4th May 2016 09:56
LONDON (Alliance News) - Summit Germany Ltd on Wednesday said it brought its expansion plan to realisation in 2015, but noted that, whilst increasing demand for German real estate offers further acquisition opportunities, it will be forced to maintain a disciplined approach to new acquisitions due to the expected future yield compression.
The German property fund reported pretax profit of EUR82.6 million for the year ended December 31, up from EUR60.5 million a year earlier, bolstered by higher rental income of EUR49.5 million from EUR43.3 million and an 8.5% increase on the value of its portfolio.
Summit Germany saw a EUR55.3 million fair value adjustment of investment properties, from EUR34.7 million a year earlier, which it said reflects the increase on the portfolio value including costs of acquisitions.
Following a EUR120.0 million fundraising in February through a share issue, Summit Germany acquired EUR95.0 million new properties in 2015 at a net initial yield of 10.5%, including six commercial properties and a multi let complex of office buildings in Stuttgart, Germany. After the year end, Summit Germany purchased EUR40.5 million of offices.
The company announced a dividend of 3.39 cents per share for 2015, up from 2.85 cents paid for 2014.
"Within just a few months after the successful fund raising in February 2015, we brought our expansion plan to realisation and deployed most of the proceeds by acquiring great accretive properties in attractive locations. Following the additional acquisitions after the end of the reporting period, we are now fully invested," said Chairman Harry Hyman and Managing Director Zohar Levy in a joint statement.
"We are encouraged by the German market, which has been strongly driven by the 'interest free' environment, turning Germany into an ever appealing investment market. Demand for the group's properties continue to be strong and we believe that an increase in rent levels in Germany could have a future boost effect on the value of our portfolio when yields may be tightening," Hyman and Zohar Levy said.
"Though the increasing demand for German real estate offers interesting acquisition opportunities, the expected future yield compression will force us to maintain a disciplined approach towards new acquisitions in an ever demanding market," Hyman and Levy added.
Shares in Summit Germany were up 1.1% at EUR1.01 on Wednesday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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