Deutsche EuroShop: Growth in portfolio and operating profit in the first half of 2023

• Acquisition of additional shares in shopping centers promotes growth
• Increase in FFO forecast to between €2.08 and €2.18 per share
• Proposed dividend: €2.50 per share

Hamburg, 14 August 2023 – Shopping center investor Deutsche EuroShop (DES) today published its results for the first half of 2023, which were characterised by growth in both the operating business and the investment portfolio. “Customer footfall and our tenants’ sales continued their recovery. Compared to the first half of 2022, 11.4% more people visited our shopping centers and our tenants recorded a 14.5% increase in retail sales. This means that retail sales have returned to 2019 levels,” explains DES board member Hans-Peter Kneip. The acquisitions of additional shares in six shopping centers at the beginning of the year improved key performance indicators in addition to the resurgent business in the existing portfolio.

In a pro-forma comparison based on an identical portfolio, the trend is as follows:

Revenue growth +2.2%

Revenue grew 2.2%, from €132.4 million to €135.4 million. Net operating income (NOI) followed a similar positive trend, improving to €107.5 million – partly due to substantially lower write-downs on rent receivables – while earnings before interest and taxes (EBIT) rose sharply by 17.1% to €113.5 million due to income from the release of provisions for non-allocable ancillary costs and maintenance as well as lower write-downs.

EPRA earnings (+24.0%) and FFO (+14.5%)

Earnings before taxes and measurement gains/losses (EBT excluding measurement) climbed by 21.9% to €90.9 million, and EPRA earnings adjusted for valuation effects were up by just under one quarter from €70.6 million to €87.6 million. Funds from operations (FFO) adjusted for measurement gains/losses and non-recurring effects rose from €76.5 million to €87.5 million, which represents a gain of 14.5%. Group liquidity has increased from €366.3 million to €432.2 million since year-end 2022.

Reduced Group result due to slightly lower property valuation

Property values fell slightly (-0.7%) in the first half of 2023, resulting in a negative valuation result of €39.8 million. Consolidated profit of €37.1 million was about one third lower than in the first half of 2022.

Equity ratio, LTV and liquidity further improved

Deutsche EuroShop’s key balance sheet figures continued to improve. The equity ratio at the end of the first six months was 56.8% and the loan-to-value (LTV) ratio was 28.7%. Group liquidity amounted to €432.2 million at the end of June 2023. Executive Board member, Hans-Peter Kneip: “Our financing is very well positioned; we pay an average of 2.34% interest on our €1.63 billion loan portfolio. Furthermore, there are no loan maturities until September 2025.”

Increased FFO forecast

In addition to the operating business meeting its targets, the first half of 2023 was positively influenced by one-off income, not least due to the partial reversal of provisions and write-downs made in 2020 and 2021 when business was heavily affected by the coronavirus pandemic. The FFO forecast for the 2023 financial year is raised by this one-off income to between €2.08 and €2.18 per share (previously: between €2.00 and €2.10).

Proposed dividend

For the Annual General Meeting scheduled for 29 August 2023, the Executive Board and Supervisory Board of Deutsche EuroShop have proposed the distribution of a dividend for financial year 2022 of just under €191.2 million, or €2.50 per share.
 

Full half-year financial report

The full half-year financial report is available as a PDF document and in ePaper format. It can be downloaded from www.deutsche-euroshop.de/ir

Deutsche EuroShop – The Shopping Center Company

Deutsche EuroShop is the only public company in Germany to invest exclusively in shopping centers in prime locations. The company currently has investments in 21 shopping centers in Germany, Austria, Poland, the Czech Republic and Hungary. The portfolio includes the Main-Taunus-Zentrum near Frankfurt, the Altmarkt-Galerie in Dresden and the Galeria Baltycka in Gdansk, among many others.
 

Key consolidated figures

¹ Including the share attributable to equity-accounted joint ventures and associates

² European Public Real Estate Association

³ Including third-party interests in equity

⁴ Loan-to-value ratio (LTV ratio): ratio of net financial liabilities (financial liabilities less cash and cash equivalents) to non-current assets (investment properties and financial investments accounted for using the equity method).

⁵ EPRA loan-to-value ratio (EPRA LTV): ratio of net debt (financial liabilities and lease liabilities less cash and cash equivalents) to property assets (investment properties, owner-occupied properties, intangible assets and other assets (net)). Net debt and real estate assets are calculated on the basis of the Group’s share in the subsidiaries and joint ventures.

⁶ The number of no-par value shares issued for the first half of 2023 takes into account, on a time-weighted basis, the capital increase against cash and non-cash contributions carried out at the beginning of 2023 and entered in the Commercial Register on 3 February 2023, as a result of which the number of Deutsche EuroShop AG shares in circulation increased from 61,783,594 to 76,464,319 no-par value shares.

⁷ The pro-forma figures given relate to a comparable group, which was prepared under the assumption that the acquisition of the six property companies had already taken place at the beginning of 2022. One-off effects resulting from the change in the consolidation method and the initial consolidation were not taken into account. Likewise, no ancillary acquisition costs were recognised in the pro-forma figures. For the purpose of improving comparability, the same weighted number of no-par value shares issued was used in the disclosure of the key Group figures per share.