CPI PROPERTY : reports record financial results for the 2018 financial year

DGAP-News: CPI PROPERTY GROUP / Key word(s): Annual Results/Real Estate CPI PROPERTY GROUP reports record financial results for the 2018 financial year 29.03.2019 / 22:28 The issuer is solely responsible for the content of this announcement. Press Release Luxembourg, 29 March 2019 CPI PROPERTY GROUP reports record financial results for the 2018 financial year CPI PROPERTY GROUP (hereinafter "CPIPG" the "Company" or together with its subsidiaries the "Group"), the largest owner of income-generating real estate in the Czech Republic, Berlin and the CEE region, hereby publishes its results for the financial year ended 31 December 2018. "2018 was an extraordinary year for CPI Property Group. Our core markets of the Czech Republic, Berlin and the CEE region are among the strongest economies in Europe, and demand for real estate remains vibrant," said Martin Nemecek, CEO. "Our asset management teams achieved higher levels of occupancy and rents, leading to record income for the Group. The Group's capital structure was transformed through refinancing, accelerating the process which began in 2017, and our reputation as a leader on the international capital markets is now firmly established. By every measure, CPIPG is doing better than ever." Highlights for the 2018 financial year include: - Total assets of EUR8.3 billion, an increase of EUR0.7 billion from 2017, driven by higher property portfolio valuations primarily in Berlin and the Czech Republic and acquisitions of EUR290 million. - Total revenues of EUR604 million (up 17% versus 2017), reflecting the combined effects of acquisitions in 2017 and 2018 and 4.9% like-for-like growth in rental income. - Substantially improved occupancy to 94.5% at year-end (up 1.7 p.p. versus 2017). - Funds from operations of EUR164 million (up 29% versus 2017). - EPRA NAV rose by 14% to EUR4.5 billion. - Net Loan to Value (LTV) reached a record low of 36.7%. - Strengthened credit ratings: a new "BBB" rating from S&P, Moody's upgrade to "Baa2" and a new "A-" rating from Japan Credit Rating Agency. - Successful issuance of EUR550 million of undated subordinated "hybrid" notes under our EMTN programme in May 2018. - Issuance of EUR840 million of senior unsecured bonds under our EMTN programme in Euros, Swiss Francs and Japanese Yen during 4Q 2018. - Repayment of about EUR1.5 billion of subsidiary bonds and secured loans leading to a streamlined funding structure and improved credit metrics. - Record 65% of unencumbered assets at the end of 2018, relative to 43% at the end of 2017. - Reduction of secured debt from 59% at the end of 2017 to 37% at the end of 2018. - Significant improvement of Net Interest Coverage Ratio to 4.2x for 2018, which only partially reflects the effect of early repayment of high-coupon subsidiary bonds. - CPIPG enhanced financial flexibility in 2018 by signing EUR230 million of 2-year revolving credit facilities; in March 2019 the facilities were replaced by a new EUR510 million 3-year revolving credit facility. - In Q1 2019, the Group further expanded its active presence on the international capital markets through the issuance of senior unsecured bonds in Hong Kong Dollars and US Dollars under the EMTN programme, and the placement of senior unsecured schuldschein (assignable loans). The issuance of bonds and schuldschein, alongside the new revolving credit facility signed in March, meant that the Group had more than EUR1 billion of available liquidity at the end of Q1 2019. "While we are proud of our success, CPIPG is not standing still. The Group will continue focusing on the long-term performance of our properties and the satisfaction of our tenants and communities," said Martin Nemecek. "Most importantly, we will continue investing in the heart of our business: our local teams, who bring their enthusiasm to work every day. Working together, I am certain that CPIPG will enjoy a successful 2019."   FINANCIAL HIGHLIGHTS Performance   31-Dec-18 31-Dec-17 Change           Gross rental income EUR million 302 262 15% Total revenues EUR million 604 515 17% Net business income EUR million 320 272 17%           Consolidated adjusted EBITDA EUR million 270 230 17% Funds from operations (FFO) EUR million 164 127 29%           Profit before tax EUR million 649 841 -23% Interest expense EUR million 78 99 -21% Net profit for the period EUR million 631 695 -9%                         Assets   31-Dec-18 31-Dec-17 Change           Total assets EUR million 8,259 7,529 10% Property Portfolio EUR million 7,555 6,722 12% Gross leasable area sqm 3,318,000 3,329,000 0% Occupancy % 94,5 92,8 1.7 p.p. Like-for-like gross rental growth % 4,9 5,4 -0,5 p.p.           Total number of properties* No. 375 432 -13% Total number of residential units No. 11,917 12,402 -4% Total number of hotel beds** No. 11,300 11,406 -1%           * Excluding residential properties in the Czech Republic ** Including hotels operated, but not owned by the Group             Financing structure   31-Dec-18 31-Dec-17 Change           Total equity EUR million 4,362 3,315 32% EPRA NAV EUR million 4,480 3,934 14%           Net debt EUR million 2,775 3,015 -8% Loan to value ratio (Net LTV) % 36.7 44.9 -8.1 p.p. Secured consolidated leverage ratio % 12.9 25.7 -12.8 p.p. Secured debt to total debt % 36.7 58.5 -21.8 p.p. Unencumbered assets to total assets % 65.1 42.9 22.2 p.p. Net ICR   4.2x 2.6x 1.6x             STATEMENT OF COMPREHENSIVE INCOME The income statement for the 12 months period ended on 31 December 2018 and 31 December 2017 is as follows:   INCOME STATEMENT (EUR million) 31-Dec-18 31-Dec-17       Gross rental income 302 262   Service charge and other income 111 103   Cost of service and other charges (85) (77)   Property operating expenses (56) (56)   Net rental income 272 232   Development sales 30 4   Development operating expenses (31) (4)     Net development income -- --   Hotel revenue 122 112   Hotel operating expenses (82) (73)   Net hotel income Revenues from other business operations 40 39   Other business revenue 38 35   Other business operating expenses (30) (34)     Net other business income 8 1     Total revenues 604 515     Total direct business operating expenses (284) (244)     Net business income 320 272   Net valuation gain* 579 771   Net gain or loss on the disposal of investment property and subsidiaries of investment property and subsidiariesof investment property and subsidiaries 1 4   Amortization, depreciation and impairment (64) (84)   Administrative expenses (49) (42)   Other operating income 7 30   Other operating expenses (7) (4)     Operating result 786 947   Interest income 14 10   Interest expense (78) (99)   Other net financial result* (72) (24)     Net finance costs (136) (112)     Share of profit of equity-accounted investees (net of tax) (1) 6     Profit before income tax 649 841   Income tax expense (18) (147)     Net profit from continuing operations 631 695     * Adjusted comparative information 2017, refer to note 2.4 of Consolidated Financial Statements as at 31-Dec 2018.   Net rental income Net rental income increased by 17% to EUR272 million compared to EUR232 million in 2017, driven by a significant increase in gross rental income reflecting strong like-for-like growth and the extension of our portfolio during the year, as well as the full year impact of properties acquired in 2017. Net valuation gain The gain on revaluation of the property portfolio totals EUR579 million and is based on the valuation reports prepared by independent and reputable appraisers. The revaluation gain reflects the strong efforts of the Group's asset management teams and improved market conditions in our core markets. Czech Republic and Berlin represent 82% (EUR476 million) of the total revaluation gain. The Group reclassified the effect of FX changes on properties from Other net financial result to Net valuation gain/loss. In 2018, due to a slight depreciation of CZK against EUR, the Group recognized an unrealised (non-cash) FX gain of EUR34 million on Euro denominated assets in the Czech Republic. Administrative expenses Administrative expenses amounted to EUR49 million in 2018, an increase of EUR7 million compared to 2017. The increase was primarily associated with additional staff costs due to the higher headcount necessary to support our acquisitions. Interest expense Interest expense amounted to EUR78 million in 2018 compared to EUR99 million in 2017. The Group continuously takes advantage of its strong financial position and credit profile to source low-cost funds, and was able to reduce its average cost of debt from 2.6% in 2017 to 1.6% in 2018. Other net financial result In 2018 other net financial result increased by almost EUR49 million. The difference relates primarily to early repayment of subsidiary bonds. The Group also reclassified the effect of FX changes on properties from Other net financial result to Net valuation gain/loss. BALANCE SHEET   BALANCE SHEET (EUR million) 31-Dec-18 31-Dec-17       NON-CURRENT ASSETS         Intangible assets and goodwill 110 120     Investment property 6,687 5,808     Property, plant and equipment 736 724     Deferred tax assets 195 142     Other non-current assets 91 89     Total non-current assets 7,819 6,883     CURRENT ASSETS         Inventories 72 82     Trade receivables 68 77     Cash and cash equivalents 99 239     Assets linked to assets held for sale 67 113     Other current assets 134 136     Total current assets 440 646     TOTAL ASSETS 8,259 7,529     EQUITY         Equity attributable to owners of the Company 3,776 3,277     Non-controlling interests 44 38     Perpetual notes 542 --     Total equity 4,362 3,315     NON-CURRENT LIABILITIES         Bonds issued 1,648 1,332     Financial debts 1,062 1,593     Deferred tax liabilities 762 710     Other non-current liabilities 53 51     Total non-current liabilities 3,525 3,685     CURRENT LIABILITIES         Bonds issued 7 158     Financial debts 158 165     Trade payables 98 75     Liabilities linked to assets held for sale 2 16     Other current liabilities 108 116     Total current liabilities 372 529     TOTAL EQUITY AND LIABILITIES 8,259 7,529     Total assets and total liabilities Total assets increased by EUR730 million (10%) to EUR8,259 million as at 31 December 2018. The predominant driver of this growth was the expansion of Group's property portfolio which rose by EUR833 million (12%) to EUR7,555 million. Acquisitions totalling EUR290 million, positive asset management efforts to improve rents and occupancy, and a strong market environment were the primary drivers of growth. Non-current and current liabilities totalled EUR3,897 million as at 31 December 2018 which represents a decrease of EUR317 million (7.5%) compared to 31 December 2017. Repayment of subsidiary bonds and secured bank loans from the proceeds of hybrid issuance was the primary driver of this decline. Net LTV dropped to a record low of 36.7%. Bonds issued and financial debts During 2018, the Group issued about EUR840 million of senior unsecured bonds and used the proceeds (together with hybrid proceeds and cash) to repay about EUR1.5 billion of subsidiary bonds and secured loans. At year-end, the Group had EUR1,819 million of unsecured debt, which represented 63% of total debt (versus 41% at the end of 2017). NAV AND EPRA NAV Total equity increased by 32%, from EUR3,315 million as at 31 December 2017 to EUR4,362 million as at 31 December 2018. The main elements impacting equity were: - Robust profit of EUR631 million - Issuance of new hybrid notes of EUR550 million - Share buy-back of EUR145 million - New shares issued of EUR50 million EPRA NAV was EUR4,480 million as at 31 December 2018, an increase of 14% relative to 2017. The main positive effect, aside from the positive equity elements described above, was an increase in deffered tax liability from positive revaluation of the Group's property portfolio. EPRA NAV (EUR million) 31-Dec-18 31-Dec-17       Equity per the financial statements (NAV) 3,776 3,277 Effect of exercise of options, convertibles and other equity interests 0 0 Diluted NAV, after the exercise of options, convertibles and other equity interests 3,776 3,277 Revaluation of trading property and PPE 7 3 Fair value of financial instruments (5) (2) Deferred tax on revaluations 745 697 Goodwill as a result of deferred tax (43) (43) Total 4,480 3,934   For disclosures regarding Alternative Performance Measures used in this press release please refer to our Annual Management Report 2018, chapters Glossary and EPRA Performance; accessible at http://cpipg.com/reports-presentations-en. Audited documents will be available tonight on: http://www.cpipg.com/reports-presentations-en Full Year 2018 audited financial report Full Year 2018 audited management report CPIPG will host a webcast in relation to its financial results for the 2018. The webcast will be held on 9 April 2019 at 11:00am CET. CPIPG will publish participation details at the beginning of April 2019. Investor Contact: David Greenbaum Chief Financial Officer CPI Property Group [e-mail] Media / PR Contact: Kirchhoff Consult AG Andreas Friedemann Borselstraße 20 22765 Hamburg T [phone] F [phone] E [e-mail] 29.03.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de

Language:	English
Company:	CPI PROPERTY GROUP
	40, rue de la Vallée
	L-2661 Luxembourg
	Luxemburg
Phone:	[phone]
Fax:	[phone]
E-mail:	[e-mail]
Internet:	www.cpipg.com
ISIN:	LU0251710041
WKN:	A0JL4D
Listed:	Regulated Market in Frankfurt (General Standard); Regulated Unofficial Market in Dusseldorf, Stuttgart
EQS News ID:	793911

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793911  29.03.2019