The main focus of Varia US Properties in the third quarter 2018 was on the continuous implementation of the value-ad strategy as well as on the optimization of the portfolio. Varia acquired two properties in the States Ohio and Tennessee for USD 40.5 million and with a total of 419 units. Both acquisitions were highly competitive and represent an excellent fit into Varia’s strategy and portfolio. The resulting portfolio, as of 30 September 2018, consisted of 52 properties with a total of 9,581 units.
- Effective Gross Income increased from USD 18.1 million to USD 22.3 million (+23.2%)
- Net Operating Income up from USD 9.6 million to USD 12.0 million (+25%)
- Acquisition of two new properties in Ohio and Tennessee for USD 40.5 million
- Disposition of a property planned for the last quarter 2018 – significant gain for investors expected
- Varia is covered by analyst research of Kepler Cheuvreux
- The Board of Directors will propose to the next AGM to start with quarterly distributions in order to mitigate the currency risk
The Board of Directors of Varia decided to sell the property Pine Ridge with 116 units which is located near Seattle (Washington). The disposition was driven by three factors: the quick and successful implementation of the value-add strategy at this asset, the favorable market conditions in the area and the relative isolation of this asset compared to Varia’s portfolio. A purchase and sale agreement was signed on 12 October 2018 and the transaction is expected to close on or before 14 December 2018. Varia expects a gross IRR near 30%. Proper announcement will be done by Varia after closing.
The hurricanes Florences and Michael having made landfall in North Carolina and Florida in September and October had minimal impact on Varia’s portfolio with very limited damage.
For the first time since its inception in 2015, Varia is covered by an analyst research. Kepler Cheuvreux issued its initial coverage research in mid-October with a Hold position and a target price of CHF 38.