CPI Property Group has published its audited financial results for the financial year ended 31 December 2023, confirming a stable market environment with high occupancy figures. On the other side, the figures have shown a considerable net loss of €877 million, driven predominantly by a non-cash negative revaluation result. Property Forum asked CPIPG spokesman Jakub Velen to comment on the figures and provide an outlook for the year ahead.
The group raised over €2.5 billion of secured and unsecured external financing in 2023, including €1.2 billion of fresh cash. Net debt was reduced by more than €400 million. CPIPG repaid over €1 billion in bridge debt, with the year-end 2023 balance at €608 million, further reduced to below €530 million as of Q1 2024. CPIPG aims for full bridge repayment by the end of H1 2024. Consolidated adjusted EBITDA was €778 million. FFO1 increased to €390 million.
The 2023 CPIPG financial year report highlights that net rental income increased by 25.9% to €796 million, and net business income rose to €874 million. Total assets were €21.9 billion, and EPRA NRV (NAV) was €7 billion. The Group has signed €2 billion of disposals since August 2022, ahead of schedule, with nearly €900 million closed or expected to be closed during Q1 and Q2 2024. A further €2 billion of assets have been identified for disposal in the coming 12 to 24 months.
Occupancy remained high at 92.1% with a stable WAULT of 3.5 years. Strong rental income growth of 7.9% on a like-for-like basis reflects the contribution from inflation indexation and a stable market environment. Annualised topped-up net rental income increased by 2.7% to €801 million.
CPIPG’s property portfolio was €19.5 billion (versus €20.9 billion at year-end 2022) due to €930 million of completed disposals and a negative revaluation result of €1.1 billion, partially offset by €376 million of CapEx and other additions. Net Loan-to-Value (LTV) was 52.3% at year-end 2023, above our target, due to the negative revaluation result and timing of disposals; Net LTV is 49.8% pro-forma for disposals already signed.
„From a day-to-day operational perspective, we achieved a record result with a net business income of €874 million, a 29% increase year-over-year due to the contributions from Immofinanz and S IMMO, healthy rental growth, high occupancy and the ongoing recovery in hotel operations,“ explains Jakub Velen, PR & Marketing Director/Spokesman at CPIPG.
He also admits: „On the other hand, the net loss of almost €1 billion is driven predominantly by a non-cash negative revaluation result for our properties as they are accounted for at fair value prices on our balance sheet with values determined by independent external appraisers and reviewed by auditors. Most of these non-cash accounting losses are related to Germany and office properties, as higher interest rates negatively impacted valuations, partially offset by rental growth. Given that returns on German properties are lower than in our CEE region, the valuations are more sensitive to changes in interest rates.“
With the outlook for 2024, Jakub Velen remains optimistic: „As interest rates seem to have plateaued and are expected to decline, we also expect more stable valuations going forward. We can already observe this here in the Czech Republic, where the National Bank started to cut its monetary policy rate at the end of December 2023, with the latest reduction last month.“
The group announced a €2 billion disposal pipeline in August 2022, with a target completion by August 2024. As of 28 March, the company has signed €2 billion of disposals, of which €900 million have closed or are expected to close during Q1 and Q2 2024. Considering the strategic priority of reducing leverage, the group has identified a further €2 billion disposal pipeline with a goal of execution in the next 12 to 24 months.
On 10 March, CPI also announced that the group is in advanced negotiations about a potential equity investment by Apollo Funds into GSG via a subscription of common shares for a total value of up to €450 million. A decision to proceed with the transaction has not been made and is subject to a final agreement on binding transaction documents and confirmation of rating agency treatment.
