IVG Immobilien AG significantly improved its consolidated net result in the first quarter of 2012 and ended the reporting period with just a slight loss of 4.8 million.
In the fourth quarter of 2011, IVG's consolidated net result had still been highly negative at 71.3 million on account of extraordinary factors. Revenues climbed by 24.7 million to 101.9 million, predominantly as a result of increases in net rents and the absence of negative extraordinary factors in the fourth quarter of 2011 in the Development segment. Operating EBIT also improved significantly from -26.3 million to 50.3 million.
Factors behind the improvement in the first quarter of 2012 included the near completion of the major project THE SQUAIRE at Frankfurt Airport, the initial rental income associated with this and the absence of the negative extraordinary factors that had squeezed earnings in the fourth quarter of 2011. Positive unrealized changes in market value in the Caverns segment (40.3 million in the first quarter of 2012) more than offset negative unrealized changes in market value in the Real Estate segment of 25.1 million, and therefore resulted in a positive overall contribution to earnings. The Funds segment continued to enjoy a stable trend in income.
The financial result improved significantly by 20.9 million to 54.8 million as a result of repayments, lower average interest rates and currency effects. IVG utilized the attractive interest rate to reduce its share of variable financial liabilities from around 41% in the previous quarter to now around 29%, and thereby to further improve planning certainty in its financial result. As at the end of the first quarter of 2012, the Group had cash and cash equivalents of 112 million.
Funds from operations (FFO I), which describes the company's operating cash flow without non-recurring income from Development and without proceeds from sales, were again positive at 2.9 million (previous quarter: 0.4 million). With vacancies at 11.4% as against 11.1% in the fourth quarter of 2011, a slight in¬crease in like-for-like rents of 0.1% and a NOI yield of 5.0%, the other main portfolio indicators were virtually stable or developed positively.
At 6.29 per share, IVG's net asset value including the value potential of Cav¬erns business (adjusted NAV) as at 31 March 2012 was unchanged as against the previous quarter (6.30). Reported NAV amounted to 4.83 per share and was therefore up 1.9% on the previous quarter.
Dr Wolfgang Schäfers, CEO of IVG Immobilien AG, said: "With IVG's perform¬ance indicators now stabilizing, we are seeing the basis for its successful ongo¬ing development into an integrated investment platform. In addition to the sys¬tematic debt reduction of the Group, the expansion of our successful Caverns business to further energy-related infrastructure projects and the growth of our fund business with selected co-investments will be crucial factors in IVG's posi¬tive future after its planned return to profitability in 2013."
CFO Dr Hans Volkert Volckens anticipates that the consolidated net result for the second and third quarters of 2012 will be somewhat weaker: "But IVG will close the fourth quarter of 2012 much more positively once again with a virtually break-even result across the entire 2012 reporting season," stated Volckens. The goal of a significant consolidated net profit in 2013 was reiterated again.
Throughout Europe in the first quarter of 2012, IVG concluded new letting agreements or prolonged existing agreements for around 97,500 m² of space in its own property portfolio.
While transaction activity for commercial properties de¬clined by nearly a fifth year-on-year in the first quarter of 2012 on Europe's in¬vestment markets, in Germany it returned almost to the previous year's level.
IVG itself conducted acquisitions and disposals, particularly for its institutional in¬vestors, with a total value of 540 million in the first three months. Good news in the Development segment included the conclusion of further leases for a