Consolidated turnover of €33.8m, driven by higher rental income and management commissions

• Net rental income amounted €8.8m in 2023, an increase of 31% compared to December 31, 2022
• Revenues on management fees reached €15.5 m, stable compared to December 31, 2022
• Signature of « Sustainability-Linked Loan » (SLL) of €90m to refinance the Group
• Loan to Value ratio (LTV)[1] remains low at 28% (compared to 22% as of December 31, 2022)
• EPRA recurring net income at €2.1m, down 21% compared to December 31, 2022
• EPRA Net Asset value (Net Reinstatement Value/NRV) per share stood at €113.3 per share, down 11% compared to December 31, 2022
• Assets under Management remained stable at around €3.0 bn as of December 31, 2023

The REIT activity continue s to develop towards assets with strong potential for value creation and greater environmental quality

• €182m of owned asset (-5.1% vs. December 31, 2022)
• Financial occupancy rate[2] remains at a high level, achieving 99.1%
• The ongoing redevelopment project of Léon Frot asset obtained the WiredScore Gold label.

The management activity on behalf of third parties remains dynamic despite a complex real estate market

• Approximately €2.8 bn managed on behalf of institutional or individual third parties, almost stable compared to December 31, 2022 

• Gross subscriptions for the SCPI funds under management amounted to €95m, down 51% compared to December 31, 2022
• The performance of SCPI funds under management (distribution ratio) is robust and is improving given unchanged subscription price

The Group continues to implement its ambitious “Create More” ESG strategy

• Definition of a zero carbon trajectory for its portfolio with an operational roadmap to decarbonize the assets by 2030

• Signature of the Energy Sobriety Charter for the sobriety of public and private commercial buildings, introduced by the Ministry of Ecological Transition
• Signature of the Charter of Commitment to Gender Parity and Professional Equality in real estate sector
• SFDR[3] Article 8 classification for the funds Novapierre Allemagne, Novapierre Allemagne 2 and Interpierre Europe Centrale
• Awarded « HappyIndexAtWork » and « WelmpactIndex » by ChooseMyCompany
• ESG rating at the Advanced level by EthiFinance

Outlook and priorities for 2024

• In 2024, PAREF will leverage its business model to deploy its strategy despite macroeconomic uncertainties and to answer the growing demands of ESG transformation
• PAREF Group will continue to diversify its revenues by increasing the recurring cash flow generated from management fees while maintaining a strict cost discipline in order to achieve continuous margin improvement

The Board of Directors proposes a dividend of €1.5 per share payable in cash for the 2023 financial year, which will be submitted for approval to the Annual Shareholder's Meeting scheduled on May 23^rd, 2024.

The Board of Directors, during the meeting held on February 22^nd, 2024, approved the closing of the annual statutory and consolidated accounts as of December 31^st, 2023. The review of the results by auditors is in progress.

“Leveraging on its diversified model, our Group demonstrated resilience during 2023 and continued to roll out its strategic plan in France and internationally.

We maintain a low debt ratio while aligning our financing with our "Create more" ESG strategy, notably through the signing of a first corporate Sustainability-linked Loan.

The Group is ready to face the current challenges of the real estate markets and to deliver sustainable operational performance in the years to come.”

Antoine Castro – Chairman & CEO PAREF

“ We are delighted to confirm the improvement in the performance of our funds, which continue to stand out positively in a challenging market environment.

These good results demonstrate the relevance of the decisions made in recent years and of our prudent approach towards valuations.

In 2024, we will seize investment opportunities in an investor-friendly real estate market. We will continue to create value on our own assets, pursuing several restructuring programs with ESG dimension placed at the heart of our strategy.”

Anne Schwartz – Deputy CEO of PAREF and CEO of PAREF Gestion

1 – Operating activities

1.1 Real Estate activity for direct investment (PAREF REIT)

As of December 31, 2023, PAREF holds:

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

Rental activity remains very performing in 2023

Rental activity remained resilient despite the downturn in the real estate market:

• The financial occupancy rate of the portfolio maintained high at 99.1%^[4] as of December 31^st, 2023;
• The weighted average lease maturity (WALB) stood at 4.5 years by the end of December 2023 compared to 4.2 years at the end of 2022, following the leasing of The Go asset located in Levallois-Perret; and
• Gross rental income increased by 4.4% on a like-for-like basis, thanks to rent indexation.

The expiry schedule of rents on owned assets is as follows:

Net rental income up 31%

Net rental income reached €8.8m in 2023, compared to €6.7m in 2022, an increase of 31%, which is mainly related to:

• the new lease signed for the entire The Go asset located in Levallois-Perret;
• the rent indexation for all the owned assets;
• the reduction of non-recoverable rental expenses.

The average gross initial yield on owned assets is 7.5%, compared with 6.5% at the end of 2022[5].

The value of real estate assets down 5.1% on a like-for-like basis, impacted by rising interest rates

The value of PAREF owned assets amounted to €182m as of December 31^st, 2023[6], composed of €169m in real estate assets and €13m in financial participations in funds managed by the Group.

The evolution of the real estate portfolio is mainly explained by:

• capitalized expenses for the restructuring of the Léon Frot project in 2023 for €6.6m;
• variation in fair value of the real estate properties for -€18.6m (-10.4%): mainly due to the decrease in the value of the floors in Franklin Tower (La Défense) and The Go asset located in Levallois-Perret, partially compensated by the value creation of the Léon Frot restructuring project.

Regarding the financial participations, mainly invested in OPPCI Vivapierre, the value amounted to €13m, an increase of 6% compared to December 31^st, 2022.

1.2 Management activity on behalf of third parties

The Group relies on its two subsidiaries, PAREF Gestion and PAREF Investment Management to provide their know-how and expertise to institutional and individual investors by providing the services covering the entire value chain of real estate assets and funds.

PAREF Gestion: dynamic investment pipeline despite a decline in subscriptions in a difficult market environment

Annual gross subscription on SCPI funds amounted to €95m in 2023, down 51% compared to 2022, mainly impacted by the market trend during second half of 2023.

The ratio of net subscriptions over gross subscriptions is 74%, in line with the level of redemptions from the market in 2023 according to the ASPIM data.

In terms of investment, the Group has carried out almost €90m in investments for all the SCPI under management and reinforced its European presence, in particular:

• €52.5m for Novapierre Allemagne 2 with three acquisitions of retail parks in the West Germany
• €18.2m for Interpierre France mainly with the acquisition of a mixed-use complex (office and logistics) in the Rhône-Alpes region;
• €8.4m for Interpierre Europe Centrale with the acquisition of a mixed-use complex (office and logistics) in Warsaw; and
• €10.4m for Novapierre Residentiel invested in the context of off-plan transactions.

In addition, several off-plan transactions were delivered for a total amount of €33m, including nearly €27m for Interpierre France and €6m for Novapierre Residentiel.

The Group also continued to rotate the portfolios under management by carrying out disposals for nearly €5m in 2023, with an average premium of 8% compared to the last independent valuation, including:

• €3.4m for Novapierre 1 ;
• €0.7m for Novapierre Résidentiel ; and
• €0.5m for Interpierre France

Proof of the quality of PAREF Group management, the performance of the SCPI under management improved with dividend distribution rates in line with or exceeding forecasts, given unchanged subscription price.

It is also worth mentioning that maintaining the subscription price for all the SCPI under management, supported by independent valuations, demonstrates the relevance of the Group's investment strategies and its ability to create long-term value for investors.

The assets managed by PAREF Gestion on behalf of third parties amounted for more than €2.0bn, -3.5% compared to December 31^st, 2022.

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

PAREF Investment Management operates in France, Germany, Italy 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 located in Frankfurt and another office asset BC 140 in Budapest, both on behalf of institutional investors.

The redevelopment of The Medelan asset, located in Milan's historical city center has seen very significant progress in leasing activities during 2023: 100% of the office space and 95% of the retail space are currently leased.

Commission revenues down 27% in 2023 due to a decrease in gross subscriptions

Management commissions amounted to €15.5m, up 15% compared to 2022, excluding the one-off effect of €2.0m related to the delivery of The Medelan in March 2022 and the disposals of two SCPI portfolios. This increase is mainly due to new investments made in the SCPIs funds in 2022 and 2023.

Gross subscription commissions reached €9.4m in 2022, down 50% compared to 2022, due to the slowdown of fundraising.

1.3 Assets under management at Group level

The value of assets under management remained stable, at around €3.0bn as of December 31^st, 2023.

2 – Consolidated P&L 202 3

Current operating result is €3.3m, decreasing by 30% compared to 2022. This is mainly explained by:

• net rental income of €8.8m, up 31% compared to 2022, thanks to the new effective lease of The Go asset and the rent indexation;

• revenues on commissions of €24.9m (-27% compared to 2022), essentially reflecting the slowdown of gross subscription in 2023 in the SCPI market, partially compensated by the increase in management fees related to 1) new investments made for funds under management during 2022 and 2023; and 2) the financial income generated by interest-bearing products invested for the funds under management;

• the change in fair value on investment properties of -€18.6m in 2023, due to the rise in market capitalization rate that generated a negative impact on the valuation on investment properties, despite CAPEX investments;

• financial expenses of €1.7m, compared to €1.0m in 2022. This increase is generated by the end of capitalization of financial costs during restructuring phase related to The Go asset, delivered at year end 2022 and the new financing cost signed in December 2023;

• results of companies consolidated under the equity-method of €0.8m compared to -€1.6m in 2022. This increase is relevant to positive variation of valuation of assets hold by OPPICI Vivapierre.

3 – Financial resources

The Group completed in 2023 a €90m sustainable refinancing, composed of €50m loan and of €40m confirmed available credit facility. Gross financial debt of PAREF amounted to €70m as of December 31^st, 2023, compared to €60m as of December 31, 2022. Loan to Value ratio (LTV)[16] stood at 28%, compared to 22% as of December 31^st, 2022.

The average cost of drawn debt is 1.62% in 2023, stable compared to 2022.

The average debt maturity stood at 4.5 years as of December 31^st2023 and 75% of the drawn debt is covered by financial instruments until its final maturities, thus limiting its sensitivity to interest rate fluctuations.

All the financial covenants are respected, including LTV<50% and ICR>1.75x.

The debt repayment schedule is as follows:

The Group has €28m available cash as of December 31^st, 2023, of which cash and cash equivalent of €8m and an available credit line of €20m.

4 - EPRA Net Asset Value

EPRA Net Reinstatement Value (NRV) came to €113.3 per share as of December 31^st, 2023, decreasing by 11% compared to €128.0 per share as of December 31, 2022.

This evolution is mainly driven by the change of fair value on investment proprieties on like-for-like basis of -€13.3 per share, dividend distribution in 2023 of -€3.0 per share, a slight decrease in revaluation of others non-current assets for -€0.1m, partially offset by net recurring +€2.1 per share.

In accordance with EPRA's recommendations (« Best Practices Recommendations »), the NRV indicators are defined by the IFRS-consolidated value of equity (fair value accounting), the mark-to-market value of debt and financial instruments.

5 – “Create More” a committed and active ESG policy

Environmental i mpact

In 2023, PAREF defined a net-zero carbon trajectory for its portfolio with an ambitious operational roadmap to decarbonize its assets by 2030.

Following the energy audits and carbon studies, it was noted that the carbon performance of PAREF's portfolio is in line with the CRREM's 2042 objective of 1.5°C. PAREF will continue to act proactively in order to achieve carbon neutrality by 2030 and thus anticipate the objective of the Paris Agreement by 20 years. The actions that will be implemented include asset renovations, investments in energy efficiency, switching to renewable energies, etc.

As a committed player, PAREF has also signed the Energy Sobriety Charter set up by the Ministry of Ecological Transition. This Charter commits the Group to reduce its energy consumption, to implement concrete actions to improve the energy efficiency of its buildings, and to share its experiences and best practices with other players in the sector.

Social & societal commitment

PAREF Group has been awarded the "HappyIndexAtWork" label, which rewards companies in which employees are happy and fulfilled, and the "WeImpactIndex" label, which recognizes companies with a genuine social and environmental responsibility policy.

Indeed, PAREF implements concrete measures to promote a fulfilling work environment, in particular by offering career development prospects, by offering training and professional support, and by setting up transparent communication with its employees. The company is also attentive to the impact of its activities on the environment and strives to reduce its ecological footprint. It also encourages its employees to engage in solidarity actions, in particular through the PAREF 4 GOOD program, which allows each employee to get involved with one or several associations, by dedicating one working day per year to volunteer actions.

In addition, its commitment to gender equality in the workplace was illustrated by the score of 94/100 in the Gender Equality Index. PAREF Group has also signed the Charter of Commitment to Gender Parity and Professional Equality in Companies and Organizations in the real estate sector. 

Integration of ESG criteria into PAREF Group's activities

Thanks to the maturity of its ESG strategy, the Group has subscribed to a Sustainability-Linked Loan (SLL) with a ESG Framework based on sustainability KPIs such as carbon emission reduction and asset labelling, as well as performance objectives during the financing period.

As a sign of its commitment, PAREF has been awarded the ESG rating (formerly GAIA index) at the Advanced level by Ethifinance, an independent rating agency with expertise in sustainable finance.

The Group was a finalist in the EPRA "Outstanding Contribution to Society" (OCS) ESG Awards in the environmental category for its "The Go" asset renovation project. This nomination demonstrates the Group's commitment to the environmental and societal transition within the community.

6 - Post-closing events

None

7 – Outlook and priorities for 2024

By capitalizing on the diversification of its activities, PAREF is ready to face the macroeconomic uncertainties and ever-increasing demands imposed by the ESG transformation of the real estate market.

The main objectives are to continue to diversify revenues, increasing the share of recurring cash flows from management fees while maintaining strict cost discipline in order to achieve continuous margin improvement.

Real estate activity for direct investment

PAREF expects positive dynamics for its rental activities in 2024:

• the ongoing repositioning of its portfolio, including the delivery of the renovation project on the Léon Frot asset, and
• the positive impact generated by the indexation of rents.

In line with its "Create More" ESG strategic plan, PAREF will continue to improve the energy performance of its portfolio and implement operational initiatives to anticipate new tenant expectations on commercial assets, which generate additional revenue.

In addition, the Group will maintain its selective approach to invest directly or as a co-investor, and to facilitate the growth of assets under management throughout the next real estate cycle. The aim is to become a trusted partner for institutional and private investors with a complete alignment of interests.

Management activity on behalf of third parties

In a rapidly changing market, the Group will continue to reposition its range of funds and services, including:

• distinctive product offering with clear strategies,
• digitalization of its services and a diversification of its distribution channels,
• improvement in energy performance of assets under management, in addition to the steadily growing financial performance.

The Group will expand its fund management services in Italy through its regulated branch, as a source of additional revenue.

In addition, PAREF is ready to offer thematic and tailor-made investment strategies to institutional investors, by proposing Value-Add investment opportunities that respond to changes in usage and expectations related to the ESG transformation of the real estate market.

Drawing on its "ONE-STOP-SHOP" expertise in real estate management, PAREF will continue to develop its Asset and Property Management activities in order to capture new management mandates and thus continue to diversify its revenue streams.

8 – Financial agenda

April 25, 2024: Financial information as of March 31, 2024

May 23, 2024: Annual shareholders' meeting

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 December 31, 2023, PAREF Group manages about €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 Dec ember 31,202 3

EPRA Net Tangible Assets (NTA) as of Dec ember 31, 202 3

EPRA Net Disposal Value (NDV) as of Dec ember 31, 202 3

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 Group owned assets perimeter (including companies consolidated under the equity method).

[1] Loan-to-value (LTV): consolidated withdrawn net debt divided by the consolidated asset value excluding transfer taxes, including the valuation of Paref Gestion made by a qualified external expert

[2] Excluding the asset Léon Frot asset under restructuring

[3] SFDR : Sustainable Finance Disclosure Regulation – Article 8 : related to the products and investments which realize a combination between the environmental/societal characteristics and other qualities

[4] Excluding the Léon Frot asset under restructuring

[5] Excluding the asset Léon Frot under restructuring

[6] Including interests in companies consolidated under the equity method (27.24% in Vivapierre OPPCI) and excluding the value of PAREF Gestion shares

[7] Distribution rate: it is the division of the gross dividend, before withholding tax and other taxes paid by the fund on behalf of the associate, paid in respect of year N (including exceptional interim dividends and the share of distributed capital gains) by the subscription price on 1st January of year N

[8] For Novapierre Résidentiel, the distribution rate of 2.28% corresponded to the payment of realized gain on disposals

[9] Open-ended funds

[10] Close-ended funds

[11] Including mainly participations in the companies consolidated in equity method OPPCI Vivapierre at 27.24%

[12] Foncière Sélection Régions

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

[14] T Including mainly participations in the companies consolidated in equity method OPPCI Vivapierre at 27.24%

[15] Including participations in the companies consolidated in equity method OPPCI Vivapierre at 27.24% and Wep Watford (the company holding the Le Gaïa asset in Nanterre, La Défense) at 50% until Dec 31, 2021, of which the asset was sold in Q1 2022

[16] Loan-to-value (LTV): consolidated withdrawn net debt divided by the consolidated asset value excluding transfer taxes, including the valuation of Paref Gestion made by a qualified external expert

[17] The valuation of PAREF Gestion was made by a qualified external expert

[18] corrected figures compared to Universal Registration Document 2022 (915K€), which didn't include the adjustment of non-recurring result related to the disposal of Gaia asset, hold by the company Wep Watford

[19] The valuation of PAREF Gestion was performed by a qualified external expert

[20] The valuation of PAREF Gestion was performed by a qualified external expert

[21] Excluding the participation in OPPCI Vivapierre and including the participation in asset Le Gaïa until Dec 31, 2021, which was sold in the first quarter in 2022. Excluding the Léon-Frot asset under restructuring

[22] 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

[23] 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.

[24] Including the investment related to the project « The Go » located in Levallois-Perret and modernization project of Léon Frot asset

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

[26] 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