EuroBusinessMedia (EBM): CeGeREAL, a real estate investment trust (REIT), reports 2014 results. Raphaël Tréguier, welcome. You are the CEO of CeGeREAL. Your company focuses on modern office properties located in the near outskirts of Paris. Before we talk about your results, why focus on this market particularly?
Raphaël Tréguier: Yes, well at CeGeREAL we had a pretty good year, but indeed we should maybe remind everyone why we decided to focus on large offices. CeGeREAL is specialised in the holding of large office premises in the close periphery of Paris, where the market has developed a couple of office hubs to welcome the big, growing international companies who want to implement their headquarters in France. So this is our competitive landscape and actually it works pretty well, as our earnings this year have increased by 24% and the asset value of our portfolio increased by roughly 3%. So, a good year.
EBM: You said it, a good operational performance, can you tell us more about your 2014 results?
Raphaël Tréguier: Yes, of course. Actually we have been quite successful for three main reasons. On the real estate side, we signed more than 17,000 m² - with new tenants or in-place tenants in our assets - out of 125,000 m2, so quite a successful year for us on a rental side. On the corporate side, we have been granted this green star label from the GRESB (Global Real Estate Sustainability Benchmark), which has turned us into a worldwide reference in terms of governance, and we also succeeded in our environmental project called “Go Green”. CeGeREAL is today the first 100% green REIT in France. From a financial point of view also, we succeeded in having a tight management of our expenses and so it should allow us to benefit fully from this increase in rents, thanks to the signings in the last year. So quite a good year, which saw an increase in the recurring cash flow from €19 to €23 million in 2014.
EBM: How did the office rental market fare in 2014?
Raphaël Tréguier: The rental market in Paris is highly connected to the anticipations from the big corporates in the French economy. So there is a big rebound in the rental market in France with an increase of 13%, and CeGeREAL fully benefitted from this rebound. More specifically, in a submarket where we have our assets like La Défense there is a take-up and the number of lettings has more than doubled compared to last year. Also in Boulogne Billancourt there is a TMT area which is a very successful area, where we have a 45,000 m² asset which was empty two years ago and is now fully let. So quite a good year thanks to this rebound of the rental market. Maybe we should also remind you that our assets are modern and very flexible, so they succeed in adapting to the new demand from the big corporates, and so we have been able to prove that verticality is equal to humanity and I think it’s very important today.
EBM: You mentioned that the asset value of your portfolio had grown by 3% in 2014. Is that a satisfactory performance?
Raphaël Tréguier: It’s quite satisfactory when you think that we have been able to increase the asset value, despite the financial crisis, from €855 to €871 million, and if you think that we have been depreciating this portfolio over all these last years we have been able to capitalise more than €200 million of unrealised gains. So yes, it’s quite satisfactory. How did we succeed in doing so? Maybe thanks to this “Go Green” project. Now we are the first fully green REIT in France, also because we succeeded in transforming our assets, to adapt our assets to the future demand of big corporates And if we look at the future, I think that the financial market will also help the value of the assets. You have to remember that all international investors who invest in France, mainly invest in Paris central business district. And they have the impact of a decrease in the capitalisation rate which are applied on the rents to make the value of the asset, and I expect this phenomenon to extend to the close periphery of Paris where we have precisely our assets. So I’m pretty sure CeGeREAL should benefit from this phenomenon within the next twelve months.
EBM: Not only are you the first fully green real estate investment trust, but you also launched the initiative “Upgreen your business”. Can you tell us more about that?
Raphaël Tréguier: Well, “Upgreen your business” is a very interesting initiative as this is the follow-up of our “Go Green” project. Through the “Go Green” project, we have certified all our portfolio, which turned a company to be the first 100% green REIT in France. “Upgreen your business” is a kind of invitation to all our parties working with us - meaning our customers, our suppliers, our investors - to benefit from this initiative and to create value altogether in a green way.
EBM: Can you tell us about your dividend? How are you going to share these successes with your shareholders?
Raphaël Tréguier: Well, with the increased visibility both in our sector and for the company, I think it’s good to share our success, so we decided to propose to the next shareholder meeting to increase our dividend to 1.65 euros per share. So this represents 6% of the current stock price, so it’s a good yield and we are very happy again to share this success with our shareholders.
EBM: Raphaël Tréguier, CEO of CeGeREAL, thank you very much.
Raphaël Tréguier: Thank you
