Cegereal, the French Core Office REIT: 2014 - Strong growth in operating performance (+24%)

Paris, February 13, 2015 - 8:00 a.m.
Regulated information

Cegereal - Annual Results

2014: Strong growth in operating performance (+24%)

• Solid operating performance

In 2014, EPRA earnings rose by 24% to €23.7 million, up from €19.1 million in 2013. This solid performance is mainly driven by a 12.9% growth in net rental income and an increase in the occupancy rate to 90%, leading to a fall in finance costs.

• Creation of the first Garden Tower in La Défense 

With its unique Garden Tower project in the heart of La Défense, Cegereal is reinventing the relationship between green spaces and office buildings by offering Europlaza users, as from spring 2015, an exceptional outdoor space and fully remodelled ground-floor common areas. Europlaza will give tenants and their visitors the opportunity to enjoy a more than 3,000-sq.m. private garden, as well as two internal gardens, all designed by architect Juan Trindade.
The interior creations, to be located in the building's entrance hall, are in the final phases of their development, while the outdoor space remodeling is ongoing.

• Successful completion of the Go Green program, start of Upgreen Your Business 

Cegereal completed its Go Green project, launched in 2012, thus becoming France's first fully "green" REIT with a portfolio that has been entirely certified for its environmental qualities.
Cegereal's environmentally responsible approach recently earned its Green Star status in the Global Real Estate Sustainability Benchmark (GRESB). The GRESB recognized Cegereal in its first appearance in the ranking as a benchmark property company in the areas of responsible management and sustainable development.
In January 2015, Cegereal demonstrated its continued commitment to CSR with the launch of the "Upgreen Your Business" collaborative program.

• Increase in net rental income (up 12.9%)

In 2014, rental income calculated in accordance with IFRS totaled €44.7 million, up 3.3% compared with 2013. Expense recoveries and penalties received from tenants rose 25% on 2013 at €13.2 million. Building-related costs slightly decreased and amounted to €16.3 million. Overall, the net rental income increased from €36.8.million to €41.6 million.

The portfolio's overall occupancy rate was 90% at December 31, 2014, compared with 89% at end-2013.

Arcs de Seine: 97% occupancy rate
In 2014, Cegereal kept up its marketing strategy for Arcs de Seine, the standout property in Paris's Telecommunication Valley. Located on the banks of the Seine on Quai du Point du Jour in Boulogne-Billancourt, Arcs de Seine was entirely renovated in 2012.
In that year, 22,220 sq.m. were leased, followed by a further 7,800 sq.m. in 2013. In 2014:

• a new lease on 700 sq.m. was signed with a new tenant, BBC, which came into effect during the second quarter;
• Sagem leased an additional 700 sq.m. of space in April, bringing its leased surface area to 5,600 sq.m.;
• in September, Huawei leased an additional 1,400 sq.m. of space, increasing to 5,200 sq.m. the total surface area occupied by this fast-growing tenant.

In January 2015, Cegereal signed two new six-year leases on 4,200 sq.m. of office space. Amgen will occupy 2,800 sq.m. of space and Exclusive Networks 1,400 sq.m.
These new signings raise the property's occupancy rate to 97% at December 31, 2014 (compared with 81% at December 31, 2013), leaving just 1,400 sq.m. of the building's 45,000 sq.m. on the market.

Rives de Bercy: HQE and BREEAM In-Use Very Good certification
The new nine-year lease signed as part of the Go Green program in January 2013 with Crédit Foncier, the building's long-standing sole tenant, includes stringent mutual undertakings by the owner and the tenant to meet environmental targets. 
In December 2014, Rives de Bercy (32,000 sq.m.) was officially granted HQE Exploitation environmental performance certification by Certivéa, an independent organization.
On January 20, 2015, the building also received the BREEAM In-Use International Very Good certification.

Europlaza: a buoyant rental activity
During the period, three tenants renewed their leases, with two of them leasing additional surface area, and two new tenants moved in:

• Galderma's lease on 4,000 sq.m. was renewed with effect from January 1, 2014 and a further 800 sq.m. were leased during the second quarter.
• The lease with Crédit Agricole/BforBank on 1,700 sq.m. was also renewed, with a further 1,300 sq.m. leased in the second quarter.
• The lease with NTT Europe on almost 1,300 sq.m. was renewed in May.
• 900 sq.m. were leased to Gas Natural, effective from May, and 600 sq.m. to Heinz France from July.

The Europlaza occupancy rate stood at 77% at December 31, 2014 versus 89% at end-2013.
Following the departure of Cap Gemini from the building's lower floors, Europlaza currently has 10,800 sq.m. of office space available for lease. This space overlooks the new gardens, which will be completed in spring 2015.

• A healthy financial position

Cegereal refinanced all of its debt in 2012 and does not have any repayment obligations until August 2017. Its loan to value is stable at 46.5%.
This debt was refinanced at the competitive rate of 3.40%, reducing finance costs by around 20%. The rate is reduced to 3.15% as soon as the occupancy rate exceeds 90%.

• Amount to be distributed in dividends in 2015: €1.65 per share 

At the Annual Shareholders' Meeting on April 15, 2015, Cegereal intends to recommend paying a total of €1.65 in dividends per share in 2015. It will be paid on July 16, 2015, subject to shareholders' approval.

• Key indicators

The portfolio was valued by DTZ Eurexi at €871 million excluding transfer costs (€928 million including transfer costs) as of December 31, 2014 versus €849 million excluding transfer costs as of December 31, 2013.
The three properties' appraisal values, excluding transfer costs, are as follows:

• Arcs de Seine:       €347 millions
• Europlaza:            €333 millions
• Rives de Bercy:     €191 millions

EPRA NNNAV excluding transfer costs stood at €34.8 per share at December 31, 2014, compared with €34.1 per share at the 2013 year-end. The decline over the period reflected dividend distributions (negative impact of €1.5 per share), consolidated earnings growth (positive impact of €1.6 per share), changes in the properties' appraisal values (positive impact of €1.6 per share), rent-free periods granted to new tenants (negative impact of €0.7 per share) and changes in the fair value of bank debt (negative impact of €0.4 per share).

Raphaël Tréguier, Cegereal's Chief Executive Officer, said:
"In 2014, we outperformed our targets with more than 20% growth in recurring net income per share. In addition to this achievement, we are delighted to report on the success of the Go Green program and the launch of Europlaza's transformation into a Garden Tower, both of which are central to our development. 2015 is set to be a promising year for Cegereal, as we look to actively engage in arbitrage opportunities and acquisition operations."

Cegereal's Board of Directors met on February 12, 2015 to approve the audited consolidated financial statements for the year ended December 31, 2014.

The annual results presentation and video can be viewed on the Company's website: www.cegereal.com.

Investor Calendar

• April 15, 2015                     Annual Shareholders' Meeting
• April 16, 2015                     First-quarter 2015 revenue
• July 16, 2015                      Payment of the 2014 dividend
• July 24, 2015                      First-half 2015 results
• October 22, 2015                Third-quarter 2015 revenue

IFRS Income Statement (consolidated)

IFRS Balance Sheet (consolidated)

IFRS Statement of Cash Flows (consolidated)

*including the 2014 interim dividend of €0.75 per share paid by Cegereal (representing a total amount of €10,029 thousand euros).

French GAAP Balance Sheet