Regulatory News:
Carmila and Cardety (Paris:CARD), two property companies
specialising in the management of shopping centres and retail parks
adjoining stores under the Carrefour Group banner, announced a
draft agreement on 2 March 2017 for the merger and absorption of
Carmila by Cardety.
The aim of the merger is to create a major listed property
company dedicated to promoting and developing locally-leading
shopping centres in France, Spain and Italy, benefitting from a
strategic partnership with the Carrefour Group, one of the World's
largest retailers and leading player in Europe.
On 31 March 2017, the boards of directors of Cardety and Carmila
approved the merger of their companies and the merger parity of one
Cardety share for 3 Carmila shares. A merger agreement was signed
on April 4, 2017, on the back of the merger plan announced on 2
March through a joint press release.
Subject to the registration with the French financial markets
authority (Autorité des Marchés Financiers, or AMF) of a Document E
and obtaining certain authorisations, the merger would be submitted
for approval of Carmila and Cardety’s respective shareholders in
General Meetings to be held in the course of 2017.
The new merged entity would be the leader in food-anchored
shopping centres and the third largest listed retail property
company in continental Europe. As of December 31, 2016, it would
have (pro forma value at December 31, 2016):
- a gross asset value2
of Euro 5.3 billion,
- 205 shopping centres and retail
parks with a total leasable surface area of 1.27 million sq
m,
- With an average portfolio rate of
return 3of 5.9%.
The proforma Net Asset Value (EPRA NAV) of the merged
entity would be Euro 2.8 billion (based on the EPRA NAV4
published by each of the two companies at 31 December 2016).
The merged entity would have an extensive, diversified portfolio
of leader and co-leader shopping centres5 in three countries:
France, Spain and Italy.
France Spain
Italy Overall merged entity At 31
December 2016 Broad geographical coverage
Critical mass and risk dispersion
Shopping centres that are leaders or attached to powerful
Carrefour stores Assets located exclusively in wealthy
northern regions Number of assets 127 assets
70 assets 8 assets 205 assets
Gross value6
Euro 3.9 billion Euro 1.1 billion Euro 0.3
billion Euro 5.3 billion % of portfolio
in gross value
74% 20% 6% Local leadership
(in % of gross value)
51%
leader
34%
co-leader
46%
leader
40%
co-leader
63%
leader
4%
co-leader
50%
leader
34%
co-leader
Average rate of return 5.7% 6.6% 6.1%
5.9%
Annualised contractual rents7
Euro 207 million Euro 72 million Euro 19
million Euro 298 million
Financial occupancy rate8
96.1% 94.8% 99.1% 96.0%
Occupancy cost ratio9
10.6% 11.4% 14.1% 11.0%
With 84% of leader or co-leader centres, the merged company
would benefit from strong local positions that it will continue to
develop, relying on its stand-out positioning, a historical
presence and the strength of the Carrefour Group at each of its
locations.
The Carrefour Group owns the premises of the food-stores on the
sites held by the new group and represents less than 1% of the
rents of the merged entity.
Key performance indicators of the merged
entity,
Unaudited Consolidated Financial
Information at 31 December 2016 (in millions of euros)
Rental revenues 282 Net rents 259 EBITDA 219
EPRA Earnings10
166
Recurring net income11
177 Gross value of the portfolio (ITT) 5,321 Net Financial debt
2,157
Loan-to-value (LTV ITT)12
40.5%
Average cost of debt13
2.1%
EPRA NAV14
2,818 EPRA NNNAV14 2,714
The Unaudited Consolidated Financial Information proforma of the
Cardety/Carmila merged entity as of December 2016 are attached as
an appendix to the French version of this press release (available
on Carmila’s and Cardety respective web sites) and will be
available shortly on Carmila and Cardety respective web sites
(www.carmila.com and www.Cardety.com Finance section) in an English
version.
A fully renovated portfolio by the end of
2017
Carmila launched its renovation plan for its entire portfolio in
2014 for a total investment for the 2014-2017 period of c. Euro 350
million (Euro 90 million paid by Carmila). 89% of the portfolio had
been renovated by the end of 2016. The reminder of the
portfolio renovations will be completed in 2017.
A pipeline of 37 extension projects
representing an investment of Euro 1.5 billion15 by 2022
37 extension projects have been launched and are currently under
way. At the end of 2016, 21 building permits and 26 commercial
licences (autorisations d’exploitation commerciale or CDAC) had
already been obtained for these controlled projects16.
Cardety and Carmila estimate that these development projects
could generate Euro 100 million in additional annualized rental
revenues, with an average yield on cost17 of
c. 6.5%.
Targeted acquisitions of shopping centres
adjacent to Carrefour stores
The merged entity would pursue its strategy of building its
portfolio by acquiring shopping centres and retail parks adjacent
to Carrefour stores with potential for value creation.
The partnership with Carrefour allows for off-market
acquisitions, thanks to longstanding local relationships, with
potential for value enhancement after acquisition.
Cardety and Carmila estimate that the value of shopping centers
adjacent to Carrefour stores owned by third parties in France,
Spain and Italy totals in excess of Euro 15 billion, which
represents a substantial source of external growth for the merged
entity.
By merging, Cardety and Carmila would thus
become the 3rd largest listed retail property company in
Continental Europe
The new entity, listed on Paris Euronext, would be renamed
Carmila and would rely on the following competitive advantages to
write a new page in its history:
1. A leading player in the segment of Retail Property
Companies in continental Europe, with assets for a gross asset
value of Euro 5.3 billion (including transfer taxes) comprising 205
shopping centres and retail parks, guided by a fundamental
ambition: to ensure and strengthen the local leadership of each of
its shopping centres;
2. A symbiotic partnership with the Carrefour Group,
which will represent a major competitive advantage for the new
entity, allowing it to develop its strategy relying on a strong
global retail group with an historical local presence, and unique
tools for customer knowledge and targeting at the local level;
3. A differentiating strategy as a “Smart Shopping Center
Company”, mainly aimed at helping its retail tenants increase
their turnover by providing them with bespoke digital local
marketing tools;
4. A portfolio of assets with substantial potential for value
creation, which has benefited from a intense renovation plan
(Most often carried out concomitantly with the modernization by the
Carrefour group of the adjoining food stores of which it is the
owner), continuous improvement in operational efficiency and in its
merchandising-mix, to offer to its retail tenants and customers an
effective commercial ecosystem;
5. A controlled extension pipeline and a targeted asset
acquisition strategy. Since its creation in April 2014, Carmila
has implemented a dynamic strategy to accelerate its expansion at a
sustained pace, combining the development of its extension pipeline
with targeted acquisitions of assets with pre-identified value
creation potential, thanks to its unique relationship with the
Carrefour Group;
6. Robust financial performance thanks to the dynamic
management of its portfolio and a sound balance sheet
relying on diversified sources of financing and a solid long-term
“BBB” rating (awarded to Carmila) since September 2015;
7. Experienced teams with a proven track record.
Carmila's management team has demonstrated, since Carmila was
created but also in prior roles, their ability to actively manage
the asset portfolio to combine secured yields, growth and value
creation.
The main shareholders of Carmila and Cardety support this
merger, demonstrating their trust in the strategy implemented and
the new entity's outlook for growth.
As part of its development plan, the merged entity could carry
out, subject to market conditions, a capital increase of
approximately Euro 500-600 million, which would entail placing
shares on the market in the course of 2017.
Important information
This press release does not constitute and shall not be
construed as an offer or the solicitation of an offer to purchase,
sell or exchange any securities of Cardety and Carmila. In
addition, it does not constitute an offer or the solicitation of an
offer to purchase, sell or exchange securities in any jurisdiction
in which it would be unlawful or subject to registration or
qualification under the laws of such jurisdiction.
This announcement is not an offer or sale of securities in the
United States. Securities may not be offered or sold in the United
States absent registration or an exemption from registration under
the U.S. Securities Act of 1933, as amended. Cardety does not
intend to register any of the securities mentioned in this
announcement in the United States or to conduct a public offering
of securities in the United States.
In connection with the proposed merger, the required information
documents will be filed with the Autorité des Marchés Financiers
(“AMF”). Shareholders and investors are strongly advised to read,
when made available, the information documents, and in particular
the sections related to the risk factors, that will be filed with
the AMF and any other relevant document that will be filed with the
AMF as well as any related amendment if any and/or supplements
because they will contain important information.
Forward-looking statements
This press release contains forward-looking information and
statements regarding the contemplated merger between Cardety and
Carmila with respect to its objectives, results, effects and
timing, as well as other information and statements which reflect
Cardety and Carmila’s best estimates based on currently available
information. Forward-looking information and statements are
sometimes identified by the use of words such as “believes”,
“expects”, “estimates”, “may”, “will”, “could”, “should”, “shall”,
“intends”, “aims”, “plans”, “predicts” or “anticipates” or the
negative, conditional or future thereof, other variations thereon
or comparable language. Investors and shareholders are cautioned
that forward-looking information and statements are subject to
numerous risks and uncertainties, many of which are difficult to
predict and generally beyond the control of Cardety and/or Carmila,
that could cause actual results and developments to differ
materially and adversely from those expressed in, or implied or
projected by, the forward-looking information and statements. These
risks and uncertainties include those discussed or identified in
filings with the Autorité des Marchés Financiers made or to be made
by Cardety and/or Carmila. Cardety and Carmila undertake no
obligation to publicly update these forward-looking statements,
whether as a result of new information, future events, or
otherwise.
Proforma unaudited consolidated financial information
This press release contains unaudited pro-forma consolidated
financial information in relation to the financial year ended 31
December 2016, which has been prepared as if the merger between
Carmila and Cardety had been completed as of 1st January 2016 for
the consolidated results of the combined entity and as of 31
December 2016 for the consolidated balance sheet of the combined
entity. The unaudited pro-forma consolidated financial information
is provided for information purposes only and does not represent
the results of the combined entity that would have been achieved if
the merger had actually been completed on such date. The unaudited
pro-forma consolidated financial information in relation to the
financial year ended 31 December 2016 included in this press
release will be made available on the websites of Carmila
(www.carmila.com rubrique Finance) and Cardety (www.cardety.com,
rubrique Finance).
About Carmila:
Carmila was founded on 16 April 2014 by Carrefour and large
institutional investors in order to increase the value of shopping
centres adjoining Carrefour stores in France, Spain and Italy. Its
portfolio consisted, as at 31 December 2016, of 194 shopping
centres in France, Spain and Italy, mostly leaders in their
catchment areas, and valued at Euro 5.2 billion. Inspired by a
genuine retail culture, Carmila's teams include all of the
expertise dedicated to commercial attractiveness: marketing,
specialty leasing, shopping centre management and portfolio
management.
Carmila's 2016 audited consolidated financial statements were
published on April 5, 2017 and are available on the website at
www.carmila.com, in the Finance section.
About Cardety:
Cardety (formerly named Carrefour Property Development) is a
listed property company benefiting from the tax regime for real
estate investment funds and principally engaged in the development,
acquisition and management of retail parks and shopping centre
units.
Cardety stock is listed in Compartment C of the Paris Euronext
under ISIN Code FR0010828137 and Mnemonic Code CARD
The press release announcing Cardety's audited results under
IFRS is available on its website (www.cardety.com, Finance
section).
APPENDIX
PROFORMA CONSOLIDATED FINANCIAL INFORMATION – Non
audited
Cardety/Carmila merged entity at 31 December 2016
To be provided shortly
See French version of the press release
1 Unaudited consolidates financial information under review by
Cardety auditors
2 Appraisal value ( including transfer taxes) of assets held by
the combined group
3 Average rate of return used bu appraisers to define the market
value of assets of the Carmila and Cardety
4 Fully diluted Net Asset Value, excluding transfer taxes
5 A shopping centre is defined as a “leader” if (i) the centre
is the leader in its commercial area in terms of the number (of
business units) in its local urban area (“agglomération”), as
defined by INSEE (Source: Codata database, 2016) or (ii) the
shopping centre has more than 80 stores in France or 60 stores in
Spain and Italy.A shopping centre is defined as a “co-leader” if
(i) the centre is not a “leader”, and (ii) (x) the centre includes
the leading hypermarket in its commercial area in terms of turnover
in France and Italy or in terms of surface area in Spain (Source:
Nielsen database, 2016) or (y) the annual turnover of the
hypermarket adjoining the centre is over Euro 100 million in France
or Euro 60 million in Spain and Italy.
6 The gross asset value ("GAV") corresponds to the appraisal
value of the assets in operation, including transfer taxes, plus
the amount of fixed assets in progress that are not taken into
account in the appraisals.
7 Sum of i) minimum guaranteed rents for leases where such a
minimum guaranteed rent is included and ii) invoiced rents for the
most recent year where payment under the lease is fully variable
(or expected rents according to the business plan for tenants in
their first year of occupancy).
8 Excluding strategic vacancy due to renovation, extension or
restructuring projects. The financial occupancy rate is calculated
by dividing invoiced rents over a given period by the total
potential amount of rents that could be invoiced should the centres
be fully leased (rents on vacant lots as per appraisals)
9 Total amounts invoiced to tenants (rent, service charges, ...)
divided by tenant revenues
10 EPRA earnings is equal to Net income accounted for in Carmila
consolidated P&L (IFRS under fair value method) less
revaluation result and associated differed taxes and less other
components included in the results not relevant to assess the
operating performance of the portfolio
11 EPRA earnings adjusted for non recurring components accounted
for in the consolidated net income.
12 Net debt divided by Gross Asset Value including transfer
taxes
13 Excluding 0.19 percentage points related to the amortization
of borrowing costs and bond redemption premiums
14 Diluted EPRA NAV excluding transfer taxes. EPRA NAV and NNNAV
are ex-2016 dividend
15 Including 50% of the development margin paid to the Carrefour
Group
16 “Controlled” projects: projects for which the studies are
very advanced and the company owns the land or the construction
rights, but where all the administrative permits have not
necessarily been obtained.
17 Including a 50/50 share of development margin with Carrefour
Group
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170404006569/en/
Carmila contact for investors and analysts:CarmilaMarie-Flore
Bachelier, +33 6 20 91 67
79marie_flore_bachelier@carmila.comorPress:Citigate Dewe
RogersonAlienor Miens, +33 6 64 32 81
75alienor.miens@citigate.frorAlison Emringer, +33 7 60 44 69
43alison.emringer@citigate.frorCardety press/investor
contact:KOMODOAgnes Villeret, +33 6 83 28 04
15agnes.villeret@agence-komodo.com
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