CA IMMOBILIEN ANLAGE

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Balance sheet as at 30 September 2020: CA Immo after three quarters with positive consolidated net income and operat-ing earnings growth

11/25/2020 | 12:21pm

Strong operating result with growth in rental income, EBITDA and FFO despite Covid-19 environment

  • Recurring earnings (FFO I) up 3.3% on last year (1-3Q 2019: € 101.4 m) to € 104.7 m (€ 1.13 per share)
  • Net result from rent increased by 10.5% to € 159.5 m (1-3Q 2019: € 144.4 m); impacts in view of the Covid-19 pandemic amounting to € -3.2 m
  • Operating result (EBITDA) of € 136.1 m, 3.0% above the previous year's figure of € 132.1 m. Adjusted for a one-time effect (Provision for possible court fees), EBITDA stands at € 161.6 m (+22.3% compared to the previous year)
  • Revaluation result of € -21.5 m shows negative value adjustments of properties with hotel and retail uses as well as of investment buildings in CEE (1-3Q 2019: € 193.5 m); positive revaluation result in Q3 of € 5.5 m
  • Consolidated net income of € 88.0 m significantly below the previous year's figure - mainly due to the weaker revaluation result (30 September 2019: € 177.9 m)
  • Net asset value: EPRA NAV per share at € 38.36 (31 December 2019: € 38.36), IFRS NAV per share at € 31.83 (31 December 2019: € 31.90)
  • Annual target 2020 for recurring earnings (FFO I) is unchanged at > € 126 m(annual target 2019: > € 125 m)

For another quarter in a row, CA Immo has posted a strong operating result and a clearly positive consolidated net income. The organic growth of the portfolio through own project completions and the continuing high occupancy rate of the investment portfolio (occupancy rate: 95%) resulted in a further strong increase in net result from rent (+10.5% on the previous year). Despite a positive valuation contribution in the 3rd quarter, the negative revaluation result - as a result of the pandemic and its various effects - continues to have a negative impact on consolidated net income. With the addition of a total of three office buildings in Berlin and Munich (including two own project completions and one portfolio acquisition) and the purchase of an office building in Warsaw, CA Immo continued its portfolio growth in 2020.

Andreas Quint, CEO of CA Immo: 'After a subdued first half of the year, the dynamics of the transaction markets increased noticeably in the 3rd and 4th quarters of 2020. We were able to take full advantage of this environment to optimize the quality of our investment portfolio by selectively buying and selling properties at very attractive conditions. At the same time, we placed our first Green Bond for the (re)financing of our sustainable project developments with great success. This underscores our commitment to the transition to a low-carbon, sustainable economy, while at the same time taking advantage of favorable market conditions to further optimize our financing structure and costs. Thanks to this positive operating dynamic, we are already paving the way for a post-pandemic, high-growth 2021.'

Results of the first three quarters 2020

An FFO I of € 104.7 m was generated in the first nine months of 2020, 3.3% above the previous year's value of € 101.4 m. FFO I, a key indicator of the Group's recurring earning power, is reported before taxes and adjusted for the sales result and other non-permanent effects. FFO I per share stood at € 1.13 on the reporting date (1-3Q 2019: € 1.09).

FFO II (including the sales result and applicable taxes) adjusted for the BUWOG one-off effect (see 'indirect expenses') amounted to € 120.4 m, which translates into an increase of 21.6% on the previous year's number (1-3Q 2019: € 99.0 m). FFO II adjusted per share stood at € 1.29 (1-3Q 2019:
€ 1.06).

In the first nine months of 2020, CA Immo recorded solid growth in rental income of 7.7% to € 177.6 m (1-3Q 2019: € 164.8 m). In addition to the successful management of the investment portfolio with a high occupancy rate, this positive development is related to the portfolio growth of recent months. The net result from rent after the first three quarters was € 159. 5 m (1-3Q 2019: € 144.4 m), a rise of 10.5% on the previous year. The Covid-19 pandemic impacted net rental income as at 30 September 2020 by a total of € -3.2 m. This mainly relates to reserves for bad debts and to a lower degree rent reductions, which are, however, counterbalanced by opposing effects from incentive agreements (rent-free periods). The efficiency of letting activity, measured as the operating margin in rental business (net rental income to rental income), stood at 89.8% above the previous year's value of 87.6%.

Sales result

As at the key date, the result from property trading and construction services stood at € 6.1 m (1-3Q 2019: € -1.6 m). The result from the sale of investment properties stood at € 24.9 m on 30 September 2020 (€ 16.3 m in 1-3Q 2019). The largest contribution in terms of value was generated by the sale of the cube berlin office building.

After the first nine months, indirect expenses amounted to € -59.4 m, 87.9% above the 2019 level of € -31.< /a>6 m. The figure includes potential court fees associated with the action for damages brought by CA Immo in the second quarter of 2020 against the Republic of Austria and the state of Carinthia in connection with the privatisation of the federal housing companies (BUWOG). Adjusted for this one-off effect in the amount of around € 25.5 m, indirect expenses arriving at € 33.9 m were 7.3% higher than in the previous year.As a result of the developments outlined above, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 3.0% to € 136. 1 m (compared to € 132 .1 m in 1-3Q 2019). EBITDA adjusted for the aforementioned BUWOG one-off effect amounted to € 161.6 m, which translates into an increase of 22.3% on the previous year's number.

The revaluation result of € -2 1.5 m on the reporting date stood significantly below the previous year's reference value (€ 1 93.5 m in 1-3Q 2019). Negative value adjustments were linked primarily to hotel and retail properties directly affected by the consequences of the pandemic as well as investment buildings in the CEE region. However, these negative value adjustments were mitigated by the increase of fair values in Germany. The value increases were generally caused by property-specific changes (e.g. ensuring reliable planning for projects and land value increases) as well as changes in market yields for office properties.

Earnings before interest and taxes (EBIT) were € 110.7 m, 66.0% below the 1-3Q 2019 result of € 325.2 m, primarily driven by the weaker revaluation result.

The financial result stood at € 9.7 m after the first nine months (1-3Q 2019: € -77.4 m). The Group's financing costs, a key element in recurring earnings, amounted to € -29.7 m, 7.6% below the value for 1-3Q 2019. The result from interest rate derivative transactions includes non-cash valuation effects in connection with the convertible bond (€ 56.2 m) plus interest rate hedges and amounted to € 44.9 m (€ -52.9 m in 1-3Q 2019).

Earnings before taxes (EBT) totalled € 120.4 m and stood substantially below the previous year's value of € 247.8 m, largely because of the weaker revaluation result. On the key date, taxes on earnings stood at € -32.4 m (1-3Q 2019: € -69.9 m).

The result for the period wa s € 88.0 m, significantly below the 1-3Q 2019 value o f € 177.9 m. Earnings per share amounted t o € 0.95 on the balance sheet dat e (€ 1.91 per share in 1-3Q 2019).

The net asset value (IFRS NAV) per share stood at € 31.83 (undiluted) on 30 September 2020 against € 31.90 at the end of 2019, a decrease of 0.2%. This development reflects, amongst others, the dividend payment of € 93 m in August 2020.
The undiluted EPRA NAV stood at € 38.36 per share on the key date (€ 38.36 per share on 31.12.2019). The undiluted EPRA NNNAV per share after adjustments for financial instruments, liabilities and deferred taxes, stood at € 34.44 as at 30 September 2020 (€ 33.69 per share on 31.12.2019).

The equity ratio of 47.9% remained unchanged in solid territory (the comparative value for the end of 2019 was 50.4%). Cash and cash equivalents stoo d at € 739.1 m on the balance sheet date (€ 439.1 m on 31.12.2019). The significant increase reflects part of the net proceeds in the amount of around € 400 m from the € 500 m fixed-rate, senior unsecured benchmark bond successfully placed in Q1 2020 with a term of seven years and an annual coupon of 0.875%.

The Group's financial liabilities stood at € 2,448.6 m on the key date (against € 2,097.3 m on 31.12.2019). The increase is related to the benchmark bond mentioned above. Net debt (interest-bearing liabilities less cash and cash equivalents) was € 1,707.8 m at the end of September 2020 (31.12.2019: € 1,656.3 m).

The loan-to-value ratio based on market values as at 30 September 2020 was 32.8% (net, taking account of Group cash and cash equivalents) compared to 31.9% at the start of the year. Gearing was 57.7% on the key date (55.8% on 31.12.2019).

The Group's average financing costs (incl. hedging costs) stood at 1.57% as of the key date (31.12.2019: 1.79%).

The book value of property assets stood - almost unchanged to 31 December 2019 - at € 5.2 bn as at the key date. Property assets include investment properties (85% share of the total portfolio) and investment properties under development (12%). Properties intended for trading or sale account for the remaining 2% of property assets. The value of the investment portfolio increased to roughly € 4.5 bn (31 December 2019: € 4.3 bn) as a result of the takeover of two project completions and a portfolio acquisition during the first three quarters, and is distributed among CEE (43%), Germany (45%) and Austria (12%). The portfolio yield was 5.4%1) (31.12.2019: 5.5%2)); the occupancy rate remained at a very high level of 95.1%1) as of 30 September 2020 (31.12.2019: 96.1%2)). Investment properties under development include projects under development and land reserves (incl. short-term property assets) with a total book value of around € 700.7 m (31.12.2019: € 878.5 m), of which Germany accounts for 96% and CEE for 4%.

Successful capital rotation with portfolio growth in Berlin and Warsaw

In the course of the first three quarters, CA Immo added three new office buildings to its portfolio: the 14,800 sqm fully let MY.B. (1st quarter) near Berlin's main railway station, which was developed by CA Immo; the 10,000 sqm fully let Berlin office building 'Am Karlsbad' on the southern edge of Potsdamer Platz (acquired in early April); and the NEO office building in Munich, which was developed by CA Immo and taken into operation in the third quarter; the first tenants have already moved in.

In October, CA Immo was also able to expand its Warsaw portfolio with the purchase of the almost fully let landmark office building 'Postepu 14' with a rentable effective area of around 34,500 sqm. Developed to a high international standard and completed in 2015, the property has a BREEAM Excellent sustainability certificate. At the same time, CA Immo continued its non-strategic sales programme with the sale of a Munich residential building developed in-house, and withdrew from another secondary market with the sale of the Zagrebtower office building. All sales were made at a premium to the last book value - underlining the value of the CA Immo portfolio in the current market environment. With this strategic capital rotation, CA Immo is expanding in its core markets, strengthening sustainable earnings and improving its portfolio quality and management efficiency.

Successful issue of a € 350 m green bond

In October CA Immo was able to build on the great success of the debut issue of a benchmark bond in the first quarter and placed a fixed rate senior unsecured green bond with a 5-year maturity and an annual coupon of 1.0%. The issue generated strong demand from over 150 investors and was more than 5 times oversubscribed. The net proceeds of € 350 m will mainly be used to finance and refinance sustainable buildings.

Annual General Meeting and dividend

The 33rd Annual General Meeting of CA Immo was held on 25 August 2020 as a virtual meeting. Alongside the usual agenda items, resolutions on the reduction of the Supervisory Board by one member and the dividend proposal of € 1.0 per share (11% increase of the previous year's dividend) found a large majority.

Outlook and forecast for business year 2020

Thanks to its stable and solid positioning, CA Immo still expects the losses caused by the Covid-19 pandemic to be minor and short-term. Nonetheless, we are unable conclusively to assess the full impact of the Covid-19 pandemic on our operational business at this time. The yearly target for recurring earnings (FFO I) is unchanged >€ 126 m (yearly target for 2019: >€ 125 m).

The Interim Financial Statement as at 30 September 2020 of CA Immobilien Anlagen AG is available at: www.caimmo.com/en/investor-relations/financial-reports/

Disclaimer

CA Immobilien Anlagen AG published this content on 25 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 November 2020 17:20:00 UTC

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