FREY: An outstanding operational performance and a highly resilient business model
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Bezannes, 09 March 2021, 5.00 PM - 2020 annual results
FREY: An outstanding operational performance
and a highly resilient business model
FREY's positioning in open-air shopping centres
shows its strength in the context of an unprecedented health crisis
Rental income: €59.5 million (+37%)
Collection rate 2020 (1): 94%
Financial occupancy rate stable at a high level: 97.6%
Profit from recurring operations (2): €42.4 million (+46%)
EPRA NDV NAV (3): €31.2 per share (-4.6%)
LTV ratio (incl. transfer tax): 32.4%
Available liquidity: €268 million (4)
Dividend 2020 (5): €1.50 per share
With an option for partial payment in shares (scrip dividend)
A solid outlook
The retail transformation is opening up a large number of opportunities:
reclassification, turnaround and mixed-use projects,
key areas of FREY’s know-how
“In a context of an unprecedented crisis, the performance of our Group highlights the strength of our
growth model, which is based on control of the entire retail real estate value chain and a partnership
with all our stakeholders. The pandemic has accelerated the changes that are taking place in the retail
industry and revealed a huge source of potential projects: reclassification and turnaround of obsolete
retail assets, but also a move towards more mixed-use aspects on sites that have already been
developed and are being subsumed by the city. These types of projects are perfectly in line with our
development philosophy, illustrated in our statement of “entreprise à mission”: restoring retail as a
service for the common good. We are proud to be the first French REIT to become an “entreprise à
mission” and we want to be the stakeholder of a major change for everyone's benefit,”
Antoine Frey - Chairman and CEO of FREY.
(1) Rents collected as a percentage of invoiced rents after deduction of tenant’s incentives.
(2) Profit from recurring operations does not take into consideration the impact of the health crisis, of €6.1 million, presented in the “waivers of rents
granted” line of the consolidated income statement.
(3) NAV calculated according to the standard developed and published by the European Public Real Estate Association (EPRA) and applicable to financial years
beginning on or after 1 January 2020.
(4) €212 million in undrawn corporate facilities and €56 million in available cash.
(5) As will be put forward to the General Meeting which will take place on 11 May 2021.
Page 1Key figures - In € million - 12 months 2020 2019 Change
Consolidated revenue 107.2 69.3 +55%
o/w property investment business (gross rental income) 59.5 43.6 +37%
Profit from recurring operations (1) 42.4 29.0 +46%
Change in fair value of investment property -19.3 +50.1
Net income Group share 2.4 49.7
Balance sheet indicators - In € million 2020 2019 Change
EPRA Net Disposal Value (NDV) 767.4 777.5 -1.3%
Per share: € 31.20 € 32.70 -4.6%
Net LTV ratio (incl. transfer tax) 32.4% 23.1% +9.3 pts
At its meeting on 09 March 2021, FREY's Board of Directors approved the consolidated financial statements for 2020. The audit
has been prepared by the Statutory Auditors. The certification is being issued.
2020 HIGHLIGHTS
• Outperformance of open-air shopping centres during the crisis
The sanitary measures introduced to tackle the COVID-19 pandemic in the three countries in which we operate
disrupted our tenants’ activity, with 2.3 months of closure over the full year (2), which is nevertheless shorter than
for enclosed shopping centres in particular.
Retailers benefited from the strengths of our centres:
- greater attractiveness of the "open-air" format, favoured by customers after the lifting of lockdown measures,
compared with “traditional malls”, with equivalent sanitary measures for welcoming customers;
- a diversified merchandising mix that meets the needs of the whole family (fashion, beauty, sports, leisure, DIY,
gardening, restaurants, services, click & collect, for parents and children),
- new services offered by FREY in addition to marketing campaigns to support footfall, including the click & collect
and click & drive services, which accelerated the expansion of online sales. In France, 47% of tenants generated
online business after the first lockdown compared with 10% previously.
Overall, across FREY’s portfolio in France (3), footfall was 84% of 2019’s level and tenants’ sales were 90%, i.e.
respectively more than 12% and more than 16% higher than the national averages published by the CNCC (French
Council of Shopping Centres). Outside of lockdown periods, tenants’ sales (3) were even up 7% compared with the
equivalent period in 2019.
• A strengthened partnership with our tenants during the crisis
To support its partner tenants, and show responsibility and solidarity in the crisis, FREY put in place exceptional
financial support in April with the creation of a €15 million relief fund.
(1) Profit from recurring operations does not take into consideration the impact of the health crisis, of €6.1 million, presented in the “waivers of rents
granted” line of the consolidated income statement.
(2) No closure for essential retail businesses (12% of 2020 annualised rent), 44 days for semi-essential retail businesses (18%), 74 days for non-essential retail
businesses (52%) and 138 days for restaurants, cinemas and gyms (17%).
(3) France scope: sites equipped with footfall counters to measure visitor numbers and sales figures reported by retailers
Page 2Over the full year 2020, FREY provided with a total support of €9.8 million, across its economic portfolio (1), broken
down as follows:
- €6.9 million of cancellation of rent receivables recognised in 2020, and
- €2.9 million of deferred rents to be collected over two years (2021 and 2022).
Given the negotiations with tenants in progress since January 1, 2021, a €2.3 million estimated additional amount
of financial aid (waiver of rent receivables net of tax credit to be received) could be recognized in 2021.
In a sign of retailers’ confidence in the open-air model, the rent collection rate (2) was at 94% in FY2020 and the
financial occupancy rate was stable at the high level of 97.6%.
The strong mobilisation of the teams in the area of leasing also led to solid performances:
- on its portfolio under operation: 90 leases signed, with an average uplift (reletting and renewal) of +4%,
corresponding to a total of €9.4 million in additional rents (€7.0 million – Group share) and bringing the arrival
or reinforcement of brands such as Darty, Lidl, Fnac and Urban Planet;
- on its assets under development: 79 leases signed (o/w 59% of new brands), representing rental income of
nearly €6.1 million. The diversification of the brand portfolio continues with the forthcoming arrival of Nocibé,
Rituals, Nature & Découvertes, Haribo, Nike, La chaise longue, Kusmi Tea, Levis and Superdry. The Shopping
Promenade centres in Strasbourg and Claye-Souilly will also have an on-site medical and ophthalmological
practice in the case of the former and a dental practice in the case of the latter.
• Continued development of the portfolio and acquisition of a stake in the FREY Retail Fund
The main impact of the pandemic has been the postponement of two major deliveries originally scheduled for
late 2020:
- Shopping Promenade Claye-Souilly (Seine-et-Marne department) which opens its doors to the public on
Wednesday 10 March,
- Shopping Promenade Cœur Alsace in Strasbourg-Vendenheim, in the Bas-Rhin department, which will open on
17 March.
Their openings will occur amid ongoing sanitary restrictions, but the two sites are posting pre-letting rates of 94%
and 97% respectively and will offer, notably in Strasbourg, a “Social Club” (culture and events hub) and an
“Agroparc” (5 hectares of land cultivated by a local producers’ collective).
Including these two projects, the portfolio of projects under development amounted to €802 million at end-2020,
representing a total GLA of 340,000 m 2 and €52.3 million in potential annualised rental income.
In 2020, FREY secured its participation in the new mixed-use urban project of the “Les Docks” eco-district in Saint-
Ouen. FREY will be responsible for developing the retail component (3). Citizers by Frey will develop 23,000 m2 of
retail space with the planning focusing on environmental responsibility (short distribution channels, reuse,
recycling, etc.) and social commitment (openness, accessibility, diversity, transmission, etc.). La Halle du Village des
Docks will offer a food hall, a food market, restaurants, a shared kitchen, an events room, co-working spaces and
local shops and services.
However, due to the political decision to discontinue the project, made by Philippe Saurel, former President of the
Montpellier Métropole, between the two rounds of municipal elections, FREY has ended its urban reclassification
project “Ode à la Mer” located near Montpellier. FREY has claimed the Montpellier Méditerranée Métropole
development company (SA3M) for compensation for damage caused (for a total amount of €77m).
(1) Economic assets include wholly-owned assets as well as the share of assets held in partnership or in associates.
(2) Rents collected as a percentage of rents after deduction of tenant’s incentives.
(3) The “Village des Docks” project is part of the transformation of the town of Saint-Ouen through the reclamation and urban regeneration of 100 hectares
of former industrial wasteland to make it a sustainable district linking the town centre to the river Seine (6,800 residential units, 300,000 m2 of offices, 12
hectares of parks along the Seine).
Page 3In July, the Group also acquired AG Real Estate’s stake in the FREY Retail Fund 2 (FRF 2) investment vehicle, thereby
becoming the majority shareholder in FRF (at 62%) alongside its long-standing partner Crédit Agricole Assurances.
This strategic transaction enables it to strengthen its position in prime assets well known to the Group and offering
solid operating performances.
• FREY is committed to the French timber industry and reaffirms its low-carbon strategy
At the beginning of 2020, FREY announced that it was aiming to achieving carbon neutrality by 2030 by focusing on
the following three pillars:
- boosting the French timber industry (the leading bio-sourced material) by acquiring and exploiting sustainably-
managed French forests;
- reinforcing the low-carbon strategy of its model, from the construction to the operation of its assets;
- and through annual monitoring of the financial impact of its carbon footprint on its profitability, using carbon-
weighted net profit Group share (1) as the key indicator.
In terms of the timber industry, FREY created its own forestry group (FoREY®) and decided to devote a €35 million
investment by 2030. FoREY® already acquired 540 hectares spread over 3 forests in 2020. According to its business
plan, FREY has completed a first wooden construction for the framework of a Basic Fit gym at its Green 7 park in
Salaise sur Sanne and has massively incorporated wood in its Open project, in the French Geneva area, construction
of which will begin in 2021 and for which the Group is aiming for its first BREEAM Excellent certification and an
E+/C- (Energy + / Carbon -) label.
2020 FINANCIAL PERFORMANCE
• Change in the portfolio
As at 31 December 2020, FREY’s (2) economic portfolio in operation:
- is valued at €947.5 million excluding transfer tax (of which €228.9 million outside France), up 5.1% year on year
(€902.2 million at 31 December 2019),
- is developing a surface area of 433,800 m² (compared with 398,000 m² at end-2019) following the acquisition
of a stake in the FREY Retail Fund2 (fully consolidated since 28 July 2020), the delivery of additional units for
Clos du Chêne and Woodshop and the sale of an asset located in Bayonne (2,200 m²),
- representing annualised gross rental income of €59.1 million (+9% compared with 31 December 2019, of which
+1% on a like-for-like basis),
- and has a high and stable financial occupancy rate (3) of 97.6%, compared with 97.7% at the end of 2019.
At 31 December 2020, the value of projects under construction amounted to €302.2 million, bringing the total
value of the portfolio (economic portfolio in operation + projects under construction) to €1,249.7 million
(excluding transfer tax), compared with €1,128.1 million at 31 December 2019. The annualised rental income from
the economic portfolio in operation and the two Shopping Promenade centres in Strasbourg and Claye-Souilly to
be opened in March 2021 amounts to €72.6 million.
• Rental income: €59.5 million (+37%) and consolidated revenue: €107.2 million (+55%)
At 31 December 2020, rental income from the consolidated portfolio totalled €59.5 million (of which €17.5 million
outside France), up 37% compared with 2019. This was due to a very significant perimeter effect with the full-year
recognition of the deliveries and acquisitions completed in 2019 (AlgarveShopping in Portugal acquired in July,
Shopping Promenade in Arles delivered in October, restructuring of Woodshop (77)) and the acquisition of a stake
in FRF2 in late July 2020.
(1) i.e. 2020 Net profit Group share of €2.4 million reduced by the 2020 carbon burden of (€6.4) million (FREY’s 2020 carbon emissions of 256,409 tonnes x
€25/tonne of carbon). Given the difficulty of accurately measuring the impact of the health crisis on visitor numbers in 2020, it was decided to keep the 2019
rate rather than apply a correction that could increase the level of uncertainty.
(2) The economic portfolio in operation comprises assets in operation that are wholly owned by FREY, plus assets held by companies in partnership and those
held by associates in proportion to FREY’s percentage interest in those associates.
(3) Delivered over a year ago and excluding strategic restructuring.
Page 4FREY’s consolidated revenue rose by 55% to €107.2 million at 31 December 2020 (compared with €69.3 million in
2019). In addition to rental income, it includes €29.7 million in revenue from property development activities (1)
(€13.6 million in 2019) and €2.3 million from property management activities.
• Profit from recurring operations (2): €42.4 million (+46%) – Net profit Group share: €2.4 million after
COVID-19 impacts
Profit from recurring operations grew very sharply to €42.4 million in 2020, compared with €29.0 million in 2019,
thanks to the increase in revenue, as described above, and good control of overheads.
Operating profit of €13.1 million was adversely affected first by the recognition of the cancellation of rent
receivables amounting to €(6.1) million across the scope of fully consolidated assets and secondly by a negative
change in fair value of €(19.3) million due to the deterioration in the rental income assumptions used by the
experts in the context of the health crisis and despite the excellent marketing campaign concerning the assets in
operation. The impact of COVID-19 on the change in fair value of the economic portfolio was €(27.3) million.
Consolidated net profit Group share was €2.4 million in 2020 (compared with €49.7 million in 2019), after taking
into account the share of profit of associates (€(1.8) million compared with €8.7 million in 2019) and a reduced cost
of net debt (€(9.8) million compared with €(10.4) million in 2019).
• Limited impact of the pandemic on the EPRA NDV (3) per share at €31.2/share
The EPRA NDV NAV (excl. transfer tax) amounted to €767.4 million at end-2020 down 1.3% compared with 31
December 2019 (€777.5 million). This decline was due mainly to the cash payment of the 2019 dividend (€(25.7)
million)) (4), partly offset by the year’s net income Group share (profit of €2.4 million) and the reclassification of
treasury shares (€13.6 million) following the partial payment of the stake in FRF2 in treasury shares.
On a per share basis, the EPRA NDV was €31.2 per share, i.e. down 4.6%.
• Solid financial structure and increased liquidity to finance projects under development
The consolidated net LTV ratio (including transfer tax) was 32.4%, compared with 23.1% at the end of 2019 and
28.1% at 30 June 2020. The Group maintains a comfortable LTV level in a context of strong development activity.
At 31 December 2020, the Group had €530.6 million in bank debt (including €379.3 million in corporate facilities)
and excellent liquidity (€268 million comprising €212 million in undrawn credit facilities and €56 million in available
cash).
The Group has further enhanced its access to the financing market by extending the maturities of its corporate
facilities (€150 million) in 2020, by signing an initial solidarity-based corporate loan of €70 million (initial term of 5
years, with 2 options to extend) and by refinancing €16 million worth of debt for the FREY Retail Fund.
After taking interest rate hedges into account, the average cost based on market conditions at 31 December 2020
(margin included) amounted to 1.48%, compared with 1.73% at 31 December 2019), i.e. a decline of 25 bp.
The maturity of the bank debt amounts to 4.5 years (compared with 5.5 years at end-2019).
• Dividend proposed for 2020: €1.50 per share
At the AGM to be held on 20 May 2020, FREY's board of directors will propose the payment of a dividend of €1.50
per share, which is unchanged compared with 2019. There will be an option for partial payment (30%) in shares
(i.e. €0.45 per share) and 70% in cash (i.e. €1.05 per share), and an option for 100% payment in cash.
(1) Mainly deliveries and disposals from Promenade d’Artois in Arras-Duisans (Pas-de-Calais department), of a 5,100 m2 asset in Calais (Pas-de-Calais
department).
(2) Profit from recurring operations does not take into consideration the impact of the health crisis, of €6.1 million, presented in the “waivers of rents
granted” line of the consolidated income statement.
(3) EPRA net disposal value.
(4) Payment of the dividend in cash for a total amount of €25.7 million and creation of 378,266 new shares under the option for partial payment of the dividend
in shares (88.69% subscribed), thereby strengthening the Group's equity by €9.7 million.
Page 52021 OUTLOOK AND STRATEGY
Against a backdrop of continuing uncertainty over COVID-19 (curfews, closures of some shops and local lockdowns)
and the possibility of further disruptions to business, the Group will work to strengthen relationships with its
tenants and to support efforts to develop its centres, while expecting the full reopening of the leisure and F&B
brands, in particular.
In the short term, the Group intends to pursue its growth strategy based on the development of retail assets that
are ideally fitted to the current environment (open-air retail, optimal price/quality ratio for customers and retailers,
an enjoyable and convenient retail experience and support for the local community):
• opening of two Shopping Promenade centres in March 2021 in Claye-Souilly and Strasbourg (aggregate of
111,000 m², €232 million in investment and minimum guaranteed rent of €16.7 million);
• launch of three projects in 2021: Shopping Promenade Lleida in Spain, Open, close to the Swiss border and
Village des Docks in Saint-Ouen (total of 128,000 m², €370 million in investment and minimum guaranteed
rent of €25.5 million).
In the longer term, the Group intends to pursue its development strategy aimed at unlocking the full potential
of its unique know-how in retail, which will remain the basis of city development.
The health crisis has accelerated changes in retail by several years. The obsolescence of retail assets that no longer
meet customers’ expectations and the unsustainable business models of those assets are creating many
opportunities for transforming retail businesses into higher performing, more mixed-use assets. They represent a
stock of already artificialized land on which cities will reinvent themselves in the future.
This environment is highly favourable for FREY in several respects:
• 100% of its assets and projects under development involve the winning formats of open-air shops
(Shopping Promenade) and convenience store (such as the project in Rennes),
• The group has control of the entire value chain and has always adopted a pioneering approach:
reclassification (Troyes), turnaround (Woodshop formerly Maisonément) and mixed-use (Strasbourg),
• FREY is leading the way once again by becoming the first French REIT to adopt “entreprise à mission”
status. FREY’s statement is to restore as a service for common good, a mission underpinned by a CSR
strategy in line with stakeholders’ expectations,
• it has the financial headroom to undertake this type of project.
Its development strategy is therefore based on four offensive strategic pillars:
• Restructuring and transforming the out-of-town shopping centres into mixed-use projects,
• Acquiring and transforming obsolete retail assets to be turned around,
• Developing mixed-use projects in dense urban areas,
• Acquiring retail assets in line with its strategy in France and abroad.
A presentation will be available on FREY's website on 10 March 2021 under Finance / Results and Press Releases.
Page 6About FREY
A planner, developer, investor and manager, FREY is a real estate company specialising in the development and operation
of open-air shopping centres. A pioneer in environmentally friendly retail parks (with its Greencenter concept) and
inventor of next generation “Feel Good” open-air shopping centres (Shopping Promenade), Frey, as an “entreprise à
mission”, is fully engaged in a more responsible, greener society that is socially beneficial to its ecosystem and its
stakeholders. As the company knows just how essential it is to urban diversity, social contact, local economic resilience
and environmental transition, its mission is to restore retail as a service for the common good.
FREY also supports major urban regeneration operations and mixed-use projects through its dedicated subsidiary
CITIZERS.
FREY is listed on compartment B of Euronext Paris. ISIN: FR0010588079 - Mnemo: FREY
CONTACTS:
Antoine Frey – Chairman and CEO
Sébastien Eymard – Chief Executive Officer – Finance & Strategy
-
Mathieu Mollière – Director of Communications, Marketing and Innovation - Tel.: +33 (0)3 51 00 50 50
Agnès Villeret – Investor relations and financial press
KOMODO - agnes.villeret@agence-komodo.com - Tel.: 06 83 28 04 15
APPENDICES
• Figures relating to the portfolio
In € million (excluding transfer tax)
PORTFOLIO VALUE – WHOLLY OWNED ASSETS
Investment property (*) 947.4
Projects under development (258.6)
Projects underway, valued at cost (37.8)
(A) Wholly-owned assets in operation value 651.0
JOINTLY-HELD ASSETS (FREY share)
Investment property in partnerships (*) 256.0
Projects underway at cost in the partnerships (5.8)
Investment property of associates (*) 46.3
Projects underway at cost of associates -
(B) Jointly-held assets in operation value (FREY share) 296.5
(C) = (A) + (B) ECONOMIC PORTFOLIO IN OPERATION 947.5
(*) Value of the total economic portfolio = €1,249.7 million.
Page 7• IFRS consolidated simplified income statement
In € million 31.12.2020 31.12.2019 Change
Gross rental income 59.5 43.6 +37%
Income from third-party development 29.7 13.6
Income from other real estate management activities 2.1 2.3
Re-invoiced expenses – IFRS 16 15.8 9.9
Revenue 107.2 69.3 +55%
Purchases consumed (49.6) (29.4)
Payroll expenses (9.1) (8.8)
Other income and expenses (1.3) 0.9
Taxes and similar payments (1.5) (1.6)
Amortisation and depreciation (3.5) (1.4)
Profit from recurring operations (1) 42.4 29.0 +46%
Other operating profit and expenses (10.0) (2.7)
of which waivers of rents granted (6.1) -
Fair value adjustments of investment property (19.3) 50.1
Operating profit 13.1 76.4 -83%
Share of net profit (loss) of associates (1.8) 8.7
Operating profit after share of net profit from associates 11.3 85.2 -87%
Cost of net financial debt (9.8) (10.4)
Other financial income and expenses 0.8 (5.3)
Profit before tax 2.3 69.5 -97%
Income tax 1.4 (10.4)
Net profit 3.7 59.1 -94%
Net profit attributable to non-controlling interests (1.3) (9.4)
Net profit Group share 2.4 49.7 -95%
• IFRS simplified consolidated balance sheet
In € million 31.12.2020 31.12.2019
ASSETS
Non-current assets 1,367.6 1,184.5
of which Investment property 1,316.2 1,094.1
of which shares of associates 16.9 57.5
Current assets 171.5 191.0
of which Cash and cash equivalents 56.2 97.5
Assets held for sale 17.7 -
EQUITY AND LIABILITIES
Equity 822.4 789.2
Non-current liabilities 573.9 454.9
of which long-term financial liabilities (including bond issues) 549.2 428.0
Current liabilities 149.4 131.4
of which short-term financial liabilities (including bond issues) 27.8 19.4
Liabilities related to assets held for sale 11.1 -
Total 1,556.8 1,375.5
(1) Profit from recurring operations does not take into consideration the impact of the health crisis, of €6.1 million, presented in the “waivers of rents
granted” line of the consolidated income statement.
Page 8• IFRS consolidated cash flow statement
In € million 31.12.2020 31.12.2019
Cash flow from operations 37.7 27.9
Dividends received from associates 10.5 4.4
Tax paid (1.7) (2.6)
Change in working capital requirement related to the activity (8.7) (1.0)
Net cash generated by operating activities (1) 37.8 28.7
Fixed asset acquisitions (83.2) (117.6)
Change in loans, advances and other financial assets (11.9) (23.0)
Fixed asset disposals 3.1 22.9
Impact of change in consolidation scope and miscellaneous (14.6) (98.9)
Change in other investments 0.6 -
Net cash flow from investment activities (2) (106.0) (216.6)
Dividends paid to shareholders of the parent company (25.7) (23.8)
Capital increase - 160.1
Net sale (acquisition) of treasury shares (6.4) (11.0)
Loan issue 152.2 433.4
Repayment of loans (including finance leases) (84.2) (327.7)
Repayment of lease liabilities (0.9) (0.9)
Cost of debt (including on lease obligations) (8.3) (22.8)
Change in other financing - -
Net cash related to financing (3) 26.7 207.4
Change in cash (1+2+3) (41.4) 19.4
• Net asset value
The Group presents the Net Reinstatement Value (NRV) and Net Disposal Value (NDV) as defined by the EPRA
recommendations for fiscal years beginning on or after 1 January 2020.
In € million 31.12.2020 31.12.2019 Change
EPRA NDV 767.4 777.5 -1.3%
EPRA NDV per share (€) 31.2 32.7 -4.6%
EPRA NRV 831.1 839.1 -1.0%
EPRA NRV per share (€) 33.8 35.3 -4.2%
Diluted number of shares 24,603,263 24,224,997
Number of shares and treasury shares held in the liquidity contract 15,127 430,969
Corrected number of shares 24,588,136 23,794,028
Page 9You can also read
