EQS-Adhoc: InCity Immobilien AG: ON THE BASIS OF PRELIMINARY FIGURES FOR 2023, INCITY ACHIEVES A CONSOLIDATED NET LOSS FOR THE YEAR OF APPROXIMATELY EUR 6.0 M AND A SINGLE-ENTITY NET LOSS FOR THE YEAR OF APPROXI

Schönefeld, 5. April 2024: In the past fiscal year 2023, InCity Immobilien AG (“InCity AG”) generated a consolidated net loss for the year (pursuant to the German Commercial Code, HGB) of approximately EUR 6.0 m, based on unaudited preliminary figures. This falls below the earnings forecast, which was revised last December and posited a consolidated net loss for the year of between EUR 5.0 m and EUR 5.5 m for 2023 as a whole. The net loss for the year (pursuant to HGB) in the company’s single-entity annual financial statements for fiscal year 2023, which amounts to approximately EUR 9.7 m, is considerably below the revised forecast (between EUR -2.3 m and EUR 2.8 m).

On 15 December 2023, InCity AG announced that an external third party’s early assessment of the portfolio property at “Stiftstrasse 18/20” in Frankfurt am Main meant that the property had to undergo a non-liquidity-related extraordinary depreciation of EUR 1.9 m within the InCity Group in FY 2023. As a result, the Group’s earnings forecast for FY 2023 has been revised to a consolidated net loss of between EUR 5.0 m and EUR 5.5 m. The external market valuation reports for the other six portfolio properties are also available as of 31 December last year. Overall, the externally assessed market value of all seven of the InCity Group’s portfolio properties (including “Stiftstrasse 18/20”) fell by around 14% from EUR 207.0 m (31 December 2022) to EUR 177.5 m as of the balance sheet date. This decrease is mainly attributable to an increase in the capitalisation rates used (or the decrease of the multipliers used on the market rents achievable for the portfolio properties). In addition to the portfolio property at “Stiftstrasse 18/20” in Frankfurt, it was necessary for another portfolio property (“Oranienburger Strasse 39” in Berlin) to undergo a non-liquidity-related extraordinary depreciation of around EUR 1.2 m. This goes a significant way to explaining the increase in the consolidated net loss for the year to approximately EUR 6.0 m compared to the higher end of the adjusted Group forecast from December 2023 (EUR 5.5 m). 

Overall, it should be noted that the EUR 6.0 m consolidated net loss for FY 2023 includes non-liquidity-related (ordinary and extraordinary) depreciations on the portfolio properties pursuant to HGB totalling EUR 5.0 m, which reduced earnings. The “hidden reserves” – i.e. the difference between all five remaining portfolio properties’ market value and HGB carrying amount (amortised cost) – totalled approximately EUR 33.9 m as of the balance sheet date (31 December 2022: EUR 58.3 m). Despite the decrease in externally assessed market values as of the balance sheet date, this still means that the market values remain around 24% higher than the HGB carrying amounts (31 December 2022: approx. 39%).

The Group’s equity ratio is approximately 49.5% as of the balance sheet date (31 December 2022: 45.9%). In spite of the consolidated net loss for the year, the equity ratio increased on the previous year. This was mainly due to the balance sheet being contracted as a result of the part handover of the office property in Schönefeld, which was built as a general contractor for a third party, and the HGB non-liquidity-related depreciations on the portfolio properties.

The LTV (loan-to-value) was 35% as of 31 December 2023 (31 December 2022: 30%), which continues to be a comparatively low level for the industry.

The net asset value (NAV) of InCity AG’s shares was EUR 1.30 per share as of  31 December 2023 (31 December 2022: EUR 1.66 per share). The NAV per share decrease reflects the development of the property portfolio’s market value in particular.

At the level of InCity Immobilien AG’s single-entity annual financial statement, the early non-liquidity-related extraordinary depreciation undergone by the portfolio property at “Stiftstrasse 18/20” in December 2023 led to loss absorption by InCity AG due to the profit and loss transfer agreement between InCity AG and the subsidiary holding the portfolio property. As a result, the earnings forecast for InCity AG (single entity) for 2023 as a whole was revised downwards to between EUR -2.3 m and EUR -2.8 m in December 2023.

Due in particular to the decrease in the portfolio properties’ externally assessed market values as of the balance sheet date, impairment testing of the long-term loans granted by InCity AG to the portfolio-managing subsidiaries (“the equity-replacing loans”) led to permanent HGB impairments on the loans granted to three of the seven property companies holding the portfolio. These non-liquidity-related impairments on the loans granted total approximately EUR 7.1 m at InCity AG level, making them the reason for the significant deterioration in the net loss for the year at single-entity financial statement level in FY 2023 (EUR 9.7 m) compared to the mean value in the revised forecast from December 2023 (net loss of between EUR -2.3 m and EUR -2.8 m). In relative terms, these valuation allowances of EUR 7.1 m represent an impairment of approximately 7% on the loans to the seven portfolio-managing subsidiaries and do not affect liquidity. 

All the figures published here are provisional and have not been audited. The InCity Immobilien AG annual report for 2023 with the final figures will be published according to schedule on 25 April 2024.