Upgrade for Grand City as it posts FFO up 138%

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The listed Luxembourg-based Grand City Properties, which invests in German residential real estate with turnaround potential, continued to post strong figures in the third quarter, boosting nine months FFO by 138% to €53m after ‘strong internal and external growth’. The share price continues to surge upwards, doubling over the past year on a string of good quarterly figures.

According to real estate veteran and CEO Christian Windfuhr, “Favourable market conditions and a strong balance sheet allow us to further extend and diversify our portfolio, placing us in a strong position to achieve high returns to our shareholders with a low risk profile.

FFO per share rose by 44% to €0.46, the firm reported. Net profit rose 27% to €174m, buoyed by rental and operational income, increasing by 135% to €151m after the addition of 17,000 units this year. The firm now owns 43,000 residential units across Germany , reflecting an increase of 65% since the end of last year. It also manages a further 21,000 units for third parties.

Earlier this month the company placed a €500m, 7-year secured bond with a 2% coupon with investors, with the placement being well oversubscribed. The proceeds are to be used to buy back an earlier €350m bond paying 6.25%.

The stream of positive news coming from the company has earned it a rating upgrade from Standard & Poor’s, from ‘BB+’ to investment grade rating ‘BBB-‘ on its long-term credit rating and on Grand City’s convertible and straight bonds. S&P said the upgrade reflected Grand City’s improved business profile, with a increased focus on managing a stabilised portfolio of income-producing properties, a larger portfolio size of €2.2bn and its greater geographical spread across Germany. S&P said GCP mainly operates in favourable regions with good rental growth prospects and where demand outpaces supply from new developments.