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14 February 2014

Cegereal – Annual Results



2013: A Year of Consolidation and “Green” Certifications

Key indicators:

  • IFRS rental income: €43.3m (up 12.1%)
  • Recurring net income1: €19.1m (up 48%)
  • Portfolio value: €849m excluding transfer costs
  • EPRA NNNAV: €34.1 per share
  • Total distribution in 2014: €1.50 per share

2013 Business Performance:

  • Leases renewed on approximately 40% of the portfolio
  • New leases signed on 7,800 sq.m. in Arcs de Seine
  • Go Green program: third and fourth office buildings in France to obtain both “HQE Exploitation” and BREEAM In-Use certification

Outlook:

  • Recurring net income expected to rise by around 15% in 2014
  • Occupancy rate should exceed 90%
  • Final stage of the Go Green program: 100% of portfolio green-certified by end-2014
  • Europlaza: a future “garden tower” for La Défense

Cegereal's Board of Directors met on February 13, 2014 to approve the audited consolidated financial statements for the year ended December 31, 2013.

Raphaël Tréguier, Cegereal’s Chief Executive Officer, said:
“In 2013, we continued the strategy to improve our portfolio, notably by moving forward with the Go Green program and earning “HQE Exploitation" in-use environmental certification for Europlaza and Arcs de Seine. Our success in marketing vacant units and renewing the leases on nearly half of the portfolio attests to our properties’ appeal. In all, the portfolio’s occupancy rate currently stands at 89%. Over the seven years since its IPO, Cegereal has lived up to expectations by delivering an average return on NNNAV of 4.50%2 while respecting its objectives of sustainable performance.”

Cegereal sets the standard in the ownership and management of prime office properties on the outskirts of Paris let over the long term to first-class companies looking for facilities that offer high value added amenities. Listed on Euronext since 2006, in compartment B, its market capitalization as of February 11, 2014 totaled €325 million.

BUSINESS REVIEW

  • Ongoing improvement in the portfolio’s rental status in a lackluster environment
    • Leases on 39% of the portfolio renewed during the year
    • New leases signed on 7,800 square meters
    • Average life of the leases extended by 2.2 years

Arcs de Seine: a further 7,800 sq.m. let during the year

Cegereal kept up its marketing strategy for Arcs de Seine, offering prospective tenants the opportunity to lease smaller units rather than whole floors, and highlighting features such as the high ratio of private underground parking spaces (1 for 3 users), the property’s proximity to Paris and its dual in-use environmental certification (HQE Exploitation and BREEAM In-Use Very Good).

After securing tenants for 22,220 sq.m. in 2012, new leases were signed on a further 7,800 sq.m. in 2013, lifting the building’s occupancy rate to 81% at December 31 from 63% a year earlier:

  • Hewlett Packard, which moved into the building in 2012, took up an additional 1,400 sq.m. and extended its lease by three years, giving it a lease on a total of 6,600 sq.m. expiring at end-July 2021.
  • Sagem Défense Sécurité, a member of the Safran Group, took up 5,000 sq.m. for its headquarters in April 2013, under a six-year lease.
  • Sonepar, the world leader in B-to-B distribution of electrical products and related services, took up 1,400 sq.m. under a six-year lease.

As at December 31st, there remained just 8,400 sq.m. of available areas.

Rives de Bercy: lease on 31,900 sq.m. with Crédit Foncier renewed for nine years

In January 2013, a new nine-year “green” lease was signed with the building’s long-standing sole tenant, Crédit Foncier, expiring in 2021.

This triple net lease sets a new standard by including stringent undertakings by the owner and the tenant to meet certain environmental targets. It is a practical demonstration of Cegereal’s commitment to improving environmental performance embodied in the Go Green project.

Europlaza: the “loyalty” operation continues

In July 2013, Cap Gemini’s lease on 7,400 sq.m. was renewed for a further six years. At end-2013, the occupancy rate at Europlaza was 89%.

After the year-end, in January 2014, the lease with Galderma was also renewed for six years on a total 4,825.sq.m. versus 4,000 sq.m. previously.

  • Go Green program: in-use environmental certification already earned for 75% of the portfolio

As part of the strategy to enhance and lock in the value of the portfolio, audits have been performed since 2012 on all of the properties, with a view to having their environmental performance certified.

So far, the Arcs de Seine and Europlaza properties have both been certified to HQE Exploitation and BREEAM In-Use Very Good standards, making them only the third and fourth buildings in France to earn the two distinctions.

An environmental audit is currently underway at Rives de Bercy and the entire portfolio should be certified to HQE Exploitation standards by the end of 2014.

All of the properties are also now part of the Green Rating association benchmark.

  • A portfolio totaling over 130,000 sq.m., with an appraisal value of €849 million excluding transfer costs

The marketing programs and the measures to preserve the properties’ value over the long term have helped to lock in their appraisal values despite a mixed macro-economic environment. The portfolio’s total appraisal value excluding transfer costs stood at €849 million at December 31, 2013 versus €865 million at the previous year-end.

The overall occupancy rate was 89% at December 31, 2013, up 7 points from 83% at the end of 2012.

IFRS FINANCIALS (consolidated)

  • Key indicators:
    • IFRS rental income: €43.3m
    • Current cash flows: €19.4m
    • EPRA earnings: €19.1m

In 2013, rental income calculated in accordance with IFRS totaled €43.3 million, up 12.1% compared with 2012. Expense recoveries and penalties received from tenants were more or less unchanged from 2012 at €10.4 million. Building-related costs rose slightly to €16.9 million, due to increased occupancy.

Cash flows from operations amounted to €19.4 million versus €4.02 million in 2012.

EPRA earnings (which exclude fair value adjustments to investment property) came in at €19.1 million.

  • A healthy financial position

Cegereal refinanced all of its debt in 2012 and does not have any repayment obligations until August 2017.
The debt was refinanced at the competitive rate of 3.40%, reducing finance costs by around 20%. The rate will be reduced to 3.15% as soon as the occupancy rate exceeds 90%.

  • EPRA NNNAV: €454.5m or €34.1/share

The Company’s EPRA NNNAV excluding transfer costs declined by €21.80 million in 2013 to €454.47 million at the year-end, representing €34.1 per share versus €35.7 at end-2012. The net year-on-year change resulted from earnings per share (+€1.4), fair value adjustments to investment property (-€1.2), dividend payments (-€0.7) and other impacts (-€1.1).

  • Total amount to be distributed in dividends in 2014: €1.50 per share

Cegereal intends to recommend paying a total of €1.50 in dividends per share in 2014, comprising a 2 step distribution: €0.75 per share to be approved by the Annual Shareholders' Meeting and €0.75 per share to be approved by the Board of Directors in December.

The first part of the dividend will be paid on July 17, 2014, subject to shareholders approval.

  • Outlook

Cegereal’s goals for 2014 are as follows:

  • Around 15% growth in recurring net income per share
  • A future-proofed portfolio, following completion of the Go Green program
  • Launch of the Europlaza “garden tower” project, with work scheduled to start in 2014

The annual results presentation can be viewed on the Company’s website: www.cegereal.com

Investor Calendar

 

1 EPRA Earnings excluding non-recurring costs (such as refinancing transaction costs cf. p.7)

2 Total dividends paid during the period plus the unrealized gain on NNNAV expressed as a percentage of the IPO price.

 

About Cegereal (NYSE Euronext Paris – Compartment B - CGR)
Cegereal is a REIT-style property company (“SIIC”) that invests in large prime office properties. Its portfolio currently comprises three office sites located in the inner suburbs of Paris. The portfolio’s appraisal value, as estimated by independent valuers DTZ Eurexi as of June 30, 2013, was €861 million excluding transfer costs.
www.cegereal.com

Media relations 
Aliénor Miens - +33 (0)153328477 
alienor.miens@citigate.fr

Investor relations
Raphaël Tréguier - +33 (0)142257636
raphael.treguier@cegereal.com