Cegereal: A Resilient Business Model

PARIS--()--Regulatory News:

Cegereal (Paris:CGR):

In millions of euros

First-half
2020

First-half
2019

Change

Rental income (IFRS)

31.6

31.3

+0.9%

EPRA earnings (EPRA)

19.8

20.6

-4%

EPRA earnings (EPRA) excl. non-recurring income

19.2

18.7

+2.7%

Portfolio value (excl. transfer duties)

1,460

1,435

+1.8%

LTV ratio

52.6%

53.7%

-1.1pt

EPRA NAV per share excl. transfer duties (in €)

44.1

42.0

+5.0%

EPRA NNNAV per share excl. transfer duties (in €)

43.7

41.3

+5.8%

Distribution per share (in €)

0.75

2.3

-67%

Despite the health crisis which emerged during the first half of 2020, Cegereal posted a slight +0.9% increase in rental income compared with the same period of 2019. EPRA earnings excluding non‑recurring income, i.e., excluding the various indemnities received, were up +2.7% versus first-half 2019. These results are a testament to sound business management during the epidemic.

The occupancy rate stood at 93.4% at the period-end, after Sagem vacated 5,700 sq.m of space at Arcs de Seine in Boulogne-Billancourt on April 1, 2020. At December 31, 2019, the occupancy rate stood at 96.9%. This recently vacated space is already being renovated, with delivery scheduled in the second half of 2020. The campus enjoys good transport links, views over the Seine, private landscaped gardens and a living roof, and is being actively marketed.

Assets adapted to support tenant decisions

In the first six months of the year, Cegereal’s operations were marked by the implementation from March of measures to ensure the health and safety of its employees, partners and clients. As lockdown measures were eased, Cegereal’s teams were fully mobilized to make the necessary adjustments at its properties, based on decisions taken by tenants’ management, and to support tenants as their employees gradually returned to the workplace. Attentive to their needs, Cegereal remains available to assess the impacts of the difficult economic conditions on its tenants’ businesses on a case-by-case basis.

Cegereal took every step to ensure that refurbishment work was delivered as initially scheduled so that the new tenants announced at the end of 2019 could take up their new space during the first half of 2020.

In terms of rental activity, despite a particularly lackluster climate, Brandt renewed its lease at the Hanami property in Rueil-Malmaison (next to the La Défense business district) until 2024.

Low exposure to economic disruptions

Cegereal is exclusively positioned in the office real estate market and its tenants which are mainly large corporates, have solid profiles. As a result, the impacts of the health crisis on its business are limited, with the rent collection rate for the third quarter currently standing at more than 95%. Rent payment deferrals granted by Cegereal in the first half represented less than 1% of its rental income.

Over the coming months, the impact of the economic crisis is expected to remain contained, as the Company benefits from a weighted average lease term of 5.2 years which has continuously increased over the last two years. Cegereal’s long-term rental income stream therefore remains secure. In addition, the loan-to-value ratio decreased by -1.1 percentage point compared with first-half 2019.

Given these factors, Cegereal is well equipped to respond to worsening economic conditions should the need arise.

“Responsible property company” strategy validated

The last few weeks have seen considerable growth in awareness and increased attention from tenants in terms of environmental, social and governance issues. Thanks to its CSR strategy, which has been in place since its creation, and its status as Europe’s most sustainable listed property company, obtained in the 2019 GRESB (Global Real Estate Sustainability Benchmark) ranking, Cegereal is confident in its position as a leading sustainable property company for both social and environmental issues.

Long-term financial agility

The Company paid a dividend of €0.75 per share in place of the initially planned €2.30 per share. Carried out in the interests of prudence, this one-off reduction gives the Company headroom and enables it to maintain its operational agility in an uncertain environment.

Investor Calendar

- November 6, 2020: Third-quarter 2020 rental income

About Cegereal

Created in 2006, Cegereal is a listed property company that invests in prime office properties in Greater Paris. The total value of the portfolio was estimated at €1,460 million at June 30, 2020 (excluding transfer duties).

Thanks to its strong commitment to environmental, social and governance issues, Cegereal achieved first place among listed companies in Europe in the 2019 Global Real Estate Sustainability Benchmark (GRESB) ranking. Its entire portfolio has achieved NF HQE™ Exploitation and BREEAM In-Use International certification.

Cegereal is a REIT listed on Euronext Paris since 2006, in compartment B (ISIN: FR0010309096). The Company had a market capitalization of €531 million at July 28, 2020.

www.cegereal.com

APPENDICES

IFRS Income Statement (consolidated)

In thousands of euros, except per share data

 

 

 

June 30,
2020

2019

June 30,
2019

6 months

12 months

6 months

 

Rental income

31 567

63 369

31 290

Income from other services

13 211

20 045

15 030

Building-related costs

(19 938)

(31 621)

(17 818)

Net rental income

24 841

51 793

28 502

 

Sale of building

0

0

0

Administrative costs

(1 774)

(3 885)

(1 983)

Other operating expenses

(6)

(13)

(7)

Other operating income

624

165

220

Increase in fair value of investment property

10 688

60 710

36 137

Decrease in fair value of investment property

(19 065)

(14 480)

(13 010)

Total change in fair value of investment property

(8 377)

46 230

23 127

 

Net operating income

15 307

94 289

49 860

 

Financial income

0

0

0

Financial expenses

(6 362)

(13 529)

(7 120)

Net financial expense

(6 362)

(13 529)

(7 121)

 

Corporate income tax

0

0

0

 

CONSOLIDATED NET INCOME

8 945

80 760

42 739

of which attributable to owners of the Company

8 945

80 760

42 739

of which attributable to non-controlling interests

0

0

0

 

Other comprehensive income

 

TOTAL COMPREHENSIVE INCOME

8 945

80 760

42 739

of which attributable to owners of the Company

8 945

80 760

42 739

of which attributable to non-controlling interests

0

0

0

 

Basic earnings per share (in euros)

0,56

5,10

2,71

Diluted earnings per share (in euros)

0,54

4,92

2,60

IFRS Balance Sheet (consolidated)

In thousands of euros

 

 

 

 

June 30,
2020

2019

June 30,
2019

 

Non-current assets

 

Property, plant and equipment

31

38

44

Investment property

1 460 380

1 463 920

1 435 240

Non-current loans and receivables

20 220

23 146

22 298

Financial instruments

38

34

57

Total non-current assets

1 480 669

1 487 138

1 457 639

 

Current assets

 

Trade accounts receivable

14 595

9 720

13 130

Other operating receivables

12 955

11 607

9 938

Prepaid expenses

188

292

131

Total receivables

27 738

21 620

23 199

 

Cash and cash equivalents

47 062

44 880

29 187

Total cash and cash equivalents

47 062

44 880

29 187

 

Total current assets

74 800

66 499

52 386

TOTAL ASSETS

1 555 469

1 553 637

1 510 025

 

Shareholders' equity

 

Share capital

79 532

79 532

79 532

Legal reserve and additional paid-in capital

55 118

66 462

66 462

Consolidated reserves and retained earnings

583 645

503 513

503 481

Net attributable income

8 945

80 760

42 739

Total shareholders’ equity

727 240

730 268

692 214

 

Non-current liabilities

 

Non-current borrowings

763 883

763 974

763 664

Other non-current borrowings and debt

11 117

10 087

9 381

Financial instruments

637

682

741

Total non-current liabilities

775 637

774 743

773 786

 

Current liabilities

 

Current borrowings

3 871

3 468

3 378

Trade accounts payable

14 920

12 349

5 866

Other operating liabilities

12 427

10 437

13 953

Prepaid revenue

21 375

22 373

20 828

Total current liabilities

52 593

48 626

44 025

 

Total liabilities

828 229

823 369

817 811

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

1 555 469

1 553 637

1 510 025

IFRS Statement of Cash Flows (consolidated)

In thousands of euros

 

 

 

 

June 30,
2020

2019

June 30,
2019

 

 

 

 

OPERATING ACTIVITIES

 

 

 

Consolidated net income

8 945

80 760

42 739

 

 

 

 

Elimination of items related to the valuation of buildings:

 

 

 

Fair value adjustments to investment property

8 377

(46 230)

(23 127)

 

 

 

 

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

 

 

 

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

6

9

7

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)

(65)

427

469

Adjustments for loans at amortized cost

1 151

2 362

1 177

Contingency and loss provisions

0

0

0

Corporate income tax

0

0

0

 

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

18 414

37 329

21 264

 

 

 

 

Other changes in working capital requirements

1 155

(8 277)

(13 314)

Working capital adjustments to reflect changes in the scope of consolidation

 

 

 

 

Change in working capital requirements

1 155

(8 277)

(13 314)

 

Net cash flows from operating activities

19 569

29 052

7 950

 

INVESTING ACTIVITIES

Acquisition of fixed assets

(4 837)

(9 170)

(3 595)

Net increase in amounts due to fixed asset suppliers

(785)

(1 745)

(1 950)

 

Net cash flows used in investing activities

(5 622)

(10 915)

(5 546)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Capital increase

0

11 204

11 204

Change in bank debt

(750)

(1 500)

(750)

Refinancing/financing transaction costs

(51)

(102)

(40)

Net variation in liability in respect of refinancing

0

(420)

(420)

Net increase in current borrowings

(22)

236

204

Net decrease in current borrowings

0,00

0,00

0,00

Net increase in other non-current borrowings and debt

1 030

544

(163)

Net decrease in other non-current borrowings and debt

0

0

0

Purchases and sales of treasury shares

(53)

(28)

(61)

Dividends paid

(11 919)

(36 557)

(36 557)

 

 

 

 

Net cash flows from financing activities

(11 766)

(26 625)

(26 583)

 

 

 

 

Change in cash and cash equivalents

2 182

(8 488)

(24 179)

 

 

 

 

Cash and cash equivalents at beginning of period*

44 880

53 367

53 367

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

47 062

44 880

29 188

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

Reconciliation of Alternative Performance Measures (APM)

Cegereal recurring cash flow APM

 

In thousands of euros

June 30, 2020

June 30, 2019

Net income under IFRS

8 945

42 739

Restatement of changes in fair value of investment property

8 377

(23 127)

Other restatements of changes in fair value

(49)

490

Restatement of other fees

2 533

534

EPRA earnings

19 807

20 636

APM EPRA earnings (EPRA) excl. non-recurring income

 

En milliers d'euros

June 30,2020

June 30,2019

EPRA earnings (EPRA)

19 807

20 636

Restatement of non-recurring income

(615)

(1 941)

EPRA earnings (EPRA) excl. non-recurring income

19 192

18 695

 

EPRA NNNAV APM

 

In thousands of euros

June 30, 2020

2019

Shareholders’ equity under IFRS

727 240

730 268

Portion of rent-free periods

(27 200)

(28 614)

Market value of loans

(770 647)

(771 837)

Carrying amount of loans

765 573

765 240

EPRA NNNAV

694 966

695 057

 

LTV ratio APM

 

In thousands of euros

June 30, 2020

June 30, 2019

Gross amount of balance sheet loans (statutory financial statements)

769

770

Fair value of investment property

1 460

1 435

LTV ratio (%)

52,6%

53,7%

 

Occupancy rate APM

 

The occupancy rate is the ratio of space for which the Company receives rent under a lease agreement to the total amount of available space.

 

Contacts

Media Relations
Aliénor Miens/Quentin Dussart
+33 (0)6 59 42 29 35 cegereal@citigatedewerogerson.com

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

Contacts

Media Relations
Aliénor Miens/Quentin Dussart
+33 (0)6 59 42 29 35 cegereal@citigatedewerogerson.com

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