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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
UNIDENTIFIED COMPANY REPRESENTATIVE: (Interpreted). Ladies and gentlemen welcome to the presentation of the annual account of Gecina. And I'm going to switch to English. -- results presentation for Gecina for 2007 results to the people in audience, and also to the people connected --
UNIDENTIFIED AUDIENCE MEMBER: We can't hear you.
UNIDENTIFIED COMPANY REPRESENTATIVE: Okay, welcome everybody into the 2007 results presentation to the people in the audience, and the people in the conference call.
For 2007 it has been an important year for Gecina, basically, because all the relevant statistics or metrics in the Company have had a significant growth in a difficult year. EBITDA has been up almost 12%, NAV of the Company has increased by more than 14% and dividend, subject to the approval of the [AGM], will increase by almost 19%.
But it has been also a year with significant operational advances. We have consolidated the growth in Logistics and our significant presence in that market.
As we will see later, we are already among the fifth largest operators or player in that market. We have entered, or already placed in the market, our stake or the subsidiary called Gecimed, with all our clinics activity and Healthcare property. As you know, we have today 38% of that quoted subsidiary.
And we have also entered into residential for students. As we will see later, very interesting market for trying to compensate the relatively reducible of residential.
This year has been important also because it has been very difficult, not only because of the market is becoming tougher, especially in the second half of the year regarding valuations, but also because of the Separation Agreement context that we have had to live with.
As you know, there has been a cancellation of the prospectus that Gecina presented to the AMF, and we will explain later the details on what we expect from that process to come. Basically, what we think is that we are on the stop of that process, but not a permanent stop, but a temporal stop. So we are hoping to restart that process as soon as possible so we can clarify our situation, our shareholdership there and, of course, our strategy.
So we wanted in this time to make a little, and very brief, summary of what has been the last three years since we entered Gecina. Because throughout -- in this year with all this noise of the Separation Agreement, we think it's good to remember what has been the evolution of the Company.
Today, Gecina, as you can see, on slide four of the presentation, is a leading player, or the leader player in the French property market. Our portfolio is valued at more than EUR13b. We have more than 400 assets and more than 30 projects under construction. We are not only a leader, or a significant player as a whole, but also in each of the segments we are present.
We are leaders in offices in the Paris market with the biggest quoted portfolio, EUR7m. We are the clear leader and benchmark on the residential activity, with a unique portfolio of roughly, or around, EUR5b. And we are significant players in -- already in the logistics market, with more than 600 square meters -- 600,000 square meters under operation, 200 of them already rented and 400 as in projects, and a total valuation of EUR500m.
We are not so big, but already present, in hotels with EUR280m of gross asset value. And we are also a clear player in Healthcare property for clinics through our subsidiary, Gecimed, with EUR600m gross asset value. And, as you know, we participate in that business with 35%, 38% stake.
How we think we have been able together to get here, it has been by clear dynamic strategy that you probably know if you have been following us in these last years. Basically three main drivers of our strategy, rotation, being present in development, or having a significant presence in development as a way to increase our profitability, and diversification.
We have been very active, as we'll see on slide six, in our investment activity. This is part of this rotation strategy I was just mentioning. We have invested in the last three years since 2004 significantly up to EUR3.3b in our portfolio.
As you can see, the increase of the gross asset value has gone from EUR8.8b up to EUR13.2b at the closing of 2007. This increase, as I was mentioning, is due basically to the revaluation of the assets, EUR2.8b, EUR3.3b in investments and the disposals that we will see the detail later that have reached almost EUR2b.
In total in these three years we have invested 38% of the initial portfolio. We have increased the portfolio by 38% through the investments, and we have sold around 20% of that initial portfolio. So, again, just to see the impact of this rotation policy, or dynamic strategy in our portfolio.
Giving a little bit of detail of what have been the investments, these EUR3.3b investments, just to mention that we have been in advance of our business plan announced at the beginning of 2006.
We have focused on the global return of the portfolio, not only on yields, but also in revaluation. And the average yield we got on those investments has been 6.3%. As you can see, 44% of the investments has been done in new segments that the Company was not present in at the end of 2004, one basically also in offices.
By kind of assets, we have invested mostly in operative assets, 66% of this EUR3.3b, in a total of 103 assets, 1.4m square meters of surface, and with an average surface, we will see later why this is important to us, on the disposals of more than 10,000 -- well, in fact, 3,000 square meters by assets.
What has been our disposals, we have sold in this period EUR1.6b assets, of which 48% have been residential assets, basically through unit-by-unit disposals. And 52% of that amount has been sold in offices. In offices we have sold EUR873m, with an average surface of 3,600 square meters. Basically, you see the difference between the size of the investment and the average size of the disposals.
In residential we have sold roughly EUR800m in a total of 2,200 apartments throughout these years and, basically, through the unit-by-unit program disposals.
Diversification is the second big component of our strategy and our way of understanding residential activity. Our property activity, we have entered into new projects that the Company was not present in 2004. These kind of project represent today 8% of the total portfolio. Still, it's not very significant, but starting from zero is always more difficult. We are present already with more than EUR500m in Logistics and, as I mentioned before, in Healthcare through our Gecimed participation.
Offices in these years have gone up from 52 -- from 50% to 54% in our weight of the portfolio. Residential weight has reduced by 10 percentage point and the difference is, of course, on these new segments and new products.
Third component of our strategy has been development timeline. We have increased from 40,000 square meters that we had at the end of 2004, up to 700,000 square meters. Most of these projects are in offices and, of course, in the Logistics as the main driver of our diversification strategy. Shopping centers with 10% of the projects is also important. As you know, it is the Beaugrenelle Centre that was already in Gecina in 2004.
We have created recently a new department for being able to capture more part of the value chain of the property activity. This new department is going to be ruled and directed by a person with significant experience in the Company which is Yves Dieulesaint, that was previously in residential direction.
All of these strategy we think that has given the Company quite a significant performance. We have increased our rental income in these years by 20%, increase our EBITDA by 18%, and you can see on the chart in the middle of the page what has been the average global return or the portfolio in these three years, 12% in 2005, 23% in 2007 (sic - see presentation) and almost 16% in 2007.
NAV evolution has reflected also these impact from the operative and also revaluation effect, and has increased in these three years by more than 60%. And also dividend per share, with the proposal of EUR5 per share subject to the approval of the AGM for this year, it will have increased by 35% in these three years.
2007, as we were saying, and now we are going back to the more financial and priority of results of the year, has been an intensive year in Gecina, apart from the shareholder changes, or influence at two levels; at the operating level and also at the Corporate level.
In this year, in 2007, we have listed Gecimed with the clinics Healthcare segment. In Gecimed we have been able to share these projects with significant shareholders, apart from the placement to the public shareholders at GE Royal Bank of Scotland have entered in these companies.
We have consolidated our presence in Logistics, becoming part of the fifth, or the fifth largest operator in Logistics. Only in three years we have been able to continue our modernization of the office portfolio with three significant acquisitions on [Cort de Fans], Crystalys -- sorry [not Cort de Fans], Defense Ouest, Crystalys and Pyramidion.
And also we have entered, as I mentioned at the beginning, on residence for students in this year with the acquisitions of six residences; four already operative and two of them in project.
In the Corporate level we have merged Gecina with SIF (Societe Imal de France), which was an affiliate of Gecina that was almost 100% owned by Gecina, but that is going to help on the simplification of the American (tele) structure of the Company.
We have also approved in the EGM the protection of taxes for our shareholders, in the sense that in case there was any tax due to the SIIC 4 due to specific shareholders, these taxes would have to be supported by only those shareholders, and not Gecina and not the rest of shareholders in Gecina.
So let me give the word to Juan-Carlos, if he is able to speak on the financial of 2007.
JUAN-CARLOS CALVO, IRO, GECINA: Good morning. I will try my throat is clear enough. Well, on the financials of the year, I would like to highlight first that it was a good year from the operating and performance of the Company with (our) increasing in EBITDA, also in NAV and also in dividend, with a very strong financial situation of the Company.
So let me go into some of the details, starting with the revenues. The rental income increased by 4.1%, to EUR591.8m. I would like to highlight that we have seen a decline in residential, which is explained by the disposals that we have been doing in the last few years, and also in 2007, most of them on a unit-by-unit basis.
And also to highlight that the Healthcare business last year in the fourth quarter was consolidated on a global basis, but since the beginning of this year it is consolidated as an associate...
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