Madrid-listed Colonial Inmobiliare reported net profit surged 90% in the first six months of the year to €437 mln, thanks to a robust performance at its Spanish operations in particular.
The strong growth in net profit also reflected a one-off €72 mln contribution from the company’s conversion to a SOCIMI – the Spanish equivalent of a REIT – with retroactive effect to 1 January.
A 10% increase in rental growth at Colonial’s Barcelona offices helped lift overall rental income in Spain by 4% and 3% overall compared to the year-earlier period. The company said the performance was among the best in the sector. In addition, the group recorded a ‘significant’ increase in signed rental contract prices of 16% over the period.
‘These set of results consolidate the positive trend started three years ago, pursuing a growth strategy based on quality and financial discipline. Our industrial approach as office specialist allows us to offer attractive returns above market average,’ CEO Pere Viñolas said in a press release.
Colonial’s Barcelona office portfolio (pictured: Diagonal 409) also generated the strongest growth in terms of valuations with a 9% rise compared to the figure for end-2016 and a 13% increase year-on-year. Overall, the value of the Spanish assets rose by 7% like-for-like in the last six months and 11% year-on-year, lifting the overall value by 11% to €8.6 bn compared to the year-earlier period.
Asset rotation in Paris
The company’s French office portfolio also contributed to the growth in both rental income and the value of the portfolio. Colonial announced on Monday that its French subsidiary SFL has sold the IN/OUT office building in Paris to French fund manager Primonial for a price expected to be around the €400 mln mark.
The group said its ‘excellent’ letting performance had enabled it to achieve and maintain ‘very solid occupancy levels’ of 98% in Barcelona, 97% in Madrid and 96% in Paris. ‘This is clearly higher than the market average in the three cities in which the group operates,’ the company said in a press release.
The company’s new REIT status also means it has better access to capital: at the beginning of May, the Colonial Group successfully completed a €253 mln capital increase which was three times oversubscribed by investors. Additionally, on 19 June, the Colonial Group was included in the IBEX 35, the benchmark index for the Spanish stock exchange which, it said, increases its visibility for institutional investors.
