According to CPI Property Group's financial results for H1 2023, the group's rental income continues to rise, even as it works on its disposal and deleveraging plans. The group's CEO expects a similar trend for the rest of the year.
“CPIPG’s rental income continues to rise, even as the Group makes excellent progress on our disposal and deleveraging plans,” said Martin Němeček, CEO and added, “I have every confidence that the second half of 2023 will show similar trends.”
Highlights for the first half of 2023 include:
- Total assets were €23.1 billion, and EPRA NRV (NAV) grew to €8.1 billion.
- CPIPG’s property portfolio was €20.3 billion (versus €20.9 billion at year-end 2022).
- The Group completed €657 million of disposals during H1 2023. In total, more than €900 million of disposals have been executed since CPIPG’s €2 billion disposal plan was announced in August 2022.
- The contracted gross rent was €907 million. Net rental income increased to €399 million and net business income rose to €437 million.
- Hotels reported net income of €29 million, reflecting the recovery of travel across Europe.
- Consolidated adjusted EBITDA was €394 million, while FFO1 was €209 million.
- Rental income grew 8.3% on a like-for-like basis. A high proportion of the Group’s rents are indexed, and CPIPG has faced no difficulty to date passing inflation on to our tenants.
- Net Loan-to-Value (LTV) decreased to 49.9%, down 1 p.p. from year-end 2022. CPIPG remains confident in our target LTV range of 45-49% by year-end 2023. Net Debt was reduced by more than €500 million.
- The Group signed multiple secured bank loans and continued to raise senior unsecured debt, contributing to a total of more than €850 million in fresh external financing year to date.
- Total available liquidity was €2 billion as of 30 June.
Update on bridge financing:
In connection with the acquisitions of Immofinanz and S Immo in 2022, CPIPG borrowed €2.7 billion through bridge loans from our relationship banks. As of 31 August 2023, about €1.7 billion of the bridge loans have been repaid through disposals, fresh external financing, and existing liquidity resources, for a current balance of about €1 billion. CPIPG expects to make additional bridge repayments during September and October, further reducing the balance.
On 30 August 2023, CPIPG signed a new €635 million 3-year bridge loan provided by Santander, Société Générale, Komerční banka, Raiffeisen, SMBC, Barclays, and Erste Bank. The new bridge loan, which includes an accordion feature of up to €1 billion to accommodate potential additional lending interest from our relationship bank group, is expected to be drawn by the end of October and will replace the existing bridge arrangements.
Net rental income
Net rental income increased by €135.3 million (51%) to €398.6 million in H1 2023 primarily due to the acquisitions of Immofinanz and S Immo and strong like-for-like rental growth.
Net hotel income
Net hotel income increased from €7.6 million in H1 2022 to €29.5 million in H1 2023 as travel demand improved significantly across Europe and due to the acquisition of S Immo.
Net valuation loss
Net valuation loss of €217.2 million in H1 2023 primarily relates to Immofinanz (€119 million) and S Immo (€80 million), mainly lower-yielding office and residential portfolios in Germany and offices in Austria.
Other operating income
Other operating income decreased in H1 2023 as there was a one-off bargain purchase from the acquisition of Immofinanz and S Immo of €285.9 million recognised in H1 2022.
Interest expense
Interest expense increased by €84.2 million in H1 2023 compared to H1 2022 primarily due to the acquisition of Immofinanz (€9.2 million) and S Immo (€18.2 million), the overall increase of cost of new financing and the relatively higher cost of the Group’s temporary bridge financing.
Total assets
Total assets decreased by €454.8 million (1.9%) to €23,066.4 million as of 30 June. The decrease was driven primarily by revaluation of investment property of negative €217.2 million and property disposals of €657 million, offset by value-enhancing CapEx investments of €155 million.
Total liabilities
Total liabilities decreased by €548.3 million (3.8%) to €13,709.9 million as of 30 June 2023 compared to 31 December 2022, largely due to the repurchase of bonds issued by CPIPG of €345.2 million and the repayment of Immofinanz bonds of €197.5 million. Further, there was a decrease in liabilities due to disposals of €121.4 million. On the other hand, financial debts increased by €218.1 million due to new loans.
Total equity increased by €44.6 million to €9,307.5 million as of 30 June 2023. The movements of equity components were primarily as follows:
- Decrease due to the loss for the period of €50.1 million (loss to the owners of €69.2 million);
- Decrease in revaluation and hedging reserve in a total of €8.5 million;
- Increase in translation reserve of €109.2 million;
EPRA NRV was €8,051 million as of 30 June 2023, representing an increase of 0.6% compared to 31 December 2022. The increase of EPRA NRV was driven by the above changes in the Group’s equity attributable to the owners (translation reserve).
