Annual report 2008 - Altarea Cogedim

Growth in rental value on a like-for-like basis
N o . of leases
concerned
Rental
income gain
(in €m)
% growth
Asset Management * 154 2.2 +2.0%
Indexation 4.8 +4.2%
Total 2008 154 7.0 +6.2%
Reminder 2007 136 4.3 +5.4%
(*) Asset Management comprises renewals, letting of empty properties,
departures without replacement and re-letting of leases
For properties already in the portfolio at the start of 2008,
ALTAREA’s letting teams signed 154 leases representing
gross rental income of €9.2 million, generating a capital
gain of €2.2 million.
In accordance with the agreements signed between the
French Federation of Real Estate Companies (FSIF) and
retailers, an amendment to the lease was proposed to the
tenants concerned in order to index rents to the new retail
rent index (ILC) (10) .
The existing portfolio still presents potential for additional
rental income, estimated at €3.5 million gross (compared
with €4.0 million at 31 December 2007).
Lease expiry schedule
Leases are broken down according to expiry date and the next
three-year termination option in the following schedule:
In €m Group share Group share
Year
Rental income
reaching lease
expiry date
% of total Rental income
reaching
three-year
termination
option
% of total
Past years 6.2 4.3% 6.2 4.3%
2009 2.2 1.6% 12.8 9.0%
2010 6.7 4.7% 23.1 16.2%
2011 7.8 5.5% 30.3 21.3%
2012 11.2 7.8% 16.9 11.9%
2013 9.7 6.8% 22.4 15.8%
2014 21.8 15.3% 19.5 13.7%
2015 12.0 8.5% 2.0 1.4%
2016 13.0 9.1% 2.4 1.7%
2017 22.7 16.0% 4.0 2.8%
2018 21.3 15.0% 1.0 0.7%
>2018 7.7 5.4% 1.7 1.2%
Total 142.2 100.0% 142.2 100.0%
• Growth in property values on like-for-like basis
The weighted average capitalisation rate (11) increased from
5.11% to 5.76% over the year.
12/31/2008 12/31/2007
Average net
capitalisation rate
Average net
capitalisation rate
France 5.66% 5.02%
International (Italy, Spain) 6.19% 5.47%
Average 5.76% 5.11%
The fall in the value of assets resulting from the increase in
capitalisation rates was partly offset by indexation and asset
management actions.
Breakdown of movements in asset value
(in €m)
Movement in
asset value 2008
% of value
in 2007
Capitalisation rate effect/reversion -253.6 -11.8%
Indexation of rents +66.6 +3.1%
Asset Management +15.6 +0.7%
Total movements in asset value -171.3 -8.0%
• Appraisal values
The ALTAREA Group’s property portfolio valuation is based
on appraisals by Cushman & Wakefield and Savills (for
properties in Italy). They use two methods:
- A method based on the capitalisation of net rental
income: the appraiser applies a yield based on the site’s
characteristics (surface area, competition, rental potential
etc.) to rental income including guaranteed minimum
rent, variable rent and the market rent of vacant premises,
adjusted for all charges.
- A method based on discounting projected cash flow over
10 years, taking into account the resale value at the end of
the period determined by capitalising net rental income.
The second method is used to validate the results obtained
with the first method.
(10) The French retail rent index (ILC) is based on the rental reference index (IRL), the construction cost index (ICC) and the retail revenues in value index (ICAV)
(11) The capitalisation rate is the rental yield relative to the appraisal value including transfer duties.
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