Diversified French REIT/SIIC Foncière des Régions last year raised net recurring income by 10% to €391m, and will propose a 2.3% dividend increase to €4.50. The portfolio expanded by €2bn to €21bn - group share of €12.8bn - and it said the outlook for 2018 is favourable.
Traditionally focused on office property, much of it held in co-ownership with large industrial clients, FdR has in recent years widened into German residential and European hotels. Under long-time CEO Christophe Kullmann it has also consolidated both its wide shareholdings in its REIT subsidiaries and the portfolio overall. FdR last year invested €1.8bn, intensified its European development in hotels in Berlin, Barcelona and Madrid, extended residential purchases in Berlin - with more than 40% rental reversion - and accelerated non-core asset sales to €1.4bn.
The result was a sharp 19% increase in EPRA net asset value to €7.1bn, or €94.5 per share, a reduction in overall debt load of 4.2pp to loan to value of 40%, and recurring net income up 10% or €5.31 per share. "With operational, financial, social and environmental indicators up, Foncière des Régions had an exceptional year," said Kullman in a results release. "Ever more exposed to European cities, innovative and close to its clients, and relying on large growth reserves, the group has all the keys to continue its European development."
At year end, FdR's overall portfolio of €21bn was centred on large European cities, in particular Paris, Berlin and Milan - 62% of total. "With a view to continually strengthening its relationship with its clients, Foncière des Régions relies on a strong long-term partnership strategy with the regions and users," it said. These include Suez, Thales, Dassault Systèmes, Orange, EDF, Vinci, Eiffage, AccorHotels, Telecom Italia. "As an investor and developer, working throughout all the real estate value chain, the group can rely on a European development pipeline of €5.1bn (+28%yy) to maintain its growth."
In proposing the increased dividend, the group said the outlook for 2018 is favourable. It expects to accelerate the pipeline to €900m in new committed projects this year, and targets EPRA earnings per-share growth of around 3%.
BIE COMMENT : FdR has been well and cleverly managed over the years, for example boosting its equity levels amid the GFC through assets acquisitions from major clients, in exchange for equity. Since 2007, its largest minority shareholder is Delfin, the holding of Italian billionaire Leonardo Del Vecchio, owner of the global Luxottica eyewear group, the world's largest, which, among others, controls LensCrafter, Sunglass Hut, Sears Optical, Ray-Ban and Oakley. Through this relationship FdR also holds a large minority in Italian REIT/SIIQ Beni Stabili. But the move into German residential and European hotels was early and fast, and is now paying off.