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PRESS RELEASE: CPI PROPERTY GROUP - Financial -2-

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PRESS RELEASE: CPI PROPERTY GROUP - Financial Results for 2019



DGAP-News: CPI PROPERTY GROUP / Key word(s): Annual Results
CPI PROPERTY GROUP - Financial Results for 2019

2020-03-31 / 23:26
The issuer is solely responsible for the content of this announcement.

_Press Release_

_Luxembourg, 31 March 2020_

CPI PROPERTY GROUP - Financial Results for 2019

CPI PROPERTY GROUP (hereinafter "*CPIPG*" the "*Company*" or together with
its subsidiaries the "*Group*"), the largest owner of income-generating real
estate in the Czech Republic, Berlin and the CEE region, hereby publishes
results for the financial year ended 31 December 2019.

"2019 was a year of many achievements for CPIPG. We grew our office
portfolio, tightened our financial policy and strengthened our liquidity,"
said Martin Nemecek, CEO of CPIPG. "The Group is resilient, diversified,
flexible and fully committed to the regions where we operate."

Key highlights for the 2019 financial year include:

? *Property portfolio increased to &euro9.1 billion *(*up &euro1.6 billion
*versus year-end 2018), driven by a combination of acquisitions, primarily
offices in Warsaw, and positive revaluations reflecting the strong
performance of our core markets.

? *Total assets increased to &euro10.7 billion *(*up &euro2.4 billion
*versus year-end 2018), driven by increases to the property portfolio as
well as a &euro0.7 billion increase in cash and cash equivalents following
significant capital markets activity in 2019.

? *Net rental income of &euro294 million *(*up 8.3% *versus 2018),
reflecting the combined effects of *4.4% like-for-like growth in gross
rental income *and acquisitions since the prior period.

? *Occupancy of 94.3% *at the end of 2019.

? *Total revenues of &euro672 million *(*up 11% *versus 2018).

? *Net business income of &euro345 million *and *consolidated adjusted
EBITDA of &euro292 million *(both *up 8% *versus 2018).

? *Funds from operations (FFO) of &euro220 million *(*up 34% *versus 2018).

? *EPRA NAV *rose by *14% *to *&euro5.1 billion*.

? *Net Loan to Value (LTV) *reached a record year-end low of *36.2%*.

? Record *70% of unencumbered assets *(*up 5 p.p. *versus year-end 2018).

? Significant improvement of *Net ICR to 7.2x *in 2019, relative to 4.2x in
2018, reflecting the combination of *higher EBITDA generation *as well as
*reduction of interest costs *following significant refinancing activity in
2018 and 2019.

? In October 2019, the Group announced a plan to acquire more than *&euro800
million *of *office properties in Warsaw *between the fourth quarter of 2019
and first quarter of 2020. In Q4
2019, CPIPG acquired three properties for more than &euro560 million, with a
total GLA exceeding
156,000 sqm and increasing the level of *green certification in our property
portfolio to 14%* *in terms of GLA and 20% by value*.

? CPIPG signed a new *&euro510 million 3-year revolving credit facility *in
March 2019, significantly enhancing the Group's *financial flexibility and
liquidity*.

? The Group further *expanded its presence on the international capital
markets and diversified its sources of funding *in 2019. We issued over
*&euro1.2 billion *equivalent of senior unsecured bonds under our EMTN
programme across Euros (including our inaugural green bond of &euro750
million), Hong Kong Dollars and US Dollars. In March 2019, we also issued
Schuldschein loans for *&euro170 million*, followed by the issuance of a
further *&euro550 million *of subordinated "hybrid" notes in April. All
foreign currency denominated bonds were swapped into Euros using cross-
currency swaps.

? Together with the new revolving credit facility, CPIPG's *total available
liquidity stood at &euro1.3 billion *at the end of December 2019.

? CPIPG *tightened our financial policies*, in line with our aim to achieve
high "BBB" ratings in future. CPIPG now targets a *Net LTV below 40% *and a
*Net ICR of 4x or above*. We also clarified our future distribution policy:
no dividends and the intention to retain and reinvest between 50% to 100% of
annual FFO going forward.

? After the year-end, CPIPG *gained access to new markets and investors *by
issuing a GBP 350 million senior unsecured green bond in Sterling (&euro411
million equivalent) and SGD 150 million additional hybrid capital in
Singapore Dollars (&euro99 million equivalent). Proceeds were primarily used
to acquire four more offices in the Warsaw acquisition pipeline, as well as
repay a small tranche of Schuldschein. During the first quarter of 2020,
CPIPG also became *the largest shareholder in Globalworth*, a leading owner
of offices in Poland and Bucharest, through the acquisition of a 29.4%
stake.

"All of the steps taken by CPIPG during 2019 prepared the Group well for the
challenges and opportunities of 2020," said David Greenbaum, CFO of CPIPG.
"Our long-term horizon and focus on financial policy, credit ratings and ESG
are uwavering."

Update on the Outbreak of COVID-19

On 23 March 2020, the Group prepared an update on our response to the
outbreak of COVID-19, which is available on CPIPG's website. CPIPG will
continue to monitor the situation closely and will provide further
information and data proactively when available.

https://www.cpipg.com/uploads/e6baa777bf69150fe92c1120148afee04a665ec8.pdf
[1]

FINANCIAL HIGHLIGHTS

*Performance Year ended*
*31 Dec 2019*

*Year ended*
*31 Dec 2018*

*Change*

Gross rental income *&euro million* 319 302 6%
Total revenues *&euro million* 672 604 11%
Net business income *&euro million* 345 320 8%
Consolidated adjusted EBITDA *&euro million* 292 270 8%
Funds from operations (FFO) *&euro million* 220 164 34%
Profit before tax *&euro million* 765 649 18%
Interest expense *&euro million* (54) (78) (31%)
Net profit for the period *&euro million* 685 631 9%
*Assets* *31 Dec *31 Dec *Change*
2019* 2018*
Total assets *&euro 10,673 8,259 29%
million*
Property portfolio *&euro 9,111 7,555 21%
million*
Gross leasable area *sqm* 3,465,000 3,318,000 4%
Occupancy *%* 94.3 94.5 (0.2 p.p.)
Like-for-like gross *%* 4.4 4.9 (0.5 p.p.)
rental growth
Total number of *No.* 332 375 (11%)
properties*
Total number of *No.* 11,919 11,917 0%
residential units
Total number of *No.* 12,416 11,300 10%
hotel beds**
* Excluding
residential
properties in the
Czech Republic

** Including hotels
operated, but not
owned by the Group
*Financing *31 Dec *31 Dec *Change*
structure* 2019* 2018*
Total equity *&euro 5,469 4,362 25%
million*
EPRA NAV *&euro 5,100 4,480 14%
million*
Net debt *&euro 3,300 2,775 19%
million*
Loan to value ratio *%* 36.2 36.7 (0.5 p.p.)
(Net LTV)
Secured *%* 9.6 12.9 (3.3 p.p.)
consolidated
leverage ratio
Secured debt to *%* 24.8 36.7 (11.9 p.p.)
total debt
Unencumbered assets *%* 69.7 65.1 4.6 p.p.
to total assets
Net ICR 7.2x 4.2x 3.0x

STATEMENT OF COMPREHENSIVE INCOME

*INCOME STATEMENT (&euro million)* *Year ended* *Year ended*
*31 Dec 2019* *31 Dec 2018*
Gross rental income 319.1 301.7
Service charge and other income 123.1 111.2
Cost of service and other charges (88.0) (85.0)
Property operating expenses (59.8) (56.0)
*Net rental income* *294.4* *271.9*
Development sales 50.1 30.3
Development operating expenses (46.3) (30.7)
*Net development income* *3.8* *(0.4)*
Hotel revenue 133.8 122.1
Hotel operating expenses (93.8) (82.1)
*Net hotel income* *40.0* *40.0*
Other business revenue 45.7 38.4
Other business operating expenses (39.0) (30.4)
*Net other business income* *6.7* *8.0*
*Total revenues* *671.8* *603.7*
*Total direct business operating *(326.9)* *(284.2)*
expenses*
*Net business income* *344.9* *319.5*
Net valuation gain 550.0 578.9
Net gain on disposal of investment 2.0 0.5
property and subsidiaries
Amortization, depreciation and (41.5) (64.4)
impairment
Administrative expenses (53.2) (49.2)
Other operating income 10.2 6.7
Other operating expenses (7.3) (6.5)
*Operating result* *805.1* *785.5*
Interest income 13.5 14.3
Interest expense (54.2) (78.4)
Other net financial result 0.4 (72.0)
*Net finance costs* *(40.3)* *(136.1)*
Share of profit of equity-accounted (0.2) (0.7)
investees (net of tax)
*Profit before income tax* *764.6* *648.7*
Income tax expense (80.0) (17.9)
*Net profit from continuing *684.6* *630.8*
operations*

*Net rental income*

Net rental income increased by 8% to &euro294 million in 2019 compared to
&euro272 million in 2018. The growth of net rental income was driven
primarily by robust performance in CPIPG's portfolios in Berlin and Budapest
and due to the impact of acquisitions in 2018 and 2019. Increases in net
rental income were also broad-based across the overall portfolio, reflecting

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March 31, 2020 17:26 ET ( 21:26 GMT)


robust conditions in our core markets.

*Net development income*

Development sales in 2019 primarily relate to sales of apartments in Nice,
France (&euro20.9 million) and sales of family homes from an ongoing
development project in Prague, the Czech Republic (&euro20.3 million).

*Net hotel income*

Hotel revenue in 2019 increased primarily due to the acquisition of the
Holiday Inn hotel in Rome in mid-way through 2018, two hotels acquired in
the Czech Republic in the first half of 2019, as well as the opening of a
new hotel in Hvar in the second half of the year. Like-for-like performance
of the hotels business was also strong.

*Net valuation gain*

In 2019, the most significant valuation gains related to the Berlin office
portfolio (&euro382.8 million), and to a lesser extent the Prague office
portfolio (&euro36.1 million), Czech residential portfolio (&euro20.1
million), two significant retail and office projects in Prague (&euro17.5
million and &euro14.2 million, respectively), other retail assets portfolio
(&euro45.0 million) and land bank (&euro17.2 million).

*Amortization, depreciation and impairments*

The decrease in amortization, depreciation and impairments in 2019 was
driven by the impairment of property, plant and equipment of &euro15.8
million related to the Crans-Montana mountain resort in Switzerland and our
agricultural properties in 2018.

*Interest expense*

Interest expense was &euro54.2 million in 2019 compared to &euro78.4 million
in 2018. Interest expenses decreased due to the substantial change in the
Group's capital structure as a result of refinancing activity in 2018 and
2019. As a result, the interest expense from bank loans decreased by
&euro15.7 million and interest expense from bonds decreased by &euro8.6
million.

*Other net financial result*

In 2018, the other net financial result primarily related to early repayment
of bank loans and bonds issued (&euro43 million).

BALANCE SHEET

*BALANCE SHEET (&euro million) 31 Dec 2019 31 Dec 2018*
*NON-CURRENT ASSETS* 107.0 110.3

8,156.8 6,687.1

885.7 736.2

168.1 195.2

246.2 90.6
Intangible assets and goodwill
Investment property
Property, plant and equipment
Deferred tax assets
Other non-current assets
*Total non-current assets* *9,563.8* *7,819.4*
*CURRENT ASSETS* 51.2 71.5

80.9 68.4

804.5 99.2

21.5 66.7

150.9 133.8
Inventories
Trade receivables
Cash and cash equivalents
Assets linked to assets held
for sale
Other current assets
*Total current assets* *1,109.0* *439.6*
*TOTAL ASSETS* *10,672.8* *8,259.0*
*EQUITY* 4,334.2 3,775.6

1,085.5 542.5

49.8 44.2
Equity attributable to owners
of the Company
Perpetual notes
Non-controlling interests
*Total equity* *5,469.5* *4,362.3*
*NON-CURRENT LIABILITIES* 2,870.9 1,648.4

1,165.3 1,061.6

805.9 761.6

73.9 52.9
Bonds issued
Financial debts
Deferred tax liabilities
Other non-current liabilities
*Total non-current *4,916.0* *3,524.5*
liabilities*
*CURRENT LIABILITIES* 20.8 6.7

47.7 157.6

86.0 97.5

132.8 110.4
Bonds issued
Financial debts
Trade payables
Other current liabilities
*Total current liabilities* *287.3* *372.2*
*TOTAL EQUITY AND LIABILITIES* *10,672.8* *8,259.0*

*Total assets*

Total assets increased by &euro2,414 million (29%) to &euro10,672.8 million
as at 31 December 2019 compared to 31 December 2018. The increase was driven
by an increase in investment property by &euro1,470 million and cash and
cash equivalents by &euro706 million.

The increase in investment property reflects the increases in valuations
(primarily in Berlin, but also broadly across the Group) plus several
notable acquisitions in 2019: three offices in Warsaw acquired in the fourth
quarter, two hotels in the Czech Republic acquired in the first half of the
year, two properties in London and also land bank in the Czech Republic.

*Total liabilities*

Non-current and current liabilities increased by &euro1,306.6 million
(33.5%) to &euro5,203.3 million as at 31 December 2019 compared to 31
December 2018. During 2019, the Group issued senior unsecured bonds of
&euro1,234 million and also completed Schuldschein loans for &euro170
million.

*NAV AND EPRA NAV*

Total equity increased from &euro4,362.3 million as at 31 December 2018 to
&euro5,469.5 million as at 31 December 2019. The movements of equity
components were as follows:

? Increase of retained earnings due to 2019 profit of &euro684.6 million;

? Increase of perpetual bonds by &euro499.6 million;

? Decrease of share capital and share premium due to share repurchases of
&euro108.8 million;

? Change in revaluation reserve of &euro24.7 million, and;

? Other changes of &euro7.1 million.

EPRA NAV was &euro5,100 million as at 31 December 2019, representing an
increase of 13.8% compared to 31 December 2018. An increase of EPRA NAV was
primarily related to the above changes in the Group's equity.

*EPRA NAV (&euro million) 31 Dec 2019 31 Dec 2018*

*Equity per the financial statements (NAV) 4,334 3,776*
Effect of exercise of options,
convertibles and other equity
interests
*Diluted NAV, after the exercise of *4,334 3,776*
options, convertibles and other
equity interests*
Revaluation of trading property and 2 7
PPE Fair value of financial
instruments Deferred tax on 0 (5)
revaluations
Goodwill as a result of deferred tax 807 745

(43) (43)
*Total 5,100 4,480*

Alternative Performance Measures

For disclosures regarding Alternative Performance Measures used in this
press release please refer to our Annual Management Report 2019, chapters
Glossary and EPRA Performance; accessible at
http://cpipg.com/reports-presentations-en [2].

Availability of Audited Financial Information

Audited documents will be available tonight at the following link:

http://www.cpipg.com/reports-presentations-en [3]

2019 Results Webcast

CPIPG will host a webcast in relation to its financial results for 2019. The
webcast will be held on

Thursday 2 April 2020 at 10:00 am CET / 09:00 am UK.

Please register for the webcast via the link below:

https://globalmeet.webcasts.com/starthere.jsp?ei=1292032&tp_key=29818912f7
[4]

Investor Contacts:

David Greenbaum Chief Financial Officer CPI Property Group
d.greenbaum@cpipg.com

Joe Weaver
Director of Capital Markets CPI Property Group j.weaver@cpipg.com

Media / PR Contact:

Kirchhoff Consult AG
Andreas Friedemann
Borselstr. 20
22765 Hamburg
T +49 40 60 91 86 50
F +49 40 60 91 86 60
E andreas.friedemann@kirchhoff.de

2020-03-31 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Archive at www.dgap.de
Language: English
Company: CPI PROPERTY GROUP
40, rue de la Vallée
L-2661 Luxembourg
Luxemburg
Phone: +352 264 767 1
Fax: +352 264 767 67
E-mail: contact@cpipg.com
Internet: www.cpipg.com
ISIN: LU0251710041
WKN: A0JL4D
Listed: Regulated Market in Frankfurt (General Standard); Regulated
Unofficial Market in Dusseldorf, Stuttgart
EQS News ID: 1012313

End of News DGAP News Service

1012313 2020-03-31


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