Earnings Release • Feb 27, 2013
Earnings Release
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Press release 2012 Annual Results Paris, February 27, 2013
Financial and operational objectives met in spite of a difficult business environment 2017 objective: FFO +50%
| • | Consolidated revenue | €1.584 billion | +42% |
|---|---|---|---|
| • | Revenue like-for-like1 | €1.259 billion | +13% |
| • | FFO (Group share)2 | €149.7 million | +11% |
| FFO/share after dilution3 | €14.2/share | +8% | |
| • | EPRA NAV (Net asset value)4 | €1.621 billion | +3.6% |
| EPRA NAV/share after dilution4 | €148.6/share | -3.4% | |
| Loan to value • • |
Dividend proposed | 49.3% €10.0/share5 |
-190 bps +11.1% |
An option for dividend payment in shares will be proposed at the General Shareholders' Meeting to take place on June 10, 20136 .
Paris, February 27, 2013, 6:00 pm. Following review by the Supervisory Board, Management approved the 2012 consolidated financial statements. The audit of the consolidated financial statements has been performed. The certification report will be issued once the necessary procedures have been finalized for the filing of the annual financial report.
1 Excluding Rue du Commerce, recognized in the consolidated financial statements at January 1, 2012
2 FFO (Funds From Operations) represents the result before changes in fair value, estimated non-cash expenses and transaction costs
3 After dilution due to dividend payout in shares (732,624 shares created in June 2012)
4 EPRA NAV: Market value of equity from the perspective of operations as a going concern 5
O/w €0.30/share representing distribution of tax-exempt income and €9.7/share as repayment of share premiums 6
On the basis of payment in shares representing 90% of the average stock price over the 20 trading days preceding the General Meeting
"We have followed the roadmap established in 2009 and arrived at our destination: despite the difficult business environment, we are finalizing all transformations we decided to launch. In the retail business, we have continued to focus the majority of our equity on a small number of large-sized assets exhibiting superior performance, while at the same time developing a management business for third parties. Thanks to this initiative, we now manage shopping centers worth a total of nearly €4 billion. For residential property, we have extended the scope of Cogedim's offering with operations in every product range. Finally, for office development, we implemented a dedicated investment vehicle in addition to our development and service activities. At the same time, we have fully incorporated the sustainable development approach into our business model thanks to our Altagreen program, which is taken into consideration for all our operations prior to launch.
These transformations, implemented in the context of the economic crisis, led us to achieve the goals we set for ourselves in terms of both FFO growth and reduction of LTV, which was brought under 50% this year. Nonetheless, our satisfaction does not prevent us from seeing the profound changes at work on each of our three markets, even if their magnitude is paradoxically occulted by current economic conditions.
For retail, we are thus convinced of the need to reinvent the retail Reit model to incorporate e-commerce. By acquiring Rue du Commerce, a leader in e-commerce in France, we became the first retail Reit to seize a substantial share of this market, which is sure to grow in the coming years. We also initiated the development of the first multi-channel property company model with the aim of offering retailers a vast range of services with high commercial value, from leases on brick-and-mortar retail space to online sales solutions and geolocation-based marketing.
For residential property, we are faced with an unprecedented industrial challenge. On the one hand, a depressed short-term market leads traditional purchasers (first-time buyers, individual investors) to adopt a pronounced wait-and-see attitude. At the same time, we must be ready for intense activity in the medium term as national authorities will promote large-scale construction of new homes. Cogedim must therefore prepare for a significant increase in volumes while still upholding the commitment to quality that sets the brand apart in property development in France.
For office development, we have taken advantage of the slowdown in activity in recent years to adjust our business model and are now primed for the future. Our teams are ready for a new growth cycle and we have full confidence in their ability to bring back the income levels we saw in previous cycles.
In spite of an extremely difficult economic context, we can distinguish unparalleled opportunities on each of our three markets. To seize these opportunities, we have decided to step up growth investments over the next two years, while still maintaining a prudent commitment policy. These investments will be focused mainly on developing new products and services, thus weighting on our results in the short term. Thanks to these futurelooking investments and barring an economic blow with repercussions for France, we are setting a goal of +50% FFO growth by 2017."
Alain Taravella, Chairman and Founder of Altarea Cogedim
In the space of three years, the Group has concentrated its portfolio around some 40 large assets exhibiting high performance on their markets. At the same time, it has significantly developed the management business for third parties. Shopping centers managed by the Group are now worth a total of €4 billion (+41% since 2009) and external fees increased by 9% in 2012 to €18 million (+73% since 2009).
| In € millions including transfer duties | 2012 | 2009 | 2009 Change |
|---|---|---|---|
| Controlled assets7 | 3,216 | 2,465 | +30% |
| Group share | 2,563 | 2,279 | +12% |
| Share of minority interests | 653 | 187 | x3.5 |
| Average unit value | €78 million | €48 million | +62% |
| No. of assets | 41 | 52 | -21% |
| Management for third parties8 | 742 | 351 | x2.1 |
| Total assets under management | 3,958 | 2,817 | +41% |
Thanks to the portfolio concentration initiative carried out in recent years, all indicators point to a new growth phase for the Group's portfolio, particularly a 7.3% increase in rental income on a like-for-like/samefloor-area basis in 2012.
| 2012 | |
|---|---|
| Footfall10 | +3.2% |
| Tenant revenue11 | +2.0% |
| Rent increases upon renewals / re-lettings | +29% |
| Occupancy cost ratio12 | 10.1% |
| Bad debt ratio13 | 1.5% |
| Financial vacancy rate14 | 2.8% |
The remodeling of the shopping center has been completed. The floor area remains identical and rental income now comes to €30 million (vs. €23 million in 2010). The decision has been made to launch phase 2 (extension), leading partners to increase Altablue's equity (the holding company for the shopping center) and thus to restructure the 2010 governance agreements. Following these operations, Altarea increased its stake in Altablue to 61.8%15, and the asset is now fully consolidated in the group's financial statements. This increase was partially financed through €109 million in subordinated perpetual notes (TSDI)16 issued by Altarea and taken up by APG.
13 (Net amount of allocations to and reversals of provisions for bad debt + Write-offs during the period) / Rent and expenses charged to tenants
7 Assets in which Altarea holds shares and for which Altarea exercises operational control
8 Assets held entirely by third parties who entrusted management to Altarea Cogedim (also includes the Group's minority interests: €59 million in 2012 vs. €74 million in 2009)
9 Assets controlled by the Group, in value terms including transfer duties. O/w €2.024 billion on a Group share basis and €653 million on a minority share basis
10 Shopping centers equipped with the Quantaflow system
11 Revenue change for shopping center tenants on a same-floor-area basis
12 Rent and expenses charged to tenants (incl. taxes) over the past 12 months (including rent reductions) / sales over the same period (incl. taxes)
14 Estimated rental value (ERV) of vacant lots as a percentage of total estimated rental value (excluding property being redeveloped), at 100% in
France
15 vs. 33.34% previously
16 Undated subordinated notes accounted for as minority interests' equity instruments in the Group's financial statements
The Group owns 6 assets in Italy and 1 asset in Spain. 83% of these assets (in value terms) are located in regions with high purchasing power18. In 2012, the performance of these assets was impacted by austerity policies. This was particularly true in Italy, where a new land tax19 negatively affected the amount of rent collected.
| 2012 | |
|---|---|
| Average value | €77 million |
| Tenant revenue20 | -3.1% |
| Rent increases upon renewals / re-lettings | +1% |
| Occupancy cost ratio21 | 11.9% |
| Bad debt ratio22 | 5.7% |
| Financial vacancy rate23 | 2.5% |
In taking control of Rue du Commerce, Altarea Cogedim has become a leader in e-commerce in France, with online business volume of €423 million in 201224. At the organizational level, the year was marked by incorporation of Rue du Commerce into the Group, as well as the initial implementation of the multi-channel property company concept. Experiments conducted in 2012 (particularly "shop in shop" for retailers and geolocation-based cross-marketing) offered extremely promising results and will be systematically rolled out in the coming months. At the operational level, 2012 was marked by strong growth for all Rue du Commerce indicators.
| 2012 | 2011 Change | |
|---|---|---|
| Visitor numbers25 | 181 million | +17% |
| o/w mobile26 | 7.8% | |
| No. of orders | 2.4 million | +10% |
| o/w High-tech | 1.3 million | |
| o/w Galerie Marchande | 1.1 million | |
| Business volume | €423 million | +10% |
| o/w High-tech | €316 million | +9% |
| o/w Galerie Marchande | €108 million | +14% |
| Galerie Marchande Commissions | €9.4 million | + 25% |
| Average rate (as % of retail sales) | 8.8% | +80 bps |
At today's meeting of the Board of Directors of Altacom (holding company for Rue du Commerce) the Group announced its intention to definitively delist27 Rue du Commerce. It currently holds 96.49% of the company's capital.
17 Assets controlled by the Group, in value terms including transfer duties
18 Northern Italy, Barcelona
19 Imposta Municipale Unica (Municipal property tax), a land tax that entered into force in Italy on January 1, 2012 and which is only partially passed on to tenants
20 Revenue change for shopping center tenants on a same-floor-area basis
21 Calculated as rent and expenses charged to tenants (incl. taxes) over the past 12 months (including rent reductions), in proportion to sales over the same period (incl. taxes) at 100%
22 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%
23 Estimated rental value (ERV) of vacant lots as a percentage of total estimated rental value. Excluding property being redeveloped, at 100% in France
24 I.e., +10% compared to 2011. 75% of business volume generated by own-brand distribution and 25% by the Galerie Marchande
25 Total number of connections to the site in 2012 (source: Médiamétrie//NetRating)
26 Applications and mobile site launched in November 2012 (downloaded 100,000 times in 2 months): 7.8% of traffic at December 31, 2012
27Via the launch of a public repurchase offer for Rue du Commerce shares followed by a squeeze-out
Over the past three years, the Group has broadened its product offering, which now encompasses all price segments: from luxury programs28 to affordable developments29 or housing for first-time buyers, as well as Serviced Residences30 (seniors, students and business travelers) and "New Neighborhood" mixed-use programs. Cogedim thus reported revenue of €949 million (+15% compared with 2011, and +79% compared with 2009) and operating profit of €100.6 million (+17% compared with 2011, and +182% compared with 2009).
In 2012, Cogedim succeeded in preserving its market share for new reservations, which have experienced the same drop as the overall market (-29%).
| 2012 | 2011 | Change | |
|---|---|---|---|
| Reservations | €861 million | €1.205 billion | -29% |
| Entry-level and midscale | €477 million | €537 million | -11% |
| High-end | €322 million | €636 million | -49% |
| Serviced residences | €62 million | €32 million | +94% |
| Revenue | €949 million | €822 million | +15% |
| €100.6 million | €86.1 million | +17% | |
| Operating cash flow | 10.6% of | 10.5% of | |
| revenue | revenue | ||
| Backlog31 | €1.414 billion | €1.62 billion | -13% |
| 18 months | 24 months | ||
| Properties for sale and future offering32 |
€4.068 billion | €3.621 billion | +12% |
Altarea Cogedim took advantage of the past three years to develop new activities that complement its traditional businesses as a developer and service provider: it now acts as an investor, fund and asset manager via the investment vehicle AltaFund33. AltaFund carried out its first investment this year by acquiring a 106,500-ft² (9,900-m²) office building on Boulevard Raspail in Paris.
Altarea Cogedim carried out three transactions34 in 2012 on surfaces totaling 1,171,000 ft² (108,800 m²) for revenue of €248 million (incl. tax) on a Group share basis. For 2012, Altarea Cogedim Entreprise reported revenue of €118.8 million (+10%) and a significant increase in operating profit, which amounted to €5.1 million (compared to €0.1 million in 2011).
28 Programs starting from <€5,000/m² in the Paris Region and <€3,600/m² in other regions
29 Operations for which the selling price is capped, after land prices have been negotiated and reduced.
30 Programs designed for seniors (under the Cogedim Club® brand), students or business travelers
31 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
32 Properties for sale include units available for sale (expressed as revenue incl. tax), and the future offering is made up of programs at the
development stage (through sales commitments, almost exclusively unilateral in nature) that have yet to be launched (expressed as revenue incl. tax)
33 In which the Group holds a stake limited to approximately 17%
34 Rue des Archives (Paris), Euromed Center (Marseille), VEFA Mercedes Benz France (Montigny)
| In € millions | FFO | 2012 Changes in value, estimated expenses and transaction costs35 |
TOTAL | FFO | 2011 Changes in value, estimated expenses and transaction costs |
TOTAL | |
|---|---|---|---|---|---|---|---|
| Brick-and-mortar retail | 190.9 | +5% | 190.9 | 182.3 | 182.3 | ||
| Online retail | 325.1 | +10% 36 | 325.1 | - | - | ||
| Residential property | 949.2 | +15% | 949.2 | 822.6 | 822.6 | ||
| Office property | 118.8 | +10% | 118.8 | 108.1 | 108.1 | ||
| REVENUE | 1,584.0 | +42% | 1,584.0 | 1,113.1 | 1,113.1 | ||
| Brick-and-mortar retail | 135.0 | -0% | 27.3 | 162.2 | 135.4 | 64.9 | 200.4 |
| Online retail | (6.0) | n/a | (7.9) | (13.9) | - | (1.7) | (1.7) |
| Residential property | 100.6 | +17% | (4.8) | 95.8 | 86.1 | (9.0) | 77.1 |
| Office property | 5.1 | n/a | (1.0) | 4.0 | 0.1 | (7.6) | (7.4) |
| Other | (2.5) | n/a | (0.6) | (3.1) | (1.7) | (0.5) | (2.3) |
| OPERATING PROFIT | 232.2 | +6% | 12.9 | 245.0 | 219.9 | 46.1 | 266.1 |
| Net borrowing costs Changes in value and profit / (loss) |
(71.7) | -9% | (3.7) | (75.5) | (78.7) | (3.1) | (81.9) |
| from disposal of financial instruments |
- | (78.4) | (78.4) | - | (80.4) | (80.4) | |
| Proceeds from the disposal of | - | 0.7 | 0.7 | (0.1) | (0.1) | ||
| investments | |||||||
| Corporate income tax | (1.9) | (29.8) | (31.6) | (0.8) | (8.8) | (9.6) | |
| NET PROFIT | 158.6 +13% | (98.4) | 60.2 | 140.4 | (46.3) | 94.1 | |
| Income attributable to equity holders of the parent |
149.7 | (93.8) | 55.9 | 134.3 | (46.0) | 88.3 | |
| Average diluted number of shares (in millions) |
10.547 | 10.241 | |||||
| FFO (GROUP SHARE) / SHARE | €14.19 +8.3% | €13.11 |
Reported revenue was up 42%, due in part to Rue du Commerce's first year of incorporation into the consolidation scope. Like-for-like, organic growth came to +13% with positive performances by all businesses (retail +5%, residential +15%, office property +10%).
In line with the stated goal, FFO37 exhibited strong growth of +11.4%, coming to €149.7 million and driven in particular by results in residential property. The retail contribution was stable, the impact of disposals being offset by the increase in rental income on a same-floor-area basis, as well as by higher external fees. The contribution of online retail was negative as a result of investments decided in 201238 and which are recognized as expenses for accounting purposes. Finally, the office property business reported renewed profitability after hitting bottom in 2011. On a per-share basis, growth reached +8.3%, coming to €14.19 after taking account of the 732,624 shares created in June 2012 for the dividend payout in shares.
Finance costs recognized as expenses declined owing to the dual effect of a slight drop in average interest rates (to 3.52%, i.e. -7 bps) and an increase in capitalized finance costs on development projects39. The interest coverage to operating cash flow ratio (ICR) stood at 3.2, compared to 2.8 in 2011.
35 Allowances for depreciation and non-current provisions, stock grants, pension provisions, staggering of debt issuance costs 36 Proforma
37 Funds From Operations, represents the result before changes in fair value, estimated non-cash expenses and transaction costs
38 Recruitments for the Galerie Marchande, technology investments (website, mobile application , IT systems) and marketing
39 Mainly Villeneuve-la-Garenne and Nîmes
Net profit was boosted by a €49.7 million (+1.9%) upward change in value for French shopping centers, and negatively impacted by a €30.1 million (-5.6%) decline in the value of international assets. Most of the variation between FFO and consolidated net income is due to hedging instruments having declined in value by €78.4 million, as well as deferred tax accounting for expenses of €29.6 million (non-cash).
Consolidated equity increased by 22% to €1.36240 billion owing to the multiple effect of the €69 million capital increase following payout of the 2012 dividend in shares41, the €109 million in TSDI taken up by APG and the takeover of Cap 3000 which contributed €159 million to equity.
The loan-to-value ratio (LTV) decreased to 49.3% (vs. 51.2%) and available liquidity increased sharply to €720 million42 thanks to €530 million in corporate lines of credit signed in 2012, including €250 million at 5- and 7 year terms issued on debt markets at competitive rates43, thus attesting market confidence in the quality of the Group's credit. The Group is thus refinancing all of its 2013 maturities and getting a head start for its upcoming refinancing program.
| 2012 | Change | |
|---|---|---|
| Net debt | €2.186 billion | +5% |
| LTV | 49.3% | -190 bps |
| ICR | 3.2x | vs. 2.8x |
| Term | 4.3 years | vs. 4.7 years |
| Average cost | 3.52% | - 7 bps |
| WCR | €265.4 million | +24% |
| WCR (% of 2012 consolidated revenue) | 16.7% | - 2.4 points |
2012 net asset value was stable or slightly up regardless of the methodology used (EPRA NAV, going-concern NAV, EPRA NNNAV). On a per-share basis, EPRA NAV44 recorded a slight drop (-3.4% to €148.6) as a result of the 732,624 shares created for the dividend payout in shares.
| In € millions | 2012 | 2011 | Change |
|---|---|---|---|
| EPRA NAV | 1,620.7 | 1,564.6 | +3.6% |
| Going concern NAV | 1,511.1 | 1,498.4 | +0.8% |
| EPRA NNNAV (liquidation NAV) | 1,425.9 | 1,421.5 | +0.3% |
Please see the business review for details regarding calculation of each NAV
| In € per share | 2012 | 2011 | Change |
|---|---|---|---|
| EPRA NAV | 148.6 | 153.7 | -3.4% |
| Going concern NAV | 138.5 | 147.2 | -5.9% |
| EPRA NNNAV (liquidation NAV) | 130.7 | 139.7 | -6.4% |
Please see the business review for details regarding calculation of each NAV
40 O/w €1.024 billion for Group share and €338 million for minority share
41 When the 2012 dividend of €9.0 per share was paid, shareholders were offered the option of subscribing new shares at a price of €94.31 per share. This operation led to the creation of 732,624 shares (76.77% take-up rate)
42 O/w €643 million in corporate sources of funds (cash and confirmed authorizations) and €77 million in unused loan authorizations secured against specific developments
43 €100 million in the form of five-year bonds at 3.65% and €150 million through a seven-year private debt placement at 3.97%
44 EPRA NAV: Market value of equity from the perspective of operations as a going concern
Considering the economic environment and the decision to continue future-looking investments to meet its objective of a 50% increase in FFO by 2017, Altarea Cogedim is anticipating for 2013 a slight drop in FFO, as well as a continued reduction in LTV. The Group also maintains its objective of an unchanged dividend of €10.0 per share.
The Group's financial communication takes place after market.
This press release is accompanied by a presentation available for download on the Financial information page of Altarea Cogedim's website.
A French-language audiocast of the meeting held to present the 2012 results will be available as of March 1st 2013 on the Financial information page of Altarea Cogedim's website.
Listed on Compartment A of NYSE Euronext Paris (SRD Long Only), 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 required know-how in each sector to design, develop, commercialize and manage made-to-measure property products. By acquiring Rue du Commerce, a leader in e-commerce in France, Altarea Cogedim became the first multi-channel property company.
Altarea Cogedim holds a shopping center portfolio of € 3.3 billion, with a market capitalization of approximately €1.3 billion in early 2013.
Eric Dumas, Chief Financial Officer [email protected], tel: + 33 1 44 95 51 42
Nathalie Bardin, Director of Communication nbardin@altareacogedim, tel: +33 1 56 26 25 36
Agnès Villeret, Analyst and Investor Relations [email protected], tel: + 33 1 53 32 78 95
Servane Taslé, Press Relations [email protected], tel: + 33 1 53 32 78 94
This press release does not constitute an offer to sell or solicitation of an offer to purchase Altarea shares. For more detailed information concerning Altarea, please refer to the documents available on our website: www.altareacogedim.com.
This press release may contain forward-looking declarations. 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 statements.
1.3. Office property
Altarea Cogedim is the first retail REIT to develop a global multi-channel business model. One of the largest shopping center owners and developers in France, managing a €4-billion asset portfolio, the Group is also a leading French e-retailer thanks to its brand Rue du Commerce, whose online business volume came to €423 million.
With its unique offering combining traditional and web-based retail, Altarea Cogedim confirms its position as a pioneer in multi-channel retail, establishing itself as the only retail REIT to provide customers and retailers with overall solutions by offering them both brick-and-mortar and online retail space.
Consumer trends are in the midst of a profound transformation as a result of somber economic conditions, as well as the clear generalization of online shopping. The emergence of new mobile devices (smartphones and computer tablets) has intensified this development. As such:
The number of sites increased by 17%, reaching a total of 117,500 active merchants at the end of 2012.
With an estimated €1 billion in sales, mcommerce already accounts for 20% of internet sales.
45 Source: Banque de France.
46 Source: Le cercle des épargnants.
47 Source: Fevad Review of e-commerce in 2012.
KEY FIGURES AT DECEMBER 31, 2012
| Operating | Under development | |||||
|---|---|---|---|---|---|---|
| December 31, 2012 | GLA m² | Current gross rental income49 , in € millions |
Appraisal value50 , in € millions |
GLA m² | Provisional gross rental income, in € millions |
Net investments51 , in € millions |
| Controlled assets52 | 744,728 | 197.9 | 3,216 | 411,100 | 121.7 | 1,417 |
| Group share | 616,738 | 158.2 | 2,563 | 243,000 | 71.8 | 838 |
| Share of minority interests | 127,989 | 39.6 | 653 | 168,100 | 49.8 | 580 |
| Minority interests | 22,538 | 6.8 | 59 | - - |
- | |
| Management for third parties53 | 211,600 | 41.8 | 683 | - - |
- | |
| Total assets under management |
978,866 | 246.5 | 3,958 | 411,100 | 121.7 | 1,417 |
Net rental income (IFRS) came to €145.8 million at December 31, 2012, a 2.1% drop compared with 2011 as a result of disposals. Like-for-like54 , rental income rose 4.5%.
By source, the change in net rental income breaks down as follows:
| In € millions | ||
|---|---|---|
| Net rental income at Dec. 2011 | 148.8 | |
| Centers opened | 0.9 | +0.6% |
| Disposals | (10.1) | +6.8% |
| Acquisitions | - | - |
| Redevelopments | (0.6) | -0.4% |
| Like-for-like change | 6.7 | +4.5% |
| Total change in net rental | ||
| income | (3.1) | -2.1% |
| Net rental income Dec. 2012 | 145.8 |
2012 was marked by the delivery of the eastern extension of the Gramont regional shopping center in Toulouse. In addition to the Auchan "Drive," this extension includes the creation of 17 new shops and an addition of approximately 7,000 m² GLA (75,000ft²) to the Auchan superstore.
€108 million in assets were sold in 201255 . Disposals include:
These disposals, together with those carried out in 2011, resulted in a €10.1 million drop in net rents in 2012.
The impact of redevelopments primarily concerns two centers. The first is Massy, whose surfaces are gradually being vacated in preparation for future redevelopment work. Regional authorization has already been granted for this project. The second is Aubergenville, for which the redevelopment plan has been revised to include an entertainment offering.
| Change | % | |
|---|---|---|
| France (84% of the portfolio in value | +€8.5 mil. | |
| terms) | +7.3% | |
| International (16% of the portfolio) | -€1.8 mil. | -5.5% |
| Total Portfolio | +€6.7 mil. | +4.5% |
The particularly pronounced increase in France (+7.3%) was driven for the most part by the major regional shopping centers (Cap 3000, Toulouse Gramont57, Bercy Village, etc.), where asset
49 Rental value on signed leases at January 1, 2013.
50 Including transfer duties.
51 Including interest expenses and internal costs.
52 Assets in which Altarea holds shares and for which Altarea exercises operational control.
53 Assets held entirely by third parties who entrusted Altarea with a management mandate for an initial period of three to five years, renewable annually.
54 Excluding impact of openings, acquisitions, disposals and redevelopments.
55 At 100% including transfer duties.
56 Excluding impact of openings, acquisitions, disposals and redevelopments.
57 Excluding the eastern extension.
management initiatives were especially intense (with a tenant turnover rate58 greater than 11%).
Regarding rental income abroad, most of the 5.5% drop concerned the Due Torri shopping center (Lombardy), where a single tenant incident involving a household equipment retailer generated a €1.3 million loss. The drop in net rental income also reflects the impact of the new IMU59 tax in Italy, which is only partially passed on to tenants.
| Data at 100% | Sales (incl. tax)60 |
Footfall61 |
|---|---|---|
| Total shopping centers | +2.0 | +3.2% |
| CNCC index | +0.2% | -1.1% |
Rental activity (gross rental income)
| Number | of leases New rent | Old rent |
Change | |
|---|---|---|---|---|
| Letting | 173 | €17.7 m | - | n/a |
| Lease renewals / Re-lettings |
76 | €8.8 m | €6.8 m | +29% |
| Total 2012 | 249 | €26.5 m | €6.8 m | n/a |
| Note: 2011 Lease renewals / Re-lettings: |
Lease expiry schedule
| In € mill., at 100% |
By lease expiry date |
% of total |
By 3-year termination option |
% of total |
|---|---|---|---|---|
| Past years | 13.8 | 8.3% | 16.1 | 9.6% |
| 2013 | 3.9 | 2.4% | 19.8 | 11.8% |
| 2014 | 10.7 | 6.4% | 43.5 | 25.9% |
| 2015 | 4.8 | 2.9% | 30.6 | 18.3% |
| 2016 | 5.0 | 3.0% | 30.8 | 18.4% |
| 2017 | 19.3 | 11.5% | 9.2 | 5.5% |
| 2018 | 23.0 | 13.7% | 7.1 | 4.2% |
| 2019 | 21.1 | 12.6% | 0.6 | 0.3% |
| 2020 | 27.9 | 16.6% | 2.6 | 1.5% |
| 2021 | 17.8 | 10.6% | 6.3 | 3.8% |
| 2022 | 17.7 | 10.6% | 0.0 | 0.0% |
| 2023 | 0.6 | 0.4% | 0.0 | 0.0% |
| > 2023 | 1.9 | 1.1% | 1.0 | 0.6% |
| Total | 167.6 | 100% | 167.6 | 100% |
58 Rental income from renewed/re-let leases, limited to total rental income at the start of the period.
Occupancy cost ratio62, bad debt ratio63 and financial vacancy rate64
| 2012 | 2011 | 2010 | |
|---|---|---|---|
| Occupancy cost ratio | 10.1% | 9.6% | 9.4% |
| Bad debts ratio | 1.5% | 1.6% | 1.9% |
| Financial vacancy rate | 2.8% | 3.9% | 3.0% |
The international shopping center portfolio comprises six Italian assets, mostly located in Northern Italy, and one Spanish asset located in Barcelona.
Operational indicators remain positive in Italy in spite of a very unfavorable economic climate, with merchant sales stable at +0.1%, an occupancy cost ratio of 12.6% and a financial vacancy rate of 2.6%.
Excluding the Due Torri incident (see above), the bad debt ratio remains at 4.4%.
In Spain, merchant sales recorded a 10.0% drop. The other operational indicators clearly outperformed the market, with an occupancy cost ratio of 10.0%, a financial vacancy rate of 3.0%, no bad debt (-0.1%) and a 12% rent uplift upon renewals/re-lettings.
Over the past few years, the Group has significantly developed its management business for third parties. This management concerns both:
At the end of 2012, these assets accounted for €41.8 million in rental income, for an overall value of nearly €683 million. They have contributed substantially to increasing Altarea France's revenues from third parties.
59 Imposta Municipale Unica (Municipal property tax), a land tax that entered into force in Italy on January 1, 2012.
60 Lfl, revenue development for shopping center tenants.
61 Shopping centers equipped with the Quantaflow system.
62 Calculated as rent and expenses charged to tenants (incl. taxes) over the past 12 months (including rent reductions), in proportion to sales over the same period (incl. taxes) at 100% in France.
63 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.
64 Estimated rental value (ERV) of vacant lots as a percentage of total estimated rental value. Excluding property being redeveloped, at 100% in France.
| In €millions | 2009 | 2010 | 2011 | 2012 | CAGR |
|---|---|---|---|---|---|
| External services | 10.4 | 13.6 | 16.5 18.065 | +20% |
Combining controlled assets and assets managed for third parties, Altarea manages a total of 1,700 leases in France and 500 in Italy and Spain.
| Asset format (in € millions) |
2012 | 2011 | Change | |
|---|---|---|---|---|
| France | Average value |
€79 mil. | €68 mil. | +15% |
| Number of assets |
34 | 39 | -13% | |
| Interna -tional |
Average value |
€77 mil. | €81 mil. | -5% |
| Number of assets |
7 | 7 | - |
| Asset format (in € millions) |
2012 | 2011 | Change | ||
|---|---|---|---|---|---|
| Regional shopping centers |
1,742 | 54% | 1,661 | 51% | +3 pts |
| Large Retail Parks (Family V.) |
697 | 22% | 684 | 21% | +1 pt |
| Nearby / downtown | 777 | 24% | 893 | 28% | -4 pts |
| TOTAL | 3,216 | 100% | 3,238 100% |
| Geographical distribution (in € millions) |
2012 | 2011 | Change | ||
|---|---|---|---|---|---|
| Paris Region | 1,039 | 32% | 1,027 | 32% | - |
| PACA / Rhône Alpes / South |
1,221 | 38% | 1,224 | 38% | - |
| Other French regions |
418 | 13% | 420 | 13% | - |
| International | 538 | 17% | 567 | 18% | -1 pt |
| TOTAL | 3,216 | 100% | 3,238 100% |
Following nearly 15 years of legal proceedings, a December 26, 2012 decision by the Council of State definitively granted SCI Bercy Village a building permit for the creation of the shopping center of which it is the owner. This decision puts an end to the dispute regarding the legality of the initial authorizations for the Bercy Village shopping center.
The extention project regarding Cap 3000 shopping center was decided at the end of 2012. For this purpose, Altablue (holding owning the center) raised its equity to €409 million, which led to the rewriting of the governance agreement signed with APG and Predica in 2010.
Following these transactions, Altarea's share in Altablue reached 61.8% of the asset, which is accounted on a global integration basis in the Group's consolidated accounts, with an impact on the rental income starting January 1st, 2013.
At December 31, 2012, controlled assets were valued at €3.216 billion, a slight drop compared with 2011 owing to disposals.
| In € millions | Gross rental income |
Value |
|---|---|---|
| TOTAL at Dec. 31, 2011 | 192.7 | 3,238 |
| Centers opened | 1.8 | 42 |
| Acquisitions | - | - |
| Disposals | (7.1) | (109) |
| Like-for-like change | 10.4 | 45 |
| Sub-total | 5.1 | (23) |
| TOTAL at Dec. 31, 2012 | 197.9 | 3,216 |
| o/w Group share | 158.2 | 2,563 |
| o/w share of minority interests |
39.6 | 653 |
| Like-for-like change | In € millions | % |
|---|---|---|
| France | 73 | +2.8% |
| International | (28) | -5.0% |
| TOTAL | 45 | +1.4% |
The decrease in value of Italian assets is due in particular to the impact of the new IMU tax.
In 2012, the average weighted capitalization rate remained virtually stable at 6.20% (+5 bps).
65 Including €13.5 million in fees from rental management for third parties and €4.5 million in development fees for programs built with third parties.
66 Assets controlled by the Group, in value terms including transfer duties.
67 The capitalization rate is the net rental yield relative to the appraisal value excluding transfer duties.
| Average net capitalization rate at 100% |
2012 | 2011 |
|---|---|---|
| France | 6.10% | 6.05% |
| International | 6.70% | 6.63% |
| TOTAL portfolio | 6.20% | 6.15% |
Asset valuation for Altarea Cogedim Group is entrusted to DTZ Eurexi and RCG (for shopping center properties located in France and Spain, hotels and business franchises) and to Retail Valuation Italia (for properties located in Italy). The appraisers use two methods:
Rental income takes into account notably:
These valuations are conducted in accordance with the criteria set out in the Red Book – Appraised and Valuation Standards published by the Royal Institution of Chartered Surveyors in May 2003. The surveyors' assignments were all carried out in accordance with the recommendations of the COB/CNC "Barthes de Ruyter working group" and fully comply 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 determined in advance and 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 by appraiser breaks down as follows:
| Expert | Assets | As % of value incl. transfer duties |
|---|---|---|
| RCG | France | 41% |
| DTZ | France & Spain | 46% |
| Retail Value Italia | Italy | 13% |
At December 31, 2012, the volume of projects under development by Altarea Cogedim represented a forecast net investment68 of approximately €838 million on a Group share basis, for potential rental income of €72 million, i.e., a forecast gross return on investment of 8.6%.
| December 31, 2012 | GLA m² | Forecast gross rental income, in € m. |
Invest ments, in € m. |
Forecast return |
|---|---|---|---|---|
| At 100% | ||||
| Retail Parks & Family V. | 112,200 | 16.8 | 198 | 8.5% |
| Shopping centers | 298,900 | 104.9 | 1,219 | 8.6% |
| Total | 411,100 | 121.7 | 1,417 | 8.6% |
| o/w redevelopments/ extensions |
47,500 | 28.3 | 310 | 9.1% |
| o/w creations | 363,600 | 93.4 | 1,107 | 8.4% |
| Group share | ||||
| Retail Parks & Family V. | 83,000 | 13.0 | 156 | 8.4% |
| Shopping centers | 160,000 | 58.8 | 682 | 8,6% |
| Total | 243,000 | 71.8 | 838 | 8,6% |
| o/w redevelopments/ extensions |
32,500 | 16.5 | 193 | 8,5% |
| o/w creations | 210,500 | 55.3 | 645 | 8.6% |
Altarea Cogedim only reports on projects that are underway or at the development stage.69 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 is made to commence work only once a sufficient level of pre-letting has been reached. In light of the progress achieved in 2012 from both an administrative and commercial point of view, most pipeline projects should be delivered between 2014 and 2016.
68 Including interest expenses and internal costs.
69 Projects underway: properties under construction.
Projects under development: projects either fully or partly authorized, where the land has been acquired or for which contracts have been signed, but on which construction has not yet begun.
At December 31, 2012, the level of commitments for these projects came to 28% (€269 million) on a Group share basis.
| In € millions (net) | At 100% | Group Share |
|---|---|---|
| Paid out | 297 | 216 |
| Committed, not yet paid out | 97 | 52 |
| Total commitments | 395 | 269 |
Investments carried out in 2012 for projects under development
Over the year, Altarea Cogedim invested70 €118 million on a Group share basis in its project portfolio.
These investments mainly concern the two shopping centers under development (Villeneuvela-Garenne and the Nîmes Costières Family Village) as well as properties undergoing redevelopment and/or extension (Toulouse, Cap 3000, Bercy and Massy).
For projects under development, authorizations are progressing as forecast in operational time lines.
| In € millions | 12-31-2012 | 12-31-2011 | |
|---|---|---|---|
| Rental income | 160.4 | 162.1 | |
| Net rental income | 145.8 | -2% | 148.8 |
| % of rental revenues | 90.9% | 91.8% | |
| External services71 | 18.0 +10% | 16.5 | |
| Production capitalized | 12.2 | 15.1 | |
| & held in inventory | |||
| Operating expenses | (50.5) | -5% | (53.1) |
| Net overhead expenses | (20.3) | (21.5) | |
| Share of affiliates72 | 9.4 | 8.2 | |
| Operating cash flow | 135.0 | -0% | 135.4 |
| % of rental income | 84.2% | 83.5% |
Operating cash flow remained at the same level as at December 31, 2011. The negative impact of disposals was offset by an increase in external services to third parties (partnerships, shopping centers sold but which Altarea Cogedim continues to manage, etc.) as well as by controlled operating expenses.
70 Change in non-current assets net of changes in amounts payable to suppliers of non-current assets.
71 Including €13.5 million in fees from rental management for third parties and €4.5 million in development fees for programs built with third parties.
72 Companies consolidated using the equity method (Gare du Nord, SEMMARIS-Rungis).
| O/w Altarea | share | O/w third-party | |||||
|---|---|---|---|---|---|---|---|
| Center | GLA m² | GRI (in € m)73 |
Value (in € m)74 |
Share | Value (in € m)74 |
Share | Value (in € m)74 |
| Toulouse Occitania | 56,200 | 100% | - | ||||
| Paris - Bercy Village | 22,824 | 85% | 15% | ||||
| Gare de l'Est | 5,500 | 100% | - | ||||
| CAP 3000 | 64,500 | 33% | 67% | ||||
| Thiais Village | 22,324 | 100% | - | ||||
| Carré de Soie | 60,800 | 50% | 50% | ||||
| Massy | 18,200 | 100% | - | ||||
| Lille - Les Tanneurs & Grand' Place | 25,480 | 100% | - | ||||
| Aix en Provence | 3,729 | 100% | - | ||||
| Nantes - Espace Océan | 11,200 | 100% | - | ||||
| Mulhouse - Porte Jeune | 14,769 | 65% | 35% | ||||
| Strasbourg - L'Aubette & Aub. Tourisme Strasbourg-La Vigie |
8,400 16,232 |
65% 59% |
35% 41% |
||||
| Flins | 9,700 | 100% | - | ||||
| Toulon - Grand' Var | 6,336 | 100% | - | ||||
| Montgeron - Valdoly | 5,600 | 100% | - | ||||
| Chalon Sur Saone | 4,001 | 100% | - | ||||
| Toulon - Ollioules | 3,185 | 100% | - | ||||
| Tourcoing - Espace Saint Christophe | 13,000 | 65% | 35% | ||||
| Okabé | 38,615 | 65% | 35% | ||||
| Villeparisis | 18,623 | 100% | - | ||||
| Herblay - XIV Avenue | 14,200 | 100% | - | ||||
| Pierrelaye (RP) | 9,750 | 100% | - | ||||
| Gennevilliers (RP) | 18,863 | 100% | - | ||||
| Family Village Le Mans Ruaudin (RP) | 23,800 | 100% | - | ||||
| Family Village Aubergenville (RP) | 38,620 | 100% | - | ||||
| Brest - Guipavas (RP) | 28,000 | 100% | - | ||||
| Limoges (RP) | 28,000 | 75% | 25% | ||||
| Misc. (6 assets) | 34,170 | n/a | n/a | ||||
| Sub-total France | 624,621 | 160.8 | 2,677 | 2,024 | 653 | ||
| Barcelone - San Cugat | 20,488 | 100% | - | ||||
| Bellinzago | 20,491 | 100% | - | ||||
| Le Due Torri | 33,680 | 100% | - | ||||
| Pinerolo | 8,108 | 100% | - | ||||
| Rome - Casetta Mattei | 15,385 | 100% | - | ||||
| Ragusa | 12,609 | 100% | - | ||||
| Casale Montferrato | 8,288 | 100% | - | ||||
| Sub-total International | 120,107 | 37.0 | 538 | 538 | - | ||
| Controlled assets | 744,728 | 197.9 | 3,216 | 2,563 | 653 | ||
| Paris - Les Boutiques Gare du Nord | 3,750 | 40% | 60% | ||||
| Roubaix - Espace Grand' Rue | 13,538 | 33% | 67% | ||||
| Châlons - Hôtel de Ville | 5,250 | 40% | 60% | ||||
| Minority interests | 22,538 | 6.8 | 59 | 22 | 37 | ||
| Ville du Bois | - | 100% | |||||
| Pau Quartier Libre | 43,000 33,000 |
- | 100% | ||||
| Brest Jean Jaurès | 12,800 | - | 100% | ||||
| Brest - Coat ar Gueven | 13,000 | - | 100% | ||||
| Thionville | 8,600 | - | 100% | ||||
| Bordeaux - Grand' Tour | 11,200 | - | 100% | ||||
| Vichy | 13,794 | - | 100% | ||||
| Reims - Espace d'Erlon | 12,000 | - | 100% | ||||
| Toulouse Saint Georges | 14,500 | - | 100% | ||||
| Chambourcy (RP) | 33,500 | - | 100% | ||||
| Bordeaux - St Eulalie (RP) | 13,400 | - | 100% | ||||
| Toulon Grand Ciel (RP) | 2,800 | - | 100% | ||||
| Assets managed for third parties | 211,600 , |
41.8 | 683 | - | 683 | ||
| Total Actifs en gestion | 978,866 | 246.5 | 3,958 | 2,584 | 1,373 | ||
| (RP) Retail park |
73 Gross rental income, Rental value on signed leases at January 1, 2013.
74 Including transfer duties.
BREAKDOWN OF SHOPPING CENTERS UNDER DEVELOPMENT AT DECEMBER 31, 2012
| At 100% | Group share |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| Center | Creation/ Redev./ Extension |
GLA created (m²) |
GRI (in € m) |
Net invest. 75 (in € m) |
Return | GLA created (m²) |
GRI (in € m) |
Net invest.75 (in € m) |
Return |
| Family Village Le Mans 2 | Creation | 16,200 | 16,200 | ||||||
| Family Village Aubergenville 2 | Extension | 10,200 | 10,200 | ||||||
| Family Village Roncq | Creation | 58,400 | 29,200 | ||||||
| Family Village Nîmes | Creation | 27,400 | 27,400 | ||||||
| Retail Parks | 112,200 | 16.8 | 198 | 8.5% | 83,000 | 13.0 | 156 | 8.4% | |
| Villeneuve la Garenne La Valette du Var |
Creation Creation |
63,300 38,400 |
31,650 38,400 |
||||||
| Massy -X% | Redev./Extensions | 7,400 | 7,400 | ||||||
| Cap 3000 | Redev./Extensions | 18,800 | 6,300 | ||||||
| Coeur d'Orly | Creation | 123,000 | 30,750 | ||||||
| Aix extension | Extension | 4,800 | 2,400 | ||||||
| Shopping centers France | 255,700 | 88.7 | 1,050 | 8.4% | 116,900 | 42.6 | 513 | 8.3% | |
| Ponte Parodi (Genoa) | Creation | 36,900 | 36,900 | ||||||
| Le Due Torri (Lombardy) | Extension | 6,200 | 6,200 | ||||||
| Shopping centers International | 43,100 | 16.2 | 169 | 9.6% | 43,100 | 16.2 | 169 | 9.6% | |
| Total at December 31, 2012 | 411,100 | 121.7 | 1,417 | 8.6% | 243,000 | 71.8 | 838 | 8.6% | |
| o/w Redev./Extensions | 47,500 | 28.3 | 310 | 9.1% | 32,500 | 16.5 | 193 | 8.5% | |
| o/w Assets creation | 363,600 | 93.4 | 1,107 | 8.4% | 210,500 | 55.3 | 645 | 8.6% |
75 Including interest expenses and internal costs.
Altarea Cogedim Group is one of the leading names in e-commerce in France thanks to its brand Rue du Commerce, whose 2012 business volume came to €423 million (+10%).
In 2012, e-commerce reported sales of €45 billion in France (+19%). General merchandise websites reported a 7% like-for-like increase in sales77 .
This growth was driven in large part by the creation of 17,000 new retail websites (+17%), for a total of 117,500 retail websites in France. Of this total, fewer than 100 sites boast more than €100 million in business.
M-commerce is experiencing strong growth as well, with estimated business volume of €1 billion in 2012 (2.5 times 2011 sales, estimated at €400 million). M-commerce now accounts for 2% of the Internet sales.
Visitor numbers (total number of connections to the site)78
RueduCommerce.com recorded a 17% increase in traffic year-on-year, from 156 million to 181 million visitors over the year (an average of 15.1 million visitors per month). This growth exceeds that of all pure play general merchandise sites, which came to 9%79 .
7.8% of these visitors used mobile devises: dedicated applications or site navigation (classic or mobile versions) with smartphones or tablets.
Average number of unique visitors (UV) per month (internet users having visited the site at least once over a one-month period)80
Rue du Commerce further maintained its position as a leading site, ranking among the "Top 10" general e-retailer websites in France81 .
| General retailer websites | Average UV per month in 2012, |
|
|---|---|---|
| in thousands | ||
| 1 | Amazon | 12,428 |
| 2 | Cdiscount | 9,168 |
| 3 | Fnac | 8,592 |
| 4 | PriceMinister | 7,544 |
| 5 | La Redoute | 7,371 |
| 6 | Carrefour | 6,667 |
| 7 | Vente-privée.com | 6,047 |
| 8 | RueduCommerce.com | 5,095 |
| 9 | 3 Suisses | 4,469 |
| 10 | Pixmania | 4,339 |
This "Top 10" ranking may exhibit little progress compared with 2011, but it is nevertheless important to note the significant growth of websites created by brick-and-mortar retailers. Indeed, 10 of these retailers are now included among the Top 40 leading e-commerce sites in France82 (compared with 7 in 2011). This development endorses Altarea Cogedim's vision of being active on both channels (brick-and-mortar and online), just like its retail clients.
Initially an online retailer of high-tech products, Rue du Commerce is the first site to have launched a marketplace in France (the "Galerie"). The Galerie's operating practices are similar in many respects to those of a shopping center.
In 2012, the site reported €423 million in business volume (+10%), with 75% generated by own-brand distribution and 25% by the Galerie Marchande.
| In € millions | 2012 | 2011 Change | |
|---|---|---|---|
| Distribution | 315.7 | 289.0 | +9% |
| Galerie merchants' sales | 107.5 | 94.7 | +14% |
| Business volume | 423.2 | 383.7 | +10% |
Rue du Commerce reported 2.4 million orders in 2012, for an average basket of approximately €201.
2012 was the year Rue du Commerce was incorporated into Altarea Cogedim and implemented a significant investment program. The principal technological innovations and "multichannel" experiences include:
76 FEVAD 2012 E-commerce review.
77 FEVAD iCE 40 survey (like-for-like growth of leading sites). 78 Xiti data.
79 Médiamétrie//NetRating data, January-November 2012 average.
80 Médiamétrie//NetRating data, January-November 2012 average.
81 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 November 2012.
82 FEVAD iCE 40 survey
France. The application was downloaded more than 100,000 times by late December, less than two months after its launch,
In 2007, Rue du Commerce launched the "Galerie," an online marketplace based on the RueduCommerce.com site whereby participating online merchants are provided with a sales platform in exchange for a percentage of the partners' sales.
| 2012 | 2011 | 2010 | CAGR | |
|---|---|---|---|---|
| Partner merchants' sales (in € millions excl. tax) |
107.5 | 94.7 | 67.9 | +26% |
| RDC commissions | 9.4 | 7.5 | 5.0 | +38% |
| Commission rate | 8.8% | 8.0% | 7.3% | +1.5pt |
| No. of orders (in millions) |
1.10 | 0.93 | 0.74 | +22% |
| Average basket (incl. tax) |
€130.5 | €138.2 | €128.8 | +€1.60 |
The Galerie's business volume increased sharply over the year (+14% compared with 2011). This boost is due in particular to strong growth in the fashion, household goods, gardening and DIY departments.
The average commission rate is 8.8%, up 0.8 points compared with 2011 thanks to a more lucrative product mix (mainly fashion, household goods and gardening, the Galerie's principal departments aside from consumer electronics).
The Group's medium-term objective is to attract the majority of retailers operating in its brick-andmortar shopping centers towards the Rue du Commerce marketplace. To this end, Rue du Commerce launched the "shops-in-shop" initiative in 2012 (brand-specific spaces included on the RueduCommerce.com website). These spaces operate in a way relatively similar to department store corners. This unique offer provides merchants with both brick-and-mortar and online retail space. It serves to set the Group apart and ensure future growth as the multi-channel business model continues its lively development.
In a highly depressed French market (2.8% drop in sales of high-tech products)84, Rue du Commerce's high-tech sales exhibited strong growth, amounting to €315.7 million (+9%), for a substantial average basket (€241 incl. tax). This outperformance attests to Rue du Commerce's expertise in this sector.
| 2012 | 2011 | Change | |
|---|---|---|---|
| Distribution revenue | |||
| (in € millions excl. tax) | 315.7 | 289.0 | +9% |
| No. of orders (in millions) | 1.29 | 0.93 | +5% |
| Average basket (incl. tax) | €241 | €237 | +2% |
| In € millions | 12-31-2012 | 12-31-2011 |
|---|---|---|
| Distribution revenues Purchases consumed and other |
315.7 +9% (291.3) |
289.0 (262.1) |
| Gross margin | 24.4 -9% | 26.9 |
| % of revenues | 7.7% | 9.3% |
| Galerie Marchande commissions |
9.4 | 7.5 |
| Net overhead expenses | (39.9) | (28.0) |
| Operating cash flow | (6.0) | 6.4 |
| % of revenues | -1.9% | 10.5% |
A number of investments - technical (site, mobile application, etc.), marketing and human (recruitment of experts) - were carried out for Rue du Commerce in FY 2012 to shore up its business and speed its development, particularly through growth of the Galerie Marchande.
These investments had a negative short-term impact on 2012 operating cash flow.
From an operational point of view, the Group aims for €1 billion in business volume in four to five years and a "Top 5" ranking among e-commerce sites in France. In financial terms, renewed profitability is one of the Group's medium-term objectives.
2012 was also marked by Altarea Cogedim Group's acquisition of stakes held by minority shareholders (20%) in Altacom, holding company of Rue du Commerce.
Furthermore, a compulsory delisting of Rue du Commerce (with the right to squeeze out minority shareholders) was initiated by Altacom on February 27, 2013. This event completed Rue du Commerce's incorporation into Altarea Cogedim Group.
83 And 50 additional merchants under discussion.
84 In the first 11 months of the year (source: GfK).
2. Residential
2012 saw a sharp drop in sales activity for new housing, with approximately 73,700 lots sold85 . This represents the lowest level of activity in 16 years, with sales down about 28% compared to the 103,300 lots sold in 2011.
Several factors came together: a difficult economic climate that shook buyer trust, tightening of credit conditions despite low interest rates, diminishing tax incentives as of the end of 2011 and uncertainty over the direction the tax and regulatory environment would take.
Slackening construction starts (-24%86) and administrative authorizations (-12%87) in 2012 will further compound the lack of new housing.
This shortage, estimated at nearly 1 million in France, has made housing a real public policy issue, whether concerning affordable housing for all or private investment. Two systems to support new housing have already entered into force since January 1, 2013: the reform of the zero-interest loan (PTZ+) and the "Duflot" buy-to-let investment tax-break scheme. The latter will feature stronger incentives than the Scellier scheme (18% reduction in taxes verses 13% for Scellier) and will have a greater social dimension (caps on rent and tenant resources).
Discussions are also currently underway to encourage institutional investors to return to the new housing market.
Cogedim's "brand capital" is founded upon a strategy of enlarging its customer base. Relying on its teams and their proven adaptability, Altarea Cogedim provides solutions tailored to the market. It is resolutely oriented towards entry-level and midscale products, while always remaining true to its principle of quality.
For several years now, Cogedim has enlarged its housing offering to align with demand trends, all while taking advantage of its fundamental strengths. Today, Cogedim's offering includes five ranges that may be grouped as follows:
Altarea Cogedim is also developing a broad range of serviced residences:
In 2012, Cogedim gave priority to midscale programs for which market demand is high: 71% of commercial launches concerned these product ranges.
Reservations89 in line with the market in 2012
Reservations in value terms and in number of lots90
Group reservations in 2012 amounted to €861 million (incl. tax) and 3,197 lots.
| 2012 | 2011 | Change | |
|---|---|---|---|
| Individual reservations | €646 mil. | €843 mil. | -23% |
| Block reservations | €215 mil. | €362 mil. | -41% |
| Total in value terms | €861 mil. | €1.205 bil. | -29% |
| Individual reservations | 2,103 lots | 2,523 lots | -17% |
| Block reservations | 1,094 lots | 1,674 lots | -35% |
| Total in no. of lots | 3,197 lots | 4,197 lots | -24% |
88 Operations with pre-agreed selling prices with local authorities, in exchange of affordable land. In 2012, Altarea Cogedim developed affordable housing operations both in the Paris Region (Saint Ouen, Nanterre, Bagneux, etc.) and outside of Paris (Nice Meridia).
85 Source: FPI estimate, press release dated February 14, 2013. 86 Source: Ministry of Ecology: Figures and Statistics - December 2012 - change in Q3 2012 compared to the same period in 2011.
87 Same as previous note.
89 Reservations net of cancellations.
90 Consolidated share.
The difference between the drop in value terms (-29%) and in number of lots (-24%) reflects increased reservations in the two midscale ranges, which feature a lower average sale price per unit.
Affordable housing sales accounted for 63% of reservations in 2012 (in value terms), attesting to the attractiveness of real estate as a safe haven.
Block reservations for institutional investors dropped 41% compared with 2011, which stood out for extremely high sales volumes to medical establishments in the Paris Region.
| In € millions (incl. tax) |
Mid scale |
High -end |
Serviced resi dences |
Total | % by region |
|---|---|---|---|---|---|
| Paris region | 274 | 172 | 25 | 471 | 55% |
| PACA | 85 | 38 | 3 | 126 | 15% |
| Rhône-Alpes | 74 | 83 | 0 | 157 | 18% |
| Grand Ouest | 45 | 29 | 34 | 107 | 12% |
| TOTAL | 477 | 322 | 62 | 861 | 100% |
| % by range | 56% | 37% | 7% |
As a consequence of the above-mentioned launch strategy, the percentage of reservations in "A and B" ranges was substantially greater than reservations in high-end ranges.
The monthly absorption rate of new operations launched in "A and B" ranges came to 31% on average over the year, and take-up increased by 4% in value terms in comparison with 201191, despite a very sharp drop in the national market for the same ranges. Although this rise does not completely offset the overall drop in demand for high-end products, it is perfectly in line with the shift in demand, thus allowing Cogedim to maintain its market share.
| In € millions (incl. tax) |
Mid scale |
High -end |
Serviced resi dences |
Total | % by region |
|---|---|---|---|---|---|
| Paris region | 177 | 302 | 26 | 505 | 59% |
| PACA | 78 | 26 | - | 104 | 12% |
| Rhône-Alpes | 66 | 97 | - | 164 | 19% |
| Grand Ouest | 46 | 20 | 20 | 87 | 10% |
| TOTAL | 367 | 446 | 46 | 860 | 100% |
| % by range | 43% | 52% | 5% | ||
| 2011 excl. Laennec | 879 | ||||
| Change | -2% | ||||
| 2011 Total | 1,070 |
Excluding the exceptional impact of the Laennec program in 2011, the level of notarized sales remained stable between 2011 and 2012.
Change -20%
Sales and net property income have grown significantly (15% and 26%, respectively) thanks to Cogedim's market share gains over the past three years.
| In € millions (incl. tax) |
Mid scale |
High -end |
Serviced resi dences |
Total | % by region |
|---|---|---|---|---|---|
| Paris region | 177 | 413 | 8 | 598 | 63% |
| PACA | 72 | 41 | - | 113 | 12% |
| Rhône-Alpes | 50 | 86 | 4 | 139 | 15% |
| Grand Ouest | 81 | 7 | 10 | 98 | 10% |
| TOTAL | 380 | 547 | 22 | 949 | 100% |
| % by range | 40% | 58% | 2% | ||
| 2011 | 822 | ||||
| Change | +15% |
| In € millions | 12-31-2012 | 12-31-2011 | |
|---|---|---|---|
| Sales | 948.6 | +15% | 821.5 |
| Cost of sales | (820.7) | (719.9) | |
| Net property income | 127.8 | +26% | 101.7 |
| % of revenues | 13.5% | 12.4% | |
| Production held in | |||
| inventory | 57.4 | 63.0 | |
| Net overhead expenses | (84.3) | (83.1) | |
| Other | (0.3) | 4.5 | |
| Operating cash flow | 100.6 | +17% | 86.1 |
| % of revenues | 10.6% | 10.5% |
The operating margin level was stable at 10.6%: business growth was accompanied by tight control of overhead expenses, in spite of future-looking investments.
At the end of 2012, the residential backlog94 amounted to €1.414 billion, equal to 18 months of sales. This level provides the Group with continued excellent visibility as to its future residential development income.
91€477 million in 2012 vs. €460 million in 2011.
92 Revenues recognized according to the percentage-ofcompletion method in accordance with IFRS standards. The percentage of completion is calculated according to the stage of construction not including land.
93 Net property income is calculated after interest, after marketing and advertising fees and expenses.
94 The backlog comprises revenues excluding tax from notarized sales to be recognized on a percentage-of-completion basis and from individual and block reservations to be notarized.
| In € millions (excl. tax) |
Notarized revenues not reco gnized |
Sales reserved but not notarized |
Total | % by region |
No. of months |
|---|---|---|---|---|---|
| Paris Region | 594 | 293 | 887 | 63% | |
| PACA | 77 | 76 | 153 | 11% | |
| Rhône-Alpes | 178 | 68 | 245 | 17% | |
| Grand Ouest | 79 | 49 | 128 | 9% | |
| TOTAL | 928 | 486 | 1,414 | 100% | 18 |
| Repartition | 66% | 34% | |||
| 2011 Change |
1,137 | 483 | 1,620 -13% |
BREAKDOWN OF PROPERTIES FOR SALE AT DECEMBER 31, 2012 (€611 MILLION INCL. TAX) 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 (in € millions excl. tax) |
15 | 12 | ||
| Cost price of properties for sale In € millions (excl. tax) |
75 | 210 | 1 | |
| Properties for sale (€611 million incl. tax) |
226 | 109 | 275 | 1 |
| % | 37% | 18% | 45% | ns |
| O/w delivered |
in 2013 in 2014 in 2015 |
€57 mil. €146 mil. €72 mil. |
55% 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).
45% of properties for sale are currently being built. Only €57 million (out of €275 million) concern lots to be completed by the end of 2013.
There is virtually no stock of finished products (€1 million).
This breakdown of developments by stage of completion reflects the cautious criteria implemented by the Group:
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, marketing launch, land acquisition and launch of construction;
In the current economic climate, particular attention is paid to the launch of new programs, which is carried out according to the level and rhythm at which properties for sale are absorbed. This policy guarantees prudent management of the Group's commitments.
Thanks to implementation of cautious criteria, Cogedim controls the bulk of its property assets through unilateral land options, which are only exercised in accordance with the commercial success of its programs.
| In € millions (incl. tax) |
< 1 year |
> 1 year |
Total 2012 |
Numb er of mont hs |
2011 |
|---|---|---|---|---|---|
| Properties for | 611 | 611 | 9 | 633 | |
| sale Future offering |
1,967 | 1,490 | 3,457 | 48 | 2,988 |
| TOTAL Pipeline |
2,578 | 1,490 | 4,068* | 57 | 3,621 |
| 2011 | 2,906 | 715 | 3,621 | ||
| Change | -11% | +108% | +12% |
* I.e., approximately 13,550 homes
The residential pipeline (properties for sale + property portfolio) comprises the following:
95 Properties for sale include lots available for sale and are expressed as revenue including tax.
96 The future offering is made up of programs at the development stage (through sales commitments, almost exclusively unilateral in nature) that have yet to be launched. It is expressed as revenue including tax.
3. Office property
The investment market saw €11 billion in property change hands on the French market, down 8% compared with last year. Economic conditions inspired considerable prudence among investors, leading them to focus on new or refurbished "core" assets with long-term leases.
2012 take-up in the Paris Region amounted to 25,850,000 ft² (2,400,000 m²). After a calm first half, Q3 and Q4 business made it possible to limit the drop to 3% compared with 2011.
Companies' choice to move remains motivated essentially by floor-space optimization policies and, most importantly, a search for lower rent. In this inauspicious economic context, investors tend to be risk-averse, avoiding on-spec programs and attempting to mitigate risks with turnkey developments (however, such developments remain rare as companies put off making real estate decisions).
For the 3rd consecutive year, the immediate supply remained virtually stable with 38,750,000 ft² (3,600,000 m²) available in the Paris Region at January 1, 2013. The percentage of new / refurbished property gradually diminished, amounting to 19%.
Outside the Paris Region, the market remains considerably heterogeneous with a pronounced wait-and-see attitude: certain evolving business districts offer significant opportunities to develop the commercial property offering (e.g. Lyon's Part-Dieu neighborhood), while other cities currently have a large supply of property.
For commercial property, the Group works with institutional investors, offering the following three services:
1. As a property developer, signing off-plan sale agreements (Vente en Etat Futur d'Achèvement or VEFA) or property development contracts (Contrat de Promotion Immobilière or CPI) for which it guarantees the cost and time line of the construction.
Thanks to its particular expertise, the Group is able to provide users with efficient "turnkey" solutions, as can be seen through the following projects:
Despite a somber context for launching on-spec operations, the Group nonetheless succeeded in positioning itself as a property developer, assuming performance and delivery risks. Withdrawal from these developments is guaranteed by an investor willing to assume the rental risk.
The Group affirmed its savoir-faire in terms of hotels:
97 Jones Lang Lasalle data from Q4 2012.
98 CBRE data from Q4 2012.
2. As a consultant and service provider (Delegated project manager, etc.), such as providing development services for the owner of a property in return for fees.
On July 5, 2012, AltaFund acquired a prime office building featuring 106,500 ft² (9,900 m²) of useful space and 220 parking spaces located at 128/130 Boulevard Raspail in Paris (6th arrondissement).
This building will undergo comprehensive redevelopment as of April 1, 2013, once it is vacated by the current occupants (Crédit Agricole). The risk and investment profile of this first acquisition is a perfect illustration of AltaFund's investment criteria.
Since the beginning of the year, the Group has carried out three transactions on surfaces totaling 1,171,000 ft² (108,800 m²) for forecast sales of €248 million (incl. tax) on a Group share basis.
| Net floor area | Value | |
|---|---|---|
| Paris, Rue des Archives | 284,000 ft² | |
| (26,400 m²) | ||
| Marseille, Euromed | 678,000 ft² | |
| Center | (63,000 m²) | |
| Montigny, Mercedes B. | 208,800 ft² | |
| (off-plan) | (19,400 m²) | |
| Total | 1,171,000 ft² | €248 mil. |
| (108,800 m²) |
In 2012, Altarea Cogedim Group developed a total of 347,850 ft² (32,325 m²), delivering two office buildings and a 4-star hotel.
| Net floor | |
|---|---|
| area | |
| Paris, Avenue de Matignon (Offices) | 8,050 |
| Antony, Croix de Berny (Pomona head office) | 13,425 |
| Nantes, Courthouse (Radisson Blu Hotel) | 10,850 |
| Total | 32,325 |
Projects at the development stage
At December 31, 2012, the Group had 22 commercial property projects under development, covering a total potential net floor area of 6,071,000 ft² (564,000 m²) and including four hotels.
| In thousands of m² (net floor area), at 100% |
Delegated project managem. |
Property developm. |
Total |
|---|---|---|---|
| Office property | 76 | 425 | 502 |
| Hotels | 57 | 57 | |
| Other (logistics, etc.) | 5 | 5 | |
| Total at the development stage |
76 | 488 | 564 |
| In €millions | 12-31-2012 | 12-31-2011 | |
|---|---|---|---|
| Sales | 113.6 | +11% | 102.0 |
| Net property income | 7.3 +134% | 3.1 | |
| % of revenues | 6.5% | 3.1% | |
| Services to third parties | 5.3 | -13% | 6.1 |
| Production held in | |||
| inventory | 5.1 | 3.9 | |
| Net overhead expenses | (12.2) | (11.7) | |
| Other | (0.4) | (1.3) | |
| Operating cash flow | 5.1 | n/a | 0.1 |
| % of revenues | 4.4% | 0.1% |
In 2012, in a difficult economic context, Altarea Cogedim reported sales of €113.6 million (+11%) and renewed profitability.
Net property income came to €7.3 million with a return on sales up 3.4 points. This progression was due to a greater number of developments underway offering higher profitability.
Considering the backlog and 2012 sales achievements, the Group expects the Office Property Division to make a significantly larger contribution in 2013 with a considerable impact from ongoing operations, particularly Raspail, Mercedes and Euromed.
The off-plan and property development contract backlog amounted to €176.9 million at December 31, 2012, compared with €157 million the previous year. The Group also has a stable delegated project management backlog of €5.3 million.
99 Revenues excluding VAT on notarized sales to be recognized according to the percentage-of-completion method, take-ups not yet subject to a notarized deed and fees owed by third parties on contracts signed.
| 2012 | 2011 | ||||||
|---|---|---|---|---|---|---|---|
| In € millions | Funds From Operations (FFO) |
Changes in value, estimated expenses and transaction costs101 |
TOTAL | Funds From Operations (FFO) |
Changes in value, estimated expenses and transaction costs |
TOTAL | |
| Brick-and-mortar retail | 190.9 | +5% | 190.9 | 182.3 | 182.3 | ||
| Online retail | 325.1 | +10% 102 | 325.1 | - | - | ||
| Residential | 949.2 | +15% | 949.2 | 822.6 | 822.5 | ||
| Offices | 118.8 | +10% | 118.8 | 108.1 | 108.1 | ||
| REVENUE | 1,584.0 | +42% | 1,584.0 | 1,113.1 | 1,113.1 | ||
| Brick-and-mortar retail | 135.0 | -0% | 27.3 | 162.2 | 135.4 | 64.9 | 200.4 |
| Online retail | (6.0) | n/a | (7.9) | (13.9) | - | (1.7) | (1.7) |
| Residential | 100.6 | +17% | (4.8) | 95.8 | 86.1 | (9.0) | 77.1 |
| Offices | 5.1 | n/a | (1.0) | 4.0 | 0.1 | (7.6) | (7.4) |
| Other | (2.5) | n/a | (0.6) | (3.1) | (1.7) | (0.5) | (2.3) |
| OPERATING PROFIT | 232.2 | +6% | 12.9 | 245.0 | 219.9 | 46.1 | 266.1 |
| Net borrowing costs | (71.7) | -9% | (3.7) | (75.5) | (78.7) | (3.1) | (81.9) |
| Changes in value and profit / (loss) from disposal of financial instruments |
- | (78.4) | (78.4) | - | (80.4) | (80.4) | |
| Proceeds from the disposal of investments | - | 0.7 | 0.7 | (0.1) | (0.1) | ||
| Income tax | (1.9) | (29.8) | (31.6) | (0.8) | (8.8) | (9.6) | |
| NET PROFIT | 158.6 | +13% | (98.4) | 60.2 | 140.4 | (46.3) | 94.1 |
| Income attributable to equity holders of the parent |
149.7 | (93.8) | 55.9 | 134.3 | (46.0) | 88.3 | |
| Average diluted number of shares (in millions) |
10.547 | 10.241 | |||||
| FFO ATTRIBUTABLE TO THE GROUP PER SHARE |
€14.19 +8.3% | €13.11 |
Revenue from brick-and-mortar retail included rental income of €160.4 million103 (-1.1%) and €18.0 million from services provided to third parties (+9.6%). This also includes €12.3 million relating to sales in connection with the property development program (Villeneuve la Garenne hypermarket building shell sold in large part on an off-plan basis to Carrefour).
Following transactions that resulted in the acquisition of a controlling interest in Cap 3000, this latter entity was fully consolidated. In light of the completion date of the transactions in late December 2012, the percentage of revenue recognized in the income statement for Cap 3000 in 2012 was maintained at 33.33%104 .
Reported revenue (statutory accounts) originated mainly from the distribution of own brands (€315.7 million or +9%). Commissions generated from the marketplace (€9.4 million or +25%) experienced strong growth both from greater volume for merchants (€107.5 million or +13%) and an increase in the average commission rate to 8.8% (+80 bp).
100 Excluding Rue du Commerce.
101 Allowances for amortization and depreciation and non-current provisions, bonus share retirement provisions, amortization of bond issuance costs.
102 Proforma.
103Recognized in accordance with 17 IAS "Leases".
104 2012 Cap 3000 rental income: €30.5 million at a 100% basis.
Property development revenue is recognized according to the percentage-of-completion method105 in proportion to the percentage of actual completion (costs incurred / total budgeted costs excluding land) and the pre-letting rate (actual sales relative to the total for budgeted sales) of programs.
This strong growth was driven by momentum in market share gains in recent years.
Revenue rose 10%. Breaking down into some ten programs, significant growth is expected in 2013 as a consequence of the buildup in the backlog over the last two years.
Funds from operations represent operating cash flow after net interest and corporate income tax expenses.
2012 was the ninth consecutive year in which the Group registered double-digit growth in FFO.
In 2012, operating cash flow rose 6% to €232.2 million, driven mainly by residential property development (+17%) and the office property business, which began once again making a significant positive contribution. Rue du Commerce's negative impact exclusively reflects the acceleration in capital investments decided by the Group in 2012. In terms of accounting, investments for this activity were fully expensed.
The decline in net borrowing costs reflects the combined impact of a marginal decrease in the average cost of debt (3.52% or -7 bp) and the rise in capitalized finance costs as projects included under the line item of construction work in progress are ramped up108 .
This represents a tax paid by entities not having adopted the SIIC tax status, for the most part within the Altareit tax group and including property development operations and Rue du Commerce. In 2012, the Group benefited from tax loss carryforwards that limited the amount of income tax payments to €2,0 million. In light of the profile of future results and stricter rules for the application of tax losses, the Group expects this item to increase in the coming years.
| In €m | |
|---|---|
| Change in value – Investment properties (France) | 49.7 |
| Change in value – Investment properties (Inter'l) | (30.1) |
| Change in value of financial instruments | (78.4) |
| Asset disposals | (5.4) |
| Deferred tax | (29.6) |
| Estimated expenses109 | (4.6) |
| TOTAL | (98.4) |
The loss in 2012 represents mainly fair value changes in the interest rate swaps portfolio following the significant drop in rates during the year.
The non-cash expense of deferred tax relates almost entirely to property development and reflects timing differences between IFRS and the tax result.
The average number of shares after dilution is the average number of shares in circulation plus shares under stock option and option bonus share plans granted at December 31, 2012, minus treasury shares and dividends paid in the form of shares110 .
105Recognized, in accordance with IAS 18 "Revenue" and interpretation IFRIC 15 "Agreements for the construction of real estate".
106Funds From Operations.
107Or consolidated EBITDA.
108Finance costs of €9.6 million were capitalized relating to property development in 2012 mainly for the Villeneuve-la-Garenne, Nîmes and Cap 3000 programs.
109Allowances for amortization and depreciation and non-current provisions, bonus share retirement provisions, amortization of bond issuance costs.
110Creation of 732,624 shares on June 11, 2012
At December 31, 2012, Altarea Cogedim's EPRA NAV amounted to €1,620.7 million, up 3.6% from a year earlier.
NAV per share amounted to €148.6, down 3.4% after the dilutive effect of the 2012 dividend paid in the form of shares111 .
| GROUP NAV | 12-31-2012 (In € millions) |
Per share | 12-31-2011 (In € millions) |
Per share | |
|---|---|---|---|---|---|
| Consolidated equity, Group share | 1,023.7 | 93.8 | 988.1 | 97.1 | |
| (1) Impact of securities convertible into shares (2) Deferred tax on the balance sheet for non-SIIC assets (international assets) (2) Effective tax for unrealized capital gains on non-SIIC assets (3) Restatement of transfer duties deducted from the carrying amount of assets (3) Estimated transfer duties and selling fees (4) Other unrealized capital gains or losses (5) Partners' share DILUTED EPRA NNNAV (liquidation NAV)* |
- 38.0 (50.3) 134.5 (86.2) 381.9 (15.7) 1,425.9 |
130.7 | -6.4% | - 42.9 (53.1) 131.6 (77.8) 406.5 (16.8) 1,421.5 |
139.7 |
| Restatement of estimated transfer duties and selling fees Partners' share DILUTED GOING CONCERN NAV** |
86.2 (0.9) 1,511.1 |
138.5 | 77.8 (0.9) 1,498.4 |
147.2 | |
| Transfer duties deducted from the carrying amount of assets added back Restatement of the effective tax for unrealized capital gains on non-SIIC assets Restatement of financial instruments Restatement of partners' share* |
(134.5) 50.3 177.1 16.6 |
-5.9% | (131.6) 53.1 127.0 17.7 |
||
| DILUTED EPRA NAV*** | 1,620.7 | 148.6 | -3.4% | 1,564.6 | 153.7 |
| * Varies according to the type of disposal, i.e. sale of asset or sale of shares. Maximum dilution of 120,000 shares. * Number of diluted shares. |
10,909,159 | 10,176,535 |
EPRA NNNAV (Triple-Net NAV) is a property company performance indicator that represents the liquidation value of the Group's total assets and liabilities. This indicator is calculated from IFRS consolidated equity (Group share) to which certain adjustments are made.
This relates to the impact of in-the-money stock options exercised and the purchase of shares to cover bonus share plans not covered by shares held in treasury (excluding the liquidity agreement).
At December 31, 2012, all plan grants were covered by shares held in treasury.
The diluted number of shares recognizes all shares subscribed for the payment of stock dividends, i.e. 732,624 shares111 .
Under the SIIC regime, most of the Group's property portfolio is exempt from taxes on capital gains (with the exception of selected assets not eligible for this exemption because of 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 open market value and the tax value of the property assets.
For Altarea Cogedim, EPRA NNNAV (liquidation NAV) takes into account the ownership methods of non-SIIC assets, since the tax reflects the effective tax liability if the shares of the company were sold or if the assets were sold building by building.
111When the 2012 dividend of €9.0 per share was paid, shareholders were offered the option of subscribing new shares at a price of €94.31 per share. This operation resulted in the creation of 732,624 new shares (with a 76.77% take-up rate), increasing Group's shareholders equity by €69 million.
Investment properties have been recognized in the IFRS consolidated financial statements at appraisal value, excluding transfer duties. For the calculation of EPRA NNNAV (liquidation NAV), the same amount of transfer duties payable having been deducted are added back and new transfer duties are estimated according to the method of disposal (shares or assets), thus minimizing the amount.
These arise from updated estimates of the value of the following assets:
These assets are appraised at the end of each financial year by external experts (CBRE for the hotel business franchises and Accuracy for Altarea France and Cogedim). Both CBRE and Accuracy use the discounted cash flow method (DCF) in conjunction with a terminal value based on normalized cash flow. CBRE provides 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.
The value of Cogedim shares has remained unchanged in relation to December 31, 2011 and corresponds to the mid-range of Accuracy's valuation. In consequence, the unrealized gain of Cogedim shares mechanically decreases by the amount of its contribution to the Group's consolidated income for the year.
The value of Rue du Commerce shares has also remained unchanged in relation to the prior year.
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).
Going concern NAV represents the amount of equity that would be required to reform the assets of the Group while maintaining the same financial structure. It is calculated after deferred taxes and based on EPRA NNNAV, adding back the value of transfer rights.
EPRA NAV represents the market value of the equity from the perspective of long-term operations as a going concern. This implies a traditional management activity under which assets are destined to be held and operated on a long-term basis.
Restatements in relation to going concern NAV are as follows:
| €/share | |
|---|---|
| EPRA NAV at December 31, 2011 | 153.7 |
| 2012 dividend | (9.0) |
| Dilution on 2012 stock dividend | (3.9) |
| NAV after impact of the 2012 dividend | 140.8 |
| FFO | 14.2 |
| Change in value of assets – France | 4.9 |
| Change in value of assets – International | (2.8) |
| Change in capital gains on Cogedim | (4.4) |
| Deferred tax liabilities | (2.8) |
| Other | (1.2) |
| EPRA NAV at December 31, 2012 | 148.6 |
Altarea Cogedim Group has a solid financial position:
This strong position results primarily from a diversified business model (brick-and-mortar and online retail, residential and office properties) that generates substantial cash flow at the top of the cycle and is highly resilient at the bottom.
Financing activities in 2012 highlighted the ability of Altarea Cogedim Group to raise funds at competitive terms while diversifying its sources of financing.
The sources of financing implemented by Altarea-Cogedim Group are as follows:
Furthermore, the Group has secured financing through a medium-term note program that may be activated as opportunities arise as well as a commercial paper program for which the first issues began with success in early January 2013 under particularly competitive terms.
The different debt financing facilities highlight the confidence of the Group's banking partners as well as new investors in the solidity of its creditworthiness amidst a marked deterioration in the European economic environment in 2012.
For property development, net debt decreased significantly in 2012 (from €234 million to €135 million113, or by €99 million), highlighting the strong cash flows generated by this business. Most financing requirements related to performance bonds (GFA) for residential property developments sold offplan (forward sales).
Available cash and cash equivalents increased significantly in the period to €720 million at December 31, 2012. This included:
Altarea Cogedim's net debt stood at €2.186 billion at December 31, 2012 compared with €2.081 billion at December 31, 2011 (+ €105 million).
| (In € millions) | Dec-2012 | Dec-2011 |
|---|---|---|
| Corporate debt | 776 | 738 |
| Mortgage debt | 1,302 | 1,172 |
| Debt relating to acquisitions114 | 288 | 271 |
| Property development debt | 142 | 163 |
| Total gross debt | 2,508 | 2,344 |
| Cash and cash equivalents | (322) | (263) |
| Total net debt | 2,186 | 2,081 |
112 This financing is accompanied by specific covenants on Foncière Altarea (LTV ≤ 50% and ICR ≥ 2,0x).
113 Excluding debt related to acquisitions.
114 Cogedim and Rue du Commerce.
| Covenant | 12/31/2012 12/31/2011 | Delta | ||
|---|---|---|---|---|
| LTV115 | ≤ 60% | 49.3% | 51.2% | - 190 bps |
| ICR116 | ≥ 2.0 x | 3.2 x | 2.8 x | +0.4 x |
Other specific covenants
At December 31, 2012, the Group was in compliance with all covenants.
Portfolio profile of hedging instruments:
Nominal amount (€ millions) and average hedge
Endettement net au 31/12/2012
In 2012, the Group restructured a portion of its portfolio of swaps to reduce the average hedge rate to market interest rates for the next two years.
The Altarea Cogedim Group average financing cost including the credit spread was 3.52% at December 31, 2012, compared with 3.59% at the end of 2011.
The average debt maturity was 4.3 years at December 31, 2012, compared with 4.7 years at the end of 2011. 51.9% of outstanding debt comprises mortgage loans backed by long-term assets and/or assets under construction.
MATURITY SCHEDULE FOR GROUP DEBT (EXCLUDING PROPERTY DEVELOPMENT, IN € MILLIONS)
Corporate debt financing in 2012 generated resources to cover the next debt repayment installments while at the same time making it possible to move forward with Altarea Cogedim's refinancing strategy.
115 LTV: Loan-to-Value = Net debt / Restated value of assets excluding transfer duties.
116 ICR = Operating profit / Net borrowing costs (under the "Operating cash flow" column).
117 Swaps and fixed rate debt after the restructuring of the portfolio of hedging instruments in January 2013.
| 2012 | 2011 | |||||
|---|---|---|---|---|---|---|
| In € millions | Funds From Operations (FFO) |
Changes in value, estimated expenses and transaction |
TOTAL | Funds From Operations (FFO) |
Changes in value, estimated expenses and transaction |
TOTAL |
| Rental income | 160.4 | costs – |
160.4 | 162.1 | costs – |
162.1 |
| Other expenses | (14.6) | – | (14.6) | (13.4) | – | (13.4) |
| Net rental income | 145.8 | – | 145.8 | 148.8 | – | 148.8 |
| External services | 18.0 | – | 18.0 | 16.5 | – | 16.5 |
| Capitalized production and change in inventories | 12.2 | – | 12.2 | 15.1 | – | 15.1 |
| Operating expenses | (50.5) | (1.5) | (52.0) | (53.1) | (2.8) | (55.8) |
| Net overhead expenses | (20.3) | (1.5) | (21.7) | (21.5) | (2.7) | (24.2) |
| Share of affiliates | 9.4 | (3.0) | 6.4 | 8.2 | (6.2) | 2.0 |
| Net allowances for depreciation, amortization and reserves | – | (1.7) | (1.7) | – | (1.8) | (1.9) |
| Net proceeds from the disposal of assets Gains/(losses) in value and impairment of investment property |
– – |
4.8 19.6 |
4.8 19.6 |
– – |
6.3 70.0 |
6.3 70.0 |
| Transaction costs | – | 9.1 | 9.1 | – | (0.6) | (0.6) |
| NET RETAIL PROPERTY INCOME (B&M FORMATS) | 135.0 | 27.3 | 162.2 | 135.4 | 64.9 | 200.4 |
| Retail revenue | 315.7 | (0.0) | 315.7 | – | – | – |
| Purchases consumed | (289.0) | – | (289.0) | – | – | – |
| Net charge to provisions for risks and contingencies | (2.3) | – | (2.3) | – | – | – |
| Retail margin | 24.4 | (0.0) | 24.4 | – | – | – |
| Galerie Marchande Commissions | 9.4 | – | 9.4 | – | – | – |
| Operating expenses | (39.9) | (0.3) | (40.2) | – | – | – |
| Net overhead expenses | (39.9) | (0.3) | (40.2) | – | – | – |
| Net allowances for depreciation, amortization and reserves | – | (6.4) | (6.4) | – | – | – |
| Transaction costs | – | (1.2) | (1.2) | – | (1.7) | (1.7) |
| NET RETAIL PROPERTY INCOME (ONLINE FORMATS) | (6.0) | (7.9) | (13.9) | – | (1.7) | (1.7) |
| Revenue | 948.6 | – | 948.6 | 821.5 | – | 821.5 |
| Cost of sales and other expenses | (820.7) | – | (820.7) | (719.9) | – | (719.9) |
| Net property income | 127.8 | – | 127.8 | 101.7 | – | 101.7 |
| External services | 0.6 | – | 0.6 | 1.0 | – | 1.0 |
| Change in finished goods and in-progress inventory | 57.4 | – | 57.4 | 63.0 | – | 63.0 |
| Operating expenses | (84.9) | (1.9) | (86.9) | (79.7) | (3.3) | (83.0) |
| Net overhead expenses | (26.9) | (1.9) | (28.8) | (15.7) | (3.3) | (18.9) |
| Share of affiliates Net allowances for depreciation, amortization and reserves |
(0.3) – |
– (2.9) |
(0.3) (2.9) |
0.1 – |
– (1.1) |
0.1 (1.1) |
| Transaction costs | – | – | – | – | (4.6) | (4.6) |
| NET RESIDENTIAL PROPERTY INCOME Revenue |
100.6 113.6 |
(4.8) – |
95.8 113.6 |
86.1 102.0 |
(9.0) – |
77.1 102.0 |
| Cost of sales and other expenses | (106.2) | – | (106.2) | (98.9) | – | (98.9) |
| Net property income | 7.3 | – | 7.3 | 3.1 | – | 3.1 |
| External services | 5.3 | – | 5.3 | 6.1 | – | 6.1 |
| Change in finished goods and in-progress inventory | 5.1 | – | 5.1 | 3.9 | – | 3.9 |
| Operating expenses | (12.2) | (0.7) | (13.0) | (11.7) | (0.9) | (12.6) |
| Net overhead expenses | (1.9) | (0.7) | (2.6) | (1.7) | (0.9) | (2.6) |
| Share of affiliates | (0.4) | – | (0.4) | (1.3) | – | (1.3) |
| Net allowances for depreciation, amortization and reserves | – | (0.3) | (0.3) | – | (0.3) | (0.3) |
| Transaction costs | – | – | – | – | (6.4) | (6.4) |
| NET OFFICE PROPERTY INCOME | 5.1 | (1.0) | 4.0 | 0.1 | (7.6) | (7.4) |
| Other (Corporate) | (2.5) | (0.6) | (3.1) | (1.7) | (0.5) | (2.3) |
| OPERATING PROFIT | 232.2 | 12.9 | 245.0 | 219.9 | 46.1 | 266.1 |
| Net borrowing costs | (71.7) | (3.7) | (75.5) | (78.7) | (3.0) | (81.8) |
| Debt and receivables discounting | – | (0.0) | (0.0) | – | (0.1) | (0.1) |
| Changes in value and income from disposal of financial instruments | – | (78.4) | (78.4) | – | (80.4) | (80.4) |
| Proceeds from the disposal of investments | – | 0.7 | 0.7 | – | (0.1) | (0.1) |
| PROFIT BEFORE TAX | 160.4 | (68.6) | 91.8 | 141.2 | (37.5) | 103.7 |
| Income tax | (1.9) | (29.8) | (31.6) | (0.8) | (8.8) | (9.6) |
| NET PROFIT | 158.6 | (98.4) | 60.2 | 140.4 | (46.3) | 94.1 |
| Non-controlling interests | (8.9) | 4.6 | (4.3) | (6.1) | 0.3 | (5.8) |
| NET PROFIT, ATTRIBUTABLE TO GROUP SHAREHOLDERS | 149.7 | (93.8) | 55.9 | 134.3 | (46.0) | 88.3 |
| Average number of shares after dilution | 10,547,562 | 10,547,562 | 10,547,562 | 10,241,241 | 10,241,241 | 10,241,241 |
| DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO GROUP SHAREHOLDERS (€) |
14.19 | (8.90) | 5.30 | 13.11 | (4.49) | 8.62 |
| In € millions | 12/31/2012 | 12/31/2011 |
|---|---|---|
| NON-CURRENT ASSETS | 3,617.5 | 3,241.2 |
| Intangible assets o/w goodwill o/w brands o/w other intangible assets Property, plant and equipment Investment properties o/w investment properties measured at fair value o/w investment properties measured at cost Investments in associates and other non-consolidated investments |
276.7 166.6 98.6 11.5 11.4 3,200.3 3,037.3 163.0 84.7 |
264.9 193.1 66.6 5.2 12.9 2,820.5 2,625.5 195.0 76.5 |
| Receivables and other non-current financial assets Deferred tax assets |
18.3 26.0 |
16.9 49.5 |
| CURRENT ASSETS | 1,504.3 | 1,402.1 |
| Non-current assets held for sale Net inventories and work in progress Trade and other receivables Income tax receivables Receivables and other current financial assets Derivative financial instruments Cash and cash equivalents |
4.8 702.6 456.7 1.8 16.3 0.3 321.8 |
55.3 684.2 390.2 1.0 7.4 0.8 263.2 |
| TOTAL ASSETS | 5,121.8 | 4,643.3 |
| EQUITY | 1,362.0 | 1,116.1 |
| Equity attributable to owners of the parent | 1,023.7 | 988.1 |
| Share capital Other paid-in capital Reserves Net profit attributable to owners of the parent |
131.7 481.6 354.6 55.9 |
120.5 509.9 269.4 88.3 |
| Equity attributable to non-controlling interests | 338.2 | 128.0 |
| Non-controlling interests in reserves Other equity components, Undated subordinated notes Non-controlling interests' share of profit |
224.9 109.0 4.3 |
122.2 – 5.8 |
| NON-CURRENT LIABILITIES | 2,371.8 | 2,259.9 |
| Non-current borrowings and financial liabilities o/w participating loans and shareholders' advances under option o/w bank borrowings o/w bank borrowings backed by VAT receivables o/w other borrowings and financial liabilities Other non-current provisions Deposits and guarantees received Deferred tax liabilities |
2,254.2 14.8 250.0 1,972.7 16.7 25.7 29.1 62.9 |
2,185.4 81.5 2,088.0 – 15.8 23.6 25.2 25.6 |
| CURRENT LIABILITIES | 1,388.0 | 1,267.3 |
| Current borrowings and financial liabilities o/w bank borrowings (excluding overdrafts) o/w bank overdrafts o/w other borrowings and financial liabilities Derivative financial instruments Accounts payable and other operating liabilities Tax payables |
311.1 282.3 2.7 26.1 181.2 892.9 2.8 |
275.4 251.0 5.3 19.2 130.2 860.5 1.2 |
| TOTAL EQUITY AND LIABILITIES | 5,121.8 | 4,643.3 |
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