Société de la Tour Eiffel : 2016 Annual Results - Strong

The Board of Directors of the Société de la Tour Eiffel met on 8 March 2017, chaired by Hubert Rodarie, and approved the financial statements for fiscal 2016. The audit procedures on these accounts have been carried out. The certification reports are being issued.

Consolidated figures

Operating indicators up sharply

• 2016 Turnover

The consolidated turnover for Société de la Tour Eiffel at 31 December 2016 was € 75.8 million including € 59.6 million of rental income (against € 53.0 million in 2015), the balance mainly consisting of rental expenses re-invoiced to tenants.

• Several factors contributed to this strong increase in rental income of +12.5% compared with 2015:  
  • The change in the scope of the property portfolio:

The recent acquisitions in Velizy-Villacoublay (March 2015), Guyancourt (2 assets acquired in April 2015 and March 2016), Puteaux (2 assets acquired in November 2015 and in March 2016) and Nanterre (an office property and a business park acquired in December 2016) had an impact of +€ 8.8 million compared with the consolidated rental income for 2015. These acquisitions are in line with the new investment strategy implemented since mid-2014.

The Group generated € 7.5 million of disposals of non-strategic properties in 2016 (€ 10.5 million in 2015). These sales of property had no impact on rental income because they involved vacant land or buildings in 2016 as in 2015.

• The change in the tenancy schedule

The impact of net reletting is -€ 2.2 million compared with 2015.

Two buildings became available on 1 ^st January 2016, a mixed-use building with offices and light industrial space in Bobigny (93) and a warehouse in Etupes (25). The disposal of these two buildings is currently in process. These vacations had a negative effect of -€ 2.4 million on the change in rental income from 2015 to 2016.

The reletting of the asset in Rueil Malmaison in turn generated an increase in rental income of € 0.5 million.

The EPRA financial occupancy rate stood at 87.5% at 31 December 2016 against 89.7% at 31 December 2015. The decrease is due in particular to the acquisition of the Nanterre Seine business park in December 2016 whose occupancy rate is, on average, slightly lower than the average for the Group's portfolio.

• The indexing effect on rental income remained neutral in 2016, as was already the case in 2015.  

• Operating income on ordinary activities grew 2.4% to € 25.2 million.  
• Current cash flow rose sharply (+20.3%) to € 38.9 million for 2016, against € 32.3 million for 2015. This very positive development reflects the increase in rental income, the satisfactory property occupancy and charge recovery rates, and the significant decline in net financial interest paid as a result of the new terms renegotiated for the entire debt mid-2015.  
• Developments

In 2016, the company pursued its development plan for its land reserves, with the programming of construction projects adapted to rental demand:

• in Orsay in the Parc Eiffel, this involves an immediate construction project of 13,000 sq. m of offices, the first phase of which consists of three buildings (7,000 sq. m of offices, 4,000 sq. m of offices and 2,000 sq. m of services). The building permit is to be filed during the 1 ^st quarter 2017;  
• in Massy within the Ampère Atlantis integrated development zone (ZAC), benefiting from the largest transport hub in the outskirts south of Paris, the "Eiffel Massy Campus" project includes the construction of over 23,000 sq. m of offices. The objective of this campus, with its focus on modular offices, services and medium-size areas, is to provide a commercial alternative to existing buildings.

              In 2016, the growth of the company was also supported by the signature of several forward lease agreements (BEFA):

• the Parc du Golf in Aix-en-Provence: signature of a 9-year BEFA including a firm 6-year lease agreement for CapGemini (already a tenant on one of the Group's sites in the Hauts-de-Seine) for which a new 4,300 sq. m building is being constructed. The building, which will be certified BREEAM Good, will be delivered in Q4 2017;  
• the Parc des Aygalades in Marseille: signature of a 12-year BEFA for the construction of a turnkey 1,967 sq. m building, with BREEAM Very Good certification and which is scheduled for handover in Q2 2018. The occupancy rate of the Parc des Aygalades will thus be increased to 98%;  
• the Parc des Tanneries in Strasbourg: signature of a 9-year BEFA for the renovation of a 1,351sq.m building.

High portfolio growth

The IFRS value (excluding transfere rights) stood at € 1,133.5 million at 31 December 2016, increasing significantly by almost 24% compared with 31 December 2015 (€ 915.3 million). The impact of acquisitions on the increase was more than € 208 million, of which 3/4 come from acquisitions made late in the year in Nanterre Seine and in Nanterre Prefecture.

In the Company's portfolio, offices account for virtually all of this value (more than 96%), 86.4% of which are located in the Île-de-France region, which makes Société de la Tour Eiffel one of the strong players in the Greater Paris development project.

On a like-for-like basis, the portfolio appraisal values are up by € 10 million.

The average net portfolio yield ( EPRA topped up ) stands at 5.5% .

The Group's LTV (Loan To Value)  stood at 36.2% at 31 December 2016 against 36.7% at year-end 2015, and the EPRA NNNAV reached € 58.9 per share against € 58.1 per share at 31 December 2015.

A successful second capital increase since 2014 take-over bid

After a first capital increase carried out early in 2015 for an amount of € 180 million, the Company strengthened its capital position with a second capital increase of € 140 million in 2016.

This increase in capital is part of the Group's intention to rebalance the ratio between its equity capital and its external financing to support the development of its business in accordance with its strategy. It underlines the full support of the company's shareholders in the strategy decided at the end of 2014.

A suitable financing structure

After the complete debt restructuring carried out in 2015, on a full-year basis 2016 resulted in renewed market conditions and a significant lengthening of its average maturity. As a result, the combination of restructuring and lower rates over the period helped reduce the average cost of the Group's financing to 1.8% in 2016, against 3.2% in 2015.

It is recalled in this context that the funding arrangements in place do not involve any collateral security on the Group's assets.

An attractive dividend will be proposed in shares or cash

The Board of Directors will propose to the Annual General Meeting the distribution of a dividend of € 3 per share in shares or cash, payment of which will be made within the legal time-frame. The share represents a yield of 5.6% calculated on the 2016 average stock price.

Achievements in line with the commitments made and outlook consistent with the strategic plan

In an uncertain economic environment which encourages extreme caution, the Group's objective is to increase the value of its assets to € 1.5 billion in the coming years. Building on its achievements in 2015 and 2016 that have helped raise the value of the portfolio to more than € 1.1 billion, the property company thus began 2017 with the aim of pursuing its development plan. The growth objective will be achieved through the acquisition of secure assets, by developments on the land reserves currently available and those that have yet to be acquired, but also through acquisitions of assets already established, compatible and consistent with the existing portfolio.

As a result, in 2017, the Group will once again be in line with a trend of significant growth in its cash flows.

"The company's transformation phase is now completed and 2016 showed that the property accumulation model, supported by a strong and long-term shareholding structure is relevant, when serving a sound and ambitious project," stated Hubert Rodarie, Chairman of Société de la Tour Eiffel .

"Our property portfolio has reached € 1.1 billion in less than two years and is now refocused on our strategic assets, 96% of which are industrial premises, 86% of which are located in the Île-de-France region based on business parks, campuses and clusters, said Philippe Lemoine, CEO of Société de la Tour Eiffel. In 2017 we shall continue our growth operations through search for secure assets and implementation of in-house developments on our parks. We are and remain an integrated operator, whose primary objective is to make occupiers the core concern of our real estate strategy."

Dates to note: 22 May 2017 - Annual General Meeting

About Société de la Tour Eiffel A listed real estate investment company (SIIC) on NYSE Euronext Paris, the company pursues a strategy focused on the ownership and the development of quality offices capable of attracting a wide range of quality tenants. The company's portfolio stood at 1.133bn Euros for 490,000 sq. m of assets mainly located in the Paris region as at 31 December 2016. Société de la Tour Eiffel is listed on NYSE Euronext Paris (Compartment B) - ISIN Code: FR0000036816 - Reuters: TEIF.PA - Bloomberg: EIFF.FP - Indexes: IEIF Foncières, IEIF Immobilier France

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