Property appraisal

ANF’s real estate assets were appraised by two independent appraisers at €1,504 million excluding transfer taxes as of December 31, 2009, compared to €1,497 million excluding transfer taxes as of June 30, 2009 and €1,544 million excluding transfer taxes as of December 31, 2008.

This sum broke down into €417 million in Lyons, €613 million in Marseilles and €474 million for the B&B hotel properties. Adjusted for changes subsequent to the drafting of the appraisal reports (disposal of apartments in Marseilles and carrying out of work on the B&B hotels), the value of ANF’s real estate assets stood at €1,504 million excluding transfer taxes as of December 31, 2009, breaking down into €417 million in Lyons, €611 million in Marseilles and €476 million for B&B.

The value of the real estate assets was up 2.2% at constant scope compared to the appraisal values as of June 30, 2009, and down 1.2% at constant scope on those as of December 31, 2008.
The various developments in Lyons and Marseilles, which are scheduled to be completed between 2010 and 2014, were appraised at €198 million as of December 31, 2009, up 6% over the 12 months. ANF’s prudent investment policy – in particular the putting in place of leases before building – is thus valued by the appraisers, confirming the strategy employed. The appraisers decided to keep overall capitalisation rates at the same levels as in June 2009.This rate stability was made possible as a result of:

- the rise in rents;
- the intrinsic quality of the Haussmann-style properties;
- the exceptional city centre location.

The strength of B&B’s model, France’s third largest budget hotel chain – attested by the improved operational performance – as well as the secured nature of the leases meant that it has been possible to stabilise capitalisation rates since June 2009. The rise in rents thus led to a slight increase in the portfolio value, at constant scope. The change in value between June 30, 2009 and December 31, 2009 stemmed from:

- the increase in value as a result of the €49 million invested;
- the €46 million decline as a result of disposals;
- the €5 million change in fair value.

Chosen gross capitalisation rates excluding transfer taxes:

The 3rd edition of the real estate appraisal code drawn up at the behest of the IFEI (Institut Français de l’Expertise Immobilière – French Real Estate Appraisal Institute), defines the percentage gross capitalisation rate as the ratio of gross income from the property to its disposal price excluding expenses and transfer taxes, or its market value.

Method:

ANF uses Jones Lang LaSalle and BNP Paribas Real Estate Expertise, two nationally recognised appraisers. They were formally appointed in 2007 for a four-year term, with two appraisals being carried out per annum. The appraisers use the 3rd edition of the real estate appraisal code drawn up at the behest of the IFEI. Each appraiser looks at around half of ANF’s real estate assets, split as follows:

− Haussmann-style properties in Lyons and Marseilles are split pretty equally between the two appraisers to ensure consistency of valuations;
− the hotel portfolio is split in two and each appraiser takes half of the 166 hotels.
The Haussmann-style properties are appraised by means of both the comparison and capitalisation methods.

Developments are appraised using two methods depending on their nature. Where they involve development on land owned by ANF the developer balance sheet method is used whereas the capitalisation and comparison method is used for major property restructuring. The hotels are appraised using the net income capitalisation method, as the discounted cash flow method isn’t appropriate due to the long length of the leases and the fixed nature of the rents. During the December 31, 2009 appraisals no building was reclassified (investment, operating).

The appraisal reports drawn up by Jones Lang LaSalle and BNP Paribas Real Estate Expertise are included in Section VI “Other general information” of Volume II of the Registration Document.