In the first quarter of 2006, net rental income of the Colonial Group advanced by 14.3% to €66.7 million. Favourable office market trends boosted the Group property occupancy to 97.4%. Rental business investments totalled €154 million.
Results
The Colonial Group recorded €27.8 million net profit in Q1 2006. Although less than Q1 2005s €35.8 million given the seasonal effects of that quarters land sales it is worth highlighting the favourable contribution in Q1 2006 from the Groups recurrent businesses of rentals and residential development.
In this respect, the Colonial Group had booked net revenues of €176 million by end-quarter, or a 12.2% year-on-year improvement. Growth was boosted by rental income increasing by 6.7% to reach €80.7 million and €70.9 million in sales of housing developments, against the previous years €59.2 million.
Group investments totalled €184 million in the first quarter, of which €154 million were focused on the rental business and the remaining €30 million on residential development and land. This all left the Companys debt at €2,820 million at end-quarter, representing a comfortable 45% gearing level as measured by debt to the market value of Group assets.
Rental business
The Colonial Groups rental income in the first quarter of the year advanced by 12.2%, to €68.7 million. The Groups office properties contributed most of this figure that was generated exclusively in the Groups three markets: Paris (57% of revenues), Madrid (24%) and Barcelona (the remaining 19%).
Healthy rental income performance took place in the context of a gradual office market upturn in the central business districts of Madrid and Barcelona, cities where occupancy in Group office properties is close to 100%. This left overall occupancy in Group properties at 97.4%, significantly above March 2005s 95.3%.
The main highlights for the rental business in Q1 2006 included the entry into operation of Barcelonas Torre Marenostrum building. This boasts above ground surface area of 22,000 m² and 553 parking places and is to be fully let to the Gas Natural Group.
The Group invested more than €154 million in rental buildings in the first quarter. Most of the figure relates to the €103 million purchase of Madrids Philips building, located at the junction of the M30 and Avenida de América. The property, with around 25,000 m2 of office space and more than 200 parking places, is fully let to Philips Ibérica.
Investments also included Colonials €27 million purchase of a site in Barcelonas 22@ technology district, a plot where the Group intends to develop an office complex with surface area nearing 21,000 m2.
As well as investments made in the first quarter, Colonials portfolio of projects in either the study or implementation stages includes 10 office buildings, a logistics facility and a retail centre, spread across the three markets where the Group is present and covering more than 245,000 m2.
Residential development and land business
Book sales of housing in Q1 2006 totalled €70.8 million, significantly in excess of the previous periods €7.9 million due to the timetable in notarising deeds for the developments. Meanwhile, the residential development and land businesss Ebitda, of €20.1 million, was less than the previous years €40.7 million, as a result of 2005s land sales being focused entirely in Q1.
On the commercial side, contracts were signed for 162 homes in Q1 2006, at a value of €54.7 million. The previous quarters healthy pace of sales continued in the first three months of 2006, thanks to the success of developments being marketed by the Group in Vallecas (Madrid) and Sant Cugat (Barcelona).
The pre-sale portfolio of flats to be booked in future quarters, totals €338 million, equivalent to more than 1.5 years annual sales.
Source: Colonial
