Investor Presentation February 2019
2
CPIPG: Long-term owner, active asset manager
Source: Company information (1) Other WE includes: France, Switzerland, Italy; Other CEE includes: Poland, Croatia, Romania, Slovakia and Russia (2) Other includes industry & logistics, and agriculture (3) As of 30 June 2018
Czech Republic 54%
Germany 24%
Hungary 8%
Other CEE 10%
Other WE 4%
Office 41%
Retail 29%
Hotels & Resorts 11%
Land bank & development
9%
Residential 8%
Other 2%
2
1
2
Property portfolio by sector (as of June 30, 2018)
Property portfolio by geography (as of June 30, 2018) Long term investor in income-generating properties in the Czech
Republic, Berlin and the CEE region Largest real estate owner in our region, with a diversified property portfolio valued at more than €7.5bn
Our asset management teams are local experts who understand the needs of each market; our platforms have shown consistent growth in rents and occupancy
Our primary shareholder Mr. Vitek is completely aligned with management and has reinvested consistently over the years to create a high quality portfolio and a professional team
Very low development exposure, currently 9% of total portfolio (of which 87% is land bank primarily in Prague3)
Investment grade ratings profile (Baa2/BBB) and consistent capital structure improvements through unsecured bond issuance and secured loan/bond repayments
3
Our portfolio operates across four key segments
€6,994m
Property portfolio 1H’2018
Net business income 1H’2018
(for half year)
€156m Source: Company information
€3,446m €86m Czech Republic 1
€1,683m €32m Berlin 2
€738m €20m Hotels 3
€1,128m €18m Complementary assets portfolio 4
Total:
Largest real estate owner in Czech Republic: #1 retail owner nationally #1 office owner in Prague #2 residential owner nationally
Owner/operator of hotels in Czech Republic and major CEE cities:
#1 congress and convention hotel provider in Czech Republic #1 resort on premier island of Hvar, Croatia
#1 owner of offices in Berlin: Assets extremely well suited for tech, creative and startups
Portfolio consists primarily of investments in Poland, Hungary and Slovakia:
Potential for further expansion in Poland and Hungary
4
Focused on the Czech Republic, Berlin, and nearby CEE countries
78% of our portfolio is located in the Czech Republic and Berlin Source: Company information
Capital and other large city
Legend
Flight time (hrs)
Drive time (hrs)
Office
Retail
Residential
Hotels
Property portfolio value per segment
Poland €337m
Germany €1,683m
Czech Republic €3,774m
Slovakia €121m
Hungary €555m
Berlin
Warsaw
Budapest Bratislava
Brno
Prague
1:20
1:05
1:20
1:10
1:10
3:30
2:30
1:30
2:00
5
CPIPG: Key performance highlights from 2018
FY 2017 FY 2018 Comment
Total Assets €7.5bn >€8.0bn Up nearly 10% versus 2017
Property Portfolio €6.7bn >€7.5bn Up nearly 12% versus 2017 due to acquisitions and higher valuations
Czech Republic + Berlin (%) 78% 78% Focused on our core areas of expertise
LFL Rental Growth 5.4% ~5% 10% in Berlin, 3% to 5% in Czech Republic and CEE
EPRA Occupancy1 93% 94.5% Up by 1.5 p.p. versus 2017
Net Business Income €272m €315m Up over 15% versus 2017
Funds From Operations (FFO) €127m €160m Up nearly 26% versus 2017
EPRA NAV €3.9bn €4.5bn Up over 15% versus 2017
Net LTV 45% <37% Decrease by 8 p.p. versus 2017
Secured Debt to Total Debt 59% 38% Decrease by 21 p.p. versus 2017
Unencumbered Assets 43% 65% Up by 22 p.p. versus 2017
Cost of Financing 2.6% 1.6% Decrease by 1 p.p. versus 2017
Net Interest Coverage Ratio 2.6x 4.2x Up by 1.6x versus 2017
Credit Ratings Baa3 Baa2/BBB/A-(JCR) Upgrade from Moody’s; new ratings from S&P and JCR
Source: Company information (1) Excluding hotels; Calculated on the basis of EPRA vacancy All FY 2018 data contained in this presentation are unaudited estimates, solely for information purposes. The final audited 2018 annual results will be in the Company's full audited annual financial report, which is expected to be published on 29 March 2019. These estimates relate to financial information not yet audited and have been prepared on the basis of assumptions about accounting policies and financial figures, which entails substantial uncertainties. Due to these uncertainties, it is possible that the Company's actual results for the financial year ended 31 December 2018 may differ materially from these estimates.
Robust operating performance, driven by growth in rents and occupancy
Transformation of our capital structure through nearly €2.3bn of bond / hybrid issuance and a €230m revolving credit facility
Cap
ital S
truct
ure
Portf
olio
Per
form
ance
6
Consistent improvements to our capital structure
Source: Company information. (1) Calculated as net debt divided by fair value of property portfolio (2) Calculated as total assets less a sum of encumbered assets divided by total assets (3) Calculated as consolidated adjusted EBITDA divided by a sum of interest income and interest expense
48% 45%
37%
2016 2017 2018
Lower net LTV1
Improved net interest coverage ratio3
2.4x 2.6x
4.2x
2016 2017 2018
23%
43%
65%
2016 2017 2018
Increasing unencumbered assets2
Decreasing secured debt as % of total debt
77% 59%
38%
2016 2017 2018
All FY 2018 data contained in this presentation are unaudited estimates, solely for information purposes. The final audited 2018 annual results will be in the Company's full audited annual financial report, which is expected to be published on 29 March 2019. These estimates relate to financial information not yet audited and have been prepared on the basis of assumptions about accounting policies and financial figures, which entails substantial uncertainties. Due to these uncertainties, it is possible that the Company's actual results for the financial year ended 31 December 2018 may differ materially from these estimates.
Market Positioning and Backdrop
16.0 14.7
13.2 11.7
7.5 6.4 5.7 4.0 2.9
8
Market leader in the Czech Republic, Berlin and CEE
Largest portfolio in the Czech Republic and Berlin
Clear market leader in the Czech Republic Largest office portfolio in Berlin
Total property value (€bn) 1
Source: Company information and latest reported figures for peers. Note: CPIPG as of 31 December 2018, others as of 30 June 2018. (1) Includes equity accounted investment in JVs, assets under development and held for sale as well as building inventories – EUR/GBP FX rate for UK peers as at 30 June 2018 of 1.1307 (2) Excludes stake in Grand City Properties (3) Latest reported figures
CPI is comparable in size to well-known Western European peers focused on offices Selected companies - total property value1 (€bn)
• Owner of a diversified real estate portfolio in the Czech Republic, with leading market positions in the office, retail and residential sectors:
– 12.8% market share in the Czech Republic shopping centres
– 8.5% market share in the Prague office market
• #1 office landlord
• Increased occupancy by 10 p.p. since 2012
• Unique, non-replicable platform
• 53-year track record
2
7.5
5.8
4.3 4.1 4.1
2.8 2.1 2.1 1.9
2,000
985
365
171
CPI
TLG
CA Immo
Sirius
Property value in the Czech Republic (€m)3
51% of total portfolio Property value in Berlin (€m)3
27% of total portfolio
3,800
2,944
1,180
696
341
341
CPI
CTP
Residomo
Klepierre
CA Immo
Immofinanz
1.9%
2.0%
2.2% 2.5%
2.0%
(1.0%)
0.0%
1.0%
2.0%
3.0%
4.0%
2014 2015 2016 2017 2018 2019 2020 2021 2022
Czech Republic Germany Poland Hungary Slovakia
3.5
3.0 2.7 2.6
0.9
1.4
1.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Poland Hungary Czech Republic
Slovakia Germany Europe US
Real
wag
e gr
owth
201
7-22
p.a
. (%
)
2.3% 3.3%
6.4% 5.5% 5.3%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E
Une
mpl
oym
ent r
ate
( %)
Czech Republic Germany Europe Poland Slovakia
9
Strong growth environment in our markets
Robust private consumption growth (2017-22 CAGR)
Low levels of unemployment
Positive trends for real wages (2017-22 CAGR)
7.5
6.3
5.5 5.4
3.8
2.6
1.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Poland Hungary Slovakia Czech Republic Germany US Europe
Source: BMI, EIU and Oxford Economics, Colliers International, BerlinOnline Stadtportal
Priv
ate
cons
umpt
ion
grow
th 2
017-
22 p
.a. (
%)
Unemployment in Berlin fell to 7.7%, its lowest level since reunification (as of Oct-18)
Czech unemployment
lowest in EU
Positive inflation expectations underpin rental growth
0
1,000
2,000
3,000
4,000
2014 2015 2016 2017 2018(f) Industrial Mixed-use Office Other Retail Residential Completed
10
CEE real estate is an attractive investment destination
Record levels of investment in Czech real estate Prime yields are compressing across sectors
Stable rental growth in Prague
Rent (€/sqm/month)
Growth
1 year 5 year CAGR
High Street Shops 220.0 4.8% 4.1%
Shopping Centres 160.0 21.2% 4.4%
Retail Parks 10.5 2.4% 1.0%
Office 22.5 7.1% 1.4%
3.5%
Investment volume in the Czech Republic (€m)
Outlook
Prime yields (%)
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Q3 2010
Q2 2011
Q1 2012
Q4 2012
Q3 2013
Q2 2014
Q1 2015
Q4 2015
Q3 2016
Q2 2017
Q1 2018
Prime office yield Prime industrial yield Prime shopping centre yield Prime high street yield Source: Eurostat, Cushman & Wakefield, CBRE, Colliers International
19.0
30.9 34.3 32.3
40.4 46.2
0
15
30
45
60
Czech Republic EU-15 Germany
1995 2017
(US$ ‘000, PPP)
+70%
+31% +35%
GDP per capita converging with Western Europe
0.0%
1.0%
2.0%
3.0%
Mun
ich
St
ockh
olm
La
Def
ense
Be
rlin
Fr
ankf
urt
Paris
: WBD
Co
logn
e
Duss
eldo
rf
Birm
ingh
am
Prag
ue
Paris
CBD
He
lsink
i Co
penh
agen
Do
ckla
nds
Dubl
in
Mila
n
Ham
burg
Vi
enna
Br
usse
ls
Lisb
on
Oslo
M
adrid
M
arse
ille
Ro
me
Ed
inbu
rgh
Lo
ndon
: City
Ba
rcel
ona
Bu
dape
st
War
saw
Lu
xem
bour
g Lo
ndon
: WE
11
Expected office employment growth
Record levels of letting activity Strong rental growth outlook
Office prime rental growth end-2018 – end-2023 (% pa) Berlin office space take-up and vacancy rate, 000s sqm
Tightness of office space availability in Germany Availability of key 7 German centres(1), 000s sqm
1. Key 7 German centres include: Berlin, Munich, Frankfurt, Hamburg, Dusseldorf, Cologne and Stuttgart.
Source: PMA, CBRE.
Berlin office market supported by strong fundamentals
0
1,800
3,600
5,400
7,200
9,000
1991
19
92
1993
19
94
1995
19
96
1997
19
98
1999
20
00
2001
20
02
2003
20
04
2005
20
06
2007
20
08
2009
20
10
2011
20
12
2013
20
14
2015
20
16
2017
20
18
2019
20
20
2021
20
22
2023
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Berlin Cologne Hamburg Frankfurt Munich Stuttgart Dusseldorf
0%
2%
5%
7%
10%
12%
0
200
400
600
800
1,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Q1 Q2 Q3 Q4 Vacancy Rate
Office employment growth end 2018 – end 2023 (% pa)
Asset Management Update
13
Local teams drive focused asset management
Increasing occupancy, rents and portfolio value
Asset management expertise and capabilities
Strong relationship with tenants, tenants mix optimized for each market
Bringing value to own tenants through investments and training
A tailor made asset management approach for each asset class within each geography A long-term approach focused on investments in our assets to maintain and increase value
Office
Retail
Hotel
Residential
• In the Czech Republic, Hungary and Poland we are focused on top-quality offices in the major/capital cities
• In Berlin, our focus in X-Berg and Rest-West is to continue bringing rents up to market levels while investing smart Capex; vacancy in these segments is mostly structural at this stage. In the Econoparks segment, our focus is on increasing occupancy, including efforts to relocate tenants who are “priced out” of the West Berlin locations
• Investing in amenities (such as food and beverage) offered in our “Congress” hotels to ensure a positive and productive experience
• Selective upgrading of city hotels to ensure a high standard of quality
• Continued investment in Hvar to support luxury positioning for these unique assets
• Focused on dominant shopping centres and convenience shopping
• Strong local teams who maintain good relationships with our tenants
• Actively upgrading our shopping centres to the latest market standards (redevelopments/ refurbishments/extensions)
• Focused on our existing Czech Republic residential portfolio
• We have invested consistently in the portfolio since the 1990s to improve quality and rents while reducing operational costs
Source: Company information
Reuchlin Berlin, Germany
Value (€m) 103
Nisa Liberec, Czech Republic
Value (€m) 102
Clarion Congress
Prague, Czech Republic
Value (€m) 97
Schlesische Strasse
Berlin, Germany
Value (€m) 93
Olympia Plzen Pilsen, Czech Republic
Value (€m) 146
Source: Company information Note: CPI as of 1H’2018
Zlaty Andel Prague, Czech Republic
Value (€m) 122
Ogrody Elbląg, Poland
Value (€m) 120
City Park Jihlava, Czech Republic
Value (€m) 113
Quadrio Prague, Czech Republic
Value (€m) 234
High quality portfolio well occupied by large global tenants
Regional headquarters of large global tenants
Quadrio, Prague • Best Office Development (CIJ Awards 2014) • ESSA Leading Green Building of the Year (CIJ Awards 2014) • Certificate LEED Silver 2015
Buddha Bar Hotel, Prague • Czech Republic’s Leading Boutique Hotel 2016 (World
Travel Awards) • Top 10 most romantic hotels in the world (Reader’s Digest)
GSG • Honor Certificate from the Chamber of Commerce and
Industry of Berlin • Winner of the Immobilienmanager Award 2016 for ‘Best
Management’ for GSG Solar – the biggest provider of solar power in Berlin
Selected awards
14
Retail, 41%
Office, 39%
Hotels & Resorts, 13%
Others, 7%
Czech Republic, 56%
Germany, 20%
Hungary, 11%
Poland, 5%
Other CEE, 5% Other WE, 3%
# Tenant % of total WAULT (in years)3
1 4.4
2 6.1
3 4.8
4 8.8
5 8.8
6 5.7
7 2.8
8 2.5
9 5.1
10 10.1
Total top 10 15.5% 5.9
4.0%
2.0%
1.9%
1.5%
1.5%
1.1%
1.1%
0.9%
0.8%
0.8%
Ahold Tesco
Generali Siemens
Cez Group Penny
Billa Takko
OBI Continental
Source: Company information Note: Based on data for CPI as of 1H’2018 (1) Other WE includes: France, Switzerland, Italy; Other CEE includes: Slovakia, Romania, Croatia and Russia (2) Other includes industry and logistics, agriculture and residential (3) WAULT reflecting the first break option
Diversification by segment (by net business income)
15
Well diversified by geography, segment, property and tenant
Top 10 tenants (based on rent)
Top 10 income generating assets (based on value)
Diversification by geography (by net business income)
# CPI Value (€m) % Total GLA in k sqm Location 1 Quadrio 234 3.3% 27 Prague, Czech Republic 2 Olympia Plzen 146 2.1% 41 Plzen, Czech Republic 3 Zlaty Andel 122 1.7% 21 Prague, Czech Republic 4 Ogrody 120 1.7% 42 Elbląg, Poland 5 City Park Jihlava 113 1.6% 29 Jihlava, Czech Republic 6 Reuchlin 103 1.5% 50 Berlin, Germany 7 Nisa 102 1.5% 50 Liberec, Czech Republic 8 Helmholtz 101 1.4% 37 Berlin, Germany 9 Clarion Congress Hotel 97 1.4% 35 Prague, Czech Republic 10 Schlesische Strasse 93 1.3% 25 Berlin, Germany
Top 10 as % of property value 1,231 17.6% 357
€156m
2
€156m
1 1
16 Source: Company information Note: CPI as of 1H’2018; Occupancy rates based on GLA (1) Value for 2017 calculated on the basis of EPRA vacancy (2) Czech Republic occupancy calculated as a straight average of all property sectors
EPRA Occupancy rate
94% 94% 94%
92% 92%
H1'2018 2017 2016 2015 2014
Group1
Czech Republic2
Berlin offices
Lease maturity profile
12% 18% 14% 10% 12% 15% 14% 5%
2018E 2019E 2020E 2021E 2022E 2023E 2024E+ Indefinite
8%
45%
16% 11% 6% 6% 6% 3%
2018E 2019E 2020E 2021E 2022E 2023E 2024E+ Indefinite
Czech Republic
Berlin
Occupancy growing across our portfolio, even as rents continue rising
14% 19% 16% 14% 14% 7% 12% 4%
2018E 2019E 2020E 2021E 2022E 2023E 2024E+ Indefinite
Group
95% 93%
90% 89% 89%
2018 2017 2016 2015 2014
91% 90%
88% 85%
83%
H1'2018 2017 2016 2015 2014
3.9 WAULT (years)
3.9 WAULT (years)
3.4 WAULT (years)
• Steady progress in Berlin, where our economic occupancy is closer to 92% (as of 30 June)
• Shorter-dated lease profile in Berlin is designed to capture rising rents in that market
• Tenant churn rate in Berlin was 7.5% for 2017 and below 7% for the last 12 months, which gives GSG ample comfort to sustain the level of renewal activity
• Strong like-for-like rental growth at around 5%, and higher in Berlin (10%), even as occupancy continues to increase
• In the Czech Republic we continue to outperform the market with occupancy at 94% versus the market average of 92% (as of 30 June)
• Occupancy stands at 95% in Hungary and at 92% in Poland, matching and even exceeding the market average (as of 30 June)
17
-2.00%
0.00%
2.00%
4.00%
Dubl
in
War
saw
M
adrid
Bu
dape
st
Barc
elon
a
Prag
ue
Paris
St
ockh
olm
M
ilan
Be
rlin
Br
usse
ls
Rom
e
Mun
ich
Am
ster
dam
M
arse
ille
Co
penh
agen
Fr
ankf
urt
Lille
Co
logn
e
Lisb
on
Ham
burg
Vi
enna
Ly
on
Man
ches
ter
Birm
ingh
am
Lond
on
Glas
gow
281 227 220
127
464 380 375
328 286 261
700
0 100 200 300 400 500 600 700 800
CPI % of retail assets in each country(3)
CPI geographies Western Europe 5% 2% 54% 8%
Density of retail below W.Europe / US Strong rental growth outlook
Retail prime rental growth end-2018 – end-2023 (% pa) Shopping centre GLA (sqm / 1,000 inhabitants)(2)
Czech Republic retail market is structurally sound
(1) Long-term average is based on 1996-2017 data (2) Source: for US, ICSC data for total shopping center GLA above 30,000 sq ft – for Europe, Cushman & Wakefield data (centres above 5,000 m²) (3) Share of property value of retail portfolio in Czech Republic, Hungary, Poland, Slovakia and Romania
Source: World Bank “Ease of doing business” index, PMA, and company information as of last reported.
Index Rating Country 1 Hong Kong
17 United Kingdom 19 France 24 Germany 40 Poland
110 Hungary 143 Slovakia 155 Uruguay 156 Czech Republic 157 West bank and Gaza 186 Somalia
0
50
100
150
200
250
300
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
E
2019
E
2020
E
0
Prague Rest of Czech Republic Long-term average(1)
Ease of obtaining construction permits Subdued development activity Shopping centre completions, 000 sqm GLA (1= easiest)
10.4%
2.6% 1.4% 1.3% 1.2%
(0.5%) (2.2%) (2.5%)
9.1%
CPI
Glob
al c
ompa
ny
Con
EU P
eer 1
Con
EU P
eer 2
Con
EU P
eer 3
Con
EU P
eer 4
UK
peer
1
UK
peer
2
Source: Company information, Euromonitor (1) Calculated as share of internet retail in total retail market based on value. Data for 2017. Select countries presented
18
Retail portfolio well positioned in response to e-commerce
CPIPG’s initiatives to support the future of retail
CPI tenant academy – we provide training to our tenants (and their shop attendants) on methods to increase sales and improve customer satisfaction
Click-and-collect shoppers – increase footfall by attracting the Clients who buy online by collect in-store
Continuous improvement of existing space – actively working with existing tenants to keep the retail space attractive
In store entertainment – enhancing the shopping experience and footfall by opening cinema complexes and kid zones in existing shopping malls
F&B and Leisure activities – offering exciting leisure activities and compelling F&B stores as a way to increase footfall in the shopping centers
CPIPG’s retail tenant sales growth (H1 2018)
3.7% 4.4%
6.2% 6.7% 8.3%
9.1%
13.3%
15.7% Online retail already mature in the Czech Republic with penetration higher than in more developed markets
CEE countries
WE countries
CEE avg
WE avg
CEE avg
WE avg
Mature Czech Republic online retail penetration1 CPI portfolio continues to show strong growth
Czech shopping centres portfolio
Group shopping centres portfolio
51.2
52.1
1H'2017 1H'2018
332.1
362.4
1H'2017 1H'2018
Annual turnover in CPI shopping centers (l-f-l, €m)
Footfall in CPI shopping centres (l-f-l, million)
19
Investing in the shopping centre experience
Quadrio, Prague
IGY Centre, České
Budějovice
Galerie Fénix, Prague
• New food court in Quadrio replaced a bookseller and other merchants on the first floor
• Further establishes Quadrio as a centre of gravity in Central Prague • Footfall has increased by more than 11.1%, exceeding
1 million/month
• Objective was to completely transform the centre • Renovated 29,000 sqm of retail space • Expanded the centre by more than 30% • The centre now houses 120 stores in addition to a 9 screen
multiplex cinema • Turnover increased by 75.4% post redevelopment
• Food court renovations completed in June 2018 • Ongoing refurbishments in the shopping centre will be completed
in the coming months • Connects to Clarion Congress Hotel, Prague which has also
benefited from recent refurbishment • Excellent location with solid transport connectivity
Source: Company information
20
Investment and asset management success in Berlin
Geneststraße
• Located in Tempelhof-Schöneberg, a three minute walk from Berlin’s second largest train station (Südkreuz)
• Includes 101 commercial units including workshops, offices, business premises and production facilities
• Asset has been guided through an development from “value add” to “core plus” through pro-active asset management and upgrading of spaces
• The shift of the asset was accompanied by reasonable and sustainable space improvements (parquet floor, new bathrooms, outside facilities, cantina, etc.)
• Significant increase in rental income (over 35% for 1H 2018), with further upside expected for 2018/2019
Aqua Höfe
• When GSG acquired the asset in 2014, tenants were primarily small creative companies, artists, a techno club and a dance school
• GSG has focused on intensive asset management: merging smaller units into larger units, increasing rents to market levels, improvements of vacant units and common areas, and generating economies of scale across all cost lines (i.e., snow removal and cleaning)
• Beginning in 2016, GSG began a redevelopment phase which involves adding 6,000 sqm GFA and 5,000 sqm NLA to the existing building
• Rents achieved in the newly built space are well above the Berlin market average (which is about €18/sqm)
Source: Company information
Prague
Celakovice
Lidice
Ričany
Libeř
Rudná
Úvaly
Development 13%
Land bank - Prague 48%
Land bank - Other 39%
84
238
294 472
366 310
456
612 615
15%
10% 8%
9% 9% 9%
2013 2014 2015 2016 2017 1H'2018
Developments and land bank (€m and % of total portfolio)
21
Minimal development exposure, high-quality land bank
CPIPG: Very low exposure to development risk
• 91% of total property value comprises income-producing assets
• Land bank comprises 87% (€532m) of non-income generating property – this is a source of flexibility and liquidity, with no immediate plans to develop
• Development (excl. land bank) represents only 1% of total property value
• No speculative development
• No bank financing encumbering any of our land bank
• Development also includes existing assets which are being refurbished
Land bank – Prague: the Bubny site
202k m2 Bubny site, situated in central Prague, constitutes significant part
of the overall land bank
Source: Company information
Financial Management
Access to liquidity
Funding strategy
Dividends
Interest coverage
Leverage
Rating commitment
• Focused on funding via unsecured debt and maintaining a high level of unencumbered assets
• Proactive management of our maturity profile
23
Sect
ion
2
Key
cred
it hi
ghlig
hts o
f the
com
bine
d gr
oup
CPIPG’s financial policy
• Absolute commitment to strong investment grade ratings
• Focused on achieving “high BBB” ratings in coming years
• Our target remains a Net LTV of 45% or below
• We may tighten this target in the future, depending on acquisition activity
• CPI has no current plans to begin paying dividends
• Focus on using cash for debt repayment and capex, lower acquisition activity in 2018
• Revolving credit lines of €230m; nine regional and international banks in our facilities
• Strong focus on investor relations in the EUR market, actively considering strategies to diversify
• CPI intends to maintain an ICR well above 3x going forward
1
2
3
4
5
6
Source: Company information
Financial policy remains a priority
24
Positive changes to our capital structure and ratings
Increasing share of unsecured debt
CPIPG Rating Evolution
CPIPG International Bond Issuance
Cost of Financing (all sources)
2017 2018 2019
Moody's S&P Japan Credit Agency
A+
A
A-
BBB+
BBB
BBB-
4.4%
3.9%
3.3% 2.9%
2.6%
1.6%
2013 2014 2015 2016 2017 2018
21% 41%
62%
69% 52%
38% 6% 5% 4% 2%
YE 2016 YE 2017 YE 2018
Unsecured debt Secured bank loans Secured bonds Other
Issue Date Ranking M S JCR Ccy Size (m) Cpn Mty
12 Feb 2019 Senior Unsecured Baa2 BBB -- HKD 450 4.51 Feb-24
10 Dec 2018 Senior Unsecured Baa2 BBB A- JPY 8,000 1.414 Dec-21
10 Dec 2018 Senior Unsecured Baa2 BBB A- JPY 3,000 1.995 Dec-28
25 Oct 2018 Senior Unsecured Baa2 BBB -- CHF 165 1.630 Oct-23
17 Oct 2018 Senior Unsecured Baa2 BBB -- EUR 600 1.450 Apr-22
9 May 2018 Junior Subordinated Ba1 BB+ -- EUR 550 4.375 Perp
4 Oct 2017 Senior Unsecured Baa2 -- -- EUR 825 2.125 Oct-24
Target “high BBB”
09/17 10/18
05/18
11/18
25
Funding
Geography
Asset class
Sourcing
Target Size
• Focus on buying assets unencumbered (unsecured funding at the CPIPG level)
• Banks have demonstrated ample capacity for bridge financing if/when required
• CPIPG does not have growth targets, and is pleased with the size/scale of our business
• Our focus is on long-term sustainability and performance
• We will only pursue acquisitions which fit our portfolio
• We continue to see proposals on individual assets and portfolios/companies
• Active dialogue with brokers, funds, and the banking community
• Focused on the Czech Republic and Berlin, although opportunities are limited
• Potential good opportunities in Poland and Hungary
• Focus on office and retail, selective in hotels
• 1H’2018 report provided guidance on the size/scale expected for our sectors over the long term
1
2
3
4
5
Source: Company information
CPIPG’s acquisition strategy: selective and consistent
Appendix
27
Income statement as of 1H’2018
Income statement (€m) 1H‘2017 1H‘2018 % change Gross rental income 120 147 22.4%
Net rental income 106 135 27.0%
Net development income (1) (2) 100%
Net hotel income 14 14 2.4%
Net income from other business operations 4 8 66.8%
Total revenue 203 245 20.6%
Total direct business operating expenses (80) (89) 11.6%
Net business income 123 156 26.5%
Net valuation gain 229 95 (58.5%)
Net loss on the disposal of investment property (0) (0) -
Net gain on disposal of subsidiaries and investees (2) (0) (96.5%)
Amortization, depreciation and impairments (15) (12) (22.3%)
Other operating income 8 1 (89.9%)
Administrative expenses (22) (25) 12.8%
Other operating expenses (1) (4) 310.6%
Operating result 321 211 (34.3%)
Net finance income / (costs) (90) (25) (71.8%)
Profit before income tax 231 185 (19.9%)
Income tax expense (41) (24) (40.9%)
Net profit from continuing operations 190 161 (15.4%)
Consolidated adjusted EBITDA 101 131 29.7%
Commentary
• Total revenues increased by 21% (compared to 1H’2017) reaching €245m mainly driven by our successful acquisitions in 2017 and 2018, most notably the acquisition of shopping centres from CBRE GE in Q2 2017
• Net valuation gain of €95m results primarily from valuation gains on the office portfolio in Berlin and Prague plus residential portfolio in the Czech Republic mainly driven by performance improvements
• Operating result declined primarily due to lower level of property revaluation gains. For 1H’2018 the Group only re-values a selected number of high performing properties
• Total interest expense substantially decreased driven by significant refinancing activities in Q4 2017
1
1
2
2
3
3 4
4
Source: Company information
28
Balance sheet as of 1H’2018
Balance sheet (€m) 1H‘2017 1H‘2018 % change Investment property 4,923 6,082 23.5%
Property, plant and equipment 682 770 12.9%
Other long-term assets 321 358 11.4%
Total non-current assets 5,926 7,210 21.7%
Cash & equivalents 235 473 101.4%
Inventories 100 80 (19.7%)
Trade receivables 75 74 (0.8%)
Other current assets 154 201 30.3%
Total current assets 563 829 47.2%
Total assets 6,490 8,038 23.9%
Interest bearing loans & borrowings 2,429 2,894 19.1%
Other non-current liabilities 622 772 24.1%
Total non-current liabilities 3,051 3,667 20.2%
Interest bearing loans & borrowings 646 303 (53.1%)
Other current liabilities 194 201 3.5%
Total current liabilities 840 504 (40.0%)
Total liabilities 3,891 4,170 7.2%
Equity attributable to owners of the Company 2,567 3,287 28.0%
Perpetual notes - 542 N.M.
Non-controlling interests 31 39 26.0%
Total equity 2,598 3,868 48.9%
Total liabilities & equity 6,490 8,038 23.9%
Commentary
• Substantial increase of investment properties mainly driven by sound acquisitions including commercial assets in Berlin for €168m (94.9% stake in ARMO) acquired in March 2017, the shopping centre Královo Pole in Brno (Czech Republic) for €59m, the shopping centre in Hradec Kralove (Czech Republic) for €121m, 2 office buildings for €78m in Warsaw (Poland), and 6 retail parks for €22m (Poland)
• Interest bearing debt changed following the issuance of €825m senior unsecured bonds in H2’2017, which were primarily used to repay secured and expensive debt
• Total equity increase mainly driven by net profit from the period, issuance of new shares of €50m (2018) and €100m (2017), as well as issuance of hybrid notes with impact of €538m
1 1
2
3
3
2
2
Source: Company information
29
Cash flow statement as of 1H’2018
Cash flow statement (€m) 1H’2017 1H‘2018 % change Profit before income tax 231 185 (19.9%)
Net valuation gain / (loss) on investment property (229) (95) (58.5%)
(Gain)/loss on disposal of investment property & subsidiaries 2 (0) (96.5%)
Depreciation / amortisation / impairments 15 12 (22.3%)
Net finance costs 50 41 (17.4%)
Change in working capital 13 (14) (205.5%)
Income tax paid (1) (6) 508.9%
Other non-cash adjustments 38 (12) (130.6%)
Net cash from operating activities 119 112 (6.3%)
Acquisitions and capex of investment property & subsidiaries (153) (198) 29.1%
Disposal of investment property & subsidiaries 27 26 (3.7%)
Loans (provided) / repaid (30) (74) 146.4%
Capex on properties under development and PP&E (17) (14) (20.9%)
Interest received 3 7 139.4%
Other investing activities - - -
Net cash from investing activities (170) (252) 48.4%
Proceeds from issue of share capital 52 50 (3.8%)
Proceeds / (repayments) of bonds 19 (30) (257.9%)
Proceeds / (repayments) of borrowings (38) 4 (109.3%)
Interest paid (51) (37) (27.8%)
Other financing activities (1) 388 (38,919.3%)
Net cash from financing (18) 375 (2,182.6%)
Net increase in cash (69) 234 (439.3%)
Commentary
• Investments in terms of capital expenditure in 1H’2018 mainly comprise:
• Office: Primarily to German portfolio (€15.5m)
• Retail: Mainly in connection with refurbishment of Olympia Teplice (€3.9m), IGY in České Budějovice (€1.4m) and Galerie Fénix in Prague (€1.6m)
• Land bank: Mainly €3.3 million relating to the revitalization of Nová Zbrojovka in Brno
• Total capital expenditure and improvements in 1H’2018 led to an increase of GAV of €54m in the respective period
• The Group has currently capital expenditure commitments of €50m
Source: Company information
30
Disciplined growth, focused on long-term sustainable income
GAV evolution over time
4,865
1,069
813
(142)
117 6,722 285 112
(60) (65)
6,994 > €7.5bn
Property value 2016
Acquisitions and additions
Change in fair value
Disposals Other changes
Property value 2017
Acquisitions and additions
Change in fair value
Disposals Other changes
Property value 1H'2018
Property value 2018
Germany 49%
Czech Republic
44%
Other 7%
Total property value (€m)
• Atrium Centrum & Atrium Plaza offices in Warsaw with a GLA of 31,869 sqm, completed in May 2018
• 5 retail parks in Poland (“HopStop Portfolio”) totalling about 19,000 sqm in GLA, completed in April 2018
• Futurum Hradec Králové shopping centre with a floor area of c. 39,000 sqm and 1,350 parking spaces, completed in April 2018
• 11 luxury apartments at Buxmead in North London, completed in December 2018
2018 Disposals 2018 Acquisitions • 5 small retail assets in regional cities of northern Czech Republic,
completed in June 2018
• Retail park in Český Těšín, completed in May 2018
• Budaörs Office Park, Hungary with a gross area of 18,512 sqm, completed in January 2018
• 3 small retail properties in the Czech Republic totalling approximately 16,000 sqm, completed in December 2018
• Regional convenience shopping outlets in December 2018
Czech Republic
58%
Germany 31%
Other 11%
Selected assets were revalued for 1H 2018 due to excellent
performance.
Source: Company information
Additional acquisitions and valuation uplift as the full
portfolio was re-valued at year-end 2018.
31
Disclaimer
portfolio
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Any decision to purchase any securities of the CPIPG should be made solely on the basis of the final terms and conditions of the securities and the information to be contained in the prospectus or equivalent disclosure document produced in connection with the offering of such securities. Prospective investors are required to make their own independent investigations and appraisals of the business and financial condition of CPIPG and the nature of the securities before taking any investment decision with respect to securities of CPIPG. CPIPG’s financial statements or prospectus (or equivalent disclosure documents) may contain information different from the information contained herein and the financial statements or prospectuses shall prevail. Subject to applicable law, CPIPG accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of the presentation, including its accuracy, completeness or verification or for any other statement made or purported to be made in connection with CPIPG and nothing in this presentation shall be relied upon as a promise or representation in this respect, whether as to the pastor the future. CPIPG disclaims all and any liability (including any liability for damages for misrepresentation under the UK Misrepresentation Act 1967) whatsoever, whether arising in tort, contract or otherwise which it might otherwise have in respect of the presentation or any such statement. This presentation contains certain statistical and market information. Such market information has been sourced from and/or calculated based on data provided by third-party sources identified herein or by CPIPG, if not attributed exclusively to third-party sources. Because such market information has been prepared in part based upon estimates, assessments, adjustments and judgments which are based on CPIPG or third-party sources’ experience and familiarity with the sector in which CPIPG operates and has not been verified by an independent third party, such market information is to a certain degree subjective. While it is believed that such estimates, assessments, adjustments and judgments are reasonable and that the market information prepared appropriately reflects the sector and the market in which the CPIPG operates, there is no assurance that such estimates, assessments, adjustments and judgments are the most appropriate for making determinations relating to market information or that market information prepared by other sources will not differ materially from the market information included herein. 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CPIPG expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based.