WOOD Flash – CA Immo: 3Q20 – FFO on track, portfolio rotation continuing, moving to renewable energy
CA Immo has published its 3Q20 results, with the key headline numbers broadly in line with our forecast. The rent collection is stable, and the pick-up in transaction activity (especially in the prime, core offices) seems to indicate that the pandemic did not have a significant impact on the price levels – at least so far. CA Immo sold its single asset in Zagreb, Croatia, and management noted that it is in advanced negotiations regarding the disposal of two offices in Serbia, which would mark a complete exit from the non-core geographies. Its portfolio repositioning, going forward, will focus mostly on rotating away from smaller (either by size or value) assets into a better-positioned product, but within the same set of geographies. The company continues to generate an impressive margin on both the disposals of land, as well as on its developments. Considering the cost of funding (average at 1.6%, marginal cost of debt closer to 1.0%), acquisitions, such as the green office purchased in Warsaw at a 7.5% yield, are highly value accretive. With a unique development exposure to Germany, significant reversionary potential in its German office portfolio, and the valuations confirmed by numerous disposals with sometimes significant premiums to book, CA Immo remains our long-term top pick among the CEE landlords. We note that the recent rally in a number of office names, driven by the pick-up in M&A activity in European listed office real estate, among other things, is supportive for our investment case for CA Immo.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.
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