News from 03/27/2008
Deutsche Wohnen: No dividends for shareholders
After taking over the Gehag group in 2007, Deutsche Wohnen AG will not distribute dividends to its shareholders. The 2007 net asset value rose by 2.4% to €37.16 per share from €36.29 per share in 2006, which includes the Gehag transaction. Operating profits before interest and taxes (EBITDA) ran to €101.2mn, with funds from operations reaching €10.2mn. The concern’s earnings after taxes amounted to €231.4mn. Net income from unheated rentals totaled €186.3mn based on a 3.6% average net rent increase to €4.89 per sqm. Due to a judgement by the Berliner Kammergericht (Superior Court of Justice) against a Gehag property fund, indemnity suits might be in the offing for Deutsche Wohnen.
Prupim: British buy Berlin logistics property for €57mn
The British investment company Prupim has acquired the Kaiser’s Tengelmann logistic headquarters in Berlin for approximately €57mn. The object at Ringstrasse 24 in Tempelhof-Schöneberg is to be integrated into the M&G European Property Fund. The existing lease with Kaiser’s Tengelmann for the more than 35,000 sqm of logistics and 3,900 sqm of office space is to run another twelve years. Annual income resulting from this contract amounts to some €3.7mn. Cushman & Wakefield Investors advised Prupim for this transaction.
Deutsche Hypo: Profits dropped, but new record for new business
The financial crisis has not left Deutsche Hypo unscathed: its subsidiary Nord/LB reported a 4.3% reduction in income from regular business activity, down to €49.3mn for the past year. The annual net profit for the year fell by 6.1% to €36.7mn. The firm's new business rose considerably, however: in commercial property financing, the bank attained the highest volume of new business in its history. In total, nearly €2.7bn in new loans were approved, a 23% increase compared with the previous year. The board’s predictions for the 2008 business year are cautious: past good results can continue only if the crisis on the financial and property markets “doesn’t keep escalating.”
FranconoWest AG: Karsten von Köller leaves board of supervisors
As of May 5, Karsten von Köller will no longer be FranconoWest AG's Chairman of the Board of Supervisors. Metehan San will replace him in that position, the 100% subsidiary of Franconofurt AG announced, and Christian Wolf will become a new member of the supervisory board. Both San and Wolf are board members of Franconofurt. Von Köller was appointed CEO at FranconoWest just in August, 2007. Previously, he had been the CEO of Eurohypo AG in 2002 and 2003, and had functioned as the President of the Association of German Mortgage Banks.
Pacific Star Europe: Asia fund for institutional investors
Dirk Große Wördemann, previously the CEO of Allianz Real Estate GmbH, and Matthias Stürmer, Eon’s Head of Alternative Investments until July 1, have founded a joint venture with the Pacific Star Group, Singapore. The new firm Pacific Star Europe (PSE) intends to offer institutional investors worldwide investment opportunities, focusing on Far Eastern property markets. PSE’s Asia Fund Select concept is to offer pension funds, insurance companies, corporations and private offices the possibility of “tailor-made indirect property investments,” says Große Wördemann. The (preliminary) target volume of Asia Fund Select's four modules (“India,” “China,” “North Asia,” “Southeast Asia”) is $2bn. In addition, the Atlas GFS umbrella fund that will invest worldwide is to be issued in July, 2008. At the moment, the new firm has eight staff members in Munich. “By the end of the year, there should be ten,” Große Wördemann said.
Logistics properties: €15bn in direct investment throughout Europe in 2007
In 2007, direct warehouse investment throughout Europe ran to €15bn, a 12% decline compared with the previous year according to the European Logistics Report issued by Jones Lang LaSalle (JLL). A glance at individual countries shows that the volume of direct investment in Germany, however, rose by 5% to €2.3bn compared with 2006. The largest part of the total volume was recorded by Great Britain, for which a 35% turnover reduction was reported. The reason given in the report for the drop in turnover throughout Europe was not the credit crisis but limited investment opportunities in many countries. This is because numerous objects constructed by international builders and of interest to investors were never placed on the market, but were kept in the developers’ own portfolios. The high proportion of projects used by the developers also restricts the number of acquisition opportunities for potential investors, the report states.
HRE: Property financier sees danger of new write-offs
Hypo Real Estate Holding AG (HRE) is not excluding the possibility of further revaluations for 2008. Since the beginning of the year, the market situation for CDO’s has worsened still further, the Munich property financier reported. For this reason, it might not be possible to fulfill plans made for the 2008 business year. As recently as mid-January, HRE had predicted returns on equity capital ranging between 10% and 12% and earnings before taxes between €1.0bn and €1.2bn.
Immofinanz: Devaluations deplete Immoeast profits
During the first nine months of the current business year, Immofinanz, Vienna, recorded rising turnover and rent income. According to a financial statement for the period from May 1, 2007 to January 31, 2008, turnover rose by 30.6% to €490.2mn (same period, previous year: €375.3mn). The rise in income from rent was quoted at 4.3%. Regarding profit, however, the firm had to accept reductions: while the EBIT increased by 1.5% to €471.6mn (same period, previous year: €464.5mn), earnings before taxes (EBT), at €400.3mn, were 10.6% lower (same period, previous year: €447.9mn). The reason for the detrimental profit situation was devaluations in the property portfolio of Immofinanz's subsidiary Immoeast, which were partially compensated by positive development in Immowest’s Buwog/ESG portfolio, Immofinanz states.