July 7, 2015 / 10:56 AM / 3 years ago

Deutsche Annington eyes earnings rise even excluding buys

FRANKFURT, July 7 (Reuters) - German residential property manager Deutsche Annington sees operating profit (FFO) around the billion-euro mark within sight as it is boosting earnings even without the aid of acquisitions, its chief executive said.

The company’s takeover of Gagfah and Sueddeutsche Wohnen could put it on track for operating profit of 800 million euros ($878 million) within two years, excluding further acquisitions or increases in rents.

“We are aiming for further increases beyond the over half a billion euros we expect this year,” Rolf Buch told Reuters in an interview.

“The company is organised in a way that it can grow without acquisitions,” Buch said.

Deutsche Annington, which is expected to be operating under its new name Vonovia from around September, is seen as a top candidate to join Germany’s DAX index of blue chip firms.

In the meantime, the company is working to draw further synergies and scale effects from its business managing some 370,000 residential properties.

“Our Germany-wide platform puts us in good position,” Buch said.

The ex-Bertelsmann manager took the helm at Annington, at the time controlled by financial investor Terra Firma, in April 2013 and guided it to a stock market listing three months later.

Terra Firma has since completely exited the company, which has seen rapid growth stoked by capital increases over the last two years that drove Deutsche Annington’s market value from 3.7 billion euros to nearly 12 billion currently.

Some analysts worry about the pace of expansion, given concerns about a possible real estate bubble in Europe’s largest economy, putting a “hold” rating on the Deutsche Annington’s stock as they await results from its efforts to integrate its acquisitions.

Buch said that the company has consistently delivered on its targets, growth is sustainable and there could be no question of a bubble given the company’s target tenant group.

Deutsche Annington focuses on relatively inexpensive apartments with rental prices just above 5 euros per square metre.

“Residential properties in our category are an extremely stable investment,” he said.

$1 = 0.9116 euros Writing by Jonathan Gould; Editing by Maria Sheahan

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