Assets in service
Leased assets or assets available for rent
The usual boilerplate prepayment by acceleration clauses provided for in financing agreements between the Group companies and banks include non-compliance with certain financial ratios, called covenants
The consequences of non-compliance with these covenants are detailed in each contract and can result in outstanding loans being declared immediately due and payable
The two main financial ratios which the group is committed to maintain under its bank financing agreements are:
- LTV ratio: commonly defined as the amount of committed financings over that of the fixed assets financed;
- ICR ratio: commonly defined as the cover of finance costs by net rentals.
Average rate = (Financial expenses of bank debt for the period + Net financial expenses for hedging of the period) / Average outstanding bank debt for the period;
Spot rate: definition comparable to the average rate over a period reduced to the last day of the period.
These are projects under construction at the balance sheet date, including properties being repositioned.
EPRA recurring net income is defined as recurring net income from current operations.
EPRA NAV and Triple Net EPRA NAV
They are calculated from consolidated shareholders’ equity.
The EPRA Triple Net Asset Value corresponds to the consolidated shareholders’ equity at 31 December 2013, plus the unrealised gains on goodwill after taxes on intangible assets corresponding to the value of SNC Tour Eiffel Asset Management.
The EPRA NAV in turn corresponds to the Group's consolidated equity at 31 December 2013:
- plus the unrealised gains on goodwill after taxes on intangible assets corresponding to the value of SNC Tour Eiffel Asset Management;
- excluding the fair value of the financial instruments;
- excluding assets and liabilities deferred tax.
Gross financial debt
Outstanding balances at end of period of bank loans (excluding accrued interest).
This indication provides information comparable from one year to the next. The scope corresponds to the existing assets over the entire duration of the two periods, which therefore excludes a number of assets acquired, sold, delivered or demolished during these two periods.
Loan To Value (LTV)
The LTV is the ratio between net financial debt and the valuation of assets (investment properties + assets for disposal + other property, plant & equipment).
Mortgages include covenants based on an LTV ratio. The method for calculating this ratio in this case is specific to the loan agreement and may possibly differ from the “group” method of calculation defined above.
Net financial debt
Gross debt minus cash in hand and equivalents.
Number of diluted shares
The number of diluted shares at the end of the period taken into account in the calculation of EPRA NAV is calculated by increasing the number of shares outstanding at the end of the period by the number of shares resulting from the conversion of securities giving access to capital, with a potentially dilutive effect. The potential dilution from these securities (options to purchase or subscribe for shares) was calculated when any such instruments were exercisable on the cut-off date.
The number of fully diluted shares included in the calculation of EPRA NAV at 31 December 2013 amounted to 6,227,986 shares. A calculation is given in note 25 to the consolidated accounts.
Recurring cash flow
Recurring cash flow represents operating cash flow after the impact of financial costs and corporate income tax. Operating cash flow refers to net rental income of the property company, after deduction of net corporate expenses. Recurring cash flow does not include non-recurring income.
|Gross rental income|
|-||Property operating expenses|
|-||Net financial interest paid|
|=||Recurring cash flow|
- Rental income recorded corresponds to gross rental income over the period, taking into account, in accordance with IFRS, the spread of any concessions granted to tenants;
- Rents LFL growth provides information comparable from one year to the next. The scope corresponds to existing assets over the entire duration of the two periods, which therefore excludes certain assets acquired, sold, delivered or demolished during these two periods.
- Annualised rental income corresponds to the gross income from existing rents for a full year, based on existing assets at the end of the period.
- Secured rental income corresponds to gross rental income applicable at the end of the period (annualised rental income) plus rental income from leases signed at the closing date and applicable thereafter.
- EPRA vacancy rate: corresponds to a period-end spot rate as the ratio between the market rent of vacant premises and the market rent of the entire operating assets (excluding developments and redevelopments);
- Financial occupancy rate of buildings in service: corresponds to a period-end spot rate on operating assets and is calculated using the following formula: secured annualised rental income / (secured annualised rental income + potential rental income)
(potential rental income corresponds to the product of the market rental value of vacant space in sq. m. (excluding strategic vacancy)).
- The rate of return is the ratio between the overall potential income (*) and the gross market value, transfer tax included (assets excluding developments and land reserves);
(*) For properties subject to vacancies, the recorded net revenue is increased by the potential rent of vacant space.
- Net Initial Yield EPRA: annualized rent at end of period, including running rental concessions, net of expenses, divided by the gross property asset value.
- Net Initial Yield EPRA topped-up: annualized rent at end of period, after reintegration of running rental concessions, net of expenses, divided by the gross property asset value.