CA Immo: Strong operating result in a challenging market environment in 2023

Higher rental income and profitable sales lead to 115% increase in EBITDA

• Increased rental income (+8% to €231.4m) reflects project completions in 2022 and higher rental income in the portfolio.
• The operating result (EBITDA) increased primarily due to the higher sales result by 115% to €322.1m (31.12.2022: €149.5m).
• Consolidated net profit of €-224.5m (€-2.28 per share), mainly driven by a non-cash negative revaluation result.
• With recurring earnings (FFO I) of €113.8m, the financial target defined for the 2023 financial year (recurring earnings of over €105m) was exceeded.
• FFO II (incl. property sales result) climbed to €244.7m (+102% yoy).
• Dividend: In line with the Group´s dividend policy to pay out around 70% of recurring earnings (FFO I), the Management Board will propose a dividend payment of €0.80 per share at the Annual General Meeting to be held on May 2, 2024.

Vienna, March 20. CA Immo, the real estate company specializing in high-quality office space, can report a solid operating performance for the 2023 business year. The results show, among other things, a significant increase in rental income (+8%) and high income from the sale of non-strategic properties (sales result of €179m, FFO II +102%), which led to an increase in the operating result (EBITDA) of 115% compared to the previous year´s figure. Although the company had to record a market-driven non-cash revaluation loss of €532m in 2023, the EBITDA of €322m offsets a large part of the full-year revaluation loss, resulting in a consolidated net income of €-224.5m for financial year 2023.

Strong liquidity, a robust balance sheet with balanced maturity profile of long-term liabilities and continued access to capital (unused €300m revolving credit facility) ensure stability and resilience even in this uncertain market situation and increase the Group´s scope for active portfolio management.

Keegan Viscius, CEO of CA Immo: "In recent years, we have maintained a proactive, disciplined approach to our activities as an investor, manager, and developer of modern prime office, and focused early on divesting non-core assets, simplifying the business model, increasing economies of scale in our core markets, and accretive reinvestment, while maintaining a strong balance sheet and returning surplus capital to shareholders. Thanks to this forward-looking approach, we were also able to operate from a position of strength in 2023, remain competitive in an uncertain market environment, and are well prepared for future growth when the real estate markets recover again."

Capital rotation program as a strategic priority
CA Immo has been pursuing a course of consolidation and portfolio optimization for several years to continuously improve the Group´s portfolio quality and organizational structures. Thanks to various measures taken in recent years, e.g. early exit from weaker and peripheral locations and assets and de-risking of the development pipeline, the company has actively minimised the impact of the current challenging real estate market environment on its business activities. Despite low transaction activity, the Group was able to continue the strategic value-accretive capital rotation programme in 2023.

In 2023,, the Group concluded a total of ten sales transactions with a total value of around €580m. Five non-strategic investment properties and five German plots of land that are not primarily suitable for prime office use were sold above book values. This has further strengthened the portfolio focus on modern, large Class A office buildings (94% office share in the portfolio) in Germany´s most attractive and established metropolitan cities (66% portfolio share in Germany).

Stable, profitable investment portfolio
Despite the generally subdued landscape for global office demand, CA Immo was able to maintain a stable occupancy rate at around 89% in 2023 and record a good leasing performance. The rents signed were around 8% above the budgeted rent levels. The weighted average lease term (WAULT) of 4.7 years shows an unchanged willingness on the part of tenants to sign long office leases.

Lean development pipeline
The development pipeline currently comprises one office building under construction located at Berlin's central station and a residential project in Mainz (CA Immo JV share 50%). The Berlin office project Hochhaus am Europaplatz with 23,000 sqm of rental space was completed and handed over to the tenant KPMG in the third quarter of 2023 - six months ahead of schedule and well below budget. The Berlin office project Upbeat, which is still under construction, is 100% pre-let and on track to complete in early 2026.

Results for the 2023 business year
CA Immo recorded an 8% increase in rental income to €231.4m in 2023 despite the sale of non-strategic properties. This development is predominantly related to higher rental income in investment properties and the completion of development projects in the previous years.

The result from property sales amounted to €179.2m (31.12.2022: €11.7m) due to profitable sales activities. The sales of the Langes Land plot in Munich, Hamburger Bahnhof and Rieckhallen properties in Berlin as well as the Rennweg/Mechelgasse property in Vienna made the largest contribution to the sales result.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased as a result of the developments described above (primarily due to the higher sales result) by 115% to €322.1m (31.12.2022: €149.5m). In addition to the increase in rental income, the main driver of the significant increase in EBITDA was the profitable sales activity in Germany.

The revaluation result totaled €-532.0m (31.12.2022: €-94.1m) and reflects the significantly changed market environment for office properties. The sharp increase in inflation in the previous year (2022) led to significantly higher interest rates and lower economic growth within a short period of time. This impacted the real estate markets in the form of lower demand for office space, a sharp decline in transaction volumes and higher yields, and ultimately resulted in significantly falling property values throughout 2023 - particularly in the course of the year-end-revaluation by external appraisers. On a like-for-like basis, the value of the investment properties declined by 8%.

Earnings before interest and taxes (EBIT) of €-217.6m was significantly below the 2022 result of €74.4m, primarily driven by the negative revaluation result.

The financial result for 2023 was €-81.1m (31.The financial result for 12.2022: €43.5m). The previous year's result was mainly driven by the positive result from interest rate derivatives. The Group's financing costs amounted to €-54.5m, (31.12.2022: €-49.8m).

At €-224.5m, consolidated net income wasbelow the previous year's figure of €75.5m, primarily burdened by the non-cash negative revaluation result. Earnings per share amounted to €-2.28 on the balance sheet date (€0.75 per share in 2022).

In 2023, FFO I of €113.8m was generated, which is 9% below the previous year's figure of €125.3m. The FY 2023 guidance of >€105m was therefore exceeded. The reduction is primarily due to the intensive sales activity in recent quarters (including the sale of the Romanian platform in Q4 2022) and the associated loss of income. As a result of these sales, FFO II increased significantly by 102% to €244.7m.

Total Property assets of €5.2bn
The company's core business is office properties across the gateway cities in Germany, Austria and the CEE region. The segments are divided into investment properties (€4.8bn, 92% of the total portfolio) and investment properties under development (€344.1m, 7% of the total portfolio). The remaining 1% (€61.1m) of the property assets are attributable to properties intended for trading or sale (reported under short-term property assets). As at 31.12.2023, CA Immo's total property assets amounted to €5.2bn (31.12.2022: €5.9bn). The largest regional segment is Germany with a 66% share of the total portfolio, followed by CEE (27%) and Austria (7%). The occupancy rate of the investment portfolio remained nearly unchanged at 89%.

Robust balance sheet, strong liquidity position
Thanks to many years of positive business development and a defensive balance sheet and financing policy, CA Immo has a robust balance sheet with a solid equity ratio of 43.8% (31.12.2022: 46.8%), a net LTV of 36.6% (31.12.2022: 32.5%) and high liquidity (cash and cash equivalents incl. cash deposits: €738.6m).

The net asset value (IFRS NAV) per share was €27.88 as at 31.12.2023, compared to €33.71 at the end of 2022 - a decrease of 17%. EPRA NTA per share was €33.78 as at the reporting date (31.12.2022: €40.31).

Outlook
The weakening of real estate investment markets and declining property values as a result of high inflation and the rapid rise of interest rates present challenges to the industry as a whole. CA Immo continues to operate in an uncertain market environment, with still more or less illiquid transaction markets, longer decision-making lead times, and shifting preferences across occupiers, investors, and lenders, all impacting the performance of our, and our competitors´, businesses. At the same time, prime office assets in central locations have shown a comparatively stable performance in recent months, with a significantly lower increase in vacancies and continued prime rental growth in almost all CA Immo markets. In addition, the current sharp reduction in new construction activity is expected to have a positive impact on future demand for prime office assets in central locations and create opportunities for premium office landlords in the coming years.

The annual target for the recurring result (FFO I) is expected to be announced latest as part of the 1H reporting in August 2024.

The 2023 financial report of CA Immobilien Anlagen AG is available at: www.caimmo.com/en/investor-relations/financial-reports/