Listed German property group Corestate Capital reported a steep decline in first-half earnings as one-off restructuring charges coupled with macro economic challenges dealt a blow to the business.
Group revenues slumped to €22.9 mln from €98.3 mln in the year-earlier period due to a steep drop in the core real estate debt business, which suffered from lower transaction volumes on the back of macro-economic uncertainty in conjunction with interest rate and inflation dynamics.
Revenues in the debt segment were also hit hard by issues at its managed fund unit Helvetic Financial Services (HFS), where a restructuring of the key Stratos II fund was recently launched.
EBITDA from continued operations plunged into the red, with Corestate reporting a loss of €125.4 mln, compared with a profit of €35.7 mln the previous year. The firm said this mainly reflected one-off expenses for risk provisions and revaluations of bridge loans, performance fees and real estate projects.
Taking into account all charges, including a steep cut in the goodwill value and the value of intangible assets at HFS and Corestate Bank, the group posted an operating loss of €521.8 mln in H1, against a profit of €3.2 mln the previous year.
Against this background, Corestate said the management board ‘has once again intensified the cost-cutting measures already initiated’.
‘The declared aim is to achieve a structural transformation of the group into an efficient and effective investment house with the existing focus on real estate equity and debt business by the end of the year. To this end, operating units will be bundled, duplicate functions and overheads systematically reduced, offices closed and all non-personnel costs and other expenses fundamentally reviewed.’
Beyond the operational and market challenges, the group said securing liquidity and reducing debt are top priorities.
Net financial debt stood at €553.1 mln at the end of H1, compared to €526.5 mln a year earlier, while cash and cash equivalents amounted to €61 mln (2021: €62.8 mln).
Corestate said it has hired specialist advisers to help it explore alternative options for two bonds maturing in the short term – a €188 mln convertible bond maturing in November 2022 and a €300 mln senior bond maturing in April 2023.
The H1 earnings cap a troubled period for the €16 bn German investment manager, which was forced to postpone the publication of its audited 2021 results at the end of March as accountancy firm E&Y ran an impairment test focused on HFS.
In March, the firm also appointed Stavros Efremidis (pictured) as CEO, moving across from his previous role as supervisory board chairman at Corestate. At the same time, Izabela Danner stepped up to the role of chief operating officer, while Ralf Struckmeyer joined as chief investment officer. Former CEO René Parmantier was charged with managing the real estate financing business.
