2017 Annual Results
Construction of solid and sustainable cash flow continues
The Board of Directors of the Société de la Tour Eiffel, meeting on 7 March 2018, approved the annual financial statements as at 31 December 2017. The review procedures for these accounts have been completed and the corresponding reports are being issued.
Consolidated figures (audited)
|Portfolio value excluding transfer duties||€ 1 168.9m||€ 1 135.1m|
|Portfolio value at amortised cost||€ 950.2m||€ 934.4m|
|Net financial debt||€ 436.1m||€ 410.1m|
|Financial debt rate||2.06%||1.85%|
|EPRA NNNAV (in €/share) *||58.3||58.9|
|Rental income||€ 68.4m||€ 59.6m|
|Gross Operating Profit||€ 52.8m||€ 46.2m|
|EPRA financial occupancy rate||87.5%||87.5%|
|Net profit/loss||€ 17.3m||€ 17.1m|
|Net recurring profit/loss||€ 17.3m||€ 16.5m|
|EPRA earnings||€ 43.6m||€ 35.4m|
|Cash-flow||€ 45.2m||€ 38.9m|
|Cash-flow in €/share **||3.7||4.0|
(*) fully diluted number of shares at end of period
(**) weighted average of outstanding shares over FY
Significant improvement in operating indicators
Gross rental income amounted to €68.4 million in 2017, compared with €59.6 million in 2016, an increase of 14.8%.
The increase in rental income was mainly due to acquisitions made in 2016 (3 assets in Guyancourt, Puteaux and Nanterre-Préfecture and the Défense-Nanterre-Seine Eiffel park).
The increase in property expenses to €5.3 million in 2017 compared with €4.2 million in 2016 is due to the integration of the Défense-Nanterre-Seine Eiffel Park, which had a vacancy rate of 39% when acquired. Despite this, the charge rate remained well under control at 7.7% in 2017.
Net rental income available on the property portfolio amounted to €63.1 million in 2017 compared with €55.3 million in 2016.
Operating income on ordinary activities amounted to €26.3 million in 2017 after taking into account depreciation and corporate expenses (€25.4 million in 2016).
Current cash flow rose sharply by more than 16% to €45.2 million against €38.9 million for 2016.
Development projects on all land reserves
In line with its accumulation strategy, which consists in making acquisitions and developments at the same time, the Group is currently pursuing the opening-up of its land reserves for development, in Ile-de-France and in the other regions of France:
- In Nanterre, the focus is on three projects in the Défense-Nanterre-Seine Eiffel Park located alongside the A86 motorway, consisting of 19 office buildings and light industrial premises:
- The NANTEUIL building (completed project): restoration work as part of a 6-year firm lease involving a floor space of 5,500 m², effective in the first quarter of 2018;
- The NAVARQUE building (ongoing project): restructuring of a building with 6,300 m² of floor space for upgrading into light industrial and offices with handover scheduled for early 2019 and BREEAM RFO Good certification as an objective; 50% of the building is already leased and negotiations are well advanced on the remaining floor space;
- The NANTURRA building (project under study): development of a new building for light industrial and offices with 2,760 m² of floor space;
- In Massy within the Ampère Atlantis integrated development zone (ZAC), the "Campus Eiffel Massy" project for the construction of more than 24,000 m² of floor space for light industrial and offices in several buildings: the objective of this campus which focuses on modularity and services is to propose a diversified commercial offer. The project has been divided into two phases:
- Phase 1: a building permit was issued in July 2016 for the construction of a property complex of 4 HQE Excellent buildings with a surface area of 12,600 m². Work began in October 2017 with delivery scheduled for the second half of 2019;
- Phase 2: approval was obtained in September 2016 for the construction of 12,150 m².
- in Orsay in the Parc Eiffel, (17,000 m² already existing for 16 buildings). A building permit was obtained in January 2018 for an additional building project involving 13,600 m², consisting of two HQE Excellent buildings (6,000 m² of offices and 7,600 m² of light industrial and offices premises and a restaurant).
- in Marseille, in the Parc Eiffel des Aygalades, (18,000 m²),
- a 1,967 m² building certified BREEAM Good will be leased by SERAMM during Q2 2018 as part of an off-plan lease agreement (BEFA);
- advanced negotiations are also underway for the leasing of a 2,600 m² building to be refurbished;
- these projects will be followed by the construction of a new building, the Olivier, at the entrance to the park, with a surface area of 3,634 m² of offices and shops;
- in Aix-en-Provence, (30,000 m²) in the Parc du Golf, the construction of a new BREEAM Good building with 4,300 m² leased to Capgemini as part of an off-plan lease agreement (BEFA). Delivery took place in January 2018.
The Group has also expanded its presence in two business parks and a cluster with several acquisitions:
- Two buildings with 1,500 m² and 1,050 m² located in the Parc du Golf in Aix-en-Provence. These acquisitions enable the Group to increase its property portfolio to 30,000 m² out of a total surface area of 47,000 m², or 64% of the business park;
- A 1,300 m² building in the Eiffel Orsay business campus. This acquisition means the Group now owns the entire business park;
- in Montigny-le-Bretonneux, Diagonale Sud, an approximately 5,500 m² office building. This acquisition, which is part of the business cluster development strategy of Société de la Tour Eiffel, completes the Company's presence with more than 58,500 m² of premises held on the Yvelines cluster.
An increase in portfolio value
At 31 December 2017, the value of the Group's property portfolio amounted to €1,168.9 million, excluding transfer duties and fees, compared with €1,135.1 million as at 31 December 2016, the change being mainly due to developments launched over the period and the acquisition of the Diagonale Sud building.
Office buildings in Ile-de-France represent 86% of this value.
The valuation of the buildings represents an average net yield (EPRA topped up) of 5.5%, a figure that remained stable compared with year-end 2016.
The EPRA vacancy rate remained at a level of 12.5% at 31 December 2017, marked by the vacancy resulting from the recently acquired Défense-Nanterre-Seine Eiffel Park, in which some of the buildings are undergoing renovation or restructuring.
On this basis and after dividend distribution of €3 per share, the EPRA Triple Net Asset Value per share stands at €58.3. It was €58.9 per share at year-end 2016.
Extension of debt maturity and maintenance of the Loan To Value (LTV) ratio
Overall gross debt as at 31 December 2017 stood at €449.1m, as against €432.7m at 31 December 2016.
Net debt (adjusted for cash and cash equivalents) amounted to €436.1m.
The Group's level of indebtedness at 31 December 2017 therefore represented 37.3% of its property assets, against 36.2% at 31 December 2016.
In fiscal 2017, the Group carried out the operations it had announced to extend the maturity of its debt with the issuance of a 10-year bond (EURO PP) of €90 million and the signing of two 7-year loans (Revolving Credit Facility) for a total amount of €160m, of which €120m was drawn as at 31 December 2017. A total of €174 million was used to partially repay a €210 million bank loan maturing in October 2018.
The Group's average financing rate increased slightly compared with 2016, rising from 1.85% to 2.06% but remaining at a historically low level.
Given these items, the Group's average term of debt stood at 7.2 years at 31 December 2017 against
4.6 years at year-end 2016, or 2.6 additional years of debt maturity.
An attractive dividend will be proposed in shares or cash
The Board of Directors will propose to the Shareholders' Meeting the distribution of a dividend of €3.0 per share in shares or cash, payment of which will be made within the legal time-frame. The dividend represents a return of 5.6% based on the average share price of 2017.
"The results of the 2017 fiscal year are consistent with the progress of the plan we have deployed for more than 3 years. Having strengthened its fundamentals, the property company is now pursuing its strategy to increase the size of its property portfolio to €1.5bn. The priority today is the pre-leasing of projects under development and the teams of Société de la Tour Eiffel are taking action to upgrade the service offer that underpins the change and development of our business parks both in Ile-de-France and in the other regions. Backed by that dynamic, I have every confidence that we shall see the Group undertake new developments and projects in 2018," said Philippe Lemoine, Managing Director of Société de la Tour Eiffel.
About Société de la Tour Eiffel
A listed real estate investment company (SIIC) on Euronext Paris, the company pursues a strategy focused on the ownership and the development of quality offices capable of attracting a wide range of quality tenants. The company's portfolio stood at 1.169bn Euros for close to 500,000 m² of assets mainly located in the Paris region as at 31 December 2017.
Société de la Tour Eiffel is listed on Euronext Paris (Compartment B) – ISIN Code: FR0000036816 - Reuters: TEIF.PA – Bloomberg: EIFF.FP - Indexes: IEIF Foncières, IEIF Immobilier France
Jean-Philippe MOCCI - Capmot
Tel : +33 (01) 81 70 96 33/+33 (0)6 71 91 18 83