The Board of Directors of Société de la Tour Eiffel, meeting on 5 March 2020, approved the annual financial statements as at 31 December 2019. The audit procedures for these accounts have been completed and the corresponding reports are being issued.
Thomas Georgeon, CEO of Société de la Tour Eiffel, stated: “2019 has seen the successful implementation of the merger by takeover of Affine with three key points:
- the definition and advanced implementation of a disposal plan to achieve the strategic objective of a portfolio comprising 100% of office property and a geographical breakdown with 80% of those properties in Greater Paris and 20% in high-potential regional cities;
- integration of the teams and adaptation of the structure to achieve synergies greater than expected and ahead of schedule for € 4.6m; and
- refinancing of the former Affine debt and a € 100m additional credit line to finance developments in an optimised financial structure.
This operation has allowed a transformation of the property company backed by noteworthy successes:
- in investment, with the completion of targeted acquisitions,
- in development, with the smooth implementation of the € 170m plan, and
- in leasing with rental success on the Massy and Suresnes sites, confirming their attractiveness.
This virtuous management of the property company brings the value of its assets to € 1.9bn, allows EPRA earnings to be maintained and to increase the NAV by 2.4%. Backed by these ideal conditions, we are continuing to deploy our strategy: increased proximity with our tenants, redevelopment of our property portfolio and development of our land reserves, opportunities for targeted acquisitions of secured assets, pursuing a trajectory towards a new critical size for the benefit of our customers and our shareholders."
- Property portfolio increasing to € 1.86bn around the 100/80/20 refocus: 100% office property, 80% in Greater Paris / 20% in high-potential regional cities
- Positive outcome of the merger by takeover of Affine: successful integration and creation of value
- Disposal plan ahead of schedule: more than 50% of the targeted assets have been sold or are under sale agreements
- Solid operational dynamics: handovers and leasing in accordance with the business plan
- Improvement of the financial structure: financing arrangements for € 330m and control of the LTV ratio
- CSR performance a central feature of our property portfolio
Achievements and Perspectives
- € 39m in acquisitions of buildings generating immediate cash flow
- € 173m of investment pipeline including € 79m of projects delivered in 2019
- € 189m in disposals: more than 50% of non-strategic assets sold or are under sale agreements
- Massy / Suresnes: renovations completed, 30% already re-let
- € 4.6m in synergies: one year ahead of forecasts
- Valuation of the property portfolio: +8.3% to € 1.86bn (+ 3.0% on a like-for-like basis)
- EPRA earnings per share: € 2.9 / Current cash flow per share: € 2.9
- Consolidated net profit: € 1.4m (vs. - € 24.5m on a pro forma basis in 2018)
- NAV Triple Net EPRA per share: € 54.2 (+ 2.4%)
- Net Initial Yield EPRA topped-up: 4.66%
- Annual cash flow: impact of two major notices of leaving (Massy / Suresnes) partially offset by synergies from the merger by takeover of Affine ahead of schedule
- 2019 dividend: taking into account the current cash flow per share and the LTV, the proposed dividend is € 2.25 per share
France's 5th largest listed office property company with assets of € 1.86bn as at 31 December 2019, Société de la Tour Eiffel Group has based its development strategy on tenant satisfaction, by meeting their requirements and anticipating those of tomorrow. Its internalized management model, its recognized proximity to its customers, its precise vision of tenant expectations and its strong CSR commitment make it a benchmark real estate player and an expert in office property in Greater Paris.
A clear 100/80/20 strategy:
Société de la Tour Eiffel is pursuing the strategic refocusing of its property portfolio aiming for a portfolio consisting exclusively of offices, 80% of which are located in Greater Paris and 20% in high-potential regional cities (Aix-Marseille, Bordeaux, Lille, Lyon, Nantes, Toulouse). The three main levers for its ramp-up are developments, acquisitions and disposal plan for non-strategic assets.
At 31 December 2019, the Group's property portfolio amounted to € 1,860m, 87% of which were offices
(€ 1,627m), 4% were mixed-use office / retail assets (€ 68m) and 9% non-strategic assets
(€ 165m). 73% of the assets are located in Greater Paris (€ 1,353m) and 18% in high-potential regional cities (€ 342m).
€ 39m in acquisitions to enhance the business parks and create land reserves
The Group continued its growth momentum by finalising the acquisition of 18,950 sq. m of floor space for € 39m, corresponding to additional annual rental income of € 2.3m:
- Sale & leaseback on 4 office buildings, including one in the Parc de Nanterre Seine: +€ 1.4m in annual rental income for 9,570 sq. m of additional floor space;
- 1 building in the Parc de Nanterre Seine: +€ 0.2m in annual rental income for 1,390 sq. m of additional floor space;
- 1 building in the Parc des Aygalades in Marseilles, +€ 0.1m in annual rental income for 1,160 sq. m of additional floor space;
- 3 office buildings in the Parc du Golf in Aix-en-Provence: +€ 0.5m in annual rental income for 6,830 sq. m of additional floor space.
€ 173m in developments in 2019 to fuel growth in future revenues
After taking into account the handover of 10 development schemes during the year (€ 79m in value, € 6.9m in potential annual rental income) as well as progress in current developments, the balance of the plan stands at € 97m as at 31 December 2019. Advanced to the tune of € 50m and expected to generate € 6.4m in annualised rental income, it consists of 2 development schemes in Greater Paris (48%) and 4 schemes in high-potential regional cities (52%).
The Group's assessment of its 2019 handovers (representing a total of 42,730 sq. m) is highly positive, in particular with:
- the Kibori building (4,000 sq. m) in Nantes, which was fully leased as soon as it was handed over;
- the Indigo building (1,000 sq. m), located on the Parc du Golf in Aix-en-Provence, which was completely renovated and fully leased to Daikin;
- the Grand Navarque site (5,850 sq. m) on the multi-tenant Nanterre Seine business park was fully redeveloped, with an occupancy rate of 96% on handover.
- the multi-tenant Massy Campus (12,060 sq. m) which was inaugurated in October, of which more than 70% has already been leased.
Among the development schemes in progress:
- signing of an off-plan lease agreement (BEFA) on the Saclay plateau in Orsay with IBM for 5,400 sq. m. With the floor space also taken by the Paris-Saclay metropolitan authority, and handover scheduled for summer 2020, the property transaction has been fully leased.
- transformation of the mixed-use site (shops and offices) in Bordeaux with the transformation of a portion of the parking lot into a business centre with nearly 3,000 sq. m of floor space, after the signing of an off-plan lease agreement (BEFA) (handover scheduled for year-end 2020).
More than 50% of the disposal plan of € 189m in non-strategic assets has already been reached
Only 9 months after its launch, more than 50% of the disposal plan of € 189m in non-strategic assets has been reached in the form of disposals or sale agreements. The sales have generated capital gains of almost 8%. The program to refocus the property portfolio mainly concerns office buildings located outside the Group's strategic locations, logistics platforms and shops.
Sustained rental activity
Over 20% of annualised headline rents were under negotiations during the year, with € 9.9m in new leases signed (48,530 sq. m) and € 10.5m renegotiated (82,460 sq. m), including the SNCF lease on the Tour Traversière renewed for a firm term of 6 years, for a net gain of +€ 1.1m.
The arrival in December of Avnet on the Massy site as well as an international group on that of Suresnes reduced their vacancy by almost a third.
In addition, the Group will take advantage of the forthcoming vacancies in H2 2020, on the Lyon Dauphiné, Puteaux Dion Bouton and Aubervilliers Jean-Jaurès sites to launch value-providing developments beyond the current cash-flows (€ 4.4m in annualised rent).
As at 31 December 2019, the financial occupancy rate (EPRA) stood at 82.1% (compared with 85.2% a year earlier or 81.2% restated for the impact of Suresnes at the end of June 2019) and the average firm lease term at 3.0 years.
EPRA earnings stable at € 2.9 per share
The Group's rental income increased by 44.2% to € 97.0m after the integration of Affine. On a pro forma and like-for-like basis, rental income decreased by 6.7%, mainly due to the notices of leaving by Alstom at the end of November 2018 from the Massy site, and by Capgemini as of 30 June 2019 from the Suresnes site. After restatement for the two departures, rental income increased by 0.6%.
Current EBITDA stood at € 71.3m, up + 51.0% compared with 2018 (+ 3.9% vs the pro forma basis), driven by cost synergies greater than expected (€ 4.6m vs € 4.2m).
Financial costs reached € 19.1m (vs. € 16.8m on a pro forma basis), reflecting ex-Affine greater use of financial leverage, additional drawdowns to finance developments and capital expenditure (€ 71.3m) as well as improved financing conditions. The average debt ratio stood at 2.1% (compared with 2.2% in 2018), demonstrating the success of the € 330m refinancing carried out last October. The Group's LTV ratio is fairly stable at 49.0% (vs. 48.9% at year-end 2018).
After taking into account other income and expenses, taxes and earnings of companies accounted for using the equity method, the EPRA result (recurring net profit) stood at € 50.0m, almost stable at € 2.92 per share compared with the pro forma basis of 2018 at € 2.95 per share.
By reintegrating all EPRA restatement adjustments (allocations, profit on disposals, and changes in the value of financial instruments), consolidated net income rose from a loss of € 24.5m on a pro forma basis in 2018 to a profit of € 1.4m in 2019. This includes the depreciation of goodwill for € 4.1m.
Current Cash Flow amounted to € 47.1m or € 2.91 per share compared with € 3.09 on a pro forma basis for 2018.
Net Asset Value were up + 2.4%
The EPRA NNNAV (Triple Net Asset Value) per share increased from € 53.0 to € 54.2 at year-end 2019. This 2.4% increase was mainly fueled by the positive change in fair value, notably linked to developments, which stood at + 3.0% on a like-for-like basis.
Taking into account the net impact of investments and disposals, assets amounted to € 1,860.1m (excluding transfer taxes and fees), compared with € 1,717.2m at year-end 2018 (+ 8.3%).
Dividend of € 2.25 per share
In view of the change in current cash flow per share (€ 2.9) and of the LTV indebtedness ratio (49.0%) , the Board of Directors will propose to the General Meeting of shareholders a dividend of € 2.25 per share paid in cash. The dividend corresponds to a yield of 5.8% and 5.7% calculated respectively on the average price for 2019 and on the closing price on the last day of the 2019 financial year.
After a year of profound transformation marked in particular by the successful integration of the Affine teams and portfolio, the Group is ready to face its new development prospects.
The ramp-up of the pipeline (€ 173m / rent: € 13.3m / completion 73%) and the disposal plan (€ 189m / rent: € 16.7m) enable the Group to strengthen its fundamentals. The Group can move resolutely towards its objectives: to refocus the property portfolio on its strategic locations, improve the quality of its assets as well as that of its revenues, and generate greater capacity for growth.
With a rigorous management, the Group has the benefit of a suitable structure with which to consider new strategic objectives and reach a new size.
In light of the sanitary environment, the Group has implemented a series of actions to protect the health of its employees, a business continuity plan for its activity as a lessor, as well as a series of concrete commitments with respect to its tenants in order to ensure the prevention, reactivity and monitoring of developments in these events.
- 30 April 2020: Annual General Shareholders' Meeting
- 28 July 2020: 2020 half-year sales turnover and results (after market close)
The presentation of the results is available on the Group's website: www.societetoureiffel.com.
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|About Société de la Tour Eiffel |
Société de la Tour Eiffel is an integrated commercial real estate company with €1.9 bn in assets and a powerful service culture. It operates across the real estate cycle, supporting companies of all sizes and sectors, and directly manages assets in strong growth regions via a rigorous management process. The real estate company manages its real estate portfolio, which is currently growing fast, for the long term. It is implementing a strategic refocus on 100% office property, 80% in Greater Paris and 20% in the regions and is now established as a leading actor in the sector.
Société de la Tour Eiffel is listed on Euronext Paris (Compartment B) - ISIN Code: FR0000036816 -Reuters: TEIF.PA - Bloomberg: EIFF.FP - A member of Indexes: IEIF Foncières, IEIF Immobilier France