Earnings Release • Oct 28, 2015
Earnings Release
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Revenue1 : €884.2 million (+24.4%)
Unaudited figures at September 30, 2015
"Altarea Cogedim's business indicators are extremely positive: new orders and reservations in residential and office developments are rising sharply, and there has been a net acceleration in the implementation of retail programs under development.
Our business development and operational successes underscore the strong growth momentum taking place within our Group. This is mostly driven by our development- and innovation-based real estate model."
Alain Taravella, Chairman and Founder of Altarea Cogedim
1 Revenue from continuing operations, excluding the contribution from Rue du Commerce, which is being sold to the Carrefour Group (recognized in accordance with IFRS 5).
2 Previous record year was 2007.
Tenant sales rose 1.0%3 across the entire portfolio, against a backdrop of reduced consumer spending (0.4% drop in the CNCC [French Council of Shopping Centers] index over the same period).
Gross rental income was up 1.6% at €130.2 million, with the impact of disposals (especially in Italy) offset by the acquisition of a 100% controlling interest in Qwartz. On a like-for-like basis4 , gross rental income increased 0.7% in an environment still characterized by a negative index.
Eighteen months after opening, Qwartz5 continues to perform well in its ramp-up phase, recording double-digit growth in footfall and tenant sales. These excellent results are primarily due to the implementation of the "connected retail" concept, developed by the Group through its "Digital Factory" and deployed for the first time at Qwartz.
Digital Factory is a unique tool that is at the crossroads between CRM and Big Data. It gathers customer data and information from the Group's many channels and centralizes them in a single data-processing platform. The data can then be used in real time to generate automated data analyses, reports, and so on, and to draw up targeted action plans. The tool gives the Group deeper insight into customer behavior and helps updating its shopping center asset management practices.
Besides, under France's economic reforms (Macron Act's implementing decree), all of the Group's existing Paris stores (Bercy Village, Gare du Nord and Gare de l'Est) and those in the pipeline (Gare Montparnasse and Gare d'Austerlitz) are confirmed as being located in "international tourist zones" (ZTI) and therefore allowed to open on Sundays and until midnight.
There was a major surge in programs under development, especially in terms of leasing activity. The Group has already doubled the rental income from leases signed6 on assets under development compared with 2014, setting a new record for 2015. The previous record dates back to 2007, the year before the financial crisis.
The signed leases mainly relate to two centers that will open in 2016:
The Group has signed an agreement to sell Rue du Commerce to the Carrefour Group. The transaction will be legally finalized once approval is received from the competition authorities, expected in the coming weeks.
Consequently, in accordance with IFRS 5, Rue du Commerce is excluded from the Group's reported revenue from continuing operations.
3 Total figure on a like-for-like basis up to the end of September 2015 (end of August for the CNCC index) in France, excluding property being refurbished.
4 Excluding the impact of openings, acquisitions, disposals and refurbishments in France.
5 The 86,000 m² Qwartz regional shopping center, located in Villeneuve-la-Garenne, is France's first connected shopping center.
6 Total minimum guaranteed rents signed up to mid-October 2015 versus those signed for the full year 2014.
| Number of units | 9/30/2015 | 9/30/2014 | Change |
|---|---|---|---|
| Sales to institutional investors | 1,436 | 878 | +64% |
| Sales to individuals | 2,319 | 1,905 | +22% |
| o/w individual investors | 64% | 51% | +13 pts |
| Total reservations | 3,755 units | 2,783 units | +35% |
| € millions including tax | 858 | 708 | +21% |
Growth was driven by sales of entry-level and midscale products, and by a particularly sharp increase in both institutional (64%) and individual investors (54%) who were eligible for attractive tax exemptions (Pinel incentive for Cogedim and Malraux incentive for Histoire & Patrimoine).
| € millions excluding tax | 9/30/2015 | 9/30/2014 | Change | |
|---|---|---|---|---|
| Percentage-of-completion revenue | 639.7 | 535.5 | +19.5% |
Housing development revenue is on the rise, in line with the increase in Group reservations recorded since 2013.
Programs that contributed to revenue (mainly entry-level and midscale products) kept pace with their markets. Their margins are expected to be higher than levels recorded in previous years.
| € millions | 9/30/2015 | 6/30/2015 |
|---|---|---|
| Backlog8 | 1,516 | 1,535 |
| Number of months of sales | 19 months | 20 months |
| Property for sale | 653 | 702 |
| Future offering | 5,076 | 4,646 |
| => Pipeline9 | 5,729 | 5,348 |
The Group boosted its future offering during the quarter by €430 million (+9%) compared with end-June. Entry-level and midscale programs account for more than 80% of the pipeline to date.
| € millions | 9/30/2015 | 9/30/2014 | Change |
|---|---|---|---|
| New orders (incl. tax) | 254 | 218 | +17% |
| Revenue | 95.3 | 31.5 | +203% |
| Off-plan/property development contract backlog10 |
172 | 12711 | +35% |
The quarter saw strong business activity, with the sale in July of the Ivoire building to BNPP REIM (8,000 m² of office space in Lyon-Gerland for the future Capgemini offices) and the sale of the headquarters of Sanofi's Animal Health and Vaccines divisions (15,000 m² in Lyon-Gerland).
7 Including Histoire & Patrimoine reservations, recognized at 55%.
8 The residential backlog comprises revenues excluding tax from notarized sales to be recognized on a percentage-of-completion basis and reservations to be notarized.
9 The pipeline consists of tax-inclusive revenues from properties for sale and the land bank, which includes all plots on which preliminary sale agreements (usually binding against the seller) have been signed.
10 The office property off-plan/property development contract backlog comprises revenues excluding tax from notarized sales to be recognized on a percentage-of-completion basis.
11 Backlog as of June 30, 2015.
| € millions | Q1 2015 | Q2 2015 | Q3 2015 | Total 9/30/2015 |
Q1 2014 | Q2 2014 | Q3 2014 | Total 9/30/2014 |
Change 9/30/2015– 9/30/2014 |
|---|---|---|---|---|---|---|---|---|---|
| Rental income | 42.6 | 44.4 | 43.2 | 130.2 | 43.1 | 42.0 | 43.1 | 128.1 | +1.6% |
| Services and other | 5.7 | 6.4 | 7.2 | 19.3 | 5.2 | 4.4 | 5.6 | 15.3 | +26.1% |
| Shopping centers | 48.3 | 50.8 | 50.4 | 149.5 | 48.3 | 46.4 | 48.7 | 143.4 | +4.3% |
| Revenue | 203.2 | 248.0 | 188.5 | 639.7 | 167.3 | 200.9 | 167.2 | 535.5 | +19.5% |
| Services | (0.3) | 0.0 | (0.0) | (0.4) | 0.2 | (0.2) | 0.2 | 0.2 | n/a |
| Residential | 202.8 | 248.0 | 188.5 | 639.3 | 167.5 | 200.7 | 167.4 | 535.6 | +19.4% |
| Revenue | 24.1 | 26.6 | 41.6 | 92.4 | 14.2 | 3.2 | 10.8 | 28.2 | +228.1% |
| Services | 1.1 | 1.1 | 0.7 | 2.9 | 0.6 | 1.7 | 1.1 | 3.3 | -12.7% |
| Offices | 25.3 | 27.7 | 42.4 | 95.3 | 14.7 | 4.9 | 11.9 | 31.5 | +202.6% |
| Revenue12 | 276.3 | 326.5 | 281.4 | 884.2 | 230.6 | 252.0 | 228.0 | 710.6 | +24.4% |
Net borrowings (bank and bonds) amounted to €2,323 million at September 30, 2015 versus €2,042 million at June 30, 2015.
Altarea Cogedim is a leading property group. As both a retail REIT and developer, it operates in the three main classes of property assets: retail, residential and offices. It has the know-how in each sector required to design, develop, commercialize and manage made-to-measure property products. With operations in France, Spain and Italy, Altarea Cogedim manages a shopping center portfolio of €4.5 billion. Listed in compartment A of NYSE Euronext Paris, Altarea had a market capitalization of €2.0 billion on September 30, 2015.
Eric Dumas, Chief Financial Officer [email protected], Tel: + 33 1 44 95 51 42
Catherine Leroy, Analyst and Investor Relations [email protected], Tel: +33 1 56 26 24 87
Nicolas Castex, Press Relations [email protected], Tel: + 33 1 53 32 78 94
This press release does not constitute an offer to sell or solicitation of an offer to purchase Altarea shares. For more detailed information concerning Altarea, please refer to the documents available on our website www.altareacogedim.com.
This press release may contain declarations in the nature of forecasts. While the Company believes such declarations are based on reasonable assumptions at the date of publication of this document, they are by nature subject to risks and uncertainties which may lead to differences between real figures and those indicated or inferred from such declarations.
12 Revenue from continuing operations, excluding the contribution from Rue du Commerce, which is being sold to the Carrefour Group (recognized in accordance with IFRS 5).
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