2018 HALF-YEAR REAULTS
A solid operational growth during transition period
Growth of the portfolio under management reaching €1.8 Bn
- €1 627 Mn managed for third party (+6% compared to December 31, 2017) in the format of SCPI1 and OPCI2, thanks to a gross subscription amount to €97 Mn in the first half of 2018 vs. € 78 Mn during the same period in 2017 (+23%)
- €149 Mn of owned assets (+2%)
Robust financial indicators
- Consolidated net results at €9.0 Mn, increase by +120% compared to the first half of 2017
- Net commissions of €6.6 Mn, vs. €4.5 Mn in H1-2017 (+47%)
- Net rental income of €3.2 Mn vs. €4.1 Mn in H1-2017 (-22%) due to the disposal of Pantin office in 2017
- Loan to value3 at a historical low level at 12% (vs. 23% at December 31, 2017), following the capital increase realized in April 2018
- Triple net NAV at €95.8 € per share (+8% vs. June 30, 2017)
The management board of PAREF, during the board meeting held on July 31, 2018, approved the closing of the half-year accounts of Jun 30, 2018. The limited review of financial statements by auditors is in progress.
«The first half year of 2018 was a very active period that we endeavored to continue the transformations to accelerate the growth of the Group beyond our day-to-day business. Reinforcement of our teams with new talents, new working conditions provided to employees, in particular the new head office and the progress in digitalization, as well as the rebranding of the Group's image, contribute to PAREF's new positioning. The quality of the teams' work also continues to produce unprecedented results, leading to value creation on owned assets and a record gross subscription. »
Antoine Onfray - CFO
I - Management for third parties (PAREF Gestion)
- Subscription and managed portfolio
During the first semester of 2018, €97 Mn gross subscription has been collected from retail investors representing +23% growth compared to the same period last year (€78 Mn in H1-2017). This result is mainly explained by dynamic performances of opened-end SCPI funds Novapierre Allemagne and Interpierre with €71 Mn and €22 Mn gross subscription respectively over the period.
The net subscription remains high with a net to gross subscription ratio of 91 % during 1st semester of 2018 (vs. 86 % in 2017 and 81 % in 2016), showing the confidence of investors in the Group's products and the quality of their management.
As at June 30, 2018, PAREF Gestion is managing €1 627 Mn of assets for third parties, a +6% increase compared to 2017 (€1 531 Mn as at December 31, 2017).
The split of the funds managed by PAREF Gestion is as follows as at June 30, 2018:
| Type | Funds | Strategy | Asset under management | Asset under management | Evolution in % |
| (€ Mn) | (€ Mn) | ||||
| Dec 31,17 | Jun 30, 18 | ||||
| SCPI | Capiforce Pierre (CF) | Diversified | 53 | 53 | 0% |
| Pierre 48 (CV) | Residential (Paris) | 281 | 282 | 0% | |
| Novapierre 1 (CV) | Retail (Greater Paris) | 153 | 156 | 2% | |
| Interpierre France (CV) | Logistic/industry | 97 | 116 | 19% | |
| Novapierre Allemagne (CV) | Retail (Germany) | 269 | 339 | 26% | |
| Atlantique Pierre 1 (CF) | Diversified | 43 | 43 | 0% | |
| Cifocoma 1 (CF) | Retail | 20 | 20 | 0% | |
| Cifocoma 2 (CF) | Retail | 21 | 21 | 0% | |
| Sub-total SCPI | 939 | 1 030 | 10% | ||
| OPCI | Vivapierre (CV) | Hotel residence (France) | 100 | 97 | -3% |
| 54 Boétie (CV) | 349 | 356 | 2% | ||
| OPPCI of hotel properties (CF) | 115 | 115 | 0% | ||
| Total OPCI | 564 | 569 | 1% | ||
| Other | 28 | 28 | 0% | ||
| Total | 1 531 | 1 627 | 6% | ||
CF : Closed-end fund
CV : Opened-end fund
2018 first half-year gross subscription is split as follows:
| Type | Funds | Gross subscription H1-2017 (€ Mn) | Gross subscription H1-2018 (€ Mn) | Evolution in % |
| SCPI | Pierre 48 | 4 | 2 | -44% |
| Novapierre 1 | 3 | 2 | -54% | |
| Interpierre France | 14 | 22 | 59% | |
| Novapierre Allemagne | 57 | 71 | 24% | |
| Total | 78 | 97 | 23% |
- Commissions
Thanks to a sustained subscription in the first six months of 2018 and growing asset under management, PAREF Gestion has achieved a remarkable growth on its gross subscription commissions and management commissions, reaching €8.6 Mn (+23%) and 3.3 M€ (+32%) respectively.
| Commissions (in €k) | H1-2017 | H1-2018 | Evolution in % |
| Management commissions | 2 537 | 3 347 | 32% |
| Subscription commissions | 7 000 | 8 605 | 23% |
| Retro-commissions | -5 072 | -5 395 | 6% |
| Net Commissions | 4 465 | 6 558 | 47% |
II - Real-estate activity (PAREF SA)
PAREF continues to reinforce its rental activity for its owned assets with more than 32 000 m² of surface let or re-let, representing almost a quarter of total assets owned by the Group (including the portion of Gaïa office). In particular, PAREF has signed with Thermes Adour, a major player in spa industry, a lease of 12-year firm period for the hotel residence asset located in Dax and Saint-Paul-Lès-Dax, bringing its maturity to July 2031.
The financial occupancy rate increased to 84.1 %, (including Gaïa office) compared to 82.2% as at December 31, 20174.
The weighted average unexpired lease term stands at 4.9 years at the end of June 2018 and the expiry schedule of rents of owned assets is as follows:
View the graph in the PDF version of the press release
PAREF also manages proactively its owned portfolio with the disposal of 2 assets, Vaux-Le-Pesnil office and half of an office asset located in Saint-Maurice, at the end of April for total net selling price of €1.8 Mn, representing a 17% premium in average above last unaffected appraisals.
The Group continues its strategy of active rotation of the owned assets, with a progressive positioning mainly towards assets of more significant size located in Greater Paris.
Despite the divestments, the asset value of PAREFE Group5 increased by 3% on a like-for-like basis thanks to the rental activity in the first half of 2018, reaching €149 Mn as at Jun 30, 2018.
| Key indicators on owned assets6 | 31/12/2017 | 30/06/2018 |
| Number of assets | 22 | 21 |
| Lettable area (in operation) | 133 422 m² | 129 116 m² |
| Financial occupancy rate (in operation) | 82.2% | 84.1% |
| Valuation | €125 Mn | €128 Mn |
Geographical owned portfolio split6
View the graph in the PDF version of the press release
In total, the net rental income of PAREF owned assets stands at €3.2 Mn for the first half year of 2018, decreasing by 22% compared to the same period in 2017, mainly due to the full impact of the disposal of Pantin assets in 2017 (impact of -€0.8 Mn for the first half year) and the end of usufruct on residential assets historically held by PAREF, which is partly compensated by active operational management of rental activities in 2017 and first half of 2018. In the same time, the gross initial yield on these assets stands at 7.0% (excluding the Gaïa office).
| Rental income on own assets (€k) | H1-2017 | H1-2018 | Evolution in % |
| Gross rental income | 4 795 | 3 795 | -21% |
| Non-recoverable rental expenses | -672 | -647 | -4% |
| Other income | 9 | 58 | n.a |
| Total net rental income | 4 132 | 3 206 | -22% |
Gross rental income increased by +3.5% on a like-for-like basis thanks to the proactive leasing activity during 2017 and first semester of 2018.
III - 2018 first semester results
Consolidated P&L:
| Detailed consolidated P&L (in €k) | 2017 H1 | 2018 H1 | Evolution in % |
| Gross rental income | 4 795 | 3 795 | -21% |
| Non-recoverable rental expenses | -672 | -647 | -4% |
| Other income | 9 | 58 | n.a. |
| Net rental income | 4 132 | 3 206 | -22% |
| Revenues on commissions | 9 537 | 11 953 | 25% |
| -including management commissions | 2 537 | 3 347 | 32% |
| -including subscription commissions | 7 000 | 8 605 | 23% |
| Retro-commissions | -5 072 | -5 395 | 6% |
| Net revenues on commissions | 4 465 | 6 558 | 47% |
| General expenses | -4 584 | -3 831 | -16% |
| Depreciation and amortization | -375 | 3 | n.a. |
| Current operating result | 3 638 | 5 936 | 63% |
| Valuation movements on assets | 2 157 | 4 262 | 98% |
| Result on disposals | 1 000 | 248 | -75% |
| Operating result | 6 796 | 10 446 | 54% |
| Financial products | 48 | 48 | -2% |
| Financial expenses | -2 360 | -830 | -65% |
| Net financial expenses | -2 312 | -783 | -66% |
| Other expenses and incomes on financial assets | 96 | 106 | 10% |
| Fair-value adjustments of financial instruments | 233 | 194 | -17% |
| Results of companies consolidated under the equity-method | -252 | 142 | n.a. |
| Result before tax | 4 561 | 10 106 | 122% |
| Income tax | -490 | -1 145 | 134% |
| Net result | 4 071 | 8 961 | 120% |
| Non-controlling interests | - | - | n.a. |
| Net result (owners of the parent) | 4 071 | 8 961 | 120% |
| Average number of shares (non-diluted) | 1 195 788 | 1 319 367 | |
| Net result / share (owners of the parent) | 3.40 | 6.79 | 99% |
| Average number of shares (diluted) | 1 207 675 | 1 324 867 | |
| Net result / share (owners of the parent diluted) | 3.37 | 6.76 | 101% |
PAREF Group realized €9.0 Mn net results in the first half of 2018, showing substantial increase compared to the same period of 2017 (+120%), mainly explained by:
- Net rental income stands at €3.2 Mn, decreasing mainly due to the impact of the disposal of Pantin assets in 2017 and the end of usufruct on residential assets historically held by PAREF;
- Net commissions strongly grew by +47% thanks to the increase in subscriptions and in the amount of assets managed on behalf of third parties;
- General expenses amount to €3.8 Mn, reducing by €0.8 Mn vs H1-2017, which is mainly explained by the disposal-related costs incurred during first semester in 2017 for €0.7 Mn;
- Net financial expenses stand at €0.8 Mn for the period vs. €2.3 Mn in H1-2017. This decrease is due to the exceptional breakage cost on Pantin office financing in 2017;
- Results of companies consolidated under the equity-method stand at €0.1 Mn, mainly thanks to the contribution from shares held in funds, in particular SCPI Interpierre.
IV - Financial resources
The gross debt of the Group stands at €43 Mn as at June 30, 2018 (€45 Mn at the end of 2017), following the repayment of existing debts.
The consolidated debt is fully composed of loans with mortgages on owned assets.
The average cost of debt of the Group is reduced to 3.6% as at June 30, 2018 vs. 4.2% as at December 31, 2017, mainly linked to the repayment of financing on Pantin office. The average debt maturity is 3.9 years as of June 30, 2018.
The Group implemented a conservative policy on interest rate risk hedging, with more than 80% of the debt issued at fixed rate or covered by hedging instruments, limiting the sensitivity of the Group to interest rates fluctuations.
Financial ratios are solid with a loan-to-value (LTV7) and an interest coverage ratio (ICR8) of 12% and 7.6x respectively (versus 23% and 4.8x respectively in 2017).
The Group respects the financial covenants on its bank debt: LTV < 55% and ICR > 2x9.
Debt repayment schedule:
View the graph in the PDF version of the press release
The Group has an amount of cash and cash equivalent covering more than 12 months debt repayment and respond to the minimum regulatory amount to be held by PAREF Gestion, with €23.8 Mn of consolidated cash and cash equivalent as at June 30, 2018.
V - Assets under Management
| In €k | 31/12/2017 | 30/06/2018 | Evolution en % |
| PAREF own assets | 107 099 | 109 825 | 3% |
| PAREF participations (1) | 38 564 | 38 687 | 0% |
| Total PAREF | 145 663 | 148 512 | 2% |
| SCPI | |||
| - Interpierre France | 97 250 | 115 902 | 19% |
| - Novapierre 1 | 153 374 | 156 236 | 2% |
| - Pierre 48 | 281 461 | 281 824 | 0% |
| - Capiforce Pierre | 53 325 | 53 325 | 0% |
| - Atlantique Pierre 1 | 43 268 | 43 268 | 0% |
| - Novapierre Allemagne | 269 422 | 338 855 | 26% |
| - Cifocoma 1 | 19 729 | 19 729 | 0% |
| - Cifocoma 2 | 20 917 | 20 917 | 0% |
| Sub-total SCPI | 938 745 | 1 030 056 | 10% |
| OPPCI | |||
| - 54 Boétie | 349 100 | 356 000 | 2% |
| - Vivapierre | 99 960 | 97 280 | -3% |
| - OPPCI spécialisé hôtels | 115 290 | 115 290 | 0% |
| Sub-total OPPCI | 564 350 | 568 570 | 1% |
| Other assets managed on behalf of third parties (2) | 28 262 | 28 362 | 0% |
| Total Assets under Management by PAREF Gestion | 1 531 357 | 1 626 988 | 6% |
| Retreatments (3) | -19 427 | -19 464 | 0% |
| TOTAL | 1 657 593 | 1 756 035 | 6% |
(1) Participations in Interpierre, Vivapierre and the Gaia
(2 Including Foncière Sélection Régions
(3) Part of PAREF portfolio is managed through SCPI (Interpierre) and OPPCI (Vivapierre) by PAREF Gestion
PAREF's own portfolio stands at €110 Mn, increased by €3 Mn compared to 2017 year-end, mainly due to:
- Disposals of €1.6 Mn (valuation as at December 31, 2017); and
- Increase in asset valuation of €4.3 Mn.
The like-for-like change in fair value amounted to €4.3 million in the first half of 2018, an increase of 4% vs. 2017.
The average gross initial yield on PARE's own assets stands at 7.0%, excluding the Le Gaïa office building (7.2% in 2017).
The Group applies the IFRS 13 regulation « Fair-Value evaluation » and classifies its owned assets in the level 3 category in view of (i) limited public information and (ii) confidentiality on data used by experts for asset valuation.
VI - Net Asset Value
PAREF Group triple net asset value (NNNAV) remains stable at €95.8 as at June 30, 2018, despite of (i) a significant capital increase through a private placement of €17 Mn at €73 per share and (ii) dividend distribution of €4.3 Mn for the 2017 fiscal year paid on May 31, 2018, of which the impacts are compensated by an important value creation linked to robust operational activities.
NNNAV is based on consolidated equity under IFRS rules (including fair value of assets) and financial instruments and debt at fair-value.
| 31/12/2017 | 30/06/2018 | Evolution en % | |
| Consolidated equity | 100.3 | 121.8 | 21% |
| Fair value of financial instruments | 0.9 | 0.8 | |
| Revaluation of intangible and operating assets (PAREF GESTION) | 16.3 | 17.6 | |
| Other | 0 | 0 | |
| NAV (in €M) | 117.5 | 140.2 | 19% |
| NAV / per share (in €) | 98.1 | 97.5 | -1% |
| Fair value of financial instruments | -0.9 | -0.8 | |
| Fair value of debt | -1.5 | -1.1 | |
| Deferred capital gain taxes | -0.4 | -0.5 | |
| NNNAV (in M€) | 114.7 | 137.8 | 20% |
| NNNAV / per share (in €) | 95.7 | 95.8 | 0.1% |
| Deferred capital gain taxes | 0.4 | 0.5 | |
| Estimated transfer taxes | 9.8 | 10.1 | |
| Going concern NAV (in M€) | 124.9 | 148.4 | 19% |
| Going concern NAV / per share (in €) | 104.3 | 103.1 | -1% |
VII - Other major events during the period
PAREF has realized with success a capital increase without preferential subscription rights of €17 Mn on April 5, 2018 (the settlement-delivery completed on April 11, 2018). The transaction has been largely oversubscribed and demonstrates investors' interest in the Group.
The shares held by Fosun Group is reduced from 71.37 % to 59.84 % of capital after the operation, allowing PAREF to maintain the SIIC status.
VIII - Other financial indicators
- Recurring result from operating activities
| In €k | Jun 30, 2017 | June 30, 2018 | Evolution in % |
| Net result (owners of the Parents) | 4 071 | 8 961 | 120% |
| Adjustments | |||
| (i) Change in fair-value of assets | -2 157 | -4 262 | 98% |
| (ii) Profits or losses on disposal of investment properties and other interests | -1000 | -248 | -75% |
| (iii) Profits or losses on disposal of financial assets available for sale | 0 | 0 | |
| (iv) Tax on profits or losses on disposals | 0 | 0 | |
| (v) Negative goodwill / goodwill impairment | 0 | 0 | |
| (vi) Changes in fair value of financial instruments and associated close-out costs | -233 | -194 | -17% |
| (vii) Acquisition costs on share deals and non-controlling joint-venture | 0 | 0 | |
| (viii) Deferred tax in respect of the adjustments above | 0 | 0 | |
| (ix) Adjustments (i) to (viii) above in respect of companies consolidated under equity method | 388 | 650 | 68% |
| (x) Non-controlling interests in respect of the above | 0 | 0 | |
| Recurring result | 1 069 | 4 907 | 359% |
| Average number of shares (diluted) | 1 195 788 | 1 319 367 | |
| Recurring result per share (diluted) | 0.89 € | 3.72 € | 316% |
| Balance Sheet - Assets (in €k) | 31/12/2017 | 30/06/2018 |
| Non-current assets | ||
| Investment properties | 105 689 | 109 125 |
| Intangible assets | 89 | 64 |
| Property, plant and equipment | 60 | 146 |
| Financial assets | 10 785 | 11 905 |
| Shares and investments in companies under the equity method | 18 829 | 18 962 |
| Financial assets held for sale | 1 035 | 1 048 |
| Total non-current assets | 136 487 | 141 250 |
| Current assets | ||
| Stocks | 0 | 0 |
| Trade receivables and related | 8 233 | 12 042 |
| Other receivables | 247 | 299 |
| Financial instruments | 0 | 0 |
| Cash and cash equivalents | 10 023 | 23 770 |
| Total current assets | 18 503 | 36 110 |
| Non-current assets available for sale | 1 410 | 700 |
| TOTAL ASSETS | 156 400 | 178 060 |
| Balance Sheet - EQUITY & LIABILITIES (in €k) | 31/12/2017 | 30/06/2018 |
| Equity | ||
| Share capital | 30 218 | 36 040 |
| Additional paid-in capital | 29 310 | 39 918 |
| Fair-value evolution of financial instruments | -289 | -265 |
| Consolidated reserves | 32 835 | 37 192 |
| Consolidated result | 8 261 | 8 961 |
| Shareholder equity | 100 334 | 121 845 |
| Minority interests | 0 | 0 |
| Total equity | 100 334 | 121 845 |
| Liabilities | ||
| Non-current liabilities | ||
| Non-current financial debt | 39 652 | 37 573 |
| Non-current taxes due & other employee-related liabilities | 176 | 64 |
| Non-current provisions | 267 | 267 |
| Total non-current liabilities | 40 095 | 37 903 |
| Current liabilities | ||
| Current financial debt | 5 704 | 5 069 |
| Current financial instruments | 996 | 779 |
| Trade payables and related | 3 477 | 3 945 |
| Current taxes due & other employee-related liabilities | 3 804 | 6 576 |
| Other current liabilities | 1 990 | 1 943 |
| Total current liabilities | 15 971 | 18 313 |
| TOTAL EQUITY & LIABILITIES | 156 400 | 178 060 |
| CASH FLOW (en k€) | 31/12/2017 | 30/06/2018 |
| Operating cash-flow | ||
| Net profit | 8 261 | 8 961 |
| Depreciation and amortization | 778 | 37 |
| Valuation movements on assets | -646 | -4 262 |
| Valuation movements on financial instruments | -520 | -194 |
| Valuation on financial assets held for sale | -16 | 0 |
| Tax | 940 | 1 145 |
| Result on disposals | - 2 919 | - 248 |
| Results of companies consolidated under the equity-method | -712 | - 142 |
| Cash flow after cost of debt and before tax | 5 165 | 5 296 |
| Net financial expenses | 3 253 | 758 |
| Taxes paid | -796 | -911 |
| Cash-flow from operating activities before net financial items and taxes | 7 622 | 5 143 |
| Other variations in working capital | -888 | -877 |
| Net cash-flow from operating activities | 6 734 | 4 267 |
| Investment cash-flow | ||
| Acquisition of investment properties | -558 | -14 |
| Acquisition of other assets | -523 | - 99 |
| Disposal of investment properties | 27 409 | 1 798 |
| Acquisition of financial assets | -2 292 | -1 315 |
| Financial assets disposal | 0 | 0 |
| Variation in companies consolidated under the equity-method | 0 | 0 |
| Financial products received | 705 | 48 |
| Change in perimeter | 0 | 0 |
| Cash-flow from investments | 24 741 | 418 |
| Financing cash flow | ||
| Variation in capital | 0 | 16 430 |
| Self-held shares | 151 | 449 |
| Increase in financial debt | 0 | 0 |
| Variation of other financial debts | 0 | 0 |
| Debt repayments | -20 280 | -2 023 |
| Financial cost on new debt | 0 | 0 |
| Variation on bank overdraft | 450 | -629 |
| Financial expenses paid | -3 331 | -849 |
| Dividends paid to shareholders and minority interests | -2 417 | -4 316 |
| Cash flows from financing activities | -25 427 | 9 062 |
| Impact of change of consolidation method - Interpierre | 0 | 0 |
| Increase / (decrease) in cash | 6 048 | 13 747 |
| Cash and cash equivalents at opening | 3 975 | 10 023 |
| Cash and cash equivalents at closing | 10 023 | 23 770 |
Financial agenda
October 31, 2018: Financial information as at September 30, 2018
About PAREF Group
PAREF operates in two major complementary areas: (i) Commercial and residential investments owned by SIIC PAREF primarily in corporate real estate in the Paris region (€149 Mn asset as at June 30, 2018) and (ii) Management on behalf of third parties via PAREF Gestion (€1 627 Mn funds under management as at June 30, 2018), an AMF-certified management company.
PAREF is a company listed on Euronext Paris, Compartment C, under ISIN FR00110263202 - Ticker PAR.
More information on www.paref.fr
Contacts
| Antoine CASTRO Chief Executive Officer | Antoine ONFRAY Chief Financial Officer |
communication@paref.com
Phone: 01 40 29 86 86
Press Contact
Citigate Dewe Rogerson, Alexandre Dechaux
01 53 32 84 79
Alexandre.dechaux@citigatedewerogerson.com
1 « Sociétés Civiles de Placements Immobiliers » (non-trading real estate investment companies)
2 « Organisme de Placement Collectif Immobilier » (property investment mutual funds)
3 Loan to value (LTV): consolidated net debt divided by the consolidated asset value excluding transfer taxes (LTV at à 15% including the 50% share in Wep Watford versus 26% in 2017)
4 Excluding Gaïa office, the financial occupancy rate is 93.0% as at Jun 30, 2018, vs. 90.8% at the end of 2017.
5 Including shares in companies consolidated under the Equity method, of which 50% of Wep Watford (the entity holds the Gaïa office (Nanterre, La Défense)), 27,24% of OPPCI Vivapierre and 9,06% of SCPI Interpierre.
6 Including Gaïa office share. Excluding Interpierre, Vivapierre and Paref Gestion shares.
7 Loan-to-value: consolidated net debt divided by the consolidated asset value excluding transfer taxes
8 ICR: financial expenses (including interest on swaps and undrawn credit lines but excluding penalty on fixed debt repayment) divided by EBITDA
9 Financial covenants on mortgaged debt are also respected