CPI PROPERTY GROUP publishes half-year financial results for 2023

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 2023

CPI PROPERTY GROUP publishes half-year financial results for 2023

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 2023.

“CPIPG’s rental income continues to rise, even as the Group makes excellent progress on our disposal and deleveraging plans,” said Martin Němeček, CEO. “I have every confidence that the second half of 2023 will show similar trends.”

Highlights for the first half of 2023 include:

• Total assets were €23.1 billion, and EPRA NRV (NAV) grew to €8.1 billion.
• CPIPG’s property portfolio was €20.3 billion (versus €20.9 billion at year-end 2022).
• The Group completed €657 million of disposals during H1 2023. In total, more than €900 million of disposals have been executed since CPIPG’s €2 billion disposal plan was announced in August 2022.
• Contracted gross rent was €907 million.
• Net rental income increased to €399 million and net business income rose to €437 million.
• Hotels reported net income of €29 million, reflecting the recovery of travel across Europe.
• Consolidated adjusted EBITDA was €394 million, while FFO1 was €209 million.
• Rental income grew 8.3% on a like-for-like basis. A high proportion of the Group’s rents are indexed, and CPIPG has faced no difficulty to date passing inflation on to our tenants.
• Net Loan-to-Value (LTV) decreased to 49.9%, down 1 p.p. from year-end 2022. CPIPG remains confident in our target LTV range of 45-49% by year-end 2023.
• Net Debt was reduced by more than €500 million.
• The Group signed multiple secured bank loans and continued to raise senior unsecured debt, contributing to a total of more than €850 million in fresh external financing year to date.
• Total available liquidity was €2 billion as of 30 June.
• In April, the Group repurchased €335 million of bonds due in 2026, 2027, and 2028. CPIPG expects to continue utilising our liquidity resources to repurchase bonds and optimise financing costs over time.
• Unencumbered assets decreased to 51%, reflecting the completion of new secured loans during H1 2023.
• Net ICR was 2.6x, reflecting the relatively higher cost of the Group’s temporary bridge financing arrangements.

Update on Bridge Financing

In connection with the acquisitions of IMMOFINANZ and S IMMO in 2022, CPIPG borrowed €2.7 billion through bridge loans from our relationship banks. As of 31 August 2023, about €1.7 billion of the bridge loans have been repaid through disposals, fresh external financing, and existing liquidity resources, for a current balance of about €1 billion.

CPIPG expects to make additional bridge repayments during September and October, further reducing the balance.

On 30 August 2023, CPIPG signed a new €635 million 3-year bridge loan provided by Santander, Société Générale, Komerční banka, Raiffeisen, SMBC, Barclays, and Erste Bank. The new bridge loan, which includes an accordion feature of up to €1 billion to accommodate potential additional lending interest from our relationship bank group, is expected to be drawn by the end of October and will replace the existing bridge arrangements.

Half-year results webcast

CPIPG will host a webcast in relation to its financial results for the six-month period ended 30 June 2023. The webcast will be held on Thursday, 7 September 2023, at 11:00 am CET / 10:00 am UK.

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

https://edge.media-server.com/mmc/p/wjzps3y3

FINANCIAL HIGHLIGHTS

Performance   H1 2023 H1 2022 Change           Total revenues € million 831 511 62.7% Gross rental income (GRI) € million 457 306 49.7% Net rental income (NRI) € million 399 263 51.4% Net hotel income € million 29 8 289.5% Net business income (NBI) € million 437 276 58.2%           Consolidated adjusted EBITDA € million 394 261 50.8% Funds from operations (FFO) € million 209 171 22.5%           Net profit for the period € million (50) 751 (106.7%)                             Assets   30-Jun-2023 31-Dec-2022 Change           Total assets € million 23,066 23,521 (1.9%) Property portfolio € million 20,256 20,855 (2.9%) Gross leasable area sqm 6,530,000 6,784,000 (3.7%) Share of green certified buildings* % 33.2 32.1 1.1 p.p. Occupancy % 92.3 92.8 (0.5 p.p.) Like-for-like gross rental growth** % 8.3 7.6 0.7 p.p.           Total number of properties*** No. 748 855 (12.5%) Total number of residential units No. 14,101 16,767 (15.9%) Total number of hotel rooms**** No. 8,061 7,810 3.2%           * According to GLA
** Based on gross rent, CPIPG standalone
*** Excluding residential properties in the Czech Republic, Germany and Austria
**** Including hotels operated, but not owned by the Group
                  Financing structure   30-Jun-2023 31-Dec-2022 Change           Total equity € million 9,308 9,263 0.5% EPRA NRV (NAV) € million 8,051 8,005 0.6%           Net debt € million 10,117 10,625 (4.8%) Net Loan-to-value ratio (Net LTV) % 49.9 50.9 (1.0 p.p.) Net debt/EBITDA x 12.9x 17.5x (4.6x) Secured consolidated leverage ratio % 21.2 19.5 1.7 p.p. Secured debt to total debt % 43.0 38.9 4.1 p.p. Unencumbered assets to total assets % 50.9 54.4 (3.5 p.p.) Unencumbered assets to unsecured debt % 183% 179% 4.0 p.p. Net ICR x 2.6× 3.2x (0.6×)                            

 
CONSOLIDATED INCOME STATEMENT

  Six-month period ended (€ million) 30 June 2023 30 June 2022 Gross rental income 457.5 305.7 Service charge and other income 219.0 122.1 Cost of service and other charges (200.2) (107.7) Property operating expenses (77.7) (56.8) Net rental income
  398.6 263.3 Development sales - 0.4 Development operating expenses - (0.4) Net development income - - Hotel revenue 103.5 49.0 Hotel operating expenses (74.0) (41.4) Net hotel income
Revenues from other business operations 29.5 7.6 Other business revenue 50.7 33.4 Other business operating expenses (42.0) (28.2) Net other business income 8.7 5.2 Total revenues 830.7 510.6 Total direct business operating expenses (393.9) (234.5) Net business income 436.8 276.1 Net valuation gain/ (loss) (217.2) 287.2 Net gain on disposal of investment property and subsidiaries (1.2) 32.3 Amortization, depreciation and impairment (34.9) (45.5) Administrative expenses (64.5) (55.1) Other operating income 7.9 290.9 Other operating expenses (15.2) (5.5) Operating result 111.7 780.4 Interest income 15.4 6.6 Interest expense (165.5) (81.3) Other net financial result 28.3 76.1 Net finance costs (121.8) 1.4 Share of gain of equity-accounted investees (net of tax) (5.4) 33.7 Profit before income tax (15.5) 815.5 Income tax expense (34.6) (64.7) Net profit from continuing operations (50.1) 750.8

 
Net rental income

Net rental income increased by €135.3 million (51%) to €398.6 million in H1 2023 primarily due to the acquisitions of IMMOFINANZ and S IMMO and strong like-for-like rental growth.

Net hotel income

Net hotel income increased from €7.6 million in H1 2022 to €29.5 million in H1 2023 as travel demand improved significantly across Europe and due to the acquisition of S IMMO.

Net valuation loss

Net valuation loss of €217.2 million in H1 2023 primarily relates to IMMOFINANZ (€119 million) and S IMMO (€80 million), mainly lower-yielding office and residential portfolios in Germany and offices in Austria.

Other operating income

Other operating income decreased in H1 2023 as there was a one-off bargain purchase from the acquisition of IMMOFINANZ and S IMMO of €285.9 million recognised in H1 2022. 

Interest expense

Interest expense increased by €84.2 million in H1 2023 compared to H1 2022 primarily due to the acquisition of IMMOFINANZ (€9.2 million) and S IMMO (€18.2 million), the overall increase of cost of new financing and the relatively higher cost of the Group’s temporary bridge financing.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(€ million) 30 June 2023 31 December 2022 NON-CURRENT ASSETS     Intangible assets and goodwill 129.1 126.7 Investment property 18,201.0 18,486.2 Property, plant and equipment 1,105.4 1,100.0 Deferred tax assets 160.4 176.8 Equity accounted investees 729.5 732.3 Other non-current assets 714.2 668.5 Total non-current assets 21,039.6 21,290.5 CURRENT ASSETS     Inventories 40.5 23.5 Trade receivables 197.1 197.8 Cash and cash equivalents 1,167.4 1,033.2 Assets linked to assets held for sale 192.7 596.5 Other current assets 429,1 379.7 Total current assets 2,026.8 2,230.7 TOTAL ASSETS 23,066.4 23,521.2 EQUITY     Equity attributable to owners of the Company 6,611.2 6,579.8 Perpetual notes 1,619.2 1,584.4 Non-controlling interests 1,077.1 1,098.8 Total equity 9,307.5 9,263.0 NON-CURRENT LIABILITIES     Bonds issued 4,262.4 4,680.4 Financial debts 6,573.5 6,165.6 Deferred tax liabilities 1,700.0 1,727.9 Other non-current liabilities 222.6 208.2 Total non-current liabilities 12,758.5 12,782.1 CURRENT LIABILITIES     Bonds issued 277.9 405.8 Financial debts 170.6 360.4 Trade payables 167.5 232.2 Other current liabilities 384.4 477.7 Total current liabilities 1,000.4 1,476.1 TOTAL EQUITY AND LIABILITIES 23,066.4 23,521.2

Total assets

Total assets decreased by €454.8 million (1.9%) to €23,066.4 million as of 30 June. The decrease was driven primarily by revaluation of investment property of negative €217.2 million and property disposals of €657 million, offset by value-enhancing CapEx investments of €155 million.

Total liabilities

Total liabilities decreased by €548.3 million (3.8%) to €13,709.9 million as at 30 June 2023 compared to
31 December 2022, largely due to the repurchase of bonds issued by CPIPG of €345.2 million and the repayment of IMMOFINANZ bonds of €197.5 million. Further, there was a decrease of liabilities due to disposals of €121.4 million. On the other hand, financial debts increased by €218.1 million due to new loans.

EQUITY AND EPRA NRV

Total equity increased by €44.6 million to €9,307.5 million as at 30 June 2023. The movements of equity components were primarily as follows:                  

• Decrease due to the loss for the period of €50.1 million (loss to the owners of €69.2 million);
• Decrease in revaluation and hedging reserve in total of €8.5 million;
• Increase in translation reserve of €109.2 million;

EPRA NRV was €8,051 million as at 30 June 2023, representing increase of 0.6% 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 (translation reserve).

	30 June 2023	31 December 2022
Equity attributable to the owners (NAV)	6,611	6,580
Effect of exercise of options, convertibles and other equity interests	-	-
Diluted NAV	6,611	6,580
Fair value of financial instruments	(211)	(243)
Deferred tax on revaluations	1,694	1,711
Goodwill as a result of deferred tax	(43)	(43)
EPRA NRV (€ million)	8,051	8,005

For disclosures regarding Alternative Performance Measures used in this press release please refer to our Half-year Management Report 2023, chapters Glossary of terms, Key ratio reconciliations and EPRA performance; accessible at http://cpipg.com/reports-presentations-en.

Unaudited documents will be available tonight at the following link:
http://www.cpipg.com/reports-presentations-en

Half-year 2023 unaudited financial statements
Half-year 2023 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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