CORESTATE Capital SA: sees weak business performance in the first nine months of 2022 – goodwill impairments and one-time effects negatively impact adjusted net income
Luxembourg, 15 November 2022 – The Corestate Capital group (Corestate) has published its results for the first nine months of 2022. In its core business, real estate equities and real estate debt, assets under management amounted to 17, €3 billion as of September 30, 2022 (2021: €20.0 billion). On the revenue side, aggregate revenue and profit from continuing operations for the reporting period 2022 decreased to €49.7 million (previous year: €156.7 million). The noticeable deterioration in macroeconomic conditions, combined with interest rate and inflation trends, has resulted in a substantial drop in the volume of transactions in the real estate sector since the beginning of this year. As a result, the Group, and more particularly the Real Estate Debt segment, experienced a sharp drop in income from structuring and financial advisory services. In addition, the Stratos fund restructuring process meant the end of performance fee income, reducing aggregate Debt segment income and gains to a low €20.0m (prior year: €91.7m). euros). Revenues from the Real Estate Equity segment amounted to EUR 44.0 million (prior year: EUR 59.2 million), mainly due to the almost total loss of transaction-related income compared to the year former.
In the first nine months of 2022, consolidated EBITDA from continuing operations amounted to -€108.3 million, compared to €53.4 million the previous year. This change is mainly due to one-off risk provisioning expenses and write-downs related to bridge loans, performance fees and real estate projects. At the end of September 2022, the company wrote off the entire goodwill of HFS as an expense due to future business developments and associated earnings expectations. Taking into account all expense items, including depreciation and write-downs on goodwill and intangible assets, the Group recorded a net result from continuing operations of -581.9 million euros (previous year: 4.1 million euros). Net profit from continuing operations, adjusted for the non-recurring effects of depreciation and deferred taxes, currently amounts to -137.4 million euros (previous year: 25.2 million euros).
In the third quarter, the Management Board systematically continued the measures initiated at the start of the year to improve efficiency and reduce costs, as well as to adapt existing capacities to current business volumes. The stated objective remains the achievement of a structural transformation of the Group into an efficient and effective investment company, with a focus on equities and real estate debt by the end of the year. To this end, business units will continue to be consolidated, duplicate functions and overheads will be reduced, individual sites will be closed, and all non-staff costs and other expenses will be reviewed.
Beyond operational and market issues, securing the Group’s liquidity remains an absolute priority. At the end of September 2022, the Group’s net financial debt amounted to €556.4m (2021: €526.5m), while the Group’s consolidated cash and cash equivalents amounted to €40.1m (2021: €65.1m). With respect to the two maturing bonds – a €188 million convertible bond (November 2022) and a €300 million bond (April 2023) – the Management Board continued discussions with a group of important bondholders and their advisors as well as with several potential equity investors in the third quarter to explore a viable alternative refinancing solution. A vote on the necessary amendments to the articles of association is planned at an extraordinary general meeting on November 22, 2022. The company has also called the holders of its two bonds to meetings of creditors to be held on November 28, 2022 to decide on the concepts restructuring that have been submitted. The proposed resolutions and related documents are available on the company’s website at https://corestate-capital.com/en/nhm/.
The full interim statement is available here: https://corestate-capital.com/en/aktionaere/publications/
Corestate Capital Holding SA published this content on November 15, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on November 15, 2022 06:50:07 UTC.