Colonia boosts profits and sees vacancies fall

Colonia Real Estate booked a profit of around EUR 6.3 mln in the first half of 2009 compared to a loss of EUR 2 mln in the year-earlier period.

EBIT (earnings before interest and tax) increased to 16.6 mln from EUR 5.6 mln, while EBITDA (earnings before interest, tax, depreciation and amortisation) rose to EUR 15.3 mln from EUR 5.8 mln.

Net asset value (NAV) declined in the second quarter to EUR 10.15 from EUR 11.62 due to the dilution effects of two successful capital increases. Liquidity improved to EUR 20.8 mln from EUR 10.2 mln in the first quarter. At the same time, the equity ratio increased to 26.1%, in line with long-term management targets.

Adjusted rental income increased by 8.6%, from EUR 27.9 mln to EUR 30.3 mln, while net operating income (NOI) in the rental sector grew from EUR 18.4 mln to EUR 21.6 mln, an increase of 17.4 percent. The further improvement of rental income was attributed mainly to the systematic cost management and the comprehensive action plan for optimising revenues from management of the real estate portfolio.

The vacancy rate declined to 13.8% (H1 2008: 15.2% ) while the average rent per square metre increased by 2.2% to EUR 4.63.

As of the end of the first half of 2009, the revaluation of residential real estate resulted in a positive non cash-effective value of EUR 1.45 mln. 'This market valuation underscores the stabilising price trend in the residential real estate market,' the company said.

Looking to the second half-year, the company expects the transaction market to start recovering - though slowly - and expects increasing revenues particularly in the area of residential renovation.

'In this area, we are anticipating a disproportionate increase in both revenues and profitability. In Berlin, for example, our subsidiary CRE Accentro already certified major sales above book value in the second quarter, which will contribute to third-quarter earnings. On the basis of our continually improving rental income and the implemented cost reductions, and in view of the reviving transaction market, we continue to anticipate an operating profit for the 2009 fiscal year.'

With around 20,000 residential units and total assets of approximately EUR 900 mln, Colonia Real Estate is Germany's third largest listed residential property company. The asset management of the CRE Group has more than EUR 2.1 bn real estate assets under management.