Deutsche Annington achieves record profitability with improved efficiency and the creation of a first class platform for sustainable growth
Bochum, March 27th, 2007 – Deutsche Annington Immobilien Gruppe (“DAIG”), one of the leading residential real estate management groups in Germany, today announced its preliminary 2006 results. In a year characterized by the integration of the Viterra activities, which was achieved ahead of schedule, DAIG achieved its best ever results and improved its financial strength. In 2006 the Viterra activities were consolidated on an annual basis for the first time.
In the reporting period, DAIG increased income from property management to €898.8 mill. (2005: €681.7 mill.). In addition to the impact of the Viterra consolidation and associated synergies substantially in excess of plan, a reduction in vacancies, an increase in average rents, efficiency gains and growth measures contributed to this improvement. Due to a more selective pursuit of tenant privatisation opportunities, margins on sales have increased even though quantities sold and therefore the total profit on disposal of properties declined to €131.3 mill. (2005: €183.4 mill.). This result met expectations due to the group’s stronger focus on the rental business.
Operating profit grew significantly to €765.9 mill. compared to €311.3 mill. in the previous year. In addition to the inclusion of Viterra, this primarily was the result of the group’s efficient and effective property management platform and its strong focus on customer satisfaction, both of which resulted in increases in the value of its property portfolio. DAIG’s long-term value-added growth strategy continues to create significant value from internal measures and external acquisitions. In accordance with IFRS, DAIG adjusted its accounting policies from a cost of acquisition model to a fair value model in 2006.
The strong operating performance has enabled the company to improve its capital-to-assets ratio on a full fair market value to almost 20% as of year-end 2006. The group also enjoyed strong cash-flow from operating activities, which grew from €549.5 mill. in 2005 to €789.9 mill. in 2006. This cash-flow allowed the group to further invest in the business through acquisition as well as to pay down debt. In August 2006, the company also accomplished the largest European securitisation of residential real estate, refinancing a total of €5,416 mill. of debt in the transaction.
Following the integration of Viterra, DAIG restructured its operating platform into seven regional branches to increase efficiency and to take advantage of its industry-leading geographic footprint.
High tenant loyalty
DAIG’s rental policy and customer service management have led to a high level of loyalty amongst its tenants. The average tenant has been in the group’s apartments for 16 years compared to the average tenure in Germany of about 10 years. Services for DAIG’s customers include an after-sales management, a 24/7 maintenance service, cooperation programs with well-known consumer brands and various other initiatives.
In 2006, Deutsche Annington refined and enhanced its unique nationwide operating platform. This platform allows for an efficient management of the existing portfolio, fast and cost-effective integration of newly acquired portfolios, and first class customer service.
2007: Focus on growth and outstanding customer service
While 2006 was dominated by the integration of Viterra, 2007 will have an emphasis on further strengthening customer service and a strong focus on acquisitions. The group will continue to pursue a flexible approach to acquisitions, which is based primarily on value and long-term success. With its industry-leading operating platform, the group is able to buy both large and small portfolios, starting at a size of approximately 100 units. While the group will continue to acquire portfolios of all sizes, DAIG also has an established track record of acquiring smaller portfolios. Recent acquisitions include portfolios of 940 residential units (Ruhr/ Westphalia), 1,623 units (Frankfurt/ Rhineland), and 80 units (Leipzig).
DAIG intends to further enhance its customer service, which plays a critical role in further decreasing vacancy rates and fluctuation. As part of this effort, DAIG plans to expand its cooperation model with leading consumer brands, which provides customers with attractive complementary offers (e.g., by Vodafone, Quelle). The group will also continue its 24/7 maintenance service where customers can be immediately assisted through a free hotline.
Cooperation with municipalities to be further expanded
As debates about sales of municipal housing portfolios have continued over the past months, DAIG reinforces its commitment to continued cooperation with municipalities and local authorities. The group has shown its long-term commitment to tenants and has proven to be an attractive and innovative landlord who is well-known for its socially responsible policies. This will remain a key focus in 2007 and for the years to come.
About Deutsche Annington:
The Deutsche Annington Immobilien Group (DAIG, Bochum) is one of the leading German, residential property companies with 230,000 leased and managed objects, nationwide. Their main areas of business are the letting of residential property, active asset management, the acquisition of new residential portfolios in order to sustainably increase the company’s value as well a the sale of flats to tenants, owner-occupiers or capital investors (including management). DAIG is a company oriented on the long-term and a responsible and strong lessor with a nationwide selection of residential property.
Contacts:
Deutsche Annington Immobilien Group
Katja Klemm
Teleohone: +49 (0)234 314 – 1901
Mobile: +49 (0)174 9224995
katja.klemm@deutsche-annington.com
A&B Financial Dynamics
Dirk T. Schmitt
Telephone: +49 (0)69 920 37 –142
Mobile: +49 (0)170 302 8833
d.schmitt@abfd.de
