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CPI PROPERTY GROUP reports financial results for the first quarter of 2019 (deutsch)

CPI PROPERTY GROUP reports financial results for the first quarter of 2019

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DGAP-News: CPI PROPERTY GROUP / Schlagwort(e):
Quartals-/Zwischenmitteilung/Immobilien
CPI PROPERTY GROUP reports financial results for the first quarter of 2019

22.05.2019 / 19:36
Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich.

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Press Release

Luxembourg, 22 May 2019

CPI PROPERTY GROUP reports financial results for the first quarter of 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 its financial results for the first quarter of 2019.

"In the first quarter of 2019, CPIPG continued our strong trajectory," said Martin Nemecek, CEO of CPIPG. "Income and profitability are rising, and our capital structure is extremely strong."

Key highlights for the first quarter of 2019, plus recent events, include:

* Total assets of EUR8.7 billion at the end of Q1, an increase of EUR0.5 billion from the end of 2018, primarily driven by an increase in cash and cash equivalents.

* Total revenues in Q1 of EUR163 million (up 12% versus Q1 2018), reflecting the combined effects of acquisitions in 2018 and 2019 and 3.2% like-for-like growth in rental income.

* Group occupancy increased to 94.7% in Q1, versus 94.5% at year-end.

* Funds from operations increased to EUR50 million for the quarter (up 8% versus Q1 2018).

* EPRA NAV remained unchanged at EUR4.5 billion.

* Net Interest Coverage Ratio increased to 7.7x for Q1 2019 (compared to 4.2x for 2018), reflecting the Group's successful refinancing activities during 2017 and 2018.

* Net Loan to Value (LTV) increased slightly from 36.7% at year-end to 37.4%.

* Unencumbered assets as a percentage of total assets rose to 67%, versus 65% at the end of 2018.

* Secured debt was reduced to 32% of total debt, relative to 37% at the end of 2018.

* Issuance of HKD 450 million (approximately EUR50 million) of senior bonds under the Group's EMTN programme in February 2019.

* Issuance of USD 350 million (approximately EUR312 million) of senior bonds under the Group's EMTN programme in March 2019.

* Issuance of senior unsecured Schuldschein (assignable loans) totaling EUR170 million in March 2019.

* New 3-year unsecured revolving credit facility of EUR510 million signed in March 2019 with 11 regional and international banks.

* Total available liquidity at the end of Q1 of about EUR1 billion, currently exceeds EUR1.5 billion following the issuance of hybrid bonds in April 2019.

* The Group's EMTN programme was increased to EUR5 billion in April 2019.

"Once again, our teams delivered excellent results for the Group," said David Greenbaum, CFO of CPIPG. "We remain focused on creating long-term sustainable value for all our stakeholders, and will continue investing in our portfolio throughout 2019."

U.S. Litigation

On 10 April 2019, a group of Kingstown companies, Investhold LTD and Verali Limited (together, the Kingstown Plaintiffs) filed a claim in the United States District Court of the Southern District of New York against, among others, CPIPG and Mr Radovan Vitek. The claims brought by the Kingstown Plaintiffs against CPIPG include alleged violations of RICO. CPIPG believes that the claims are without merit, and were designed to create negative press attention for CPIPG and force an undue settlement. CPIPG intends to vigorously contest the claims and has retained an international law firm, Hogan Lovells, with an experienced team of litigators and significant experience in RICO cases. At this time, CPIPG has no further comments on developments in the case, aside from the Group's previously published statements.

FINANCIAL HIGHLIGHTS

Performance 31-Mar-19 31-Mar-18 Chang- e

Gross rental income EUR 77 73 6% mil-
lion
Total revenues EUR 163 145 12% mil-
lion
Net rental income EUR 73 67 10% mil-
lion

Consolidated adjusted EBITDA EUR 72 64 12% mil-
lion
Funds from operations (FFO) EUR 50 46 8% mil-
lion

Profit before tax EUR 33 29 17% mil-
lion
Net Interest expense EUR (9) (19) (50%) mil-
lion
Net profit for the period EUR 29 24 23% mil-
lion

Assets 31-Mar-19 31-Dec-18 Chang- e

Total assets EUR 8,719 8,259 6% mil-
lion
Property Portfolio EUR 7,594 7,555 1% mil-
lion
Gross leasable area* sqm 3,308,000 3,318,000 0% Occupancy % 94.7 94.5 0.2 p.p.

Total number of properties** No. 376 375 0% Total number of residential units No. 11,915 11,917 0% Total number of hotel beds*** No. 11,670 11,300 3%

* Excluding hotels ** Excluding
residential properties in the Czech
Republic *** Including hotels
operated, but not owned by the Group

Financing structure 31-Mar-19 31-Dec-18 Chang- e

Total equity EUR 4,384 4,362 0.5% mil-
lion
EPRA NAV EUR 4,494 4,480 0% mil-
lion

Net debt EUR 2,842 2,775 2.4% mil-
lion
Loan to value ratio (Net LTV) % 37.4 36.7 0.7 p.p. Secured consolidated leverage ratio % 12.2 12.9 (0.7 p.p.) Secured debt to total debt % 31.8 36.7 (4.9 p.p.) Unencumbered assets to total assets % 66.7 65.1 1.6 p.p. Net ICR mul- 7.7x 4.2x 3.5x ti-
ple

STATEMENT OF COMPREHENSIVE INCOME

The income statement for the 3 months period ended on 31 March 2019 and 31 March 2018 was as follows:

INCOME STATEMENT (EUR 31-M- 31-M- million) ar-1- ar-1- 9 8

Gross rental income 77 73 Service charge and other 31 28 income*
Cost of service and other (23) (21) charges*
Property operating expenses (12) (13) Net rental income 73 67 Development sales 15 7 Development operating (15) (8) expenses**
Net development income - (1) Hotel revenue 19 18 Hotel operating expenses (17) (15) Net hotel income Revenues 2 3 from other business
operations
Other business revenue 21 19 Other business operating (12) (12) expenses**
Net other business income 9 7 Total revenues* 163 145 Total direct business (79) (69) operating expenses*
Net business income 84 76 Net valuation gain / 4 (5) (loss)***
Amortization, depreciation (14) (7) and impairment
Administrative expenses (12) (12) Other operating income 1 1 Other operating expenses (2) (1) Operating result 61 52 Interest income 3 4 Interest expense (12) (23) Other net financial (18) (4) result***
Net finance costs (27) (23) Share of profit of - - equity-accounted investees (net of tax)
Profit before income tax 33 29 Income tax expense (4) (5) Net profit from continuing 29 24 operations

* In connection with the adoption of IFRS 15, the Group changed, in respect of service charges, revenue recognition from net to gross, before deduction of cost of services (refer to the annual management report for 2018 for further detail). The presentation of the statement of profit or loss for the three months period of 2018 was adjusted due to the changes in the accounting policy as follows:

31 March Effect of IFRS 15 31 March 2018 2018 adoption Adjusted Gross rental income 73 - 73 Net service revenue 7 (7) - Service charge and other - 28 28 income
Cost of service and other - (21) (21) charges
Property operating expense (13) - (13) Net rental income 67 - 67 Total revenues 124 21 145 Total direct business (48) (21) (69) operating expenses
Net business income 76 - 76 ** To provide reliable and more relevant information, the Group reclassified (firstly as at 31-Dec-2018) the following items, which are no longer presented separately, in the consolidated financial statements:

* Cost of goods sold related to Development sales and Other business were reclassified to Development operating expenses and Other business operating expenses. Comparative information of EUR 7 million and EUR 1 million as at 31 March 2018 was adjusted accordingly.

*** The Group reclassified effect of changing foreign exchange rates on the revaluation of the investment properties from the Other net financial result to the Net valuation gain or loss. Management finds the adjusted presentation reliable and more relevant, because the effect is already included in determination of the fair value of the relevant investment properties by the Group's subsidiaries.

Comparative information as of 31 March 2018 was adjusted accordingly. The change in the accounting policy had no impact on the statement of financial position, the impact on the statement of comprehensive income is presented in the table below:

31 March Effect of the 31 March 2018 2018 accounting policy Adjusted change
Net business income 76 - 76 Net valuation gain (3) (2) (5) Operating result 54 (2) 52 Other net financial (6) 2 (4) result
Net finance costs (25) 2 (23) Profit before income 29 - 29 tax
Net profit from 24 - 24 continuing operations
Net rental income

Net rental income increased by 10% to EUR73 million compared to EUR67 million in Q1 2018, driven primarily by an increase in gross rental income reflecting 2018's acquisitions of Futurum Hradec Králové shopping centre (net increase of EUR2 million) and Atrium office complex in Poland (net increase of EUR1.6 million). The better performance of our Berlin portfolio (net increase of EUR2.2 million) contributed to the overall increase in net rental income.

Net development income

Development sales in Q1 2019 were represented by sales of apartments in Nice (revenue of EUR11.6 million) and sales of family houses in Bezinves (revenue of EUR3.3 million).

Net valuation gain / (loss)

Valuation gain in Q1 2019 relates mainly to an FX gain on our property portfolio.

Amortization, depreciation and impairments

The increase in amortization, depreciation and impairments in Q1 2019 was affected by the write-off of goodwill (EUR7 million), which was recognized in 2014 in connection with the acquisition of the Group's agriculture business.

Interest expense

Interest expense was EUR12 million in Q1 2019 compared to EUR23 million in Q1 2018. Interest expense dropped due to the substantial change in the Group's financing structure, resulting into a significant decrease in interest expense from bank loans (net decrease of EUR4.7 million) and bonds (net decrease of EUR5.4 million).

Other net financial result

Other net financial result in Q1 2019 was adversly affected by foreign exchange losses of EUR14 million.

BALANCE SHEET

BALANCE SHEET (EUR million) 31-Mar-19 31-Dec-18

NON-CURRENT ASSETS
Intangible assets and goodwill 103 110 Investment property 6,717 6,687 Property, plant and equipment 754 736 Deferred tax assets 195 195 Other non-current assets 135 91 Total non-current assets 7,904 7,819 CURRENT ASSETS
Inventories 64 72 Trade receivables 83 68 Cash and cash equivalents 464 99 Assets linked to assets held for sale 61 67 Other current assets 143 134 Total current assets 815 440 TOTAL ASSETS 8,719 8,259 EQUITY
Equity attributable to owners of the Company 3,789 3,776 Perpetual notes 549 542 Non-controlling interests 46 44 Total equity 4,384 4,362 NON-CURRENT LIABILITIES
Bonds issued 2,011 1,648 Financial debts 1,178 1,062 Deferred tax liabilities 761 762 Other non-current liabilities 58 53 Total non-current liabilities 4,008 3,525 CURRENT LIABILITIES
Bonds issued 15 7 Financial debts 103 158 Trade payables 85 98 Other current liabilities 124 109 Total current liabilities 327 372 TOTAL EQUITY AND LIABILITIES 8,719 8,259 Total assets

Total assets increased by EUR460 million (6%) to EUR8,719 million as at 31 March 2019. The predominant driver of this growth was the increase in cash and cash equivalents by EUR365 million.

Increase in investment property by EUR29 million reflects primarily capex and development costs incurred in Q1 2019. Due to the acquisition of Orchard hotel in Ostrava the Group's property portfolio rose by of EUR11 million.

Total liabilities

Non-current and current liabilities totalled EUR4,335 million as at 31 March 2019, an increase of EUR438 million (11.2%) compared to 31 December 2018. During the first quarter, the Group raised USD bonds (EUR312 million), HKD bonds (EUR50 million), and Schuldschein (EUR170 million). The Group also signed a new secured bank loan of EUR170 million from Unicredit Bank AG and repaid loans totaling EUR102 million.

NAV AND EPRA NAV

Total equity increased from EUR4,362 million as at 31 December 2018 to EUR4,384 million as at 31 March 2019. The main elements impacting equity were:

* an increase in equity due to profit for three months of 2019 in the amount of EUR29 million;

* a decrease by EUR12 million due to a shift in hedging and translation reserves;

* an increase by EUR5 million due to the change in revaluation reserve.

EPRA NAV was EUR4,494 million as at 31 March 2019, an increase of 0.3% relative to 31 March 2018. The main positive effect was the positive equity elements described above.

EPRA NAV (EUR million) 31-Ma- 31-De- r-19 c-18

Equity per the financial statements (NAV) 3,790 3,776 Effect of exercise of options, convertibles and 0 0 other equity interests
Diluted NAV, after the exercise of options, 3,790 3,776 convertibles and other equity interests
Revaluation of trading property and PPE 5 7 Fair value of financial instruments (3) (5) Deferred tax on revaluations 745 745 Goodwill as a result of deferred tax (43) (43) Total 4,494 4,480 Investor Contact:

David Greenbaum
Chief Financial Officer
CPI Property Group
[e-mail]

Media / PR Contact:

Kirchhoff Consult AG
Andreas Friedemann
Borselstraße 20
22765 Hamburg
T [phone]
F [phone]
E [e-mail]

GLOSSARY

Alter- Definition Rationale
nati-
ve
Per-
for-
mance
Measu-
res
(APM)
EPRA Net Asset Value adjusted Makes adjustments to IFRS NAV to NAV to include properties provide stakeholders with the most and other investment relevant information on the fair interests at fair value value of the assets and and to exclude certain liabilities within a true real items not expected to estate investment company with a crystallise in a long-term investment strategy. long-term investment
property business model.
Lo- It is calculated as Net Loan-to-value provides a general an-to- debt divided by fair assessment of financing risk -Va- value of Property undertaken.
lue Portfolio.
or
Net
LTV
Net It is calculated as This measure is an important ICR Consolidated adjusted indicator of a firm's ability to EBITDA divided by a sum pay interest and other fixed of interest income as charges from its operating reported and interest performance, measured by EBITDA. expense as reported.
Secu- It is calculated as a This measure is an important red sum of secured bonds and indicator of a firm's financial debt secured financial debts flexibility and liquidity. Lower to as reported divided by a levels of secured debt typically total sum of bonds issued and also means lower levels of debt financial debts as mortgage debt - properties that reported. are free and clear of mortgages are sources of alternative liquidity via the issuance of property-specific mortgage debt, or even sales. Unen- It is calculated as This measure is an important cumbe- total assets as reported indicator of a commercial real red less a sum of encumbered estate firm's liquidity and as- assets as reported flexibility. Properties that are sets divided by total assets free and clear of mortgages are to as reported. sources of alternative liquidity total via the issuance of as- property-specific mortgage debt, sets or even sales. The larger the ratio of unencumbered assets to total assets, the more flexibility a company generally has in repaying its unsecured debt at maturity, and the more likely that a higher recovery can be realized in the event of default. Conso- Net business income as This is an important economic lida- reported deducted by indicator showing a business's ted administrative expenses operating efficiency comparable to adjus- as reported. other companies, as it is ted unrelated to the Group's EBITD- depreciation and amortization A policy and capital structure or tax treatment. It is one of the fundamental indicators used by companies to set their key financial and strategic objectives.
Funds It assumes net income Funds from operations provide an from (computed in accordance indication of core recurring opera- with IFRS), excludes earnings.
tions non-recurring (non-cash)
or items like gains (or
FFO losses) from sales of
property and inventory,
impact of derivatives
revaluation and
impairment transactions.
Calculation excludes
accounting adjustments
for unconsolidated
partnerships and joint
ventures.
Secu- Secured consolidated This measure is an important red leverage ratio is a indicator of a firm's financial conso- ratio of a sum of flexibility and liquidity. Lower lida- secured financial debts levels of secured debt typically ted and secured bonds to also means lower levels of lever- Consolidated adjusted mortgage debt - properties that age total assets. are free and clear of mortgages ratio Consolidated adjusted are sources of alternative total assets is total liquidity via the issuance of assets as reported property-specific mortgage debt, deducted by intangible or even sales. assets and goodwill as
reported.

Non-finan- Definition
cial
definiti-
ons
Company CPI Property Group S.A.
Property The sum of value of Property Portfolio owned by the Group Portfolio
value or
PP value
Gross Gross leasable area is the amount of floor space Leasable available to be rented. Gross leasable area is the area Area or for which tenants pay rent, and thus the area that GLA produces income for the property owner. Group CPI Property Group S.A. together with its subsidiaries Net debt Net debt is borrowings plus bank overdraft less cash and cash equivalents.
Occupancy Occupancy is a ratio of estimated rental revenue regarding occupied GLA and total estimated rental revenue, unless stated otherwise.
Property Property Portfolio covers all properties held by the Portfolio Group, independent of the balance sheet classification, from which the Group incurs rental or other operating income.
APM RECONCILIATION

EPRA NAV reconciliation (EUR million) 31-Ma- 31-De- r-19 c-18 Equity per the financial statements (NAV) 3,790 3,776 Effect of exercise of options, convertibles and 0 0 other equity interests
Diluted NAV, after the exercise of options, 3,790 3,776 convertibles and other equity interests
Revaluation of trading property and PPE 5 7 Fair value of financial instruments (3) (5) Deferred tax on revaluation 745 745 Goodwill as a result of deferred tax (43) (43) EPRA NAV 4,494 4,480

Net LTV reconciliation (EUR million) 31-Mar-19 31-Dec-18 Financial debts 1,281 1,219 Bonds issued 2,026 1,655 Net debt linked to AHFS 0 0 Cash and cash equivalents (464) (99) Net debt 2,842 2,775 Total property portfolio 7,594 7,555 Net LTV 37.4% 36.7%

Net Interest coverage ratio reconciliation (EUR 31-Mar-- 31-Dec-- million) 19 18 Interest income 3 14 Interest expense (12) (78) Net Business Income 84 320 Administrative expenses (12) (49) Net Interest coverage ratio 7.7x 4.2x

Secured debt as of Total debt reconciliation 31-Mar-- 31-Dec-- (EUR million) 19 18 Secured bonds 0 0 Secured financial debts 1,052 1,055 Total debts 3,306 2,874 Secured debt as of Total debt 31.8% 36.7%

Unencumbered assets reconciliation (EUR 31-Mar-1- 31-Dec-1- million) 9 8 Bonds collateral 0 0 Bank loans collateral 2,902 2,883 Total assets 8,719 8,259 Unencumbered assets ratio 66.7% 65.1%

Consolidated adjusted EBITDA reconciliation (EUR 31-Mar-- 31-Mar-- million) 19 18 Net business income 84 76 Administrative expenses (12) (12) Consolidated adjusted EBITDA 72 64

Funds from operations reconciliation (EUR 31-Mar-- 31-Mar-- million) 19 18 Net profit for the period 29 24 Deferred income tax 1 3 Net valuation gain or loss on investment (4) 3 property
Net valuation gain or loss on revaluation of (4) 1 derivatives
Net gain or loss on disposal of investment 0 0 property
Net gain or loss on disposal of inventory 0 0 Net gain or loss on disposal of assets (1) 0 Amortization, depreciation and impairments 14 7 Other non-recurring / non-cash items 16 9 Funds from operations 50 46

Secured consolidated leverage ratio 31-Mar-- 31-Dec-- reconciliation (EUR million) 19 18 Secured bonds 0 0 Secured financial debts 1,052 1,055 Consolidated adjusted total assets 8,616 8,149 Secured consolidated leverage ratio 12.2% 12.9%

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22.05.2019 Veröffentlichung einer Corporate News/Finanznachricht, übermittelt durch DGAP - ein Service der EQS Group AG. Für den Inhalt der Mitteilung ist der Emittent / Herausgeber verantwortlich.

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Sprache: Deutsch
Unternehmen: CPI PROPERTY GROUP
40, rue de la Vallée
L-2661 Luxembourg
Luxemburg
Telefon: [phone]
Fax: [phone]
E-Mail: [e-mail]
Internet: www.cpipg.com
ISIN: LU0251710041
WKN: A0JL4D
Börsen: Regulierter Markt in Frankfurt (General Standard); Freiverkehr in Düsseldorf, Stuttgart EQS News ID: 814871

Ende der Mitteilung DGAP News-Service
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814871 22.05.2019

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