VIB Vermögen AG, a company specialising in the development, acquisition and portfolio management of commercial properties, closed the 2019 fiscal year with very strong results. The previously published interim IFRS figures for the Group for the 2019 fiscal year have therefore been confirmed. During the reporting period, revenue increased by 4.8 per cent to EUR 91.0 million (previous year: EUR 86.8 million), chiefly due to new additions to the portfolio.
Changes in value for investment properties amounted to EUR 22.3 million in the year under review (previous year: EUR 19.5 million). Expenses for investment properties climbed to EUR 16.1 million (previous year: EUR 15.0 million). Personnel expenses at the Group rose slightly from EUR 3.7 million to EUR 3.9 million. Other operating expenses remained on a par with the previous year’s level at EUR 1.8 million (previous year: EUR 1.8 million).
Sharp climb in earnings recorded
On account of the ongoing favourable financing conditions, expenses for the financing of the portfolio were reduced to EUR 15.0 million (previous year: EUR 15.6 million). When adjusted for valuation effects, earnings before tax (EBT) rose sharply by 8.2 per cent, or EUR 4.2 million, to EUR 56.0 million (previous year: EUR 51.7 million). Consolidated net income therefore increased accordingly by 9.2 per cent to EUR 65.4 million in 2019 (previous year: EUR 59.9 million). Given the 27.6 million shares, it also corresponds to earnings per share of EUR 2.29 (previous year: EUR 2.09).
Equity increased by EUR 49.7 million to EUR 577.3 million in the period to December 31, 2019 (31/12/2018: EUR 527.6 million). The equity ratio remained virtually unchanged at 42.5 per cent (31/12/2018: 42.7 per cent).
Further improvement in key property portfolio figures
As of year end, the portfolio of the VIB Group comprised 109 properties, with a balance sheet value of EUR 1.3 billion. The net asset value (NAV) of the company climbed to EUR 613.0 million as of December 31, 2019 (31/12/2018: EUR 559.9 million). Given the number of outstanding shares, it increased by 9.5 per cent to EUR 22.23 per share (31/12/2018: EUR 20.30 per share). Funds from operations (FFO), as an indicator of the company’s operating cash inflow, were improved in the year under review, rising by 7.9 per cent from EUR 1.64 per share to EUR 1.77 per share.
Continuation of growth strategy through in-house developments
In particular, in-house developments at VIB Vermögen will once again, from todays perspective, lead to a rise in rentable space, and therefore higher rental income, in 2020.
At the current time, revenue is expected to come in at between EUR 91.0 million and EUR 97.0 million. Excluding valuation effects and extraordinary items, EBT is expected to reach a level between EUR 55.0 million and EUR 59.0 million. FFO (funds from operating activities) is expected to rise to between EUR 48.0 million and EUR 52.0 million in the 2020 fiscal year.
Impact of the coronavirus crisis on VIB Vermögen currently manageable
The VIB Vermögen properties from the core business segment of logistics/light industry account for by far the largest portion of annualised net basic rents in the VIB portfolio and are not currently affected by the closures ordered by the authorities in connection with the coronavirus pandemic. The same applies to VIB Vermögen retail units in the grocery and chemist segments, as well as depending on regional legislation for home improvement stores and garden centres. Therefore, properties that make up a total share of more than 90 per cent of rental income are not directly affected by the closures. By contrast, tenants in the department store and clothing segments, as well as smaller retail units and restaurants, are substantially being affected by the ordered closures. As such tenants account for less than 10 per cent of consolidated rental income, the risk for the VIB Group as a whole, however, remains limited.
In the interests of continuing long-standing and successful business relations, VIB Vermögen is currently working on individual solutions with most of the tenants who are facing a direct and existential threat. In total, agreements have been concluded in an amount of some EUR 2 million; these mainly include rental deferrals, but – where legitimate exceptional circumstances apply – may also include rental waivers.
“We are in close contact with affected tenants, the aim being to work together in a constructive and flexible way to find solutions that are viable and feasible for both parties against the challenging backdrop of coronavirus,” explains Martin Pfandzelter, Chief Executive Officer of VIB Vermögen AG. “In our view, this is yet another component of a sustainable and future-oriented business policy,” adds Holger Pilgenröther, Chief Financial Officer of VIB Vermögen AG.
The 2019 Annual Report, as well as an up-to-date corporate presentation, is available for download at www.vib-ag.de.