DGAP-News: Preliminary figures FY 2020 - burdens from valuation effects and one-off expenses - basis for sustained growth starting in 2021

Preliminary figures FY 2020 - burdens from valuation effects and one-off expenses - basis for sustained growth starting in 2021

• Aggregated revenues and gains of € 191m, EBITDA of € 17m, adjusted net profit of € -48m
• AuM basis slightly increases to nearly € 28bn
• Valuation adjustments due to COVID-19 at retail and commercial assets as well as at "Serviced Apartments"
• Financial outlook for 2021 forecasts substantial growth in aggregated revenues and gains, EBITDA and adjusted net profit
• Deleveraging target for 2021 confirmed, with a financial leverage ratio of under 3x

Frankfurt, 23 February 2021. Corestate Capital Group (Corestate), a leading independent real estate investment manager in Europe, announced today its preliminary results for the past financial year. Based on the unaudited figures, aggregated revenues and gains amounted to € 191m in 2020 and were therefore within the forecast range. EBITDA stood at € 17m and adjusted net profit at € -48m. Due to the crisis, both performance indicators fell significantly short of the company's own expectations on account of significant negative, but mainly non cash-relevant valuation effects and one-off expenses.

Real estate assets under management increased to around € 24.6bn over the course of the year (end of 2019: € 22.8bn). The acquisition of STAM Europe at the start of the year and net organic growth of 1.3%, even taking into account valuation adjustments triggered by the corona-pandemic, made a significant contribution to this development. Total assets under management (AuM) stood at roughly € 27.8bn (previous year: € 26.3bn). That figure includes non-real estate assets, which recorded a decline.

In a market declining by one third, revenues from the core and core+ real estate asset classes proved to be resilient; by contrast, earnings from higher-risk investments in the value-add and opportunistic segments were under pressure. This results not only in significantly lower fee income, but also to COVID-19-driven declining property values of around € -16m, especially in (co-)investments in serviced apartments, retail and office properties with corresponding substantial earnings decreases in the revenue segments Alignment Capital and Warehousing. Due to reversal of several micro-living-projects, services already rendered in the amount of around 20m had to be adjusted. In non-operational business, Corestate additionally wrote down goodwill of roughly € -22m on Atos, an asset manager for commercial properties the company acquired in 2017 and realised negative tax one-off of around € -11m.

The private debt business showed its resistance to the crisis. The fundamental investment strategy focusing on residential real estate in German-speaking conurbations proved successful. Nevertheless, minor revaluations have been made and the risk provisioning has been increased. Total mezzanine fund volume stood at some € 1.2bn at the end of the fourth quarter. This includes cash outflows commonly seen at the end of the fund year. The company expects a noticeable increase of the fund volume in the current financial year. In light of record demand for mezzanine and fully invested funds, the capacities for highly profitable bridge loans through the company's own balance sheet were expanded for a short period of time in the fourth quarter of 2020. Correspondingly, cash and cash equivalents within the Group fell temporarily to € 91m at the end of the year. The repayment of these mezzanine loans is scheduled for the first half of 2021 and will increase liquidity accordingly.

The further development of the product portfolio to account for changing client preferences, along with the growth-oriented fixed cost base, led to a temporary substantial rise in the operating cost/income ratio. Various one-off burdens in the financial year 2020 of around € -9m from acquisitions, changes to the Management Board and the efficiency programme also played a role. This will be offset by savings from the cost-reduction programme of around € 10m from 2021.

CEO René Parmantier comments: "Duration and strength of the second wave of the pandemic led to significant valuation discounts in some segments. But we also used the time to set us up more powerful. We remain focused on institutional and semi-institutional investors, but we will broad our client base. Thus, we can meet the new and growing demand on a higher scale.

In light of the temporary decrease in cash and cash equivalents, net financial debt stood at € 517m at the end of December (end of September 2020: € 449m). The high negative one-off effects at EBITDA level of more than € -45m also had a short-term negative impact on the company's financial leverage ratio. Based on the debt reduction already announced, the company reaffirms the medium-term target corridor of 2.0x to 3.0x. The acquisition of Frankfurt-based Aggregate Financial Services GmbH (AFS), announced on 14 January 2021, is scheduled for completion in the second quarter. The purchase price is to be paid through new shares from authorised capital and will have no negative effect on net financial debt.

Lars Schnidrig, CFO, adds: "We are well on track to reduce the financial leverage ratio to under 3x by the end of 2021. We have already taken initial important steps towards this goal through last year's capital increase and the additional EBITDA from the AFS acquisition. In addition, the program of placing co-investments and other balance sheet assets, along with increasing our operating profitability, plays a particularly instrumental role in achieving this objective."

CEO René Parmantier: "We're re-emerging from the depths. Our focus on the investors' needs is crystal clear. We will offer them, along the entire life cycle and the entire value chain, fully integrated, real estate investment solutions. It became apparent in the first few weeks of the new year that our organisational enhancement as well as the consolidation of sales, will bear fruit over the course of the year. That's why we are confident."

On the backdrop of the improving macroeconomic environment and a further increase in investment volume among clients, the company expects transaction business to pick up over the course of the year and anticipates dynamic demand on the private debt market. As a result, the financial outlook for the current year, which was also published today, forecasts a significant increase in aggregated revenues and gains to between € 235m and € 260m, EBITDA adjusted for the acquisition costs of the AFS transaction of between € 90m and € 115m and adjusted net profit of between € 50m and € 75m. This outlook takes into account the pro rata consolidation of AFS from July 2021, as well as the currently foreseeable impact of the COVID-19 pandemic on the business activities and the economic environment of the company.

Press contact

Jorge Person

T: +49 69 3535630-136 / M: +49 162 2632369

[email protected]

Investor relations contact

Mario Groß

T: +49 69 3535630-106 / M: +49 162 1036025

[email protected]

About CORESTATE Capital Holding S.A.

CORESTATE Capital Holding S.A. (CORESTATE) is an investment manager and co-investor with roughly € 28 bn in assets under management. As a fully integrated real estate platform, CORESTATE offers its customers combined expertise in the areas of investment and fund management as well as property management services. The company operates as a respected business partner of institutional clients and wealthy private investors internationally. CORESTATE is headquartered in Luxembourg and has 42 additional offices in Frankfurt, London, Paris, Madrid, Zurich and Amsterdam, among others. The company employs around 800 people and is listed in the Prime Standard (SDAX) of the Frankfurt Stock Exchange. Please visit www.corestate-capital.com for further information.

Forward-looking statements

This press release may contain certain forward-looking statements based on current assumptions and forecasts made by our management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial position, development or performance of the Company and the estimates given here. These factors include those described in published reports. These reports are available on our website www.corestate-capital.com. The Company assumes no obligation whatsoever to update these forward-looking statements or to conform them to future events or developments. No inappropriate significance should be attached to forward-looking statements, which apply only to the date of this communication.