EANS-Adhoc: ECO Business-Immobilien AG / ECO Business-Immobilien AG: Increase in revenues - negative earnings due to impairment charges

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25.03.2009

ECO Business-Immobilien AG:
Increase in revenues - negative earnings due to impairment charges

Vienna, 25 March 2009. The development of earnings at ECO
Business-Immobilien AG (Vienna Stock Exchange: ECO) in 2008 was
negatively influenced by the financial crisis and the resulting
effects on the real economy. In spite of a further improvement in
revenues to EUR 74.8 million, Group earnings fell to EUR -35.7
million for the reporting year (2007: EUR 32.8 million). This shift
was triggered above all by a market-related decline in the value of
the portfolio during the second half of the year, which amounted to
roughly 5% of property assets. However, net cash earnings (FFO after
interest and tax, incl. impairment charges) were positive at EUR 5.0
million despite a substantial rise in finance costs and a challenging
market environment throughout the entire year. The equity ratio
equalled 33.7% as of the balance sheet date on 31 December 2008.

Revenues rose by 54% to EUR 74.8 million in 2008 (2007: EUR 48.6
million). This growth resulted above all from the acquisition of the
former BAWAG properties at the end of 2007, which made their first
full year´s contribution to revenues in 2008. The increase in
revenues was also supported by stable rental prices in the company´s
core markets and a concentration on tenants with sound credit
ratings. The liquidity shortage on financial markets had an
unfavourable effect on the investment market for business properties
during the entire year. Accordingly, income from the sale of
properties declined from EUR 16.5 million in 2007 to EUR 4.5 million
for 2008. However, the profit margin on these sales in relation to
the IFRS carrying amounts remained clearly positive at 22.3%.

Operating profit (EBIT) fell to EUR -6.8 million, compared with EUR
60.8 million in 2007. The main cause of the drop in EBIT was the net
loss from fair value adjustments, which totalled EUR 49.0 million or
roughly 5.0% of property assets - compared with a net gain of EUR
17.1 million from fair value adjustments in the prior year. In
addition to a lower volume of property sales, EBIT was also
negatively affected by non-recurring expenses related to the
cancellation of a property transaction during the second quarter of
2008.

Financial results deteriorated from EUR -19.1 million in 2007 to EUR
-43.2 million for the reporting year, and were influenced by
significantly higher finance costs. The increase in finance costs
resulted from a substantial rise in the volume of financing from EUR
491.8 million in 2007 to EUR 740.9 million for 2008 as well as higher
average basis interest rates in the reporting year. Profit before tax
fell from EUR 41.7 million in 2007 to EUR -49.9 million in 2008.
Earnings per share equalled EUR -1.05 for 2008, compared with EUR
1.11 in the previous year.

Net cash earnings (FFO after interest and tax, incl. impairment
charges), which illustrates the operating strength of ECO, was
positive at EUR 5.0 million in 2008 despite the substantial
year-on-year increase in finance costs, but remained below the EUR
24.7 million recorded in 2007. The positive operating development of
the company supported an increase in FFO before interest and tax to
EUR 48.1 million (2007: EUR 44.2 million).

A decrease in liabilities as of the balance sheet date led to an
improvement in the equity ratio, which rose from 32.6% at the end of
2007 to 33.7% as of 31 December 2008. The loan-to-value ratio (LTV)
equalled 64.5% as of 31 December 2008 (2007: 66.1%). Equity of EUR
375.1 million was contrasted primarily by non-current liabilities of
EUR 470.8 million (2007: EUR 618.3 million). Approximately one-third
of the company´s debt financing was hedged against fluctuations in
interest rates. Excluding the effects of hedging instruments, the
average interest rate for the ECO Group equalled roughly 3.9% at the
end of the reporting year (basis interest rate incl. margin). Cash
and cash equivalents totalled EUR 14.6 million as of the balance
sheet date (2007: EUR 34.7 million) and were increased at the
beginning of 2009 by proceeds of over EUR 100 million from the sale
of properties.

Net asset value (NAV) per share declined from EUR 12.40 to EUR 10.80,
primarily as a result of the above-mentioned impairment charges.
Adjusted NAV equalled EUR 10.72 per share.

The property portfolio of ECO Business-Immobilien AG comprised 117
objects with a combined value of EUR 1.07 billion at the end of 2008.
During the past year, ECO focused primarily on the management of the
properties in its portfolio.

In order to further strengthen its focus on office and commercial
properties, ECO sold objects that cannot be classified in full under
this segment of business and/or are used predominately for
residential purposes. These properties comprise 50% of the Allianz
trading portfolio (EUR 52.0 million) as well as individual objects in
Austria and Germany with a combined value of EUR 61.3 million. The
properties were purchased by the conwert Group, which previously held
the remaining 50% stake in the Allianz portfolio. The agreed purchase
price was based on an appraisal by independent experts as of 31
December 2008. As a result of the current market environment and the
resulting effect on property valuations, the sale price of EUR 113.3
million is less than the historical acquisition cost of the related
properties. This transaction will not only optimise the ECO
portfolio, but will also largely repay the liability to the conwert
Group. The transferred portfolio is comprised mostly of residential
objects at inner city locations and also includes a hotel in Austria
and two senior citizens´ residences in Germany. Following the
completion of the sale in 2009, ECO will only hold portfolios in the
investment and development segments of business.

During the first weeks of 2009, ECO sold two properties in Vienna to
private investors for a total of EUR 112.7 million. These funds will
strength the liquidity of the company over the long-term and also
increase the equity ratio.

Since the further development of the real economy and the duration
and extent of the current recession are difficult to estimate, ECO
assumes the 2009 financial year will be characterised by a difficult
market environment.

In addition to the optimisation of the portfolio through the sale of
selected objects, activities for the coming year will concentrate on
the management of the existing properties. ECO is currently
conducting a thorough analysis of each object to ensure optimal
realisation. Ongoing measures to improve the equipment, structure and
realisation of the ECO properties should ensure a stable level of
occupancy and rental prices in times of a downturn, and also form the
basis for an increase in value and earnings when the current market
trend reverses. ECO intends to utilise selective prospects for
acquisitions and also to take advantage of opportunities for sales.
Financing has already been secured for projects in the development
portfolio, and these assignments will now be completed. However,
ECO´s current plans do not call for the start of any new projects.

Effective asset management should allow ECO to meet its current
expenses from operating income and also generate positive cash
earnings in 2009. ECO expects rental income will remain stable in
comparison with the previous year, while proceeds from the sale of
properties will be used above all to reduce debt and strengthen
liquidity. Therefore, the equity ratio should increase in relation to
the 2008 level. In the financing area, ECO will profit from the
decline in interest rates and should record an improvement in
financial results compared with 2008.

Selected Company Data in accordance with IFRS

01-12/2008 01-12/2007
Revenues (TEUR) 74,794 48,589
Thereof rental income (TEUR) 61,668 39,959
Income from the disposal of non-current assets (TEUR) 4,517 16,508
Net gain/(loss) from changes (TEUR) -48,985 17,146
in the fair value of investment properties
Operating profit (EBIT) (TEUR) -6,790 60,801
Profit before tax (EBT) (TEUR) -49,940 41,654
Profit after tax (after minority interests)(TEUR) -35,698 32,772
Earnings per share (EUR) -1.05 1.11
Weighted average number of shares (Nr.) 34,100,000 29,550,000
FFO (funds from operations)1)(TEUR) 48,067 44,195
before interest and tax, incl. impairment charges
Cash earnings (FFO - funds from operations)2)(TEUR) 4,991 24,723
after interest and tax
NAV per share(EUR) 10.80 12.40

1) EBIT + depreciation and amortisation +/- fair value adjustments +/-
impairment charges

2) EBIT + depreciation and amortisation +/- fair value adjustments
+/- impairment charges - financial results - income taxes paid

Balance sheet indicators

Balance Sheet - Summary (TEUR) 31/12/2008 31/12/2007
Non-current assets 1,085,709 1,244,766
Thereof investment properties 981,890 1,140,019
Thereof construction in progress 40,421 34,746
Thereof properties available for sale 51,881 58,319
Current assets 27,904 93,330
Total Assets 1,113,614 1,338,095
Equity and reserves 375,113 435,685
Thereof minority interests 6,918 12,784
Non-current liabilities 470,846 618,343
Current liabilites 267,654 284,067
Total Equity and Liabilities 1,113,614 1,338,095

Property Data
31/12/2008 31/12/2007
Number of objects 117 127
Thereof investment portfolio 72 73
Thereof trading portfolio 41 46
Thereof development projects 4 8
Rentable space in m²* 662,700 668,000
Thereof trading portfolio 39,100 42,800
Thereof development projects 38,800 53,100
Garage spaces (number) 3,530 3,380
Thereof trading portfolio 270 280
Thereof development projects 150 230
Property assets (in TEUR) 1,074,192 1,233,083
Thereof properties under construction 40,421 34,746
Thereof trading portfolio 51,881 58,319

* Garage spaces were included at 20 m² each

This press release includes forward-looking estimates and statements that are
based on the information available to ECO Business-Immobilien AG at the present
time. Forward-looking statements are normally described with terms such as
"expect", "estimate", "plan", "anticipate", "assume", "should", "could", etc.,
and reflect conditions at the time they are made. ECO notes that numerous
factors may cause actual circumstances and, therefore also actual results, to
differ from the expectations described in this press release.

end of announcement euro adhoc
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ots Originaltext: ECO Business-Immobilien AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

ECO Business-Immobilien AG

Friedrich Scheck, CEO

Tel.: +43(1)535 21 99-9012

mailto:scheck@eco-immo.at

Peter Pechar

Head of Investor Relations

Tel.: +43(1)535 21 99-9035

mailto:pechar@eco-immo.at

Hochegger Financials

Roland Mayrl

Tel.: +43(1) 504 69 87-331

mailto:r.mayrl@hochegger.com

Branche: Real Estate
ISIN: AT0000617907
WKN: A0D8RY
Index: Prime.market
Börsen: Wiener Börse AG / Regulated free trade