ALTAREA Share on:
- Excellent performance in Retail
- Commitments lowered in Residential with consequences on results
- Rolling out investments in other business lines
- Maintaining capability to seize opportunities
Retail REIT: the Group's financial backbone
- €5.5 bn assets under management (stable at constant scope)
- Tenants' revenue: +8.0%
- Net rental income +5.0% at constant scope
- Financial vacancy 2.7%
Residential: commitments lowered with consequences on results
- Appropriate commitments policy given the context
- WCR improvement of €143m, decline in operating income
- Reservations -7% in value in a market down 35%1
- Developing "new generation" offer: low-carbon, affordable and cost-effective
Business Property: lack of contribution from major projects
- Good commercial activity in the Regions
- Major progress on the Bollène XXL logistics project
New businesses: significant milestones
- Asset Management: creation of a €1 bn real estate debt fund in partnership
- Photovoltaics: setting up the organisation, 1 GWp pipeline targeted
Finance: maintaining the capability to seize opportunities
- Revenue: €1,250.1 m (-12%), 48% aligned with European taxonomy
- FFO2: €21.7 m (-83%)
- Robust financial structure: LTV 25.9%, available liquidity €2.5 bn
- Upgraded financial rating by S&P Global to BBB-, stable outlook
Publication of financial information for the 3rd quarter of 2023 on 7 November 2023 (after market)
"Altarea delivered a first-half financial performance in line with earlier announcement, marked by the lack of major projects in Business Property and a very low contribution from Residential. The Retail is back to the levels of performance not seen since a decade and is more than ever the Group's financial backbone.
The deterioration of the property market, which was already perceived by the end of year 2022, accelerated throughout the first half of the year. Rising interest rates and increasing difficulties to access the credit had a sharp impact on real estate, which magnitude varies depending on the asset class. The residential market is clearly experiencing the downturn especially in volumes and this adjustment phase is likely to last over several quarters. The business property market in the Paris region is undergoing a more fundamental crisis, while rental values in the logistics and retails remain favourably oriented.
Under such a context, Altarea is rolling out its transformation strategy through the rebalanced allocation of its capital employed:
During the first half of the year, Altarea has reduced its working capital requirements in the residential acknowledging the consequences of a strong decline in results. The new housing market is undergoing profound changes, and it is wise to reduce the Group's exposure during this adjustment phase and to prepare for the future markets, which fundamentals will be very different. Tomorrow's new housing market will be low-carbon and affordable, with transaction volumes definitely and structurally lower than in the past, against increasing proportion of refurbishments. Altarea's teams are already working on all these issues, and we have set each of our brands ambitious targets in this area. In the short term, we need to focus on reducing the units available for sale which were mostly designed in previous cycle. We also need to be very selective on our commitments, which will affect our results. The diversification of its business model and its financial strength grant Altarea the ability to afford the consequence of this more aggressive policy.
The reduction in capital employed in Residential enables us to maintain a robust financial structure while continuing to invest in other businesses. Altarea currently prioritises organic growth, particularly in its new businesses. We are determined to enter in the huge photovoltaic infrastructure market. We have also launched several initiatives in terms of managed funds, particularly in property debt. All these initiatives negatively affect the Group's short-term results, but our experience teaches us that betting on skills and know-how are rewarding long-term investments.
On the second half 2023, the Group will remain very focused on managing the change in real estate cycle and implementing its operational roadmap. When the time comes, Altarea will count on its financial strength to seize opportunities to accelerate its transformation.
Alain Taravella, Chairman and Founder of Altarea
Paris, 27 July 2023, 5.45 p.m. Following review by the Supervisory Board, the Management has approved the consolidated financial statements for the half-year ended 30 June 2023. Limited review procedures have been completed. The Statutory Auditors' reports on the financial information will be issued without reservations on 28 July 2023.
1 - FPI (Fédération des Promoteurs Immobiliers), Q1 2023 data.
2 - Funds from operations (FFO): net income excluding changes in value, estimated expenses, transaction costs and changes in deferred tax. Group share.
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Altaréa SCA published this content on 27 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2023 15:56:26 UTC.
