LONDON (Alliance News) - Summit Germany Ltd Wednesday said good opportunities still exist in the German real estate market though it expects "growing appetite" will push prices up and limit them in the future.
"With no forecast for change in the extremely low interest rates and with Germany being the strongest economy in Europe, we believe that the German market is the most attractive real estate market in Europe. We expect the ever growing appetite for German real estate to continue pushing prices up and limiting investment opportunities. Against this backdrop we will maintain a disciplined approach to acquisitions," Chairman Harry Hyman and Managing Director Zohar Levy said in a joint statement.
The German property fund said its pretax profit increased to EUR74.0 million in 2014 from EUR23.9 million in the prior year, bolstered by higher rental income and a significant reversal from the negative fair value adjustments of its investment properties recorded in 2013.
Subtracting financial income from the cost of servicing liabilities resulted in a EUR635 million gain in 2014, compared with a EUR2.1 million loss in 2013.
Summit said the refinancing of a previous debt facility of EUR268 million towards the end of the year with a new seven year arrangement of EUR240 million has enabled it to secure lower interest payments to service the debt, meaning it can help cash flow. It said interest costs will be cut further due to the early repayment of a EUR50 million shareholders loan with an annual coupon of 9.5% due to parent company Summit Israel.
The company announced a dividend of 0.77 cents per share for the first quarter of 2015. Its quarterly dividend payments amounted to 2.85 cents in 2014, equivalent to an annualised yield of 5.42% on the 63 cents pricing of its initial public offering. The company is targeting a yield of 7% on IPO price.
"Acknowledging the importance of dividends to our shareholders, Summit took active steps towards improving its cash flows and the potential for the company to increase the dividends," Hyman said.
Summit raised EUR35 million when it listed on AIM in February 2014 and a further EUR120 million in February the next year.
"With a stable portfolio and a firm management platform we are well positioned to continue and move forwards towards our targeted expansion," Levy said.
Summit shares were up 2.5% at EUR0.908 on Wednesday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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