| DGAP-News: CPI PROPERTY GROUP / Key word(s): Interim Report CPI PROPERTY GROUP - Financial results for the first quarter of 2020 29.05.2020 / 18:11 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 Luxembourg, 29 May 2020 CPI PROPERTY GROUP - Financial results for the first quarter of 2020 CPI PROPERTY GROUP (hereinafter "CPIPG" the "Company" or together with its subsidiaries the "Group"), hereby publishes unaudited financial results for the first quarter of 2020. "CPIPG's diversified, high-quality property portfolio and active local asset management were a winning formula during the first quarter of 2020," said Martin Němeček, CEO of CPIPG. "We expanded our role as the leading owner of offices in Central and Eastern Europe and reached new levels of rental income and profitability." Key highlights for the first quarter of 2020 include: - Total assets increased to €11.1 billion (up 4% fromyear-end 2019), driven by the acquisitions of four office properties in Warsaw and a 29.4% stake inGlobalworth Real Estate Investments Limited ("Globalworth"). The total property portfolio stood at €9.8 billion;
- Net rental income of €84 million (up 14% versus Q1 2019), reflecting the positive impact of 3.1% like-for-like growth in gross rental income, aslight improvement in occupancy to 94.4% and the income from recent office acquisitions;
- Total revenues of €164 million (up 0.4% versus Q1 2019);
- Net business income was €91 million (up 9%versus Q1 2019) and consolidated adjusted EBITDA was €85 million (up 18%versus Q1 2019);
- Funds from operations (FFO) was €59 million (up 17% versus Q1 2019);
- More than 98% of Q1 rent was collected by the Group, despite the impact of COVID-19 lockdowns beginning in early March;
- Net Interest Coverage Ratio (Net ICR) was 6.3x and the Net Loan to Value (Net LTV) was 42%. The Group is fully committed to our long-term financial policy of a Net ICR above 4x and a Net LTV below 40%;
- CPIPG continued accessing multiple financing channels, issuing GBP 350 million (€411 million equivalent) of 8-year green bonds, SGD 150 million (€99 million) of perpetual hybrid bonds, and HKD 250 million (€29 million) of 10-year bonds during Q1. CPIPG also drew €116 million of secured bank loans and repaid €49 million of Schuldschein loans maturing in 2025;
- Total available liquidity (including cash and undrawn revolving credit facilities) at the end of the first quarter was above €1 billion.
Updates on the Impact of COVID-19 "The outbreak of COVID-19 was an unexpected challenge for our asset management teams," said Tomáš Salajka, Director of Acquisitions, Asset Management & Sales for CPIPG. "Once again, CPIPG's local expertise and close collaboration with tenants led to excellent results." Governments across CPIPG's region have successfully eased lockdown restrictions in recent weeks. More than 95% of the Group's property portfolio is now open, excluding hotels. In the Czech Republic, hotels were permitted to open on 25 May. The Group will gradually increase hotel capacity based on demand, with a continued focus on costs. During the closed period, the Group reduced hotel operating costs by about 70%. Footfall and turnover in CPIPG's regional shopping centres in the Czech Republic have improved every week since full reopening on 11 May, with some centres now reporting volume near 2019 levels. Tenants and shoppers are adjusting to new hygiene rules and demand for certain non-essential categories (such as services, sports equipment and shoes) has been strong. Restaurants and food courts also opened on 25May to enthusiastic demand. The quality of CPIPG's properties and tenant base is reflected in the Group's rent collections. The Group has not granted discounts or made meaningful use of rental deposits or bank guarantees. The table below reflects CPIPG's approximate collections for Q1, March and April. | | % of portfolio value (FY 2019) | % rent collected, Q1 2020 | % rent collected, March 2020 | % rent collected, April 2020 | | Total CPIPG | -- | 98% | 95% | 76% | | Office | 46% | 100% | 98% | 91% | | Retail | 24% | 96% | 90% | 48% | | Residential | 8% | 98% | 98% | 96% | Rents are invoiced and collected on varying timetables across CPIPG's portfolio. Following the outbreak of COVID-19, some tenants are paying later than usual, creating a lag in collections. For example, total March collections were reported at 84% on 23 April, versus 95% today. Similarly, the Group expects April collection rates to continue rising. In partnership with our retail tenants in the Czech Republic whose units were closed, and in anticipation of Czech government aid to tenants, CPIPG agreed to delay some rental payments until shops were permitted to reopen. On 18 May, the Czech government approved a programme to pay 50% of the rent for tenants whose premises were subject to mandatory closure between 13 March and 30 June. Details around implementation, including the amount and nature of any discounts provided by landlords (expected to be about 30%), are forthcoming. Key Events Occurring after the end of Q1 2020 - On 24 April 2020, the Group acquired a 50.3% stake in Chalubinskiego 8 office building in Warsaw and increased CPIPG's EMTN programme to €8 billion;
- On 12 May 2020, CPIPG issued €750 million of senior unsecured 6-year green bonds at a rate of 2.75%. Proceeds were used to repurchase about €800 million of bonds maturing in 2022, 2023, and 2024 through a tender offer and open market repurchases;
- On 28 May 2020, the annual general meeting of the shareholders of the Company was held in Luxembourg (the "AGM"). The AGM approved the statutory and consolidated annual accounts, as well as the allocation of financial results for the financial year ending 31 December 2019. The AGM re-appointed the board of directors and auditors for another year. Similar to previous years, the AGM also renewed a buy-back programme enabling CPIPG to repurchase its own shares. Share repurchases continue to be governed by regulatory requirements and the Group's financial policy.
"The success of CPIPG's latest green bond offering demonstrates that investors appreciate the resilience of the Group's business and our commitment to financial policy," said David Greenbaum, CFO of CPIPG. "Our tenants are getting back to business, our properties are open, and CPIPG is well-prepared for any challenges ahead." FINANCIAL HIGHLIGHTS | Performance | | Q1-2020 | Q1-2019 | Change | | | | | | | | Gross rental income | € million | 90 | 77 | 16% | | Total revenues | € million | 164 | 163 | 0% | | Net business income | € million | 91 | 84 | 9% | | | | | | | | Consolidated adjusted EBITDA | € million | 85 | 72 | 18% | | Funds from operations (FFO) | € million | 59 | 50 | 17% | | | | | | | | Profit before tax | € million | 70 | 33 | 112% | | Interest expense | € million | (18) | (12) | 47% | | Net profit for the period | € million | 62 | 29 | 118% | | | | | | | | | | | Assets | | 31-Mar-20 | 31-Dec-19 | Change | | | | | | | | Total assets | € million | 11,127 | 10,673 | 4% | | Property portfolio | € million | 9,795 | 9,111 | 7% | | Gross leasable area | sqm | 3,530,000 | 3,465,000 | 2% | | Occupancy | % | 94.4 | 94.3 | 0.1 p.p. | | Like-for-like gross rental growth | % | 3.1 | 4.4 | (1.3 p.p.) | | | | | | | | Total number of properties* | No. | 334 | 332 | 1% | | Total number of residential units | No. | 11,911 | 11,919 | 0% | | Total number of hotel beds** | No. | 12,416 | 12,416 | 0% | | | | | | | | * Excluding residential properties in the Czech Republic ** Including hotels operated, but not owned by the Group | | | | | | | | Financing structure | | 31-Mar-20 | 31-Dec-19 | Change | | | | | | | | Total equity | € million | 5,459 | 5,469 | 0% | | EPRA NAV | € million | 4,985 | 5,100 | (2%) | | | | | | | | Net debt | € million | 4,111 | 3,300 | 25% | | Net loan to value ratio (Net LTV) | % | 42.0 | 36.2 | 5.8 p.p. | | Secured consolidated leverage ratio | % | 10.2 | 9.6 | 0.6 p.p. | | Secured debt to total debt | % | 24.4 | 24.8 | (0.4 p.p.) | | Unencumbered assets to total assets | % | 70.0 | 69.7 | 0.3 p.p. | | Net ICR | | 6.3x | 7.2x | (0.9x) | STATEMENT OF COMPREHENSIVE INCOME* The income statement for the three-month period ended 31 March 2020 and 2019 was as follows: | | INCOME STATEMENT (€ million) | 31-Mar-20 | 31-Mar-19 | | | | | | Gross rental income | 90 | 77 | | | Service charge and other income | 32 | 31 | | | Cost of service and other charges | (24) | (23) | | | Property operating expenses | (15) | (12) | | | Net rental income | 83 | 73 | | | Development sales | 3 | 15 | | | Development operating expenses | (2) | (15) | | | | Net development income | 1 | - | | | Hotel revenue | 17 | 19 | | | Hotel operating expenses | (18) | (17) | | | Net hotel income Revenues from other business operations | (1) | 2 | | | Other business revenue | 22 | 21 | | | Other business operating expenses | (14) | (12) | | | | Net other business income | 8 | 9 | | | | Total revenues | 164 | 163 | | | | Total direct business operating expenses | (73) | (79) | | | | Net business income | 91 | 84 | | | Net valuation gain (net of foreign exchange gain) | - | - | | | Amortization, depreciation and impairment | (5) | (14) | | | Administrative expenses | (13) | (12) | | | Other operating income | 1 | 1 | | | Other operating expenses | (1) | (2) | | | | Operating result | 73 | 57 | | | Interest income | 5 | 3 | | | Interest expense | (18) | (12) | | | Other net financial result** | 10 | (15) | | | | Net finance costs | (3) | (24) | | | | Profit before income tax | 70 | 33 | | | Income tax expense | (8) | (4) | | | | Net profit from continuing operations | 62 | 29 | | * The presented financial statements do not represent a full set of interim financial statements as if prepared in accordance with IAS 34. ** Including net foreign exchange gains and losses (including valuation gains classified within valuation gain under IFRS), share of profit of equity accounted investees and other financial gains and losses. Net rental income Net rental income increased by 14% to €84 million in the three-month period ended 31 March 2020 primarily due to the acquisition of offices in Warsaw (increase of gross rental income by €10 million) and continuing rental income growth in Berlin. Amortization, depreciation and impairments In the three-month period ended 31 March 2020, the decrease in amortization, depreciation and impairments was caused by a goodwill write-off (€7 million) relating to the Group's agriculture business. Interest expense The increase of the interest expense from €12 million in the three-month period ended 31 March 2019 to €18 million in the three-month period ended 31 March 2020 related to newly issued bonds in 2019 and 2020. BALANCE SHEET* | | BALANCE SHEET (€ million) | 31-Mar-20 | 31-Dec-19 | | | | | | NON-CURRENT ASSETS | | | | | | Intangible assets and goodwill | 102 | 107 | | | | Investment property | 8,194 | 8,157 | | | | Property, plant and equipment | 866 | 886 | | | | Deferred tax assets | 170 | 168 | | | | Other non-current assets | 974 | 246 | | | | Total non-current assets | 10,306 | 9,564 | | | | CURRENT ASSETS | | | | | | Inventories | 50 | 51 | | | | Trade receivables | 81 | 81 | | | | Cash and cash equivalents | 497 | 805 | | | | Assets linked to assets held for sale | 17 | 22 | | | | Other current assets | 176 | 150 | | | | Total current assets | 821 | 1,109 | | | | TOTAL ASSETS | 11,127 | 10,673 | | | | EQUITY | | | | | | Equity attributable to owners of the Company | 4,220 | 4,334 | | | | Perpetual notes | 1,194 | 1,086 | | | | Non-controlling interests | 45 | 50 | | | | Total equity | 5,459 | 5,470 | | | | NON-CURRENT LIABILITIES | | | | | | Bonds issued | 3,309 | 2,871 | | | | Financial debts | 1,206 | 1,165 | | | | Deferred tax liabilities | 799 | 806 | | | | Other non-current liabilities | 68 | 74 | | | | Total non-current liabilities | 5,382 | 4,916 | | | | CURRENT LIABILITIES | | | | | | Bonds issued | 27 | 21 | | | | Financial debts | 65 | 48 | | | | Trade payables | 73 | 86 | | | | Other current liabilities | 121 | 132 | | | | Total current liabilities | 286 | 287 | | | | TOTAL EQUITY AND LIABILITIES | 11,127 | 10,673 | | * 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 €454 million to €11,127 million (increase by 4%) as at 31 March 2020 compared to 31 December 2019. The increase in total assets primarily reflects our acquisitions of a 29.4% stake in Globalworth and investment properties in Warsaw. Growth in total assets was partly offset by cash utilized to fund these acquisitions, together with new issuance. In addition, there was a moderate impact from the valuation of certain properties valued in local currencies (primarily CZK) given the performance relative to the Euro in the quarter. Total liabilities Total liabilities increased by €465 million to €5,668 million (increase by 9%) as at 31 March 2020 compared to 31 December 2019. The increase is primarily attributable to issuance of green GBP and HKD bonds of €390 million and €29 million, respectively. The Group also drew new bank loans of €116 million. On the other hand, the Group repaid a Schuldschein loan of €49 million. EQUITY AND EPRA NAV Total equity decreased from €5,470 million as at 31 December 2019 by €11 million to €5,459 million as at 31 March 2020. The key changes in equity in the three months period ended 31 March 2020 were as follows: - A decrease of translation reserve by €216 million (due to depreciation of CZK, HUF and PLN) against EUR in the three months period ended 31 March 2020);
- An increase of perpetual notes due to issuance of new hybrids of €95 million and the interest of €13.5 million.
- An increase of retained earnings by the profit for the period of €50 million;
- An increase of revaluation and hedging reserve of €52 million.
EPRA NAV was €4,985 million as at 31 March 2020 which represents a decrease by 2% compared to 31 December 2019. The main drivers of the decrease were described above. | EPRA NAV (€ million) | 31-Mar-20 | 31-Dec-19 | | | | | | Equity attributable to owners of the company | 4,220 | 4,335 | | Effect of exercise of options, convertibles and other equity interests | - | - | | Diluted NAV, after the exercise of options, convertibles and other equity interests | 4,220 | 4,335 | | Revaluation of trading property and property, plant and equipment | 1 | 1 | | Deferred tax on revaluations | 807 | 807 | | Goodwill as a result of deferred tax | (43) | (43) | | Total | 4,985 | 5,100 | 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 NAV | Net Asset Value adjusted to include properties and other investment interests at fair value and to exclude certain items not expected to crystallise in a long-term investment property business model. | Makes adjustments to IFRS NAV to provide stakeholders with 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 (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 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. | | 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. | | 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 NAV reconciliation (€ million) | 31-Mar-20 | 31-Dec-19 | | Equity attributable to owners of the company | 4,220 | 4,334 | | Effect of exercise of options, convertibles and other equity interests | 0 | 0 | | Diluted NAV, after the exercise of options, convertibles and other equity interests | 4,220 | 4,334 | | Revaluation of trading property and property, plant and equipment | 1 | 2 | | Fair value of financial instruments | 0 | 0 | | Deferred tax on revaluation | 807 | 807 | | Goodwill as a result of deferred tax | (43) | (43) | | EPRA NAV | 4,985 | 5,100 | | Net LTV reconciliation (€ million) | 31-Mar-20 | 31-Dec-19 | | Financial debts | 1,271 | 1,213 | | Bonds issued | 3,336 | 2,892 | | Net debt linked to assets held for sale | 0 | 0 | | Cash and cash equivalents | (497) | (805) | | Net debt | 4,111 | 3,300 | | Total property portfolio | 9,795 | 9,111 | | Net LTV | 42.0% | 36.2% | | Net Interest coverage ratio reconciliation (€ million) | 31-Mar-20 | 31-Dec-19 | | Interest income | 5 | 14 | | Interest expense | (18) | (54) | | Consolidated adjusted EBITDA | 85 | 292 | | Net Interest coverage ratio | 6.3x | 7.2x | | Secured debt to total debt reconciliation (€ million) | 31-Mar-20 | 31-Dec-19 | | Secured bonds | 0 | 0 | | Secured financial debts | 1,124 | 1,017 | | Total debts | 4,608 | 4,105 | | Secured debt to total debt | 24.4% | 24.8% | | Unencumbered assets to total assets reconciliation (€ million) | 31-Mar-20 | 31-Dec-19 | | Bonds collateral | 0 | 0 | | Bank loans collateral | 3,339 | 3,236 | | Total assets | 11,127 | 10,673 | | Unencumbered assets ratio | 70.0% | 69,7% | | Consolidated adjusted EBITDA reconciliation (€ million)* | 31-Mar-20 | 31-Mar-19 | | Net business income | 91 | 84 | | Administrative expenses | (14) | (12) | | Other effects | 7 | - | | Consolidated adjusted EBITDA | 85 | 72 | | Funds from operations (FFO) reconciliation (€ million)* | 31-Mar-20 | 31-Mar-19 | | Net profit/(loss) for the period | 62 | 29 | | Deferred income tax | 6 | 1 | | Net valuation gain or loss on investment property | 0 | 0 | | Net valuation gain or loss on revaluation of derivatives | 0 | (4) | | Net gain or loss on disposal of investment property and subsidiaries | 0 | 0 | | Net gain or loss on disposal of inventory | (1) | 0 | | Net gain or loss on disposal of PPE/other assets | 0 | (1) | | Amortization, depreciation and impairments | 5 | 14 | | Other non-recurring/non-cash items | (17) | 12 | | Other effects | 3 | 0 | | Funds from operations | 59 | 50 | | Secured consolidated leverage ratio reconciliation (€ million) | 31-Mar-20 | 31-Dec-19 | | Secured bonds | 0 | 0 | | Secured financial debts | 1,124 | 1,017 | | Consolidated adjusted total assets | 11,025 | 10,566 | | Secured consolidated leverage ratio | 10.2% | 9.6% | * Includes pro-rata EBITDA/FFO for Q1 2020 of Equity accounted investees | Property portfolio reconciliation (€ million) | 31-Mar-20 | 31-Dec-19 | | Investment property - Office | 4,353 | 4,186 | | Investment property - Retail | 2,129 | 2,173 | | Investment property - Residential | 700 | 756 | | Investment property - Land bank | 675 | 697 | | Investment property - Development | 139 | 142 | | Investment property - Industry & Logistics | 101 | 99 | | Investment property - Agriculture | 94 | 101 | | Investment property - Other | 3 | 3 | | Property, plant and equipment - Hospitality | 755 | 775 | | Property, plant and equipment - Mountain resorts | 77 | 76 | | Property, plant and equipment - Agriculture | 12 | 13 | | Property, plant and equipment - Office | 6 | 7 | | Property, plant and equipment - Residential | 5 | 6 | | Property, plant and equipment - Retail | 1 | 1 | | Equity accounted investees/Other financial assets | 683 | 12 | | Inventories - Development | 45 | 45 | | Assets held for sale | 17 | 19 | | Total | 9,795 | 9,111 | For further information please contact: INVESTORS CPI PROPERTY GROUP David Greenbaum Chief Financial Officer d.greenbaum@cpipg.com CPI PROPERTY GROUP Joe Weaver Director of Capital Markets j.weaver@cpipg.com MEDIA/PR Kirchhoff Consult AG Andreas Friedemann T +49 40 60 91 86 50 F +49 40 60 91 86 60 E andreas.friedemann@kirchhoff.de
29.05.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de
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