Baader Helvea zu CA Immo: 3Q17 - Again a positive surprise on the FFO line

Our conclusion

 FFO per share (CA Immo definition, i.e. pre-taxes) came in some 8% above our forecast and also 8% above consensus. The main reason why our forecast was beaten was a better than expected net rental income margin. The occupancy of the portfolio improved to 93.6%. Also positive to mention is the like-for-like rental income growth of 3% in 9M17.

 The full year FFO guidance of >EUR 100mn (pre-taxes) or >EUR 1.05 per share was confirmed. We are at EUR 105mn and feel comfortable with it.

 Tower 185 to be sold in 4Q: The disposal of the Tower 185 (share CAI: 1/3, valuation of share CAI end FY16: EUR 195mn) will most likely be signed in 4Q.

 Entry into funds business in partnership confirmed: As already indicated with the 2Q results, CAI will look for a partner to enter the funds business in order to monetize the residential landbank in Germany (mainly Munich) with a development potential of >EUR 1bn.

Facts & Analysis

 The occupancy rate stands at 93.6% (vs. 92.4% end of 2016). The like-for-like rental income improved by 3% (vs. 2.4% in 1H17). The net rental income margin surprised positively and reached 92.9% in 3Q17 vs. 90.7% in 1H17 and 88.9% in 3Q16.

 The disposal result was above our forecast as there was a reclassification of trading gains from the valuation result into the disposal result. This reclassification led to a negative valuation result for 3Q17.

 The result from Joint Ventures was with EUR 14mn considerably above our neutral forecast as the Tower 185 saw a positive revaluation (we would have expected it for 4Q).