(AOF) – In the 1st quarter of 2023, Argan, a French property company specializing in the development and rental of warehouses, recorded rental income of 45.2 million euros, up 11% compared to the same period of the year. Previous exercice. This strong growth is mainly linked to the full year effect of rents generated by developments in 2022, as well as to the rent review on January 1, 2023.
Argan plans to deliver four new developments and an extension in 2023, representing an investment volume of 135 million euros for 100,000 square meters of new space. All of these developments are already being financed through depreciable mortgages, taken out in 2022 before the rise in rates.
Regarding 2024, Argan has already secured a development volume of 175 million euros for 155,000 square meters. Half of these developments are already financed by amortizing mortgage loans, the other half will be financed by the proceeds of the sale of warehouses at the end of 2024 or the beginning of 2025 depending on the evolution of the markets.
The average cost of debt is 2% at March 31, 2023, taking into account a 3-month Euribor equal to 3%. The mortgage debt (68% of the group’s debt at the end of 2022) is amortized each year and does not require refinancing on the markets.
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A demand crisis
According to data from the Federation of Property Developers (FPI), the figures for the third quarter of 2022 continue to be alarming. Sales of new collective housing fell by 12.4% over one year, to 19,006 units. Over the first nine months of 2022, the decline reached 10.2%, to 72,670 units.
Reservations are also plummeting due to the collapse of bulk sales to social landlords and institutional investors. As interest rates rise, institutional investors renegotiate or halt operations. First-time buyers are penalized by the rise in rates and the tightening of the Pinel system puts off some private investors.
Due to the sharp rise in construction costs, the REIT estimates that one out of six authorized operations is ultimately not carried out for economic reasons.
Faced with this, prices are still rising: the sale prices of new collective housing increased by 5.9% throughout France in the third quarter of 2022. Ile-de-France is an exception, with a drop of 0, 9%.