PAREF - 2018 Full-Year results
2018 FULL-YEAR RESULTS
Increasing results showing the efficiency of PAREF Group's strategy
Financial indicators in strong growth
- Net result of €11.8 Mn (+43%)
- Net commissions of €13.2 Mn vs. €8.9 Mn in 2017 (+48%)
- EPRA Triple net NAV at €99.1 per share (+4%)
- Loan to value1 at a historical low of 4% vs. 23% as at December 31, 2017
A portfolio of asset under management of €1.6 Bn
- €1,439 Mn managed on behalf of third parties through SCPI2 and OPCI3, thanks to a gross subscription amount of €236 Mn in 2018 vs. €160 Mn in 2017 (+48%)
- €138 Mn of owned assets (+3% on a like-for-like basis)
Proposed distribution of €3.85 per share for the fiscal year 2018 to be paid in cash, a 28% increase compared to 2017, for approval by the Annual General Meeting to be held in May 2019 (date to be confirmed).
The management board of PAREF, during the board meeting held on February 19, 2019, approved the closing of the annual statutory and consolidated accounts as of December 31, 2018. The review of results by auditors is in progress.
“The financial and operational results of 2018 are demonstrating once again the relevance of PAREF Group's strategy. The diversification of our activities and revenue sources insures strong resilience of our business model and value creation for our shareholders.”
Antoine Castro - CEO
I - Management activity on behalf of third parties (PAREF Gestion)
- Subscription and portfolio under management
2018 has been again a successful year in terms of gross subscription from retail investors with a +48% growth compared to 2017, reaching c. €236 Mn (€160 Mn in 2017). This result is mainly explained by strong performance of opened-end SCPI funds Novapierre Allemagne and Interpierre France with €176 Mn and €54 Mn gross subscription respectively over the period.
In addition to the good performance in subscription, the net subscription remains high with a net to gross subscription ratio of 79 % in 2018, showing investors' strong confidence in the Group's products and the quality of management.
As at December 31, 2018, PAREF Gestion manages €1,439 Mn of assets on behalf of third parties, a +22% increase on a like-for-like basis compared to 2017 (-6% compared to December 31, 2017 due to the disposal of the asset held by OPCI fund 54 Boétie in the second semester of 2018, representing an asset value of €349M€ at the end of 2017).
Breakdown of the funds managed by PAREF Gestion as at December 31, 2018:
|Type||Funds||Strategy||Assets under Management
Dec 31, 2017
|Assets under Management
Dec 31, 2018
|Evolution in %|
|SCPI||Novapierre Allemagne (OF4)||Retail (Germany)||269||449||67%|
|Pierre 48 (OF4)||Residential (Paris)||281||285||1%|
|Novapierre 1 (OF4)||Retail (Greather Paris)||153||156||2%|
|Interpierre France (OF4)||Office/Logistic||97||136||40%|
|Capiforce Pierre (CF)||Diversified||53||53||0%|
|Atlantique Pierre 1 (CF5)||Diversified||43||48||11%|
|Cifocoma 1 (CF5)||Retail||20||18||-7%|
|Cifocoma 2 (CF5)||Retail||21||22||6%|
|OPCI||Vivapierre (OF4)||Hôtel (France)||100||94||-6%|
|54 Boétie (OF4)||349||-||n.a|
|OPPCI de murs d'hôtels (CF5)||115||142||23%|
Breakdown of the 2018 gross subscription:
|Evolution in %|
Thanks to the dynamic gross subscription in 2018 and the growth in assets managed on behalf of third parties, PAREF Gestion achieved substantial growth on its gross subscription and management commissions, reaching €21.2 Mn (+40%) and €6.6 Mn (+25%) respectively.
|Commissions (in €k)||2017||2018||Evolution in %|
II - Real-estate activity (PAREF SA)
During 2018, PAREF has largely improved rental activities on its owned assets with more than 50,000 sqm let or re-let, representing c. 45% of total space of the portfolio. In particular, PAREF has signed a 12-year firm lease for the hotel resorts located at Dax and Saint-Paul-Lès-Dax with the historical operator Thermes Adour, a major player in the thermal industry. The lease will mature in July 2031.
The financial occupancy rate of its owned assets increased to 82.8 % compared to 81.8% as at December 31, 20176. The weighted average unexpired lease term stands at 4.8 years at the end of 2018 (compared to 4.4 years at the end of 2017). The expiry schedule of rents of owned assets is as follows:
In addition, PAREF continues to manage proactively its owned portfolio with the disposal of 3 assets, including Melun Vaux-le-Pesnil building, parking lots located in Pantin and half of an office asset located in Saint Maurice, for a total net sale price of €2.1 Mn, representing a 15 % premium in average above the last appraisals.
PAREF Group portfolio valuation7 stands at €138 Mn as at December 31, 2018, of which €127 Mn of real-estate assets (including the participation in Gaïa office) and €11 Mn of financial assets invested in the SCPI funds managed by the Group, following the disposal of shares in SCPI Interpierre for ca. €9.5 Mn in the second semester of 2018.
|Key indicators on owned assets8||2017||2018|
|Number of assets||22||20|
|Lettable area (in operation)||133,422 sqm||129,069 sqm|
|Financial occupancy rate (in operation)||81.8%||82.8%|
In total, the net rental income of PAREF's owned assets stands at €6.8 Mn in 2018, decreasing compared to 2017 (-18%) mainly due to the disposal of Pantin Courtois office in August 2017, which is partly compensated by a positive evolution of rental income thanks to sustained rental activities. Net rental income also increased by +0.3% on a like-for-like basis mainly thanks to the leasing activity during the year.
|2018 rental income on owned assets (in k€)||2017||2018||Evolution in %|
|Gross rental income||9,114||7,512||-18%|
|Non-recoverable rental expenses||-790||- 793||0%|
|Total net rental income||8,337||6,822||-18%|
The average gross initial yield on these assets stands at 6.9%, showing a slight decrease compared to 7.2% at the end of 20179.
III - 2018 Results
|Detailed consolidated P&L (in €k)||2017||2018||Evolution in %|
|Gross rental income||9,114||7,512||-18%|
|Non-recoverable rental expenses||-790||-793||0%|
|Net rental income||8,337||6,822||-18%|
|Revenues on commissions||20,409||27,802||36%|
|-of which management commissions||5,286||6,620||25%|
|-of which subscription commissions||15,123||21,182||40%|
|Net revenues on commissions||8,858||13,150||48%|
|Depreciation and amortization||-767||-415||-46%|
|Current operating result||7,481||10,390||39%|
|Variation of fair value on investment properties||646||5,843||x8|
|Result on disposals of investment properties||2,919||216||-93%|
|Net financial expenses||-3,253||-1,989||-39%|
|Other expenses and incomes on financial assets||160||246||54%|
|Fair-value adjustments of financial instruments||536||398||-26%|
|Result on disposal of shares in companies consolidated under Equity method||595||n.a.|
|Results of companies consolidated under the equity-method||712||-1,818||n.a.|
|Result before tax||9,201||13,880||51%|
|Net result (owners of the parent)||8,261||11,803||43%|
|Average number of shares (non-diluted)||1,197,128||1,379,932|
|Net result / share (owners of the parent)||6.90||8.55||24%|
|Average number of shares (diluted)||1,201,543||1,384,022|
|Net result / share (owners of the parent diluted)||6.88||8.53||24%|
PAREF Group has realized net results of €11.8 Mn in 2018, significantly increasing by 43% compared to 2017:
- Net rental income stands at €6.8 Mn, decreased by 18% compared to 2017, following the disposals in 2017 and 2018;
- Net commissions strongly increased by +48% thanks to the growth in subscriptions and in the amount of assets managed on behalf of third parties;
- General expenses amounted to €9.2 Mn, in slight increase by 2% explained by the reinforcement of the team in different departments
- The variation of fair value on investment properties has significantly increased, reaching €5.8 Mn in 2018, mainly thanks to an increase in value on the resort assets located in Dax and Saint-Paul-Lès-Dax following the signature of a 12-year firm lease;
- Net financial expenses stand at €2.0 Mn in 2018 (of which €0.5 Mn of indemnities linked to early repayment of existing debts) versus €3.3 Mn in 2017 (excluding fair-value adjustments of financial instruments). This reduction is explained by an active management of liabilities, especially the repayment of existing debts in 2017 and 2018;
- Results of companies consolidated under the equity-method decrease to -€1.8 Mn, mainly due to the impact of a negative variation on the fair value of Gaïa office asset.
IV - Financial resources
The gross debt of the Group decreased substantially and stands at €35 Mn as at December 31, 2018, an important reduction compared to 2017 (€45 Mn as at December 31, 2017), following the early repayment and the contractual amortization on existing debts.
The consolidated debt is fully composed of loans with mortgages on owned assets.
The average cost of debt of the Group stands at 3.6% as at December 31, 2018 (4.2% as at December 31, 2017) and the average debt maturity is 3.9 years.
The Group implemented a conservative policy on interest rate risk hedging, with more than 80% of the debt issued at fixed rate or covered by hedging instruments at the end of 2018, limiting the sensitivity of the Group to interest rates fluctuations.
Financial ratios are solid with a loan-to-value (LTV10) and an interest coverage ratio (ICR11) of 4% and 7.0x respectively (versus 23% and 4.8x respectively in 2017).
The Group respects the financial covenants on its bank debt: LTV < 55% and ICR > 2x12.
Debt repayment schedule:
The Group has an amount of cash and cash equivalent of €28 Mn as at Dec 31, 2018, to cover more than 12 months debt repayment and to meet the regulatory requirement of minimum amount to be held by PAREF Gestion.
The Group also realized a successful capital increase of €17 Mn on April 5, 2018 (settlement on April 11, 2018). This operation largely over-subscribed demonstrated investors' appetite for the Group. The main shareholder stake (FOSUN Group) decreased therefore from 71.37% down to 59.84% allowing PAREF to maintain the SIIC tax status.
V - Assets under Management
|In k€||2017||2018||Evolution in %|
|PAREF owned assets||107,099||111,070||4%|
|Total patrimoine PAREF||145,663||138,287||-5%|
|Other assets managed on behalf of third parties (1)||28,262||35,300||25%|
|Total Assets under Management by PAREF Gestion||1,531,357||1,438,735||-6%|
(1) Including Foncière Sélection Régions
(2) Part of PAREF portfolio is managed through OPPCI (Vivapierre) by PAREF Gestion, and SCPI (Interpierre) in 2017
PAREF's owned portfolio stands at €111 Mn, increased by €4 Mn compared to 2017, mainly explained by:
- Disposals of €1.9 Mn (valuation as at December 31, 2017);
- Capitalized expenses of €0.1 Mn in 2018;
- Increase in fair value of investment properties of €5.8 Mn.
The like-for-like change in fair value amounted also to €5.8 million in 2018, representing an increase of +5.5%.
The average gross initial yield on PAREF's owned assets stands at 6.9% vs. 7.2% at the end of 2018 (excluding Le Gaïa office building).
VI - EPRA Net Asset Value
PAREF Group EPRA triple net asset value (NNNAV) stands at €99.1 per share as at December 31, 2018, increasing by €3.4 per share (+4% versus 2017). The evolution is mainly explained by 2018 net results for +€8.2/share, the positive variation of fair value on investment properties and the valuation of PAREF Gestion's management mandates for +€2.7/share, dividend payment for -€3/share and the dilution generated by the capital increase realized in April 2018 for € -4.3/share.
EPRA NNNAV is based on consolidated equity under IFRS rules (including fair value of assets) and financial instruments and debt at fair-value.
|31/12/2017||31/12/2018||Evolution in %|
|NAV per the financial statements||100.3||124.8||24%|
|Fair value of financial instruments||0.9||0.5|
|Revaluation of intangible and operating assets (PAREF Gestion)14||16.3||19.5|
|EPRA NAV (in €M)||117.5||144.8||23%|
|EPRA NAV per share (in €)||98.1||100.3||2%|
|Fair value of financial instruments||-0.9||-0.5|
|Fair value of debt||-1.5||-0.6|
|EPRA NNNAV (in M€)||114.7||143.1||25%|
|EPRA NNNAV per share (in €)||95.7||99.1||4%|
|Estimated transfer taxes||9.8||9.2|
|Going concern NAV (in M€)||124.9||152.9||22%|
|Going concern NAV / per share (in €)||104.3||105.9||2%|
VII - Post-closing events
Group PAREF signed two new 9-year leases on Gaïa office building, with 6-year and 5-year firm period respectively. The effective date is between May 2019 and May 2020 for a total surface of 965 sqm. This signature confirms the quality of Gaïa asset and will increase the physical occupation rate to 39%.
VIII - Strategy and perspectives
PAREF Group continues to accelerate its development based on 3 main pillars:
- A progressive growth of PAREF real estate portfolio with a proactive management: asset management of the existing portfolio, asset rotation and selective investments, for a repositioning on large assets located in Greater Paris area;
- A rational development of the management activity for individual investors through (i) an increase in assets under management on existing products and (ii) the creation of new products;
- An acceleration of management activity for institutional investors in France and continental Europe, notably thanks to the new entity PAREF Investment Management created in late 2018.
In this context, the Group maintains its distribution policy representing between 65% and 75% of the recurring result over the next years.
IX - Other EPRA indicators
- EPRA Earnings
|In k€||31/12/2017||31/12/2018||Evolution in %|
|Earnings per IFRS income statement||8,261||11,803||43%|
|(i) Change in fair-value of investment properties||-646||-5,843||804%|
|(ii) Profits or losses on disposal of investment properties and other interests||-2,919||-216||-93%|
|(iii) Profits or losses on disposal of financial assets available for sale||0||-595||n.a.|
|(iv) Tax on profits or losses on disposals||0||0|
|(v) Negative goodwill / goodwill impairment||0||0|
|(vi) Changes in fair value of financial instruments and associated close-out costs||-536||-398||-26%|
|(vii) Acquisition costs on share deals and non-controlling joint-venture||0||0|
|(viii) Deferred tax in respect of the adjustments above||0||0|
|(ix) Adjustments (i) to (viii) above in respect of companies consolidated under equity method||767||3,383||341%|
|(x) Non-controlling interests in respect of the above||0||0|
|Average number of shares (diluted)||1,197,128||1,379,932|
|EPRA Earnings per share (diluted)||4.1€||5.9 €||44%|
- EPRA Vacancy rate
|In k€||31/12/2017||31/12/2018||Evolution in %|
|Estimated rental value of vacant space (1)||1,785||1,650|
|Estimated rental value of the whole portfolio (1)||9,814||9,580|
|EPRA Vacancy Rate||18.2%||17.2%||-1.0pts|
(1) Including the participation in Gaïa office, excluding shares in SCPI Vivapierre. Excluding Gaïa, EPRA vacancy rate stands at 8.1% as at December 31, 2018 vs. 9.3% as at December 31, 2017.
- EPRA Net Initial Yield (NIY) and ‘topped-up' NIY
|In %||31/12/2017||31/12/2018||Evolution in %|
|PAREF Net yield||7.06%||6.29%||-0.78pts|
|Impact of estimated duties and costs||-0.4%||-0.4%||0.07pts|
|Impact of changes in scope||-0.9%||0.2%||1.07pts|
|EPRA Net initial yield (1)||5.73%||6.10%||0.36pts|
|Excluding lease incentives||0.1%||0.3%||0.19pts|
|EPRA “Topped-Up” Net initial yield (2)||5.83%||6.38%||0.55pts|
(1) The EPRA Net Initial Yield rate is defined as the annualized rental income, net of property operation expenses, after deducting rent adjustments, divided by the value of the portfolio, including duties.
(2) The EPRA ‘topped-up' Net Initial Yield rate is defined as the annualized rental income, net of property operating expenses, excluding lease incentives, divided by the value of the portfolio, including taxes.
- EPRA cost ratios
The ratio below is computed based on PAREF Group owned assets perimeter (including companies consolidated under the equity method).
|In k€||31/12/2017||31/12/2018||Evolution in %|
|(i) General expenses (1)||-1,406||-1,916||36%|
|(ii) Costs related to properties||-166||-222||34%|
|(iii) Net service charge costs/fees||-3,429||-3,351||-2%|
|(iv) Management fees less actual/estimated profit element||0||0||n.a.|
|(v) Other operating income/recharges intended to cover overhead expenses||0||0||n.a.|
|(vi) Share of general expenses of companies consolidated under equity method||-438||-341||-22%|
|(vii) Depreciation and amortization|
|(viii) Ground rent costs||1,245||1,257||1%|
|(ix) Service charge costs recovered through rents but not separately invoiced||1,560||1,469||-6%|
|EPRA Costs (including direct vacancy costs) (A)||-2,634||-3,104||18%|
|(x) Less: Direct vacancy costs (unrecoverable rent costs)||441||479||9%|
|EPRA Costs (excluding direct vacancy costs) (B)||-2,193||-2,625||20%|
|(xi) Gross Rental Income less ground rent costs||10,359||8,801||-15%|
|(xii) Less: service charge costs included in Gross Rental Income||-1,245||-1,257||1%|
|(xiii) Add: share of Gross Rental Income less ground rent costs of companies consolidated under equity method||2,749||3,159||15%|
|Gross Rental Income||11,863||10,702||-10%|
|EPRA Cost Ratio (including direct vacancy costs) (A/C)||22.2%||29.0%||+6.8 pts|
|EPRA Cost Ratio (excluding direct vacancy costs) (B/C)||18.5%||24.5%||+6.0 pts|
(1) Without exceptional costs linked to the shareholding structural change of PAREF Group in 2017
|Balance Sheet - Assets (in €k)||31/12/2017||31/12/2018|
|Other property, plant and equipment||60||482|
|Shares and investments in companies under the equity method||18,829||9,910|
|Financial assets held for sale||1,035||1,007|
|Total non-current assets||136,487||132,918|
|Trade receivables and related||8,233||10,372|
|Cash & cash equivalents||10,023||28,437|
|Total current assets||18,503||38,956|
|Properties and shares held for sale||1,410||700|
|Balance Sheet - Liabilities (in €k)||31/12/2017||31/12/2018|
|Additional paid-in capital||29,310||39,922|
|Fair-value through equity||29||45|
|Fair-value evolution of financial instruments||-289||-230|
|Consolidated net result||8,261||11,803|
|Non-current financial debt||39,652||29,226|
|Non-current taxes due & other employee-related liabilities||176||117|
|Total non-current liabilities||40,095||29,931|
|Current financial debt||5,704||5,541|
|Current financial instruments||996||540|
|Trade payables and related||3,477||4,519|
|Current taxes due & other employee-related liabilities||3,804||5,293|
|Other current liabilities||1,990||1,924|
|Total current liabilities||15,971||17,817|
|CASH-FLOW STATEMENT (in €k)||31/12/2017||31/12/2018|
|Depreciation and amortization||778||411|
|Valuation movements on assets||-646||-5,843|
|Valuation movements on financial instruments||-520||-398|
|Valuation on financial assets held for sale||-16||1|
|Result on disposals||- 2,919||-810|
|Results of companies consolidated under the equity-method||-712||1,818|
|Cash-flow from operating activities after net financial items and taxes||5,165||9,059|
|Net financial expenses||3,253||1,989|
|Cash-flow from operating activities before net financial items and taxes||7,622||9,355|
|Other variations in working capital||-888||-18|
|Net cash-flow from operating activities||6,734||9,336|
|Acquisition of tangible assets||-558||-38|
|Acquisition of other assets||-523||-500|
|Acquisition of financial assets||-2,292||-2,426|
|Financial assets disposal||0||0|
|Variation in companies consolidated under the equity-method||9,450|
|Financial products received||705||466|
|Change in perimeter||0||0|
|Cash-flow from investments||24,741||9,077|
|Variation in capital||151||553|
|Increase in financial debt||0||0|
|Other financial debt evolution||0||-8|
|Debt repayment||-2, 280||-10,000|
|Variation on bank overdraft||450||-571|
|Financial expenses paid||-3,331||-2,092|
|Dividend paid to shareholders and minorities||-2,417||-4,316|
|Cash-flow from financial activities||-25,427||1|
|Change in accounting methodology on Interpierre||0||0|
|Increase/ Decrease in cash||6,048||18,414|
|Cash & cash equivalent at opening||3,975||10,023|
|Cash & cash equivalent at closing||10,023||28,437|
April 25, 2019: Financial information as at March 31, 2019
About PAREF Group
PAREF operates in two major complementary areas: (i) Commercial and residential investments owned by SIIC PAREF primarily in corporate real estate in the Paris region (€138 Mn asset as at December 31, 2018) and (ii) Management on behalf of third parties via PAREF Gestion (€1,426 Mn funds under management as at December 31, 2018), an AMF-certified management company.
PAREF is a company listed on Euronext Paris, Compartment C, under ISIN FR00110263202 - Ticker PAR.
More information on www.paref.fr
Chief Executive Officer
Chief Financial Officer
Phone: 01 40 29 86 86
Citigate Dewe Rogerson, Alexandre Dechaux
01 53 32 84 79
1 Loan-to-value: consolidated net debt divided by the consolidated asset value excluding transfer taxes (LTV at 8% including the 50% share in Wep Watford versus 26% in 2017)
2 « Sociétés Civiles de Placements Immobiliers » (non-trading real estate investment companies)
3 « Organisme de Placement Collectif Immobilier » (property investment mutual funds)
4 OF: Opened-end fund
5 CF: Closed-end fund
6 Including 50% participation in Le Gaïa office (excluding Le Gaïa, the financial occupancy rate stands at 91.9% in 2018 vs. 90.7% in 2017).
7 Including shares in companies consolidated under the equity method (50% in Wep Watford (Gaïa office - Nanterre, La Défense)), and 27.24% in Vivapierre OPPCI at the end of 2018.
8 Including Gaïa office share. Excluding shares in Vivapierre and the value of Paref Gestion shares.
9 Excluding Gaïa office.
10 Loan-to-value: consolidated net debt divided by the consolidated asset value excluding transfer taxes
11 ICR: financial expenses (including interest on swaps and undrawn credit lines but excluding penalty on fixed debt repayment) divided by EBITDA
12 Financial covenants on mortgaged debt are also respected
13 Including shares in companies consolidated under the equity method (50% in Wep Watford (Gaïa office - Nanterre, La Défense), and 27.24% in Vivapierre OPPCI (and 10.8% in Interpierre SCPI as at Dec 31, 2017. Excludes Paref Gestion shares
14 PAREF Gestion valuation is based on multiples applied on revenues with an average over the last 2 years (2x on management fees and 0.5x on subscription fees in average).
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