DGAP-News: CPI PROPERTY GROUP / Key word(s): Miscellaneous
CPI Property Group - End of Year Message
2020-12-20 / 23:49
The issuer is solely responsible for the content of this announcement.
CPI PROPERTY GROUP
(_société anonyme_)
40, rue de la Vallée
L-2661 Luxembourg
R.C.S. Luxembourg: B 102 254
PRESS RELEASE
CORPORATE NEWS
Luxembourg, 20 December 2020
*CPI Property Group - End of Year Message*
CPI Property Group ("*CPIPG*" or the "*Group*"), the leading owner of real
estate in Berlin, Prague and Warsaw has prepared the following update on the
Group's performance during 2020, along with our outlook for full year 2020
and 2021.
"There is no doubt that 2020 was challenging for many businesses. Thanks to
the quality of our people, properties, markets and tenants, CPIPG has been
resilient throughout the year and continued our growth trajectory," said
Martin Nemecek, CEO. "We appreciate the consistent support of our
stakeholders and send best wishes for a restful and healthy holiday season."
Portfolio Performance
The outbreak of COVID-19 has challenged many long-held ideas about real
estate. Despite uncertainties, CPIPG's diversified property portfolio
delivered strong performance. The Group collected more than 95% of rent due
through Q3 2020. With comparable trends experienced in Q4, the Group expects
to report higher levels of rental income, EBITDA and FFO for 2020 relative
to 2019.
While COVID-19 has proven that working from home is possible, CPIPG is
confident that our tenants are eager to return to their offices and reclaim
the collaboration, creativity and communication which have suffered during
the pandemic. The Group's office platforms in key Central European capital
cities of Berlin, Prague, and Warsaw (52% of our property portfolio)
continue to benefit from high occupancy, stable or increasing rents and
near-100% rent collection rates. Leasing activity in Berlin and Warsaw has
been robust, with increased like-for-like rents. Occupancy has risen to 93%
in Warsaw and remains stable at 95% in Prague. Recently completed office
developments and refurbishments such as Bubenska in Prague along with The
Benjamin and Prinzessinnen-Höfe in Berlin are 100% leased and will
contribute meaningful rental income to the Group in 2021.
CPIPG's retail properties (22% of our property portfolio) are primarily
shopping centres and retail parks in regional cities of the Czech Republic.
More than 50% of the Group's retail units were considered "essential" and
never closed despite COVID-19 restrictions. During the first nine months of
2020, the Group collected almost 90% of retail rents; retailers who were
temporarily required to close received strong financial support from the
Czech Government. One-time rent discounts were necessary in limited
circumstances and are expected to represent less than 4% of CPIPG's rental
income for 2020. In connection with one-time discounts, many retail leases
were extended by around six months. CPIPG has also succeeded in maintaining
high occupancy and stable rents across the retail portfolio. The Group's
Czech shopping centres were 96% occupied at the end of Q3 and leasing
activity has continued on like-for-like terms. Occupancy reached 100% in the
Group's retail parks and hypermarkets as tenants report higher turnovers,
with recent lease negotiations seeing a 10% rise in rents.
All retail in the Czech Republic was permitted to reopen on 3 December.
Shops are expected to remain open during the festive period, subject to
certain operational restrictions. The Czech government will continue to
closely monitor COVID-19 infection rates and calibrate restrictions
accordingly. Other retail restrictions also remain in force in other
countries such as Poland, where the Group has a significantly smaller retail
exposure.
The Group's hotels (7% of our property portfolio) have been mostly closed
throughout the pandemic. Fortunately, CPIPG operates our hotels and was able
to quickly reduce operating expenses by nearly 50%. While hotels contributed
&euro40 million of net income to the Group in both 2018 and 2019, income
from the segment is expected to be near zero for 2020. CPIPG is preparing a
measured reopening of hotels for Spring/Summer 2021, under the expectation
that business and leisure travel will gradually resume.
Finally, the Group's residential platform in the Czech Republic (4% of our
property portfolio) has benefited from nearly 100% collection rates.
Residential demand remains strong across the Czech Republic, leading to
generally higher valuations and rents.
Financial Policy, Liquidity and Acquisitions
CPIPG remains committed to our credit ratings and financial policy. During
2020, the Group's balance sheet was significantly strengthened through debt
repayment, debt maturity extension and new hybrid capital issuance.
Total liquidity should exceed &euro1.3 billion at year-end 2020, bolstered
by the signing of a new &euro700 million revolving credit facility due in
2026. In conjunction with CPIPG's conservative shareholder distribution
policy, the Group will retain 100% of FFO during 2020.
CPIPG spent about &euro950 million on acquisitions during the first nine
months of 2020, primarily in Q1 when the Group acquired five offices in
Warsaw and a stake in Globalworth. Activity in Q2 and Q3 was significantly
reduced as the Group focused on cash retention. During Q4, CPIPG made three
small acquisitions as described below.
_Acquisition of Nova Re in Italy_
In November 2020, CPIPG acquired more than 50% of Nova RE SIIQ S.p.A. ("Nova
RE"), an Italian real estate company with a property portfolio valued at
&euro123 million at 30 June 2020, by participating in a capital increase for
a total consideration of about &euro26 million. Over time, Nova RE will
become a platform for the Group's investments in Italy. A mandatory tender
offer concerning the remaining shares of Nova RE was launched in December,
with results expected mid-January 2021.
_Residential Acquisitions in the UK_
CPIPG acquired our first residential property in the UK during 2018,
followed by two properties in 2019. In Q4 2020, the Group completed two
small acquisitions that will complement the Group's existing UK residential
platform.
The first property, St. Mark's Court, is located in St. John's Wood. St.
Mark's Court is a rare unbroken freehold terrace consisting of 24 apartments
with the potential for expansion on the existing lot. The property was
purchased directly from a charity. The second property, Metrogate House, is
located in South Kensington. Metrogate House consists of three
interconnected white stucco terrace properties which are currently leased to
a student accommodation provider. The purchase prices for both St. Mark's
Court and Metrogate House were below GBP1,000 per square foot, representing
exceptional value for these locations. CPIPG intends to refurbish both
properties over time.
Litigation
The lawsuit filed by Kingstown in April 2019 in the United States District
Court for the Southern District of New York was dismissed in September 2020.
In October 2020, Kingstown filed a notice of their intention to appeal the
dismissal. The Second Circuit Court of Appeals has scheduled the parties to
submit their briefs during the first quarter of 2021. CPIPG continues to
believe that the Kingstown lawsuit and corresponding appeal lacks merit and
will defend the appeal vigorously.
In December 2020, the Luxembourg court announced a schedule to hear the
merits of Kingstown's litigation filed in Luxembourg in 2015. CPIPG's
subsidiary CPI FIM SA and other defendants are scheduled to present their
written submissions during the first half of 2021, with pleading scheduled
in the second half of the year. The lawsuit was already dismissed against
CPIPG in June 2019 because the Luxembourg court determined that the claim
was not clearly pleaded ("libellé obscur").
Corporate & Social Responsibility
CPIPG has continued to prioritize corporate & social responsibility during
2020. The Group continues to pursue our environmental goals and is one of
Europe's largest and most well-known issuers of green bonds following
transactions in EUR, GBP, and HUF. Corporate governance was also further
strengthened by the appointment of our third independent board member in
December 2020.
"The challenges of 2020 prepared CPIPG well for 2021," said David Greenbaum,
CFO. "We intend to continue delivering on our commitments and are well
positioned for the future."
For more on CPI PROPERTY GROUP, visit our website: www.cpipg.com [1]
For further information please contact:
INVESTORS
CPI PROPERTY GROUP
David Greenbaum
Chief Financial Officer
d.greenbaum@cpipg.com
CPI PROPERTY GROUP
Joe Weaver
Director of Capital Markets
j.weaver@cpipg.com
2020-12-20 Dissemination of a Corporate News, transmitted by DGAP - a
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Language: English
Company: CPI PROPERTY GROUP
40, rue de la Vallée
L-2661 Luxembourg
Luxemburg
Phone: +352 264 767 1
Fax: +352 264 767 67
E-mail: contact@cpipg.com
Internet: www.cpipg.com
ISIN: LU0251710041
WKN: A0JL4D
Listed: Regulated Market in Frankfurt (General Standard); Regulated
Unofficial Market in Dusseldorf, Stuttgart
EQS News ID: 1156511
End of News DGAP News Service
1156511 2020-12-20
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(END) Dow Jones Newswires
December 20, 2020 17:49 ET (22:49 GMT)