Newly-listed Deutsche Annington boosts profit on rising rents

The recently-listed Deutsche Annington posted strong third-quarter figures, boosting operating results (adjusted EBITDA) by 3% to €363m and FFO by fully 41.2% to €163.4m, thanks largely to increases in real rents and a lowering of the vacancy rate.

The Bochum-based Annington, Germany’s largest private landlord with 180,000 of its own apartments and a further 40,000 managed on behalf of third parties, said that monthly in-place rents had risen 2.1% to €5.37 (per sqm per month), while the vacancy rate dropped further to 3.9% from 4.4% last year.

Allowing for valuation adjustments in its huge portfolio, the net operating profit was actually €474.3m, or 159% up on the same period last year, said the company. In a letter to its new shareholders the board commented, “Not all of our apartments meet our own standards, so we plan further concentration on resolving these deficiencies in a successive manner”. This will involve capex for energy-saving and senior citizen-friendly improvements of €800m over the next five years, starting with €150m in 2014.

However, the company is already looking for suitable bolt-on acquisitions to increase economies of scale, and has enough financial flexibility to “solidly finance deals of up to €4bn”, said the company. Finance director Dr. Stefan Kirsten commented, “Our IPO along with our Investment Grade rating has put us in a position of being able to refinance ourselves on the international capital markets at very attractive conditions.”

Added CEO Rolf Buch, “We will nevertheless continue to maintain our price and management discipline in future. Despite our considerable earning power, it is not simply a matter of growth but of whether we can also transfer our efficient and price-conscious property management to a new portfolio. Besides, any potential deals have to have considerable value-added potential for our shareholders.”

Annington is continuing to sell off units from its non-core holdings, and expects to have sold 4,100 units by the end of this year, reducing the non-core portfolio by 28%.