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PRESS RELEASE: CPI PROPERTY GROUP - Financial Results for 2019

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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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