DGAP-News: InCity Immobilien AG: INCITY CLOSES FISCAL YEAR 2021 WITH GROUP PROFIT OF EUR 1.0 M - NET ASSET VALUE INCREASES SIGNIFICANTLY

Frankfurt am Main, 28 April 2022 - In its annual report for fiscal year 2021 published today, InCity Immobilien AG ("InCity AG") reports a net income of EUR 1.0 m at Group level and a net income of EUR 2.1 m at single-entity annual financial statement level. The final results thus align with the preliminary figures communicated on 6 April 2022. The decrease compared to the results of the prior fiscal year (2020: EUR 2.4 m at Group level and EUR 4.5 m at single-entity annual financial statement level) can be explained in particular by the fact that the prior year was more strongly influenced by the earnings contribution from the sale of the portfolio property at "Brönnerstrasse 13/15" compared to the lesser earnings contribution from the sale of the portfolio property at "Werftstrasse 3" in the reporting year. "Overall, the results achieved in the entire year 2021 fulfilled the Management Board's expectations, despite the positive and negative deviations from the forecast, which was adjusted upwards in June 2021. In the second year of the pandemic, InCity's property portfolio again proved its resilience and value stability and also continued to increase in value. In addition, we have taken an important strategic step towards expanding our earnings base with the resumption of our own project development activities," says  CFO  Helge  H.  Hehl.

As of 31 December 2021, the InCity Group's property portfolio comprised seven properties in total, five residential and commercial buildings and two office properties in Berlin and Frankfurt am Main. The portfolio reduction by one property, which took place after the prior balance sheet date, results from the sale in the reporting year of the residential and commercial property at "Werftstrasse 3" in Berlin as part of a share deal. The change in ownership and transfer of risks and rewards took place at the end of September 2021. The HGB carrying amount of the property portfolio was approximately EUR 152.2 m as of 31 December 2021 (31 December 2020: approximately EUR 160.6 m); this decrease is due to the depreciation and amortisation to be carried out in accordance with the German Commercial Code (HGB) as well as to the disposal of the sold property in Berlin.

One important focus of InCity AG's business activities in fiscal year 2021 was the implementation of the previously announced strategic decision to resume its own project management and development activities in future, in addition to the active asset management of its portfolio properties and the provision of asset management services for third parties, thus further expanding and diversifying the Group's earnings base. For this purpose, IC Bau GmbH was founded in July 2021 as a wholly-owned subsidiary of InCity AG. In the summer of 2021, the subsidiary was commissioned as a general contractor to construct new office buildings for a third party in Schönefeld, in the immediate vicinity of the capital city's airport Berlin-Brandenburg (BER). The prestigious building will have a gross floor area of approximately 12,000 square metres and is expected to be completed at the end of 2023. It is being constructed at an already established commercial location which is to be further expanded in the coming years. After the conclusion of this project, the Management Board of InCity AG expects a resulting earnings contribution in the low single-digit million range with an effect on income at the level of the InCity Group. "The first contract for InCity Bau GmbH, with a volume in the mid double-digit million euro range, represents a successful kick-off for InCity's resumption of its own project development activities," says Michael Freund, CEO of InCity AG. "In addition, this opens up the prospect of further contracts for us during the realisation of the next construction phases of the Schönefeld business park neighbourhood development, to which the building currently in construction belongs. In the coming years, further buildings are to be constructed there, which could result in corresponding earnings potential for our project development business unit in the event of a renewed commission."

In second year of pandemic, InCity portfolio again proves its resilience and value stability 

Given the multiple waves of rebounding infections, the COVID-19 pandemic shaped the entire fiscal year 2021. The associated considerable restrictions in nearly all areas of private and economic life essentially remained in place until after the end of the year. In this challenging environment, the InCity Group's property portfolio once again proves its crisis resilience and value stability. With an average payment rate for the year of around 98% of all existing tenants in the properties held by companies in the InCity Group, the net cold rents owed under the contracts and the prepayments for ancillary costs were collected almost in full, despite the challenges posed by the pandemic in many sectors of the economy.

"This gratifyingly high rate of payment demonstrates the stable value of our high-quality property portfolio with tenants with strong credit ratings, where we deliberately focus on locations that are attractive in the long term, primarily in Berlin," CEO Michael Freund describes this development. "Our planning is unchanged as regards the further expansion of our existing property portfolio in the coming years, but even in future, we will avoid purchases where we would have to compromise on our key investment criteria."

High equity ratio and rising NAV document financial stability

In fiscal year 2021, the total EBITDA of the InCity Group amounted to approximately EUR 5.5 m. The decline compared to the prior-year value of around EUR 6.5 m is largely explained by the lower earnings contribution from the sale of properties in the reporting year compared to the sale of a property in the prior year (EUR 0.8 m lower earnings contribution from the sale of portfolio properties compared to the prior year).

InCity Immobilien AG's equity ratio was around 91% as of the balance sheet date on 31  December   2021 (31 December 2020: 82%). The Group's equity ratio increased to 50% as of the balance sheet date (31 December 2020: 47%). The increase of the equity ratio is due to the (consolidated) net income for the year generated in the reporting year as well as to the partial repurchase of the issued bond 2018/2023 in the (nominal) amount of EUR 11.75 m.

The net asset value (NAV) of InCity AG's shares was EUR 1.88 per share as of 31 December 2021 (31 December 2020: EUR 1.68 per share), which reflects the positive development of the property portfolio's market values, which amounted to a total of approximately EUR 227.2 m as assessed by an external third party as of 31 December 2021. With regard to the HGB result of the Group, it should also be noted that this does not reflect the increase in the market values of the portfolio properties, while scheduled depreciation and amortisation at amortised cost reduces the result. The hidden reserves of the portfolio properties as of 31 December 2021 thus comprise around EUR  75  m, based on the portfolio valuation by an external third party compared to the HGB carrying amount of the portfolio properties.

With a view to the current fiscal year 2022, the Management Board expects a net loss for the year of between EUR -2.5 m and EUR -3.0 m at Group level due to reductions in earnings as a result of ordinary HGB depreciation on property, plant and equipment of around EUR 2.0 m, of which around EUR 1.9 m is attributable to the portfolio properties, as well as investments in the portfolio of between EUR 1.0 m and EUR 1.5 m that are not to be capitalised and thus also reduce earnings. The vast majority of these investments are value-enhancing measures. The current forecast for InCity AG is a net loss for the year between EUR -0.1 m and EUR -0.6 m. It should be noted here that the asset management fees of the portfolio-managing companies of the InCity Group (2021: around EUR 0.6 m) will no longer be collected by InCity AG from fiscal year 2022 onwards, but instead by its wholly-owned subsidiary, IC Immobilien Betriebsgesellschaft mbH, and can therefore flow indirectly to InCity AG via profit distributions in future. This planning does not take into account any positive profit contributions that could result from potential acquisitions or sales of portfolio properties or any negative effects the war in Ukraine could have on the economic environment in Europe and Germany, in particular in the event of a stoppage of Russian gas deliveries, which would have a significant impact on the German economy according to leading economic research institutes.

About InCity Immobilien AG
As a multi-disciplinary real estate company, InCity Immobilien AG (referred to in the following as InCity AG) is dedicated to creating and increasing the value of property portfolios and operates in the fields of asset management and project development. For its property portfolio, InCity AG focuses on the real estate markets of the two major cities Berlin and Frankfurt am Main and pursues a sustainable investment strategy. The decisive factors here are location, property quality and long-term value stability. Accordingly, the portfolio consists of high quality core properties with value stability in Berlin as well as properties in locations in Frankfurt that are attractive in the long term with investment volumes between EUR 5 m and EUR 50 m. In addition, InCity AG assumes comprehensive and individually developed asset management contracts for third parties. InCity AG also has partnership-model-based participations with regional project developers in residential and commercial property projects in selected German metropolitan areas. It significantly strengthened its project development business unit in July 2021 by undertaking a contract, as a general contractor, for the construction of a new office property in the immediate vicinity of the Berlin-Brandenburg (BER) airport, as well as adding its own project development activities.