Restructured Conwert books record operating result in 2015

Vienna-listed Conwert Immobilien reported its best operating results ever in 2015 thanks to higher average rents in the core portfolio and a strong decline in net interest costs.

Revenue increased year-on-year by around 33% to €506 mln thanks to a stronger focus on residential property in A and B locations in metropolitan regions in Germany and Austria, as well as the related acceleration in selling off non-core property.

Rental income slipped in line with expectations by 4.7% to €226 mln but this was largely due to the refocusing on the core property portfolio and a 10% reduction in lettable rental units.

Last year, Conwert found itself in the middle of the consolidation wave that has swept over listed landlords of German residential property in recent years. Deutsche Wohnen, the number 2 in the German listed sector, made a €1.2 bn takeover bid for Conwert but this was rejected by shareholders of the Austrian company in April 2016. Since then Conwert has been free to concentrate on its reorganisation.

The consistent implementation of Conwert's strategic restructuring led to 'notable improvements' in the earnings figures, the company's CEO Wolfgang Beck said. 'By focusing on the three priorities – improving the operating profitability, optimising the financing structure and the strategic focus on residential property in Germany and Austria – we have implemented the right measures in order to prepare conwert for future developments.'

Higher average rents per m2 and a significant decline in vacancy rates caused the net rental result (NRR) to fall by just 1.2% to €148.8 mln, despite the significantly reduced portfolio. By the end of the year the average vacancy rates for the entire portfolio were down harply at 6.6% from 9% at end-2014. The vacancy rate for the core portfolio was just 3.1%.

In 2015 proceeds from the sale of properties more than doubled against 2014 and totalled €272.6 mln. As a result of sales, the value of the Conwert property portfolio declined by 4.2% from €2.8 bn in 2014 to €2.7 bn. However, the value of the core property portfolio increased sharply over the year by 7.5% to €1.9 bn, with the core residential portfolio Germany generating the strongest growth (+9.6% to €1.3 bn).

The value of the core residential portfolio Austria also rose by 3.8% to €401 mln. In contrast, sales led to a pronounced reduction in the non-core portfolio in Germany by 27.3%, in Austria by 17.1% and by 53.2% in other countries (Czech Republic, Slovakia, Hungary, Ukraine and Luxembourg).

For the 2016 financial year management expects further progress to be made in improving the operating performance and the concentration on residential property in Germany and Austria.