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EQS-News: Branicks Group AG / Key word(s): Real Estate/Annual Report
Branicks Group AG: Operationally successful in a challenging 2023 financial year
2024-04-30 / 07:00 CET/CEST
The issuer is solely responsible for the content of this announcement.
Branicks Group AG: Operationally successful in a challenging 2023 financial year

Press release
Branicks Group AG: Operationally successful in a challenging 2023 financial year
. Targets for 2023 largely achieved
. Financing secured
. Many new lettings continue at good conditions
. New renewables asset class
Branicks Group AG (Branicks), ISIN: DE000A1X3XX4, today published its annual and consolidated financial statements for
2023 with an unqualified audit opinion. In a challenging environment, the 2023 financial year was concluded
operationally successful and largely in line with the forecast.
The operational letting business again developed very positively in both major asset classes. By contrast, the recovery
in the transaction business, which was originally expected in the market, did not materialize and was flat throughout
the year.
Assets under management as the sum of the existing portfolio and assets managed by Branicks as part of the
Institutional Business amounted to EUR 13.2 billion at the end of the financial year (2022: EUR 14.7 billion). The
decline is the result of sales and a valuation effect of -6.0%.
Branicks reorganized its financial structures in 2023 and in the first months of the 2024 financial year, putting its
financing on a reliable footing for the coming years. The halving of the bridge financing for the acquisition of VIB
Vermögen AG and the scheduled repayment of the 2018/2023 corporate bond contributed to this in the 2023 reporting year.
At the end of the first quarter of 2024, Branicks reached agreements with its creditors on the repayment of a further
partial amount of EUR 40 million of the VIB bridge financing and on a restructuring plan based on corporate planning
audited by independent experts regarding the timing of the repayment of promissory note loans originally due in 2024
and the remaining VIB bridge financing. This has paved the way for a sustainable, financially stable future for the
company.
CEO Sonja Wärntges comments: "Despite all the adversities of the real estate market, we have made it through 2023
successfully in operational terms. We are able to attract more and more tenants to our assets, and on good terms. We
are continuing to invest in quality and sustainability. On this basis, we have set the course to be at the forefront
when the sector recovers."
The Branicks Management Board had already announced in January 2024 that it would propose to the Supervisory Board and
Management Board that no dividend be paid for the 2023 financial year due to the priority of stabilizing the company's
financial position.
Key figures and results for the 2023 financial year
Given the challenging conditions on the real estate market, the ongoing phase of high interest rates on the financial
markets and the tense global situation, Branicks Group AG closed the 2023 financial year with an FFO result (after
minority interests, before taxes) of EUR 51.9 million, in line with the forecast, which had been revised in July 2023
to EUR 50-55 million (previous year: EUR 114.2 million). EUR 43.5 million was generated in the Commercial Portfolio and
EUR 8.4 million in the Institutional Business. The decline in FFO was mainly due to reduced property management income
and higher net interest expenses. FFO II (after minority interests, before taxes), adjusted for the effects of
disposals, amounted to EUR 59.4 million.
Letting performance up 19% on the previous year - like-for-like rental growth of 5.4%
In 2023, the letting teams signed a total of 446,600 sqm, around 19% more space (previous year: 374,900 sqm) and
annualized rental income of EUR 55.0 million, an increase of 12% (previous year: EUR 48.9 million). Of this, 67.1% (EUR
36.9 million) was attributable to the Institutional Business and 32.9% (EUR 18.1 million) to the Commercial Portfolio.
Thanks to the outstanding work of the letting teams, annualized rental income from the Commercial Portfolio increased
like-for-like by 2.7% to EUR 176.0 million as at the reporting date (previous year: EUR 171.4 million), while
like-for-like rental income in the Institutional Business rose by 6.6% to EUR 435.5 million (previous year: EUR 408.5
million). Overall, like-for-like growth in rental income thus amounted to 5.4% (previous year: +5.8%). As announced,
the Group's operating costs were noticeably reduced in the reporting year, which is reflected in the -16% decline in
OPEX (operating expenses).
Low transaction volume due to market environment
The difficult market conditions in 2023, caused by high inflation, high interest rates and volatile energy prices as
well as macroeconomic and geopolitical uncertainties, led to a persistently flat transaction volume throughout the
year. Despite the difficult market environment, we achieved a total transaction volume of EUR 377 million (previous
year with acquisition of VIB EUR 3.3 billion, without VIB EUR 1.1 billion), resulting from acquisitions with a volume
of EUR 90 million exclusively in the Institutional Business and notarized sales of EUR 287 million, mainly from our own
portfolio (EUR 223 million).
Significant increase in the green building quota and solid development of long-term calculable revenues in the
Commercial Portfolio
The key operating figures for the Commercial Portfolio reflect the unchanged robust letting market in 2023 in a
year-on-year comparison. In the financial year, gross rental income increased by around 7% to EUR 188.3 million
(previous year: EUR 176.0 million) due to the first-time inclusion of VIB for a full 12 months and excellent letting
work. Net rental income rose by around 8% to EUR 164.6 million in the 2023 financial year (previous year: EUR 152.5
million). The EPRA vacancy rate rose from 4.3% at the beginning of the year to 5.3% at the end of the year. The green
building ratio in the Commercial Portfolio increased significantly to 43.6% (previous year: 31.0%). The external
valuation of the properties in the Commercial Portfolio resulted in a valuation effect of around -6.8% or EUR -267.2
million at the end of the year. The market value of the Commercial Portfolio fell to around EUR 3.64 billion as at the
reporting date at the end of the 2023 financial year (previous year: EUR 4.45 billion). The decline is mainly due to
sales amounting to EUR 569 million and the revaluation carried out as at the reporting date.
Institutional business stable factor in a challenging environment
In the 2023 financial year, we generated a lower transaction volume than in previous years and therefore lower
transaction-related real estate management income due to the difficult conditions on the real estate investment market
and delays and rescheduling of transactions. Despite the very subdued real estate investment market, we were able to
achieve our adjusted annual target for real estate management income of EUR 50.9 million (previous year: EUR 88.4
million). Assets under management in the Institutional Business fell from EUR 10.2 billion to EUR 9.6 billion in the
financial year.
Balance sheet and real estate assets
As at December 31, 2023, Branicks Group AG's real estate assets in the Commercial Portfolio had a carrying amount of
EUR 3,398.6 million (previous year: EUR 3,673.3 million). The net asset value (NAV) amounted to EUR 1,298.3 million or
EUR 15.54 per share (previous year: EUR 1,593.5 million or EUR 19.16 per share). The adjusted net asset value (adjusted
NAV), adjusted for the full value of the Institutional Business segment, amounted to EUR 1,473.5 million or EUR 17.63
per share at the end of 2023 (previous year: EUR 1,888.4 million or EUR 22.71 per share). The decline in adjusted NAV
is primarily due to the lower valuation of the Institutional Business segment as a result of the increased discount
factor.
Forecast 2024 - continued focus on operational strength and portfolio and cash flow optimization
With the gradual recovery of the transaction market expected in the second half of 2024, we see opportunities to
further exploit the potential of the properties in our two segments Commercial Portfolio and Institutional Business and
to successfully implement the "Performance 2024" action plan, in particular the sales plan. Branicks Group AG is
planning transactions with a total volume of between EUR 0.8 billion and EUR 1.2 billion across all segments for 2024.
Purchases totaling around EUR 0.15 billion to EUR 0.3 billion are planned exclusively for the Institutional Business
segment, both for existing mandates and as part of new mandates and investment vehicles. Branicks anticipates sales
across all segments with a volume of around EUR 650 to 900 million. Of this, around EUR 500 to 600 million will be
attributable to the Commercial Portfolio and around EUR 150 to 300 million to the Institutional Business. Based on the
current own portfolio, the planned letting performance and further on-balance sheet sales in the current financial
year, Branicks expects gross rental income from the Commercial Portfolio to increase to between EUR 160 million and EUR
175 million. We also expect total income from property management of EUR 40 to 50 million in the 2024 financial year.
In 2024, Branicks will focus in particular on further portfolio and cash flow optimization, so that total FFO (after
minorities, before taxes) is expected to be in the range of EUR 40 to 55 million. The business forecast is based on the
key assumptions explained on page 89 of the Branicks Group AG annual report.
Expansion of the business model to include the Renewables asset class
In view of the ongoing changes on the real estate markets, the Branicks Group is tapping into additional potential for
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