Regulatory News:
The interim consolidated financial statements for the six months ended 30 June 2012 were approved by the Board of Directors of Société Foncière Lyonnaise (Paris:FLY) on 24 July 2012, at its meeting chaired by Juan-José Brugera.
Presented by Bertrand Julien-Laferrière, Chief Executive Officer, these financial statements show a 6.9% rise in property rentals on a comparable portfolio basis, a 5.9% increase in the portfolio´s appraisal value and significant growth in net profit.
The auditors have completed their limited review of the interim financial information and are in the process of issuing their review report.
| Consolidated data (€ millions) | |||||||||||
| First-half | First-half | ||||||||||
| Property rentals | 74.6 | 71.6 | |||||||||
| Operating profit before disposals and fair value adjustments | 60.6 | 58.8 | |||||||||
| Attributable net profit | 154.8 | 90.1 | |||||||||
| Underlying attributable profit (EPRA earnings) | 34.6 | 38.6 | |||||||||
| 30 June | 31 Dec. | ||||||||||
| Attributable equity | 2,035 | 1,948 | |||||||||
| Attributable Portfolio value excluding transfer costs | 3,269 | 3,086 | |||||||||
| Attributable Portfolio value including transfer costs | 3,432 | 3,241 | |||||||||
| EPRA NNNAV | 2,043 | 1,993 | |||||||||
| EPRA NNNAV per share | €43.9 | €42.8 | |||||||||
Results
- Property rentals for the period amounted to €74.6 million, up €3.0 million or 4.1% from the €71.6 million reported in first-half 2011. On a comparable portfolio basis, rentals grew by €4.1 million or 6.9%, reflecting leases signed during 2011 and the impact of applying rent indexation clauses. Revenues from buildings under renovation during the period were stable overall, as the higher contribution from the Mandarin Oriental Paris offset the lack of revenues from new properties in the pipeline, notably in the Edouard VII and Louvre buildings. Lastly, revenues from the Old England building sold in December 2011 were down €1.2 million in the first half of 2012.
- Operating profit before disposals and fair value adjustments amounted to €60.6 million in first-half 2012 versus €58.8 million in the year-earlier period, an increase of €1.8 million.
- The property portfolio´s appraisal value increased by 5.9% between 31 December 2011 and 30 June 2012 on a comparable portfolio basis. Fair value adjustments to investment properties added €136.6 million to first-half 2012 profit compared with €44.4 million in the year-earlier period.
- Associates "´ corresponding to the 29.6% interest in SIIC de Paris "´ contributed €9.3 million to first-half profit, of which €6.9 million was included in EPRA earnings. The comparable figures for the year-earlier period were €11.1 million and €5.8 million, respectively.
- Net finance costs rose to €35.4 million from €19.2 million in first-half 2011. Fair value adjustments to financial instruments represented a negative €7.2 million at 30 June 2012 versus a positive €3.6 million in the year-earlier period, for a difference of €-10.8 million. Aside from these adjustments, the year-on-year rise reflects higher net debt and an increase in the average cost of debt to 4.5%.
- After taking into account these key items, the Group reported attributable net profit for the period of €154.8 million, compared with €90.1 million for first-half 2011. Excluding the impact of disposals, changes in fair value of investment properties and financial instruments and the related tax effect, underlying attributable net profit (EPRA earnings) came in at €34.6 million for first-half 2012 compared with €38.6 million for the year-earlier period.
First-Half 2012 Business Review
New leases "´ notably with Simon-Kucher & Partners for 1,100 square meters in the Edouard VII property and with GE for 2,900 square meters in 103 Grenelle "´ lifted the occupancy rate (excluding properties undergoing renovation) to 95.3% at 30 June 2012 from 94.0% at 31 December 2011. In all, some 20,000 square meters were let or re-let in the first six months of the year, in a particularly hesitant rental market in which premium properties remain scare and highly sought after. Nominal rent averaged €716 per square meter for offices, corresponding to an effective rent of €695 per square meter.
Capitalized work carried out in first-half 2012 totalled €49.9 million and mainly concerned redevelopment projects at the In/Out building in Boulogne, on which major demolition and construction work began in January, and the Ozone building at 92 Champs-Elysées, which is now fully leased and scheduled for delivery in November (see press release dated July 17, 2012).
No properties were purchased or sold during first-half 2012.
Upcoming development project
The lease on the rue de Richelieu building will end as scheduled on 31 July 2012, with LCL´s departure to Villejuif, and the complex will be renovated. The project, known as "Cardinal by SFL", is in the building permit stage. This project involves creating 38,000 square meters of unique, upscale office space in the centre of Paris for top-tier businesses.
Financing
Net debt at 30 June 2012 amounted to €1,344 million, compared with €1,243 million at 31 December 2011, representing a loan-to-value ratio of 36.3% including the minority interest held in SIIC de Paris. In addition, SFL had €250 million in undrawn lines of credit at the end of the first half, which exceeds the amount of debt scheduled to mature in 2012 and 2013. At 30 June 2012, the average cost of debt after hedging was 4.5% and the average maturity was 3.1 years.
Net Asset Value
The appraisal value of the portfolio attributable to SFL, at 30 June 2012 was €3,269 million excluding transfer costs, up 5.9% from €3,086 million at 31 December 2011. The estimated replacement value (including transfer costs) was €3,432 million.
The portfolio comprises 19 prestige properties, of which prime office properties in Paris´s Central Business District (93%) and in the most attractive parts of the Western Crescent (7%).
The average rental yield stood at 5.3% at 30 June 2012 compared with 5.5% at 31 December 2011.
EPRA NNNAV stood at €2,043 million or €43.9 per share at 30 June 2012 compared with €42.8 per share at 31 December 2011, an increase of 2.5%.
For more information, visit www.fonciere-lyonnaise.com
With an exceptional portfolio of properties valued at €3.4 billion including transfer costs, essentially located in the Paris Central Business District, SFL is a preferred vehicle for investors wishing to invest in the Paris office and retail property market. As the leading player in this market, the Group is firmly focused on pro-actively managing high-quality property assets. SFL has elected to be taxed as an SIIC since 2003.
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