- Strong operational and financial results, delivering on acquisition promises
- Amendment in acquisition accounting
Regulatory News:
CTP, Europe's largest listed developer, owner, and manager of industrial and logistics properties by gross lettable area (GLA), has entered the next phase of growth in Germany, following the acquisition of Deutsche Industrie REIT-AG ("DIR") nearly two years ago, for which the acquisition accounting will be amended. The impact of this amendment, which is described below, leads to an improvement of the Group's overall indebtedness.
After building up the organization during 2022 and 2023, CTP has been able to achieve strong operational and financial results in 2023 across its German portfolio.
In 2023, CTP relet 155,000 sqm within the former DIR portfolio, with an average monthly rent of €5.1 per sqm, 57% above the average monthly rent that was in place at the FY-2022. The FY-2023 average monthly rent of €3.5 per sqm continues to offer a very significant reversion opportunity, with nearly 50% of the portfolio's leases due to expire over the next 3-years.
The Groups ability to increase rents on a consistent basis has been also recognized by the independent appraisers, who increased the ERV of the former DIR portfolio by 12% in 2023, while there was no material yield widening.
CTP's total German rent roll has increased from €59.7 million at the time of underwriting the DIR acquisition to €69.7 million at year-end 2023.
CTP's German team now has 53 employees, with all activities ranging from procurement, construction, leasing, property management to accounting now being in-house, in-line with CTP's business model. This also resulted in a reduction of property operating expenses across the German portfolio, improving the NRI to GRI margin from 71.6% in 2022 to 83.7% in 2023, with further improvement expected in 2024.
CTP Germany's strong platform and financial position means it is set to enter its next phase of growth. It plans to develop new parks using CTP's tried and tested formula for developing business parks with vibrant business eco-systems.
In the spring of 2023 CTP announced a €300 million multi-year investment plan to grow its CTPark network in Germany. During 2023, CTP acquired in total 781,000 sqm of land with an opportunity to develop around 370,000 sqm of GLA over the coming years. CTP has already started work on refurbishing and extending CTPark Weiden where Heineken is a tenant, which will increase the park's GLA to 60,000 sqm. CTP has also begun the construction of 32,400 sqm GLA of new space at CTPark Bremen.
Recent acquisitions include a 335,000 sqm site in Mulheim, where CTP plans to develop a major new high tech business park in cooperation with the local municipality. CTP is also developing a 130,000 sqm site in the German city of Wuppertall to create an R&D focused business park, while a 60,000 sqm redevelopment and extension is being undertaken at CTPark Krefield in east Germany.
Amendment in acquisition accounting1
- CTP's equity will increase by €137 million to €5.4 billion, improving the Group's overall indebtedness
- No material impact on profit for the period and unchanged Company specific adjusted EPRA EPS earnings
Following a recommendation by the Dutch Authority for the Financial Markets (AFM), the Group will change the DIR accounting from an acquisition of assets to a business combination. This interpretation of IFRS 3.3 and consequently the acquisition accounting method for a business combination that is outlined in IFRS 3.4, will be corrected in CTP's FY-2023 financial statements and comparative figures. The amendment has no impact on CTP's ongoing operational results nor strategy.
Transaction background
On 28 January 2022, the Group received 98.17% shareholder support for its voluntary public takeover and delisting offer for DIR.
On 3 February 2022, the Group acquired 80.9% ownership interest in DIR, and obtained control over DIR. 25,951,833 DIR Shares were tendered, of which 25,937,060 were settled against issuance of CTP shares, with the remaining settled in cash. Accordingly, a total of 32,421,325 CTP Shares were issued.
On 23 August 2022, CTP acquired the remaining 19.1% of Deutsche Industrie Grundbesitz AG ("DIG", formerly DIR) through a cross-border merger.
Impact on financial statements
While having no cash impact, the change in accounting method leads to adjusted 2022 comparatives in the 2023 financial statements. In the FY-2022 balance sheet, €171 million of goodwill will be recognized, which increases the asset base from €12.5 billion to €12.7 billion, while CTP's equity will increase by €137 million to €5.4 billion and the deferred tax liabilities by €35 million to €948 million. This improves the Group's overall indebtedness, as the equity to total assets ratio increases.
The different treatment of deferred tax liabilities and transaction expenses under the accounting guidelines for a business combination, leads to a higher amount of assets in the opening balance sheet and therefore lower revaluation, resulting in a FY-2022 profit for the period attributable to the parent company of €759 million. The initial impairment test found the goodwill as at 31 December 2022 to be justified, therefore no impairment is expected to take place.
About CTP
CTP is Europe's largest listed owner, developer, and manager of logistics and industrial real estate by gross lettable area, owning 11.2 million sqm of GLA across 10 countries as at 30 September 2023. CTP certifies all new buildings to BREEAM Very good or better and earned a 'Low-Risk' ESG rating by Sustainalytics, underlining its commitment to being a sustainable business. For more information, visit CTP's corporate website: www.ctp.eu
1 Unaudited
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Contacts:
CONTACT DETAILS FOR ANALYST AND INVESTOR ENQUIRIES:
Maarten Otte, Head of Investor Relations
Mobile: +420 730 197 500
Email: maarten.otte@ctp.eu
CONTACT DETAILS FOR MEDIA ENQUIRIES:
Patryk Statkiewicz, Group Head of Marketing PR
Mobile: +31 (0) 629 596 119
Email: patryk.statkiewicz@ctp.eu
