CA Immo with stable FFO and strong earnings growth in the first half of 2021
- Recurring earnings (FFO I) of €68.5 m (€0.72 per share) 0.5% above the previous year's value
- Rental income increased by 1.5% to €119.9 m (30.6.2020: €118.1 m)
- Successful capital rotation programme generates strong sales result of €28.1 m (30.6.2020: €24.2 m)
- Operating result (EBITDA) of €114.9 m up 27% on the previous year's figure
- Positive revaluation result of €195.3 m reflects, among other things, successful project pre-letting and strong investor demand in Germany (30.6.2020: €–27.0 m)
- Strong consolidated net profit of €171.3 m significantly above the previous year´s figure (30.6.2020: €44.7 m)
- Net asset value EPRA NTA per share at €41.54 after €40.09 as of 31.12.2020 (+4%)
- Value of property assets increased to €5.9 bn (+5% at year-end)
- Significant improvement in balance sheet and financing ratios since the beginning of the year (equity ratio at 49.3% after 45.9% as at 31.12.2020)
Andreas Quint, CEO of CA Immo: "We look back on a first half-year 2021 with a stable operating performance record. Amidst a market situation that remains subdued due to ongoing work-from-home discussions and new virus variants, we achieved good leasing results and successfully progressed our sales and development pipeline. Our strategic capital rotation programme, whereby we sell non-strategic properties and use the proceeds to fund our German development pipeline or purchase cash-flowing office buildings with additional development potential, is highly profitable and contributed significantly to earnings growth in the first half of 2021.”
Results of the 1st half-year 2021
FFO I, key indicator for the sustainable earnings power of the Group, which is reported before tax and adjusted for the sales result and other non-sustainable effects, stood at €68.5 m (30.6.2020: €68.2 m). FFO I per share amounted to €0.72 as at the reporting date (30.6.2020: €0.73 per share). FFO II, including the sales result and after tax an indicator of the overall profitability of the Group, totalled €71.8 m compared to €63.8 m in 2020 (+12.5%). FFO II per share stood at €0.75 per share (30.6.2020: €0.69 per share).
CA Immo recorded a 1.5% increase in rental income to €119.9 m in the first six months. This positive development is related to the portfolio growth of the past quarters. Net result from rent totalled €101.6 m after the first six months (30.6.2020: €105.9 m), a decline of 4.0% year-on-year. This decline is based on a positive effect in the 1st half of 2020 in the amount of €3.7 m in connection with proceedings decided in favour of CA Immo regarding the payment of building taxes (release of provisions for property-related taxes). The Covid-19 pandemic impacted net rental income by €–2.3 m in the first six months of 2021. This mainly relates to reserves for bad debts and, to a lesser extent, rent reductions, which are, however, counterbalanced by opposing effects from incentive agreements (rent-free periods).
Property sales result
The result from property trading and construction services was €7.1 m as at the reporting date (30.6.2020: €5.8 m). The result from the sale of investment properties amounted to €28.1 m as at 30.6.2021 (30.6.2020: €24.2 m). The sale of a non-strategic property in Düsseldorf in the second quarter generated the major part of this result.
Indirect expenses amounted to €–27.5 m after the first six months and were thus 44.3% below the previous year's level (30.6.2020: €–49.4 m). The 1H 2020 figure included a provision for possible court fees in connection with the action for damages brought by CA Immobilien Anlagen AG in the second quarter of 2020 regarding the privatisation of the federal housing companies (BUWOG). Adjusted for this one-off effect of around €25.5 m, the indirect expenses of the previous year were €–23.9 m.
As a result of the developments outlined above, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 27.3% to €114.9 m (compared to €90.3 m in 1H 2020). Adjusted for the above-mentioned one-off effects (among other things, the provision for the BUWOG lawsuit in the amount of €25.5 m) in the first half of 2020, EBITDA as at 30.6.2021 increased by 2.5% yoy.
CA Immo had an almost complete external valuation of the portfolio carried out as at 30 June 2021. The result is a significantly higher revaluation result of € 195.3 m compared to the previous year (30.6.2020: €–27.0 m). In addition to the positive revaluation of the "Upbeat" development project in Berlin, which was fully let in March 2021 even before the start of construction, there were further revaluation gains in the second quarter, which is primarily attributable to the continuing strong investor demand for first-class office properties in central locations in Munich and Berlin.
At €310.8 m, the Earnings before interest and taxes (EBIT) was substantially higher than the previous year's result (30.6.2020: €60.7 m), mainly due to the increase in the revaluation result.
The financial result totalled €–61.7 m after the first six months (30.6.2020: €9.0 m). This large deviation compared to the previous year is mainly due to a negative derivative valuation of the convertible bond issued in October 2017 in the amount of €–46.2 m (30.6.2020: €41.6 m).
Earnings before taxes (EBT) totalled €249.1 m and were thus significantly higher than the previous year's figure of €69.8 m, primarily due to the higher revaluation result. Taxes on earnings were €–77.8 m as at the reporting date (30.6.2020: €–25.1 m). Due to the developments described above, the consolidated net profit of €171.3 m was substantially higher than the previous year's figure of €44.7 m. Earnings per share amounted to €1.79 (30.6.2020: €0.48 per share).
Balance sheet strength and high liquidity
Convertible bonds with a nominal value of €197.8 m were converted in the second quarter, a significant factor for the increase in the equity ratio to 49.3% (31.12.2020: 45.9%) and an improvement in all balance sheet and financing ratios. CA Immo has cash and cash equivalents of €973.8 m (31.12.2020: €934.9 m).
Portfolio growth and strategic capital rotation continued
CA Immo continued its strategic capital rotation programme in the first half of 2021. A number of property sales were successfully concluded – for example, the company withdrew from the small secondary market of Slovakia with the sale of the BBC 1 and 2 office complex in Bratislava and sold a number of non-strategic properties in Germany at attractive conditions. At the same time, CA Immo took over another self-developed office building into its own investment portfolio with the completion of the ZigZag office project in Mainz. The value of total property assets increased further by 5% compared with year-end 2020 to €5.9 bn as at reporting date. Around 56% of the portfolio is attributable to Germany, the largest single market (30.6.2020: 51%). The net asset value EPRA NTA per share (diluted) was €41.54 as at the reporting date (after €40.09 as at 31 December 2020).
Successful letting performance
In the first half of 2021, CA Immo concluded or extended leases for a total of around 70,000 sqm of existing space. In addition, a number of partly large-volume leases were concluded for ongoing construction projects and a total of around 48,000 sqm of usable space was pre-let in project developments. Despite this positive letting performance, the Group-wide occupancy rate fell to 90.7% (31.12.2020: 94.8%), which is primarily due to declines in occupancy in the Hungarian portfolio and the departure of a tenant in Serbia.
According to the OECD, Europe's economy is recovering faster than expected – thanks in part to the increasing vaccination coverage of the population against the Covid-19 virus. Although the situation for real estate investment has largely improved since Q3 2020 in line with economic recovery trends, the short- and long-term economic impact of the Covid-19 pandemic on real estate markets remains uncertain.
As in the previous year, we intend to continue our strategic capital rotation to secure and further increase the attractiveness and sustainability of our investment portfolio. CA Immo continues to invest the sales proceeds generated in this way in the value-enhancing continuation of the profitable German development pipeline and in attractive, cash-flow-strong portfolio acquisitions.
The Interim Q2 2021 Report of CA Immobilien Anlagen AG is available at www.caimmo.com/en/investor-relations/financial-reports/.