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| Stock quotes : 14.99€ (2012/02/03 11:39:00) |
2010 ASSESSMENT and OUTLOOK
What’s your assessment of current trends in commercial real estate?
Raphaël TRÉGUIER
Our sector confirmed its credentials as a safe investment, founded on the indispensable role it plays in the French economy. Offices in particular have enjoyed sustained levels of rental activity in the Paris Region, which opens up opportunities to improve the existing portfolio of properties and to conduct “responsable” renegotiations of the lease between landlord and tenant. This new momentum in value creation and the accompanying resumption in rental activity are positive indicators for investors, and for their banks, as we face the challenges of the coming years, such as the refinancing of the large waves of acquisitions made during the period 2006 to 2008.
How did CeGeREAL perform in 2010?
Bardo MAGEL
After a very active first half of 2010 in terms of rental activity, the large offices sector experienced a fairly sluggish second half. It was against this atypical backdrop that Bouygues Telecom, our main tenant at Arcs de Seine for the last 10 years, confirmed that it was leaving. Naturally, CeGeREAL seized this opportunity to commence renovation work on this exceptional site, in anticipation of finding one or more new users of the 36,000 m2 that have been vacated. Thanks to the excellent quality of its tenants – 96% receive the top ratings from Dun & Bradstreet – and to its low debt ratio of 46%, the company’s fundamentals are sound.
What is the occupancy rate for your properties?
Bardo MAGEL
Our occupancy rate was 93% on 31 December and 64% at the start of January 2011 as a result of the departure of Bougues Telecom. The marketing of the Europlaza tower is continuing successfully. A new tenant, Experian, moved onto the site in November, which reduced the tower’s vacancy rate to 9%.
What is CeGeREAL’s position with regards to environmental standards?
Raphaël TRÉGUIER
In the context of its approach to CSR, the company is taking comprehensive action to improve the environmental quality of its properties. Investors who concentrate on high quality assets can no longer afford to ignore current environmental regulations; no easy task since they are constantly being tightened. The first steps towards “HQE Exploitation” certification (BREEAM equivalent for existing buildings) have already been taken at Arcs de Seine. We shall pursue the same course of action for all our buildings.
What are the strengths of CeGeREAL’s “value added” properties?
Bardo MAGEL
Quality and services. CeGeREAL’s properties offer a pleasant environment in which to live and work. Their design ensures optimal service delivery to all users. From the cafeteria and the meeting rooms, and from the gym to the offices, everything is in place to create an appealing working environment. When a company chooses a CeGeREAL property, it gives its employees the opportunity to work in a building that is easy to access, not far from Paris, in a safe district, and that provides optimal working conditions. Many companies place the individual at the centre of their strategy; this is certainly the case for CeGeREAL.
You announced that there would soon be an acquisition, is this still going ahead?
Raphaël TRÉGUIER
Of course. However, acquiring at any price is not in our shareholders’ interests. Examination of a number of properties revealed that they did not meet all CeGeREAL’s criteria. Typical failings were an absence of services, insufficient modularity of the premises or an asking price that was too high. The objective is to acquire assets that offer longterm value to our shareholders.
Are you concerned about a property bubble overinflating the price of office buildings?
Bardo MAGEL
The current economic situation is not conducive to a property bubble for office property. The French market has kept an even keel since the number of new properties coming onto the market over the next 3 years is limited. This situation should make it possible to let existing vacant office space and to sustain rent levels.
What risks are taken by a CeGeREAL shareholder?
Raphaël TRÉGUIER
Just like any other listed company, and in any cyclical sector, there are of course risks associated with investing in CeGeREAL; however, these are mitigated by the experience of its shareholders, the quality of its governance and its management team who takes a long-term view for all decisions. CeGeREAL is one of the few listed yield stocks that specialises in office property in the Paris Region, backed by a strong shareholder base capable of accompanying the company as it grows.
