bfw liegenschaften ag publishes preliminary results for fiscal year 2011

bfw liegenschaften ag (SIX Swiss Exchange: BLIN) today published preliminary (unaudited) results for fiscal year 2011. As already anticipated at the publication of the half-year results in September 2011, the company was able to achieve stable earnings from rental income during the second half of 2011 compared to the first six month of the year.

For fiscal year 2011, earnings from rental income amounted to CHF 15.4 million. Positive changes in the fair value of real estate investments contributed a further CHF 2.2 million and an additional profit of CHF 2.2 million was generated from the sale of properties. EBIT reached CHF 18.3 million, and was at the upper end of the previously expected range of CHF 16 – 19 million. The company is very satisfied with this operating result.

The company has restructured the interest rates linked to mortgages of CHF 62.0 million during the first half of 2011 through the use of interest rates swaps with maturities of 7 to 10 years. In addition, it entered into receiver swaptions with maturities of between 10 to 15 years (one-sided right of the banks to extend the maturities at the same interest rates that the corresponding interest rates swaps with shorter maturities are carrying). The company did these interest rate swaps and receiver swaptions as it expects interest rates to rise in the long-term. By using these instruments, the duration of mortgage liabilities increased from 2.25 years (as of year-end 2010) to 4.33 years at 31 December 2011. According to IAS 39 interest rate swaps and receiver swaptions have to be valued at their current fair value at each balance sheet date, and changes in the fair value have to be reflected in the income statement.

During fiscal year 2011, and particularly in the second half-year 2011, interest rates declined substantially again. This interest rate development resulted in negative fair value adjustments in 2011 for the interest rate swaps and receiver swaptions in an amount of CHF 9.9 million at 31 December 2011. The fair value adjustment to these long-term interest rate protections has no cash flow impact and does not affect the company’s operating effectiveness at all. Considering these valuation differences, net earnings amounted to CHF 2.7 million (IFRS). Net earnings excl. these effects from changes in the fair value of the interest rate protections and deferred taxes came to almost CHF 11 million.

bfw liegenschaften ag will publish further information and full details on its financial statements and the Annual Report 2011 on 15 March 2012.