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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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