In Q1-Q3 2022, CA Immo was able to increase its recurring earnings (FFO I) by 2.4% year-on-year to €102.5 million in the third quarter. Rental income rose by 2.5% to €158.1 million in the first nine months. The recent portfolio expansions and higher rental income from investment properties thus more than offset the effects from portfolio sales. Consolidated net income rose by 40% to €267.5 million, driven among other things by a strong revaluation result (Q1-Q3 2021: €180.4 million). The positive development in the third quarter was mainly due to the good letting business and the takeover of two project completions into the own portfolio. Following the strong first nine months, CA Immo confirms its earnings forecast for 2022 and expects recurring earnings (FFO I) of more than €125 million.
The value of total property assets increased by around 5% compared to the end of 2021 to €6.5 billion at the end of Q3 2022; around 80% of this is accounted for by investment properties (€5.3 billion) and around 11% by investment properties under development (€0.7 billion), the remaining 9% is intended for trading or sale (short-term property assets, incl. discontinued operation Romania). Around 62% of the total property assets are attributable to Germany, the largest single market.
Silvia Schmitten-Walgenbach, CEO of CA Immo said: “We are making good progress in the consistent implementation of our strategic capital rotation programme. Despite the challenging market environment, we were able to successfully complete the announced sale of our Romanian platform. This not only advances our focus on our core market of Germany, but also increases the quality of our portfolio and significantly improves our liquidity position. This makes CA Immo even more resilient in times of rapidly changing conditions for the real estate sector.”
Robust demand for premium offices in central locations
In the first nine months of 2022, CA Immo concluded or extended leases for a total of around 112,800 sqm of existing space, an increase of around 15% on the same period last year (excl. Romania). In addition, a total of around 10,500 sqm of usable space was pre-let in project developments.
Slight increase in rental income despite the sale of non-strategic properties
CA Immo recorded a slight increase in rental income by +2.5% to €158.1 million in the first nine months of 2022. This development is mainly related to the completion of project developments and the purchase of Kasernenstrasse 67 asset in Duesseldorf (+€7.7 million year-on-year) as well as higher rental income from investment properties (+€2.3 million year-on-year), which more than compensated for the decline in rental income from the sale of non-strategic properties as part of the strategic capital rotation program (€–6.2 million year-on-year).
Strategic capital rotation programme to further improve portfolio quality
In particular, CA Immo has made further progress in implementing the strategic capital rotation programme, with the sale of the Romanian platform, the signed sale of the Mechelgasse 1 hotel and office property in Vienna, and the planned sale of Hamburger Bahnhof and Rieckhallen in Berlin in connection with the acquisition of an attractive building plot in the immediate vicinity of Berlin's main railway station. The sale of the Romanian portfolio was completed shortly after the signing, the closing of the building complex in Vienna is expected in Q1 2023. CA Immo has thus further enhanced the quality of the portfolio in line with the strategy and significantly strengthened its liquidity position. CA Immo is thus very well positioned and – in a more difficult market environment – has significantly increased its stability and resilience as well as its further options for action.
Challenging and uncertain environment changes framework conditions for real estate
High energy prices as a result of the Russian war of aggression against Ukraine, rapidly rising construction costs and the significant interest rate increases by the central banks to combat inflation are currently significantly changing the framework conditions for the real estate sector. A recession is generally expected in Europe in the coming months. In addition, tenants are placing increasing demands on office space against the backdrop of hybrid working environments and the transition to a sustainable economy. CA Immo is responding to these changes from a position of strength and sees them as an opportunity.
Ongoing review and further development of the strategy
In order to further enhance its competitiveness, future viability and resilience, CA Immo is sharpening its strategy in an ongoing process. In doing so, it is essentially pursuing three thrusts. Firstly, a further increase in the quality of the portfolio through a clear focus on the core market of Germany and the gradual sale of properties that do not or no longer meet the strategic requirement profile. In the medium term, the share of German properties in the portfolio is to be increased from currently 62% to over 75%. Secondly, the transformation to a sustainable company is to be accelerated. And thirdly, CA Immo is pursuing the consistent optimisation of organisational and cost structures in order to generate value for all stakeholders.
Annual target for 2022 confirmed
Against the backdrop of the positive business development in the first nine months, CA Immo remains confident for the remainder of the business year despite the fundamentally changing environment. The communicated target for 2022 of achieving recurring earnings (FFO I) of more than €125 million (FFO I 2021: € 128.3 million) is confirmed.
