by Property Forum | Report

The Management Board and Supervisory Board of CA Immo have decided to start evaluating all strategic options for the core market of Romania, including a potential sale of the entire portfolio. The company published its interim results for Q1-Q3 2021.


Key results

  • Recurring earnings (FFO I) of €100.1 million (€1.03 per share) 4% below the previous year's value
  • Rental income stable at €175.8 million (Q1-Q3 2020: €177.6 million)
  • Operating result (EBITDA) of €160.0 million up 18% on the previous year's figure
  • Strong consolidated net profit of €190.8 million 117% above the previous year´s figure (Q1-Q3 2020: €88.0 million)
  • Strategic options for the core market of Romania being evaluated, including a potential sale of the entire portfolio

Andreas Quint, CEO of CA Immo said: "After the first nine months of 2021, we can present an unchanged stable operating performance record, which is primarily characterised by successfully completed sales transactions and good progress in the implementation and pre-letting of the development pipeline. All sales in the reporting period were concluded at prices that were significantly higher than the book values of the properties sold. During the same period, we were able to add a total of three of our own project completions to the portfolio. Our strategic capital rotation programme is thus running very profitably and contributes significantly to earnings growth and to securing the long-term value and competitiveness of our portfolio.”

Results of the first nine months of 2021

FFO I, a key indicator for the sustainable earnings power of the Group, which is reported before tax and adjusted for the sales result and other non-sustainable effects, stood at €100.1 million after the first nine months of 2021, 4.4% below the previous year´s figure of €104.7 million. FFO I per share amounted to €1.03 as at the reporting date (Q1-Q3 2020: €1.13 per share). FFO II, including the sales result and after tax an indicator of the overall profitability of the Group, totalled €105.1 million compared to €94.9 million in 2020 (+10.8%). FFO II per share stood at €1.08 per share (Q1-Q3 2020: €1.02 per share).

CA Immo recorded a slight decline in rental income of 1.0% to €175.8 million in the first nine months of 2021. This development is related to the property sales of the past quarters, which could not be fully compensated by the positive rental contributions from project completions and acquisitions of investment properties in the same period. Net result from rent totalled €152.8 million after the first nine months (Q1-Q3 2020: €159.5 million), a decline of 4.2% year-on-year. This decline is based, among other things, on a positive effect in the 1st half of 2020 in the amount of €3.7 million in connection with proceedings decided in favour of CA Immo regarding the payment of building taxes (release of provisions for property-related taxes). The Covid-19 pandemic impacted net rental income by €–2.8 million in the first nine months of 2021.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 17.5% to €160.0 million (compared to €136.1 million in 1-3Q 2020). Adjusted, among other things, for the above-mentioned provision for the BUWOG lawsuit in the amount of approximately €26.0 million in 2020, EBITDA as of 30 September 2021 is 3.2% above the previous year's value.

Balance sheet strength and high liquidity

Convertible bonds with a nominal value of €200.0 million were converted over the reporting period, a significant factor for the increase in the equity ratio to 50.2% (2020: 45.9%) as well as an improvement in all balance sheet and financing ratios. As at the key date, CA Immo has cash and cash equivalents of €847.2 million (2020: €934.9 million).

Portfolio optimization through strategic capital rotation continued

CA Immo continued its strategic capital rotation programme in Q3 2021. A number of property sales, which were already successfully completed in Q1 (including the sale of the BBC 1 and 2 office complex in Bratislava and several sales of non-strategic plots in Germany), were followed in Q3 by the sale of a smaller office building in Budapest. At the same time, two office buildings were added to the portfolio as planned with the completion of the Missouri Park and Mississippi House office projects in Prague. Including the ZigZag office project in Mainz, which was completed in the first quarter, CA Immo added three self-developed office buildings to its own portfolio in the first nine months. The value of total property assets stands at €5.9 billion (+5% compared with year-end 2020). Around 57% of the portfolio (based on book value) is attributable to Germany, the largest single market, around 9% account for Austria and 34% for the CEE region. The Group-wide occupancy rate fell to 90.0% (2020: 94.8%), which is primarily due to declines in occupancy in the Hungarian and Serbian portfolio. The net asset value EPRA NTA per share (diluted) was €41.81 as at the reporting date (after €40.09 as at 31 December 2020).

Outlook

The FFO I annual target for 2021 of around €128 million is confirmed. The successful sale of non-strategic assets as part of the strategic capital rotation program is also expected to lead to a strong EBITDA-accretive sales result and a corresponding inflow of liquidity.

The continuous sales activity of non-strategic assets, combined with weaker letting momentum should generate FFO I for 2022 which, from today´s perspective, will be below the target of €140 million. This development is largely driven by ongoing uncertainties and delays in the letting markets, especially in connection with the recent worsening of the Covid-19 pandemic in our core markets. The final impact of the pandemic and its economic consequences cannot be conclusively assessed in light of the recent increase in negative developments, but are subject to ongoing evaluation by CA Immo.

In addition, the Management Board and Supervisory Board of CA Immo have decided to start evaluating all strategic options for the core market of Romania, including a potential sale of the entire portfolio.

As a result of the dynamic developments described above, the Management Board intends to specify the FFO I target for the 2022 business year in the first half of next year.