Cegereal : Continues Its Growth With a 30.6% Increase in EPRA Earnings

2019 Annual Results – Regulated Information Rental income up 19.5% Portfolio value up 3.9% European leader in CSR €2.3 per share dividend distribution

Regulatory News:

Cegereal (Paris:CGR):

Key indicators

In millions of euros	2019	2018	Change
IFRS rental income	63.4	53.0	+19.5%
EPRA earnings	40.0	30.7	+30.6%
Portfolio value (excluding transfer duties)	1,464	1,409	+3.9%
Occupancy rate	96.9%	96.1%	+0.8 pts
LTV ratio	52.6%	54.7%	-2.1 pts
EPRA NNNAV per share excluding transfer duties (in €)	43.7	41.0	+2.4%

Jérôme Anselme, Cegereal’s Chief Executive Officer commented: “This year once again, Cegereal’s teams have enabled the Company to deliver a record performance both operationally and financially, with EPRA earnings coming out at €40 million. Illustrated in particular by the arrival of the European Banking Authority’s teams and the significant extension of KPMG France’s lease in Europlaza tower, our solid rental activity demonstrates our capacity to attract and build strong relationships with clients. Our strength lies in our capacity to offer a user experience uniting connectivity, convenience, flexibility and respect for the environment. 2020 will see us roll out the same strategy and continue to focus on our objective of increasing the value of our portfolio and our Company”.

Record 96.9% occupancy rate

The highlights of 2019 included the extension of KPMG France’s lease in Europlaza tower, in which the firm now occupies 12,600 sq.m, reaffirming the property’s continued appeal, as well as the arrival of Salto, the French VoD platform developed by television channels TF1, M6 and France Télévisions, at Arcs de Seine.

In total, leases have been renewed, extended or signed on 45% of the portfolio’s surface area in the last three years. This successful rental activity has pushed the portfolio occupancy rate to 96.9%, demonstrating the effectiveness of Cegereal’s strategy, both in terms of asset management and the close relationship the Company has with its tenants. Four out of five assets are now fully leased.

Benefiting from the many signings in 2019, Cegereal’s rental income climbed 19.5% to €63.4 million in 2019, with the December 2018 acquisition of the Passy Kennedy building contributing €9.9 million. On a like-for-like basis, rental income grew 2.2% year-on-year.

The estimated value of Cegereal’s property portfolio (excluding transfer duties) amounted to €1,464 million, up 3.9% compared with 2018. This increase was driven by the signing of leases under market-beating conditions, as well as by the desirable location of the portfolio’s different properties.

Improvement in all financial indicators

The Company’s operational and financial performance was positively impacted by its excellent rental activity as well as the full-year impact of income generated by the Passy Kennedy building. Cegereal’s EPRA earnings totaled €40.0 million in 2019, a sharp 30.6% increase on 2018.

Net attributable income came in at €80.8 million in 2019, compared with €33.4 million in 2018, mainly due to the increase in the portfolio value.

Consolidated net debt stood at €769 million at December 31, 2019, representing an LTV ratio of 52.6%, while the average maturity of the Group’s borrowings stood at 3.5 years with an average interest rate of 1.3%.

EPRA NNNAV stood at €695.1 million or €43.7 per share at end-December, up 8.7% from €639.6 million or €41 per share at December 31, 2018. This increase reflects the growth in IFRS consolidated net income to €80.8 million, mainly thanks to the €55.4 million increase in the portfolio value, offset by the dividend distribution of €36.6 million.

No. 1 in Europe in CSR

Each year since its creation, Cegereal has proven its strong engagement in respect of environmental, social and governance (ESG) issues. Its commitment and the transparency of its non-financial reporting have been commended by ratings agencies such as the European Public Real Estate Association (EPRA) and the Carbon Disclosure Project (CDP), as well as the Global Real Estate Sustainability Benchmark (GRESB), which has placed the Company in the top 3 since it first participated in the benchmark. With a score of 95/100, Cegereal reached a new milestone in 2019, climbing to number one in Europe and number three worldwide, all sectors combined.

The in-depth work carried out during the year to analyze and control the environmental indicators of each of the Company’s buildings paid off, resulting in a reduction in the portfolio’s energy consumption and greenhouse gas emissions by 30% and 42%, respectively, since 2013. In addition, its entire portfolio has achieved NF HQE^TM Exploitation and BREEAM In-Use International certification.

Cegereal also stands out in how it manages biodiversity across its portfolio: the Company promotes the development of the flora and fauna housed in the portfolio’s 37,300 sq.m of green space.

2020 dividend distribution: €2.3 per share

Cegereal’s recurring cash flow rose to €42.9 million, up from €35.2 million in 2018. At the next General Shareholders’ Meeting, Cegereal will recommend paying another significant dividend distribution of €2.3 per share.

* * *

Cegereal’s Board of Directors met on February 27, 2020 to approve the audited consolidated financial statements for the year ended December 31, 2019.

The annual results presentation can be viewed on the Company’s website: www.cegereal.com

About Cegereal

Created in 2006, Cegereal is a listed property company that invests in prime office properties in Greater Paris. The total value of the portfolio is estimated at €1,464 million at December 31, 2019 (excluding transfer duties).

Thanks to its strong commitment to environmental, social and governance issues, Cegereal achieved first place among listed companies in Europe in the 2019 Global Real Estate Sustainability Benchmark (GRESB) ranking. Its entire portfolio has achieved NF HQE^TM Exploitation and BREEAM In-Use International certification.

Cegereal is a REIT listed on Euronext Paris since 2006, in compartment B (ISIN: FR0010309096). The Company had a market capitalization of €658.5 million at February 27, 2020.

www.cegereal.com

APPENDICES

IFRS Income Statement (consolidated)

In thousands of euros, except per share data
	2019	2018
	12 months	12 months
Rental income	63 369	53 026
Income from other services	20 045	15 010
Building-related costs	(31 621)	(31 002)
Net rental income	51 793	37 034
Sale of building	0	0
Administrative costs	(3 885)	(4 039)
Other operating expenses	(13)	(89)
Other operating income	165	0
Increase in fair value of investment property	60 710	12 501
Decrease in fair value of investment property	(14 480)	(800)
Total change in fair value of investment property	46 230	11 701
Net operating income	94 289	44 607
Financial income	0	6
Financial expenses	(13 529)	(11 508)
Net financial expense	(13 529)	(11 502)
Corporate income tax	0	0
CONSOLIDATED NET INCOME	80 760	33 106
of which attributable to owners of the Company	80 760	33 106
of which attributable to non-controlling interests	0	0
Other comprehensive income
TOTAL COMPREHENSIVE INCOME	80 760	33 106
of which attributable to owners of the Company	80 760	33 106
of which attributable to non-controlling interests	0	0
Basic earnings per share (in euros)	5,10	2,40
Diluted earnings per share (in euros)	4,92	2,27

IFRS Balance Sheet (consolidated)

In thousands of euros
	Dec. 31, 2019	Dec. 31, 2018
Non-current assets
Property, plant and equipment	38	47
Investment property	1 463 920	1 408 520
Non-current loans and receivables	23 146	20 230
Financial instruments	34	597
Total non-current assets	1 487 138	1 429 393
Current assets
Trade accounts receivable	9 720	7 747
Other operating receivables	11 607	14 726
Prepaid expenses	292	116
Total receivables	21 620	22 589
Cash and cash equivalents	44 880	53 367
Total cash and cash equivalents	44 880	53 367
Total current assets	66 499	75 957
TOTAL ASSETS	1 553 637	1 505 350
Shareholders' equity
Share capital	79 532	78 006
Legal reserve and additional paid-in capital	66 462	93 277
Consolidated reserves and retained earnings	503 513	470 500
Net attributable income	80 760	33 106
Total shareholders’ equity	730 268	674 889
Non-current liabilities
Non-current borrowings	763 974	763 321
Other non-current borrowings and debt	10 087	9 543
Non-current corporate income tax liability	0	0
Financial instruments	682	791
Total non-current liabilities	774 743	773 655
Current liabilities
Current borrowings	3 468	3 152
Trade accounts payable	12 349	24 996
Corporate income tax liability	0	0
Other operating liabilities	10 437	9 698
Prepaid revenue	22 373	18 960
Total current liabilities	48 626	56 806
Total liabilities	823 369	830 461
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	1 553 637	1 505 350

IFRS Statement of Cash Flows (consolidated)

In thousands of euros
	2019	2018
OPERATING ACTIVITIES
Consolidated net income	80 760	33 106
Elimination of items related to the valuation of buildings:
Fair value adjustments to investment property	(46 230)	(11 701)
Annulation des dotations aux amortissement
Indemnité perçue des locataires pour le remplacement des composants	0	0
Elimination of other income/expense items with no cash impact:
Depreciation of property, plant and equipment (excluding investment property)	9	11
Free share grants not vested at the reporting date	0	0
Fair value of financial instruments (share subscription warrants, interest rate caps and swaps)	427	473
Adjustments for loans at amortized cost	2 362	2 247
Contingency and loss provisions	0	0
Corporate income tax
Penalty interest
Cash flows from operations before tax and changes in working capital requirements	37 329	24 136
Other changes in working capital requirements	(8 277)	19 621
Working capital adjustments to reflect changes in the scope of consolidation
Change in working capital requirements	(8 277)	19 621
Net cash flows from operating activities	29 052	43 757
INVESTING ACTIVITIES
Acquisition of fixed assets	(9 170)	(227 422)
Net increase in amounts due to fixed asset suppliers	(1 745)	2 620
Net cash flows used in investing activities	(10 915)	(224 802)
FINANCING ACTIVITIES
Capital increase	11 204	79 901
Capital increase transaction costs	0	(794)
Change in bank debt	(1 500)	147 000
Issue of financial instruments (share subscription warrants)	0	0
Refinancing/financing transaction costs	(102)	(1 930)
Net increase in liability in respect of refinancing	(420)	420
Purchases of hedging instruments	0	(796)
Net increase in current borrowings	236	134
Net decrease in current borrowings	0	0
Net increase in other non-current borrowings and debt	544	3 615
Net decrease in other non-current borrowings and debt	0	0
Purchases and sales of treasury shares	(28)	(42)
Dividends paid	(36 557)	(54 813)
Net cash flows from financing activities	(26 625)	172 694
Change in cash and cash equivalents	(8 488)	(8 351)
Cash and cash equivalents at beginning of period*	53 367	61 718
CASH AND CASH EQUIVALENTS AT END OF PERIOD	44 880	53 367
* There were no cash liabilities for any of the periods presented above.

French GAAP Income statement

In euros
	Dec. 31, 2019	Dec. 31, 2018
	12 months	12 months
Sales of services	248 750	249 160
NET REVENUE	248 750	249 160
Reversal of depreciation and amortization charges, impairment and expense transfers	0	235 610
Other revenue	22 559	1 886
Total operating revenue	271 309	486 656
Purchases of raw materials and other supplies	0	0
Other purchases and external charges	1 901 020	2 564 773
Taxes, duties and other levies	39 809	80 181
Wages and salaries	340 980	714 151
Social security charges	175 048	300 884
Fixed assets: depreciation and amortization	3 561	1 955
Contingency and loss provisions	0	0
Other expenses	196 229	191 927
Total operating expenses	2 656 646	3 853 871
OPERATING LOSS	(2 385 337)	(3 367 215)
Financial income from controlled entities	3 022 000	3 353 425
Other interest income	0	6 347
Foreign exchange gains	0	0
Total financial income	3 022 000	3 359 772
Interest expenses	104 731	85 396
Foreign exchange losses	0	0
Total financial expenses	104 731	85 396
NET FINANCIAL INCOME	2 917 269	3 274 376
RECURRING LOSS BEFORE TAX	531 932	(92 839)
Non-recurring income on capital transactions	42 347	68 222
Reversal of impairment, provisions and non-recurring expense transfers	0	194 056
Total non-recurring income	42 347	262 278
Non-recurring expenses on management transactions	5 000	0
Non-recurring expenses on capital transactions	11 352	213 895
Total non-recurring expenses	16 352	213 895
NET NON-RECURRING INCOME	25 995	48 383
Corporate income tax	0	0
TOTAL INCOME	3 335 656	4 108 706
TOTAL EXPENSES	2 777 729	4 153 162
NET LOSS	557 927	(44 456)

French GAAP Balance Sheet

In euros
ASSETS	Gross amount	Depr., amort. & prov.	Dec. 31, 2019	Dec. 31, 2018
Property, plant and equipment
Other property, plant and equipment	10 776	5 705	5 071	4 753
Financial fixed assets
Receivables from controlled entities	235 004 686		235 004 686	242 004 686
Loans	-		-	-
Other financial fixed assets	791 653		791 653	801 745
FIXED ASSETS	235 807 115	5 705	235 801 410	242 811 184
Receivables
Trade accounts receivable	233 134		233 134	241 992
Other receivables	68 291 960		68 291 960	73 376 973
Cash and cash equivalents	2 236 722		2 236 722	14 762 019
CURRENT ASSETS	70 761 815		70 761 815	88 380 984
Prepaid expenses	-		-	11 206
TOTAL ASSETS	306 568 930	5 705	306 563 225	331 203 374

In euros
EQUITY AND LIABILITIES			Dec. 31, 2019	Dec. 31, 2018
Capital
Share capital (including paid-up capital: 66,862,500)			79 532 200	78 006 250
Additional paid-in capital			59 463 926	86 278 764
Revaluation reserve			152 341 864	152 341 864
Reserves
Legal reserve			7 800 625	7 800 625
Other reserves			0	122 849
Retained earnings
Retained earnings			27 867	14 006
Net loss for the year			557 927	(44 456)
SHAREHOLDERS’ EQUITY			299 724 408	324 519 901
OTHER EQUITY			-	-
Loss provisions			0	0
CONTINGENCY AND LOSS PROVISIONS			-	-
Non-current borrowings and debt
Miscellaneous borrowings and debt			5 793 854	5 630 705
Trade accounts payable and other current liabilities
Trade accounts payable			721 770	758 313
Tax and social liabilities			323 194	294 455
Amounts owed to fixed asset suppliers			0	0
LIABILITIES			6 838 817	6 683 473
TOTAL EQUITY AND LIABILITIES			306 563 225	331 203 374

Reconciliation of Alternative Performance Measures (APM)

Cegereal recurring cash flow APM
In thousands of euros	2019	2018
Net income under IFRS	80 760	33 106
Restatement of changes in fair value of investment property	-46 230	-11 701
Other restatements of changes in fair value	454	475
Restatement of other fees	5 061	8 794
EPRA earnings	40 046	30 674
IFRS adjustments (rent-free periods, etc.)	602	2 256
Restatement of deferred finance costs	2 260	2 247
Cegereal recurring cash flow	42 908	35 177
EPRA NNNAV APM
In thousands of euros	2019	2018
Shareholders’ equity under IFRS	730 268	674 889
Portion of rent-free periods	-28 614	-27 315
Market value of loans	-771 837	-772 432
Carrying amount of loans	765 240	764 507
NNNAV PER SHARE	695 057	639 649
LTV ratio APM
In thousands of euros	2019	2018
Gross amount of balance sheet loans (statutory financial statements)	769	771
Fair value of investment property	1 464	1 409
LTV ratio (%)	52,6%	54,7%

Occupancy rate APM

The occupancy rate is the ratio of space for which the Company receives rent under a lease agreement to the total amount of available space.

Taking into account the upcoming arrivals (KPMG particularly), Cegereal’s overall occupancy rate is up sharply at 96.9%.

At December 31, 2019, i.e., before the effective date of these new leases, the occupancy rate stood at 93.9%, versus 92.3% one year earlier.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200227005938/en/