Cegereal, the French Core Office REIT, actively pushes ahead with its growth in 2018

Paris, February 22, 2019 – 8:00 am
2018 Annual Results – Regulated Information

CEGEREAL ACTIVELY PUSHES AHEAD WITH ITS GROWTH STRATEGY IN 2018

• Acquisition of the Passy Kennedy office property
• Sharp increase in the occupancy rate to 96.1%
• €35.2 million in recurring cash flow
• €2.3 per share distribution

Jérôme Anselme, Chief Executive Officer of Cegereal, commented: "The performance of Cegereal’s teams in 2018 enabled us to deliver results in line with the ambitious objectives set in 2017. The acquisition of Passy Kennedy illustrates our selective acquisition strategy focused on Paris – an area with strong potential for rental income growth – and brings our portfolio value to €1,409 million, up 20.5% year on year. Our rental activity remained robust in 2018, as illustrated by the leases signed with the European Banking Authority and KPMG for 10,000 sq.m of space in the Europlaza building. These new leases come less than a year after the units were vacated and help to drive a sharp increase in the occupancy rate to 96.1%. We are confident about the year ahead and intend to continue on our path of controlled growth that creates value for our shareholders, leveraging our strategy of investing in our assets.” 

First acquisition in Central Paris

In 2018, Cegereal continued to expand its portfolio with the acquisition of the Passy Kennedy office property. The 23,800 sq.m iconic Parisian building is set in a highly sought-after location along the banks of the Seine in Paris’ wider central business district, and offers stable cash flow and potential for growth in rental income over the long term.

The transaction was financed through an €80 million capital increase with pre-emptive subscription rights for existing shareholders and a €148.5 million bank loan. Following these operations, the Group’s loan-to-value ratio stood at 54.7% at December 31, 2018, compared with 53.4% one year earlier.

Value-creating investment policy

Cegereal continued to invest significantly in its different properties during the year. Thanks to the gradual repositioning of Europlaza, begun in 2016, and our policy of guiding potential tenants in their choice of property from the start of the process, we leased over 10,000 sq.m in under ten months at a rate of between €480 and €500 per sq.m:

• In April, the European Banking Authority will take possession of 5,300 sq.m of space for a period of nine years.
• KPMG extended its existing lease to cover almost 7,400 sq.m of space for a period of nine years with no break option.

These new leases drive a sharp rise in Cegereal’s overall occupancy rate to 96.1% (up from 91.4% at December 31, 2017).

Rental income came in at €53.0 million in 2018 (€52.3 million on a comparable portfolio basis, i.e., excluding the €0.7 million contribution from Passy Kennedy), up 3.4% compared with the prior-year period. The increase was mainly led by our excellent rental activity. The Passy Kennedy acquisition and the recently signed leases will have a significant impact on 2019 rental income.

At December 31, 2018, the estimated value of Cegereal’s real estate portfolio was up 1.5% on a comparable portfolio basis from €1,169 million excluding transfer duties at December 31, 2017. Including Passy Kennedy, the portfolio value stood at €1,409 million excluding transfer duties, up 20.5% year on year.

EPRA earnings stable at €30.7 million

EPRA earnings came in at €30.7 million for 2018, compared with €32.7 million for 2017. After adjusting for the 3% corporate income tax contribution on dividends, which was reimbursed in 2017 in an amount of €1.7 million, EPRA earnings were stable year on year, retreating 0.3% from €30.9 million to €30.7 million. The contribution of Passy Kennedy, acquired at the end of the year, was modest in 2018, but will have a significant impact on 2019 EPRA earnings.

EPRA NNNAV stood at €639.6 million at December 31, 2018, up from €585.4 million one year earlier. The increase was mainly attributable to the capital increase (positive €79.1 million impact) and the contribution of consolidated net income (positive €33.1 million impact).

IFRS net income came in at €33.1 million, compared with €62.4 million in 2017. The year-on-year difference reflects the significant €37.2 million rise in fair value of investment property recorded in 2017, caused by last year’s interest rate squeeze. In contrast, the fair value of investment property increased by €11.7 million in 2018.

Recognition for our financial and environmental performance

Cegereal has been committed to an ambitious CSR policy for a number of years. In 2018, its initiatives were once again recognized with a number of awards:

• Two Gold Awards at the annual conference of the European Public Real Estate Association (EPRA) for the quality of its financial and non-financial reporting.
• Second place in the Global Real Estate Sustainability Benchmark’s (GRESB) "listed office property companies in Europe” category, ranking among the top 3 for the fourth consecutive year.
• Dual BREEAM In-Use International and NF HQE^TM Exploitation certification for its entire portfolio.

Solid governance

Cegereal’s Board of Directors validates the strategy implemented since Jérôme Anselme was first appointed and has decided to renew its confidence in him by confirming his position as Chief Executive Officer.

2019 distribution: €2.3 per share

Cegereal’s recurring cash flow remained stable at €35.2 million, compared with €35.8 million in 2017.

At the Annual Shareholders’ Meeting to be held in April 2019, Cegereal intends to recommend distributing an amount of €2.3 per share, up 4.5% compared with the prior year (excluding the special distribution).

Cegereal’s Board of Directors met on February 21, 2019 to approve the audited consolidated financial statements for the year ended December 31, 2018.

The annual results presentation can be viewed on the Company’s website:

www.cegereal.com

Investor Calendar

• April 30, 2019       Annual Shareholders’ Meeting
• April 30, 2019       First-quarter 2019 revenue
• May 7, 2018         Payment of the 2018 dividend
• July 25, 2019        First-half 2019 results

For more information, contact:

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 €1,409 million at December 31, 2018 (excluding transfer duties).

From an environmental point of view, Cegereal’s portfolio is fully certified with NF HQE^TM 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 €555 million at February 19, 2019.

www.cegereal.com

APPENDICES

IFRS Income Statement (consolidated)

IFRS Balance Sheet (consolidated)

IFRS Statement of Cash Flows (consolidated)

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

French GAAP Income Statement

French GAAP Balance Sheet

In euros

Reconciliation of Alternative Performance Measures (APM)

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.

Taking into account the upcoming arrival of the European Banking Authority and KPMG, Cegereal’s overall occupancy rate is up sharply at 96.1%.

At December 31, 2018, i.e., before the effective date of these new leases, the occupancy rate stood at 92.3% (91.1% on a comparable portfolio basis), versus 91.4% one year earlier.

Attachment

• PDF Press Release