Summit Germany, the German commercial real estate company, has provided a trading update with a number of key developments. The first is that it has agreed terms to refinance €268m of its €309m debt facilities. This includes a new €240m, 7 year, 3.4% debt facility (the current loan is at 3.9%) which is expected to be in place by the end of the year. Overall, the company expects the refinancing to result in an NAV uplift of €12m. October saw the expiration of Summit’s ‘legacy swaps’. The improved cashflow from the reduced interest rate is expected to be in the region of €7m per annum.
In April 2014, Summit announced the acquisition of a portfolio of 11 properties across Germany for €46m financed using equity (valued at 30 June 2014 at €75m). However, Summit has now agreed terms to finance 9 of the 11 properties with a 7 year facility of €30-35m, which is expected to complete in January 2015.
Summit is reportedly trading in line with management expectations. It has signed 173 new leases and renewals in 2014 with rental value of €8.2m per annum. these have achieved a 7% higher rent per sqm. Furthermore, annual net rent on a like for like basis has increased by 2.65% to €46.5 million, whilst occupancy has increased across its core portfolio to 90% (from 87% for 2013). Blended occupancy across the core portfolio and ‘sale and redevelopment portfolio’ is 85.4% (up from 84.3% for 2013).
Pre sales in Summit’s residential Joint Venture has achieved 80% for the first project and 43% for the second project. Marketing of the third project will commence in January 2015. Summit is also in negotiations to acquire land sites for additional residential developments in Berlin.
The Q3 dividend (to be paid on 30 December) was announced at 0.6 cents (up from 0.5 cents for Q1 and 0.55 cents for Q2). The Q4 dividend is expected to reflect a ca. 7% annual yield on the current market capitalisation.
In terms of outlook, the manager reports that, “The German investment market is moving ahead towards its best year since 2007”, with historically low interest rates stimulating demand. Moreover, “Demand for Summit’s properties continues to be strong and is increasing as we see an increase in rental income and decrease in vacancy”.
SMTG : German market moving towards best year since 2007