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KWG increases turnover and results in the first nine months 2011 and raises its forecast for 2011

11-08-2011 02:24 PM CET | Industry, Real Estate & Construction

Press release from: KWG Kommunale Wohnen AG

• Net rental income increased by 11 % to EUR 10.9 million, turnover rose by 9 % to EUR 15.8 million
• Group profit improved from EUR 0.4 million to EUR 4.5 million
• Vacancy rate in core portfolio reduced from 6.1 % to 3.9 %
• Guidance for 2011 raised due to positive operative development
Hamburg, 8 November 2011 - KWG Kommunale Wohnen AG, a German property holding company with a long-term strategy, looks back on successful nine months in 2011. Following the positive operative development in the first half of 2011 and further successes in the portfolio management KWG AG shows a strong development in turnover, rental income and results.
Considerable increase in financial results
The net rental income increased in the period by 11 % to 10.9 million (30.09.2010: EUR 9.9 million). Coincidentally turnover rose from EUR 14.5 million to EUR 15.8 million. Compared to last year the group profit sharply increased from EUR 0.4 million to EUR 4.5 million. Accordingly the results per share equal EUR 0.42. On 30.09.2011 KWG AG shows a positive operating cash flow and Funds-From-Operations (FFO) of approximate EUR 1.1 million.
Optimization of portfolio
The strong performance was based on considerably decreasing vacancy rates and rising average rents per square meter. Here the average rent achieved with new lets increased by 5 % compared to last year from EUR 5.06 to EUR 5.30. In the same period the vacancy rate of the portfolio decreased from 6.1 % to 3.9 %. In line with the continuous improvement of the portfolio the vacancy rate in the core portfolio will be reduced to less than 3.5 % by the end of the business year.
The improvements in the portfolio management were driven by extensive investments in the value enhancement of the portfolio of more than EUR 6 million in the first nine months of the business year. The investments primarily targeted the portfolios in Lower Saxony and North-Rhine Westphalia. Due to the active investment approach KWG AG is able to extend its core portfolio. By the end of the year the great majority of the total portfolio will consist of units of the core portfolio.
Successful business model
The strong financial results and positive development of the real estate portfolio prove the success of the KWG AG business model once again. It aims at increasing the share of net rents over total turnover with a continuous reduction of additional rental costs. The success of this strategic approach is reflected in a disproportionate rise in net rents over turnover in the first nine months. Apart from net rents the turnover also includes home owner's association fees as well as energy and operating costs.
Guidance for 2011 increased
Due to the positive operative performance and plain visibility for 2011 KWG AG raises its guidance for 2011. The management board expects to increase its net rental income in 2011 to EUR 15 million and to achieve a positive operating cash flow by the end of the fiscal year. Therefore the guidance released on 25.08.2011 will be outperformed by the year end. Due to the positive development of the portfolio the annual group net income will be kept at the level of the previous year.

KWG Kommunale Wohnen AG is a German property company with a long-term investment approach. The company acquires property portfolios for attractive prices in well positioned micro-locations of metropolitan regions and medium-sized cities. With an active real estate asset management KWG creates sustainable value and reduces the utility costs for the tenants with a consequent enhancement of the portfolio's energy efficiency. The corporation offers services along the entire value chain comprising purchasing, construction management as well as property management. With the combination of these measures KWG is able to reduce its vacancy rates considerably and increases its revenue from rentals providing an exceptionally high return on equity. Currently the portfolio of KWG incorporates more than 5,400 residential and commercial properties. The company's shares are listed in the Entry Standard of the Frankfurt Stock Exchange.

KWG Kommunale Wohnen AG
Jan Hutterer, Head of Investor Relations
Alstertor 9
20095 Hamburg
+49 (0)40 226 30 88-100

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