par GSG GROUP S.A. (isin : LU0251710041)
CPI PROPERTY GROUP publishes financial results for the first quarter of 2023
EQS-News: CPI PROPERTY GROUP / Key word(s): Quarter Results/Real Estate
CPI PROPERTY GROUP publishes financial results for the first quarter of 2023
31.05.2023 / 19:50 CET/CEST
The issuer is solely responsible for the content of this announcement.
CPI Property Group
(société anonyme)
40, rue de la Vallée
L-2661 Luxembourg
R.C.S. Luxembourg: B 102 254
Press Release - Corporate News
Luxembourg, 31 May 2023
CPI PROPERTY GROUP publishes financial results for the first quarter of 2023
CPI PROPERTY GROUP (hereinafter “CPIPG”, the “Company” or together with its subsidiaries the “Group”), a leading owner of income-generating European real estate, hereby publishes unaudited financial results for the three-month period ended 31 March 2023.
“CPIPG’s first quarter results reflect the significant increase in our rental income due to indexation,” said Martin Nemecek, CEO. “Market fundamentals in the CEE region are strong, with a healthy supply/demand balance evidenced by the Group’s solid occupancy and positive rent reversion.”
Operational highlights for the first quarter of 2023 include:
- Like for like-for-like rent increased by 9.9%, with a rent collection rate near 100%.
- Occupancy was steady at 92%.
- €400 million of property disposals were signed in Q1, with over €500 million completed year-to-date. Nearly €850 million have been completed since the Group’s €2 billion pipeline was announced in August 2022.
- Limited real estate construction, strong tenants, healthy consumer spending, and market trends including a lower impact from home working continue to support solid appetite for CEE real estate.
Financial highlights for the first quarter of 2023 include:
- Property portfolio of €20.6 billion, total assets of €23.3 billion.
- EPRA NRV (NAV) grew to €8.2 billion.
- Gross debt declined by about €300 million.
- Net Loan-to-Value (LTV) declined 0.60% to 50.3%.
- Q1 LTV does not reflect the positive effect of disposal proceeds received after quarter-end, plus the benefit of bond repurchases completed in Q2 2023.
- Year-end target LTV of 45-49% is unchanged.
- Net rental income increased to €197 million and net business income rose to €213 million.
- Consolidated adjusted EBITDA was €198 million, while FFO was €108 million.
- Total available liquidity was €1.9 billion, including €850 million of undrawn revolving credit facilities, the majority of which mature in 2026.
- Unencumbered assets increased to 55%.
- Net ICR was 2.8x.
“While the Group’s cash flow generation is strong, some of CPIPG’s financial metrics temporarily exceed our target range,” said David Greenbaum, CFO. “We made progress on reducing leverage in Q1, took further actions in Q2 and expect to announce more steps in the coming months.”
Post-Q1 events and updates
In April 2023, CPIPG completed tender offers for senior unsecured bonds maturing in 2026, 2027 and 2028. In total, the Group accepted €335 million of bonds for tender. Because the bonds were repurchased at a discount, CPIPG expects to report a gain of approximately €60 million in Q2 2023.
CPIPG will consider further bond and/or hybrid buybacks over the course of 2023 and 2024 through tender offers and secondary market purchases, depending on the Group’s level of cash and the speed of our bank financing and disposal pipelines.
In May 2023, CPIPG’s board approved a reduction of the Group’s shareholder distribution target for 2023 from 65% of FFO1 to less than 25%, with the final payout to be decided by the board in Q4 2023. In future years, CPIPG will consider similar measures to adjust the payout ratio depending on the real estate environment and considering our commitment to investment-grade credit ratings and our long-term financial policy.
In Q2, CPIPG completed the disposal of a brownfield site with a land area of almost 45,000 m2 in the Lambrate district of Milan, Italy. IMMOFINANZ also successfully closed the sale of landbank in Turkey with about 197,000 m2 of land area. Gross proceeds from the two sales were about €55 million.
Financing
CPIPG has an extensive pipeline of new secured bank loans in Poland, the Czech Republic, Romania, Serbia, the UK and other locations. One or more significant borrowings are expected to close during Q2, with proceeds used primarily to repay the Group’s outstanding 2025 bridge loans, which currently stand at €1.55 billion. Additional secured bank financings are in advanced discussion for H2 2023. Overall, the Group’s near-term debt maturities are highly manageable with existing liquidity resources of nearly €2 billion.
FINANCIAL HIGHLIGHTS
Performance Q1-2023 Q1-2022 Change Total revenues € million 410 216 90.3% Gross rental income (GRI) € million 229 128 79.1% Net rental income (NRI) € million 197 110 79.4% Net hotel income € million 5 (2) 361.3% Net business income (NBI) € million 213 117 81.4% Consolidated adjusted EBITDA € million 198 119 66.8% Funds from operations (FFO) € million 108 84 27.7% Net profit for the period € million 53 381 (86.1 %) Assets 31-Mar-2023 31-Dec-2022 Change Total assets € million 23,271 23,521 (1.1%) Property portfolio € million 20,551 20,855 (1.5%) Gross leasable area sqm 6,604,000 6,784,000 (2.6%) Occupancy % 92.0 92.8 (0.8 p.p.) Like-for-like gross rental growth** % 9.9 7.6 2.3 p.p. Total number of properties*** No. 780 855 (8.8%) Total number of residential units No. 14,870 16,767 (11.3%) Total number of hotel rooms**** No. 8,067 7,810 3.3% * According to GLA
** Based on headline rent
*** Excluding residential properties in the Czech Republic
**** Including hotels operated, but not owned by the Group
Financing structure 31-Mar-2023 31-Dec-2022 Change Total equity € million 9,461 9,263 2.1% EPRA NRV (NAV) € million 8,203 8,005 2.5% Net debt € million 10,346 10,625 (2.6%) Net Loan-to-value ratio (Net LTV) % 50.3 50.9 (0.6 p.p.) Net debt/EBITDA x 13.1x 17.5x (4.4x) Secured consolidated leverage % 19.0 19.5 (0.5 p.p.) Secured debt to total debt % 38.6 38.9 (0.3 p.p.) Unencumbered assets to total assets % 55.4 54.4 1 p.p. Unencumbered assets to unsecured debt % 185% 179% 6 p.p. Net interest coverage (Net ICR) x 2.8x 3.2x (0.4x)
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT*
Three-month period ended (€ million) 31 March 2023 31 March 2022 Gross rental income 229.2 128.0 Service charge and other income 116.4 47.0 Cost of service and other charges (104.2) (42.4) Property operating expenses (44.2) (22.6) Net rental income197.2 110.0 Development sales - - Development operating expenses - (0.1) Net development income - (0.1) Hotel revenue 37.5 15.5 Hotel operating expenses (32.7) (17.3) Net hotel income
Revenues from other business operations 4.8 (1.8) Other business revenue 27.0 25.0 Other business operating expenses (16.0) (15.6) Net other business income 11.0 9.4 Total revenues 410.1 215.5 Total direct business operating expenses (197.1) (98.0) Net business income 213.0 117.5 Net valuation loss (6.6) (0.7) Net gain/loss on disposal of investment property and subsidiaries (1.7) 21.8 Amortization, depreciation and impairment (17.8) (11.7) Administrative expenses (26.6) (18.5) Other operating income 3.5 278.2 Other operating expenses (3.8) (3.5) Operating result 160.0 383.1 Interest income 6.0 2.7 Interest expense (75.4) (31.3) Other net financial result (30.2) 12.1 Net finance costs (99.6) (16.5) Share of gain of equity-accounted investees (net of tax) 8.2 17.2 Profit before income tax 68.7 383.8 Income tax expense (15.7) (2.9) Net profit from continuing operations 53.0 380.9
* The presented financial statements do not represent a full set of interim financial statements as if prepared in accordance with IAS 34
Gross rental income
Gross rental income increased by €101.2 million (79.1%) to €229.2 million in Q1 2023 primarily due to the contributions of IMMOFINANZ (€55.2 million) and S IMMO (€48.0 million).
Property operating expenses
Property operating costs increased by €21.6 million (96.0%) to €44.2 million in Q1 2023 due to property operating costs associated with IMMOFINANZ (€13.6 million) and S IMMO (€9.0 million).
Net hotel income
In Q1 2023, net hotel income increased to €4.8 million, primarily due to additional income generated by
S IMMO (€2.5 million).
Administrative expenses
Administrative expenses increased by €8.1 million to €26.6 million due to the acquisition of IMMOFINANZ
(€5.8 million) and S IMMO (€2.3 million).
Other operating income
Other operating income decreased in Q1 2023 as there was a significant bargain purchase of
€274.6 million recognized in Q1 2022.
Interest expense
Interest expense increased by €31.3 million to €75.4 million in Q1 2023 primarily due to interest expense incurred by IMMOFINANZ (€12.1 million) and S IMMO (€9.0 million).
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION*
(€ million) 31 March 2023 31 December 2022 NON-CURRENT ASSETS Intangible assets and goodwill 129.5 126.7 Investment property 18,528.8 18,486.2 Property, plant and equipment 1,107.4 1,100.0 Deferred tax assets 180.1 176.8 Equity accounted investees 736.7 732.3 Other non-current assets 776.3 668.5 Total non-current assets 21,458.9 21,290.5 CURRENT ASSETS Inventories 35.4 23.5 Trade receivables 222.2 197.8 Cash and cash equivalents 1,016.9 1,033.2 Assets linked to assets held for sale 197.9 596.5 Other current assets 340.1 379.7 Total current assets 1,812.5 2,230.7 TOTAL ASSETS 23,271.4 23,521.2 EQUITY Equity attributable to owners of the Company 6,752.9 6,579.8 Perpetual notes 1,600.2 1,584.4 Non-controlling interests 1,108.2 1,098.8 Total equity 9,461.3 9,263.0 NON-CURRENT LIABILITIES Bonds issued 4,582.4 4,680.4 Financial debts 6,133.1 6,165.6 Deferred tax liabilities 1,683.0 1,727.9 Other non-current liabilities 197.5 208.2 Total non-current liabilities 12,596.0 12,782.1 CURRENT LIABILITIES Bonds issued 296.4 405.8 Financial debts 351.5 360.4 Trade payables 160.2 232.2 Other current liabilities 406.0 477.7 Total current liabilities 1,214.1 1,476.1 TOTAL EQUITY AND LIABILITIES 23,271.4 23,521.2* The presented financial statements do not represent a full set of interim financial statements as if prepared in accordance with IAS 34
Total assets
Total assets decreased by €249.7 million (1.1%) to €23,271.4 million as at 31 March 2023 compared to
31 December 2022. The decrease is primarily related to disposals of properties.
Total liabilities
Total liabilities decreased by €448.1 million (3.1%) to €13,810.1 million as at 31 March 2023 compared to
31 December 2022, primarily due to a decrease in bonds issued (€207.3 million) and a decrease of liabilities linked to assets held for sale (€ 126.8 million due to Q1 2023 sales).
Equity and EPRA NRV
Total equity increased by €198.3 million from €9,263.0 million as at 31 December 2022 to €9,461.3 million as at 31 March 2022. The movements of equity components were as follows:
- Increase due to the profit for the period of €53.0 million (profit to the owners of €33.8 million);
- Increase in translation, revaluation and hedging reserve of €139.2 million;
- Payment of perpetual notes coupon of €3.3 million;
- Increase of NCI in the period of €9.4 million.
EPRA NRV was €8,203 million as at 31 March 2023, representing an increase of 2.5% compared to 31 December 2022. The increase of EPRA NRV was driven by the above changes in the Group’s equity attributable to the owners (increase of retained earnings and other reserves).
| 31 March 2023 | 31 December 2022 | |
| Equity attributable to the owners (NAV) | 6,753 | 6,580 |
| Diluted NAV | 6,753 | 6,580 |
| Fair value of financial instruments | (218) | (243) |
| Deferred tax on revaluations | 1,711 | 1,711 |
| Goodwill as a result of deferred tax | (43) | (43) |
| EPRA NRV (€ million) | 8,203 | 8,005 |
GLOSSARY
the most relevant information on the fair value of the assets and
liabilities within a true real estate investment company with a
long-term investment strategy. Funds from operations or FFO It is calculated as net profit for the period adjusted by non-cash revenues/expenses (like deferred tax, net valuation gain/loss, impairment, amortisation/depreciation, goodwill etc.) and non-recurring (both cash and non-cash) items. Calculation also excludes accounting adjustments for unconsolidated partnerships and joint ventures. Funds from operations provide an indication of core recurring earnings. Net debt/EBITDA It is calculated as Net debt divided by Consolidated adjusted EBITDA. A measure of a company’s ability to pay its debt. This ratio measures the amount of income generated and available to pay down debt before covering interest, taxes, depreciation and amortisation expenses. Net ICR It is calculated as Consolidated adjusted EBITDA divided by a sum of interest income as reported and interest expense as reported. This measure is an important indicator of a firm´s ability to pay interest and other fixed charges from its operating performance, measured by EBITDA. Net Loan-to-Value or Net LTV It is calculated as Net debt divided by fair value of Property Portfolio. Loan-to-value provides a general assessment of financing risk undertaken. Secured consolidated leverage ratio Secured consolidated leverage ratio is a ratio of a sum of secured financial debts and secured bonds to Consolidated adjusted total assets. This measure is an important indicator of a firm´s financial flexibility and liquidity. Lower levels of secured debt typically also means lower levels of mortgage debt - properties that are free and clear of mortgages are sources of alternative liquidity via the issuance of property-specific mortgage debt, or even sales. Secured debt to total debt It is calculated as a sum of secured bonds and secured financial debts as reported divided by a sum of bonds issued and financial debts as reported. This measure is an important indicator of a firm´s financial flexibility and liquidity. Lower levels of secured debt typically also means lower levels of mortgage debt - properties that are free and clear of mortgages are sources of alternative liquidity via the issuance of property-specific mortgage debt, or even sales. Unencumbered assets to total assets It is calculated as total assets as reported less a sum of encumbered assets as reported divided by total assets as reported. This measure is an important indicator of a commercial real estate firm´s liquidity and flexibility. Properties that are free and clear of mortgages are sources of alternative liquidity via the issuance of property-specific mortgage debt, or even sales. The larger the ratio of unencumbered assets to total assets, the more flexibility a company generally has in repaying its unsecured debt at maturity, and the more likely that a higher recovery can be realized in the event of default. Unencumbered assets to unsecured debt It is calculated as unencumbered assets as reported divided by a sum of unsecured bonds and unsecured financial debts as reported. This measure is an additional indicator of a commercial real estate firm’s liquidity and financial flexibility.
Non-financial definitions Definition Company CPI Property Group S.A. Property Portfolio value or PP value The sum of value of Property Portfolio owned by the Group Gross Leasable Area or GLA Gross leasable area is the amount of floor space available to be rented. Gross leasable area is the area for which tenants pay rent, and thus the area that produces income for the property owner. Group CPI Property Group S.A. together with its subsidiaries Net debt Net debt is borrowings plus bank overdraft less cash and cash equivalents. Occupancy Occupancy is a ratio of estimated rental revenue regarding occupied GLA and total estimated rental revenue, unless stated otherwise. Property Portfolio Property Portfolio covers all properties and investees held by the Group, independent of the balance sheet classification, from which the Group incurs rental or other operating income.
APM RECONCILIATION*
EPRA NRV reconciliation (€ million) 31-Mar-23 31-Dec-22 Equity attributable to owners of the company 6,753 6,580 Effect of exercise of options, convertibles and other equity interests 0 0 Diluted NAV, after the exercise of options, convertibles and other equity interests 6,753 6,580 Revaluation of trading property and property, plant and equipment 0 0 Fair value of financial instruments (218) (243) Deferred tax on revaluation 1,711 1,711 Goodwill as a result of deferred tax (43) (43) EPRA NRV 8,203 8,005Net LTV reconciliation (€ million) 31-Mar-22 31-Dec-22 Financial debts 6,485 6,526 Bonds issued 4,879 5,086 Net debt linked to assets held for sale 0 46 Cash and cash equivalents (1,017) (1,033) Net debt 10,346 10,625 Total property portfolio 20,551 20,855 Net LTV 50.3% 50.9%
Net Interest coverage ratio reconciliation (€ million) Q1-2023 FY 2022 Interest income 6 20 Interest expense (75) (210) Consolidated adjusted EBITDA 198 608 Net Interest coverage ratio 2.8x 3.2x
Secured debt to total debt reconciliation (€ million) 31-Mar-23 31-Dec-22 Secured bonds 0 0 Secured financial debts 4,389 4,552 Total debts 11,363 11,690 Secured debt to total debt 38.6% 38.9%
* Totals might not sum exactly due to rounding differences.
Unencumbered assets to total assets reconciliation (€ million) 31-Mar-23 31-Dec-22 Bonds collateral 0 0 Bank loans collateral 10,390 10,733 Total assets 23,271 23,521 Unencumbered assets ratio 55.4% 54.4%Consolidated adjusted EBITDA reconciliation (€ million)* Q1-2023 Q1-2022 Net business income 213 117 Administrative expenses (27) (19) Other effects 11 20 Consolidated adjusted EBITDA 198 119
Funds from operations (FFO) reconciliation (€ million)* Q1-2023 Q1-2022 Net profit/(loss) for the period 53 381 Deferred income tax 20 0 Net valuation gain or loss on investment property (7) (1) Net valuation gain or loss on revaluation of derivatives (30) 37 Net gain or loss on disposal of investment property and subsidiaries (2) 22 Net gain or loss on disposal of PPE/other assets 0 0 Amortization, depreciation and impairments (18) (12) Other non-cash items (1) 10 GW/Bargain purchase -- 274 Other non-recurring items (24) (37) Share on profit of equity accounted investees/JV adjustments 8 17 Other effects 3 14 Funds from operations 108 84
Secured consolidated leverage ratio reconciliation (€ million) 31-Mar-23 31-Dec-22 Secured bonds 0 0 Secured financial debts 4,389 4,552 Consolidated adjusted total assets 23,142 23,394 Secured consolidated leverage ratio 19.0% 19.5%
Unencumbered assets to unsecured debt reconciliation (€ million) 31-Mar-23 31-Dec-22 Total assets 23,271 23,521 Bonds collateral 0 0 Bank loans collateral 10,390 10,733 Total debt 11,363 11,690 Secured bonds 0 0 Secured financial debts 4,389 4,552 Unencumbered assets to unsecured debt 185% 179%
* Includes pro-rata EBITDA/FFO for Q1 2023 and Q1 2022 of Equity accounted investees.
Net debt/EBITDA reconciliation (€ million) 31-Mar-23 31-Dec-22 Net debt 10,346 10,625 Net business income* 852 676 Administrative expenses* (107) (129) Other effects* 45 61 Net debt/EBITDA 13.1x 17.5x
*Annualised.
For further information please contact:
Investor Relations
David Greenbaum
Chief Financial Officer
d.greenbaum@cpipg.com
Moritz Mayer
Manager, Capital Markets
m.mayer@cpipg.com
For more on CPI Property Group, visit our website: www.cpipg.com
Follow us on Twitter (CPIPG_SA) and LinkedIn
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| Language: | English |
| Company: | CPI PROPERTY GROUP |
| 40, rue de la Vallée | |
| L-2661 Luxembourg | |
| Luxemburg | |
| Phone: | +352 264 767 1 |
| Fax: | +352 264 767 67 |
| E-mail: | contact@cpipg.com |
| Internet: | www.cpipg.com |
| ISIN: | LU0251710041 |
| WKN: | A0JL4D |
| Listed: | Regulated Market in Frankfurt (General Standard); Regulated Unofficial Market in Dusseldorf, Stuttgart |
| EQS News ID: | 1646513 |
| End of News | EQS News Service |
1646513 31.05.2023 CET/CEST