Alstria office REIT-AG: Annual results 2017

Press release

Annual results 2017

- Corporate development in line with guidance: Revenues of EUR 193.7 m and FFO of EUR 113.8 m

- Strong letting result: 245,400 sqm letting volume and EPRA like-for-like rental growth of 6.3%

- Value accretion: EPRA NAV up by 12.4% to EUR 12.71 per share

- Net LTV down to 40.0%

- Attractive dividend: Management proposes dividend of EUR 0.52 per share for FY 2017

Hamburg, March 1, 2018 - alstria office REIT-AG (symbol: AOX, ISIN: DE000A0LD2U1) announces its result for the financial year 2017.

Efficient operations drove FFO margin to 58.8%

Based on a very supportive leasing market alstria can report on a successful year 2017. Revenues amounted to EUR 193.7 m (guidance: EUR 193 m) and were slightly lower compared to the prior year period (EUR 202.7 m) as a result of the full year impact of the disposal of non-core assets in prior periods. Despite lower revenues the FFO of EUR 113.8 m remained broadly stable compared to FY 2016 (EUR 116.4 m) while the FFO margin further improved to 58.8% (2016: 57.4%). The increase in the FFO margin by another 140 bps was mainly driven by lower financing costs. The EPRA cost ratio remained stable at 16.7% and average cost of debt fell to 1.9% as per December 31, 2017. Due to strong operations and a valuation gain of EUR 181.5 m (EUR 1.18 per share) following the yearly external valuation alstria's consolidated profit for the period grew by 67.9% to EUR 297.0 m.

Growing balance sheet: EPRA NAV up by 12.4% to EUR 12.71 per share and net LTV down to 40.0%

As per December 31, 2017 alstria's IFRS equity increased by EUR 226.2 m (EUR 1.47 per share) to EUR 1,955 m. The EPRA NAV per share amounted to EUR 12.71 and was up by 12.4% year-on-year (December 31, 2016: EUR 11.31). alstria's net LTV improved further to 40.0% (2016: 40.9%) and the G-REIT equity ratio, which is defined as total equity divided by immovable assets, was 57.1% (2016: 56.7%), underlining the Company's balance sheet quality. alstria holds a BBB rating by Standard & Poors, the ICR stood at 4.9 in 2017.

Investment properties of EUR 3.3 bn, gross valuation yield of 5.9%
The value of alstria's investment properties amounted to EUR 3,332 m as per December 31, 2017 and grew by 11.1% (EUR 333 m) in the course of 2017. The valuation yield amounted to 5.9%. In 2017 alstria successfully recycled capital and sold six assets (including 49% JV "Kaisergalerie") for a total consideration of EUR 187.8 m and bought 15 buildings in its core regions for EUR 259.5 m. The disposed assets were sold at an average book gain of 29.2% compared to the year-end valuation 2016 and generated on average an unlevered return (UIRR) of 14.4% over their holding period.

Strong letting result: EPRA like-for-like rental growth of 6.3% and like-for-like growth yield of 11.9%

The very liquid German letting market allowed alstria to lease up 245,400 sqm (thereof 98,300 sqm of new leases), which is a new record level in the company's history and represents 16% of the total portfolio. Despite the acquisition of 19,900 sqm of vacancy, which offers further growth potential going forward, the EPRA vacancy rate was only slightly up to 9.4% in the reporting period. The EPRA like-for-like rental growth was 6.3% (2 year period), mainly driven by vacancy reduction and rent increases following alstria's capex measures. Over a two-year period (2015-2017) the Company invested EUR 90.1 m capex into the portfolio and increased its rental income by EUR 10.8 m. This represents a like-for-like growth yield of 11.9%.

Dividend proposal: EUR 0.52 per share

The Management will propose to the Annual General Meeting a dividend payment of EUR 0.52 per share, representing a 4.3% dividend yield based on a 2017 VWAP (Volume-weighted average price) of EUR 12.08^[1]. The EUR 0.52 of dividend corresponds to a pay-out ratio of 70 %.
^[1] Source : Bloomberg, AOX GY.

Outlook 2018: Revenues of EUR 187 m, FFO of EUR 110 m

Based on the current portfolio and the contractually agreed rent, alstria expects revenues of EUR 187 m and funds from operations (FFO) of EUR 110 m for FY 2018. The guidance reflects the loss in rental income following the disposal of non-core properties (EUR 5 m) and the termination of lease contracts (EUR 16 m) as the company rebuilt its development pipeline. These effects are almost offset by the income from new acquisitions (EUR 8 m), new lettings (EUR 7 m) and lower costs (EUR 2 m). The FFO margin is expected to remain broadly stable at around 59%. alstria intends to further de-lever the balance sheet mainly as a result of the conversion of the outstanding convertible bond.

"The long-term opportunity we see in the German market is not so much a glimpse in the crystal ball of future rental growth. It is the much-needed transformation of the office stock to adapt it to the change of behaviour of the corporate environment. Real estate operators that have access to capital and a good understanding of the new requirements of corporate tenants will be successful regardless of market rent volatility," said Olivier Elamine, CEO of alstria. "alstria has time and time demonstrated its ability to turn around assets. We have closed with a record year of leasing, a 6.3% EPRA like-for-like rental growth and a new cycle of asset repositionings which started at the time of the acquisition of Deutsche Office. We will now rebuild our pipeline of opportunities that we will need to procure future rental growth."

Invitation to the telephone conference on March 2, 2018
The alstria management board, CEO Olivier Elamine and CFO Alexander Dexne, will present the 2017 financial results in a telephone conference at 10:00 am (CET) which will also be webcasted on our website (www.alstria.com). The full Annual report (Company report and Audited Financial Statements) are available for download on our website.

Please use one of the following dial-in numbers:
Germany: + 49 69 222 22 9043
UK: + 44 203 009 2452
PIN: 242 65 914#

Contact IR/PR:  
Ralf Dibbern
Bäckerbreitergang 75
20355 Hamburg, Germany
Tel: +49 40 22 63 41-329
Email: rdibbern@alstria.de

More information on: 
www.alstria.com
www.alstria.blogspot.com
www.twitter.com/alstria_REIT
www.beehive.work

About alstria:
alstria office REIT AG is the leading real-estate operator focusing solely on German office property in selected German markets. Our strategy is based on the ownership and an active management of our properties throughout their entire life cycle, strong added-value services to our customers and deep knowledge of the markets in which we operate. alstria strives for sustainable long-term value creation while taking advantage of short-term arbitrage of inefficiencies in the real estate markets. The portfolio comprises 116 buildings with a lettable area of 1.6 million sqm and a total portfolio value of EUR 3.4 billion.

Disclaimer:
This release constitutes neither an offer to sell nor a solicitation of an offer to buy any shares. As far as this press release contains forward-looking statements with respect to the business, financial condition and results of operations of alstria office REIT-AG (alstria), these statements are based on current expectations or beliefs of alstria's management. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those reflected in such forward-looking statements. Apart from other factors not mentioned here, differences could occur as a result of changes in the overall economic situation and the competitive environment - especially in the core business segments and markets of alstria. Also, the development of the financial markets and changes in national as well as international provisions particularly in the field of tax legislation and financial reporting standards could have an effect. Terrorist attacks and their consequences could increase the likelihood and the extent of differences. alstria undertakes no obligation to publicly release any revisions or updates to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.