DGAP-News: CPI PROPERTY GROUP publishes half-year financial results for 2022

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 August 2022

CPI PROPERTY GROUP publishes half-year financial results for 2022

CPI PROPERTY GROUP (hereinafter CPIPG, the Company or together with its subsidiaries the Group), a leading European landlord, hereby publishes unaudited financial results for the six-month period ended 30 June 2022.

CPIPG has been positively transformed through the acquisitions of IMMOFINANZ and S IMMO, said Martin Nmeek, CEO of CPIPG. The Group is now one of Europes largest landlords and owns the best real estate platforms in Central and Eastern Europe.

Highlights for the first half of 2022 include:

• CPIPGs property portfolio increased to 20.9 billion (versus 13.1 billion at year-end 2021) as the Group consolidated the property portfolios of IMMOFINANZ (5.4 billion) and S IMMO (3.1 billion). Total assets reached 23.7 billion. EPRA NRV (NAV) grew by 21% to 8.5 billion.
• Net rental income increased to 263 million (versus 175 million for H1 2021) and net business income rose to 276 million because of acquisitions, CPIPGs 7.7% like-for-like growth in gross rental income and steady occupancy at 93.4%.
• Hotels reported net income of 8 million (versus a loss of 4 million in H1 2021) reflecting the gradual post-COVID travel recovery and CPIPGs effective cost management as an owner-operator.
• Consolidated adjusted EBITDA was 261 million (+52% from H1 2021), while FFO was 171 million (+32% from H1 2021).
• Due to the timing of CPIPGs acquisitions, Net Loan-to-Value (LTV) increased to 44.8%, at the upper end of the Groups financial policy target range. LTV is expected to peak temporarily in Q3, followed by a sharp reduction in coming quarters as the Group executes our 2 billion+ disposal pipeline.
• Total liquidity was 2.5 billion, including 915 million of undrawn revolving credit facilities, the majority of which mature in early 2026.
• Unencumbered assets decreased to 55% (vs. 70% at the end of 2021) reflecting the high proportion of secured debt at IMMOFINANZ and S IMMO. CPIPG will continue to closely monitor the level of unencumbered assets and expects to repay secured debt when unsecured pricing becomes attractive.
• Net ICR stood at 3.5x. The Group has a low-cost, long-dated debt maturity profile and a high degree of indexation in our rental contracts (90%+) which should support ICR going forward, particularly as deleveraging targets are achieved.

CPIPGs commitment to our capital structure and credit ratings is unchanged, said David Greenbaum, CFO. Deleveraging will take slightly longer than initially expected, but we are fully confident to deliver.

Notable Events Occurring after 30 June

Mandatory takeover offer for S IMMO

On 15 July 2022, CPIPG published a mandatory offer for S IMMO. Upon the conclusion of the initial acceptance period on 12 August 2022, CPIPG purchased an additional 36.66% stake, bringing the total shareholding stake to 79.20% (direct and indirectly through IMMOFINANZ). The additional acceptance period will close on 18 November 2022. The offer price represents a discount of 19% to book value.

Financing and Bridge Extension

In 2021 and 2022, CPIPG signed 3.75 billion of 2-year bridge loans for the acquisitions of IMMOFINANZ and S IMMO. In total, 3.4 billion has been spent on the acquisitions, funded by equity, cash and 2.5 billion of bridge drawings. About 900 million of the bridge loans have already been repaid, with 1.6 billion currently outstanding.  On 31 August 2022, the Group signed a facility which extended the maturity of all bridge loans until H1 2025.

Also in August 2022, S IMMO repaid 104 million of senior unsecured bonds maturing in 2027 and 2028 due to the embedded change of control provision. The repayment was funded from S IMMOs ample cash balances.

In July 2022, CPIPG repaid a secured bank loan of 123 million maturing in December 2022 and raised a new 7-year secured bank loan of 275 million. The underlying assets were located in the Czech Republic and pricing was highly attractive.

Expansion of CPIPGs Disposal Pipeline

In June 2022, CPIPG completed (on time) a disposal program initiated in August 2021, with gross proceeds of 1 billion. Disposals were executed across the Groups portfolio, targeting non-core or highly mature assets.

Currently, CPIPG has a disposal pipeline exceeding 2 billion. The pipeline includes about 30 assets/transactions across offices, retail, hotels, residential and landbank in multiple geographies. Disposal plans were also confirmed by IMMOFINANZ (1 billion) and S IMMO (200 million). Overall, the consolidated Group is wellpositioned to dispose of substantially more than 2 billion of assets over the next 12 to 24 months.

A high degree of diversification, along with significant granularity (pipeline disposals range in size from 10 million to 200 million+) is a significant advantage for the Group. CPIPG does not depend on any asset, market, sector, investor, or trend in order to achieve our disposals. As a result, our execution confidence is high.

Half-year results webcast

CPIPG will host a webcast in relation to its financial results for the six-month period ended 30 June 2022. The webcast will be held on Wednesday 7 September 2022 at 10:00am CET / 9:00am UK.

Please register for the webcast in advance via the link below:

https://stream.brrmedia.co.uk/broadcast/6304b269da906b287e99c5f6

FINANCIAL HIGHLIGHTS

CONSOLIDATED INCOME STATEMENT

*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 117.6 million (62.5%) to 305.7 million in H1 2022 primarily due to income generated by IMMOFINANZ, contributions from other acquisitions and CPIPGs 7.7% like-for-like growth.

Net hotel income

In H1 2022, net hotel income turned positive to 7.6 million, an increase from negative 3.9 million as both leisure and business travel recovered from the COVID-19 pandemic.

Net valuation gain

In H1 2022, the net valuation gain of 287.2 million reflected primarily revaluations of the Czech portfolio (168.3 million) and IMMOFINANZs portfolio (71.3 million).

Amortization, depreciation and impairment

Amortization, depreciation and impairment increased by 34.9 million to 45.5 million in H1 2022 primarily due to impairment of receivables of 18.4 million and impairment of property, plant and equipment (6.7 million) which was negative in H1 2021 (release of impairment of 8.5 million).

Administrative expenses

Administrative expenses increased by 30.6 million to 55.1 million in H1 2022 primarily due to the acquisition of IMMOFINANZ (24.3 million).

Other operating income

In H1 2022, other operating income represented primarily bargain purchase resulting from the acquisition of IMMOFINANZ and S IMMO in total of 285.9 million.

Interest expense

Interest expense increased by 34.0 million to 81.3 million in H1 2022 due to higher levels of debt and the consolidation of IMMOFINANZ.

Other net financial result

The other net financial result reflects primarily change in the fair value of financial derivatives (gain of 63.7 million).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

*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 9.3 billion (65%) to 23.7 billion at 30 June 2022 compared to 31 December 2021. The increase was driven primarily by the acquisition of IMMOFINANZ and S IMMO (investment property increased by 8.3 billion and cash / cash equivalents by 962 million), partly offset by a decrease in assets held for sale due to disposals in the period.

Total liabilities

Total liabilities increased by 6.7 billion to 13.3 billion at 30 June 2022 compared to 31 December 2021, largely due to the acquisition of IMMOFINANZ and S IMMO. The Group issued new bonds and Schuldschein of 1.2 billion and repaid 1.2 billion of bonds. During H1 2022, the Group drew new bridge facility with 1.2 billion outstanding at 30 June 2022.

Deferred tax liability increased by 674 million to 1.8 billion at 30 June 2022 compared to 31 December 2021, primarily due to the acquisition of IMMOFINANZ and S IMMO.

EQUITY AND EPRA NRV

Total equity increased from 7.7 billion at 31 December 2021 to 10.4 billion at 30 June 2022 (increase of 2.7 billion). The movements of equity components were as follows:                   

• Increase due to the profit for the period of 750.8 million (profit to the owners of 682.8 million);
• Increase in translation, revaluation and hedging reserve in total of 49.1 million;
• Increase of non-controlling interests (NCI) by 1.8 billion through the acquisition of IMMOFINANZ and S IMMO;
• Increase of retained earnings by 75.3 million due to acquisition of additional NCI;

EPRA NRV was 8.5 billion at 30 June 2022, representing an increase of 20.7% compared to 31 December 2021. The increase of EPRA NRV was driven by changes in the Groups equity attributable to the owners (increase of retained earnings and other reserves) and changes in deferred tax in revaluations (primarily due to the acquisition of IMMOFINANZ and S IMMO and H1 2022 revaluations).

For disclosures regarding Alternative Performance Measures used in this press release please refer to our Half-year Management Report 2022, chapters Glossary, Key Ratio Reconciliations and EPRA Performance; accessible at https://cpipg.com/reports-presentations-en.

Unaudited documents will be available tonight at the following link:

https://www.cpipg.com/reports-presentations-en

Half-year 2022 unaudited financial report

Half-year 2022 unaudited management report

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

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