KWG Kommunale Wohnen AG, a long-term oriented property holding company of residential real estate in which Austrian conwert Immobilien Invest SE holds a 76% majority stake, sells 160 of its apartments in Wolfsburg.
The price realized for the portfolio of around 9.400 m² of residential letting space amounts to €9.2 million and thus is approx. 4.5 million higher than the price KWG paid at acquisition. It represents a factor of 13.0x current annual rental income and a price of €978 per m² for the apartment complex situated on leasehold property. The profitable sale at IFRS book value documents KWG's successful business model which aims to sustainably optimize its portfolio through an active approach to asset management.
KWG acquired the property in November 2007 for a purchase price of approx. €4.7 million (purchase price plus ancillary costs). KWG then invested some €2.1 million into the property by means of clearly focused refurbishment and modernization measures. From the successful sale alone compared to the purchase price paid at acquisition KWG realized a Return on Equity of 143.1% and a Return on Investment of 34.3%.
In addition KWG increased the property's Cash Flow substantially. Annual rental income rose by 85% through KWG's clearly focused refurbishment and modernization measures. The main driver was the increased rental income from the letting of refurbished apartments. Whereas due to a substantial backlog of refurbishment at the time of acquisition vacancies initially amounted to 19%, the property is currently almost completely let.
Torsten P. Hoffmann, management board member at KWG: "Despite being a long-term oriented property holding company we try to capitalize on opportunities to realize profits at attractive market prices and will continue to focus on our core markets. Going forward we shall focus on the growth regions of Berlin, Lower Saxony, Leipzig, Dresden and North Rhine Westphalia. This sale at IFRS book value confirms our portfolio's realistic valuation."
KWG's real estate portfolio was valued at €428.9 million or €713 per m² as per 31 Dec 2012. With its NNNAV of €11.19 per share as per 31 Dec 2012 KWG's shares currently trade approx. 40% below their book value.