CA Immo shows stable operating Q1 result – Consolidated net income significantly increased
• Recurring earnings (FFO I) up 1.4% on last year to € 30.0 m (€ 0.32 per share)
• Rental income increased by 7.2% to € 62.4 m (31 March 2019: € 58.3 m)
• Operating result (EBITDA) stable at € 38.8 m compared to € 38.1 m in the previous year
• Revaluation result of € –11.1 m reflects negative value adjustments of properties with hotel
and retail uses in connection with the COVID-19-pandemic (31 March 2019: € 16.1 m)
• Financial result of € 20.5 m significantly higher than in the previous year (€ –39.7 m),
mainly due to a positive valuation effect in connection with the convertible bond
• Consolidated net income of € 33.5 m significantly above the previous year's figure
(31 March 2019: € 5.4 m)
• EPRA NAV per share at € 38.83 (31 March 2019: 38.37 €)
CA Immo presents a result for the first quarter that is virtually not affected by the COVID-19-pandemic. The steady growth and the continuing high occupancy rate of the investment portfolio brought solid growth in rental income (+7.2% year-on-year). Although the negative revaluation result reflects the exceptional economic situation now prevailing, other positive earnings contributions more than made up for this. CA Immo continued its portfolio growth with the addition of an almost fully let Berlin project completion to the investment portfolio in the first quarter and the purchase of a further Berlin office building in April.
Andreas Quint, CEO of CA Immo: "As restrictive measures on our core markets continue to ease, we expect greater clarity on the consequences for our tenant base, and our rental revenue as a result. In the first quarter, 97% of the invoiced rents were collected, whereby we are in ongoing discussions primarily with those tenants who are particularly affected by the COVID-19-crisis. As an operator of class A office premises in well connected inner city locations, we expect the losses caused by the COVID-19-pandemic to be minor and short-term compared to those in the retail and hotel sectors in particular. In light of our strong balance sheet and access to liquidity, we are capable of responding prudently and with considerable latitude to evolving market conditions – with a view to consolidating tenant relations for the long term while monitoring potentially attractive portfolio acquisitions.”
Results of the first quarter 2020
An FFO I of € 30.0 m was generated in the first three months of 2020, 1.4% above the previous year’s value of € 29.6 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 – nearly unchanged to 31.12.2019 – at € 0.32 on the key date.
FFO II, which includes the sales result and applicable taxes, stood at € 15.9 m on the key date, 36.5% below the 2019 value of € 25.1 m. FFO II per share was € 0.17 per share (2019: € 0.27 per share).
In the first three months of 2020, CA Immo recorded solid growth in rental income of 7.2% to € 62.4 m (2019: 58.3 m). In addition to the successful management of the investment portfolio with a high occupancy rate, this positive development, is related to the organic portfolio growth of recent months. The net result from renting after the first quarter was € 49.6 m (2019: € 46.7 m), a rise of 6.1% on the previous year. The efficiency of letting activity, measured as the operating margin in rental business (net rental income to rental income), stood at 79.4% slightly below the previous year’s value of 80.2%
As at the key date, the result from property trading and construction services stood at € 0.2 m (2019: € –0.4 m). The result from the sale of investment properties stood at € –0.1 m on 31 March 2020 (€ 1.3 m in 2019).
After the first three months, indirect expenditures amounted to € –12.8 m, 22.4% above the 2019 level of € –10.4 m.
As a result of the developments outlined above, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 1.8% to € 38.8 m (compared to € 38.1 m in 2019).
The revaluation result of € –11.1 m on the key date stood significantly below the previous year’s reference value (€ 16.1 m in 2019). Negative value adjustments due to the current economic situation in connection with the COVID-19-pandemic concentrated on directly affected properties with the main types of use being hotels and retail businesses.
Earnings before interest and taxes (EBIT) were € 26.1 m, 51.1% below the 2019 result of € 53.5 m, primarily driven by the weaker revaluation result.
The financial result stood at € 20.5 m after the first three months (2019: € –39.7 m). The Group’s financing costs, a key element in recurring earnings, amounted to € –11.4 m, 20.3% above the value for 2019. The result from interest rate derivative transactions includes non-cash valuation effects in connection with the convertible bond (€ 41.5 m) plus interest rate hedges and amounted to € 35.7 m
(€ –28.2 m in 2019). The convertible bond issued in 2017 comprises a debt component and a separable embedded derivative based on the cash settlement option of CA Immo. The embedded derivative of the convertible bond is reported at fair value.
Earnings before taxes (EBT) totalled € 46.6 m and stood significantly above the previous year’s value of € 13.7 m, largely because of the improved financial result. On the key date, taxes on earnings stood at € –13.1 m (2019: € –8.3 m).
The result for the period was € 33.5 m, significantly above the 2019 value of € 5.4 m. Earnings per share amounted to € 0.36 on the balance sheet date (€ 0.06 per share in 2019).
The net asset value (IFRS NAV) per share stood at € 32.26 (undiluted) on 31 March 2020 against € 31.90 at the end of 2019, an increase of 1.1%. The undiluted EPRA NAV stood at € 38.83 per share on the key date (€ 38.37 per share on 31.12.2019).The undiluted EPRA NNNAV per share after adjustments for financial instruments, liabilities and deferred taxes, stood at € 34.91 per share as at 31 March 2020 (€ 33.69 per share on 31.12.2019).
The equity ratio of 47.5% remained unchanged in solid territory (the comparative value for the end of 2019 was 50.4%). Cash and cash equivalents stood at € 800.3 m on the balance sheet date (€ 439.1 m on 31.12.2019). The significant increase reflects net proceeds (after the repurchase of outstanding corporate bonds) of approximately € 400 m from the € 500 m fixed-rate, senior unsecured benchmark bond successfully placed in January 2020 with a term of seven years and an annual cou-pon of 0.875%.
The Group’s financial liabilities stood at € 2,506.7 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 € 1,704.5 m at the end of March 2020 (31.12.2019: € 1,656.3 m). 100% of interest-bearing bank liabilities and bonds are in euros.
The loan-to-value ratio based on market values as at 31 March 2020 was 32.5% (net, taking account of Group cash and cash equivalents) compared to 31.9% at the start of the year. Gearing was 56.8% on the key date (55.8% on 31.12.2019).
The Group's average financing costs (incl. hedging costs) stood at 1.6% as of the key date (31.12.2019: 1.8%).
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 (87% share of the total portfolio) and investment properties under development (13%). 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 further project completions, and is distributed among CEE (45%), Germany (43%) and Austria (12%). The portfolio yield was 5.4% 1) (31.12.2019: 5.5% 2)); the occupancy rate stood at 95.2%1) (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 € 682.6 m (31.12.2019: € 878.5 m), of which Germany accounts for 97% and CEE for 3%.
As before, we believe that the office asset class will be relatively unscathed by the current extraordinary situation. Beyond that, high quality locations and buildings have always been the most important prerequisite for good rentability and value stability in the real estate sector, even during difficult market phases. As an operator of class A office premises in well connected inner city locations, we expect the losses caused by the COVID-19-pandemic to be minor and short-term compared to those in the retail and hotel sectors in particular.
Given the wide-ranging changes in the general conditions, the positioning of CA Immo in the high quality core office segment is proving to be of greater importance than ever before. Our timely with-drawal from secondary cities and sites has lowered the risk profile of our portfolio. In light of our strong balance sheet and access to liquidity, we are capable of responding prudently and with considerable latitude with a view to consolidating tenant relations for the long term while monitoring potentially attractive portfolio acquisitions.
Nonetheless, we are unable conclusively to assess the full impact of the COVID-19-pandemic on our operational business at this time. As restrictive measures on our core markets continue to ease, we expect greater clarity on the consequences for our tenant base, and on our rental revenue as a result. We plan therefore to provide an update on our FFO expectation for business year 2020 along with half-year results end of August at the latest. Between January and April, approximately 93% of our invoiced rents were collected (1Q 2020: 97%). We are currently holding discussions with all affected tenants with a view to finding individual solutions in the interests of maintaining long-term partnerships.
Proposed dividend for business year 2019
The proposed resolution adopted in March to pay a dividend of € 1.00 per share with dividend entitlement for the 2019 financial year remains valid. Compared to last year, this represents a rise of approximately 11%. In view of the still unclear situation in connection with the COVID-19-pandemic, the Management and Supervisory Boards will evaluate the proposal for decision until the Annual General Meeting on 25 August 2020 on an ongoing basis and reserve the right to modifications.
The Interim Financial Statement for the 1st quarter 2020 of CA Immobilien Anlagen AG is available at: www.caimmo.com/en/investor-relations/financial-reports/
1) Excl. the project completions cube berlin and MY.O (Munich), which are still in the stabilisation phase
2) Excl. the project completions Orhideea Towers (Bucharest), ViE (Vienna) und MY.O (Munich), which were still in the stabilisation phase as at 31 December 2019