Ad hoc Notification pursuant to Article 17 MAR
alstria business update on the corona virus situation
- As of today, tenants representing around EUR 1 million of monthly rents announced their intention to withhold payment (6.8% of the current rent roll)
- EUR 121 million of free liquidity after committed capex and debt repayment
- Withdrawal of the current dividend proposal
Hamburg, March 30, 2020 - In view of the prevailing conditions and in consideration of the exceptional circumstances around the COVID-19 outbreak, alstria is updating the market about its current business situation, outside of its regular reporting.
New regulations supporting the economy
The German parliament adopted a legal framework to mitigate the consequences of the COVID-19 pandemic last week.
These legislative amendments provide, inter alia, that the ability of the landlord to terminate a lease due to rent arrears for the period from April 1 to June 30, 2020 is temporarily suspended, if the non-payment is caused by the effects of the COVID-19 pandemic. If the COVID-19 pandemic continues to cause significant adverse effects, the period for which the restriction on termination applies may be extended by statutory order.
Under the current legal situation, alstria would be entitled to terminate leases after two months of payment arrears. However, under the new law the rent remains due and payable and all unpaid rent would have to be paid by June 30, 2022 at the latest.
Impact on alstria
Based on our current knowledge, it is likely that this law and the current outbreak of COVID-19 will affect alstria's cashflow as the rent payment is potentially being delayed by some tenants. It is also expected that tenant groups will be affected to varying degrees.
To date (March 30, 2020) alstria has been informed by 90 tenants representing a total monthly rent of EUR 1 million (or around 6.8% of the current monthly rent roll) that they will not be paying their rent in the coming months.
We are presenting below the current monthly rent roll grouped according to the perceived resilience to liquidity considerations.
- Government tenants and multi-national corporations (49.3% of current monthly rent):
This includes public sector tenants (representing 26.2% or EUR 3.8 million of monthly rent) and multi-national corporations (23.1% or 3.4 million of monthly rent). In this tenant group alstria has received no requests for a suspension of rent.
- Domestic corporations (25.7% of current monthly rent):
This includes large domestic and mid-size corporates (EUR 3.8 million of monthly rental income). To date, alstria has received requests in that group representing a total monthly rental income of EUR 0.25 million per month.
- SMEs (19.3% of current monthly rent):
This includes mainly SME office tenants (generating EUR 2.8 million of monthly rental income). To date, alstria has received requests in that group representing a total monthly rental income of EUR 0.28 million per month.
- Most affected tenants (5.7% of the current monthly rent):
This includes mainly retail, co-working, hotels, parking operators etc. that are directly and immediately affected by the COVID-19 outbreak (generating EUR 0.8 million of monthly rental income). To date, tenants of this group have asked alstria to suspend their rent payments in the amount of EUR 0.5 million per month.
The impact on alstria's P&L should be limited as the rent will remain due and will essentially relate to the voluntary rent waiver which alstria will consider on a case-by-case basis in particular for the most affected tenants who will not be in position to bear the weight of the rent arrears.
Strongest balance sheet in the corporate history
alstria has taken advantage of the favourable economic conditions of the past years to prepare the Company for a cyclical downturn. alstria's net LTV was 27.1% as of the last reporting date (December 31, 2019) and net debt/EBITDA was 8.5. The REIT equity ratio reached a record level of 70.9% as per December 31, 2019 (vs. legal obligation of 45%).
alstria did not buy any new properties year-to-date but sold five properties in the current year for a total consideration of EUR 82 million, generating a gain of 6% on the last book value. Of these five disposed properties, four transactions have already closed for a total consideration of EUR 61 million and one is expected to close in the coming months (EUR 21 million).
EUR 121 million of free cash after debt repayment and committed capex
alstria will repay EUR 37 million of Schuldschein loan due in May 2020 and EUR 327 million of capital market bonds due in March 2021. These liabilities, as well as the current committed capex of EUR 198 million are comfortably covered by the current cash position of EUR 683 million and future inflow from disposals already signed of EUR 21 million. The next debt maturity of EUR 325 million will not come due before April 2023.
Annual general meeting and dividend
As announced previously alstria has postponed its annual general meeting that was initially planned for 23rd of April 2020 to a later date still to be fixed.
There is substantial uncertainty in both the length of the current lock-down and the depth of its impact on the overall economy. More specifically it is impossible to reasonably assess the impact on the ability of alstria's tenants to pay rent in the medium term. While the current assumption is that the vast majority of our tenants will not run into liquidity problems, it is also clear that the longer the economical standstill, the higher the pressure on tenant cashflows will be. Considering these circumstances and consistent with the prudent approach the Company has taken over the years, alstria's management board is withdrawing its current dividend proposal for the year 2019. The dividend proposal will be reassessed when the Company will have better visibility on the full impact of the crisis on its tenant's economic situation, and therefore on the Company's own cashflow. This reassessment will be made prior to the calling of the 2020 annual general meeting and will be communicated to the market at the latest within the new invitation thereof.
Invitation to a telephone conference on April 3, 2020
alstria's management board, CEO Olivier Elamine and CFO Alexander Dexne, will host a telephone conference on April 3, 2020 at 1:00 pm (CET) to answer questions that market participants might have, which will also be webcasted on our website (www.alstria.com).
The dial-in details will be published on our website www.alstria.com in the course of this week.
Explanations to the utilized financial figures can be found on the website of alstria office REIT-AG under https://www.alstria.com/en/glossary.
alstria office REIT-AG
Head of IR & PR
T +49 40 22 63 41-329
F +49 40 22 63 41-229
alstria office REIT AG is the leading real-estate operator focusing solely on German office property in selected German markets. Our strategy is based on the ownership and an active management of our properties throughout their entire life cycle, strong added-value services to our customers and deep knowledge of the markets in which we operate. alstria strives for sustainable long-term value creation while taking advantage of short-term arbitrage of inefficiencies in the real estate markets. As per December 31, 2019 the portfolio comprised 116 buildings with a lettable area of 1.5 million m2.
/This release constitutes neither an offer to sell nor a solicitation of an offer to buy any shares. As far as this press release contains forward-looking statements with respect to the business, financial condition and results of operations of alstria office REIT-AG (alstria), these statements are based on current expectations or beliefs of alstria's management. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those reflected in such forward-looking statements. Apart from other factors not mentioned here, differences could occur as a result of changes in the overall economic situation and the competitive environment - especially in the core business segments and markets of alstria. Also, the development of the financial markets and changes in national as well as international provisions particularly in the field of tax legislation and financial reporting standards could have an effect. Terrorist attacks and their consequences could increase the likelihood and the extent of differences.
The current COVID-19 outbreak is creating substantial uncertainty in the marketplace. Although alstria has diligently reviewed the information contained in this release it is based on its own analysis and estimate, as well as available public sources and not on active discussion with tenants. As such the current liquidity risk of the tenants can materially differ from alstria's own estimate, and the actual impact of the COVID 19 outbreak may differ substantially from the current previsions.
alstria undertakes no obligation to publicly release any revisions or updates to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events
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