UBM released Q2 results, showing a steep increase in total output thanks to several disposals but still weak operating performance due to the ongoing standstill on the real estate transaction market.
Total output in Q2, which in addition to sales also refers to pro-rata sales of companies consolidated at-equity as well as proceeds from share deals, increased by 161% yoy to € 164.1m, which was especially driven by the partial sale of the LeopoldQuartier Office project (30% stake) to a project partner. Further drivers were the disposals of the W3 - Center Wien Mitte to the co-owner as well as the office building Polezcki Madrid to a tenant. Notably, all deals were concluded at book value. Total net cash inflows from the transaction amount to € 75m in H1 (eNuW: € 50m in Q2), leading to a comfortable cash position of € 179m (FY '23: € 152m).
Yet, Q2 sales, which only recognize signed project sales on a PoC base, only increased slightly by 13% yoy to € 22.5m (eNuW: € 24.9m) against a weak comparable base. The most significant sales contributions came from the construction progress on residential projects in Germany and the Czech Republic as well as forward sales in Austria. Yet, early indicators for a revival of the residential market were visible, as UBM sold a total of 97 units in H1, which is already exceeding the FY '23 amount (96).
On a positive note, Q2 EBITDA improved yoy to € 1m (eNuW: € -1.2m), which is mainly to the absence of negative fair value adjustments of the property portfolio. Moreover, cost for personnel reduced by 20% yoy following reduced head count.
As it remains uncertain, when the real estate market will reopen again, we still expect positive newsflow form UBM in the coming quarters. For instance, the company recently sent out the teaser for the Timber Pioneer project and so far attracted dozens of interested buyers for Frankfurt's first hybrid-timber office building. While a disposal in H2 appears not likely due to the shortage of time, we estimate a closing in H1 '25e to be realistic. Furthermore, we expect the recovery in residential to accelerate going forward, driven by the increasing supply/demand imbalance. In office/light-industrial we further anticipate positive impacts from Germany's "Gebäudetyp-E" draft law, which is seen to simplify planning processes (i.e. more flexibility on room height, less radiators, etc.) and thus reduce total construction costs.
The shares remains a BUY with an unchanged PT of € 27 based on DDM.
ISIN: AT0000815402
