CA Immo starts into 2023 with good operating figures
- Increased rental income (+15.8% to €61.7 m) reflects recent project completions and higher rental income in the portfolio
- Operating result (EBITDA) increased by 37.0% to €56.5 m (1Q 2022: €41.2 m), primarily due to the higher sales result
- Revaluation result of €–2.4 m significantly below the previous year's value of €99.4 m
- Consolidated net profit of €30.8 m 77% below previous year's level, primarily burdened by the sharp year-on-year decline in valuation result
- Recurring earnings (FFO I) 18.3% below previous year's level at €23.9 m (31.3.2022: €29.2 m) due to profitable sales activity in 2022. FFO II (incl. sales result) was €38.8 m (+69.3% compared to Q1 2022)
- Slight increase in net asset value (IFRS NAV) by 1% to € 34.07 per share as at 31.03.2023 (31.12.2022: € 33.71 per share)
- Annual target 2023: expected EBITDA of more than €200 m confirmed, FFO I target to be announced as part of the half-year results in August 2023
Vienna, May 24, 2023. CA Immo, the real estate group specializing in high-quality office space, has started into 2023 with solid operating figures. The results for the first quarter show, among other things, a significant increase in rental income (+16%), good income from the sale of non-strategic properties (sales result €22.2 m, FFO II +69%) and an unbroken strong balance sheet with high liquidity (cash and cash equivalents incl. cash deposits: €782.8 m). At the same time, the global trend of falling property values as a result of rising interest rates has left its mark in the form of a slightly negative valuation result (€–2.4 m as of 31 March 2023 after a valuation gain of €99.4 m in Q1 2022), which, among other things, caused the consolidated net profit to drop significantly to €30.8 m compared to the same quarter of the previous year (–77%).
Keegan Viscius, Chief Investment Officer of CA Immo: "We have adapted quickly and at an early stage to the changing market environment in order to emerge stronger from the current downturn in the property markets. We intend to use this consolidation and transformation process to reduce the complexity of our business model and increase its efficiency. The capital rotation programme to improve the quality and focus of the portfolio – among other things by accelerating the sale of non-core properties – will be continued. Thanks to our stable balance sheet and strong positioning as a leading prime office player in attractive metropolitan cities, we are confident that we will be able to continue to push through strong rental growth and specifically use and further expand our positioning as a strategic competitive advantage in the current market environment."
Capital rotation programme as a key pillar of corporate strategy
CA Immo made further progress in the first months of 2023, particularly in implementing the strategic capital rotation programme. The highly profitable sale of the Rennweg/Mechelgasse 1 hotel and office property in Vienna and the Vizivaros Office Center in Budapest further enhanced the quality and efficiency of the portfolio, significantly strengthened the liquidity position and demonstrated the solidity of the book values.
Targeted investments in portfolio quality
Following the commissioning of two prime office projects in 2022 (Frankfurt high-rise ONE and Berlin office building Grasblau), further leases were successfully concluded in both buildings this year; the space will be successively handed over to the tenants. The remaining two office buildings under construction directly at Berlin's main railway station are 100% pre-let. CA Immo is also investing specifically in the quality, energy efficiency and special tenant comfort of the building stock.
The results for the first quarter of 20231)
CA Immo recorded a 15.8% increase in rental income to €61.7 m in the first quarter of 2023. This development is mainly related to higher rental income in investment properties and the completion of project developments in the previous year, which more than compensated for the decline in rental income from the sale of non-strategic properties (excl. sale of the discontinued business unit Romania, which is not included in the comparative figures).
The result from the sale of long-term real estate assets amounted to €22.2 m as at 31 March 2023 (1Q 2022: €0.1 m). The sale of the Rennweg/Mechelgasse 1 property in Vienna made the largest contribution to the sales result.
Indirect expenses amounted to €–12.8 m after the first three months and were thus 17.0% above the previous year's level (1Q 2022: €–10.9 m).
Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 37.0% to €56.5 m (1Q 2022: €41.2 m) as a result of the developments described above (primarily due to the higher sales result).
The revaluation result was €–2.4 m as at the reporting date and thus significantly below the reference value of the previous year (1Q 2022: €99.4 m).
Earnings before interest and taxes (EBIT) of €53.1 m was 66.2% below the 1Q 2022 result of
€156.9 m. This development is mainly due to the high valuation gain in 1Q 2022.
The financial result totalled €–19.9 m after the first three months (1Q 2022: €19.8 m). The positive result of the previous year is mainly due to the positive result from derivatives. The Group's financing costs amounted to €–13.4 m and were thus 28.8% above the previous year's value (1Q 2022: €–10.4 m).
Consolidated net income was €30.8 m, also down on the 1Q 2022 value of €136.9 m. Earnings per share amounted to €0.31 on the balance sheet date (1Q 2022: €1.37).
Property assets of €5.8 bn
As at key date 31 March 2022, CA Immo’s total property assets stood at €5.8 bn (31 December 2022: €5.9 bn). The company’s core business is commercial real estate, with a clear focus on office properties across the gateway cities in Germany, Austria and the CEE region; it deals with both investment properties (€5.0 bn, 85% of the total portfolio) and investment properties under development (€614 m, 10% of the total portfolio). Properties intended for trading or sale (reported under short-term property assets) account for the remaining 5% (€267 m) of property assets. The largest regional segment is Germany with a share of 67% of the total portfolio, followed by CEE (27%) and Austria (6%). The economic occupancy rate of the investment portfolio was 89.4% (31.12.2022: 89.9%).
Stable balance sheet and slightly rising net asset values
In view of its many years of positive business development and defensive balance sheet and financing policy, CA Immo has an extremely robust balance sheet with a solid equity ratio of 48.0% (31.12.2022: 46.8%), a net LTV of 31.3% (31.12.2022: 32.5%) and high cash reserves (cash and cash equivalents incl. cash deposits: €782.8 m).
The net asset value (IFRS NAV) per share was €34.07 at 31.03.2023 compared to €33.71 at year-end 2022 – an increase of 1.1%. EPRA net tangible assets (NTA) per share stood at €40.71 as at the reporting date, slightly above the value at the end of 2022 (€40.31).
Persistent inflation, the resulting sharp rise in interest rates and the tightening of financing conditions, the decline in transaction activity and the ongoing uncertainty regarding the long-term demand for office space continue to weigh on the framework conditions for the real estate sector. At the same time, hybrid working and the transition to a sustainable economy have caused a bifurcation of the market towards prime locations and quality (Class A) and away from Class B properties.
CA Immo is countering the current market downturn with a consolidation course aimed at reducing the complexity of the business model and increasing its efficiency. The capital rotation programme to improve the quality and focus of the portfolio - including the accelerated sale of non-core properties - will be continued.
Annual target 2023
For the 2023 financial year, an expected EBITDA of over €200 m is confirmed on the basis of profitable sales of non-strategic properties. This would represent a significant increase compared to the figure for 2022 (€149.5 m).2) In light of the ongoing dynamic strategic capital rotation programme, we plan to announce the annual target for sustainable earnings (FFO I) as part of the half-year reporting in August 2023.
The financial report of CA Immobilien Anlagen AG is available at: https://www.caimmo.com/en/investor-relations/financial-reports/.
1) The Romanian portfolio was sold in November 2022 and is therefore presented as discontinued operations in 2022. In the consolidated income statement, the result (after tax) of the Romanian portfolio is shown in a separate line in the comparative figures for 2022. In the consolidated balance sheet, all assets and liabilities of the Romanian portfolio as at 31 December 2022 are no longer included. In the comparative figures for 2022, Romanian contributions to earnings are therefore included in the consolidated net profit, but not in the remaining P&L figures.
2) Based on transactions signed and closed to date.