SFL -- 2024 Annual Results
EPRA earnings: EUR119.2m (up 8.4%)
Portfolio value (excluding transfer costs): EUR7,571m (up 3.3% like-for-like)
Physical occupancy rate: 99.4% (100% occupancy for offices)
EPRA NTA stable vs 31 December 2023: EUR88.0/share
Recommended dividend: EUR2.85 per share
PARIS--(BUSINESS WIRE)--February 18, 2025--
Regulatory News:
SFL (Paris:FLY):
"In a commercial property market shaped by investment volumes at an all-time low and a profound transformation of corporate demand, SFL's results put it in a class of its own. Our laser-sharp strategic refocusing on the Paris market, the ambition reflected in our latest redevelopment projects and the opportunities represented by our development pipeline (Scope, Condorcet) underpin the Group's resilience and hold out the promise of significant value creation in the coming years. At the same time, the headroom provided by our balance sheet structure offers plenty of scope to seize the new market opportunities that are likely to come our way in 2025," said Aude Grant, SFL's Chief Executive Officer.
The consolidated financial statements for the year ended 31 December 2024 were approved by the Board of Directors of Société Foncière Lyonnaise ("SFL") on 18 February 2025, at its meeting chaired by Pere Vi olas Serra.
These financial statements show a further increase in operating profit and EPRA earnings, helped by the portfolio's 99.4% occupancy rate. This performance illustrates the polarisation of the Paris region's rental market, which has benefited properties located in the city centre, as well as SFL's ability to offer real estate solutions in line with the requirements of blue-chip companies. The portfolio's appraisal value grew by 3.3% over the year.
The auditors have completed their audit of the annual financial statements and are in the process of issuing their report.
Consolidated data (EUR millions)
---------------------------------- -------- -------- -------
2023 2024 Change
---------------------------------- -------- -------- -------
Revenue* 234.4 254.2 +8.5%
Rental income 234.4 248.8 +6.1%
Adjusted operating profit** 201.6 217.8 +8.0%
Attributable net profit/(loss) (638.8) 206.9
---------------------------------- -------- -------- -------
EPRA earnings 109.9 119.2 +8.4%
per share EUR2.56 EUR2.78 +8.3%
---------------------------------- -------- -------- -------
* Including, in 2024, reversal of a EUR5.4 million provision for impairment of rent receivables
** Operating profit before disposal gains and losses and fair value adjustments
31/12/2023 31/12/2024 Change
---------------------------------------------- ---------- ---------- ------
Attributable equity 3,540 3,642 +2.9%
Consolidated portfolio value excluding
transfer costs 7,332 7,571 +3.3%
Consolidated portfolio value including
transfer costs 7,817 8,075 +3.3%
---------------------------------------------- ---------- ---------- ------
EPRA NTA 3,752 3,779 +0.7%
per share EUR87.5 EUR88.0 +0.6%
+1.8%
EPRA NDV 3,673 3,739 +1.6%
------
per share EUR85.7 EUR87.0
---------------------------------------------- ---------- ---------- ------
Growth in 2024 operating results driven by the Group's super-prime positioning
SFL's strategic positioning means it can take full advantage of the very positive momentum and premium rents in the Paris property rental market. The physical occupancy rate for revenue-generating properties remained at a record high of 99.4% at 31 December 2024 (99.7% at 31 December 2023), including 100% occupancy of the office portfolio. The EPRA vacancy rate was 0.5% (0.2% at 31 December 2023).
Leases were signed on around 21,000 sq.m. during the year, including 20,000 sq.m. of office space let for the most part to new tenants (14 transactions). Renegotiated leases on around 4,000 sq.m. were signed with existing tenants, in some cases ahead of the lease-break date to allow SFL to capture the reversionary potential in advance.
Most leases concerned small and medium-sized units, including:
- #Cloud.paris, with 3,400 sq.m. let for a non-cancellable period of nine years to an international fund management company;
- Cézanne Saint-Honoré, with 2,700 sq.m. let for a non-cancellable period of nine years to an international law firm;
- Louvre Saint-Honoré: with the 6-year rollover of a lease on 2,300 sq.m. with Groupement des Cartes Bancaires.
A new record was set for rents on the new office leases, with the average nominal rent hitting EUR962 per sq.m., corresponding to an average effective rent of EUR846 per sq.m., for an average non-cancellable period of 7.8 years.
Slightly higher appraisal values, reflecting the rents negotiated for the new leases signed on properties in the portfolio and the stabilisation of interest rates
The appraisal value of the Group's portfolio at 31 December 2024 was EUR7,571 million excluding transfer costs, up 3.3% from EUR7,332 million at 31 December 2023. No properties were purchased or sold during the year.
The increase in appraisal values reflected the application of rent escalation clauses and the sharp rise in rental values in the prime segment of the Paris property market. Discount rates and exit capitalisation rates narrowed slightly, declining by an average of 11 bps and 4 bps respectively.
The average EPRA topped-up Net Initial Yield (NIY) was unchanged at 3.8% at 31 December 2024 (3.8% at 31 December 2023). The potential rental yield was 4.1% at 31 December 2024 (3.9% at 31 December 2023).
Exemplary non-financial performance, an integral part of the Group's strategy
SFL continued to be one of the highest scoring European groups in the Global Real Estate Sustainability Benchmark (GRESB), attesting to its outstanding commitment to sustainable development.
In 2024, the Group ranked among the top 10% of participants in the Europe/Listed compartment, with exceptional scores of 92/100 for the Standing Investments benchmark and 97/100 for the Development benchmark.
Last year's renewal of its 5-star rating, for the 12(th) year in a row, underscored the consistency of SFL's performance, confirming its position as a benchmark in the sector.
An attractive outlook, with a reversionary potential of EUR65.8 million per year
At 31 December 2024, the portfolio's total reversionary potential (vacant space, pipeline properties, lease renegotiations) was estimated at around EUR65.8 million per year.
Pipeline properties represented 14% of the Group's portfolio and mainly comprised the following projects:
Renovation of the Haussmann Saint-Augustin building (around 12,600 sq.m.). Following the departure of the tenant (WeWork) on 30 June 2024, work has been undertaken to improve the standing of the service areas and the organisation of the office floors. Delivery is scheduled for June 2025.
Redevelopment of the Scope office building on Quai de la Râpée in Paris (around 22,700 sq.m.). The property has been completely restructured since its tenant moved out in September 2022. The site clearance and asbestos removal work was completed in May 2024. Restructuring work began in August 2024, with delivery scheduled for summer 2026.
Capitalised work carried out in 2024 amounted to EUR93.2 million, including the above two projects for a combined amount of EUR25.2 million and refurbishment of complete floors and common areas in the Washington Plaza, Louvre Saint-Honoré and Edouard VII buildings.
A balance sheet structure aligned with the long-term visibility of the Group's cash flows
In 2024, SFL continued to adapt its balance sheet in anticipation of its future repayment obligations, while leveraging its relationship with its main shareholder:
- In June 2024, the EUR100 million bilateral credit line obtained from BNP Paribas was rolled over for five years (with two one-year extension options). The facility includes a spread adjustment mechanism based on the Group's performance in relation to three sustainable development criteria.
- In July 2024, the December 2022 EUR300 million syndicated Term Loan was extended by one year, to December 2029, and the June 2023 EUR835 million RCF was extended to June 2029.
- In November 2024, a EUR500 million long-term shareholder loan was obtained from Inmobiliaria Colonial, covering the May 2025 redemption at maturity of a bond issue for the same amount.
This loan had not been drawn down at 31 December 2024. The long-term loan is in addition to a EUR600 million short-term shareholder advance set up in 2023, of which EUR562 million had been drawn down at 31 December 2024.
Net debt at 31 December 2024 amounted to EUR2,660 million (EUR2,539 million at 31 December 2023), representing a loan-to-value ratio (LTV) of 32.9% including transfer costs and an EPRA LTV (excluding transfer costs and net of non-controlling interests) of 43.3%. At the same date, the average cost of debt after hedging was 2.0% and the interest coverage ratio $(ICR.AU)$ was 3.5x. The average maturity of debt is 3.3 years.
Lastly, at 31 December 2024, the Group also had access to EUR1,570 million in undrawn confirmed lines of credit.
(MORE TO FOLLOW) Dow Jones Newswires
February 18, 2025 12:52 ET (17:52 GMT)
Comments