EIFF Tour Eiffel

2017 Half-Year Results

High Growth in Earnings

The Board of Directors, which met on 21 July 2017 under the chairmanship of Hubert Rodarie, approved the financial statements at 30 June 2017. The limited review procedures for these accounts have been completed and the corresponding reports are being issued.

Consolidated figures (audited)

Significant improvement in operating indicators

Consolidated turnover (comprising rental and service charge income from investment properties) stood at €44.3m for H1 2017 compared with €36.6m for H1 2016, of which rents alone accounted for €34.4m and €28.9m respectively, or growth of 19%.

The increase in rental income was mainly due to acquisitions made in 2016 (3 assets in Guyancourt, Puteaux and Nanterre-Préfecture and the Défense-Nanterre-Seine business park).

Operating income on ordinary activities stood at €12.1m for H1 2017 after taking into account depreciation, property expenses and overheads.

Current cash flow rose sharply by 20% to €24.9m against €20.8m for H1 2016.

Development projects on all land reserves

In line with its strategy of simultaneously performing acquisitions and developments depending on opportunities, the Group is currently pursuing the upgrading of its land reserves in Ile-de-France and in the other regions:

• In Nanterre, two projects are being studied in the Défense-Nanterre-Seine Business Park along the A86 motorway, which already comprises 19 office buildings and light industrial premises:
  • The NAVARQUE: restructuring of a building with 6,423 m² of floor space for redevelopment for mixed uses and offices.
  • The NANTURRA: development of a 1^st phase of 3,000 m² of a new building for mixed uses and offices.
     
• At Massy within the Ampère Atlantis integrated development zone (ZAC), the "Campus Eiffel Massy" project for the construction of 24,000 m² of floor space for mixed uses and offices in several buildings: the objective of this campus which focuses on modularity, services and medium-sized floor space segments, is to propose an alternative commercial offer to existing buildings. The project has been divided into two phases:
  • Block O: a building permit was issued in July 2016 for the construction of a property complex of 4 HQE buildings with a surface area of more than 12,000 m²;
  • Block P: approval was obtained in September 2016 for the construction of 12,150 m².
     
• In Orsay in the Parc Eiffel, (17,000 m²), an additional construction scheme representing 13,600 m², consisting of two buildings (6,000 m² of office space and 7,600 m² of light industrial premises and a restaurant), the building permit for which is going tobe filed in the Q3 2017.
   
• In Marseille in the Parc des Aygalades (18,000 m²), an additional construction scheme of a building with 3,634 m² of floor space for offices and retail. This project complements the ongoing development of a building with 1,967 m² of floor space leased by SERAMM as part of an off-plan lease agreement (BEFA), the delivery of which is scheduled for H1 2018.
   
• In Aix-en-Provence, (25,000 m²), in the Parc du Golf, the construction of an additional building with 4,600 m² of floor space leased by Capgemini as part of an off-plan lease agreement (BEFA). The construction of this new building is continuing with the delivery scheduled for early 2018.

Moreover, the Group has expanded its presence in two business parks with several acquisitions:

• Two buildings of 1,500 m² and 1,100 m² respectively located in the Parc du Golf in Aix-en-Provence. These acquisitions enable the Group to increase its property portfolio to 30,000 m² out of a total surface area of 43,000 m², or 70% of the business park.
• A 1,300 m²building in the Orsay University Parc Eiffel. This acquisition means the Group owns the entire business park.

An increase in portfolio value

The Group's property assets at 30 June 2017 stood at €1,145.2m, excluding transfer duties and expenses, of which €1,140.9m represented investment properties and €4.3m represented assets for disposal. Office buildings in Ile-de-France account for 86% of this value. The valuation of the portfolio was €1,135.1m as at 31 December 2016, variation is mainly due to the costs incurred for development during the period.

The valuation of the buildings indicates an average net yield (EPRA topped up) of 5.5%, a figure that remained stable compared with year-end 2016.

The EPRA vacancy rate remained at a level of 12.7% at 30 June 2017, marked by the vacancy resulting from the recently acquired Défense-Nanterre-Seine Business Park, in which some of the buildings are undergoing renovation or restructuring.

On this basis and after dividend distribution of €3 per share, the EPRA Triple Net Asset Value per share stood at €57.3.  It was €58.9 per share at year-end 2016.

Extension of debt maturity and stability of the Loan To Value ratio

Overall gross debt as at 30 June 2017 stood at €431.8m, as against €432.7m at 31 December 2016.

Net debt (adjusted for cash and cash equivalents) amounted to €412.0m.

Thus, the Group's level of indebtedness at 30 June 2017 represented 36.0% of its property assets, against 36.2% at 31 December 2016.

In the first half of 2017, the Group undertook the previously announced operations to extend the maturity of its debt with the signing of a 7-year Revolving Credit Facility for the sum of €100m, of which €84m were used to repay part of the loan maturing in October 2018.

Given these items, the Group's average term of debt stood at 5.8 years at 30 June 2017 against 4.6 years at year-end 2016.

The Group's average financing rate remained stable at 1.9% in the first half of 2017 compared with the 2016 financial period.

Outlook

"The results for the first half of 2017 are in line with the growth of the last two years. The property company is strengthening its fundamentals and is rolling out its plan to increase the size of its assets to €1.5bn in the coming years. The priority is to pre-market development projects but the teams are also taking action to optimize the service offer that goes hand in hand with the transformation and development of business parks. As a result, both in Ile de France and the other regions, the attention is constantly focused on upgrading the parks and the operations. Backed by that dynamic and the support of the shareholders, I am confident that the Group will undertake new projects in the coming months," said Philippe Lemoine, Managing Director of the Société de la Tour Eiffel.

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