Rental income: €174.6m (up 3.0%
like-for-like) EPRA earnings: €92.4m Attributable net
profit: €292.0m Portfolio value: €7,606m (up 5.7%
like-for-like) EPRA NTA: €107.9 per share (up 5.1%)
Regulatory News:
The financial statements for the year ended 31 December 2021
were approved by the Board of Directors of Société Foncière
Lyonnaise (Paris:FLY) on 18 February 2022 at a meeting chaired by
Juan José Brugera.
As reflected in these financial statements, the portfolio's
appraisal value and NAV per share both increased in 2021, attesting
to the quality of SFL’s assets. Rental income also increased
significantly on a comparable portfolio basis.
The auditors have completed their audit of the annual financial
statements and are in the process of issuing their report.
Consolidated data (€ millions)
2021
2020
Change
Rental income
174.6
182.4
-4.3%
Adjusted operating profit*
134.2
152.6
-12.0%
EPRA earnings
92.4
100.8
-8.3%
Attributable net profit
292.0
286.9
+1.8%
* Operating profit before disposal gains
and losses and fair value adjustments
31/12/2021
31/12/2020
Change
Attributable equity
4,387
4,647
-5.6%
Consolidated portfolio value excluding
transfer costs
7,606
7,458
+2.0%
Consolidated portfolio value including
transfer costs
8,138
7,946
+2.4%
EPRA NDV
4,375
4,596
-4.8%
+3.3%
EPRA NDV per share
€102.1
€98.8
Results
Rental income
Rental income amounted to €174.6 million in 2021 versus €182.4
million the previous year, a decline of €7.8 million (or 4.3%) as
reported.
- On a like-for-like basis (excluding all changes in the
portfolio affecting period-on-period comparisons), rental income
was €4.6 million higher, a 3.0% increase that was primarily
attributable to the improved occupancy rate for revenue-generating
units. The main contributors to the increase were the Washington
Plaza, 106 Haussmann, Rives de Seine and Edouard VII
properties.
- Rental income from units being redeveloped or renovated in the
periods concerned was down by €6.3 million, due to the renovation
of several floors vacated in late 2020, mainly in the Cézanne
Saint-Honoré and Washington Plaza buildings. Conversely, the 83
Marceau building contributed to rental income for the first time,
following its delivery in the second half of 2021 after two years
of restructuring. This property is fully let.
- Finally, the early 2021 sale of the 112 Wagram and 9 Percier
buildings led to a €6.1 million reduction in rental income.
Operating profit before disposal gains and losses and fair value
adjustments to investment property came to €134.2 million in 2021,
versus €152.6 million the year before.
Portfolio appraisal value
The portfolio’s appraisal value at 31 December 2021 was 5.7%
higher on a like-for-like basis than at 31 December 2020. The
increase led to the recognition of positive fair value adjustments
to investment property of €255.2 million in 2021 compared with
positive adjustments of €176.5 million in 2020.
Net profit
Net finance costs contracted by €4.1 million to €30.2 million in
2021, from €34.3 million in 2020. Of the total decrease, €2.5
million concerned non-recurring costs and the other €1.6 million
concerned recurring costs, reflecting the positive impact of the
reduction in debt and its average cost.
After taking account of these key items, EPRA earnings stood at
€92.4 million in 2021, versus €100.8 million the previous year.
EPRA earnings per share amounted to €2.05 in 2021 versus €2.17 the
previous year, a controlled decrease of 5.2%.
Attributable net profit for the year amounted to €292.0 million,
versus €286.9 million in 2020.
Business review
Rental operations
After four very lacklustre months at the beginning of 2021, the
Paris commercial property rental market recovered strongly, ending
the year with volumes up 32% on 2020. Against this backdrop, SFL
performed exceptionally well, signing leases on 57,000 sq.m.,
representing total annual rental income of approximately €47
million. The main new leases concerned the following
properties:
- Washington Plaza, with leases signed on approximately 16,000
sq.m., notably with two existing tenants, Finastra and TP ICAP, and
new companies such as Advancy, Prologis, Havea Group and Puig.
- #cloud.paris, where the lease with an existing tenant was
rolled over and extended to cover a total of 13,700 sq.m.
- Cézanne Saint-Honoré, which was 90% pre-let during the year,
with three companies – listed investment company Wendel
Investissement, the Lacourte Raquin Tatar law firm, and the Lincoln
International investment bank – taking up a total of 8,600 sq.m. to
be delivered in 2022.
- Edouard VII, with 9,000 sq.m. let during the year, mainly
under three leases.
- 103 Grenelle, with four leases signed on a total of 4,500
sq.m.
- 92 Champs-Elysées, with a lease on 900 sq.m. of retail space
signed with the Paris Saint-Germain football club.
The average nominal rent on these leases stands at €768 per
sq.m., corresponding to an effective rent of €652 per sq.m, for an
average non-cancellable term of 7.2 years. These lease terms attest
to the very high quality of the Group’s properties.
The revenue-generating properties are virtually fully let, with
the physical occupancy rate standing at 98.0% as of 31 December
2021 compared to 93.7% at the previous year-end. The EPRA vacancy
rate was 1.7%, versus 6.0% at 31 December 2020.
Development operations
Properties undergoing development at 31 December 2021
represented roughly 20% of the total portfolio. The three main
projects concern:
- The Cézanne Saint-Honoré building, where one of the two
buildings (approximately 10,000 sq.m.) is being renovated and a
roof top terrace is being created. Delivery is scheduled for
mid-2022 and the building is currently 90% pre-let.
- The Biome office complex on avenue Emile Zola (approximately
24,000 sq.m.). Redevelopment work continued at a brisk pace in 2021
and the complex is scheduled to be delivered in the third quarter
of 2022.
- The retail space in the Louvre Saint-Honoré building
(approximately 20,000 sq.m.). The space to be redeveloped has been
cleared and work has begun. All of the 20,000 sq.m. have been
pre-let to the Fondation Cartier and should be delivered by the end
of 2023.
In addition, refurbishment work was carried out on various units
that became vacant as tenants rotated, in Washington Plaza, Edouard
VII and other buildings.
The 83 Marceau building was delivered as planned in the second
half of 2021 and is fully let.
Capitalised work carried out in 2021 amounted to €150
million.
Portfolio operations
Disposal of the 112 Wagram and 9 Percier properties was
completed in early 2021. The disposal processes were launched in
2020 under the Group’s asset rotation policy. These properties were
sold in January and February 2021 at a net sale price of €120.5
million and €143.5 million, respectively. The sale prices, which
were already reflected in the two assets’ fair value carrying
amounts at 31 December 2020, represented a premium of around 17% on
their appraisal value at 31 December 2019. The success of these two
property disposals in a troubled market where investors are
particularly demanding, is further evidence of the quality and
liquidity of SFL’s assets.
No properties were acquired in 2021.
Covid-19 crisis
During the year, SFL continued to apply the measures deployed in
2020 to limit the pandemic’s effects on its business and
results.
The rent collection rate was very satisfactory throughout the
year (at between 96% and 98% in each of the quarters). Past-due
rents were reviewed on a case-by-case basis to determine whether a
provision was needed. Very few new support measures were granted to
tenants during the year.
The rental market had slowed since the onset of the Covid-19
crisis, but it picked up in the second half of 2021 and leases were
signed by SFL on several significant units.
The Covid-19 crisis had little impact on appraisal values at 31
December 2021. In particular, SFL’s office properties proved to be
resilient despite the Covid-19 crisis, with an overall
like-for-like increase of 5.7% in their appraisal values during the
year.
Financing
During the year, a number of transactions were carried out as
part of SFL’s proactive balance sheet management strategy. The
focus was on further improving the Group’s financial liquidity,
extending the average maturity of its debt and optimising its
future average borrowing costs.
- The outstanding 2014 1.875% bonds, which matured in November
2021, were redeemed for €250 million.
- The Parholding sub-group entities’ mortgage loans due in July
2022 were repaid in advance for a total of €196 million.
- €500 million were raised through a 6.5-year bond issue due 21
April 2028. The 0.50% interest rate on the bonds represents a
record low for SFL.
- Lastly, a new €100 million five-year revolving line of credit
was obtained from Banca Intesa Sanpaolo (Paris branch).
Net debt at 31 December 2021 amounted to €1,792 million versus
€1,890 million at the previous year-end. The loan-to-value ratio is
a very conservative 22.0%, leaving significant headroom for future
investments. The average cost of debt after hedging was 1.2% at 31
December 2021 and the average maturity was 4.6 years. The interest
coverage ratio stood at 4.9x in 2021.
Lastly, at 31 December 2021, SFL had access to €1,140 million in
undrawn confirmed lines of credit.
Net asset value
The portfolio’s appraisal value at 31 December 2021, on a
consolidated basis and excluding transfer costs, was €7,606 million
versus €7,458 million at end-2020. The year-on-year increase was
5.7% like-for-like; however, on a reported basis, it was only 2%,
due to the sale of two properties during the year.
The appraisal values of properties under development are very
satisfactory, reflecting the quality of the development work
performed to date and the success of pre-marketing campaigns.
Growth in the appraisal values of other revenue-generating assets
was more subdued and the value of retail units continued to
decline.
The average EPRA topped-up net initial yield (NIY) was 2.9% at
31 December 2021, unchanged from 31 December 2020.
At 31 December 2021, EPRA Net Tangible Assets stood at €4,627
million and the EPRA Net Disposal Value was €4,375 million.
Over the year, EPRA NTA per share increased by 5.1% to €107.9
and EPRA NDV per share by 3.3% to €102.1, after distribution of a
dividend of €2.10/share in April 2021.
Transactions in SFL shares by Colonial
In 2021, Colonial – SFL’s majority shareholder – launched a
two-step transaction:
- A public cash and paper offer for the SFL shares not already
held by Colonial and Prédica, with €46.66 in cash and 5 Colonial
shares offered for each SFL share.
- Restructuring of the partnership between SFL and Prédica,
involving the buyout by SFL of Prédica’s interests in the
Washington Plaza, 106 Haussmann, 90 Champs-Elysées and Galerie des
Champs-Elysées buildings, and the buyback and cancellation of 3.66
million SFL shares held by Prédica, in exchange for Prédica’s
acquisition of a 49% interest in the #cloud.paris, Cézanne-Saint
Honoré, 92 Champs-Elysées and 103 Grenelle buildings. The remaining
SFL shares held by Prédica were exchanged for Colonial shares on
the basis of 9.66 Colonial shares for one SFL share.
In July 2021, SFL’s Board of Directors recommended that
shareholders support these transactions, which were finalised in
August 2021.
They led to a reduction in the number of outstanding SFL shares
from 46,528,974 to 42,864,715 and an increase in Colonial’s
interest in SFL’s capital and voting rights to 98.33%.
The main impacts of the transaction on the consolidated
financial statements are as follows:
- Equity attributable to owners of the parent: a decrease of
€465 million, of which €355 million was due to the share
cancellations and €109 million to changes in percentage
interests.
- Equity – non-controlling interests: increase of €487 million,
due to changes in percentage interests.
- Profit attributable to non-controlling interests: €55 million
reduction in net profit attributable to owners of the parent for
2021 (including a €3 million reduction in attributable EPRA
earnings).
The transaction also had a negative 1.5% impact in absolute
terms on the value of the portfolio excluding non-controlling
interests, which contracted to €6,537 million (excluding transfer
costs) at 31 December 2021 from €6,635 million at 31 December
2020.
Dividend
At the Annual General Meeting to be held on 7 April 2022, the
Board of Directors will recommend paying a dividend of €4,20 per
share.
EPRA indicators
2021
2020
EPRA Earnings (€m)
92.4
100.8
/share
€2.05
€2.17
EPRA Cost Ratio (including vacancy
costs)
16.2%
15.8%
EPRA Cost Ratio (excluding vacancy
costs)
14.4%
14.0%
31/12/2021
31/12/2020
EPRA NRV (€m)
5,084
5,210
/share
€118.6
€112.0
EPRA NTA* (€m)
4,627
4,779
/share
€107.9
€102.7
EPRA NDV (€m)
4,375
4,596
/share
€102.1
€98.8
EPRA Net Initial Yield (NIY)
2.5%
2.7%
EPRA topped-up NIY
2.9%
2.9%
EPRA Vacancy Rate
1.7%
6.0%
* Transfer costs are included at their amount as determined in
accordance with IFRS (i.e., 0).
Alternative Performance Indicators (APIs)
EPRA Earnings API
€ millions
2021
2020
Attributable net profit
292.0
286.9
Less:
Fair value adjustments to investment
property
(255.2)
(176.5)
Profit (loss) on asset disposals
(0.1)
-
Non-recurring costs relating to
disposals
8.1
-
Fair value adjustments to financial
instruments, discounting adjustments to debt and related costs
2.6
5.0
Expenses related to asset
contributions
2.0
-
Tax on the above items
(9.0)
(7.9)
Non-controlling interests in the above
items
52.0
(6.7)
EPRA earnings
92.4
100.8
Average number of shares (in
thousands)
45,002
46,529
EPRA Earnings / share
€2.05
€2.17
EPRA NRV/NTA/NDV APIs
€ millions
31/12/2021
31/12/2020
Attributable equity
4,387
4,647
Treasury shares
2
3
Fair value adjustments to owner-occupied
property
34
22
Unrealised capital gains on intangible
assets
4
2
Elimination of financial instruments at
fair value
(4)
0
Elimination of deferred taxes
211
109
Transfer costs
451
427
EPRA NRV (Net Reinstatement
Value)
5,084
5,210
Elimination of intangible assets
(2)
(1)
Elimination of unrealised gains on
intangible assets
(4)
(2)
Elimination of transfer costs*
(451)
(427)
EPRA NTA (Net Tangible Assets)
4,627
4,779
Intangible assets
2
1
Financial instruments at fair value
4
0
Fixed-rate debt at fair value
(47)
(76)
Deferred taxes
(211)
(109)
EPRA NDV (Net Disposal Value)
4,375
4,596
* Transfer costs are included at their amount as determined in
accordance with IFRS (i.e., 0).
Net debt API
€ millions
31/12/2021
31/12/2020
Long-term borrowings and derivative
instruments
1,489
1,476
Short-term borrowings and other
interest-bearing debt
413
481
Debt in the consolidated statement of
financial position
1,902
1,957
Less:
Current account advances (liabilities)
0
(52)
Accrued interest, deferred recognition of
debt arranging fees, negative fair value adjustments to financial
instruments
5
0
Cash and cash equivalents
(115)
(15)
Net debt
1,792
1,890
More information is available at
www.fonciere-lyonnaise.com/en/publications/results
About SFL
Leader in the prime segment of the Parisian commercial real
estate market, Société Foncière Lyonnaise stands out for the
quality of its property portfolio, which is valued at €7.6 billion
and is focused on the Central Business District of Paris
(#cloud.paris, Edouard VII, Washington Plaza, etc.) and for the
quality of its client portfolio, which is composed of prestigious
companies in the consulting, media, digital, luxury, finance and
insurance sectors. As France’s oldest property company, SFL
demonstrates year after year an unwavering commitment to its
strategy focused on creating a high value in use for users and,
ultimately, substantial appraisal values for its properties.
Stock market: Euronext Paris Compartment A – Euronext Paris ISIN
FR0000033409 – Bloomberg: FLY FP – Reuters: FLYP PA
S&P rating: BBB+ stable outlook
www.fonciere-lyonnaise.com
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version on businesswire.com: https://www.businesswire.com/news/home/20220218005430/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
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