Together in real estate
Cofinimmo – Press ConferenceAcquisition of the MAAF branches portfolioDivestment of the Citylink office park
December 21, 2011
1. Introduction:
Cofinimmo Total Return YTD
2. Acquisition of the MAAF branches portfolio
Presentation of the acquisition
Description of the MAAF branches portfolio
About MAAF Assurances SA
About Foncière Atland
Financing of the acquisition
Impact on Cofinimmo net current result
Integration of the acquisition in the Cofinimmo distribution property networks segment
3. Divestment of the Citylink office park
Description of the operation
4. Balance sheet impact
5. Evolution of Cofinimmo properties portfolio
Annex 1: Pictures of MAAF branches
Annex 2: Characteristics of the mandatory convertible bonds
Presentation Take Aways
Table of Contents
2
Acquisition of all 285 sites (branches and offices) currently owned by MAAF.
All sites located in France .
Total surface of 60 411 m2.
Total investment of € 107.6 million (price of € 1 781/m2).
MAAF Assurances SA is sole tenant of the properties.
Indexed leases with an average weighted duration of 9.7 years
Annual indexation based on the commercial leases index (“ ILC”).
Rental income: € 7.86 million per annum (rent of € 130/m2).
Gross yield of 7.31%.
Renovation and compliance works on 219 sites to be undertaken by MAAF, at their own cost, before 2017, for €79.3 million.
Presentation of the acquisition - Summary (1)
6
Portfolio to be acquired by a newly formed subsidiary of Cofinimmo, Cofinimur I SA (“Cofinimur”):
Capital and voting rights:
Cofinimmo SA: 97,65%
Foncière Atland: 2,35%
SIIC status
Foncière Atland REIM responsible for
asset management
property management
Presentation of the acquisition (2)
7
Cofinimur
Portfolio of 270 branches and 15 properties used mainly as offices
Weighted average lease term of 9.7 years
83% of rental income comes from fixed leases for 9/12 year, 3% from 6/9 year leases and 13% from 3/6/9 year leases. The remaining is vacant or 1 year leases.
Description of the MAAF portfolio (1)
8
Total weighted surface : 60.411 m² Rental income p.a. : € 7.86 million
Portfolio of 270 branches and 15 offices
Out of a total of 587 branches constituting the total MAAF network in France (the other 317 already rented)
15 sites rented by GIE Europac (guarantee of MAAF)
Total surface of 60 411 m2
2/3 of the portfolio is located in geographical areas with high population growth (“Ile- de- France”, PACA region and Western France)
55% of the sites are located in cities with more than 50.000 inhabitants
Prime, Bis and Ter locations
Description of the MAAF portfolio (2)
9
77
1212
55
77
1010
161688
88
11
77
664141
99
66
66
1313
1818
2222
88
1010
1616
3232
77
1212
55
77
1010
161688
88
11
77
664141
99
66
66
1313
1818
2222
88
1010
1616
3232
PRIME BIS
Location hyper centre, near
pedestrian streets
Paris
Location « city entrance »
Ile de France
Major cities(Lyon, Marseille,
Toulouse, …) Small agglomerations
(remaining townships)
Location close to the city center
Location on high streets with
commercial activities and medium visibility
TER
MAAF is part of the Covéa Group, a mutual insurance company
Multi-line insurer aimed at the general public, private individuals and businesses
587 branches in France –sales network operated by employees (--> no subletting)
MAAF with 2 others brands of the Covéa Group (MMA and GMF) account for 20% of the French insurance market.
Renovation and compliance works of branches and offices before 2017 financed by MAAF for € 79.3 million (from € 1300/m2 to € 1800/m2).
Key MAAF figures on 31.12.2010:Income € 3 915 millionNet Result –Group Share € 134 millionEquity € 2 502 millionMembers and clients 4.1 million
About MAAF Assurances SA
10
Foncière Atland is a real estate investment trust (SIIC), listed on Euronext Paris. It operates in the “Ile-de-France” region and in the French regions
Key player in the sector through 3 business lines :
Outsourcing of property assets
Construction on own account and development of turnkey properties for rent
Opportunistic investments
Portfolio of € 100 million own assets and € 170 million assets under management mainly within corporate partnerships
Foncière Atland REIM is responsible for the asset management and the property management of the MAAF 285 sites portfolio
About Foncière Atland
11
Financing of the acquisition (1)
12
Cofinimur I SA
Cofinimmo
FoncièreAtlandInvestorthird party
Capital: €47.8 million
Capital: €1.1 millionMandatoryconvertible bonds ("ORA" in French)Equity: €52 million
PropertiesPortfolio MAAF
€107.6 million
Shareholders loan€6.7 million
Mandatory convertible bonds issued by Cofinimur for € 52 million
Issue price: € 96 per bond
Mandatory redemption in shares of Cofinimur (1 share for 1 bond) on the 12th anniversary date
Exchangeable at the bondholders’ option for Cofinimmo SA ordinary shares (1 share for 1 bond) in the month preceding the 12th anniversary date
Call option for Cofinimmo as from the 7th anniversary date: at Cofinimmo’s option
in cash or
in Cofinimmo ordinary shares at market value, then with bondholders’ consent
20 % coupon step-up from the 10th anniversary date
Financing of the acquisition (2)
13
Characteristics of the mandatory convertible bonds (a)
Financing of the acquisition (3)
14
•Maturity : 12 years• Issue price: € 96 for each bond (= NAV of Cofinimmo at 30.09.2011)•Coupon :
‐ without exceeding the lower of :‐ 9% of the par value or ‐ 86.5% of the net current result per share of Cofinimur
‐ without being lower than 1% Step-up of 20% as from the 10th anniversary date
•Bonds redemption : in the issuer’s shares (1 share/1 bond)• Call option for Cofinimmo as from the 7th anniversary date, with bonds valued at intrinsic value
‐ in cash
‐ or with at least the agreement of 2/3 of the bondholders: in Cofinimmo
ordinary shares (at a price equal to the average closing price of the 30 calendar days preceding the exercise of the call )
Payment at Cofinimmo’s choice
5.5% indexed
Financing of the acquisition (4)
15
• Property portfolio of Cofinimur: only MAAF properties
•Financing of Cofinimur: •no financial debt at the inception (but for the bonds and the shareholders loans)
•maximum LTV of 10% allowed subsequently for capex financing
•Subscribers of bonds: French and Belgian insurers
•Solvency II Directive : bonds categorized as real estate investment for insurers
Characteristics of the mandatory convertible bonds (b)
Issuying mandatory convertible bonds compares favorably to issuing new Cofinimmo shares:
Issue price of the mandatory convertible bonds (€ 96 per bond) is above the current 30-day average closing price of the Cofinimmo ordinary share (€ 86.06)
Bonds issued at the Cofinimmo’s NAV per share at 30.09.2011 (portfolio in fair value)
5.5 % coupon is well below Cofinimmo share dividend yield (€ 6.50/ € 86.06= 7.55%)
For Cofinimmo: equity at NAV in the form of minority interests
For the institutional investors in the bonds: property exposure with low volatility but less liquidity than Cofinimmo shares
Financing of the acquisition (5)
16
Advantages for Cofinimmo shareholders
Gross yield of portfolio: 7.31%
Net yield of portfolio: 7.05% (after direct costs):
Estimated maintenance obligations limited to the structural maintenance (art.606 of French civil code): 2% of rents or 2,3 EUR/m² (vs Cofinimmo office portfolio: 3,6 EUR/m²)
Net net yield of portfolio: 6.18% (after direct and indirect costs):
Asset management fee: 0.5% of acquisition value- 5 year contract with Foncière Atland REIM
Other costs : accountants, property experts
Some VAT not recovered (non VAT leases)
Relutive impact of € 0.13 on the net current result per share – MAAF portfolio is 3.3% of Cofinimmo’s total portfolio (in investment value)
Impact on Cofinimmo net current result
17
Acquisition of MAAF properties portfolio is a further step in the Cofinimmo portfolio diversification strategy
2nd real estate distribution property network after the acquisition of the Pubstone portfolio (partnership with AbInBev) realized in 2007
Characteristics of the investments:
Direct distribution network necessary for the tenant activities
Sale and lease back
Longer term leases
Possibility of alternative uses (local shops)
Acquisition at an attractive price per square meter
If vacated these assets attract interest from local investors
Small unit values – Residual value risk widely spread
The distribution property networks segment now regroups the properties of Pubstone and Cofinimur and accounts for 16.5% of Cofinimmo’s total portfolio
Integration of the acquisition in the Cofinimmo distribution property networks segment
18
Sale of the Antwerp located Citylink office business park to Mercator Verzekeringen NV for a price of €63.2 million
Business park composed of 4 office buildings of 27 108 m2 and 587 parking slots delivered in 2009 (contract signed in 2007)
100% occupancy thanks to successful letting by Cofinimmo
Main tenants: Mercator (51% of the rental income), Arcadis and Soresma
Sale price in line with the latest investment value (including taxes) determined by the independent expert.
Description of the operation
20
Impact of both transactions on Cofinimmo’s consolidated balance sheet
22
Acquisition
MAAF
Sale
CitylinkTotal
Investment properties 107.6 (a) -63.2 44.4
Total assets 107.6 -63.2 44.4
Shareholders’ equity attributable to
shareholders of the parent company
0.0 0.0 0.0
Minority interests 1.3 (b) +52.0 – 4.5 (c)
= 48.8
0.0 48.8
Financial debts (non-current and
current)
58.8 -63.2 -4.4
Total shareholders’ equity and
liabilities
107.6 -63.2 44.4
(a) Fair value assumed equal to acquisition price(b) Interest of Foncière Atland(c) Discounted value of minimum coupon
24
Evolution of Cofinimmo properties portfolio (1)
Diversification strategy started by Cofinimmo in 2005, from 100% in Belgian offices, allowed Cofinimmo to enlarge its portfolio to the nursing homes/clinics segment
In 2007, first distribution property networks contract with the acquisition of AbInBev pubs portfolio in Belgium and Netherlands (AbInBev retains 10% interest)
During 2010-2011: Cofinimmo reinforces its position in healthcare real estate assets and becomes a European leader in the nursing homes segment
In December 2011, with the acquisition of the MAAF branches, Cofinimmo improves the overall composition of its portfolio and reinforces its distribution property networks segment which now accounts for 16.5% of Cofinimmo’s portfolio
End 2011, the percentage of the office buildings segment is below the 50% mark
25
Evolution of Cofinimmo properties portfolio (2)
Portfolio in investment value : 31.12.2010 Portfolio in investment value: 21.12.2011
Total portfolio residual lease term/order book : 11.5 years
31
Presentation Take Aways
New niche in Cofinimmo portfolio with:
Attractive yield
Recurrent cash flows
Attractive values/m2
Use of JV structure commonly utilized in the US
Alternative raising of equity at NAV
Rotation of office portfolio
Increased diversification of assets
Together in real estate
Disclaimer:This presentation is directed to financial analysts and institutional investors and is not to be considered as an incentive to invest or as an offer to acquire Cofinimmo shares. The information herein is extracted from Cofinimmo annual and half-yearly reports and press releases but does not reproduce the whole content of these documents. Only the French annual and half-yearly reports and press releases form legal evidence.
For more information contact:Valerie KibietaTel.: +32 2 373 60 [email protected] www.cofinimmo.com
33