‘08 annual results presentation - cegereal · leases with bouygues telecom: • building a...
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‘08 Annual Results PresentationParis, 18 February 2009
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REAL ESTATE
Portfolio review
Large office market
EuroplazaArcs de SeineRives de Bercy
Rental analysis
Trends in asset values
FINANCIAL
IFRS balance sheet
Income statement
French GAAP – IFRS reconciliation
Bank financing
Net Asset Value
Dividend
CORPORATE
Shareholders & Share price
Commerz Real
Internal structure
Changes under SIIC 5
Key points for 2008
Appendices
2
REAL ESTATE
Portfolio review
Large office market
EuroplazaArcs de SeineRives de Bercy
Rental analysis
Trends in asset values
3
A high-quality portfolioThree recent HRO property complexes
In excellent locationsFinancial occupancy rate of 100% at 31 December 2008
EUROPLAZA
1998La Défense
ARCS de SEINE
2000Boulogne - Point du Jour
RIVES de BERCY
2003Charenton - Bercy
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A strong market segmentLarge office properties (>20,000m2)
Take-up was up to double Supply in the past
Areas > 5,000 m2 Areas > 20,000 m2
Source: CBRE
0
200
400
600
800
1 000
1 200
1 400'000 m2
2000 2001 2002 2003 2004 2005 2006 2007 2008
Take-up Supply
Under-supply Over-supply Under-supply
0
100
200
300
400
500
600'000 m2
2000 2001 2002 2003 2004 2005 2006 2007 2008
Under-supply
5
A high-quality portfolio
EUROPLAZA
* GE Capital 9-year firm* Cap Gemini 4-year firm on 58% of the
initial floor space* Galderma 6-year firm* Credit Agricole 6-year firm
31-storey tower, 1300m2 per floor, restructured by HRO in 1998
* Refurbishment of lift lobbies* Extension of shared restaurant* Refurbishment of space vacated by Cap Gemini
52% of areas renegotiated
€3.3m in improvement works
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A high-quality portfolio
ARCS de SEINE
Signature of an extension and alignment of two leases with Bouygues Telecom:
• Building A 25,000m2 Jan 2010 -> March 2011
• Building C 10,000m2 May 2009 -> March 2011
Signature of a partial transfer and extension of TF1 lease by Boursorama:• Building B 2,200m2 Jan 2010 -> Jan 2011
3 independent buildings developed or fully refurbished by HRO in 1999-2000
• 2 years to prepare• Sales teams in place
Alignment of leases on 2011
What will happen in 2011?
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A high-quality portfolio
RIVES de BERCY
Single tenant since the building’s completion
Renewal of the existing lease:
- 6 year firm
- triple-net lease
- from February 2009
Three buildings linked by a fourth forming a façade, completed by HRO in 2003
Credit Foncier
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Rental analysisChanges in lease book: 72% renegotiated in 2008
43% 72%
Tenant Transaction Area (m2) Firm period Gain/(Loss) of rent in %
Sales
Cap Gemini Renewal 2 600 2 years 0%Cap Gemini Renewal 6 500 5 years 0%GE Capital Renewal 9 300 9 years 0%Galderma Renewal 4 000 6 years (1%)Credit Foncier Renewal 28 100 6 years (10%)
50 500
Credit Agricole New lease 1 300 6 years (2%)
Average total 2008 51 800 6 years (5%)
Bouygues Telecom Extension of 2 leases 35 000 1.5 years
Departures
Visteon (transfered to CA) Date Sept 08 1 300 Cap Gemini Date Oct 08 6 500 Lexmark Date Nov 08 2 200
10 000
Total portfolio 120 000 Spot at 12/31/2008Total financial vacancy rate 0 0%Total physical vacancy rate 8 700 7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Next break optionEnd of lease
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Major tenancy terms
Bouygues Telecom
Credit Foncier GE CapitalCap Gemini
Telecom
Rental analysis
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2
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Sector exposure
Size of largesttenant
Rental analysis
Bouygues Telecom Crédit Foncier Cap gemini Telecom Galderma IntlTF 1 GE Capital Cap gemini France
Boursorama SPSS FranceFM Insurance Gartner France SARLCredit Agricole
42%36%
17%
5%
Media &Communications
Banking & Insurance Services Health & Technology
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Blue-chip tenants with excellent guaranteesRental analysis
0%
20%
40%
60%
80%
100%
Very lowrisk/cashdeposit
Low risk Standard risk Average risk High risk
Poor tenant
Average tenant
Good tenant
Very good tenant
Excellent tenant
Dun & Bradstreet ratings of tenants and guarantors(% of total rent)
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A high-quality portfolioTrends in Asset values (€m)
- 100 200 300 400 500 600 700 800 900
1 000 1 100
Mar-06
Jun-0
6Sep
-06Dec
-06Mar-
07Ju
n-07
Sep-07
Dec-07
Mar-08
Jun-0
8Sep
-08Dec
-08
+11%+7% -9%
€868m€961m
€1,032m€938m
R ives de Bercy
Arcs de S eine
E uroplaza
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FINANCIAL
IFRS balance sheet
Income statement
French GAAP – IFRS reconciliation
Bank financing
Net Asset Value
Dividend
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Balance sheet- as at 31 December 2008-
IFRS - €mIPO
12/31/2008 12/31/2007 31/12/2006 31/03/2006AssetsFixed assets 938 1,032 963 867Current assets 26 36 34 33Cash and equivalent 10 20 31 37Total Assets 974 1,088 1,028 937
LiabilitiesShareholders' equity 547 633 555 443Bank debt 377 377 376 376Exit Tax 22 44 63 83Other liabilities 28 34 34 35Total liabilities 974 1,088 1,028 937
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Income statement- as at 31 December 2008 -
12/31/2008 12/31/2007
Rents 6.17% 57.9 56.7Break option penalties 0.25% 2.3 0,0Recoverable real estate expenses 1.13% 10.6 10.5Real estate expenses (1.34%) (12.5) (10.6)Net revenue 6.21% 58.25 56.52
Asset management costs (0.35%) (3.3) -3.6Other income and expenses (0.20%) (1.9) -0.9Interest costs (1.70%) (16.0) -16.1Cash Flow on recurring operations 3.95% 37.1 36.1
Depreciations (2.79%) (26.2) (26,0)Net Income (French GAAP) 1.16% 10.9 10.1
(€m) % value
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French GAAP / IFRS reconciliation
12/31/2008 12/31/2007 Change(€ '000s)
Net profit under French GAAP 10.88 10.08 0.80
Reversal of depreciation, FMV in accordance with IAS 40 26.03 26.02 0.02
Mark-to-market of property assets in accordance with IAS 40 (93.75) 68.44 (162.18)
Mark-to-market of exit tax debt in accordance with IAS 39 (1.90) (2.07) 0.17
Deferred tax liability on interest expense for the period, impact of adoption of SIIC status 0.17 0.17 0.00
Refinancing costs spread over the term of the loan in accordance with IAS 23 (0.78) (0.46) (0.32)
Cancellation of provision for impairment of treasury stock 0.13 0.00 0.13
Net profit under IFRS (59.23) 102.16 (161.39)
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Bank financing and Covenants
Bank debt €379.9m drawn down€22.5m available for Dec.2009 exit tax installment
Current LTV 40%Term March 2013Interest rate 4.15% fixed, 4.25% if LTV > 60%No hedging instruments
Main covenants
Contract Current positionLTV 70% 40%ICR 1.5 3.0
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Solid and transparent yieldNet Asset Value as at 31 December 2008
IPO12/31/2008 12/31/2007 12/31/2006 3/31/2006
Net Asset Value (€m) 535 635 546 443
NAV per share (€) 40.0 47.5 40.9 33.1
-16%
21%
Decrease in NAV since 2007
Increase in NAV since IPO
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Solid and transparent yieldDividend for the year 2008
12/31/2008 12/31/2007 12/31/2006
Dividend per share 1.95 1.95 1.84
Yield- On share price 2 day's prior to earnings release 9.70% 6.12% 5.10%- On IPO share price (March 2006) 6.13% 6.13% 5.79%
Pay-out ratio on Recurring Cash Flow 70% 72%
(€m)
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CORPORATE
Shareholders & Share price
Commerz Real
Internal structure
Changes under SIIC 5
Key points for 2008
Appendices
21
Stable shareholdingLeading institutions
Increasing granularity of the free float
67%Commerz Realfor the fundhausInvest europa(Largest German open ended fund)14%
Covéa GroupGMF-MMA-MAAF
(+7% since March 2006)
19%Free float
833 investors(+195 in 2008)
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8,5
7,3
6,3 6,35,7
5,24,7
3,7
3,02,6 2,5 2,4 2,4 2,2 2,1 1,9 1,8 1,7 1,7 1,7
1,4 1,3 1,2 1,00,6 0,6 0,5 0,5 0,4 0,4 0,4 0,4 0,4 0,3 0,3 0,3 0,3 0,2 0,1 0,1 0,0 0,0
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2
3
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5
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Source: BVI
German open funds
Total: €84.3bnNet assets under management at 31 December 2008
http://www.hausinvest-europa.de
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Share price performance
-
0,20
0,40
0,60
0,80
1,00
1,20
1,40 ja
nv.-0
8
févr
.-08
mar
s-08
avr.-
08
mai
-08
juin
-08
juil.
-08
août
-08
sept
.-08
oct.-
08
nov.
-08
déc.
-08
janv
.-09
févr
.-09
CegerealIEIF_SIIC_FRCAC40EPRA EUR
In line with its marketOutperformed SIIC average since end-November 2008
24
Management team
Board of Directors
External providers
Property ManagementFacility management
CeGeREAL Structure
CRI Covéa Free float
External providers
Accounting/ReportingTaxLegal
Asset Management Support functionsCommerz Real
AcquisitionsAsset Management
Financing
Transactions & Finance
Commerz RealAG
Framework agreement
25
Changes under SIIC 5
Reminder of SIIC4Main shareholder or those acting in concert allowed to exceed 60% ownership threshold if this is temporary and regularised during the current year
SIIC 53-year prolongation (article 210E of the General Tax Code)Conformity with 60% thresholdCarried forward by one yearPeriod of suspension with return to common law rules if threshold exceeded at 1/1/10Definitive exclusion and payment of heavy fines if situation still not in conformity at 1/1/11
Amended Finance Act for 2009Possibility of lease financings with purchase option for one year under article 210E
Regulatory framework
26
Changes under SIIC 5
An extra one year to bring Commerz Real’s stake to below 60%;
The maintenance for three years of vendor advantages from selling assets to SIIC companies (tax rate reduced to 19%);
An alternative method of acquisition financing for SIIC companies, which can now use lease financing with purchase option.
Benefits for Cegereal
These changes in the SIIC rules are very beneficial as they will allow:
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Real estate3 recent property complexes, which can be easily sub-divided72% of leases renegotiated93% of leases at very low risk of non-paymentAsset value down by 9%
FinancialDistributable earnings up 7.6%LTV of 40% at a fixed 4.15% to 2013Net asset value down by 16%Dividend maintained at €1.95 per share
CorporateA solid major shareholderCovéa has increased its stakeA marked increase in the number of individual investorsSIIC 5: an extra year to meet shareholding threshold and vendor benefits extended for three years
Key points for 2008
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Appendices
29
Commerz Real
Commerzbank AG
EUROHYPO
Commercial Real Estate
Commerzbank’s real estate division
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Commerz Real
Commerzbank
Real estate assets€32bn
Non real estate assets€11bn
CRIPublic investments
(supervised by BaFin)€11bn
Tax mitigation productssold through the
Commerzbank network
hausInvest europa€9bnEurope
hausInvest global€2bn
Europe, Asia and Americas
CeGeREAL€1bn
Direct holdings
SIICSize > €50m
Non‐SIICSize > €50m
CRSClub dealsNon‐SIIC
Size < €50m
Commerz RealOrganisation