H2 acquisitions underpin growth outlook
​Summit Germany (SGL) owns a well-diversified commercial property portfolio, located in Germany's main commercial centres. Its strategy is to actively manage its assets to improve net rent and capital values, and grow portfolio scale through acquisition. The recent interims confirmed the positive impact of actions taken to stabilise finances in 2014. Summit cut ongoing debt funding costs in half, maintained portfolio occupancy despite lease expiries, secured €6.3m rent from new leases/renewals and extended weighted average lease lengths to 4.1 years. That freed it to resume building its portfolio this year and two acquisitions post the mid-year committed another €95m. It has now invested the bulk of the cash raised in February's share issue, although it could release further funds by refinancing these assets. The acquisitions are excellent fits with the existing portfolio, add stable rental cash flows and help finance progressive dividend growth. The short term outlook, particularly opportunities for further acquisition based growth, is being influenced by competition amongst lenders, which has added to demand for German commercial property and pushed up prices. The group nonetheless still expects to identify suitable assets that fit a cautious approach, focused upon enhancing cash earnings. We still expect NAV/share growth by end FY15 in an improving portfolio and market, and, on our forecasts, the shares offer a prospective yield for the year ending December 2016 of 5.1%.
Summit Germany is a commercial real estate company, with a portfolio of properties mainly focused in Germany's main commercial centres. Co. owns, enhances and operates commercial real estate assets in Germany including office buildings, logistic centres and others, which are leased to commercial and industrial tenants. Co. invests primarily in such properties that provide substantial income flows and potential for value increase through asset management. As of Dec 31 2016, Co.'s aggregate portfolio comprised 100 assets, ca. 864,000 square meter (sq. m) of net lettable space, located on approximately 1,407,000 sq. m of land.
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