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The renovation of retail space at Rue de la République in Lyons, in the Marie – Opéra sector is a success. New chains
such as Hygena kitchens, Pierre Ricaud laboratories, Copy Top, and Crocs shoes moved in to replace third rank chains,
thereby boosting foot traffi c. This way, ANF confi rmed its commitment to renovating city centres.
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Retail Space in Marseilles
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Having new tenants for Rue de la République in Marseilles between the Vieux Port and Place Sadi Carnot is now an operational reality thanks to the recent arrival of such well-known chains as Desigual and H&M children’s apparel.
The strategy initiated in 2005 is now refl ected in ANF’s results.
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Assessed valuations continued their climb, rising 11% to €1,544 million against particularly difficult market conditions.
Although the increase in capitalisation rates applied by the appraisers had a considerable effect on the valuations,
the property estate’s value grew over €264 million, offsetting this rate increase.
This increase, when viewed in the current market context, shows the potential of ANF’s assets and justifies its strategy.
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On 12 December 2008, ANF obtained permission to construct a new building of over 20,000 sq. m close to Place de la Joliette at Marseilles. The site is currently occupied by a hospital which will be relocated a part of a vast hospital modernization project. A long-term project for ANF, it shows the growth drivers already identifi ed for completion by 2014.
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Opposite the new hospital, ANF will develop a complex of about 27,000 sq. m for mixed uses. Plans call for housing, offi ces, a senior citizen’s housing block, a hotel, retail stores and several hundred parking spaces. The building permit was issued on 13 October 2008 and tenants are now being signed up.
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ANF contributes to the development of its main B&B tenant by undertaking renovation work. This signifi cantly improves the quality of the properties and of the hotel product while at the same time boosting rental income.
In addition, ANF acquired two more hotels in 2008.
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By continuing the strategy of rental upgrading, ANF’s rental income grew sharply in 2008. Sales rose to €59.1 million, up 17% on a constant scope basis. Rental income at Marseilles rose 22% to €16.0 million on a constant scope basis. At Lyons, rental income rose 12% to €14.9 million on a constant scope basis. The rental income from 161 B&B hotel properties was raised by 5.62% under a contractual indexation starting 1 November 2008. This equates to a €1.6 million increase on an annual basis.
This rental upgrading, which is at the core of ANF’s strategy, lends credibility to its medium and long-term ambitions and ensures a continuous cash fl ow for the Company.
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Begun at year-end 2008, this project entails a major construction site in the city of Marseilles. It totals nearly 19,000 sq. m assigned for residences at 6,000 sq. m and offi ces at 13,000 sq. m. During the year, ANF rented out 9,000 sq. m of offi ce space to a high quality tenant and sold the remaining 4,000 sq. m to be completed in thefuture, to the same user.
The project was completed in a diffi cult economic climate, and shows the robust demand for ANF’s products.
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ANF reduced its stocks of vacant residential properties by 2,500 sq. m in 2008. It was the fi rst time these stocks declined, which underscores the appeal of the Rue de la République sector in Marseilles.
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Message from the Chairman of the Supervisory Board : Alain Hagelauer
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The global economic crisis has obviously not spared the property sector. The business activity of all of its players is affected somehow by the consequences of this slowdown, indeed this recession.
In this deteriorated environment and uncertain economy, all of the financial markets have penalised listed property companies across the board irrespective of their results, the value of their underlying property assets, their indebtedness, and their various growth prospects.
ANF suffered the same fate when its share price fell sharply along with all of the other property companies, and this despite a doubledigit increase in the latest appraised value of its property estate as compared with the previous year. Moreover, rental income practically doubled as well from that of 2007 with the acquisition of B&B hotel properties and EBITDA tripled. Lastly, ANF’s debt level is one of the lowest of its peer group.
Led by its Executive Board, ANF followed the strategy laid out and implemented since 2005 at Lyons and Marseilles, namely upgrading and restoring its buildings to increase their return on investment.
Lyons maintained its forward momentum owing to a mature property market which better resisted the recession than in other urban areas.
ANF continues to sign new leases for offices, businesses and residences whose rental fees are considerably higher than on previous leases.
Lyons’ vibrant economy, its density and its diversity all contribute to a good occupancy rate for our buildings. Moreover, ANF’s Lyons assets still have a high potential for improvement owing to leases up for renewal soon.
At Marseilles, ANF is fi nalising its ambitious programme to upgrade the buildings on Rue de la République, part of the vast urban renewal project undertaken by the city and regional authorities which has attracted numerous well-known commercial chains.
Marseilles’ nomination as the European Cultural Capital in 2013 will only enhance the city’s appeal, as will the public funds to be invested there.
ANF will benefit greatly from the many projects located at the heart of this scheme.
Lastly, the B&B hotel properties operation, which accounts for nearly a third of ANF’s assets, constitutes a strong hedge against a declining return on investment owing to a steady stream of secure and predictable rental income over the long term.
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