DGAP-News: CPI PROPERTY GROUP - Financial results for the first quarter of 2020
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:
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.
(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
"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
** 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:
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*
* 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:
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.
GLOSSARY
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
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
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