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Balance sheet as at 30 September 2018: CA Immo increases recurring earnings (FFO I) by 11%

Strong portfolio growth in 2018 as a basis for significant earnings increase in 2019

 

• Net rental income up 7% to € 130.5 m (2017: € 121.8 m)

• Earnings before interest and taxes (EBIT) at € 224.1 m (+10%)

• EPRA NAV rises to € 31.13 per share (+6% since start of year, adjusted for dividend of € 0.80 per share)

• FFO I up 11% to € 93.7 m (2017: € 84.2 m)

• Annual target for recurring earnings (FFO I) is confirmed

Vienna, 20 November 2018. CA Immo presents a very positive interim balance sheet as at 30 September 2018. The three investment properties acquired in CEE this year so far will – together with the in-house project completions – form the basis for continued profitable growth. In the wake of dynamically implementing the development pipeline, the ViE office building in Vienna was completed in Q3 and transferred to CA Immo's property portfolio, following the KPMG building, a fully let office property in Berlin, which was completed in Q1. With Campus 6.1 in Bucharest, Visionary in Prague and Warsaw Spire Building C, CA Immo has additionally acquired three high-quality office buildings in 2018 so far, which will – when full occupancy is reached – raise annual rental revenue by more than € 13 m in the years ahead.

Andreas Quint, CEO of CA Immo: "Our operating business continues to run successfully, as we concluded large-scale rental agreements in Q3 and acquired with Warsaw Spire Building C another office building in Warsaw at the beginning of Q4. In total, we therefore added three prime office buildings to our property portfolio in CEE with a total transaction volume of approx. € 220 m. In addition to working on our project pipeline as scheduled, we will expand our investment portfolio by six new office buildings and a hotel this year. This dynamic growth course will be reflected in a significant increase of our rental income in 2019. All in all, we are very well positioned, and we now have an institutional blue chip international core shareholder who has capital and is supportive of the business and of further growth.“

Keegan Viscius, Chief Investment Officer (CIO) of CA Immo, says: „We have a profitable asset base with strong potential for growth and value creation in some of the strongest and most exciting markets in Europe. In our portfolio, the safe haven status of Germany and Austria is complimented by the high growth markets of CEE, which should allow for stability and growth regardless of what the overall macro market environment may be. We´ll continue to drive internal organic growth by development out of our existing land bank, while external growth can be driven by expanding our footprint in our core cities. In addition, we´ll evaluate investing into new markets in our core countries. As we grow we will continue to see diversification of our asset base, a well-balanced risk-return profile, economies of scale, increased index weighting, and a clear equity story – always focusing on growing sustained earnings, a rising FFO and dividend payouts.” 

Results for the first three quarters of 2018
Recurring earnings (FFO I) increased by 11.4% on the 2017 figure of € 84.2 m to stand at € 93.7 m. FFO I per share totalled € 1.01, up 11.6% on last year’s reference value. As in preceding quarters, this underlines operational development that was both highly robust and independent of the valuation result and which forms the basis for the long-term dividend policy of CA Immo. FFO II, which includes the sales result and applicable taxes, stood at € 88.3 m (€ 95.3 m in 2017) while FFO II per share was € 0.95 per share (€ 1.02 per share in 2017).

In the first three quarters of 2018, rental income for CA Immo rose by 6.0% to € 141.5 m. This positive development was mainly the result of the acquisition of the Warsaw Spire Building B in the Polish capital and the associated increase in rent. Completion of the KPMG building and a new large-scale letting in Berlin delivered further growth momentum. Net rental income as at the key date was € 130.5 m, up 7.1% on the 2017 value of € 121.8 m.

The sales result from property assets held as current assets stood at € 4.7 m (2017: € 8.4 m) on the key date. The result from the sale of investment properties amounted to € 5.3 m as of 30 September 2018 (2017: € 14.4 m). The largest contribution to earnings included here came from the sale of a non-strategic plot of land in Munich.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 6.0% to € 113.4 m, below the previous year’s level. This was largely due to the lower contribution from property sales. 

The revaluation result was highly positive at € 92.5 m on key date 30 September 2018, significantly above the 2017 figure of € 32.7 m. The largest contributions to the revaluation gain in terms of amount came from value adjustments to the German real estate portfolio on the basis of higher land values. Moreover, a contractually agreed letting in the Austrian portfolio in Q4 led to a significantly positive valuation effect. After the first three quarters, the result from joint ventures was € 19.9 m (€ 52.4 m in 2017).

Earnings before interest and taxes (EBIT) were € 224.1 m, 10.1% above the corresponding figure for last year of € 203.6 m. The financial result of € -41.6 m (€ -22.5 m last year) contained a non-cash valuation effect in connection with the outstanding convertible bond of € -23.4 m. Despite a higher financing volume, the Group's finance costs, a key element of recurring earnings, remained stable (–0.1%) compared to 2017, and arrived at € –26.4 m. Earnings before taxes (EBT) of € 182.5 m were 0.8% up on the 2017 value of € 181.2 m. Adjusted to take account of the convertible bond valuation effect, there was an increase of 12.8%. The result for the period totalled € 135.9 m or € 1.46 per share (2017: € 147.3 m or € 1.58 per share). 

Robust balance sheet indicators
With an equity ratio of 48.7% and a conservative loan-to-value ratio (net debt to property assets) of 34.3%, the strength of CA Immo’s balance sheet provides an extremely sound basis on which to implement the Group’s growth strategy. Net asset value (shareholders’ equity) was € 26.64 per share on the key date (€ 25.95 per share on 31.12.2017). The EPRA NAV was up 3.5% at € 31.13 per share as of 30 September 2018 (€ 30.09 per share in 2017). Adjusted to take account of the dividend payment of 80 cents per share in May 2018, the EPRA NAV rose by 6.1% since the start of the year.

As at key date 30 September 2018, CA Immo’s total property assets stood at € 4.1 bn (31.12.2017: € 3.8 bn), including investment properties (82% of the total portfolio) and investment properties under development (17% of the total portfolio). Properties intended for trading (reported under short-term property assets) account for the remaining 1% of property assets. Of the investment property portfolio with an approximate book value of € 3.4 bn (31 December 2017: € 3.2 bn), around 49% (based on book value) is located in CEE and SEE nations, with 35% of the remaining investment properties in Germany and 16% in Austria. The portfolio produced a yield of 6.1 %1); the occupancy rate was 95.3 %1) as at 30 September 2018. Of investment properties under development with a total book value of around € 670.7 m, development projects and land reserves in Germany account for 88 %, while the Eastern Europe segment represents 12%. 

Dynamic pace of growth maintained
The in-house development of high quality properties on core markets and subsequent transfer to the asset portfolio is a significant driver of organic growth for the CA Immo Group, enabling long-term earning power and thus the dividend paid to shareholders to be steadily raised. In the wake of dynamically implementing the development pipeline, the ViE office building in Vienna was completed in Q3 and transferred to CA Immo's property portfolio, following the KPMG building, a fully let office property in Berlin, which was completed in Q1. Two more development projects – Orhideea Towers in Bucharest and Steigenberger Hotel at the Frankfurt main railway station – are due for completion in Q4. In total, four buildings newly developed by CA Immo with a total investment volume of around € 230 m will be added to the portfolio in 2018.
Selective acquisitions on CA Immo’s core Eastern European markets are sustaining the strong pace of organic growth. Following on from successful acquisitions in Bucharest and Prague in the first half year, another value-generating purchase was confirmed in Warsaw in the beginning of quarter four of 2018. Acquisition of the Warsaw Spire C office building (approximate trans-action volume of €100 m) with gross rentable space of 21,700 sqm will lead to an increase in annual rental revenue of around € 5.4 m (full occupancy).

In total, CA Immo has acquired three high-quality office buildings in 2018 so far with a total transaction volume of around € 220 m, which will – when full occupancy is reached – raise annual rental revenue by more than € 13 m in the years ahead.

Outlook 
General conditions are expected to remain favourable on the core markets of CA Immo. The annual target for recurring earnings – an increase in FFO I on last year’s value of € 106.8 m to over € 115 m – is hereby confirmed.

The financial report for CA Immobilien Anlagen AG as at 30 September 2018 is published on the company’s website at http://www.caimmo.com/en/investor-relations/financial-reports/

1) Excl. properties used for own purposes and the project completions Visionary in Prague and ViE in Vienna, which are still in the stabilization phase 

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Susanne Steinböck
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