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ADO Properties S.A.: ADO Properties with strong first half of 2015

ADO Properties S.A. / Key word(s): Half Year Results

2015-08-27 / 07:30

- Distinct growth in income from rental activities (+80%), EBITDA (+78%)
and FFO1 (+85%)

- Portfolio volume increases to EUR 1.2 billion thanks to further acquisitions

- Integrated management platform and significant investments to modernize and re-position residential units as key success drivers

- Current Net Asset Value per share at EUR 20.73 (pro forma EUR 20.35)

- Company anticipates strong like-for-like rental growth of approximately
5% in 2015

- FFO1 guidance for total year raised to approximately EUR 30 million

Berlin, 27 August 2015 - ADO Properties S.A., the only Prime Standard listed, pure-play Berlin residential real estate company, looks back on a successful first half of the year in 2015. All of the company's key figures verify the substantial growth in 2015.

It is the first time that ADO Properties has issued a quarterly report after its start of trading on the regulated market (Prime Standard) at the Frankfurt Stock Exchange on 23 July. Part of the IPO was a capital increase which led to gross proceeds of approximately EUR 200 million for further acquisitions and investments in the quality of the portfolio. The net proceeds reached approximately EUR 194 million.

Distinct growth in operational key figures
The income from rental activities of ADO Properties increased by 80% year-on-year to EUR 28.6 million in the first half of the year (30.6.2014: EUR 15.9 million). This growth was mainly driven by the integration of the Carlos Portfolio with 5,750 residential units from 1 April 2015. The quarterly income from rental activities reflects an annualized income of EUR 71 million.

The company's EBITDA from rental activities increased by 72% from EUR 12.3 million for the first six months 2014 to EUR 21.1 million for the first six months 2015. The Q2 result represents an annualized EBITDA of EUR 52 million.

In addition, the company started a privatization program at the end of 2014. In the first half of 2015, ADO sold 20 apartments, in line with the goal of selling 50 apartments by the end of the year. The average sales price of EUR 2,791 per sqm compares very positively to the average portfolio value of EUR 1,250 per sqm. The company expects to sell around 100 to 150 units per annum from 2016 onwards.

The FFO1 (without profit from disposals) in Q2 2015 rose by approximately 119% in comparison to the corresponding Q2-period of the previous year, resulting in EUR 0.53 per share. Taking into account the 10 million new shares issued in the course of the IPO in July, the pro forma FFO1 per share amounts to EUR 0.38. The FFO1 of the second quarter represents an annualized FFO1 from rental activities of EUR 34 million and reflects a FFO yield of 6.5% on our NAV.

The average in place rent of the residential portfolio amounted to EUR 5.71 per sqm and month. In comparison, the average rent for new lettings was at EUR 8.21 per sqm and month. Over the past three years, there was an average annual rental growth of 6.2% on a like-for-like basis. The company managed to reduce the vacancy rate for its residential portfolio from 4.8 % as of 31 December 2014 to 4.3 % as of 30 June 2015.

Integrated management platform and individual modernization strategies as key drivers for value enhancement
"The reason for the successful letting of our apartments is our unit modernization strategy. For each building we acquire, we develop a detailed modernization and refurbishment strategy to improve the quality and the sustainable value. Due to our integrated management platform with dedicated employees for Asset-, Property- and Facility Management, we are close to our buildings and tenants and know which measures are necessary for successful letting, rent development, and tenant satisfaction. In the first half of 2015 we invested EUR 19.2 per sqm p.a. after EUR 27.2 per sqm for the complete year in 2014. This is distinctly more than other residential companies invest. But we are a long-term investor and we are convinced that timely, fundamental investment in maintenance and modernization will lead to a sustainable value enhancement of each building as well as the complete portfolio. From our point of view, this is a more successful asset strategy than postponing modernization measures", said Rabin Savion, CEO of ADO Properties.

Portfolio growth and solid financial structure
ADO Properties' portfolio was valued at EUR 1.2 billion as of 30 June 2015. It consists of 14,500 units, or which around 13,700 are residential units (31.12.2014: 6,600 units). The acquisition of the Carlos Portfolio with 5,750 residential units in Spandau and Reinickendorf in April 2015 had the greatest impact on portfolio growth. The Net Asset Value of the portfolio amounted to EUR 518.2 million or EUR 20.73 per share as of 30 June 2015. Due to net proceeds of the IPO, the pro forma NAV amounted to EUR 712.2 million or EUR 20.35 per share.

The financial structure of the company remains conservative and solid with an LTV of 57.6% and an average interest rate of 2.6%. More than 95% of the loans have fixed interest rates or are hedged. The loan maturity period is approximately six years. ADO Properties expects net proceeds from the IPO of approximately EUR 194 million, which will improve the conservative financial structure going forward (pro forma LTV 41.6%).

Continuing positive outlook for year's end
For the complete year 2015, the company expects an FFO1 of approximately EUR 30 million. Moreover, we anticipate a rental growth of approximately 5% on a like-for-like basis and target disposal of 50 apartments. The company intends to pay out a dividend of 30-40% of FFO1. We will use the rest of FFO1 to invest in our portfolio and to fund acquisitions. Our target LTV is between 45 and 50%.

Berlin residential market offers potential for further improvement
"Berlin is now one of the most exciting cities in Europe, and Berlin's property market is one of the most dynamic in Germany," said Rabin Savion, CEO of ADO Properties S.A. "Over the last four years, Berlin's population grew by an average of 40,000 people per year. This greater population is faced with a low supply of new residential constructions. Thanks to our insider knowledge of this market and our highly efficient in-house management platform, we are in a position to react to market developments very quickly. This is how we identify opportunities and invest in Berlin's most promising neighborhoods. Although the market is facing more challenges with governmental regulations such as housing rent caps, the Berlin property market still harbors a lot of potential. That's why we are 100% focused on the Berlin market and why ADO Properties is set to continue to grow in Berlin. After the company's strong development during the first six months of 2015, we see a bright outlook for a successful financial year in 2015 and in 2016 as well."

Key Figures
30.06.15 30.06.14 Difference absolute Difference percentage 31.12.14
Income from rental activities, in thousands EUR 28,607 15,934 12,673 79.5% 33,719
EBITDA from rental activities, in thousands EUR 21,099 12,290 8,809 71.7% 24,584
EBITDA, in thousands EUR 21,822 12,290 9,532 77.6% 24,682
FFO 1, in thousands EUR 13,138 7,094 6,044 85.2% 13,529
FFO 1 per share, EUR 0.53 0.28 0.25 85.2% 0.54
FFO 2 (including disposal), in thousands EUR 13,861 7,094 6,767 95.4% 13,627
EPRA NAV, in thousands EUR 518,212        
EPRA NAV per share, EUR 20.73        
LTV, percent 57.6%        
Units 14,500 thereof 13,700 residential        
Portfolio value, MEUR 1,211        
In-place-rent residential EUR/sqm/month 5.71        
Vacancy rate residential percent 4.3%        
Rent for new letting, EUR/sqm/month 8.21        
Maintenance and CAPEX per sqm 19.2        
Proforma EPRA NAV, MEUR 712.2        
Proforma EPRA NAV per share, EUR 20.35        
Proforma FFO1 per share, EUR 0.38        
Proforma LTV 41.6%        

* Proforma numbers include the effect of the expected net proceeds of the IPO of MEUR 194 and 35 million shares post IPO

About ADO Properties

ADO Properties is a pure-play, Berlin-based residential real estate company with approximately 14,500 units, thereof 13,700 are residential units. The Company has a fully integrated, scalable in-house platform with its own property management. Along with the responsibility for the condition of its apartments and buildings, ADO Properties also assumes responsibility towards people, employees, and neighborhoods. ADO Properties' portfolio is focused on central locations in Berlin and attractive suburban districts.

Press contact
Thomas Rücker
Wallstraße 16
10179 Berlin, Germany

Tel.: +49 30 2844987-48
Fax: +49 30 2844987-99

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