GSW Nine-Month FFO Rises on Berlin Rent Income Increase

GSW Immobilien AG (GIB), Germany’s third- largest residential landlord by market value, said funds from operations increased during the first nine months on rising rental income.

FFO excluding divestments, a measure of a property company’s ability to generate cash, climbed 24 percent to 50 million euros ($64 million), the Berlin-based company said in a statement today.

GSW, which only operates in Berlin, is benefiting from rising demand for homes in the capital. Apartment rents have gained about 8 percent in the past year and 26 percent in five years, according to Berlin-based online broker ImmobilienScout24.

“The situation on the Berlin housing market remains positive and stable,” the company said in the statement. “We are therefore confident of reaching the targets set for the 2012 financial year.”

Third-quarter net income dropped to 15.6 million euros, or 31 cents a share, from a restated 17 million euros, or 41 cents, a year earlier, GSW said. The decline was mainly due to an 81 percent drop in interest income after a derivative sale boosted the year-earlier figure. Net rental income increased 26 percent to 42 million euros.

GSW fell as much as 2.2 percent to 29.58 euros in Frankfurt trading, the lowest intraday price since Oct. 4, and traded at 29.61 euros at 9:28 a.m. The shares have gained about 35 percent this year, while the FTSE EPRA/NAREIT’s index of German real estate has climbed 30 percent.

Acquisition Target

GSW is close to buying 3,000 apartments in Berlin, according to a separate statement, The company owns 52,000 homes in the city valued at about 2.9 billion euros and agreed to acquire an additional 4,400 in October.

To help pay for the acquisitions, GSW will sell convertible bonds valued at about 185 million euros, the company said. The bonds will mature in November 2019. GSW raised 202 million euros in a share sale in April.

The company repeated that 2012 FFO excluding sales will be between 61 million to 64 million euros.