Press release         
Paris, April 30, 2019

FY 2018/2019 consolidated net loss: -€48.6 million €
Public Repurchase Offer by REOF Holding potentially followed by a squeeze-out, subject to disposal of Newtime.

M€ 31.03.2019 31.03.2018 Var. (%)
Net rental income 1.7 7.3 -76.7%
Value adjustment on buildings -21.8 43.6 -150.0%
Consolidated net profit -48.6 25.1 -293.6%
M€ 31.03.2019 31.03.2018 Var. (%)
Real estate portfolio valuation (excluding duties) 184.4 347.2 -46.9%
Shareholder's equity 4.8 52.4 -90.8%
Consolidated net debts

Overall indebtedness ratio[1]
182.8

99.2%
298.1

85.9%
-38.7%

+15.5%
Liquidation NAV per share (diluted)1
Liquidation NAV per share (non-diluted)
0.77 €
0.10 €
2.20 €
2.50 €
-65.0%
-96.0%

Officiis Properties' Board of Directors met today and approved the consolidated annual accounts of the Company, which are currently being audited, for the period from April 1, 2018 to March 31, 2019

Taking into account the amount of debts the Company has accumulated and the announced disposal of its principal asset, the management and the Board of Directors have examined the applicability of going concern.

At March 31, 2019, the group disposing of a net cash position of €17.3 million, sufficient to meet its maturities over the upcoming 12 months, or until March 31, 2020, the annual accounts of the financial year have been established on the going concern principle.   

Decrease in Rental Income

Gross rents recorded during the FY 2018/2019 reached €4.6 million at March 31, 2019, compared with €9.3 million during the previous fiscal year. This decrease of approximately 50% is partly due to the disposals of the Salengro (December 2017)[2], Think and Imagine buildings (October 2018)2, and partly due to the departure of the tenant Faurecia2 at the end of November, 2018.

As a reminder, a new lease at the Newtime building covering 905 sqm and for €0.4 million of annual gross rents was signed during the 1st semester of the FY 2018/20192.

On February 14, 2019, Officiis Properties and National Instruments, the last tenant of the Magellan building, have agreed to an amicable termination amendment to the commercial lease that bound them together, which will take effect on June 1st, 2019.

At March 31, 2019, the financial occupation rate of the buildings held by Officiis Properties and its subsidiaries reached 66.2%.

Portfolio Value Declining

At March 31, 2019, on the basis of the independent appraisal carried out by the company JLL, the overall portfolio's rental market value stands at €11.4 million, with a value including duties of €189.5 million, or a yield of 6.0%. The value excluding duties is estimated at €184.4 million, declining by €21.2 million in comparison with the value at March 31, 2018 assuming a comparable scope (excluding the Think and Imagine buildings).

This decline in value of -10.3%, to a large extent occurring during the 1st semester of FY 2018/2019, comes from the Newtime building, whose valuation in the annual accounts of March 31, 2019 corresponds to its net disposal price of €152.6 million, while it was €174.6 million in the preceding annual accounts (see below).

Disposal of the Newtime building expected on May 15, 2019

The conditions precedent of the sales agreement of the Newtime building signed on February 6, 2019 have been lifted. The disposal of the building should thus occur on May 15th, 2019. After taking into account the amount of the repurchase of rent-free periods granted to the tenants, the fees and expenses of advisors, and the rental guarantee, the net amount to be perceived will amount to €152.6 million.

Implications of the disposal of the buildings on the financial structure of the Group

As a reminder, subsequently to the disposals of the Think and Imagine buildings on October 26, 2018, the group had used a portion of the sales proceeds to reimburse a part of the mortgage loans underwritten by the bank Helaba.

Officiis Properties had proceeded with the full reimbursement of its mortgage debt which stood at €53.1 million, and Officiis Properties Paris Ouest 1 had reimbursed 115% of the amount of the debt backed by the financing of the Think building, or €23.3 million. Following these partial reimbursements, the remaining balance of the mortgage debt of the group stood at €56.4 million.


On December 20, 2018, Officiis Properties Paris Ouest 1 concluded with the bank Helaba a refinancing of the mortgage of the Newtime building for an amount of €92 million, and the group proceeded with a partial reimbursement of €90.7 million of the subordinated non-banking loan granted by the company TwentyTwo Credit 1 S.à.r.l.[3]

At March 31, 2019, the outstanding amount owed by Officiis Properties with regards to this subordinated non-banking loan stood at €79.7 million.

The net proceeds of the disposal of the Newtime building, scheduled on May 15, 2019 (€152.6 million) will be used to proceed with the full reimbursement of the mortgage loan with Helaba for an amount of €92 million and also to partially reimburse the subordinated non-banking loan for an amount of €60 million.

Increase of the Overall Debt Ratio, decrease of the Revalued Net Asset Value

In January 2019, with the help of a renowned investment bank, the Company launched a consultation with around 15 financing companies with the goal of refinancing its subordinated non-banking loan. Following this consultation, only two indicative offers were received but were not retained, since they would have had an adverse financial impact compared with the present situation.

At March 31, 2019, the financial debts amount globally to €199.8 million (including interest accrued and/or capitalized), of which €92.3 million are mortgage debts.[4]

The mortgage debt at March 31, 2019 (principal and accrued interest), net of available cash and of cash reserves (€17.3 million), represents 40.7% of the value excluding duties of the Company's portfolio value (€184.4 million), compared with 34.6% at March 31, 2018.

The Overall Debt Ratio (including mortgages, non-bank loans, convertible bonds and related accrued and/or capitalized interests, net of cash and cash reserves)3 has increased and is very high: it represents 99.2% of the value excluding duties of the Company's portfolio value at March 31, 2019, compared with 85.9% at March 31, 2018.

The Company's consolidated shareholders' equity stands at €4.8 million at March 31, 2019, compared with €52.4 million at March 31, 2018 (-91%).

The shareholders' equity stands at -€0.6 million and are less than half of the share capital.

The liquidation NAV[5] per share on a non-diluted basis3 is €0.10 (€2.50 at March 31, 2018). On a diluted basis, it stands at €0.77.

Outlook

From an operational standpoint, following the departure of Faurecia, the principal tenant of the Magellan building, the company has initiated renovation works on this real estate asset. These works should cost €10 million (excl. tax) and will be completed by December 2019.

From an organizational standpoint, subject to the actual disposal of the Newtime building, it will be proposed at the future extraordinary general meeting of the shareholders of the Company to (i) simplify the structure of the group by making it absorb its two subsidiaries and to (ii) modify the date of the annual closing of accounts of the Company, which would henceforth be the 30th of June of each year, with a first set of accounts covering a 3 month period until June 30, 2019.

On April 26, 2019, the company REOF Holding S.à r.l, majority shareholder of the company, informed it that once the disposal of the Newtime building has been completed, pursuant to its commitments, it will implement a public repurchase offer according to Article 236-6 of the Autorité des Marchés Financiers ("AMF") General Regulations, for all securities granting access to the shareholders' equity that it does not hold as well as the convertible bonds of the Company at the following terms:

  • Price per share of the Company: €1.20
  • Price per convertible bond of the Company: €2.05

REOF Holding S.à r.l has also indicated that this public repurchase offer could be followed up with a squeeze-out if, at its conclusion, it results in its holding a large enough number of shares of the Company and/or securities granting rights to its capital which would enable it to implement a squeeze-out according to applicable regulations.

The Company has designated, on March 29, 2019, the firm DK Expertises et Conseil, represented by Messrs. Didier Kling and Teddy Guerineau as independent expert called upon to provide a fairness opinion on the financial terms of the above-mentioned offer (including in the context of the potential implementation of a squeeze-out).

From a financial standpoint, the company launched a consultation process with several banking institutions to obtain a new mortgage loan backed by the Newtime building, which would enable it to proceed with the partial reimbursement of the non-banking loan.

As indicated above, the group has a cash position large enough to meet its obligations over the upcoming 12 months, or until March 31, 2020. The annual accounts have thus been established on the going concern principle.

Nevertheless, beyond this date, the Company estimates that it may not have the means to reimburse the entirety of the subordinated non-banking loan and the convertible bond of the Company which arrive at maturity on July 31, 2020. At March 31, 2019, the subordinated non-banking loan stands at €79.9 million, and the convertible bonds stand at €28.1 million. As indicated above, following the disposal of the Newtime asset, planned on May 15, 2019, the Company envisages reimbursing €60 million of the non-banking loan. 

The Company thus intends to negotiate with its creditors, or will envision a capital increase, once the public repurchase offer implemented by REOF Holding S.à r.l is completed, and if applicable the squeeze-out is realized.

If the outcome of these negotiations were not to be favourable, or if the cash position following a potential subsequent disposal of the Magellan asset would not be sufficient, going concern may not be applicable.

Schedule

The trading of the shares of Officiis Properties will resume starting on May 3rd, 2019.

The general assembly of the shareholders will be held on June 28, 2019. A notice of the convening of said assembly, as well as the regulatory documents to the attention of the shareholders, will be published within the required deadlines.

Key figures for FY 2018/2019 (Consolidated IFRS figures)

In € million 31.03.2019 31.03.2018 Var. (%)
Profit and loss statement      
Net rental income 1.7 7.3 -77%
Operating Costs (3.0) (2.5) +20%
Income from disposal of investment property 0.0 1.6 -100%
Asset valuation adjustment (21.8) 43.6 -150%
Net Operating Income (23.0) 50.1 -146%
Financial Income 0.0 0.0  
Net income from financial liabilities at fair value through comprehensive income 0.0 0.0  
Interest and similar expenses   (25.6) (25.0) +2%
Consolidated net income
Consolidated net income attributable to shareholders
(48.6)
(48.6)
25.1
25.1
-294%
-294%
 
In € million 31.03.2019 31.03.2018 Var. (%)
Balance sheet      
Investment properties 31.8 31.0 +3%
Properties held for sale 152.6 316.2 -52%
Other assets
  • Of which available cash and cash reserves
20.4
17.3
18.3
11.7
+11%
+48%
Total assets 204.8 365.5 -44%
       
Shareholders' equity 4.8 52.4 -91%
Non-current liabilities
  • Of which financial debts
98.4
97.6
191.2
189.3
-49%
-48%
Passifs courants
  • Of which financial debts
101.5
99.3
121.8
117.6
-17%
-16%
Total liabilities 204.8 365.5 -44%
       
Key figures per share 31.03.2019 31.03.2018 Var. (%)
Liquidation NAV (diluted basis)[6] 0.77 € 2.20 € -65%
Operating cash-flow (diluted basis)4 (0.68) € (0.57) € +19%
Liquidation NAV (undiluted basis)4 0.10 € 2.50 € -96%
Operating cash-flow (undiluted basis)4 (1.14) € (1.00) € +14%

Contacts

Pierre Essig, Chief Executive Officer, Officiis Properties

52B rue de la Bienfaisance, 75008 Paris

Tél. +33 (0)1 83 92 33 86, pierre.essig@officiis-properties.com

For more information, and/or to contact us, please visit the company website: https://officiis-properties.com

About Officiis Properties

Officiis Properties is a listed property company that has opted for SIIC status and which invests in office properties. Its real estate portfolio consists of two office buildings in the Paris region.

Officiis Properties' shares are listed on Euronext Paris Compartment C - ISIN: FR0010298901 under the name of Officiis Propertie - Mnemonic OFP

Definitions

Financial vacancy rate

The rate of financial vacancy is obtained by dividing the vacant spaces multiplied by the market rental value of these spaces as defined by the independent evaluator by the sum of the vacant spaces multiplied by the market rental value of these spaces as defined by the independent evaluator and the rented spaces at their rent price contractually determined by the leases. As a result of the disposals of the Think and Imagine buildings and of the departure of the tenant Faurecia, the rate of financial vacancy stands at 33.8% as of the date of this press release.

Liquidation NAV

The company has opted for the accounting of its properties at their fair value excluding rights, the Liquidation Net Asset Value (i.e. the amount that would be returned to shareholders in case of immediate cessation of business and of the sale of its buildings at their fair value excluding duties), corresponds to its consolidated shareholders' equity (€4.841 thousand) minus the "shareholders' equity" component of the convertible bonds issued on July 31, 2015 (€2,786 thousand). The liquidation NAV thus amounts to €2.055 thousand at March 31, 2019.

Liquidation NAV per share

The Liquidation NAV per share on an undiluted basis is obtained by dividing the Liquidation NAV by the number of shares outstanding at the date of the calculation of said Liquidation NAV, excluding shares held in treasury stock, or 19.810.619 shares at March 31, 2019.

The liquidation NAV per share on a diluted basis is obtained by dividing the Liquidation NAV, adjusted by the impact on shareholder's equity of the conversion of the convertible bonds issued by the company on July 31, 2015 (+€20.969 thousand) by the number of potential shares on the date of calculation of the liquidation NAV, excluding shares held in treasury stock, or 33.332.977 potential shares at March 31, 2019. The difference of 13,522,358 shares corresponds to the number of shares that would be created by the conversion of the convertible bonds issued by the company on July 31, 2015.

Operating Cash-flow

Operating Cash flow is defined as consolidated net income (-€48.573 thousand), restated for changes in the fair value of assets (€21.807 thousand), the impact of disposals of real estate (€-64 thousand), loan issuance costs (€1.570 thousand), the reevaluation of isolated financial instruments (€2.944 thousand) and the discounting of tenant security deposits (-197 thousand). Capitalized interest (non-bank borrowings, convertible bonds) is not restated for the calculation of the Operating Cash flow since the cash outflow remains due even if deferred. Operating Cash flow was -€22.513 thousand at March 31, 2019.

Operating Cash-flow per share

Undiluted Operating Cash flow per share is calculated on the basis of the weighted average number of outstanding shares during the period under review (excluding shares held in treasury stock), or 19.831.284 shares for the period from April 1, 2018 to March 31, 2019.

The diluted Operating Cash flow per share is established on the basis of the weighted average number of potential shares (see above definition of the liquidation NAV per share) during the period under review (excluding shares held in treasury stock), or 33.353.642 shares for the period from April 1, 2018 to March 31, 2019.

Overall Debt Ratio

The Overall Debt Ratio compares the sum of:

  • Bank loans (principal)                                                                                              92.000 K€
  • Non-bank loans and shareholders' loans (principal)                                               72.084 K€
  • Convertible bonds                                                                                                    26.599 K€
  • Accrued interests and commissions                                                                         9.410 K€
  • Available cash and equivalent                                                                                -17.264 K€

Total Consolidated Financial Debts                                                                      182.833 K€

to:

  • Real Estate portfolio value (excluding duties)                                                       184.407 K€

Ratio :                                                                                                                                   99,2%



[1] See definitions below.

[2] See press releases from 12/21/2017, from 10/29/2018, and from 11/29/2018.

[3] See press release from 12/21/2018

[4]In the IFRS consolidated accounts, financial debts amount to €196.9 million, of which €0.5 million are tenant security deposits and €91.5 million are mortgage debts because of the reclassification of the "shareholders' equity" component of the convertible bonds (€2.8 million), the amortization of financial debts' issuing costs (€0.8 million) and the value adjustment of interest rate swaps (€0.1 million).

[5] See definitions below.

[6] See definitions below.

2018/2019 FY Results



This announcement is distributed by West Corporation on behalf of West Corporation clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Officiis Properties via Globenewswire