(AOF) – Carmila announces the signing of a sales agreement with Etixia (property company of the Kiabi brand) relating to Bay 1 in Torcy, in Ile de France. This asset, acquired in 2014 and 100% occupied, comprises 25 shops, including several innovative restaurant concepts and medium-sized stores. The sale price, of 35 million euros including duties, is in line with the appraisal value. Completion of the transaction is expected in the second half of 2023.
This disposal comes on top of the sale of an asset to Tarnos for €8 million including duties in the second quarter of 2023, as part of Carmila’s new target, announced in February 2023, of a total amount of additional disposals of 100 million euros by the end of 2024.
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Key points
– Third largest retail property company in continental Europe managing a network of shopping centers, located around Carrefour hypermarkets in medium-sized towns;
– Real estate portfolio worth €6.2 billion, split between France for 71%, Spain for 23% then Italy and generating €357 million in rental income;
– Positioning business model as an incubator & omnichannel platform for merchants, leader of sustainable and diversified transition;
– Capital controlled at 35.51% by Carrefour, Predica holding 9.64% of the shares, Marie Cheval being Chairman and Chief Executive Officer of the board of 13 directors;
– Controlled balance sheet with €3.3 billion in equity and LTV ratio of 35.8% but leverage still high at 7.7.
Challenges
– 2026 strategic plan based on multi-channel, digital and carbon neutrality:
– 10% annual growth in recurring earnings per share in 2022 and 2023,
– “Building sustainable growth” growth initiatives: additional €30 million in net income contributed equally by the incubator and retailer services, Next Tower and Carmila Retail Development,
– LTV debt ratio of 40%,
– reinvestment of disposals in the business and distribution to shareholders
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– Innovation strategy in the service of the multi-channel offer, experiments being carried out based on data analyzed in cooperation with Carrefour;
– 2030 environmental strategy validated by the SBTi and endowed with an annual budget of €10 million:
– zero net emissions in 2030 for scopes 1 and 2, positive contribution in 2040,
– 40% reduction in energy consumption in 2030, vs 2019,
– 100% waste recovery and climate resilience of all buildings by 2025,
– carbon compensation actions with the agricultural world, – green loans governed by a Green Bond Framework;
– Postponement to 2025 at the earliest of the 5 major extension projects in France, due to regulatory constraints affecting profitability, resulting in a drop to €200m vs. €550m in investments;
– Delivery in 2023 of 33 restructuring and restoration projects, at a cost of €40 million, and continuation of the disposal plan -additional €100 million by the end of 2024, part of which will be returned to shareholders;
– Ramp-up of the profit contribution of the new business lines, Retail Development and Next Tower.
Challenges
– Monitoring of net assets per share, to be compared to the stock market price, of €25.26, and activity indicators: rent collection rate (96.6%) and occupancy rate of premises (96 % at the end of March);
– After a 5.5% rise in rents at the end of March, 2023 target of recurring earnings per share up 8% to €1.57;
– 2022 dividend of €1.17, up 17%, i.e. a payout rate of 75%, €20 million share buyback program.
Find out more about the real estate sector
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%.