Berlin-focused ADO Properties reaps solid return on capex investment
The listed ADO Properties, a pure-play Berlin residential investor, continued to expand its portfolio over the first six months of the year, and posted strong figures showing an increase in key metric FFO of nearly 25%. FFO rose to €33.3m, up from last year’s €26.7m on what looks like a strong operational performance.
Rental income rose by 26.4% to €64.9m, up from €51.4m in the corresponding period last year, driven by 5.1% like-for-like rental growth and an expansion of the portfolio. The portfolio grew by €498m or 15% to €3.82bn as of 30thJune. The company now owns 23,500 units, of which 22,000 are residential units. The EPRA Net Asset Value of the portfolio came to €2.18bn or €49.62 per share (the current share price is about €53.00).
The company earns average in-place rent on its residential portfolio of €6.57 per sqm per month, up from the €6.42 as at 31st December 2017. The vacancy rate for the residential portfolio decreased by 50 basis points to 3.1% (31st December 2017: 3.6%) due to faster unit modernization.
The company’s financial structure remains conservative with an LTV of 41.8. The average weighted maturity of the outstanding debts is about 5.0 years while the average interest rate on its long-term debt is 1.8%. Almost all loans have fixed interest rates or are hedged.
According to Rabin Savion, CEO of ADO Properties, “Our like-for-like rental growth rose by 5.1%, which can be attributed first and foremost to our CAPEX strategy. The investments carried out as part of the CAPEX program, which entailed investing in newly acquired vacant spaces over the course of these past few months, are now starting to pay off.”
“At the same time, this resulted in a drop of the vacancy rate to 3.1%. This pleasing development is one which our investors are able to experience directly: on 19th June 2018 a dividend payout of €0.60 per share was agreed to at the shareholders’ meeting in Luxembourg. This amounts to a year-on-year increase of around 33%. From this strong position we look ahead to the second half of 2018 with high expectations. Anticipating further growth and value increases for ADO Properties, we expect our 2018 year-end FFO 1 run rate to be at least €66 million after closing all signed transactions and implementation of the long term financing.“