WOOD Flash – CA Immo: 2Q18 results - another strong quarter, FFO I 11% above consensus
CA Immo published its 2Q18 results yesterday. It achieved EUR 35.5m FFO I in the quarter, up 9% yoy, and significantly surpassing our estimate of EUR 31.1m on a combination of a higher (than we expected) JV result and slightly better net rental income. The FFO I was also a 10% above the consensus estimate of EUR 32m. For the first six months, FFO I reached EUR 63m, and management reiterated the annual target of at least EUR 115m. The EPRA NAV was EUR 30.4/share, a slight increase compared to the previous quarter, despite the EUR 0.8 DPS paid in May. The NAV was boosted by EUR 49m of revaluation gains booked in the period, in line with the level we have been pencilling, driven predominantly by higher land values in Germany.With another set of a strong results, exceeding both our expectations and consensus, we expect a positive reaction in today’s trading. We see upside to our full-year FFO estimate of EUR 111m, and expect the positive earnings dynamics to continue in the coming quarters, as the results should be boosted by the recently-closed acquisitions: the 23k sqm GLA Visionary office in Prague, and the 22k sqm GLA Campus 6.1 in Bucharest. Organic growth should be also driven by developments: in the coming months, we expect the completion of the 23k sqm ViE office building in Vienna and the 37k sqm GLA Orchideea Towers in Bucharest (both scheduled for 3Q18E), as well as the 17k sqm Steigenberger hotel in Frankfurt (scheduled for 4Q18E). Finally, with vast land reserves in key German cities and 44% of the standing portfolio (by value) located in Germany, CA Immo benefits from the stellar investment demand, and an acute shortage of available office space in cities like Berlin and Munich.
That said, we believe the majority of the impact from both the developments and the new acquisitions will be visible only from 2019E-onwards. Having generated a total return ytd of over 25%, CA Immo’s shares are now trading at 1.04x P/NAV and c.4% 2018E FFO yield. As such, we believe that the room for a further rerating, in the near-term, is limited, and reiterate our HOLD recommendation.
CA Immobilien Anlagenis a real estate investment company. Co. invests in commercial real estate, comprising hotel, residential, office, industrial, storage space, and logistics. Co. is also active in project development business. Co.'s activities are focused in Austria, Germany and Eastern Europe. Co. has 263 subsidiaries (including 24 joint ventures) in the following countries: Germany, Austria, Hungary, Luxembourg, Bulgaria, Netherlands, Slovakia, Cyprus, Russia, Czech Republic, Poland, Croatia, Ukraine, Romania and Serbia. Co., through its subsidiaries, is engaged in creation of entire urban districts, acquisition of real estate, project development, as well as property renovation.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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