First quarter 2017: acceleration of the rental growth
26 April 2017
Growth in rental income on each of our markets
* Rental income, Group Share, of EUR145.4 million, an increase of 4.0% and of
1.7% on a like-for-like scope
* France Offices: +0.8% on a like-for-like scope
* Italy Offices: +3.7% on a like-for-like scope for the portfolio, excluding
* Germany Residential: +4.7% on a like-for-like scope in Berlin
* Hotels in Europe: increase in variable rental income of +3.4% on a
EUR1 billion in investments
* Offices: continued investment in properties under development
* Germany Residential: EUR279 million in acquisitions mainly in central Berlin
* Hotels in Europe: major EUR559 million acquisition in Spain, mainly in
Barcelona and Madrid
* Successful capital increase of EUR400 million to finance new investments
A development pipeline of EUR4 billion for building our future growth
* EUR1.1 billion committed for delivery by 2019; EUR2.8 billion of managed
* A record year for deliveries: 13 buildings for EUR596 million, 92,700 m2 of
offices and 673 hotel rooms
Consolidation on major European cities
Foncière des Régions consolidated its foothold in major European cities
during the first quarter of 2017. The Group invested EUR1 billion (EUR543
million Group Share) including EUR933 million of acquisitions (EUR508 million
Group Share) located 80% in Berlin, Milan, Barcelona and Madrid with an
immediate average yield of 5.1% and a potential yield of 6.2%.
France Offices: continued investment in development projects
Consistent with a rental market which favours new buildings and bolstered by
its good track record, Foncière des Régions continued to invest in its
development projects. The Group delivered the 10,700 m2 Silex1 building
opposite the Lyon Part-Dieu railway station in January. Almost 90% of this new
prime asset in the Lyon CBD has already been let, mainly to BNP Paribas and to
The Thaïs building (5,600 m2) was also delivered in Levallois-Perret in April.
MCI has leased 1,980 m2 of this former Orange Asset located close to Louise
Michel metro station and negotiations are at an advanced stage for letting the
rest of the building.
Italy Offices: EUR56 million of investment (EUR29 million Group Share) in Milan
Foncière des Régions acquired the 7,000 m2 Principe Amedeo building (signed
in 2015) in the heart of the Milan CBD for redevelopment by 2018. Work on
assets under development continued, especially on Via Cernaia (8,300 m2) and
Via Colonna (3,500 m2), two buildings in Milan, which will be delivered in
Germany Residential: EUR279 million of acquisitions (EUR180 million Group
Share), 80% in Berlin
The Group continued its development in Berlin with EUR279 million of
acquisitions of residential units mainly in the city's central districts. These
investments were made at an average price of EUR1,710/m2 (EUR2,120/m2 in
Berlin), with a return of 4.4% (4.1% in Berlin) after reletting the vacant 13%.
With an average potential rental reversion of 40%, these assets will contribute
to the Group's future organic growth.
Hotels: EUR613 million of acquisitions (EUR306 million Group Share), mainly in
Barcelona and Madrid
Foncière des Régions took a major step forward in its European development
with the acquisition of 17 hotels and 3,335 rooms for EUR559 million, 80% of
which are in Barcelona and Madrid. This portfolio of mainly 4*-5* city centre
assets is enabling the Group to reach critical size on a fast-growing Spanish
market (Revpar has grown 10% since the start of the year).
Successful capital increase of EUR400 million
Foncière des Régions successfully completed a EUR400 million capital increase
in January, which was oversubscribed several times. This operation along with
the programme to sell-off non-core buildings is providing the financing for
the Group's development, especially the acquisitions of hotels in Spain and
residential property in Berlin, together with the European development pipeline
(EUR1.1 billion committed and a EUR705 million Group Share). 2017 will
therefore be a record year with the delivery of 13 buildings, i.e. 92,700 m2
of offices and 673 hotels rooms, at a total cost of EUR596 million (EUR430
million Group Share).
Rental income at end-March: acceleration of the like-for-like growth
Rental income for the quarter, totalling EUR145.4 million, a 4.0% increase,
benefited from the strong investment dynamic in 2016 especially in Hotels
(rental growth of 15%), in Italy (+7.1%) and in Germany Residential (+6.6%).
Rental income has increased by 1.7% on a like-for-like scope, compared to +0.2%
over 2016 as a whole. This solid performance reflects the buoyant rental
markets over the Group's trades as a whole, and confirms the investment choices
made in recent years.
Thus the 0.8% increase on a like-for-like scope for France Offices results from
rentals last year and the 0.8% increase in rental income from lease
renegotiations in 2016. The 3.7% rental growth on a like-for-like scope in
Germany Residential has been boosted, in particular by the 4.7% gain on a like-
for-like scope in Berlin. In Italy (+1.8% on a like-for-like scope) the rental
income increased by 3.7% for the portfolio excluding Telecom Italia, stimulated
by the big improvement in the occupancy rate since the start of 2016. Finally,
for Hotels (+1.4%) the variable rental income indexed to AccorHotels' revenue
increased by 3.4% in the first quarter on a like-for-like scope.
Foncière des Régions confirms its target of growth for rental income for 2017
as a whole of between 1.5% and 2.0% on a like-for-like scope.
Rent al Rent al Change on
3M 2017 - income income like-
EURmillion 100% Group Change for-like Occupancy Residual firm
Share basis rate terms
France 67.6 61.3 -0.7% +0.8% 95.0% 5.4 years
Italy 50.9 26.6 +7.1% +1.8% 95.6% 8.8 years
Germany 55.3 34.2 +6.6% +3.7% 98.4% n.a.
Sector 48.8 21.5 +15.0% +1.4% 100.0% 10.7 years
Resi.) 3.0 1.8 n.a. n.a. n.a. n.a.
Total 225.5 145.4 +4.0% +1.7% 96.6% 7.2 years
A conference call for analysts and investors will take place today at 6 pm
A presentation related to the conference call will be available on Foncière
des Régions' website: www.en.foncieredesregions.fr/finance_en
Results for the first six months of 2017: 20 July 2017
Foncière des Régions, co-author of real estate stories
As a key player in real estate, Foncière des Régions has built its growth and
its portfolio on the key and characteristic value of partnership. With a total
portfolio valued at EUR19Bn (EUR12Bn in group share), located in the
high-growth markets of France, Germany and Italy, Foncière des Régions is now
the recognised partner of companies and territories which it supports with its
two-fold real estate strategy: adding value to existing urban property and
designing buildings for the future.
Foncière des Régions mainly works alongside Key Accounts (Orange, Suez
Environnement, EDF, Dassault Systèmes, Thales, Eiffage, etc) in the Offices
market as well as being a pioneering and astute operator in the two other
profitable sectors of the Residential market in Germany and Hotels in Europe.
Foncière des Régions shares are listed in the Euronext Paris A compartment
(FR0000064578 - FDR), are admitted to trading on the SRD, and are included in
the composition of the MSCI, SBF 120, Euronext IEIF "SIIC France" and CAC
Mid100 indices, in the "EPRA" and "GPR 250" benchmark European real estate
indices, and in the FTSE4 Good, DJSI World, Euronext Vigeo (World 120, Eurozone
120, Europe 120 et France 20), Oekom, Ethibel and Gaïa ethical indices.
Foncière des Régions is rated BBB/Stable by Standard and Poor's.
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