CPI PROPERTY GROUP publishes financial results for the first half of 2024

CPI Property Group
(société anonyme)
40, rue de la Vallée
L-2661 Luxembourg
R.C.S. Luxembourg: B 102 254

Press Release - Corporate News

Luxembourg, 30 August 2024

CPI PROPERTY GROUP publishes financial results for the first half of 2024

CPI PROPERTY GROUP (“CPIPG” or the “Group”), a leading European landlord, hereby publishes unaudited financial results for the six-month period ended 30 June 2024.

“CPIPG’s consistent growth in rental income demonstrates once again the benefits of our diversified, resilient and high-quality portfolio,” said David Greenbaum, CEO. “Further reducing leverage and complexity remain our key priorities.”

Highlights for the first half of 2024 include:

• Total assets were €21.2 billion, and EPRA NRV was €6.8 billion.
• CPIPG’s property portfolio was €18.6 billion (versus €19.5 billion at year-end 2023) reflecting disposals, a modest decline in valuations (-0.8%) and FX movements, partially offset by CapEx investments.
• The Group closed €980 million of disposals year-to-date. Nearly €400 million of signed disposals are expected to close in the next 2-3 months.
• Net rental income increased by 5.0% to €418 million despite disposals driven by like-for-like rental growth of 4.4%. Net business income rose to €443 million.
• Consolidated adjusted EBITDA was €395 million; FFO1 was €200 million.
• Occupancy remained solid at 91.3% with a stable WAULT of 3.4 years.
• The EPRA topped-up net initial yield increased by 0.3% versus year-end to 5.7%.
• In May 2024, CPIPG issued a €500 million 5-year green bond, with proceeds used to fully repay our remaining bridge facility.
• Net LTV decreased to 50%, down 2.3 p.p. from year-end 2023. Net Debt was reduced by more than €900 million compared to year-end.
• Net debt/EBITDA declined by 1.3x to 11.8x on an annualised basis versus year-end.
• Unencumbered assets stood at 49%, and net ICR increased slightly to 2.6x.
• In June 2024, the Group completed a minority equity investment in part of our portfolio in Poland from Sona Asset Management (UK) LPP for €250 million.
• Total available liquidity was €1.7 billion at the end of H1 2024, covering bond maturities over the next two years.

Completion of independent review of short seller allegations

Earlier today, CPIPG published an update for our stakeholders regarding the completion of an independent review by Global Law firm White & Case relating to the allegations raised by a short seller.

The investigation found no evidence to substantiate the short seller’s claims.

The separate press release and further information can be found here.

Other selected events occurring post-H1

On 12 July, S IMMO completed the sale of the HOTO Business Tower in Zagreb.

On 20 August, IMMOFINANZ sold the myhive Victorei office development in the old town of Bucharest for approximately €27 million.

Half-year results webcast

CPIPG will host a webcast in relation to its financial results for the six-month period ending 30 June 2024. The webcast will be held on Thursday, 5 September 2024, at 11:00 am CET / 10:00 am UK.

Please register for the webcast in advance via the link below:

https://edge.media-server.com/mmc/p/5vj8vceb

FINANCIAL HIGHLIGHTS

Performance   H1 2024 H1 2023 Change           Total revenues € million 811 831 (2.3%) Gross rental income (GRI) € million 472 457 3.2% Net rental income (NRI) € million 418 399 5.0% Net hotel income[1] € million 18 29 -- Net business income (NBI) € million 443 437 1.4%           Consolidated adjusted EBITDA € million 395 394 0.3% Funds from operations (FFO) € million 200 209 (4.3%)           Net profit for the period € million (3) (50) 94.5                             Assets   30-Jun-2024 31-Dec-2023 Change           Total assets € million 21,231 21,930 (3.2%) Property portfolio € million 18,623 19,531 (4.7%) Gross leasable area sqm 6,485,000 6,462,000 0.4% Share of green certified buildings* % 41.4 40.6 0.8 p.p. Occupancy % 91.3 92.1 (0.8 p.p.) Like-for-like gross rental growth** % 4.4 7.9 (3.5 p.p.)           Total number of properties*** No. 665 711 (6.5%) Total number of residential units No. 13,273 13,630 (2.6%) Total number of hotel rooms**** No. 6,845 8,690 (21.2%)           *According to property portfolio value     ** Based on gross headline rent
*** Excluding residential properties in the Czech Republic
**** Including hotels operated, but not owned by the Group
                  Financing structure   30-Jun-2024 31-Dec-2023 Change           Total equity € million 8,432 8,257 2.1% EPRA NRV (NAV) € million 6,791 7,033 (3.4%)           Net debt € million 9,312 10,220 (8.9%) Net Loan-to-value ratio (Net LTV) % 50.0 52.3 (2.3 p.p.) Net debt/EBITDA x 11.8x 13.1x (1.3x) Secured consolidated leverage % 23.3 24.0 (0.7 p.p.) Secured debt to total debt % 47.1 46.5 0.6 p.p. Unencumbered assets to total assets % 48.9 47.8 1.1 p.p. Unencumbered assets to unsecured debt % 187 174 13.0 p.p. Net interest coverage (Net ICR) x 2.6x 2.5x 0.1x                            

^[1] Due to the sale of a 50% stake in CPI Hotels, the hotel operating entity, income due from most hotel properties have been reclassified as rental income, as opposed to hotel income previously. Thus, the current hotel income figures are not comparable on a like-for-like basis to last year’s figures.
 

CONSOLIDATED INCOME STATEMENT

  Three-month period ended (€ million) 30 June 2024 30 June 2023 Gross rental income 472.0 457.5 Service charge and other income 216.0 219.0 Cost of service and other charges (191.6) (200.2) Property operating expenses (78.1) (77.7) Net rental income
  418.3 398.6 Development sales 12.7 - Development operating expenses (11.4) - Net development income 1.3 - Hotel revenue 68.8 103.5 Hotel operating expenses (50.8) (74.0) Net hotel income
Revenues from other business operations 18.0 29.5 Other business revenue 41.7 50.7 Other business operating expenses (36.6) (42.0) Net other business income 5.1 8.7 Total revenues 811.2 830.7 Total direct business operating expenses (368.5) (393.9) Net business income 442.7 436.8 Net valuation loss (153.7) (217.2) Net loss on disposal of investment property and subsidiaries             (14.6) (1.2) Amortization, depreciation and impairment (16.0) (34.9) Administrative expenses (68.3) (64.5) Other operating income 12.7 7.9 Other operating expenses (9.9) (15.2) Operating result 192.9 111.7 Interest income            20.9 15.4 Interest expense (175.0) (165.5) Other net financial result 3.0 28.3 Net finance costs (151.1) (121.8) Share of gain of equity-accounted investees (net of tax) (20.7) (5.4) Profit before income tax 21.1 (15.5) Income tax expense (23.9) (34.6) Net profit from continuing operations (2.8) (50.1)

 

Gross rental income

Gross rental income increased by €14.5 million (3.17%) to €472 million in Q2 2024 compared to Q2 2023. The change was driven by reclassification of hotels from PPE to Investment property (and related revenue from hotels revenue to gross rental income) of €5.1 million and inflation indexation of rental income by the Group.

Administrative expenses

Administrative expenses increased by €3.8 million in Q2 2024 compared to Q2 2023, primarily due to increase of overall advisory costs.

Net valuation loss

Net valuation loss of €153.7 million in Q2 2024 was represented primarily by revaluation loss generated by S IMMO (€84.2 million), Immofinanz (€28.4 million) and selected office portfolio in Prague.

Interest expense

Net interest expense increased by €4.0. million in Q2 2024 compared to Q2 2023, mainly due to an overall increase in the cost of financing. IMMOFINANZ and S IMMO net interest expense increased by €4.6 million and €6.5 million, respectively.

Net hotel income

Net hotel income decreased by €11.5 million due to disposal of part of the Group´s hotels portfolio in March 2024.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(€ million) 30 June 2024 31 December 2023 NON-CURRENT ASSETS     Intangible assets and goodwill 80.9 129.8 Investment property 16,886.8 17,262.7 Property, plant and equipment 379.6 866.5 Deferred tax assets 117.9 118.2 Equity accounted investees 784.7 717.2 Other non-current assets 600.2 452.1 Total non-current assets 18,850.1 19,546.5 CURRENT ASSETS     Inventories 81.8 73.5 Trade receivables 229.0 227.7 Cash and cash equivalents 1,162.5 1,022.6 Assets linked to assets held for sale 522.3 722.7 Other current assets 385.6 337.3 Total current assets 2,381.2 2,383.8 TOTAL ASSETS 21,231.3 21,930.3 EQUITY     Equity attributable to owners of the Company 5,372.2 5,567.6 Perpetual notes 1,623.4 1,585.2 Non-controlling interests 1,436.7 1,104.5 Total equity 8,432.3 8,257.3 NON-CURRENT LIABILITIES     Bonds issued 4,724.9 4,274.1 Financial debts 4,925.0 6,325.7 Deferred tax liabilities 1,489.8 1,547.7 Other non-current liabilities 211.2 223.7 Total non-current liabilities 11,350.9 12,371.2 CURRENT LIABILITIES     Bonds issued 71.7 209.2 Financial debts 709.7 412.2 Trade payables 140.7 218.3 Other current liabilities 526 462.1 Total current liabilities 1,448.1 1,301.8 TOTAL EQUITY AND LIABILITIES 21,231.3 21,930.3

 

Total assets

Total assets decreased by €699 million (3.2%) to €21,231.3 million as at 30 June 2024 compared to 31 December 2023. The decrease relates primarily to disposals of investment property (€692.7 million including €281.6 million of investment property classified as asset held for sale as at 31 December 2023).

Total liabilities

Total liabilities decreased by €874 million (6.4%) to €12,799 million as at 30 June 2024 compared to 31 December 2023, primarily due to a decrease in financial debts (€ 1,103.2 million).

Equity and EPRA NRV

Total equity increased by €175.0 million from €8,257.3 million as at 31 December 2023 to €8,432.3 million as at 30 June 2024. The movements of equity components were as follows:                   

• Decrease of translation reserve by €52.4 million, of revaluation reserve by €23.6 million, and of hedging reserve by € 14.3 million;
• Decrease of retained earnings by €111.8 million;
• Increase in perpetual notes by €38.2 million.
• Increase in non-controlling interests of €332.2 million.      

EPRA NRV was €5,372 million as at 30 June 2024, representing a decrease of 3.5% compared to 31 December 2023. The decrease of EPRA NRV was driven by the above changes in the Group’s equity attributable to the owners, primarily a decrease of retained earnings and a decrease of translation, revaluation and hedging reserve.

For disclosures regarding Alternative Performance Measures used in this press release please refer to our Half-year

Management Report 2024, chapters Glossary of terms, Key ratio reconciliations and EPRA performance; accessible at

http://cpipg.com/reports-presentations-en.

Unaudited documents will be available tonight at the following link:

http://www.cpipg.com/reports-presentations-en

Half-year 2024 unaudited financial statements
Half-year 2024 unaudited management report

For further information please contact:

Investor Relations

Moritz Mayer
Manager, Capital Markets
m.mayer@cpipg.com

For more on CPI Property Group, visit our website: www.cpipg.com