- Total income of USD 100.8 million (+14.3%)
- Effective gross income of USD 86.0 million (+30.7%)
- Portfolio value adjustment of USD 14.7 million
- EBITDA of USD 38.9 million (+46.6%)
- EBITDA margin of 43.6% (2017: 40.3%)
- Property portfolio value of USD 767.5 million as of 31 December 2018 (+24.2%)
- NAV growth to USD 37.14 (2017: USD 34.38)
- Earnings per share of USD 2.79 (2017: USD 4.15)
- Distribution of CHF 2.50 per share for the business year 2018 proposed to the Annual General Meeting 2019
In 2018, Varia focused on the buyout of the former non-controlling interest holder (NCI) and gained ownership on 100% of its portfolio and financial data. The Company also continued its growth path being focused on workforce housing in the US and on implementing its value-add strategy. It finally started to implement a green initiative program that will be further developed in the years to come. The 2018 results are in-line with the guidance provided and demonstrate the efficiency of the strategy adopted by Varia.
Total income up to USD 100.8 million
The Company portfolio, as of 31 December 2018, consisted of 52 properties totalizing 9,737 units in 19 states, representing a real estate value of USD 767.5 million (2017: USD 618 million). The occupancy rate stood at 93.7% (2017: 94.3%) due to a faster implementation of the value-add strategy. In 2018, the portfolio generated a yearly effective gross income of USD 86.0 million (2017: USD 65.8 million) and a total income of USD 100.8 million (2017: USD 88.2 million). Total operating expenses were USD 50.2 million (2017: USD 39.2 million), which results in a net operating profit of USD 50.6 million (2017: USD 48.9 million). After deduction of the finance cost and the income tax provision, the profit for the period is USD 24.9 million (2017: USD 34.9 million). Accordingly, the earnings per share was at USD 2.79 (2017: USD 4.15). The difference between those figures is due to a reduced fair value adjustment, the absence of the 2017 tax cut and a one-off tax adjustment after the NCI buyout, all being non-cash entries.
In terms of EBITDA margin, Varia increased its profitability up to 43.6% (2017: 40.3%).
The net gain from fair value adjustment on investment property amounted to USD 14.7 million (2017: USD 22.4 million) and reflects the translation of the value-add strategy of Varia in the assets purchased. This number also include the successful sale of the property Pine Ridge in December 2018, resulting in a net IRR of 30.5%.
Manuel Leuthold, Chairman of the Board of Directors of Varia, said: “We are very satisfied with the operational performance of Varia in 2018. The very good results emphasize the effectiveness of our focus on workforce housing in secondary and tertiary markets in the US. We accelerated once again the implementation of our value-add strategy resulting in increased income level of the properties. The higher gross potential income combined with the positive market conditions for the workforce multifamily sector creates interesting growth perspectives for our Company.”