Westgrund AG triples profit, prior to Adler takeover
The listed residential real estate company Westgrund AG has gone through huge growth in the past year, and has just posted its best ever results. It tripled its number of apartments from 4,905 to 16,847 in the course of the year, and nearly doubled its revenues (almost entirely rental income) to €35.7m.
Its corresponding increase in market cap will see the company enter the small-cap-index SDAX of 50 smaller listed companies in April, putting it in the elite company of the 130 most significant listed stocks on the German exchange. Other real estate companies in the SDAX include DIC Asset, Alstria Office REIT, Hamborner REIT, Deutsche Office AG, TLG Immobilien and Patrizia Immobilen.
The leap into the big time came last year when Westgrund bought a 13,000-unit portfolio, tripling its size at one fell swoop. The company financed the deal with nearly 35% of its own equity, with a subsequent rise in the free float from 20% to more than 50% through a capital raising via the issue of new shares, which raised €140m.
Gross profit almost tripled in line with growth in the real estate portfolio to €119.2 million, reflecting the increased value of the real estate portfolio, at €78.9 million almost four times higher than in the previous year. EBT jumped to €71.6m, more than triple the figure for 2013. The after-taxes consolidated net figure was €59.8m, again triple the previous year’s figure. FFO also quadrupled, from €1.3m to €5.6m. The company’s overall LTV ratio was 54%, and its average weighted interest rate on its recently renegotiated external borrowings is now 2.6%.
Based on these figures, the EPRA going concern value of Westgrund will be €313.5m at end-2014, with undliluted NAV per share at €4.24. The company’s share price has soared since then, to more than €5.00. Fellow-listed Adler Real Estate AG, who shares a common major shareholder with Westgrund in the Swiss-based Wecken & Cie, has already secured enough votes for a takeover of Westgrund by the middle of this year.
Adler itself recently posted a strong increase in cash flow for 2014, up by 40.3% to €16.75m, and a consolidated profit which more than doubled to €111.57m from €46.88m the previous year. The company boosted its own residential property portfolio from 7,797 units at end-2013 to 24,086 units, including some commercial properties, by the end of 2014.