Inside Information / News release on accounts, results

                                                                                    Paris, 23 July 2024

SFL – First-Half 2024 Results

The consolidated financial statements for the six months ended 30 June 2024 were approved by the Board of Directors of Société Foncière Lyonnaise (“SFL”) on 23 July 2024, at its meeting chaired by Pere Viňolas Serra. 

These financial statements reflect sharp growth in operating profit, stable portfolio appraisal values and a significant increase in EPRA earnings. The occupancy rate remained at an exceptionally high 99.8% and properties let during the period commanded increasingly high rents, attesting to the attractiveness of prime Paris office properties and the quality of SFL's business model.

“This is a very interesting time in the market – our appraisal values are holding firm after falling steadily over the past 18 months and our rental income is rising. These encouraging performances, in a still very uncertain environment, can be put down to a number of differentiating factors: our rigorous property selection processes, our commitment to ensuring that redevelopment projects comply with the highest technical and environmental standards, and finally our determination to constantly improve the satisfaction of our tenants and their staff. 

anniversary this year: this remarkable longevity means that we have to

adapt our products to the trends and expectations of employees in the Paris region, and always question of exceptional properties, and

-changing world, in our segment of choice,

said Dimitri Boulte, SFL's Chief Executive Officer.

The auditors have completed their review of the financial statements and issued their report on the interim financial information, which does not contain any qualifications or emphasis of matter.

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              Consolidated data (€ millions)                                                                                                        

* Including the cancellation of a rent accrual in an amount of €5.4 million in the first half of the year

** Operating profit before disposal gains and losses and fair value adjustments

Strong revenue growth in a still uncertain environment

Rental income up 7.4% like-for-like

Revenue came to €127 million in the first half of 2024, including €121.6 million in rental income and the cancellation of a rent accrual in an amount of €5.4 million.

Rental income for the period was up by a strong €10.2 million (up 9.2%) compared with the first half of 2023. The period-on-period change can be explained as follows: generating properties, excluding all changes in the portfolio

period comparisons), rental income was €8.1 million higher (up 7.4%),

including the €4.6 million impact of rent indexation clauses and the contribution from new standing tenants such as Infravia, Havea and Fast Retailing, and new tenants such as a leading luxury goods company and Brunswick). These new leases drove significant growth in rental income from the Washington Plaza, Cézanne Saint-

Rental income from spaces being redeveloped during the periods under review rose by million. This included the €7.8 million contribution for the whole of first-half 2024 from

Honoré project, which was delivered in July 2023 to the

-funded redevelopment work, and the

million contribution of the new Adidas flagship store on the Champs-Elysées.

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- The decision by a tenant to break their lease led to the cancellation of the related rent accrual in the IFRS financial statements, which was partly offset by a provision reversal, and the recognition of a lease termination penalty paid by the tenant. The net impact on rental income was a negative €1.9 million. 

Adjusted operating profit (i.e., operating profit before disposal gains and losses and fair value adjustments to investment property) rose by a strong 12.9% to €109.8 million in first-half 2024, from €97.2 million in the year-earlier period.

Stable appraisal values against a backdrop of ongoing uncertainty

The portfolio’s appraisal value rose by 1.0% over the six months to 30 June 2024 on a comparable basis, leading to positive fair value adjustments to investment property of €27.4 million for the period versus negative adjustments of €327.8 million in first-half 2023.

The stabilisation of appraisal values reflected the application of rent escalation clauses and the sharp rise in rental values in the prime segment of the Paris property market. The discount rate declined (by an average of 2 bps), while the average exit capitalisation rate continued to rise (by an average of 3 bps).

Higher net profit despite the increase in finance costs

Net finance costs stood at €28.3 million in first-half 2024, versus €26.1 million in the same period of 2023, representing an increase of €2.2 million. Excluding non-recurring items, the increase was €4.7 million, reflecting the impact on recurring finance costs of higher interest rates and the increase in average debt.

After taking account of these key items, EPRA earnings came in at €60.1 million in first-half 2024 versus €53.2 million in the year-earlier period. 

EPRA earnings per share stood at €1.4 in first-half 2024, up 12.9% from €1.24 in first-half 2023.

 million, versus a loss of €177.5 million

SFL's strategic positioning means it can take full advantage of the very positive momentum in the Paris property rental market and particularly higher market rents. The physical occupancy rate remained at December 2023). The EPRA vacancy rate was 0.2%

SFL signed leases on around 12,000 sq.m. in the first half, including 11,300 sq.m. of office space, mainly

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This sustained rental activity primarily concerned the following properties:

−     #cloud.paris, with 3,500 sq.m. let for a non-cancellable period of nine years to an international fund management company;

− Cézanne Saint-Honoré, with 2,700 sq.m. let for a non-cancellable period of nine years to an international law firm;

        −                  Edouard VII, with 1,230 sq.m. let for a non-cancellable period of six years to Brunswick;

        −                               103 Grenelle, with 1,315 sq.m. let for a non-cancellable period of ten years to Beau de Loménie;

        −                office space in the Washington Plaza and 176 Charles de Gaulle properties;

        −                  residential units representing around 500 sq.m. and retail units representing 200 sq.m.

Average nominal rents for the new office leases rose sharply to €998 per sq.m., corresponding to an effective rent of €883 per sq.m., for an average non-cancellable period of 8.7 years. These lease terms attest to the attractiveness of the Group’s properties.  

Efficiently managed pipeline offering a €31.4 million annual reversionary potential

Properties undergoing redevelopment at 30 June 2024 represented 10% of the total portfolio. They include the Scope office building (formerly Rives de Seine) on the Quai de la Râpée in Paris (around 23,000 sq.m.). Site clearance and asbestos removal work has now been completed, and the works contract with the general contractor was signed on 17 June, with delivery still scheduled for mid-2026.

Capitalised work carried out in first-half 2024 amounted to €27.5 million, including the Scope project for a total of €6.3 million and floor-by-floor renovations, primarily in the Edouard VII complex.

No acquisitions/disposals 

half 2024, the Group rolled over its €100 million credit line with BNP Paribas. The new

facility agreement includes a spread adjustment mechanism based on the achievement of three

nmental certification of assets and

year extension options) replaces the existing credit line.

he €300 million Term Loan and the €835 million RCF were extended by one year, increasing the

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Net debt at 30 June 2024 amounted to €2,688 million compared to €2,539 million at 31 December 2023, representing a loan-to-value ratio of 34.0% including transfer costs. At the same date, the average cost of debt after hedging was 2.1% and the Interest Coverage Ratio (ICR) was 3.5x.

At 30 June 2024, the Group had access to €1,570 million in undrawn confirmed lines of credit.

EPRA Net Asset Value stable overall, taking into account a dividend payout of

€2.40/share

The portfolio’s consolidated appraisal value at 30 June 2024 was €7,406 million excluding transfer costs, up 1.0% from €7,332 million at 31 December 2023. 

The average EPRA topped-up Net Initial Yield (NIY) was 3.8% at 30 June 2024, unchanged from 31 December 2023.

Lastly, during the period, Pargal SAS elected to be taxed as an SIIC, with retroactive effect from 1 January 2024. The election had the effect of reducing EPRA NTA by €48.1 million and increasing EPRA NDV by €21.1 million.

EPRA indicators

Alternative Performance Indicators (APIs)

EPRA Earnings API

EPRA NRV/NTA/NDV APIs:

* Transfer costs are included at their amount as determined in accordance with IFRS (i.e., 0).

Net debt API

More information is available at www.fonciere-lyonnaise.com/en/publications/results

About SFL

A benchmark player in the prime segment of the Parisian commercial real estate market, Société Foncière Lyonnaise stands out for the quality of its property portfolio, which is valued at €7.4 billion and is focused on the Central Business District of Paris (#cloud.paris, Edouard VII, Washington Plaza, etc.), and for the quality of its client portfolio, which is composed of prestigious companies. As France’s oldest property company, SFL demonstrates year after year an unwavering commitment to its strategy focused on creating a high value in use for users and, ultimately, substantial appraisal values for its properties. With its sights firmly set on the future, SFL is committed to sustainable real estate with the aim of building the city of tomorrow and helping to reduce carbon emissions in its sector.

Stock market: Euronext Paris Compartment A – Euronext Paris ISIN FR0000033409 – Bloomberg: FLY FP – Reuters: FLYP PA

S&P rating: BBB+ stable outlook