Bloomberg News

Deutsche Annington Earnings Increase on Reduced Debt Costs (2)

August 09, 2013

Deutsche Annington Immobilien SE (ANN), the German residential landlord that sold shares to the public for the first time last month, said first-half profit rose 35 percent after the company reduced its debt costs.

Funds from operations excluding divestments, a measure of a property company’s ability to generate cash, climbed to 103.4 million euros ($138 million) from 76.4 million euros a year earlier, the Bochum-based company said in a statement today. The landlord said its FFO for the whole year will be 210 million euros to 220 million euros.

The first-half increase resulted from lower interest expense owing to the restructuring of the GRAND refinancing and capital repayments, the company said.

Deutsche Annington, which owns 180,000 apartments in cities including Berlin and Cologne, is Germany’s largest residential landlord. In December the company received court approval to restructure its GRAND commercial mortgage-backed security after more than a year of negotiations with creditors. GRAND was valued at 5.8 billion euros when it was issued in 2006, making it Europe’s biggest corporate CMBS.

Higher Rents

Deutsche Annington repeated that it would pay a 2013 dividend of about 70 percent of its funds from operations excluding property sales. The company said it expects to increase rents by between 1.8 percent and 2 percent in 2013.

Deutsche Annington was down 0.5 percent at 18.16 euros at the close of trading in Frankfurt, giving the company a market value of about 4.1 billion euros.

The former owners, Terra Firma Capital Partners Ltd. and Apollo Group Inc. (APOL:US), raised about 575 million euros in last month’s initial public offering. JPMorgan Chase & Co. (JPM:US) and Morgan Stanley (MS:US) were lead managers on the IPO.

Net income almost quadrupled in the first half to 436.8 million euros, or 2.18 euros a share, from 111.1 million euros, or 56 cents, a year earlier, Deutsche Annington said. Rental income was little changed at 364 million euros as apartment sales were offset by rising rents and lower vacancies.

Deutsche Annington said all of its GRAND debt has been repaid with help from a 2.5-billion euro loan from JPMorgan and Morgan Stanley, and 1.3 billion euros of corporate bonds with three- and six-year maturities that were issued in July.

To contact the reporter on this story: Dalia Fahmy in Berlin at dfahmy1@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net


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