Rental income: €91.2 million EPRA earnings:
€50.1 million Attributable net profit: €113.7 million Portfolio
value: €7,239 million (up 1.1%) EPRA NNNAV: €95.7 per share (down
0.2% over 6 months/up 8.5% over 1 year)
Regulatory News:
The interim consolidated financial statements for the six months
ended 30 June 2020 were approved by the Board of Directors of
Société Foncière Lyonnaise (Paris:FLY) on 28 July 2020, at its
meeting chaired by Juan José Brugera. In a market thrown into
turmoil by the Covid-19 crisis, rental income and EPRA earnings
declined but the portfolio’s appraisal value continued to rise and
the Group’s NAV remained stable, attesting to SFL’s strategic
resilience. The auditors have completed their review of the
financial statements and issued their report on the interim
financial information, which does not contain any qualifications or
emphasis of matter.
Consolidated data (€ millions)
H1 2020
H1 2019
Change
Rental income
91.2
97.9
-6.9%
Adjusted operating profit*
74.8
83.3
-10.1%
EPRA earnings
50.1
57.2
-12.5%
Attributable net profit
113.7
253.5
-
* Operating profit before disposal gains
and losses and fair value adjustments
30/06/2020
31/12/2019
Change
Attributable equity
4,473
4,485
-0.3%
Consolidated portfolio value excluding
transfer costs
7,239
7,158
+1.1%
Consolidated portfolio value including
transfer costs
7,715
7,632
+1.1%
EPRA NNNAV
4,452
4,461
-0.2%
EPRA NNNAV per share
€95.7
€95.9
Results:
Rental income:
First-half 2020 consolidated rental income amounted to €91.2
million, down €6.7 million (6.9%) from the €97.9 million reported
for the same period of 2019.
- On a like-for-like basis (excluding changes
in consolidation scope affecting period-on-period comparisons),
rental income contracted by €2.6 million (2.9%). The decline was
due to the effects of the Covid-19 crisis, which led to rent
holidays being granted to tenants of small retail units (with a
marginal overall impact) and the closure of the Edouard VII and
#cloud.paris conference centres as well as the Indigo hotel.
Adjusted for the impacts of the conference centres, Indigo hotel
and Edouard VII car park closures, like-for-like rental income
increased by €0.3 million.
- Rental income from units being redeveloped
or renovated in the periods concerned was down by €3.5 million, due
to the renovation of several floors that were vacated in late 2019
and early 2020, mainly in the 103 Grenelle building.
- Lastly, income from various penalties was
down by a slight €0.6 million in first-half 2020.
Operating profit before disposal gains and losses and fair value
adjustments to investment property came to €74.8 million in
first‑half 2020 versus €83.3 million in the year‑earlier
period.
Portfolio appraisal value:
The portfolio’s appraisal value at 30 June 2020 was 1.1% higher
on a like-for-like basis than at 31 December 2019. Positive fair
value adjustments to investment property amounted to €42.8 million
at 30 June 2020 versus positive adjustments of €234.5 million at 30
June 2019.
Net profit:
Net finance costs amounted to €13.7 million in first-half 2020
compared with €15.2 million in the year‑earlier period, a decrease
of €1.5 million. The €0.4 million increase in recurring finance
costs, mainly reflecting the Group’s higher level of debt, was
partly offset by the lower average cost of debt.
After taking into account these core items, the Group reported
EPRA earnings of €50.1 million in first‑half 2020, down 12.5% from
€57.2 million in the year-earlier period. Attributable net profit
for the period came in at €113.7 million compared with €253.5
million in first‑half 2019.
Business review:
Rental operations:
Despite the Covid-19 crisis which severely disrupted the Paris
region rental market, SFL signed leases on around 16,000 sq.m. in
first‑half 2020 on very good terms. The 10,000 sq.m. of offices let
during the period included over 80% (6,500 sq.m.) of the office
space in the 83 Marceau building currently in the process of being
redeveloped, which has been let to Goldman Sachs under a turnkey
lease.
The new office leases were signed at an average nominal rent of
€867 per sq.m, corresponding to an effective rent of €754 per sq.m.
These prices attest to the Paris rental market’s resilience and the
very high quality of the Group’s properties.
The physical occupancy rate for revenue-generating properties
stood at 95.0% at 30 June 2020 compared with 97.4% at 31 December
2019. The remaining vacant units are located mainly in the Le
Vaisseau building in Issy-les-Moulineaux and the 103 Grenelle
building where around 6,000 sq.m. of newly renovated offices have
just been delivered. The EPRA vacancy rate was 4.5% at June 30,
2020 versus 1.6% at 31 December 2019.
Development operations:
Properties undergoing development at 30 June 2020 represented
roughly 17% of the total portfolio. They consist mainly of the
Group’s current three flagship projects concerning:
- The retail space in the Louvre Saint-Honoré
building, which is scheduled for delivery at the end of 2023 under
a turnkey lease on over 20,000 sq.m. Work has just begun on
clearing the space to be redeveloped and removing asbestos. - The
Biome office complex on avenue Emile Zola (approximately 24,000
sq.m.), which is being completely redeveloped. The partial
demolition phase has already been completed and the building is due
to be delivered in 2022. - The office building at 83 avenue Marceau
(approximately 9,000 sq.m.), which is in the process of being
redeveloped, with delivery scheduled for 2021. Most of the units
have been pre-let, including almost 6,500 sq.m. (81% of the
building's total surface area) let under a turnkey lease signed in
first-half 2020.
Development costs capitalised in first-half 2020 amounted to
€32.5 million, including the above projects for a total of €18.4
million and large-scale renovations of complete floors in the
Washington Plaza, 103 Grenelle and 106 Haussmann buildings.
Work on these projects was halted for approximately two months
during the Covid-19 lockdown. Once the lockdown was lifted, the
various teams gradually returned to work as conditions allowed and
site activity was almost back to normal levels in June. The
resulting delivery delays were kept to a reasonable three-to-six
months depending on the project.
Portfolio operations:
No properties were purchased or sold in first-half 2020.
Financing:
During the period, SFL issued €500 million worth of 1.50%
seven-year bonds due on 5 June 2027.
In addition, a new five-year €150 million revolving line of
credit was obtained from BNP Paribas. This new facility cancels and
replaces a previous €150 million revolving line of credit that was
reduced to €100 million in 2019 and was due to expire in May
2021.
The bond issue and revolving line of credit will be used for
general corporate purposes. They have extended the average maturity
of the Group's debt as part of its proactive balance sheet
management strategy.
Net debt at 30 June 2020 amounted to €1,877 million (compared
with €1,732 million at 31 December 2019), representing a
loan-to-value ratio of 24.3%. At June 30, 2020, the average cost of
debt after hedging was 1.5% and the average maturity was 4.7 years.
At the same date, the interest coverage ratio stood at 5.6x.
At 30 June 2020, SFL had €1,040 million in undrawn lines of
credit.
EPRA NNNAV:
The consolidated market value of the portfolio at 30 June 2020
was €7,239 million excluding transfer costs, an increase of 1.1%
from €7,158 million at 31 December 2019 that was primarily due to
the value created by work on the Group’s flagship projects. The
market value of its revenue-generating office properties was stable
compared with end-2019.
The average EPRA topped-up net initial yield (NIY) was 3.0% at
30 June 2020, unchanged from 31 December 2019.
EPRA NNNAV stood at €4,452 million or €95.7 per share at 30 June
2020 versus €95.9 per share at 31 December 2019, reflecting a very
small 0.2% decrease over the past six months after payment of a
dividend of €2.65 per share in April 2020. After adding back the
dividend payout, EPRA NNNAV was up 2.6% over the period.
Management of the Covid-19 health crisis:
As soon as the crisis emerged, SFL took all necessary measures
to limit the pandemic’s effects on its business and results:
- All the office buildings remained open and
available for use by tenants, and the necessary health protection
measures were deployed in the buildings’ common areas. - The
conference centres (Edouard VII and #cloud.paris) and the Indigo
hotel (Edouard VII) were closed. - Government measures concerning
very small businesses and small retail outlets were applied and
tenant requests for help were managed on a case-by-case basis in
order to provide them with the necessary support as far as
possible, for example by allowing them to defer payment of their
second quarter rent. - Property leasing activities continued in a
very slow rental market. - Agreements were signed with the general
contractors working on the main redevelopment projects currently in
progress. - The Group’s financial liquidity was strengthened.
As a result of these measures, the top-line impact of the crisis
was limited to €3.7 million in “lost” rental income, leading to a
€2.5 million reduction in net property rentals.
A citizen-based approach:
To ensure business continuity while also protecting employees,
all of SFL’s teams worked from home during the lockdown, with no
temporary lay-offs, since the lockdown was lifted, they have been
gradually returning to the office.
Lastly, SFL contributed to the collective effort to fight the
pandemic, by donating €550,000 to the Fondation de France’s
programmes in support of hospitals and health workers, medical
research and assistance for vulnerable people. The Group also
offered to make one of its vacant properties available to the Paris
urban affairs ministry to provide emergency housing.
EPRA indicators
H1 2020
H1 2019
EPRA Earnings (€m)
50.1
57.2
/share
€1.08
€1.23
EPRA Cost Ratio (including vacancy
costs)
16.1%
13.2%
EPRA Cost Ratio (excluding vacancy
costs)
14.3%
12.5%
30/06/2020
31/12/2019
EPRA NAV (€ millions)
4,606
4,623
/share
€99.0
€99.4
EPRA NNNAV (€ millions)
4,452
4,461
/share
€95.7
€95.9
EPRA Net Initial Yield (NIY)
2.6%
2.7%
EPRA topped-up NIY
3.0%
3.0%
EPRA Vacancy Rate
4.5%
1.6%
Alternative Performance Indicators (APIs)
API EPRA earnings
€ millions
H1 2020
H1 2019
Attributable net profit
113.7
253.5
Less:
Profit (loss) on asset disposals
-
-
Fair value adjustments to investment
property
(42.8)
(234.5)
Fair value adjustments to financial
instruments, discounting adjustments to debt and related costs
0.2
2.1
Tax on the above items
(9.0)
12.5
Non-controlling interests in the above
items
(12.0)
23.6
EPRA earnings
50.1
57.2
API EPRA NNNAV
€ millions
30/06/2020
31/12/2019
Attributable equity
4,473
4,485
Treasury shares
4
8
Unrealised capital gains
23
23
Fair value adjustments to fixed rate
debt
(48)
(55)
EPRA NNNAV
4,452
4,461
API net debt
€ millions
30/06/2020
31/12/2019
Long-term borrowings and derivative
instruments
1,936
1,441
Short-term borrowings and other
interest-bearing debt
258
393
Debt in the consolidated statement of
financial position
2,194
1,834
Less:
Current account advances (liabilities)
(50)
(50)
Accrued interest, deferred recognition of
debt arranging fees, negative fair value adjustments to financial
instruments
2
1
Cash and cash equivalents
(270)
(54)
Net debt
1,877
1,732
More information is available at
www.fonciere-lyonnaise.com
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version on businesswire.com: https://www.businesswire.com/news/home/20200729005334/en/
SFL - Thomas Fareng - T +33 (0)1 42 97 27 00 -
t.fareng@fonciere-lyonnaise.com Evidence - Grégoire Silly -
T +33 (0)6 99 10 78 99 - gregoire.silly@evidenceparis.fr
www.fonciere-lyonnaise.com
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