Balance sheet for 30 June 2019: CA Immo presents strong half-year result
• Recurring earnings (FFO I) of € 64.5 m, 2.1% above previous year’s value (€ 63.2 m)
• Rental income up 18.9% to € 111.4 m (2018: € 93.8 m)
• Consolidated net income of € 103.3 m (+15.3% on previous year)
• EPRA NAV per share (undiluted) at € 34.06 (31.12.2018: € 33.30)
• The annual target for recurring earnings – an increase in FFO I on last year’s value of € 118.5 m to over € 125 m – is hereby confirmed.
With excellent operating results in the first half of the year, CA Immo has smoothly maintained the progress of 2018, itself a year of expansion. With a 19% increase in rental income, the company is reaping the benefit of last year’s intensive developments and acquisitions. Given the strong support of a dynamic market environment in Germany, productive development activity is set to continue in 2019. The company’s efficiently managed portfolio holdings, which are continually expanding as a result (occupancy rate: 95.3%), will provide a stable foundation for corporate performance based on long-term and quantifiable rental revenue.
According to Andreas Quint, CEO of CA Immo: “Our excellent operational start to 2019 follows logically on from a strong period of expansion last year – and we will continue to pursue our strategy of profitable expansion in 2019. The two office projects in Berlin that we plan to complete in the second half of 2019 and transfer to the portfolio were thus 93% and 100% pre-let respectively by the end of June. This year we are also commencing development of another office high-rise in a prime location in Berlin. Before construction work even starts, this is fully let to KPMG.”
Results for the first half of 2019
FFO I, a key indicator of the Group’s recurring earning power, reported before taxes and adjusted for the sales result and other non-permanent effects, rose 2.1% to € 64.5 m in the first six months of 2019 (2018 value: € 63.2 m). FFO I per share stood at € 0.69 on the key date, an increase of 2.1% on the 2018 value of € 0.68 per share. FFO II, an indicator of the Group’s overall profitability that includes the sales result and applicable taxes, stood at € 61.3 m on the key date, 3.4% below the 2018 value of € 63.4 m. FFO II per share was € 0.66 per share (against € 0.68 per share in 2018).
In the first six months of 2019, rental income for CA Immo rose by a significant 18.9% to € 111.4 m (€ 93.8 m in 2018). Adjusted for the IFRS 16 effects in the amount of € 8.4 m, rental income stood at € 103.1 m, a rise of 9.9% year-on-year. This positive development was linked to portfolio expansion in 2018. Completion of the KPMG building in Berlin, InterCity Hotel Frankfurt Hauptbahnhof and Orhideea Towers in Bucharest alongside the acquisition of the Warsaw Spire C office building in Warsaw, Campus 6.1 in Bucharest and the Visionary building in Prague delivered a highly positive contribution in terms of yearly comparisons. The result from renting after the first two quarters was € 96.1 m (2018: € 86.8 m), an increase of 10.7% in year-on-year comparison. Adjusted to take account of IFRS 16 effects, the result from renting was € 95.3 m (+9.8% year on year). The efficiency of letting activity (also adjusted for IFRS 16 effects), measured as the operating margin in rental business (net rental income in relation to rental income), was 92.5%, almost identical to the previous year’s value of 92.6%.
As at the key date, the result from property trading and construction services stood at € –2.0 m (2018: € 5.1 m). The result from the sale of investment properties was € 8.5 m as at 30 June 2019 (2018: € 4.4 m).
As a result of the developments outlined above, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 4.3% to € 82.7 m (2018: € 79.3 m).
The revaluation result of € 114.8 m on the key date was above the previous year’s reference value (€ 48.7 m in 2018). The largest contributions to the revaluation gain in terms of amount came from value adjustments linked to construction progress on the development projects Cube and MY.B in Berlin, one site in Frankfurt and the portfolios in the Czech Republic and Hungary on the basis of positive market developments.
Earnings before interest and taxes (EBIT) were € 195.8 m, 30.7% above the previous year’s result (2018: € 149.8 m).
The financial result stood at € –55.9 m after the first six months (2018: € –26.5 m). The Group’s financing costs, a key element in long-term revenue, amounted to € –20.5 m, 12.1% above the value for 2018. The result from interest rate derivative transactions includes non-cash valuation effects in connection with the convertible bond (€ –15.7 m) plus interest rate hedges and amounted to
€ –40.1 m (€ –16.8 m in 2018).
Earnings before taxes (EBT) totalled € 140.0 m, 13.5% above the previous year’s value of € 123.3 m, largely because of the improved revaluation result. On the key date, taxes on earnings stood at
€ –36.7 m (2018: € –33.7 m).
The result for the period was € 103.3 m, 15.3% above the previous year’s value (2018: € 89.6 m). Earnings per share amounted to € 1.11 on the balance sheet date (2018: € 0.96 per share).
Further increase in shareholder value
Net asset value (shareholders’ equity) per share (undiluted) had risen to € 28.70 on the key date (€ 28.37 per share on 31.12.2018). The EPRA NAV (undiluted) stood at € 34.06 per share on the key date (€ 33.30 per share on 31.12.2018). Adjusted to take account of the dividend payment of € 0.90 per share in May 2019, EPRA NAV per share was up 5.0% since the start of the year. The EPRA NNNAV (undiluted) per share after adjustments for financial instruments, liabilities and deferred taxes, stood at € 30.31 per share as at 30 June 2019 (€ 30.08 per share on 31.12.2018). The equity ratio of 48.1% remained unchanged and within the strategic target range (the comparative value for the end of 2018 was 49.3%).
The Group’s financial liabilities stood at € 2,058.0 m on the key date (against € 1,943.4 m on 31.12.2018). Cash and cash equivalents amounted to € 317.5 m on the balance sheet date (31.12.2018: € 374.3 m). Net debt (interest-bearing liabilities less cash and cash equivalents) was € 1,737.1 m at the end of June 2019 (31.12.2018: € 1,566.9 m). The loan-to-value ratio based on market values as at 30 June 2019 was 36.9% (net, taking account of Group cash and cash equivalents) compared to 35.0% at the start of the year. On the key date, gearing was 65.1% (59.4% on 31.12.2018).
As at the key date 30 June 2019, total property assets had a portfolio value of € 4.7 bn (31.12.2018: € 4.5 bn) and covered investment properties (82% of the total portfolio) as well as property assets under development (17% of the total portfolio); properties intended for trading (reported under current assets) account for the remaining 1% of property assets. Germany accounts for some 46% of property assets; 12% are in Austria, with 42% in Central and Eastern Europe. The asset portfolio produced a virtually unchanged yield of 5.7% on 31 December 20181), and was 95.3% let1) as at 30 June 2019 (31.12.2018: 94.4%2)). Of property assets under development (including projects under construction and land reserves) with a total market value of approximately € 804.8 m (31.12.2018: € 651.6 m), Germany accounted for 99% on the key date and Central and Eastern Europe accounted for 1%.
The CA Immo share also continued its positive development in the first half of 2019. The share price rose by 17% since the start of the year to stand at € 32.30 on the final day. By comparison, the ATX and EPRA, the European index for real estate (excluding the UK), reported increases of approximately 8% and 6% respectively.
Outlook: Further growth of assets, revenue and dividends
Demand for (office) projects developed by CA Immo remains high. Pre-letting for the three Berlin office projects due to be completed in the second half of 2019 was 93% (for MY.B) and 100% (for the Kunstcampus office building and Cube in Berlin) at the end of June. CA will transfer two of the three buildings (MY.B and the Kunstcampus office building) to its own portfolio on completion.
In planning to commence the construction of another class A office high-rise adjacent to Berlin’s main station in 2019, CA Immo is pushing ahead with its strategy of profitable expansion of the asset portfolio through its own development projects. The 84-metre structure has been fully pre-let to KPMG before construction work begins. As at the balance sheet date, CA Immo had an approximate volume of 151,500 sqm of rentable effective area under construction (equivalent to an investment volume of just under € 820 m); some 129,000 sqm (approximately € 680 m) is earmarked for the company’s portfolio and the rest will be sold.
With a project pipeline containing an additional 600,000 sqm of usable space on the basis of current land reserves (development horizon to 2028), CA Immo is a leading investor, asset manager and developer of high-quality office properties in Germany’s top cities.
The annual target for long-term revenue in 2019 – an increase in FFO I on last year’s value of € 118.5 m to over € 125 m – is hereby confirmed.
1) Excludes properties used for own purposes and the office buildings Orhideea Towers (Bucharest) and ViE (Vienna), which were completed and transferred to the portfolio in 2018 and remain in a phase of stabilisation
2) Excludes properties used for own purposes and the office buildings Visionary (Prague), Campus 6.1 and Orhideea Towers (Bucharest) and ViE (Vienna), which were completed and transferred to the portfolio in 2018 and were still in a phase of stabilisation
The report of CA Immobilien Anlagen AG for the first half of 2019 is published at: www.caimmo.com/de/investor-relations/finanzberichte/.