CPI PROPERTY GROUP publishes financial results for 2022

EQS-News: CPI PROPERTY GROUP / Key word(s): Annual Report/Real Estate
CPI PROPERTY GROUP publishes financial results for 2022
31.03.2023 / 23:58 CET/CEST
The issuer is solely responsible for the content of this announcement.
CPI Property Group (societe anonyme)

40, rue de la Vallee L-2661 Luxembourg R.C.S.

Luxembourg: B 102 254 Press Release – Corporate News Luxembourg, 31 March 2023

CPI PROPERTY GROUP publishes financial results for 2022 CPI PROPERTY GROUP (hereinafter “CPIPG“, the “Company” or together with its subsidiaries the “Group“) hereby publishes audited financial results for the financial year ended 31 December 2022. “2022 was an exceptional year of change for CPIPG,” said Martin Nemecek, CEO. “Through our acquisitions of IMMOFINANZ and S IMMO, the Group became one of Europe’s largest landlords.

In 2023 we will focus on integration, optimisation, and reducing leverage.” The Group fully consolidates the assets, liabilities, and equity of IMMOFINANZ and S IMMO. Income-related measures are reported proportionately, reflecting the acquisition timing during 2022.

Highlights of the 2022 financial year include:

CPIPG’s property portfolio reached EUR20.9 billion (versus EUR13.1 billion at year-end 2021) as the Group consolidated IMMOFINANZ (EUR5.3 billion) and S IMMO (EUR3.4 billion) and made nearly EUR900 million of disposals during 2022. Disposals continued in 2023, with about EUR400m signed in Q1.
Total assets reached EUR23.5 billion, and EPRA NRV (NAV) grew to EUR8.0 billion.
Contracted gross rent was EUR906 million.
Net rental income increased to EUR632 million and net business income rose to EUR676 million.
Hotels reported net income of EUR46 million, reflecting the recovery of travel across Europe in 2022.
Consolidated adjusted EBITDA was EUR608 million, while FFO1 was EUR355 million.
Rental income grew 7.6% on a like-for-like basis. Rental growth was primarily organic. A high proportion of the Group’s rents are indexed; based on early data, inflation may have an 8%+ positive effect on rents in 2023.
Net Loan-to-Value (LTV) increased to 50.9% at year-end 2022, outside of the Group’s financial policy targets.

CPIPG’s top priority is to reduce leverage through disposals and other measures and we expect a Net LTV of 45-49% by year-end 2023.
Total available liquidity was EUR2 billion, including EUR910 million of undrawn revolving credit facilities, the majority of which mature in early 2026.
Unencumbered assets decreased to 54%, reflecting the high proportion of secured debt at IMMOFINANZ and S IMMO. CPIPG prefers senior unsecured borrowings, but in the current environment secured loan pricing is substantially more attractive. Like CPIPG, IMMOFINANZ and S IMMO have well-established relationships with a broad range of international and regional secured lenders, which we see as an advantage.
Net ICR was 3.2x. The Group has a low-cost, long-dated debt maturity profile and sees strong potential to improve the ICR through deleveraging and the expectation of higher rents over time.

Notable events occurring after the end of 2022

Financing activity On 6 March 2023, the Group signed a EUR100 million unsecured term loan with MUFG with a five-year maturity. In keeping with CPIPG’s commitment to reduce the greenhouse gas (“GHG”) emissions intensity of our property portfolio by 32.4% through 2030 versus the 2019 baseline, the loan’s margin will step up or step down on an annual basis from 2023 onwards.

On 31 March 2023, the Group signed a GBP35 million five-year secured loan with Rothschild & Co. against a portion
of our UK assets. CPIPG remains in active discussion with banks about secured loans in Germany, the Czech Republic, Poland, the UK and other geographies.
Disposals

In January 2023, our subsidiary S IMMO sold a commercial park near Munich. In March 2023, S IMMO sold a large residential portfolio in Berlin. In March 2023, IMMOFINANZ sold an office property in Vienna.

In total, the Group signed disposals in Q1 2023 of about EUR400 million.
Therefore, the Group has achieved over EUR750 million of gross disposal proceeds since August 2022, when CPIPG announced a disposal pipeline exceeding EUR2 billion to be executed over the following 12 to 24 months.
CPIPG still has more than 30 disposal projects in execution, with about EUR1 billion of letters of intent signed.

ESG rating upgrade On 24 February 2023, CPIPG announced that the Group had received a rating of BBB (on a scale of AAA – CCC) in the MSCI ESG Ratings assessment, an improvement from the previous rating of BB. Key drivers for the higher rating were the larger share of certified green buildings, green leases, and enhanced corporate governance.

Annual results webcast CPIPG will host a webcast in relation to its financial results for 2022. The webcast will be held on Thursday, 6 April 2023 at 11:00 am CET / 10:00 am UK.

Please register for the webcast in advance via the link below: https://edge.media-server.com/mmc/p/2e5qbxvh FINANCIAL HIGHLIGHTS

Performance		2022	2021	Change

Total revenues	EUR million	1,282	664	93.1%
Gross rental income (GRI)	EUR million	749	402	86.3%
Net rental income (NRI)	EUR million	632	363	74.1%
Net hotel income	EUR million	46	14	230.0%
Net business income (NBI)	EUR million	676	385	75.3%

Consolidated adjusted EBITDA	EUR million	608	368	64.9%
Funds from operations (FFO)	EUR million	355	254	40.1%

Net profit for the period	EUR million	557	1,292	(56.9%)



Assets		31-Dec-2022	31-Dec-2021	Change

Total assets	EUR million	23,521	14,369	63.7%
Property portfolio	EUR million	20,855	13,119	59.0%
Gross leasable area	sqm	6,784,000	3,667,000	85.0%
Share of green certified buildings*	%	32.1	24.2	7.9 p.p.
Occupancy	%	92.8	93.8	(1.0 p.p.)
Like-for-like gross rental growth**	%	7.6	3.3	4.3 p.p.

Total number of properties***	No.	855	367	133.0%
Total number of residential units	No.	16,767	11,755	42.6%
Total number of hotel rooms****	No.	7,810	7,025	11.2%

* According to GLA Based on gross rent, excluding one-time discounts in 2021, CPIPG standalone * Excluding residential properties in the Czech Republic **** Including hotels operated, but not owned by the Group

Financing structure		31-Dec-2022	31-Dec-2021	Change

Total equity	EUR million	9,263	7,695	20.4%
EPRA NRV (NAV)	EUR million	8,005	7,039	13.7%

Net debt	EUR million	10,625	4,682	127.0%
Net Loan-to-value ratio (Net LTV)	%	50.9	35.7	15.2 p.p.
Net debt/EBITDA	x	17.5x	12.7x	4.8x
Secured consolidated leverage ratio	%	19.5	9.8	9.7 p.p.
Secured debt to total debt	%	38.9	27.0	11.9 p.p.
Unencumbered assets to total assets	%	54.4	70.4	(16.0 p.p.)
Unencumbered assets to unsecured debt	%	179%	267%	(88.0 p.p.)
Net ICR	x	3.2x	4.6x	(1.4x)

CONSOLIDATED INCOME STATEMENT

	Twelve-month period ended
(EUR million)	31 December 2022	31 December 2021
Gross rental income	748.5	401.8
Service charge and other income	315.1	139.1
Cost of service and other charges	(281.8)	(116.2)
Property operating expenses	(150.0)	(61.8)
Net rental income	631.8	362.9
Development sales	–	12.9
Development operating expenses	–	(9.4)
Net development income	–	3.5
Hotel revenue	165.1	66.4
Hotel operating expenses	(119.6)	(52.6)
Net hotel income Revenues from other business operations	45.5	13.8
Other business revenue	53.2	43.6
Other business operating expenses	(54.8)	(38.4)
Net other business income	(1.6)	5.2
Total revenues	1,281.9	663.8
Total direct business operating expenses	(606.2)	(278.4)
Net business income	675.7	385.4
Net valuation gain/(loss)	(88.8)	1,275.8
Net gain on disposal of investment property and subsidiaries	35.9	34.5
Amortization, depreciation and impairment	(99.5)	(52.0)
Administrative expenses	(128.7)	(58.4)
Other operating income	331.8	6.5
Other operating expenses	(24.9)	(5.8)
Operating result	701.5	1,586.0
Interest income	20.3	17.9
Interest expense	(210.2)	(97.3)
Other net financial result	151.3	39.3
Net finance costs	(38.6)	(40.1)
Share of gain of equity-accounted investees (net of tax)	19.1	15.1
Profit before income tax	682.0	1,561.0
Income tax expense	(124.8)	(269.4)
Net profit from continuing operations	557.2	1,291.6

Net rental income

Net rental income increased by EUR269.0 million (74.1%) to EUR631.8 million in 2022 primarily due to the acquisitions of IMMOFINANZ and S IMMO (EUR191.8 million and EUR58.2 million, respectively). Net hotel income In 2022, net hotel income improved to EUR45.6 million, an increase of EUR31.8 million (230%) due to the recovery of travel demand across Europe.

Net valuation gain In 2022, the net valuation loss of EUR88.8 million, primarily due to the acquisitions of IMMOFINANZ and S IMMO generated losses of EUR111.8 million and EUR107.4 million, respectively. On the other hand, valuation gains were generated mainly by the Czech residential portfolio (EUR107.0 million)

The moderate decline in valuations of less than 1% reflects the Group’s diverse portfolio of higher-yielding assets coupled with CPIPG’s ability to increase rents as an offset against higher yield requirements. Other operating income In 2022, the Group realized other operating income of EUR331.8 million.

Of the amount, bargain purchase related to acquisition of IMMOFINANZ and S IMMO was EUR189.3 million and EUR129.1 million, respectively. Interest expense Interest expense increased by EUR112.9 million to EUR210.2 million in 2022 due to the acquisition of IMMOFINANZ (EUR64.4 million) and S IMMO (EUR15.9 million) and overall increase of bank loans and bonds issued.

Other net financial result The other net financial result reflects primarily a change in fair value on derivative instruments (EUR163.1 million). CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(EUR million)	31 December 2022	31 December 2021
NON-CURRENT ASSETS
Intangible assets and goodwill	126.7	114.0
Investment property	18,486.2	10,275.8
Property, plant and equipment	1,100.0	854.6
Deferred tax assets	176.8	164.1
Equity accounted investees	732.3	1,216.1
Other non-current assets	668.5	338.0
Total non-current assets	21,290.5	12,962.6
CURRENT ASSETS
Inventories	23.5	11.8
Trade receivables	197.8	105.7
Cash and cash equivalents	1,033.2	501.8
Assets linked to assets held for sale	596.5	588.5
Other current assets	379.7	198.6
Total current assets	2,230.7	1,406.4
TOTAL ASSETS	23,521.2	14,369.0
EQUITY
Equity attributable to owners of the Company	6,579.8	5,991.8
Perpetual notes	1,584.4	1,611.6
Non-controlling interests	1,098.8	91.2
Total equity	9,263.0	7,694.6
NON-CURRENT LIABILITIES
Bonds issued	4,680.4	3,693.7
Financial debts	6,165.6	1,164.4
Deferred tax liabilities	1,727.9	1,082.4
Other non-current liabilities	208.2	96.2
Total non-current liabilities	12,782.1	6,036.7
CURRENT LIABILITIES
Bonds issued	405.8	41.1
Financial debts	360.4	233.5
Trade payables	232.2	116.2
Other current liabilities	477.7	246.9
Total current liabilities	1,476.1	637.7
TOTAL EQUITY AND LIABILITIES	23,521.2	14,369.0

Total assets

Total assets increased by EUR9,152.2 million (64.7%) to EUR23,521.2 million at 31 December 2022 compared to 31 December 2021. The increase was driven primarily by investment property acquisitions, development costs and other additions (EUR8,669.6 million) and increase of cash and cash equivalents due to IMMOFINANZ and S IMMO (EUR660.3 million). Total liabilities

Total liabilities increased by EUR7,583.8 million (113.6%) to EUR14,258.2 million at 31 December 2022 compared to 31 December 2021, largely due to incremental debt issuance (EUR2,215.7 million) and IMMOFINANZ and S IMMO acquisitions (EUR2,246.0 million and EUR988.1 million, respectively).
The increase of deferred tax liability was primarily due to acquisitions of IMMOFINANZ and S IMMO (EUR318.7 million and EUR262.2 million, respectively). EQUITY AND EPRA NRV

Total equity increased by EUR1,568.3 million to EUR9,262.9 million as at 31 December 2022. The movements of equity components were mainly as follows:

Increase due to the profit for the period of EUR557.2 million (profit to the owners of EUR457.0 million);
Decrease due to share buy-back EUR190.3 million;
Increase in revaluation and hedging reserve in total of EUR56.1 million;
Increase in translation reserve of EUR64.5 million;
Increase from transactions with NCI in total of EUR1,184.2 million
Decrease due to issuance and repayment of perpetual notes net of EUR102.3 million.

EPRA NRV was EUR8,005 million as at 31 December 2022, representing increase of 13.7% compared to 31 December 2021. The increase of EPRA NRV was driven by the above changes in the Group’s equity attributable to the owners (increase of retained earnings and other reserves).

	31 December 2022	31 December 2021

Equity attributable to the owners (NAV)	6,580	5,992
Effect of exercise of options, convertibles and other equity interests	–	–
Diluted NAV	6,580	5,992
Fair value of financial instruments	(243)	–
Deferred tax on revaluations	1,711	1,090
Goodwill as a result of deferred tax	(43)	(43)
EPRA NRV (EUR million)	8,005	7,039

For disclosures regarding Alternative Performance Measures used in this press release please refer to our Annual Management Report 2022, chapters Glossary of terms, Key ratio reconciliations and EPRA performance; accessible at http://cpipg.com/reports-presentations-en.

Audited documents will be available tonight at the following link: http://www.cpipg.com/reports-presentations-en
2022 audited financial report

2022 audited management report For further information please contact:
Investor Relations

David Greenbaum Chief Financial Officer
[email protected]
Moritz Mayer

Manager, Capital Markets
[email protected]
For more on CPI Property Group, visit our website: www.cpipg.com Follow us on Twitter (CPIPG_SA) and LinkedIn

31.03.2023 CET/CEST Dissemination of a Corporate News, transmitted by EQS News – a service of EQS Group AG.
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