DJ EQS-News: CPI PROPERTY GROUP publishes financial results for the first quarter of 2024
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EQS-News: CPI PROPERTY GROUP / Key word(s): Quarter Results/Real Estate
CPI PROPERTY GROUP publishes financial results for the first quarter of 2024
2024-05-31 / 23:40 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 2024
CPI PROPERTY GROUP publishes financial results for the first quarter of 2024
CPI PROPERTY GROUP ("CPIPG" or the "Group"), a leading European landlord, hereby publishes unaudited financial results
for the three-month period ending 31 March 2024.
"CPIPG's like-for-like rents continued to grow at healthy rates through a combination of positive rent reversion and
indexation," said David Greenbaum, CEO. "Leverage, both value and earnings-based, declined during the first quarter and
is on track to decline further as we progress on disposals."
Highlights for the first quarter of 2024 include:
. Total assets were EUR21.5 billion, and EPRA NRV (NAV) was EUR7.0 billion.
. CPIPG's property portfolio was EUR19.2 billion (versus EUR19.5 billion at year-end 2023), reflecting
completed disposals and negative FX and valuation movements, partially offset by CapEx investments.
. The Group has closed more than EUR600 million of disposals year-to-date (EUR340 million in Q1 2024). In
addition, more than EUR600 million of signed disposals are expected to close in the coming months.
. Despite disposals, net rental income increased by almost 6% to EUR208 million, supported by a strong rental
income growth of 5.5% on a like-for-like basis. Net business income rose to EUR221 million.
. Hotels had an excellent start to the new year with a net income of EUR5 million, an increase of 12%
compared to Q1 2023.
. Consolidated adjusted EBITDA was EUR199 million; FFO1 increased to EUR111 million.
. Occupancy remained solid at 91.4% with a stable WAULT of 3.5 years.
. Net Loan-to-Value (LTV) decreased to 51.9%, down 0.4 p.p. from year-end 2023. Net LTV is 49.7% pro forma
only for disposals closed post-reporting date or to be closed in the coming months.
. Net debt was reduced by more than EUR250 million versus year-end.
. Net debt/EBITDA declined by 0.6x to 12.5x on an annualised basis.
. Total available liquidity was EUR1.3 billion at the end of Q1 2024. Net proceeds from disposals signed
post-Q1 plus disposals signed and due to close soon will contribute EUR600 million to the Group's liquidity,
complemented by new financings and possible minority equity transactions.
. The average weighted debt maturity (4.6 years) and average cost of debt (3.12%) were unchanged from
year-end.
. Unencumbered assets stood at 47%, and Net ICR was 2.5x.
Hot Topics for Our Investors
While CPIPG understands the keen investor interest in some of the topics below, we look forward to refocusing the
discussion onto our diversified, well-positioned, well-managed property portfolio as soon as possible.
Credit Ratings and Capital Structure
Today, S&P Global Ratings unexpectedly downgraded CPIPG from BBB- to BB+ with a negative outlook (please see our press
release published earlier today, "Comments on Recent Events").
Based on our business plan, the Group expects to remain within S&P's rating thresholds for both a BBB- and BB+ rating
with S&P adjusted debt to debt plus equity below 60%, an EBITDA interest coverage of above 1.8x, and a debt to
annualised EBITDA below 14x-15x in 2024 and 13x-14x in 2025. Hence, the Group will target stabilising our outlook and
eventually regaining our investment grade rating with S&P.
The additional five years of equity credit assigned by S&P to our perpetual notes as part of the rating change is a
development CPIPG did not anticipate, as the Group always believed CPIPG could remain investment grade. Prior to the
downgrade, CPIPG had been vocal about the fact that we value our hybrid bondholders, that we know many of our hybrid
bondholders also own our senior unsecured bonds, and that we place a high value on market access and our reputation.
The Group will reevaluate our liability management options in the coming weeks and months and looks forward to
deploying our liquidity to optimise our maturity profile and interest expense.
Liquidity and disposals
CPIPG has EUR184 million of debt maturities for the remainder of 2024, and EUR401 million in 2025. Nearly all the debt
relates to secured bank loans. Because of the quality of CPIPG's assets, the Group is confident that secured lenders in
our local markets will continue to be interested both in rolling over and new financing.
CPIPG has a EUR700 million revolving credit facility (RCF) with a large syndicate of banks maturing in January 2026. As
the Group has prioritised repaying our bridge financing (now fully extinguished), and because of delayed regulatory
approvals for certain disposals, the RCF was drawn. The current RCF balance is EUR460 million. CPIPG intends to repay and
/or refinance the RCF before the end of 2024.
Since the end of Q1, the Group received about EUR150 million in net cash proceeds from disposals. EUR449 million in
additional net proceeds are expected in Q2 / Q3 from disposals signed but not yet closed. The Group's disposal pipeline
under discussion still exceeds EUR2 billion.
In total, the Group is currently in discussions with secured lenders for EUR267 million of fresh financing. While CPIPG
prefers senior unsecured financing, for the moment secured financing has a lesser impact on our ICR. CPIPG sees ample
opportunity to increase the scope of the Group's secured borrowing, if necessary, but also prefers to minimise
structural subordination for our bondholders wherever possible.
As announced or commented previously, CPIPG is currently engaged in discussions with several highly respected
international investors for up to EUR800 million of minority equity investments in Poland, Germany, and Italy. CPIPG sees
benefits in the liquidity and flexible capital offered through these transactions but acknowledges drawbacks in terms
of cost and complexity. Therefore, the Group seeks the right balance in terms of number and quantum. More details and
decisions on these transactions should be expected in the coming months.
CPIPG Liquidity Analysis
The table below demonstrates CPIPG's ample liquidity coverage of near-term maturities. Minority equity or new financing
discussions would increase the level of available liquidity.
Amounts in EURmm Liquidity Disposals Disposals Active financing
at Q1 '24 post-Q1 (net) signed (net) discussions Total
CPIPG (Group) 1,302 150 449 267 2,168
Liquidity coverage 2.2x 3.7x
(Q2 2024-2025)
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Distributions and Shareholder Loans As part of our ongoing deleveraging efforts, CPIPG will sharply reduce distributions relative to our target of 65% of FFO, just as we did in 2022 and 2023. As stated previously, the Group intends to distribute to our shareholders only via share buybacks going forward, with final decisions on distributions made in Q4 each year. The Group's past practice of providing shareholder loans will be eliminated. More details on shareholder loans and related party transactions (policy, approach, and governance) can be expected from the Group over the summer, as announced on 24 May. Selected actions occurring post-Q1 On 28 April, the Group signed a commitment agreement with Sona Asset Management regarding a proposed equity investment of EUR250 million in Poland. On 2 May, the Group completed the sale of Crans-Montana Ski Resort for more than CHF 100 million. On 6 May, IMMOFINANZ completed the sale of City Tower Vienna for more than EUR150 million. On 7 May, CPIPG completed a successful EUR500 million green bond transaction, and fully repaid the remaining EUR460 million of bridge loans. With that, CPIPG successfully completed the repayment of around EUR2.7 billion in acquisition financings for IMMOFINANZ and S IMMO. On 24 May, IMMOFINANZ commenced preparations for a squeeze-out of S IMMO, which would contribute significantly to simplification of the Group's structure and improve costs/EBITDA going forward. On 29 May, S IMMO announced the disposal of several commercial and residential assets across German cities for a total transaction volume of EUR255 million. FINANCIAL HIGHLIGHTS
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Performance Q1-2024 Q1-2023 Change
Total revenues EUR million 412 410 0.5%
Gross rental income (GRI) EUR million 237 229 3.5%
Net rental income (NRI) EUR million 208 197 5.6%
Net hotel income EUR million 5 5 12.4%
Net business income (NBI) EUR million 221 213 3.9%
Consolidated adjusted EBITDA EUR million 199 198 0.6%
Funds from operations (FFO) EUR million 111 108 2.6%
Net profit for the period EUR million 41 53 (23.1 %)
Assets 31-Mar-2024 31-Dec-2023 Change
Total assets EUR million 21,465 21,930 (2.1%)
Property portfolio EUR million 19,183 19,531 (1.8%)
Gross leasable area sqm 6,406,000 6,462,000 (0.9%)
Occupancy % 91.4 92.1 (0.7 p.p.)
Like-for-like gross rental growth* % 5.5 7.9 (2.4 p.p.)
Total number of properties** No. 685 711 (3.7%)
Total number of residential units No. 13,594 13,630 (0.3%)
Total number of hotel rooms*** No. 6,412 8,019 (20.0%)
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DJ EQS-News: CPI PROPERTY GROUP publishes financial -2-
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* Based on gross headline rent
** Excluding residential properties in the Czech Republic
*** Including hotels operated, but not owned by the Group
Financing structure 31-Mar-2024 31-Dec-2023 Change
Total equity EUR million 8,231 8,257 (0.3%)
EPRA NRV (NAV) EUR million 6,964 7,033 (1.0%)
Net debt EUR million 9,965 10,220 (2.5%)
Net Loan-to-value ratio (Net LTV) % 51.9 52.3 (0.4 p.p.)
Net debt/EBITDA x 12.5x 13.1x (0.6x)
Secured consolidated leverage % 24.0 24.0 --
Secured debt to total debt % 47.1 46.5 0.6 p.p.
Unencumbered assets to total assets % 47.1 47.8 (0.7 p.p.)
Unencumbered assets to unsecured debt % 176% 174% 2.0 p.p.
Net interest coverage (Net ICR) x 2.5x 2.5x --
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CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT*
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Three-month period ended
(EUR million) 31 March 2024 31 March 2023
Gross rental income 237.2 229.2
Service charge and other income 105.9 116.4
Cost of service and other charges (96.6) (104.2)
Property operating expenses (38.2) (44.2)
Net rental income 208.3 197.2
Development sales 8.4 -
Development operating expenses (8.4) -
Net development income - -
Hotel revenue 32.5 37.5
Hotel operating expenses (27.1) (32.7)
Net hotel income 5.4 4.8
Revenues from other business operations
Other business revenue 28.2 27.0
Other business operating expenses (20.6) (16.0)
Net other business income 7.6 11.0
Total revenues 412.2 410.1
Total direct business operating expenses (190.9) (197.1)
Net business income 221.3 213.0
Net valuation loss (22.6) (6.6)
Net loss on disposal of investment property and subsidiaries (4.2) (1.7)
Amortization, depreciation and impairment (16.1) (17.8)
Administrative expenses (32.6) (26.6)
Other operating income 5.5 3.5
Other operating expenses (4.5) (3.8)
Operating result 146.8 160.0
Interest income 10.1 6.0
Interest expense (89.9) (75.4)
Other net financial result (21.4) (30.2)
Net finance costs (101.2) (99.6)
Share of gain of equity-accounted investees (net of tax) 5.5 8.2
Profit before income tax 51.1 68.7
Income tax expense (10.3) (15.7)
Net profit from continuing operations 40.8 53.0
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* 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 EUR8.0 million (3.5%) to EUR237.2 million in Q1 2024 compared to Q1 2023. The increase was primarily driven by rent indexation. Property operating expenses Property operating costs decreased by EUR6.0 million in Q1 2024 compared to Q1 2023, primarily due to lower repairs, maintenance, and personnel costs. Administrative expenses Administrative expenses increased by EUR6.0 million in Q1 2024 compared to Q1 2023, primarily due to an increase in admin payroll costs and overall advisory costs. Net valuation loss Net valuation loss of EUR22.6 million in Q1 2024, represented primarily by revaluation loss generated by S IMMO. Interest expense Interest expense increased by EUR14.5 million in Q1 2024 compared to Q1 2023, mainly due to an overall increase in the cost of financing. IMMOFINANZ and S IMMO interest expense increased by EUR6.8 million and EUR9.4 million, respectively.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION*
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(EUR million) 31 March 2024 31 December 2023
NON-CURRENT ASSETS
Intangible assets and goodwill 81.6 129.8
Investment property 16,980.6 17,262.6
Property, plant and equipment 631.0 866.5
Deferred tax assets 117.2 118.2
Equity accounted investees 804.9 717.2
Other non-current assets 591.8 452.0
Total non-current assets 19,207.1 19,546.3
CURRENT ASSETS
Inventories 69.8 73.5
Trade receivables 239.5 227.8
Cash and cash equivalents 920.2 1,022.6
Assets linked to assets held for sale 699.4 722.7
Other current assets 329.3 337.3
Total current assets 2,258.2 2,383.9
TOTAL ASSETS 21,465.3 21,930.3
EQUITY
Equity attributable to owners of the Company 5,511.2 5,567.6
Perpetual notes 1,600.9 1,585.1
Non-controlling interests 1,119.0 1,104.5
Total equity 8,231.1 8,257.2
NON-CURRENT LIABILITIES
Bonds issued 4,287.6 4,274.1
Financial debts 5,787.9 6,325.7
Deferred tax liabilities 1,495.7 1,547.7
Other non-current liabilities 207.0 223.7
Total non-current liabilities 11,778.2 12,371.2
CURRENT LIABILITIES
Bonds issued 43.8 209.2
Financial debts 748.5 412.2
Trade payables 177.4 218.3
Other current liabilities 486.3 462.1
Total current liabilities 1,456.0 1,301.8
TOTAL EQUITY AND LIABILITIES 21,465.3 21,930.2
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* 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 EUR465.0 million (2.1%) to EUR21,465.3 million as at 31 March 2024 compared to 31 December 2023. The decrease relates primarily to disposals of investment property (EUR133.4 million), negative foreign retranslation effect on investment property (EUR104.0 million) and decrease of property, plant and equipment (EUR235.0 million), related to the sale of hotels portfolio to the newly established joint venture. Total liabilities Total liabilities decreased by EUR438.8 million (3.2%) to EUR13,234.2 million as at 31 March 2024 compared to 31 December 2023, primarily due to a decrease in financial debts (EUR201.5 million) and bonds issued (EUR151.9 million). Equity and EPRA NRV Total equity decreased by EUR26.1 million from EUR8,257.2 million as at 31 December 2023 to EUR8,231.1 million as at 31 March 2024. The movements of equity components were as follows: . Increase due to the profit for the period of EUR40.8 million (profit to the owners of EUR7.6 million); . Increase in retained earnings due to sale of hotel portfolio to newly established joint venture (EUR23.8million); . Decrease in translation, revaluation and hedging reserve of EUR87.6 million; . Net interests to perpetual notes holders of EUR15.7 million; . Increase of NCI in the period of EUR14.4 million.
EPRA NRV was EUR6,964 million as at 31 March 2024, representing a decrease of 1.0% compared to 31 December 2023. The decrease of EPRA NRV was driven by the above changes in the Group's equity attributable to the owners (increase of retained earnings and decrease of translation, revaluation and hedging reserves).
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31 March 2024 31 December 2023
Equity attributable to the owners (NAV) 5,511 5,568
Diluted NAV 5,511 5,568
Fair value of financial instruments (101) (93)
Deferred tax on revaluations 1,596 1,601
Goodwill as a result of deferred tax (43) (43)
EPRA NRV (EUR million) 6,964 7,033 GLOSSARY
Alternative
Performance Definition Rationale
Measures
(APM)
Consolidated Net business income as reported deducting This is an important economic indicator showing a
adjusted administrative expenses as reported. business's operating efficiency comparable to other
EBITDA companies, as it is unrelated to the Group's
depreciation and amortisation policy and capital
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structure or tax treatment. It is one of the fundamental
indicators used by companies to set their key financial
and strategic objectives.
Consolidated Consolidated adjusted total assets is total
adjusted assets as reported deducting intangible assets
total assets and goodwill as reported.
EPRA Net EPRA NRV assumes that entities never sell assets Makes adjustments to IFRS NAV to provide stakeholders
Reinstatement and aims to represent the value required to with
Value (NRV) rebuild the entity. 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 It is calculated as net profit for the period Funds from operations provide an indication of core
operations or adjusted by non-cash revenues/expenses (like recurring earnings.
FFO 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.
Net debt/ It is calculated as Net debt divided by A measure of a company's ability to pay its debt. This
EBITDA Consolidated adjusted EBITDA. 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 This measure is an important indicator of a firm´s
divided by a sum of interest income as reported ability to pay interest and other fixed charges from its
and interest expense as reported. operating performance, measured by EBITDA.
Net It is calculated as Net debt divided by fair Loan-to-value provides a general assessment of financing
Loan-to-Value value of Property Portfolio. risk undertaken.
or Net LTV
Secured Secured consolidated leverage ratio is a ratio This measure is an important indicator of a firm´s
consolidated of a sum of secured financial debts and secured financial flexibility and liquidity. Lower levels of
leverage bonds to Consolidated adjusted total assets. secured debt typically also means lower levels of
ratio 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 It is calculated as a sum of secured bonds and This measure is an important indicator of a firm´s
to total debt secured financial debts as reported divided by a financial flexibility and liquidity. Lower levels of
sum of bonds issued and financial debts as secured debt typically also means lower levels of
reported. 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 It is calculated as total assets as reported This measure is an important indicator of a commercial
assets to less a sum of encumbered assets as reported real estate firm´s liquidity and flexibility. Properties
total assets divided by total assets as reported. 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 It is calculated as unencumbered assets as This measure is an additional indicator of a commercial
assets to reported divided by a sum of unsecured bonds and real estate firm's liquidity and financial flexibility.
unsecured unsecured financial debts as reported.
debt
Non-financial Definition
definitions
Company CPI Property Group S.A.
Property Portfolio The sum of value of Property Portfolio owned by the Group
value or PP value
Gross Leasable Area Gross leasable area is the amount of floor space available to be rented. Gross leasable area is
or GLA 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.
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APM RECONCILIATION[*]
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EPRA NRV reconciliation (EUR million) 31-Mar-24 31-Dec-23
Equity attributable to owners of the company 5,511 5,568
Effect of exercise of options, convertibles and other equity interests 0 0
Diluted NAV, after the exercise of options, convertibles and other equity interests 5,511 5,568
Revaluation of trading property and property, plant and equipment 0 0
Fair value of financial instruments (101) (93)
Deferred tax on revaluation 1,596 1,601
Goodwill as a result of deferred tax (43) (43)
EPRA NRV 6,964 7,033
Net LTV reconciliation (EUR million) 31-Mar-24 31-Dec-23
Financial debts 6,536 6,738
Bonds issued 4,331 4,483
Net debt linked to assets held for sale 17 22
Cash and cash equivalents (920) (1,023)
Net debt 9,965 10,220
Total property portfolio 19,183 19,531
Net LTV 51.9% 52.3%
Net Interest coverage ratio reconciliation (EUR million) Q1-2024 FY 2023
Interest income 10 39
Interest expense (90) (348)
Consolidated adjusted EBITDA 199 778
Net Interest coverage ratio 2.5x 2.5x
Secured debt to total debt reconciliation (EUR million) 31-Mar-24 31-Dec-23
Secured bonds 0 0
Secured financial debts 5,128 5,232
Total debts 10,888 11,257
Secured debt to total debt 47.1% 46.5%
Unencumbered assets to total assets reconciliation (EUR million) 31-Mar-24 31-Dec-23
Bonds collateral 0 0
Bank loans collateral 11,349 11,440
Total assets 21,465 21,930
Unencumbered assets ratio 47.1% 47.8%
Consolidated adjusted EBITDA reconciliation (EUR million)* Q1-2024 Q1-2023
Net business income 221 213
Administrative expenses (33) (27)
Other effects 10 11
Consolidated adjusted EBITDA 199 198
Funds from operations (FFO) reconciliation (EUR million)* Q1-2024 Q1-2023
Net profit/(loss) for the period 41 53
Deferred income tax (3) 20
Net valuation gain or loss on investment property (23) (7)
Net valuation gain or loss on revaluation of derivatives 14 (30)
Net gain or loss on disposal of investment property and subsidiaries (4) (2)
Net gain or loss on disposal of PPE/other assets (1) 0
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