2018 Half-Year Results
Ongoing developments to prepare for the future
The Board of Directors of Société de la Tour Eiffel, which met on 20 July 2018, approved the financial statements at 30 June 2018. The limited review procedures for these accounts have been completed and the corresponding reports are being issued.
Consolidated figures (audited)
|Portfolio value excluding transfer duties||€ 1 158.6m||€ 1 168.9m|
|Portfolio value at amortised cost||€ 946.3m||€ 950.2m|
|Net financial debt||€ 467.0m||€ 436.1m|
|Financial debt rate||2.26%||2.06%|
|EPRA NNNAV (in €/share)||54.9||58.3|
|EPRA financial occupancy rate||86.8%||87.5%|
|H1 2018||H1 2017|
|Rental income||€ 34.2m||€ 34.4m|
|Gross Operating Profit||€ 23.6m||€ 25.5m|
|Net profit/loss||-€ 2.9m||€ 8.0m|
|Net recurring profit/loss||€ 4.2m||€ 8.0m|
|EPRA earnings||€ 18.2m||€ 21.5m|
|Cash-flow||€ 23.5m||€ 24.8m|
|Cash-flow in €/share||1.9||2.1|
Key performance indicators remain at a strong level
Gross rental income amounted to €34.2m at 30 June 2018 compared with €34.4m at 30 June 2017.
The change in charges on buildings, which stood at €5.2m for the 1st half of 2018 compared with €4.2m in the 1st half of 2017 reflects the slight increase both in the vacancy rate and in expenditure to improve the leasing of the property portfolio.
Net rental income available on the property portfolio amounted to €28.9m as at 30 June 2018 compared with €30.1m as at 30 June 2017.
Operating income on ordinary activities amounted to €23.6m as at 30 June 2018 after taking into account depreciation and overheads against €25.5m as at 30 June 2017.
Current cash flow stood at €23.5m compared with €24.8m for the first half of 2017.
Development projects underway 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 four projects in the La Défense-Nanterre-Seine Business Park located alongside the A86 motorway, consisting of 19 office buildings and light industrial premises:
- the NANTEUIL building: after renovation of the building, a 6-year firm lease for a surface area of 4,000 m² took effect as of the first quarter of 2018;
- the NAVARQUE building (ongoing project): restructuring of a 6,423 m² building for upgrading into offices and light idustrial with handover scheduled for late 2018 and BREEAM RFO Good certification as a further objective; 50% of the building is already on the market and negotiations are well advanced on the remaining floor space;
- the NYMPHEA building: renovation of a 2,900 m² building for offices and light industrial. Handover is scheduled for the end of October 2018;
- the NANTURRA building (project under study): development of a new 2,790 m² building for offices and light industrial;
- 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 mixed uses and offices in several buildings: the objective of this campus which focuses on modularity and services is to propose an additional 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 total surface area of more than 12,600 m²; Work began in October 2017 with handover scheduled for the second half of 2019; the complex is in the process of pre-leasing and includes 2 leases signed for 2,500 m² of further floor space;
- phase 2: approval was obtained in September 2016 for the construction of 12,000 m²;
- In Orsay in the Parc Eiffel, (17,000 m² already exist with 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 premises and a staff restaurant). Taking into account the agreements in principle to lease 70% of the surface area, the development has been launched with handover scheduled for 2020;
- In Marseille in the Parc des Aygalades, (16,000 m²),
- a 1,967 m²building certified BREEAM Good was delivered as announced and leased by SERAMM in Q2 2018;
- the renovation of a further building with 2,600 m² to a single tenant;
- a new building, the Olivier, with a surface area of 3,600 m² of offices and shops, the construction of which began in Q2 2018 with handover scheduled for late 2019;
- In Aix-en-Provence, (30,000 m²) in the Parc du Golf,
- the construction of a new BREEAM Good 4,600 m² building leased by Capgemini as part of an off-plan lease agreement (BEFA). Handover took place in January 2018;
- Renovation of a building with 1,000 m² of floor space acquired in 2017 with negotiations underway for the entire surface area.
The potential rent expected for all of these transactions represents more than €11.0m over time.
Portfolio value marked by developments and 2 break leases
At 30 June 2018, the Group's assets amounted to €1,158.9m, excluding transfer duties and fees, compared with €1,168.9m as at 31 December 2017.
During the first half of 2018, the Group received two break leases from tenants in the Copernic in Massy and the Seine Etoile building in Suresnes, which will become effective respectively in November 2018 and June 2019. Their inclusion in the valuation assumptions of the independent experts led to the recognition in the financial statements at 30 June 2018 of a temporary depreciation pending new leases of €7.1m. Marketing operations are already underway to on-lease the surface areas that will become vacant as soon as possible.
The valuation of the buildings indicates an average net yield (EPRA topped up) of 5.4%, a figure that remained stable compared with year-end 2017 (5.5%).
The EPRA vacancy rate, which applies to all of the property portfolio, increased slightly, reaching a level of 13.2% compared with 12.5% as at 31 December 2017. Excluding properties that are in the process of being sold or are not marketable due to major works or restructuring, the financial vacancy rate was 9.5% at 30 June 2018 compared with 10.3% at year-end 2017.
On this basis and after a dividend distribution of €3 per share, the EPRA Triple Net Asset Value per share stood at €54.9. It was €58.3 per share at year-end 2017.
Control of the Loan To Value ratio (LTV)
Gross debt amounted to €493.9m at 30 June 2018 compared with €449.1m at 31 December 2017, taking into account an additional drawdown of €40m on a credit facility in June 2018.
Net debt (adjusted for cash and cash equivalents) amounted to €467.0m.
As a result, the Group's level of indebtedness at 30 June 2018 represented 40.3% of its property assets, against 37.3% at 31 December 2017.
The average financing rate for the Group was slightly up for H1 2018, rising from 2.06% in 2017 (on a full-year basis) to 2.26%, remaining at a historically low level.
Given these items, the Group's average term of debt stood at 6.6 years at 30 June 2018 against 7.2 years at year-end 2017.
On 6 July 2018, the Group signed a revolving credit facility for €100m with a maturity of 7 years and a variable interest rate of Euribor + 100 basis points.
"The results of the first half of the 2018 fiscal year are consistent with the roll-out of the plan we have deployed for close to 4 years. Without any major acquisitions since end of 2016, the amount of the rental income is currently levelling off and the property company is now pursuing its strategy to increase the size of its property portfolio to €1.5bn in the coming years. The priority today is on developments and the teams of the 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 investment dynamic, I have every confidence that we shall see the Group undertake new projects in the coming months," 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 1.159bn Euros for close to 500,000 m² of assets mainly located in the Paris region as at 30 June 2018.
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 (0)1 81 70 96 33/+33 (0)6 71 91 18 83