FREY (EPA:FREY) - STRENGTHENING OF FREY’S BUSINESS MODEL
Transparency directive : regulatory news
08/03/2019 08:00
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COMMUNIQUÉ DE PRESSEBezannes, 08 March 2019 - 8.00 am
2018 annual results
STRENGTHENING OF FREY'S BUSINESS MODEL
Implementation of the Shopping Promenade concept in France
European expansion
1st success for "Citizers" in 2019, the team dedicated to mixed use projects
launched in 2018
Strong operating performance of the economic portfolio (1)
Valuation: EUR729.8 million (+23%) - Annualised rental income :
EUR42.6 million (+27%)
Footfall (2): +1.4% - Tenants' sales (2): +1.2%
Occupancy rate (2): 96.7% (+170 bp)
Sound financial structure
Fund raising of EUR322 million(3)
Diluted going concern NAV EUR34.40/share (+5%)
after the impact of the capital increase
Profit from recurring operations: EUR18.3 million (+46%)
Dividend 2018 (4): EUR1.20 per share (+20%)
Change in relation to 31.12.2017
Key figures - In EUR million - 12 months 2018 2017 Change
Consolidated revenues 56.7 29.4 +93%
Property investment activity (gross rental income) 32.8 23.7 +38%
Profit from recurring operations 18.3 12.5 +46%
Fair value adjustment of investment property 35.7 53.8 N/A
Net income group share 45.1 61.1 -26%
Balance sheet indicators - In EUR million 31.12.2018 31.12.2017
Change
Going concern NAV (including stamp duty) 646.6 394.6 +64%
i.e. per share (2) EUR34.40 EUR32.60 +5.5%
Triple net EPRA NAV (5) 601.8 367.3 +64%
i.e. per share (2) EUR32.00 EUR30.34 +5.5%
Net LTV (6) 26.1% 37.7% -1,160 bp
At its meeting on 07 March 2019, FREY's Board of Directors closed the
consolidated financial statements for 2018. The audit has been prepared by the
Statutory Auditors. The certification report has been issued.
(1) The economic portfolio comprises assets in operation that are wholly-owned
by FREY or jointly held with associates, in proportion to FREY's percentage
interest in those associates.
2 On a like-for-like basis. Assets owned more than 50% in France.
(3) At 31 December 2018, FREY's share capital is composed of 18,841,665 shares
compared with 12,112,500 at the end of 2017, after the creation of 6,729,165
new shares resulting
from the capital increase of EUR202 million carried out in June 2018. FREY also
signed EUR120 million in additional corporate facilities in 2018.
(4) As will be put forward to the Annual General Meeting which will take place
on 21 May 2019. Total amount of around EUR22.6 million compared with EUR12.1
million for the 2017
dividend (up 87%).
(5) Triple net NAV calculated according to the standards developed and
published by the EPRA (European Public Real Estate Association).
(6) Including stamp duty, excluding Opirnane.
On the occasion of the annual results, Antoine Frey commented: "We are very
proud of the excellent operational and financial performance of the Group once
again this year. For the future, we believe that the deep on-going changes in
the retail sector will strengthen the weight of specialists in this asset
class. Thanks to its unique know-how, FREY is well positioned to be the
reference player of the transformation of retail which, in the months and years
to come, will offer many value-creating opportunities in both France and
abroad."
2018 HIGHLIGHTS AND SUBSEQUENT EVENTS
* Three Shopping Promenade projects under construction in Strasbourg,
Claye-Souilly and Arles
In 2018, the Group continued the building works of the Shopping Promenade Coeur
Alsace (67) and the Shopping Promenade Claye-Souilly (77), due to be delivered
in 2020. Many tenants are joining FREY's sites or strengthening their presence,
such as New Yorker, Kaporal, Adidas, Reebok, Vib's, Big Fernand, Vapiano and
Factory & Co.
This year, FREY has launched works on the Shopping Promenade in Arles (13).
This site with an area of more thn 18,000 m2 will provide a shopping and
leisure offering with 30 strong covenants, including the first H&M store signed
by FREY, but also Fnac, New Yorker, Courir and Emilie & the cool kids (winner
of the FREY Passport Award for the 2018 Franchise). This site is part of the
urban renewal project of the district.
These three projects represent a total investment of EUR245 million for the
Group and potential annualised rent of EUR19.5 million for the patrimonial part
(119,000 m2).
The Group also delivered the Z'Aisne retail park (11,000 m2) located in
Saint-Quentin (02) and sold for EUR26.4 million(1) of assets above the last
appraisal value.
* New professional awards
This year the Group received the Janus label of excellence for retail (2018),
awarded by the French Institute of Design, and the CNCC 2018 trophy for the
Shopping Promenade Coeur Picardie in Amiens (80). For its first anniversary,
the retail park has recorded very good performances: footfall of 4.9 million
and an occupancy rate of 97.9% with the following recently opened tenants: JD
Sport, 231 East St, Colombus and IT Trattoria.
The Group once again received the highest rating among the property investment
companies in the ranking established by the magazine "Sites Commerciaux"
(annual study on landlord-tenant relationships). FREY's portfolio posted a
competitive occupancy cost ratio in 2018 of 7.8%.
* Launch of the international development: acquisition of Parc Vallès in
Spain
In 2018, the Group acquired Parc Vallès near Barcelona, an open-air retail
site of 47,000 m2 (42,000 m2 acquired in April 2018 and 5,000 m2 in February
2019). This property has posted a sound performance: 13.2 million visitors, net
annual rental income of EUR5.9 million and an occupancy rate of 100%. The Group
plans to carry out an extension to continue its value creation process. This
investment reflects the Group's strategy to develop its open-air shopping
centre concept in countries surrounding France, mainly in Spain and Portugal.
* Ongoing transformation of the Group's financial structure
FREY Group has continued to significantly transform its financial structure and
strengthen its robustness:
- capital increase of EUR202 million in June to cover the share of equity
needed to finance projects under development and to participate in the
acquisition of real estate assets. FREY received the 2018 award for the best
equity transaction in the "mid-caps" category awarded by Euronext Paris;
(1) Amount of 100% disposals, i.e. EUR5.3 million attributable to owners of the
company.
- increase of the syndicated credit facility signed in June 2017, from
EUR300 million to EUR350 million. On this occasion, the Group lowered the
financial terms of this credit and extended its maturity date by one
year. FREY also signed a new EUR70 million syndicated credit facility at
the end of 2018, for a period of five years with two options for an
additional one-year extension, thus diversifying its financing partners.
At the end of 2018, the Group has EUR325 million of available liquidity(1).
* Launch of Citizers, the FREY's entity specialised in mixed use projects and
1st success in Rennes(2)
Citizers will be the dedicated business unit of FREY in the selection and
design of mixed urban projects (direct sourcing or public auction). The team is
co-directed by Roger Barbary and Pascal Allançon, seasoned specialists in this
type of industry.
In early 2019, the Group, in partnership with Engie, won its first success by
being awarded winner of the public tender for the conversion of the Palais du
Commerce in Rennes (35), an iconic building in the city centre. Named
"Renaissance", this ambitious project, designed by the architects of MVRDV and
Bernard Desmoulin, has been conceived as a place for living, sharing and
communicating.
With over 18,000 m2, the project will gather an unprecedented range of mixed
uses for the Rennes metropolitan area: 5,000 m2 of retail space, including new
major retailers (Citadium, Décathlon City, AMPM, etc.), 4,100 m2 of offices
and co-working areas, a 105-room "concept hotel" operated by the Marriott
Group, seven cafés and restaurants (including the historic Brasserie de la
Paix), a catering and hotel trade training institute chaired by chef Thierry
Marx and reserved primarily for those on back-to-work schemes as well as a
variety of original and attractive leisure and cultural facilities such as a
boxing gym, an electro bar and a Lego workshop. Moreover, there will also be
many other innovative services, including those offered by La Poste, the
building's owner and historical operator, such as digital and physical
concierge and urban logistics services.
EVOLUTION OF PROPERTY PORTFOLIO
At 31 December 2018, FREY's (3) economic portfolio:
- is valued at EUR729.8 million excluding stamp duty, up 23% compared with 31
December 2017,
- comprises 365,000 m2 of GLA area (compared with 308,700 m2 at 31 December
2017),
- generates an annualised base rent of EUR42.6 million (up 27% compared with 31
December 2017),
- and has an occupancy rate (EPRA) (4) of 96.7%, compared with 95.0% at the end
of 2017.
The growth of the economic portfolio results from the acquisition of Parc
Vallès in Spain, the delivery of the Z'Aisne open air shopping centre in
Saint-Quentin (02) and the leasing of existing assets.
At 31 December 2018, projects under construction represent a value (excluding
stamp duty) of EUR140.2 million, which brings the total value of the assets
(economic portfolio + ongoing projects) to EUR870 million.
FINANCIAL PERFORMANCE IN 2018
* Revenue and rental income
At 31 December 2018, the growth of the property company brought gross rental
income from wholly-owned property (i.e. 301,300 m2) to EUR32.8 million, up
38.4% year-on-year (compared with EUR23.7 million and 247,700 m2 at 31 December
2017).
(1) EUR247 million in corporate facilities and EUR78 million in cash
available.
(2) Cf. press release published on 07 February 2019, available on the FREY
website.
(3) The economic portfolio comprises assets in operation that are wholly-owned
by FREY or jointly held with associates, in proportion to FREY's percentage
interest in those associates.
(4) Delivered over a year ago and excluding strategic restructuring.
This very strong growth stemmed both from a very significant scope effect
related to deliveries in 2018 and 2017 (Shopping Promenade Coeur Picardie in
Amiens, for EUR2.7m) and acquisitions made in 2018 and 2017 (Parc Vallès, Be
Green (100%) mainly, for EUR5.7 million), and a very good performance on a
like-for-like basis (+2.8%), mainly related to the leasing activity and the
improved occupancy rate for the property portfolio.
Development business rose significantly in financial year 2018, mainly thanks
to the forward sale (VEFA) of a retail site located in Laval-Saint-Berthevin
(53).
FREY's total revenue grew by 93% to EUR56.7 million at 31 December 2018,
compared with EUR29.4 million at the end of 2017, reflecting the growth
momentum of property under development.
* Profit from recurring operations of EUR18.3 million (up 46%)
Profit from recurring operations, up sharply by 46%, stood at EUR18.3 million
at 31 December 2018, compared with EUR12.5 million at 31 December 2017. The
Group has efficiently controlled its overhead costs over the year, in a context
of strong growth. Its active recruitment policy aims to support the growth of
assets in operation and the progress of several major pipeline projects, some
of which will be delivered in 2020 (Shopping Promenade Strasbourg and Claye
Souilly).
Operating profit amounted to EUR53.1 million (versus EUR65.2 million at 31
December 2017, down 19%). In 2017, this result was due in part to the
recognition of very strong value creation (EUR53.8 million) related to the
launch of works for the two major Shopping Promenade centres in Strasbourg and
Claye Souilly.
This year value creation remained high at EUR35.7 million, made up of assets
under development (EUR23.7 million), acquisitions (EUR4.4 million) and assets
in operation at 31 December 2017 (up EUR7.6 million on a like-for-like
basis).
Profit from recurring operations(1) amounted to EUR60.2 million (compared with
EUR74.2 million at 31 December 2017, down 19%).
Net profit group share amounted to EUR45.1 million for the year, after taking
into account a stable net cost of debt of EUR(9.3) million and income tax of
EUR(2.8) million, the latter compared with EUR(0.7) million in 2017.
* Diluted going concern NAV per share of EUR34.40 (up 5.5%) post-dilution due
to the capital increase and 2017 dividend payment
The diluted going concern NAV (including stamp duty) amounted to EUR646.6
million at 31 December 2018, up 64% compared with 31 December 2017 (EUR394.6
million). This growth was driven by the Group's operating performance and the
increase in the value of assets held in the portfolio.
Adjusted per share, the NAV increased by 5.5% to EUR34.40/share over 12 months
after the impact of the capital increase carried out in June 2018 (2) and
payment of the 2017 dividend of EUR1.0 per share (for a total sum of EUR12.1
million). The triple net EPRA NAV (3) amounted to EUR601.0 million. Adjusted
per share, it came out at EUR32.0, up 5.5%.
* Bank debt
The net consolidated LTV ratio including stamp duty, excluding Opirnane,
temporarily fell to 26.1%, compared with 37.7% at the end of 2017, given the
strengthening of equity and the increase in the value of investment property
over the year.
The average interest rate on bank debt after taking into account interest rate
hedges and with 3-month Euribor at 31 December 2018 of (0.309%) was 1.95%,
composed of 1.29% for corporate facilities and of 2.85% for other bank
financing. The debt duration was 5.9 years and the debt has an interest rate
protection at 98.2%.
(1) Profit from recurring operations includes the share of profit from
recurring operations attributed to associates.
(2) Impact of the creation of 6,729,165 new shares following the EUR201.9
million capital increase of June 2018.
(3) Triple net NAV calculated according to the standards developed and
published by the EPRA (European Public Real Estate Association).
PROPOSED DIVIDEND FOR 2018: EUR1.20 PER SHARE (+20%)
FREY's Board of Directors will propose a dividend of EUR1.20/share at the
Annual General Meeting to be held in May, up 20%, amounting to around EUR22.6
million, up 87% compared with the amount distributed for the 2017 dividend.
OUTLOOK AND PROGRESS OF PROJECTS UNDER DEVELOPMENT
The Group will pursue its growth strategy taking into account the full
potential of its unique know- how in retail real estate. Thanks to its robust
business model, based on controlling the entire retail value chain, FREY
intends to take advantage of new opportunities for development and value
creation offered by current changes in retail universe:
- win restructuring projects of retail areas on the outskirts of towns, such
as in Strasbourg or Montpellier. At the end of 2018, the pipeline of
open-air shopping centres represented a total investment of EUR989
million and 14 projects (excluding Rennes);
- on an opportunistic basis, acquire assets sold by their owners, in order
to convert them into the brand new concepts, such as Wood-Up (formerly
Maisonnément in Cesson) or Parc Vallès in Barcelona;
- promote the urban retail anchor by developing dense mixed projects via
Citizers, as in Rennes. Citizers is currently working on six redevelopment
operations in major French cities;
- continue the internationalisation of the Group, to uplift the share of its
international portfolio to 30% in the medium term, by focusing on Spain
and Portugal.
A presentation will be made available in the finance section of FREY's website
on 11 March.
FREY's 2018 registration document will be put online on the website frey.fr,
under the heading Finance / Regulatory Information, by 12 April 2019 at the
latest.
About property investment company FREY
FREY is a property investment company specialising in major urban renewal
operations and the development and operation of outdoor shopping centres. Its
Shopping Promenades(r) represent a comprehensive offer combining shopping and
leisure, to create an "enhanced experience" for all the family. Through its
unique expertise, FREY has become a recognised French leader in this resilient
asset class, covering the whole market (creation, extension and renovation) and
in perfect harmony with the expectations of consumers, retailers and
communities.
Property investment company FREY is listed on compartment B of Euronext Paris.
ISIN: FR0010588079 - Mnemo: FREY
CONTACTS:
Antoine Frey - Chairman and CEO
Emmanuel La Fonta - Director-Finance & Human Resources.
Mathieu Mollière - Director of Communications,
Marketing and Innovation - Tel.: + 33 (0)3 51 00 50 50
Agnès Villeret - Investor relations and financial press
KOMODO - agnes.villeret@agence-komodo.com - Tel.: + 33 (0)6 83 28 04 15
APPENDICES - Financial statements at 31 December 2018 - Consolidated financial
statements (audited and certified)
Figures relating to the portfolio
In EUR million
Portfolio value (excl. stamp duty)
Investment property - IFRS statement of financial position 746.2
Projects under development (140.2)
Wholly-owned assets in operation 606.0
Jointly-owned assets in operation in proportion to the percentage
interest held 123.8
Economic portfolio 729.8
Assets in operation, jointly-owned (share non-FREY) 553.3
Total wholly-owned asset portfolio 1,283.1
Annualised rental income
Rents recognised 32.8
Impact of disposals during the period (0.3)
Impact of acquisitions / deliveries during the period 3.1
Impact of vacancies during the period 0.5
Rent-free periods and step rents invoiced 0.8
Reinvoicing of works and staggering of rent-free periods (1.7)
Annualised rental income of wholly-owned assets in operation 35.2
Annualised rental income from jointly-owned assets in operation
in proportion to the percentage interest held 7.5
Annualised rental income from the economic portfolio 42.7
Annualised rental income of assets in operation, jointly-owned
(share non-FREY) 25.0
Annualised rental income from the wholly-owned asset portfolio 67.7
IFRS consolidated simplified income statement
In EUR million 2018 2017 Change
Gross rental income 32.8 23.7 +38%
Income from third-party development 21.6 2.8 N/A
Income from other real estate management
activities 2.2 2.8
Revenue 56.7 29.4 +93%
Purchases consumed (28.2) (8.0)
Payroll expenses (8.8) (6.7)
Other income and expenses 0.5 0.2
Taxes and similar payments (1.1) (1.0)
Amortisation and depreciation (0.9) (1.3)
Profit from recurring operations 18.2 12.5 +46%
Other operating profit and expenses (0.9) (1.1)
Adjustment of values of investment property 35.7 53.8
Operating profit 53.0 65.2 -19%
Share of net profit (loss) of associates 7.2 9.0
Operating profit after share of net profit
(loss) of associates 60.2 74.2 -19%
Cost of net debt (9.3) (9.2)
Adjustment of values of derivatives
instruments (3.1) (3.2)
Profit before tax 47.8 61.8 -22%
Income tax (2.7) (0.7)
Net income attributable to owners of the
company 45.1 61.1 -26%
IFRS simplified consolidated statement of financial position
In EUR million 31.12.2018 31.12.2017
ASSETS
Non-current assets 818.8 636.3
of which Investment property 746.2 569.7
Of which Shares of associates 54.2 50.4
Current assets 168.2 127.0
of which Cash and cash equivalents 78.0 70.0
EQUITY AND LIABILITIES
Equity 600.5 366.8
Non-current liabilities 299.1 351.4
of which long-term financial debt (including
bond issues) 280.0 339.4
Current liabilities 87.4 45.1
of which short-term financial debt (including
bond issues) 44.6 7.8
Total statement of financial position 987.0 763.3
Loan to value 31.12.2018 31.12.2017
Non-current financial liabilities 280.0 339.4
Current financial liabilities 44.5 7.8
Adjustment of share of debt of OPIRNANE bonds (25.4) (26.9)
Adjustment of debts not related to investment
property (*) (3.8) (3.2)
Cash (77.7) (70.0)
Total debt (A) 217.6 247.1
Investment property 746.2 569.7
Registered office (recognised in property, plant
and equipment) 7.2 6.2
Adjustment of non-recoverable costs on projects (24.8) (16.8)
Stamp duty 29.7 20.6
Total property holdings including stamp duty (B) 758.3 579.7
Investment property including stamp duty 124.2 123.5
Debt (52.4) (49.7)
Cash 2.8 2.2
Total free assets of associates (C) 74.6 76.1
Net LTV including stamp duty (A / (B + C)) 26.1% 37.7%
(*) including deposits and guarantees received and IFRS treatment of debt
issuance costs
IFRS consolidated cash flow statement
In EUR million 31.12.2018 31.12.2017
Cash flow from operations 19.5 13.0
Dividends received from associates 3.3 2.6
Tax paid (0.7) (1.5)
Change in working capital requirement (31.6) (13.3)
Net cash generated by operating activities (9.4) 0.9
Fixed asset acquisitions (60.5) (61.7)
Fixed asset disposals - 4.5
Impact of change in consolidation scope and
miscellaneous (25.3) (7.9)
Change in other financial assets 0.0 (5.3)
Net cash related to investment (83.4) (70.4)
Dividends paid to shareholders of the parent company (12.1) (9.3)
Capital increase 201.1 98.9
Cost of debt (10.8) (10.8)
Loan issue 148.0 216.8
Loan repayment (225.0) (168.5)
Change in other financing (0.2) (0.1)
Net cash related to financing 100.9 127.1
Change in cash 8.1 57.6
Net asset value
In EUR million 31.12.2018 31.12.2017 Change
Consolidated equity - attributable to
owners of the company 600.5 366.6 +64%
Adjustment of financial instruments 4.7 3.7
Deferred tax on the statement of financial
position on non-REIT assets 7.4 0.5
Adjustment of associates 0.1 0.6
EPRA NAV 612.7 371.6 +65%
Market value of financial instruments (4.7) (3.7)
Effective tax on unrealised capital gains
of non-REIT assets (7.4) (0.5)
Optimisation of stamp duty and expenses 1.3 0.1
Adjustment of associates (0.1) (0.2)
EPRA triple net NAV 601.8 367.3 +65%
EPRA triple net NAV per share 32.0 30.4 +5.5%
Reintegration of stamp duty and actual
disposal costs 29.7 20.6
Reintegration of tax on unrealised capital gains 7.4 0.5
Adjustment of associates 7.7 6.2
Diluted going concern NAV 646.6 394.6 +64%
Diluted going concern NAV per share 34.4 32.6 +5.5%
Diluted number of shares 18,841,665
12,112,500
Number of shares and treasury shares held
in the liquidity contract 30,337 17,671
Corrected number of shares 18,811,328 12,094,829
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