential and a handful of commercial units, making it the owner of one of the largest real estate portfolios in Berlin. The company’s full-year results for 2012 contain no real surprises, and underpin the GSW share price performance which has risen a steady 50% in sympathy with most German residential company valuations over the past year.

Briefly, GSW improved consolidated net income by 36.3% to €143.4m, and boosted net operating profit (EBIT) by 21% to €214.4m. FFO funds from operations rose by 13.5% to €64.2m, the equity ratio improved from 38.4% to 40.4%, the vacancy rate was lowered by 0.7% to 2.7%, and the net asset value (NAV under EPRA rules) increased from €29.72 to €30.21 per share. The current share price of €31.00 is thus at a slight premium to NAV. The company is paying a dividend of €0.90 per share.

Listed in Germany’s MDAX for medium-sized companies, GSW completed a major capital increase of 9.5 million new shares, the placement of a seven-year, 2%-coupon convertible bond, and the acquisition of a further 7,000 apartments throughout the year. The current portfolio is valued at €3.3bn, or €909 per sqm as at year-end 2012.

Apart from internal company improvements over the year, COO Jörg Schwagenscheidt attributed the steady growth to “the positive economic development in Berlin and the housing market in Berlin. Falling unemployment rates, rising real incomes and a substantial increase in the population are having a positive influence on the housing market. Rental apartment and condominiums were both in high demand over the past year, and while new building has also developed positively, it cannot satisfy the consistent increase in the demand for housing space. This saw rental and purchase prices increasing across all price segments in 2012, which will have positive implications for our company.” He forecast that the company’s FFO would rise in 2013 to between €73m to €78m from last year’s €64.2m.

Meanwhile GSW’s CEO Thomas Zinnöcker is leaving the company after eight years to become the new CEO at fellow-listed residential property manager Gagfah, replacing Stephen Charlton. Zinnöcker will be replaced at GSW by Dr. Bernd Kottmann, who has most recently been deputy supervisory board chairman at Hamborner REIT in Duisburg and a board member with responsibility for finance at Bonn-based IVG Immobilien AG.