First semester of 2023 backed by solid operational performance

The Assets under Management continue to increase and exceed €3.0 bn as at June 30, 2023, +2% vs Dec 31, 2022

• €189m for the Group's directly owned asset (-2% vs. Dec 31, 2022),
• €2,872m on behalf of third parties (+2% vs. Dec 31, 2022).

A positive evolution of several indicators for the owned portfolio

• Net rental income up by 34%, reaching €4.2m in the 1^st semester of 2023,
• Financial occupancy rate of directly owned asset achieved 99.1%[1], remaining stable compared to the end of 2022,
• WALB increased to 5.1 years[2] as at June 30, 2023, vs. 4.2 years as at December 31, 2022,
• EPRA Net Asset value (Net Reinstatement Value/NRV) reached €121.4 per share, down by 5% vs. €128.0 per share as at Dec 31, 2022,
• Loan to Value ratio (LTV) remained stable at 27%[3].

Considerable achievements for the management activity on behalf of third parties regardless of difficult market environment

• Revenues on commissions up by 15% except the one-off impact, thanks to the development of the funds under management,
• Continuation of investments for the funds under management with €31m of acquisitions,
• Gross subscriptions amounted to €66m in the 1^st semester of 2023, down by 39% compared to the same period in 2022, in a context where all the players in the sector have been impacted by the slowdown in fundraising,
• An occupancy rate of almost 100% for The Medelan, illustrating the success of a major restructuring operation.

New awards, milestones and initiatives

• Further steps towards the deployment of ESG strategy “Create More”: decarbonization roadmap completed, aiming for carbon neutrality by the end of 2023 and Net Zero by the end of 2050 for the REIT; climatic risk evaluation and CRREM[4] analysis performed for more than 30 assets; decarbonization study launched for PAREF Gestion; SRI label obtained for Interpierre Europe Centrale, etc.,
• Numerous awards won by PAREF team in the 1^st semester of 2023: Trophée d'Or in the category of Best retail SCPI awarded to Novapierre Allemagne 2 by the trophies list of best real estate investments from the magazine “Le Revenu”, Editorial prize – SCPI category attributed to PAREF Gestion by the magazine “Investissement Conseils”, 2^nd prize of retail SCPI awarded to Novapierre Allemagne by the magazine “Mieux Vivre Votre Argent”s,
• Pursuit of Group's digitalization to put in place multiple initiatives and innovation with technology partners, namely a new platform for the relations between tenants and landlords (with Bazimo).

The Management Board of PAREF, during the meeting held on July 27, 2023, approved the closing of the consolidated accounts as of June 30, 2023.

The Management Board also co-opted new qualified administrators: Fumihiko Niwa, Guanghui Qi and Pengpeng Sia. As recognized professionals in the finance and real estate sector on an international level, they joined the Management Board together with Antoine Castro, Michaela Robert, Dietrich Heidtmann, Mingtao Liu, Valérie Guillen and the company Anjou Saint Honoré represented by Mark Goh. The three new administrators replaced Lingyu Cai, Yufei Jin and Liang Shan following their departures.

Their appointments will be approved during the next shareholders' general meeting of PAREF.

“Against a backdrop of rising interest rates and decreasing transaction volumes, PAREF teams have continued to deliver a solid operational performance, thanks to the diversification of our business model which continues to bear fruit. Our real estate activity derives profit from increasing rental income, high occupancy rate and longer leases. We keep on improving the rental situation of our assets, implementing our ESG strategy “Create More” and pursuing the digitalization of our processes and services for the benefit of customer experience. I also would like to welcome the new members of our Management Board, which is thus strengthened in terms of expertise and quality.”

Antoine Castro – Chairman & CEO of PAREF Group

1 – Operating activities

1.1 Real Estate activity for owned asset

As at June 30, 2023, PAREF holds:

• 7 assets directly, mainly office assets in Greater Paris area,
• financial participations in SCPI and OPPCI.

Portfolio directly held by PAREF remains performing

Thanks to the signatures realized during 2022, the financial occupation rate (TOF) reached 99,1% [5]as at June 30, 2023, maintaining the same level compared to December 31, 2022.

The weighted average maturity of leases (WALB) stood at 5.1 years[6] as at June 30, 2023, vs. 4.2 years at year end 2022, as result of the new lease signed on The Go asset in Levallois-Perret, with effective date in February 2023.

The expiry schedule of rents on directly hold assets is as follows:

Net rental income up by +34%

The net rental revenue of assets owned by PAREF achieved €4.2m during the 1^st semester of 2023, increasing by 34% vs. €3.2m during the same period of 2022. This increase is mainly explained by:

• the rental income generated by The Go asset following the delivery of restructuring project at the end of 2022, and
• the positive rent indexation taken into effect in H1 2023.

On a like-for-like basis, the indexation has increased the gross rental income by 2.7% compared to the 1^st semester of 2022.

The average gross initial yield on owned assets reached 6.9% vs. 6.5% at the end of 2022[7].

Asset value down by 2% on a like-for-like basis, due to the rise of interest rates, partially compensated by the investments in redevelopment works

PAREF's owned asset value stood at €189m on June 30, 2023, composed by €175m of real estate assets and €13m of financial participations in the funds managed by the Group.

The evolution of portfolio is mainly explained by:

• the costs of improvement works realized in the 1^st semester 2023 for €3.2m, notably in the restructuring project of Leon Frot,
• a negative variation in fair value of assets in the portfolio for about €8.4m (-4.7%),
• the linearization of current asset/liabilities linked to investment properties for about €0.9m.

1.2 Management activity on behalf of third parties

PAREF Gestion: fundraising decreased under a difficult market but investment pipeline remained dynamic

The gross subscriptions of SCPI amounted to €66m for the 1^st semester of 2023, down by 39% compared to the same period of 2022. The 1^st quarter of 2022 has recorded an exceptional subscription for SCPI Novapierre Allemagne 2, due to the market anticipation of subscription price increase. Apart from this one-off impact, the gross subscription fell by 19% between 2023 H1 and 2022 H1, lower than the average level of SCPI market in France during the 1^st semester 2023 (according to the figures of ASPIM).

The ratio of gross-to-net subscription reached 78% for the 1^st semester of 2023, vs. 89% in 2022.

Breakdown of the gross subscription of SCPI in H1 2023:

The Group has made acquisitions of more than €31m in France and in Poland for three SCPI under management, in particular:

• €21m for Interpierre France of a mixed-use property asset (offices and business units) with WALB of 6.8 years,
• €8m for Interpierre Europe Centrale of a mixed-use property asset (offices and business units) in Warsaw with WALB of 8 years, and
• €2,4m for Novapierre Résidentiel as part of sales before completion program (VEFA) in Gennevilliers and Paris Clignancourt.

The Group has also continued to actively manage the portfolio under management by concluding disposals for approximately €6m during H1 2023, of which:

• €3m for Novapierre 1,
• €2m for of the last assets in Cifocoma and Cifocoma 2, and
• €1m for Novapierre Résidentiel.

The assets managed by PAREF Gestion on behalf of third parties reached more than €2,1 Bn, increasing by 1% vs. December 31, 2022.

PAREF Investment Management: a European presence backed by its expertise in asset restructuring

PAREF Investment Management operates in France, Italy, Germany and Switzerland. Its mission is to provide institutional investors with the skills and services already provided within the Group, notably in investment, asset management, property management, project management, legal and financial services.

Since 2021, PAREF Investment Management has been managing an office redevelopment project on The Trade asset in Frankfurt and another office asset BC 140 in Budapest, both on behalf of institutional investors.

The restructuring project of The Medelan asset, located in Milan's historical city center, managed by the Italian subsidiary, has recognized a significant progress in leasing activities during the 1^st semester of 2023: 100% of office space and 95% of retail spaces are henceforth let or under binding offer.

Commission revenues

Revenues on management commissions reached €7.7m, compared to €8.0m in the 1^st semester of 2022. Except a one-off impact, a commission of €1.3m following the delivery of The Medelan project in 2022, the revenues on management commissions increased by 15%, which is mainly explained by the new investments realized since 2022 for the SCPI funds, principally in Novapierre Allemange 2, Interpierre France and Interpierre Europe Centrale.

Revenues on gross subscription commissions reached €6.6m in 2022, down by 39% compared to the 1^st semester of 2022, related to the slow-down of subscriptions after a successful year in 2022.

1.3 Assets under M anagement at Group level

The value of assets under management exceeds €3.0 bn as at June 30, 2023, up by 2% compared to Dec 31, 2022.

2 – Consolidated P&L H1 2023

Current operating result reached €2.4m, decreasing by 23% compared to the same period of 2022. This is mainly explained by:

• net rental income of €4.2m, up by 34%, thanks to new effective lease on The Go asset and rent indexation,

• revenues on commissions of €14.3m (-24% compared to the 1^st semester of 2022). The evolution is essentially related to the decrease of gross subscription in 2023 and a one-off commission following the delivery of The Medelan in 2022. Those are partially compensated by the increase in revenues on management commissions thanks to the new investments for the funds under management since 2022,

• remunerations of intermediates reaching €5.9m, down by 40% compared to €9.8m in the 1^st semester of 2022. It is composed of commissions paid to distributors of €4.1m (-45%), directly correlated to the decrease of subscription in H1 2023, and of commissions paid to partners of €1.8m, down by 21%, mainly explained by delay of certain investments,

• general expenses of €9.5m, +11% compared to the 1^st semester of 2022, as result of the investments to support business development.

Besides the elements above, the following points have also contributed to the evolution of net result:

• variation of fair value on investment properties stood at -€8.4m as at June 30, 2023, essentially owing to the rise in market capitalization rates which generated a negative impact on the valuation on investment properties,

• financial expenses of €0.7m, compared to €0.5m in H1 2022. The increase is explained by the end of capitalization of financial costs during restructuring phase related to The Go asset, delivered at year end 2022,

• other expenses and incomes on financial assets of -€0.04m vs. €1.8m in the 1^st semester of 2022, which was an exceptional income in 2022 linked to the distribution of dividend following the disposal of Le Gaïa asset, 50% owned via the company Wep Watford,

• results of companies consolidated under the equity method of €1.1m compared to -€0.9m in the 1^st half of 2022. This strong increase is related to the positive valuation movements of the assets in OPPCI Vivapierre.

3 – Financial resources

Gross drawn financial debt of PAREF amounts to €67m as at June 30, 2023, compared to €60m as at December 31, 2022.

Average drawn cost of debt is 1.87% as at June 30 2023, vs. 1.60% as at December 31, 2022.

The evolution of financing cost starting since 2019 is as follows:

The average debt maturity is 0.6 year as at June 30, 2023 (vs 1.1 years end of 2022).

PAREF is in advanced discussion on the refinancing of its debt, integrating ESG indicators. Even if the refinancing amount is not equivalent to the commitment of the actual credit line, namely €100m, the financial covenants and the maturity should be similar to those of the actual debt. The bank partners have confirmed their willingness to participate in PAREF refinancing to accompany the development of the Group. The management team is confident about the conclusion of refinancing during the second half of 2023.

The drawn debt is fully hedged till its maturity by the financial instruments.

Financial covenants of the Group are respected:

4 - EPRA Net Asset Value

EPRA Net Reinstatement Value (NRV) came to €121.4 per share as of June 30, 2023, down by 5% compared to €128.0 per share as of Dec 31, 2022.

This evolution is mainly driven by the variation of fair value on investment proprieties on like-for-like basis of -€5.5 per share and dividend distribution in 2023 of -€3.0 per share, partially compensated by net recurring results of €1.2 per share.

Regards to the recommendations of EPRA (« Best Practices Recommendations »), the indicators NRV is defined by the IFRS-consolidated value of equity, the mark-to-market value of debt and financial instruments.

5 - Post-closing events

None

6 – Financial agenda

October 26, 2023: Financial information as of September 30, 2023

About PAREF Group

PAREF is a leading European player in real estate management, with over 30 years of experience and the aim of being one of the market leaders in real estate management based on its proven expertise.

Today, the Group operates in France, Germany, Italy, and Switzerland and provides services across the entire value chain of real estate investment: investment, fund management, renovation and development project management, asset management, and property management. This 360° approach enables it to offer integrated and tailor-made services to institutional and retail investors.

The Group is committed to creating more value and sustainable growth and has put CSR concerns at the heart of its strategy.

As at June 30, 2023, PAREF Group manages over €3bn assets under management.

PAREF is a company listed on Euronext Paris, Compartment C, under ISIN FR0010263202 – Ticker PAR.

More information on www.paref.com

Press contacts

APPENDIX

CONSOLIDATED BALANCE SHEET

CASHFLOW STATEMENT

EPRA Earnings per share as of June 30, 2023

EPRA Net Tangible Assets (NTA) as of June 30, 2023

EPRA Net Disposal Value (NDV) as of June 30, 2023

Other EPRA indicators

• EPRA Vacancy rate

• EPRA Net Initial Yield (NIY) and ‘topped-up' NIY

• Capital expenditure

• EPRA cost ratios

The ratio below is computed based on PAREF owned assets[30] perimeter (including companies consolidated under the equity method).

[1] Excluding the Léon Frot asset under restructuring

[2] WALB: weight average lease break. Excluding the Léon Frot asset under restructuring

[3] Loan-to-value (LTV) : consolidated withdrawn net debt divided by the consolidated asset value excluding transfer taxes and including the valuation of PAREF Gestion and financial participations in the funds managed by the Group

[4] CRREM: carbon risk real estate monitor

[5] Excluding the Léon Frot asset under restructuring

[6] Excluding the Léon Frot asset under restructuring

[7] Excluding the Léon Frot asset under restructuring

[8] Excluding shares in SCPI/OPPCI.

[9] Open-ended funds

[10] Close-ended funds in liquidation process 

[11] Participations in SCPI/OPPCI

[12] Foncière Sélection Régions

[13] Including the asset The Medelan in Italy, the asset The Trade in Germany and office asset in Hungary

[14] Participation in SCPI/ OPPCI

[15] Including participations in the companies consolidated in equity method OPPCI Vivapierre at 27.24% and 50% of Wep Watford (the company holding the Le Gaïa asset in Nanterre, La Défense was sold in Q1 2022)

[16] LTV (Loan to Value) : consolidated withdrawn net debt divided by the consolidated asset value excluding transfer taxes and including the valuation of PAREF Gestion and financial participations in the funds managed by the Group

[17] ICR (Interest Coverage Ratio): EBITDA divided by consolidated financial expenses excluding penalties on debt early repayment.

[18] DSF : secured financial debt divided by the consolidated asset value (including the value of PAREF Gestion's share).

[19] Including the value of PAREF Gestion, realized by a qualified external expert as at Dec 31^st 2022

[20] The valuation of PAREF Gestion was made by a qualified external expert as at Dec 31, 2022

[21] corrected figures vs. Half-year Financial Report as at June 30, 2022(-95K€), which didn't include the adjustment of non-recurring result related to the disposal of Gaia asset, hold by the company Wep Watford

[22] The valuation of PAREF Gestion was performed by a qualified external expert Dec 31, 2022

[23] The valuation of PAREF Gestion was performed by a qualified external expert Dec 31, 2022

[24] Excluding the participation in OPPCI Vivapierre and the Léon-Frot asset under restructuring which has been put into restructuring since 2022. Until Dec 30, 2022, the participation of 50% in asset Le Gaïa was included until Dec 31, 2022, which was sold in the 1^st quarter in 2022

[25] The EPRA Net Initial Yield rate is defined as the annualized rental income, net of property operation expenses, after deducting rent adjustments, divided by the value of the portfolio, including duties

[26] The EPRA ‘topped-up' Net Initial Yield rate is defined as the annualized rental income, net of property operating expenses, excluding lease incentives, divided by the value of the portfolio, including taxes.

[27] Including the investment related to restructuring project of Léon Frot asset. The restructuring project of The Go asset located in Levallois-Perret was included until Dec 30, 2022

[28] Mainly including the investment related to Croissy Beaubourg asset, Aubergenville asset and 6 floors in Franklin Tower

[29] Including eviction indemnities, rent adjustments and capitalized financial costs relating to "The Go" project as well as the eviction indemnities and financial compensation of development project for the restructuring project of Leon Frot asset in 2022

[30] Excluding the Léon Frot asset under restructuring