AFFINE RE Paris, 28 July 6:00 pm
2016 consolidated half-year results
NET OPERATING PROFIT OF €12.2M UP 25%
NET PROFIT DOWN TO €4.1M
(+) Fair value up by €2.4m
(+) Cost of debt stable at 2.5%
(-) Gross rental income down 17.0% due to disposals in 2015
(-) Negative contribution from Banimmo (-€4.1m) EPRA EARNINGS(EXCLUDINGBANIMMO) DOWNTO€5.6MIMPROVEMENTINOCCUPANCYRATE
LTVSTABLE AT 46.5%(-0.1PERCENTAGE POINT)
CHANGE IN PORTFOLIO
€7.4m of acquisitions and refurbishments
€9.7m from disposals
EPRA NAV PERSHARE: €21.0 EPRA NNNAV PERSHARE: €24.0
The Board of Directors of Affine, meeting on 26 July 2016, approved the summarised half-yearly consolidated financial statements for the period ending 30 June 2016. Limited review procedures are in the process of finalisation.
EARNINGS
The first effects of the portfolio renewal launched two years ago are felt in 2016: gross rental income has fallen due to the disposal of major assets while signed turnkey projects have not yet begun to generate rent.
This strategy is reflected in the portfolio's fair value adjustment, and has led to a 25% increase in net operating profit.
Consolidated net profit totalled €4.1m in the first half of 2016, versus €5.6m at the same period last year.
This change mainly resulted from:
The completion of the logistics platforms' disposal process in the second half of 2015, which reduced gross rental income by 17.0%. Like-for- like, rents were up 0.3%.
From the drop in profit on disposals (-€0.3m versus €1.4m) and taxes (-€1.0m versus -€0.3m).
A significant reduction in the financial costs (€3.8m versus €5.0m), linked to the disposals of the last 12 months.
Generally significant improvement in fair value adjustments: +€2.4m versus -€7.0m for properties; +€0.1m versus +€1.9m for financial instruments.
A negative contribution from Banimmo (which is 49.5% owned by Affine), from -€0.7m to -€4.1m. (see the Banimmo press release).
EPRA earnings, which measure Affine's recurring consolidated earnings (group share), fell (excluding Banimmo) from €9.7m to €5.6m. EPRA earnings amount to €3.4m versus €7.4m after including Banimmo.
For the same reasons, funds from operations dropped slightly from €11.2m to €7.4m. Given the positive change in WCR (€2.0m vs €1.8m), mainly due to the recovery of the VAT paid during the acquisition of the second building in Toulouse,
operating cash flow dropped from €17.1m to
€14.1m.
ACTIVITY
Rental activity was buoyant and the EPRA occupancy rate improved from 85.8% at year-end 2015 to 87.0%.
During the half-year, Affine signed 17 new leases concerning a total surface area of 27,900 sqm and total annual rents of €1.6m. In addition, 18 tenants cancelled their leases or left their spaces, representing a total surface area of 4,900 sqm and annual rent of €1.1m. Lastly, there were 14 renegotiations for leases representing a total of
€1.1m in rents. The priority was given to extending the firm period of leases (no full-year impact).
During the period, the portfolio turnover allowed renewal of assets and refocusing on office and retail property:
a total of €7.4m was invested through acquisitions and refurbishments to upgrade the quality of assets,
the disposal of mature, small assets located outside target areas or building dedicated to logistics amounted to €9.7m.
NETASSETVALUE
At the end of June 2016, the fair value of investment property remained stable at €514m (excluding transfer taxes) compared to year-end 2015.
Including the properties of Banimmo (transfer taxes included), the Group's total assets amount to €908m.
EPRA Net Asset Value (excluding transfer taxes, after deducting quasi-equity and after adjustments to the fair value of derivatives and deferred taxes), fell 2.6% to €215.9m due to the distributions in 2016 (dividends and payment of the BSR bonds and PSL). NAV per share (excluding treasury shares and after deduction of PSL and conversion of BSR bonds), dropped from €21.6 at year-end 2015 to €21.0 (-2.6%).
Lastly, EPRA triple net NAV (excluding transfer taxes), which includes the fair value of hedging instruments, deferred tax and the difference between accounting values and the discounted value of the debt amounted to €24.0 per share versus €24.4.
FINANCING
€31.9m in new loans were set up during the period and the company paid off a total of €34.9m.
At 30 June 2016, the financial debt, net of cash, remained stable at €283m. The LTV ratio (net bank debt/market value of buildings including transfer taxes, plus property inventories, plus net position of associates) was 46.5% versus 46.6% at the end of 2015.
The average cost of debt remained stable at 2.5% hedging included (1.6% excluding hedging). The average term of debt was 5.1 years. There are no significant debts maturing in the next few years.
OUTLOOK
For the last 18 months, the volume of investments committed or in advanced stages of negotiation has exceeded €90m, expected to ultimately generate annual rent of €6.5m, of which €1.6m (on an annual basis) is already reflected in the financial statements for the first half of 2016. This investment policy will be continued according to the following criteria:
Rejuvenating the portfolio by investing in new or refurbished buildings, combined with the continued gradual disposal of properties located outside the target areas or dedicated to logistics;
returning to the rent volume of prior years by investing in high-yield assets and increasing efforts to improve the occupancy rate;
embracing and implementing the technological developments in the real estate sector (rental services, new ways of using business premises and more);
ensuring that Banimmo returns to balanced growth by successfully completing the planned sales, by maximising the potential of the real estate companies owned in Belgium and by strengthening through partnerships, its intervention capacities in the retail sector in France.
This strategy should allow Affine to maintain its distribution strategy.
CALENDAR
19 October 2016: Third quarter revenues
February-March 2017: 2016 annual revenues and earnings
April 2017: First-quarter revenues
April 2017: Annual General Meeting
May 2017: Dividend payment
CONSOLIDATEDEARNINGS
(€m) (1)
H1 2015
2015
S1 2016
Gross rental income Net rental income Other income Corporate expenses Current EBITDA (2)Current operating profit
Other income and expenses Net profit or loss on disposals
Operating profit (before value adjustments) Net balance of value adjustments
Net operating profit Net financial cost
Fair value adjustments of financial instr. Taxes
Associates Miscellaneous(3)Net profit
Net profit - Group share
20.7
18.2
0.8
(3.8)
15.1
15.0
0.3
1.4
16.8
(7.0)
9.7
(5.0)
1.9
(0.3)
(0.4)
(0.4)
5.6
5.6
39.0
34.4
1.2
(7.9)
27.7
27.1
(0.4)
(7.2)
19.5
3.8
23.2
(9.1)
2.1
0.5
(0.5)
(15.7)
0.4
0.4
17.2
14.7
0.2
(4.1)
10.8
10.1
0.0
(0.3)
9.8
2.4
12.2
(3.8)
0.1
(1.0)
(0.1)
(3.2)
4.1
4.1
Net profit - Group share (excluding Banimmo)
6.3
16.9
8.2
Based on IFRS standards and EPRA recommendations.
Current EBITDA represents the current operating profit excluding current depreciation and amortisation costs. In H1 2015, 2014 and H1 2016, this amount does not include the depreciation of buildings in inventory of the property development business of -€0.1m, -€0.1m and €0.0m respectively, which is recognised under other income and expenses.
Net profit from activities that have been discontinued or are being sold, other financial income and expenses.
EPRA EARNINGS(INDIRECTMETHOD)
(€m)
H1 2015
2015
H1 2016
Net profit - Group share
5.6
0.4
4.1
Value adjustments for investment and
6.9
(3.8)
(2.4)
development properties
Net profit or loss on disposals
(1.4)
7.2
0.3
Goodwill adjustment
-
-
-
Fair value adjustment of hedging instruments
(1.9)
(2.1)
(0.1)
Non-current tax, deferred and exit tax
0.0
0.1
0.5
Adjustments for associates
(1.8)
11.4
0.9
Minority interests in respect of the above
-
-
-
EPRA earnings (4)
7.4
13.3
3.4
EPRA earnings (4)(excluding Banimmo)
9.7
17.4
5.6
EPRA is a trade association of European real estate companies listed on the stock market. In December 2014, this association updated a guide on performance
measurement. Additional guidance was released in January 2014. As detailed in the EPRA adjustments note, EPRA earnings essentially exclude the effects of fair value changes and gains or losses on sales.
EPRAEARNINGS (CURRENT/NON-CURRENT PRESENTATION -DIRECT METHOD)(1)
(€m)
H1 2015
2015
H1 2016
Gross rental income Net rental income Other income Corporate expenses Current EBITDA Current operating profit
Other income and expenses Net financial cost
Taxes (current) Miscellaneous (current)(3)Associates (current)
Net current profit
EPRA earnings (Net current profit- group share)
20.7
18.2
0.8
(3.8)
15.1
15.0
0.2
(5.0)
(0.2)
(0.4)
(2.2)
7.4
7.4
39.0
34.4
1.2
(7.9)
27.7
27.1
(0.4)
(9.1)
0.5
(0.5)
(4.3)
13.3
13.3
17.2
14.7
0.2
(4.1)
10.8
10.1
0.0
(3.8)
(0.6)
(0.1)
(2.3)
3.4
3.4
EPRA earnings (excluding Banimmo)
9.7
17.4
5.6
Other income and expenses (non-current)
0.1
0.1
(0.0)
Net profit or loss on disposals
1.4
(7.2)
(0.3)
Net balance of value adjustments
(7.0)
3.8
2.4
Fair value adjustments of hedging instr.
1.9
2.1
0.1
Taxes (non-current)
(0.0)
(0.1)
(0.5)
Miscellaneous (non-current )(3)
(0.0)
(0.0)
(0.0)
Associates (non-current)
1.8
(11.4)
(0.9)
Net non-current profit
(1.9)
(12.8)
0.7
Net non-current profit - group share
(1.9)
(12.8)
0.7
Net non-current profit - group share (excluding Banimmo)
(3.4)
(0.5)
2.6
Net profit
5.6
0.4
4.1
Net profit- group share
5.6
0.4
4.1
ABOUTAFFINEGROUP
Affine is a real estate company specialised in commercial property. At the end of June 2016, it directly owned 44 buildings with a total value of €514m (excluding taxes), for a total floor area of 357,000 sqm. The firm owns office properties (65%), retail properties (22%) and warehouses and industrial premises (13%). Its assets are distributed more or less equally between Ile-de France and the other French regions.
Affine is also the major shareholder (49.5%) of Banimmo, a Belgian property repositioning company with operations in Belgium and France. At the end of June 2016, Banimmo had total assets of 18 office and commercial buildings, with a value of €359m (transfer taxes included).
Total Group assets are €908m (including transfer taxes).
In 2003, Affine opted for French real estate investment trust (SIIC) status. Affine's shares are listed on NYSE Euronext Paris (ticker: IML FP/BTTP.PA; ISIN code: FR0000036105) and eligible for the Deferred Settlement Service (long only). It is included in the CAC Mid&Small, SIIC IEIF and EPRA indexes. Banimmo is also listed on NYSE Euronext.
To find out more: www.affine.fr. Follow our news thread on: https://twitter.com/Groupe_Affine
CONTACT
INVESTORRELATIONS
Frank Lutz
+33 (0)1 44 90 43 53 - frank.lutz@affine.fr
PRESSRELATIONS
RPpublics - Alexandra Richert
+33 (0)1 45 23 55 01 - alexandra.richert@rppublics.com
Affine RE SA published this content on 28 July 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 28 July 2016 17:26:05 UTC.
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