2001 Annual Report - Unibail-Rodamco

NET ASSET VALUE
Average
Valuation capitalization Estimated
of the Office Average rate used by Passing Initial Rental Reversionary
Portfolio Valuation per m 2 (1) valuers rent (2) yield (3) Value (4) yield (5)
€m %
Excluding Messine Monceau Murat (3 M Project)
€ per m 2 % €m % €m %
Paris Central Business
District 1,265 27% 6,920 6.6% 70 6.3% 83 7.7%
Neuilly, Levallois,
Boulogne, Issy 727 16% 4,734 6.9% 46 6.3% 60 8.3%
La Défense 2,384 51% 5,444 6.8% 158 6.6% 200 8.4%
Other 266 6% 1,503 8.1% 22 8.3% 23 8.6%
Total 4,642 100% 4,855 6.8% 296 6.6% 366 8.2%
(1)
Excluding car parking – assuming an average value of € 15,000 per car park.
(2)
Rent invoiced + potential rent from vacant premises.
(3)
Passing rent divided by valuation.
(4)
Annualized market rent estimated by valuers.
(5)
ERV (Estimated Rental Value) divided by valuation.
The valuers have capitalized the rental income over the term of the
lease and discounted this value back to end of 2001. In addition,
the cost of the outstanding construction work and the financial
expenses are deducted.
On a like-for-like basis, the value of the office portfolio rose by
6.9% over the 2001 full-year and 0.4% over the second half of
2001. The change in the second half is due to a slight 10bp increase
in the average initial yield. This generated a negative impact of
1.5%, which was more than offset by the 1.9% positive impact of
the annualized rental increase. Excluding Coeur Défense, the likefor-like
increase in value amounted to 2.7% in 2001, based on: i)
a 20bp average increase in initial yields (generating a negative
impact of 3.0%); and ii) an estimated 5.7% annualized rental
increase.
On average, the sale price on Unibail’s property disposals in 2001
(including transfer duties) were 5% higher than the valuers’
appraisals.
Cœur Défense
The construction of this 182,000 m 2 office complex was completed
by Bouygues on May 21, 2001. By year-end 2001, around 164,000 m 2 ,
or 94% of the available office space, had been leased to nine bluechip
tenants:AXA IM; Cap Gemini - Ernst & Young; CCF-HSBC, Crédit
Lyonnais; ING; PeopleSoft; Microsoft; SIFF energies (EDF Group) and
Société Générale. All the leases have nine-year terms, with a firm
six or nine-year tenant commitment, leading to an average firm lease
period of 8 years.
Expertim estimated the value of Coeur Défense at € 1,303m as at
year-end 2001 (compared with € 1,280m at year-end 2000). This
is based on a net rental target of € 86m (fully let), capitalized at
6.65% (against 6.50% at year-end 2000). The cost recorded in
Unibail’s consolidated financial statements at year-end 2001 was
€ 693.8m (or € 535.2m Group share). This produced a total
potential capital gain of € 609.6m (or € 481.5m Group share).
Overall, this office complex boosted 2001 Net Asset Value by
€ 199.6m (or € 157.5m Group share), i.e. € 3.3 per fully diluted
share.
Office properties under construction at year-end 2001
Cité du Retiro - Paris 8: this project involves the full reconstruction
of a 21,000 m 2 office building complex located between rue du
Faubourg Saint Honoré and Madeleine. It has already been fully
prelet to Cartier, which plans to base its international headquarters
there from the second half of 2002. The twelve-year lease includes
a firm period of nine years.
Messine, Monceau, Murat (3M) - Paris 8: this property is the former
EDF headquarters. Acquired in October 2001, it has a total surface
area of around 80,000 m 2 and is due to undergo major renovation
works. It has been valued at € 191m at its book value at year-end
2001.
Office properties under renovation at year-end 2001:
108 rue de Richelieu - Paris 2: this was Unibail’s former head office
until October 2000. Refurbishment was completed in January 2002.
The property has been valued on the assumption of a six-month
vacancy period.
67 avenue de Wagram - Paris 17: this property is the former Time
Warner France headquarters. Following the merger with AOL, the
newly-formed entity relocated to another Unibail building at
115- 123 avenue Charles de Gaulle in Neuilly in October 2000.
Following a renovation phase ending in January 2002, the property
has been valued on the assumption of a six-month vacancy period.
Tour Europe - La Défense: in 2001, Unibail acquired full ownership
of Tour Europe and managed to prelet virtually all its vacant space,
17,250 m 2 , to the OECD. The building is due to become operational
during the second quarter of 2002, once asbestos removal and
safety standards improvements have been completed. This property
has been valued at its completion value less the cost of any
outstanding works required as at year-end 2001.
Tour Ariane - La Défense: in 2001 Unibail decided to launch a
phased renovation program for this property, which was 80%-
occupied at year-end 2001. The first phase will involve six of the
thirty-four floors and should be completed during the third quarter
of 2002. The remaining floors will be renovated as tenants relocate.
Although current rents are expected to increase by over 75% as a
result of these renovations, this property has been valued in its
current condition at end-December 2001.
137 Saint Honoré - Paris 8: Unibail has decided to renovate the
2,200 m 2 of space vacated in 2001, around half the total surface area
of this unique building. Works are due for completion in June 2002.
The property was valued as at year-end 2001, after deducting the
cost of any outstanding works required and based on the
assumption of a six-month vacancy period.
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