CA Immo: Operating result more than doubled after three quarters

Press | 11/29/2023 | 18:00

Higher rental income and profitable sales lead to 129% increase in EBITDA

• Increased rental income (+9% to €172.7m) reflects project completions in 2022 and higher rental income in the portfolio (incl. indexations)
• The operating result (EBITDA) increased primarily due to the higher sales result by 129% to €268.4m (30.9.2022: €117.0m)
• Consolidated net profit of €61.1m (€0.62 per share)
• Recurring earnings (FFO I) of €82.7m (-19% compared to the previous year´s figure). FFO II (incl. property sales result) climbed to €158.7m (+88% yoy)
• Annual target for 2023: For the full year 2023, the forecast for recurring earnings (FFO I) is raised slightly to over €105m (€1.07 per share).

Vienna, November 29. CA Immo, the real estate company specializing in high-quality office space, can report a good operating performance for the first three quarters of 2023. The results show, among other things, a significant increase in rental income (+9%) and high income from the sale of non-strategic properties (sales result of €158m, FFO II +88%), which led to an increase in the operating result (EBITDA) of 129% compared to the previous year´s figure. In total, CA Immo generated a consolidated net profit of €61.1m, which was around 77% below the previous year's figure, primarily due to the non-cash-effective, market-related negative result from revaluation.

High liquidity, a solid equity ratio of 47.9% and a balanced maturity profile of long-term liabilities ensure stability even in this uncertain market situation and increase the scope for active portfolio management.

Keegan Viscius, CEO of CA Immo: "Thanks to our proactive portfolio optimisation program which has focused our portfolio on prime assets in attractive urban gateway markets, our business has remained resilient and we are able to report stable occupational figures while delivering strong rental growth. Our development pipeline was further de-risked during the quarter with delivery of the highly profitable 100% occupied Berlin Hochhaus project - 6 months ahead of schedule and 10% under budget. We anticipate that the challenging market conditions and tighter access to capital will create tremendous opportunities for a well capitalised business such as ours, and with our stable balance sheet, focused business model, and in-house operating expertise we are well positioned to perform as the trajectory of the economy becomes more transparent."

Capital rotation program as a cornerstone of the corporate strategy
To emerge stronger from the current market downturn, CA Immo initiated a consolidation and transformation process at an early stage to further improve the group´s portfolio quality and organizational structures. A key pillar of this process is the strategic capital rotation program, which was successfully continued despite headwinds on the markets.

In the first nine months of 2023, the Group concluded a total of eight sales transactions with a total value of around €540m. Four non-strategic investment properties and four plots of land in Germany that are not primarily suitable for office use were sold. The gross sales prices achieved were on average around 50% higher than the most recently reported book values of the properties. Thanks to the continuous implementation of the capital rotation program, the quality of the portfolio has increased significantly in recent years, primarily due to the increasing focus on modern, large Class A office buildings and the reinvestment and development of new, high-quality office buildings in Germany for the company's own portfolio.

Stable, profitable investment portfolio
Despite the generally subdued landscape for global office demand, CA Immo was able to maintain a stable occupancy rate at around 90% in the first three quarters and record a good leasing performance. A total of around 92,000 sqm of space was newly let or existing rental agreements extended; the rents signed were around 10% above the budgeted rent levels. The weighted average lease term (WAULT) of 4.7 years shows an unchanged willingness on the part of tenants to sign long office leases.

Lean development pipeline
The development pipeline has been significantly de-risked compared to previous years, currently totaling one office building under construction located at Berlin's main train station, and a residential project in Mainz (CA Immo JV share 50%). The Berlin office project Hochhaus am Europaplatz with almost 23,000 sqm of rental space was completed and handed over to the single tenant KPMG in the third quarter of 2023 - six months ahead of schedule and almost 10% under budget. The Berlin office project Upbeat, which is still under construction, is 100% pre-let with approx. 80% of the outstanding construction costs contracted and prices secured.

Results for the first three quarters of 2023
CA Immo recorded a 9% increase in rental income to €172.7m in the first nine months of 2023 despite the sale of non-strategic properties. This development is predominantly related to higher rental income in investment properties and the completion of development projects in the previous year.

The result from property sales amounted to €158.0m as at September 30, 2023 (30.9.2022: €11.4m) due to profitable sales activities. The sales of the Langes Land plot in Munich, Hamburg Bahnhof and Rieckhallen properties in Berlin as well as the Rennweg/Mechelgasse property in Vienna made the largest contribution to the sales result.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased as a result of the developments described above (primarily due to the higher sales result) by 129.4% to €268.4m (30.9.2022: €117.0m). Based on the sales transactions signed since the beginning of the year, most of which have now been completed, EBITDA is expected to exceed €300m for the year as a whole.

The revaluation result after the first three quarters totaled -€155.7m (30.9.2022: €180.4m) and reflects the significantly gloomier market environment for commercial properties compared to previous years.

Earnings before interest and taxes (EBIT) of €111.1m was -65.3% below the 1-3Q 2022 result of €319.7m, primarily driven by the weaker revaluation result in the first nine months in 2023.

After the first nine months, the financial result stood at €-36.4m (30.9.2022: €54.4m). The previous year's result was mainly driven by the positive result from derivatives. The Group's financing costs amounted to €-39.8m, 6.4% above the previous year´s value (30.9.2022: €-37.4m).

At €61.1m, consolidated net income wasbelow the previous year's figure of €267.5m, primarily burdened by the negative revaluation result. Earnings per share amounted to €0.62 on the balance sheet data (€2.66 per share in 1-3Q 2022).

In the first nine months of 2023, FFO I of €82.7m was generated, which is 19.4% below the previous year's figure of €102.5m which is primarily due to the intensive sales activity in recent quarters (including the sale of the Romanian platform in Q4 2022) and the associated loss of income. As a result of these sales, FFO II increased by 88% to €158.7m.

Total Property assets of €5.5bn

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. The segments are divided into Investment Properties (€5.0bn, 91.3% of the total portfolio) and Investment properties under development (€401.8m, 7.3% of the total portfolio). The remaining 1.4% (€79.9m) of the property assets are attributable to properties intended for trading or sale (reported under short-term property assets). As at September 30, 2023, CA Immo's total property assets amounted to €5.5bn (December 31, 2022: €5.9 bn). The largest regional segment is Germany with a 67% share of the total portfolio, followed by CEE (26%) and Austria (7%). The economic occupancy rate of the investment portfolio remained unchanged at 89.9%.

Strong balance sheet, stable financial profile
Thanks to many years of positive business development and a defensive balance sheet and financing policy, CA Immo has an extremely robust balance sheet with a solid equity ratio of 47.9% (31.12.2022: 46.8%), a net LTV of 30.4% (31.12.2022: 32.5%) and high liquidity (cash and cash equivalents incl. cash deposits: €862.9m).

The net asset value (IFRS NAV) per share was €33.44 as at September 30, 2023, compared to €33.71 at the end of 2022 - a decrease of 1%. EPRA NTA per share was €39.53 as at the reporting date (31.12.2022: €40.31).

Outlook and financial guidance for 2023
Our strategic priorities remain focused on (1) acceleration of non-core disposals, (2) simplification of our business model, (3) increasing critical mass and driving economies of scale, (4) continued disciplined investment in financially accretive developments and income-producing properties, (5) selective external investment, (6) maintaining a strong balance sheet and stable financing KPI / covenants and (7) returning surplus cash to shareholders.

For the full year 2023, the forecast for recurring earnings (FFO I) is raised slightly to over €105m (€1.07 per share). The decline compared to the previous year (€125.3m) reflects in particular the loss in income from the sale of the Romanian platform and other non-strategic assets, which substantially improve the portfolio and earnings quality of CA Immo going forward.

The financial report of CA Immobilien Anlagen AG is available at: www.caimmo.com/en/investor-relations/financial-reports/