CA Immo: High profitability and record net profit 2021

Balance sheet as at 31 December 2021

Increases in sales result and revaluation, FFO I annual target achieved, strong balance sheet

• Recurring earnings (FFO I) of €128.3 m (€1.31 per share): Annual target of at least €128 m achieved, but 4% below the previous year's value
• Rental income slightly lower at €229.1 m, in particular due to capital rotation (31.12.2020: €235.6 m)
• Operating result (EBITDA) of € 210.1 m 7% above the previous year's value of €195.6 m
• Positive revaluation result of €541.1 m reflects the profitable development activities and the persistently attractive market environment, especially in Germany (31.12.2020: € 183.5 m)
• Highest consolidated net income in the company's history at €479.8 m, up 89% on the previous year (31.12.2020: €254.0 m), mainly due to the high revaluation result
• Return on equity increased to 14.9% (31.12.2020: 8.3%)
• Property assets increased by 12% to €6.3 bn
• Net asset value EPRA NTA per share at €40.05 after €40.09 as of 31.12.2020 – despite high dividend payout in 2021 and Q1 2022
• Strong balance sheet with 46.3% equity ratio and cash and cash equivalents of €633.1 m
• Balance sheet profit for the 2021 financial year to be carried forward to new account

Silvia Schmitten-Walgenbach, CEO of CA Immo: "Our high-quality inner-city office portfolio and the high profitability of the development business generated good earnings and further value enhancement for our shareholders in the 2021 business year. Through targeted portfolio management, we increased the quality, sustainability and value of our property assets and generated a total return on equity of 14.9%. The year 2022 will also be characterised by a focus on Class A office buildings, environmental and climate protection and intensive tenant retention. Against the backdrop of the current changes in working life, we want to support our tenants with the best product and the best service in shaping their working environments."

Results of the business year 2021

Recurring earnings (FFO I) totalled €128.3 m and was thus 4% below the previous year's value (31.12.2020: €133.8 m). FFO I per share amounted to €1.31 as at the reporting date (31.12.2020: €1.44 per share). The annual target of >€128 m was thus achieved. FFO II, including the sales result and after tax an indicator of the Group's overall profitability, totalled €143.1 m compared to €141.1 m in 2020 (+1.4% on the previous year's figure). FFO II per share stood at € 1.46 per share (31.12.2020: € 1.52 per share).

CA Immo recorded a slight decline in rental income of 2.8% to € 229.1 m in 2021, partly due to portfolio sales and temporarily higher vacancy rates in CEE. Net rental income after deduction of direct management costs attributable to letting activities decreased by 4.9% from € 209.7 m to €199.5 m. The Covid 19 pandemic had a negative impact of €3.1 m on net rental income as at the balance sheet date.

Property sales result

The earnings contribution from the trading portfolio totalled €6.7 m (31.12.2020: €7.9 m). The largest contribution to earnings in terms of value was generated by the sale of the NEO Living residential project developed by CA Immo in Munich. At €52.7 m, the result from the sale of long-term real estate assets was significantly higher than the previous year's figure of €43.9 m. The sale of a non-strategic property in Düsseldorf in the 2nd quarter generated the largest share of this result.

Indirect expenses decreased from €–73.2 m in the previous year to €–58.2 m in 2021 (–20.4%). The previous year's figure included court fees for the claims for damages brought by CA Immo in Q2 2020 in connection with the privatisation of the federal housing companies (BUWOG) completed in 2004.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed to € 210.1 m and were thus 7.4% above the previous year's level of € 195.6 m.

The revaluation result based on independent external appraisals totalled €541.1 m, significantly above the previous year's figure (31.12.2020: €183.5 m). The result reflects the still attractive market environment in Germany, especially in Munich and Berlin, despite the Covid 19 pandemic. In addition, profitable development activity was a key driver of the valuation increase, both in terms of the progress of ongoing construction projects and the development of land reserves (creation of building rights).

Earnings before interest and taxes (EBIT) totalled €749.6 m and thus doubled compared to the previous year's value (€375.4 m, +99.6%) – in particular due to the increased revaluation result.

The financial result totalled €–74.4 m in 2021 compared to €–27.2 m in the previous year. This increase is primarily due to a negative derivative valuation of the convertible bond issued in October 2017, which has since been fully converted, in the amount of €–46.2 m (2020: €32.2 m).

The Group's financing expenses of €–47.6 m were also higher than in the previous year (31 December 2020: €–42.3 m). In contrast, the interest rate development over 2021 led to a positive valuation effect of the company's interest rate derivatives in the amount of €20.3 m (31.12.2020: €–10.8 m). The Group's average financing costs (incl. interest rate hedges) remained unchanged at 1.5% at the end of the year.

Earnings before taxes (EBT) of €675.2 m (31.12.2020: €348.3 m) recorded a significant year-on-year increase of 93.9% based on the earnings developments described above. At €479.8 m, the net profit for the period is the highest in the company's history (88.9% above the previous year's figure of €253.9 m). Earnings per share (undiluted) amounted to €4.89 (31.12.2020: €2.73 per share).

Shareholder value and dividend policy for the 2021 business year

CA Immo distributed dividends of €3.50 per share from the retained earnings as at 31 December 2020 in the 2021 business year and a further dividend of €2.50 per share to shareholders in the current business year on 15 March 2022 (total dividend distribution €604.2 m or €6 per share). Despite this high payout ratio, the net asset value EPRA Net Tangible Assets (NTA) stood 0.9% above the value at the end of 2020 (€3,999.3 m) at €4,033.9 m on the reporting date. This corresponds to an EPRA NTA per share of €40.05, (31.12.2020: €40.09 per share).

Due to the high payout ratio and against the backdrop of the current geopolitical environment and the increased uncertainty and volatility on the markets, the Management Board and Supervisory Board of CA Immo have decided, following a thorough review, to propose to the Annual General Meeting to be held on 5 May 2022 to deviate from the previous dividend policy and to carry forward the entire net profit for the 2021 financial year.

Robust balance sheet and capital strength

CA Immo continues to have an extremely robust balance sheet with a solid equity ratio of 46.3% (31.12.2020: 45.9%), which is reflected in conservative debt ratios such as a net loan-to-value ratio (financial liabilities less cash and cash equivalents to property assets) of 31.1% (31.12.2020: 33.8%). Cash and cash equivalents totalled €633.1 m as at the balance sheet date and were thus below the level as at 31.12.2020 (€934.9 m). The reduction in cash and cash equivalents is due, among other things, to the redemption of a corporate bond maturing in 2021 (€107 m) and the payment of a special dividend of approximately €252 m in December 2021.

Property assets further increased to €6.3 bn

Due to the transfer of own project completions to the portfolio and a positive valuation result, the book value of the property assets increased further by 12% during the year to €6.3 bn as at 31.12.2021 (31.12.2020: €5.6 bn). Property assets include investment properties (80% of the total portfolio) and investment properties under development (17%), the remaining 3% is accounted for by short-term property assets (intended for trading and sale). Around 60% of total property assets are located in Germany. Of the investment portfolio with a value of approx. €5.0 bn (31.12.2020: €4.7 bn), 50% account for Germany, 40% for CEE and 10% for Austria. The portfolio yield was 4.6%[1] (31.12.2020: 5.2%[2]); the occupancy rate stood at 88.9%[1] (31.12.2020: 94.8%[2]). Properties under development include projects under development and land reserves with a total book value of around €1.1 bn (incl. projects and land reserves intended for trading and sale), of which Germany accounts for 100%.

Portfolio management: Increase in portfolio quality, profitable sales above book value
Numerous property sales that were already successfully concluded in the first half of the year (including the exit from Slovakia with the sale of an office complex in Bratislava as well as several sales of non-strategic properties in Germany) were followed by further sales of non-strategic properties in Warsaw, Budapest and Vienna in the second half of the year. The sales transactions in 2021 were concluded at prices above the last book value.

On the investment side, three more own project completions in Prague and Mainz were added to the investment portfolio as planned. In addition, CA Immo acquired a high-quality office building with around 10,400 sqm in a prime city centre location at the beginning of 2022 to strengthen the fourth German core market, Düsseldorf.

With this strategic capital rotation, CA Immo is strengthening the quality, sustainability and value of its investment portfolio.

CA Immo Poland

As of 31 December 2021, CA Immo held property assets with a book value of around €564 m (9% of total property assets) in Warsaw (31 December 2020: €590 m, 10.5%). The occupancy rate of the Polish portfolio stood at 88.4% as at balance sheet date (2020: 94.0%), the properties produced a yield of 6.3% (2020: 6.6%). Of total rental income totaling €229.1 m in 2021, 15% accounted for the Polish portfolio. During business year 2021, one Warsaw office property (Wspolna 47-49, approx.. 7,700 sqm) has been sold. Leasing activity in Warsaw was successful in 2021, CA Immo signed leases for more than 36,000 sqm of rentable office space during the year, which is around 22% of the total leasable space in our Warsaw portfolio (31 December 2021: 164,114 sqm rentable area in Warsaw). The biggest single lease contract signed in 2021 was the 17,900 sqm lease extension with AstraZeneca in the Postepu 14 office building, which was also the biggest lease in the Warsaw market in 2021.

Outlook for 2022

Russia's invasion of Ukraine has shaken the global economy. Despite the uncertainty and possible direct and indirect effects, the CA Immo Group currently assumes that the Russia-Ukraine war will not affect the company's ability to operate successfully in the long term.

The special synergy of being an experienced developer of green buildings and manager of an international class A office portfolio in attractive metropolises makes CA Immo the ideal partner for blue chip companies. We intend to exploit and further develop these strengths in order to expand our good market position in the long term. The profitable sale of non-strategic properties as part of the strategic capital rotation programme should also lead to a strong EBITDA-generating sales result and a corresponding inflow of liquidity. We plan to specify the annual financial target for the 2022 financial year in the course of the year.

The Annual Report 2021 of CA Immobilien Anlagen AG is available at: www.caimmo.com/en/investor-relations/financial-reports/

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[1]  Excl. the project completions ZigZag (Mainz), Mississippi House and Missouri Park (Prague), which are still in the stabilisation phase

[2] Excl. the project completions NEO (Munich) and quarter garage Zollhafen Mainz, which were still in the stabilisation phase as at 31 December 2020