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by Property Forum | Report

CA Immo has reported a good operating performance for the first three quarters of 2023. The results show, among other things, a significant increase in rental income (+9%) and high income from the sale of non-strategic properties (sales result of €158 million, FFO II +88%), which led to an increase in the operating result (EBITDA) of 129% compared to the previous year´s figure. In total, CA Immo generated a consolidated net profit of €61.1 million, which was around 77% below the previous year's figure, primarily due to the non-cash-effective, market-related negative result from revaluation.

Key figures

  • Increased rental income (+9% to €172.7 million) reflects project completions in 2022 and higher rental income in the portfolio (incl. indexations)
  • The operating result (EBITDA) increased primarily due to the higher sales result by 129% to €268.4 million (30.9.2022: €117.0 million)
  • Consolidated net profit of €61.1 million (€0.62 per share)
  • Recurring earnings (FFO I) of €82.7 million (–19% compared to the previous year´s figure). FFO II (incl. property sales result) climbed to €158.7 million (+88% yoy)
  • Annual target for 2023: For the full year 2023, the forecast for recurring earnings (FFO I) is raised slightly to over €105 million (€1.07 per share).

Keegan Viscius, CEO of CA Immo said: "Thanks to our proactive portfolio optimisation program which has focused our portfolio on prime assets in attractive urban gateway markets, our business has remained resilient and we are able to report stable occupational figures while delivering strong rental growth. Our development pipeline was further de-risked during the quarter with delivery of the highly profitable 100% occupied Berlin Hochhaus project – 6 months ahead of schedule and 10% under budget. We anticipate that the challenging market conditions and tighter access to capital will create tremendous opportunities for a well-capitalised business such as ours, and with our stable balance sheet, focused business model, and in-house operating expertise we are well-positioned to perform as the trajectory of the economy becomes more transparent.”

Capital rotation program as a cornerstone of the corporate strategy

To emerge stronger from the current market downturn, CA Immo initiated a consolidation and transformation process at an early stage to further improve the group´s portfolio quality and organizational structures. A key pillar of this process is the strategic capital rotation program, which was successfully continued despite headwinds in the markets.

In the first nine months of 2023, the Group concluded a total of eight sales transactions with a total value of around €540 million. Four non-strategic investment properties and four plots of land in Germany that are not primarily suitable for office use were sold. The gross sales prices achieved were on average around 50% higher than the most recently reported book values of the properties. Thanks to the continuous implementation of the capital rotation program, the quality of the portfolio has increased significantly in recent years, primarily due to the increasing focus on modern, large Class A office buildings and the reinvestment and development of new, high-quality office buildings in Germany for the company's own portfolio.

Stable, profitable investment portfolio

Despite the generally subdued landscape for global office demand, CA Immo was able to maintain a stable occupancy rate at around 90% in the first three quarters and record a good leasing performance. A total of around 92,000 sqm of space was newly let or existing rental agreements extended; the rents signed were around 10% above the budgeted rent levels. The weighted average lease term (WAULT) of 4.7 years shows an unchanged willingness on the part of tenants to sign long office leases.

Total property assets of €5.5 billion

The company's core business is commercial real estate with a clear focus on office properties across the gateway cities in Germany, Austria and the CEE region. The segments are divided into Investment Properties (€5.0 billion, 91.3% of the total portfolio) and Investment properties under development (€401.8 million, 7.3% of the total portfolio). The remaining 1.4% (€79.9 million) of the property assets are attributable to properties intended for trading or sale (reported under short-term property assets). As at September 30, 2023, CA Immo's total property assets amounted to €5.5 billion (December 31, 2022: €5.9  billion). The largest regional segment is Germany with a 67% share of the total portfolio, followed by CEE (26%) and Austria (7%). The economic occupancy rate of the investment portfolio remained unchanged at 89.9%.

Outlook and financial guidance for 2023

The company’s strategic priorities remain focused on (1) acceleration of non-core disposals, (2) simplification of our business model, (3) increasing critical mass and driving economies of scale, (4) continued disciplined investment in financially accretive developments and income-producing properties, (5) selective external investment, (6) maintaining a strong balance sheet and stable financing KPI / covenants and (7) returning surplus cash to shareholders.

For the full year 2023, the forecast for recurring earnings (FFO I) is raised slightly to over €105 million (€1.07 per share). The decline compared to the previous year (€125.3 million) reflects in particular the loss in income from the sale of the Romanian platform and other non-strategic assets, which substantially improve the portfolio and earnings quality of CA Immo going forward.