CPI Property S A : GROUP – Financial Results for the First Quarter of 2021

CPI Property Group (société anonyme) 40, rue de la Vallée L-2661Luxembourg

R.C.S. Luxembourg: B 102 254

Press Release

Luxembourg, 31 May 2021

CPI PROPERTY GROUP - Financial Results for the First Quarter of 2021

CPI PROPERTY GROUP (hereinafter "CPIPG", the "Company" or together with its subsidiaries the "Group"), the leading owner of income-generating real estate in the Czech Republic, Berlin, Warsaw and the CEE region, hereby publishes unaudited financial results for the first quarter of 2021.

"CPIPG's resilient performance during Q1 2021 continued the steady trajectory of 2020," said Martin Nemecek, CEO. "The impact of COVID-19 on the Group's business has been mild, and we see positive trends in our key markets and property portfolios."

Key highlights for the first quarter of 2021 include:

• CPIPG's property portfolio increased by 2% to €10.5 billion compared to the end of 2020 due to selective acquisitions, positive revaluations and currency effects;
• Total assets increased slightly to €11.9 billion, driven by increases to the property portfolio and partly offset by a reduction in shareholder loans;
• Net rental income increased by 6% to €88 million compared to the first quarter of 2020, reflecting the contribution from recent acquisitions, 0.5% like-for-like growth in gross rental income and steady occupancy;
• Consolidated adjusted EBITDA increased by 7% to €90 million and funds from operations (FFO) increased by
  4% to €61 million compared to the first quarter of 2020 based on higher net rental income, lower costs and the Group's proportionate share in Globalworth Real Estate Investments Limited ("Globalworth");
• Net business income increased by 1% to €92 million as the increase in net rental income was offset by slightly lower net income from hotels and resorts;
• The Group's net interest coverage ratio (Net ICR) was 5.6x and net loan to value (Net LTV) was 40.6%, slightly improved from year end 2020 and well within the Group´s financial policy;
• Unencumbered assets remained high at 71% at the end of Q1 2021;
• Total available liquidity stood at €1.4 billion at the end of the first quarter of 2021;
• EPRA NRV (NAV) slightly decreased to €5.0 billion (versus €5.1 billion at the end of 2020) as an increase in equity from additional hybrid issuance and revaluations was offset by share buybacks;
• The Group collected 91% of Q1 2021 rent before one-timeCOVID-19 discounts and 94% after discounts, despite non-essentialretailers being closed for the entire period. CPIPG expects collections to increase as invoicing and collections continue in the second quarter;

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Other notable events occuring during Q1

• During Q1, CPIPG issued about €1.1 billion of senior unsecured and hybrid bonds, including the Group's inaugural 10-yearbenchmark-sized issuance in Euros. The proceeds were used in part to repay more than €750 million of senior unsecured bonds, Schuldschein and hybrid bonds callable or maturing in 2022, 2023 and 2024;
• In January 2021, CPIPG concluded a mandatory tender offer for the remaining shares of Nova RE SIIQ S.p.A. ("Nova RE"). A total of 9,348,018 shares were tendered for a consideration of €2.36 per share and a total value of €22.061 million. Following the mandatory tender offer, the Group increased its stake in Nova RE to 92.44% of the relevant share capital. At the end of May 2021, CPIPG held an 87.09% stake in Nova RE.
• In February 2021, CPIPG completed a share buyback offer and purchased a total of 641,658,176 shares for an aggregate amount of €395,261,436 (or €0.616 per share). About 94% of shares were tendered by CPIPG's primary shareholder, Radovan Vitek (350,500,000 shares) and CPIPG's subsidiary CPI FIM SA (252,302,248 shares), together with management and third parties. Mr. Vitek used the proceeds to repay loans to CPIPG. The tendered shares were cancelled by the extraordinary general meeting of the shareholders held on 31 March 2021;
• In March 2021, CPIPG increased the ambition of our environmental targets and now aims to reduce GHG emissions intensity by 30% by 2030 versus baseline 2019 levels across all scopes 1-3 (versus the previous 20% target across only scopes 1 and 2). In support of this objective, the Group has committed to transition all electricity purchases to 100% renewable sources by 2024. CPIPG believes these targets align to Paris Agreement goals to limit the global temperature increase to well-below 2 degrees centigrade versus pre- industrial levels. In May 2021, CPIPG was was officially recognised as being committed to science based targets; the Group's strategy is currently being assessed by the Science Based Targets initiative ("SBTi"), with results and feedback expected in the summer.

Notable events occurring after Q1

• On 6 April 2021, the defamation claim filed in June 2020 by Kingstown Capital Management L.P. and Investhold LTD against CPIPG and Radovan Vitek in New York State Court was dismissed in its entirety. As previously communicated to our stakeholders, the separate SDNY Court Lawsuit was dismissed in September 2020 and the plaintiffs appealed that decision, with briefing scheduled to be completed during H1 2021. CPIPG is confident that the appeal lacks merit and that the SDNY Court's decision is on sound footing;
• On 14 April 2021, CPIPG formed a consortium with Aroundtown SA and announced a cash offer for the entire issued share capital of Globalworth not already held by the consortium. The offer document was posted to Globalworth shareholders on 12 May and the First Closing Date of the Offer is 1.00 p.m. (London Time) on 2 June 2021. Further updates on the progress of the Offer will be provided to stakeholders in due course.

"CPIPG is committed to our dual objectives of portfolio growth and capital structure strength," said David Greenbaum, CFO. "We are certain that the quality of CPIPG's properties and people will fuel our continued success."

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FINANCIAL HIGHLIGHTS

Performance		Q1-2021	Q1-2020	Change
Gross rental income	€ million	93	90	3.8%
Net rental income	€ million	88	84	5.6%
Net hotel income	€ million	(3)	(1)	(164.1%)
Total revenues	€ million	158	164	(3.7%)
Net business income	€ million	92	91	0.8%
Consolidated adjusted EBITDA	€ million	90	85	7.0%
Funds from operations (FFO)	€ million	61	59	4.2%
Net profit for the period	€ million	111	62	78.8%

Assets		31-Mar-2021	31-Dec-2020		Change
Total assets	€ million	11,854	11,801	0.4%
Property portfolio	€ million	10,514	10,316	1.9%
Gross leasable area	sqm	3,637,000	3,636,000	0.0%
Occupancy	%	92.7	93.7		(1.0 p.p.)
Like-for-like gross rental growth*	%	0.5	0.8		(0.3 p.p.)
Total number of properties**	No.	348	343	1.5%
Total number of residential units	No.	11,929	11,929	0.0%
Total number of hotel beds***	No.	12,768	12,768	0.0%

• Based on headline rent, excluding one-time discounts
• Excluding residential properties in the Czech Republic
• Including hotels operated, but not owned by the Group

Financing structure		31-Mar-2021	31-Dec-2020	Change
Total equity	€ million	5,801	5,787	0.3%
EPRA NRV (NAV)	€ million	5,004	5,118	(2.2%)
Net debt	€ million	4,268	4,194	1.8%
Net Loan-to-value ratio (Net LTV)	%	40.6	40.7	(0.1 p.p.)
Net debt/EBITDA		11.8x	12.4x	(0.6x)
Secured consolidated leverage ratio	%	11.3	12.0	(0.7 p.p.)
Secured debt to total debt	%	27.0	29.0	(2.0 p.p.)
Unencumbered assets to total assets	%	70.7	70.0	0.7 p.p.
Net ICR		5.6x	5.4x	0.2x

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STATEMENT OF COMPREHENSIVE INCOME

	Three-month period ended
(€ million)	31 March 2021	31 March 2020
Gross rental income	93.5	90.0
Service charge and other income	32.9	32.2
Cost of service and other charges	(24.9)	(23.1)
Property operating expenses	(13.1)	(15.4)
Net rental income	88.4	83.7
Development sales	9.5	2.6
Development operating expenses	(9.0)	(1.8)
Net development income	0.5	0.8
Hotel revenue	5.0	16.9
Hotel operating expenses	(7.5)	(17.9)
Net hotel income	(2.5)	(1.0)
Other business revenue	16.8	22.0
Other business operating expenses	(11.2)	(14.3)
Net other business income	5.6	7.7
Total revenues	157.7	163.7
Total direct business operating expenses	(65.7)	(72.5)
Net business income	92.0	91.2
Net valuation gain*	56.2	0.2
Net gain on disposal of investment property and subsidiaries	0.1	0.0
Amortization, depreciation and impairment	(4.1)	(5.1)
Administrative expenses	(11.8)	(13.5)
Other operating income	1.4	1.3
Other operating expenses	(2.1)	(1.4)
Operating result	131.7	72.7
Interest income	5.1	4.5
Interest expense	(21.2)	(17.9)
Other net financial result*	3.6	9.5
Net finance costs	(12.5)	(3.9)
Share of profit of equity-accounted investees (net of tax)	5.5	1.3
Profit before income tax	124.7	70.1
Income tax expense	(13.5)	(7.9)
Net profit from continuing operations	111.2	62.2

• Comparative financial information adjusted due to change in accounting policy, for more information refer to note 2.4 of the consolidated financial statements as at 31 December 2020.

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Gross rental income

Gross rental income increased by €3.5 million (+4%) to €93.5 million in Q1 2021. The increase was driven by office acquisitions in Warsaw completed during 2020 (€1.4 million) along with continued growth in like-for-like rental income, especially in the Berlin office portfolio (€1.8 million).

Net development income

Development sales increased by €6.9 million to €9.5 million and development operating expenses increased by €7.2 million to €9.0 million due to sales of apartments and homes in Prague.

Net hotel income

In Q1 2021, primarily due to the COVID-19 pandemic, hotel revenues decreased by €11.9 million (71%) to €5 million compared to Q1 2020. However, tight cost control led to a reduction in hotel operating expenses by €10.4 million (58%) to €7.5 million.

Net valuation gain

Net valuation gain of €56.2 million in Q1 2021 reflected positive trends in the Czech residential portfolio and the effect of properties in Italy which were acquired at a significant discount to fair value.

Interest expense

Interest expense increased by €3.3 million to €21.2 million in Q1 2021 primarily due to the increase in total bonds outstanding.

Other net financial result

Other net financial result in Q1 2021 comprises the net foreign exchange gain on investment property of €15.2 million, intra-group loans of €10.8 million and financial expenses connected with early repayment of bonds of €18.0 million.

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