Cegereal: First-half 2019 Results: Sharp 41% Increase in EPRA Earnings

  • Strong 20% in rental income
  • 6.4% value creation over first half
  • Brisk rental activity with leases signed on 13,000 sq.m in 6 months
  • Reaffirmed commitment to environmental change

PARIS--()--Regulatory News:

Cegereal (Paris:CGR):

Key indicators

In millions of euros

First-half

2019

First-half

2018

Change

 

IFRS rental income

31.3

26.0

+20%

EPRA earnings

20.6

14.7

+41%

Portfolio value (excluding transfer duties)

1,435

1,174

+22%

LTV ratio

53.7%

53.1%

+0.6 pts

EPRA NAV per share excluding transfer duties (in €)

42.0

40.9

+2.7%

EPRA NNNAV per share excluding transfer duties (in €)

41.3

40.4

+2.4%

Dividend per share (in €)

2.3

2.2

+4.5%

A winning property strategy

Cegereal enjoyed brisk rental activity in first-half 2019, with new leases, renewals or extensions signed on 13,000 sq.m of space (i.e., 7% of the portfolio). At end-June 2019, the average remaining lease term remained high at more than five years.

At June 30, 2019, Cegereal’s overall occupancy stood at 94.2%, including recently signed leases and the departure of Capgemini. At December 31, 2018, the occupancy rate stood at 96.1%.

The arrival of the European Banking Authority and KPMG’s teams at the Europlaza tower in the first six months of 2019, just weeks after ongoing renovation work was delivered, illustrates the effectiveness of Cegereal’s capital expenditure program.

Results in line with Cegereal’s growth plan

The acquisition of the Passy Kennedy building had a positive impact on first-half 2019 results.

The transaction helped to drive 20% growth in rental income, which came in at €31.3 million (€26.4 million euros like for like).

The portfolio value (excluding transfer duties) came to €1,435 million, growing by 22% and €1,212 million like for like (+3.2%), benefiting from the asset management policy implemented on the portfolio.

Cegereal’s EPRA earnings totaled €20.6 million in first-half 2019, a sharp 41% increase on the prior‑year period. As reported, they came to €17.2 million, representing growth of 17% due to an improvement in net rental income and good cost control.

EPRA NNNAV stood at €657.0 million at June 30, 2019, up from €639.6 million at December 31, 2018. The increase mainly reflects growth in consolidated net income (positive €19.6 million impact), the change in fair value of investment property (positive €23.1 million impact), the dividend payout (negative €36.6 million impact), and the capital increase carried out in March 20191 (positive €11.2 million impact).

The positive results allowed Cegereal to deliver a Total Shareholder Return of 6.4% over the six months (dividends added back).

A tenant-focused strategy

Particularly attentive to changes in lifestyles and ways of working, Cegereal invests significantly in its properties in order to constantly improve its tenants’ user experience. As an example, the restaurant facilities at the Europlaza tower are soon to be transformed into welcoming, connected living spaces.

Cegereal also focuses specifically on managing energy consumption and biodiversity across its portfolio. In total, its properties feature more than 3.7 hectares of green space overall, including a 4,800 sq.m lake at Hanami, a 3,000-sq.m wooded garden at Europlaza and a living roof at Arcs de Seine.

Cegereal will continue to pursue this long-term strategy, which drives it to continually improve the quality and energy performance of its portfolio, and offer environmental advantages and a working environment that meet the expectations of new generations. In return, these tenants will ensure high occupancy rates and stable, quality income streams for Cegereal.

Investor Calendar

- November 15, 2019 Third-quarter 2019 rental income

1 Creation of 305,190 new shares at a price of €36.71, representing € 11,203,524.90 (including €1,525,950 in nominal value and € 9,677,574.90 in additional paid-in capital).

About Cegereal

Created in 2006, Cegereal is a commercial property company that invests in prime office properties in Greater Paris. The total value of the portfolio is estimated at €1,435 million at June 30, 2019 (excluding transfer duties).

From an environmental point of view, Cegereal’s portfolio is fully certified with NF HQETM Exploitation and BREEAM In-Use International certification, and benefits from the “Green Star” rating in the international GRESB benchmark.

Cegereal is a REIT listed on Euronext Paris since 2006, in compartment B (ISIN: FR0010309096). The Company had a market capitalization of €614 million at July 24, 2019.

www.cegereal.com

APPENDICES

IFRS Income Statement (consolidated)

In thousands of euros, except per share data

 

 

 

 

June 30, 2019

Dec. 31, 2018

June 30, 2018

 

6 months

12 months

6 months

 

Rental income

31,290

53,026

26,036

Income from other services

15,030

15,010

10,746

Building-related costs

(17,818)

(31,002)

(16,074)

Net rental income

28,502

37,034

20,707

 

Administrative costs

(1,983)

(4,039)

(2,377)

Net additions to provisions & depreciation and amortization

0

0

(5)

Other operating expenses

(7)

(89)

(133)

Other operating income

220

0

0

Increase in fair value of investment property

36,137

12,501

4,291

Decrease in fair value of investment property

(13,010)

(800)

(5,688)

Total change in fair value of investment property

23,127

11,701

(1,397)

 

Net operating income

49,860

44,607

16,795

 

Financial income

0

6

6

Financial expenses

(7,120)

(11,508)

(5,643)

Net financial expense

(7,121)

(11,502)

(5,637)

 

Corporate income tax

0

0

0

 

CONSOLIDATED NET INCOME

42,739

33,106

11,158

of which attributable to owners of the Company

42,739

33,106

11,158

of which attributable to non-controlling interests

0

0

0

 

Other comprehensive income

 

TOTAL COMPREHENSIVE INCOME

42,739

33,106

11,158

of which attributable to owners of the Company

42,739

33,106

11,158

of which attributable to non-controlling interests

0

0

0

 

 

 

 

Basic earnings per share (in euros)

2.71

2.40

0.84

Diluted earnings per share (in euros)

2.60

2.27

0.79

IFRS Balance Sheet (consolidated)

In thousands of euros

 

 

 

June 30, 2019

Dec. 31, 2018

June. 30, 2018

 

Non-current assets

 

Property, plant and equipment

44

47

53

Investment property

1,435,240

1,408,520

1,174,400

Non-current loans and receivables

22,298

20,230

21,289

Financial instruments

57

597

10

Total non-current assets

1,457,639

1,429,393

1,195,752

 

Current assets

 

Trade accounts receivable

13,130

7,747

13,902

Other operating receivables

9,938

14,726

11,866

Prepaid expenses

131

116

196

Total receivables

23,199

22,589

25,964

 

Cash and cash equivalents

29,187

53,367

18,879

Total cash and cash equivalents

29,187

53,367

18,879

 

Total current assets

52,386

75,957

44,843

TOTAL ASSETS

1,510,025

1,505,350

1,240,595

 

Shareholders' equity

 

Share capital

79,532

78,006

66,863

Legal reserve and additional paid-in capital

66,462

93,277

25,314

Consolidated reserves and retained earnings

503,481

470,500

470,363

Net attributable income

42,739

33,106

11,158

Total shareholders’ equity

692,214

674,889

573,697

 

Non-current liabilities

 

Non-current borrowings

763,664

763,321

616,418

Other non-current borrowings and debt

9,381

9,543

6,505

Non-current corporate income tax liability

0

0

0

Financial instruments

741

791

780

Total non-current liabilities

773,786

773,655

623,704

 

Current liabilities

 

Current borrowings

3,378

3,152

2,970

Trade accounts payable

5,866

24,996

14,698

Corporate income tax liability

0

0

0

Other operating liabilities

13,953

9,698

11,363

Prepaid revenue

20,828

18,960

14,163

Total current liabilities

44,025

56,806

43,194

 

Total liabilities

817,811

830,461

666,898

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

1,510,025

1,505,350

1,240,595

IFRS Statement of Cash Flows (consolidated)

In thousands of euros

 

 

 

June 30, 2019

Dec. 31, 2018

June 30, 2018

 

OPERATING ACTIVITIES

Consolidated net income

42,739

33,106

11,158

 

Elimination of items related to the valuation of buildings:

Fair value adjustments to investment property

(23,127)

(11 701)

1,397

 

Elimination of other income/expense items with no cash impact:

Depreciation of property, plant and equipment (excluding investment property)

7

11

5

Free share grants not vested at the reporting date

0

0

0

Fair value of financial instruments (share subscription warrants, interest rate caps and swaps)

469

473

253

Adjustments for loans at amortized cost and fair value of embedded derivatives

1,177

2,247

1,208

Contingency and loss provisions

0

0

0

Corporate income tax

0

0

0

Penalty interest

0

0

0

 

Cash flows from operations before tax and changes in working capital requirements

21,264

24,136

14,021

 

Other changes in working capital requirements

(13,314)

19,621

3,965

Working capital adjustments to reflect changes in the scope of consolidation

 

Change in working capital requirements

(13,314)

19,621

3,965

 

Net cash flows from operating activities

7,950

43,757

17,986

 

INVESTING ACTIVITIES

Acquisition of fixed assets

(3,595)

(227,422)

(6,399)

Net decrease in amounts due to fixed asset suppliers

(1,950)

2,620

833

 

Net cash flows used in investing activities

(5,546)

(224,802)

(5,567)

 

FINANCING ACTIVITIES

Capital increase

11,204

79,901

0

Capital increase transaction costs

0

(794)

0

Change in bank debt

(750)

147,000

(750)

Issue of financial instruments (share subscription warrants)

0

0

0

Refinancing/financing transaction costs

(40)

(1,930)

(68)

Net increase in liability in respect of refinancing

(420)

420

0

Purchases of hedging instruments

0

(796)

0

Net increase in current borrowings

204

134

0

Net decrease in current borrowings

0

0

(23)

Net increase in other non-current borrowings and debt

0

3,615

577

Net decrease in other non-current borrowings and debt

(163)

0

0

Purchases and sales of treasury shares

(61)

(42)

(180)

Dividends paid

(36,557)

(54,813)

(54,813)

 

Net cash flows from financing activities

(26,583)

172,694

(55,258)

 

 

 

Change in cash and cash equivalents

(24,179)

(8,351)

(42,839)

 

Cash and cash equivalents at beginning of period*

53,367

61,718

61,718

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

29,188

53,367

18,879

* There were no cash liabilities for any of the periods presented above.

Reconciliation of Alternative Performance Measures (APM)

EPRA earnings APM

In thousands of euros

June 30,
2019

June 30,

2018

Net income under IFRS

42,739

11,158

Restatement of changes in fair value of investment property

(23,127)

1,397

Other restatements of changes in fair value

490

253

Restatement of other fees

534

1 862

EPRA earnings

20,636

14,670

EPRA NNNAV APM

In thousands of euros

June 30,
2019

December 30,
2018

Shareholders’ equity under IFRS

692,214

674,889

Portion of rent-free periods

(26,028)

(27,315)

Market value of loans

(774,055)

(772,432)

Carrying amount of loans

764,894

764 507

EPRA NNNAV

657,025

639,649

LTV ratio APM

In millions of euros

June 30,
2019

June 30,

2018

Gross amount of balance sheet loans (statutory financial statements)

770

623

Fair value of investment property

1,435

1,174

LTV ratio (%)

53.7%

53.1%

Occupancy rate APM

The occupancy rate takes into account the space for which the Company receives rent or rental expenses under a lease agreement.

It stood at 94.2% at the end of the first half of 2019, compared with 96.1% at 31 December 2018.

Total Shareholder Return APM

Total Shareholder return corresponds to the growth in EPRA NNNAV since December 2018, after adding back the 2019 dividend payout.

In euros

EPRA NNNAV per share excluding transfer duties at June 30, 2019

41.3

EPRA NNNAV per share excluding transfer duties at December 31, 2018

41.0

2019 dividend per share

2.3

Value creation (%)

6.4%

 

Contacts

Media Relations
Aliénor Miens/Alexandre Dechaux
+33 7 62 72 71 15
cegereal@citigatedewerogerson.com

Investor Relations
Charlotte de Laroche
+33 1 42 25 76 38
info@cegereal.com

Contacts

Media Relations
Aliénor Miens/Alexandre Dechaux
+33 7 62 72 71 15
cegereal@citigatedewerogerson.com

Investor Relations
Charlotte de Laroche
+33 1 42 25 76 38
info@cegereal.com