disposal of a property portfolio for €1.7 billion 2018
TRANSCRIPT
Full year results 2006 Presentation 15 March 2007la foncière
parisienne
2018 results presentation
February 13th, 2019
Investor Presentation - February 13th, 2019
Disposal of a property portfolio comprising 28 real estate assets to
Swiss Life AG for €1.7 billion
3
85 65 91 118 116 211 151 139
327
(12)
232 146 103
2011 2012 2013 2014 2015¹ 2016 2017 2018 Revaluation Acquisitions net of disposals
€2,090m €0m (€36m) €2,054m
End of 2018 before revaluations
Revaluations End of 2018
TERREÏS' portfolio evolution in 2018: for the first time since 2011, no
acquisitions made during the year
Portfolio value creation no longer relying on
acquisitions but mainly capturing rental
reversionary potential
appraisers' asset revaluations (64% of total)
Annual evolution of TERREÏS' portfolio value (€m)
Sources: company. 1 In 2015, TERREÏS made €54m of acquisitions and €54m of disposals in parallel.
Given the current market environment, TERREIS’ business model, based on its ability to purchase assets at attractive prices, no longer generates the same value creation
4
10
20
30
40
50
60
(Discount) on EPRA liquidation NAV
TERREÏS share price
EPRA liquidation NAV
2014 2014 2015 2016 2017 2018 2019
Po in
ts
EPRA France Index Over the last 12 months, the EPRA France index
has fallen by 9% (compared to a 3%
decline of SBF120 over the same period)
Persistence / increase of a discount of TERREÏS
share price to EPRA liquidation NAV
Real but limited share price upside anticipated
by financial analysts
• Analysts’ target prices range from €35.5 to €49.0, i.e. implying a (€(4.8)) to €8.7 upside vs. 8-Feb-2019 closing price (€40.3)
Sources: company, Euronext, Bloomberg. Market data as of 11-Feb-2019. The EPRA France index aggregates the stock market performance of the main listed French property companies. Notes: 1 Last update on 29-Jan-2019. 2 Last update on 24-Jan-2019. 3 Last update on 24-Jan-2019. 4 Last update on 07-Feb-2019.
9% decrease of
months
Mean 44.2
• Discount to EPRA Liquidation NAV at 08/02/2019: (29)% • 1-year average discount : (22)%
In a more difficult market environment, TERREÏS share price continues to trade at a discount to its NAV
5
Investor Presentation - February 13th, 2019
In this context, the prospects of a third party offering an attractive valuation for TERREÏS as a whole seem limited
• Who can buy a property company at or above the NAV? • Another SIIC ? Impossible given current trading discount : a SIIC trading at a 30% discount to
NAV cannot pay NAV to acquire another SIIC • Property investment funds (OPCI) ? Requires a tax ruling (unlikely due to divergence of tax
status) • Who could buy a controlling stake at NAV ?
• Requires a mandatory public tender offer • Loss of SIIC status with consequences (exit tax, assets accounted at historical book value), and
discount to NAV
• Wide divergence between public and private markets • Contrast between average public markets (SIIC trading at a 30% discount to NAV) vs. very high
asset valuation in the private market, in line with NAV • Very low cap rates • Strong demand • Despite high valuation levels, private market continues to attract demand
6
Investor Presentation - February 13th, 2019
• Disposal of a property portfolio comprising 28 assets for a price of €1.7 billion (excluding transfer duties) to Swiss Life AG
1
2
Sources: company, appraisal reports, Catella et CBRE as of 31-Dec-2018. Note: 1 This indicative amount will be finalized according to the conclusions of the report of the independent expert and to legal distribution obligations under the SIIC tax regime. 2 This indicative amount will be finalized according to the conclusions of the report of the independent expert. 3This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert
Disposal to Swiss Life AG
Dividends
buyback tender offer (OPRA)
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime in relation to the disposal of the portfolio of 28 assets to Swiss Life AG
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime between January and the month of the closing of the transaction with Swiss Life AG, expected in May 2019
— The payment of both amounts would be concomitant with the payment of the balance of the dividend relating to the 2018 financial year, representing in total approximately €25 per share1
• Launch of a public share buyback tender offer (OPRA) by TERREÏS for a price of approximately €35 per share2 providing liquidity to all minority shareholders of TERREÏS
Taking into account the payment of the dividends referred to above and the price to be offered in the context of the public tender offer filed by TERREÏS, TERREÏS minority shareholders would
receive approximately €60 per share3
Overview of the proposed transaction
7
Disposal to Swiss Life AG 1
• Signing of an agreement with Swiss Life AG for the sale of a portfolio of 28 assets valued at € 1.7 billion (excluding transfer duties) - 90% of Prime office assets in the Central
Business District of Paris - Represents about 72% of the total assets
of TERREÏS as of 31-Dec-20181 • The transaction externalizes a 7% premium
to the appraisal value of the portfolio as of 31-Dec-2018 (excluding transfer duties)
• The closing of the transaction is subject to (i) the satisfaction of the condition related to the potential exercise of the urban pre- emption rights and (ii) relevant antitrust approval
• Disposal will be submitted to TERREÏS shareholders' consultation at the Annual General Meeting in May 2019
The transaction is perfectly in line with TERREÏS' strategy of value creation through an active management of its portfolio
Sources: company, Catella and CBRE appraisal reports at 31-Dec-2018 Note: 1 Based on the Catella and CBRE appraisal reports.
8
Investor Presentation - February 13th, 2019
• Launch of a public share buyback tender offer (OPRA) by TERREÏS for a price of c.€35 per share2, providing liquidity to all minority shareholders of TERREÏS
• Ovalto, which owns 54% of the share capital of TERREÏS, has indicated its intention not to tender its shares, in order to reserve liquidity to all minority shareholders
• This public offer will be subject to a clearance decision (décision de conformité) by the Autorité des marchés financiers
• The price of the public tender offer will be determined in reference to the EPRA liquidation NAV (excluding transfer duties) of TERREÏS adjusted for the impact of the disposal to Swiss Life AG and the payment of the dividends referred to above
• Depending on the outcome of the share buyback tender offer, Ovalto will file a public buyout offer followed by a squeeze-out at the same price as that of the public share buyback tender offer
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime in relation to the disposal of the portfolio of 28 assets to Swiss Life AG
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime between January and the month of the closing of the transaction with Swiss Life AG expected in May 2019
• The payment of both dividends would be concomitant with the payment of the balance of the dividend relating to the 2018 financial year, amounting in total to approximately €251 per share
2 Dividends and Public Offer
Dividends
Public share buyback
tender offer (OPRA)
Source: company. Note: 1 This indicative amount will be finalized according to the conclusions of the report of the independent expert and to legal distribution obligations under the SIIC tax regime. 2 This indicative amount will be finalized according to the conclusions of the report of the independent expert. 3This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert
Following the contemplated transaction TERREÏS minority shareholders would be entitled to receive approximately 60 euros per share3
9
Breakdown of the potential €601 total consideration offered to minority shareholders
Source: company. Note: 1 This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert. 2 Subject to the approval of the General Meeting of Shareholders to be held in May 2019. 3 This indicative amount will be finalized according to the conclusions of the report of the independent expert and to legal distribution obligations under the SIIC tax regime. 4 This indicative amount will be finalized according to the conclusions of the report of the independent expert.
in euros per share
OPRA: c.€35 4 per share
Total: c.€60 per share
€0.76
Balance of dividend relating to the 2018 financial year²
Dividend relating to the disposal to Swiss Life AG
Dividend corresponding to the activity of TERREÏS between January and the month of the closing of the transaction with
Swiss Life AG
10
Investor Presentation - February 13th, 2019
• The shareholders of TERREÏS will be invited to vote at the Annual General Meeting: — (i) on the transaction with Swiss Life AG in accordance with the position-recommendation
2015-05 of the Autorité des marchés financiers; and — (ii) on the resolutions intended to allow the implementation of the public share buyback tender
offer
Source: company.
• The Annual General Meeting will be held in May 2019 • The actual completion of the disposal to Swiss Life AG is scheduled in May 2019 • The payment of the dividend and the settlement of the public tender offer are expected in early July
TERREIS shareholders
Indicative timetable
• The Board of Directors of TERREÏS has appointed Ledouble as independent expert to assess the fairness of the aforementioned transactions for the shareholders of TERREÏS, and in the context of a potential mandatory squeeze-out
Independent expert
• Transaction approved unanimously by TERREÏS’ Board of Directors • Subject to the conclusions of the independent expert, all members of TERREÏS’ Board of Directors,
with the exception of Ovalto, have already announced their intention to tender their TERREÏS shares to the public offer
Governance
11
An attractive offer for the minority shareholders of TERREÏS
• Liquidity option offered to minority shareholders
• Total consideration of c.€60 per share¹ for TERREÏS’ minority shareholders
TERREÏS share price since IPO
Premium offered to minority shareholders
— +5% over the EPRA liquidation
NAV (excluding transfer duties) at Dec-2018 (€57.02)
— +49% on the closing price of February 8th, 2019 (€40.3)
— +56% on the volume-weighted average price during the month prior to February 8th, 2019 (€ 38.4)
0
10
20
30
40
50
60
€60 €
IPO Price: 8.88 €
Sources: company, Euronext. Note: 1 This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert ; 2 Based on the Catella and CBRE appraisal reports.
12
Investor Presentation - February 13th, 2019
• Participating in the public share buyback tender offer will protect TERREÏS’ minority shareholders from the consequences of the loss of the SIIC status, should Ovalto end up with more than 60% of TERREÏS’ share capital following the offer:
– Additional tax burden for TERREÏS
– French Real Estate Wealth Tax (Impôt sur la Fortune Immobilière) applicable to individual shareholders crossing the relevant threshold
– Limited stock liquidity expected in the wake of the decrease in free float
• Riskier profile of the portfolio retained by TERREÏS
– Following the transaction, TERREÏS will retain a portfolio of assets with an appraised value of approximately €600 million as of December 31, 2018, including €150 million of non-strategic assets.
The public offer will provide liquidity to minority shareholders
13
Simplified indicative timetable
TERREÏS Annual General Meeting May
Closing of the transaction with Swiss Life AG: effective disposal of 28 assets May
Filing of the project of public offer with the Autorité des Marchés Financiers June
Public offer June / July
14
2018 Annual Results
2018 key figures
• EPRA Liquidation NAV
• Appraised portfolio value
• LTV Ratio
€56.99/share (+11.5 %) €63.3 m (+5 %) €2.19 bn (+5 %) 98 % (stable) 32 % (-4 pts)
16
Table of Content
17
2018: a new year of strong portfolio growth
In € million
Portfolio: + 4.8 %
2,054 139 2,193
End of 2017 Disposals (value 2017) End of 2018 before revaluation
Revaluations End of 2018
Investor Presentation - February 13th, 2019
• Constant search of quality assets in the Paris Prime market under strict investment criteria (multi-tenant, occupancy rate…)
• Acquisitions realised under favourable conditions
• Value creation materialising from the acquisition date
€976m value creation over the 2011-2018 period, of which €139m in 2018 alone
Value creation as measured by appraiser revaluations
Euro millions
85 65
19
Sq.m. Value excl.
Offices in Paris 135,718 2,028 74 3.60 %1 3,57%1
o/w Paris CBD 109,571 1,794 63 3.52 %1 3,55%1
Value €/sq.m.
Yield evolution in 2018
Sources: appraisal reports, CBRE and CATELLA Valuation as of 31-Dec-2018.
1 Excluding the impact of CNC assets which were vacated in July 2018.
20
• 2018 Disposals: € 42.6 m
• As of 31-Dec-2018, still € 132 m worth of assets to be disposed of (6% of portfolio)
• € 32 m worth of offices in the Paris region, € 9 m worth of offices in the rest of France and € 91 m worth of residential assets
Paris Residential
Disposals
Continuation of sales of non-strategic assets for an amount of € 42.6 million
21
36
Portfolio growth drivers 2011 - 2018
0.95
22
92%
A constant strategy of concentration of the asset portfolio…
Basis 100 % total assets
Basis 100 % total assets
Basis 100% Parisian Offices
88%
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23
Table of Content
24
Total rental revenues
Strategic assets (Offices in Paris CBD)
Rental revenues: + € 2.8 million from strategic assets (+ € 2.4 miilion in total)
+ € 2.4 m + € 2.8 m
2.8 64.8 67.2 (0.3)*
1.6 60.5 63.3 1.2
2018 2017 2017 acquisitions
net of 2018 disposals
Improvement of financial occupancy
EPRA vacancy rate
Relettings • Quai de Valmy
(CONVERTEO – 1,600 sqm for a € 912k rent or € 568 / sqm. / +76 % vs previous rent) • Rue Damrémont
(NUXEO – 1,100 sqm for a € 600k rent / + 48 % vs previous rent)
Based on portfolio in operation
2.6 %
6.8 %
0.7 %
4.4 %
2.7 %
0.7 %
2016 2017 2018 2016 2017 2018 Total portfolio Strategic assets
26
Table of Content
27
EPRA Earnings
(In € million) 2018 2017 Change % Rental income 67.2 64.8 +3.7%
Rental expenses incurred and others 0.6 (0.8)
SG&A (5.8) (5.8)
Financial result (26.0) (28.0)
28
Net result
(In € million) 2018 2017 Change % EPRA Earnings 35.8 28.5 +25.6%
Amortisation on investment properties (31.0) (29.4)
Depreciation on investment properties 1.3 1.7
Profit on disposals 30.2 34.0
Fair value of financial instruments 0.4 (0.6)
Termination costs of swaps - (2.3)
Net result 36.7 31.8 +15.4%
29
Investor Presentation - February 13th, 2019
End of 2016 End of 2017 End of 2018 End of 2018 adjusted for swaps
and mortgage break fees
+ 11.5 %
share EPRA Liquidation NAV at end 2018
56.99
Adjustments
55.38
56.99
Revalued portfolio Net debt LTV ratio
End of 2017
Closing remarks
• Another year of value creation despite a more challenging market environment
• Continued signs that the business model of TERREÏS has reached the end of a cycle
• Exceptional opportunity to offer to TERREÏS shareholders a very attractive valuation for their shares
32
Appendix
Consolidated P&L (1/2)
In % of rental income
Rental income 67.2 100.0% 64.8 100.0% +3.7%
Other revenues 3.3 2.5 Reinvoiced charges (2.2) (2.5) Management and rental fees (0.5) (0.8) Net revenue income 67.8 100.9% 63.9 98.6% +6.1%
Operating charges (6.5) (6.2) -
Depreciation (30.0) (30.0)
34
Consolidated P&L (2/2)
(In € million) 2018 2017 Var. % Current operating income 31.3 27.8 +12.6%
Margin on assets disposals 30.2 34.0 Others 1.7 1.7 Operating income 63.2 63.5 -
Financial income/expense (25.6) (30.8) Taxes (0.9) (0.8)
Net income 36.7 31.8 +15.4%
Group share 35.7 31.1 Minority interests 1.0 0.7 Net income per share 1.40€ 1.22€ +14.8%
35
Consolidated balance sheet
(In € million) 2018 2017 ASSETS Buildings 1,026 1,055 Other non-current assets 5 6 Current assets 38 33 Cash 9 5 Total 1,078 1,099
LIABILITIES Shareholders equity 268 251 Non-current liabilities 697 740
o/w financial liabilities 668 709 Current liabilities 113 108
o/w financial liabilities 45 47 Total 1,078 1,099
36
Disclaimer
The present document contains projections and descriptions of TERREÏS’ future strategy, objectives and prospects.
These projections and descriptions may be affected by known or unknown risks, uncertainty and other random factors that could result in TERREÏS’ future results, performance and achievements being significantly different from what is envisaged or suggested in the present document. These risks are described in the « Risks Factors » part of the Document de Référence registered with AMF on 6 April 2018 with the number D18-0301.
TERREÏS makes no commitment and extends no guarantee that it will fulfil or meet its future strategy, objectives and prospects.
Unless the law states otherwise, TERREÏS makes no commitment to update or revise the projections and descriptions contained in the present document.
The present document does not constitute in any way a solicitation to sell, buy or subscribe to TERREÏS shares.
Slide Number 1
Slide Number 2
Given the current market environment, TERREIS’ business model, based on its ability to purchase assets at attractive prices, no longer generates the same value creation
In a more difficult market environment,TERREÏS share price continues to trade at a discount to its NAV
Slide Number 5
Slide Number 8
Slide Number 9
An attractive offer for the minority shareholders of TERREÏS
The public offer will provide liquidity to minority shareholders
Simplified indicative timetable
Slide Number 14
2018 key figures
Table of Content
Yield evolution in 2018
Continuation of sales of non-strategic assets for an amount of € 42.6 million
Portfolio growth drivers 2011 - 2018
Continuous focus on offices within Paris CBD
Table of Content
Rental revenues: + € 2.8 million from strategic assets (+ € 2.4 miilion in total)
EPRA vacancy rate
Table of Content
Slide Number 30
2018 results presentation
February 13th, 2019
Investor Presentation - February 13th, 2019
Disposal of a property portfolio comprising 28 real estate assets to
Swiss Life AG for €1.7 billion
3
85 65 91 118 116 211 151 139
327
(12)
232 146 103
2011 2012 2013 2014 2015¹ 2016 2017 2018 Revaluation Acquisitions net of disposals
€2,090m €0m (€36m) €2,054m
End of 2018 before revaluations
Revaluations End of 2018
TERREÏS' portfolio evolution in 2018: for the first time since 2011, no
acquisitions made during the year
Portfolio value creation no longer relying on
acquisitions but mainly capturing rental
reversionary potential
appraisers' asset revaluations (64% of total)
Annual evolution of TERREÏS' portfolio value (€m)
Sources: company. 1 In 2015, TERREÏS made €54m of acquisitions and €54m of disposals in parallel.
Given the current market environment, TERREIS’ business model, based on its ability to purchase assets at attractive prices, no longer generates the same value creation
4
10
20
30
40
50
60
(Discount) on EPRA liquidation NAV
TERREÏS share price
EPRA liquidation NAV
2014 2014 2015 2016 2017 2018 2019
Po in
ts
EPRA France Index Over the last 12 months, the EPRA France index
has fallen by 9% (compared to a 3%
decline of SBF120 over the same period)
Persistence / increase of a discount of TERREÏS
share price to EPRA liquidation NAV
Real but limited share price upside anticipated
by financial analysts
• Analysts’ target prices range from €35.5 to €49.0, i.e. implying a (€(4.8)) to €8.7 upside vs. 8-Feb-2019 closing price (€40.3)
Sources: company, Euronext, Bloomberg. Market data as of 11-Feb-2019. The EPRA France index aggregates the stock market performance of the main listed French property companies. Notes: 1 Last update on 29-Jan-2019. 2 Last update on 24-Jan-2019. 3 Last update on 24-Jan-2019. 4 Last update on 07-Feb-2019.
9% decrease of
months
Mean 44.2
• Discount to EPRA Liquidation NAV at 08/02/2019: (29)% • 1-year average discount : (22)%
In a more difficult market environment, TERREÏS share price continues to trade at a discount to its NAV
5
Investor Presentation - February 13th, 2019
In this context, the prospects of a third party offering an attractive valuation for TERREÏS as a whole seem limited
• Who can buy a property company at or above the NAV? • Another SIIC ? Impossible given current trading discount : a SIIC trading at a 30% discount to
NAV cannot pay NAV to acquire another SIIC • Property investment funds (OPCI) ? Requires a tax ruling (unlikely due to divergence of tax
status) • Who could buy a controlling stake at NAV ?
• Requires a mandatory public tender offer • Loss of SIIC status with consequences (exit tax, assets accounted at historical book value), and
discount to NAV
• Wide divergence between public and private markets • Contrast between average public markets (SIIC trading at a 30% discount to NAV) vs. very high
asset valuation in the private market, in line with NAV • Very low cap rates • Strong demand • Despite high valuation levels, private market continues to attract demand
6
Investor Presentation - February 13th, 2019
• Disposal of a property portfolio comprising 28 assets for a price of €1.7 billion (excluding transfer duties) to Swiss Life AG
1
2
Sources: company, appraisal reports, Catella et CBRE as of 31-Dec-2018. Note: 1 This indicative amount will be finalized according to the conclusions of the report of the independent expert and to legal distribution obligations under the SIIC tax regime. 2 This indicative amount will be finalized according to the conclusions of the report of the independent expert. 3This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert
Disposal to Swiss Life AG
Dividends
buyback tender offer (OPRA)
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime in relation to the disposal of the portfolio of 28 assets to Swiss Life AG
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime between January and the month of the closing of the transaction with Swiss Life AG, expected in May 2019
— The payment of both amounts would be concomitant with the payment of the balance of the dividend relating to the 2018 financial year, representing in total approximately €25 per share1
• Launch of a public share buyback tender offer (OPRA) by TERREÏS for a price of approximately €35 per share2 providing liquidity to all minority shareholders of TERREÏS
Taking into account the payment of the dividends referred to above and the price to be offered in the context of the public tender offer filed by TERREÏS, TERREÏS minority shareholders would
receive approximately €60 per share3
Overview of the proposed transaction
7
Disposal to Swiss Life AG 1
• Signing of an agreement with Swiss Life AG for the sale of a portfolio of 28 assets valued at € 1.7 billion (excluding transfer duties) - 90% of Prime office assets in the Central
Business District of Paris - Represents about 72% of the total assets
of TERREÏS as of 31-Dec-20181 • The transaction externalizes a 7% premium
to the appraisal value of the portfolio as of 31-Dec-2018 (excluding transfer duties)
• The closing of the transaction is subject to (i) the satisfaction of the condition related to the potential exercise of the urban pre- emption rights and (ii) relevant antitrust approval
• Disposal will be submitted to TERREÏS shareholders' consultation at the Annual General Meeting in May 2019
The transaction is perfectly in line with TERREÏS' strategy of value creation through an active management of its portfolio
Sources: company, Catella and CBRE appraisal reports at 31-Dec-2018 Note: 1 Based on the Catella and CBRE appraisal reports.
8
Investor Presentation - February 13th, 2019
• Launch of a public share buyback tender offer (OPRA) by TERREÏS for a price of c.€35 per share2, providing liquidity to all minority shareholders of TERREÏS
• Ovalto, which owns 54% of the share capital of TERREÏS, has indicated its intention not to tender its shares, in order to reserve liquidity to all minority shareholders
• This public offer will be subject to a clearance decision (décision de conformité) by the Autorité des marchés financiers
• The price of the public tender offer will be determined in reference to the EPRA liquidation NAV (excluding transfer duties) of TERREÏS adjusted for the impact of the disposal to Swiss Life AG and the payment of the dividends referred to above
• Depending on the outcome of the share buyback tender offer, Ovalto will file a public buyout offer followed by a squeeze-out at the same price as that of the public share buyback tender offer
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime in relation to the disposal of the portfolio of 28 assets to Swiss Life AG
• Payment of a dividend corresponding to the legal distribution obligations under the SIIC tax regime between January and the month of the closing of the transaction with Swiss Life AG expected in May 2019
• The payment of both dividends would be concomitant with the payment of the balance of the dividend relating to the 2018 financial year, amounting in total to approximately €251 per share
2 Dividends and Public Offer
Dividends
Public share buyback
tender offer (OPRA)
Source: company. Note: 1 This indicative amount will be finalized according to the conclusions of the report of the independent expert and to legal distribution obligations under the SIIC tax regime. 2 This indicative amount will be finalized according to the conclusions of the report of the independent expert. 3This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert
Following the contemplated transaction TERREÏS minority shareholders would be entitled to receive approximately 60 euros per share3
9
Breakdown of the potential €601 total consideration offered to minority shareholders
Source: company. Note: 1 This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert. 2 Subject to the approval of the General Meeting of Shareholders to be held in May 2019. 3 This indicative amount will be finalized according to the conclusions of the report of the independent expert and to legal distribution obligations under the SIIC tax regime. 4 This indicative amount will be finalized according to the conclusions of the report of the independent expert.
in euros per share
OPRA: c.€35 4 per share
Total: c.€60 per share
€0.76
Balance of dividend relating to the 2018 financial year²
Dividend relating to the disposal to Swiss Life AG
Dividend corresponding to the activity of TERREÏS between January and the month of the closing of the transaction with
Swiss Life AG
10
Investor Presentation - February 13th, 2019
• The shareholders of TERREÏS will be invited to vote at the Annual General Meeting: — (i) on the transaction with Swiss Life AG in accordance with the position-recommendation
2015-05 of the Autorité des marchés financiers; and — (ii) on the resolutions intended to allow the implementation of the public share buyback tender
offer
Source: company.
• The Annual General Meeting will be held in May 2019 • The actual completion of the disposal to Swiss Life AG is scheduled in May 2019 • The payment of the dividend and the settlement of the public tender offer are expected in early July
TERREIS shareholders
Indicative timetable
• The Board of Directors of TERREÏS has appointed Ledouble as independent expert to assess the fairness of the aforementioned transactions for the shareholders of TERREÏS, and in the context of a potential mandatory squeeze-out
Independent expert
• Transaction approved unanimously by TERREÏS’ Board of Directors • Subject to the conclusions of the independent expert, all members of TERREÏS’ Board of Directors,
with the exception of Ovalto, have already announced their intention to tender their TERREÏS shares to the public offer
Governance
11
An attractive offer for the minority shareholders of TERREÏS
• Liquidity option offered to minority shareholders
• Total consideration of c.€60 per share¹ for TERREÏS’ minority shareholders
TERREÏS share price since IPO
Premium offered to minority shareholders
— +5% over the EPRA liquidation
NAV (excluding transfer duties) at Dec-2018 (€57.02)
— +49% on the closing price of February 8th, 2019 (€40.3)
— +56% on the volume-weighted average price during the month prior to February 8th, 2019 (€ 38.4)
0
10
20
30
40
50
60
€60 €
IPO Price: 8.88 €
Sources: company, Euronext. Note: 1 This indicative amount, balance of 2018 dividend attached, will be determined in accordance with the conclusions of the report prepared by the independent expert ; 2 Based on the Catella and CBRE appraisal reports.
12
Investor Presentation - February 13th, 2019
• Participating in the public share buyback tender offer will protect TERREÏS’ minority shareholders from the consequences of the loss of the SIIC status, should Ovalto end up with more than 60% of TERREÏS’ share capital following the offer:
– Additional tax burden for TERREÏS
– French Real Estate Wealth Tax (Impôt sur la Fortune Immobilière) applicable to individual shareholders crossing the relevant threshold
– Limited stock liquidity expected in the wake of the decrease in free float
• Riskier profile of the portfolio retained by TERREÏS
– Following the transaction, TERREÏS will retain a portfolio of assets with an appraised value of approximately €600 million as of December 31, 2018, including €150 million of non-strategic assets.
The public offer will provide liquidity to minority shareholders
13
Simplified indicative timetable
TERREÏS Annual General Meeting May
Closing of the transaction with Swiss Life AG: effective disposal of 28 assets May
Filing of the project of public offer with the Autorité des Marchés Financiers June
Public offer June / July
14
2018 Annual Results
2018 key figures
• EPRA Liquidation NAV
• Appraised portfolio value
• LTV Ratio
€56.99/share (+11.5 %) €63.3 m (+5 %) €2.19 bn (+5 %) 98 % (stable) 32 % (-4 pts)
16
Table of Content
17
2018: a new year of strong portfolio growth
In € million
Portfolio: + 4.8 %
2,054 139 2,193
End of 2017 Disposals (value 2017) End of 2018 before revaluation
Revaluations End of 2018
Investor Presentation - February 13th, 2019
• Constant search of quality assets in the Paris Prime market under strict investment criteria (multi-tenant, occupancy rate…)
• Acquisitions realised under favourable conditions
• Value creation materialising from the acquisition date
€976m value creation over the 2011-2018 period, of which €139m in 2018 alone
Value creation as measured by appraiser revaluations
Euro millions
85 65
19
Sq.m. Value excl.
Offices in Paris 135,718 2,028 74 3.60 %1 3,57%1
o/w Paris CBD 109,571 1,794 63 3.52 %1 3,55%1
Value €/sq.m.
Yield evolution in 2018
Sources: appraisal reports, CBRE and CATELLA Valuation as of 31-Dec-2018.
1 Excluding the impact of CNC assets which were vacated in July 2018.
20
• 2018 Disposals: € 42.6 m
• As of 31-Dec-2018, still € 132 m worth of assets to be disposed of (6% of portfolio)
• € 32 m worth of offices in the Paris region, € 9 m worth of offices in the rest of France and € 91 m worth of residential assets
Paris Residential
Disposals
Continuation of sales of non-strategic assets for an amount of € 42.6 million
21
36
Portfolio growth drivers 2011 - 2018
0.95
22
92%
A constant strategy of concentration of the asset portfolio…
Basis 100 % total assets
Basis 100 % total assets
Basis 100% Parisian Offices
88%
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23
Table of Content
24
Total rental revenues
Strategic assets (Offices in Paris CBD)
Rental revenues: + € 2.8 million from strategic assets (+ € 2.4 miilion in total)
+ € 2.4 m + € 2.8 m
2.8 64.8 67.2 (0.3)*
1.6 60.5 63.3 1.2
2018 2017 2017 acquisitions
net of 2018 disposals
Improvement of financial occupancy
EPRA vacancy rate
Relettings • Quai de Valmy
(CONVERTEO – 1,600 sqm for a € 912k rent or € 568 / sqm. / +76 % vs previous rent) • Rue Damrémont
(NUXEO – 1,100 sqm for a € 600k rent / + 48 % vs previous rent)
Based on portfolio in operation
2.6 %
6.8 %
0.7 %
4.4 %
2.7 %
0.7 %
2016 2017 2018 2016 2017 2018 Total portfolio Strategic assets
26
Table of Content
27
EPRA Earnings
(In € million) 2018 2017 Change % Rental income 67.2 64.8 +3.7%
Rental expenses incurred and others 0.6 (0.8)
SG&A (5.8) (5.8)
Financial result (26.0) (28.0)
28
Net result
(In € million) 2018 2017 Change % EPRA Earnings 35.8 28.5 +25.6%
Amortisation on investment properties (31.0) (29.4)
Depreciation on investment properties 1.3 1.7
Profit on disposals 30.2 34.0
Fair value of financial instruments 0.4 (0.6)
Termination costs of swaps - (2.3)
Net result 36.7 31.8 +15.4%
29
Investor Presentation - February 13th, 2019
End of 2016 End of 2017 End of 2018 End of 2018 adjusted for swaps
and mortgage break fees
+ 11.5 %
share EPRA Liquidation NAV at end 2018
56.99
Adjustments
55.38
56.99
Revalued portfolio Net debt LTV ratio
End of 2017
Closing remarks
• Another year of value creation despite a more challenging market environment
• Continued signs that the business model of TERREÏS has reached the end of a cycle
• Exceptional opportunity to offer to TERREÏS shareholders a very attractive valuation for their shares
32
Appendix
Consolidated P&L (1/2)
In % of rental income
Rental income 67.2 100.0% 64.8 100.0% +3.7%
Other revenues 3.3 2.5 Reinvoiced charges (2.2) (2.5) Management and rental fees (0.5) (0.8) Net revenue income 67.8 100.9% 63.9 98.6% +6.1%
Operating charges (6.5) (6.2) -
Depreciation (30.0) (30.0)
34
Consolidated P&L (2/2)
(In € million) 2018 2017 Var. % Current operating income 31.3 27.8 +12.6%
Margin on assets disposals 30.2 34.0 Others 1.7 1.7 Operating income 63.2 63.5 -
Financial income/expense (25.6) (30.8) Taxes (0.9) (0.8)
Net income 36.7 31.8 +15.4%
Group share 35.7 31.1 Minority interests 1.0 0.7 Net income per share 1.40€ 1.22€ +14.8%
35
Consolidated balance sheet
(In € million) 2018 2017 ASSETS Buildings 1,026 1,055 Other non-current assets 5 6 Current assets 38 33 Cash 9 5 Total 1,078 1,099
LIABILITIES Shareholders equity 268 251 Non-current liabilities 697 740
o/w financial liabilities 668 709 Current liabilities 113 108
o/w financial liabilities 45 47 Total 1,078 1,099
36
Disclaimer
The present document contains projections and descriptions of TERREÏS’ future strategy, objectives and prospects.
These projections and descriptions may be affected by known or unknown risks, uncertainty and other random factors that could result in TERREÏS’ future results, performance and achievements being significantly different from what is envisaged or suggested in the present document. These risks are described in the « Risks Factors » part of the Document de Référence registered with AMF on 6 April 2018 with the number D18-0301.
TERREÏS makes no commitment and extends no guarantee that it will fulfil or meet its future strategy, objectives and prospects.
Unless the law states otherwise, TERREÏS makes no commitment to update or revise the projections and descriptions contained in the present document.
The present document does not constitute in any way a solicitation to sell, buy or subscribe to TERREÏS shares.
Slide Number 1
Slide Number 2
Given the current market environment, TERREIS’ business model, based on its ability to purchase assets at attractive prices, no longer generates the same value creation
In a more difficult market environment,TERREÏS share price continues to trade at a discount to its NAV
Slide Number 5
Slide Number 8
Slide Number 9
An attractive offer for the minority shareholders of TERREÏS
The public offer will provide liquidity to minority shareholders
Simplified indicative timetable
Slide Number 14
2018 key figures
Table of Content
Yield evolution in 2018
Continuation of sales of non-strategic assets for an amount of € 42.6 million
Portfolio growth drivers 2011 - 2018
Continuous focus on offices within Paris CBD
Table of Content
Rental revenues: + € 2.8 million from strategic assets (+ € 2.4 miilion in total)
EPRA vacancy rate
Table of Content
Slide Number 30