Balance sheet as at 30 June 2020: CA Immo posts strong operating result in the first half of 2020
- Recurring earnings (FFO I) up 5.7% on last year to € 68.2 m (€ 0.73 per share)
- Net result from rent increased by 10.2% to € 105.9 m (30 June 2019: € 96.1 m); impacts in the form of rent reductions and incentive agreements (rent-free periods) in view of the Covid-19 pandemic amounting to € –2.6 m
- Operating result (EBITDA) of € 90.3 m, 9.1% above the previous year's figure of € 82.7 m. Adjusted for a one-time effect (provision of € 25.5 m for the BUWOG lawsuit), EBITDA stands at € 115.8 m (+39.9% compared to the previous year)
- Revaluation result of € –27.0 m shows negative value adjustments of properties with hotel and retail uses as well as of investment buildings in CEE (30 June 2019: € 114.8 m)
- Consolidated net income of € 44.7 m significantly below the previous year's figure (30 June 2019: € 103.3 m)
- Net asset value: EPRA NAV per share at € 38.84 (31 December 2019: € 38.37), IFRS NAV per share at € 32.38 (31 December 2019: € 31.90)
- Annual target 2020 for recurring earnings (FFO I) of > € 126 m (annual target 2019: > € 125 m)
CA Immo presents a solid operating result for the first half of the year, hardly affected by the Covid-19 pandemic. Continuous portfolio growth and the continuing high occupancy rate of the property portfolio brought a further increase in net result from rent (+10.2% on the previous year). Although the negative revaluation result reflects the current state of economic emergency, its impact on consolidated net income was significantly mitigated by other positive earnings contributions. CA Immo continued its portfolio growth in the first half of the year with the addition of two fully let Berlin office buildings (including one project completion and one portfolio acquisition) to the investment portfolio.
Results of the first half year 2020
An FFO I of € 68.2 m was generated in the first six months of 2020, 5.7% above the previous year’s value of € 64.5 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 at € 0.73 on the reporting date (1H 2019: € 0.69).
FFO II, which includes the sales result and applicable taxes, stood at € 63.8 m on the reporting date, 4.1% above the 2019 value of € 61.3 m. FFO II per share was € 0.69 (1H 2019: € 0.66).
In the first six months of 2020, CA Immo recorded solid growth in rental income of 6.0% to € 118.1 m (1H 2019: € 111.4 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 rent after the first two quarters was € 105.9 m (1H 2019: € 96.1 m), a rise of 10.2% on the previous year. The Covid-19 pandemic impacted net rental income in the first half of 2020 – in the form of rent reductions and taking into account incentive agreements (rent-free periods) – by a total of € –2.6 m. The efficiency of letting activity, measured as the operating margin in rental business (net rental income to rental income), stood at 89.6% above the previous year’s value of 86.2%.
As at the key date, the result from property trading and construction services stood at € 5.8 m (1H 2019: € –2.0 m). The result from the sale of investment properties stood at € 24.2 m on 30 June 2020 (€ 8.5 m in 1H 2019). The largest contribution in terms of value was generated by the sale of the cube berlin office building.
After the first six months, indirect expenses amounted to € –49.4 m, 121.2% above the 1H 2019 level of € –22.3 m. The figure includes potential court fees associated with the action for damages brought by CA Immobilien Anlagen AG in the second quarter of 2020 against the Republic of Austria and the state of Carinthia in connection with the privatisation of the federal housing companies (BUWOG). Adjusted for this one-off effect in the amount of around € 25.5 m, indirect expenses arriving at € 23.9 m were 7.1% higher than in the previous year.
As a result of the developments outlined above, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 9.1% to € 90.3 m (compared to € 82.7 m in 1H 2019). EBITDA adjusted for the aforementioned BUWOG one-off effect amounted to € 115.8 m, which translates into an increase of 39.9% on the previous year’s number.
The revaluation result of € –27.0 m on the reporting date stood significantly below the previous year’s reference value (€ 114.8 m in 1H 2019). Negative value adjustments were linked primarily to hotel and retail properties directly affected by the consequences of the pandemic as well as investment buildings in the CEE region. However, these negative value adjustments were mitigated by the increase of fair values in Germany. The value increases were generally caused by property-specific changes (e.g. ensuring reliable planning for projects and land value increases) as well as progress in projects under construction and project completions.
The financial result stood at € 9.0 m after the first six months (1H 2019: € –55.9 m). The Group’s financing costs, a key element in recurring earnings, amounted to € –18.1 m, 12.1% below the value for 2019. This item includes a positive effect in connection with proceedings concerning the payment of building taxes amounting to € 5.2 m (release of provisions for interest on arrears) decided in favour of the CA Immo Group. The result from interest rate derivative transactions includes non-cash valuation effects in connection with the convertible bond (€ 41.6 m) plus interest rate hedges and amounted to
€ 31.8 m (€ –40.1 m in 1H 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 € 69.8 m and stood substantially below the previous year’s value of € 140.0 m, largely because of the weaker revaluation result. On the key date, taxes on earnings stood at € –25.1 m (1H 2019: € –36.7 m).
The net asset value (IFRS NAV) per share stood at € 32.38 (undiluted) on 30 June 2020 against € 31.90 at the end of 2019, an increase of 1.5%. The undiluted EPRA NAV stood at € 38.84 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 € 34.95 as at 30 June 2020 (€ 33.69 per share on 31.12.2019).
The equity ratio of 48.1% remained unchanged in solid territory (the comparative value for the end of 2019 was 50.4%). Cash and cash equivalents stood at € 777.8 m on the balance sheet date (€ 439.1 m on 31.12.2019). The significant increase reflects part of the net proceeds in the amount of around € 400 m from the € 500 m fixed-rate, senior unsecured benchmark bond successfully placed in Q1 2020 with a term of seven years and an annual coupon of 0.875%.
The Group’s financial liabilities stood at € 2,462.0 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 € 1,682.4 m at the end of June 2020 (31.12.2019:€ 1,656.3 m).
The loan-to-value ratio based on market values as at 30 June 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 55.8% 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 (86% share of the total portfolio) and investment properties under development (14%). 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 a further project completion and a portfolio acquisition during the first half year, and is distributed among CEE (44%), Germany (43%) and Austria (13%). The portfolio yield was 5.4%) (31.12.2019: 5.5%)); the occupancy rate stood at 95.1%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 € 726.0 m (31.12.2019: € 878.5 m), of which Germany accounts for 97% and CEE for 3%.
Outlook and forecast for business year 2020
As an operator of class A office premises in well connected inner city locations, CA Immo continues to expect only minor or short-term losses from the Covid-19-pandemic. Nonetheless, we are unable conclusively to assess the full impact of the Covid-19 pandemic on our operational business at this time. The yearly target for recurring earnings (FFO I) is >€ 126 m (yearly target for 2019: >€ 125 m).
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%. The decisions on the utilisation of net retained earnings for 2020 and the dividend payout will be made in the course of the Ordinary General Meeting on 25 August 2020.
The Interim Financial Statement for the first half year 2020 of CA Immobilien Anlagen AG is available at: www.caimmo.com/en/investor-relations/financial-reports/
1) Excl. the project completion MY.O (Munich), which is 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