1
Foncière des Regions INVESTOR REPORT
2
Foncière des Regions INVESTOR REPORT
Foncière des Régions is a holding company of real estate investment
(REIT) companies that own residential and commercial properties in 8
countries (mostly Europe). Its business comes from the rental and
leasing of properties (including hotels, residential building and car lots)
over 70% of which is office space in France and Italy. Its biggest clients
are major companies the largest of which is France Telecom which
rented half of Fonciere's office space in France. Other major customers
are Telecom Italia, Electricite de France and IBM. Widely recognized
properties include one of France's tallest skyscrapers Tour Gan (also
known as CB21) and Carré Suffren in Paris.
Fonciere des Regions was created in 1963 as Garages Souterrains de
Metz an operator of underground garages/parking lots. Most growth
happened in the 21st century beginning with key acquisitions and
leaseback agreements with EDF, AXA, AGF between 2000 and 2004. In
2000 it acquired housing developer Sovakle. The Company opted for
the SIIC legal status in 2003. In 2004 the division dealing with hotels,
Foncière des Murs was formed.
CONTACT
Finance
30, Avenue Kléber
75208 Paris France
www.foncieredesregions.fr
3
Foncière des Regions INVESTOR REPORT
Overview
Through subsidiaries Fonciere
operates in France, Italy, UK,
Luxembourg, Germany (EM), Belgium
(NC), USA (73% of Red Sail Real Estate
Holding USA Inc. which is based in LA,
NYC, and Chicago) and Portugal.
In 2013 rental income (€526 million)
came mostly from the offices business
segment (62%), German residential
(15%), hotel and service sector (8%)
and other activities (15% remaining).
The occupancy rate is of 96%,
generating a vacancy rate of only 4%
(The occupancy rate “H1 2014” is
96.7%, excluding Logistics, 95.8%
including Logistics. The occupancy
rate rose 0.3% for Offices France to
96.1%, following leases signed in the
first half in Tour CB 21, which is now
nearly 97% rented).
Dividend is of €4.20, proposed by
Shareholders’ Meeting (04/28/2014).
The percentage of “Green Building” is
of 41.3%, and it will grow up in next 4
years of 18.7%, as we can see on the
chart.
The Shareholding capital is composed
by 44.6% Public, 27.6% Delfin Group,
13.41% Covea Finance Group, 7.6%
Assurances Du Credit Mutuel, 7.4%
Credit Agricole Group, 0.3% Treasury
Shares.
Divisions (these three are separate
publicly traded companies) in order
of size are:
Foncière Développement
Logements controls all of the
company's French (in Ile-de-
France) and Germany (Bavaria,
Nort h Rhine-Westphalia, Lower
Saxony) residential properties
which include apartments and
condominiums. Marceau,
Triname and Garonor France III
are among numerous
subsidiaries managed through
the division.
Foncière des Murs is a SIIC that
provides hospitality services in
addition to its function as
landlord of hotels and
restaurants.
Foncière Europe Logistique is
the subsidiary that controls
assets relating to Logistics in
France and Germany.
4
Foncière des Regions INVESTOR REPORT
Highlights
In partnership with Crédit
Agricole Assurances, Foncière
des Régions acquired the future
Campus Eiffage, a new 24,000
sqm building designed by Jean-
Michel Wilmotte.
Launch of Cœur d'Orly, one of
the major Grand Paris urban
projects, with construction of
“Askia”, an initial building with
18,500 sqm of office space,
which is 50% pre-leased.
Launch of the Green Corner
project in St-Denis, 70% leased
to the Haute Autorité de Santé,
with a delivery date set for the
end of 2015.
Foncière des Régions and B&B
Hôtels signed a partnership
agreement for the
development of nine new
hotels in Germany over the next
three years.
Euromed Center: Louvre Hôtel
decided to install a four-star
Golden Tulip hotel in the
Marseille complex to be
underwritten by Foncière des
Régions and Crédit Agricole
Assurances.
Foncière des Régions increased
its stake in its subsidiary Foncière
Développement Logements
and bolstered its position in the
German residential market. This
represents an investment of
nearly €1 billion.
Foncière des Régions was
awarded for the quality of its
financial reporting through the
EPRA Award Gold for its 2012
Reference Document, and for
extra-financial reporting,
earnings the EPRA Award Silver
for its 2012 Sustainable
Development Report.
Foncière des Régions was
included in four of the NYSE
Euronext – Vigeo indices:
"France 20", "Eurozone 120",
"Europe 120" and "World 120".
Foncière des Régions
successfully carried out a new
ORNANE issue for €345 million
and completed a private bond
placement for the amount of
€180 million.
Real Estate Investment Strategy
Foncière des Régions is a leading
player in commercial property and, as
such, has developed its asset base
around the key and characteristic
value of partnership. With an
aggregate portfolio value of €16
billion (€10 billion in Group share),
Foncière des Régions is now the
recognised partner of companies and
municipalities, which it supports in
developing property strategies.
With a strong presence in the Offices
market alongside Key Accounts,
Foncière des Régions is active in the
profitable markets of the Paris region
and Grand Paris, the major
metropolitan regional areas and
Northern Italy, through its subsidiary
Beni Stabili.
5
Foncière des Regions INVESTOR REPORT
Foncière des Régions is also extending
its business to two other sectors, the
Hotels & Service sector and the
Residential sector in Germany. Its
pioneering and relevant approach
led it to identify the potential of these
two sectors and to deploy its expertise
to establish a leading presence on
these two markets.
As a listed property investment
company, Foncière des Régions has
established reliable and long-term
relationships with its various
stakeholders—tenants, municipalities,
property operators, investors and co-
investors, suppliers, shareholders and
others.
Foncière des Régions is attentive to its
partners’ needs. Its ambition is to
develop a high performance property
entity that can adapt to the
expectations of users in a controlled
economic process that is both
responsible and sustainable.
Portfolio
Foncière des Régions' defines a
dynamic and tailored property policy
has the dual objective of enhancing
value to existing portfolio and
designing the property world of the
future. Through targeted negotiations,
performance-seeking management
processes and tailored development
projects, Foncière des Régions is firmly
ensconced in a portfolio
enhancement strategy.
At the same time, the company
constantly offers buildings in sync with
tenants’ needs. In accomplishing this,
Foncière des Régions remains attuned
to stakeholder concerns, carries out
surveys, analyses best practices in the
sector and builds the skill sets of its
employees.
Foncière des Régions has a thorough
understanding of all the business
areas of the property chain, from
asset and property management
through to development and
technical aspects. The company
combines this 360° expertise with a
long-term vision to support its partners,
companies and municipalities, for the
duration of their property projects.
Foncière des Régions can place itself
directly alongside the strategic issues
of its stakeholders through its use of
partnership committees with each of
its Key Accounts.
Using its partnership culture as a
mainstay, Foncière des Régions
quickly established a sustainable
development roadmap based on
high performance results, an
ambitious works program and a daily
support system to ensure effective
management for its tenants.
Below it is the list of major asset.
6
Foncière des Regions INVESTOR REPORT
Breakdown Portfolio (Destination
and Geographical Area)
France Office: The France
Offices indicators are presented
at 100% and as Group share
(GS). Assets held partially are
the following:
- The Tour CB 21 75% owned
- Carré Suffren 60% owned
- The Eiffage properties
located at Vélizy (head
office of Eiffage
Construction and Eiffage
Campus, the head office of
Eiffage Groupe) 50.1%
owned (fully consolidated)
- The DS Campus and New
Vélizy properties 50.1%
owned (equity method)
- Euromed Center 50% owned
(equity method)
- Askia, 1st office building in
the Cœur d’Orly project,
25% owned.
The proportion of the “Core”
portfolio is 17.64%, the
proportion of the Value-added
portfolio is 13.1%, the remaining
is performed by Secondary
asset. Rent revenues
(annualized) is €255 million.
Italy Office: Listed on the Milan
Stock Exchange since 1999,
Beni Stabili is the leading listed
Italian property company (SIIQ
– Italian version of the SIIC
regime). Its assets consist largely
of offices located in cities in
northern and central Italy,
particularly Milan and Rome.
The company has a portfolio of
€4.1 billion at the end
of June 2014.
Hotel/Service Sector: Foncière
des Murs (FDM), which is 28.3%
owned by Foncière des
Régions, is a listed real estate
investment company (SIIC)
specialising in the service
sector, especially in hotels,
healthcare, and retail. The
Company’s investment policy
favours partnerships with the
leading operators in their
business sector, in order to offer
secure returns to its
shareholders. The company has
a portfolio of €3 billion
dedicated to this business.
The portfolio is composed by
59.7% Hotels, 5.46% Healthcare
and the remaining Rental
Premises, as we can see in the
table below
7
Foncière des Regions INVESTOR REPORT
Germany and France
Residential: Foncière des
Régions operates in the
residential sector through its
subsidiaries, Immeo Wohnen in
Germany, and Foncière
Développement Logements in
France. With 41,000 housing
units, 75% of which are located
in Germany (25% in France),
Foncière des Régions ranks
among the leading operators,
especially in Germany, with
assets valued at €3.3 billion.
Germany has genuine potential
for value creation through its
growth markets in the
residential sector. Foncière des
Régions' strategy in this business
line is to geographically diversify
its locations, reinforcing its
holdings in vibrant, attractive
cities such as Berlin, Dresden
and Leipzig. The annualized rent
for this business is estimated of
€207 million (2014).
Logistics: Annualized rent for this
business are estimated of €18.7
million.
Portfolio Comparison With The
Main Competitors
Seen the breakdown of our portfolio,
we can see that in term of type and
geographic position of assets, it is fully
diversificated. We can compare our
portfolio in these terms with those of
the principal competitors. Compared
to:
Inmobiliaria Colonia, our
company has a better
diversification in term of
geographic position; in fact
INMB Colonial has assets only in
Spain and France (only in Paris).
Deutsche Wohnen, our
company has a better
diversification in terms of
geographic position and
destination of assets; in fact DTS
Wohnen has mostly residential
assets in Germany.
IGD, our company has a better
diversification in terms of
geographic position and
destination of assets; in fact IGD
has mostly retail assets in Italy.
Sacyr has a fully diversificated
portfolio in term of destination
of asset, like ours, but
investment only in Spain.
Patrizia Immobilien has a
portfolio like Sacyr, but
investment mostly in Germany.
Unibail Rodamco, in the last
year it was registered an high
volatility of the stock price.
8
Foncière des Regions INVESTOR REPORT
Stock Technical Analysis*
Concerning the value of the stock of
Foncière des Régions, we can note
how it grew up last year, passing from
62.75€ to to 76.77€ (28/11/2014), with
a minimum of 59.62€ and a maximum
of 81.90€. The trend of the stock is
clearly a rising one, gaining the
22.34% so better than the -0.8%
registered the previous year. This is a
very strong signal of how the market
appreciate the asset allocation of the
company and the strategies
developed by its top management.
Moreover they decided to pay a
lower dividend of 2.926€ with a
dividend yield of 4.09%, a P/E ratio of
25.68€ and an EPS of 2,99€ in 2014,
rather than the 4.2€ distributed to the
shareholders in 2013, for a dividend
yield of 7.05%. This is useful for
understanding how the company’s
business is creating value for the
stakeholders without the need of
paying high dividend also to attract
new investors. Looking at other
indicator, Foncière des Régions
presents a market Beta of 0.94 respect
to the 0.78 of the average of the
sector, this mean that although our
stock is more risky than the market
itself, they anyway manage their
business more actively, respect to the
other competitors of the industry,
giving the possibility to offer more
profit to its investors. This is something
you should really pay attention to, as
for a company in the real estate
sector it is not so easy to be active
respect to the market, this indicates
that the company is able to diversify
its risk and to do it in a way that
create value for the shareholders. So
buying this stock you are not buying
just the solidity and the profitability of
the real estate market, but you are
adding to these important factors also
diversification and active strategies in
order to make sure your investment.
Giving a view to the market to which
Foncière des Régions is linked to, the
CAC40 index of Paris stocking
exchange, we can say that there is a
rising trend in the last two years; it only
registered a bad loss in October 2014
due to the crisis of Greek bonds and
Athen’s index, but it is something that
shocked many other indexes among
Europe, so it is not an intrinsic problem
of the French market but an
exogenous shock, that moreover has
been already recovered, so that now
the price is coming back to the peak
of the year and rising without
problems since the mid of October to
now. Another important indicator to
consider for this stock is the gross
margin, that for a company involved
in the real estate business is incredibly
high, in fact it is at a level of €91.34 in
the last year respect to the €45.59
average of the competitors, so more
than the double. As we are talking
about a real estate company, we
can’t forget to mention the Price to
book ratio, it stands at a level of at
Price trend 2013-2014
9
Foncière des Regions INVESTOR REPORT
1.17 respect to the average of 1.74 of
the industry; the fact that the ratio of
Foncière des Régions is so lower than
the competitors is not something to
worry about, in fact it has to be
interpreted as the market reflects
perfectly the value of the underlying
assets of the company. This is
something very important for our
analysis, in fact it is commonly known
that real estate companies have high
price to book ratio because they
have so valuable assets in their
balance sheets but the market often
tends not to value them entirely in the
stock’s price because for the not so
much efficient management of the
business. While a P/B ratio growing in
the last year means that the market
recognizes the strategies of the
company and includes all the value
of the assets in the price meaning also
that the way how the business is
managed is so much better than the
competitors.
So if you were not convinced just by
the portfolio allocation of this
company, its market positioning and
the stock analysis should give you a
360° view of the real value of this
investment, showing the high
possibility to make very good profits
taking such a low risks (standard
deviation’s level deeply low). All of
this has been possible managing such
a solid business like real estate in a
very dynamic way.
*(Yahoo Finance Data 29/11/2014)
Stock Comparison With The Main
Competitors
Concerning the stock’s return in the
last 12 months of the other possible
investment we can note that
Immobiliaria Colonia has registered a
-0.53%, indicating a very weak
reliability of the investors for this stock.
Also Sacyr last year have had a loss
but so more deep, in fact it left on the
market the 19.21% of its value.
Although Patrizia Immobiliaren
registered a huge +54.66% in the last
year you must consider that this stock
has a really high beta respect to the
deutsche market, and last year the
Dax30 index grew consistently, so the
strong correlation with the market is
the reason of such returns. Also
Deutsche Wohnen performed very
well, registering a +31.54%, but we
know that they are fully invested in
the Deutsche RE market, that had a
very positive return last year. Whereas
there are really few things to say
about the performance of IGD, whose
investor’s only gained a +0.95% on the
stock’s value.
Ratio Analysis**
In this section, we introduce an
analysis of the principal competitors
based on their financial ratios. We will
see two of the most common Equity
Side ratios, Price/Earnings and
Price/Book Value, and the most used
assed side ratio: the EV/EBITDA; this
type of ratio is the most reliable,
because it is not influenced by
10
Foncière des Regions INVESTOR REPORT
amortization. In the table we can see
the values of these ratios for our
companies analyzed.
In the cells where are a value equal
to zero, it means that the ratio loses
significance, because it is negative
(this is the result of a simplification).
In the tables above you can see the
average of the ratios and (below) the
ratios of Foncière des Régions.
Looking at the P/E, our company has
a value of 11.53 (14.78 average), it
means that, for the same level of
profitability, the price of the Foncière
des Régions Stock is lower. In fact,
computing the theoretical price of
the stocks (31/12/13) linked to that
ratio, we get a price of €84.55 (we got
it multiplying the P/E of the
competitors for the earnings ”per
share” of our company), while the
stock’s price was €62.75; this can be
interpreted or as the market
underrates the stock, or as our
company is more risky. But, our
analysis shows that this second
hypothesis is less probable, because
Foncière des Régions has a fully
diversificated portfolio. The same
words can be spent about the
EV/EBITDA; don’t forget, this ratio
takes into account the whole value of
the firm.
By the analysis of the ratio Price/Book
of Foncière des Régions compared to
the average of the competitors, we
can underline a little weakness; in fact
this ratio had a value of 0.91,
downside the average. This ratio
represents the report between Market
Value and Book Value. Usually an
higher value of this ratio shows a
better valuation of the market,
compared to the accounting data.
However this ratio doesn't move away
so much from the average. Moreover
this value will be higher in the 2014
going near 1.17; so it's adjusting on
the average of the competitors.
Therefore, considering this analysis
and the previous examination of the
portfolio, it is showed a general
positive framework.
**(Bloomberg Data 31/12/13)