Dresden

FINANCIAL RESULTS PRESENTATION Q1 2024

May

2024

HIGHLIGHTS

2

Q1 2024 KEY RESULTS SUMMARY

KEY FINANCIAL RESULTS

P&L

Q1 2024

change

Q1 2023

Net Rental

€105,301

4%

€101,376

Income

Adjusted

€81,984

3%

€79,504

EBITDA

FFO I

€45,249

-4%

€46,955

FFO I per

€0.26

-4%

€0.27

share

GUIDANCE CONFIRMED (FFO I of 175M-185M)

Balance

Mar 2024

change

Dec 2023

Sheet

Cash and

liquid

€1,287m

5%

€1,230m

assets

Total equity

€5,277m

1%

€5,230m

EPRA NTA

€4,063m

1%

€4,014m

EPRA NTA

€23.5

1%

€23.2

per share

FINANCIAL PROFILE

Mar 2024

Dec 2023

LTV

36%

37%

EPRA LTV

48%

48%

Net debt/

9.6x

10.0x

EBITDA

ICR

5.8x

5.6x

BBB+

Negative Outlook

Affirmed in Dec 23

Mar 2024

Dec 2023

Cost of debt

1.9%

1.9%

Ø debt

5.1 years

5.3 years

maturity

Unencumbered

€6.6bn

€6.6bn

Assets (€bn)

Unencumbered

75%

75%

Assets (%)

PORTFOLIO

Mar 2024

Dec 2023

Annualised net

€410m

€406m

rent

Units

63,216

63,303

Vacancy

3.9%

3.8%

In-place rent

€8.7/sqm

€8.6/sqm

L-F-L rental

3.4%

3.3%

growth

+3.4%

+3.3%

L-F-L

+0.1%

Total net rent growth

L-F-L

Mar 2024

L-F-L

In-place rent growth

Occupancy growth

Mar 2024

Mar 2024

3

SUCCESSFUL PERPETUAL NOTES TRANSACTION

EXCHANGE AND TENDER OFFER IN Q2 24

  • In April 2024, GCP launched an exchange offer with a 15% tender option to the holders of two of its perpetual notes with aggregate nominal amount of €550m.
  • The transaction was highly successful with high acceptance rate of 82%.
  • The holders had the opportunity to exchange the current notes with
    • new perpetual notes at the relevant exchange ratio, or
    • new perpetual notes at the relevant exchange ratio, and a tender offer for 15% of their exchanged notes at a small premium to market prices prior to the offer

RESULT AND BENEFITS

  • With the high acceptance rate and issuance of a new large note, GCP reestablished itself in the Capital market.
  • The offer supports credit metrics as S&P equity content was regained, with only little cash usage.
  • Savings of €2m of coupon per annum, due to the reduction of the outstanding balance. Accretive impact starting Q2 2024, following the completion of the transaction.
  • New perpetual notes have first call date in January 2030. Next perpetual call date for existing series is in mid-2026.

Nominal

Coupon

First call date

% and

Exchange

Amount

Nominal

Amount

absolute

Ratio

repurchased

Amount

outstanding

accepting

via tender

outstanding

before

the offer

after

6.332% Perpetual Notes

€200m

6.332%

Jan 2023 76% / €152m

100%

€13m

€48.4m

5.901% Perpetual Notes

€350m

5.901%

Oct 2023

85% / €298m

98%

€21m

€52.5m

New 6.125% Perpetual

-

6.125%

Jan 2030

€409.5m

Notes

Total Perpetual Notes:

€550m

Reduction:

Reduction:

€510m

€6m

€34m

MAIN CHARACTERISTICS PERPETUAL NOTES

  • Perpetual notes have no maturity date. On specified dates GCP can call the notes. There is no requirement to call. Noteholders don't have a put option on the call date.
  • Perpetual notes are ranked junior to debt securities and have no covenants.
  • Coupons are deferable at GCP's discretion.
  • Under IFRS Perpetual Notes are 100% equity instruments. Under S&P methodology Perpetual Notes are considered 50% equity / 50% debt until the first call date.
  • The nature and use of perpetual notes has a positive corporate credit rating impact.

4

OPERATIONAL & FINANCIAL RESULTS

5

STRONG OPERATIONAL DYNAMICS

CONTINOUSLY DELIVERING OPERATIONAL PERFORMANCE

+3.4%

+3.3%

L-F-L

+0.1%

Total net rent growth

L-F-L

Mar 2024

L-F-L

In-place rent growth

Occupancy growth

Mar 2024

Mar 2024

Cologne

In-place rent

+3.2%

(in €/sqm)

CAGR

8.2

8.3

8.6

8.7

8.1

Dec

Dec

Mar

Dec

Mar

2021

2022

2023

2023

2024

Vacancy rate remains at low level at 3.9% as of March 2024. GCP has seen significant reduction in vacancy in recent years, as a result of GCP's strong operating performance and strong market demand.

In-place rental growth continued, reaching €8.7/sqm

as of March 2024 and further upside to catch up to current market rents.

Demand remains very strong in key metropolitan areas, while supply is drying up further.

Vacancy

-1.2%

5.1%

4.2%

4.2%

3.8%

3.9%

Dec

Dec

Mar

Dec

Mar

2021

2022

2023

2023

2024

6

PORTFOLIO OVERVIEW

  • The annualized net rental income is significantly below market rent, indicating a market upside potential of 22%.
  • In addition to the portfolio below, GCP has investment property held for sale amounting to ~€170 million.
  • No valuations were carried in Q1 2024. The next portfolio valuation will be part of the H1 2024 report.
  • In Q1 2024, GCP completed €30 million of assets disposals at a 2% premium to book value and signed additional €23 million of disposals, expected to close in the coming periods.

ANNUALISED NET RENTAL INCOME vs.

MARKET POTENTIAL (ERV)

(in € millions)

+22%

upside 500

410

Mar 2024

Annualised market

annualised net rent

potential (ERV)

Value

Area

EPRA

Annualised

In-place rent

Number of

Value per

Rental

March 2024

net rent

per sqm

sqm

(in €M)

(in k sqm)

vacancy

units

yield

(in €M)

(in €)

(in €)

NRW

1,796

1,193

4.5%

93

6.6

17,436

1,506

5.2%

Berlin

1,944

625

4.0%

70

9.3

8,492

3,109

3.6%

Dresden/Leipzig/Halle

1,157

816

3.0%

57

5.9

13,997

1,419

4.9%

Mannheim/KL/Frankfurt/Mainz

390

177

3.2%

19

9.0

3,013

2,196

4.9%

Nuremberg/Fürth/Munich

289

80

5.4%

11

12.0

1,430

3,629

3.7%

Hamburg/Bremen

387

264

3.5%

22

7.2

3,996

1,462

5.8%

London

1,664

186

3.4%

84

38.8

3,462

8,949

5.1%

Others

885

676

4.5%

54

7.0

11,390

1,309

6.1%

Development rights & Invest

169

Total March 2024

8,681

4,017

3.9%

410

8.7

63,216

2,119

4.8%

Total December 2023

8,629

4,020

3.8%

406

8.6

63,303

2,109

4.8%

7

P&L RESULTS

Selected consolidated statement of profit or loss

Q1 2024

Q1 2023

in € '000 unless otherwise indicated

Revenue

149,052

150,052

Net rental income

105,301

101,376

Property revaluations and capital gains (loss)

640

(53,091)

Property operating expenses

(64,807)

(67,894)

Administrative and other expenses

(2,951)

(2,817)

EBITDA

81,934

26,250

Adjusted EBITDA

81,984

79,504

Depreciation and amortization

(1,448)

(2,311)

Finance expenses

(14,121)

(13,470)

Other financial results

(8,961)

(20,464)

Current tax expenses

(10,282)

(10,111)

Deferred tax income (expenses)

(3,393)

8,511

Profit (loss) for the year

43,729

(11,595)

Basic earnings (loss) per share in €

0.17

(0.09)

Diluted earnings (loss) per share in €

0.17

(0.09)

NET RENTAL INCOME

ADJUSTED EBITDA

(in € millions)

(in € millions)

+4%

82

105

+3%

80

101

Q1 2023

Q1 2024

Q1 2023

Q1 2024

  • Net rental income and adjusted EBITDA increased primarily due to the solid like-for-like rental growth of 3.4% and despite the negative impact of net disposals.
  • Operating costs reduced in Q1 2024 compared to Q1 2023, due lower utility costs related mainly to heating expenses which are recoverable from tenants.

8

FFO I + II

in € '000 unless otherwise indicated

Q1 2024

Q1 2023

Adjusted EBITDA

81,984

79,504

Finance expenses

(14,121)

(13,470)

Current tax expenses

(10,282)

(10,111)

Contribution to minorities

(1,408)

(1,530)

Adjustment for perpetual notes attribution

(10,924)

(7,438)

FFO I

45,249

46,955

FFO I per share (in €)

0.26

0.27

FFO I

45,249

46,955

Result from disposal of properties

848

3,785

FFO II

46,097

50,740

FFO I

FFO I per share

(in € millions)

(in €)

-4%

47

45

0.27

-4%

0.26

Q1 2023

Q1 2024

Q1 2023

Q1 2024

  • FFO I decreased by -4%, mainly due to the reset of two perpetual notes in 2023 at the end of January 2023 and October 2023 where the coupon rates increased from 2.75% to 6.3% and from 2.5% to 5.9% respectively.
  • Lower FFO II compared to Q1 2023, mainly due to the lower disposal activity in Q1 2024. In Q1 2024 GCP disposed investment properties in the amount of ca. €30 million at a premium of 2% over book values and 3% over total cost.

9

MAINTENANCE & CAPEX

REPOSITIONING CAPEX

  • Focus remains on improving asset quality, value creation and increasing rental income
  • Other value-add measures include:
    • Upgrading apartments for new rentals
    • Enhancing staircases and public areas
    • Installing playgrounds
    • Installing elevators and ramps
    • Other similar measures
  • In Q1 2024, GCP invested €4.5/avg sqm into repositioning capex., stable as compared to Q1 2023.
  • Additionally, in Q1 2024, GCP invested around €1 million in modernisation and €3 million in pre-letting modifications
  • Investments related to energy efficiency and CO2 reduction, such as replacing windows and heating systems, are attributed to the above category's depending on the project specifics

REPOSITIONING CAPEX & MAINTENANCE

(in € per average sqm)

6.0

6.0

Repositioning

capex per avg

sqm

4.5

4.5

Maintenance per

avg sqm

1.5

1.5

Q1 2023

Q1 2024

ADJUSTED FUNDS FROM OPERATIONS (AFFO)

in € '000 unless otherwise indicated

Q1 2024

Q1 2023

FFO I

45,249

46,955

Repositioning Capex

(18,659)

(18,298)

AFFO

26,590

28,657

ROOF RENOVATION & MODERNISATION

Hamm (before)

Hamm (after)

10

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Disclaimer

Grand City Properties SA published this content on 16 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2024 04:45:00 UTC.