Annual report 2008 - Altarea Cogedim

Despite the severe slowdown in lending activity at the end of
2008 in particular, well designed development projects with
a high level of pre-marketing were able to obtain financing
under financially profitable terms for the ALTAREA Group.
1.5 Financial covenants
LTV ratio
The Group’s consolidated LTV ratio was 53.4% at
31 December 2008 compared with 50.4% at the end of
2007.
With a covenant maximum of 65%, the ALTAREA Group
believes that it has significant leeway to allow it to cope with
any further deterioration in economic conditions.
Interest cover ratio (EBITDA (25) /financing costs)
The interest cover ratio stood at 2.6x at 31 December 2008
compared with a covenant of 2.0x.
Other specific covenants
An exhaustive review of the specific covenants for each
credit line was conducted in 2008.
All covenants relating to the shopping centres business are
largely respected and should be able to hold up against any
further deterioration in values.
All covenants relating to the loan for the acquisition of
Cogedim were very largely respected at 31 December
2008 (27) .
2. Hedging and maturity
The hedging instruments held by the Group at 31 December
2008 allowed it to hedge a maximum nominal amount of
€2.2 billion, equal to 100% of consolidated gross debt.
Over the full year in 2008, net cash flow from the hedging
portfolio amounted to €20 million, thereby helping to
maintain the Group’s cost of debt.
The portfolio of hedging instruments comprises the following:
Nominal amount (m€) and amount hedged
Maturity
Swap
at
12/31/2008
Cap/Collar
at 12/31/2008
600
400
200
0
70
24 40
126
409
2009 2010 2011 2012 2013 2014 2015 2016 2017
232
Total
hedging
36
512
Average
Euribor
hedged
2009 1,860 224 2,084 4.07 %
2010 1,760 89 1,849 4.09 %
2011 1,632 87 1,719 4.14 %
2012 1,482 85 1,566 4.20 %
2013 982 29 1,011 4.27 %
2014 799 29 828 4.20 %
2015 728 29 757 4.21 %
2016 591 29 620 4.28 %
2017 310 – 310 4.19 %
As a result of the interest rate cut at the end of 2008,
the ALTAREA Group reported an accounting net loss of
€110 million on the value of its hedging portfolio (IAS
32 and 39), with no repercussions on cash and cash
equivalents.
Cost of debt
The ALTAREA Group’s average financing cost was 4.68% in
2008 compared with 4.47% in 2007. The average spread
in 2008 was below current market conditions. The “credit
spread“ component of existing debts was not stated at the
market value in the Group’s NAV.
Debt maturity
No major debt repayments are due before mid-2013. The
average debt maturity was 7.0 years at 31 December 2008
compared with 7.7 years in 2007. Most of the outstanding
debt comprises mortgage loans backed by assets held for
the long term, which explains this very long maturity.
Group debt repayment schedule
(excludind properly development)
Nominal (in €m)
630
(26) EBITDA is equal to recurring operating profit before depreciation, amortisation and provisions.
(27) EBITDA leverage of 3.1x (compared with covenant maximum of 5.75x) and ICR ratio of 3x (compared with covenant minimum of 2x).
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