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, 30 November 2021
CPI PROPERTY GROUP - Financial Results for the Third Quarter of 2021
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 nine-month period ended 30 September 2021.
"The third quarter of 2021 was positive for CPIPG by every measure," said Martin Nemecek, CEO. "The income, scale and value of our property portfolio continued to grow; our leadership position in Central European real estate has been further solidified through consistently strong performance."
Highlights for the third quarter of 2021 include:
- CPIPG's property portfolio rose to €11.9 billion (up 15% versus 2020) as the Group completed €656 million of acquisitions and benefited from a €879 million increase in fair value mainly relating to offices in Berlin and Warsaw, along with landbank and residential in the Czech Republic and also factoring in recent acquisitions in Italy at sharp discounts to fair value.
- Total assets reached €13.3 billion (up 13% versus 2020), driven by increases to the property portfolio, offset by a slight reduction in cash and cash equivalents.
- Net rental income increased to €265 million (up 6% versus Q3 2020) and consolidated adjusted EBITDA rose to €272 million (up 6% versus Q3 2020) due to the contribution from recent acquisitions and developments, broadly stable occupancy at 93.3%, limited COVID-19 rent discounts and 2.6% like-for-like growth in gross rental income.
- Because of a strong increase in bookings, the hotel segment reported net income of €10 million.
- Net business income (up 9% versus Q3 2020 to €282 million) and FFO (up 20% versus Q3 2020 to €208 million) show the benefits of CPIPG's organic rental growth, improved performance in hotels, and contribution from recent acquisitions.
- The Group collected 95% of contracted rent in Q1-Q3 2021 before the impact of one-time COVID-19 discounts, which amounted to about 3.5% of gross rental income. Office and residential collections were close to 100%.
- EPRA NRV (NAV) increased by 17% to €6.0 billion.
- Net Loan-to-Value (LTV) at 39.3% (-1.4 p.p. versus 2020, -1.7 p.p. versus Q3 2020) is below the Group's target of 40%.
- Unencumbered assets remain high at 67% (-3 p.p. versus 2020) and net ICR stood at 5.2x (-0.2x versus 2020), well above financial policy guidelines.
- CPIPG's total liquidity stood at more than €1.2 billion at the end of Q3 2021.
- On 1 September 2021, Mr. Vitek, CPIPG's primary shareholder, subscribed to 162,337,662 new ordinary shares for €100 million.
Notable events occurring after 30 September 2021 include:
- On 22 November 2021, CPIPG and the "Apollo Funds" managed by affiliates of Apollo Global Management, Inc. (together with its consolidated subsidiaries, "Apollo") announced Apollo's subscription for new shares for a total amount of €300 million, resulting in a stake of about 5.5%. On the same date, Mr. Vitek also subscribed to 243,506,494 new ordinary shares of CPIPG at €0.616/share, increasing the Group's equity by a further €150 million. Proceeds from the share issuances will be used for acquisitions and deleveraging.
- To accommodate Apollo as a new equity investor and further regularize the Group's equity shareholder distributions, CPIPG adopted a new distribution policy, increasing our FFO I distribution target from 50% to 65% beginning in 2022.
- In total, the Group has raised €550 million of equity from Apollo and Mr. Vitek in H2 2021.
- In August 2021, CPIPG's board of directors approved a plan to complete up to €1 billion of disposals in the next 6 to 12 months, subject to pricing. Substantial progress has been made on disposals with about €700 million expected to sign and partially close in 2021 with a clear pipeline for early 2022. In the vast majority of cases, disposals are expected to be at prices well above book value.
"CPIPG's operational successes combined with recent capital raising and disposals clearly support our conservative financial profile," said David Greenbaum, CFO. "The Group is well-prepared to pursue growth opportunities while continuing to invest in our portfolio."
FINANCIAL HIGHLIGHTS
| Performance |
|
Q1-Q3 2021 |
Q1-Q3 2020 |
Change |
| |
|
|
|
|
| Gross rental income |
€ million |
291 |
264 |
10.0% |
| Net rental income |
€ million |
265 |
251 |
5.7% |
| Net hotel income |
€ million |
10 |
(1) |
1,752% |
| Total revenues |
€ million |
474 |
451 |
5.2% |
| Net business income |
€ million |
282 |
260 |
8.7% |
| |
|
|
|
|
| Consolidated adjusted EBITDA |
€ million |
272 |
257 |
6.0% |
| Funds from operations (FFO) |
€ million |
208 |
173 |
20.1% |
| |
|
|
|
|
| Net profit for the period |
€ million |
801 |
58 |
1,288% |
| |
|
|
|
|
| |
|
| |
|
|
|
|
|
| Assets |
|
30-Sep-2021 |
31-Dec-2020 |
Change |
| |
|
|
|
|
| Total assets |
€ million |
13,307 |
11,801 |
12.8% |
| Property portfolio |
€ million |
11,885 |
10,316 |
15.2% |
| Gross leasable area |
sqm |
3,659,000 |
3,636,000 |
0.6% |
| Occupancy |
% |
93.3 |
93.7 |
(0.4 p.p.) |
| Like-for-like gross rental growth* |
% |
2.6 |
0.8 |
1.8 p.p. |
| |
|
|
|
|
| Total number of properties** |
No. |
349 |
343 |
1.7% |
| Total number of residential units |
No. |
11,739 |
11,929 |
(1.6%) |
| Total number of hotel rooms*** |
No. |
6,850 |
6,753 |
1.4% |
| |
|
|
|
|
* Based on headline rent, excluding one-time discounts
** Excluding residential properties in the Czech Republic
*** Including hotels operated, but not owned by the Group |
|
| |
|
|
|
|
|
| Financing structure |
|
30-Sep-2021 |
31-Dec-2020 |
Change |
| |
|
|
|
|
| Total equity |
€ million |
6,743 |
5,787 |
16.5% |
| EPRA NRV (NAV) |
€ million |
5,967 |
5,118 |
16.6% |
| |
|
|
|
|
| Net debt |
€ million |
4,675 |
4,194 |
11.5% |
| Net Loan-to-value ratio (Net LTV) |
% |
39.3 |
40.7 |
(1.4 p.p.) |
| Net debt/EBITDA |
|
12.9x |
12.4x |
0.5x |
| Secured consolidated leverage ratio |
% |
11.5 |
12.0 |
(0.5 p.p.) |
| Secured debt to total debt |
% |
29.2 |
29.0 |
0.2 p.p. |
| Unencumbered assets to total assets |
% |
67.4 |
70.0 |
(2.6 p.p.) |
| Net ICR |
|
5.2x |
5.4x |
(0.2x) |
| |
|
|
|
|
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT*
| |
Nine-month period ended |
| (€ million) |
30 September 2021 |
30 September 2020 |
| Gross rental income |
290.6 |
264.1 |
| Service charge and other income |
93.7 |
96.3 |
| Cost of service and other charges |
(74.4) |
(72.3) |
| Property operating expenses |
(44.8) |
(37.3) |
| Net rental income |
265.1 |
250.8 |
| Development sales |
12.1 |
17.2 |
| Development operating expenses |
(9.3) |
(15.9) |
| Net development income |
2.8 |
1.3 |
| Hotel revenue |
47.8 |
36.3 |
| Hotel operating expenses |
(38.2) |
(36.9) |
Net hotel income
Revenues from other business operations |
9.6 |
(0.6) |
| Other business revenue |
29.9 |
36.7 |
| Other business operating expenses |
(25.1) |
(28.5) |
| Net other business income |
4.8 |
8.2 |
| Total revenues |
474.1 |
450.7 |
| Total direct business operating expenses |
(191.8) |
(191.0) |
| Net business income |
282.3 |
259.7 |
| Net valuation gain (loss) |
790.7 |
(11.2) |
| Net gain on disposal of investment property and subsidiaries |
1.2 |
0.6 |
| Amortization, depreciation and impairment |
(22.4) |
(62.7) |
| Administrative expenses |
(40.1) |
(34.3) |
| Other operating income |
4.7 |
4.6 |
| Other operating expenses |
(3.7) |
(1.5) |
| Operating result |
1,012.7 |
155.2 |
| Interest income |
16.4 |
12.2 |
| Interest expense |
(69.0) |
(58.0) |
| Other net financial result |
1.1 |
(8.5) |
| Net finance costs |
(51.5) |
(54.4) |
| Share of gain (loss) of equity-accounted investees (net of tax) |
3.9 |
(11.2) |
| Profit before income tax |
965.1 |
89.6 |
| Income tax expense |
(164.2) |
(31.9) |
| Net profit from continuing operations |
800.9 |
57.7 |
* 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 €26.5 million (10.0%) to €290.6 million in Q1-Q3 2021 primarily due to higher rental income generated by the office portfolios in Berlin (€7.1 million) and Warsaw (€3.1 million) and acquisitions in Italy (€10.8 million).
Net hotel income
In Q1-Q3 2021, hotel revenues increased by €11.5 million (31.5%) to €47.8 million due to partial recovery from the COVID-19 restrictions. In particular, Suncani Hvar generated net income of €8.5 million from total net hotel income of the Group of €9.6 million. On the other hand, hotels in larger cities such as Prague continue to be negatively impacted by the COVID-19 restrictions.
Net valuation gain
In Q1-Q3 2021, the valuation gain reflected primarily an increase of the fair value of Berlin offices (€398.2 million) newly acquired assets in Italy (€135.1 million), two landbanks in Prague (€122.5 million) and the residential portfolio in the Czech Republic (€71.8 million).
Amortization, depreciation and impairment
Amortization, depreciation, and impairment decreased by €40.3 million to €22.4 million in Q1-Q3 2021 due to impairment loss of €30.8 million from revaluation of hotels in Q1-Q3 2020. In Q1-Q3 2021, the Group partially released the impairment in the amount of €10.8 million.
Interest expense
Interest expense increased by €10.9 million to €69.0 million in Q1-Q3 2021 due to increase in the volume of bonds issued.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION*
| (€ million) |
30 September 2021 |
31 December 2020 |
| NON-CURRENT ASSETS |
|
|
| Intangible assets and goodwill |
108.1 |
107.1 |
| Investment property |
10,223.0 |
8,792.6 |
| Property, plant and equipment |
842.2 |
779.4 |
| Deferred tax assets |
152.7 |
155.6 |
| Equity accounted investees |
663.5 |
658.1 |
| Other non-current assets |
325.0 |
330.9 |
| Total non-current assets |
12,314.5 |
10,823.7 |
| CURRENT ASSETS |
|
|
| Inventories |
32.1 |
38.8 |
| Trade receivables |
92.1 |
85.4 |
| Cash and cash equivalents |
541.9 |
632.3 |
| Assets linked to assets held for sale |
130.6 |
37.7 |
| Other current assets |
195.6 |
183.5 |
| Total current assets |
992.3 |
977.7 |
| TOTAL ASSETS |
13,306.8 |
11,801.5 |
| EQUITY |
|
|
| Equity attributable to owners of the Company |
5,011.3 |
4,320.8 |
| Perpetual notes |
1,643.8 |
1,369.6 |
| Non-controlling interests |
87.6 |
96.1 |
| Total equity |
6,742.7 |
5,786.5 |
| NON-CURRENT LIABILITIES |
|
|
| Bonds issued |
3,539.2 |
3,195.2 |
| Financial debts |
1,407.2 |
1,269.6 |
| Deferred tax liabilities |
1,006.9 |
842.2 |
| Other non-current liabilities |
105.2 |
116.9 |
| Total non-current liabilities |
6,058.5 |
5,423.9 |
| CURRENT LIABILITIES |
|
|
| Bonds issued |
104.2 |
108.8 |
| Financial debts |
166.0 |
253.0 |
| Trade payables |
83.7 |
70.6 |
| Other current liabilities |
151.7 |
158.6 |
| Total current liabilities |
505.6 |
591.0 |
| TOTAL EQUITY AND LIABILITIES |
13,306.8 |
11,801.5 |
* 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 increased by €1,505.4 million (12.8%) to €13,306.9 million as at 30 September 2021 compared to 31 December 2020. The increase was driven primarily by acquisitions (investment property increased by €1,430 million and property, plant and equipment by €62.8 million, compared to 31 December 2020), partly offset by a slight decrease of loans provided and cash and cash equivalents.
Total liabilities
Total liabilities increased by €549.1 million (9.1%) to €6,564.1 million at 30 September 2021 compared to 31 December 2020, primarily due to movements in the Group's debts and increase of deferred tax liability. The Group issued senior unsecured bonds of €774 million, and additionally drawn secured debts of €253 million, while €464 million of bonds and €194.1 million of secured debts were repaid in Q1-Q3 2021. Deferred tax liability increased by €165 million in Q1-Q3 2021.
EQUITY AND EPRA NRV
Total equity increased by €956.2 million from €5,786.5 million as at 31 December 2020 to €6,742.7 million as at 30 September 2021. The movements of equity components were as follows:
- Increase due to the profit for the period of €747.3 million (profit to the owners of €736.7 million);
- Decrease due to share buy-back of €240 million;
- Increase due to issuance of new shares €100 million;
- Increase in translation reserve of €63 million;
- Decrease in revaluation, hedging and legal reserve of €6 million;
- Increase of NCI due to acquisitions and sales in the period of €18 million;
- Increase due to issuance and repayment of perpetual notes net of €274 million (including interests);
EPRA NRV was €5,967 million as at 30 September 2021, representing increase of 16.6% compared to 31 December 2020. 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).
| |
30 September 2021 |
31 December 2020 |
| |
|
|
| Equity attributable to the owners (NAV) |
5,011 |
4,321 |
| Diluted NAV |
5,011 |
4,321 |
| Revaluation of trading property and PPE |
2 |
3 |
| Deferred tax on revaluations |
996 |
837 |
| Goodwill as a result of deferred tax |
(43) |
(43) |
| EPRA NRV (€ million) |
5,967 |
5,118 |
GLOSSARY
| Alternative Performance Measures (APM) |
Definition |
Rationale |
| Consolidated adjusted EBITDA |
Net business income as reported deducting administrative expenses as reported. |
This is an important economic indicator showing a business's operating efficiency comparable to other companies, as it is unrelated to the Group's depreciation and amortization policy and capital structure or tax treatment. It is one of the fundamental indicators used by companies to set their key financial and strategic objectives. |
| Consolidated adjusted total assets |
Consolidated adjusted total assets is total assets as reported deducting intangible assets and goodwill as reported. |
|
| EPRA Net Reinstatement Value (NRV) |
EPRA NRV assumes that entities never sell assets and aims to represent the value required to rebuild the entity. |
The objective of the EPRA NRV is to highlight the value of net assets on a long-term basis. |
| Funds from operations or FFO |
It is calculated as net profit for the period adjusted by non-cash revenues/expenses (e.g. deferred tax, net valuation gain/loss, impairment, amortization/depreciation, goodwill etc.) and non-recurring (both cash and non-cash) items (e.g. net gain/loss on disposals etc.). The calculation also excludes accounting adjustments for unconsolidated partnerships and joint ventures. |
Funds from operations provide an indication of core recurring earnings. |
| 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. |
| |
|
| 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) |
30-Sep-21 |
31-Dec-20 |
| Equity attributable to owners of the company |
5,011 |
4,321 |
| Effect of exercise of options, convertibles and other equity interests |
0 |
0 |
| Diluted NAV, after the exercise of options, convertibles and other equity interests |
5,011 |
4,321 |
| Revaluation of trading property and property, plant and equipment |
2 |
2 |
| Fair value of financial instruments |
0 |
0 |
| Deferred tax on revaluation |
996 |
837 |
| Goodwill as a result of deferred tax |
(43) |
(43) |
| EPRA NRV |
5,967 |
5,118 |
| Net LTV reconciliation (€ million) |
30-Sep-21 |
31-Dec-20 |
| Financial debts |
1,573 |
1,523 |
| Bonds issued |
3,643 |
3,304 |
| Net debt linked to assets held for sale |
0 |
0 |
| Cash and cash equivalents |
(542) |
(632) |
| Net debt |
4,268 |
4,194 |
| Total property portfolio |
11,885 |
10316 |
| Net LTV |
39.3% |
40.7% |
| Net Interest coverage ratio reconciliation (€ million) |
Q1-Q3 2021 |
2020 |
| Interest income |
16 |
18 |
| Interest expense |
(69) |
(81) |
| Consolidated adjusted EBITDA |
272 |
338 |
| Net Interest coverage ratio |
5.2x |
5.4x |
| Secured debt to total debt reconciliation (€ million) |
30-Sep-21 |
31-Dec-20 |
| Secured bonds |
0 |
0 |
| Secured financial debts |
1,522 |
1,400 |
| Total debts |
5,217 |
4,827 |
| Secured debt to total debt |
29,2% |
29.0% |
* Totals might not sum exactly due to rounding differences.
| Unencumbered assets to total assets reconciliation (€ million) |
30-Sep-21 |
31-Dec-20 |
| Bonds collateral |
0 |
0 |
| Bank loans collateral |
4,337 |
3,541 |
| Total assets |
13,307 |
11,801 |
| Unencumbered assets ratio |
67.4% |
70.0% |
| Consolidated adjusted EBITDA reconciliation (€ million)* |
Q1-Q3 21 |
Q1-Q3 20 |
| Net business income |
282 |
260 |
| Administrative expenses |
(40) |
(34) |
| Other effects |
30 |
31 |
| Consolidated adjusted EBITDA |
272 |
257 |
| Funds from operations (FFO) reconciliation (€ million)* |
Q1-Q3 21 |
Q1-Q3 20 |
| Net profit/(loss) for the period |
801 |
58 |
| Deferred income tax |
(155) |
(23) |
| Net valuation gain or loss on investment property |
791 |
(11) |
| Net valuation gain or loss on revaluation of derivatives |
2 |
1 |
| Net gain or loss on disposal of investment property and subsidiaries |
1 |
1 |
| Net gain or loss on disposal of PPE/other assets |
0 |
0 |
| Amortization, depreciation and impairments |
(22) |
(63) |
| Other non-cash items |
11 |
24 |
| Other non-recurring items |
(21) |
(14) |
| Share on profit of equity accounted investees/JV adjustments |
4 |
(11) |
| Other effects |
17 |
19 |
| Funds from operations |
208 |
173 |
| Secured consolidated leverage ratio reconciliation (€ million) |
30-Sep-21 |
31-Dec-20 |
| Secured bonds |
0 |
0 |
| Secured financial debts |
1,522 |
1,400 |
| Consolidated adjusted total assets |
13,199 |
11,695 |
| Secured consolidated leverage ratio |
11.5% |
12.0% |
* Includes pro-rata EBITDA/FFO for Q1-Q3 2021 and Q1-Q3 2020 of Equity accounted investees
| Property portfolio reconciliation (€ million) |
30-Sep-21 |
31-Dec-20 |
| Investment property - Office |
5,191 |
4,716 |
| Investment property - Retail |
2,467 |
2,184 |
| Investment property - Land bank |
1,278 |
798 |
| Investment property - Residential |
950 |
855 |
| Investment property - Industry & Logistics |
121 |
117 |
| Investment property - Agriculture |
102 |
99 |
| Investment property - Development |
82 |
13 |
| Investment property - Hospitality |
7 |
6 |
| Investment property - Other |
26 |
4 |
| Property, plant and equipment - Hospitality |
716 |
676 |
| Property, plant and equipment - Mountain resorts |
75 |
67 |
| Property, plant and equipment - Agriculture |
12 |
12 |
| Property, plant and equipment - Office |
12 |
9 |
| Property, plant and equipment - Retail |
8 |
1 |
| Property, plant and equipment - Residential |
6 |
6 |
| Property, plant and equipment - Other |
1 |
0 |
| Equity accounted investees |
663 |
658 |
| Other financial assets |
14 |
26 |
| Inventories - Development |
23 |
31 |
| Assets held for sale |
131 |
38 |
| Total |
11,885 |
10,316 |
For further information please contact:
Investor Relations
David Greenbaum
Chief Financial Officer
d.greenbaum@cpipg.com
Mindee Lee
Senior Manager, Corporate Strategy
m.lee@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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