Quarterly Report • Jul 30, 2015
Quarterly Report
Open in ViewerOpens in native device viewer
| - | Real estate FFO / share | €6.22/share | (+3.9%) |
|---|---|---|---|
| - | Consolidated FFO4 / share |
€5.40/share | (-1.0%) |
| - | NAV / share5 | €126.5/share | (-2.5%) |
| - | LTV6 | 41.1% | |
Paris, July 30, 2015, 9:00 pm. Following review by the Supervisory Board, Management approved the H1 2015 consolidated financial statements. Limited review procedures have been carried out. The certification report is being issued with no reservations.
1 Results of Shopping center, Residential, Office and other corporate business lines.
2 Shopping centers: m² GLA created. Residential: Inhabitable surface area. Offices: Net floor area or useful surface area.
3 Shopping center value: rental income at 100% capitalized at 5.5%. Residential property value: properties for sale + portfolio assets (i.e. excluding
programs under construction). Office property value: Off-plan/property development contracts: Share of contract amounts, Delegated project management: Share of capitalized fees, AltaFund: cost price at 100%. Estimated change compared to 12/31/2014. 4
Funds from operations.
5 Diluted Going-Concern NAV: market value of equity from the perspective of long-term operations as a going concern, recognizing all shares subscribed for the payment of dividends in shares.
6 LTV (Loan to Value) = Net debt / Restated value of assets including transfer duties.
"Over the semester, the Group took full advantage of macroeconomic conditions favourable to real estate (historically low interest rates, low raw material cost and abundant liquidity). Nevertheless, the economic environment in France remains mitigated with weak consumer spending and high unemployment rate.
In this context, Altarea Cogedim witnessed strong activity recovery, especially in residential and office property development, with a 32% increase in residential property reservations and office property new orders all together during the semester.
We also accelerated the rotation of our shopping center portfolio, benefiting from every type of leverage available (including acquisitions, disposals, openings, developments). Moreover, we continued the deployment of our Digital Factory. This brand new CRM approach is to revolution shopping center asset management methods. Altarea Cogedim confirmed its leadership as a connected retail reit.
Finally, we benefited from very advantageous market conditions to remarkably improve our financing structure (extension of the duration and reduction of the average cost).
We are entering into a new phase of our development plan with comprehensively renewed strategy and offering, as well as a consolidated pipeline representing potential value of more than €10 billion. It positions Altarea Cogedim as one of the leading real estate asset developers in France.
Financial results from this strong recovery should be more noticeable starting this year end.
We forecast a significant increase in the 2015 published FFO as well as a dividend above €10.00 per share".
Alain Taravella, Chairman and Founder of Altarea Cogedim
Over the semester, Altarea Cogedim increased its stake in Qwartz – the shopping center in Villeneuve-La Garenne (92) – to 100%, based on a valuation of €400 million including transfer duties. The Group previously held a 50% stake7 in Qwartz, France's first connected regional shopping center.
Meanwhile, four small non-core assets located in Italy were sold for a total price of €122 million.
Finally, the Group opened a factory outlet in Aubergenville (78), strengthening the existing Family Village®. The Group also delivered the renovation/extension of the Jas-de-Bouffan shopping center in Aixen-Provence.
The portfolio now includes 38 shopping centers with an average size of €97 million8 in value.
| Portfolio at 6/30/2015 | |
|---|---|
| Assets under management | €4,473 mil. |
| (including management for third parties) | |
| Portfolio assets | €3,705 mil. |
| o/w Group share | €2,549 mil. |
| Gross rental income under management9 | €241.9 mil. |
| o/w Group share | €140.4 mil. |
Altarea Cogedim won the bid to create and operate retail space in the Paris-Austerlitz rail station (approximately 323,000 ft² or 30,000 m²). The Group hence confirmed its leadership in traffic retail.
The Group is now developing or operating the retail space of four Parisian rail stations10, representing a total traffic of some 300 million travelers (expected to ultimately reach 450 million travelers). Once in operation, these spaces will account for approximately €55 million in gross rental income.
| Indicators at 6/30/2015 | |
|---|---|
| Net consolidated rental income | €80.2 million |
| Change | +3.7% |
| Like-for-like change in rental income11 | +1.1% |
| o/w France | +1.6% |
| Tenant revenue12 | +1.1% |
| Benchmark (CNCC) | -1.8% |
| Occupancy cost ratio13 | 9.6% |
| Bad debt ratio14 | 1.0% |
| Development pipeline at 6/30/2015 (at 100%) | ||||||
|---|---|---|---|---|---|---|
| Number of programs | 13 projects | |||||
| Surface area created (GLA) | 5,242,000 ft² (487,000 m²) | |||||
| Net investments16 | €2,184 million | Provisional gross rental income | €180 million | |||
| o/w Group share | €1,656 million | o/w Group share | €133 million | |||
| Potential value17 | €3,271 million | Projected return | 8.2% |
7 In partnership with Orion.
10 Gare du Nord and Gare de l'Est in operation, Paris-Montparnasse and Paris Austerlitz under development.
11 Excluding impact of commissioning, acquisitions, divestitures and restructurings.
8 38 assets (vs. 52 at end-2010), including 35 assets in France with average value of €96 million, and three sites abroad with average value of €117 million. 9 Assets in operation: rental value on signed leases at July 1, 2015.
12 Tenant revenue development on a "same-floor-area" basis, cumulative over 12 months, at June 30, 2015 (May 30 for the CNCC indicator). France only. 13 Calculated as rent and expenses charges to tenants (incl. taxes and rent reductions), in proportion to sales over the same period (incl. taxes) at 100% in France. Excluding property being redeveloped. France only.
14 Net amount of allocations to and reversals of provisions for bad debt plus any write-offs during the period as a percentage of total rent and expenses charged to tenants, at 100% in France. Excluding property being redeveloped. France only.
15 In surface area, and more than 90% of gross rental income from existing portfolio assets. Figures at 100%.
16 Total budget including interest expenses and internal costs.
The Group has built up human and technological capital that stands at the heart of its activities as a retail reit. These initiatives led to the development of the Digital Factory, a platform created to systematically centralize and operate customer data.
Practically, the Digital Factory gathers customer data and information drawn from the Group's many channels18 and centralizes this information in a system dedicated to data processing19. These actions make it possible to use the information gathered (automatic data analysis, reporting, etc.) and establish targeted action plans.
With the Digital Factory, the Group has created a unique tool at the junction between CRM and "Big data." This tool:
These features are already operational at Qwartz, France's first connected shopping center, where the movements of nearly 50% of customers are now recorded, processed and analyzed. Thus, the Digital Factory made it possible to maximize the center's development (regular reminders to spur return visits and real-time asset management initiatives).
Moreover, thanks to its experience in rail station retail, the Group developed a unique concept of "connected traffic retail" which significantly contributed to Altarea Cogedim's win in the bids for Paris-Montparnasse in 2014 and Paris-Austerlitz in 2015.
Despite a backdrop of intense competition for high-tech products, Rue du Commerce recorded slight growth in business volume at €175.4 million (+2%), maintaining its leading position among the Top 10 general merchandise sites in France20 .
Altarea Cogedim owns 33.34% of Semmaris, the company that holds the concession21 of the Rungis National Interest Market (MIN). The Macron Act provides an extension of the concession of Semmaris until 2049 (compared to 2034 previously).
19 Via a Data Management Platform or "DMP".
17 Potential value of shopping centers under development: rental income at 100% capitalized at 5.5%.
18 Wi-Fi and geolocation, awards programs, mobile shopping center websites and applications, social networks, 'opt-in' bases, etc.
20 Médiamétrie//NetRating ranking according to the number of unique visitors per month (i.e., internet users having visited the site at least once over a one-
month period) from January to May 2015. 21 Semmaris'mission is to develop, operate and manage MIN facilities, which it leases to companies in return for payments invoiced to wholesalers ans market users.
Residential property reservations and office property new orders came to €874 million at June 30, up 32% year-on-year.
| Business activity | 6/30/2015 | Change |
|---|---|---|
| Reservations (in value terms, incl. tax)22 | €641 million | +20% |
| Reservations (in volume) | 2,717 units | +26% |
| o/w entry-level and midscale | 65% | +5 pts |
New housing sales were driven by entry-level and midscale product ranges23, and by institutional investors.
In the current context of low interest rates and a return of institutional investors, Altarea Cogedim and the SNI Group signed a five-year partnership for the sale of intermediate housings. At the end of July, agreements had been signed for 500 units, with an additional 800 units under negotiation (not recognized in H1 reservations).
| Residential property results | 6/30/2015 | Change |
|---|---|---|
| Revenue (excl. tax) | €451 million | +23% |
| Operating cash flow | €24.5 million | +52% |
| Backlog24 | €1,535 million | +5% |
| 20 months | -2 months | |
| Properties for sale and future offering25(incl. tax) | €5,348 million | +8% |
| o/w entry-level and midscale | €3,028 million | +9% |
2015 H1 saw a boost in office property new orders, reaching €233 million (+83%).
The Group signed agreements for several major programs over the semester:
22 Reservations net of cancellations, with Histoire & Patrimoine reservations accounted for in proportion to the Group share of ownership.
23 Programs priced at under €5,000/m² in the Paris Region and under €3,600/m² outside of Paris.
24 The backlog comprises revenues excluding tax from notarized sales to be recognized on a percentage-of-completion basis and individual and block reservations to be notarized.
25 The future offering is made up of secured programs (through sales commitments, almost exclusively unilateral in nature) that have yet to be launched. It is expressed as values including tax. Excl. Histoire & Patrimoine transactions.
26 Off-plan / Property Development contract sales: Amounts are recognized once the contract (or firm commitment) is signed and construction has been launched. DPM development sales: Fees capitalized at 4%. Investor sales: At the sale date, disposal margin recognized as Investor share (compared to the amount of the Property Development Contract).
27 As a 50/50 joint venture with Goldman Sachs.
28 AltaFund is a discretionary investment fund created in 2011. In March 2015, the Group increased its capital allocation from €100 million to €150 million, thereby increasing its interest in new programs initiated by AltaFund since 2015 to 30%.
29 Negotiations nearing completion. Signature of the sale contract expected in Q3 2015.
These achievements should enable a very strong increase in new orders in 2015, as well as significant growth in profit during H2.
| Office property results | 6/30/2015 | Change |
|---|---|---|
| Net property income (property development) | €6.6 million | |
| Fees (service provision) | €8.7 million | |
| Share of equity-method associates (investment30) | €1.0 million | |
| Total revenue | €16.3 million | +15% |
| Operating cash flow | €8.5 million | -1.0% |
| New orders | €233 million | +83% |
Today, Altarea Cogedim is the only French property group able to operate in all asset classes (residential, offices, hotels, retail) and through all types of action (investor, property developer, service provider and asset manager). This development model enabled to build an extremely significant project portfolio, providing basis for the Group's future growth.
| Pipeline | Retail | Residential | Offices | TOTAL |
|---|---|---|---|---|
| Number of projects | 13 | - | 25 | 38 |
| & Number of units | - | 22,300 | - | 22,300 units |
| Surface areas31 | 5,242,000 ft² (490,000 m²) |
13,831,500 ft² (1,285,000 m²) |
5,629,500 ft² (523,000 m²) |
24.7 million ft² (2.3 million m²) (+4.2%) |
| Investment Return |
€2.2 billion 9.0% |
n/a | n/a | n/a |
| Potential value32 | €3.3 billion | €5.3 billion | €1.8 billion33 | €10.5 billion (+7.6%) |
Two major mixed-use development projects were added to the pipeline over the half-year: Bezons-Cœur de Ville (700 units and 215,250 ft² / 20,000 m² of retail spaces) 34 and Villeurbanne-La Soie (600 units, 43,000 ft² / 4,000 m² of retail spaces and 199,000 ft² / 18,500 m² of offices).
34 In partnership with Imestia Group.
30 Mainly AltaFund.
31 Retail: m² GLA created. Residential: Inhabitable surface area. Offices: Net floor area or useful surface area. Estimated change compared to 12/31/2014. 32 Shopping center value: rental income at 100% capitalized at 5.5%. Residential property value: properties for sale + portfolio assets (i.e. excluding programs under construction). Office property value: Off-plan/property development contracts: Share of contract amounts, Delegated project management: Share of capitalized fees, AltaFund: cost price at 100%. Estimated change compared to 12/31/2014.
33 O/w €660 million as Investor (total cost price of the program at 100%), €1.12 billion as Property developer (amount of signed contract) and €60 million as Service provider (capitalized fees).
| € millions | Real estate results35 | Consolidated results36 | ||
|---|---|---|---|---|
| Shopping centers | 96.8 | 96.8 | +2% | |
| Residential | 450.8 | 450.8 | +22% | |
| Offices | 52.9 | 52.9 | +170% | |
| E-commerce | - | 124.3 | -0% | |
| REVENUE | 600.5 | +24.5% | 724.7 | +19.5% |
| Shopping centers | 82.7 | 82.7 | -2% | |
| Residential | 24.5 | 24.5 | +52% | |
| Offices | 8.5 | 8.5 | -1% | |
| E-commerce | - | (12.1) | +77% | |
| Other | 1.1 | 1.1 | n/a | |
| OPERATING CASH FLOW | 116.9 | +7.5% | 104.8 | +2.9% |
| FFO37 | 100.0 | + 11.3% | 89.8 | + 7.3% |
| FFO (Group share) | 77.5 | +11.1% | 67.3 | +5.8% |
| FFO per share after dilution | €6.22/share | +3.9% | €5.40/share | -1.0% |
| Net profit | 77.8 | -10,6% | ||
| Net Profit, Group Share | 53.0 | -19.4% |
Results at June 30, 2015 were driven by the recovery in real estate activities.
Real estate revenue39 (83% of the total) is up 24.5% and real estate FFO is up 11.3% to €100 million thanks to the strong recovery in the Residential business (+52%), benefiting from the strategy of range extension (commercial successes and volume effect). The contribution of Shopping centers is down slightly (disposal of the Italian assets). The contribution of Office property is stable in H1, although this is not representative of the current dynamic, as strong growth is expected for 2015 H2.
Consolidated FFO40 grew by 7.3% to €89.8 million, despite the loss recorded for e-commerce. On a Group share basis, consolidated FFO grew by 5.8% and real estate FFO by 11.1% to €77.5 million.
Net consolidated income41 came to €77.8 million, down -10.6% versus H1 2014 (€53.0 million on a Groupshare basis, down 19.4%). It includes a value adjustment for Rue du Commerce.
| NAV at June 30, 2015 | € millions | €/share* | Change |
|---|---|---|---|
| Diluted Going-Concern NAV | 1,583.4 | 126.5 | -2.5% |
| EPRA NNNAV (liquidation NAV) | 1,512.8 | 120.9 | -2.9% |
| EPRA NAV42 | 1,502.0 | 120.0 | -8.2% |
*Number of diluted shares: 12,513,394
Group NAV per share as of 30 June included the dividend payout of €10.0 per share.
35 Income from Shopping center, Residential, Office and other corporate business lines.
36 Including Rue du Commerce. 2014 data restated for the effect of application of interpretation IFRIC 21 – Levies (very slight impact).
37 Funds from operations: operating cash flow after net interest and corporate income tax expenses, Group share and other.
38 Income from Shopping center, Residential, Office and other corporate business lines.
39 Revenue of Shopping center, Residential, Office and other corporate business lines.
40 Group share and other.
41 Group share and other.
42 The diluted NAV and NAV continuation liquidation NNNAV includes the market value of the financial instruments (net increase) contrary to the EPRA NAV. Hence, the decrease in EPRA NAV is more important than the continuation diluted NAV and NAV liquidation NNNAV.
Altarea Cogedim took advantage of a particularly advantageous market window to re-profile its long-term debt structure: the Group signed or received firm commitments from banks for a total of €1.371 billion43 . The majority of these financing concerns long-term mortgage loans44. The average duration of the finance agreements implemented over the half-year is 8.4 years with an average spread of 112 bps.
At the same time, the Group reviewed its portfolio of hedging instruments to align the maturity of these instruments with the new duration and put hedged rates in line with market levels.
Altarea Cogedim Group's net financial debt now stands at €2.042 billion45, with maturity extended to 6.3 years and average cost of 2.15% at June 30, 2015.
Thanks to these initiatives, the Group enjoys excellent visibility on the average cost of long-term debt.
| 6/30/2015 | 12/31/2014 | Change | |
|---|---|---|---|
| Net debt | €2.042 billion | €1.772 billion | +€270 million |
| Available cash and cash equivalents | €539 million | €622 million | -€83 million |
| LTV46 | 41.1% | 37.7% | +3.4 bps |
| ICR47 | 7.5 x | 5.9 x | +1.6 x |
| Duration | 6.3 years | 3.7 years | +2.6 years |
| Average cost | 2.15% | 2.41% | -26 bps |
This press release is accompanied by a PowerPoint presentation. The presentation is available for download on the Financial Information page of Altarea Cogedim's website.
Altarea Cogedim is a leading property group. As both a commercial land owner and developer, it operates in all three 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 Euronext Paris, Altarea had a market capitalization of €2 billion at June 30, 2015.
Eric Dumas, Chief Financial Officer [email protected], tel: + 33 1 44 95 51 42
Catherine Leroy, Investor Relations [email protected], tel: +33 1 56 26 24 87
Nicolas Castex, Press relations [email protected], tel: + 33 1 53 32 78 88
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.
43 O/w €1.034 billion to refinance existing loans and €337 million in new funds.
44 20 assets were financed or refinanced (primarily as mortgage debt)
45 I.e. an increase of €270 million compared to December 31, 2014, mainly due to the acquisition of 100% of Qwartz.
46 LTV (Loan to Value) = Net debt / Restated value of assets including transfer duties.
47 ICR = operating profit / net debt costs ("Funds from operations" column).
| 1 | INTRODUCTION 11 | |
|---|---|---|
| 1.1 | Accounting changes (IFRIC 21) 11 | |
| 2 | BUSINESS REVIEW 12 | |
| 2.1 | Retail 12 | |
| 2.2 | Residential22 | |
| 2.3 | Offices 25 | |
| 2.4 | Innovation 28 | |
| 3 | CONSOLIDATED RESULTS 30 | |
| 3.1 3.2 |
Results30 Net asset value (NAV)32 |
|
| 4 | FINANCIAL RESOURCES34 |
The IFRIC 21 interpretation – "Levies", adopted by the European Union on June 13, 2014, applies to outflows imposed on entities by governments, leading entities to record a debt immediately once there exists an obligation to pay. The interim recognition schedule for select levies, such as the French corporate social solidarity contribution and land taxes, is affected by the interpretation.
This interpretation is mandatory, retrospectively, as from January 1, 2015. Information regarding H1 2014 as expressed below in the Group financial statements, has consequently been restated (very slight impact).
| In operation | Under development | |||||
|---|---|---|---|---|---|---|
| June 30, 2015 | GLA in m² | Current gross rental income (€ millions) (d) |
Appraisal value (€ millions) (e) |
m² GLA created |
Estimated gross rental income (€ millions) |
Net investments (€ millions) (f) |
| Controlled assets (fully consolidated) (a) |
648,681 | 178.0 | 3,443 | 392,000 | 163.9 | 1,982 |
| Group share | 520,632 | 131.0 | 2,425 | 335,000 | 127.6 | 1,584 |
| Share of minority interests | 128,049 | 47.0 | 1018 | 57,000 | 36.3 | 398 |
| Equity assets (b) | 105,618 | 20.8 | 262 | 98,000 | 16.1 | 202 |
| Group share | 49,332 | 9.4 | 124 | 39,000 | 5.9 | 72 |
| Share of third parties | 56,286 | 11.4 | 138 | 59,000 | 10.2 | 130 |
| Management for third parties (c) | 205,500 | 43.2 | 768 | - | - | - |
| Total assets under management | 959,799 | 241.9 | 4,473 | 490,000 | 179.9 | 2,184 |
| Group share | 569,964 | 140.4 | 2,549 | 374,000 | 133.5 | 1,656 |
| Share of third parties | 389,835 | 101.6 | 1,924 | 116,000 | 46.5 | 528 |
(a) Assets in which Altarea holds shares and over which Altarea exercises operational control. Fully consolidated in the consolidated financial statements.
(b) Assets in which Altarea is not the majority shareholder, but for which Altarea exercises joint operational control or a significant influence. Consolidated using the equity method in the consolidated financial statements.
(c) Assets held entirely by third parties who entrusted Altarea with a management mandate for an initial period of three to five years, renewable.
(d) Rental value on signed leases at July 1, 2015.
(e) Appraisal value including transfer duties
(f) Total budget including interest expenses and internal costs.
Household consumption in France rose slightly in late 2014 and early 2015, registering overall growth of 1.2%48 at June 30, 2015. Online sales reached similar levels (+2% for the French market, and +6% like-for-like for leading general merchandise websites49).
However, the shopping center performance indicator (CNCC) recorded a 1.8% drop50 in tenant revenue.
In this context of growing targeted consumer spending, Altarea Cogedim continues to pursue its strategy of concentrating its portfolio on premium sites with strong appeal and marketability.
Group shopping centers exhibited resilience with tenant revenue up by 1.1% 51 .
Net rental income (IFRS) came to €80.2 million (+3.7%) at June 30, 2015. Like for like, rental income in France increased by 1.6%, in a context of slightly declining indexation52 .
| € millions | ||
|---|---|---|
| Net rental income at June 30, 2014 | 77.3 | |
| 100% control of Qwartz | 5.3 | |
| Disposals | (3.1) | |
| Redevelopments | (0.1) | |
| Like-for-like change France | 1.0 | +1.6% (a) |
| Like-for-like change International | (0.2) | -1.9% (b) |
| Total Change in Net Rental Income | 2.9 | +3.7% |
| Net rental income at June 30, 2015 | 80.2 |
(a) As a like-for-like percentage in France.
48Source: INSEE, end-June 2015 (sale of manufactured goods). 49 Source: FEVAD and iCE 100 survey (like-for-like growth of leading sites and high-tech products) as of late May 2015 (5 months). 50 Source: CNCC, Like-for-like revenue development for shopping center tenants as of late May 2015.
(b) As a like-for-like percentage outside of France.
51 H1 2015 like-for-like revenue development for shopping center tenants in France.
52 ILC (Commercial Rent Index) Q2 2014: +0.0%, CCI (Construction Cost Index) Q2 2014: -1.0%.
In April 2015, Qwartz, France's first connected regional shopping center, celebrated its one-year anniversary. The winner of four awards for its digital innovations in 2014, this shopping center spans a total of 925,750 ft² (86,000 m²) or 86,000 m² (463,000 ft²) GLA. With 165 shops, it offers retailers exceptional visibility and should ultimately attract 9 million visitors per year.
Qwartz is the first asset of the portfolio equiped with the Digital Factory's features (see further description below, in the « Innovation » section), in support of the center's asset management. Since its opening, the center's operational performances are highly above ones that would be expected from an asset just launched53 .
Initially developed in partnership with Orion, in March 2015 Group Altarea Cogedim increased its stake in the center to 100% (from 50% previously) on the basis of a 100% valuation of €400 million including transfer duties. Consequently, Quartz has been fully consolidated in the Group's financial statements since the date of the transaction.
H1 2015 stood out for two deliveries:
• The Jas-de-Bouffan shopping center in Aix-en-Provence, which underwent a renovation and an extension of the shopping gallery, increasing the overall size of the center to 379,000 ft² (35,200 m²), including a Casino hypermarket and a 127,000-ft² (11,800-m²) GLA shopping gallery comprising 69 shops.
• A brand village - Marque Avenue® - in Aubergenville, whose exceptional strengths (catchment area, accessibility, design and innovative shopping experience) will help to attract new customers to the existing Family Village® and increase rental income. Marque Avenue® Aubergenville includes 61 shops over a surface area of 140,000 ft² (12,900 m²) and was awarded the trade's Janus label 2015 in July.
Over the half-year, the Group sold four small Italian shopping centers to Tristan Capital Partners for a total of €122 million.
The Group's strategy of focusing on large-size premium assets also includes redeveloping/extending portfolio shopping centers with strong potential for value creation.
In H1 2015, the Group's redevelopment projects carried out to strengthen its centers mainly concerned Cap 3000 (redevelopment of the existing center together with the extension project).
2.1.1.3 Operational performance
In France, net rental income recorded a 1.6% growth like-for-like54 in a context of decreasing indexing rates.
| Data at 100% | Sales (incl. tax) |
|---|---|
| Total shopping centers | +1.1% |
| CNCC Benchmark | (1.8)% |
| € mil., at 100% |
Lease expiry date |
% of total |
3-year termination option |
% of total |
|---|---|---|---|---|
| Past | 10.9 | 6.1% | 10.9 | 6.1% |
| 2015 years |
3.6 | 2.0% | 3.6 | 2.0% |
| 2016 | 5.0 | 2.8% | 39.6 | 22.4% |
| 2017 | 13.8 | 7.8% | 45.7 | 25.8% |
| 2018 | 16.5 | 9.3% | 31.8 | 18.0% |
| 2019 | 11.1 | 6.3% | 7.9 | 4.5% |
| 2020 | 21.6 | 12.2% | 15.6 | 8.8% |
| 2021 | 16.0 | 9.0% | 9.4 | 5.3% |
| 2022 | 23.8 | 13.5% | 6.8 | 3.8% |
| 2023 | 17.7 | 10.0% | 2.7 | 1.5% |
| 2024 | 27.7 | 15.7% | 1.8 | 1.0% |
| 2025 | 6.9 | 3.9% | 0.0 | 0.0% |
| >2025 | 2.5 | 1.4% | 1.2 | 0.7% |
| Total | 176.9 | 100% | 176.9 | 100% |
53 At June 30, 2015, Qwartz recorded a 11% increase in number of visitors and a 10% rise in its tenants revenue, after restating the opening impact.
54Excluding impact of openings, acquisitions, disposals and redevelopments.
55 H1 2015 like-for-like revenue development for shopping center tenants.
Occupancy cost ratio56, bad debt ratio57 and financial vacancy rate58
| H1 2015 | 2014 | 2013 | |
|---|---|---|---|
| Occupancy cost ratio | 9.6% | 9.8% | 10.2% |
| Bad debt ratio | 1.0% | 0.7% | 1.5% |
| Financial vacancy rate | 3.6% | 3.4% | 3.4% |
Following the disposal of four non-core assets in Italy, the international portfolio includes three major assets with an average value of €117 million: one asset in Spain and two in Italy, located in the most dynamic areas of each country (Barcelona and Lombardy).
In Italy, against a backdrop of economic recovery, the refocused portfolio exhibits solid performance with tenants revenue59 up 5.4% and a 3.2% rise in visitor numbers.
This performance is the result of beneficial asset management and lease review initiatives (higher quality retailers), which still has a slight impact on net rental income like-for-like (-3.3%) and leads to an improvement in bad debt (1.5% vs. 2.2% in late 2014).
The performance improvement of Sant Cugat in Spain also confirms the center's solid positioning: tenants revenue60 up 3.4%.
Over the past several years, the Group has significantly developed its management business for third parties.
In H1 2015, these assets represented €43.2 million in rental income for an overall value of €768 million. They contributed to the growth of Altarea Commerce's fees in the amount of €9.8 million (+3%).
Combining controlled assets and assets managed for third parties, Altarea manages a total of approximately 1,800 leases in France and 300 in Italy and Spain.
At June 30, 2015, the value of the Group's portfolio assets (controlled or equity-method assets) was down by €32 million to €3.705 billion.
This decline was due primarily to the disposal of the non-strategic portfolio in Italy. Like-for-like, portfolio value grew by €33 million.
| € millions | Value |
|---|---|
| TOTAL at December 31, 2014 | 3,737 |
| Centers opened | 69 |
| Acquisitions | – |
| Disposals | (134) |
| Like-for-like change | 33 |
| o/w France | 26 |
| o/w Italy | – |
| o/w Spain | 7 |
| Total change | (32) |
| TOTAL at June 30, 2015 | 3,705 |
| o/w Group share | 2,549 |
| o/w share of third parties | 1,155 |
The Group owns 38 sites (35 in France and 3 abroad) with average value of €97 million.
The portfolio is now virtually entirely focused on the most dynamic metropolis, both in France and abroad.
| Breakdown by type (€ mil.) | H1 2015 | 2014 | Change | ||
|---|---|---|---|---|---|
| Regional shopping centers | 2,310 | 62% | 2,275 | 61% | 1 pt |
| Large Retail Parks (Family V.) | 832 | 22% | 802 | 21% | 1 pt |
| Local / downtown | 563 | 15% | 661 | 18% | (2) pts |
| TOTAL | 3,705 | 100% | 3,737 | 100% | |
| o/w Group share | 2,549 | 2,416 |
| Geographical distribution (€ mil.) |
H1 2015 | 2014 | Change | ||
|---|---|---|---|---|---|
| Paris Region | 1,341 | 36% | 1,275 | 34% | 2 pts |
| PACA/Rhône-Alpes/South | 1,611 | 43% | 1,573 | 42% | 1 pts |
| Other French regions | 400 | 11% | 411 | 11% | (0) pts |
| International (Lombardy & | 352 | 10% | 478 | 13% | (3) pts |
| Barcelona) | |||||
| TOTAL | 3,705 | 100% | 3,737 | 100% | |
| o/w Group share | 2,549 | 2,416 |
| Asset format | H1 2015 | 2014 | Change | |
|---|---|---|---|---|
| France | Average value | €96 million | €93 million | 3% |
| Number of assets | 35 | 35 | 0 | |
| Interna- | Average value | €117 mil. | €68 mil. | 71% |
| tional | Number of assets | 3 | 7 | -4 |
| TOTAL | Average value | €97 mil. | €89 mil. | 9% |
| Number of assets | 38 | 42 | -4 |
56 Calculated as rent and expenses charged to tenants (incl. taxes and rent reductions), in proportion to revenue (incl. taxes) at 100 % in France. Excluding property being redeveloped.
57Net amount of allocations to and reversals of provisions for bad debt plus any write-offs during the period as a percentage of total rent and expenses charged to tenants, at 100 % in France. Excluding property being redeveloped.
58Estimated rental value (ERV) of vacant units as a percentage of total estimated rental value. Excluding property being redeveloped.
59 Like-for-like revenue development for shopping center tenants.
| Average net capitalization rate, at 100% |
H1 2015 | 2014 |
|---|---|---|
| France | 5.41% | 5.49% |
| International | 6.20% | 7.15% |
| TOTAL Portfolio | 5.48% | 5.71% |
| o/w Group share | 5.74% | 5.99% |
| o/w share of third parties | 5.06% | 5.03% |
The task of valuating Altarea Cogedim Group assets is entrusted to DTZ Valuation and JLL. The appraisers use two methods:
• discounting projected cash flows, with resale value at the end of the period;
• capitalization of net rental income, based on a capitalization rate that includes the site's characteristics and rental income (also including variable rent and market rent of vacant premises, adjusted for all charges incumbent upon the owner).
These valuations are conducted in accordance with the criteria set out in the Red Book – Appraisal and Valuation Standards, published by the Royal Institute of Chartered Surveyors. The surveyors' assignments were all carried out in accordance with the recommendations of the COB / CNC Barthes de Ruyter working group and comply fully with the instructions of the Appraisal Charter of Real Estate Valuation (Charte de l'Expertise en Evaluation Immobilière) updated in 2012. Surveyors are paid lump-sum compensation based on the size and complexity of the appraised properties. Compensation is therefore totally independent of the results of the valuation assessment.
The value of the portfolio breaks down by appraiser as follows:
| Appraiser | Portfolio | % of value, incl. transfer duties |
|---|---|---|
| JLL | France | 22% |
| DTZ | France & International | 78% |
The Group is focused on initiatives to create and redevelop large regional shopping centers, traffic retail sites and large Retail Parks.
Compared with the Group's assets in operation, the pipeline accounts for more than 90% of potential additional rental income (on a group share basis or at 100%).
41 leases were signed on pipeline assets over the half year, for a total of nearly €10 million in rental income. These leases mainly concerned assets to be delivered in the near future (Macdonald, Toulon-La Valette, first part Cap 3000).
| GLA in m² (c) |
Forecast gross rental income (€ mil.) |
Net invest ment (€ mil.) (d) |
Forecast return |
|
|---|---|---|---|---|
| Controlled projects (fully consolidated) (a) |
392,000 | 164 | 1,982 | 8.3% |
| Group share | 335,000 | 128 | 1,584 | |
| Share of minority interests | 57,000 | 36 | 398 | |
| Equity projects (b) | 98,000 | 16 | 202 | 8.0% |
| Group share | 39,000 | 6 | 72 | |
| Share of third parties | 59,000 | 10 | 130 | |
| Total | 490,000 | 180 | 2,184 | 8.2% |
| Group share | 374,000 | 133 | 1,656 | 8.1% |
(a) Projects in which Altarea holds shares and over which Altarea exercises operational control. Fully consolidated in the consolidated financial statements.
(b) Projects for which Altarea is not the majority shareholder. Consolidated using the equity method in the consolidated financial statements. (application of IFRS 11) (a) Total GLA (Gross Leasable Area) built and / or redeveloped, excluding off-plan developments for third parties.
(d) Total budget including interest expenses and internal costs.
Altarea Cogedim Group only reports on projects that are secured or underway62. This pipeline does not include identified projects on which development teams are currently in talks or carrying out advanced studies.
Given the Group's cautious criteria, the decision to commence work is only made once a sufficient level of pre-letting has been reached. In light of the progress achieved in H1 2015 from both an administrative and commercial point of view, most pipeline projects should be delivered between 2016 and 2020.
61The capitalization rate is the net rental yield relative to the appraisal value excluding transfer duties.
62 Projects underway: properties under construction. Secured projects: projects either fully or partly authorized, where the land has been acquired or for which contracts have been exchanged, but on which construction has not yet begun.
| € millions, net | At 100% | Group share |
|---|---|---|
| Paid out | 488 | 325 |
| Committed, remaining to be paid out | 407 | 160 |
| Total commitments | 896 | 485 |
| % of net investment | 41% | 29% |
Over the half-year, Altarea Cogedim invested63 €147 million in its project portfolio on a Groupshare basis.
These investments mainly concerned:
• residual investments in centers delivered recently (Aubergenville, Qwartz, etc.),
• and shopping centers under construction and/or redevelopment (essentially Cap 3000 and Toulon-La Valette).
Following the consultation launched by Gares & Connexions, Altarea Cogedim Group was selected as a partner for the modernization of Paris-Austerlitz rail station, which should ultimately serve up to 60 million travelers (compared to 22 million today).
The Group will be in charge of designing, building and operating 322,700 ft² (30,000 m²) of retail space in this historic station, as well as offices and hotels (not carried out by the group).
One year after being selected to guide the transformation of Paris-Montparnasse rail station, this new success confirms the Group's expertise in traffic retail.
After an initial remodeling in 2012 and the opening of four new waterfront restaurants in May 2014, the Group launched last November the extensionrenovation project of the Cap 3000 shopping center, located outside of Nice.
Following this project, which will be carried out in two successive phases between 2016 and 2018, the center will feature 300 retailers over a total net floor area of 1,453,000 ft² (135,000 m²) [1,076,500 ft² or 100,000 m² GLA], compared to 140 retailers and a net floor area of 915,000 ft² (85,000 m²) today.
The cost of the extension comes to approximately €400 million, bringing the overall amount invested in the center since its acquisition to over €1 billion.
In 2016, the Group will deliver two iconic shopping centers:
• Paris-Boulevard Macdonald, a center spanning more than 323,000 ft² GLA (30,000 m²) developed through a 50/50 partnership with Caisse des Dépôts. This project will feature 40 shops and restaurants, including 10 mid-size stores.
• L'Avenue 83 (Toulon-La Valette), an outdoor retail & entertainment center spanning 549,000 ft² (51,000 m²) 64, located in one of the countries most dynamic retail areas (Toulon – Grand Var). The center will feature two specialized department stores, a dozen mid-size stores, 70 shops and kiosks and 54,000 ft² (5,000 m²) of restaurants offering outdoor dining, as well as a 16-screen Pathé cinema.
| € millions | 6/30/2015 | 6/30/2014 restated |
|
|---|---|---|---|
| Rental income | 87.0 | 85.0 | |
| Net rental income | 80.2 | 4% | 77.3 |
| % of rental income | 92.2% | 90.9% | |
| External services | 9.8 | 9.5 | |
| Own work capitalized and production held in inventory |
15.1 | 11.3 | |
| Operating expenses | (29.2) | 18% | (24.7) |
| Net overhead expenses | (4.3) | (3.9) | |
| Contribution of EM associates | 6.9 | 11.1 | |
| Operating cash flow | 82.7 | (2)% | 84.4 |
A product of development synergies with Cogedim's Residential property teams, in 2013 the Group created a structure dedicated to high street retail to enhance the value of retail and business surfaces connected to development programs.
This pooling of expertise among the Retail, Residential and Office property teams makes it possible for the Group to provide local
63 Change in non-current assets net of changes in amounts payable to suppliers of non-current assets.
64 O/w 398,250 ft² (37,000 m²) for the mall and 150,500 ft² (14,000 m²) for the cinema.
governments with the best solution, particularly when it comes to creating new neighborhoods.
This business concerns various formats:
• Small retail complexes from 21,500 ft 2 to 54,000 ft2 (2,000 to 5,000 m 2 ) (new neighborhoods).
Either these retail sites are intended to be kept in the portfolio (the most important assets) or they will ultimately be sold following leasing.
At June 30, 2015, the Group was working on 44 programs, some of which have already been leased and are currently in the disposal phase. This new business is expected to contribute actively to the Group's FFO as of 2016 .
| Number | Surface area | |
|---|---|---|
| Secured programs (a) | 33 | 361,215 ft² (33,558 m²) |
| Under development | 11 | 456,390 ft² (42,400 m²) |
| Total programs underway | 44 | 817605 ft² (75,958 m²) |
(a) Programs secured by a sales commitment.
| o/w Group share | o/w share of third parties |
||||||
|---|---|---|---|---|---|---|---|
| Center | GLA in m² |
Gross rental income (in € millions) (d) |
Value (in € millions) (e) |
Share | Value (in € millions) (e) |
Share | Value (in € millions) (e) |
| CAP 3000 | 64,500 | 33% | 67% | ||||
| Villeneuve la Garenne - Qwartz | 42,980 | 100% | – | ||||
| Toulouse Occitania | 56,200 | 51% | 49% | ||||
| Paris - Bercy Village | 22,824 | 51% | 49% | ||||
| Thiais Village | 22,324 | 100% | – | ||||
| Aix en Provence | 11,800 | 78% | 22% | ||||
| Gare de l'Est | 5,500 9,700 |
51% 100% |
49% – |
||||
| Flins Okabé |
15,077 | 65% | 35% | ||||
| Lille - Les Tanneurs & Grand' Place | 25,480 | 100% | – | ||||
| Strasbourg - L'Aubette & Aub. Tourisme | 8,400 | 65% | 35% | ||||
| Strasbourg - La Vigie | 16,232 | 59% | 41% | ||||
| Toulon - Ollioules | 3,185 | 100% | – | ||||
| Mulhouse - Porte Jeune | 14,769 | 65% | 35% | ||||
| Massy | 18,200 | 100% | – | ||||
| Toulon - Grand' Var | 6,336 | 100% | – | ||||
| Tourcoing - Espace Saint Christophe | 13,000 | 65% | 35% | ||||
| Gennevilliers (RP) | 18,863 28,000 |
51% 100% |
49% – |
||||
| Brest - Guipavas (RP) Nimes (RP) |
27,500 | 100% | – | ||||
| Limoges (RP) | 28,000 | 75% | 25% | ||||
| Aubergenville - Marques Avenue | 12,900 | 100% | – | ||||
| Family Village Aubergenville (RP) | 27,800 | 100% | – | ||||
| Family Village Le Mans Ruaudin (RP) | 23,800 | 100% | – | ||||
| Herblay - XIV Avenue | 14,200 | 100% | – | ||||
| Villeparisis | 18,623 | 100% | – | ||||
| Pierrelaye (RP) | 9,750 | 100% | – | ||||
| Various shopping centers (3 assets) | 7,491 | n/a | n/a | ||||
| Sub-total France | 573,433 | 156.1 | 3,091 | 2,073 | 1,018 | ||
| Barcelona - San Cugat | 20,488 33,691 |
100% 100% |
– – |
||||
| Le Due Torri Bellinzago |
21,069 | 100% | – | ||||
| Sub-total International | 75,248 | 21.9 | 352 | 352 | – | ||
| Controlled assets (fully consolidated) (a) | 648,681 | 178.0 | 3,443 | 2,425 | 1,018 | ||
| Carré de Soie | 60,800 | 50% | 50% | ||||
| Paris - Les Boutiques Gare du Nord | 3,750 | 40% | 60% | ||||
| Châlons - Hôtel de Ville | 5,250 | 40% | 60% | ||||
| Roubaix - Espace Grand' Rue | 13,538 | 33% | 68% | ||||
| Various shopping centers (2 assets) | 22,279 | n/a | n/a | ||||
| Equity assets (b) | 105,618 | 20.8 | 262 | 124 | 138 | ||
| Chambourcy | 33,800 | – | 100% | ||||
| Bordeaux - Grand' Tour & St Eulalie | 25,900 | – | 100% | ||||
| Pau - Quartier Libre | 33,800 | – | 100% | ||||
| Brest - Jean Jaurès Nantes - Le Sillon Shopping |
12,500 11,200 |
– – |
100% 100% |
||||
| Orange - Les Vignes | 30,700 | – | 100% | ||||
| Vichy - Les 4 Chemins | 14,000 | – | 100% | ||||
| Ville du Bois | 14,600 | – | 100% | ||||
| Reims - Espace d'Erlon | 7,100 | – | 100% | ||||
| Valdoly | 5,800 | – | 100% | ||||
| Brest - Coat ar Gueven | 6,400 | – | 100% | ||||
| Angers - Fleur d'Eau | 2,900 | – | 100% | ||||
| Chalon Sud | 4,000 | – | 100% | ||||
| Toulon - Grand Ciel Assets managed for third parties (c) |
2,800 205,500 |
43.2 | 768 | – | – | 100% | 768 |
| Total assets under management | 959,799 | 241.9 | 4,473 | 2,549 | 1,924 |
(a) Assets in which Altarea holds shares and over which Altarea exercises operational control. Fully consolidated in the consolidated financial statements.
(b) Assets in which Altarea is not the majority shareholder, but for which it exercises joint operational control or a significant influence. Consolidated using the equity method in the consolidated. financial statements (c) Assets held entirely by third parties who entrusted Altarea with a management mandate for an initial period of three to f .. ive years, renewable.
(d) Rental value on signed leases at July 1, 2015.
(e) Including transfer duties.
(RP) Retail Park
| At 100% | Group share | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Center | SC / RP |
Creation / Redevelopment / Extension |
m² GLA created (a) |
Gross rental income (€ millions) |
Net investmen ts (€ millions) |
Return | GLA in m² (a) |
Gross rental income (€ millions) |
Net investments (€ millions) |
| Cap 3000 | SC | Redev./Extensio | 35,000 | 12,000 | |||||
| La Valette du Var | SC | n Creation |
37,000 | 19,000 | |||||
| F. Village Le Mans 2 | RP | Creation | 16,000 | 16,000 | |||||
| Massy -X% | SC | Redev./Extensio | 22,000 | 22,000 | |||||
| Chartres | SC | n Creation |
70,000 | 70,000 | |||||
| Paris Region | SC | Redev./Extensio | 86,000 | 86,000 | |||||
| Entrepôt Macdonald | SC | n Creation |
32,000 | 16,000 | |||||
| Montparnasse Rail Station | SC | Creation | 19,000 | 19,000 | |||||
| Gare d'Austerlitz | SC | Creation | 30,000 | 30,000 | |||||
| Developments - France | 347,000 | 149.9 | 1,823 | 8.2% | 290,000 | 113.6 | 1,425.5 | ||
| Ponte Parodi (Genoa) | SC | Creation | 37,000 | 37,000 | |||||
| Le Due Torri (Lombardy) | SC | Extension | 8,000 | 8,000 | |||||
| Developments - International | 45,000 | 14.0 | 158 | 8.8% | 45,000 | 14.0 | 158.5 | ||
| Controlled developments (fully consolidated) | 392,000 | 163.9 | 1,982 | 8.3% | 335,000 | 127.6 | 1,584 | ||
| Promenade de Flandres - Lille Cœur d'Orly - Retail |
RP SC |
Creation Creation |
58,000 40,000 |
29,000 10,000 |
|||||
| Equity-method developments | 98,000 | 16.1 | 202 | 8.0% | 39,000 | 5.9 | 72.3 | ||
| Total at June 30, 2015 | 490,000 | 179.9 | 2,184 | 8.2% | 374,000 | 133.5 | 1,656 | ||
| o/w redevelopments / extensions | 151,000 | 88.8 | 1,010 | 8.8% | 128,000 | 63.1 | 759 | ||
| o/w asset creation | 339,000 | 91.1 | 1,174 | 7.8% | 247,000 | 70.3 | 897 |
(a) Total GLA (Gross Leasable Area) created, excluding off-plan developments for third parties. For renovation/extension projects, figures represent additional GLA created.
(b) Total budget including interest expenses and internal costs.
(SC) Shopping center (RP) Retail Park
Altarea Cogedim Group is one of the leading actors in e-commerce in France thanks to Rue du Commerce, whose business volume amounted to €175 million in H1 2015 (2% growth year-on-year).
At June, 30, 2015, e-commerce recorded 2% growth in France. General merchandise websites reported sales growth of +6% like-for-like.
Rue du Commerce maintained its position as a leading site, ranking among the "Top 10" general merchandise sites in France66 .
| General merchandise sites | Average 5-month UV in 2015, in thousands |
|
|---|---|---|
| 1 | Amazon | 16,604 |
| 2 | Cdiscount | 10,253 |
| 3 | Fnac | 8,369 |
| 4 | Carrefour | 6,357 |
| 5 | PriceMinister | 6,050 |
| 6 | La Redoute | 5,898 |
| 7 | vente-privee | 5,367 |
| 8 | Darty | 4,690 |
| 9 | Rue du Commerce | 4,550 |
| 10 | E.Leclerc | 4,474 |
| € millions | H1 2015 | H1 2014 | Change |
|---|---|---|---|
| Distribution and other Revenue | 118.6 | 119.2 | (0)% |
| Galerie Marchande business volume | 56.7 | 52.9 | 7% |
| Total business volume | 175.4 | 172.2 | 2% |
| € millions | 6/30/2015 | 6/30/2014 | |
|---|---|---|---|
| Distribution revenues | 118.6 | (0)% | 119.2 |
| Purchases consumed and other | (116.7) | (104.4) | |
| Galerie Marchande commissions | 5.6 | 9% | 5.1 |
| Net overhead expenses | (19.6) | (19.3) | |
| Operating cash flow | (12.1) | (6.8) | |
| % of revenue | (10.2)% | (5.7)% |
The deterioration of operating cash flow was due essentially to distribution of high-tech products, which witnessed extremely intense price competition.
Altarea Cogedim Group owns 33.34% of Semmaris, the company that holds the concession on the Rungis National Interest Market (MIN).
The world's largest wholesale food market spans 578 acres (234 hectares), with 10,764,000 ft² (1,000,000 m²) of leasable surface area. The 1,200 market operators employ nearly 12,000 workers. 2013 sales came to €8.5 billion.
The Société d'Exploitation du Marché International de Rungis was created by decree in 1965 when the Paris Region wholesale market was transferred to Rungis from its traditional site at Les Halls in downtown Paris. Its mission is to develop, operate and manage MIN facilities, which it leases to companies in return for payments invoiced to wholesalers ans market users.
The Macron Act provides for an extension of the concession on Semmaris until 2049 (compared to 2034 previously).
Semmaris shareholding breaks down as follows:
As the Group owns only 33.34% of Semmaris, IFRS consolidated results for Semmaris appears under the line item "Share in income of associated companies."
65Source: FEVAD and iCE 100 survey (like-for-like growth of leading sites and high-tech products) as of late May 2015 (5 months). 66Médiamétrie//NetRating ranking according to the number of unique visitors per month (i.e., internet users having visited the site at least once over a one-month period) from January to May 2015.
Semmaris revenue came to €51.2 million at June 30, 2015, up 1.5% compared to June 30, 2014.
| € millions | 6/30/2015 | 6/30/2014 | |
|---|---|---|---|
| Indexed usage fees | 7.5 | 7.9 | |
| Certified usage fees | 20.7 | 20.2 | |
| Tolls | 6.2 | 5.8 | |
| Other | 2.0 | 2.0 | |
| Subtotal of lease payments and other revenue |
36.4 | 1.5% | 35.9 |
| Recovered expenses | 14.8 | 14.6 | |
| Total revenue | 51.2 | 1.5% | 50.5 |
Semmaris revenues consist of:
• Indexed usage fees: Rates indexed every three years on the basis of the Construction Cost Index.
• Certified usage fees: Rates set annually by the Board of Directors of Semmaris and are then certified by prefectoral decree.
• Tolls: Entrance tolls are paid by vehicles entering the MIN.
With 14% growth compared to Q1 201467, new home sales have picked up since the start of the year, driven mainly by private investors, many of whom had withdrawn from the market following the end of the Scellier Act.
Taking advantage of the Pinel scheme, which is more flexible than the Duflot scheme, as well as the rezoning initiative, sales to private investors increased by nearly 60%68 compared to last year, once again confirming enthusiasm for property ownership in France, particularly with an eye to preparing for retirement.
Continued record low interest rates also contributed to this favorable market trend, which also benefited first-time homeowners.
Positive effects on construction starts will become clear in the coming months.
Reservations of new Group residential properties amounted to €641 million in H1 2015, i.e. 2,717 units. + 26% in volume and + 20% in value terms.
| H1 2015 | 2014 | Change | |
|---|---|---|---|
| Individual reservations | €439 mil. | €385 mil. | +14% |
| Sales to institutional | €202 mil. | €150 mil. | +34% |
| investors Total in value terms |
€641 mil. | €535 mil. | +20% |
| Individual reservations | 1,626 units | 1,437 units | +13% |
| Sales to institutional | 1,091 units | 715 units | +53% |
| investors Total in number of units |
2,717 | 2,152 | +26% |
47 programs were launched (primarily entry-level and mid-range70) for sales of approximately €760 million (inc. tax) and 3,600 units, i.e. 9% more than in H1 2014.
This strong sales growth is due in particular to sales to institutional investors, which now account for 32% of sales (compared to 28% in H1 2014).
Altarea Cogedim and SNI Group have signed a five-year partnership for the sale of intermediate homes. In late July, agreements have been concluded on some 500 units, with an additional 800 units under negotiation (not recognized into account for semester's reservations).
Altarea Cogedim also continues to pursue its strategy with respect to major project development in partnership with metropolitan areas. Over the half-year, the Group initiated two new predominantly residential mixed-use programs: Bezons-Cœur de Ville (700 homes and 215,250 ft² (20,000 m²) of retail space)71 and Villeurbanne-La Soie (600 homes, 43,000 ft² (4,000 m²) of retail space and 193,750 ft² (18,000 m²) of offices).
| Number of units | H1 2015 | % | H1 2014 | % | Change |
|---|---|---|---|---|---|
| Entry-level / mid-range | 1,766 | 65% | 1,281 | 60% | |
| High-end | 645 | 24% | 613 | 28% | |
| Serviced Residences | 222 | 8% | 179 | 8% | |
| Renovation | 84 | 3% | 79 | 4% | |
| Total | 2,717 | 2,152 | +26% |
Most significantly, sales growth in the H1 2015 was associated with entry-level and midscale programs, which account for two-thirds of sales in terms of number of units (compared to 60% in H1 2014).
| € millions (incl. tax) | H1 2015 | % | H1 2014 | % | Change |
|---|---|---|---|---|---|
| Entry-level / mid-range | 190 | 48% | 198 | 56% | |
| High-end | 183 | 47% | 119 | 34% | |
| Serviced Residences | 14 | 4% | 30 | 8% | |
| Histoire & Patrimoine | 5 | 1% | 8 | 2% | |
| Total | 393 | 355 | +11% |
Notarized sales came to €393 million in H1 2015, up 11% year-on-year.
71 In partnership with Imestia Group.
67 Source: Ministry of Sustainable Development May 2015 Figures and Statistics: marketing of new homes in Q1 2015.
68 Source: FPI press release, May 21, 2015.
69Reservations net of cancellations, with Histoire et Patrimoine reservations accounted for in proportion to the Group share of ownership.
70Programs priced at under €5,000/m² in the Paris Region and under €3,600/m² outside of Paris.
| € millions excl. tax | H1 2015 | % | H1 2014 | % | Change |
|---|---|---|---|---|---|
| Entry-level / mid-range | 223 | 49% | 165 | 45% | |
| High-end | 200 | 44% | 167 | 45% | |
| Serviced Residences | 28 | 6% | 36 | 10% | |
| Total | 451 | 368 | + 23% |
Residential sales came to €451, up 23% year-onyear. Entry-level and midrange programs accounted for nearly half of percentage-ofcompletion revenues.
| € millions | 6/30/2015 | 6/30/2014 restated |
|
|---|---|---|---|
| Revenue | 451.2 | 23% | 368.2 |
| Cost of sale | (411.2) | (337.5) | |
| Net property income | 40.0 | 30% | 30.7 |
| % of revenue | 8.9% | 8.3% | |
| Production held in inventory | 26.6 | 20.5 | |
| Net overhead expenses | (43.3) | (37.2) | |
| Other (a) | 1.2 | 2.2 | |
| Operating cash flow | 24.5 | 52% | 16.1 |
| % of revenue | 5.4% | 4.4% |
(a) Particularly includes the contributions of companies consolidated using the equity method
| € millions excl. tax | H1 2015 | 2014 | Change |
|---|---|---|---|
| Notarized revenues not recognized on a percentage of completion basis |
730 | 879 | |
| Revenues reserved but not notarized |
805 | 580 | |
| Backlog | 1,535 | 1,459 | +5% |
| Number of months | 20 | 22 |
Breakdown of properties for sale at the end of 2015 (€679 million incl. tax and approx. 2,800 units) by stage of completion:
| - | <--- Risk---> | + | ||
|---|---|---|---|---|
| Operating phases | Preparation (land not acquired) |
Land acquired / project not yet started |
Land acquired/ project in progress |
Stock of completed residential properties |
| Expenses incurred (€ mil. excl. tax) |
14 | 3 | ||
| Cost price of properties for sale (€ mil. excl. tax) |
311 | 9 | ||
| Property for sale (€679 mil. incl. tax) |
402 | 15 | 251 | 11 |
| In % | 59% | 2% | 37% | 2% |
| o/w to be delivered | in 2015 | €16 mil. | ||
| in 2016 | €126 millionmil. | |||
| in 2017 | €88 mil. | |||
| in 2018 | €21 mil. |
61% of properties for sale concern developments on which construction had not yet begun and on which the amounts committed correspond primarily to research and advertising costs and land order fees (or guarantees) paid upon the signature of preliminary land sales agreements with the possibility of retraction (mainly unilateral agreements).
37% of properties for sale are currently being built. Only €16 million (out of €251 million) concern units to be completed by the end of 2015.
The stock of finished products is insignificant.
This breakdown of developments by stage of completion reflects the cautious criteria implemented by the Group:
• the decision to give priority to signature of unilateral preliminary sales agreements rather than bilateral sale and purchase agreements,
• requiring a high level of pre-marketing at the time the site is acquired, as well as at the start of construction work,
• requiring agreement from the Commitments Committee at all stages of the transaction: signature of the purchase agreement,
72 Revenues recognized according to the percentage-of-completion method in accordance with IFRS standards. The percentage of completion is calculated according to the stage of construction not including land.
73 Net property income is calculated after interest, after marketing and advertising fees and expenses.
74The backlog comprises revenues excluding tax from notarized sales to be recognized on a percentage-of-completion basis and individual and block reservations to be notarized.
75Properties for sale include units available for sale and are expressed as values including tax. The breakdown of the offering does not include the Histoire & Patrimoine renovation product offering (€22 million including tax).
marketing launch, land acquisition and launch of construction,
• withdrawing from or renegotiating transactions having generated inadequate take-up rates.
Thanks to the use of cautious risk management criteria, Cogedim exerts virtually exclusive control over its property assets through unilateral land options, which are only exercised in accordance with the commercial success of its programs.
| Revenue incl. tax (€ millions) |
Number of units |
|
|---|---|---|
| Programs supplied in H1 2015 | 1,157 | 5,104 |
| o/w entry-level and mid-range | 724 | 3,625 |
| % of H1 2015 supply | 63% | 71% |
Sales commitments signed in H1 2015 account for the equivalent of €1.2 billion in revenue (incl. tax) being approximately 5,100 units. 70% of these agreements concern entry-level and mid-range programs featuring price levels that are particularly suited to purchasers' creditworthiness.
| € millions (incl. tax) | At 6/30/2015 |
No. of months |
At 12/31/2014 |
|---|---|---|---|
| Properties for sale | 702 | 7 | 562 |
| Future offering | 4,646 | 47 | 4,380 |
| Total Pipeline | 5,348 | 54 | 4,942 |
| O/w entry-level / mid-range | 3,028 | +9% | |
| 12/31/2014 | 4,942 | ||
| Change | +8% |
The residential pipeline (properties for sale + future offering) was up 8% compared to end-2014.
77 The future offering is made up of secured programs (through sales commitments, almost exclusively unilateral in nature) that have yet to be launched. It is expressed as values including tax. Excl. Histoire & Patrimoine transactions.
76New programs included in the land portfolio.
Down 38% year-on-year, investment in office property came to €5.4 billion.
Investors benefited from low borrowing costs, thus generating an influx of capital directed mainly at large-sized "Core" assets, especially in Paris. Competition for these high-quality assets remains strong, leading to a drop in prime rates of return in the Central Business District of Paris.
In H1 2015, take-up in the Paris Region amounted to 9,849,000 ft² (915,000 m²). Down 22% year-onyear, this trend is mainly due to a lack of transactions on surface areas over 54,000 ft² (5,000 m²).
Corporate relocations remain motivated by a search for optimized floor space and lower rents. Yet, the economic environment and low margins lead users to avoid risk-taking and prefer renegotiating their current lease.
At June 30, 2015, the immediate supply changed little, remaining stable at 41.9 million ft² (4 million m²). The share of new and redeveloped properties in immediate supply continued on a downward trend, coming to 18% (vs. 20% at end-2014).
Regarding office property, the Group has developed an original model that makes it possible to take very bold action on the market with limited risks:
• as an investor through AltaFund80. The Group is the fund's exclusive operator and one of its main shareholders, holding an interest of between 17% and 30%81 ,
78Source: Immostat for Q2 2015.
80AltaFund is a discretionary investment created in 2011.
• as a property developer82 with a particularly strong position on the market for turnkey projects intended for users,
• as a service provider for major institutional investors83 .
In all, the Group has the ability to act on every link in the value-creation chain with a diversified revenue model (development margins, fees, rental income, capital gains, etc.) for optimized capital allocation.
New orders84 grew by 83% over the half-year, at €233 million with 5 operations.
| € millions | 6/30/2015 | 6/30/2014 | Change |
|---|---|---|---|
| New orders | 233 | 127 | +83% |
| Project | Descript | Surface area | H1 2015 |
|---|---|---|---|
| ion | at 100% | achievements | |
| LA DEFENSE - Pascal Towers |
AltaFund | 683,500 ft² (63,500 m²) |
Acquisition |
| OLLIOULES - | Off-plan | 49,850 ft² | Signature of |
| Technopôle de la Mer | sale | (4,630 m²) | off-plan sale |
| LYON GERLAND - | Off-plan | 162,500 ft² | Signature of |
| SANOFI | sale | (15,100 m²) | off-plan sale |
| LYON GERLAND - Ivoire |
Off-plan lease & off-plan sale |
81,250 ft² (7,550 m²) |
Signatures of off-plan lease & off-plan sale |
| PARIS - | PDC | 243,850 ft² | Construction |
| Rue des Archives | (22,655 m²) | start | |
| MARSEILLE - Euromed Center Ph. 1 |
PDC | 152,933 ft² (14,208 m²) |
Delivery |
| PARIS - Laennec |
DPM | 193,750 ft² (18,000 m²) |
Delivery |
• In May 2015, AltaFund partnered with Goldman Sachs to acquire a 683,500-ft² (63,500-m²) office property complex located in Paris – La Défense and designed to be restructured.
79Source: CBRE: Q2 2015 Office Marketview.
81In March 2015, the Group increased its capital allocation from €100 million to €150 million and so on increasing its interest in new programs initiated by AltaFund since 2015 to 30%.
82 In the form of off-plan sale agreements, off-plan lease and property development contracts.
83 Through delegated project management contracts.
84 Off-plan sale / Property Development contract new order: Amounts are recognized one the contract (or firm commitment) is signed and construction has been launched.
DPM development new order: fees capitalized at 4%.
Investor sales new order: At the sale date, disposal margin recognized as Investor share (compared to the amount of the Property Development Contract).
• Lyon (69) - Sanofi: in the heart of the Gerland Biopôle, the Group is building the future head office of Sanofi's Animal Health and Vaccine Division. The property complex, with 166,850 ft² (15,500 m²) to be developed, is currently under construction for delivery in 2017, and has been sold by the Group to an investor.
• Ollioules (83) – Technopôle de la mer: the Group sold the first phase of this program to a group of investors under an off-plan sale agreement.
• Lyon (69) - Ivoire: in June the Group signed an off-plan lease agreement with Capgemini Group to bring together several entities located in Lyon. And at the end of July, the Group signed an off-plan sale agreement for this asset to an investor. The disposal is coupled with a property development contract involving Altarea Cogedim Entreprise. Construction is slated to begin in the third quarter 2015 for delivery in early 2017.
In H1 2015, the Group also started construction on a 244,500-ft² (22,700-m²) building in the heart of the Marais neighborhood in Paris.
The Group delivered two programs for a total of 344,500 ft² (32,000 m²): the Laennec program office building in the 7th arrondissement of Paris (DPM) and the first phase of the Euromed Center mixeduse program in Marseille (DPM).
| Surface area | Equivalent value |
|---|---|
| at 100% | in Group share |
| 1,446,131 ft² | €660 |
| (134,350 m²) | mil. |
| 3,840,175 ft² | €1,120 |
| (356,764 m²) | mil. |
| 345,500 ft² | €60 |
| (32,100 m²) | mil. |
| 5,631,828 ft² | 1,840 |
| (523,214 m²) | mil. |
| 1,455,173 ft² | €415 |
| (135,190 m²) | mil. |
| 5,281,603 ft² | €1,702 |
| (490,677 m²) | mil. |
| +7% | +8% |
(a) Amount = total cost price of programs at 100%.
(b) Amount = amount of the signed contract (or estimate in the case of off-plan leases). (c) Amount = capitalized fees.
| € millions | 6/30/2015 | 6/30/2014 restated |
|
|---|---|---|---|
| Revenue | 50.8 | 192% | 17.4 |
| Net property income | 6.6 | 202% | 2.2 |
| % of revenue | 13.1% | 12.7% | |
| External services | 2.2 | (3)% | 2.2 |
| Production held in inventory | 6.5 | 4.9 | |
| Operating expenses | (7.8) | (5.6) | |
| Net overhead expenses | 0.9 | 1.5 | |
| Other (Profit attributable to EM associates) (a) |
1.0 | 4.9 | |
| Operating cash flow | 8.5 | (1)% | 8.6 |
| % of revenue | 16.8% | 49.5% |
(a) Mainly AltaFund.
The H1 2015 contribution (stable at €8.5 million) is not representative of the current trend, which is expected to lead to strong growth in income as of H2 2015.
| Project | Description | Surface area at 100% | Equivalent value in Group share |
Status |
|---|---|---|---|---|
| PARIS - Semapa | AltaFund | 159,930 ft² (14,858 m²) | Secured | |
| NEUILLY - Avenue Charles de Gaulle | AltaFund | 270,115 ft² (25,092 m²) | Secured | |
| PARIS - Rue de Richelieu | AltaFund | 332,605 ft² (30,900 m²) | Secured | |
| LA DEFENSE – Tours Pascal | AltaFund | 683,500 ft² (63,500 m²) | Secured | |
| AltaFund programs (a) | 1,446,150 ft² (134,350 m²) | € 660 mil. |
||
| PARIS - Raspail | PCD | 109,200 ft² (10,145 m²) | Construction underway | |
| CŒUR D'ORLY - Ilot Askia | PDC | 197,420 ft² (18,341 m²) | Construction underway | |
| MONTPELLIER - Mutuelle des motards | PDC | 96,875 ft² (9,000 m²) | Construction underway | |
| OLLIOULES - Technopôle de la Mer | Off-plan sale | 49,837 ft² (4,630 m²) | Construction underway | |
| MARSEILLE - Euromed Center (Phases 2.3 & 4) | PDC | 324,381 ft² (30,136 m²) | Construction underway | |
| TOULOUSE Blagnac - SAFRAN | Off-plan sale | 271,068 ft² (25,183 m²) | Construction underway | |
| LYON GERLAND - SANOFI | Off-plan sale | 162,535 ft² (15,100 m²) | Construction underway | |
| PARIS - Rue des Archives | PDC | 243,856 ft² (22,655 m²) | Construction underway | |
| ISSY-LES-MOULINEAUX | PDC | 609,250 ft² (56,600 m²) | Secured | |
| LYON GERLAND - Ivoire | Off-plan sale | 81,268 ft² (7,550 m²) | Secured | |
| VILLEURBANNE - View One | Off-plan sale | 167,465 ft² (15,558 m²) | Secured | |
| MARSEILLE - Michelet | Off-plan sale | 177,066 ft² (16,450 m²) | Secured | |
| TOULON - TPM (Retail & hotel) | Off-plan sale | 49,170 ft² (4,568 m²) | Secured | |
| MASSY - Hôtel Place du Grand Ouest | Off-plan sale | 66,198 ft² (6,150 m²) | Secured | |
| ANTONY - Croix de Berny (Tranche 2) | Off-plan sale | 179,176 ft² (16,646 m²) | Secured | |
| NANTERRE - Cœur de Quartier | Off-plan sale | 223,728 ft² (20,785 m²) | Secured | |
| CŒUR D'ORLY (Excl. Ilot Askia) | PDC | 585,255 ft² (54,372 m²) | Secured | |
| NICE MERIDIA - Ilot Robini (Lot 1 & 3) | PDC | 101,009 ft² (9,384 m²) | Secured | |
| MARSEILLE - Euromed Center (Phases 5) | PDC | 145,431 ft² (13,511 m²) | Secured | |
| Property development contracts / Off-plan sales / Off-plan leases (b) |
3,840,175 ft² (356,764 m²) | € 1.12 bil. |
||
| PARIS - Champs Elysées | DPM | 258,333 ft² (24,000 m²) | Secured | |
| PARIS - Matignon | DPM | 87,187 ft² (8,100 m²) | Secured | |
| Delegated project management (c) | 345,522 ft² (32,100 m²) | € 60 mil. |
||
| TOTAL | 5,631,829 ft² (523,214 m²) | € 1.84 bil. |
||
| (a) Amount = total cost price of the program at 100%. |
(b) Amount = amount of the signed contract (or estimate in the case of off-plan leases).
(c) Amount = capitalized fees.
In line with its entrepreneurial DNA, Altarea Cogedim has created a cross-disciplinary unit dedicated to innovation: AltaFuture.
This structure, endowed with significant human resources, identifies and selects innovations that can be implemented by operational teams working in the Group's different business lines. A scientific committee made up of multidisciplinary external experts works together with AltaFuture in pursuit of practical solutions to the urban challenges facing today's cities.
AltaFuture is also in charge of establishing contacts and partnerships with companies and organizations working in fields that go beyond real estate, as well as developing an ecosystem of young and innovative businesses.
Over the past three years, Altarea Commerce has built up human and technological capital that stands at the heart of its activities as a retail reit. These initiatives led to the development of the Digital Factory, a platform created to systematically centralize and operate customer data, ultimately bringing about a profound transformation in shopping centers' asset management practices.
Practically, the Digital Factory:
• gathers customer data and information drawn from the Group's many channels85 ,
• centralizes this information in a system dedicated to data processing (Data Management Platform or "DMP"),
• these actions make it possible to use the information gathered (automatic data analysis, reporting, etc.) and establish targeted action plans.
With the Digital Factory, the Group has created a unique tool at the junction between CRM and "Big data." This tool:
• increases knowledge of customers (segmentation, profile comparison of on- and offline purchasing behaviors, cross-referencing with "opt-in" databases, etc.),
• provides a minute-by-minute analysis of customers' path in connected shopping centers (information on purchasing habits by aggregating receipts, individual footfall for each shop, etc.),
• aims at contributing to efficient measures (targeted customer communication, customized geolocation-based offers in real time, optimized mixed merchandising management, solutions to increase footfall in "cold areas" and during off-peak hours, negotiations with retailers based on objective criteria, etc.).
These features are already operational at Qwartz, France's first connected shopping center, where the paths of nearly 50% of customers are now recorded, processed and analyzed. The Digital Factory has thus helped powering up the center (regular reminders to spur return visits and realtime asset management initiatives).
The Digital Factory is currently being rolled out in Altarea Cogedim's largest shopping centers. Major investors controlling shopping centers have already expressed their interest in these features for their own portfolio.
Moreover, thanks to its experience in rail station retail, the Group has developed a unique concept of "traffic retail" which contributed significantly to Altarea Cogedim's victory in the competitions for Paris-Montparnasse in 2014 and Paris-Austerlitz in 2015.
Thanks to its multi-product profile (retail, residential, offices, hotels), Altarea Cogedim is the only French property group with the ability to comprehensively design large-scale urban projects.
This expertise naturally led the Group to address the topic of "Smart Cities" and create strong concepts that plan for the neighborhoods of tomorrow while putting forth a lifestyle that:
• promotes efficiency by focusing on complementary uses,
• furthers a sense of community and enhances comfort thanks to digital technologies.
This concept is being implemented for the first time in major projects currently underway:
85 Wi-Fi and geolocation, loyalty programs, shopping center websites and applications, social networks, Rue du Commerce, etc.
• Massy-Place du Grand Ouest (700 housing units, 7 000 m² of retail, a hotel, a multiplex and congress center),
• Bezons-Cœur de Ville (700 housing units et 20 000 sqm of retail),
• Lyon-La Soie (600 housing units, a 18 500 m² office property and 4 000 m² of retail).
For residential property, the Group structures its approach with five innovation-based themes: customization, scalability and modularity, shared space and services, new technologies, and ecoconstruction.
For its office programs, the Group guides leading companies in their efforts to enhance their working environment, as can be seen in the following projects, currently underway:
• Optimized air quality and filtration for the Austerlitz project (Paris, 13th arrondissement),
• A Positive-energy building for the head office of Sanofi Pasteur and Merial (Lyon).
When it comes to eco-construction, Altarea Cogedim is innovating in the field of low-carbonfootprint building processes by creating the first French shopping center featuring 100% wooden architecture for a carbon footprint 30% lower than conventional retail projects. Showcasing this performance, the Aubergenville Brand Village will stand out as a pilot project to establish the new Low Carbon Building label.
Results at June 30, 2015 were driven by momentum in real estate activities.
Real estate revenue86 (83% of the total) was up 24.5% and real estate FFO was up 11.3% to €100.0 million thanks to the strong recovery in the Residential business (+52%), which benefited from the range extension strategy (commercial success and volume effect). The contribution of Shopping centers was down slightly (disposal of Italian assets). The contribution of Office property was stable in H1, which is not representative of on-going dynamics (strong growth is expected as of H2 2015).
Consolidated FFO87 grew by 7.3% to €89.8 million, in spite of the loss recorded in the e-commerce. On a Group share basis, consolidated FFO grew by 5.8% and real estate FFO by 11.1% to €77.5 million.
Net consolidated income88 came to €77.8 million, down 10.6% compared to H1 2014 (€53 million on a Group-share basis, down 19.4%). This figure particulary includes an adjustment in the value of Rue du Commerce.
| 6/30/2015 | 6/30/2015 | 6/30/2014 Restated | |||||||
|---|---|---|---|---|---|---|---|---|---|
| € millions | Funds from operations (FFO) - Real estate (a) |
Funds from operations (FFO) - Consolidated (b) |
Changes in value, estimated expenses and transaction costs |
TOTAL | Funds from operations (FFO) |
Changes in value, estimated expenses and transaction costs |
TOTAL | ||
| Shopping centers | 96.8 | 96.8 | 2% | – | 96.8 | 94.6 | – | 94.6 | |
| Residential | 450.8 | 450.8 | 22% | – | 450.8 | 368.3 | – | 368.3 | |
| Offices | 52.9 | 52.9 | 170% | – | 52.9 | 19.6 | – | 19.6 | |
| Online retail | – | 124.2 | (0)% | – | 124.2 | 124.3 | – | 124.3 | |
| REVENUE | 600.5 | 24.5% | 724.7 | 19.5% | – | 724.7 | 606.7 | – | 606.7 |
| Shopping centers | 82.7 | 82.7 | (2.0)% | 24.5 | 107.2 | 84.4 | (27.8) | 56.6 | |
| Residential | 24.5 | 24.5 | 51.9% | (1.5) | 23.0 | 16.1 | (2.7) | 13.4 | |
| Offices | 8.5 | 8.5 | (0.7) | (0.3) | (8.6) | 2.5 | (7.3) | ||
| Online retail | – | 77 | (23.6) | (35.7) | (6.8) | (0.5) | 11.1 | ||
| Other | 1.1 | 1.1 | (2.4) | (1.3) | (0.5) | (3.5) | (4.0) | ||
| OPERATING INCOME | 116.9 | 7.5% | 104.8 | 2.9% | (3.3) | 101.5 | 101.8 | (31.9) | 69.9 |
| Net borrowing costs | (13.5) | (14.0) | (14.8)% | (3.0) | (17.0) | (16.5) | (2.7) | (19.2) | |
| Change in value and income from disposal of financial instruments |
– | – | (0.2) | (0.2) | – | (44.5) | (44.5) | ||
| Proceeds from the disposal of investments | – | – | 7.8 | 7.8 | – | 0.0 | 0.0 | ||
| Corporate income tax | (3.3) | (1.0) | (3.3) | (4.3) | (1.7) | 82.5 | 80.8 | ||
| NET CONSOLIDATED INCOME | 100.0 | 11.3% | 89.8 | 7.3% | (12.0) | 77.8 | 83.7 | 3.4 | 87.1 |
| Non-controlling interests | (22.5) | (22.5) | 12.0% | (2.3) | (24.8) | (20.1) | (1.2) | (21.3) | |
| NET ATTRIBUTABLE INCOME | 77.5 | 11.1% | 67.3 | 5.8% | (14.3) | 53.0 | 63.6 | 2.2 | 65.7 |
| Average number of shares after dilution (in millions) |
12.452 | 12.452 | 11.645 | ||||||
| FFO (Group share) PER SHARE |
6.22 | 3.9% | 5.40 | (1.0)% | 5.46 |
(a) FFO of Shopping center, Residential, Office and other corporate business lines.
(b) Including results of Rue du Commerce.
86 Revenue of Shopping center, Residential, Office and other corporate business lines.
87 Group share and other.
88 Group share and other.
FFO represents operating cash flow after net interest and corporate income tax expenses.
OPERATING CASH FLOW90 : 104.8 MILLION EUROS (+2.9%)
Over the first semester, the operating cash flow was mainly brought by the important recovery of the Residential business.
The decline in net borrowing costs was the direct result of lower average costs (-26 bps in 6 months).
This represents the tax paid by entities not having adopted the SIIC tax status, for the most part within the Altareit tax group and including in particular Property Development operations. In H1 2015, the Group was able to offset its taxable income against tax loss carryforwards, limiting the amount of income tax payments to -€1.0 million.
In 2014, the Group carried out a €100 million capital increase via the share-based payment of the 2014 dividend, leading to the creation of 922,682 shares and dilution of per-share performance indicators.
| € mil. | |
|---|---|
| Change in value - Investment properties (a) | 30.1 |
| Change in value - Financial instruments | (0.2) |
| Disposal of assets and transaction costs | 5.7 |
| Share of equity-method associates | (3.0) |
| Deferred tax | (3.3) |
| Estimated expenses (b) | (41.2) |
| TOTAL | (12.0) |
(a) Including change in value of assets consolidated using the equity method. (b) Allowances for depreciation and non-current provisions, stock grants, pension provisions, staggering of debt issuance costs
90 Or consolidated EBITDA.
| GROUP NAV | 6/30/2015 | 12/31/2014 published | ||||
|---|---|---|---|---|---|---|
| € millions | Change | €/share (c) | Change/ share |
€ millions | €/share (c) | |
| Consolidated equity, Group share | 1,180.0 | 94.3 | 1,249.5 | 99.9 | ||
| Other unrealized capital gains | 281.8 | 276.8 | ||||
| Restatement of financial instruments | 22.2 | 87.8 | ||||
| Deferred tax on the balance sheet for non-SIIC assets (international assets) |
18.0 | 22.4 | ||||
| EPRA NAV | 1,502.0 | (8.2)% | 120.0 | (8.2)% | 1,636.5 | 130.8 |
| Market value of financial instruments | (22.2) | (87.8) | ||||
| Fixed-rate market value of debt | (11.6) | (13.1) | ||||
| Effective tax for unrealized capital gains on non-SIIC assets (a) | (6.6) | (17.6) | ||||
| Optimization of transfer duties (a) | 65.7 | 55.6 | ||||
| Partners' share (b) | (14.5) | (14.9) | ||||
| EPRA NNNAV (liquidation NAV) | 1,512.8 | (2.9)% | 120.9 | (2.9)% | 1,558.6 | 124.6 |
| Estimated transfer duties and selling fees | 71.3 | 65.9 | ||||
| Partners' share (b) | (0.7) | (0.6) | ||||
| Diluted Going Concern NAV | 1,583.4 | (2.5)% | 126.5 | (2.5)% | 1,623.9 | 129.8 |
| (a) Varies according to the type of disposal, i.e. sale of asset or sale of |
securities (b) Maximum dilution of 120,000 shares
(c) Number of diluted shares: 12,513,394 12,512,638
At June 30, 2015, the Group's diluted Going Concern NAV stood at €1.583 billion, down 2.5% compared to 2014.
| Diluted Going-Concern NAV | In € | €/share | |
|---|---|---|---|
| At December 31, 2014 | millions 1,624 |
129.8 | |
| Net profit | 63 | 5.1 | |
| Other changes in value (a) | 32 | 2.5 | |
| At June 30, 2015 before dividend | 1,719 | 137.3 | 5.8% |
| 2014 dividend | (125) | (10.0) | |
| At June 30, 2015 after dividend | 1,595 | 127.3 | (1.9)% |
Diluted Going Concern NAV and EPRA NNNAV (liquidation NAV) take into account the market value of the financial instruments (rising sharply) unlike EPRA NAV. EPRA NAV decreases more importantly than diluted going concern NAV and EPRA NNNAV (liquidation NAV) do.
These arise from updated estimates of the value of the following assets:
Once a year, these assets are appraised by external experts (JLL and DTZ for the hotel business franchises and Accuracy for Altarea France, Semmaris, Cogedim and AltaFund). JLL, DTZ and Accuracy all use the discounted cash flow method (DCF) in conjunction with a terminal value based on normalized cash flow. JLL and
DTZ provide a single appraisal value, while Accuracy provides a range of values calculated using different scenarios. In addition to its DCF valuation, Accuracy also provides a valuation based on listed peer group comparables.
Most of Altarea's Property Portfolio is not subject to capital gains tax under the SIIC regime. The exceptions are a limited number of assets which are not SIIC-eligible due to their ownership method, and assets owned outside France. For these assets, capital gains tax on disposals is deducted directly from the consolidated financial statements at the standard tax rate in the host country, based on the difference between the market value and tax value of the property assets.
Altarea Cogedim took into account the ownership methods of non-SIIC assets to determine going concern NAV after tax, since the tax reflects the tax that would effectively be paid if the shares of the company were sold or if the assets were sold building by building.
Investment properties have been recognized in the IFRS consolidated financial statements at appraisal value excluding transfer duties. To calculate going-concern NAV, however, transfer duties were added back in the same amount.
In Altarea Cogedim's EPRA NNNAV (liquidation NAV), duties are deducted either on the basis of transfer of securities or building by building.
The partners' share represents the maximum dilution provided for under the Group's Articles of Association in the case of liquidation by a partner (where the General Partner would be granted 120,000 shares).
Since the start of the year, the Group has signed or received firm commitments from banks for a total of €1.371 billion (o/w Group-share €998 million):
• €1.034 billion to refinance existing loans (essentially concerning maturities from 2015 to 2017),
• and €337 million in new funds.
Nearly all of this financing (€1.341 billion) concerns long-term mortgage loans:
• €400 million backed by the Cap 3000 shopping center (refinancing of the existing loan and financing of new extension work), for a six-year maturity,
• signature of a framework agreement in July for mortgage-backed refinancing of 16 assets for a total of €855 million91 with a 10-year term.
• three agreements to finance ongoing office programs for a total of €86 million.
The average duration of the finance agreements implemented over the half-year is 8.4 years with an average spread of 112 bps.
Altarea Cogedim's net financial debt stood at €2.042 billion at June 30, 2015 compared to €1.772 billion at December 31, 2014 (+€270 million).
This increase is due in large part to the acquisition of 100% of Qwartz.
| June 2015 | Dec. 2014 |
|---|---|
| 558 | 458 |
| 546 | 537 |
| 1,042 | 901 |
| 243 | 234 |
| 2,388 | 2,130 |
| (346) | (358) |
| 2,042 | 1,772 |
91And €777 million on a Economic-share basis.
At the date of publication, available cash includes:
• €389 million in corporate sources of funds (cash and confirmed authorizations),
• €149 million in unused loan authorizations secured against specific developments.
| Covenant | June 2015 | Dec. 2014 | Delta | ||
|---|---|---|---|---|---|
| LTV (a) | ≤ 60% | 41.1% | 37.7% | + 3.4 pts | |
| ICR (b) | ≥ 2.0 x | 7.5 x | 5.9 x | + 1.6 x |
(a) LTV (Loan to Value) = Net debt / Restated value of assets including transfer duties. (b) IRC = Operating profit / Net cost of debt
(Funds from operations column)
At June 30, 2015, the Group was in compliance with all covenants.
After accounting for refinancing transactions, the average duration of Group debt (excluding property-development debt and treasury notes) increased from 3.7 years at December 31, 2014 to 6.3 years at June 30, 2015.
€ millions
| Maturity | Swap | Fixed-rate debt |
Total | Average base rate (a) |
|---|---|---|---|---|
| June 15 | 1 250 | 330 | 1 580 | 0.41% |
| June 16 | 1 324 | 330 | 1 654 | 0.65% |
| June 17 | 1 276 | 330 | 1 606 | 0.62% |
| June 18 | 1 268 | 230 | 1 498 | 1.51% |
| June 19 | 1 276 | 230 | 1 506 | 1.46% |
| June 20 | 1 141 | 230 | 1 371 | 1.19% |
| June 21 | 1 008 | - | 1 008 | 1.23% |
| June 22 | 982 | - | 982 | 1.23% |
| June 23 | 981 | - | 981 | 1.23% |
| June 24 | 980 | - | 980 | 1.23% |
(a) Average rate of swaps // Average base rate of fixed-rate loans (excl. spread, at the fixing date of each transaction).
Since the beginning of 2015, the Group significantly restructured hedges, taking advantage of an extremely favorable market window in Q2 2015.
The goal is to hedge approximately 75% of debt. The table above presents the average hedged base rate, to which the average spread must be added to determine the Group's all-in cost.
At June 30, 2015, the average cost of financing stood at 2.15% margin included, compared to 2.41% at December 30, 2014 (-26 bps).
Thanks to these operations, the Group has an excellent view on the average cost of long-term debt.
92Excluding property-development debt and treasury notes, and including financing for which the Group received a firm commitment in July, in € millions.
| 6/30/2015 | 6/30/2014 Restated* | ||||||
|---|---|---|---|---|---|---|---|
| In € millions | Funds from operations (FFO) |
Changes in value, estimated expenses and transaction costs |
Total | Funds from operations (FFO) |
Changes in value, estimated expenses and transaction costs |
Total | |
| Rental income | 87.0 | – | 87.0 | 85.0 | – | 85.0 | |
| Other expenses | (6.8) | – | (6.8) | (7.8) | – | (7.8) | |
| Net rental income | 80.2 | – | 80.2 | 77.3 | – | 77.3 | |
| External services | 9.8 | – | 9.8 | 9.5 | – | 9.5 | |
| Own work capitalized and production held in inventory | 15.1 | – | 15.1 | 11.3 | – | 11.3 | |
| Operating expenses | (29.2) | (0.2) | (29.4) | (24.7) | (0.8) | (25.5) | |
| Net overhead expenses | (4.3) | (0.2) | (4.5) | (3.9) | (0.8) | (4.7) | |
| Share of equity-method affiliates | 6.9 | (3.3) | 3.6 | 11.1 | 3.5 | 14.6 | |
| Net allowances for depreciation and impairment | – | (0.6) | (0.6) | – | (0.5) | (0.5) | |
| Income / loss on sale of assets (1) | – | 7.8 | 7.8 | – | 0.6 | 0.6 | |
| Income / loss in the value of investment property | – | 30.1 | 30.1 | – | (30.0) | (30.0) | |
| Transaction costs | – | (1.6) | (1.6) | – | (0.5) | (0.5) | |
| NET SHOPPING CENTERS INCOME | 82.7 | 32.3 | 115.0 | 84.4 | (27.8) | 56.6 | |
| Distribution and other revenue | 118.6 | (0.0) | 118.6 | 119.2 | – | 119.2 | |
| Cost of sales and other expenses | (116.7) | – | (116.7) | (111.8) | – | (111.8) | |
| Retail margin | 2.0 | (0.0) | 1.9 | 7.4 | – | 7.4 | |
| Galerie Marchande commissions | 5.6 | – | 5.6 | 5.1 | – | 5.1 | |
| Operating expenses | (19.6) | (1.2) | (20.8) | (19.3) | (0.1) | (19.5) | |
| Net overhead expenses | (19.6) | (1.2) | (20.8) | (19.3) | (0.1) | (19.5) | |
| Net allowances for depreciation and impairment | – | (31.9) | (31.9) | – | (0.4) | (0.4) | |
| Transaction costs | – | (0.4) | (0.4) | – | – | – | |
| NET ONLINE RETAIL INCOME | (12.1) | (33.6) | (45.7) | (6.8) | (0.5) | (7.3) | |
| Revenue | 451.2 | – | 451.2 | 368.2 | – | 368.2 | |
| Cost of sales and other expenses | (411.2) | – | (411.2) | (337.5) | – | (337.5) | |
| Net property income | 40.0 | – | 40.0 | 30.7 | – | 30.7 | |
| External services | (0.3) | – | (0.3) | 0.0 | – | 0.0 | |
| Production held in inventory | 26.9 | – | 26.9 | 20.4 | – | 20.4 | |
| Operating expenses | (43.3) | (0.6) | (43.9) | (37.2) | (0.8) | (38.1) | |
| Net overhead expenses | (16.7) | (0.6) | (17.3) | (16.8) | (0.8) | (17.6) | |
| Share of equity-method affiliates | 1.2 | 0.8 | 2.0 | 2.2 | (0.3) | 1.9 | |
| Net allowances for depreciation and impairment | – | (1.5) | (1.5) | – | (1.2) | (1.2) | |
| Transaction costs | – | (0.2) | (0.2) | – | (0.3) | (0.3) | |
| NET RESIDENTIAL PROPERTY INCOME | 24.5 | (1.5) | 23.0 | 16.1 | (2.7) | 13.4 | |
| Revenue | 50.8 | – | 50.8 | 17.4 | – | 17.4 | |
| Cost of sales and other expenses | (44.1) | – | (44.1) | (15.2) | – | (15.2) | |
| Net property income | 6.6 | – | 6.6 | 2.2 | – | 2.2 | |
| External services | 2.2 | – | 2.2 | 2.2 | – | 2.2 | |
| Production held in inventory | 6.5 | – | 6.5 | 4.9 | – | 4.9 | |
| Operating expenses | (7.8) | (0.2) | (8.0) | (5.6) | (0.2) | (5.8) | |
| Net overhead expenses | 0.9 | (0.2) | 0.7 | 1.5 | (0.2) | 1.3 | |
| Share of equity-method affiliates | 1.0 | (0.5) | 0.5 | 4.9 | 2.9 | 7.7 | |
| Net allowances for depreciation and impairment | – | 0.3 | 0.3 | – | (0.1) | (0.1) | |
| Transaction costs | – | – | – | – | – | – | |
| NET OFFICE PROPERTY INCOME | 8.5 | (0.3) | 8.2 | 8.6 | 2.5 | 11.1 | |
| Other (Corporate) | 1.1 | (2.4) | (1.3) | (0.5) | (3.5) | (4.0) | |
| OPERATING INCOME | 104.8 | (5.5) | 99.3 | 101.8 | (31.9) | 69.9 | |
| Net borrowing costs Discounting of debt and receivables |
(14.0) – |
(3.0) (0.1) |
(17.0) (0.1) |
(16.5) – |
(2.7) (0.1) |
(19.2) (0.1) |
|
| Change in value and income from disposal of financial | |||||||
| instruments | – | (0.1) | (0.1) | – | (44.4) | (44.4) | |
| Proceeds from the disposal of investments | – | 0.0 | 0.0 | – | 0.0 | 0.0 | |
| PROFIT BEFORE TAX | 90.8 | (8.6) | 82.1 | 85.4 | (79.1) | 6.3 | |
| Corporate income tax | (1.0) | (3.3) | (4.3) | (1.7) | 82.5 | 80.8 | |
| NET PROFIT | 89.8 | (12.0) | 77.8 | 83.7 | 3.4 | 87.1 | |
| Non-controlling interests | (22.5) | (2.3) | (24.8) | (20.1) | (1.2) | (21.3) | |
| NET PROFIT ATTRIBUTABLE TO GROUP SHAREHOLDERS | 67.3 | (14.3) | 53.0 | 63.6 | 2.2 | 65.7 | |
| Average number of shares after dilution | 12,452,453 | 12,452,453 | 12,452,453 | 11,645,043 | 11,645,043 | 11,645,043 | |
| DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO GROUP SHAREHOLDERS (€) |
5.40 | (1.15) | 4.26 | 5.46 | 0.19 | 5.65 |
* Restated for the impact of the application of the IFRIC 21 interpretation – "Levies".
(1) Includes, in 2015, the gain on sale of the italian retail portfolio, that is part of the usual activities of the company.
| 6/30/2015 | 12/31/2014 | |
|---|---|---|
| In € millions | Restated* | |
| NON-CURRENT ASSETS | 4,239.1 | 3,940.5 |
| Intangible assets | 233.5 | 244.7 |
| o/w goodwill | 128.7 | 128.7 |
| o/w Brands | 95.9 | 96.8 |
| O/w other intangible assets | 8.9 | 19.2 |
| Property, plant and equipment | 9.8 | 10.6 |
| Investment properties | 3,532.5 | 3,163.6 |
| o/w investment properties in operation at fair value o/w investment properties under development and under construction at cost |
3,288.7 243.8 |
2,974.4 189.2 |
| Securities and investments in equity affiliates and unconsolidated interests | 299.3 | 362.0 |
| Loans and receivables (non-current) | 43.3 | 43.3 |
| Deferred tax assets | 120.7 | 116.4 |
| CURRENT ASSETS | 1,476.8 | 1,406.4 |
| Net inventories and work in progress | 572.1 | 617.9 |
| Trade and other receivables | 498.6 | 392.5 |
| Income tax credit | 5.8 | 6.3 |
| Loans and receivables (current) | 26.3 | 15.2 |
| Derivative financial instruments | 26.0 | 15.9 |
| Cash and cash equivalents | 346.4 | 358.0 |
| Non-current assets held for sale | 1.7 | 0.7 |
| TOTAL ASSETS | 5,715.9 | 5,347.0 |
| EQUITY | 2,165.6 | 2,169.9 |
| Equity attributable to Altarea SCA shareholders | 1,180.0 | 1,250.1 |
| Capital | 191.2 | 191.2 |
| Other paid-in capital | 396.8 | 518.7 |
| Reserves | 538.9 | 425.9 |
| Income associated with Altarea SCA shareholders | 53.0 | 114.3 |
| Equity attributable to minority shareholders of subsidiaries | 975.7 | 919.8 |
| Reserves associated with minority shareholders of subsidiaries | 755.8 | 579.1 |
| Other equity components, subordinated perpetual notes | 195.1 | 195.1 |
| Income associated with minority shareholders of subsidiaries | 24.8 | 145.6 |
| NON-CURRENT LIABILITIES | 2,169.9 | 1,850.0 |
| Non-current borrowings and financial liabilities | 2,098.3 | 1,795.1 |
| o/w participating loans and advances from associates | 54.9 | 50.8 |
| o/w bond issues | 477.5 | 477.2 |
| o/w Borrowings from lending establishments | 1,565.8 | 1,267.1 |
| Long-term provisions | 36.3 | 21.3 |
| Deposits and security interests received | 28.6 | 26.2 |
| Deferred tax liability | 6.7 | 7.4 |
| CURRENT LIABILITIES | 1,390.4 | 1,327.0 |
| Current borrowings and financial liabilities | 394.3 | 448.3 |
| o/w bond issues | 4.2 | 4.3 |
| o/w Borrowings from credit institutions (excluding overdrafts) | 262.7 | 326.5 |
| o/w Treasury notes | 61.5 | 53.0 |
| o/w bank overdrafts | 16.5 | 2.1 |
| o/w Advances from Group shareholders and partners | 49.4 | 62.3 |
| Derivative financial instruments | 46.7 | 102.7 |
| Accounts payable and other operating liabilities | 805.9 | 757.4 |
| Tax due | 18.0 | 18.7 |
| Amount due to shareholders | 125.4 | 0.0 |
| TOTAL LIABILITIES | 5,715.9 | 5,347.0 |
* Restated for the impact of the application of the IFRIC 21 interpretation – "Levies".
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.