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UPDATE VALUATION
REPORT WITH VISIT
« ATRIUM 1 », 50 Allée de Safed, 59777 EURALILLE,
France
Valuation Report: 02 August 2016
Date of Valuation: 30 June 2016
On behalf of
A.D.N GLOBAL EQUITY
Sasson Hogi Towers:12 Abba Hillel Silver P.O Box 3669
RAMAT GAN
5213606
ISRAEL
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TABLE OF CONTENTS
1 EXECUTIVE SUMMARY
2 VALUATION REPORT
3 PROPERTY REPORT
PROPERTY DETAILS
LEGAL CONSIDERATIONS
MARKET COMMENTARY
VALUATION CONSIDERATIONS
OPINION OF MARKET VALUE (FAIR VALUE)
4 APPENDICES
A LOCATION PLANS
B CADASTRAL PLAN
C PHOTOGRAPHS
D FLOOR PLANS
E LIST OF DOCUMENTS REQUESTED AND RECEIVED
F GENERAL PRINCIPLES
G VALUATION CALCULATION
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1 EXECUTIVE
SUMMARY
« ATRIUM 1 » 50, ALLÉE DE SAFED – 59777, EURALILLE
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EXECUTIVE SUMMARY
The Property
Address: « ATRIUM 1 », 50 Allée de Safed, 59777 EURALILLE, France
Main Use: Office
Site area: 60,941 sq m
Lettable area: 5,502 sq m
Tenure
According to the title deed dated 21st April 2005, the property consists of co-ownership
lots forming an office building held in flying freehold by SCI du 50 ATRIUM.
The property is registered section TX n°11, for a total area of 60,941 sq m
Tenancies and Covenant Strengths
Detailed financial investigations of the tenant are outside the scope of this report.
The subject property is 100% let to 4 tenants (except 5 car parking places) and two of
them being part of EDF group.
The weighted average break option is 3.07 years as at 31 December 2015, which
means that the rental income is secured for this period of time.
We believe that the property investment market would view the tenants in place as
providing good financial security.
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Gross Current Income
€907,989 per annum
(€165 per rented sq m per annum, pkgs and staff
canteen included)
Gross Market Rent
€890,773 per annum
(€162 per sq m per annum, pkgs and staff canteen
included)
Market Value (Fair Value)
Upon the assumption that there are no onerous restrictions or unusual outgoings of
which we have no knowledge and the specific comments and assumptions, which are
set out in this valuation statement, we are of the opinion that the total market value of
the subject property, as at 30 June 2016, is:
12,740,000 EUR
(Twelve Million Seven Hundred and Forty Thousand Euros)
Excluding transfer costs and duties
The gross market value is €13,622,186 including €878,262 purchaser’s costs
(6.90%).
Our opinion of Market Value reflects the following yield profile:
Equivalent Yield 6.35%
Reversionary Yield 6.41%
Net Initial Yield 5.55%
Capital Value in EUR / sq m €2.315 /sq m
For further information, please refer to the Appendix G “Valuation Calculation”.
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Comments
STRENGTHS
1. Very good location, in the heart of
Lille’s central business district (“Euralille”)
2. Excellent access by road and by public transport,
3. Property fully rented, with a WABO of 3.07 years and a WALT of 4.91 years (according to the assumptions)
4. The main tenants present excellent covenant.
5. good quality of the fixtures and fittings
6. Property benefitting from a staff restaurant,
7. Building classified as a Category 2 ERP (building suitable for public admission)
8. Adapted number of interior car spaces regarding the very central location of the property.
WEAKNESSES
1. Property held under a volume division
2. High level of charges and taxes: €90/sqm/a split as follows: - service charges = €67/sqm/a, - land tax = €23/sqm/a
OPPORTUNITIES
1. Property easy to subdivide for multi-tenant occupancy.
2. The vacancy rate in Lille region is only around 5% at the valuation date. Moreover the demand for office spaces in Euralille 1 is still very strong.
3. Potential reconversion use for the premises located on the ground floors: retail premises (food court / leisure) or services.
THREATS
1. Competition from recent office
properties in the North-East periphery of Lille.
2. Building aging even though well-maintained.
3. 550 sqm will be vacated by EDF on 31/03/2017.
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Attraction of the Property:
As at the valuation date, the property is fully rented to 4 tenants (except 5 car parking
places). The 2 major tenants of the property have excellent covenant strength. The
leases are drawn on terms which are as close as possible to triple net. The landlord’s
liability in terms of Art 606 of the French Civil Code (repairs to roof and structure). The
tenant undertakes to maintain the property in each case.
We have assumed that there is no risk related to construction, state of repair,
environment or any legal issues.
Risks and Mitigating Factors:
The subject property presents some disadvantages: the age and state of repair of the
building (19 years old balanced well-maintained building), the high level of rental
charges, the reduced natural brightness in a part of the building.
These points are also balanced by the fact that the property is well-maintained and the
major tenant present excellent covenant.
According to the information we have been provided by our client, EDF has notified the
return of 550 sqm on 31/03/2017, i.e. circa 10% of the areas will be vacant at that
date. As at the valuation date there are 9 remaining months which is reasonable to find
a new tenant.
Concerning investment market at this stage we consider the property having an
average liquidity. One consequence of the constant search for quality and security is
that secondary products are not very much in demand. Investors continued to be
averse to risk, focussing on very good quality secure assets. Good quality well located
properties, with strong tenants, were the most sought after type of asset, with sometimes
investors giving priority to one criterion or the other. There is therefore an ever-growing
theoretical gap between yields for prime products and yields for secondary products.
This trend applies to all types of assets, but is difficult to measure exactly because there
is no real market for secondary products at the moment.
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2 VALUATION REPORT
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CBRE Valuation France 145-151 rue de Courcelle
75017 Paris
T: +33 1 53 64 00 00 F: +33 1 53 64 34 34
VALUATION REPORT
Report Date 05/08/2016
Addressee A.D.N GLOBAL EQUITY Ltd
Dganit Grinberg,
Avremi Rapoport,
Sasson Hogi Towers:12 Abba Hillel Silver
P.O Box 3669
RAMAT GAN
5213606
ISRAEL
The Property « ATRIUM 1 », 50 Allée de Safed,
59777 EURALILLE,
France
Property Description The property is built on a plot of land totalling 60,941
sqm and registered under the cadastral reference TX n°
11.
The subject property accommodates 5,502 sqm of
office, training and retail spaces. It also benefits from
72 underground car parking units and from a corporate
restaurant.
Ownership Purpose Investment
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Instruction In accordance with your instructions confirmed in July
2016, we have valued an office property, located 50
Allée de Safed, 59777 EURALILLE, France, and where
possible, made all appropriate enquiries in order to
advise you as to our opinion of the property’s:
Estimated rental value,
Market Value (Fair Value) in its current state at the
date of valuation, as defined in the basis of
valuation herewith and under the various
assumptions set out in greater detail below.
Purpose and date of valuation
This report is intended to estimate the fair value of
the property interest subject to all leasehold
interests, as determined by IAS 40, at 30 June
2016.
The Valuation is to be provided to you for use by
you (financial publication) and any bank or other
financial institution (collectively, the "Lenders") that
provide funds directly or indirectly in connection to
the Loan Facility by any means including
syndication, sub-participation, assignment, transfer
and/or securitisation.
The reports is a valuation report that we made to
determine the fair value of the properties as at 30
June 2016 in accordance with the IAS/IFRS
Standards and the regulations of the Israel
Securities Authority
We confirm that the valuation date is: 30 June
2016.
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Addressee and reliance
This Valuation report is addressed to and may be relied
upon by A.D.N GLOBAL EQUITY and to further
assignees or transferees of any of those parties for the
purposes of a syndication and/or securitisation of the
Loan Facility. It may be disclosed to (but not relied upon
by) any rating agency, any manager and any investor or
potential investor and their advisers but otherwise may
not be disclosed to or relied upon by any other person
without our prior written consent.
Moreover we confirm that we have given our consent to
the inclusion of the full report within the financial
statements as of 30 June 2016 of A.D.N GLOBAL
EQUITY LTD which is intended to be published in
September 2016.
Should the Addressee want to include a reference to the
Valuation in any other publication, our prior written
approval will be sought, such approval not to be
unreasonably withheld.
Compliance with Valuation Standards
The valuation has been prepared in accordance with
The RICS Valuation Standards (Jan 2014). The property
details on which each valuation is based are as set out
in this report.
We confirm that we have sufficient current local and
national knowledge of the particular property market
involved, and have the skills and understanding to
undertake the valuation competently.
Status of Valuer The Valuers are independent Valuers as defined by the
RICS Valuation Standards.
Experience of the Valuers
The property has been valued by a valuer who is
qualified for the purpose of the valuation in accordance
with the RICS Valuation Standards.
Report format This report details all the considerations that we have
taken into account in order to provide both the
estimated rental value and the fair value of the subject
property.
The “General Principles” attached as Appendix of this
report detail our treatment of various aspects relevant to
the valuation of the property, incorporating further
general assumptions and definitions. We specifically
draw your attention to these.
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Currency The reporting currency is Euro.
Special Assumptions None
Assumptions We have made various assumptions as to tenure,
letting, town planning, and the condition and repair of
buildings and sites – including ground and groundwater
contamination – as set out below.
If any of the information or assumptions on which the
valuation is based are subsequently found to be
incorrect, the valuation figures may also be incorrect
and should be reconsidered.
Variation from Standard Assumptions
Other than mentioned, none.
Verification We recommend that before any financial transaction is
entered into based upon this valuation, you obtain
verification of the information contained within our
report and the validity of the assumptions we have
adopted.
As a general condition, we would advise you that whilst
we have valued the Property reflecting current market
conditions, there are certain risks, which may be or may
become uninsurable. Before undertaking any financial
transaction based upon this valuation, you should
satisfy yourselves as to the current insurance cover and
the risks that may be involved should an uninsured loss
occur.
Independence The total fees, including the fee for this assignment,
earned by CBRE Valuation S.A.S. (or other companies
forming part of the same group of companies within
France) from the Addressees and the Borrower (or other
companies forming part of the same groups of
companies) are less than 5.0% of the total France
revenues.
Information We have relied upon information provided by our
client.
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Conflict of Interest There is no conflict of interest between our company
and the client or property.
Please not that CBRE Valuation was instructed in
December 2015 to carry-out the Market Value
valuation for the intention of the lender, namely Saar
LandesBank.
Insurance and Liability The liability of CBRE, of a legal representative or an
agent is restricted to gross negligence and wilful intent.
The liability restriction referred to in the first paragraph
shall not apply, if and as far as product liability claims
are present, if the existence of a defect has been
maliciously concealed, if a guarantee has been
assumed and/or in case of a personal injury, death or
damage to personal health.
The liability restriction referred to in the first paragraph
shall not be applicable in cases of negligence, if
essential Contractual obligations (so-called “cardinal
duties”, the satisfaction of which enables the proper
execution of the Contract at all and on which the Client
relies and may as a rule rely on its compliance) have
been violated. However, the liability for essential
Contractual obligations is limited to the reimbursement
of the foreseeable, typically occurring damages.
The Client will be sole responsible for the information
and documents sent to the valuer. The Valuer’s
responsibility will not be sought should the Client
provide inexact or incomplete information or
documents. The contractual responsibility of the Valuer,
criminal or of any other nature resulting from or linked
to the execution of the present contract or provided for
in another form in the instruction letter, is limited to:
A hundred times the amount of fees received excluding
VAT if the value of the assets, as mentioned in our
valuation report, does not exceed ten million euros.
Four million euros if the value of the assets, as
mentioned in our valuation report, is superior to ten
million euros.
The capped amount to our responsibility is global (no
matter the amount of claims) and applies to the entire
assets concerned in the engagement letter.
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Limitation Warranty claims based on slight negligence shall
become time-barred one year after the termination of
the year in which the acceptance took place. Exceptions
hereto are the cases as referenced in Para 1 Sentence 2
(a) and (b) of “Insurance and Liability”.
Yours faithfully
Yours faithfully
Yours faithfully
Yours faithfully
Alexandre Petitpré
Senior Surveyor
Valuation & Advisory
Sylvain Denizot, MRICS
Regional Director
Valuation & Advisory
Franck Truong, MRICS,
Director
Valuation & Advisory
Pierrick Astier
Analyst
Valuation & Advisory
For and on behalf of CBRE
Valuation France
For and on behalf of CBRE
Valuation France
For and on behalf of CBRE Valuation
France
For and on behalf of CBRE
Valuation France
T: +33 1 53 64 34 61 T: +33 3 20 21 88 66 T: +33 1 53 64 34 38 T: +33 3 20 21 99 02
E: [email protected] E: [email protected] E: [email protected] E: [email protected]
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SCOPE OF WORK & SOURCES OF
INFORMATION
Sources of Information
We have carried out our work based upon information
supplied by our client, listed below:
Copy of the different leases,
Rent Roll dated June 2016,
Breakdown of areas per plot number and per storey
carried out in April 2007 by MOREL & MOREL,
land surveyor;
Copy of the asbestos reports (suspended ceilings,
flocking and insulation) dated 9 July 1998 and 30
October 2001 which concluded that no asbestos
was present,
Copy of the documents concerning pollution and
listed facilities,
Copies of the building permit application dated 9
February 1994, of the PCM application dated 3
November 1994, of the PC decrees dated 30
March 1995 and of its appendices dated 16 July
1992 and 3 December 1991.
Breakdown of land tax and co-ownership charges
per property and per type of area (office / pkg).
Copy of the recent leases and their amendments.
Please refer to Appendix “List of documents requested
and received”.
All conclusions made by CBRE as regards the condition
and the actual characteristics of the land and buildings
have been based exclusively on our inspection of the
subject property and on the documents and information
provided.
CBRE has assumed that it was provided with all
information and documents that were relevant to CBRE
in carrying out this appraisal report. We have assumed
that the information and documentation had unrestricted
validity and relevance as at the date of valuation. We
have not checked the relevant documents and
information with respect to the above-mentioned issues.
The Property Our report contains a summary of the property details
on which our valuation has been based.
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Inspection The Property was inspected internally and externally on
27th January 2016 by Pierrick Astier, representing CBRE
Valuation France.
The inspection took place in the morning and the sky
was cloudy.
CBRE had access to the subject property in order to
carry out the inspection. We have not carried out any
building surveys. The property has not been measured
as part of CBRE’s inspection nor have the services or
other installations been tested. All of CBRE’s
conclusions resulting from the inspection are based
purely on visual investigations without any assertion as
to their completeness.
Investigations that might cause damage to the subject
property have not been carried out. Statements about
parts of the structure or materials that are covered or
otherwise inaccessible are based on the information or
documents provided or on assumptions. In particular,
structural surveys and technical investigations of any
defects or damage of the property, which may exist,
have not been carried out.
Areas We have not measured the Property but have relied
upon the floor areas provided.
Environmental Matters
We have been provided with several environmental
reports, whose conclusions are listed below
(“Environmental considerations”)
We have not carried out any investigation into the past
or present uses of the Property, nor of any neighbouring
land, in order to establish whether there is any potential
for contamination and have therefore assumed that
none exists.
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Repair and Condition We have not carried out building surveys, tested
services, made independent site investigations,
inspected woodwork, exposed parts of the structure
which were covered, unexposed or inaccessible, nor
arranged for any investigations to be carried out to
determine whether or not any deleterious or hazardous
materials or techniques have been used, or are present,
in any part of the property. We are unable, therefore, to
give any assurance that the property is free from defect.
Town Planning We are not planning experts and we have provided
general information only. If the Addressee requires
additional information in this regard, they should have
the documentation reviewed by a specialised firm of
planning consultants.
Titles, Tenures and Lettings
Details of title/tenure under which the property is held
and of lettings to which it is subject are as supplied to
us. We have not generally examined nor had access to
all the deeds, leases or other documents relating
thereto. Where information from deeds, leases or other
documents is recorded in this report, it represents our
understanding of the relevant documents. We should
emphasise, however, that the interpretation of the
documents of title (including relevant deeds, leases and
planning consents) is the responsibility of your legal
adviser.
We have not conducted credit enquiries on the financial
status of any tenants. We have, however, reflected our
general understanding of purchasers’ likely perceptions
of the financial status of tenants.
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VALUATION ASSUMPTIONS
Fair value We confirm that the "Fair Value" reported in the
portfolio report, for the purpose of financial reporting
under International Financial Reporting Standards, is
effectively the same as "Market Value".
Our opinion of “Fair Value” is based upon the Scope of
Work and Valuation Assumptions attached, and has
been primarily derived using comparable recent market
transactions on arm’s length terms.
Please note that the definition of market value is the
estimated amount for which an asset or liability should
exchange on the valuation date between a willing buyer
and a willing seller in an arm’s-length transaction after
proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion.
Please note that the market value stated in each
property report as to be considered as fair value.
Capital Values Acquisition costs have been included in our valuation.
No allowances have been made for any extraordinary
expenses of realisation, nor for taxation which might
arise in the event of a disposal.
No account has been taken of any inter-company
leases or arrangements, nor of any mortgages,
debentures or other charges.
No account has been taken of the availability or
otherwise of capital based Government or European
Community grants and Capital Gains Tax.
Rental Values Rental values indicated in our report are those which
have been adopted by us as appropriate in assessing
the capital value and are not necessarily appropriate for
other purposes nor do they necessarily accord with the
definition of Market Rent.
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The Property Where appropriate we have regarded the shop fronts of
retail and showroom accommodation as forming an
integral part of the building.
Landlord’s fixtures such as lifts, escalators, central
heating and other normal service installations have
been treated as an integral part of the building and are
included within our valuations.
Process plant and machinery, tenants’ fixtures and
specialist trade fittings have been excluded from our
valuations.
All measurements, areas and ages quoted in our report
are approximate.
Environmental Matters
We have not conducted any environmental analysis to
determine the current condition of the soil and water
table of the site and therefore we have assumed that:
(a) the property is not contaminated and is not
adversely affected by any existing or proposed
environmental law;
(b) any processes which are carried out on the property
which are regulated by environmental legislation are
properly licensed by the appropriate authorities.
Site Conditions We did not carry out investigations on site in order to
determine the suitability of ground conditions and
services, nor did we undertake environmental,
archaeological, or geotechnical surveys. Unless notified
to the contrary, our valuations were carried out on the
basis that these aspects are satisfactory and also that
the site is clear of underground mineral or other
workings, methane gas, or other noxious substances.
In the case of a property which may have
redevelopment potential, we have assumed that the site
has load bearing capacity suitable for the anticipated
form of redevelopment without the need for additional
and expensive foundations or drainage systems.
Furthermore, we have assumed in such circumstances
that no unusual costs will be incurring in the demolition
and removal of any existing structure on the property.
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Legal Requirements / Consents and Authorisation for the Use of the property
An investigation of the compliance of the property with
legal requirements (including /permanent/ planning
consent, building permit, acceptance, restrictions,
building, fire, health and safety regulations etc.) or with
any existing private-law provisions or agreements
relating to the existence and use of the site and building
has not been carried out.
In preparing our valuations, we have assumed that all
necessary consents and authorisations for the use of the
property and the processes carried out at the property
are in existence, will continue to subsist and are not
subject to any onerous conditions.
Taxes, Contributions, Charges
Since no information to the contrary has been brought
to our attention, we have assumed that all public taxes,
contributions, charges etc. which could have an effect
on value will have been levied and paid as at the date
of valuation.
Insurance Policy Since no information to the contrary has been brought
to our attention, we have assumed that the subject
property is covered by a valid insurance policy that is
adequate both in terms of the sum assured and the
types of potential loss covered.
Statements by Public Officials
In accordance with established legal practice, we have
not regarded statements by public officials, particularly
regarding factual information, as binding. We do not
assume any liability for the application of any such
statements or information in the subject appraisal
report.
Assumptions regarding the Future
For the purpose of determining the market value of the
subject property, we have assumed that the existing
business will continue (as regards both manner and
extent of usage of the subject property) for the
remainder of the useful life determined for the
buildings, or that comparable businesses would be
available to take over the use of the subject property.
Where there is high voltage electricity supply apparatus
within close proximity to the property, unless, otherwise
stated, we have not taken into account any likely effect
on future marketability and value due to any change in
public perception of the health implications.
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Tenants No investigations have been carried out concerning
either the status of payments of any contractually
agreed rent or ground rent at the date of valuation, or
of the creditworthiness of any tenant(s). Since no
information to the contrary has been brought to our
attention, we have assumed that there are no
outstanding rental payments and that there are no
reservations concerning the creditworthiness of any of
the tenants.
Pending Litigation, Legal Restrictions (Easements on Real Estate, Rent Regulation etc.)
Since no information to the contrary has been brought
to our attention, we have assumed that the property is
free from any pending litigation, that the ownership is
unencumbered and that there are no other legal
restrictions such as easements on real estate other than
those referred to our valuation assumptions, rent
regulations, restrictive covenants in leases or other
outgoings which might adversely affect value.
Repair and Condition In the absence of any recent information, we have
assumed that:
(a) there are no abnormal ground conditions, nor
archaeological remains, present which might adversely
affect the current or future occupation, development or
value of the property;
(b) the property is free from rot, infestation, structural or
latent defect; and
(c) no currently known deleterious or hazardous
materials or suspect techniques, including but not
limited to Composite Panelling, have been used in the
construction of, or subsequent alterations or additions
to, the property; and
(d) the services, and any associated controls or
software, are in working order and free from defect.
We have otherwise had regard to the age and apparent
general condition of the property. Comments made in
the property details do not purport to express an
opinion about, or advise upon, the condition of
uninspected parts and should not be taken as making
an implied representation or statement about such
parts.
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Subsidies Since no information to the contrary has been brought
to our attention, we have assumed that there are no
circumstances related to subsidies or grants that might
influence the value of the property.
Title, Tenure, Planning and Lettings
Unless stated otherwise within this report, and in the
absence of any information to the contrary, we have
assumed that:
(a) the property possesses a good and marketable title
free from any onerous or hampering restrictions or
conditions;
(b) all buildings have been erected either prior to
planning control, or in accordance with planning
permissions, and have the benefit of permanent
planning consents or existing use rights for their current
use;
(c) the property is not adversely affected by town
planning or road proposals;
(d) all buildings comply with all statutory and local
authority requirements including building, fire and
health and safety regulations;
(e) there are no tenant’s improvements that will
materially affect our opinion of the rent that would be
obtained on review or renewal;
(f) tenants will meet their obligations under their leases;
(g) there are no user restrictions or other restrictive
covenants in leases which would adversely affect value;
(h) where appropriate, permission to assign the interest
being valued herein would not be withheld by the
landlord where required; and
(i) vacant possession can be given of all
accommodation which is unlet or is let on a service
occupancy.
VAT All rents and capital values stated in this report are
exclusive of VAT.
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3 PROPERTY REPORT
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PROPERTY DETAILS
Location
The subject property is located in the city of Lille, the county town of the French region
of “Nord-Pas-de-Calais”.
With an excellent geographical location in the centre of the Paris-London-Brussels
triangle, Lille Métropole has had a successful post-industrial conversion. The major
Channel tunnel, high speed train (TGV) and Euralille construction sites were the driving
forces of the transformation of this cross-border 1.2 million inhabitant’s city.
The property is located more specifically in the EURALILLE area, considered as the
central business district of Lille. The Euralille area is located in the city centre, on over
120 ha fully managed by SAEM Euralille in charge of developing the whole
programme and selling the building rights.
More precisely the property, subject to valuation, is situated at the northern end of the
Euralille area and does not benefit from a good visibility from the street, apart from the
premises facing passageway towards the Lille train station which enjoys higher
pedestrian traffic.
Location plans of the property are attached in Appendix.
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Road and railway access
Public transport:
Located between two railway stations (Lille Europe / Lille Flandres), the property
benefits from an excellent access by public transport:
The train stations (TGV) Lille-Europe and Lille-Flandres are connected with the high speed railway service Eurostar (UK), the Thalys network (Belgium), the national and local railway networks;
Two Tramway lines, two subway lines and several bus lines serve the railway stations “Lille-Europe” and “Lille-Flandres”.
Moreover the Lille-Lesquin airport is located less than 15 km away.
Road access:
The subject property benefits from a direct access to motorways A1 (Paris), A25
(Eurotunnel) and A27 (Brussels).
Comment
In summary, the property is located in the heart of the central business district of Lille
and benefits from a very good access by road and by public transport. However, it
does not benefit from a good visibility.
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Site
The subject property is part of a larger real estate complex described by two documents
[Etat Descriptif de Division volumétrique] known as the “Triangle des Gares” and the
“Cité des Affaires”.
The plots consist specifically of volume 12 from the volume division known as the
“Triangle des Gares” and of volumes 11, 12 and 14 from the volume division known
as the “Cité des Affaires”. Some co-ownership lots currently used as the canteen have
been classified as indivisible for the co-owners.
The property complex (offices and shopping centre) is built on a plot covering 60,941
sq.m, registered in the land registry section TX n° 11.
The land is not fenced. The building occupies the entire the plot and is connected with
the shopping centre Euralille.
A cadastral plan of the property is attached in Appendix.
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Description
Constructions
The property, mainly used as an office building, is arranged over 3 basement levels, a
ground floor and 4 floors used for offices.
It was constructed in 1995 and was designed to seem as a glass and aluminium prism
with four parts (A, B, C and D) stretching out around an atrium.
The building frame is of reinforced concrete.
Roofing consists of light steel sheeting posed on a horizontal structure with a metal roof
support. The atrium is covered by glass (skeleton in anodised natural aluminium
covered with double glazing).
Walls façades feature outside framework in aluminium and double glazing.
The building is classified as a Category 2 ERP (building suitable for public admission).
The property is also equipped with 72 internal car spaces located in the “Euralille”
Vinci Park.
Layout
Upper Ground Floor
The ground floor (building D) is divided into two parts separated by a central core:
- Central core: comprises a hall which can be accessed directly from the
square and the atrium. The hall ensures access to the two parts on this level,
via an elevator and a stairwell.
- Left part: a large area of some 137 m² with access from the central hall and
also directly from the atrium. These premises have been let to “ENVIE DE
SAISONS” since 1st October 2013, and used as a salad bar.
- Right part: set of partitioned or open-space offices with a central corridor
that can be accessed from the central hall. An emergency exit to the atrium
has been refurbished as an office. These offices, let to EDF, are decorated
in a classical manner.
On this level, the atrium is accessible to the north from the square by two accesses,
one in the middle of part A, the other between parts A and D.
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Floors 1 to 4
Upper floors are for offices and conference rooms. They are allocated along three
buildings sections on two, three and four floors.
The overall configuration for each level is as follows:
- Partitioned offices with natural daylight and conference rooms accessed via
a central corridor
- A central building section containing WC facilities, a stairwell and two
elevators. It should be noted that building sections B and C do not have an
elevator.
- Level 4 of the building sections A and D can be accessed only via the
stairwell from the lower floor.
The property also includes 72 parking spaces located in the basement of the building
atrium shared with the shopping centre. Only markings on the pillars make it possible
to make a distinction but there is no access restriction to these spaces.
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Fixtures and fittings
The premises are fitted with the following materials:
Entrance Hall:
- Flooring in remoulded flagstones
- Ceiling in staff.
Corridors:
- Floor carpeting
- Partitions
- Suspended ceiling with recessed lighting.
Passageways:
- Parquet flooring
Offices:
Considering the fact that the internal fixtures and fittings depend on the tenant’s
choice, it has been observed that, in general terms, the premises present a good state
of repair and are fitted with the following materials:
- Floor carpeting
- Removable glazed partitions
- Suspended ceilings with metallic micro-perforated casements, solid ceiling in
the last level.
Sanitary:
- Tiled flooring
- Tiled walls.
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Services and Amenities
The building was constructed in 1995 and benefits from the following technical
equipment:
Vertical circulations (for the whole ATRIUM building)
- Four lifts
- Four staircases for access to the various levels in the building
- Emergency access
- One escalator for access to the canteen
- One escalator for access to the exterior from the Atrium.
Heating / Air conditioning
- Reversible heating/refreshing system (individual heat pump type on a water
circuit).
- The individual pumps and the water circuit located in the individual sectors are
privately owned by each proprietor. The water circuit located in the common
areas is owned by the joint property.
Air stations:
- Air treatment stations (“full air replenishing”) including a hot water supply (no
cold water supply) replenish the office air.
Security
- Remote surveillance
- Access control
- Alarm
Fire safety
- Fire detection system,
- Alarm,
- Extinguishers,
- Smoke hatches,
- Sprinklers.
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Comment:
In summary, we are of the opinion that the subject property is well maintained and
offers a good layout and that the offices are fit-out to modern market standards.
Moreover, given its configuration, the building can be divided to be occupied by
various tenants.
Photographs of the property are attached in Appendix.
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Areas
We have not measured the property, but as instructed, we have relied upon floor areas
provided to us by our client (Géomètre-Expert Morel & Morel dated April 2007). Our
inspection allowed us to conclude that the measurements transmitted seem correct.
In summary, the net internal floor areas are as follows:
Floor Areas
NOTA BENE:
- In the frame of this study, the surface area mentioned comes from the
breakdown of areas per plot number and per storey provided by L’Etoile
Properties, cross-checked with the plans per level carried out in April 2007 by
MOREL& MOREL, land surveyor, and confirmed by the different leases and by
the tenancy schedule dated
- The subject property benefits from a global lettable area of 5,502 sq m, and
from 72 internal parking spaces. Therefore the number of parking spaces
results in a ratio of 1 space per 75 sq m usable area. This ratio could ordinary
be thought as slightly insufficient, but considering the high quality access to the
property by public transport, this ratio can be considered as convenient.
Floor Plans of the property are attached in Appendix.
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State of Repair
The property was completed in 1995. At the valuation date, the property presents a
good state of repair and is not subject to any immediate repairs. We have however
considered that the property will be subject to maintenance works on a regular basis
(art 606 of the French Civil Code). We have retained an amount of 2.00% of the
rental value per annum, in perpetuity in the frame of our valuation.
CBRE have not undertaken a structural survey, nor tested the services. We have not
been supplied with a survey report prepared by any other firm. We have undertaken
only a limited inspection for valuation purposes.
General Condition
The property presents an adequate state of repair that is confirmed by the site
inspection and by the document mentioned above. It has to be pointed out that the
layouts together with the arrangement depend on the tenant consideration.
Capex deduction
Works related to the 606 article of the Civil Code are to be supported by the owner.
However, we are not qualified to estimate the amount of work. Therefore, we have
integrated those future works in the yield appreciation and we have also retained an
amount of 2.00% of the rental value per annum for recurrent maintenance works.
Conclusion:
Our site inspection allows us confirm our opinion of the current state of repair of the
premises. They are currently in a good state of repair.
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Environmental Considerations
We were not instructed, nor have we carried out; structural surveys, tested services,
made independent site investigations, inspected woodwork, exposed parts of the
structure which were covered, unexposed or inaccessible, nor arranged for any
investigation to be carried out to determine whether or not any deleterious or
hazardous materials or techniques have been used or are present in any part of the
properties. We are unable, therefore, to give any assurance that the property is free
from defect.
Soil pollution
In the frame of this study, we have not been provided with any diagnostic report
regarding the existence of soil pollution on site. As a consequence, we have considered
that the property is not, or likely to be, affected by land contamination and that there
are no abnormal ground conditions, nor archaeological remains, nor hazardous nor
deleterious materials present which might adversely affect the present or future
occupation, development or value of the property.
Asbestos
The asbestos survey provided by dated 9 July 1998 and 30 October 2001 concluded
that no asbestos is present within the property.
Termites
The town of Lille is not located within a zone contaminated by termites according to the
French Ministry of Environment.
Legionella
In the frame of this study, we have not been provided with any diagnostic report
regarding the existence of legionella on site. As a consequence, we have assumed that
there is no legionella on site.
Lead
The property, being not allocated to residential use, it is not subject to the provisions
relative to the article 123 of the law n°98-567 dated 29th July 1998.
Natural and technological risks
The property is not included in a zone affected by natural or technological risks
(flooding, etc.).
Conclusion
Based on the findings or statements mentioned above, we have not identified any
environmental risk factors which, in our opinion, would affect value. However, CBRE
give no warranty as to the absence of such environmental risk factors.
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Town Planning
Planning regulation
The land use plan of the Métropole Européenne de Lille (MEL) (plan local d'urbanisme
- PLU) was approved on 8 October 2004 and modified in April 2011. The plot of
land, subject to our study, is included in the UL1a area of the PLU.
The UL1a area corresponds to the first part of Eurallille and also includes the shopping
centre.
It is affected by the following public easements:
The land is subject to a pre-emptive right benefiting to the town hall [Droit de
préemption urbain]
The land is located within the protected perimeter of an historic monument
Archaeological site
Waste water drains
Metro subsoil easement
Electromagnetic waves.
In summary, we are not aware of any issues which would adversely impact upon the
value of the property. The subject property has been constructed in compliance with the
town planning regulation.
Planning History / Construction Documentation
In the frame of this study, we have not been provided with the history of the planning
permissions and the certificates of compliance concerning the subject property.
We have assumed that the property is fully authorised in terms of town and country
planning. We reserve the right to alter our valuation, should any information contradict
our assumptions.
From the documentation we have viewed and from our inspection, there is nothing that
has come to our attention that in our opinion would give rise to any contravention of
statutory requirements. However, we cannot be certain that we have seen all
documentation or physical acts or processes that would give rise to any contravention.
Therefore, we reserve the right to amend our valuation accordingly if any further
information comes to light. In summary, we are not aware of any issues which would
adversely impact upon the value of the property.
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Monument Protection
The property, subject to our study is not subject to monument protection. This is
confirmed by the PLU (plan local d’urbanisme).
VAT
We understand from the lease that the property is elected for VAT.
All rents and capital values stated in this report are exclusive of VAT.
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LEGAL CONSIDERATIONS
Tenure
According to the title deed dated 21st April 2005, the property consists of co-ownership
lots forming an office building held in flying freehold by “SCI du 50 ATRIUM”
represented by SAS Yizoom France.
Cadastral Information
The land is registered as parcels of land under the following cadastral references:
Section TX n° 11: 60,941 sq m.
We have not been provided with any encumbrances, restrictions, easements in the land
register. Furthermore, the deed of sale transmitted by the client does not mention any.
Thus, we have assumed that the subject property is free from any encumbrances or
restrictions.
We provided a copy of the Cadastral Register Extract attached in Appendix.
Administrative authorization
From the documentation we have been provided with and our inspection, we
understand that the subject property has been constructed in accordance to the town
planning regulation and the building permit.
According to the building permit, the building was constructed to be used primarily as
offices.
Infrastructure Provisions
The site of the property is fully developed and no recoupment charge for local public
infrastructure has to be paid. According to our understanding, there are no outstanding
local infrastructure charges or any planned developments for the subject property.
Easements & Restrictions
The land, subject to our study, is located in a sector dedicated to mixed economic
activities such as office use, service, craft, trade, non-polluting light industrial and
public facilities uses.
There are no further easements and restrictions that were brought to our attention.
We have thus considered that there is no financial impact on the valuation (market
value).
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Tenancy
At the valuation date (30 December 2016), the tenancy schedule is as follows:
TenantStart
dateLease type
Break
option
Expiry
dateUse Lettable Area
Interior
Parking
units
Global rent Rent /sqm/a
Land
tax to
be
paid
by
Proper
ty tax
to be
paid
by
Manage
ment
fees to
be paid
by
Art.
606
Works
to be
paid by
ERDF 01/04/14Commercial
6/931/03/20 31/03/23 Offices 593,0 sq m 16 u 101 599 € 171 €/sq m tenant tenant tenant landlord
EDF 01/04/11Commercial
6/931/12/18 31/03/20 Offices 2 158,0 sq m 51 u
EDF
(regularization)01/04/11
Commercial
6/931/12/18 31/03/20 Offices 44,0 sq m 0 u
EDF returned
premises01/04/11
Commercial
6/931/03/17 31/03/17 Offices 550,0 sq m 0 u 78 681 € 143 €/sq m
ENVIE DE
SAISONS01/10/13
Commercial
6/930/09/19 30/09/22 Retail 163,8 sq m 0 u 21 320 € 130 €/sq m tenant tenant tenant landlord
MAESTRIS -
front premises1 190,4 sq m 0 u
MAESTRIS -
back premises803,0 sq m 0 u
VacancyCar park
spaces5 u - - - - - -
TOTAL 5 502,2 sq m 72 u 774 430 € 141 €/ sq m
vacancy rate 0%
headline net rent = 903 975 € 164 €/ sq m
by retaining headline net rents for Envie de Saison and Maestris
pkgs and staff canteen included
pkgs and staff canteen included
379 623 € 172 €/sq m tenant tenant
tenant tenant tenant landlord
Annual Rent excl. taxes
and charges
at 30 June 2016
tenant landlord
01/07/14Commercial
6,75/9,7531/03/21 31/03/24 School 193 207 € 97 €/sq m
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Nota Bene: the global annual rent mentioned in the tenancy schedule provided by the
asset manager amounts to € 907,988 (‘net annual rent after tenant incentives’). The
diffiference with the above document comes from several reasons:
- leases recently indexed,
- The rent of MAESTRIS has several steps and includes rental charges (€67
/sqm/a). We have retreated it to reflect the net current rent excluding taxes and
charges.
- The rent of Envie de Saison is assorted with several steps.
Lease Summaries
ERDF
ERDF
Start date: lease renewed on 01/04/2014
End of lease: 31/03/2023
6/9 years lease
Premises: 3rd and 4th floors (i.e. 593 sqm) + 16 parking spaces
Current rent : €101,599 pa excluding taxes and charges,
7 months of rent free split between the first 6 years of the lease (2 during the first
year then 1 months per year);
Additional 3 months of free rent if the tenant does not exercise the break option
after the first 6 years (assumption retained in our valuation).
Guarantee deposit : none
Annual indexation based on ILAT index (without possibility for the rent to fall
under the initial rent)
Taxes and charges: paid by the tenant
Art 606 of the French Civil Code: paid by the landlord.
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EDF
(Please note that EDF also rents 132 sqm in the LILLE ATRIUM 2 property)
Comments:
Since 01/04/2014, EDF has been renting an extra area of 44 sqm vacated by
ERDF on 31/03/2014. Indeed these are technical premises (computer rooms)
necessary for the activity of EDF. The lease are has been regularized by an
amendment dated January 2016.
An amendment has been recently agreed between ADN and EDF: EDF cancels
its 31/03/2017 break option and extends its lease until 30/6/2020. In
counterpart the landlord grants an extra rent free period of 3 months.
According a lease amendment date January 2016, EDF had the opportunity to
return 550 sqm on 31/03/2017 in counterpart EDF:
o Has to deliver a leave notice before 30/06/2016,
o The 2-month of rent incentive schedule on Q2 2018 is cancelled.
We have been informed by our client that EDF has notified him that they will
return 550 sqm on 31/03/2017. Therefore we have taken that departure into
account, following a 9-month void period along with 3 months of rent free.
Key points of the lease:
Let areas: 2,708 sqm + 44 sqm = 2,752 sqm / 51 interior parking places
Start date: 01/04/2011
End of lease: 30/06/2020
Next break option: 31/12/2018 under the following conditions: return of the
whole premises, with a 12-month notice, a 6-month of rent compensation, the
refund of 1-month rent free in Q2-2016 and the cancel of a 2-month rent free
period in Q2-2018.
9.25 firm years
Current rent: €458,304 pa excluding taxes and charges. This includes the 44
sqm extra premises recently let.
Rent indexed annually on 1st April
Rent free:
The initial lease was assorted with a 6-month rent free period.
Another rent free period of 3 months has been agreed recently in
counterpart of a cancellation of the 31/03/2017 break option and of an
extension of the lease until 30/06/2020.
The rent free period agreed is split as follows:
1 month in May 2016 and 2 month in April-May 2018.
Taxes and charges: paid by the tenant
Art 606 of the French Civil Code: paid by the landlord
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ENVIE DE SAISONS
Premises : 164 sqm located on the upper ground floor;
Use of the premises: snack / salad bar
6/9 firm year lease started on 01/10/2013
Step rent fixed at :
o €18,860 the first year
o €19,680 the second year
o €21,320 from the third year
6 months of rent free period split as follows:
o 3 months on Q4 2013
o 3 months on Q3 2016
Annual indexation based on ICC index Q1 2013 (1646);
Guarantee deposit : 3 months of rent;
Taxes and charges: paid by the tenant
Art 606 of the French Civil Code: paid by the landlord.
Layout works: supported by the tenant.
MAESTRIS
(Please note that MAESTRIS also rents 712 sqm and 680 sqm in the LILLE ATRIUM 2
property)
Premises : 1,993.4 sqm split as follows:
o 1st floor facing Place de Rotterdam: 594.90 sqm
o 2nd floor facing Place de Rotterdam: 595.50 sqm
o 2nd floor rear building: 803 sqm
Use of the premises: graduate school
The lease is based on a total of 9.75 years:
o 9-month renovation period
o +6 year fixed period
o +3 year option period
Start date: 01/07/2014
Break option: 31/03/2021
Expiry date: 31/03/2024
Step rent / rent free:
o 9 months of rent free period at lease start corresponding to the
renovation period. The rent free includes the service charges (estimated
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at €67/sqm/a) but excludes the land taxes (estimated at €23/sqm/a).
The tenant must pay back the whole rent free in case of departure
before lease end.
More precisely, during the renovation period the tenant has to pay the
service and co-ownership charges (€99,650) but if the 9-year option is
exercised this is returned to him in the 7th year (we retained such an
assumption in the valuation).
o Apr 2015-March 2016: €266,975 pa excluding taxes BUT including
service charges (estimated at €67/sqm/a)
o Apr 2016-March 2017: €326,765 pa excluding taxes BUT including
service charges
o Apr 2017-March 2018: €390,570 pa excluding taxes BUT including
service charges
o Apr 2018-March 2019: €456,310 pa excluding taxes BUT including
service charges
o From Apr 2019: €486,205 pa excluding taxes BUT including service
charges
First indexation of the rent on 01/04/2019, based on ICC index Q1 2018.
Then rent indexed annually on 1st April.
Guarantee deposit : 3 months of rent;
Land Taxes : paid by the tenant.
Service charges and co-ownership costs: already included in the rent and
therefore non rechargeable to the tenant.
Art 606 of the French Civil Code: paid by the landlord.
Layout works: supported by the tenant.
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MARKET COMMENTARY
Office Market Overview in France – H1 2015
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Office Market Overview in Lille (Q2 2016)
During the first semester 90,600 sqm have been transacted representing 198 deals.
This is a 52% increase regarding the 2015 1st semester. The average area amounts to
400 sqm.
The market was boosted by 3 major deals >5,000 sqm accounting for 20,000 sqm in
total: BNP took premises in a fully refurbished buildings and 2 turnkeyoperation for
Mobivia and Movitex.
The immediately available supply for office space in Lille’s agglomeration amounts to
230,000 sq m and mainly composed by second hand assets (82%).
The vacancy rate decrease slightly regarding the end of 2015 and is now established
at 5.2%
The supply of new or recent buildings remains very low encouraging turnkey
operations.
Then, 19,600 sqm under construction will be available before the end of 2016 in
second ranked offices areas (in Roubaix, Lesquin or Villeneuve d’Ascq), 17,100 sqm in
2017 (“Le 101” and “Le Conex” in Euralille) and and 14,800 sqm in 2018 (“Ekla” in
Eurallile).
The take-up demand is mainly composed by new premises (45%).
KEY FIGURES
Geographical distribution of the office
transactions :
The most demanded sector remains Lille and
Villeneuve d’Ascq (including Eurasanté and
Euratechnologies) which hosted 30% of the
transacted office space in S1 2016.
Occupiers are mainly IT, advising or finance
firms.
Secondly comes Eurallile and the “Grands
Boulevards” (11%).
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Price levels (Rental and Sales markets) :
“Prime” Values remain stable, whereas Values for second hand premises tend to decrease
Facial rents in the most demanded sectors (Euralille 1 + vicinity of the railway stations) remained stable in
H1 2016, with a « prime » level of rent amounting to €220 /sqm/a excl. taxes and charges.
On the contrary, a decrease by 5% to 10% is observed for second hand peripheral properties, for which
rent free periods can reach 2 months per year of engagement.
Rental prices Sales prices
The subject property is located in EURALILLE submarket which can be considered as Lille’s Central Business District. In this sector, the average rents for second premises have globally remained stable since the end of 2014.
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Estimated Rental Values / Sale Prices
On one hand the facial market rents for new, refurbished or recent properties,
remained globally stagnant during the year 2016 at €220/sqm pa as for commercial
incentives (rent free periods, layout works). On the other hand, for second hand
properties, and principally in secondary sectors, we observed a slight fall in the market
rents this year (-5% to -10%).
On the whole, estimated rental values for second hand tertiary premises currently
range between €80 and €160/sqm/a excl. taxes and charges. As for selling prices,
they are comprised between €900 and €1,600/sqm excl. Transfer costs.
Concerning new or refurbished office premises, rental values range between €110 and
€220 /sqm/a excl. taxes and charges. As for selling prices, they amount to
€2,400/sqm excl. transfer costs for the best programs.
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Rental Comparable Evidences
We have listed below few comparable evidences occurred in the surroundings of the
subject property.
71 rue de Paris - 59800 Lille Date: 01/06/2016 Area: 400 sqm Rent: € 130/sqm pa State of repair: Second hand Comment: Second hand premises located in the very centre of Lille close to the Grand Place and to the train stations. “Opera Faidherbe” – 2 rue Anatole France - 59800 Lille Date: 11/05/2016 Area: 259 sqm Rent: € 220/sqm pa State of repair: Renovated Comment: Fully renovated office premises located in the very centre of Lille, on top of the Apple Store, in front of the Lille’s Opera. This transaction confirmed the Prime Rent.
2 rue Jean Roisin - 59800 Lille Date: 10/05/2016 Area: 415 sqm Rent: € 150/sqm pa State of repair: Second hand Comment: Second hand premises located close to the Grand Place and to the subway station “Rihour”. 6/9-year lease.
2 rue Nationale - 59800 Lille Date: 14/03/2016 Area: 526 sqm Rent: € 165/sqm pa State of repair: Renovated Comment: Renovated premises located in the very centre of Lille in front of the Grand Place. 3/6/9-year lease with 10 car parking spaces rent at € 1,300 pa per place.
“Arboretum” – Bv Paul Pain Levé - 59000 Lille Date: 01/02/2016 Area: 303 sqm and 606 sqm Rent: € 170/sqm pa State of repair: New Comment: Immeuble completed in 2013 located in the business district “Euralille 2”. 2 leases 3/6/9-year have been signed to I REVE and NFID.
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Opinion of Market Rent
To determine the market rent, we have taken into account:
- The location of the property: very good location in the heart of Lille’s central
business district,
- the age of the property and the characteristics of the premises:
o advantages:
the property is nearly twenty years old (built in 1995) but is well
maintained and benefits from a good level of equipment (air-cooling
system, partitioning walls, globally renovated premises).
o disadvantages:
One part of the premises suffers from a lack of natural luminosity.
Moreover the level of charges+taxes is high (€90 /sqm/annum)
compared to the ratio applied in the other office buildings available on
the market.
Headline prime rents as at the half of 2016 are estimated at a level of circa €220 per
sq m per annum excluding taxes and charges, and excluding parking units.
In the heart of Euralille (buildings located in Euralille 1, close to the railway station),
recent transactions for second hand buildings show headline rental values at a level of
€185 per sq m per annum. Considering its age and state of repair, the subject
property falls into this category. However, the darkness of a small part of the premises,
the high level of rental charges and the fact that the building is one of the eldest
properties in Euralille, are also to be considered.
Therefore, based on comparable transactions, the competing supply and the property’s
features, we are of the opinion the subject property could command a market rent of:
- Offices located in the front building and facing the Parvis de Rotterdam
(benefitting from a good natural brightness) : €140 per sq m
- Offices located in the rear building (on the 2nd floor, suffering from a weak
natural brightness but suitable for an office use) : €125 per sqm
- Retail premises located on the ground floor (Envie de Saisons): €140 per sqm
- Staff canteen: €8.50 per office sq m, which equals to an ERV of €125per staff
canteen sq m (770sqm).
- Parking units : €1,200 per unit.
All rents are per annum excl. taxes and charges.
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At the valuation date, the total estimated rental value amounts to € 890,772 rounded as detailed below:
%
global
areas
TenantStart
dateLease type
Break
option
Expiry
dateUse Lettable Area
Interior
Parking
units
Global rent Rent /sqm/a Global ERV
ERV Offices
/sqm /a
Staff Canteen
ratio
/office sqm/a
ERV
Parking
units
/unit /a
Passing
rent /
ERV
Headline
rent / ERV
11% ERDF 01/04/14Commercial
6/931/03/20 31/03/23 Offices 593,0 sq m 16 u 101 599 € 171 €/sq m 107 261 € 140 €/sq m 8,50 €/sq m 1 200 € -5%
39% EDF 01/04/11Commercial
6/931/12/18 31/03/20 Offices 2 158,0 sq m 51 u 381 663 € 140 €/sq m 8,50 €/ sq m 1 200 €
1%EDF
(regularization)01/04/11
Commercial
6/931/12/18 31/03/20 Offices 44,0 sq m 0 u 5 874 € 125 €/sq m 8,50 €/ sq m
EDF returned
premises01/04/11
Commercial
6/931/03/17 31/03/17 Offices 550,0 sq m 0 u 78 681 € 143 €/sq m 81 675 € 140 €/sq m 8,50 €/ sq m
3%ENVIE DE
SAISONS01/10/13
Commercial
6/930/09/19 30/09/22 Retail 163,8 sq m 0 u 21 320 € 130 €/sq m 24 324 € 140 €/sq m 8,50 €/ sq m -12%
22%MAESTRIS -
front premises1 190,4 sq m 0 u 176 774 € 140 €/sq m 8,50 €/ sq m
15%MAESTRIS -
back premises803,0 sq m 0 u 107 201 € 125 €/sq m 8,50 €/ sq m
0% VacancyCar park
spaces5 u - - 6 000 € 1 200 € -
TOTAL 5 502,2 sq m 72 u 774 430 € 141 €/ sq m 890 772 € 162 €/ sq m -13%
14%
379 623 € 172 €/sq m
pkgs and staff
canteen included
-2%
Annual Rent excl. taxes
and charges
at 30 June 2016
ERV excl. taxes and charges
at 30 June 2016
01/07/14Commercial
6,75/9,7531/03/21 31/03/24 School -32%193 207 € 97 €/sq m
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French Investment Market Commentary
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The investment market in the greater Lille area
€ 243 M have been invested during the past six months, mainly in retail premises
(69%). The major transaction is the sale of the “Mac Arthur Glen” factory retail park in
Roubaix for € 160 M. Regarding offices, € 47 M have been invested.
The prime equivalent yield remains stable at 5.40%. For second hand premises and for
new or redeveloped assets which are not “prime” (average location, unsecure leases),
net equivalent yields are more likely situated between 6.50% and 9.00% in the Lille
region.
Nevertheless, the global pressure in yield observed in France, and the huge amount of
liquidity held by the investors, seem to indicate a future decrease in yield which is not
illustrated yet with transaction in Lille.
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Yield Evidence
69, rue du Luxembourg - 59777 EURALILLEQ3 2015
Net Equivalent Yield 5.8%
Net Initial Yield 5.23% 5,23%
Net Value 14.15 m€ Excl. Taxes
Offices ERV 216 €/ sq m pa
Seller AEW
Buyer Roquette
Comments:
Fully renovated in 2009, this building is located in Euralille 1 and accommodates
underground parking spaces.
It is fully rented to EDF.
The Net Initial Yield reflects an over-rented situation by circa 13%.
"EUROSUD" EURALILLE (59)Q4 2014
Net initial Yield 6.30%Net Value 23.4 m€ Excl. Taxes
Offices ERV 211 €/ sq m pa
Current Rent 226 €/ sq m pa
Seller Unofi
Buyer AXA Real Estate
Comments:
Prime location in the core of Euralille 1, in front of the studied property.
Property delivered in 2006 accomodating 6,950 sq m of offices premises.
Strong tenants covenants (SNCF, BNP, Sofinco, Vinci).
Rue du Vieux Faubourg - LILLE (59)2014
Net initial Yield 5.4%Net Value 22.9 m€ Excl. Taxes
Offices ERV 208 €/ sq m pa
Seller Deutsche Bank
Buyer Swiss Life REIM
Comments:
92% of the premises are rent with strong tenant covenants.
This net initial yield is currently the lowest yield observed in Lille.
This property is a former Private Hostel fully redeveloped in offices premises in
2001.
Prime location regarding is proximity with the two main train station "Lille
Flandres" and "Lille Europe".
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"Les Arcuriales" - Rue de Tournai - LILLE (59)2014
Net initial Yield 6.5%Net Value 41.3 m€ Excl. Taxes
Offices ERV 190 €/ sq m pa
Seller Foncières des Régions
Buyer SPPICAV Villiers Immobilier
Comments:
Prime location regarding is proximity with the two main train station "Lille
Flandres" and "Lille Europe".
Property build in the 90's, composed with 5 buildings accomodating 15,240 sq m
of offices premises.
Strong tenant covenant.
Immeuble EUROCENTRE - EURALILLE (59)2013
Net initial Yield 6.15%Net Value 25.2 m€ Excl. Taxes
Offices ERV 220 €/ sq m pa
Seller SEB Real Estate
Buyer AXA Real Estate
Comments:
Prime location in the core of Euralille 1, in front of the studied property.
Immeuble ONIX - EURALILLE (59)2012
Net initial Yield 5.8%Net Value 60 m€ Excl. Taxes
Offices ERV 190 €/ sq m pa
Seller AXA Real Estate
Buyer BNP REIM
Comments:
Prime location in the core of Euralille 1, close to the studied property.
Avenue de la République - LA MADELEINE (59)2012
Net initial Yield 7.6%Net Value NC
Offices ERV 165 €/ sq m pa
Seller Foncières des Régions
Buyer Skipper Immobilier
Comments:
Fully redeveloped property accomodating 4,200 sq m.
Property delivered in 2006 accomodating 7,500 sq m of offices premises.
83% of the premises are currently rent by BNP.
Property delivered in August 2010 accomodating 15,400 sq m of offices premises.
Very strong tenants covenants : firms leases with quality tenants (PwC, Natixis,
Nacarat…).
Second hand property located less than 800 meter from Euralille.
The property is fully let to EDF.
"ONIX" - EURALILLE (59)2012
Net initial Yield 5.8%Net Value 60 m€ Excl. Taxes
Offices ERV 190 €/ sq m pa
Seller AXA Real Estate
Buyer BNP REIM
Comments:
Prime location in the core of Euralille 1, close to the studied property.
Property delivered in August 2010 accomodating 15,400 sq m of offices premises.
Very strong tenants covenants : firms leases with quality tenants (PwC, Natixis,
Nacarat…).
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Opinion of Valuation Yields
To determine the yield of the property, we would therefore retain as basis of our calculation the
current estimated prime yield in Lille for brand new office properties (5.40%). Then, we have
applied for the “hardcore” method different risk premiums depending on the premises:
- Leases recently signed or recently amended, with good quality tenants and with firm
periods (ERDF, MAESTRIS, ENVIE DE SAISONS, EDF):
Risk premium of 90 basis points leading to an equivalent yield of 6.30%.
- EDF premises going to be vacant on 31/03/2017: risk premium of 50 basis points
compare to recent leases leading to an equivalent yield of 6.80%
- Vacant car spaces
Risk premium of 190 basis points leading to an equivalent yield of 7.30%.
Thus, taking into consideration the characteristics of the subject property and the current economic
environment we are of the opinion that an equivalent yield of 6.35% is appropriate for the whole
subject property.
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VALUATION CONSIDERATIONS
The Property
We have relied upon the information supplied to us and have assumed that it is correct. There are
several comments and assumptions with regards to the valuation that we listed below:
Key Valuation Factors
STRENGTHS
1. Very good location, in the heart of
Lille’s central business district (“Euralille”)
2. Excellent access by road and by public transport,
3. Property fully rented, with a WABO of 3.07 years and a WALT of 4.91 years (according to the assumptions)
4. The main tenants present excellent covenant.
5. good quality of the fixtures and fittings
6. Property benefitting from a staff restaurant,
7. Building classified as a Category 2 ERP (building suitable for public admission)
8. Adapted number of interior car spaces regarding the very central location of the property.
WEAKNESSES
1. Property held under a volume division
2. High level of charges and taxes: €90/sqm/a split as follows: - service charges = €67/sqm/a, - land tax = €23/sqm/a
OPPORTUNITIES
1. Property easy to subdivide for multi-tenant occupancy.
2. The vacancy rate in Lille region is only around 5% at the valuation date. Moreover the demand for office spaces in Euralille 1 is still very strong.
3. Potential reconversion use for the premises located on the ground floors: retail premises (food court / leisure) or services.
THREATS
1. Competition from recent office properties in the North-East periphery of Lille.
2. Building aging even though well-maintained.
3. 550 sqm will be vacated by EDF on 31/03/2017.
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Valuation Methodology
In the frame of our study, we have retained the following assumptions:
- The tenants will remain in occupation at the lease end date, - The renewal will be done at the Market Rental Value, without any rent free period, - The charges mentioned in the French Civil Code at the 606 article ( structural repairs and
maintenance) will be paid by the landlord, based on 2.00% of the rental market value per annum, in perpetuity,
- Non recovered charges and land tax on vacant premises: €90/sq m/annum.
Capital expenditure
According to the information provided, no capital expenditures are planned in the near future.
We have not retained any capex budget.
Non Recoverable costs
- Provision for the landlord’s external and structural maintenance and repairing obligations
has been made at 2.00% of the rental value per annum in perpetuity (corresponding to
article 606 of the French Civil Code) from the date of valuation.
- Considering the vacant spaces, we retain an amount of €90 /sq.m per annum for the non-
recovered charges and taxes. This includes charges on void, land tax, building insurance,
office tax, maintenance costs and property management fees.
Current voids
At the valuation date the property is 100 % let, except 5 car parking spaces.
Considering the vacant spaces, we have retained in our valuation the following assumptions:
- Considering the vacant car parking spaces, we have retained in our valuation a 9 months
void period.
- Re-letting assumptions: letting fees budgeted at 15% of the rental value on lease
start/renewal with void.
Considering the premises that EDF are going to return on 31/03/2017, we have retained in our
valuation the following assumptions:
- Considering the vacant car parking spaces, we have retained in our valuation a 9 months
void period, along with a 3 month rent free period.
- Re-letting assumptions: letting fees budgeted at 15% of the rental value on lease
start/renewal with void.
Furthermore, we have assumed that the other tenants will renew their lease at the leases end date.
Thus, no void period has been retained for the let areas in our valuation (except for 550 sqm
currently occupied by EDF).
Tenant Departures and Renewals
We have considered tenants would renew at ERV with no commercial incentives.
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DCF Approach
We have used a Discounted Cash Flow (DCF) model on the basis of a 10-year hold period and a
subsequent sale. We summarise our approach as follows:
Rental income is based on the existing rents, indexed annually at an appropriate rate.
The rental income at full occupancy is reduced by the loss of rent due to rent abatements and
vacancy (if any).
The Net Operating Income (NOI) is determined after deduction of the non-recoverable costs.
At the end of year 10 we have assumed a sale of the property. Deductions have been made for
transfer duties and other typical costs of sale, equivalent to 6.90% of the gross sale price, to arrive
at the projected net sale proceeds.
Annual cash flows and the net sale proceeds have been discounted and added to give our estimate
of Gross Value. We have then made the normal industry-standard deductions for transfer duties
and other costs to arrive at our Net Value.
Revenues
There are no other revenues for this property aside from the rental income.
Annual expenses
Service charges and taxes are generally recoverable from the tenant according to the leases
received. All charges are recoverable by the landlord excluding costs defined in the article 606 of
the French Civil Code.
Specific assumptions for discounted-Cash-Flow
Rental Growth Forecasts.
For the purpose of our valuation we have included rental indexation (ICC) as well as market
growth in our DCF model only. In this approach with growth explicit consideration of inflation, the
rental income changes depending on the rental growth expectations, i.e. through the contractually
secured stable value clause in the rent contract or through a market rent adjusted for increase in
the case of re-letting.
We have considered due to economic context that the rental market value will remain stable the
first 12 months, and then increase at 0.5 % for 12 months, then increase at 1.5% for 12 months
before resuming a 2.0% growth for the following years. (CBRE Valuation indexation standard for
4Q 2015 valuations).
We have considered the rental indexation income will increase by:
- ICC: 0.0% the first year; 0.50% the second year; 1.50% the third year and 2.40% until the end of
the cash flow.
- ILAT: 0.75% the first year; 1.25% the second year and 2.0% until the end of the cash flow.
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Lettability and saleability
Lettability
We believe that the subject property benefit from a good lettability for the following reasons:
o Excellent location in the heart of Lille central business district, with an easy access
by car, foot, or public transport,
o Convenient configuration and good natural brightness of the premises. Moreover
the tenants Maestris and EDF have recently carried out huge renovation works in
their private premises.
o Building classified as a Category 2 ERP (building suitable for public admission,
allowing the property to attract several types of users (offices, school, training
centres, services, staff canteens…).
o Building benefitting from a corporate restaurant (located in Atrium 2)
o Very low level of available supply in the heart of Euralille business district.
However the previous points are balanced by several weaknesses that make the lettability of the property not optimum even if good:
o the high level of rental charges (€90/sqm/a)
o the age of the building (all the structural elements are original and date from
1995), creating competition from more recent properties in the surrounding.
Should the property fall vacant, we estimate that it could be re-let at Market Rent in a time frame of approximately 6-12 months.
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Alternative Potential Use
Considering the location and configuration of the property, we consider that the premises located
on the ground floor of the property offer a real potential of revalorization in other uses as standard
offices, for the following reasons:
a) These premises are directly and internally accessible from the nearby shopping centre
EURALILLE managed by Unibail-Rodamco.
This regional-sized shopping centre located between the two railway stations of Lille and
managed by Unibail-Rodamco offers around 67,000 sq m of gross lettable area on 3
levels, together with 2,900 parking spaces. It is one of the most attractive commercial
zones of Lille agglomeration (footfall of 1.2M persons), anchored by a 15,000 sq m
Carrefour hypermarket and several international brands such as New Yorker, H&M, Zara,
Go Sport, Sephora. It totalizes some 120 retail shops and services and attracts a wide
scope of consumers thanks to its very convenient access by car, bus, subway and tramway.
b) These premises also represent a natural connection between
o On one part, the Euralille shopping centre, the railway station Lille Flandres and
then the town center of Lille,
o On the other part, the Lille-Europe railway station, the Euralille 1 tertiary zone, the
Casino Barrière property and in a second rank the Euralille 2 tertiary zone to the
South.
Subsequently, one could imagine that private management schools / engineer schools /research centres could be interested in letting plates in the property. Secondly, the site could also be attractive for a private entities looking to establish it training centre with accommodation and restaurant facilities.
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This strategic location is illustrated in the map below:
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Saleability
Equivalent yields in regional markets and more specifically in Lille are currently at a historically low
level.
However this trend only concerns prime assets, with excellent location, good architectural quality
and secured occupational conditions.
The subject property does not directly fall into this category because of its age (20 years old,
without any major refurbishment since the delivery).
However we believe that it presents a good saleability on the local investment market, considering
several strong advantages:
o Property fully let at a good level of rent (close to ERV), to strong tenants and with a
secured level of WABO (3.07 years) and WALT (4.91 years),
o Excellent location in the heart of Lille central business district,
o Multi-tenants asset (EDF/ERDF representing 61% and MAESTRIS representing 36%
of the global areas), which reduces the vacancy risk,
o Good quality of the fittings. Moreover the tenants Maestris and EDF have recently
carried out huge renovation works in their private premises.
We therefore consider that a period of 9 months should be sufficient to achieve a sale of the
property.
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VALUATION ANALYSIS
Income Forecast
In our valuation we have assumed that the let premises will be re-let without any void period or
rent free period.
Moreover, we have assumed that for most of the lease renewals all charges will be recoverable
excluding art 606.
Furthermore, given the departure notification is at least 6 months, the management on the assets
occupancy has to be performed 6 months before.
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Sensitivity analysis
We have considered in this sensitivity analysis the sensitivity of the portfolio to the two major points
in real estate investment: the estimated rental value and the yield (in these cases we have analysed
the equivalent yield).
This is done by holding all other assumptions fixed and then calculating the present value to each
different economic assumption. It will highlight the impact of changes in ERV or yield and the issue
of the impact.
Sensitivity analysis: ERV / Yield.
The table above demonstrates that the property is more sensible to yield (in relative terms)
than to ERV. Beyond this first analysis, we can provide the following comments. The
property is more sensitive to investment trends, and to national investment trends. Yields
were more correlated to global trends than ERV, which are more closely correlated to Lille
trends but also to the economic context. We have seen in most of the Office market in
France region a stabilisation of ERV including the Lille Office market. ERV should continue
to be stabilised for prime property, for the second hand premises the range of estimated
rental value should stabilised as well.
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The global yield trend shows that equivalent yields in office regional markets are currently
decreasing for prime assets. This trend only concerns prime assets: excellent location, new
building, firm term lease and tenant with strong covenant. For the other assets on the
market equivalent yield seem to remain stable. Therefore only the core assets have a real
liquidity, especially at a time when investors are particularly shy of taking risks. But on the
other hand, the cash raised by investors is increasing since the past two years and the
credit rate in France has never been that low therefore the environment is very favourable
to investment operations.
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As we consider that the equivalent yield is more sensitive, we can show a graphic projection analysing the potential of the value of the property.
The graphics shows the sensitivity of the portfolio compare to the Equivalent yield and the value obtains compare to an increase or an increase of the
yield (5.50% to 8.50 %):
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OPINION OF VALUE
Valuation Conclusions
Based on assumptions and a discounted rate of 6.50% and an exit yield of 6.63%, the
DCF approach produces a value of:
Gross Value € 13,330,076
Net Value: € 12,380,000 (rounded)
Assuming deductions of 6.90 % for purchaser’s costs.
Based on an equivalent yield 6.35%, the capitalisation approach therefore produces a
value of:
Gross Value € 13,622,186
Net Value € 12,740,000 (rounded)
Assuming deductions of 6.90 % for purchaser’s costs.
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Market Value (Fair Value)
We have valued the property under two calculation methods: a Discounted cash-Flow
and a Hardcore method (traditional method). The major Investment fund in Europe used
the Hardcore method for their valuation, considering that this type of investors will be the
most interesting investors for this type of property we have retained the Hardcore method
for the final value.
Upon the assumption that there are no onerous restrictions or unusual outgoings of
which we have no knowledge and the specific comments and assumptions which are set
out in this valuation statement, we are of the opinion that the total market value of the
subject property, as at 30 June 2016, is:
12,740,000 EUR
(Twelve Million Seven Hundred and Forty Thousand Euros)
Excluding transfer costs and duties
The gross market value is €13,622,186 including €879,262 purchaser’s costs (6.90%).
Our opinion of Market Value reflects the following yield profile:
Equivalent Yield 6.35%
Reversionary Yield 6.41%
Net Initial Yield 5.55%
Capital Value in EUR / sq m €2.315 /sq m
Yours faithfully
Yours faithfully
Yours faithfully
Yours faithfully
Alexandre Petitpré
Senior Surveyor Valuation & Advisory
Sylvain Denizot, MRICS
Regional Director Valuation & Advisory
Jérôme de Laboulaye, MRICS, CIS HYPZERT
Director International Department Valuation & Advisory
Pierrick Astier
Surveyor Valuation & Advisory
For further information, please refer to the Appendix “Valuation Calculation”.
APPENDICES
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5 APPENDICES
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A LOCATION PLANS
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LOCATION PLANS
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B CADASTRAL PLAN
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CADASTRAL PLAN
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APPENDICES
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C PHOTOGRAPHS
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APPENDICES
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PHOTOGRAPHS
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APPENDICES
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APPENDICES
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APPENDICES
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D FLOOR PLANS
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P lot Level Type Lettable area notes / occupier
12017 upper ground floor retail 163,80 sq m ENVIE DE SAISONS
12029 & 12030 1st floor offices/school (front) 594,90 sq m
12037 & 12038 2nd floor offices/school (front) 595,50 sq m
12045 (partially) 2nd floor offices/school (back) 224,60 sq m
12041 2nd floor offices/school (back) 331,10 sq m
12039 / 12040 2nd floor offices/school (back) 247,30 sq m
12050 - 12051 3rd & 4th floors offices (front) 593,00 sq m ERDF renewed lease
12018 upper ground floor offices (front) 130,00 sq m
12027 - 12028 1st floor offices (front)
12033 - 12034 -
12035 - 12036 -
12046
2nd floor offices (front)
12047 - 12048 -
120493rd & 4th floors offices (front)
12045 (partially) 2nd floor offices (back) 44,00 sq m EDF (regularization)
TOTAL 5 502,20 sq m
NC BasementInternal Parking
spaces72 units
EDF: 51 u
ERDF: 16 u
Vacant: 5 u
MAESTRIS
EDF2 578,00 sq m
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E LIST OF
DOCUMENTS
REQUESTED AND
RECEIVED
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Type of information (1) Requested Provided Observations
Property/tenure:
Title deed or attestation, or property leasing contract, or bilateral agreement to
sell
Commonhold regulations
Minutes of the last general assembly of the commonhold
Easements
Legal proof of use of premises
Land register/zoning:
Cadastral survey
Plot plan
Zoning certificate
Other permits (CDEC, listed activities, etc.)
Operating permit for storage premises with capacity of over 50,000 cubic metres
Construction:
Planning permission
Declaration of completion and certificate of compliance
Any disputes that may exist
Description, list of general and technical facilities
Plans/areas :
Floor plans by level – site plan
Detailed schedule of areas by level and by type
Tenancy:
Detailed letting schedule in force – latest rents charged
Leases and amendments
Sub-letting agreement
Any disputes that may be underway
Amount of building service charges recoverable and not recoverable by the
Lessor, broken down by item
Amount of land tax, tax on offices and other taxes, building insurance, and management expenses, both recoverable and not recoverable by the Lessor,
broken down by item
Works:
List of works carried out recently (major works, routine maintenance) and cost
List of projected works (major works, routine maintenance) and cost
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Environment/Energy performance:
Technical document and/or document concerning the environment and/or energy
performance:
Diagnoses of asbestos, termites, radon, lead, etc.
Energy performance diagnosis (DPE), label or certificate (targets chosen: HQE, LEED, BREEAM, etc.)
Soil pollution
Miscellaneous:
Contact details of managers and/or people to contact for conducting inspections
Detailed operating statements over 3 years -
Operating income – Occupancy rate – Prices charged.
Other:
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F GENERAL
PRINCIPLES
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We list below the general principles upon which valuations and reports are normally prepared and
they shall apply unless expressly stated otherwise:
1. RICS Valuation Standards:
The valuations have been prepared in accordance with The RICS Valuation - Professional
Standards (8th Edition, 2012). The property details on which each valuation is based are as set out
in this report.
We confirm that we have sufficient current local and national knowledge of the particular property
market involved and have the skills and understanding to undertake the valuations competently.
2. Valuation Basis:
All valuations are made on the appropriate basis as agreed with the client in accordance with the
provisions and definitions of the Valuation Standards unless otherwise specifically agreed and
stated.
The specific basis of valuation adopted in relation to a particular instruction and the definition
thereof is detailed below.
No allowances are made in our valuations for any expenses of realisation, or to reflect the balance
of any outstanding mortgages, either in respect of capital or interest accrued thereon.
It should be noted that our valuations are based upon the facts and evidence available at the date
of valuation. It is therefore recommended that valuations be periodically reviewed.
3. Capital Values:
The valuation has been prepared on the basis of “Market Value” which is defined as:
“The estimated amount for which a property should exchange on the date of valuation between a
willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without compulsion".
No allowances have been made for any expenses of realisation nor for taxation which might arise
in the event of a disposal. Acquisition costs have not been included in our valuation.
No account has been taken of any inter-company leases or arrangements, nor of any mortgages,
debentures or other charges.
No account has been taken of the availability or otherwise of capital based Government or
European Community grants.
4. Rental Value:
Rental values indicated in our report are those which have been adopted by us as appropriate in
assessing the capital value and are not necessarily appropriate for other purposes nor do they
necessarily accord with the definition of Market Rent.
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5. Information Supplied:
We accept as being complete and correct the information provided to us by the sources detailed in
our report, relating to items such as tenure, tenancies, tenants' improvements and other relevant
matters
6. Verification:
We recommend that before any financial transaction is entered into based upon these valuations,
you obtain verification of the information contained within our report and the validity of the
assumptions we have adopted.
We would advise you that whilst we have valued the Properties reflecting current market conditions,
there are certain risks which may be, or may become, uninsurable. Before undertaking any
financial transaction based upon this valuation, you should satisfy yourselves as to the current
insurance cover and the risks that may be involved should an uninsured loss occur.
The Property has been valued by a valuer who is qualified for the purpose of the valuation in
accordance with the RICS Valuation Standards.
7. Documentation and Title:
Where title documentation or leases are provided to us, we recommend that reliance should not be
placed on our interpretation thereof without prior verification by your legal advisors.
Unless notified to the contrary, we assume that each property has a good and marketable
title and is free from any pending litigation. We further assume that all documentation is
satisfactorily drawn and that there are no unusual or onerous restrictions, easements,
covenants or other outgoings that would adversely affect the value of the relevant
interest(s).
8. Tenancies:
It is assumed that, except where otherwise stated, all properties are subject to normal outgoings
and that tenants are responsible for all repairs, the cost of insurance and payment of rates and
other unusual outgoings, either directly or by means of service charge provisions.
Unless otherwise stated, it is further assumed that leases are standard French 3-6-9 year leases
with a tenant's option to break every 3 years and reviewable to market value only at expiration.
9. Tenants' Covenant Strength:
Unless specifically requested, we do not make detailed inquiries into the covenant strength of
occupational tenants but rely on our judgement of the market's perception of them. Any comments
on covenant strength should therefore be read in this context. Furthermore, we assume, unless
otherwise advised, that the tenant is capable of meeting its financial obligations under the lease
and that there are no arrears of rent or undisclosed breaches of covenant.
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10. Inspections:
We undertake such inspections and conduct investigations as are, in our opinion, correct in our
professional judgement, appropriate and possible in the particular circumstances.
11. Measurements:
Surface Hors Oeuvre Brute (SHOB) – Gross External Area:
The SHOB is equal to the sum of the floor areas of each floor of a building calculated from the
bare exterior of the walls at the level of the finished floors. It comprises the basements and the
attics whether these can be used or not, as well as balconies, loggias and accessible flat-roof
terraces (excluding exterior terraces at ground level).
Surface Hors Oeuvre Nette (SHON) – Gross Internal Area:
The SHON is calculated from the bare exterior of the walls. It is equal to the SHOB after
deduction for: the attics and basements that cannot be inhabited for residential or used for
professional activities, (N.B. roof space where the headroom is inferior to 1.80 metres is
considered as attic and is therefore deductible), flat-roof terraces, balconies, loggias and non
enclosed areas on the ground floor. Parking areas for vehicles floor areas of buildings assigned for
storing harvests, keeping animals, or agricultural materials as well as greenhouses.
Surface Utile Brute or surface locative (SUB) – Net Lettable Area:
The SUB is equal to the sum of: office floor areas and common areas, corridors, washrooms,
premises for society purposes, landings.
12. Town Planning and Other Statutory Regulations:
Wherever possible, we undertake direct inquiries to obtain town planning and highway information
from the relevant Local Authority. If written confirmation of these matters is required, we
recommend that verification of the position, as stated in our Report, is obtained through your legal
advisors.
Our Valuations are prepared on the assumption that the premises comply with all relevant statutory
enactments and building regulations and that a valid and up-to-date Fire Certificate has been
issued. We also assume that all necessary consents and authorisations for the use of the property
and the process carried out therein have been obtained and will continue to subsist and are not
subject to any onerous conditions.
13. Structural Surveys:
Unless expressly instructed, we do not undertake structural surveys, or test any of the electrical,
heating, or other services. Any readily apparent defects or items of disrepair noted during our
inspection will be reflected in our Valuations, but no assurance is given that any property is free
from defect. We assume that those parts which have not been inspected would not reveal material
defects which would cause us to alter our Report and Valuations.
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14. Site Conditions:
Unless specifically requested, we do not carry out investigations on site in order to determine the
suitability of ground conditions and services, nor do we undertake environmental, archaeological,
or geo-technical surveys. Unless notified to the contrary, our Valuations are on the basis that these
aspects are satisfactory and also that the site is clear of underground mineral or other workings,
methane gas, or other noxious substances.
In the case of properties that may have redevelopment potential, we assume that the site has load-
bearing capacity suitable for the anticipated form of redevelopment without the need for additional
and expensive foundations or drainage systems.
15. Environmental Contamination:
In preparing our Valuations we have assumed that no contaminative or potentially contaminative
use is, or has ever been, carried out at the property. Unless specifically instructed, we do not
undertake any investigation into the past or present uses of either the property or any adjoining
property or nearby land, to establish whether there is any contamination or potential for
contamination from these uses or sites and assume that none exists.
Should it, however, be subsequently established that such contamination exists at any of the
properties or on any adjoining land or that any premises have been or are being put to
contaminative use, this may be found to have a detrimental effect on the value reported.
In preparing our Valuations, we have assumed that all necessary consents and authorisations for
the use of the property and the processes carried out at the property are in existence, will continue
to subsist and are not subject to any onerous conditions.
16. Plant and Machinery:
Our Valuations include items usually regarded as forming part of the building and comprising
landlord's fixtures, such as boilers, heating, lighting, sprinklers and ventilation systems but generally
exclude operational plant and machinery and those fixtures and fittings normally considered to be
the property of the tenant.
17. Taxation:
In preparing our Valuations, no allowances are made for any liability which may arise for payment
of corporation taxes or capital gains tax, or any other property related tax, whether existing or
which may arise on development or disposal, deemed or otherwise. We also specifically draw your
attention to the fact that our Valuations are exclusive of any VAT liability that may be incurred.
18. Government Grants:
All Valuations are given without any adjustment for capital based Government grants received or
potentially receivable at the date of the valuation.
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19. Special Purchaser Value:
Unless otherwise stated, our Valuations do not reflect any element of marriage value or special
purchaser value which could possibly be realised by a merger of interests or by a sale to an owner
or occupier of an adjoining property, other than in so far as this would be reflected in offers made
in the open market by prospective purchasers apart from the purchaser with a special interest.
20. Aggregation:
Unless otherwise stated, in the valuation of portfolios, each property is valued separately and not
as part of the portfolio. Accordingly, no allowance, either positive or negative, is made in the
aggregate value reported to reflect the possibility of the whole or part of the property being put on
the market at any one time.
21. Confidentiality:
Our Valuations and Reports are strictly confidential to the party to whom they are addressed, or
their other professional advisors, for the specific purpose to which they refer and no responsibility
whatsoever is accepted to any third parties for the whole or part of their contents.
22. Publication:
Neither the whole nor any part of our Reports, nor any reference thereto, may be included in any
published document, circular or statement, nor published in any way nor disclosed orally to a third
party, without our written approval of the form and context of such publication. Such approval is
required whether or not CBRE Valuation are referred to by name and whether or not the Reports
are combined with others.
23. Insurance:
We maintain professional indemnity insurance.
For the current services, the professional civil liability of CBRE Valuation is limited to:
€2,000,000 on an aggregate claims basis.
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G CALCULATIONS
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HARDCORE METHOD:
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DISCOUNTED CASH-FLOW METHOD: