Consus Real Estate AG (CC1); Q119 results shaped by SSN Group acquisition

Published on 19-06-2019 14:00:00
Author Michal Mierzwiak

Consus has released today it’s Q119 financial results presenting steady increase in revenues and adjusted EBITDA, which however did not translate into improved net results. This period was the first one fully reflecting the effects of SSN Group acquisition, including expanded development portfolio.

The company’s reported revenues and overall performance increased 35% year-on-year, reaching €118.4m and €132.1m respectively. Reported EBITDA amounted to €26.9m compared to €28.6m in Q118 and adjusted EBITDA (pre-PPA and pre-one offs) increased to €46.1m from €38.9m, which, according to management, is the best indicator of the company’s performance.

That said, Consus reported that their financial costs during the reporting period, €51.4m, are almost twice that of Q118, mainly due to its acquisition of the SSN Group. This is because SSN’s acquisition was partially financed with new debt, but also as a result of higher interest rates on SSN Group loans than company’s average. Consequently, the net result stood at negative €9.9m, compared to €4.9m in Q118.

To help solve the companies’ indebtedness, Consus placed a senior secured bond with a volume of €400m to institutional investors in May 2019. The bond pays a coupon of 9.625% per annum and will mature in 2024. It was issued at 98.5% of its par value. The placement was the first milestone in reducing the cost of project financing, which should be obtained through realignment towards a long-term financing structure as the proceeds have been used to refinance the SSN acquisition facility.

The Gross Development Value (GDV) of the portfolio remained unchanged in the reporting period, amounting to €9.6bn and placing Consus as the largest property developer in Germany’s top 9 cities. After the reporting date, the company also agreed to purchase three new projects with a GDV of €993m, which should be concluded in Q319. These transactions will be offset by an upfront sale amounting to €884m GDV, also expected to close in the Q319. This should help rebalance the portfolio and reduce the company’s leverage and cost of debt. Consequently, the portfolio’s GDV is expected to remain broadly flat in the upcoming months.

Management has reconfirmed it is targeting adjusted EBITDA of €450m in 2020, which implies significant operational improvements in the upcoming periods. According to management, earnings momentum should be an important contributor to leverage moderation, with the company’s targeted mid-term net debt to adjusted EBITDA multiple at around 3.0x (vs 8.3x in Q119).

Net debt, however, increased slightly in the Q119 reaching €2,171m compared to €2,104m as at 31 December 2018.

Author: Michal Mierzwiak

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