CA Immo raises consolidated net income by over 30%
- Recurring earnings (FFO I) of € 101.4 m, 8.1% above previous year’s value (€ 93.7 m)
- Rental income (adjusted)1) up 9.7% to € 155.3 m (2018: € 141.5 m)
- Earnings before interest and taxes (EBIT) were € 325.2 m, 45.1% above the previous year’s result (2018: € 224.1 m)
- Result for the period was € 177.9 m, 30.9% above the previous year’s value of € 135.9 m
- EPRA NAV (undiluted) stood at € 35.33 per share (€ 33.30 per share on 31.12.2018); adjusted to take account of the dividend payment of € 0.90 per share, EPRA NAV per share was up 8.8% since the start of the year
- Property assets expanded 8.5% to € 4.9 bn (31.12.2018: € 4.5 bn)
- 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
Thanks to excellent operating results over the first nine months, CA Immo is on course for another positive overall result for the year. With a 10% increase in rental income1), the company is reaping the benefit of last year’s intensive development and acquisition activity. The efficiently administered portfolio holdings, which are continually expanding as a result (occupancy rate of 95%, total property assets of € 4.9 bn), will provide a stable foundation for corporate performance based on long-term and quantifiable rental revenue. With the support of a consistently dynamic market environment, CA Immo will sustain its highly value-enhancing development activity.
According to Andreas Quint, CEO of CA Immo: “Our internal project development activity is facilitating earnings growth that is continual, and above all quantifiable. This means we can secure a return on investment that would not have been possible solely through the acquisition of existing buildings in the present highly priced market situation. In September, for example, an internally developed and fully let office building in Berlin was transferred to our portfolio. Two other office projects in Berlin and Munich that we plan to complete in the second half of 2020 and transfer to the portfolio were also 93% and 92% pre-let respectively as of the end of September. This additional rental revenue is already pointing to positive earnings contributions for business year 2020.”
Results of the first nine months 2019
Recurring earnings (FFO I) rose 8.1% to € 101.4 m in the first nine months of 2019 (2018 value: € 93.7 m). FFO I per share stood at € 1.09 on the key date, an increase of 8.1% on the 2018 value of € 1.01 per share.
In the first nine months of 2019, rental income for CA Immo rose by a significant 16.4% to € 164.8 m (€ 141.5 m in 2018). Adjusted for the IFRS 16 effects in the amount of € 9.5 m, rental income stood at € 155.3 m, a rise of 9.7% year-on-year. This positive development was linked to portfolio expansion in 2018. Completion of the office buildings KPMG building in Berlin, ViE in Vienna and Orhideea Towers in Bucharest, the InterCity Hotel Frankfurt Hauptbahnhof as well as the acquisition of the Warsaw Spire C office building in Warsaw, Campus 6.1 in Bucharest and the Visionary building in Prague delivered a positive contribution in terms of yearly comparisons.
Net rental income after the first three quarters was € 144.4 m (2018: € 130.5 m), a rise of 10.7% on the previous year. Adjusted for IFRS 16 effects, net rental income stood at € 143.2 m (+9.8% in yearly comparison). The efficiency of letting activity (also adjusted for IFRS 16 effects), measured as the operating margin in rental business (net rental income to rental income), remained unchanged at the previous year’s value of 92.2%.
As at the key date, the result from property trading and construction services stood at € –1.6 m (2018: € 4.7 m). The result from the sale of investment properties stood at € 16.3 m on 30 September 2019 (€ 5.3 m in 2018).
As a result of the developments outlined above, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 16.5% to € 132.1 m (2018: € 113.4 m).
The revaluation result of € 193.5 m on the key date significantly exceeded the previous year’s reference value (€ 92.5 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, NEO in Munich and one land reserve in Frankfurt. As regards income-producing investment properties, assets in Berlin recorded the largest gains on the basis of positive market developments.
Earnings before interest and taxes (EBIT) were € 325.2 m, 45.1% above the previous year’s result (2018: € 224.1 m).
The financial result stood at € –77.4 m after the first nine months (2018: € –41.6 m). The Group’s financing costs, a key element in recurring earnings, amounted to € –32.2 m, 21.8% above the value for 2018, due to an increased financing volume. The result from interest rate derivative transactions includes non-cash valuation effects in connection with the convertible bond (€ –18.6 m) plus interest rate hedges and amounted to € –52.9 m (€ –23.4 m in 2018).
Earnings before taxes (EBT) totalled € 247.8 m, 35.8% above the previous year’s value of € 182.5 m, largely because of the improved revaluation result. On the key date, taxes on earnings stood at € –69.9 m (2018: € –46.6 m).
The result for the period was € 177.9 m, 30.9% above the previous year’s value (2018: € 135.9 m). Earnings per share amounted to € 1.91 on the balance sheet date (2018: € 1.46 per share).
Further increase in shareholder value
The EPRA NAV (undiluted) stood at € 35.33 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 8.8% since the start of the year. As at 30 September 2019, market capitalisation for CA Immo was approximately € 3.2 bn (€ 2.7 bn on 31.12.2018).
CA Immo has maintained a robust balance sheet that serves as a sound basis for dynamic corporate growth. As at the key date, the equity ratio was 48.4% and the loan-to-value ratio (net, taking account of Group cash and cash equivalents) stood at 35.5%. Cash and cash equivalents amounted to € 352.1 m on the balance sheet date (31.12.2018: € 374.3 m). On the key date, gearing was 62.5% (59.4% on 31.12.2018).
As at the key date 30 September 2019, total property assets had a portfolio value of € 4.9 bn (31.12.2018: € 4.5 bn). Investment properties accounted for 82% of the total portfolio, property assets under development for 17% and properties intended for trading (reported under current assets) for the remaining 1% of property assets. Germany accounts for some 47% of property assets; 12% are in Austria, with 41% in Central and Eastern Europe. The asset portfolio produced a yield of 5.6%2) (31 December 2018: 5.8%3)) and was 95.0% let2) as at 30 September 2019 (31.12.2018: 94.4%3)). Of property assets under development (including projects under construction and land reserves) with a total market value of approximately € 844.8 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 Q3 2019. The share price rose by 18% since the start of the year to stand at € 32.55 on the final day. Taking the dividend of 90 cents per share into account, the total shareholder return amounts to 21%. By comparison, the ATX and EPRA, the European index for real estate (excluding the UK), reported increases of approximately 10% and 15% respectively.
Development-pipeline: Further growth of property assets, revenue and dividends
Tenant demand for (office) projects developed by CA Immo remains high. The Kunstcampus office building in Berlin, which has been completed in September, is 100% let and now part of the CA Immo investment portfolio. Pre-letting for the other two office projects due to be completed and transferred to the company´s own investment portfolio in the first half of 2020 was 93% (for MY.B, Berlin) and 92% (for MY.O, Munich) as at reporting date.
In 2019, CA Immo has been successfully pushing ahead with the strategy of profitable expansion of the investment portfolio through own development projects. Besides the project completion in Berlin – as mentioned above –, construction of two premium office buildings in Prague started (Mississippi & Missouri), which will complement the established Class-A-office complex River City Prague to a total of five buildings in a top location of Prague directly on the Vltava River. In Q4 2019, construction of another class A office highrise adjacent to Berlin’s main station is about to start. 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 around 170,000 sqm of rentable effective area under construction (equivalent to an investment volume of just above € 870 m). Of this development volume, some 134,000 sqm (approx. € 660 m) is earmarked for the company’s portfolio and the rest will be sold on completion.
Successful sale of non-strategic stake in Immofinanz
In November, CA Immo successfully sold its remaining stake in Immofinanz AG on the market (volume of approximately 4.0% of the capital stock issued by Immofinanz) as part of an accelerated process for placement with institutional investors. The total value of this remaining stake was approximately € 111 m. An additional share of 0.9% of the capital stock issued by Immofinanz had already been sold in the course of the year. The total investment generated an approximate return on investment of approximately € 19 m, equivalent to some 15% of the investment volume of around € 130 m. CA Immo will reinvest the revenue from this non-strategic disinvestment in its core business, i.e. the development and management of high quality real estate in the company’s core cities in Germany and Austria as well as Central and Eastern Europe.
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) Adjusted for the IFRS 16 effects in the amount of € 9.5 m
2) Excludes properties used for own purposes and the office buildings Orhideea Towers (Bucharest), ViE (Vienna) and Bürogebäude am Kunstcampus (Berlin), which were completed and transferred to the portfolio in 2018 and 2019 respectively and remain in
a phase of stabilisation
3) 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 as at 31 December 2018
The report of CA Immobilien Anlagen AG for the first nine months of 2019 is published at: https://www.caimmo.com/en/investor-relations/financial-reports/.