Historically active first half of the year:
operational performances and amicable business combination with
Eurosic
Regulatory News:
Gecina (Paris:GFC):
Total return of +17.0% in six months and +22.2% over one
year
- Triple net NAV per share up +15.0%
over six months to €152 per share
- Portfolio value up +10.4% over
six months, reflecting the upturn on the rental markets, combined
with a further compression of capitalization rates, as well as
ongoing work to extract value on the assets under development
- Strong increase in value for the
residential portfolio (+23.0% over six months) reflecting the
growing appetite for this asset class among institutional
operators.
Recurrent net income in line with the Group's expectations
and 2017 targets confirmed
- Contraction in recurrent net
income over the first half of 2017, resulting from the
significant changes in scope (€1.7 bn of non-strategic or
mature buildings sold and work launched to redevelop five buildings
in 2016)
- These scope effects will no longer
have an impact in the second half of 2017, with recurrent net
income expected to be at least equal to the level recorded in the
second half of 20161 (excluding impacts linked to Eurosic’s
integration)
- Confirmation of the target for
recurrent net income, restated for the impact of the healthcare
sale and before taking into account Eurosic's integration, to
contract by nearly -5% to -6%2 in 2017.
Pace of project deliveries and lettings accelerated in a
buoyant market
- Buoyant market, supporting
Gecina's portfolio and strategy
- Rental income for offices up +2.1%
like-for-like
- Major letting successes since
the start of 2017, with nearly 95,000 sq.m let, pre-let, relet
or renegotiated for €36.1m economic rents
- Close to 33,000 sq.m delivered
during the first half of the year in Paris (55 Amsterdam) and Lyon
(Gerland/Septen), with nearly 80% let
- Pipeline pre-letting rate increased to
35% (pre-letting in 2017 so far of Octant-Sextant and 20
Ville-l’Evêque)
2017 already a historic year for Gecina with its proposed
acquisition of Eurosic
- Acceleration of Gecina's total
return strategy
- Acceleration of the portfolio's
rotation, with a planned sales program for over
€1.2 bn
- Combined project pipeline
increased to nearly €2.5 bn (for the scope from end-2016), with
deliveries scheduled from 2017 to 2019
- Immediate accretive impact
representing +10% for the full year on recurrent net income per
share
- Strengthening of the Group's
strategic positioning on real estate markets
- Growing specialization on
offices (>80% of the total portfolio after the disposal
program)
- Strengthening of the office
portfolio's focus on central sectors (>60% in Paris City
following the disposal program)
- Building of unrivalled coverage of
the Paris market (strengthening and access to new office
markets at the heart of Paris)
- Operation secured and balance
sheet safeguarded
- Operation secured and fully financed,
particularly through a €1.5 bn bond issue with an average coupon
of 1.3%
- €1 bn capital increase with
preferential subscription rights issue planned to refinance part of
the debt
New organization rolled out on July 3 to support operational
performance
- Creation of two business units for
Offices and the Residential portfolio, and recruitment of two
executive directors to head up these units, making it possible to
better monitor the operational and financial performances of the
portfolios concerned.
- Setting up a dedicated business unit
for the residential portfolio reflects Gecina's ambition to focus
in priority on extracting value and optimizing the management of
this division.
1 All other things being equal2 This target may be revised up or
down depending on opportunities for investments and sales during
the year.
Key figures
In million
euros Jun 30, 16 Jun 30, 17
Change (%) Gross rents 298.8 240.6
-19.5%
(+1.6% like-for-like)
EBITDA 247.3 191.4 -22.6%
Recurrent net income (Group share)
198.0 152.7 -22.9%
(-11% excl. impact of healthcare
sale)
per share (€) 3.16 2.46 -22.1% Net income – Group share 526.9
1307.1 +148,0%
Diluted EPRA triple net NAV (block)
128.6 152.0 +18.2%
* EBITDA less net financial expenses and recurrent tax, as
defined in the accounts appended to this press release** Table
presenting the transition between Group shareholders' equity from
the financial statements and EPRA triple net NAV available in
section 3.7 of the half-year financial report
Historically intense first half of the
year on positive real estate markets
Earnings for the first half of 2017 reflect the solid trends for
the rental and investment markets in Paris, with EPRA
triple net NAV up +15% over six months and +2.1%
like-for-like growth in office rental income.
Alongside this, the positive trends on the Paris markets have
supported the major letting successes finalized since the beginning
of 2017, with nearly 95,000 sq.m already let, pre-let or
renegotiated, including the pre-lettings of Octant-Sextant
(Levallois-Perret) and 20 Ville-l’Evêque (Paris CBD). These
lettings have further strengthened Gecina's confidence in the
outlook for growth over the coming years, particularly with its
pipeline of projects that are under development.
These results also reflect a transition phase between the
impact of the major volumes of sales and redevelopments carried out
in 2016, which, as expected, explain the temporary contraction in
recurrent net income for the first half of this year, and the
future impacts that will be generated by Eurosic’s acquisition and
the deliveries of buildings that are currently under development.
These significant scope effects, with a full impact over the first
six months of this year, will have a relatively limited impact on
the second six months. As a result, Gecina is able to confirm
with confidence its 2017 target for recurrent net
income, excluding the impact of both the healthcare sale and
Eurosic's acquisition, to contract by -5% to -6%.
The first half of the year was also marked primarily by the
proposed amicable business combination with Eurosic, which
Gecina will gain control of by end of August. This is a
strategically structuring operation for the Group, enabling it to
ramp up and accelerate the deployment of its strategy, in line with
the ambitions announced at the start of the year. In addition to
accelerating the portfolio rotation program, particularly through
the sales programs for which processes are already underway, this
operation will further strengthen the Group's exposure to the
office real estate market's most central sectors, especially in
Paris City. The combined structure will have a pipeline that is
unrivalled in Europe, focused principally on the market's most
buoyant sectors, offering increased visibility in terms of cash
flow growth and value extraction. In the short term, this operation
will have an accretive impact representing +10% per share on
a fully year basis.
In connection with the financing for this operation, Gecina has
already refinanced part of the €2.5 bn bridge, which made it
possible to finance the operation, through a bond issue in
three tranches for a total of €1.5 bn, with an average
maturity of 10 years and an average coupon of 1.3%. A €1 bn
capital increase with preferential subscription rights issue is
also planned.
Alongside this operation, Gecina has remained active on the
markets with a share buyback program that has now been
closed, making it possible to buy back €224.5 M of securities at an
average price of €121.8 per share. The Group has also finalized its
acquisition of two office buildings in Paris' central
business district and La Défense for a total of €141.5 M. In
addition, Gecina has finalized sales of residential assets
for €83 M, while a further €142 M of sales were
subject to preliminary agreements at end-June 2017.
Since July 3, 2017, Gecina's teams have been working based on a
new organizational framework. Two business units have been
created for the office portfolio and the residential portfolio,
with two executive directors recruited (Valérie Britay and Franck
Lirzin respectively). This new organization will help build
understanding of and improve the operational and financial
performances of the portfolios concerned. Over the coming quarters,
this new organization will also facilitate Eurosic's integration.
The creation of a dedicated business unit for the residential
division reflects Gecina's ambition to focus in priority on
optimizing this portfolio's operational management and identifying
opportunities for optimizing value.
Méka Brunel, Chief Executive Officer: “Over one year, the
strategy rolled out by Gecina has made it possible to generate a
total return of more than +22%, which reflects not only the Paris
office market’s positive trends, but also the relevance of the
Group’s positioning on the Paris Region's key sectors, as well as
the potential for growth and value creation with the project
pipeline. Through its proposed amicable business combination with
Eurosic, Gecina achieved a historic first half of the year,
establishing itself as Europe’s fourth-largest real estate group
and the market leader for offices.”
Financial Calendar
Business at September 30, 2017October
19, 2017
Rental income in line with the Group’s forecasts and
like-for-like growth confirmed
On a current basis, the rental performance reported for the
first half of 2017 reflects the full impact of the significant
changes in scope from 2016 (sale of the healthcare portfolio,
transfer of five buildings to the pipeline and sales of various
office buildings). This base effect should not impact the second
half of 2017.
Total gross rental income came to €240.6 M for the first half of
2017. Restated for the healthcare portfolio's sale, it is down
-7.3% on a current basis and up +1.6% like-for-like.
Like-for-like, the first half of the year confirms the
return to rental growth (+1.6%). This performance,
driven primarily by the office portfolio, factors in the level of
indexation, which is still low, but positive (+0.3%), a slightly
positive level of reversion, and the letting of buildings that were
partially or completely vacant in the first half of 2016.
On a current basis, the -7.3% contraction (excluding
healthcare) is linked primarily to the offices and residential
assets sold in 2016 (with an average premium of around +15% versus
the latest appraisal values), as well as the launch of work to
redevelop office buildings with strong potential for creating value
when their current tenants leave. In 2016, Gecina incorporated
seven new development projects into its pipeline, including five
from within the Group's portfolio.
Over the period, the loss of rent resulting from the sales
(excluding healthcare) carried out primarily in 2016 (Vinci-Rueil,
Dassault-Suresnes, Bourse-Paris and residential properties on a
vacant unit basis) represents a total of -€7.0 M. The building
redevelopment projects launched, including Octant-Sextant in
Levallois, 20 Ville l’Evêque in Paris and Graviers-Neuilly in 2016,
represent a loss of rent of around -€17.8 M.
Gross rental
income Jun 30, 16 Jun 30, 17
Change (%) In million euros
Current basis Like-for-like
Offices 194.9
178.7 -8.3% +2.1% Traditional
residential 57.5 54.8 -4.7% -0.1% Student residences 7.0 7.1 +0.7%
+0.7%
Group total (excluding healthcare) 259.5
240.6 -7.3% +1.6%
Healthcare and other 39.4 0.0 -100.0%
NA Group total 298.8 240.6 -19.5% +1.6%
Offices: positive trends in the most central sectors
Like-for-like, rental income is up +2.1%, in line with
the Group’s expectations. This increase reflects the improvement in
the financial occupancy rate, particularly with Pointe Métro 2 let
to CREDIPAR and Le Cristallin to the Renault Group. This growth has
also benefited from a slightly positive level of both indexation
(+0.4%) and reversion. With this organic performance, against a
backdrop of improvements in market rental conditions, the Group is
able to confirm that the like-for-like change in office rental
income is expected to be positive in 2017.
On a current basis, rental income from offices is down
-8.3% in view of the impact of the changes in scope from 2016
(sales and redevelopments), while the impact of deliveries was
still limited for the first half of this year.
Gross rental
income – Offices Jun 30, 16 Jun 30,
17 Change (%) In million euros
Current basis Like-for-like Offices 194.9
178.7 -8.3% +2.1% Paris City 94.9 94.6
-0.3% +1.0% Paris CBD - Offices 53.3 53.5 +0.3% +3.4% Paris
CBD - Retail units 18.4 17.6 -4.1% -3.6% Paris excl. CBD
23.2 23.5 +1.3% -1.4% Western Crescent - La
Défense 82.2 65.3 -20.6% +4.0% Other 17.8 18.8
+5.4% +1.0%
Occupancy rate stable and still high
The average financial occupancy rate for the first half
of 2017 came to 95.5% excluding healthcare, stable over six months
and year-on-year. For offices, this rate shows a slight improvement
thanks to the letting of certain assets that were previously vacant
in Gennevilliers (Pointe Métro 2) and Boulogne (Le Cristallin) in
particular.
Average
financial occupancy rate Jun 30, 16 Dec 31, 16
Jun 30, 17
Offices 95.4%
95.5% 95.5% Diversification
95.9% 95.6% 95.5% Traditional residential
97.1% 96.6% 96.4% Student residences 88.7% 89.1%
90.1%
Group total excl. healthcare
95.5% 95.5% 95.5% Healthcare
100.0% 100.0% -
Reported Group total 96.2%
95.9% 95.5%
Recurrent net income (Group share) in line with the Group's
targets
Recurrent net income (Group share) is down –11% excluding
the impact of the healthcare portfolio's sale (finalized on July 1,
2016), in line with the Group's expectations. This contraction
primarily reflects the high volume of assets being transferred
to the pipeline during 2016 (including Octant-Sextant in
Levallois, 20 Ville l’Evêque in Paris and Neuilly Graviers), as
well as the impact of the properties sold in 2016, achieving
a 15% premium versus the latest appraisal values (Rueil Malmaison -
Vinci, Suresnes- Dassault, Neuilly – Peretti and Paris-Bourse).
Since the first half's contraction in recurrent net income
primarily reflects the changes in scope, mainly from the first half
of 2016 and the start of the second half of 2016 (sales of office
buildings and launch of redevelopment projects), as well as the
finalization of the healthcare portfolio disposal (on July 1,
2016), this effect is not expected to be repeated over the second
half of the year. Gecina is therefore confirming that recurrent
net income in 2017, excluding the impact of Eurosic's integration
and restated for the impact of the healthcare sale, is expected to
contract by around -5% to -6%3. This expected
performance reflects the combined impact of underlying growth,
which is expected to reach around +2% to +3%4, and the start of
redevelopment projects, which will be dilutive in the short term,
but accretive when they are delivered, scheduled primarily for 2018
and 2019.
In million
euros Jun 30, 16 Jun 30, 17
Change (%)
Gross rental income 298.8
240.6 -19.5% Net rental income
277.6 221.4 -20.2% Services and other income
(net) 1.0 1.6 +61.9% Salaries and management costs (31.3) (31.7)
+1.0%
EBITDA 247.3 191.4 -22.6% Net
financial expenses (47.0) (36.6) -22.1%
Recurrent gross
income 200.2 154.7 -22.7% Recurrent
minority interests (0.3) (0.5) NS Recurrent tax (1.9) (1.6) -16.1%
Recurrent net income (Group share) 198.0
152.7 -22.9% Recurrent net income
(Group share) per share 3.16 2.46
-22.1%
3 These objectives do not include assumptions for any sales or
investments and may therefore be revised up or down depending on
opportunities for investments and sales during the year.4 Including
the impact of sales (excluding healthcare) in 2016, deliveries of
assets in 2016 and 2017, and organic growth.
The rental margin came to 92.0%, stable compared with the
first half of 2016 (excluding the healthcare portfolio), with the
contraction in the rental margin for the residential portfolio
(-110 bp to 81.0%) offset by the increase in the rental margin for
offices (+80 bp to 95.9%). This increase reflects the improved
occupancy rate for offices and the optimization of certain cost
items.
Group Offices
Residential Healthcare Rental margin for first
half of 2016 - reported 92.9% 95.1% 82.1%
99.0%
Rental margin for first half of 2016 - excl.
healthcare 92.0% Rental margin at end-2016 – reported
92.4% 95.5% 81.0% 98.9%
Rental margin at end-2016 - excl.
healthcare 91.9% Rental margin for first half of
2017 92.0% 95.9%
81.0% NA
Further reduction in the average cost of debt and extension
of its average maturity
Gecina has continued to optimize its liabilities, capitalizing
on a still positive environment to make progress on all its
financial indicators.
Net financial expenses are down -22.1% compared with the
first half of 2016 to €36.6 M.
The average cost of debt (including undrawn credit lines)
came to 2.1% for the first half of 2017, down slightly
(-10 bp) compared with 2016, thanks to the optimization work
carried out in a very positive market environment.
As a result, Gecina's ICR shows a further slight
increase, up from 4.9x at the end of 2016 to 5.0x at end-June
2017.
At the end of June 2017, the average maturity of the Group's
debt was up to 8.6 years (compared with 6.7 years at end-2016
and 5.2 years at end-June 2016). This increase in the average
maturity of debt has benefited primarily from the bond issues
placed on June 27, 2017 for €1.5 bn with an average coupon of 1.3%
and an average maturity of 10 years in connection with the
financing for Eurosic's acquisition. It has also benefited from the
anticipated renewals of unused credit lines for close to €1bn.
Net debt at end-June 2017 represents €3,936 M, down €803
M over the year, resulting from a predominantly net seller profile
for the period. However, over six months, net debt is up €354 M,
linked to the financing for the share buyback program and the
progress made with the development pipeline.
At end-June 2017, Gecina's LTV came to 27.6% including duties
and 29.3% excluding duties, virtually stable over six months
(-10 bp). This stability reflects the offset impacts of the
share buyback program and the investments made through the pipeline
on the one hand, and on the other hand the increase in the
portfolio's value and the assets sold over the first half of the
year.
Ratios
Covenant Jun 30, 17 Loan to value (block,
excl. duties) < 55% 29.3% EBITDA (excluding
disposals) / net financial expenses > 2.0x 5.0x Outstanding
secured debt / net asset value of portfolio (block, excl. duties)
< 25% 5.8% Net asset value of portfolio (block, excl. duties) in
million euros > 6,000 - 8,000 13,447
Historically active first half of the year in terms of
investments
Proposed acquisition of Eurosic: €6.2 bn5 real estate portfolio
(86% offices)
On June 21, 2017, Gecina announced that it had received the
support of Eurosic's six main shareholders (representing nearly 95%
of the capital) under firm agreements signed to sell blocks and
undertakings to tender securities for the public offer that will be
submitted once the blocks have been acquired. The portfolio
concerned by this transaction is made up primarily of offices
(86%), with the majority located at the heart of Paris (59% of the
office portfolio in Paris City and 24% elsewhere in the Paris
Region).
This operation, in line with the Group's strategy, will make it
possible to accelerate the portfolio rotation program (with
a minimum of €1.2 bn of sales planned within 12 months), while also
further strengthening the prospects for growth and value
creation through an additional pipeline representing
around €1 bn (at end-2016), located primarily in Paris.
Following the planned asset sales, with part already
underway, the percentage of office properties within the
combined structure will be increased to over 80% (versus 76%
for Gecina on its own at June 30, 2017), while the percentage of
offices at the heart of Paris City will be increased to over
60% (vs. 55% currently).
This operation will significantly improve Gecina's coverage of
the heart of Paris, particularly in the key sectors represented by
the 6th and 7th arrondissements, as well as the emerging districts
in the 9th and 10th arrondissements.
This operation's financing is secured with a €2.5 bn bridge,
which has been partially refinanced through bond issues for €1.5 bn
(with an average coupon of 1.3% and an average maturity of 10
years). The rest will be refinanced through a capital increase with
preferential subscription rights for €1.0 bn6. This operation
will also enable Gecina to accelerate its real estate portfolio
rotation strategy, with a minimum of €1.2 bn of sales7 expected to
be completed within 12 months. As a result, the LTV ratio will be
kept below 40%. A further €1 bn of sales could be considered
depending on market conditions.
Two office buildings in the CBD and La Défense acquired since
the start of the year
Since the start of the year, Gecina has also finalized its
acquisition of two office buildings in key sectors for the Paris
Region office market.
In this way, the Group acquired a building with nearly
5,000 sq.m on Rue de Courcelles in Paris' CBD for almost
€63 M excluding duties. This building is adjacent to an asset
with nearly 20,000 sq.m already owned by Gecina (Le Banville),
opening up opportunities for extensive real estate synergies.
On July 4, Gecina also finalized its acquisition of a
10,500 sq.m office building in La Défense, based on an
immediate net yield of around 5.7%, for €78.5 M. This building is
fully let with a residual firm period of three years and is located
in the ZAC Danton development zone, close to the T1&B buildings
already owned by Gecina.
Share buyback program: 1.8 million securities for €224.5 M,
with an average of €121.8 per share
During the first half of 2017, Gecina bought back its own
securities in connection with its share buyback program, set up on
February 24. This share buyback program was closed on June 21,
after making it possible to acquire nearly 1.8 million shares for a
total of €224.5 M, with an average of €121.8 per share. The
program was therefore carried out for 75% of the maximum authorized
amount of €300 M.
5 Based on the offer price of €51 per share, excluding the
diversification portfolios sold to Batipart6 Under the
authorizations approved at the General Meeting on April 26, 2017.7
Excluding the sale of Eurosic’s diversification portfolio, sold to
Batipart.
€83 M of residential sales finalized during the first half of
2017
During the first half of 2017, Gecina finalized €83 M of
residential sales, with €72 M on a unit basis and €12 M on a block
basis. The unit sales achieved an average premium of 32.2% compared
with the latest appraisals.
At end-June 2017, €142 M of sales were also covered by
preliminary agreements (with €122 M concerning residential
properties, including €20 M on a unit basis), while
preliminary agreements are currently being prepared for €13 M
of sales.
Lettings ramped up since the start of the year
In line with the ambition mapped out by Gecina at the start of
the year to accelerate its strategy's deployment, Gecina has
secured a major volume of new lettings (lettings, relettings or
renewals) since the start of the year, particularly with projects
that are under development. Based on the portfolio of projects
under development at end-2016, nearly 45% of the space has already
been or is about to be pre-let, compared with just 22% at the end
of 2016.
Gecina has let, relet or renegotiated nearly 95,000 sq.m of
offices, representing €36.1 M of economic rent, reflecting both the
positive trends on the Paris market and the Group's commitment to
anticipating its letting challenges.
- 11,000 sq.m let in anticipation
of a tenant departure scheduled for end-2017
Ahead of schedule, Gecina has let 11,000 sq.m of office space in
the Le Valmy building in eastern Paris (Paris 20th) to an
outstanding tenant almost nine months before it is due to be
vacated, with a firm six-year period. Alongside this, Gecina has
extended an existing lease with this tenant for over 5,000 sq.m of
space in this same building.
- Almost 9,000 sq.m of vacant
space let in Saint-Ouen
Gecina has also signed a lease with a firm nine-year period with
Caisse Régionale RSI Île-de-France for the Dock-en-Seine
building in Saint-Ouen. The building will be fully occupied
following this tenant's arrival at the start of 2018.
- 11,600 sq.m let to the
Renault Group in Le Cristallin
In addition, Gecina has signed a lease with a firm 10-year
period with the Renault Group for the 11,600 sq.m available in the
Le Cristallin building, delivered in 2016. This letting
represents the final stage in the redevelopment and value
extraction process launched by Gecina for this building in
2014.
- 40% of the space let for 55
Amsterdam, delivered in the first half of 2017
On June 15, 2017, Gecina signed a six-year lease with an
operator from the new economy for nearly 40% of the space in the
55 Amsterdam building, located in Paris' 8th
arrondissement.
In addition, advanced discussions are on-going on remaining
surfaces.
Based on these transactions and the assumptions for letting the
remaining space, Gecina now expects this operation's yield on
delivery to be higher than the initial expectations for around
7.8%. This performance highlights the level of interest among
tenants in a building that is aligned with the real estate
industry's highest standards, as well as the positive rental market
at the heart of Paris.
- 20 Ville l’Evêque pre-let
nine months before delivery in Paris' central business
district
Gecina has signed a lease for a firm six-year period with an
outstanding tenant for 20 rue de la Ville l'Evêque at the
heart of Paris' central business district (CBD), nine months before
it is scheduled to be delivered.
- 81% of Octant Sextant
(Levallois-Perret) pre-let almost one year before
delivery
On July 11, Gecina signed a lease with a firm 10-year period
with the Lagardère Active Group for 28,000 sq.m, representing 81%
of this project's total space, almost one year before this project,
currently under development, is due to be delivered.
Project pipeline (€3.6 bn): two projects delivered during the
first half of the year in Paris and Lyon
Gecina delivered two office real estate projects during the
first half of 2017 in Paris (55 Amsterdam) and Lyon
(Gerland-Septen). These two buildings represent a combined total of
over 32,000 sq.m of offices and almost 80% of their space has
already been let.
Delivery in first half
of 2017 Location Delivery dates Space
Total invest. Expected yield on delivery
Indicative prime rates
Q1-2017
% let (sq.m)
(€m) (net) (BNPPRE) (at June 30, 2017)
Paris - 55 Amsterdam Paris Q1-17 12,300 101 7.8% 40% Gerland -
Septen Lyon Q2-17 20,300 52 8.4%
100%
TOTAL
32,600 152 8.0%
3.7% 77%
Following the delivery of these two projects, the committed
pipeline for operations under development represents nearly
€1.4 bn (vs. €1.5 bn at end-2016), and is made up
primarily of programs with delivery scheduled for 2018, with an
expected yield on delivery of around 6.4%.
€1.4 bn of committed projects with deliveries expected
primarily for 2018
Nearly half of this committed pipeline is located in Paris
City, with more than 40% in the Western Crescent's best
business sectors (Levallois, Neuilly and Issy-les Moulineaux), and
the remaining 10% concerning the SKY 56 project in Lyon Part-Dieu,
already pre-let at 83%. Following the deliveries of the 55
Amsterdam and Gerland-Septen buildings, with nearly 80% of their
space let on average, Gecina's committed pipeline from end-June
2017 is expected to be pre-let for over 35% (in terms of space)
taking into account the negotiations that are currently being
finalized.
At end-June 2017, €355 M were still to be invested on committed
projects, with €141 M in 2017, €189 M in 2018 and €25 M in
2019.
€0.70 bn of “certain” controlled projects over the short
or medium term, exclusively in Paris' CBD
The “certain” controlled pipeline concerns the assets held by
Gecina that are currently being vacated and for which a
redevelopment project aligned with Gecina’s investment criteria has
been identified. These projects will therefore be launched over the
coming half-year or full-year periods. These “certain” projects
that have not yet been committed to represent a combined total of
€0.70 bn. The “certain” controlled pipeline is now concentrated
exclusively in Paris' CBD, through projects with indicative
delivery dates from 2020 to 2021. The “controlled and certain”
pipeline notably includes the project located on Avenue de la
Grande Armée, with the current tenant (PSA Group) scheduled to
leave at the end of 2017.
€1.55 bn of “probable” controlled projects over the longer
term, with 87% in Paris City
The “probable” controlled pipeline covers the projects
identified and owned by Gecina that may require pre-letting (for
greenfield projects in peripheral locations within the Paris
Region) or cases when tenant departures are not yet certain over
the short term.
Immostat Delivery
Space Total Already
Still to Est. yield Exit
yield Indicative Pre-letting
Projects sector date investment
invested invest on cost on delivery
prime rate Jun 30
(sq.m) (€M) (1) (€M) (2)
(€M) (net) (Gecina est.)
(BNPPRE) (%) Levallois - Octant Sextant
Western Crescent Q3-18 37,500 222 181 41 7.6% 81% 20 Ville l'Evêque
Paris CBD Q1-18 6,400 63 55 8 5.5% 100% Paris – Guersant Paris
non-CBD Q3-18 14,100 127 98 29 6.1% Lyon Part Dieu - Sky 56 Lyon
Q3-18 30,700 133 78 54 6.9% 83% Paris – Ibox Paris non-CBD Q3-18
19,400 163 114 49 5.9% 0% Be Issy Western Crescent Q3-18 25,000 159
109 51 7.0% Le France Paris non-CBD Q4-18 20,300 182 160 23 5.2% 0%
Paris – Friedland Paris CBD Q2-19 2,000 23 17 6 5.7% Neuilly –
Graviers Western Crescent Q2-19 14,500 118 95 24 5.8% Paris - 7,
Rue de Madrid Paris CBD Q3-19 10,500
109 64 45 6.4%
Total offices
180,400 1,301 973
327 6.3% 4.6% 3.8%
35% Marseille – Mazenod Other regions Q3-17 3,700 14
14 1 6.7% NA Puteaux Valmy - Skylights Western Crescent Q3-17 4,000
21 21 1 6.4% NA Puteaux - Rose de Ch. Western Crescent
Q3-18 7,400 43 17 26 6.9%
NA
Total student
residential 15,100
79 52 27
6.7% 5.0% NA
TOTAL committed projects
195,500 1,380 1,025
355 6.4% 4.6% NA
Controlled and certain
2020-2021
44,000
698 538 159 4.8%
3.9% 3.2% Controlled
and probable 2019-2024
208,547 1,554 691
863 6.9% 4.9% NA
Total pipeline
448,047 3,632
2,254 1,377 6.3%
4.6% (1) Total investment for
the committed pipeline = latest appraisal value from when the
project started up + total build costs. For the controlled pipeline
= latest appraisal to date + operation's estimated costs
(2) Includes the value of plots and
existing buildings for redevelopments
Strong portfolio value growth over the first half of the year
(+10.2% year-on-year)
The portfolio value (block) represents €13,338 M, up
+8.7% over six months and +10.2% year-on-year on a like-for-like
basis.
Like-for-like, the office portfolio value is up +5.1%
over six months, factoring in +6.5% growth for the Paris portfolio
over the half-year period. Although they have also seen growth,
values have increased more slowly for the other sectors (+3.7% for
the Western Crescent and La Défense and +2.2% for other sectors).
Like-for-like, these appraisals reflect a 22 bp compression of
capitalization rates for offices since the end of 2016 to 4.39%
including retail units and 4.88% exclusively for offices.
This growth in value includes a positive rent effect, indicating
the effective upturn on the rental market, particularly in the
Paris Region's most central sectors. Nearly one third of this
increase in value is linked to a business plan effect, with the
rest resulting from the compression of capitalization rates.
The valuation retained for Gecina’s residential portfolio
shows a significant increase, up +23.0% like-for-like over six
months. This strong increase primarily reflects the growing
appetite among institutional investors for residential real estate,
illustrated by several recent transactions used as a benchmark for
the appraisals from end-June 2017.
Breakdown by
segment Appraised values Net
capitalization rates Like-for-like change In
million euros
Jun 30, 17 Dec 31, 16
Jun 30, 17 Dec 31, 16 June 2017
vs. Dec 2016
June 2017
vs. June 2016
Offices (incl. retail units)
10,185 9,434 4.39%
4.61% +5.1% +6.6% Paris
City 5,629 5,125 3.93%
4.18% +6.5% +8.2% Paris CBD - Offices
2,851 2,609 4.24% 4.42% +5.2% +6.9% Paris CBD - Retail units 1,412
1,298 2.42% 2.63% +8.8% +10.5% Paris non-CBD 1,365 1,218 5.81%
6.31% +6.5% +8.1%
Western Crescent - La Défense 3,567
3,399 4.72% 4.91% +3.7% +5.3%
Other 989 910
5.98% 6.10% +2.2%
+2.5% Traditional and student residential (block)
3,153 2,644 3.54%
4.37% +23.0% +24.1% Group
total 13,338 12,078 4.19% 4.56%
+8.7% +10.2% Total value: unit appraisals
13,807 12,788
NAV growth supported by the strategy and favorable market
trends
Diluted EPRA triple net NAV (block) came to €152.0 per
share, with strong growth of +18.2% year-on-year.
Diluted EPRA NAV (block) represents €152.7 per share, up
+15.6% year-on-year.
This performance reflects a compression of capitalization rates
for offices in Paris and a positive business plan effect, as well
as the impacts of Gecina’s total return strategy, through the
growth in value achieved for assets acquired or delivered during
the year, as well as the portfolio under development (+€3.2 per
share). The increase in value for the development portfolio has
benefited from the pre-lettings secured during the first half of
the year.
Growth in EPRA triple net NAV per share for the first half of
2017 came to +€19.9, with the following breakdown:
- Interim dividend: - €2.6
- Impact of recurrent net income: +
€2.4
- Value adjustment on offices assets
like-for-like: + €6.6
- Value adjustment on residential assets
like-for-like: + €8.6
- Net value increase for 2017
acquisitions and pipeline (incl. deliveries): + €3.1
- Net capital gains from sales completed
or underway: + €0.2
- Fair value adjustment on financial
instruments & debt: + €1.0
- Accretion from share buyback program: +
€0.9
- Other: - €0.3
On a unit value basis, diluted EPRA NAV represented
€158.6 per share at end-June 2017, compared with €143.6 per share
at end-2016, up +10.4% over the first six months of 2017.
Jun 30, 16 Dec 31, 16 Jun 30, 17
In million euros Amount /
number of shares
€/share Amount /
number of shares
€/share Amount /
number of shares
€/share Fully diluted number of shares 63,370,944
63,402,484 61,556,067
Shareholders' equity under IFRS 7,961 8,276
9,031 + Receivable from shareholders 157.1 0.0 159.2 +
Impact of exercising stock options 35.2
17.7 15.6
Diluted NAV
8,153 €128.7 8,294
€130.8 9,205 €149.6 + Fair value
reporting of buildings, if amortized cost option has been selected
87.9 92.9 109.1 + Optimization of transfer duties 71.4 68.9 66.8 -
Fair value of financial instruments 62.5
29.5 20.1
= Diluted
EPRA NAV 8,375 €132.2
8,485 €133.8 9,401
€152.7 + Fair value of financial instruments (62.5) (29.5)
(20.1) + Fair value of liabilities (165.2)
(78.9) (27.9)
=
Diluted EPRA triple net NAV 8,147
€128.6 8,377 €132.1
9,354 €152.0
New organizational structure in place since July 3
Since July 3, 2017, Gecina's teams have been working based on a
new organizational framework. Two business units have been created
for the office portfolio and the residential portfolio, with two
executive directors recruited (Valérie Britay and Franck Lirzin
respectively). This new organization will help build understanding
of and improve the operational and financial performances of the
portfolios concerned. Over the coming quarters, this new
organization will also facilitate Eurosic's integration. The
creation of a dedicated business unit for the residential division
reflects Gecina's ambition to focus in priority on optimizing this
portfolio's operational management and identifying opportunities
for extracting value.
As a result of this reorganization, the composition of the
executive committee has been redefined around the following seven
executives:
- Thibault Ancely, Executive Director
Investments and Development
- Valérie Britay, Executive Director
Offices
- Brigitte Cachon, Executive Director
R&D, Public Relations and CSR
- Nicolas Dutreuil, Executive Director
Finance
- Franck Lirzin, Executive Director
Residential
- Philippe Valade, General Secretary
- Frédéric Vern, Executive Director Legal
Affairs (from September 2017).
2017 targets confirmed (excluding impact of Eurosic's
acquisition)
2017 reflects Gecina's strong choices in terms of value
extraction, particularly the sales of mature and non-strategic
assets in 2016, as well as the launch of work to redevelop five
previously occupied buildings in order to optimize its extraction
of value creation potential. In view of the results achieved by
Gecina over the first half of this year, the Group is able to
confirm that recurrent net income, restated for the impact of
the healthcare sale, is expected to contract by nearly -5% to -6%
in 20178. This expected performance reflects the
combined impact of underlying growth, which is expected to reach
around +2% to +3%9 including the impact of sales (excluding
healthcare) and the start of work to redevelop buildings from the
portfolio after they have been vacated.
Gecina, a leading real estate group
Gecina owns, manages and develops property holdings worth 13.3
billion euros at end-June 2017, with nearly 96% located in the
Paris Region. The Group is building its business around France’s
leading office portfolio and a diversification division with
residential assets and student residences. Gecina has put
sustainable innovation at the heart of its strategy to create
value, anticipate its customers' expectations and invest while
respecting the environment, thanks to the dedication and expertise
of its staff.
Gecina is a French real estate investment trust (SIIC) listed on
Euronext Paris, and is part of the SBF 120, Euronext 100,
FTSE4Good, DJSI Europe and World, Stoxx Global ESG Leaders and
Vigeo indices. In line with its community commitments, Gecina has
created a company foundation, which is focused on protecting the
environment and supporting all forms of disability.
www.gecina.fr
8 This target may be revised up or down depending on
opportunities for investments and sales during the year. It does
not include the impacts of the acquisition of Eurosic, which is
underway.9 Including the impact of sales (excluding healthcare) in
2016, deliveries of assets in 2016 and 2017, and organic
growth.
2017 first-half earnings
APPENDIX
1- FINANCIAL STATEMENTS
CONDENSED INCOME STATEMENT AND RECURRENT INCOME
At the Board meeting on July 17, 2017, chaired by Bernard
Michel, Gecina's Directors approved the financial statements at
June 30, 2017. The procedures for a limited review of these
accounts have been completed and the statutory auditors' report on
the half-year financial information was issued on July 17, 2017
following a verification of the information contained in the
Half-year Financial Report.
Excluding IFRIC 21 and IFRS 5
In million euros Jun 30, 16 Jun 30,
17 Change (%) Gross rental income 298.8
240.6 -19.5% Expenses not billed to tenants (21.2)
(19.1) -9.8%
Net rental income
277.6 221.4 -20.2% Services and
other income (net) 1.0 1.6 +61.9% Salaries and management costs
(31.3) (31.7) +1.0%
EBITDA
247.3 191.4 -22.6% Gains from
disposals 30.9 14.5 NS Change in fair value of properties 336.4
1,142.0 NS Amortization (2.4) (2.2) -7.0% Net impairments and
provisions 1.5 0.5 NS
Operating income
613.7 1,346.2 +119.4% Net
financial expenses (47.0) (36.6) -22.1% Financial impairments and
depreciation 0.0 0.0 Change in value of financial instruments and
debt (36.4) 9.4 -125.9% Net income from associates 0.1
0.0 NS
Pre-tax income 530.3
1,319.0 +148.7% Current tax (1.9) (1.6)
-16.1% Non-current tax 0.0 0.0 NS
Net income from continuing
operations
528.4 1,317.4 Net income
from discontinued operations
Consolidated net income
528.4 1,317.4 +149.3%
Non-recurrent minority interests (1.1) (9.8) Recurrent minority
interests (0.3) (0.5)
Net income
(Group share) 526.9 1,307.1
+148.0% Recurrent net income - total
share 198.4 153.2
-22.8% Recurrent net income - Group share
198.0 152.7 -22.9% Average
number of shares over the period 62,713,386
62,055,134 -1.0%
Undiluted recurrent net income per share
- Group share 3.16 2.46
-22.1%
CONSOLIDATED BALANCE SHEET
ASSETS Jun 30, 17
Dec 31, 16 LIABILITIES Jun 30, 17
Dec 31, 16 In million euros
In million euros
Non-current assets 12,800.1 11,546.9
Capital and reserves 9,054.6 8,289.7
Investment properties 11,669.2 10,430.6 Share capital 475.8 475.8
Buildings under redevelopment 1,053.0 1,038.7 Additional paid-in
capital 1,910.7 1,910.7 Buildings in operation 60.8 61.1
Consolidated reserves 5,345.0 5,076.1 Other property, plant and
equipment 8.4 7.4
Consolidated net income
1,299.3 813.5 Intangible assets 5.8 6.3
Capital and reserves
attributable to owners of the parent 9,030.7
8,276.0 Long-term financial investments 2.8 2.8
Non-controlling interests 24.0 13.7 Investments in associates 0.0
0.0 Non-current financial instruments 0.0 0.0
Non-current
liabilities 4,698.3 3,230.9 Deferred tax assets
0.0 0.0 Non-current financial debt 4,636.8 3,158.8 Non-current
financial instruments 20.7 31.0
Current assets
2,436.5 798.8 Deferred tax liabilities 0.0 0.0
Properties for sale 554.6 547.4 Non-current provisions 40.8 41.0
Inventories 0.0 0.0 Non-current taxes due & other
employee-related liabilities 0.0 0.0 Trade receivables and related
121.2 105.9 Other receivables 84.0 67.7
Current liabilities
1,483.6 825.1 Prepaid expenses 20.0 17.6 Current
financial debt 955.5 481.6 Current financial instruments 0.6 1.5
Current financial instruments 0.0 0.0 Cash and cash equivalents
1,656.1 58.6 Security deposits 51.3 49.3 Trade payables and related
198.9 211.7 Current taxes due & other employee-related
liabilities 72.8 41.2 Other
current liabilities 205.2 41.3
TOTAL ASSETS
15,236.6 12,345.7 TOTAL
LIABILITIES 15,236.6 12,345.7
2- ANNUALIZED GROSS RENTAL INCOME
In million euros
IFRS-2016 IFRS-H1-2017 Offices 350
340 Traditional residential 114 111 Student residences
15 15
Total 479
464
Gecina draws the public's attention to the risk factors
described in section 1.7 “Risks” of the 2016 reference document.
The occurrence of one or more of these risks may have a material
adverse effect on Gecina’s activities, reputation, financial
position, results, outlook or share price.
Disclaimers
This press release includes indications concerning the
objectives, outlook and development strategies of Gecina and its
consolidated subsidiaries (“Gecina”), as well as forward-looking
statements, particularly relating to the Eurosic acquisition and
the related financing operations described in this press release
(the “Eurosic Acquisition”). These indications may be identified by
the use of the future or conditional tense or by forward-looking
terminology, including the terms “considers” “anticipates”,
“thinks”, “targets”, “expects”, “intends”, “must”, “aims”,
“estimates”, “believes”, “wishes”, “may”, or in each case, their
negative or other variations or comparable terminology. These
forward-looking statements are not historical facts and shall not
be interpreted as guarantees that the facts and data stated will
occur. These forward-looking statements are based on data,
assumptions and objectives that Gecina believes to be reasonable.
They may evolve or change due to uncertainties relating to the
economic, financial, competitive and regulatory environment. In
addition, the occurrence of certain risks listed in section 1.7
“Risks” of the 2016 reference document may have an impact on
Gecina's activities, outlook and financial results, as well as its
ability to meet its objectives. The information mentioned in this
press release includes statements regarding Gecina’s intentions,
expectations and objectives in relation to, inter alia, Gecina's
market, strategy, growth, results, financial position and cash
position. The forward-looking statements mentioned in this press
release are provided on the date of this press release. Subject to
all relevant laws or regulations, Gecina undertakes no obligation
to publish any revisions to any forward-looking statements included
in this press release in order to reflect any changes in its
objectives or in the events, conditions or circumstances after the
date of this press release. Gecina operates in a rapidly-changing
and competitive environment; it cannot anticipate all the risks,
uncertainties or other factors that may affect its activity, their
potential impact on it activity or to what extent the occurrence of
a risk or a combination of risks may cause results and developments
to differ materially from those expressed or implied by the
forward-looking statements, while noting that forward-looking
statements are not guarantees of future performance.
This press release and the information contained herein do not
constitute an offer to sell or purchase, or the solicitation of an
offer to sell or purchase, Gecina securities.
No communication or information relating to the contemplated
capital increase or the mandatory public offer may be distributed
to the public in any jurisdiction (other than France) in which
registration or approval is required. No action has been (or will
be) undertaken in any jurisdiction outside of France where such
steps would be required. The subscription for or purchase of Gecina
securities may be subject to legal or statutory restrictions in
certain jurisdictions. Gecina assumes no responsibility for any
breach of such restrictions by any person. The distribution of this
press release in certain jurisdictions may be restricted by
law.
This press release does not constitute a prospectus within the
meaning of Directive 2003/71/EC as amended (the “Prospectus
Directive”). The rights issue will be open to the public in France
only.
With respect to each member State of the European Economic Area
other than France (the “Member States”), no action has been
undertaken or will be undertaken to make an offer to the public of
securities requiring a publication of a prospectus in any Member
State. As a result, the securities of Gecina may only be offered in
the Member States (a) to qualified investors, as defined by the
Prospectus Directive, or (b) in any other circumstances not
requiring Gecina to publish a prospectus as provided for under
Article 3(2) of the Prospectus Directive. For the purposes of this
paragraph, “securities offered to the public” in a given Member
State means any communication, in any form and by any means, of
sufficient information concerning the terms and conditions of the
offer and the securities so as to enable an investor to make a
decision to buy or subscribe for the securities, as the same may be
varied in that Member State. The above selling restrictions are in
addition to any other selling restrictions that may be applicable
in the Member States that have transposed the Prospectus
Directive.
The distribution of this press release is directed only at (i)
persons outside the United Kingdom, subject to applicable laws, or
(ii) persons having professional experience in matters relating to
investments who fall within the definition of “investment
professionals” in Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 as amended (the
“Order”) or (iii) high net worth bodies corporate, unincorporated
associations and partnerships and trustees of high value trusts as
described in Article 49(2) (a) to (d) of the Order (all such
persons together being referred to as “relevant persons”). The
rights issue will only be available to, and any invitation, offer
or agreement to subscribe, purchase or otherwise acquire such
rights will be engaged in only with, relevant persons. Any person
who is not a relevant person should not act or rely on this press
release or any information contained herein.
This press release does not constitute an offer or invitation to
sell or purchase, or a solicitation of any offer to purchase or
subscribe for, any securities of Gecina in the United States of
America. Securities may not be offered, subscribed or sold in the
United States of America without registration under the 1933 U.S.
Securities Act, as amended (the “U.S. Securities Act”), except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements thereof. The securities of Gecina
have not been and will not be registered under the U.S. Securities
Act and Gecina does not intend to make a public offer of its
securities in the United States of America.
The distribution of this press release in certain countries may
be prohibited under applicable law.
This press release does not constitute an offer of securities in
the United-States (including in the territories and dependencies
and in any State of the United States), in Canada, in Australia, or
in Japan.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170717006057/en/
GECINA CONTACTSFinancial communicationsSamuel
Henry-Diesbach, +33 (0)1 40 40 52
22samuelhenry-diesbach@gecina.frorVirginie Sterling, +33 (0)1 40 40
62 48virginiesterling@gecina.frorPress relationsBrigitte
Cachon, +33 (0)1 40 40 62 45brigittecachon@gecina.frorThérésa Vu,
+33 (0)1 44 82 46 13theresa.vu@consultants.publicis.fr
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