Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Shareholder value wikipedia , lookup
Business valuation wikipedia , lookup
Corporate governance wikipedia , lookup
Board of directors wikipedia , lookup
Systemically important financial institution wikipedia , lookup
Joint venture wikipedia , lookup
Business ownership within England and Wales wikipedia , lookup
REFERENCE DOCUMENT 2014 CONTENT S 1 MANAGEMENT REPORT 2014 1.1. Main key figures 1.2.Strategy 1.3. Major transactions during the period 1.4. Events after reporting period 1.5. Business analysis 1.6. Analytical data for the business by segment 1.7. Financial information and comments 1.8. Net Assets Value (NAV) 1.9. Real estate appraisals 1.10. Financial resources 1.11. Risk factors 1.12. Shareholder structure 1.13. Stock market and dividends 1.14. Corporate officers 1.15. Information about the company and its interests 2 2 3 4 4 8 8 9 17 44 54 56 70 74 79 90 94 126 1.17. Agreements of article L. 225-102-1 last paragraph of the french commercial code 126 1.18. Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 127 4 SUSTAINABLE DEVELOPMENT144 2.1. 50% of green assets, one year ahead of our goal! 2.2. Foncière des Régions, a sustainable growth model 2.3. A portfolio of green offices 147 164 2.4. Strong partnerships with tenants that strengthen the Hotels and Service Sector business 176 2.5. The performance of our Logistics business 180 2.6. Dynamic management of the Residential portfolio 2.7. An approach shared with all subsidiaries 2.8. Promoting regional expansion 2.9. Human capital 3.1. Consolidated financial statements as at 31 December 2014 3.2. Notes to the consolidated financial statements 276 283 3.3. Statutory Auditors’ report on the consolidated financial statements 349 3.4. Parent company financial statements as at 31 December 2014 3.5. Notes to the company financial statements 351 355 3.6. Statutory Auditors’ report on the annual financial statements 384 3.7. Statutory Auditors’ report on related-party agreements and commitments 3.8. Agenda and draft resolutions 3.9. 125 1.16. Information about social and environmental impact FINANCIAL INFORMATION274 3.10. Statutory Auditors’ report on the issue of shares and/or securitiesgiving access to the capital reserved for members of a company savings plan 411 3.11. Statutory Auditors’ report on the issue of shares and various securitieswith maintenance and/or waiver of the preferential subscription right 412 CONTROL OF THE COMPANY 2.10. Open and transparent governance 182 190 195 202 210 2.11. CSR performance 217 2.12. Verification by an independent third party auditor 271 413 4.1. Report by the Chairman of the Board of Directors on corporate governance and internal control 414 4.2. Statutory Auditors’ report, prepared in accordance with Article L. 225-235 of the French Commercial Code on the report prepared by the Chairman of the Board of Directors of Foncière des Régions 439 4.3. Parties responsible for auditing the financial statements 440 146 5 386 391 Statutory Auditors’ report on the capital reduction 410 INFORMATION AND MANAGEMENT 5.1. Presentation of the company 5.2. General information concerning the issuer and its share capital 5.3. Administration and management 5.4. 5.5. 441 442 446 454 Person responsible for the Reference Document 458 Annual information document (Article 221‑1‑1 of the general regulations of the AMF) 459 6 7 TABLE OF CONCORDANCE FOR THE REFERENCE DOCUMENT 461 EPRA REPORTING AS AT 31 DECEMBER 2014 465 8 DEFINITIONS, ACRONYMS AND ABBREVIATIONS USED 473 C O - C R É AT E U R D ’ H I S T O I R E S I M M O B I L I È R E S 2 COULEURS QUADRI MONOCHROME RVB Pantone 542 C 70 / M 20 / J 0 / N 10 Pantone 280 55 % R 59 / V 151 / B 200 Pantone 280 C 100 / M 70 / J 0 / N 20 Pantone 280 100 % R 0 / V 70 / B 138 REFERENCE DOCUMENT Niveaux de gris 2014 Monochrome noir En réserve blanche noir 100 % blanc noir 65 % noir 100 % RENTAL INCOME + 0.2% à pc 558 M € OCCUPANCY RATE EPRA RNI 97.1% Foncière des Régions DIVIDEND + 6% 315 M € 1 Reference Document 2014 + 2.4% € 4.30 1 MANAGEMENT REPORT 2014 1.1. MAIN KEY FIGURES 4 1.7. FINANCIAL INFORMATION AND COMMENTS44 1.7.1. 1.7.2. 1.2. STRATEGY4 1.3. MAJOR TRANSACTIONS DURING THE PERIOD 1.8. NET ASSETS VALUE (NAV) 8 1.8.1. 1.4. EVENTS AFTER REPORTING 1.8.2. 1.8.3. PERIOD8 1.5. BUSINESS ANALYSIS 1.5.1. 1.5.2. 1.5.3. 1.5.4. 1.5.5. 1.5.6. 1.5.7. 1.5.8. Recognised rental income: +6.2% 9 Lease expirations and occupancy rates 10 Breakdown of rental income – Group share12 Disposal and agreements for disposals: €986 million 13 Asset acquisitions: €397 million Group share 14 Development projects: €1.5 billion Group share 15 Portfolio16 List of major assets 17 THE BUSINESS BY SEGMENT 1.6.1. 1.6.2. 1.6.3. 1.6.4. 1.6.5. 1.8.4. 9 1.6. ANALYTICAL DATA FOR Offices France Offices Italy Hotels & Service sector German Residential Other activities 1.9.1. 1.9.2. 1.9.3. 1.9.4. 1.9.5. 1.9.6. 1.9.7. 18 27 33 38 41 2 54 56 Introduction56 Context56 Asset valuation method 62 Summary of expert appraisals of the France Offices portfolio63 Abridged appraisers’ report regarding the 2014 year-end estimate of the market value of assets owned by the company64 Abridged appraisers’ report regarding the 2014 year-end estimate of the market value of assets owned by the company Foncière Europe Logistique 66 Abridged appraisers’ report regarding the 2014 year-end estimate of the market value of assets owned by the company Immeo AG67 1.10. FINANCIAL RESOURCES 1.10.1. 1.10.2. 44 50 Fair value adjustment for the buildings and business goodwill 55 Fair value adjustment for the car parks 55 Recalculation of the base cost excluding duties of certain assets 55 Fair value adjustment for fixed-rate debts55 1.9. REAL ESTATE APPRAISALS 17 Foncière des Régions Consolidated accounts Consolidated financial statements 70 Main debt characteristics capitalised 70 Financial indicators of the main activities73 Reference Document 2014 1.11. RISK FACTORS 1.11.1. 1.11.2. 1.11.3. 74 Risks linked to Foncière des Régions’ activity and strategy Financial risks Legal, fiscal, regulatory, environmental and insurance risks 1.12. SHAREHOLDER STRUCTURE 1.14. CORPORATE OFFICERS 1.14.1. 1.14.2. 74 77 1.14.3. 78 79 COMPANY AND ITS INTERESTS 125 Information on capital 79 Securities providing access to the share capital79 1.12.3. Breakdown of share capital and voting rights80 81 1.12.4. Threshold disclosure 1.12.5. Declarations of intent 82 1.12.6. Change in the capital over the last five fiscal years 82 1.12.7. Employee shareholding 83 1.12.8. Information about the share buyback programme83 1.12.9. Share subscription and share purchase options and bonus shares 84 1.12.10. Transactions carried out by Company Officers involving company shares 87 1.12.11. Active authorisations 89 1.15.1. 1.15.2. 1.15.3. 1.15.4. 1.15.5. 1.13.5. 1.13.6. AND ENVIRONMENTAL IMPACT 126 1.17. AGREEMENTS OF ARTICLE L. 225-102-1 LAST PARAGRAPH OF THE FRENCH COMMERCIAL CODE126 1.18. REPORT OF THE BOARD Stock markets 90 Market price at 31 December 2014 90 Transactions in the last 18 months (Euronext Paris) 91 Information about elements that could be relevant in the event of a takeover offer91 Dividends distributed within the last five fiscal years 93 Appropriation of earnings for the fiscal year 93 Foncière des Régions Group organisation 125 Results of subsidiaries and investments126 Information on cross-shareholding 126 Extrordinary events and litigation 126 Ratings126 1.16. INFORMATION ABOUT SOCIAL 1.13. STOCK MARKET AND DIVIDENDS 90 1.13.4. Remuneration of corporate officers 94 Gross remuneration for members of the Board of Directors105 Corporate officers’ terms of office and functions107 1.15. INFORMATION ABOUT THE 1.12.1. 1.12.2. 1.13.1. 1.13.2. 1.13.3. 94 OF DIRECTORS ON THE DRAFT RESOLUTIONS TO BE SUBMITTED TO THE ORDINARY AND EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS ON 17 APRIL 2015 127 1.18.1. 1.18.2. 3 Ordinary resolutions Extraordinary resolutions Reference Document 2014 127 140 1 Management report 2014 Main key figures Ladies and Gentlemen, We have convened you at an Ordinary and Extraordinary General Shareholders’ Meeting pursuant to the Articles of Association and the provisions of the French Commercial Code to report to you on the company’s activity during the year ending on 31 December 2014, the results of this activity, as well as that of its subsidiaries and the outlook for the future, as well as to submit the separate and consolidated financial statements for the said year for your approval. These financial statements are attached to this report. The notices of meeting required by law have been sent to you regularly, and all the documents and exhibits provided for by current regulations have been kept at your disposal within the required time periods. 1.1. MAIN KEY FIGURES 2014 results – Enhanced strategic positioning Reinforcement of the real estate positioning Major investment in Hotel real estate at the beginning of 2015 ww Offices: acceleration of investments in the pipeline. ww German Residential: reinforcement of the exposure on a buoyant market. ww Acquisition on February 2015 of a 14.6% stake in Foncière des Murs at €23. ww Hotels: diversification of our partners and our investment tools. ww Exit from Logistics. ww Launch of a takeover bid on Foncière des Murs that can reach 9.2% of the share capital, considering the commitment not to contribute. Sound 2014 results ww Capital increase of Foncière des Régions of €250 million contemplated. ww Occupancy rate up to 97.1%. ww Stability of firm lease terms (5.8 years). Outlook ww Increase in the value of the portfolio (+2.1% like-for-like). ww Dividend of €4.30 per share(1), up by 2.4%. ww Recurring Net Income (RNI) EPRA up 6% at €315 million (€5.03 per share). ww €1 billion in investments already committed in 2015. ww Objective of a slight increase in the EPRA Recurring Net Income per share for 2015. ww EPRA NAV of €75.5 per share. 1.2. STRATEGY A strengthened real estate positioning Foncière des Régions now holds a portfolio of €16.4 billion (€9.8 billion Group share) focused on the Office sector, leased to large companies, including two areas of diversification on strong and buoyant markets, which are Residential in Germany and Hotels/Service sector. Foncière des Régions relies on a partnership strategy with a leasing base made up of blue chip companies (Suez Environnement, Thales, Dassault Systèmes, Orange, EDF, IBM, Eiffage, Accor, Telecom Italia, etc.). ww in German Residential, the Group has enhanced its exposure with €358 million of acquisitions (€218 million Group share), mainly in prime locations in Berlin Sucessful strategies of 2014 have strengthened this real estate positioning and confirmed the permanence of the cash-flows: Foncière des Régions has posted a record volume of nonstrategic asset disposals, with the sale of €986 million Group share, including €606 million in Logistics. The portfolio, now comprising 91% in strategic assets, has sound strong points and posts an occupancy rate of 97.1%, as well as an average firm lease term of 5.8 years. ww in Hotel real estate, the year has been marked by geographic diversification and the set up of new partnerships. In addition, with the creation of FDM Management, Foncière des Régions is now also in possession of a tool to accompany operators in their strategic shift through investments in premises and businesses. ww in the Office sector, with €351 million, Foncière des Régions has accelerated investments in its pipeline and continued its strategy of selective acquisitions Real estate activity in 2014: rents up by 6% (1) Will be put to the vote by the General Meeting on 17 April 2015. Foncière des Régions 4 Reference Document 2014 Management report 2014 Strategy ww Rental income on like-for-like basis: +0.2%. ww Occupancy increase: 97.1% (+1.1 point). ww Stability of average firm lease term: 5.8 years (stable). ww Increase of values like-for-like: +2.1%. With the increase in Germany, and despite the impact of sales, rents were at €558.1 million Group share, up by 6% and by 0.2% at constant scope. Rental income (€M) Change on like-for-like basis Occupancy rate Residual firm terms of leases Offices – France 238.2 +0.7% 96.9% 5.3 years Offices – Italy 114.9 -1.5% Offices 353.1 Residential Germany Hotels/Service Sector 95.2% (1) 6.3 years +0.0% 96.3% 5.6 years 103.4 +1.8% 98.3% N/A 51.0 -0.6% 100% 6.8 years Other 50.7 N/A N/A N/A TOTAL 558.1 +0.2% 97.1% 5.7 YEARS Core Portfolio. ➡ (1) Indexation: +0,6% Occupancy rate: -0,3% Renewals: -0,1% Offices in France: Growth of indicators (€5.0 billion portfolio at 100%; €4.4 billion Group share) with Schlumberger for 3,150 m² in Montpellier and with Bose for 5,100 m² in Saint-Germain-en-Laye. As part of its selective acquisitions strategy, the Group has entered into a new partnership with the acquisition from Natixis of the ”Liberté et Coupole” property complex, with an area of 38,000 m² at Charenton-le-Pont, on the Liberté metro station. This investment of €162 m, duties included, was made on the basis of a yield of 6.5%. Natixis has signed a new triple net firm lease of 9 years, without incentive. ww Rise in occupancy rate: 96.8% (+1.0 point). ww Firm lease maturity: 5.4 years. ww Growth of rents like-for-like: +0.7%. ww Growth of values like-for-like: +3.0%. ww Objective of 50% green portfolio achieved one year early (+9.0 points). Foncière des Régions has continued the qualitative rotation of its portfolio, through the sale of €137 million of non-core or mature assets, for an average margin of 7% on the last appraisal value. This dynamic rotation of assets has contributed to the improvement of the France Offices portfolio. Therefore, almost 50% of the current France Offices portfolio has been acquired or developed in the last five years. ww Pipeline: €1.4 billion, including €518 million committed. Successful lettings have increased the occupancy to a record level of 96.8% (compared with 95.8% at the end of 2013). Over the year, this means more than €50 million Group share of leases (20% of rents) which were signed or renewed for a mean firm term of 6.1 years. In particular, 11,400 m² have been let in the Tour CB 21, now 97% leased. With signatures in 2014, the average firm lease term remains high at 5.4 years. The year was marked by a rise in values on like-for-like basis of 3.0%, supported by compression of yield rates in Paris Region and in the regional cities of France. Worthy of note is the gain of 8% on projects currently in development. Foncière des Régions has accelerated its investments borne by the projects pipeline in Offices France, now standing at €1.4 billion. Almost €518 million of projects are now committed, €309 million of which will be delivered in 2015, for more than €36 million of annual rents (yield on cost above 7%). Committed projects relate mainly to property redevelopments and leasing turnkey projects and enjoy a pre-let rate of almost 2/3. Offices Italy: sound foundations (€4.1 billion portfolio at 100%; €2.0 billion Group share) ww High occupancy rate: 95.2% (Core portfolio). ww Average firm lease term: 6.3 years (Core portfolio). With the strength of its partnership model, Foncière des Régions, alongside Crédit Agricole Assurances, has delivered the New Vélizy campus in the heart of the Vélizy-Meudon district. This 46,000 m² asset is leased to Thales for a fixed term of 9 years. In addition, Foncière des Régions signed the 13,100 m² extension of the Dassault Systèmes Campus and the extension of the lease for 12 years firm (total rent more than €24 million and €12 million Group share). Turnkey projects have also been signed Foncière des Régions ww Rents like-for-like: -1.5% (-0.3% excluding release in Turin). ww Resistance of values -0.2% like-for-like (stability across the Core portfolio). Foncière des Régions operates in Italy through its subsidiary Beni Stabili, first Italian property development company, having a high quality portfolio, with 90% located in Northern and Central Italy, in particular Milan and Rome. This positioning maintains sound 5 Reference Document 2014 1 1 Management report 2014 Strategy real estate indicators, with 95.2% occupancy for an average firm lease term of 6.3 years (across the Core portfolio). These rotations have continued the qualitative recentring on target locations, which accounted for 84% of the portfolio at the start of 2015 (compared with 63% at end 2012). Leasing activity has been highlighted by the success of restructurings and renovations, marketed at high leasing values. The San Fedele asset in Milan has thus been leased at 100%. The San Nicolao development (Milan, 11,700 m²), was let before its delivery to the Luxottica Group for 7 years firm and a rent of €5.4 million. The asset in Via dell’Arte (Rome, 6,400 m²), delivered in the 1st half, is leased with 93% occupancy. Almost 24,000 m² has also been renewed with a rise in rents of 14%. This strategy in Germany is confirmed by the good indicators for the year. Rents have grown by 1.8% at constant scope, including 4.9% in Berlin and Dresden, and occupancy rate remains very high at 98.3%. Second, the value of the portfolio has grown by 2.9% at constant scope (average yield 6.5%), including 4.9% in Berlin and Dresden. Qualitative rotation of the portfolio has continued with a sale of €81 million worth of assets (€39 million Group share), with a margin of 3.3% on last appraisal value. Hotels and Service sector: leader in Europe (€3.0 billion portfolio at 100%; €0.8 billion Group share) Rents have fallen by 1.5% on like-for-like basis due to the vacancy of the Corso Ferrucci asset (Turin, 51,000 m²), which was actively marketed. Finally, the positioning of the portfolio covering Core zones has allowed stability of appraisal values in 2014 (-0.2% like-for-like). ww Occupancy held at 100%. ww Average firm lease term: 6.8 years. ww Strength of leases like-for-like: -0.6%. ww Growth of values like-for-like: +2.0%. Germany Residential: acceleration of investments (€2.7 billion at 100%; €1.7 billion Group share) Europe’s leader in hotel real estate, Foncière des Régions relies on long term partnerships with major players in the hotel sector (Accor, Louvre Hotels and B&B Hôtels). The year was highlighted by three successes: ww Very high occupancy rate: 98.3%. ww Partner diversification with the signature of partnerships with NH Hotels Group, Motel One and Meininger ww Rent growth like-for-like: +1.8%. ww Geographic diversification through the acquisition of NH 4* Amsterdam and new investments in Germany ww Rise in values like-for-like: +2.9%. ww Diversification of investment tools with the creation of FDM Management. The Group has been given the means to accompany its operator strategy growth, by being able to invest in premises and businesses. FDM Management has already signed the acquisition in 2014 of nine hotels in Germany, managed by Louvre Hotels Group and the development for Accor of a Pullman hotel at Roissy. With operations in Germany since 2005, Foncière des Régions has improved its exposure in the German Residential market during 2013 and now has a direct holding of 60.9% in its Imméo subsidiary. The Group enjoys an exposure of 17% of its portfolio in German Residential and a €1.7 billion Group share (compared with €0.8 billion in 2012) through 41,400 residential housing units. The year has been highlighted by the acceleration of investments with €358 million (€218 million Group share) acquired in Berlin, Dresden and Leipzig. The Group is concentrating its investments on small size but prime downtown assets, combining reversionary potential (25-30%) and long term sale potential. At the same time, €160 million (€97 million Group share) of assets have been sold or have been the subject of disposal agreements in NRW (with a mean margin of 5.4% on the appraisal at the end of 2013). Rents have held firm on like-for-like basis (-0.6%) and experienced an improvement over the 2nd part of the year. Income from the Accor hotels, variable according to revenues, fell by only 1.1% despite the 3 point rise in VAT. At the end of 2014, the value of the portfolio rose by 2.0% at constant scope (average return 6.1%), sustained by the growth in value of the hotels of 2.8%. Growth in the Recurring Net Income and the dividend Liabilities secured des Régions indebtedness has remained controlled with a stable LTV, at 46.1% (compared with 46.5% at the end of 2013). Satisfactory operational performance and a reduction of the average cost of the debt has improved the ICR to 2.8, compared with 2.5 in 2013. During 2014, Foncière des Régions continued to improve the quality of its liabilities by refinancing or by issuing debt securities amounting to €3.1 billion (€1.9 billion Group share), of which 32% was raised on the bond market. Beni Stabili, the Italian subsidiary of Foncière des Régions, has in particular successfully refinanced the ImSer debt, related to the portfolio of €1.7 billion in Telecom Italia assets (cost of new loans 2.5%). This refinancing has been accompanied by a capital increase of €150 million, followed by Foncière des Régions, which now holds 48.3% of the capital. EPRA Recurring Net Income: €314.5 million, +6.0% The EPRA Recurring Net Income was €314.5 million Group share, up by 6.0% over a year. This good performance results fundamentally from the improvement in German Residential and The Group has thus improved the diversification of its debt and maintained an average maturity of more than 4 years. Foncière Foncière des Régions 6 Reference Document 2014 Management report 2014 Strategy the fall in the cost of the debt (to 3.29% compared with 3.94% at the end of 2013), despite the impact of disposals in 2013 and 2014. rate of 86% and a yield of 4.6% on the basis of the closing price on 19 February 2015. Per share, the EPRA Recurring Net Income was €5.03/share, slightly up by 1.1% over a year due to the impact of the share issue in the 2nd half of 2013 in connection with the successful exchange offer on FDL. EPRA NAV/share: €75.5/share The EPRA NAV was €4,754 million and €75.5/share, down by 2.8% compared with the end of 2013. The soundness of the Recurring Net Income and the increase in appraisal values have to some extent offset the effect of the distribution, as well as the impacts of the Imser refinancing and restructuring of the hedges, which will have a favorable effect on profile and cost of the debt. Growth of the dividend, at €4.30 per share Given the good performance in 2014 results and the sound outlook, the Group will be proposing at the vote of the General Meeting on 17 April next a dividend of €4.30 per share, up by 2.4% compared to last year. This dividend represents a distribution The EPRA triple net NAV was set at €4,145 million and €65.9/ share, impacted by the fair valuation of the financial instruments and debts. Major investment in Hotel real estate at the beginning of 2015 Foncière des Régions to announce the acquisition of a 14.6% stake in Foncière des Murs (FDM) its subsidiary specialising in Hotel real estate, with a portfolio of €3.2 billion. This acquisition will be closed on 23 February with Generali (10.3%) and ACM (4.3%) which will still have 10.3% and 10.0% of the share capital. The price of €23 is equivalent to a 1.3% premium on the Triple Net NAV per share. Foncière des Régions will then hold 43.1% of its share capital which, as a limited partner it already consolidates. the stake that can be bought reaches 9.2% of the share capital (€157 million). Once these transactions have been completed, Foncière des Régions’ portfolio will show an additional €430 million to €700 million GS in the Hotels and Service Sector. This enhancement in the attractive Hotel investment market will create value immediately. It will enable to increase the portion of strategic assets and improve financial results visibility (longer lease terms, increased occupancy rate and operating margin). Foncière des Régions will also launch a takeover bid for the balance of FDM’s capital. The contemplated price is €23 per share (following the delivery of the report of the independent expert that will be appointed by the Supervisory Board of FDM and subject to the decision of conformity of the offer by the AMF). Considering the commitment not to contribute of the main institutional investors, which hold 47.7% of share capital after disposals (Crédit Agricole Assurances, Cardif, Generali and ACM) In order to finance those acquisitions in Hotels and, to a greater extent, its investments and growth projects in each of its asset classes (Offices, Residential, Hotels), Foncière des Régions is contemplating a capital increase of around €250 million with preferential subscription rights(1). The majority shareholders, representing close to 50% of the share capital have already expressed their desire to participate in this. Outlook for 2015: slight increase in the Recurring Net Income per share ww in Hotel real estate, Foncière des Régions is increasing its exposure (the operation on FDM represents an investment of €430 million to €700 million of assets) and intends to accelerate investments via three tools (sale and leaseback, developments and acquisitions of premises and businesses). The Group set itself an investment target of over €400 million (€200 million GS). These sound results confirm the permanence of the cash-flows and robust values. 2014 saw the solidity of the portfolio increase, with focusing on strategic markets, the capacity to capitalise on investment opportunities and improvement of the visibility of the results. In 2015, Foncière des Régions intends to capitalise on new growth opportunities in its strategic asset classes: ww in Offices, the Group intend to invest €300 million mainly in its pipeline. In 2015, nine projects will be delivered for a cost of €309 million To date, already €1 billion of investments are committed. The strategy of portfolio quality enhancement will also continue thanks to the pursue of disposals with a €700 million program. ww in Germany Residential, which has an organic growth potential, the Group aims to invest €500 million in prime acquisitions in strategic locations. Two portfolios have been negotiated already for €221 million Backed by its sound outlook, for 2015, Foncière des Régions targets more than 95% of its portfolio in its strategic markets and is anticipating a slight increase in its EPRA Recurring Net Income per share. (1) Subject to obtaining the prospectus approved by the AMF. Foncière des Régions 7 Reference Document 2014 1 1 Management report 2014 Major transactions during the period 1.3. MAJOR TRANSACTIONS DURING THE PERIOD January 2014 September 2014 ww Beni Stabili issues a €350 million convertible bond offer. ww Foncière des Régions successfully places a €500 million seven-year bond issue. ww Acquisition by Foncière des Régions and Crédit Agricole Assurances of the future Eiffage Groupe campus at Vélizy-Villacoublay. ww Foncière des Régions presented with two EPRA Gold awards for the quality of its financial and non-financial reporting, for the 2013 Reference Document and 2013 Sustainable Development report. February 2014 October 2014 ww B&B supported in its European development. ww CB 21: new letting. Nearly 10,750 m2 let. ww New rental partnership for Foncière des Régions. Acquisition of the ”Liberté et Coupole” complex at Charenton-le-Pont, from Natixis. March 2014 ww Foncière des Régions continues to pursue its strategy in German Residential properties. ww Foncière des Régions speeds up its strategic refocus, disposing of nearly 60% of its logistics assets for €473 million. November 2014 June 2014 ww Foncière des Régions and Crédit Agricole Assurances deliver the New Vélizy campus to Thales. ww Foncière des Régions acquires the ”****Amsterdam Centre” hotel from operator NH Hotel Group. ww Foncière des Murs: Successful €200 million capital increase. ww Foncière des Régions continues to build up its presence in the German residential market. December 2014 ww Foundation stone laid for the Golden Tulip hotel in **** the Euromed Center, Marseille’s new cultural and economic hub. ww Foncière des Régions and Meininger Hotels announce a strategic partnership. ww Opening of the B&B hotel Paris Porte des Lilas. ww Foncière des Régions announces the creation of FDM Management. July 2014 ww Foncière des Régions and Demathieu & Bard Immobilier develop the future registered office of Bose France in Saint-Germain-en-Laye. 1.4. EVENTS AFTER REPORTING PERIOD January 2015 February 2015 ww Foncière des Régions continues to invest in Germany. ww Foncière des Régions launches a new hotel partnership with Motel One. ww Foncière des Régions launches takeover bid for subsidiary Foncière des Murs. Foncière des Régions 8 Reference Document 2014 Management report 2014 Business analysis 1.5. BUSINESS ANALYSIS Foncière des Régions increased its stake in Foncière Développement Logements following the Public Exchange Offer (PEO) in August 2013. At the close of the PEO, Foncière des Régions held 59.7% of Foncière Développement Logements, which, as from 1 August 2013, is fully consolidated. In this way, the P&L was impacted for 5 months of the Residential business in 2013 compared with 12 months in 2014. On 27 October, Foncière des Régions participated in the capital increase of Beni Stabili, and it now holds 48.3% of Beni Stabili’s capital. Foncière des Régions increased its equity interest in Foncière des Murs following capital increase in November 2014, and it now owns 28.46% of Foncière des Murs. Also, following the France and Germany activities split done in July 2014, Foncière des Régions directly holds 60.9% of the German portfolio and Foncière Développement Logements holds 61.26% of it. 1.5.1. Recognised rental income: +6.2% 100% (€M) Offices France Paris Paris Region Other French regions Offices Italy Core portfolio Dynamic portfolio Development portfolio Group Share 2013 2014 Change (%) 2013 2014 Change (%) Change (%) LFL 265.2 84.3 102.5 78.5 231.7 228.4 3.3 0.0 250.7 82.5 101.3 66.9 228.7 226.0 2.7 0.0 -5.5% -2% -1% -15% -1.3% -1% -19% 0% 255.0 79.8 96.8 78.4 117.9 116.2 1.7 0.0 238.2 77.9 93.4 66.9 114.9 113.5 1.3 0.0 -6.6% -2% -4% -15% -2.5% -2% -19% 0% 0.7% -1.5% % of rent 43% 14% 17% 12% 21% 20% 0% 0% TOTAL OFFICES 496.9 479.4 -3.5% 372.9 353.0 -5.3% 0.0% 63% Hotels and Service sector Hotels Healthcare Business premises Residential Germany 204.0 143.1 22.2 38.7 63.8 196.1 142.8 16.5 36.7 171.1 -3.9% 0% -26% -5% 168.0% 53.0 35.8 6.3 10.9 37.9 51.0 35.8 4.7 10.5 103.4 -3.9% 0% -25% -4% 173.1% -0.6% 1.8% 9% 6% 1% 2% 19% TOTAL CORE ACTIVITIES 764.7 846.5 10.7% 463.7 507.4 9.4% 0.2% 91% 67.2 54.2 13.0 61.9 33.1 28.8 -8.0% -39% 122% 62.0 54.2 7.8 50.7 33.1 17.6 -18.1% -39% N/A N/A 9% 6% 3% 832.0 908.4 9.2% 525.7 558.1 6.2% 0.2% 100% Other Logistics Residential France TOTAL RENT IN RENTAL INCOME The explanation, like-for-like (+0.2%), for this improvement lies in the very low indexation over the period, the rent renewals signed in 2013, as well as the maintenance of an occupancy rate above 97.1% at the end of December 2014. 9% Other 19% Residential Germany 9% 43% France Offices Hotels & Service sector 21% Italy Offices Foncière des Régions 9 Reference Document 2014 1 1 Management report 2014 Business analysis As Group share, rental income totalled €558 million, an increase of 6.2% over the period. The increase was mainly due to the consolidation of the Residential business (+€75 million), and: ww new asset acquisitions and deliveries (+€6.4 million) ww disposals (-€46.2 million, €21.3 million of which was related to disposals in Logistics) ww indexation and the mixed effect from departures and re-lettings (-€0.3 million). 1.5.1.1. Cost to revenue by business Offices France Offices Hotels & Italy Service Sector Residential Germany Other Total 2014 2014 2014 2014 2014 2013 2014 238.2 114.9 51.0 103.4 50.7 525.7 558.1 Unrecovered property operating coats -5.7 -12.4 -0.0 -3.0 -6.7 -26.6 -27.9 Expenses on properties -1.9 -3.7 -0.0 -9.0 -3.3 -11.4 -17.8 Net losses on unrecoverable receivable -0.5 -1.2 -0.0 -3.3 -0.1 -5.3 -5.1 Rental Income Net rental income COST TO REVENUE RATIO 230.2 97.6 50.9 88.0 40.6 482.4 507.3 3.4% 15.1% 0.0% 14.8% 19.9% 8.3% 9.1% The cost to revenue ratio rose from 8.3% in 2013 to 9.1% in 2014 following the inclusion of the France Residential business, for which cost to revenue ratio was higher than the average for the Group. Excluding the effect of inclusion, the cost to revenue ratio fell to 7.1% in 2014, compared with 7.7% in 2013. 1.5.2. Lease expirations and occupancy rates 1.5.2.1. Annualised lease expirations: 7.9 years of residual term leases (5.8 years firm) for commercial activities By lease end date (1st break) % of total By lease end date % of total 2015 31.6 8% 21.9 5% 2016 29.4 7% 2.6 1% 2017 39.7 9% 25.9 6% 2018 43.7 10% 30.0 7% 2019 47.1 11% 45.0 11% 2020 30.0 7% 30.0 7% 2021 76.1 18% 37.0 9% 2022 33.9 8% 37.8 9% 2023 35.6 8% 45.4 11% 2024 6.7 2% 9.2 2% (€M)(1) Beyond 46.2 11% 135.2 32% TOTAL 419.9 100% 419.9 100% (1) Residential and Logistics excluded. Foncière des Régions 10 Reference Document 2014 Management report 2014 Business analysis LEASE EXPIRATION 18% 8% 9% 10% 11% 11% 8% 7% 7% 8% 2% 2015 2016 2017 2018 2019 2020 2021 2022 2023 By lease end date (1st break) (year) 2024 Beyond By lease end date 2013 2014 2013 2014 France 5.7 5.4 6.8 6.4 Italy 6.9 6.3 12.6 12.1 Offices 6.1 5.7 8.5 8.0 Hotels & Service sector 7.1 6.8 7.1 6.9 Office – Key Accounts 6.2 5.8 8.4 7.9 Other 3.1 N/A 5.5 N/A TOTAL 5.8 5.7 8.0 7.9 GS The firm term of the leases remained stable between 2013 and 2014 following the disposal of short-term leases (sale of most of the Logistics business) and the signature of new leases, notably with Natixis and Thales, each for a firm term of 9 years. 1.5.2.2. Occupancy rate: 97.1% Occupancy rate (%) 2013 2014 France 95.8% 96.8% Italy 97.7% 95.2% Offices 96.4% 96.3% GS Hotels & Service sector 100.0% 100.0% Residential Germany 98.7% 98.3% Strategic activities 97.2% 97.1% Other 85.5% N/A TOTAL 96.0% 97.1% (1) Excluding France Residential. The occupancy rate is 97.1%, excluding Logistics, and 96.3% including this segment. For France Offices, it grew by 1 point and was 96.8% following the lettings in the CB 21 Tower and the signature of preliminary sale agreements for vacant assets at the end of the year. In Italy Offices, the occupancy rate fell by 2.5% due to a 51,383 m² asset in Turin being vacated. Foncière des Régions 11 Reference Document 2014 1 1 Management report 2014 Business analysis 1.5.3. Breakdown of rental income – Group share 1.5.3.1. Breakdown by major tenants: a strong rental income base Annualised rental income (€M) GS 2014 % Orange 90.4 22% Telecom Italia 56.5 13% Accor 23.7 6% Suez Environnement 21.3 5% EDF 18.2 4% Thales 10.7 3% Natixis 10.5 2% Dassault Systèmes 9.8 2% Intesa 9.2 2% Eiffage 8.4 2% SNCF 7.6 2% Tecnimont 7.3 2% B&B 6.8 2% AON 5.4 1% Peugeot/Citroën 5.2 1% Korian 4.4 1% Quick 4.7 1% Other tenant < €4 M 119.8 29% TOTAL RENTAL INCOME 419.9 100% 22% Orange 29% < €4m Other tenants 13% 1% Telecom Italia Korian AON Quick Peugeot Citroën 6% Accor 5% Suez Environnement 2% 4% Dassault Systèmes Natixis Tecnimont Eiffage Intesa SNCF B&B EDF 3% Thales Foncière des Régions 12 Reference Document 2014 Management report 2014 Business analysis 1.5.3.2. Geographic breakdown: Paris Region, Berlin, Milan and Rome account for 54% of rental income IN RENTAL INCOME 5% Other 19% Residential Germany 10% Hotels & Service sector 13% NRW 36% Paris Region 6% Berlin 2% International 47% 5% Regions Offices France 3% Paris Region 11% Region 10% Other 19% Offices Italy 2% Rome 7% Milan 1.5.4. Disposal and agreements for disposals: €986 million Disposals Agreements (agreements as of end New New as of end of of 2013 disposals agreements 2013 closes) (I) to close 2014 (II) 2014 (€M) Total 2014 Margin vs 2013 value Total Disposals Yield (I + II) Offices – France 100% 152 105 116 21 137 7.0% 6.6% 268 Offices – Italy 100% 29 3 79 2 81 3.3% 6.1% 108 GS 14 2 38 1 39 3.3% 6.1% 52 100% 119 1 33 127 160 5.4% 7.1% 151 GS 72 1 20 78 97 5.4% 7.1% 92 100% 79 3 57 5 62 1.4% 5.5% 136 GS 22 1 16 1 18 1.4% 5.5% 39 Other 100% 17 0 608 143 751 0.2% 6.1% 625 GS 10 0 565 129 694 -0.3% 6.4% 576 TOTAL ASSET DISPOSALS 100% 395 113 894 298 1,191 1.9% 6.2% 1,289 GS 271 109 756 230 986 1.5% 6.4% 1,027 Residential – Germany Hotels & Service sector During 2014, Foncière des Régions concluded €986 million in new disposals (€756 million) and disposal agreements (€230 million). These disposals mainly related to non-Core businesses (70%) with the sale of 77% of the Logistics portfolio. New disposals in 2014 achieved a positive margin of 1.5% over appraisal values at the end of 2013. Foncière des Régions 13 Reference Document 2014 1 1 Management report 2014 Business analysis 1.5.5. Asset acquisitions: €397 million Group share (€M) Total ID(1) 2014 Yield 6.5% Offices – France 100% 161.9 Offices – Italy 100% - GS - Hotels & Service sector 100% 60.4 GS 17.2 Residential Germany 100% 357.8 GS 217.9 Other 100% - TOTAL 100% 580.1 GS 397.0 (1) 6.9% 6.0% 6.2% ID: including duties. In 2014, Foncière des Régions continued its strategy of acquiring assets in its strategic markets with: ww the acquisition in September 2014 of the Offices rented to Natixis in Charenton-le-Pont with a total surface area of almost 38,000 m²; the acquisition price was €162 million ww Hotel acquisitions totalling €60 million (100%) and the acquisition in June 2014 of the Hotel NH Amsterdam Centre for €48 million ww Residential investments in Germany for €358 million (100%), with 62% of the assets located in Berlin, 33% in Dresden and 5% in Leipzig. Foncière des Régions 14 Reference Document 2014 Management report 2014 Business analysis 1.5.6. Development projects: €1.5 billion Group share 1.5.6.1. Committed Projects: €532 million, Group share (of which 63% pre-let) Projects Euromed Center – Astrolabe (QP FDR: 50%) Euromed Center – Parking + Commerces (QP FDR: 50%) Steel ERDF Avignon Nanterre Respiro Quatuor Askia – Cœur d’Orly (QP FDR: 25%) Location Area Offices France Marseille MRC Construction 14,000 2015 250 35% 19.0 > 7% 100% MRC Construction 900 2015 N/A 100% 15.9 > 7% 100% Paris Refurbishment 3,700 2015 600 0% 36.1 6% 80% MRC Refurbishment Paris Region Construction 4,100 2015 160 100% 8.9 > 7% 75% 11,150 2015 310 100% 51.2 > 7% 75% MRC Construction 9,700 2015 160 72% 23.0 > 7% 80% 18,500 2015 250 50% 15.4 > 7% 70% 20,400 2015 285 70% 86.9 > 7% 60% 23,000 2015 270 100% 53.1 > 7% 70% MRC Construction 9,900 2016 N/A 100% 18.6 > 7% 35% MRC Construction Paris Region Construction 9,600 2016 250 0% 14.9 > 7% 20% 13,100 2016 300 100% 34.5 6% 5% MRC Refurbishment 3,150 2016 155 100% 8.1 > 7% 20% MRC Refurbishment Paris Region Refurbishment 10,600 2016 280 0% 47.2 6% 10% 5,500 2016 N/A 100% 25.0 6% 5% Construction 5,100 2016 225 100% 20.3 > 7% 30% Refurbishment Construction Construction 5,500 3,947 2,493 2017 2015 2015 N/A N/A N/A 0% 100% 100% 40.0 2.4 1.0 > 7% 6% 7% 10% 83% 37% Construction 2,264 2015 N/A 100% 1.7 > 7% 35% Construction Construction Construction Construction Construction 2,429 2,306 2,597 N/A 2,706 2015 2015 2015 2016 2015 N/A N/A N/A N/A N/A 100% 100% 100% 100% 100% 2.1 1.5 1.1 2.3 1.5 > 7% > 7% > 7% > 7% > 7% 21% 40% 12% 2% 30% 63% 532 >7% 49% 72% 71% Thaïs B&B Porte de Choisy B&B Lyon Caluire Offices France Orly Offices France Saint-Denis Offices France Vélizy Offices France Marseille Offices France Marseille Offices France Vélizy Offices France Montpellier Offices France Lyon Offices France Saint-Mandé SaintOffices Germain-enFrance Laye Offices France Levallois Hotels Paris Hotels Lyon B&B Romainville Hotels Romainville B&B Torcy B&B Mülheim B&B Erfurt B&B Berlin B&B Duisburg Hotels Hotels Hotels Hotels Hotels Torcy Mülheim Erfurt Berlin Duisburg Green Corner Campus Eiffage (QP FDR: 50%) Euromed Center – Hôtel (QP FDR: 50%) Euromed Center – Calypso (QP FDR: 50%) Dassault Systèmes Extension (QP FDR: 50%) Schlumberger Montpellier Pompignane Silex I Clinique Saint-Mandé Bose Surface(1) (m²) Delivery Type Offices France Marseille Offices France Paris Offices France Avignon Offices France Nanterre Offices France Lille-Roubaix Project Target rent PreTotal (€/m²/ leased Budget(2) Target (%) (€M) Yield Progress year) Paris Region Construction Paris Region Construction Paris Region Construction Paris Region Paris Region Paris MRC Paris Region Paris Region Germany Germany Germany Germany TOTAL 200,642 Surface 100%. (2) Group share, including land cost and financial cost. (1) Foncière des Régions 15 Reference Document 2014 1 1 Management report 2014 Business analysis 2014 saw the renewal of the development pipeline with the delivery of seven development projects, including the delivery of the New Vélizy asset (46,000 m²) and the launch of nine new projects. The pre-letting rate was 63% at the end of 2014. 1.5.6.2. Managed projects Type Location Area Surface(1) (m²) Delivery timeframe Nancy Grand Cœur Offices – France Nancy MRC 6,500 2016 Euromed Center: Bureaux Floreal (QP FDR 50%) Offices – France Marseille MRC 13,500 2016 Euromed Center: Bureaux Hermione (QP FDR 50%) Offices – France Marseille MRC 10,400 2016 Saint-Mandé Logements Offices – France Saint-Mandé Paris Region 7,300 2017 Toulouse Marquette Offices – France Toulouse MRC 10,900 2017 Cœur d’Orly Commerces (QP FDR 25%) Offices – France Orly Paris Region 31,000 2017 Issy Grenelle Offices – France Issy Paris Region 10,800 2017 Silex II Offices – France Lyon MRC 30,700 2018 New Vélizy – Extension (QP FDR 50%) Offices – France Vélizy Paris Region 14,000 2018 Meudon Saulnier Offices – France Meudon Paris Region 30,000 2018 Meudon Green Valley Offices – France Meudon Paris Region 46,900 2018 DS Campus Extension 2 (QP FDR 50%) Offices – France Vélizy Paris Region 11,000 2018 Cœur d’Orly Bureaux (QP FDR 25%) Offices – France Orly Paris Region 50,000 2017-2018 119,000 Dependind pre-let status Projects Milan, Symbiosis (Ripamonti) Offices – Italy Milan Italy TOTAL (1) 392,000 Surface 100%. 1.5.7. Portfolio 1.5.7.1. Valuation and change in the portfolio Value 2013 Value 2014 Value 2014 GS Offices – France(1) 4,664 5,032 Offices – Italy(1) 4,157 4,093 Total Office 8,821 Residential Germany 2,446 Hotels & Service sector Other (€M) (1) Parking facilities Portfolio Equity affiliates LFL change 12 months Yield ED 2013 Yield ED 2014 % of portfolio 4,353 3.0% 6.8% 6.6% 45% 1,977 -0.2% 6.1% 6.1% 20% 9,125 6,330 2.0% 6.6% 6.4% 65% 2,746 1,656 2.9% 6.6% 6.5% 17% 3,232 3,243 844 2.0% 6.3% 6.1% 9% 1,662 1,088 778 1.3% 4.6% 4.7% 8% 241 210 124 N/A N/A N/A 1% 16,402 16,413 9,732 2.1% 6.5% 6.3% 100% 23 20 20 TOTAL – CONSOLIDATED 16,425 16,433 9,752 TOTAL – GS 10,010 9,752 (1) In operation assets (Offices – France & Hotel and Service Sector)/Core assets (Offices – Italy). The Group share of Foncière des Régions’ total asset portfolio at the end of December 2014 stood at €9.8 billion (€16.4 billion at 100%) compared to €10 billion at the end of 2013, a like-for-like increase of 2.1% compared to the end of 2013. Value adjustments like-for-like were supported by the France Offices (+3.0%), Residential Germany (+2.9%) and Hotels & Service (+2%) segments. Foncière des Régions 16 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.5.7.2. Geographic breakdown IN ASSET VALUE (€M) GS(1) 2014 France 5,945 Italy 1,977 Germany 1,679 Other Other 17% Germany 131 TOTAL PORTFOLIO (1) 2% 20% 9,732 61% Italy Excluding Equity method. France 1.5.8. List of major assets The value of the ten main assets represents almost 16% of the portfolio (Group share). Location Tenants Surface (m²) Paris-La Défense Suez Environnement, AIG Europe, Nokia, Groupon 68,079 75% Natixis Charenton Charenton Natixis 37,835 100% Dassault Campus Vélizy-Villacoublay Dassault 56,193 50.1% Top 10 Assets Tour CB 21 Complexe Garibaldi Immeuble – 23 rue Médéric New Vélizy Carré Suffren Share of affiliates Milan Maire Tecnimont 44,650 48.3% Paris 17e Orange 11,182 100.0% Vélizy-Villacoublay Thales 46,163 50.1% Paris 15e AON, Institut Français, Ministère de l'Éducation 24,864 60% Percier e Paris 8 Chloe 8,544 100.0% Cap 18 Paris 18e Genegis, Media Participations 61,097 100.0% Traversière Paris 12 SNCF 13,700 100.0% e Excluded assets under commitments. 1.6. ANALYTICAL DATA FOR THE BUSINESS BY SEGMENT Offices France indicators are presented at 100% and as Group share (GS). Assets held partially are the following: ww the DS Campus and New Vélizy properties 50.1% owned (equity method) ww Le Ponant 83.5% owned ww Euromed Center 50% owned (equity method) ww the CB 21 Tower 75% owned ww Askia, the first office building in the Cœur d’Orly project, 25% owned (equity method). ww Carré Suffren 60% owned ww the Eiffage properties located at Vélizy (head office of Eiffage Construction and Eiffage Campus, the head office of Eiffage Groupe) 50.1% owned (fully consolidated) Foncière des Régions CAP 18 is reclassified under Offices France (instead of Logistics previously). 17 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.1. Offices France 1.6.1.1. Rental income recognised: €238 million, +0.7% like-for-like 1.6.1.1.1. Geographic breakdown strategic locations (Paris Region and Regional Cities – MRC) generate 87% of rental income Rental income 2013 GS Rental income 2014 100% Rental income 2014 GS Change (%) Surface (m²) Number of assets Rental income 2013 100% Paris Centre West 70,971 11 30.3 30.5 30.5 30.6 0.4% 12.1% Southern Paris 77,996 11 33.5 28.7 31.7 26.9 -6.3% 12.6% North Eastern Paris 113,753 6 20.5 20.5 20.4 20.4 -0.6% 8.1% Wester Crescent and La Défense 207,141 22 63.9 58.2 63.7 57.2 -1.7% 25.4% Inner suburbs 351,996 22 17.9 18.0 21.9 20.4 13.5% 8.7% Outer suburbs 124,653 56 20.6 20.6 15.7 15.7 -23.7% 6.3% Total Paris Region 946,510 128 186.8 176.6 183.8 171.2 -3.0% 73.3% MRC 425,764 75 38.9 38.8 33.7 33.7 -13.1% 13.4% 484,290 180 39.6 39.6 33.2 33.2 -16.2% 1,856,564 383 265.3 255.0 250.7 238.2 -6.6% (€M) Other French regions TOTAL IN RENTAL INCOME 13% Other French Regions 14% 13.2% 0.7% 100.0% -- the New Vélizy asset, a turnkey property leased to Thales, delivered in October 2014 (€1.1 million Group share) 12% West Central Paris -- delivery of the Pégase asset, a turnkey property leased to Eiffage and located in Clichy (92) in April 2013 (+€0.4 million) 13% Southern Paris -- a turnkey office building leased to Egis in Montpellier, delivered in July 2014 (+€0.4 million) 8% Outer suburbs % of rental income ww delivery of pre-leased assets, including: MRC 6% Change (%) LFL ww vacation of properties earmarked for refurbishment or complete redevelopment (-€3.1 million), notably the Silex 1 and 2 buildings in Lyon and the Levallois Anatole France property Northeast Paris 9% 25% Inner suburbs ww an increase like-for-like of +0.7% (€1.5 million) thanks to: Western Crescent & La Défense ww the positive effect of indexation (+€1 million) ww the rental activity (+€0.5 million): -- rentals (+€3.3 million) -- vacated premises (-€2.1 million) -- renewals/renegotiations (-€0.7 million, a drop of 1% in renewed leases). Group share rental income fell from €255 million to €238.2 million, a drop of €16.8 million over one year. This change is the combined result of: ww asset disposals and sharing agreements in 2013 and 2014 (-€18.6 million), due primarily to disposals in the outer suburbs and in the Regions, along with the sharing of the DS Campus (-€2.7 million) ww asset acquisitions and deliveries (+€5.8 million): ww acquisitions: -- of the Natixis building to Charenton in Q4 2014 (€2.6 million) -- of the SICRA headquarters to Chevilly-Larue in March 2013 (€0.4 million) Foncière des Régions 18 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.1.2. Annualised rental income: €263 million 1.6.1.2.1. Breakdown by major tenants (€M) GS (1) Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of rental income Orange 603,007 192 108.4 90.4 -16.6% 34.3% 44,637 2 21.1 21.3 0.9% 8.1% Suez Environnement EDF 195,083 23 19.0 18.2 -4.4% 6.9% Natixis 37,890 3 0.0 10.5 N/A 4.0% Dassault Systèmes 56,192 1 9.8 9.8 0.3% 3.7% Thales 88,274 2 9.2 10.7 16.2% 4.1% Eiffage 190,657 104 9.1 8.4 -7.5% 3.2% SNCF 13,700 1 7.7 7.6 -1.4% 2.9% AON 15,592 1 5.5 5.4 -1.3% 2.1% Peugeot Citroën 19,531 1 5.1 5.2 1.4% 2.0% Other tenants < €4 M TOTAL (1) 592,001 53 74.5 75.7 1.7% 28.8% 1,856,564 383 269.4 263.1 -2.3% 100.0% Including DS Campus in GS 50%. IN RENTAL INCOME 29% Other tenants 34% 2% Orange 3% Suez Environnement Peugeot Citroën AON Holdings France 8% SNCF Thales Eiffage 7% EDF 4% Dassault Systèmes Currently, the ten leading tenants represent 71% of annualised rents, a percentage slightly lower than at the end of 2013 (75%). The 2.3% drop in rental income between 2013 and 2014 is mainly due to the impact of disposals (notably Orange and EDF). This was partially offset by the acquisition of the Natixis Charenton building (€10.5 million of annual rents). Foncière des Régions 19 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.1.2.2. Geographical breakdown: Paris Region accounts for 76% of rental income Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Paris Centre West 70,971 11 34.0 Southern Paris 77,996 11 30.6 113,753 6 20.7 (€M) GS (1) North Eastern Paris Change (%) % of rental income 34.0 0.0% 13% 28.6 -6.6% 11% 21.4 3.2% 8% Wester Crescent and La Défense 207,141 22 64.0 63.1 -1.4% 24% Inner suburbs (1) 351,996 22 27.5 40.2 46.1% 15% Outer suburbs 124,653 56 19.4 13.0 -33.1% 5% Total Paris Region 946,510 128 196.2 200.2 2.0% 76% MRC 425,764 75 36.1 32.6 -9.8% 12% 484,290 180 37.1 30.3 -18.2% 12% 1,856,564 383 269.4 263.1 -2.3% 100% Other French regions TOTAL (1) Including DS Campus in GS 50%. IN RENTAL INCOME 12% 13% Other French Regions West Central Paris 12% 11% MRC Southern Paris 5% 8% Outer suburbs Northeast Paris 15% Inner suburbs 24% Wester Crescent & La Défense The geographical breakdown of rental income is in line with that of the accounted rental income, confirming the prevalence of the Paris Region share, with 76% of annualised rental income. The main changes in rental income by geographical area reflect the rental activity since 1 January 2014: 1.6.1.3. Indexation ww disengagement from the Regions (-18.2%) and from the outer suburbs (-33.1%) by disposing of assets, particularly the EDF rue de Verdun in Nîmes (€0.9 million in annualised rental income) and the Orange asset in Soisy-sous-Montmorency The rents benefiting from an indexation floor (1%) represent 34% of the annualised rents and are indexed on the ILAT. The indexation effect is +€1 million over 12 months. 28% of rental income is indexed to the ICC, 69% is indexed to the ILAT, whilst the balance is indexed to the ILC or IRL. The impact of a negative indexation of the ILAT and the ICC at -1% on annualised rents is estimated at €1.4 million, a decrease of 0.5%. ww developments in the inner suburbs (+46% of annualised rental income), notably the acquisition of the Natixis Charenton asset. Foncière des Régions 20 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.1.4. Rental activity (€M) Surface (m²) Annualised rental income Annualised rental income (€/m²) Vacating 117,593 14.3 121.4 Letting 76,410 Renewal (1) 115,543 18.4 (1) 241.3 28.1 243.0 GS rent = €11,9 million. ww eight properties rented by the Eiffage group (9,249 m²; €0.5 million of rent) in January 2014 in accordance with our initial agreements As regards marketing efforts, the significant events for this year were the letting in the CB 21 Tower. Five new leases with Covidien, FHB, Groupon, Wano and Verizon, representing a total of 11,364 m² were signed in 2014. The Tower currently has an occupation rate of 97% and one floor remains to be let (1,300 m²). ww of 16 assets leased to Orange (45,545 m²: €6.1 million of rent) located mostly in regions and which are intended to be sold vacant to developers (five have already been sold in 2014 for 13,194 m²/€1.1 million). 2014 was also underscored by the renewal of 11% of the leases in the portfolio as a result of the continuation of our partnership strategy, which is proving effective in keeping our tenants in our properties. These vacancies have been offset by letting existing assets and delivering leased assets, representing €11.9 million in annualised rental income (76,410 m²) and the delivery of the New Vélizy assets (46,000 m²) in October and the building leased to Egis in Montpellier (6,000 m²) in July. All the signatures of the year (including the acquisition of the building Natixis at Charenton) represent €50 million for 6.1 year firm lease. In 2014, one asset in Levallois-Perret and two assets in Meudon and Vélizy were vacated with a view to redevelopment, but also: 1.6.1.5. Lease expirations and occupancy rates 1.6.1.5.1. Lease expirations: 6.4 years residual lease term (5.4 years firm) By lease end date (1st break) % of total By lease end date % of total 2015 28.7 11% 19.5 7% 2016 27.9 11% 2.2 1% 2017 22.2 8% 13.5 5% 2018 28.1 11% 17.8 7% 2019 25.2 10% 38.3 15% 2020 27.7 11% 29.4 11% 2021 18.3 7% 36.1 14% 2022 19.5 7% 30.9 12% 2023 32.8 12% 40.1 15% (€M) (1) 2024 4.1 2% 3.4 1% Beyond 28.6 11% 31.8 12% TOTAL 263.1 100% 263.1 100% (1) Including DS Campus in GS 50%. Foncière des Régions 21 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment LEASE EXPIRATIONS 11% 11% 11% 10% 12% 11% 8% 7% 11% 7% 2% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Beyond The firm residual term is lower at 5.4 years, vs. 5.7 years at the end of 2013. By lease termination date, the residual term of the leases amounts to 6.4 years (vs. 6.8 in 2013). The mechanical loss of 12 months of residual term was partially offset by the signature of long leases (Natixis and Thales in New Vélizy leases for 9 years firm at the end of 2014), the lease renegotiations, particularly for the Percier assets (Chloé lease + 3 years firm). 1.6.1.5.2. Occupancy rate and type: an occupancy rate of 96.8% 2013 2014 100.0% 100.0% Southern Paris 99.2% 99.2% North Eastern Paris 96.1% 97.4% Wester Crescent and La Défense 92.5% 97.7% Inner suburbs 98.5% 99.0% (%) Paris Centre West Outer suburbs 95.4% 94.0% Total Paris Region 96.3% 97.9% MRC 95.4% 95.1% Other French regions 93.8% 89.9% TOTAL 95.8% 96.8% 1.6.1.6. Reserves for unpaid rents The occupancy rate is up in comparison with the end of 2013 (96.8% vs. 95.8%). That is explained by the successful letting of CB 21 Tower. Therefore, the occupancy rate in Paris Region has risen by 1.6 point over the year. The increase in the vacancy rate in the Regions is explained by the liberation of the Eiffage and Orange sites which are the subject of an ongoing sales process. 2013 2014 As % of rental income 0.1% 0.2% 0.3 0.5 In value (1) (1) The other vacant office space is mainly found in 3 properties located in Paris (marketing ongoing), Nîmes and in Lille; these latter two are the subject of an ongoing sales process. Foncière des Régions (€M) Net provision/reversals of provision. For France Offices, the level of unpaid rents remains very low, given the quality of the client base. 22 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.1.7. Disposals and disposal agreements: €137 million Disposals (agreements as of end of 2013 closed) (I) Agreements as of end of 2013 to close New disposals 2014 (II) Total Paris Region 65.9 82.6 MRC 60.4 5.2 Other French regions 26.0 17.6 (€M) Participations TOTAL New agreements 2014 58.2 14.8 23.7 0.0 Total 2014 Margin vs 2013 value Yield Total Disposals (I + II) 8.6 66.7 10.0% 6.0% 124.0 12.7 27.5 11.7% 5.5% 75.2 23.7 0.3% 9.7% 49.7 0.0 0.0 19.5 0.0 19.5 0.0% N/A 19.5 152.3 105.5 116.1 21.3 137.5 7.0% 6.6% 268.4 New commitments (new disposals and new preliminary disposal agreements) reflecting a desire to improve the quality of the portfolio. These €137 million commitments relate to 34 assets, including 30 in the dynamic compartment and a total of €51 million in other French regions. Work on disposals in 2014 also included the materialisation of €152 million in preliminary agreements signed in previous years. 1.6.1.8. Acquisitions: €162 million ID Surface (m²) Location Natixis Charenton 37,835 Charenton-le-Pont TOTAL 37,835 Assets (1) Tenants Acquisition Price (€million) Yield(1) Natixis 161.9 6.5% 161.9 Including duties. Foncière des Régions entered into a new partnership with Natixis by acquiring a 38,000 m² asset leased for 9 years firm at the start of October 2014 under a sale and lease back programme, BREEAM In-Use certified. 1.6.1.9. Development projects: a pipeline of more than €1.4 billion 1.6.1.9.1. Delivery of properties The development policy of Foncière des Régions aims mainly at continuing the asset enhancement work undertaken (improvement of asset quality and creation of value), supporting Key Accounts partners over the long term in the deployment of their real estate strategy, and managing new operations in strategic locations. ww in October 2014, the New Vélizy asset, a campus of 46,000 m² built turnkey for the Thales group and located in VélizyVillacoublay, under a 9 year firm lease, HQE and BREEAM ”Very Good” certified Over the year, the following properties were delivered: ww in July 2014, a new turnkey office building covering 6,000 m² leased to Egis and located in the Parc de la Pompignane in Montpellier under a 9 year firm lease. The strategy is based, in the greater Paris area, on locations which are well served by public transport and/or in established tertiary districts and in the large Regional Cities where the annual take-up is greater than 50,000 m² per year, in prime locations. Foncière des Régions 23 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.1.9.2. Committed projects Target offices rent Total (€/m²/ Pre-let Budget(2) year) (%) (€M) Progress Projects Location Area Project Surface(1) (m²) Delivery Euromed Center – Astrolabe (QP FDR: 50%) Marseille MR Construction 14,000 2015 250 35% 19 100% > 7% Euromed Center – Parking + Commerces (QP FDR: 50%) Marseille MR Construction 900 2015 N/A 100% 16 100% > 7% Paris Paris Refurbishment 3,700 2015 600 0% 36 80% 6% MR Reconstruction 4,100 2015 160 100% 9 75% > 7% Steel ERDF Avignon Avignon Yield Paris Region Construction 11,150 2015 310 100% 51 75% > 7% Lille-Roubaix MR Construction 9,700 2015 160 72% 23 80% > 7% Orly Paris Region Construction 18,500 2015 250 50% 15 70% > 7% Saint-Denis Paris Region Construction 20,400 2015 285 70% 87 60% > 7% Vélizy Paris Region Construction 23,000 2015 270 100% 53 70% > 7% Euromed Center – Hôtel (QP FDR: 50%) Marseille MR Construction 9,900 2016 N/A 100% 19 35% > 7% Euromed Center – Calypso (QP FDR: 50%) Marseille MR Construction 9,600 2016 250 0% 15 20% > 7% Vélizy Paris Region Construction 13,100 2016 300 100% 34 5% 6% MR Reconstruction 3,150 2016 155 100% 8 20% > 7% Nanterre Respiro Quatuor Askia – Cœur d’Orly (QP FDR: 25%) Green Corner Campus Eiffage (QP FDR: 50%) Dassault Systèmes Extension (QP FDR: 50%) Schlumberger Montpellier Pompignane Silex I Nanterre Montpellier Lyon MR Refurbishment 10,600 2016 280 0% 47 10% 6% 5,500 2016 N/A 100% 25 5% 6% 5,100 2016 225 100% 20 30% > 7% 5,500 2017 ND Clinique Saint-Mandé Saint-Mandé Paris Region Reconstruction Bose SaintGermain-enLaye Paris Region Construction Levallois Paris Region Refurbishment Thaïs TOTAL (1) (2) 181,900 0% 40 10% > 7% 62% 518 53% >7% Surface 100%. In Group share, including land cost and financial cost. ww with Bose on a 5,100 m² turnkey property for the future headquarters of the Group in Saint-Germain-en-Laye for which work began in July Several projects were launched and begun during the year: ww Calypso, an office building of 9,600 m² within the Euromed Center project in Marseille ww with Schlumberger on a 3,150 m² turnkey property in the Parc de la Pompignane, in Montpellier for which work began in November ww Silex 1, a 10,600 m² office building in the heart of the Part-Dieu district in Lyon ww A turnkey for ERDF in Avignon over a floor area of 4,100 m² ww with INICEA on a 12 year firm lease in advance of completion, for the construction of a 120-bed psychiatric clinic in Saint Mandé, as part of the development of the site formerly occupied by EDF. ww Thaïs, a 5,500 m² building at the foot of the Louise Michel metro station in Levallois-Perret. Leases have also been signed over the year: ww with Dassault Systèmes for an extension to the existing campus in Vélizy over 13,100 m². The planning application was filed at the end of June and the work is due to start in February 2015. The lease for the campus (with extension) is extended to 10 years from 2016 Foncière des Régions Finally, regarding the Euromed Center Phase 1 development in Marseille, the 857-space car park and the first office building (Astrolabe), covering 14,000 m², were delivered in January 2015. Work on the hotel (following the signing of a firm 12-year lease with Louvre Hôtels for the Golden Tulip brand) is ongoing, with delivery expected in 2016. 24 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.1.9.3. Managed projects Foncière des Régions manages around 273,000 m²: Projects Euromed Center: Bureaux Hermione (QP FDR 50%) Saint-Mandé Logements Toulouse Marquette Delivery timeframe MR 6,500 2016 MR 13,500 2016 Project Area Nancy Construction Marseille Construction Nancy Grand Cœur Euromed Center: Bureaux Floreal (QP FDR 50%) Surface(1) (m²) Location Marseille Construction MR 10,400 2016 Saint-Mandé Reconstruction Paris Region 7,300 2017 Toulouse Reconstruction MR 10,900 2017 Orly Construction Paris Region 31,000 2017 Issy Restructuration + Extension Paris Region 10,800 2017 Lyon Restructuration + Extension MR 30,700 2018 Cœur d’Orly Commerces (QP FDR 25%) Issy Grenelle Silex II New Vélizy – Extension (QP FDR 50%) Vélizy Construction Paris Region 14,000 2018 Meudon Saulnier – Opale Meudon Reconstruction Paris Region 30,000 2018 Meudon Green Valley – Canopée Meudon Reconstruction Paris Region 46,900 2018 Vélizy Construction Paris Region 11,000 2018 Orly Construction Paris Region 50,000 2017-2018 DS Campus Extension 2 (QP FDR 50%) Cœur d’Orly Bureaux (QP FDR 25%) TOTAL (1) 273,000 Surface 100%. The building permits have been completed on the Nancy Grand Cœur (6,500 m²), Meudon Saulnier – Opale (30,000 m²) and Meudon Green Valley – Canopée (47,000 m²) projects. These projects are currently in the pre-marketing phase and are likely to be committed depending on leasing agreements to be completed. On the Silex 2 (project to renovate/extend the tower vacated by EDF in the Part-Dieu district of Lyon), Toulouse Marquette (10,900 m² building in the centre of Toulouse) and Issy Grenelle (renovation and extension over 10,800 m² in Issy-les-Moulineaux) the building permits have been filed. The building permit has been obtained for the extension of the New Vélizy campus, of which the first phase of 46,000 m² was delivered in October 2014. Discussions with Thales are currently underway regarding a 14,000 m² extension. Further, work is continuing on the Euromed Center assets: Floréal and Hermione. 1.6.1.10. Asset values 1.6.1.10.1. Change in assets (€M) Asset(1) Assets in operation Assets under development TOTAL (1) Value ED 2013 Value adjustment Acquisitions Disposals Invest. Transfer Value ED 2014 3,912 116 162 -249 50 0 3,991 205 18 0 0 139 0 362 4,117 134 162 -249 189 0 4,353 Including DS Campus, New Vélizy, Euromed and Cœur d’Orly in GS. Foncière des Régions 25 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.1.10.2. Change like-for-like Value GS (incl. assets under development) 100% value ED 2013 100% value ED 2014 Value ED 2014 GS (1) LFL change 12 months Yield ED 2013 Yield ED 2014 % of total value Paris Centre West 575.5 624.6 624.6 8.4% 5.9% 5.4% 14% Southern Paris 594.5 584.2 467.8 4.2% 6.3% 6.1% 11% North Eastern Paris 293.0 306.0 306.0 4.0% 6.4% 7.2% 7% (€M) Wester Crescent and La Défense 1,188.3 1,139.0 992.2 0.5% 6.2% 6.4% 23% Inner suburbs 621.2 974.4 679.1 0.4% 6.5% 5.9% 16% Outer suburbs 218.2 170.2 170.2 1.3% 8.6% 7.7% 4% 3,490.6 3,798.4 3,239.9 2.9% 6.1% 6.2% 74% 384.3 420.1 420.1 2.9% 7.3% 7.5% 10% Total Paris Region MRC Other French regions 495.3 331.0 331.0 -1.4% 9.2% 9.0% 8% TOTAL IN OPERATION 4,370.2 4,549.6 3,991.0 2.5% 6.8% 6.6% 92% Assets under development TOTAL (1) 294.3 482.8 362.0 8.0% 0.3% 3.6% 8% 4,664.5 5,032.4 4,353.0 3.0% 6.5% 6.3% 100% Including DS Campus, New Vélizy and Euromed in GS. 1.6.1.11. Strategic asset segmentation VALUE GS (INCL. ASSETS UNDER DEVELOPMENTS) 8% Assets under development ww ”Core” portfolio: the Core portfolio is the strategic asset core, consisting of resilient properties providing long-term income. Mature buildings can be disposed of in timely fashion in managed proportions, freeing up resources that can be reinvested in value-creating operations, either by shoring up our asset base or by new investments. 14% West Central Paris 8% Other French Regions 10% 11% Southern Paris ww ”Secondary” portfolio: the ”Secondary” portfolio originates principally from outsourcing operations with our major partners-lessees. This portfolio provides a pocket yielding higher than the offices portfolio average, with an historically high lease renewal rate. The small size of these individual assets and their liquidity on the local markets make them apt candidates for gradual disposal. MRC 4% Outer suburbs 16% 7% Northeast Paris Inner suburbs 23% Western Crescent & La Défense ww Portfolio ”In the process of valuation”: the ”in the process of valuation” portfolio includes properties targeted for specific restructuring or rental development actions. These assets are primed to become core assets once the asset management work has been completed. 2014 was marked by a 3% increase in like-for-like assets: Paris Centre West is the area with the highest growth (8.3%). This is due to the contraction in capitalisation rates on Parisian assets with long leases, reflecting a market trend during the year. Note that in the city area of Paris, the increase is 6% like-for-like. In 2014, only the assets in other French regions decreased in value with a drop of 1.4% like-for-like. Foncière des Régions 26 Reference Document 2014 Management report 2014 Analytical data for the business by segment Core Portfolio Value enhancement Portfolio Secondary asset Total Number of assets 70 54 259 383 Value ED GS (€M) 2,844 910 599 4,353 Yield 6.2% 5.5% 8.1% 6.3% Residual firm duration of leases (years) Occupancy rate The core part of the portfolio rose slightly during 2014 (65% of the Office France portfolio, i.e. 2%) while the ”Secondary” compartment decreased significantly over the year (from 19% at 6.2 3.2 4.0 5.4 99.3% 94.3% 90.5% 96.8% the end of 2013 to 14% at the end of 2014), thanks to the sale of €203 million in assets in this compartment (thanks to a targeted disposal strategy). 1.6.2. Offices Italy Listed on the Milan stock exchange since 1999, Beni Stabili is the largest listed Italian property firm. Its assets consist largely of offices located in cities in northern and central Italy, particularly Milan and Rome. The company’s assets totalled €4.1 billion at the end of December 2014. Foncière des Régions holds 48.3% of the capital of Beni Stabili. The figures are disclosed as 100%. 1.6.2.1. Accounted rental income: -1.5% like-for-like (€M) Core portfolio Dynamic portfolio Subtotal Development portfolio TOTAL Surface (m²) Number of assets Rental income 2013 Rental income 2014 1,726 214 228.4 226.0 -1.1% 98.8% 95 37 3.3 2.7 -23.4% 1.2% 1,821 251 231.7 228.7 -1.3% 100.0% 0 2 0.0 0.0 0.0% 0.0% 1,821 253 231.7 228.7 -1.3% Change (%) Change (%) LFL -1.5% % of total 100.0% IN RENTAL INCOME The variation in rental income between 31 December 2013 and 31 December 2014 is €3 million, or -1.3%. This change is due primarily to: 1% Dynamic portfolio ww the effect of properties being vacated, leased and indexation (mostly the impact of an asset in Turin being vacated for which the annualised rent is €5.4 million): -€3.3 million ww disposals: -€6.6 million ww deliveries of assets under development, principally Via dell’Arte in Rome and San Fedele and San Nicolao in Milan: +€5.6 million. 99% The change like-for-like was -1.5% over the period. Core portfolio Foncière des Régions 27 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.2.2. Annualised rental income: €219 million 1.6.2.2.1. Breakdown by portfolio (€M) Core portfolio Dynamic portfolio Subtotal Development portfolio TOTAL Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of total 1,726 214 227.2 216.4 -5.0% 99.0% 95 37 2.2 2.2 1.0% 1.0% 1,821 251 229.4 218.7 -4.9% 100.0% 0 2 0.0 0.0 0.0% 0.0% 1,821 253 229.4 218.7 -4.9% 100.0% Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of total 426 41 89.1 83.2 -7.1% 38.1% 1.6.2.2.2. Geographic breakdown (€M) Milan Rome 158 32 19.5 19.7 1.0% 9.0% Other 1,236 178 120.8 115.8 -4.4% 52.9% TOTAL 1,821 251 229.4 218.7 -4.9% 100.0% IN RENTAL INCOME 38% Milan 53% Other 9% Rome The increase in revenues in Rome is due to the delivery of the Via dell’ Arte property in Q2 2014. Foncière des Régions 28 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.2.2.3. Breakdown by tenant (€M) Telecom Italia Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of total 1,160 159 118.4 117.0 -1.2% 53.5% Other 661 92 111.0 101.7 -9.2% 46.5% TOTAL 1,821 251 229.4 218.7 -4.7% 100.0% IN RENTAL INCOME 46% Other 54% Telecom Italia 1.6.2.3. Indexation The annual indexation in rental income is usually calculated by taking 75% of the increase in the Consumer Price Index (CPI) applied on each anniversary of the signing date of the agreement. The average increase in the IPC index was 0.2% in 2014. All leases are protected against negative indexation. 1.6.2.4. Rental activity During 2014, rental activity can be summarised as follows: Surface (m²) Annualised rental income Annualised rental income (€/m²) Vacating 69,666 10.4 149 Letting 25,384 11.4 451 Renewal 23,800 4.2 175 (€M) The new leases mainly concern the San Nicolao property (€5.4 million in rent) let under the terms of a 13-year lease, seven of which are firm, to Luxottica. The other leases concern the Piazza San Fedele (€2.1 million) and Via Dante (€1.2 million) assets in Milan, and the Via dell’Arte asset in Rome (€0.7 million). Renewals was renegociated resulted in increased rental income of 14%, mostly from the Via Dell’ Union asset in Milan and the Via Darsena asset in Ferrara, with a surface area of almost 12,455 m². The Corso Ferrucci property (Turin, 51,383 m²) was vacated in June 2014 and is being actively marketed. Foncière des Régions 29 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.2.5. Lease expirations and occupancy rates 1.6.2.5.1. Lease expirations: 12.1 years residual lease term (6.3 years firm) (€M) By lease end date (1st break) % of total By lease end date % of total 2015 5.6 3% 4.6 2% 2016 3.1 1% 0.9 0% 2017 12.2 6% 1.6 1% 2018 8.4 4% 1.2 1% 2019 33.0 15% 2.3 1% 2020 4.6 2% 1.0 0% 2021 119.4 55% 1.6 1% 2022 26.0 12% 10.6 5% 2023 5.2 2% 10.5 5% 2024 1.0 0% 7.6 3% Beyond 0.2 0% 176.8 81% 218.7 100% 218.7 100% TOTAL 55% 15% 3% 2015 1% 2016 6% 2017 4% 2018 12% 2% 2019 2020 2% 2021 2022 2023 0% 0% 2024 Beyond Leases expiring after 2024 are mostly linked to Telecom Italia. The residual firm term for leases was 6.3 years at the end of 2014. 1.6.2.5.2. Occupancy rate and type: an occupancy rate of 95.2% The spot financial occupancy rate at the end of 2014 was 95.2% for the Core portfolio, down in comparison with the end of 2013 (97.7%) after the property in Turin was vacated. 1.6.2.6. Reserves for unpaid rents (€M) 2013 2014 As % of rental income 1.9% 1.0% 4.5 2.4 In value(1) (1) Net provision/reversals of provision. Reserve unpaid rent corresponds to net charges, reversals or provisions and losses, which amounted to 1% of rental income in 2014, down slightly compared with 2013. Foncière des Régions 30 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.2.7. Disposals and disposal agreements: €81 million In 2014, the value of disposals and disposal agreements was €80.9 million, a total of €108 million in cash sales. These new commitments in 2014 were entered into at 3.3% above the 2013 appraisal values and based on a 6.1% yield. Disposals (agreements as of end of 2013 closed) Agreements as of end of 2013 closed New disposals 2014 New agreements 2014 Total 2014 Margin vs 2013 value Milan 9.1 0.0 74.5 0.0 74.5 Rome 0.0 0.0 0.9 0.2 1.2 Other 19.4 3.3 4.0 1.3 TOTAL 28.6 3.3 79.4 1.5 (€M) Yield Total disposals 4.4% 6.1% 83.6 0.0% -13.7% 0.9 5.3 -6.9% 7.5% 23.4 80.9 3.3% 6.1% 108.0 IN ASSET VALUE 6.2% 92.1% Other Milan 1.7% Rome 1.6.2.8. Acquisitions No acquisitions were made during the year. 1.6.2.9. Development projects 1.6.2.9.1. Projects delivered Delivery of the Via dell’Arte assets in Rome in May 2014 (surface area of 6,700 m², 93% let) and San Nicolao in Milan in December 2014 (surface area of 11,234 m², fully pre-let). 1.6.2.9.2. Managed projects Projects Milan, Symbiosis (Ripamonti) Location Area Surface (m²) Delivery timeframe Milano Italy 119,000 Depending Prelet Status TOTAL 119,000 Foncière des Régions 31 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.2.10. Asset values 1.6.2.10.1. Change in assets (€M) Core portfolio Dynamic portfolio Subtotal Development portfolio TOTAL Value ED 2013 Change in value Acquisitions Disposals Invest. Reclass. Value ED 2014 3,713 -1 0 -95 17 134 3,769 155 -3 0 -10 1 0 143 3,869 -3 0 -105 18 134 3,912 288 -3 0 0 30 -134 181 4,157 -6 0 -105 48 0 4,093 1.6.2.10.2. Like-for-like change: -0.2% (€M) Core portfolio Dynamic portfolio Subtotal Development portfolio TOTAL Value ED 2013 100% Value ED 2014 100% LFL change 12 months Yield ED 2013 Yield ED 2014 % of total value 3,713.4 155.3 3,768.9 0.0% 6.1% 6.1% 92.1% 143.4 -1.8% 1.4% 1.5% 3.5% 3,868.8 3,912.3 -0.1% 5.9% 5.9% 95.6% 288.2 180.7 -1.6% N/A N/A 4.4% 4,157.0 4,093.0 -0.2% 5.5% 5.6% 100.0% IN ASSET VALUE 4% Development portfolio 92% Core portfolio 4% Dynamic portfolio The value of the Beni Stabili portfolio was solid with a decrease of 0.2% like-for-like in 2014. Foncière des Régions 32 Reference Document 2014 Management report 2014 Analytical data for the business by segment Value ED 2013 100% Value ED 2014 100% LFL change 12 months Yield ED 2013 Yield ED 2014 % of total value Milan 1,759.6 1,812.4 0.8% 5.1% 5.2% 44.3% Rome 316.9 352.3 1.0% 6.2% 6.2% 8.6% (€M) Other 1,792.2 1,747.7 -1.2% 6.7% 6.6% 42.7% Subtotal 3,868.8 3,912.3 -0.1% 5.9% 5.9% 95.6% 288.2 180.7 -1.6% N/A N/A 4.4% 4,157.0 4,093.0 -0.2% 5.5% 5.6% 100.0% Development portfolio TOTAL IN ASSET VALUE 4% 44% Development portfolio Milan 43% 9% Other Rome Most assets are located in Milan and Rome (53%). 1.6.3. Hotels & Service sector Foncière des Murs (FDM), which is 28.5% owned by Foncière des Régions, is a listed property investment company (SIIC) specialising in the service sector, especially in hotels, healthcare, and retail. The Company’s investment policy favours partnerships with the leading operators in their business sector, in order to offer secure returns to its shareholders. The figures are quoted at 100% and FDM share of affiliates. 1.6.3.1. Accounted rental income: -0.6% like-for-like Recognised rental income is presented at 100% and in Foncière des Murs share. 3 assets was aquired in 2014 (100%). 1.6.3.1.1. Breakdown by business sector (€M) Hotels Healthcare Number of assets Rental income 2013 Rental income 2013 in GS FDM Rental income 2014 100% Rental income 2014 in GS FDM 322 143.1 126.5 142.8 125.8 29 22.2 22.2 16.5 16.5 Change (%) 100% Change (%) in GS Change (%) LFL % of rental income -0.2% -0.6% -0.2% 70% -25.6% -25.6% 1.1% 9% Retail Premises 185 38.7 38.7 36.7 36.7 -5.1% -5.1% -2.4% 21% TOTAL 536 204.0 187.4 196.1 179.0 -3.9% -4.5% -0.6% 100% Foncière des Régions 33 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment ww the decrease in rental income like-for-like: 0.6% (-€1.1 million), due to the drop in Accor revenues (-0.8% over the year) and decreases in rental incomes from Jardiland assets compared with an extension of leases following the lease renegotiations at the end of 2013. Consolidated rental income stood at €196 million at 100% at the end of 2014, down 3.9% compared with 2013. This was due mainly to: ww the impact of disposals in 2013 and 2014 (-€10.4 million) ww the impact of 2014 acquisitions/deliveries amounting to €3.6 million 1.6.3.2. Annualised rental income: €180 million (FDM share of affiliates) 1.6.3.2.1. Breakdown by business sector (€M) Hotels Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of rental income 1,121,838 322 125.8 127.6 1.5% 71% Healthcare 115,559 29 20.9 15.6 -25.2% 9% Retail Premises 197,573 185 38.6 36.7 -4.8% 20% 1,434,970 536 185.4 180.0 -2.9% 100% (€M) Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of rental income Accor 594,363 129 86.9 83.4 -4.1% 46% B&B 337,632 187 21.9 23.8 8.8% 13% Korian 115,559 29 18.2 15.6 -14.1% 9% Quick 37,487 81 17.1 16.6 -2.8% 9% Jardiland 151,681 49 15.0 13.5 -9.5% 8% Sunparks 133,558 4 13.6 13.7 0.9% 8% 8,405 55 6.6 6.6 0.2% 4% 45,813 1 3.4 3.4 0.5% 2% 0 0 2.7 0.0 N/A 0% 10,472 1 0.0 3.3 N/A 2% 1,434,970 536 185.4 180.0 -2.9% 100% Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of rental income Paris excl. CBD 73,066 9 21.4 20.5 -4.1% 11% Inner suburbs 114,340 33 18.3 18.0 -1.8% 10% TOTAL 1.6.3.2.2. Breakdown by tenant Courtepaille Club Med Générale de Santé NH TOTAL 1.6.3.2.3. Geographic breakdown (€M) Outer suburbs 124,085 57 15.6 15.6 -0.3% 9% Total Paris Region 311,491 99 55.3 54.1 -2.3% 30% MRC 273,760 109 34.7 32.8 -5.4% 18% Other French regions 548,041 291 66.1 60.2 -9.0% 33% International 301,678 37 29.3 33.0 12.5% 18% 1,434,970 536 185.4 180.0 -2.9% 100% TOTAL The increase in international rental income is linked to the investment program implemented in 2014, and in particular with the acquisition of the NH hotel in Amsterdam. Foncière des Régions 34 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.3.3. Indexation place in July 2014; the negative impact of €1.5 million is due to the decreased rents granted following the lease renegotiations in 2014 54% of the rental income is indexed to benchmark indices. All of the portfolios generating fixed rental income were indexed: ww the indexation of the Quick and Courtepaille portfolios, which was based on the construction cost index (ILC), took place in October 2014, generating a total impact of +€0.4 million. ww the Korian portfolio was indexed in January 2014 based on the Q4 2013 Rental Reference Index (IRL), which had a positive impact of €0.2 million 46% of rental income was indexed on Accor revenue, which fell 0.8% over the year. ww the indexation of Jardiland, based on the ILC construction cost index for one third of the portfolio and the IRL Rental Reference Index for the other two-thirds of the portfolio, took 1.6.3.4. Lease expirations and occupancy rates (€M) By lease end date (1st break) % of total By lease end date % of total 2015 0.8 0% 0.8 0% 2016 0.0 0% 0.0 0% 2017 40.7 23% 40.7 23% 2018 40.6 23% 40.6 23% 2019 21.1 12% 19.4 11% 2020 0.3 0% 0.3 0% 2021 0.3 0% 0.3 0% 2022 6.2 3% 6.2 3% 2023 1.0 1% 1.0 1% 2024 7.4 4% 7.4 4% Beyond 61.7 34% 63.3 35% TOTAL 180.0 100% 180.0 100% The firm residual lease term was 6.8 years at the end of 2014, compared to 7.1 years at the end of 2013. The occupancy rate was 100% at the end of 2014. 34% 23% 23% 2017 and 2018 expirations mostly concerned Accor leases. 12% 0% 0% 1.6.3.5. Reserves for unpaid rents 0% 0% 3% 1% 4% The portfolio had no reserves for bad debt during 2014, just as in 2013. 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Beyond 1.6.3.6. Disposals and disposal agreements: €62 million Disposals (agreements as of end of 2013 closed) (I) Agreements as of end of 2013 to close New disposals 2014 (II) New agreements 2014 Total 2014 Margin vs 2013 value Yield Total Disposals (I + II) Hotels 43.4 0.0 0.3 4.6 4.9 6.6% 5.1% 43.7 Healthcare 33.6 0.0 56.9 0.0 56.9 1.0% 5.5% 90.6 1.7 3.1 0.0 0.0 0.0 0.0% 0.0% 1.7 78.6 3.1 57.2 4.6 61.8 1.4% 5.5% 135.9 (€M) Retail Premises TOTAL Foncière des Régions 35 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment Five properties were sold during 2014, for a value of €57 million. These disposals, on a portfolio or unit basis, only concerned the healthcare sector. Also, a disposal agreement on a property representing a total of €5 million was signed during the year. 1.6.3.7. Acquisitions Assets NH Amsterdam Surface (m²) Location Tenants Acquisition Price(1) ID (€M) Gross Yield ID(2) 10,472 Netherlands NH 48.3 6.8% B&B Salon-de-Provence 1,954 France B&B 2.8 7.5% B&B Valenciennes Marly 1,932 France B&B 3.3 7.2% 2,797 France B&B 6.0 6.6% 60.4 6.9% B&B EuraLille TOTAL 17,155.0 In GS of Foncière des Murs. ID = Including duties. (1) (2) Foncière des Murs acquired the NH Amsterdam Centre hotel in June 2014 for €48 million. 3 B&B hotels were acquired by the B2 Hotel Invest investment partnership (50.2% owned by FDM) for €12 million. 1.6.3.8. Development projects: a €59 million pipeline 1.6.3.8.1. Committed projects: €59 million, 100% pre-let Projects Surface (m²) Total Budget (€M) Progress Location Area B&B Porte de Choisy France Paris Region Construction 3,947 Dec., 2015 6% 100.0% 16 83% B&B Lyon Caluire France MRC Construction 2,493 Dec., 2015 7% 100.0% 7 37% B&B Romainville France Paris Region Construction 2,264 Sept., 2015 >7% 100.0% 6 35% B&B Torcy Delivery Pre-let (%) France Paris Region Construction 2,429 Dec., 2015 >7% 100.0% 7 21% B&B Mülheim Germany Germany Construction 2,306 May, 2015 >7% 100.0% 5 40% B&B Erfurt Germany Germany Construction 2,597 Aug., 2015 >7% 100.0% 4 12% B&B Berlin Germany Germany Construction N/A May, 2016 >7% 100.0% 8 2% B&B Duisburg Germany Germany Construction 2,706 Nov., 2015 >7% 100.0% 5 30% >7% 100.0% 59 TOTAL 18,742 The 2* B&B hotel with 265 rooms in Paris (19th arrondissement) Porte des Lilas purchased in advance of completion was delivered in May 2014. Foncière des Murs also owns several buildings under development, which are all leased to B&B Hôtels: ww one hotel at Porte de Choisy (Ivry-sur-Seine) developed by the B2 Hotel Invest investment partnership (50.2% owned by FDM). It is a six-floor hotel with 182 rooms ww a hotel with 120 rooms in Caluire-et-Cuire, just outside Lyon, owned by the B2 Hotel Invest investment partnership ww a 130-room hotel in Torcy ww a 107-room hotel in Romainville ww four hotels in Germany, totalling 433 rooms, open as of May 2015. Foncière des Régions 36 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.3.9. Asset values 1.6.3.9.1. Change in asset values (€M) Assets in operation Assets under development TOTAL Value ED 2013 GS Value adjustment Acquisitions Disposals Invest. Transfert Value ED 2014 GS FDM 2,941 52 60 -135 0 26 2,945 26 6 0 0 16 -26 21 2,966 58 60 -135 16 0 2,965 The asset value of Foncière des Murs was €2,965 million at the end of 2014, up like-for-like by 2.0% over the year. 1.6.3.9.2. Like-for-like change: +2.0% 100% value ED 2013 GS 100% value ED 2014 Value ED 2014 GS LFL change 1 year Yield ED 2013 Yield ED 2014 % of total value Paris 408.0 397.7 391.5 10.3% 5.6% 5.2% 12.3% Inner suburbs 307.4 345.2 313.1 3.4% 5.6% 5.8% 10.6% Outer suburbs 252.6 292.9 263.4 3.7% 6.2% 5.9% 9.0% Total Paris Region 968.0 1,035.8 967.9 6.1% 5.8% 5.6% 31.9% MRC 554.7 610.1 537.2 0.4% 6.2% 6.1% 18.8% Other French Regions 990.2 1,077.6 940.6 -0.9% 6.6% 6.4% 33.2% (€M) International 453.5 519.6 519.6 1.6% 6.4% 6.3% 16.0% 2,966.4 3,243.2 2,965.3 2.0% 6.2% 6.1% 100.0% 100% value ED 2013 GS 100% value ED 2014 Value ED 2014 GS LFL change 1 year Yield ED 2013 Yield ED 2014 % of total value 2,011.1 2,380.5 2,111.5 2.8% 6.3% 6.0% 73.4% Healthcare 331.8 235.5 235.5 -2.7% 6.3% 6.4% 7.3% Retail Premises 597.6 597.5 597.5 0.3% 6.5% 6.3% 18.4% 2,940.6 3,213.5 2,944.5 1.8% 6.3% 6.1% 99.1% TOTAL (€M) Hotels Total in operation Assets under development TOTAL 25.7 29.7 20.8 30.5% N/A N/A 0.9% 2,966.3 3,243.2 2,965.3 2.0% 6.2% 6.1% 100.0% In the hotel sector, a like-for-like advance of 2.0% is noted, compared to the end of 2013, mainly due to the compression of capitalisation rates on the Paris assets. The healthcare sector fell by 2.7%, due to impairment on two specific assets. Restated for these two assets, the change like-for-like on healthcare is +0.6%. On retail premises (+0.3%), the fall in capitalisation rates offset the rise in transfer duties, 0.7% out of Paris. Foncière des Régions 37 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.4. German Residential Foncière des Régions is involved in the Residential sector in Germany via its subsidiary, Immeo, of which it owns 60.9% (against 59.48% at 31/12/2014 via Foncière Développement Logements). The company is responsible for over 41,000 units, located mostly in North Rhine-Westphalia and Berlin. strengthening its presence in Berlin and in other dynamic and attractive cities such as Dresden and Leipzig. From an operational point of view, 2014 saw an accelerated rotation of the portfolio which played a major role in the improved results of the company. The strategy used by Foncière des Régions for this business is to continue the geographical diversification of its presence by The figures are presented at GS Immeo. 1.6.4.1. Accounted rental income: +1.8% like-for-like 1.6.4.1.1. Geographic breakdown Surface (m²) Number of units Rental income 2013 Rental income 2014 Change (%) Change (%) LFL % of rental income 792,544 11,848 18.2 46.0 151.2% 4.9% 27% NRW 1,945,699 29,498 134.8 123.7 -8.2% 1.4% 73% TOTAL 2,738,243 41,346 153.1 169.7 10.8% 1.8% 100% (€M) Berlin(1) (1) Including Dresden and Leipzig. Rental income stood at €169.7 million in 2014, compared with €152.5 million in 2013. This change was due mainly to: Dresden and Leipzig, which saw average growth of 4.9%, proving the relevance of the geographical diversification policy. ww the impact of disposals (-€12.4 million) ww the change in rental income like-for-like (+€2.3 million). Regulated rents accounted for 10% of the North RhineWestphalia portfolio (or 7% of the total portfolio) and had an average reversion of +14%. The 1.8% rise in rental income like-for-like over a year was essentially driven by the growth of the portfolios located in Berlin, Berlin accounts for 11% of 2014 rental income like-for-like (included Dresde and Leipzig) ww the impact of acquisitions (+€26.7 million) 1.6.4.2. Annualised rental income: €177 million 1.6.4.2.1. Geographic breakdown (€M) Berlin (1) Surface (m²) Number of units Annualised rental income 2013 Annualised rental income 2014 Change (%) Average rent (€/m²/month) % of rental income 792,544 11,848 31.2 57.5 84.4% 6.3 32% NRW 1,945,699 29,498 128.3 119.8 -6.6% 5.1 68% TOTAL 2,738,243 41,346 159.5 177.3 11.2% 5.5 100% (1) Including Dresden and Leipzig. Foncière des Régions 38 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.4.3. Indexation The rental income from residential premises in Germany changes according to three mechanisms: ww re-letting: the option to increase the rent freely without being excessive in urban areas ww for current leases: by implementing a three-year maturity, option to increase the rent by 15% to 20% depending on the region without being able to exceed a market average (Mietspiegel) ww for current leases: option to increase the rent when work is done. The increase is then limited to 11% of the work which contributed to the valuation of the building and the rent cannot exceed the Mietspiegel. 1.6.4.4. Occupancy rate 2013 2014 Berlin(1) 99.0% 98.3% NRW 98.7% 98.3% TOTAL 98.7% 98.3% (%) Including Dresden and Leipzig. (1) The occupancy rate for assets in operation stood at 98.3% at 31 December 2014 compared to 98.7% at 31 December 2013. The occupancy rate is down slightly due to the result of resuming the management of the portfolios acquired in the second half of the year. 1.6.4.5. Reserves for unpaid rents (€M) 2013 2014 As % of rental income 2.0% 3.3% 3.0 5.5 In value(1) Net provision/reversals of provision. (1) The increase in unpaid rent in Germany in 2014 was mainly the result of taking over the management of the portfolios acquired during the course of the year. 1.6.4.6. Disposals and disposal agreements: €160 million Disposals (agreements as of end of 2013 closed) (I) Agreements as of end of 2013 to close New disposals 2014 (II) New agreements 2014 Total 2014 Margin vs 2013 value Yield Total Disposals (I + II) Germany 118.9 1.3 32.5 127.3 159.9 5.4% 7.1% 151.5 TOTAL 118.9 1.3 32.5 127.3 159.9 5.4% 7.1% 151.5 (€M) 2014 was particularly active, with €159.9 million in new commitments concluded at an average rate of over 5.4% to the appraisal value. 32% of these transactions were in Duisburg. Foncière des Régions 39 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.4.7. Acquisitions: €358 million mainly in Berlin and Dresden Assets (in GS) Surface (m²) Number of units Acquisition Price (€M) ID(1) Gross Yield Berlin 169,869 2,373 222.3 5.7% Dresden 109,335 2,225 116.5 6.3% Leipzig 26,421 389 19.0 6.8% TOTAL 305,625 4,987 357.8 6.0% Including duties. (1) €357.8 million in acquisitions were made during 2014, mostly in Berlin and Dresden. These investments have a yield of 6.0%. Thanks to their technical features and their excellent locations within their respective markets, the average expected rent reversion by the Company on these new assets will done between +25% and +30%. 1.6.4.8. Asset values 1.6.4.8.1. Change in asset values (€M) Value ED 2012 Value adjustment Acquisitions Disposals Invest. Value ED 2014 1,848 39 0 -139 28 1,747 587 35 358 -8 16 972 2,435 73 358 -147 44 2,719 NRW Berlin (1) TOTAL Including Dresden and Leipzig. (1) The following contribute to maintaining portfolio quality and its increased value: €13.8 million in OPEX work (i.e. €5.1/m²) and €44.3 million in CAPEX work (i.e. €16.5/m²) which was done in 2014. At the end of 2014, the portfolio was valued at €2,718.8 million compared with €2,434.7 million at the end of 2013. This change was due to the following: ww the impact of disposals (-€147 million) ww the impact of acquisitions (+€358 million) ww the change in values like-for-like (+€73 million). 1.6.4.8.2. Like-for-like change: +2.9% (€M) Berlin 100% value ED 2013 GS Value ED 2014 LFL change 12 months Yield ED 2013 Yield ED 2014 % of total value 586.9 971.8 4.9% 5.4% 5.9% 36% NRW 1,847.8 1,747.0 2.2% 7.0% 6.9% 64% TOTAL GERMANY 2,434.7 2,718.8 2.9% 6.6% 6.5% 100% Like-for-like, values grew by +2.9%, including +4.9% on average on the Berlin portfolio. Foncière des Régions 40 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.5. Other activities 1.6.5.1. France Residential (100% FDL) Following the separation of operations in France and Germany FDL intends to pursue actions to strengthen its position on the housing market in France. The latter is characterized by sustained demand, by a structural shortage of housing and socio-demographic trends, including the increase in population and number of households. 1.6.5.1.1. Accounted rental income Rental income 2013 Rental income 2014 Change (%) % of rental income 16.0 14.0 -12.7% 50% Paris Region exclud. Paris and Neuilly 6.0 5.4 -10.6% 19% Rhône-Alpes 3.4 2.8 -15.9% 10% PACA 4.2 4.1 -2.1% 15% Large West 1.9 1.5 -20.3% 5% East 0.4 0.4 -4.8% 1% 31.9 28.2 -11.6% 100% (€M) Paris and Neuilly Total France Total Luxembourg TOTAL FONCIÈRE DÉVELOPPEMENT LOGEMENTS 0.6 0.6 0.0% 100% 32.5 28.8 -11.4% 100% Rental income stood at €28.8 million in 2014, compared with €32.5 million in 2013. This change was due mainly to: ww the impact of disposals (-€2.1 million) ww the impact of vacant properties (-€2.4 million) ww the impact of acquisitions (+€0.2 million) ww the impact of indexation (+€0.6 million). 1.6.5.1.2. Annualised rental income: €26 million (€M) Paris and Neuilly Annualised rental income 2013 Annualised rental income 2014 Change (%) % of rental income 15.3 12.8 -16% 51% Paris Region exclud. Paris and Neuilly 5.7 4.9 -14% 19% Rhône-Alpes 3.1 2.4 -23% 9% PACA 4.3 3.8 -12% 15% Large West 1.8 1 -44% 4% East Total France Total Luxembourg TOTAL FONCIÈRE DÉVELOPPEMENT LOGEMENTS 0.4 0.4 0% 2% 30.6 25.3 -17.2% 100% 0.6 0.6 0.0% 100% 31.1 25.9 -16.9% 100% 1.6.5.1.3.Indexation The index used to calculate the indexation in France is the IRL (Rental Reference Index). For commercial assets (retail and offices), the most widely used indexation is the ICC (Construction Cost Index). Foncière des Régions 41 Reference Document 2014 1 1 Management report 2014 Analytical data for the business by segment 1.6.5.1.4. Disposals and disposal agreements: €120 million Disposals (agreements as of end of 2013 closed) (I) Agreements as of end of 2013 to close New disposals 2014 (II) New agreements 2014 Total 2014 Margin vs 2013 value Yield Total Disposals (I + II) France 17.0 0.1 84.2 35.5 119.7 5.6% 1.4% 101.2 TOTAL 17.0 0.1 84.2 35.5 119.7 5.6% 1.4% 101.2 (€M) Of all new commitments (€120 million), 60% were made in Paris and Neuilly-sur-Seine. The value of new commitments has increased by around 50% compared with the previous year. 1.6.5.1.5. Asset valuation This increase is mainly due to some major assets in Paris being transferred from a block value to an occupied retail value following a disposal commitment obtained on these assets, and to the compression of the capitalisation rates used by experts on some assets. At the end of 2014, the Foncière Développement Logements (France and Luxembourg) portfolio was valued at €800 million with a like-for-like basis increase of 3.0% over the year. 1.6.5.2. Logistics 1.6.5.2.1. Accounted rental income: 0.8% like-for-like (€M) Surface (m²) Rental income 2013 Rental income 2014 Change (%) Change (%) LFL % of total 531,457 54.3 33.1 -39.1% 0.8% 100% TOTAL Rental income in 2014 amounted to €33.1 million, i.e. a decrease of 39.1% compared to the end of 2013. This change was due to: ww incoming and outgoing tenants (+€0.1 million) ww disposals made in 2013 and 2014 (-€21.3 million) Like-for-like, rental income increased by 0.8% (all of the Chalon site has now been leased). ww renewals (-€0.1 million). ww indexation and staged rents (+€0.1 million) 1.6.5.2.2. Annualised rental income: €19.7 million (€M) Surface (m²) Number of assets Annualised rental income 2013 Annualised rental income 2014 Change (%) % of rental income TOTAL 531,457 9 56.2 19.7 -64.9% 100% Following disposals made in 2014, the annualised rents fell by 64.9%. 1.6.5.2.3.Indexation In France, the indices used to calculate the indexation are those of the lCC and the ILAT. Collar rents account for 20% of annualised rental income. Foncière des Régions 42 Reference Document 2014 Management report 2014 Analytical data for the business by segment 1.6.5.2.4. Occupancy rate: 80,2% The occupancy rate at 31 December 2014 was 80.2%, compared with 85.5% at 31 December 2013. This decrease is due to the change in scope of Logistics (major disposal in 2014). On the residual perimeter, the occupancy rate has increased, thanks to the marketing efforts of Pantin and Chalon. Occupancy rate (%) TOTAL 2013 2014 85.5% 80.2% 1.6.5.2.5. Unpaid Rent The impact of unpaid rent on the Company’s 2014 accounts was positive by €0.1 million, down by €1.8 million compared with the end of 2013 (the 2013 accounts were impacted by the forced liquidation of Telemarket). 1.6.5.2.6. Disposals and disposal agreements: €606 million (€M) TOTAL Disposals (agreements as Agreements as of end of 2013 of end of 2013 closed) (I) to close 0.0 0.0 New disposals 2014 (II) New agreements 2014 Total 2014 Margin vs 2013 value Yield Total Disposals (I + II) 498.4 107.3 605.7 -1.2% 7.1% 498.4 In 2014, Foncière des Régions continued its portfolio rotation policy: ww completion of several sales with a total value of €498 million (including the 17 logistics platforms sold to property funds managed by Blackstone) ww signature of a preliminary sale agreement in the second half of 2014 for a disposal planned for the first half of 2015. 1.6.5.2.7. Asset values 1.6.5.2.7.1. Change in asset values (€M) TOTAL Value ED 2013 Value adjustment Acquisitions Disposals Invest. Transfert Value ED 2014 791 -9 0 -498 4 0 288 1.6.5.2.7.2. Change like-for-like Appraised values like-for-like over one year declined by 1.5%. This change is mainly due to tenant departures being taken into account. (€M) TOTAL Value ED 2013 100% Value ED 2014 100% Value ED 2014 GS LFL change 12 months Yield ED 2013 Yield ED 2014 % of total value 790.9 267.8 267.8 -1.5% 7.4% 7.2% 100% The portfolio will worth €180.5 million, post disposals planned in half-year 2015. Foncière des Régions 43 Reference Document 2014 1 1 Management report 2014 Financial information and comments 1.7. FINANCIAL INFORMATION AND COMMENTS The activity of Foncière des Régions consists of the acquisition, ownership, administration and leasing of properties, developed or otherwise, specifically in the Office, Residential, Hotels and Service, Logistics, and Car Parks sectors. The financial statements were approved by the Board of Directors on 19 February 2015. The audit procedures on the consolidated financial statements have been completed. The certification report will be issued after the specific verifications. The review report is being issued. Registered in France, Foncière des Régions is a limited company (société anonyme) with a Board of Directors. 1.7.1. Consolidated accounts 1.7.1.1. Scope of consolidation At 31 December 2014, the scope of consolidation of Foncière des Régions includes companies in France and nine other countries in Europe (Offices: Italy Residential: Germany, Austria, Denmark; Hotels & Service Sector: Germany, Portugal, Belgium, the Netherlands and Luxembourg). The main percentages of control during the year were as follows: 2013 2014 Foncière Développement Logements 59.7% 61.3% Foncière des Murs 28.3% 28.5% N/A 60.9% Beni Stabili 50.9% 48.3% OPCI CB 21 (Tour CB 21) 75.0% 75.0% Urbis Park 59.5% 59.5% Fédérimmo (Carré Suffren) 60.0% 60.0% SCI Latécoëre (DS Campus) 50.1% 50.1% SCI 11, Place de l’Europe (Campus Eiffage) 50.1% 50.1% Lenovilla (New Vélizy) 50.1% 50.1% Subsidiaries Immeo Foncière des Régions increased its stake in Foncière Développement Logements following the Public Exchange Offer in August 2013. As a result of the offer, Foncière des Régions holds 59.7% of Foncière Développement Logements, which has been fully consolidated since 1 August. Foncière des Régions increased its equity interest in Foncière des Murs following capital increase in November 2014, and it now owns 28.46% of Foncière des Murs. 1.7.1.2. Accounting standards In July 2014, Foncière Développement Logements sold its equity interests in the German Residential sector to its shareholders. Foncière des Régions currently holds 60.9% of the German Residential sector via Immeo. The consolidated financial statements have been prepared in accordance with the international accounting standards issued by the IASB (International Accounting Standards Board) and adopted by the European Union on the date of preparation. These standards include the IFRS (International Financial Reporting Standards), as well as their interpretations. The financial statements were approved by the Board of Directors on 19 February 2015. In addition, the completion in September of the Foncière Développement Logements share buyback offer and the cancellation of shares raised Foncière Développement Logements ownership stake in Foncière des Régions to 61.26%. On 27 October, Foncière des Régions participated in the capital increase of Beni Stabili, and it now holds 48.3% of Beni Stabili’s capital. Foncière des Régions 44 Reference Document 2014 Management report 2014 Financial information and comments 1.7.1.3. EPRA Income Statements (100%) (€M) Consolidated 2013 Change GS GS 2014 before Discontinued reclassification operations 2014 GS 2014 before Discontinued 2013 reclassification operations 2014 % RENTAL INCOME 832.0 908.4 33.1 875.4 525.7 558.1 33.1 525.0 6.2% Unrecovered rental costs -40.0 -44.0 -4.6 -39.4 -26.6 -27.9 -4.6 -23.3 4.9% Expenses on properties -18.3 -29.0 -0.9 -28.0 -11.4 -17.8 -1.0 -16.9 56.1% Net expenses on unrecoverable receivables -8.8 -8.6 0.1 -8.7 -5.3 -5.1 0.3 -5.4 -3.8% Net rental income 764.8 826.9 27.7 799.2 482.4 507.3 27.6 479.6 5.2% ratio of costs to revenues 8.1% 9.0% 8.7% 8.2% 9.1% Management and administration revenues 22.2 23.7 0.3 23.4 21.1 23.3 0.3 23.0 10% Activity-related costs -4.9 -5.7 -0.3 -5.4 -3.7 -3.6 -0.3 -3.3 -3% Committed fixed costs -82.7 -104.0 -1.0 -103.0 -61.5 -74.7 -1.0 -73.7 21.5% -0.5 -0.2 0.0 -0.2 -0.4 -0.2 0.0 -0.2 -50% -65.9 -86.3 -1.0 -85.3 -44.4 -55.2 -1.0 -54.2 24.3% 19.5 26.9 0.0 26.9 13.8 21.5 0.0 21.5 55.8% -15.0 -15.6 0.0 -15.6 -10.1 -10.3 0.0 -10.3 2.0% Development costs NET COST OF OPERATIONS Income from other activities Depreciation of operating assets Net change in provisions and other CURRENT OPERATING INCOME Net income from inventory properties Income from asset disposals Income from value adjustments Income from disposal of securities Income from changes in scope OPERATING INCOME Income from non-consolidated companies Cost of net financial debt Value adjustment on derivatives 8.7% 2.1 -19.1 -2.7 -16.4 1.9 -9.9 -2.6 -7.2 N/A 705.5 732.9 24.0 708.9 443.6 453.4 24.0 429.4 2.2% -5.2 -2.1 0.0 -2.1 -2.5 -1.2 0.0 -1.2 -52% 3.5 -5.9 -8.0 2.0 -1.3 -7.1 -8.0 0.9 N/A -37.7 158.7 -8.6 167.4 -40.2 102.0 -8.6 110.6 N/A 3.8 0.0 0.0 0.0 3.8 0.0 0.0 0.0 N/A 48.8 32.5 30.6 1.9 48.8 31.8 30.5 1.3 N/A 719.0 916.1 37.9 878.2 452.1 578.9 38.0 540.9 28.0% 10.1 0.9 0.0 0.9 10.1 0.9 0.0 -307.4 -289.1 -7.0 -282.2 -192.0 -175.0 -7.0 -168.1 0.9 -91.1% -8.9% 110.0 -311.4 -7.7 -303.7 71.7 -190.9 -7.7 -183.2 N/A Discounting of liabilities and receivables -2.9 -3.4 -0.1 -3.3 -2.8 -3.4 -0.1 -3.2 21.4% Net change in financial and other provisions -47.7 -124.0 0.0 -124.0 -25.0 -65.3 0.0 -65.4 N/A 32.5 21.1 0.0 21.1 29.3 19.8 0.0 513.6 210.1 23.1 187.0 343.5 164.9 23.2 141.7 6.2 -80.6 0.5 -81.1 1.4 -40.0 0.1 -40.1 N/A -7.6 -9.9 0.4 -10.3 -4.8 -6.4 0.4 -6.8 33% 512.1 119.6 0.0 95.6 118.5 23.7 94.8 0.0 0.0 24.0 0.0 0.0 23.7 Share in earnings of affiliates PRE-TAX INCOME Deferred tax Corporate income tax NET INCOME FROM CONTINUING OPERATIONS Post-tax profit or loss of discontinued operations NET INCOME FROM DISCONTINUED OPERATIONS NET INCOME FOR THE PERIODE Non-controlling interests NET INCOME FOR THE PERIOD – GS 19.8 -32.4% 0.0 0.0 24.0 0.0 0.0 23.7 512.1 119.6 24.0 119.6 340.1 118.5 23.7 118.5 -172.0 -1.1 0.0 -1.1 0.0 0.0 0.0 0.0 340.1 118.5 24.0 118.5 340.1 118.5 23.7 118.5 Foncière des Régions 45 Reference Document 2014 -52% -65% -65% 1 1 Management report 2014 Financial information and comments 1.7.1.3.1. Rental income 1.7.1.3.4. Depreciation and provisions Rental Income (before reclassification of Logistics as Discontinued Operations) rose by 6.2% to €558.1 million, Group share (vs €525.7 million). This increase can be explained primarily through the consolidation on a full-year basis of the residential business, adding €75 million, as well as the following: Allowances for depreciation and provisions during the period consisted largely of depreciation on operating properties and car parks. 1.7.1.3.5. Change in the fair value of assets ww asset acquisitions and deliveries (+€6,4 million) The income statement recognises changes in the fair value of assets based on appraisals conducted on the portfolio. During 2014, the change in the fair value of investment assets was positive by €102.0 million for the Group share and €158.7 million on a consolidated basis, versus -€40.2 million (Group share) at 31 December 2013 (-€37.7 million at 100%). ww disposals (-€46.2 million, of which -€21.3 million related to disposals in Logistics) ww indexation and the mixed effect from departures and re-lettings (-€0.3 million). In consolidated data, rental income increased by 9.2% (+€76 million): Operating income, Group share, thus amounted to €578.9 million at 31 December 2014 compared to €452.1 million at 31 December 2013. ww Germany Residential: +€107.3 million ww France Residential: +€15.8 million ww Offices France: -€14.5 million (-5.5%) ww Offices Italy: -€3.0 million (-1.3%) 1.7.1.3.6. Financial aggregates ww Hotels and Service Sector: -€7.9 million (-3.9%) Financial expenses stood at €175 million in Group share (compared to €191.4 million at 31 December 2013) and at €289.1 million on a consolidated basis (vs €307.4 million at 31 December 2013). The amount of interest capitalised on assets under development amounted to €15 million (Group share) for 2014. ww Logistics: -€21.2 million (-39.1%). 1.7.1.3.2. Net operating costs Net operating costs amounted to €55.2 million, Group share, at 31 December 2014 (€86.3 million on a consolidated basis) compared to €44.4 million at 31 December 2013 (€65.9 million on a consolidated basis), for an increase of 24.3%. This increase is related primarily to the integration of Residential activity on a full-year basis. Stripping out the impact of Residential, net operating costs fell during 2014. These overhead expenses mainly consist of payroll, attorneys’ fees, auditors’ fees, and office, communications and IT costs. In addition, financial instruments both assets and liabilities (before reclassification of Discontinued Operations) represented a net balance sheet amount of €580.3 million (€384.4 million for the Group share) and deferred tax liabilities from non-SIIC foreign companies accounted for €244.6 million (€127.4 million Group share). The change in the fair value of financial instruments was negative €190.9 million in Group share at 31 December 2014. (-€311.4 million on a consolidated basis), compared to positive €71.7 million in Group share (+€110 million on a consolidated basis) at 31 December 2013. This was after a drop in long-term rates and a change in the fair value of the ORNANE between 2013 and 2014 (-€52.7 million, Group share and €69.2 million at 100%). 1.7.1.3.3. Other business income Other business income mainly concerned the ”Car Parks” activity (€7.6 million), i.e. car parks owned or under concession, as well as real estate development activities. Net income from these activities rose during 2014 due mainly to real estate development activity (€5.5 million). Other business income stood at €21.5 million at 31 December 2014 (Group share), compared to €13.8 million at 31 December 2013. 1.7.1.3.7. Share of income of associates % interest Value 2013 Contribution to earnings Value 2014 Change (%) OPCI Foncière des Murs 19.90% 71.8 1.3 69.2 3.8% SCI Latécoère (Dassault Campus) 50.10% 95.3 5.4 92.8 2.7% Lénovilla (New Vélizy) 50.10% 6.9 7.0 13.8 -50.0% Consolidated data Other equity interests TOTAL 10.8 7.4 12.9 -16.4% 184.8 21.1 188.7 -2.1% 1.7.1.3.8. Income (loss) from changes in consolidation scope 1.7.1.3.9. Income from non consolidated companies The income from changes in consolidation scope corresponded mainly to the impact to net profit from the disposal of the Logistics companies for €30.5 million (Garonor France III in particular). Income from non-consolidated companies corresponds to OPCI Technical Fund dividends for €0.9 million. Foncière des Régions 46 Reference Document 2014 Management report 2014 Financial information and comments 1.7.1.3.10.Taxes Taxes determined are for: ww foreign companies not covered or only partially covered by a specific scheme for real estate businesses ww French subsidiaries not having opted for the SIIC regime ww French SIIC or Italian subsidiaries with taxable activity. Note that the change in the Italian SIIQ tax regime resulted in the cancellation of €30 million (Group share) in net deferred tax assets. 1.7.1.3.11. EPRA Net Recurring Income Group share (€M) 2013 2014 before reclassification NET RENTAL INCOME 483.8 508.5 24.7 5.1% Net operating costs -42.7 -54.2 -11.5 26.9% 14.4 21.2 6.8 47.2% Income from other activities Net change in provisions and other Change % 0.2 0.0 -0.2 N/A -190.4 -173.5 16.9 -8.9% Recurrent net income from equity affiliates 23.4 14.2 -9.2 -39.3% Income from non consolidated affiliates 10.1 0.9 -9.2 -91.1% Recurrent tax -2.2 -2.7 -0.5 22.7% 296.7 314.5 17.8 6.0% 1.1% Cost of net financial debt EPRA RECURRENT NET INCOME EPRA RECURRENT NET INCOME PER SHARE 4.98 5.03 0.1 Fair value adjustment on real estate assets -40.2 102.0 142.2 N/A Other asset value adjustments -34.2 -8.3 25.9 -75.7% Fair value adjustment on financial instruments 71.7 -190.9 -262.6 N/A Other 48.8 -55.1 -103.9 N/A Non-recurrent tax -2.7 -43.7 -41.0 N/A 340.1 118.5 -221.6 -65.2% 59,632,122 62,538,274 2,906,152 4.9% NET INCOME Diluted average number of shares Net income GS Restatements EPRA RNI NET RENTAL INCOME 507.3 1.3 508.6 Operating costs -55.2 0.9 -54.2 21.5 -0.3 21.2 -10.3 10.3 0.0 Income from other activities Depreciation of operating assets Net change in provisions and other CURRENT OPERATING INCOME -9.9 9.9 0.0 453.4 22.1 475.5 -1.2 1.2 0.0 Net income from inventory properties Income from asset disposals Income from value adjustments -7.1 7.1 0.0 102.0 -102.0 0.0 0.0 0.0 0.0 Income from disposal of securities Income from changes in scope OPERATING INCOME 31.8 -31.8 0.0 578.9 -103.4 475.5 Income from non-consolidated companies 0.9 0.0 0.9 COST OF NET FINANCIAL DEBT -175.0 1.6 -173.5 Value adjustment on derivatives -190.9 190.9 0.0 -3.4 3.4 0.0 -65.4 65.4 0.0 Discounting of liabilities and receivables Net change in financial provisions Share in earnings of affiliates 19.8 -5.5 14.3 PRE-TAX NET INCOME 164.9 152.3 317.2 Deferred tax -40.0 40.0 0.0 Corporate income tax NET INCOME FOR THE PERIOD Foncière des Régions 47 -6.4 3.7 -2.7 118.5 196.0 314.5 Reference Document 2014 1 1 Management report 2014 Financial information and comments 1.7.1.4. Balance sheet 1.7.1.4.1. Consolidated balance sheet (€M) 2013 H1 2014 Disconbefore tinued reclassi- operafication tions 2014 Non-current assets 2013 2014 Shareholders’ equity Capital Intangible assets 154 145 0 145 Additional paid-in capital Tangible assets 108 80 0 80 Consolidated reserves 14,298 14,535 0 Treasury stock Investment properties H1 2014 Disconbefore tinued reclassi- operafication tions 14,535 Earnings Total shareholders’ equity Group share 188 188 0 188 2,371 2,291 0 2,291 -11 -4 0 -4 1,402 1,564 0 1,564 340 119 0 119 4,290 4,158 0 4,158 Financial assets 156 185 0 185 Non-controlling interests 2,925 3,142 0 3,142 Equity affiliates 185 189 0 189 Total shareholders’ equity (I) 7,215 7,300 0 7,300 Deferred tax assets 90 17 0 17 Non-current liabilities Long-term financial instruments 12 39 0 39 7,520 7,709 7 7,707 476 540 20 520 295 261 0 261 Pension and other liabilities 41 44 0 44 Other long-term debt 38 10 4 7 537 Total non-current liabilities (II) 8,369 8,564 24 8,540 2 0 2 Long-term borrowings Long-term financial instruments Total non-current assets (I) 15,002 15,189 0 15,189 Deferred tax liabilities Current assets Assets held for sale 1,197 825 288 Loans and finance lease receivables 10 8 0 Inventories and work-in-progress 80 73 0 Short-term financial instruments 8 Current liabilities 73 Liabilities held for sale 0 11 21 0 110 90 3 87 283 277 13 264 Short-term borrowings 979 1,204 0 1,204 3 7 4 Short-term financial 3 instruments 95 101 3 98 Other receivables 202 127 4 123 Tenant security deposits 6 5 0 5 Accrued expenses 12 10 0 134 146 7 139 382 1,029 2 17 17 0 17 Trade receivables Current tax Cash and cash equivalents Discontinued operations 21 Trade payables Advances and deposits 10 received on current orders 1,027 Short-term provisions 311 Current tax 5 6 0 6 Other debt 204 93 11 82 47 37 0 37 Accruals Discontinued operations Total current assets (II) TOTAL ASSETS (I + II) 47 2,179 2,376 311 2,377 Total current liabilities (III) 1,597 1,702 24 1,732 17,181 17,566 311 17,566 TOTAL LIABILITIES (I + II + III) 17,181 17,566 47 17,566 Foncière des Régions 48 Reference Document 2014 Management report 2014 Financial information and comments 1.7.1.4.2. Simplified consolidated balance sheet Assets 2014 before reclassification Fixed assets 14,760 2014 Liabilities 14,760 Shareholders’ equity 2014 before reclassification 2014 4,158 4,158 Equity affiliates 189 189 Non-controlling interests 3,142 3,142 Financial assets 185 185 Shareholders’ equity 7,300 7,300 Deferred tax assets 17 17 Borrowings 8,913 8,906 Financial instruments 60 60 Financial instruments 641 618 825 537 Deferred tax liabilities 261 261 Assets held for sale Cash 1,029 1,027 Discontinued operations Discontinued operations 311 Other liabilities Other 502 481 TOTAL 17,566 17,566 TOTAL 54 451 427 17,566 17,566 2014 before reclassification 2014 4,158 4,158 5,765 5,758 1.7.1.4.3. Simplified balance sheet, Group share 2014 before reclassification 2014 8,650 8,650 Equity affiliates 139 139 Financial assets 181 181 Shareholders’ equity Assets Fixed assets(1) Deferred tax assets 8 Financial instruments Liabilities 8 Borrowings 55 55 Financial instruments 439 417 Assets held for sale 661 373 Deferred tax liabilities 135 135 Cash 803 801 Other 339 314 Discontinued operations 311 Discontinued operations Other 339 318 TOTAL 10,836 10,836 TOTAL 47 10,836 10,836 €408 million under development. (1) 1.7.1.4.4. Shareholders’ equity 1.7.1.4.5. Net debt Consolidated shareholders’ equity, Group share, fell from €4,290 million at the end of 2013 to €4,158 million at 31 December 2014, i.e. a decrease of €132.1 million due mainly to: Foncière des Régions’ bank loans amounted to €5,727 million in Group share, and €8,893 million on a consolidated basis. Net debt at 31 December 2014 was €4,962 million (Group share) and €7,884 million (on a consolidated basis), compared to €5,098 million (Group share) and €8,117 (consolidated) at the end of 2013. The net debt decreased by €136 million (Group share) and €233 million on a consolidated basis. ww income for the period: +€118.5 million ww financial instruments included in shareholders’ equity: +€42.5 million ww impact of the cash dividend distribution: -€262.7 million ww change percentage of Beni Stabili held: -€30.2 million ww structuring of residential sector: -€2.8 million. Foncière des Régions 49 Reference Document 2014 1 1 Management report 2014 Financial information and comments 1.7.2. Consolidated financial statements ww the participation in the capital increase of Beni Stabili on 14 October 2014. The percentage of holding fell from 50.9% to 48.3% The financial statements for the fiscal year are presented according to the same accounting principles, rules and methods as those for the previous fiscal year. The annexes are prepared in accordance with ANC recommendation 2014-03 published by the decree of 8 September 2014. ww the participation in the capital increase of Foncière des Murs carried out on 18 November 2014. The percentage of holding increased from 28.3% to 28.5% The financial statements for 2014 reflect the impact of the following significant events that occurred during the fiscal year: ww the universal transfer of the assets of the companies SCI 32/50 rue Parmentier, SCI Tostel and SARL Foncière Electimmo ww main transactions involving investments linked to: ww the reduction in capital and the exceptional distribution of Foncière Développement Logements, which brings the accounting value of the Foncière Développement Logements securities on Foncière des Régions balance sheet from €726.7 million to €190.5 million ww the impact of provisions for impairment of equity investments recorded at subsidiaries when the net asset value is lower than the value of the investment securities. Net provisions for impairment of investments mainly concern Beni Stabili (+€94 million) ww a new investment in the company Imméo ReWo Holding GmbH (fully-owned subsidiary) for €646.5 million. Immeo Rewo Holding GmbH holds an investment of approximately 60% in the German residential sector ww the payment of a €263 million dividend to shareholders ww the issuance in September of a bond loan of €500 million maturing in seven years with a 1.75% coupon. ww the subscription of 100% of the shares of SCI Charenton for €16 million. This SCI purchased a property complex made up of three buildings leased to Natixis The 2014 financial statements showed corporate earnings of €186.5 million, versus €180.6 million in 2013. 1.7.2.1. Changes in the income statement 2014 (published) 2013 (published) 2013/2014 Changes 2012 (published) Rental receipts 40.9 43.7 -2.8 39.2 Provision of services 25.5 23.0 2.5 25.3 Primary aggregates (€M) Sundry income 7.8 6.3 1.5 9.2 Revenues 74.2 73.0 1.2 73.7 Net overheads 47.0 49.9 -2.9 52.2 Amortisation 20.2 23.0 -2.8 21.4 5.2 -0.8 6.0 3.9 Impairment and Provisions Operating profit 1.8 0.9 0.9 -3.8 Financial income 409 355.0 54.0 302.2 Financial charges 246.1 172.4 -73.7 228.1 Net financial income 162.9 182.5 -19.6 74.1 Income from ordinary operations 164.7 183.3 -18.6 70.3 24.2 -2.1 26.3 72.5 0 0 0 0 2.4 0.8 1.6 0.8 186.5 180.6 5.9 142.1 Net non-recurring income Profit-sharing Corporate income tax PROFIT Total revenues for the fiscal year amounted to €74.2 million, including €40.9 million in leasing income, €25.5 million for the provision of services and €7.8 million for reinvoicing expenses. The depreciation and amortisation charges amounted to €20.2 million at 31 December 2014, versus €23 million at 31 December 2013. Allocations and reversals to provisions in assets and liabilities had a negative impact on operating income in the amount of -€5.2 million. This amount mainly corresponds to provisions for depreciation of fixed assets. Therefore, operating income rose from -€0.9 million to +1.8 million. Services correspond to those rendered to subsidiaries and to administrative and accounting activity for companies held in partnership in 2014. The decrease in net overheads of €2.9 million compared to 2013 mainly includes a drop in other purchases and external expenses. Foncière des Régions 50 Reference Document 2014 Management report 2014 Financial information and comments Financial income totalled €409 million, versus €355 million the previous fiscal year, i.e. an increase of €54 million. This increase includes both an increase in merger surpluses during the fiscal year (+€60.3 million) and to an increase in paid-in dividends received (+€32.8 million), offset by a decrease in reversals of provisions and transferred charges (-€35.7 million). Net intangible assets amounted to €21.5 million, versus €23.7 million in 2013. Plant, property and equipment, which mainly corresponds to properties subject to deduction of the depreciation, amortisation and provisions made increased from €528.5 million to €545.4 million. They include the investments realised mainly on the Green Corner, Nanterre Respiro, Bose Saint-Germain and Lille Quatuor in Roubaix (€72 million) development projects and disposals for the fiscal year (including Lille Arcuriale) as well as amortisations for the period. Financial expenses were €246.1 million, versus €172.4 million in 2013, up €73.7 million, which is mainly due to provisions associated with greater investments than in 2013 (additional expense of €56.3 million), and an increase in interest and similar costs of €18 million. Financial income thus rose from €182.5 million in 2013 to €162.9 million in 2014, while operating income fell from €183.3 million to €164.7 million, down €18.6 million. Investment securities totalled €3,625.7 million compared with €3,450.1 million in the accounts for 2013, representing a net increase of €175.6 million, essentially reflecting the following major changes: Extraordinary income of €24.2 million was due largely to capital gains on asset disposals of €23.8 million. ww a new investment in the company Imméo ReWo Holding, holding 60% of Germany Residential, for +€646.5 million ww increases in shares in the companies Foncière des Murs (+€58.4 million) and Beni Stabili (+€51.7 million), following capital increases Income tax for the year amounted to €2.4 million. ww increases in shares following full transfers of assets of Foncière Electimmo with investments (+€50.1 million) 1.7.2.2. Change in major balance-sheet items ww a new investment in the company SCI Charenton for +€16 million The company’s shareholders’ equity, before distribution, as at 31 December 2014 totalled €2,823.9 million, down -€77.3 million. This drop was due largely to the following events: ww upon the impact of the reduction in capital and the exceptional distribution of Foncière Développement Logements for -€536.2 million ww the payment of a €263 million dividend to shareholders ww cancellation of securities of companies under the TUP programme (-€25.3 million) ww earnings for the fiscal year totalling €186.5 million ww a decrease in regulated provisions totalling €1.1 million. ww changes in depreciation of equity investments of -€85.6 million, in particular the depreciation of Beni Stabili shares (€93.6 million). The provisions for contingencies and losses decreased by €8.4 million, in particular due to: ww a provision for contingencies not used for risks concerning unrealised capital losses on financial instruments for €4.8 million Borrowings fell from €895.3 million to €538.6 million, down €356.7 million, in view of the new loans extended to subsidiaries (in particular Charenton €147 million) and the repayment of loans (in particular Foncière Europe Logistique €288.5 million, Garonor France III €150 million and Technical €129 million). ww a provision for contingencies for yield guarantees for €1 million, following the activation of the guarantee by the partner ww a reversal of provisions for treasury shares of €3.1 million. Current assets totalled €776.7 million, compared with €328.6 million in the accounts for 2013, representing an increase of €448.1 million linked essentially to increases in securities (€505.7 million). Debt amounted to €2,649 million. It was impacted by the issuance of a €500 million non-convertible bond and by changes in other bank borrowings (-€26 million). Foncière des Régions 51 Reference Document 2014 1 1 Management report 2014 Financial information and comments 1.7.2.3. Company earnings over the past five fiscal years Pursuant to the provisions of Article R. 225-102 of the French Commercial Code, the financial table reproduced below shows the company’s income over the past five fiscal years. (€) 2010 fiscal year 2011 fiscal year 2012 fiscal year 2013 fiscal year 2014 fiscal year 164,774,919 164,846,385 173,690,076 188,049,264 188,050,671 I - CAPITAL AT YEAR-END a. Share capital b. Number of ordinary shares outstanding 54,924,973 54,948,795 57,896,692 62,683,088 62,683,557 c. Number of priority dividend shares (without voting rights) outstanding 0 0 0 0 0 d. Maximum number of future shares to be created 0 0 0 0 0 0 0 0 0 0 395,736 383,279 326,462 311,561 310,056 77,039,761 77,715,684 73,716,015 72,992,648 74,203,034 -253,050,343 176,505,542 230,436,681 192,350,072 303,487,063 c. Corporate income tax 0 0 747,538 789,695 2,387,437 d. Employee profit-sharing due for the year 0 0 0 0 0 e. Income after tax, employee profit-sharing, depreciation and provisions 111,136,742 113,562,173 142,109,966 180,571,839 186,513,137 f. Distributed income 230,684,887 230,784,939 243,166,106 263,268,970 269,539,295 d1. Through conversion of bonds d2. Through exercise of subscription rights II - OPERATIONS AND INCOME FOR THE FISCAL YEAR a. Revenues net of tax b. Income before tax, employee profit sharing, depreciation and provisions III -NET INCOME PER SHARE a. Income after tax and employee profit sharing, but before depreciation and provisions -4.61 3.21 3.98 3.06 4.80 b. Income after tax, employee profit-sharing, depreciation and provisions 2.02 2.07 2.45 2.88 2.98 c. Dividend per share 4.20 4.20 4.20 4.20 4.30(1) IV – PERSONNEL a. Average salaried headcount over the fiscal year b. Total payroll for the fiscal year c. Amount paid in employee benefits for the fiscal year (social security, benefits, etc.) 138 131 145 141 158 13,307,494 20,004,683 18,453,462 16,858,351 15,964,832 5,913,323 5,790,337 6,396,840 6,457,459 7,264,791 Proposed for vote by the Ordinary and Extraordinary General Shareholders Meeting of 17 April 2015. (1) Foncière des Régions 52 Reference Document 2014 Management report 2014 Financial information and comments 1.7.2.4. Non-tax-deductible expenses In accordance with Article 223 quater of the French General Tax Code, it should be noted that financial statements for the past year include a total of €51,447 corresponding to non-tax-deductible expenses (depreciation and excess rent on leased vehicles). During the past fiscal year, Foncière des Régions incurred no expenses subject to Articles 223 quinquies and 39-5 of the French General Tax Code. 1.7.2.5. The company’s research and development activity Foncière des Régions carried out no research and development activities during the past fiscal year. 1.7.2.6. Payment periods for company suppliers and clients In accordance with the provisions of Article L. 441-6-1, paragraph 1 of the French Commercial Code, the breakdown of debt balances at year-end for the past two fiscal years relating to Foncière des Régions’ suppliers is presented below by date due. Foncière des Régions – balance by due date as at 31/12/2013 (€K) Total Balance not due (invoice date < 60 days) Supplier debt 1,134 0 Balance not due (invoice date > 60 days) Overdue by less than 30 days Overdue by 30 to 90 days ago Overdue by more than 90 days 872 246 16 0 Foncière des Régions – balance by due date as at 31/12/2014 (€K) Total Balance not due (invoice date < 60 days) Supplier debt 4,341 4,078 Balance not due (invoice date > 60 days) Overdue by less than 30 days Overdue by 30 to 90 days ago Overdue by more than 90 days 0 256 7 0 Trade receivables totalled €471 million at 31 December 2014 and are itemized by due date in the table below: Foncière des Régions – balance by due date as at 31/12/2014 (€K) Trade receivables Total Balance not due Overdue by less than 90 days Overdue by 90 to 180 days Overdue by more than 180 days 472 3 166 65 238 1.7.2.7. Review by the Statutory Auditors Pursuant to the legal and regulatory provisions, reports by the Statutory Auditors concerning the approval of the 2014 financial statements as reproduced in the Reference Document are available. Foncière des Régions 53 Reference Document 2014 1 1 Management report 2014 Net Assets Value (NAV) 1.8. NET ASSETS VALUE (NAV) EPRA NAV (€M) EPRA NAV/share (€) EPRA TRIPLE NET NAV (€M) EPRA triple net NAV/share (€) Number of shares 2013 2014 Var. vs 2013 Var. (%) vs 2013 4,871.1 4,753.5 -117.6 -2.4% 77.7 75.5 -2.2 -2.8% 4,342.1 4,145.1 -196.9 -4.5% 69.2 65.9 -3.4 -4.9% 62,708,431 62,941,712 233,281 0.4% €4,754 million €4,871 million +€315 million €75.5/share +€102 million €77.7/share -2.8% -€106 million -€263 million -€85 million -€35 million -€45 million Tax implications of logistics disposal Other Favourable impacts on the debt profile and cost EPRA NAV 2013 RNI EPRA Distribution Property values Refinancing and increase capital increase of Beni Stabili Hedge restructuring EPRA NAV 2014 Number of shares used to calculate NAV: 62,941,712 for 2014 vs 62,708,431 for 2013 SHAREHOLDERS’ EQUITY € Million €/share 4,158.0 66.1 Fair value assessment of buildings (operation + inventory) 27.1 Fair value assessment of parking facilities 34.0 Fair value assessment of goodwill 1.9 Fixed debt -93.4 Restatement of value ED 17.5 EPRA TRIPLE NET NAV 4,145.1 Financial instruments and fix rate debt 407.4 Deferred tax 127.4 ORNANE 65.9 73.6 EPRA NAV 4,753.5 75.5 IFRS NAV 4,158.0 66.1 Valuation work is carried out in accordance with the code of conduct applicable to SIICs, and in accordance with the Charter of property valuation expertise, the recommendations of the COB/CNCC working group chaired by Mr Barthès de Ruyther and the international plan in accordance with European TEGoVA standards and those of the Red Book of the Royal Institution of Chartered Surveyors (RICS). The property portfolio directly held by the Group underwent a complete valuation on 31 December 2014 by independent property experts such as REAG, DTZ Eurexi, CBRE, JLL, BNP Paribas Real Estate, Cushman and Yard Valtech. Foncière des Régions 54 Reference Document 2014 Management report 2014 Net Assets Value (NAV) Assets were estimated at values excluding and/or including duties, and rents at market value. Estimates were made using the comparative method, the rent capitalization method and the discounted future cash flows method. Other assets and liabilities were valued using the principles of the IFRS standards on consolidated accounts. The application of the fair value essentially concerns the valuation of the debt coverages and the ORNANES. The level of exit tax is known and included in the financial statements for all of the companies that have opted for the fiscal transparency system. Car parks were valued by capitalizing the gross operating surplus generated by the business. For companies shared with other investors, only the Group share was taken into account. 1.8.1. Fair value adjustment for the buildings and business goodwill In accordance with IFRS standards, properties in operation and in inventory are valued at historical cost. A value adjustment, in order to take into account the appraisal values, is recognised in the NAV for a total amount of €27.1 million. Since goodwill is not valued in the consolidated accounts, a restatement to recognise its fair value (as calculated by the appraisers) was made in the NAV in the amount of €2.0 million at 31 December 2014. 1.8.2. Fair value adjustment for the car parks Car parks are valued at historical cost in the consolidated financial statements. A restatement is made in the NAV to take into account the appraisal value of these assets, as well as the effect of the farm-outs and subsidies received in advance. The impact on the RNA was €34.0 million at 31 December 2014. 1.8.3. Recalculation of the base cost excluding duties of certain assets When a company, rather than the asset that it holds, can be sold off, transfer duties are recalculated based on the company’s net asset value. The difference between these recalculated duties and the transfer duties already deducted from the value of the assets generates a restatement of €17.5 million at 31 December 2014. 1.8.4. Fair value adjustment for fixed-rate debts The Group has taken out fixed-rate loans. In accordance with EPRA principles, triple net NAV is adjusted by the fair value of fixed-rate debts, with an impact of -€93.4 million at 31 December 2014. Foncière des Régions 55 Reference Document 2014 1 1 Management report 2014 Real estate appraisals 1.9. REAL ESTATE APPRAISALS 1.9.1. Introduction Foncière des Régions consolidates the activities of three public companies. Thus, the part concerning the appraisals of assets in the Services Sector, France Residential and Italy Offices can be consulted directly in the subsidiaries’ Reference Documents, namely: ww Foncière des Murs for Services Sector assets ww Foncière Développement Logements for France Residential ww Beni Stabili for Italy Offices. Summary reports covering Foncière Europe Logistique’s logistics and light industrials activities and Immeo AG’s Germany Residential activity are included in 1.9.6 and 1.9.7, respectively. 1.9.2. Context 1.9.2.1. The office market in Paris Region – 2014 review SUMMARY TABLE Paris Region La Défense 2013 2014 Change 2013 2014 Change 1,870,200 m 2 2,118,400 m 13% 105,500 m 2 234,800 m 123% 669,300 m2 826,800 m2 24% 52,700 m2 170,300 m2 223% 5,931,400 m 2 5,733,300 m -3% 704,200 m 2 489,000 m -31% 3,925,000 m2 4,024,000 m2 3% 401,000 m2 409,000 m2 2% Vacancy rate 7.1% 7.20% 0.1 pt 12.30% 12.20% -0.1 pt For the year 2 Take-up o/w > 5,000 m2 Firm offer Immediate 2 2 2 2 1,305,700 m 1,251,300 m -4% 165,400 m 71,900 m -57% More than one year 700,700 m2 458,000 m2 -35% 137,800 m2 8,100 m2 -94% Likely offer > 5,000 m2 2,974,000 m2 3,583,200 m2 20% 482,900 m2 698,800 m2 45% Ready to start 1,412,800 m 2 1,845,700 m 31% Construction permits filed 1,077,100 m2 879,000 m2 -18% 484,100 m2 858,500 m2 New or restructured €296 €297 Second-hand €218 €707 Vacancy and project 2 2 2 2 185,100 m 2 292,900 m 58% 237,000 m2 181,900 m2 -23% 77% 60,800 m2 224,000 m2 268% 0% €423 €415 -2% €218 0% €345 €340 -1% €687 -3% €442 €498 13% 2 Average rent excl. tax (ch/m2/year) Average ”prime” rent Sources: CBRE and Immostat-IPD. In 2014, take-up in Paris Region was 2.1 million m2, a 13% volume increase over one year, but still 8% below the annual average for the last ten years, an indication of the still difficult economic environment for companies whose margins continue to be squeezed. The 0-5,000 m2 market remained robust (nearly 1.3 million m2 taken up) and we saw the expected bounceback in > 5,000 m2 transactions after a quiet year in 2013: 62 deals signed for 826,800 m2, including three > 40,000 m2, compared to none in 2013. Western Paris accounted for nearly a quarter of the surface area taken up, with total sales of 537,400 m2 despite a less dynamic > 5,000 m2 market (except in Neuilly-Levallois), beating West Central Paris with 466,800 m2. Meanwhile, the inner Foncière des Régions and outer suburbs experienced an annual rise in volumes, but are still well below their long-term average. As at 1 January 2015, the immediate supply in Paris Region topped 4 million m2, giving a vacancy rate of 7.2%. Big geographical and structural disparities remain. The structurally tight Paris city market has a modest 5.1% vacancy rate with few new/ restructured premises and/or large surfaces available. This contrasts with the situation in the peripheral areas, particularly the West (Western Paris and La Défense), which has a vacancy rate of around 12% and includes more than half the region’s new and restructured supply. 56 Reference Document 2014 Management report 2014 Real estate appraisals But there is still a shortage of quality supply. Since 2007, the new/restructured share of the market has shrunk to 20% in 2014 (compared to 24% in 2013), reflecting a slowdown in building starts on new programmes and quick sales of what little new inventory is delivered. In 2014, rental face values remained relatively stable after oversupply drove the market sharply down between 2011 and 2013. In Paris, modest inventory availability is helping sustain face values while stiff competition among landlords in the peripheral markets has driven down face and, particularly, economic values. In oversupplied locations, landlords are frequently offering 2-3 month rent-free periods per year committed on > 1,000 m2 leases with firm commitments of at least 6 years. In Paris city, the average incentive is 1.5-2 months. Despite a fall in transaction numbers, 1.08 million m2 was marketed in 2014, a volume increase of 4% over one year but broadly in line with the ten-year average (-0.5%). Diametrically opposed changes in business activity were seen between Grenoble and Strasbourg. In Grenoble, business activity fell by 39%, while in Strasbourg it rose by 70% over one year, with major transactions accounting for much of this difference. With 234,800 m2 taken, La Défense saw robust activity, the busiest since 2008. The fall in economic rents, high-quality inventory plus the attractions of a business district (central, accessible, services, visibility, etc.) all helped build momentum in the market: 13 > 5,000 m2 transactions totalling 170,300 m2 drove the recovery. Immediate supply did not rise in 2014, despite the delivery of the Majunga and D2 towers, as some major transactions mopped up the vacant inventory. The gradual sale of new and restructured assets delivered in the last 18 months has driven the average ”prime” rent to €498 excl. tax ch/m2/yr while commercial benefits offered remain substantial, between 2 and 3 months’ of free rent per year committed. The 22 > 5,000 m2 transactions (21 in 2013) signed in 2014 (228,000 m2) made up nearly 21% of total take-up, with only five of these stemming from the public sector. Of these mega-deals, seven were in Lyon, including the purchase of the Tour Incity by Caisse d’Épargne, which plans to move into 17,600 m2 of the building’s surface area. Another three were in Toulouse and two in Lille. Face rental values held steady. As in 2013, the weighted average rent for new/restructured offices was €206.5 excl. tax ch/m2 yr. However, regional prime rent, still led by Marseille, has now reached €300 excl. tax ch/m2/yr following a transaction in the Tour La Marseillaise, whose construction is due to be completed in 2018. Marseille is followed by Lyon Part-Dieu at €260, and Euralille at €220. 1.9.2.2. The office market in other French regions(1) – 2014 review At nearly 1.8 million m2, the immediate supply as at 31 December 2014 in the ten major regional cities sampled grew by 5% over one year and was 24% above its ten-year average (1.45 million m2). Vacancy rates remain in a fairly tight range of between 5% and 6.5%, indicative of some fluidity in these markets. That said, in sought-after office segments such as Lyon Part-Dieu vacancies can fall below 4%. Weighted average rent for second-hand surface area was unchanged over one year at €123 excl. tax ch/m2/yr in 2014. In contrast, face rental values for second-hand assets outside city centres continued to trend downward. 20% of total vacant inventory is in Greater Lyon, which also saw a strong increase over the year (+21%) and 14% is in the Lille agglomeration. 1.9.2.3. The Office Investment Market in France – 2014 review SUMMARY TABLE Paris Region 2013 Other French Regions 2014 Change 2013 2014 Dynamic portfolio Change 2013 2014 Change Commitments €9,399 million €13,567 million +44% €1,494 million €1,545 million +3% €0 million €18 million _ wwforeign €3,172 million €5,849 million +84% -1% €0 million €0 million _ wwdomestic €6,227 million €7,718 million +24% €1,250 million €1,492 million +19% €0 million €18 million _ ”Prime” yield rate 4.25% €244 million 3.75% -50 bps 5.70% €53 million 5.40% -30 bps _ _ _ Sources: CBRE and Immostat-IPD. (1) Analysis based on a representative sample of ten major regional cities: Aix-en-Provence/Marseille, Bordeaux, Grenoble, Lille, Lyon, Montpellier, Nantes, Rennes, Strasbourg and Toulouse. Foncière des Régions 57 Reference Document 2014 1 1 Management report 2014 Real estate appraisals In 2014, €15.1 billion were exchanged on the French office investment market, up 44% over one year. After two relatively disappointing years, the segment performed well even if its weighting (65%) in total commitments in France remains substantially below its long-term average. Thanks to a very active fourth quarter, investment in 2014 was back to near levels last seen before the economic crisis, in a context of strong growth in European real estate investment with notable influxes of capital looking for large volumes. The year was also marked by some massive transactions (Risanamento portfolio, Cœur Défense, Campus SFR, etc.) which inflated commitments somewhat artificially. However, in a positive sign, mid-sized transactions (between €50 million and €200 million), which are the traditional heart of the market and had been suffering thin liquidity due to a lack of supply, proved particularly dynamic toward the end of the year. underlining the substantial role of wealth management in real estate investment. Finally, investment funds, having become net investors once again in the first half of the year thanks to the vigorous involvement of US funds, returned to being generally sellers in the second half of the year. Strong demand driven by fresh inflows of liquidity, supply limited by issues of capital reuse, record cheap money, rental values offering potential for a medium-term rebound, all these factors combined in 2014 to drive a strong and steady fall in real estate yield rates. The Paris prime rate is now 3.75% and the squeeze is not restricted to the capital’s traditional business districts. The best locations in Western Paris are yielding 5% or below, the northern and southern inner suburbs have fallen below 5.5% and the outer suburbs are near 6%. However, while secured yield rates have become more standardised, there is still a real geographical hierarchy between these broad areas. Also, buyers remain very concerned about quality and the visibility of assets. 1.9.2.4.1. The Milan offices market 1.9.2.4. The office market in Milan and Rome – 2014 review While 2013 seemed to be a year of transition, 2014 did not bring any clearly more positive tone to the Italian office market. Activity continues to fluctuate from quarter to quarter and location to location. 277,000 m2 were taken up in 2014, a 20% increase on 2013 and close to the 5-year average. This strong performance reflects a particularly dynamic first half of the year. The market for midsized surfaces (1,000 m2-5,000 m2) was active, making up 40% of volumes taken up. Porta Nueva is gradually becoming the district of choice for new technology companies like Google, which has established its Italian registered office there. In 2014, the industrial sector remained more active, reflecting the momentum of the fashion sector (32% of take-up), followed by corporate consultancy and services and the financial sector (22%, respectively). The still soft user market has worked against the relaxation of risk criteria, and the diversification of investment targets has remained selective. Geographically, the appeal of Paris assets held up strongly throughout the year, despite the very low yield rates on the best products. In this way, the capital attracted nearly €6.5 billion in office commitments (43% of the total), an unprecedented volume. Also, while many investors expect an economic recovery in the medium term, the focus remains on secured assets. In this way, core assets attracted 64% of office commitments of over €50 million in 2014, compared to 58% in 2013 and the weighting of value-added products dropped from 20% to 11%. In contrast, the market for properties in advance of future completion, having begun the year weak, revived slightly in the last few months. Here again, however, investors are only interested in some closely targeted locations, and willing to accept part of the rental risk in exchange. The vacancy rate was 13.3%, a small rise over one year. Future new supply remains restricted as half of upcoming deliveries are already pre-leased. However, many landlords are undertaking restructuring work to boost the value of their assets. This, despite the difficulty of obtaining credit. Prime rent also rose slightly to €490/m2/year (€480 in 2013). At €900 million, the investment market grew by 19% compared to 2013, a disappointing performance given expectations. However, this was mainly the result of drawn-out negotiations that delayed a number of deals until 2015. Foreign investors’ share was 65%. The prime yield rate narrowed to 5%, reflecting investors’ appetite for the rare core products. 1.9.2.4.2. The Rome Offices market In this intensely competitive market, the effect of foreign capital was very strong throughout the year. However, domestic investors remained in the majority, making 61% of all commitments. Among these French investors, institutions again led the way, investing either directly (insurance companies and real estate investment companies, which continue to attract plentiful new funds) or via OPCI RFA real estate funds. In addition, we increasingly saw asset managers developing joint acquisitions, shared between different funds either open to the general public or restricted to professional investors. We should also note the fairly high weighting of private funds, which financed the second biggest office deal of the year (the Risanamento portfolio), Foncière des Régions Although the fourth quarter 2014 was the best in the year with 59,400 m2 taken up, this level of activity failed to make up for previous quieter quarters. Overall, 119,900 m2 were let over the entire year, a drop of 34% compared to 2013. The robust level of activity in the fourth quarter was partly due to a major transaction involving 27,000 m2 as part of the new Europarco programme. EUR is still the most dynamic sub-market in Rome, although the central districts have seen an uptick in activity. 58 Reference Document 2014 Management report 2014 Real estate appraisals Demand is being driven by new technology companies (36% of the volume let) followed by the services and consultancy sector (25%). In contrast, the financial sector has been lacklustre, contributing just 3% of annual take-up. As at 31 December 2014, Immeo AG owned 40,564 residential properties in Germany with a combined value of €2.7 billion, or €1.6 billion for Foncière des Régions group share. The vacancy rate was 8.2%, a stable level compared to the end of 2013. New supply remains restricted and on-spec launches virtually non-existent as developers hold off until their programmes are pre-sold. 1.9.2.5.1. The German real estate market Unlike other European countries, Germany did not experience rapid growth in its real estate market in the wake of the crises of the 1990s that impacted most European countries. The economic weight of the reunification process and stability in demographics in conjunction with low consumption in households are factors that contributed to a certain listlessness in prices over the last decade. Values did not follow trends noted in other European countries, resulting in lower numbers of transactions and prices remaining stable. Prime rent in the CBD edged down from €400/m2/year to €380 over a year, while that of EUR increased from €320 to €330, in conjunction with the new programmes recently delivered. Lease renegotiations remained the preferred option for companies, but we are starting to see some look to rationalise their floor space with new and higher quality premises. The investment market mirrored the users’ market. Over the year as a whole, investment in offices was €265 million, down 52% compared to 2013. Activity was close to zero in the first half of the year. The prime yield rate nevertheless fell slightly to 5.25%, reflecting more confident sentiment across the Italian market. Despite this, Germany has one of the largest residential inventories in Europe, built in large part over properties destroyed during the Second World War through incentive-based public policies. Emphasis has been placed on rental properties, as the rate of home owners is one of the lowest in Europe at about 45%. This reflects the solidity and performance of the German rental sector, while offering major perspectives of capital earnings. 1.9.2.5. Residential Germany Foncière des Régions’ assets in Germany, held via its subsidiary Immeo AG, are located in the West of the country, in the RhineRuhr region, and in the East, in Berlin, Dresden and Leipzig. The high yields featured in the residential sector have attracted many foreign investors in recent years, principally the Anglo Saxon private equity funds, which have taken up the slack of public and private companies that wish to outsource residential real estate holdings under advantageous conditions. The Rhine-Ruhr metropolitan region has a population of around ten million inhabitants, about half of the population of the Federal State of North Rhine-Westphalia, the most densely populated area of Germany. This former industrial and mining region is now a thoroughly converted e-intelligence centre of major importance. During the economic crisis that has marked recent years, housing prices have remained stable. The volume of mortgages has stayed at the same level and there has been no boom in construction, with the government’s stimulus packages maintaining household solvency levels. Berlin, with some 3.5 million inhabitants extending to 4.4 million with the metropolitan outskirts, is the most populated city in Germany. The capital is now a very popular destination for international companies to set up their registered offices. Berlin is enjoying positive demographic growth, and as a consequence, is a highly dynamic real estate centre. While the still relatively reasonable prices of properties have attracted institutional investors to Berlin, the private real estate market is also very active for good quality housing located in small, well-placed real estate complexes. With ownership rates of properties among the lowest in Germany at 15% compared to 45% for all other countries, the perspectives for value creation in the long term appear significant. 1.9.2.5.2. The investment market in 2014 In 2014, the German residential sector experienced strong demand by investors, who have invested around €13 billion in the residential segment. Domestic investors in particular turned to the residential segment, where yields were perceived as an attractive alternative to bond interest rates. In 2014, the market was dominated by a number of significant deals: the acquisition of Vitus (around 30,000 residential properties) by Deutsche Annington for around €1.4 billion, the acquisition of DEWAG (around 11,500 residential properties), also by Deutsche Annington for €970 million and, finally, the acquisition by BUWOG of DGAG’s portfolio of around 18,000 residential properties. Alongside Berlin, other cities in East Germany such as Dresden, Leipzig, Potsdam, Jena and Erfurt have gained in attractiveness. Due to an economic climate that generates higher growth than the average in Germany, these regions have profited from the establishment of innovative companies positioned in new technologies and health. These factors have all contributed to the increase in real estate demand, primarily in town centres. Foncière des Régions The segment is thus continuing to consolidate and the big domestic public companies have reinforced their position as leading players in what is a highly liquid market. 59 Reference Document 2014 1 1 Management report 2014 Real estate appraisals INVESTMENT VOLUMES IN THE GERMAN RESIDENTIAL SEGMENT 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2005 2006 2007 2008 2009 2012 2013 2014 The German real estate market shows considerable variation in prices and rents. Depending on cities, rental values have undergone very different changes in recent years. Rents in the major cities in Western Germany have increased, albiet moderately. In the East, except for Berlin, Dresden and other attractive cities like Leipzig, an abundance of properties have helped keep rents low. In the large towns, however, a shortage of supply continues to drive the market. In Berlin, prices and rents are on a clear uptrend, sustained by a rising number of residents and households in the city. At the same time, construction volumes remained relatively low compared to the constantly growing demand. 2.80% Middle East 2011 1.9.2.5.3. Rental and home ownership market BREAKDOWN OF INVESTMENTS BY SOURCE OF FUNDS (%) 0.90% 2010 Other 1.30% North America 13.30% Europe 81.70% Germany CHANGE IN BERLIN RESIDENTS AND HOUSEHOLDS: 2000-2012/2013 1,950,000 3,500,000 1,900,000 3,400,000 1,850,000 3,300,000 1,800,000 3,200,000 1,750,000 3,100,000 1,700,000 3,000,000 1,650,000 2000 2001 Resident 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Households Source: German federal bureau of statistics 2014, BNPP REC. Foncière des Régions 60 Reference Document 2014 2012 2013 Management report 2014 Real estate appraisals CHANGE IN BERLIN AVERAGE RENTS ON ASSETS BUILT BEFORE 1948: 2005-2013 (€/m2) 9 8 7 6 5 4 3 2 1 0 2009 2010 2011 2012 2013 Rental income/m²/month simple quality (YOC before 1948) Rental income/m²/month average quality (YOC before 1948) Rental income/m²/month good quality (YOC before 1948) Source: IVD, BNPP REC. Berlin rents have risen uninterruptedly since 2005. Depending on location and quality, housing commands average rents of €4.9 to €8.5. However, in the central city districts, rents can be higher, around €10/m2. CHANGE IN BERLIN FLAT PRICES: 2005-2013 (€/m2) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2009 2010 2011 2012 2013 Selling price (€/m²), average quality units Selling price (€/m²), very good quality units Selling price (€/m²), simple quality units Selling price (€/m²), good quality units Source: IVD, BNPP REC. Flat prices have grown faster than rents over recent years, contributing to the downtrend in yield rates. Depending on location and facilities, prices can range from €950 to €3,150 or even more for prime properties. Foncière des Régions 61 Reference Document 2014 1 1 Management report 2014 Real estate appraisals 1.9.3. Asset valuation method 1.9.3.1. Leasing revenue discount method The overall portfolio is appraised by independent experts on a half-yearly basis (30 June and 31 December), and according to the calculation methods determined by an internal set of specifications based on guidelines of the oversight bodies: This approach involves recognising the revenues produced or capable of being produced by an asset and capitalising them at an appropriate rate. This rate is derived from the revenues recognised, the characteristics of the asset and its foreseeable potential. It is the result of analysis of other rental properties and should be repositioned in the general context of revenues expected from various investments in a given economic environment. ww recommendations from the Autorité des Marchés Financiers (AMF) ww instructions from the COB report of 3 February 2000 on real estate appraisals (”Report from the Working Group on expert appraisals of the real estate portfolios of companies issuing public calls for savings” chaired by Georges Barthès de Reyter). Foncière des Régions also abides by the Listed Real Estate Investment Company (SIIC) Code of Ethics applicable to FSIF (Fédération des Sociétés Immobilières et Foncières) member companies, particularly in terms of real estate appraisals. The main criteria for choosing rates of return are as follows: Moreover, the real estate experts selected, namely BNP Real Estate, DTZ Valuation France, Jones Lang LaSalle Expertise, CBRE Valuation and VIF Expertise, are all members of the AFREXIM (Association Française des Experts Immobiliers – French Association of Real Estate Appraisers), and meet the real estate appraisal charter approved by the AFREXIM. As a result of this, experts adhere to the various French standards. Their valuation methods comply with the RISC and IVSC international codes of conduct. ww size and profitability of the establishment. ww geographic location ww age and condition of the property complex ww possible convertibility of the property complex 1.9.3.2. Discounted future cash flow (DCF) method This method takes into consideration future revenue, including recognised rental income, anticipated rental income, and work under contract for the lessor and residual gains from any sale at the end of the holding period. This method consists of discounting to present value the flows generated by the asset and adding in the present exit value of the assets in the last year. Each asset is subject to a full appraisal at the time of its acquisition, or when there is a change of appraiser. Interim appraisals involve dossier updates, sometimes with an inspection of the asset. Assets with an appraisal value of over €30 million are subject to full appraisal every three years. The remainder are appraised every five years. In the case of an asset that is under development meeting the IAS 40 standard and subject to an appraisal, Foncière des Régions integrates a disbursement for future works in its cash flow. A complete appraisal consists of: 1.9.3.3. Unit value comparison method ww preparation of a dossier including legal, technical and financial documents required for an objective analysis of the factors that enhance or reduce the value of the assets in consideration This method consists in referring to the sale prices found on the market for equivalent assets. The comparison factors used derive specifically from internal databases in which each reference is analysed, classified by situation and by category, and expressed in gross surface units or weighted surface units. ww an internal visit to the sites and their environment ww research and analysis of comparison factors ww drafting of a report in which the final appraisal must comply with the resulting logic of the aforementioned observations, and a relevant analysis of the category market in question. Foncière des Régions It is more a method of cross-checking the two methods described above, than a principal method. 62 Reference Document 2014 Management report 2014 Real estate appraisals 1.9.4. Summary of expert appraisals of the France Offices portfolio Appraisal value Restatements (preliminary agreements, sales, others) Fair value % of total value of portfolio Type of reports provided (breakdown/summary) 561,500 11.2% Summary -5,462 689,509 13.7% Summary 0 111,195 2.2% Summary 94,800 0 94,800 1.9% Summary Geographic area Appraiser Paris BNP Paribas Real Estate 561,500 0 DTZ Valuation France 694,970 CBRE Valuation 111,195 Jones Lang LaSalle VIF Expertise Paris Region 92,000 0 92,000 1.8% Summary Crédit Foncier Expertises 0 0 0 0.0% Summary Assets under preliminary agreement not appraised 0 0 0 0.0% Summary Asset at cost not appraised 0 0 0 0.0% Summary Total 1,554,465 -5,462 1,549,004 30.8% BNP Paribas Real Estate 1,409,920 0 1,409,920 28.0% DTZ Valuation France 552,841 683 553,524 11.0% Summary CBRE Valuation 242,849 6,039 248,888 4.9% Summary and breakdown Jones Lang LaSalle 178,250 0 178,250 3.5% Summary and breakdown VIF Expertise 120,830 0 120,830 2.4% Summary and breakdown Crédit Foncier Expertises 0 0 0 0.0% Summary Assets under preliminary agreement not appraised 12,940 0 12,940 0.3% Assets at cost not appraised Total Other French BNP Paribas Real Estate Regions DTZ Valuation France Summary and breakdown 6,172 0 6,172 0.1% 2,523,802 6,722 2,530,524 50.3% 82,330 0 82,330 1.6% Summary and breakdown 472,297 572 472,869 9.4% Summary and breakdown CBRE Valuation 235,823 0 235,823 4.7% Summary and breakdown Jones Lang LaSalle 102,330 -250 102,080 2.0% Summary and breakdown 33,952 0 33,952 0.7% Summary and breakdown 100 0 100 0.0% Summary 0.1% VIF Expertise Crédit Foncier Expertises Assets under preliminary agreement not appraised Assets at cost not appraised Total TOTAL 3,100 0 3,100 22,608 0 22,608 0.4% 952,540 322 952,862 18.9% 5,030,807 1,583 5,032,390 100% 1.9.4.1. Appraiser remuneration Appraisers (€ –100% – excl. tax) 2014 Total (%) BNP Real Estate 838,394 30% DTZ 605,888 22% CBRE 438,755 16% JLL 313,360 11% REAG 168,050 6% CW 137,956 5% VIF 96,750 3% Yard Valttech 90,000 3% CFE 83,500 3% 2,772,653 100% TOTAL Foncière des Régions 63 Reference Document 2014 1 1 Management report 2014 Real estate appraisals 1.9.5. Abridged appraisers’ report regarding the 2014 year-end estimate of the market value of assets owned by the company Sir, Please find enclosed our abridged report concerning the valuation at 31 December 2014 of the fair value of assets that are the property of Foncière des Régions. 1.9.5.1. General context of the mission It should be noted here that, when the principal is the tenant under the terms of a financial lease, the appraiser values only the assets underlying the contract, and not the financial lease contract itself. In the same way, when a real estate asset is held by a special purpose entity, its value was estimated on the assumption of the sale of the underlying real estate asset, and not the sale of the company. 1.9.5.1.1. General framework Foncière des Régions asked us, under an expert appraisal agreement, to estimate the fair value of its portfolio. This request was part of the half-year valuation of its portfolio. We conducted our audits with complete independence. The appraisal companies DTZ Valuation France, CBRE Valuation, BNP Paribas Real Estate Valuation, Jones Lang LaSalle Expertises and VIF Expertise have no capital ties with Foncière des Régions. 1.9.5.2. Conditions of performance 1.9.5.2.1. Documents examined The appraisal companies DTZ Valuation France, CBRE Valuation, BNP Paribas Real Estate Valuation, Jones Lang LaSalle Expertises and VIF Expertise confirm that their assessments were performed by, and under the responsibility of, qualified appraisers. This mission was conducted on the basis of the documents and information provided to us, all of this information being assumed to be accurate and to represent all of the information and documents in the possession of, or known to, the principal, which could have an impact on the fair value of the portfolio. Thus, we do not examine title deeds and zoning certificates. Annual fees billed to Foncière des Régions are determined before the assessment year. They represent less than 10% of the revenue of each appraisal company. 1.9.5.2.2.Standards The appraisals and valuations were completed in accordance with: The rotation of the appraisers is organised by Foncière des Régions. ww the recommendations of the Barthès de Ruyter report on the valuation of real estate portfolios of public, publicly traded companies, published in February 2000 We identified no conflict of interest on this mission. The mission is in compliance with the AMF recommendation on the representation of valuation and risk assessment data on the real estate portfolios of public, publicly traded companies published on 8 February 2010. ww the Charter for Expert Appraisal in Real Estate Valuation ww the principles established in the Code of Ethics for Listed Real Estate Investment Companies (SIIC) ww IFRS standard 13. 1.9.5.1.2. Current mission 1.9.5.2.3. Methodology used Our mission was to assess the fair value of 374 assets in France. For this mission, Foncière des Régions asked us to carry out initial appraisals or updates thereof when assets have not been subjected to an initial appraisal less than five years ago. For the investment assets making up the various portfolios, we used the Discounted Cash Flow method and the yield method, with cross-checking by direct comparison. Our mission was to estimate the fair value with the occupancy rate announced at 31 December 2014. 1.9.5.3. Overall fair value The appraised assets are located in the national territory. These are investment assets that are either fully owned or under construction lease by Foncière des Régions. The assets are offices, retail premises or commercial real estate. 1.9.5.3.1. Fair value appraised by the appraisal company DTZ Valuation France Overall fair value means the sums of the unit values of each asset. The assets in the various portfolios are leased to various tenants under commercial lease arrangements with (or without) firm 3-year, 6-year, 9-year or 12-year leases or exceptional leases. Foncière des Régions 100% fair value: €1,720,108,000 excluding costs and transfer duties. Fair value Foncière des Régions share: €1,558,361,700 excluding costs and transfer duties. 64 Reference Document 2014 Management report 2014 Real estate appraisals 1.9.5.3.4. Fair value appraised by the appraisal company Jones Lang LaSalle Expertises 1.9.5.3.1.1. Appraisal values by asset class Valuation Number of assets Paris 694,970,000 16 Paris Region excluding Paris 552,841,000 49 1,247,811,000 65 472,297,000 142 1,720,108,000 207 Geographic breakdown Total Paris Region Other French Regions TOTAL Overall fair value means the sums of the unit values of each asset. 100% fair value: €375,380,000 excluding costs and transfer duties. Fair value Foncière des Régions share: €375,380,000 excluding costs and transfer duties. 1.9.5.3.4.1. Appraisal values by asset class Geographic breakdown 1.9.5.3.2. Fair value appraised by the appraisal company CBRE Valuation Paris Overall fair value means the sums of the unit values of each asset. 100% fair value: €589,867,000 excluding costs and transfer duties. Fair value Foncière des Régions share: €562,732,000 excluding costs and transfer duties. Valuation Number of assets Paris 111,195,000 2 Paris Region excluding Paris 242,849,000 10 Total Paris Region 354,044,000 12 Other French Regions 235,823,000 32 TOTAL 589,867,000 44 178,250,000 5 Total Paris Region 273,050,000 8 Other French Regions 102,330,000 24 TOTAL 375,380,000 32 1.9.5.3.5.1. Appraisal values by asset class Geographic breakdown Paris Valuation Number of assets 92,000,000 1 Paris Region excluding Paris 120,830,000 8 Total Paris Region 212,830,000 9 33,952,000 42 246,782,000 51 Other French Regions TOTAL Fair value Foncière des Régions share: €1,629,373,100 excluding costs and transfer duties. 1.9.5.4. General observations 1.9.5.3.3.1. Appraisal values by asset class Valuation Number of assets 561,500,000 6 Paris Region excluding Paris 1,409,920,000 22 Total Paris Region 1,971,420,000 28 82,330,000 12 2,053,750,000 40 TOTAL Paris Region excluding Paris Fair value Foncière des Régions share: €191,592,600 excluding costs and transfer duties. 100% fair value: €2,053,750,000 excluding costs and transfer duties. Other French Regions 3 100% fair value: €246,782,000 excluding costs and transfer duties. Overall fair value means the sums of the unit values of each asset. Paris 94,800,000 Overall fair value means the sums of the unit values of each asset. 1.9.5.3.3. Fair value appraised by the appraisal company BNP Paribas RE Geographic breakdown Number of assets 1.9.5.3.5. Fair value appraised by the appraisal company VIF Expertises 1.9.5.3.2.1. Appraisal values by asset class Geographic breakdown Valuation Foncière des Régions This abridged report cannot be separated from the body of work completed by each of the appraisers in their mission. Each of the appraisers confirms the values of the assets where they themselves performed the appraisal or update, without assuming responsibility for those performed by other appraisal companies. 65 Reference Document 2014 1 1 Management report 2014 Real estate appraisals 1.9.6. Abridged appraisers’ report regarding the 2014 year-end estimate of the market value of assets owned by the company Foncière Europe Logistique Sir, Please find enclosed our abridged report, in accordance with Afrexim recommendations, concerning the appraisal of the market value of the property of Foncière Europe Logistique at 31 December 2014. 1.9.6.1. General context of the mission When a real estate asset is held by a special purpose entity, its value was estimated on the assumption of the sale of the underlying real estate asset, and not the sale of the company. 1.9.6.1.1. General framework Foncière Europe Logistique asked us, under an expert appraisal agreement, to estimate the market value of its assets. This request was part of the half-year valuation of its portfolio. 1.9.6.2. Conditions of performance We conducted our audits with complete independence. 1.9.6.2.1. Documents examined The appraisal companies DTZ Valuation France, Jones Lang Lasalle Expertises and BNP Paribas Real Estate Valuation France have no capital ties with Foncière Europe Logistique. This mission was conducted on the basis of the documents and information provided to us, all of this information being assumed to be accurate and to represent all of the information and documents in the possession of, or known to, the principal, which could have an impact on the market value of the portfolio. The appraisal companies mentioned above confirm that the appraisals were made by and under the responsibility of qualified appraisers. 1.9.6.2.2.Standards Annual fees billed to Foncière Europe Logistique are determined before the assessment year. They represent less than 5% of the revenue of each appraisal company. The appraisals and valuations were completed in accordance with: ww for appraisals of French assets: The rotation of the appraisers is organised by Foncière Europe Logistique. ww the recommendations of the Barthès de Ruyter report on the valuation of real estate portfolios of public, publicly traded companies, published in February 2000 We identified no conflict of interest on this mission. The mission is in compliance with the AMF recommendation on the representation of valuation and risk assessment data on real estate portfolios of public, publicly traded companies published on 8 February 2010. ww the Charter for Expert Appraisal in Real Estate Valuation ww the principles established in the Code of Ethics for Listed Real Estate Investment Companies (SIIC). 1.9.6.2.3. Methodology used 1.9.6.1.2. Current mission For assets corresponding to investment properties, we have used the discounted cash flow method, as well as the yield method. As pertinent, cross-checking by direct comparison was done. Our mission was to assess the market value of eight assets in France. For this mission, Foncière Europe Logistique asked us to carry out initial appraisals or updates thereof when assets have not been subjected to an initial appraisal. 1.9.6.3. Overall market value Our mission was carried out during the fourth quarter of 2014 and involved estimating the market value at the occupancy rate announced at 31 December 2014. 1.9.6.3.1. Market value appraised by the appraisal company DTZ Valuation France All the appraised assets are in France. These are investment assets that are either fully owned or under construction lease by Foncière Europe Logistique. The assets are logistics platforms, shipping facilities and retail premises. The overall market value corresponds to the sum of the unit values of each asset, mentioned in the detailed reports dated 31 December 2014 for the share owned by Foncière Europe Logistique and it stood at €10,300,000 excluding costs and transfer duties. The assets are leased to different tenants under leases consistent with the laws of the country in question. 1.9.6.3.1.1. Appraisal values by asset class TOTAL Foncière des Régions 66 Reference Document 2014 Valuation Number of assets 10,300,000 1 Management report 2014 Real estate appraisals 1.9.6.3.2. Market value appraised by the appraisal company Jones Lang LaSalle Expertises 1.9.6.3.3.1. Appraisal values by asset class The overall market value corresponds to the sum of the unit values of each asset, mentioned in the detailed reports dated 31 December 2014 for the share owned by Foncière Europe Logistique and it stood at €105,960,000 excluding costs and transfer duties. TOTAL Number of assets 64,700,000 3 1.9.6.4. General observations 1.9.6.3.2.1. Appraisal values by asset class TOTAL Valuation Valuation Number of assets 105,960,000 4 These values are to be understood as subject to market stability and to the lack of significant changes to the assets between the appraisal date and the value date. This abridged report cannot be separated from all the work performed as part of the appraisal missions, especially the detailed reports associated with them. 1.9.6.3.3. Market value appraised by the appraisal company BNP Paribas Real Estate Valuation Each of the three appraisers confirms the values of the assets where they themselves performed the appraisal or update, without assuming responsibility for those performed by other appraisal companies. The overall market value corresponds to the sum of the unit values of each asset, mentioned in the detailed reports dated 31 December 2014 for the share owned by Foncière Europe Logistique, and it stood at €64,700,000 excluding costs and transfer duties. 1.9.7. Abridged appraisers’ report regarding the 2014 year-end estimate of the market value of assets owned by the company Immeo AG Sir, Please find enclosed our abridged report concerning the valuation of the fair value of assets that are the property of Immeo AG at 31 December 2014. 1.9.7.1. General context of the mission 1.9.7.1.2. Current mission 1.9.7.1.1. General framework Our mission was to assess the fair value of 6,575 assets in Germany. For this mission, Immeo AG asked us to carry out initial appraisals or updates thereof when assets have not been subjected to an initial appraisal less than five years ago. Immeo AG has asked us, through appraisal contracts or additional clauses dated: ww 19 March 2014 in the case of BNP Paribas Real Estate ww 27 September 2013 in the case of Cushman & Wakefield Our mission was to estimate the fair value with the occupancy rate announced at 31 December 2014. to estimate the fair value of the assets comprising its portfolio in Germany. This request was part of the half-year valuation of its portfolio. All the appraised assets are in Germany. Most of these assets are wholly owned by Immeo AG or its subsidiaries. They are essentially assets for residential use. We conducted our audits with complete independence. The assets are rented to many tenants, mainly under residential leases. The appraisal companies BNP Paribas Real Estate and Cushman & Wakefield have no capital ties with Immeo AG. It should be noted here that, when the principal is the tenant under the terms of a financial lease, the appraiser values only the assets underlying the contract, and not the financial lease contract itself. In the same way, when a real estate asset is held by a special purpose entity, its value was estimated on the assumption of the sale of the underlying real estate asset, and not the sale of the company. The appraisal companies BNP Paribas Real Estate and Cushman & Wakefield confirm that the valuations were carried out by and under the responsibility of qualified appraisers. Annual fees billed to Immeo AG are determined before the assessment year. They account for less than 10% of the revenues of each appraisal company. The rotation of the appraisers is organised by Immeo AG. We identified no conflict of interest on this mission. Foncière des Régions 67 Reference Document 2014 1 1 Management report 2014 Real estate appraisals 1.9.7.2. Conditions of performance consistency and comparability of fair value valuations and related disclosures, IFRS 13 prescribes a fair value hierarchy which sets out three levels of valuation based on the inputs used to measure fair value. 1.9.7.2.1. Documents examined This mission was conducted based on documents and information provided to us in the course of September 2014, all of this information being assumed to be accurate and to represent all of the information and documents in the possession of, or known to, the principal, which could have an impact on the market value of the portfolio. Thus, we do not examine title deeds and zoning certificates. The top level under this hierarchy is for values based on (unadjusted) public prices on asset markets for identical assets or liabilities (level 1 inputs) and the lowest level is for valuations based on non-observable inputs (level 3 inputs). In some cases, the inputs used to measures the fair value of an asset or liability can be classified at different levels of the hierarchy. The fair value obtained is classified in its entirety at the level of the lowest level input that is significant to the entire measurement. Whether an input is deemed significant to the entire fair value is based on the application of judgement and takes account of the specific features of the asset or liability. 1.9.7.2.2.Standards The appraisals and valuations were completed in accordance with: ww the principles of the Royal Institution of Chartered Surveyors Red Book 2014 1.9.7.2.3. Methodology used ww International Valuation Standards promoted by the International Valuation Standards Council (IVSC) The assets composing the various portfolios are investment properties and we therefore applied the discounted cash flow method. ww the standards IAS/IFRS 40 and IFRS 13 . (1) In addition, the fair values of assets owned by the company have been classified according to the same standard. To improve the 1.9.7.3. Overall valuation 1.9.7.3.1. Fair value established by the appraisal company BNP Paribas Real Estate Overall value means the sums of the unit values of each asset. 100% value: €1,002,863,000 excluding costs and transfer duties. 1.9.7.3.1.1. Appraisal values by location Geographic breakdown Valuation Number of assets IFRS 13 classification Berlin 773,206,000 229 3 Dresden 208,413,000 108 3 Leipzig 21,244,000 25 3 1,002,863,000 362 3 TOTAL 1.9.7.3.1.2. Observations (if any) by the appraiser BNP Paribas Real Estate None. (1) Under IFRS 13, with effect for periods beginning 1 January 2013 at the latest, the assets held by Immeo AG in France and Germany were evaluated at fair value, defined as ”the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. Foncière des Régions 68 Reference Document 2014 Management report 2014 Real estate appraisals 1.9.7.3.2. Fair value established by the appraiser Cushman & Wakefield Overall value means the sums of the unit values of each asset. 100% value: €1,766,709,000 excluding costs and transfer duties. 1.9.7.3.2.1. Appraisal values by location Geographic breakdown Valuation Number of assets IFRS 13 classification Duisbourg €521,950,000 2,521 3 Essen €507,385,000 1,453 3 Mülheim €183,896,000 695 3 Oberhausen €148,967,000 449 3 Datteln €106,600,000 590 3 €39,059,000 28 3 €258,852,000 794 3 €1,766,709,000 6,213 3 Düsseldorf Other cities TOTAL GERMANY 1.9.7.3.2.2. Observations (if any) by appraiser Cushman & Wakefield None. 1.9.7.4. General observations These values are to be understood as subject to market stability and to the lack of significant changes to the assets between the appraisal date and the value date. Furthermore, this abridged report cannot be separated from the body of work conducted by each of the appraisers in their respective missions. Each of the appraisers confirms the values of the assets where they themselves performed the appraisal or update, without assuming responsibility for those performed by other appraisal companies. Foncière des Régions 69 Reference Document 2014 1 1 Management report 2014 Financial resources 1.10. FINANCIAL RESOURCES 1.10.1. Main debt characteristics capitalised 2013 2014 Net debt, Group share (€M) 5,098 4,962 Average annual rate of debt 3.94% 3.29% 4.5 4.1 80% 84% GS Average maturity of debt (years) Debt active hedging spot rate Average maturity of hedging LTV Including Duties ICR 4.9 5.1 46.5% 46.1% 2.49 2.76 1.10.1.1. Debt by type The net debt, Group share, of Foncière des Régions amounted at 31 December 2014 to €5 billion (€7.9 billion on a consolidated basis). As a share of total debt, non-mortgage debt rose from 48% at 31 December 2013 to 60% at 31 December 2014, due in particular to the issue of new bonds during the financial year totalling €0.8 billion for the year (€1.1 billion on a consolidated basis). COMMITMENTS (100%) 47% Bank mortgages 17% Corporate credit facilities COMMITMENTS (GROUP SHARE) 5% 5% Investor mortgage facilities Investor mortgage facilities 38% Bonds 35% 31% Bank mortgages Bonds 22% Corporate credit facilities COMMITMENTS PER COMPANY (GROUP SHARE) CONSOLIDATED COMMITMENTS PER COMPANY (100%) 18% 25% Beni Stabili debt Beni Stabili debt 38% 1% 1% Urbis Park debt Urbis Park debt 16% 15% Immeo debt 4% FDL debts 55% FDR debt FDR debt Immeo debt 4% 16% FDL debts FDM debt 7% FDM debt In addition, at the end of 2014, the cash and cash equivalents of Foncière des Régions totalled nearly €1.9 billion, Group share (€2.5 billion on a consolidated basis). These amounts do not include the unused portion of loans allocated to development projects under way. Foncière des Régions 70 Reference Document 2014 Management report 2014 Financial resources 1.10.1.2. Debt maturities The average maturity of Foncière des Régions debt was 4.1 years at the end of 2014. The 2015 and 2016 maturities are covered entirely by existing cash. Maturities for 2015 mainly affect Beni Stabili (€222 million Group share and €459 million on a consolidated basis) and Foncière des Régions (€80 million): DEBT MATURITY COMMITMENTS, GROUP SHARE DEBT MATURITY COMMITMENTS AT 100% 1,500 2,500 2,000 1,000 1,500 1,000 500 500 0 2015 FDR 2016 2017 FDM 2018 2019 URBIS 2020 2021 BS 2022 0 2023 etc. FDL FDR 1.10.1.3. Main changes during the period 2016 2017 2018 FDM 2019 URBIS 2020 2021 BS 2022 2023 etc. FDL ww finally, during the year, Beni Stabili renegotiated three existing funding sources totalling €116 million and took out €60 million in new bank loans 1.10.1.3.1. New debt issues: €3,125 million at 100% (€1,908 million, Group Share) ww Hotels and Service sector: €487 million raised in 2014 (€137 million in Group share): ww Foncière des Régions: €799 million (€799 million, Group share): ww in May 2014, Foncière des Murs took out €209 million in loans backed by a diversified asset portfolio mainly comprised of hotel assets, to: ww during the second half of 2014, Foncière des Régions continued the process it began in 2013 of renegotiating its corporate credit facilities to optimise their financial conditions and extend their maturity. As a result, €260 million in corporate credit facilities were renegotiated or refinanced. In addition, €39 million in new corporate debts were taken out -- refinance the balance of mortgage loans set up in 2007 -- refinance the €60 million mortgage loan taken out in 2013 to optimise the financial conditions of the facility ww in December 2014, Foncière des Murs extended its covered bond by two years using €242 million in hotel assets for a coupon reduced to 2.75% starting on 16 February 2015 ww in September 2014, Foncière des Régions issued a bond of €500 million with a maturity of September 2021 and a fixed coupon of 1.75%, for a spread of 105 bps. This strategy enabled the extensive diversification of financing sources, reduction in cost of debt and extension of its maturity to continue ww Foncière des Murs also raised €35 million in new mortgage financing as part of its acquisitions ww Residential France: €350 million raised in 2014 (€209 million in Group share): ww Beni Stabili: €1,276 million raised in 2014 (€636 million Group share): ww Foncière Développement Logements refinanced the Stockholm 1 and 2 loans in January 2014 with new debt for a nominal amount of €350 million ww Beni Stabili placed a €350 million, unsecured inaugural bond issue in January 2014 with an annual coupon of 4.125% and maturing in four years, i.e. in January 2018 ww Residential Germany: €213 million raised in 2014 (€127 million in Group share): ww in March 2014, Beni Stabili successfully completed a private placement with institutional investors for a total of €250 million with a 3.50% coupon. The bond matures in April 2019 ww in Germany, Immeo raised €68 million in new financing for four- and five-year maturities, which are to be used to finance the acquisition of housing portfolios in Berlin, Dresden and Leipzig ww in September 2014, Beni Stabili refinanced the IMSER securitisation collateralised by the €1.7 billion Telecom Italia real property portfolio via the creation of €300 million of mortgage financing and €200 million in corporate financing. This refinancing significantly reduced Beni Stabili’s average cost of debt while increasing its financial flexibility Foncière des Régions 2015 ww in October 2014, Immeo also took out mortgage acquisition loans totalling €145 million with a ten-year maturity, backed by an asset portfolio consisting of 3,500 residential units in Berlin and Dresden. 71 Reference Document 2014 1 1 Management report 2014 Financial resources 1.10.1.4. Hedging profile During the 2014 financial year, the hedge management policy remained unchanged, with debt hedged at 90% to 100%, at least 75% of which had short-term hedges and all of which have maturities exceeding debt maturity. Based on net debt at the end of December 2014, Foncière des Régions is covered (in Group Share) up to 87% in short term hedges, compared to 94% at the end of 2013. The average hedge duration is 5.1 years in Group share. 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2014 2015 2016 2017 2018 2019 1.10.1.5. Average interest rate on the debt and sensitivity 2020 2021 2022 2023 ww The most restrictive consolidated LTV covenants at 31 December 2014 amounted to 60% for Foncière des Régions, Foncière des Murs, Foncière Développement Logements and Beni Stabili. The average rate on the debt of Foncière des Régions stood at 3.3% in Group share, compared to 3.9% in 2013. This decrease occurred mainly due to the refinancing of Beni Stabili’s ecuritized debt in September, a new 7-year, 1.75% bond issue in September on Foncière des Régions for €500 million and the full-year impact of the 2013 renegotiations and hedge restructuring. ww The threshold for consolidated ICR covenants differs from one REIT to another, depending on the type of assets, and may be different from one debt to another even for the same REIT, depending on debt seniority. The most restrictive ICR consolidated covenant applicable to the property investment companies are the following: For information purposes, a 50 bps drop in the 3-month Euribor rate would have a positive impact of €0.5 million on net recurring income for 2015. The impact would be negative by €3.6 million in the event of a 50 bps hike. ww for Foncière des Régions: 200% ww for Foncière des Murs: 200% ww for Foncière Développement Logements: 150% ww for Beni Stabili: 140%. 1.10.1.5.1. Financial structure ww Furthermore, in some scopes financed using dedicated debt, there are specific covenants which may be added to or replace the consolidated covenants. Excluding debts raised without recourse to the Group’s property companies, the debts of Foncière des Régions and its subsidiaries generally include bank covenants (ICR and LTV) applying to the borrower’s consolidated financial statements. If these covenants are breached, early debt repayment may be required. These covenants are established in Group share for Foncière des Régions and for Foncière des Murs and on a consolidated basis for the subsidiaries of Foncière des Régions (if their debts include them). ww With respect to Immeo, for which the debt raised is ”nonrecourse” debt, there are no consolidated covenants associated with portfolio financing. Lastly, concerning Foncière des Régions, corporate credits have been amended following 2013 renegotiations. In particular, for some they include the following ratios: Ratio Covenant 2014 LTV 60.0% 50.3% ICR 200.0% 276.0% 22.5% 7.7% Secural debt ratio All covenants were fully complied with at the end of 2014. No loan has an accelerated payment clause contingent on a Foncière des Régions rating. Foncière des Régions 72 Reference Document 2014 Management report 2014 Financial resources 1.10.1.5.2. LTV calculation details GS (€M) 2013 2014 5,098 4,911 Receivables on disposals -413 -338 Security deposits received -11 -39 Finance lease-backed debt -3 -2 Net book debt(1) Net debt Appraised value of real estate assets (ID) Preliminary sale agreements Financial assets 4,671 4,532 10,204 9,871 -413 -338 40 39 3 2 79 117 Goodwill Receivables linked to associates Share of equity affiliates 132 139 10,044 9,829 LTV ED 48.9% 48.5% LTV ID 46.5% 46.1% Value of assets Adjusted for changes in fair value of convertible bond (-€73.6 million). (1) 1.10.2. Financial indicators of the main activities Foncière des Murs EPRA Recurrent net income (€M) EPRA Recurrent net income (€/share) EPRA NAV (€/share) EPRA triple net NAV (€/share) Beni Stabili 2013 2014 Var. (%) 2013 2014 Var. (%) 123.9 120.0 -3.1% 74.0 87.2 17.8% 1.9 1.84 -4.7% 0.04 0.04 -4.0% 26.2 25.9 -1.1% 1.06 0.87 -17.8% -2.6% -17.0% 23.3 22.7 0.96 0.80 % of capital held by FDR 28.3% 28.5% 50.9% 48.8% LTV ID 40.8% 34.7% 49.9% 50.8% 3.21 3.21 1.55 1.79 ICR Foncière des Régions 73 Reference Document 2014 1 1 Management report 2014 Risk factors 1.11. RISK FACTORS The risks presented below are, at the date of this document, those that the company estimates could have a significant negative impact on its financial position or results. The company has reviewed its risks and considers that there are no other significant risks than those presented hereunder. Investors’ attention is always drawn to the fact that, as at the date of this document, other risks, either unknown or which occurrence is not considered, may exist and could potentially have a significant negative impact. Furthermore, as Foncière des Régions has significant equity interests in the public companies Foncière Développement Logements, Foncière des Murs and Beni Stabili, investors should refer to the risk factors section in the Reference Document of each of these companies. Certain specific information on the risk factors linked to the German residential portfolio held by ImmeoWohen is provided below, as this company does not publish a Reference Document. 1.11.1. Risks linked to Foncière des Régions’ activity and strategy 1.11.1.1. Environment-related risks demographics (population, number of households, immigration) and to economic activity, in a more indirect way. There is a scaled-back new housing offer in this market. The company may not always be in a position to implement its rental or leasing strategy, its investments and, where applicable, its disposals at a favourable time or under favourable market conditions, or it may be forced to defer such strategy and investments depending on the fluctuations to which the property market may be subjected. In general, an unfavourable change in the property market could have a negative effect on both the company’s investment policy and on the appraisal of its portfolio, as well as on its business, its financial position, its results or its outlook. In particular, a declining real estate market could have a significant negative impact on the company’s financing terms. The company’s business, financial position, results, prospects and asset valuation are influenced by domestic and international economic conditions, in particular by the level of economic growth, interest rates, the unemployment rate in France, the method used in calculating rent indexation, and changes in various indices, as well as by available investment alternatives (financial assets, indices, etc.). Changes or a deterioration in economic conditions could have a significant adverse impact on the company’s business, financial position and results, particularly through: (i) a decline in demand for corporate real-estate projects, (ii) decline in the occupancy rate and in the leasing or re-leasing price of its real-estate assets, and (iii) decline in the valuation of its portfolio. The strategy defined and the policies implemented by the company seek to limit the negative effects of these risks. During the recent financial crises, Foncière des Régions was therefore able to prove the resilience of its high-calibre portfolio, which is 97.1% leased with a firm residual duration of leases of 5.7 years. Foncière des Régions is protected against such risks, largely due to the term of leases and the prudential standards applied when its development projects are launched, such as monitoring the pre-commercialisation ratio on assets under development. 1.11.1.2. Risks linked to changes in the realestate market 1.11.1.3. Risks linked to the competition The company faces strong competition in conducting its asset and rental business activities. The company competes with a large number of players in its development activity. Some of its competitors may have more financial strength or, in certain cases, may benefit from better regional or local implementation than the company. Such factors may offer these competitors a chance to participate in tender offers, particularly those involving development operations, under financial conditions that do not necessarily match the investment criteria the company set for itself. This could lead to uncertainties regarding growth prospects for its activity. The company’s rental activity is likewise subject to strong competitive pressure. In particular, the development by competitors of new offices located near the company’s existing assets could have an adverse impact on its activity, its financial position and its results. The company operates primarily in the office property sector in France and Italy, the residential sector in Germany and the hotel sector in Europe. The company is subject to risks in its business sectors and particularly with respect to their cyclical nature. The value of the company’s portfolio depends on the developments in these real estate markets, which may fluctuate, particularly with respect to rental income and property values in light of the supply/demand balance and the overall economic situation. The real estate market in France and Italy is primarily influenced by economic growth and changes in employment on the demandside and by urban planning regulations and available financing on the supply-side. Developments in the hotel real estate market depend on tourism, business travel and therefore economic activity in a broad sense. A specific characteristic of this market is that it heavily relies on the brands that operate these hotels. The developments in the German residential real estate market are linked to the following factors. Demand is linked to local Foncière des Régions Foncière des Régions’ policy of building long-term partnerships and continuous review of projects in the very early stages partially protect it from such competition risks. 74 Reference Document 2014 Management report 2014 Risk factors 1.11.1.4. Risks linked to lease renewals and rental of real estate assets Most of the rent for Foncière des Régions’ residential portfolio in Germany is paid via direct debt. A national register of payment defaults that can be consulted by lessors and financial institutions is also a way to curtail the risk of unpaid rents. Upon expiration of existing leases, the company may be unable to renew them or to lease the assets involved within the time frame and under conditions as favourable as those of current leases, particularly due to macroeconomic and real estate market conditions. In particular, the company may not be in a position to draw enough attractive tenants or companies to its offices, and may not succeed at maintaining a satisfactory occupancy rate or rental income, which could have a negative impact on its financial position and its results. For informational purposes, unpaid rent by tenants (expense line item/unrecoverable receivables) represented 1% of total rent at 31 December 2014. 1.11.1.6. Risks linked to asset valuation Foncière des Régions recognises its investment properties at fair value in accordance with the option offered by IAS 40. The fair value of an investment property is the price at which this asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. It reflects the actual state of the market estimated by independent appraisers, who base their assessment on the relationship between supply and demand, interest rates, the economic situation and numerous other factors that can vary significantly in the event that the economic environment changes. The fact that Foncière des Régions’ leases generally still have a long time to run and the fact that their expiry dates are staggered, as well as ongoing discussions with current tenants, help greatly to limit such risks. With regard to the German residential portfolio held by the company’s subsidiary Immeo-Wohnen, rent increases are regulated and limited by the rental amounts of comparable housing in the surrounding area (and may not exceed approximately 20% every three years). This rent level is determined by the towns and cities, which publish the current rents and break them down by location, construction year, building condition and the number of facilities in the building. There are two crucial indicators among the several used in the valuation of property assets. The first one is the yield rate (also called the capitalisation rate), which expresses the return that a buyer could receive on a real estate asset. Determining this rate depends on comparables and is influenced by the level and the changes in interest rates, the perceived risk of the real estate asset (term of lease, tenant’s creditworthiness, ease or difficulty in re-leasing it at the end of the lease, etc.). A decline in the capitalisation rate, as determined by an independent appraiser in preparing the valuation, would have a positive impact on the asset’s value. However, an increase in the capitalisation rate would automatically trigger an adverse impact on the asset’s value. The second crucial indicator in the valuation of the property asset is revenues, i.e., rental income. This aggregate change is in line with indexation, current market rents, the risk of vacancy or unpaid rent. It is important to note that, with respect to historical data, the valuation of a property asset in terms of an absolute change is more sensitive to changes in interest rates and the implied risk premium than to changes in rental income, which are by nature less volatile. 1.11.1.5. Risks linked to tenants Foncière des Régions has opted to build tenant partnerships with key accounts. Foncière des Régions is therefore exposed in terms of revenues to several large companies (Orange, Accor, Telecom Italia, Suez Environnement, EdF, etc.) and accordingly depends on these key accounts. This strategic decision to enter into tenant partnerships with these key accounts was influenced by the fact that these large companies have an extensive presence, access to various sources of funding and highly sustainable business models. Partnership committees are regularly organised with these key accounts, providing an opportunity to keep track of their business developments and future real estate portfolio. The tenants’ solvency is another indicator that needs to be monitored on a regular basis. In addition to the portfolio in operation and assets under construction, the company’s property assets consist of land and sometimes real estate reserves whose valuation depends on the risks of potential real estate projects that could be developed and on assumptions and projections by the company. The company’s ability to collect rent first and foremost depends on its tenants’ financial soundness and therefore their solvency. Tenant insolvency risks and their impact on the company’s results are greater in office real estate given the relative size of each tenant. It cannot be guaranteed that significant payment defaults or delays potentially impacting the company’s earnings will not occur. The Group’s tenant selection process helps contain this risk by focusing on: Foncière des Régions’ diversified client portfolio and important long-term partnerships with major tenants. The company reviews the tenants’ creditworthiness and the financial stability before signing any lease. General Management reviews the monthly report on unpaid rent. Foncière des Régions The net asset value calculated by the company could vary significantly in the event of any value adjustments estimated by the appraisers linked to a change in the main assumptions used by the appraisers (yield rate, rental value and occupancy rate). The appraisal process is regularly audited under a review procedure and the company has also set very stringent rotation rules for the appraisers, thereby reinforcing the management of this type of risk. A sensitivity analysis on the impact of changes in yield rates on asset value adjustments is provided in paragraph 3.2.6.1 of this report. 75 Reference Document 2014 1 1 Management report 2014 Risk factors A summary of methodologies and appraisals is given in paragraphs 1.9.3 and 1.9.4 of this management report. 1.11.1.7. Risks linked to development of new real estate assets tants, coupled with market analyses, is to keep these risks to a minimum. With respect to thresholds defined by management, acquisitions are submitted to the Executive Committee, the Strategic and Investment Committee and the Board of Directors for validation. The risks, obstacles and opportunities are reviewed during the validation procedure. Through certain subsidiaries, Foncière des Régions performs development activities for its own account or the account of its subsidiaries. 1.11.1.9. Risks linked to international exposure This type of business incurs risks: higher than estimated construction costs, construction phases exceeding those initially estimated, technical difficulties or delays due to the complexity of certain projects or construction material price increases, failure to obtain administrative authorisations, lack of third-party consent, impossibility of securing project financing at competitive terms, etc. Foncière des Régions has significant investments in companies that are active in Italy and Germany, and to a lesser extent, in Luxembourg, Portugal and Belgium. Some of these countries may have particular risk profiles. The economic and political context may become less solid and less stable, and regulatory concerns and entry barriers less favourable. The country risk could have a negative effect on Foncière des Régions’ operating income and financial position. Foncière des Régions’ diversified international exposure in Euro zone countries help to reduce such risks. The performance monitoring broken down by country is provided in detail in paragraph 3.1 of this Reference Document. In addition, initial costs (e.g. the cost of studies) cannot generally be deferred or cancelled in the event of delays or failure to carry out a project. A specific procedure for development projects has been introduced within the Group. It encompasses all of the studies to be carried out prior to the launch of any project, selection process for external service providers, the period ranging from construction to the delivery of the asset and the market launch of ”on-spec” projects. Deadlines are therefore fully assimilated and monitored during the entire project. The building up of the teams in the past few years and the highly-skilled project development teams also help to reduce these risks. The fact that Foncière des Régions operates solely in Euro zone countries and its diversified international exposure help reduce such risks. In both Italy and Germany, Foncière des Régions has investments in real estate companies that work with locallybased teams that are experts in their respective markets. 1.11.1.10. Risk linked to geographical and sector-specific concentration 1.11.1.8. Acquisition risks A significant part of the company’s business is concentrated in the Paris Region and in major regional cities in France. Consequently, economic conditions, real-estate risks, or risks of any other nature affecting the Paris Region and in the major regional cities in France could have a significant effect on the company’s business, financial position or results. As at 31 December 2013, offices accounted for 43% of the company’s portfolio (as a percentage of rental income, group share). A deterioration in conditions in the office leasing market in the Paris Region and in major regional cities in France could have a negative impact on the company’s business, financial position or results. The acquisition of real estate assets or companies that hold them is part of Foncière des Régions and its subsidiaries’ growth strategy. This strategy entails risks such as underestimating the expected yield of assets and consequently buying them at too high a price given financing in place, or being unable to acquire them under satisfactory conditions, particularly with regard to properties acquired through a bidding procedure or during periods of high economic volatility or uncertainty. The purchased assets could also have latent defects, especially in terms of environmental compliance, or features not covered by the warranties given in the purchase contract due to non-compliance. In order to contain this risk, Foncière des Régions is implementing a strategy of diversification of its portfolio. The goal of the comprehensive due diligence performed before each acquisition with the aid of external specialised consul- Foncière des Régions 76 Reference Document 2014 Management report 2014 Risk factors 1.11.2. Financial risks The management of financial risks as described below is discussed in further detail in paragraph 3.2.2 of this Reference Document. 1.11.2.1. Liquidity risk to remedy such breach within the contractually stipulated time period, the lenders could demand early repayment of the debt and possibly seize any collateral backing the debt. Certain loan agreements also have cross-default clauses allowing lenders to demand the early repayment of sums due in the event that Foncière des Régions fails to meet the undertakings contained in other credit agreements (and fails to remedy this default within the specified time periods). Consequently, any failure to meet its financial undertakings could have an adverse impact on Foncière des Régions’ financial situation, its income figures, and its flexibility in conducting business and pursuing its development. Foncière des Régions’ strategy depends on its ability to raise financial resources, either by borrowing or through equity, in order to finance its investments and acquisitions, and refinance debts on maturity. Under the SIIC regime, Foncière des Régions is required to distribute a significant part of its profits. Therefore, it relies to a great extent on debt to finance its growth. This type of financing may sometimes not be available at advantageous terms. This situation could arise, in particular, in the event of crises in the capital or debt markets, events affecting the real estate sector, restrictions imposed by credit agreement covenants, downgrading of the company’s credit rating or any change in Foncière des Régions’ business, financial position or shareholder structure that may have an influence on the perception that investors or lenders have of its credit worthiness. Foncière des Régions’ policy of paying down debt, instituted several years ago, has minimised this risk. Monitoring adherence to covenants is also a priority for the company. Moreover, 18-month liquidity forecasts are analysed every month by the Finance Department and are submitted to General Management. Foncière des Régions has set up a checks and monitoring system on its covenants in order to contain these risks. 1.11.2.3. Interest Rate Risks and Counterparty Default Risks Foncière des Régions’ indebtedness exposes it to interest rate fluctuation risk. Financial charges borne by Foncière des Régions on the floating rate part of its debt could increase significantly if the rates increased significantly. Foncière des Régions is also exposed to general risks linked to all types of indebtedness, particularly the risk of not generating enough operating cash flow to service its debt. A shortage of cash could result in acceleration or prepayment, and if the debt is collateralised, enforcement of the guarantee and, where applicable, the seizure of assets. Foncière des Régions uses derivative instruments to hedge against this interest rate risk, primarily Cap and Swap contracts. The Group has no market transactions for any purpose other than to hedge against interest rate risk. The use of interest rate hedging contracts could expose Foncière des Régions to the risk of insolvency by the counter parties to such contracts, which could lead to payment delays or defaults, which could have a negative impact on Foncière des Régions’ results. For more information, please see paragraph 3.2.2.2 of Chapter 3. 1.11.2.2. Risks linked to covenants and other undertakings stipulated in certain credit agreements Outside of the hedging transactions mentioned above, since Foncière des Régions is structurally a borrower, counterparty risk is limited mainly to investments made by the Group. IFRS 13 explicitly provides for counterparty risk assessment in the fair value measurement of liabilities. This measurement was conducted by a specialist organisation and recognised in Foncière des Régions’ financial statements. The credit agreements entered into by Foncière des Régions contain, in addition to the usual covenants and undertakings, other covenants requiring compliance with specific financial ratios, such as those set out in paragraph 3.2.6.12. If Foncière des Régions were to breach one of its financial undertakings and fail Foncière des Régions For more information, please see paragraphs 3.2.2.3 and 3.2.6.13 of Chapter 3. 77 Reference Document 2014 1 1 Management report 2014 Risk factors 1.11.3. Legal, fiscal, regulatory, environmental and insurance risks 1.11.3.1. Risks linked to lease regulations Foncière des Régions must comply with multiple laws and regulations, including urban planning regulations, building permits and operating licences, health and safety regulations, (particularly for assets open to the public), environmental regulations, legislation on leases, labour regulations and tax and corporate law, particularly the provisions governing SIICs. In France, the law on commercial leases imposes certain restrictions on the lessor. Contractual provisions relating to term, termination, renewal, security deposit, and rent indexation fall within the public realm and may restrict, for example, the flexibility of owners to increase rent in line with market changes and thereby to maximise their rental income. Changes in the regulatory or legal framework and/or the loss of advantages linked to a statute or authorisation may force Foncière des Régions to adjust its business, assets or strategy, which could have a significant adverse impact on the value of its real estate portfolio and/or on its results. In addition, tenants have the option of vacating premises at the lease expiry date as well as, in principle, at the end of any threeyear period unless explicitly agreed otherwise. Changing the rules that apply to commercial leases, especially with respect to term, rent indexation and caps, or the calculation of eviction compensation for tenants, could adversely impact the valuation of the company’s portfolio, results, business activity or financial position. Foncière des Régions is mindful of legislative and regulatory changes, in particular, those concerning the ALUR law reforming residential lease, co-ownership and property mandate regulations, as well as those relating to a law known as the ”Pinel” law, especially insofar as this involves a review of the status of commercial leases. The company’s Legal Department guides the operational departments when any new contract is implemented. When deemed necessary, the assistance of specialised outside counsel is called upon. A regulatory watch has been set up to anticipate and analyse such risks. In Germany, leases are subject to local regulations on residential leases. Local teams specialised in residential portfolio management ensure that these regulations are applied. Due to the inherent complexity and bureaucracy involved in the tax environment of the business in which Foncière des Régions operates, the company may be exposed to tax risk if it breaches these regulations. In such cases, Foncière des Régions could be subject to tax adjustments and disputes. 1.11.3.2. Risks linked to the SIIC real estate trust status Foncière des Régions and its subsidiaries are also exposed to possible changes in tax rules in the countries in which they operate. Foncière des Régions is subject to the Tax System for French Listed Real Estate Investment Trusts (hereinafter SIIC), and as such, is not subject to corporate tax. Opting for the SIIC tax regime involves the immediate liability for an exit tax at the reduced rate of 19% on unrealised capital gains relating to assets and securities of entities not subject to corporation tax. Exit tax is payable over four years, in four instalments, starting with the year the option is taken up. In return, the company undertakes to pay out 95% of its profits generated by the leasing of its real estate assets, 60% of capital gains generated on its disposals and 100% of dividends received from SIIC-status subsidiaries. In the normal course of its business, the Group may become involved in legal proceedings relating to, for example, contractual liability, its liability as an employer or its criminal liability, and may be subject to tax audits and administrative procedures. Each of these risks is associated with a risk to reputation and/or image, particularly if actions are perceived as going against business ethics or good business practices. Given the ongoing changes to tax legislation, the Group is likely to be subject to reassessment proposals from the Tax Administration. If an adjustment presents a risk of reassessment in the opinion of our Advisors, a provision is made at that point. A summary of the main disputes is given in paragraph 3.2.2.9.4 of Chapter 3. These provisions require various conditions to be satisfied, which have been continually modified by successive governments, in particular as part of budget laws, and are also subject to interpretation by the Tax Administration. There exists no other governmental, legal or arbitral proceeding, including any other procedures of which the Group is aware that are pending or impending that may have or have had a significant impact on the Group’s financial position or profitability in the past twelve months. The Tax Department and outside counsel regularly conduct analyses on compliance with the SIIC regime in order to limit the aforementioned risks. The company has implemented a system of audits and internal checks to anticipate and counter these risks. Foncière des Régions 78 Reference Document 2014 Management report 2014 Shareholder structure 1.11.3.3. Environmental risks 1.11.3.4. Risks linked to the costs and availability of appropriate insurance cover As a property owner and Manager, Foncière des Régions is required to comply with all applicable environmental regulations. Non-compliance with such environmental regulations, or the need to comply with new environmental standards that may be enacted, could bring on an increase in costs, with subsequent repercussions on Foncière des Régions’ results. The company considers that the nature of the covered risks and the guaranteed amounts are in line with regular practice in its business sector. However, it could face increased costs from its insurance policies or sustain losses that may not be fully covered by the insurance in place. In addition, given the size of the portfolio to be insured and the level of insurance coverage sought, it may not be able to obtain adequate insurance coverage at an acceptable cost, or it may even be unable to cover all or part of certain risks. The cost – or in the event of insurance claims – the unavailability of adequate insurance coverage, could affect the valuation of the company’s portfolio, its business, its financial position and its results. The potential risks in this area are as follows: ww health or pollution risks, (particularly land and subsoil) that could generate significant extra costs and delays linked to the search for and removal of toxic substances or materials when engaging in development or asset renovation projects ww environmental damages, safety hazards and more generally non-compliance with legal and regulatory obligations may result in civil and, if applicable, criminal liability, thus bringing on adverse consequences for the company’s image. The Insurance Department manages this risk by challenging the various insurance companies particularly with the intervention of its broker, by working in the early phases of the policy renewals and by spreading out policies over several insurance companies. For more information, please see Chapter 2 of this Reference Document. 1.12. SHAREHOLDER STRUCTURE Foncière des Régions’ shareholder structure includes the Delfin Group and insurance groups such as Crédit Agricole Assurances, Covea Finance and Assurances du Crédit Mutuel. 1.12.1. Information on capital As at 1 January 2014, Foncière des Régions’ share capital was €188,049,264 divided into 62,683,088 fully paid-up shares, each with a par value of €3.00 and all of the same class. At year-end, and taking into account the capital increase completed on 13 October 2014, Foncière des Régions’ share capital was €188,050,671 divided into 62,683,557 fully paid-up shares, each with a par value of €3.00, and of a single class of shares. 1.12.2. Securities providing access to the share capital Convertible bonds: given the distribution of a dividend of €4.20 per share for 2013, €1.31929 of which was taken from ”Retained earnings”, ”Other revaluation difference provisions” and ”Share premiums”, on 19 May 2014, the Chief Executive Officer, on the authorisation of the Board of Directors, and in order to protect the rights of holders of ORNANE issued in May 2011 and November 2013 adjusted the conversion value of the ORNANE. Consequently, based on a conversion rate of 1.10 shares per ORNANE 2011, and a conversion rate of 1.03 shares per ORNANE 2013, the potential number of shares stood at 9,973,248 as at 31 December 2014, i.e. an individual potential dilution of 13.73% and an overall potential dilution of 13.66%. Following the disposal by the Delfin Group of 1,279,778 ORNANE 2011 bonds in January 2014 and based on the information provided by the company, all of the ORNANE are now held by the public and break down as follows. Number of ORNANE 2011 bonds % holding of ORNANE 2011 bonds Number of ORNANE 2013 bonds % holding of ORNANE 2013 bonds Total number of ORNANE Total % holding of ORNANE Public 5,253,944 100% 4,071,757 100% 9,325,701 100% TOTAL 5,253,944 100% 4,071,757 100% 9,325,701 100% Foncière des Régions 79 Reference Document 2014 1 1 Management report 2014 Shareholder structure Bonus shares: the number of shares that may be issued under bonus share grants implemented by the company stood at 337,123. These shares may be new, or existing, shares. Based on a grant of 337,123 new shares, the individual potential dilution would be 0.54%, and the overall potential dilution would be 0.46%. According to the provisions of the Articles of Association, each share entitles the holder to one vote at the General Meeting of Shareholders. There are no shares with double voting rights. Nevertheless, the number of voting rights exercisable in a General Meeting of Shareholders must be adjusted to take account of treasury shares, which do not bear voting rights. Information on the awards of bonus shares is provided in point 1.12.9 below of this report. In accordance with the power conferred by Article L. 225-123, paragraph 3 of the French Commercial Code, a proposal will be submitted to the General Meeting of Shareholders on 17 April 2015 to amend Article 10 of the Articles of Association so that the double voting right established by French law no. 2014-384 of 29 March 2014, known as the ”Florange” law, is not granted to fully paid-up shares held in registered form for at least two years by the same shareholder. This is so that each shareholder will continue to have the same number of votes as he or she has shares. Assuming that (i) the vesting of all the bonus shares granted by the company subject to a presence requirement is made by creating new shares and (ii) the exercise of the option to redeem all of the ORNANE into shares and assuming that the entire delivery is made in new shares, the company would have to issue 10,310,371 new shares, representing a maximum potential dilution of 14.12%. No other securities giving access to the share capital of the company exist. 1.12.3. Breakdown of share capital and voting rights The table below shows the allocation of capital and voting rights over the past three years, to the best of the company’s knowledge. 31/12/2014 31/12/2013 % of % of voting Number of shares % of capital theoretical rights voting exercisable rights(1) in GM(2) Number of shares 31/12/2012 % of % of voting theoretical rights % of voting exercisable capital rights in GM Number of shares % of % of voting theoretical rights % of voting exercisable capital rights in GM Public 27,360,808 43.65% 43.65% 43.70% 27,310,358 43.57% 43.57% 43.70% 27,097,430 46.80% 46.80% 47.28% Delfin Group(3) 17,362,054 27.70% 27.70% 27.73% 17,321,546 27.63% 27.63% 27.72% 17,188,789 29.69% 29.69% 29.99% Covea Finance Group 8,406,210 13.41% 13.41% 13.43% 13.41% 13.45% 4,887,123 8.44% 8.44% 8.53% Crédit Mutuel Insurances 4,880,229 7.78% 7.78% 7.80% 4,783,829 7.63% 7.63% 7.66% 3,474,342 6.00% 6.00% 6.06% Crédit Agricole Group 4,595,288 7.33% 7.33% 7.34% 4,666,256 7.44% 7.44% 7.47% 4,668,221 8.06% 8.06% 8.14% 78,968 0.13% 0.13% / 194,889 0.31% 0.31% / 580,787 1.00% 1.00% / 62,683,557 100% 100% 100% 62,683,088 100% 100% 100% 57,896,692 100% 100% 100% Treasury shares TOTAL 8,406,210 13.41% These percentages are calculated on the basis of all shares with voting rights attached, including shares temporarily stripped of voting rights. These percentages are calculating by excluding shares held by the company that do not have voting rights. (3) Delfin SARL is a holding that belongs to the Del Vecchio family. Delfin SARL controls the companies Aterno and DFR Investments. Delfin SARL is primarily involved in financial business and holds the following interests: - in the eyewear sector through Luxottica Group, a public company on the Milan and New York stock markets and founded in 1961 by Leonardo Del Vecchio, of which Delfin SARL has control. Luxottica Group is the world leader in the production, wholesale distribution and retail sale of corrective eyewear and sunglasses (http://www.luxottica.com) - in the real estate sector through an interest in Foncière des Régions - in the financial sector through its minority interests in banks, insurance companies, etc. (1) (2) There has been no significant change in the breakdown of capital and voting rights since year-end. The company is neither directly nor indirectly controlled within the meaning of Article L. 233–3 of the French Commercial Code. To the best of the company’s knowledge, there is no other shareholder who directly or indirectly, alone or in concert, owns more than 5% of the capital or voting rights in the company. As at 31 December 2014, Foncière des Régions directly held, outside the terms of the liquidity agreement (34,501), 44,467 treasury shares. A description of the share buyback programmes implemented during the fiscal year is provided in point 1.12.8 below. To the best of the company’s knowledge, there are no shareholder agreements involving at least 0.5% of the capital or voting rights in the company, nor any concerted actions. Foncière des Régions 80 Reference Document 2014 Management report 2014 Shareholder structure There was no cross-shareholding: the company has no direct or indirect capital interest in any company which, in turn, has a controlling interest in Foncière des Régions. The company has proceeded, through Euroclear, to identify the holders of shares that confer voting rights in its own Shareholders’ Meetings, either immediately or in the future. The result of this study is presented in Chapter 5 of the Reference Document, paragraph 5.2.3. 1.12.4. Threshold disclosure During 2014, the company was informed of the following instances where legal thresholds and thresholds set by the Articles of Association were crossed: Upward threshold crossing Downward threshold crossing Articles of Legal Association Articles of Legal Association Shareholder Date limit exceeded Actions Voting rights % of capital % of voting rights State Street Corporation 1 January 2014 / 1% and 2% BNP Paribas Investment Partners 27 February 2014 / / 1,657,916 1,420,501 2.64% 2.27% / AXA Investment Managers 1% / / 791,750 729,495 1.2631% 1.1638% 25 March 2014 / / / 1% 618,480 618,480 0.99% 0.99% UBS Investment Bank, Wealth Management and Corporate Centre 1 April 2014 / 1% / / 648,207 648,207 1.03% 1.03% UBS Investment Bank, Wealth Management and Corporate Centre 4 April 2014 / / / 1% 420,177 420,177 0.67% 0.67% BNP Paribas Investment Partners 24 April 2014 / / / 1% 584,454 533,571 0.9324% 0.8512% UBS Investment Bank, Wealth Management and Corporate Centre 22 May 2014 / 1% / / 714,023 714,023 1.14% 1.14% UBS Investment Bank, Wealth Management and Corporate Centre 28 May 2014 / / / 1% 495,658 495,658 0.79% 0.79% BNP Paribas Investment Partners 27 June 2014 / / / 1% 633,120 554,713 1.01% 0.8849% BNP Paribas Investment Partners 24 July 2008 / / / 1% 572,802 494,395 0.9138% 0.7887% Cardif Assurance Vie 1 October 2014 / / / 2% 1,004,316 1,004,316 1.60% 1.60% Starting 1 January 2015, the company was informed of the following instances where legal thresholds and thresholds set by the Articles of Association were crossed: Shareholder Date limit exceeded Upward threshold crossing Downward threshold crossing Articles of Legal Association Articles of Legal Association Actions Voting rights % of capital % of voting rights CIC Est 12 January 2015 / / / 1% 566,323 566,323 0.9035% 0.9035% Cardif Assurance Vie 15 January 2015 / / / 1% 623,005 623,005 0.99% 0.99% Cohen & Steers 23 January 2015 / 1% / / 692,161 239,122 1.10% 0.38% Foncière des Régions 81 Reference Document 2014 1 1 Management report 2014 Shareholder structure 1.12.5. Declarations of intent No declaration of intent was made during 2014. 1.12.6. Change in the capital over the last five fiscal years The company’s share capital has changed as follows over the last five years: Capital 31 December 2010 31 December 2011 31 December 2012 31 December 2013 31 December 2014 €164,774,919 €164,846,385 €173,690,076 €188,049,264 €188,050,671 54,924,973 54,948,795 57,896,692 62,683,088 62,683,557 Number of shares Changes in the company’s capital over the last five years were the result of the operations described below: Date Nature Exercise of stock options 22 March 2010 Exercise of 1,343,820 equity warrants Exercise of stock options 11 June 2010 Exercise of 24,826,575 equity warrants 30 June 2010 Cancelling shares acquired as part of a share buyback programme 9 July 2010 Exercise of the option to pay the dividend in shares Number of shares issued Share premium amount (in €) Number of shares Capital amount (in €) 5,630 268,944.95 50,632,095 151,896,285 89,588 5,554,456 50,721,683 152,165,049 15,337 820,563.52 50,737,020 152,211,060 1,655,105 102,616,510 52,392,125 157,176,375 409,776 / 51,982,349 155,947,047 1,521,192 94,313,904 53,503,541 160,510,623 Exercise of stock options 1,712 29,566.24 53,505,253 160,515,759 Exercise of 80,250 equity warrants 5,589 346,518 53,510,842 160,532,526 16 July 2010 Award of bonus shares 5,000 / 53,515,842 160,547,526 29 July 2010 Capital increase reserved for employees 12,211 669,040.69 53,528,053 160,584,159 Exercise of stock options 10,405 519,999.98 53,538,458 160,615,374 Exercise of 718,125 equity warrants 49,134 3,046,308 53,587,592 160,762,776 Award of bonus shares 28,100 / 53,615,692 160,847,076 12 November 2010 Exercise of stock options 14 January 2011 Exercise of 19,104,945 equity warrants 5 May 2011 Exercise of stock options 26 July 2011 Exercise of stock options 5 August 2011 Capital increase reserved for employees 22 February 2012 Exercise of stock options 24 May 2012 Exercise of the option to pay the dividends in shares 25 July 2012 Exercise of stock options 12 August 2013 Capital increase (1st public exchange offer period on Foncière Développement Logements shares) 3 September 2013 Capital increase (2nd public exchange offer period on Foncière Développement Logements shares) 29 November 2013 Capital reduction by cancellation of treasury shares 13 October 2014 Exercise of stock options Foncière des Régions 2,113 98,445.86 53,617,805 160,853,415 1,307,168 78,894,394.78 54,924,973 164,774,919 4,630 202,225.04 54,929,603 164,788,809 5,849 251,608.75 54,935,452 164,806,356 12,987 749,739.51 54,948,439 164,845,317 356 18,444.36 54,948,795 164,846,385 2,930,739 141,261,619.80 57,879,534 173,638,602 887,915.21 57,896,692 173,690,076 5,099,890 304,463,394.83 62,996,582 188,989,746 29,505.93 62,997,111 188,991,333 -314,023 / 62,683,088 188,049,264 469 35,470.47 62,683,557 188,050,671 17,158 82 529 Reference Document 2014 Management report 2014 Shareholder structure 1.12.7. Employee shareholding In accordance with the provisions of Article L. 225-102 of the French Commercial Code, you will find hereafter a report on employee shareholding in the company’s share capital as at the last day of the fiscal year. As at 31 December 2014, 210,269 Foncière des Régions shares were held by employees of the company and its affiliated companies as defined in Article L. 225-180 of the French Commercial Code, repre- senting 0.34% of share capital. Pursuant to the provisions of Article L. 225-102, paragraph 1 of the French Commercial Code, 0.16% of the share capital is held by employees whose shares are managed through collective investment schemes over which the interested parties have no direct control, representing 99,090 Foncière des Régions’ securities. 1.12.8. Information about the share buyback programme ww awarding to employees and officers of the company and/or companies in its group In 2014, Foncière des Régions used the authorisation conferred upon it by the General Meeting on 24 April 2013, and by the General Meeting on 28 April 2014 and implemented by decision of the Board of Directors, in order to renew and continue the liquidity agreement with Exane BNP Paribas, under the same conditions. ww delivering shares upon the exercise of rights attached to securities entitled to the award of shares ww holding and delivering them as payment or in exchange under potential external growth transactions, mergers, spin-offs or contributions The characteristics and terms of this share buyback programme are as follows: ww cancelling shares ww the maximum purchase price is €100 per share (excluding acquisition expenses) ww using them in any other practice that may come to be recognised by law or by the Financial Markets Authority (Autorité des Marchés Financiers) or any other purpose that would provide a basis for the presumption of legitimacy. ww the maximum amount of funds reserved for the share buyback programme is €150,000,000 ww purchases, sales, exchanges or transfers transactions may be executed by any means, whether on the market or over the counter, including block purchases or sales, or by recourse to financial instruments, with the following primary aims: The latest authorisation ended the previous buyback programme which resulted, on 28 April 2014, in 141,516 treasury shares being held by the company, 36,641 of which from the liquidity agreement, 104,875 shares intended for allocation to Foncière des Régions’ group employees and corporate officers. ww implementing a liquidity agreement with an investment service provider under the conditions and according to the methods set by the regulations in place and acknowledged market practices The terms and conditions relating to the implementation of the new buyback programme were described in the share buyback programme description posted on the company’s website on 28 April 2014 and 4 June 2014. Treasury share movements in terms of transactions and use in 2014 shown by type of objective being pursued by the company were as follows: (in number of shares) Position as at 31 December 2013 Movements over the period Acquisition Sale Transfer Reallocation Liquidity agreement Position as at 31 December Cancellation 2014 66,593 405,809 437,901 - - - 34,501 Allocation to employees and corporate officers of the Group 128,296 - - 83,829 - - 44,467 Shares held by the company 194,889 Foncière des Régions 78,968 83 Reference Document 2014 1 1 Management report 2014 Shareholder structure The transactions completed during 2014 were as follows: Acquisition Sale Number of shares Average price per share in € Number of shares Average price per share in € General Meeting on 24 April 2013 141,412 63.18 171,364 62.11 General Meeting on 28 April 2014 264,397 73.61 266,537 72.75 TOTAL 405,809 69.97 437,901 68.59 Share buyback programme As at 31 December 2014, Foncière des Régions held 78,968 treasury shares representing 0.13% of the share capital, valued at €6,064,742.40, or €76.80 per share, for a par value of €3.00 per share. Transaction costs during 2014 amounted to €14,365.03 ex-tax. As the authorisation that was granted by the General Meeting on 28 April 2014 was for a period of 18 months, a new share buyback programme will be submitted to the General Meeting on 17 April 2015. The company did not use derivatives in its share buyback programmes in 2014. 1.12.9. Share subscription and share purchase options and bonus shares The award of share subscription options, share purchase options or bonus shares within the Foncière des Régions group is intended to enable employees who contributed to the company’s growth to share in the company earnings, in order to enhance motivation and loyalty among company employees and Directors. 1.12.9.1 Share subscription and share purchase options In 2014, 469 share subscription options were exercised by an employee of the Foncière des Régions Group under plan no. 1403008 dated 4 May 2007, thereby creating 469 new shares. Since 2008, the company has not implemented a share subscription or share purchase options plan. None of the corporate officers of Foncière des Régions exercised share subscription options in 2014. All the options awarded under plans prior to 2008 were share subscription options, which were able to be exercised in a period of two to seven years after their awarding. Comprehensive information on the share subscription options is provided in the special report of the Board of Directors prepared pursuant to Article L. 225-184 of the French Commercial Code. Foncière des Régions 84 Reference Document 2014 Management report 2014 Shareholder structure 1.12.9.2. History of awards of Foncière des Régions’ share subscription options Plan No. 6 2007 Management Board meeting date 4 May 2007 Original exercise price €97.96 Adjusted exercise price N/A Adjusted exercise price (06/2007) N/A Adjusted exercise price on 31/12/2009 €97.40 Adjusted price (06/2010) €88.08 Adjusted price (06/2011) €85.48 Adjusted price (05/2012) €82.37 Adjusted price (05/2013) €80.05 Adjusted price (05/2014) €78.63 TOTAL NUMBER OF OPTIONS ABLE TO BE SUBSCRIBED Number of options awarded 203,782 of which total number of options awarded to corporate officers wwC. Kullmann 5,608 wwO. Estève 3,740 wwA. Mazzocco - NUMBER OF OPTIONS SUBSCRIBED BY CORPORATE OFFICERS wwC. Kullmann 0 wwO. Estève 0 wwA. Mazzocco - Start of option exercise period 12 October 2009 Option expiry date 12 October 2014 NUMBER OF OPTIONS SUBSCRIBED BY CORPORATE OFFICERS Number of options remaining at 31/12/2013 201,416 Number of options subscribed between 01/01 and 18/05/2014 0 Number of options cancelled between 01/01 and 18/05/2014 1,379 Number of options remaining before adjustment at 18/05/2014 200,037 Number of options remaining after adjustment at 19/05/2014 203,782 Number of options subscribed between 19/05 and 31/12/2014 469 Number of options cancelled between 19/05 and 31/12/2014 203,313 Number of options remaining at 31/12/2014 0 According to BNP data. Foncière des Régions 85 Reference Document 2014 1 1 Management report 2014 Shareholder structure 1.12.9.3. Bonus shares Acting on a proposal by the Appointments and Remunerations Committee, and by virtue of the authority delegated to it by the General Meeting on 6 May 2011 and 28 April 2014, the Board of Directors awarded 193,072 bonus shares in 2014 as described below: Date of the bonus share plans Number of bonus shares allotted 26 February 2014 36,812 25 June 2014 5 December 2014 (1) (2) 106,500 49,760 Unit value, as estimated by an independent actuary Beneficiaries of the bonus shares Corporate officers of the company and directors of related companies Group Foncière des Régions employees France Italy €32.69(1) €43.59(2) Vesting period Germany €30.66(1) France Retention period Italy and Germany €40.88(2) 3 years Italy and Germany France 2 years 4 years €33.68 (1) €54.11(2) €47.84(2) / 4 years / 3 years 2 years Awards subject to performance requirements. Awards not subject to performance requirements. The policy for awarding bonus shares to executive officers in 2013 is set out in paragraph 1.14.1 of the management report. In connection with the delivery of the bonus shares that became available in 2014, the Board of Directors furthermore decided to use up to 66,471 of the treasury shares that the company acquired under the previous share buyback programmes for the purpose of granting them to the beneficiaries listed below. The criteria for awarding bonus shares to staff members of the Foncière des Régions group are mainly linked to performance and potential, the goal being to build loyalty and an association with the company’s stock-market performance. Number of bonus shares delivered in 2014 Delivery date of bonus shares Date of the bonus share plans French beneficiaries German and Italian beneficiaries Number of beneficiaries 21 February 2014 21 February 2011 19,721 - 5 10 March 2010 - 3,700 2 10 November 2014 10 March 2014 9 November 2011 26,700 - 107 10 December 2014 10 December 2010 16,350 120 1.12.9.4. Details of adjustments made to share subscription options and bonus shares After year-end, at its meeting on 19 February 2015, the Board of Directors allocated 33,571 bonus company shares to Foncière des Régions’ corporate officers and Directors of related companies. The unit value, as estimated by an independent actuary, was €51.05 (awards subject to performance requirements) and/or €68.06 (awards not subject to performance requirements) for French beneficiaries and €46.41 for Italian and German beneficiaries subject to performance requirements and €61.88 for Italian and German share awards not subject to performance requirements. In accordance with the provisions of Article L. 225-181, L. 228-99, R. 225-137, R. 225-140 and R. 228-91 of the French Commercial Code and the various provisions of the share subscription option plans in effect, the Chief Executive Officer of Foncière des Regions, by delegation of the Board of Directors, decided on 19 May 2014, to adjust the subscription ratio as well as the subscription price and the corresponding number of share subscription options, considering the distribution in 2013 of a dividend of €4.20 per share taken, after allocation to the legal reserve, partly from the ”retained earnings”, ”other revaluation difference provisions”, and ”Share premium” accounts, and in order to protect the rights of holders of existing share subscription options. The Board of Directors also recorded the allocation of 23,907 bonus shares to Foncière des Régions’ corporate officers and Directors of related companies at the end of the vesting period, of which: ww 6,000 by way of delivery of bonus shares awarded on 21 February 2011 to Italian beneficiaries and ww 17,907 by way of delivery of bonus shares awarded on 22 February 2012 to French beneficiaries. Foncière des Régions 86 Reference Document 2014 Management report 2014 Shareholder structure ADJUSTMENT OF SHARE SUBSCRIPTION OPTIONS Options concerned No. of original plan Year Expiry date Number of options able to be exercised before adjustment decision of 19/05/2014 Plan No. 6 2007 11/10/2014 200,037 Number of options able to be exercised after adjustment decision of 19/05/2014 Issue price before distribution of dividends before 19/05/2014 adjustment decision Subscription price after distribution of dividends after 19/05/2014 adjustment decision Number of options able to be exercised at 31/12/2014 203,782 €80.05 €78.63 0 1.12.10. Transactions carried out by Company Officers involving company shares 1.12.10.1. Transactions carried out by members of General Management in Foncière des Régions shares during 2014 Purchase of shares Average value Sale of shares Average value Number of shares held at 31/12/2014 (to the best of the company’s knowledge) Christophe Kullmann 8,236(1) €65.96 / / 26,844(2) Olivier Estève 3,795 €65.96 / / 23,045 Aldo Mazzocco 2,700 €67.65 / / 9,200 Management Board members (1) (1) Award of bonus shares. (2) Fully-owned shares to which may be added 24,000 shares beneficially owned resulting from a bare ownership transfer. (1) Foncière des Régions 87 Reference Document 2014 1 1 Management report 2014 Shareholder structure 1.12.10.2. Transactions carried out by members of the Board of Directors in Foncière des Régions shares during 2014 Purchase of shares Average value Sale of shares Average value Number of shares held at 31/12/2014 (to the best of the company’s knowledge) Jean Laurent / / / / 400 Leonardo Del Vecchio / / / / 1 32,008 70.79 / / 10,239,198 8,500 70.96 / / 7,122,856 Members of the Board of Directors Aterno DFR Investment (associate of Leonardo Del Vecchio) Romolo Bardin 700 70.22 / / 3,200 96,400 66.12 / / 4,880,229 Catherine Allonas Barthe / / / / 0 Jean-Luc Biamonti / / / / 216 GMF Vie / / / / 4,182,453 ACM Vie Lionel Calvez / / / / 0 100 73.11 / / 171 Sergio Erede / / / / 1 Predica / / / / 4,328,251 Jérôme Grivet / / / / 0 Pierre Vaquier Bertrand de Feydeau 150 73.50 / / 272 Micaela Le Divelec Lemmi / / / / 90 Sylvie Ouziel / / / / 400 Sigrid Duhamel 1 77.00 / / 1 Foncière des Régions 88 Reference Document 2014 Management report 2014 Shareholder structure 1.12.11. Active authorisations The General Meeting regularly authorises the Board of Directors to increase the company’s share capital by issuing shares and/or securities providing access to the company’s equity. In accordance with the provisions of Article L. 225-100 paragraph 7 of the French Commercial Code, please find below a breakdown of active authorisations for capital increases in 2014 granted by the General Meetings on 6 May 2011 and 28 April 2014. Use of the authorisation Validity of the authorisation 2014 2015 General Meeting date Description of the authorisation 6 May 2011 Resolution 13 Authorisation to award bonus shares, existing or to be issued, to employees and/or corporate officers of the company and its associated companies. Cap set at 0.5% of share capital on the day of the decision to award them by the Board of Directors. 38 months Award of 248,730 Expired on bonus shares 28/04/2014 (including 36,812 in 2014) 28 April 2014 Resolution 11 Authorisation to increase the share capital through capitalisation of reserves, earnings or premiums. Nominal capital increase cap set at €20,000,000. 26 months Expiry on 28/06/2016 None None 28 April 2014 Resolution 13 Authorisation granted to issue shares and/or securities providing access to the company’s capital, maintaining shareholders’ preferential subscription rights. Nominal capital increase cap set at €50,000,000. Nominal marketable security issue cap set at €750,000,000. 26 months Expiry on 28/06/2016 None €11,753,166 28 April 2014 Resolution 14 Delegation of authority to issue, through public offerings, debt securities giving access to the company’s share capital, with waiver of shareholders’ preferential subscription rights. Nominal debt security issue cap set at €750,000,000. Nominal capital increase cap set at €25,000,000. 26 months Expiry on 28/06/2016 None Capital increase for the issuance of 3,917,722 new shares at a unit price of €65.00 representing a nominal cap set at €11,753,166 28 April 2014 Resolution 15 Delegation of authority to undertake capital increases reserved for employees of the company and the companies of the Foncière des Régions group that are members of a company Savings Plan, with waiving of shareholders preferential right of subscription. Nominal capital increase cap set at €500,000. 26 months Expiry on 28/06/2016 None None 28 April 2014 Resolution 16 Authorisation to award bonus shares, existing or to be issued, to employees and/or corporate officers of the company and its associated companies. Cap set at 0.5% of share capital on the day of the decision to award them by the Board of Directors. 38 months Award of 156,260 Expiry on bonus shares 28/06/2017 Award of 33,571 bonus shares Foncière des Régions 89 Reference Document 2014 1 1 Management report 2014 Stock market and dividends 1.13. STOCK MARKET AND DIVIDENDS 1.13.1. Stock markets Euronext in Paris (ISIN code: FR0011629344). The bonds were issued with an annual interest rate of 0.875%. Foncière des Régions’ shares are listed for trading on the Euronext Paris market – Compartment A (ISIN code: FR0000064578) and admitted on the SRD. Foncière des Régions stock is included in the MSCI, SBF 120, Euronext IEIF ”SIIC France” and CAC Mid100 indices, as well as the benchmark indices for European realestate firms: EPRA and GPR 250. Foncière des Régions bonds issued in October 2012, for a total of €500 million, maturing in January 2018, carry a fixed coupon of 3.875% and are listed on the Euronext in Paris (ISIN code: FR0011345545). The bonds redeemable in cash and/or in new and/or existing shares (”ORNANE”) issued in May 2011, for a total of €550 million, maturing on 1 January 2017, were admitted on the Euronext in Paris (ISIN code: FR0011050111). The bonds were issued with an annual interest rate of 3.34%. Foncière des Régions bonds issued in March 2013, for a total of €180 million, maturing in April 2020, carry a fixed coupon of 3.30% and are listed on the Euronext in Paris (ISIN code: FR0011442979). Foncière des Régions bonds issued in September 2014, for a total of €500 million, maturing in September 2021, carry a fixed coupon of 1.75% and are listed on the Euronext in Paris (ISIN code: FR0012146744). The bonds redeemable in cash and/or in new and/or existing shares (”ORNANE”) issued in November 2013, for a total of €345 million, maturing on 1 April 2019, were admitted on the 1.13.2. Market price at 31 December 2014 The closing Foncière des Régions’ share price for the year was €76.80, bringing stock market capitalisation to €4.8 billion at year end 2014. CHANGE IN FONCIÈRE DES RÉGIONS’ SHARE PRICE OVER THE YEAR 90 80 70 60 50 40 30 20 10 0 12/31 2013 01/31 2014 02/28 2014 03/31 2014 04/30 2014 05/31 2014 06/30 2014 Foncière des Régions 07/31 2014 90 08/31 2014 09/30 2014 10/31 2014 11/30 2014 Reference Document 2014 12/31 2014 Management report 2014 Stock market and dividends 1.13.3. Transactions in the last 18 months (Euronext Paris) No. of shares traded Highest price Lowest price 2013 July 1,233,200 62.2 56.05 August 1,263,195 63.79 57.01 September 1,889,651 61.98 56.57 October 1,235,267 64.97 60.95 November 1,250,398 65.58 61.68 December 1,103,270 62.75 59.62 January 1,458,115 63.15 60.3 February 1,375,282 67.7 59.91 March 1,443,309 68.56 64.91 April 1,427,002 73.82 66.67 May 1,494,912 75.10 60.66 June 1,572,570 79.25 73.46 July 1,455,799 81.9 74.74 August 1,296,229 78.08 73.24 September 1,389,560 77.38 69.6 October 65.61 2014 1,722,789 73.4 November 961,894 76.85 72.1 December 1,375,045 77.94 72.54 January 3,063,972 92.34 75.64 February 2,039,719 95.50 90.55 2015 1.13.4. Information about elements that could be relevant in the event of a takeover offer In accordance with the provisions of Article L. 225-100-3 of the French Commercial Code, please find hereafter our report on the elements likely to have an impact in the event of a public takeover offer. from the day on which either threshold is crossed. Mutual fund management firms shall be required to carry out such reporting for the entirety of the shares of the company held by the funds that they manage. 1.13.4.1. Legal restrictions and restrictions in the Articles of Association on the exercise of voting rights If this declaration obligation is not satisfied, shareholders who together hold at least 1% of the capital may request at a General Meeting that the shares exceeding the percentage that should have been declared be deprived of voting rights in Shareholders’ Meetings until the expiration of two years after the date of regularisation of the declaration. Article 8.1 of the Articles of Association establishes an obligation to declare to the company every instance in which a shareholder passes the threshold of 1% (or any multiple of this percentage) of the capital or the voting rights relating thereto whether upwards or downwards, including the legal and regulatory thresholds. Such notification shall be made by registered letter with return receipt addressed to the registered office within five trading days Foncière des Régions Article L. 233-14 par. 1 of the French Commercial Code stipulates that any shareholder who does not make the declarations in time as provided for in I and II (legal thresholds) of Article L. 233-7 or in VII (statement of intent) of this Article shall be deprived of the voting rights attached to those shares in excess of the fraction that has not been declared in time. This shall apply 91 Reference Document 2014 1 1 Management report 2014 Stock market and dividends 1.13.4.5. Powers of the Board of Directors and General Management to all Shareholders’ Meetings for a period of two years dating from the time the declaration is finally made. Under the same conditions, the voting rights attached to the shares that have not been properly declared may not be exercised or delegated by the defaulting shareholder. This information appears on pages 428 of section 4 and on page 454 of section 5 of the Reference Document. The authorisations granted by the General Meeting to the Board of Directors with regard to capital increases are mentioned on page 89 of this management report. Furthermore, under Article 8.2 of the company’s Articles of Association, if any corporate entity holds more than 10% of the share capital directly or indirectly and its shares have not been registered by the third working day prior to any General Meeting of the company’s shareholders, their voting rights will be capped at one tenth of the number of shares held. This situation may be resolved by ensuring that all the shares held directly or indirectly are registered no later than the third working day prior to the General Meeting in question. 1.13.4.6. Rules applicable to the appointment and removal of members of the Board of Directors and changes in the company’s Articles of Association 1.13.4.2. Capital structure of the company The company’s Articles of Association in this regard do not derogate from any of the principles generally admitted with regard to French stock corporations. This information appears on page 80 of this management report. 1.13.4.3. Shares providing special control rights 1.13.4.7. Agreements regarding compensation to the members of General Management in the event of termination of their functions as Chief Executive Officer and Deputy General Manager as a result of forced departure relating to a change of strategy or control pursuant to II and III of Article L. 223-16 of the French Commercial Code None. 1.13.4.4. Agreements between shareholders that are known to the company and that could involve restrictions to the transfer of shares and the exercise of voting rights There are no agreements between shareholders that are known to the company and that could involve restrictions to the transfer of shares and the exercise of company voting rights. Foncière des Régions This information is included in pages 103 and 104 of this management report. 92 Reference Document 2014 Management report 2014 Stock market and dividends 1.13.5. Dividends distributed within the last five fiscal years In the last five fiscal years, the dividends paid out and the corresponding tax rebate were as follows: Fiscal year 2009 Dividend paid per share Amount of dividend subject to 40% rebate(1) Amount of dividend not subject to the 40% rebate Current €5.10 €1.99 €3.11 Type of dividend Exceptional €1.80 / €1.80 2010 Current €4.20 €2.05 €2.15 2011 Current €4.20 €0.05 €4.15 2012 Current €4.20 / €4.20 2013 Current €4.20 €0.11907 €4.08093 Dividends eligible for the 40% tax rebate for individual tax residents in France. (1) Until 2012, SIIC status, adopted on 1 January 2003, allowed for the exemption of property management revenues and real estate capital gains provided that at least 85% of current income and 50% of capital gains were distributed to shareholders. These thresholds were raised in the 2014 Finance Law and are now 95% for obligations to distribute earnings from asset rentals and 60% for capital gains from the sale of assets and shares in subsidiaries. The company’s distribution policy naturally takes regulatory requirements into account. 1.13.6. Appropriation of earnings for the fiscal year Based on the number of existing shares as at 31 December 2014, i.e. 62,683,557 shares, a total dividend for €269,539,295.10 will therefore be awarded. The portion of this dividend drawn from tax-exempt profits and awarded to private individuals who are subject to income tax does not grant a right to a 40% rebate, in accordance with Article 158-3 of the French General Tax Code. This rebate remains applicable in other cases, where appropriate (Article 158-3-2 of the French General Tax Code). A proposal will be made to the General Meeting of Shareholders on 17 April 2015, on the recommendation of the Board of Directors, after having noted that income for the year was €186,513,136.94 and that, in consideration of retained earnings of €548,095.80, the distributable profit amounts to €187,061,232.74, to distribute a dividend totalling €269,539,295.10 taken: ww in the first place from the total distributable profit i.e. €187,061,232.74 ww then from ”Other revaluation difference provisions”, i.e. €705,808.31 The balance of the dividend deducted in the amount of €81,731,236.92 from the ”share premium” account is treated as a reimbursement of contribution in terms of the provisions of Article 112.1 of the French General Tax Code. ww the ”merger premium”, i.e. €41,017.13 ww the ”share premium account”, i.e. €81,731,236.92, which reduces the share premium account from €351,573,487.02 to €269,842,250.10. The dividend drawn against the company’s profits exempt from corporation tax pursuant to Article 208 C of the French General Tax Code totals €187,808,058.18. Thus, each share will receive a dividend of €4.30. The dividend drawn against the company’s profits exempt from corporation tax pursuant to Article 208-3 quater of the French General Tax Code totals €0. The dividend will be paid out on 28 April 2015. Foncière des Régions 93 Reference Document 2014 1 1 Management report 2014 Corporate officers 1.14. CORPORATE OFFICERS 1.14.1. Remuneration of corporate officers 1.14.1.1. Chairman of the Board of Directors It comprises a single fixed amount totalling €400,000 which includes attendance fees. The Chairman, in close coordination with the General Management, leads the Board of Directors and its Committees. He also provides the Chief Executive Officer with help and advice in designing and implementing strategy. He ensures that all Directors are always kept fully notified of any information relevant to the strategy and its implementation. In close coordination with General Management, he ensures that the quality of the Board’s relationships with the company’s shareholders, major partners or group customers, as well as with public authorities, institutional and regulatory authorities, the media and investors deemed to be economic players, is maintained. He helps to promote the image and values of Foncière des Régions, both inside and outside the Group. In 2014, this €400,000 remuneration broke down as follows: ww €362,000 fixed remuneration ww €7,000 benefits in kind (company car) ww €31,000 attendance fees (detailed in 1.14.2 of the 2014 Reference Document). It is noted that Jean Laurent is waiving his right to attendance fees for his participation in the Foncière des Régions’ Strategic and Investment Committee. In 2014, he also received €50,000 by way of attendance fees paid by Beni Stabili, an Italian subsidiary of Foncière des Régions, in which he has an active oversight role. Remuneration of the Chairman of the Board of Directors of Foncière des Régions was set on 31 January 2011 by the Board for the full term of office. It has not been reviewed since that date. TABLE 2 SUMMARY TABLE OF THE REMUNERATION PAID TO EACH CORPORATE OFFICER 2014 fiscal year 2013 fiscal year Executive corporate officer name and function Jean Laurent, Chairman of the Board of Directors since 31/01/2011 Fixed remuneration Amounts due for the 2013 Amounts paid in 2013 Amounts due for 2014 Amounts paid in 2014 368,000 368,000 361,998 361,998 Annual variable remuneration 0 0 0 0 Multiannual variable remuneration 0 0 0 0 Extraordinary remuneration 0 0 0 0 Foncière des Régions attendance fees 25,000 25,000 31,000 31,000 Beni Stabili attendance fees 51,742 51,742 50,000 50,000 Benefits in kind TOTAL This fixed remuneration is not accompanied by any variable remuneration, performance bonus or remuneration paid in company shares. 7,000 7,000 7,002 7,002 451,742 451,742 450,000 450,000 This remuneration is in line with the average remuneration for non-executive chairmen in the SBF 120. TABLE 1 SUMMARY TABLE FOR THE REMUNERATION AND OPTIONS AND SHARES ALLOCATED TO EACH CORPORATE OFFICER Executive corporate officer name and function Jean Laurent, Chairman of the Board of Directors since 31/01/2011 Remuneration due for the fiscal year (detailed in table 2) Value of the multiannual variable remuneration during the fiscal year Value of options granted during the year (detailed in table 4) Value of performance shares granted during the year (detailed in table 6) TOTAL Foncière des Régions 94 Reference Document 2014 2013 fiscal year 2014 fiscal year 451,742 450,000 0 0 None None None None 451,742 450,000 Management report 2014 Corporate officers 1.14.1.2. General Management On 5 December 2014, upon the proposal of the Appointments and Remunerations Committee, the Board of Directors decided to renew Christophe Kulmann’s term of office for four years, and change his fixed remuneration to €600,000. As the corporate officers waived their right to attendance fees paid by the French subsidiaries as of 2015, this increase, of 9%, is in line with the increase in salaries at Foncière des Régions from 2011 to 2014, and below the increase in fixed salaries of CEOs of SBF80 companies (4% per year on average). This remuneration will not change in the duration of the term of office, unless there is a major change in responsibilities or scope. The remuneration policy for the CEO and Deputy General Manager, France, is determined by the Board of Directors on the basis of work carried out and proposals made by the Appointments and Remunerations Committee. This Committee met three times in 2014 to ensure the compliance of this policy with the principles listed by the latest changes to the Afep-Medef Code of corporate governance. The Committee and the Board are particularly keen to follow these guidelines: In 2011, the Board had also decided to gradually raise the Deputy General Manager’s fixed remuneration to €350,000 over a threeyear period. This level was reached in 2013 and Olivier Estève’s fixed remuneration will remain unchanged in 2014. ww the remuneration is granted exhaustively via all of its components: fixed portion, variable portion, allocation of performance shares, benefits in kind and, if applicable, attendance fees ww the basic principles sought are: On 5 December 2014, upon the proposal of the Appointments and Remunerations Committee, the Board of Directors decided to renew Olivier Estève’s term of office for 4 years, and change his fixed remuneration to €360,000. This increase compensates for the waiver of attendance fees paid by French subsidiaries as of 2015. ww a balance between the various components, short term and long term, fixed and variable ww higher levels of staff retention ww a strong link between remuneration and operational performance ww a variable portion based on objective quantifiable performance criteria that combine the interests of the organisation, its staff and its shareholders, at the same time providing an incentive for outperformance and a ”circuit breaker” system to sanction any deterioration of key company indicators 1.14.1.2.2. Variable portion With respect to the variable portion of remuneration (bonuses), the Appointments and Remunerations Committee wished for each Director to be assessed and compensated on the basis of targets that are clear, precise, quantifiable and operational. These targets are determined every year, in February, by the Board of Directors, based on proposals put forward by the Appointments and Remunerations Committee. They are determined according to the strategic plan, the budget approved by the Board of Directors for the year under way, and the company’s priorities at the time. ww a financial alignment with the long-term interests of shareholders ww remuneration correctly situated in the market and designed to encourage loyalty. The Committee and the Board constantly use sector-based benchmarks and general research studies simply to check that overall remuneration packages are in line with market rates. The target bonus for the CEO equals 100% of his/her fixed annual salary. The target bonus for the Deputy CEO in France equals 75% of the fixed annual salary. For several years, the Appointments and Remunerations Committee has been ensuring that this remuneration policy is in line with best practices and the latest recommendations of the Afep-Medef Code. Therefore, after having decided in 2013 to make all bonus share awards to corporate officers dependent upon performance conditions, in 2014, the Committee decided to review the basis for calculating the severance pay for the Chief Executive Officer and the Deputy General Manager if they are forced to leave as a result of a change in strategy or control, excluding from this basis performance shares, and extending the external condition over a period of three years. In an effort to provide differentiation, motivation and an incentive to outperform, a provision is made for an upside of as much as 50% of the target bonus to reward performance that goes beyond the targets set at the beginning of the year. In an effort to align this with the interests of shareholders, the Committee proposes that this upside portion of the bonus be paid, if at all, not in cash but in bonus shares, which are to be conditional on the recipient remaining in the company’s employ for three years after the award. Finally, this ”circuit breaker” system provides for bonuses to be withheld in the event of a significant deterioration in the company’s performance over the year. For 2014, the ”circuit breaker” was based on a Loan To Value (LTV) threshold, the crossing of which would have entailed non-payment of the bonus. 1.14.1.2.1. Fixed portion The Appointments and Remunerations Committee and the Board of Directors ensure, on a regular basis, that the amount of fixed remuneration paid to corporate officers is positioned correctly in relation to the market by using benchmarks relating to Directors of SBF80 companies and those companies with equivalent stock market capitalisation to that of Foncière des Régions, supplemented by French and European sector-based research. As a matter of principle, the Board is keen only to review this remuneration at regular intervals and on fixed expiry dates, increases normally being associated with events affecting the company. For 2014, the criteria for awarding the variable portion of the Chief Executive Officer’s remuneration were set as follows: ww 70% for quantitative targets relating to recurring net income per share, net revalued assets per share, a strategic shift in focus on the portfolio and improving its quality, development projects, strengthening of German residential and hotels in Europe The Chief Executive Officer’s fixed salary was, therefore, set in January 2011, at the commencement of his term of office, at €540,000. It remained unchanged in 2012, 2013 and 2014. Foncière des Régions ww 30% for qualitative targets relating to management, leadership of European teams and CSR policy. 95 Reference Document 2014 1 1 Management report 2014 Corporate officers On 11 February 2015, the Appointments and Remunerations Committee reviewed all these criteria using precise analytical frameworks, and recorded the following levels of attainment for each objective: Actual (in €K) % of bonus Min. Target Max. (as a % of target) (in €K) EPRA RNI/share 15% 0 81 122 115% 93 EPRA NAV/share 15% 0 81 122 88% 71 40% 0 216 324 140% 302 30% 0 162 243 140% 227 100% 0 540 810 128% 694 Chief Executive Officer Quantitative = 70% of the variable Strategic shift in focus on portfolio and quality improvement: improving environmental performance, arbitration of non-strategic activities and non-core assets, location Pipeline of real estate development – Offices France: deliveries (details, budget), creating value, committed projects Reinforcement of residential in Germany of hotels in Europe: acquisitions, partnerships Shift in focus: cost of debt, maturity structure Qualitative = 30% of the variable Management, leadership and development of France, Germany and Italy teams CSR policy TOTAL The details of these objectives cannot however be made public for reasons of confidentiality. Consequently, the Committee made a proposal to the Board, which was then approved on 19 February 2015, that the 2014 bonus should be paid at 128% of the target. This €694,000 variable portion represents a 10% increase compared with 2013, and is 1% lower than in 2012. This variable remuneration of €540,000 will be paid in cash with the upside of €154,000 being paid in company shares allocated at the end of the vesting period, in 2018. The 2014 bonus for the Deputy General Manager was calculated as follows: ww 80% based on quantitative targets: Recurring net income per share, net revalued assets per share (targets shared with the Chief Executive Officer), pre-marketing of ongoing development projects and launch of new pre-marketed projects, occupancy rate of assets, improvement of the portfolio’s energy and environment performance, asset management, disposals plan ww 20% based on qualitative criteria: management and leadership of real estate teams, crossover Group leadership, representation of Foncière des Régions vis-à-vis the sector and stakeholders of Foncière des Régions, leadership of the CSR policy. On 11 February 2015, the Appointments and Remunerations Committee reviewed all these criteria using precise analytical frameworks, and recorded the following levels of attainment for each objective: Actual (in €K) % of bonus Min. Target EPRA RNI/share 15% 0 EPRA NAV/share 15% Deputy General Manager Quantitative = 80% of the variable Max. (as a % of target) (in €K) 39 59 115% 45 0 39 59 88% 35 50% 0 131 197 131% 172 20% 0 52 79 125% 66 100% 0 262 393 121% 317 Marketing of development projects Launch of turnkey rentals Value creation on projects delivered Occupation rate Disposals Acquisitions Asset management: lease terms, changes in lease payments Disengagement from non-strategic activities Improvement of the portfolio’s energy performances Qualitative = 20% of the variable Management, leadership of real estate teams Internal and external representation CSR policy TOTAL Foncière des Régions 96 Reference Document 2014 Management report 2014 Corporate officers The details of these objectives cannot however be made public for reasons of confidentiality. portion represents a 12% increase compared with 2013, and is 6% higher than in 2012. Consequently, the Committee made a proposal to the Board, which was then approved on 19 February 2015, that the bonus should be paid at 121% of the target. This €317,000 variable This variable remuneration of €262,000 will be paid in cash with the upside of €55,000 being paid in company shares allocated at the end of the vesting period, in 2018. The tables below give a summary of the fixed and variable remuneration paid to each corporate officer for 2014, along with a 2013 comparison. TABLE 2 2014 fiscal year 2013 fiscal year Amounts due for 2013 Amounts paid in 2013 Amounts due for 2014 Amounts paid in 2014 540,000 540,000 540,000 540,000 630,000 700,000 694,000 630,000 0 0 0 0 Attendance fees 67,942 67,942 65,500 65,500 Benefits in kind (company car, GSC type unemployment insurance, etc.) 46,431 46,431 46,739 46,739 1,284,373 1,354,373 1,346,239 1,282,239 Executive corporate officer name and function Christophe Kullmann, Chief Executive Officer Fixed remuneration Annual variable remuneration (1) Multiannual variable remuneration Extraordinary remuneration TOTAL The variable portion of €700,000 due for 2012 was made up of €540,000 paid in cash in 2013 and 3,668 bonus shares allocated in 2013. The variable portion of €630,000 due for 2013 was made up of €540,000 paid in cash in 2014 and 2,065 bonus shares allocated in 2014. The variable portion of €694,000 due for 2014 was made up of €540,000 paid in cash in 2015 and 2,263 bonus shares allocated in 2015. (1) The remuneration component paid in cash has thus not increased from 2013 to 2014. The overall fixed and variable remuneration increased by 4.8%, this increase was paid in the form of a bonus share allocation for the upside part of the bonus, with these shares being delivered in 2018. TABLE 2 2014 fiscal year 2013 fiscal year Executive corporate officer name and function Olivier Estève, Deputy Chief Executive Amounts due for 2013 Amounts paid in 2013 Amounts due for 2014 Amounts paid in 2014 Fixed remuneration 346,014 346,014 350,004 350,004 Annual variable remuneration(1) 283,000 300,000 317,000 283,000 0 0 0 0 Multiannual variable remuneration Extraordinary remuneration 0 9,500 0 0 Attendance fees 36,199 36,199 9,300 9,300 Benefits in kind (company car, GSC type unemployment insurance) 17,785 17,785 36,405 36,405 682,998 709,498 712,709 678,709 (2) TOTAL The variable portion of €300,000 due for 2012 was made up of €244,000 paid in cash in 2013 and 1,283 bonus shares allocated in 2013. The variable portion of €283,000 due for 2013 was made up of €263,000 paid in cash in 2014 and 459 bonus shares allocated in 2014. The variable portion of €317,000 due for 2014 was made up of €262,000 paid in cash in 2015 and 808 bonus shares allocated in 2015. (2) Incentive component and company contribution (last paid in 2013 for 2012). (1) The remuneration component paid in cash has thus not increased from 2013 to 2014. The overall fixed and variable remuneration increased by 4.4%, this increase was paid in the form of a bonus share allocation for the upside part of the bonus, with these shares being delivered in 2018. Foncière des Régions 97 Reference Document 2014 1 1 Management report 2014 Corporate officers Aldo Mazzocco, Deputy CEO Italy of Foncière des Régions, earns fixed and variable remuneration from Beni Stabili as CEO of this company. The remuneration is determined by the Board of Directors of Beni Stabili, on the basis of a proposal put forward by the Beni Stabili Appointments and Remunerations Committee. It is detailed below. TABLE 2 Executive corporate officer name and function Aldo Mazzocco, CEO of Beni Stabili Deputy CEO of Foncière des Régions Remuneration paid by Beni Stabili 2014 fiscal year 2013 fiscal year Amounts due for 2013 Amounts paid in 2013 Amounts due for 2014 Amounts paid in 2014 Fixed remuneration 484,000 484,000 484,000 484,000 Annual variable remuneration 270,000 270,000 270,000 270,000 Multiannual variable remuneration 0 0 0 0 Extraordinary remuneration 0 0 0 0 106,000 106,000 106,000 106,000 Attendance fees Benefits in kind (company car and accommodation) TOTAL 59,263 59,263 61,460 61,460 919,263 919,263 921,460 921,460 This remuneration remained stable between 2013 and 2014. 1.14.1.2.3. Long-term incentive plan ww this delay, suggested by the Appointments and Remunerations Committee, makes it possible to award shares contingent on the achievement of operational results and the achievement of individual targets, and to determine performances also in consideration of the closing of the accounts for year N As regards the long-term incentive (LTI) component of the remuneration, on 19 February 2015, the Appointments and Remunerations Committee proposed to the Board of Directors, which approved the proposal, that performance-based bonus shares be allocated under the following conditions: ww in setting this annual allocation period for share awards to corporate officers, the Appointments and Remunerations Committee has made it possible to avoid any windfall effect through any share price volatility. ww the share vesting period shall be three years in France and four years in Italy, counting from the date of the Board’s allocation decision This long-term incentive plan has the following aims as regards the recipients of the shares: ww the share retention period shall be two years in France, starting from the time of their vesting. In Italy, beneficiaries shall not be subject to any mandatory share retention period. ww employee retention: shares are not definitively allocated until the end of the vesting period, on the condition that beneficiaries are still employed by the company The principles used to award performance shares to corporate officers are as follows: ww motivation and involvement: share values ultimately depend on the company’s performance in its sector, which is reflected in the share price ww the allocation of bonus shares is a long-term incentive plan comprising a third component of remuneration, in addition to the fixed and variable portions of salary ww alignment of Director’s interests with those of the shareholders: shares are only definitively allocated if the performance criteria are met. ww for executive officers, the LTI for year-N is awarded once the accounts are closed, at the start of year N+1 100% of share awards are subject to the following performance criteria, each analysed over the three-year vesting period, given that the number of shares awarded, subject to performance requirements, may not exceed the number listed at the time of allocation: 50% Presence requirement and market performance condition: wwOverall stock market performance of Foncière des Régions in relation to the EPRA index, defined as the change in the share price over the reference period, taking account of all dividends or interim dividends (gross) reinvested on the distribution date or other distributions reinvested on the distribution date. wwThe performance rate will be applied to the number of shares. 50% Presence requirement and internal performance condition not affected by the market: wwThe number of performance shares is weighted by a coefficient corresponding to the average rate of achievement of the bonus objectives between the year of allocation and the year preceding the acknowledgement of the achievement of the performance target. wwThis average performance rate will be applied to the target number of shares. Foncière des Régions 98 Reference Document 2014 Management report 2014 Corporate officers These conditions combine external and internal performances, thus providing shareholders with assurances that: Committee to suggest to the Board that the number of shares allocated be decreased. ww that Directors’ long-term remuneration is directly linked to Foncière des Régions’ stock market performance The number of performance shares awarded to corporate officers accounted for 15% of all shares awarded for 2014 within the Group. ww it is also linked to the company’s operating performance: bonuses are in fact linked on a yearly basis to targets for meeting budgets, implementing the strategy, growth of indicators, the financial policy, etc. Corporate officers receiving performance shares have entered into a formal undertaking not to hedge their risk. Also, the performance conditions for shares subject to said conditions for the first time in 2015, were reviewed. The Appointments and Remunerations Committee noted that the overall stock market performance of Foncière des Régions exceeded that of the EPRA Eurozone index, and that the attainment rate of these targets over the period exceeded the target, both for Christophe Kullmann and Olivier Estève. Therefore, all shares allocated in February 2012 (8,900 shares for Christophe Kullmann and 5,000 shares for Olivier Estève) were received in February 2015. The LTI 2014 distributed in February 2015 took place in line with all of these principles. The number of shares allocated is as follows: ww Christophe Kullmann: 13,000 performance shares (potentially amounting to a maximum of 0.02% of capital) ww Olivier Estève: 7,000 performance shares (potentially amounting to a maximum of 0.01% of capital) ww Aldo Mazzocco: 5,500 performance shares (potentially amounting to a maximum of 0.009% of capital). Finally, it is noted that since 2008, the Board of Directors, on the recommendation of the Appointments and Remunerations Committee, has put an end to schemes for allocation of stock options that were previously activated in parallel with the schemes for allocation of bonus shares. The number of shares awarded is lower than the 2013 LTI allocated in 2014 (15,000, 8,000 and 6,000, respectively). This drop is due to the rise in the Foncière des Régions share price of 39% in one year, which led the Appointments and Remunerations The overall remuneration of corporate officers including LTI is shown in the table below. TABLE 1(1) 2014 fiscal year 2013 fiscal year Executive corporate officer name and function Christophe Kullmann, Chief Executive Officer Remuneration (detailed in table 2) Value of the multiannual variable remuneration allocated during the fiscal year Value of options granted during the year (detailed in table 4) Value of the performance shares allocated (detailed in table 6)(2) TOTAL Amounts due for 2013 Amounts paid in 2013 Amounts due for 2014 Amounts paid in 2014 1,284,373 1,354,373 1,346,239 1,282,239 0 0 0 0 None None None None 490,350 440,748 663,650 490,350 1,774,723 1,795,121 2,009,889 1,772,589 Since the allocation of performance shares granted for year N is delayed until N+1, for the sake of the accuracy and completeness of the information provided, table 1 distinguishes between allocations paid and those due for each fiscal year. (2) Share valuations do not include any bonuses paid in bonus shares which are already included, where appropriate, in table 2. (1) N.B.: share valuations are calculated by an independent expert. The overall remuneration for 2014 paid to the Chief Executive Officer, including all of these components (€2,010,000) is below the average (€2,359,000) paid to the top executive directors of SBF 80 companies. Since the start of the term of office, i.e. from 2011 to 2014 inclusive, the cash part of the remuneration remained stable. The par-value increase from 2013 to 2014 affected the non-cash and long term part paid in performance shares. It comes from a rise in the bonus, particularly the rise in the Foncière des Régions share price (39% in one year). Foncière des Régions 99 Reference Document 2014 1 1 Management report 2014 Corporate officers The tables below show the change in the cash/non-cash mix from 2013 to 2014. 2013 2014 32% No Cash 42% 68% No Cash Cash 58% Cash Change in the fixed/variable/LTI mix between 2013 and 2014 illustrates the same phenomenon. 2013 2014 28% 37% 33% 42% LTI Fixed LTI Fixed 30% 30% Variable Variable 68% of the remuneration paid to the Chief Executive Officer is subject to performance conditions. TABLE 1(1) 2014 fiscal year 2013 fiscal year Amounts due for 2013 Amounts paid in 2013 Amounts due for 2014 Amounts paid in 2014 682,998 709,498 712,709 678,709 0 0 0 0 None None None None Value of performance shares granted during the year (detailed in table 6)(2) 261,520 244,860 357,350 261,520 TOTAL 944,518 954,358 1,070,059 940,229 Executive corporate officer name and function Olivier Estève, Deputy Chief Executive Remuneration due for the fiscal year (detailed in table 2) Value of the multiannual variable remuneration paid during the fiscal year Value of options granted during the year (detailed in table 4) Since the allocation of performance shares granted for year N is delayed until N+1, for the sake of the accuracy and completeness of the information provided, table 1 distinguishes between allocations paid and those due for each fiscal year. Share valuations do not include any bonuses paid in bonus shares which are already included, where appropriate, in table 2. (1) (2) N.B.: share valuations are calculated by an independent expert. The overall remuneration for 2014 paid to the Deputy General Manager (€1,070,000) is in line with the average (€1,031,000) paid to peers from SBF 120 companies. The cash part of the remuneration remained stable in 2014 compared with 2013. The par-value increase from 2013 to 2014 affected the non-cash and long-term part paid in performance shares. It comes from a rise in the bonus, particularly the rise in the Foncière des Régions share price (39% in one year). Foncière des Régions 100 Reference Document 2014 Management report 2014 Corporate officers The tables below show the change in the cash/non-cash mix from 2013 to 2014. 2013 2014 32% No Cash 42% No Cash 58% Cash 68% Cash The change in the fixed/variable/LTI mix between 2013 and 2014 illustrates the same phenomenon. 2013 2014 28% 33% LTI 37% LTI 42% Fixed Fixed 30% 30% Variable Variable 63% of the remuneration paid to the Chief Executive Officer is subject to performance conditions. TABLE 1(1) 2014 fiscal year 2013 fiscal year Executive corporate officer name and function Aldo Mazzocco, CEO of Beni Stabili Deputy CEO of Foncière des Régions Remuneration due for the fiscal year (detailed in table 2) Value of the multiannual variable remuneration paid during the fiscal year Value of options granted during the year (detailed in table 4) Value of performance shares granted during the year (detailed in table 6) TOTAL Amounts due for 2013 Amounts paid in 2013 Amounts due for 2014 Amounts paid in 2014 919,263 919,263 921,460 921,460 0 0 0 0 None None None None 183,960 190,900 255,255 183,960 1,103,223 1,110,163 1,176,715 1,105,420 Since the allocation of performance shares granted for year N is delayed until N+1, for the sake of the accuracy and completeness of the information provided, table 1 distinguishes between allocations paid and those due for each fiscal year. (1) N.B.: share valuations are calculated by an independent expert. The cash part of the remuneration remained stable in 2014 compared with 2013. The par-value increase from 2013 to 2014 affected the non-cash and long term part paid in performance shares. It comes from a rise in the Foncière des Régions share price (39% in one year). Foncière des Régions 101 Reference Document 2014 1 1 Management report 2014 Corporate officers 1.14.1.2.4. Share retention obligation for executive officers The Afep-Medef Code recommends that performance-based bonus shares awarded to Directors and officers be conditional upon the purchase of a defined quantity of shares on availability of the awarded shares. This recommendation is not applied by Foncière des Régions. The Board has obliged corporate officers to retain at least 50% of any shares acquired as performance shares until the end of their terms of office, up to the limit of two years’ fixed remuneration. Given the strict nature of this obligation, the Board considered that it was not useful to require that they buy an amount of shares in company stock when the awarded bonus shares became available, as the undertaking to retain the shares is a mechanism with an equivalent effect. The Afep-Medef Code recommends that the Board set a share retention obligation for executive officers on bonus shares and shares from the exercise of stock options that is sufficiently strict so as to allow for really taking the company’s long-term performance into account. The Board of Directors of Foncière des Régions has set a retention obligation of 50% for performance shares throughout the term of office, until executive officers hold shares equivalent to two years’ worth of fixed remuneration. Beyond that threshold, Directors and officers will again be free to transfer shares. The tables below show the transactions by corporate officers relating to stock options and bonus shares. TABLE 4 SHARE SUBSCRIPTION OR PURCHASE OPTIONS GRANTED DURING THE FISCAL YEAR TO EACH EXECUTIVE CORPORATE OFFICER No. and date of plan Type of options (purchase or subscription) Valuation of options based on the method used for the consolidated accounts Number of options awarded during the year Jean Laurent None None None None Christophe Kullmann None None None None Olivier Estève None None None None Aldo Mazzocco None None None None Options granted to each Company Director by the issuer and by any company of the Group (list by name) Exercise price Exercise period TABLE 5 SHARE SUBSCRIPTION OR PURCHASE OPTIONS EXERCISED DURING THE YEAR BY EACH EXECUTIVE CORPORATE OFFICER No. and date of plan Type of option (purchase or subscription) Exercise price Jean Laurent None None None Christophe Kullmann None None None Olivier Estève None None None Aldo Mazzocco None None None Options exercised by executive officers (list by name) Foncière des Régions 102 Reference Document 2014 Management report 2014 Corporate officers TABLE 6 PERFORMANCE SHARES ALLOCATED TO EACH CORPORATE OFFICER(1) Performance shares awarded during the year to each executive Company Officer by the issuer and by any company in the Group (list of names) Plan date Number of shares allocated during the year(1) Valuation of shares by the method used for consolidated accounts(2) None None Christophe Kullmann 26/02/2014 15,000 Christophe Kullmann 26/02/2014 Olivier Estève 26/02/2014 Olivier Estève Aldo Mazzocco Date of acquisition Date available €32.69 26/02/2017 26/02/2019 2,065 €43.59 26/02/2017 26/02/2019 8,000 €32.69 26/02/2017 26/02/2019 26/02/2014 459 €43.59 26/02/2017 26/02/2019 26/02/2014 6,000 €30.66 26/02/2018 26/02/2018 Jean Laurent Performance conditions 50% = overall stockmarket performance compared to the EPRA 50% = attainment rate of individual targets For year N-1/includes the upside of the bonus, paid in shares. (2) Value of the share calculated by an independent expert. (1) TABLE 7 PERFORMANCE SHARES BECOMING AVAILABLE DURING THE YEAR FOR EACH EXECUTIVE CORPORATE OFFICER Bonus shares becoming available for corporate officers (list of names) Plan date Jean Laurent Number of shares available during the fiscal year Vesting conditions(1) Date of allocation None Christophe Kullmann 21/02/2011 8,236 N/A 21/02/2014 Olivier Estève 21/02/2011 3,795 N/A 21/02/2014 Aldo Mazzocco 10/03/2010 2,700 N/A 10/03/2014 (1) Latest plan without performance conditions. 1.14.1.2.5. Plurality of employment contract and holding office 1.14.1.2.6. End-of-service compensation After the abandonment without compensation of their employment contracts, which provided for the payment of a severance compensation in the event of forced departure, the Board of Directors proposed implementing an end-of-service compensation for the Chief Executive Officer and the Deputy General Manager in France. Pursuant to the Afep-Medef recommendation, which specifies that: ”when a Director becomes a corporate officer of the company, [it is recommended] that their employment contract with the company be terminated, or that they resign”, the employment contract of Christophe Kullmann was terminated, by joint agreement between Foncière des Régions and Mr Kullmann, on 26 November 2008, without payment of any compensation. Such compensation would be paid only in the event of forced departure due to a change of control or a change of strategy, which would exclude cases in which they were to leave the company at their own initiative, change functions within the Group or be able to claim their retirement rights in short order. Christophe Kullmann has since that date received GSC unemployment insurance. He also has supplementary group mutual insurance covering health-care expenses. He does not benefit from the Group Incentive Plan. On 5 December 2014, to meet the recommendations of the AfepMedef Code, the Board of Directors decided henceforth to exclude the long-term incentive plan (paid in performance shares) from the base for calculating the compensation amount. Similarly, the employment contract with Olivier Estève, Deputy General Manager, was terminated on 1 November 2012, without payment of compensation. Since that date, he also benefits from GSC unemployment insurance, as well as supplementary group mutual insurance covering health-care expenses. He benefitted for the last time in 2013 from the Group’s 2012 incentive plan. Foncière des Régions 1.14.1.2.6.1. Theoretical compensation amount Thus the theoretical compensation amount would be equal to 12 months’ total remuneration including the fixed salary and the variable part, plus one month’s additional remuneration per year of service at the company including all roles, it being understood that the current remuneration system does not include payment of an exceptional bonus. 103 Reference Document 2014 1 1 Management report 2014 Corporate officers 1.14.1.2.6.2. Performance criteria In any case, although the exceeding of one of the two fractions of the compensation may compensate for a possible deduction from the other fraction, the total amount of the end-of-service benefit is capped at two years of total remuneration. This cap rule applies to all forms of severance pay and includes any other compensation paid for any other reason at the end of a term of office, it being specified that the Chief Executive Officer and Deputy General Manager shall not receive any remuneration from Foncière des Régions other than that paid for their term of office. In accordance with the provisions of Article L. 225-42-1 of the French Commercial Code and the recommendations of the AfepMedef Code, this compensation is subject to demanding internal and external performance conditions: ww 50% of the theoretical compensation amount is linked to the change in NAV over the last three fiscal years prior to the cessation of functions: if the change in the EPRA NAV of Foncière des Régions is below 25% of the average for real estate companies in the EPRA index, the fraction of the severance pay linked to this criterion will not be paid. Otherwise, the theoretical amount of this fraction of the compensation will be adjusted by the variation in the NAV for the period considered As a result of the performance criteria listed above being set, the Board will be able to reflect on the severance pay and the target and actual performance of the Chief Executive and Deputy Chief Executivee, where appropriate. Since the targets that are the conditions for payment of the variable portion are themselves linked to operational performance, staying within budgets and implementing strategy, the compensation paid cannot help but be proportional to the results obtained, thus more fully meeting the requirements of the recommendations made by the Afep-Medef Code. ww 50% of the theoretical compensation amount is linked to the achievement of target performance during the three years prior to the termination of office. The criteria for allocation of the target bonus are reviewed every year by the Appointments and Remunerations Committee, based on ambitious operational and strategic targets. Their achievement is assessed according to a table of preset criteria. If the average rate of fulfilment of the objectives over the last three years is less than 80%, the fraction of the severance pay linked to that criterion is not paid. Otherwise, the amount of the theoretical compensation will be adjusted by the average of the coefficients of achievement of the last three variable portions. The compensation payable to the Chief Executive Officer and Deputy General Manager were approved in their current version by the Board of Directors on 5 December 2014, and will be submitted to a vote by the shareholders at the General Meeting to be held on 17 April 2015, when voting on Resolutions 5 and 6 will take place. The amount and the conditions for awarding this compensation were disclosed on 15 December 2014. 1.14.1.2.7. Supplementary pension scheme No Company Officer within the Group benefits from a specific defined benefits or defined contributions retirement scheme offered by the company. The table below shows the situations of the executive officers. TABLE 10 Employment contract Corporate officers Yes No Supplementary pension scheme Yes No Compensation or benefits due or likely to be due by reason of cessation of or change in position Yes No Compensation for non-competition clause Yes No Jean Laurent Start of term of office: 31 January 2011 x x Christophe Kullmann Start of term of office: 31 January 2011 x x x x Olivier Estève Start of term of office: 31 January 2011 x x x x Aldo Mazzocco Start of term of office: 31 January 2011 x x Foncière des Régions 104 x Reference Document 2014 x x x Management report 2014 Corporate officers 1.14.2. Gross remuneration for members of the Board of Directors Attendance fees represent the portion of the remuneration awarded to members of the Board of Directors for attending the meetings of the Board and the specialised Committees. Taking into account a benchmark at companies comparable to Foncière des Régions, the General Meeting held on 31 January 2011 set an overall budget of €500,000 as part of the implementation of the company’s new Governance policy. The amount actually paid breaks down into a fixed annual amount and a variable portion, which takes into account the actual attendance of each member. The table below provides a detailed breakdown: Board of Directors Fixed annual portion allocated to the Chairman €10,000 Fixed annual portion allocated to each member €6,000 Variable portion for attendance allocated to the Chairman and to each member for every meeting that is attended €3,000 Special Committees Fixed annual portion allocated to the Chairman of the Audit Committee and the Strategic and Investment Committee €6,000 Fixed annual portion allocated to the Chairman of the Appointments and Remunerations Committee €5,000 Fixed annual portion allocated to each member of the Committees €3,000 Variable portion for attendance allocated to the Chairman and to each member of the Strategic and Investment Committee and of the Appointments and Remunerations Committee, every time a meeting is attended €2,000 Variable portion for attendance allocated to the Chairman and to each member of the Audit Committee, every time a meeting is attended €3,000 The gross amount for attendance fees allocated in 2014 to members of the Board for their participation in its work and in the special Committees amounted to €453,000, given that Christophe Kullmann waived all his attendance fees. The table below provides a detailed breakdown by board member: 2014 gross attendance fees paid in € 2014 net attendance fees paid in € Jean Laurent 31,000 31,000 Leonardo Del Vecchio 27,000 18,900 ACM Vie represented by Catherine Allonas Barthe 21,000 21,000 Aterno represented by Romolo Bardin 39,000 30,810 Jean-Luc Biamonti 48,000 37,920 GMF Vie represented by Lionel Calvez 44,000 44,000 Bertrand de Feydeau 42,000 26,670 Sergio Erede 38,000 30,020 Predica represented by Jérôme Grivet 41,000 26,035 Pierre Vaquier 38,000 24,130 Micaela Le Divelec Lemmi 33,000 26,070 / / Sylvie Ouziel 32,000 20,320 Sigrid Duhamel 19,000 12,065 453,000 348,940 Board and Committee members Christophe Kullmann TOTAL Tax levies (withheld at source, mandatory 21% deduction at source and 15.5% social security contributions), totalling €104,060 were paid by the company direct to the tax authorities. Foncière des Régions 105 Reference Document 2014 1 1 Management report 2014 Corporate officers TABLE SHOWING OTHER ATTENDANCE FEES (EXCLUDING ATTENDANCE FEES PAID BY FONCIÈRE DES RÉGIONS) AND OTHER REMUNERATION EARNED BY CORPORATE OFFICERS WHO ARE NOT DIRECTORS (IN €) Amounts paid during 2013 Non-executive corporate officers(1) Amounts paid during 2014 Jean Laurent Attendance fees (Beni Stabili) Other remuneration 51,742 50,000 375,000 369,000 57,742 56,000 7,200 7,700 139,975 140,054 6,612 4,700 638,271 627,454 Leonardo Del Vecchio(2) Attendance fees (Beni Stabili) Other remuneration Bertrand de Feydeau Attendance fees (Foncière Développement Logements) Other remuneration (Foncière Développement Logements) Catherine Allonas Barthe (permanent representative of ACM Vie) (3) Attendance fees (Foncière des Murs – Foncière Développement Logements until September 2013) Other remuneration TOTAL This table only takes into account corporate officers who were not Directors in 2014. (2) These attendance fees gave rise to tax levies. (3) The attendance fees were paid to the company in its capacity as Director, not to its permanent representative. (1) The members of the Board of Directors and Committees are also entitled to reimbursement for travel expenses and costs incurred from attending Board and Committee meetings, upon producing supporting documents. Foncière des Régions 106 Reference Document 2014 Management report 2014 Corporate officers 1.14.3. Corporate officers’ terms of office and functions In accordance with the provisions of Article L. 225-102-1 par. 4 of the French Commercial Code, please find below a list of all offices and functions exercised in all companies, in France and abroad, by each of the company’s corporate officers in 2014. 1.14.3.1. List of offices and functions exercised by members of the General Management Christophe Kullmann Born 15 October 1965 in Metz (57) French national Business address: 30, avenue Kléber – 75116 Paris Main function: CEO of Foncière des Régions Chairman of the Strategy Committee: Biography: ww FDM Management SAS (since 5 December 2014) Christophe Kullmann, who has a postgraduate degree (DEA) in management, is the Chief Executive Officer of Foncière des Régions. He was the force behind the development of Foncière des Régions, the leading Office real estate developer in Europe in terms of the size of its portfolio. Member of the Supervisory Board: ww Immeo AG (formerly Immeo Wohnen GmbH), a German company Director: ww Foncière Développement Logements – FDL SA (public company), Beni Stabili S.p.A. SIIQ (Italian public company) Christophe Kullmann has spent his whole career in the real estate industry. He was in charge of financial management at Immobilière Batibail, a publicly traded real estate development company, from 1992 until its merger in 1999 with Foncière Gecina, where he was also charged with its financial management. Manager: He joined Foncière des Régions in 2001 and, until 31 January 2011, was Chairman of the General Management. Legal representative of Foncière des Régions, Chairman: ww GFR Kléber SARL Permanent representative of Urbis Park, Director: ww BP 3000 SA ww Technical SAS Christophe Kullmann has also been Chairman of the French real estate companies federation (FSIF) since 2012. Legal representative of Foncière des Régions, Manager: ww SCI Esplanade Belvédère II, SCI Raphaël, SCI Le Ponant 1986, SCI Omega A, SCI Omega C, SCI Ruhl Côte d’Azur, SCI Latécoère, SCI Latécoère 2, SCI place de l’Europe Number of shares held at 31 December 2014: 26,844 (as well as 24,000 beneficially-owned shares following a bare ownership transfer) Member of the Audit Committee: ww Foncière des Murs SCA (public company) Member of the Appointments and Remunerations Committee: Offices held within Foncière des Régions group: ww Foncière Développement Logements – FDL SA (public company) Chief Executive Officer Date of appointment: 31 January 2011 Offices held outside the Foncière des Régions group: Date of re-appointment: 1 January 2015 Chairman of the Board of Directors: Date of expiration of the term of office: 31 December 2018 ww FSIF (Trade association) Director Member of the executive board: Date of appointment: 25 April 2012 ww EPRA Date of expiration of the term of office: General Meeting in 2016 to approve the financial statements for the fiscal year ending 31 December 2015 Terms of office expired within the last five fiscal years: Chairman of the General Management: Other offices held within the Foncière des Régions group: ww Foncière des Régions SA (public company – form changed in 2011) Chairman of the Supervisory Board: Chairman: ww FDR 3 SAS (ended in 2013), FDR 2 SAS (ended in 2012) ww Foncière des Murs SCA (public company) Foncière des Régions 107 Reference Document 2014 1 1 Management report 2014 Corporate officers Director: Legal representative of Foncière des Régions, Manager: ww IEIF (Association) – until April 2014), IPD France SAS (ended in 2013), Electron GIE (ended in 2011), GFR Property SAS, now Foncière des Régions Property SNC (ended in 2010) ww SCI Tostel (until 30 June 2014), SCI du 32/50 Rue Parmentier (until 31 March 2014), SCI Esplanade Belvédère III (end in 2011), SCI Mareville (ended in 2011), SCI Toulouse Blagnac (ended in 2010) Member of the Supervisory Board: Legal representative of Foncière des Régions, Chairman of GFR Blériot, Manager: ww Foncière Europe Logistique SCA (ended in 2012) Legal representative of Foncière des Régions, Manager: ww SCI du 1 Rue de Verdun (until 4 June 2014), SCI du 15 Rue des Cuirassiers (until 4 June 2014), SCI du 288 Rue Duguesclin (until 4 June 2014), SCI du 20 Avenue F. Mistral (ended in 2010) ww FSIF (Trade association) – ended in 2012) Legal representative of Foncière des Régions, Chairman: ww GFR Blériot SAS (until 4 June 2014), GFR Externalisation SAS (ended in 2012), SAS Coetlosquet (ended in 2011), SAS Quai de Dion Bouton (ended in 2011), Urbis Paris Services SAS (ended in 2010) Permanent representative of FDR 3, member of the Supervisory Board: ww Altarea SCA (public company – ended in 2012) Olivier Estève Born 18 September 1964 in Algiers – Algeria French national Business address: 30, avenue Kléber – 75116 Paris Main function: Deputy CEO of Foncière des Régions Director: Biography: ww Ulysse Trefonds SA (Belgian company), Sunparks Trefonds SA (Belgian company), Iris Tréfonds SA (Belgian company) Olivier Estève is a graduate of École Spéciale des Travaux Publics (ESTP). Chairman of the Investment Committee: Between 1990 and 2001, he held various positions within Groupe Bouygues: Business Manager, then Development Director for the general management subsidiary SB-Ballestrero. ww Urbis Paris SA, Foncière des Murs SCA (public company) Permanent representative of FDR 2, Director: ww Foncière Développement Logements – FDL SA (public company) He joined Foncière des Régions in September 2002. He was Real Estate Director responsible for Major Commercial Property Development Projects. Member of the General Management until 31 January 2011. He then became Deputy General Manager in charge of the Offices, Logistics and Car Parks businesses. Member of the Supervisory Board: ww Foncière des Murs SCA (public company) Manager: ww Foncière des Régions Développement SNC, GFR Ravinelle SARL, Euromarseille Invest EURL, SCI Euromarseille 1, SCI Euromarseille 2, FDR 4 EURL, FDR 5 EURL, FDR 6 EURL, FDR 7 EURL, Fédération EURL, BGA Transaction SARL, Foncière Electimmo SARL, Foncière Margaux SARL, SARL du 25-27 quai Félix faure, SARL du 2 rue Saint Charles, SARL du 106-110 rue des Troenes, SARL du 11 rue Victor Leroy, Télimob Paris SARL, Imefa 127 SCI, SCI Atlantis, Eurl Languedoc 34, SCI Pompidou Metz, SNC Palmer Plage, SNC Palmer Transactions, SNC Foncière Palmer, SCI Palmer Montpellier, SCI Dual Center, Lenopromo SNC, GFR Blériot SARL (since 4 June 2014), SCI Charenton (since 26 September 2014), Latepromo SNC (since 22 December 2014) Number of shares held at 31 December 2014: 23,045 Offices held within Foncière des Régions group: Deputy General Manager Date of appointment: 31 January 2011 Date of re-appointment: 1 January 2015 Date of expiration of the term of office: 31 December 2018 Other offices held within the Foncière des Régions group: Legal representative of Foncière des Régions, Manager: ww SCI Lenovilla, SCI Meudon Saulnier Chairman: Legal representative of Fédération, Manager: ww FDR 2 SAS, GFR Services SAS, Foncière Europe Logistique SAS ww Federimmo SCI Chairman of the Board of Directors: Legal representative of Telimob Paris SARL, Manager: ww Urbis Park SA, BP 3000 SA, Office CB 21 SPPICAV Foncière des Régions ww Telimob Est SNC, Telimob Nord SNC, Telimob Ouest SNC, Telimob Paca SNC, Telimob Paris SNC, Telimob Rhône-Alpes SNC, Telimob Sud-Ouest SNC 108 Reference Document 2014 Management report 2014 Corporate officers Legal representative of Foncière Margaux, Manager: Permanent representative of SAS Coetlosquet, Director: ww SCI du 10 bis et 11 à 13 allée des Tanneurs (since 31 December 2014), SCI du 125 avenue du Brancolar (since 31 December 2014), SCI du 1630 Avenue De La Croix Rouge (since 31 December 2014), SCI du 32 avenue P. Grenier (since 31 December 2014), SCI du 20 avenue Victor Hugo (since 31 December 2014) – SCI du 11 avenue de Sully (since 31 December 2014), SCI du 682 cours de la Libération (since 31 December 2014), SCI du 3 place A. Chaussy (since 31 December 2014), SCI du 1 rue de Châteaudun (since 31 December 2014), SCI du 57/59 rue du Commandant R. Mouchotte (since 31 December 2014), SCI du 9 rue des Cuirassiers (since 31 December 2014), SCI du 35/37 rue Louis Guérin (since 31 December 2014), SCI du 2 rue de l’Ill (since 31 December 2014), SCI du 8 rue M. Paul (since 31 December 2014), SCI du 40 rue Jean-Jacques Rousseau (since 31 December 2014), SCI du 2 rue de Verdun (since 31 December 2014) ww Foncière Développement Logements – FDL SA (public company – ended in 2011) Legal representative of GFR Blériot, Manager: ww Telimob Est SNC (end in 2010) Manager: ww SCI 11 Place de l’Europe (ended in 2013), FR IMMO SARL (ended in 2013), SNC Late (ended in 2012), SNC Latécoère (ended in 2012), SARL du 174 Av. de la République (ended in 2012), Bionne SARL (ended in 2011), Telimob Pivot SARL (ended in 2011), Financière Palmer SARL (ended in 2011), Akama SARL (ended in 2011), Telimob Est SARL (ended in 2010), Telimob Nord SARL (ended in 2010), Telimob Ouest SARL (ended in 2010), Telimob PACA SARL (ended in 2010), Telimob Rhône-Alpes SARL (ended in 2010), Telimob Sud-Ouest SARL (ended in 2010), Imefa 106 SCI (ended in 2010) Legal representative of Telimob Paris SARL, Manager: ww Telimob Transaction SNC (end in 2012) Legal representative of Telimob Est SARL, Manager: ww SCI du 15 rue des Cuirassiers (since 4 June 2014), SCI du 288 rue Duguesclin (since 4 June 2014) Legal representative of Telimob Paca SARL, Manager: ww Telimob Paca SNC (ended in 2010) Legal representative of SCI Euromarseille 1, Manager: Legal representative of Telimob Ouest SARL, Manager: ww SCI Euromarseille BL, SCI Euromarseille BI, SCI Euromarseille BH, SCI Euromarseille BH2 ww Telimob Ouest SNC (end in 2010) Legal representative of Telimob Nord SARL, Manager: Legal representative of SCI Euromarseille 2, Manager: ww Telimob Nord SNC (end in 2010) ww SCI Euromarseille PK, SCI Euromarseille M, SCI Euromarseille H Legal representative of Telimob Rhône-Alpes SARL, Manager: Offices held outside the Foncière des Régions group: ww Telimob Rhône-Alpes SNC (end in 2010) None Legal representative of Telimob Sud-Ouest SARL, Manager: Terms of office expired within the last five fiscal years: Legal representative of Foncière Electimmo, Manager: Member of the General Management: ww SCI du 10 bis et 11 à 13 allée des Tanneurs (until 31 December 2014), SCI du 125 avenue du Brancolar (until 31 December 2014), SCI du 1630 Avenue De La Croix Rouge (until 31 December 2014), SCI du 32 avenue P. Grenier (until 31 December 2014), SCI du 20 avenue Victor Hugo (until 31 December 2014), SCI du 11 avenue de Sully (until 31 December 2014), SCI du 682 cours de la Libération (until 31 December 2014), SCI du 3 place A. Chaussy (until 31 December 2014), SCI du 1 rue de Châteaudun (until 31 December 2014), SCI du 57/59 rue du Commandant R. Mouchotte (until 31 December 2014), SCI du 9 rue des Cuirassiers (until 31 December 2014), SCI du 35/37 rue Louis Guérin (until 31 December 2014), SCI du 2 rue de l’Ill (until 31 December 2014), SCI du 8 rue M. Paul (until 31 December 2014), SCI du 40 rue Jean-Jacques Rousseau (until 31 December 2014), SCI du 2 rue de Verdun (until 31 December 2014), SCI du 2 boulevard Docteur Cattenoz (ended in 2013), SCI du 4 Rue I. Newton (ended in 2013), SCI du 8 rue de Bouteville (ended in 2013), SCI du 13 rue J. Monod (ended in 2012), SCI du 8/10 promenade du Fort (ended in 2012), SCI du 46 boulevard Saint Antoine (ended in 2012) ww Télimob Sud-Ouest SNC (ended in 2010) ww Foncière des Régions SA (public company – form changed in 2011) Chairman of the Board of Directors: ww SPM – Maintenance SA (ended in 2011) Chairman of the Supervisory Board: ww Foncière Europe Logistique SCA (form changed in 2012) Director: ww Electron GIE (ended in 2011), Beni Stabili S.p.A. SIIQ (Italian public company – ended in 2013) Legal representative of Akama, Manager: ww SNC Cortone (ended in 2011), SNC Latécoère (ended in 2011), SNC Caudron (ended in 2011), SNC Late (ended in 2011) Permanent representative of Foncière des Régions, member of the Supervisory Board: ww Altarea SCA (public company – ended in 2013), Foncière des Murs SCA (public company – ended in 2011) Legal representative of Foncière des Régions, Manager: Legal representative of GFR Blériot, Manager: ww Technical Property Fund 1 SPPICAV (until 15 December 2014) ww SCI du 1 rue de Verdun (from 30 June 2014 to 30 June 2014) Permanent representative of FDR 3, Director: Chairman: ww Foncière Développement Logements – FDL SA (public company – ended in 2013) ww FDR 8 SAS (ended in 2012), Foncière des Régions Développement SAS (form changed in 2013) Liquidator: ww Electron GIE (end in 2011) Foncière des Régions 109 Reference Document 2014 1 1 Management report 2014 Corporate officers Aldo Mazzocco Born 2 September 1961 in Harare (Zimbabwe) Italian national Business address: Via Piemonte n. 38, 00187 Rome (Italy) Main function: CEO of Beni Stabili S.p.A. SIIQ Biography: Offices held outside the Foncière des Régions group: Aldo Mazzocco is an Engineering graduate from the University of Padua. He has an MBA from Bocconi University in Milan. He currently serves as CEO of Beni Stabili. ww Assoimmobiliare (foreign company) Chairman: Member of the Board of Directors: ww EPRA (foreign company) Number of shares held at 31 December 2014: 9,200 Member: Offices held within Foncière des Régions group: ww Assonime (foreign company), Bocconi University Advisory Group (foreign company) Deputy General Manager Director: Date of appointment: 31 January 2011 ww Beni Stabili Property Services SpA (foreign company) Date of re-appointment: 1 January 2015 Terms of office expired within the last five fiscal years: Date of expiration of the term of office: 31 December 2018 Member: Other offices held within the Foncière des Régions group: ww Venezia Architecture University Advisory Group (foreign company) Deputy CEO: Vice-Chairman: ww Beni Stabili SpA SIIQ (foreign public company) ww Aspesi (foreign company) Director: Member of the General Management: ww Beni Stabili Development Milano Greenway SpA (foreign company) ww Foncière des Régions SA (public company – form changed in 2011) Chairman: Director: ww Beni Stabili Gestioni SpA SGR (foreign company) ww Imser Srl (foreign company) Foncière des Régions 110 Reference Document 2014 Management report 2014 Corporate officers 1.14.3.2. List of offices and functions exercised by members of the Board of Directors Jean Laurent Born 31 July 1944 in Mazamet (81200) French national Business address: 3, allée Beau-Site, 92150 Suresnes Main function: Chairman of the Board of Directors of Foncière des Régions Biography: Other offices held within the Foncière des Régions group: Jean Laurent is a graduate of the École Nationale Supérieure de l’Aéronautique (1967) and holds a Master of Science from Wichita State University. ww Beni Stabili SpA SIIQ (foreign public company) Director: Offices held outside the Foncière des Régions group: He has spent his entire career within the Crédit Agricole Group, initially in the Crédit Agricole branches in Toulouse, then in Loiret and in Paris Region where he held or supervised various roles in retail banking. Lead Director, Chairman of the Corporate Social Responsibility Committee, and Chairman of the Appointments and Remunerations Committee: ww Danone SA (public company) He then joined the Caisse Nationale du Crédit Agricole, first as Deputy CEO (1993-1999), and then as CEO (1999-2005). In this capacity, he handled the IPO of Crédit Agricole SA (2001), then the acquisition and integration of Crédit Lyonnais in the Crédit Agricole group. Vice-Chairman of the Supervisory Board, Chairman of the Audit Committee and member of the Strategic and Investment Committee: ww Eurazeo SA (public company) He was appointed Chairman of the Board of Directors of Foncière des Régions in 2011. Terms of office expired within the last five fiscal years: Director: Number of shares held at 31 December 2014: 400 ww Unigrains SA (ended in 2014) Member of the Supervisory Board: Offices held within Foncière des Régions group: ww M6 Television (ended in 2012) Chairman of the Board of Directors Director: Member of the Strategic and Investment Committee ww Crédit Agricole Egypt SAE (ended in 2012) Chairman of the Board of Directors: Date of appointment: 31 January 2011 ww Institut Europlace de Finance (Foundation) Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Foncière des Régions Chairman: ww Pôle de Compétitivité Finance Innovation (Association) (ended in 2011) 111 Reference Document 2014 1 1 Management report 2014 Corporate officers Leonardo Del Vecchio Born 22 May 1935 in Milan – Italy Italian national Business address: 24, avenue Princesse Grace – Le Roccabella, 98000 Monaco Main function: Director of Delfin SARL Other offices held within the Foncière des Régions group: Biography: Director: Leonardo Del Vecchio is the Chairman and founder of the Luxottica Group, a world leader in the design, manufacturing and distribution of eyewear, which has been listed on the New York Stock Exchange since 1990. Since 2000, the group has also been listed on the Milan Stock Exchange where it holds a prominent position in the S&P/MIB index of blue chip companies, with a market capitalisation in excess of €24 billion. In 1986, Leonardo Del Vecchio was named ”Cavaliere del Lavoro”, a decoration awarded by the President of Italy. ww Beni Stabili SpA SIIQ (foreign public company) Offices held outside the Foncière des Régions group: Director: ww Delfin SARL (foreign company), Aterno SARL (foreign company), Luxottica Group SpA (public foreign company), Julius Baer SGR (foreign company), GIVI Holding SpA (foreign company), Gianni Versace SpA (foreign company) Leonardo Del Vecchio is a Director of Gianni Versace SpA, GIVI Holding SpA, Julius Baer SGR SpA, Beni Stabili SpA, Delfin Sarl and Aterno Sarl. Terms of office expired within the last five fiscal years: Member and Vice-Chairman of the Supervisory Board: ww Foncière des Régions SA (public company – form changed in 2011) Number of shares held at 31 December 2014: 1 Offices held within Foncière des Régions group: Member and Vice-Chairman of the Board of Directors Chairman of the Strategic and Investment Committee Date of appointment: 31 January 2011 Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Foncière des Régions 112 Reference Document 2014 Management report 2014 Corporate officers ACM VIE SA 34, rue du Wacken – 67000 Strasbourg Offices held outside the Foncière des Régions group: Strasbourg Commercial and Trade Register TI 332 377 597 Director: Number of shares held at 31 December 2014: 4,880,229 ww Foncière des 6e et 7e arrdts de Paris SA (public company), Partners Assurances SA (foreign company), ACM Ré SA (foreign company), Agrupacio ACMI SA (foreign company) Offices held within Foncière des Régions group: Member of the Supervisory Board: Director ww Foncière Massena SCA, SCPI CM CIC Pierre Investissement, SCPI Crédit Mutuel Pierre 1, SCPI Selectipierre 1, SCPI Logipierre 1, SCPI Logipierre 3 Date of appointment: 31 January 2011 Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Terms of office expired within the last five fiscal years: Member of the Supervisory Board: ww Foncière des Régions SA (public company – form changed in 2011) Other offices held within the Foncière des Régions group: Director: Member of the Supervisory Board: ww Korian (public company – ended in March 2014) ww Foncière des Murs SCA – public company Catherine Allonas Barthe Born 18 January 1955 in Strasbourg (67) French national Business address: 42, rue des Mathurins – 75008 Paris Main function: Deputy General Manager of ACM Offices held outside the Foncière des Régions group: Biography: Chief Executive Officer: Catherine Allonas Barthe has a master’s degree in mathematics. She is a graduate of the École Nationale de la Statistique et de l’Administration Économique (ENSAE), and has served as Financial Director of Insurance at Crédit Mutuel since 2003. In addition, she is Chief Executive Officer of ACM Vie Mutuelle. Previously, Catherine Allonas Barthe served as Financial Director of SOCAPI, a subsidiary of the CIC banks, from 1992 to 2003. ww ACM VIE SAM Director: ww CIC SA (public company) Permanent representative of ACM Vie SA, Director: ww Serenis Insurance (since 7 May 2014) Permanent representative of ACM Vie SAM, Director: ww Foncière de Paris (public company – cooptation in 2014), GIE ACM, Valinvest Gestion SICAV Number of shares held at 31 December 2014: None Permanent representative of Pargestion 2, Director: Offices held within Foncière des Régions group: ww CM CIC Asset Management SAS Permanent representative of ACM Vie, Director Chairman: Member of the Strategic and Investment Committee (non-voting) ww Masséna Property SAS (since 31 August 2014) Manager: Date of appointment: 31 January 2011 ww SCI ACM Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Terms of office expired within the last five fiscal years: Permanent representative of ACM Vie SAM, member of the Supervisory Board: Other offices held within the Foncière des Régions group: ww CM CIC Asset management (ended in 2013) None Foncière des Régions 113 Reference Document 2014 1 1 Management report 2014 Corporate officers ATERNO Other offices held within the Foncière des Régions group: 26/b, boulevard Royal, L-2449 Luxembourg RCS Luxembourg B 122.254 None Number of shares held at 31 December 2014: 10,239,198 Offices held outside the Foncière des Régions group: Offices held within Foncière des Régions group: None Director Date of appointment: 31 January 2011 Terms of office expired within the last five fiscal years: Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 None Romolo Bardin Born 23 April 1978 in Belluno, Italy Italian national Business address: 26/b, boulevard Royal, L-2449 Luxembourg Main function: Deputy Director of Delfin SARL Offices held outside the Foncière des Régions group: Biography: Deputy Director: Romolo Bardin is a graduate of Business Management at Ca’Foscari University in Venice. He is Financial Director of Delfin Sàrl. Prior to that he held positions at Sunglass Hut Europe in London, and Luxottica Group in Italy. ww Delfin SARL (foreign company) Member of the Board of Directors and Chairman and Chief Executive Officer: Offices held within Foncière des Régions group: ww Aterno SARL (foreign company), DFR Holding SARL (foreign company), DFR Investment SARL (foreign company), Redfern SARL (foreign company), Delfin Finance SA (foreign company), Immochapelle SA (foreign company) Permanent representative of Aterno, Director Terms of office expired within the last five fiscal years: Member of the Audit Committee Date of appointment: 31 January 2011 Permanent representative of Delfin, member of the Supervisory Board: Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Member of the Board of Directors: Number of shares held at 31 December 2014: 3,200 ww Foncière des Régions SA (public company – form changed in 2011) ww Molmed SpA (foreign public company – ended in 2014) Other offices held within the Foncière des Régions group: Member of the Board of Directors: ww Batisica SA (foreign company) Foncière des Régions 114 Reference Document 2014 Management report 2014 Corporate officers Jean-Luc Biamonti Born 17 August 1953 in Monaco Monacan nationality Business address: 18, avenue de Grande-Bretagne – MC 98000 Monaco – Principality of Monaco Main function: Deputy Chairman of the Société des Bains de Mer Monaco Member of the Audit Committee Biography: Member of the Appointments and Remunerations Committee Holder of an MBA from the University of Columbia and a graduate of the ESSEC, Jean-Luc Biamonti joined Goldman Sachs as an investment banker and held various offices there for 16 years. As a partner in the firm, he was responsible for banking business in France and for coverage of the distribution and mass market consumer goods industry in Europe. After having left the bank in 2008, he founded Calcium Capital and developed an SME investment business via this group. Since January 2013, he has been Deputy Chairman of Société des Bains de Mer Monaco, where he has been a Director since 1985 and Chairman of the Board of Directors since 1995. Date of appointment: 31 January 2011 Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Other offices held within the Foncière des Régions group: None Offices held outside the Foncière des Régions group: Deputy Chairman: Number of shares held at 31 December 2014: 216 ww Société des Bains de Mer Monaco SA (foreign public company) Offices held within Foncière des Régions group: Terms of office expired within the last five fiscal years: Director None GMF VIE 1, rue Raoul Dautry – 95120 Ermont Vice-Chairman of the Supervisory Board: RCS Pontoise 315 814 806 ww Covea Finance SAS Member of the Supervisory Board: Number of shares held at 31 December 2014: 4,182,453 ww Foncière de Paris SIIC SA (public company) Manager: Offices held within Foncière des Régions group: ww Silverseine SCI Director Date of appointment: 31 January 2011 Terms of office expired within the last five fiscal years: Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Member of the Supervisory Board: ww Foncière des Régions SA (public company – form changed in 2011), Anthémis SAS Director: Other offices held within the Foncière des Régions group: ww AME Réassurance SA, Azur GMF Mutuelles d’assurances Associées SA, Barrière Frères SA, Cofitem-Cofimur SA, Covea Finance Actions Américaines SICAV, Covea Finance Actions Françaises SICAV, Covea Finance Actions Japonnaises SICAV, Covea Finance Horizon Durable SICAV, Covea Finance Moyen Terme SICAV, Covea Finance Sécurité SICAV, Foncière Paris France SA, Foncière Développement Logements – FDL SA (public company – until 2013) None Offices held outside the Foncière des Régions group: Director: ww AGSI GIE, Assistance Protection Juridique SA, Cegereal SA (public company), Covea SGAM, Covea Coopérations SA, Eurosic SA (public company), Fidelia Assistance SA, Foncière des 6e et 7e arrdt. de Paris SA (public company), GMF Assurances SA, La Sauvegarde SA, Téléassurances SA Foncière des Régions 115 Reference Document 2014 1 1 Management report 2014 Corporate officers Lionel Calvez Born 13 July 1972 in Quimper (29) French national Business address: Chauray, 79036 Niort Cedex 9 Main function: Director of Financial Strategy at the MAAF Group Permanent representative of Covea, member of the Supervisory Board: Biography: Lionel Calvez was awarded an actuarial degree in June 1995 from the Euro-Institut d’Actuariat (EURIA). After his first job at a life insurance company (Mutavie, a subsidiary of the Macif Group), he joined MAAF Vie, a life insurance company in the MAAF Assurances group in September 2000 as AssetsLiabilities and Profitability Studies Manager. Then at the end of 2002, he took over in the Actuarial and IT Systems Department of this Group subsidiary. Since 2006, he has directed the Strategic Financial Department of the MAAF Assurances group. ww Fincorp SAS Member of the Supervisory Board: ww MAAF Participatif FCPE Permanent representative of MAAF Vie, member of the Supervisory Board: ww Covea Finance SAS Permanent representative of Maaf Assurances SA, Chairman: ww Chauray Valeurs SAS Chairman: Number of shares held at 31 December 2014: None ww Dauphin Liège SAS Offices held within Foncière des Régions group: Terms of office expired within the last five fiscal years: Permanent representative of GMF Vie, Director Permanent representative of MAAF Assurances SA, Chairman: Member of the Audit Committee ww UCAR SA (ended in 2010) Member of the Strategic and Investment Committee Member of the Supervisory Committee: Date of appointment: 31 January 2011 ww ADERI (Association – ended in 2010) Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Chairman and Chief Executive Officer: Other offices held within the Foncière des Régions group: ww Appellations SAS (end in 2011) ww CCL SA (end in 2011) Permanent representative of MAAF Assurances SA, member of the Strategy Committee: Permanent representative of Covea Finance, Director: None ww APJ SA (end in 2012) Offices held outside the Foncière des Régions group: Permanent representative of GMF Assurances, Director: ww Boissy Finance SA (end in 2012) Member of the General Management: Permanent representative of MAAF Assurances SA, member of the Supervisory Board: ww MAAF Vie SA Permanent representative of Precerti, Director: ww Gimar Finances SCA (ended un 2012), Ofivalmo Partenaires SA (ended in 2014) ww Assurland.com SA Permanent representative of MAAF Assurances SA, Chairman: Permanent representative GMF Vie, Director: ww Gestepargne Investissement Services SA ww Medica SA (public company – ended in 2014) Permanent representative of MAAF Assurances SA, member of the Supervisory Board: ww EFFI Invest 1 SCA Foncière des Régions 116 Reference Document 2014 Management report 2014 Corporate officers Bertrand de Feydeau Born 5 August 1948 in Paris (75) French national Business address: 30, avenue Kléber – 75116 Paris Main function: Chairman of Foncière Développement Logements – FDL Other offices held within the Foncière des Régions group: Biography: Chairman of the Board of Directors: After legal and political sciences training at École du Louvre, Bertrand de Feydeau embarked on his career in real estate at Groupe de l’Union Internationale Immobilière and participated in its development worldwide as its Chief Financial Officer between 1972 and 1982. ww Foncière Développement Logements – FDL SA (public company) Offices held outside the Foncière des Régions group: Chairman and Chief Executive Officer: In 1982, he joined Claude Bébéar’s team at the regional insurance group, which in a few years would become one of the world’s top financial groups, under the name AXA. He headed the group’s real-estate activity for 18 years, participating in the structuring of the business in order to give it an international and financial dimension. ww Société des Manuscrits des Assureurs Français Director: ww Klepierre (public company), Affine (public company), Société Beaujon SAS, Sefri-Cime Offices held in associations: In 2000, he was called by Monseigneur Lustiger to join the Paris diocese as its Managing Director for Economic Affairs, and he led the restoration of the Collège des Bernardins, inaugurated in September 2008. ww Chairman of the Fondation des Bernardins, Chairman of the Palladio Foundation, Director of the Fondation du Patrimoine (Vice-Chairman), Director of the Vieilles Maisons Françaises (Vice-Chairman), Director of the F.S.I.F. (French federation of real estate companies), Director of the Club de l’Immobilier In July 2010, he became Chairman of the Fondation des Bernardins. Terms of office expired within the last five fiscal years: He is currently Chairman of Foncière Développement Logements and a Director on the boards of various real estate companies (Klepierre, Affine, Foncière des Régions), in addition to being Chairman of the Palladio Foundation. Director: ww Klemurs (public company), SITC SAS, Radio Notre-Dame, KTO Chief Executive Officer: He is also Vice-Chairman of the Fondation du Patrimoine and Vice-Chairman of Vieilles Maisons Françaises. ww Parisian Diocesan Association Chairman and Chief Executive Officer: Number of shares held at 31 December 2014: 171 ww AXA Immobilier SAS Offices held within Foncière des Régions group: ww Foncière des Régions SA (public company – form changed in 2011) Member of the Supervisory Board: Director Chairman of the Audit Committee Date of appointment: 31 January 2011 Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Foncière des Régions 117 Reference Document 2014 1 1 Management report 2014 Corporate officers Sergio Erede Born 14 August 1940 in Florence, Italy Italian national Business address: Via Barozzi 1 – 20122 Milan, Italy Main function: Lawyer Biography: Other offices held within the Foncière des Régions group: Sergio Erede is a graduate of the University of Milan (1962) and earned an LLM from Harvard Law School in 1964. He was admitted to the Italian bar in 1967. None Sergio Erede was one of the founding partners of the Bonelli Erede Pappalardo legal firm. Sergio Erede worked at Hale & Door in Boston from 1963 to 1964, then at Sullivan & Cromwell in New York. Director: From 1965 to 1969, he headed up the legal department at IBM Italie S.p.A. He founded Erede e Associati in 1995, which gained a reputation in the mergers and acquisitions and securities transactions sectors. In 1999, the firm merged with two other large law firms: Bonelli e Associati, a firm specialising in corporate law, bankruptcy law and litigation, and Pappalardo e Associati, a firm specialising in anti-trust and European Union law. Chairman: Offices held outside the Foncière des Régions group: ww Brioni Space SpA (foreign company) Sintonia Space SpA (foreign company), Delfin Sàrl (foreign company), Space Holding Srl (foreign company) ww AON Italia Srl (foreign company), Bolton Group International SRL (foreign company) Terms of office expired within the last five fiscal years: Director at foreign companies: ww Luxottica Group SpA (until 13 March 2014), Interpump Group SpA (until 13 March 2014), Editoriale L’espresso SpA (until 13 March 2014), Indesit Company SpA (until 13 March 2014), Space SpA (until 13 March 2014), Manuli Rubber Industries SpA (until 10 April 2014), Gruppo IPG Holding Srl (until 28 April 2014), Manifatture Lane Gaetano Marzotto & Figli SpA (ended in 2010), Prysmian SpA (ended in 2011), Manetti & Roberts SpA (ended in 2011) Number of shares held at 31 December 2014: 1 Offices held within Foncière des Régions group: Director Member of the Strategic and Investment Committee Vice-Chairman of foreign companies: Member of the Appointments and Remunerations Committee ww Banca Nazionale del Lavoro SpA (until 14 March 2014) Date of appointment: 31 January 2011 Member of the Supervisory Board: Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 ww Foncière des Régions SA (public company – form changed in 2011) Foncière des Régions 118 Reference Document 2014 Management report 2014 Corporate officers PREDICA 50/56, rue de la Procession – 75015 Paris Member of the Supervisory Board: Paris Commercial and Trade Register 334 028 123 ww EFFI-Invest I SCA, EFFI-Invest II SCA, Interfimo SA, Lion SCPI, Ofelia SAS, Unipierre Assurance SCPI, CA Grands Crus SAS, Sopresa (SA) Number of shares held at 31 December 2014: 4,328,251 Co-Manager: Offices held within Foncière des Régions group: ww Predicare SARL Director Non-voting member of the Board of Directors – permanent representative: Date of appointment: 31 January 2011 ww Siparex Associés SA Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Chairman: ww Citadel SAS, Citadel Holding SAS Member of the Supervisory Committee: Other offices held within the Foncière des Régions group: ww Fondis SCI Member of the Compensation Committee: Member of the Supervisory Board: ww Parholding SAS, Logitis Sppicav ww Foncière des Murs SCA (public company) Director: Terms of office expired within the last five fiscal years: ww Urbis Paris SA, Foncière Développement Logements – FDL SA (public company), B2 Hotel Invest. OPPCI Member of the Supervisory Board: ww Board of Directors, Foncière des Régions SA (public company – form changed in 2011) Offices held outside the Foncière des Régions group: Director: Director: ww Altapar, B. Immobilier, CAAM Convertibles Euroland, Financière du Carrousel, Crédit Agricole Immobilier Promotion (ex-Unimo), Dolcea Vie, Domaine Listel, Foncière Régions Dynamique, Foncière Paris France, SCI Holding Dalhia, Cyrius Conseil ww Altarea SCA (public company), AEW Immocommercial OPCI, CAA Commerces 2 OPCI, Aéroport de Paris SA (public company), Gecina (public company), Eurosic SA (public company), Icade SA (public company), Previseo Obsèques SA, La Médicale de France SA, CAAM Mone Cash SICAV, Predica Habitation OPCI, Predica Bureaux OPCI, Predica Commerces OPCI, River Ouest OPCI, Sanef (HIT) SA, Medica SA (public company), Lesica SAS, Messidor OPCI Foncière des Régions 119 Reference Document 2014 1 1 Management report 2014 Corporate officers Jérôme Grivet Born 26 March 1962 in London French national Business address: 16/18, boulevard de Vaugirard – 75015 Paris Main function: Chief Executive Officer of Crédit Agricole Assurances and Predica Permanent representative of Crédit Agricole Assurances SA, Director: Biography: Jérôme Grivet is a graduate of ESSEC, the Paris Institute of Political Sciences (Sciences Po), and of the ENA. He spent his early career in administration (general inspection of finances, advisor to the Prime Minister for European Affairs) and went on to join Crédit Lyonnais in 1998, first as Financial Director of the retail banking business in France, and then as Director of Strategy. He was Deputy General Manager of Calyon from 2007 to 2010. Jérôme Grivet is a member of the Executive Committee of Crédit Agricole S.A. At the end of 2010, he was named Chief Executive Officer of Predica and Chief Executive Officer of Crédit Agricole Assurances. ww Caci SA Permanent representative of Predica, member of the Supervisory Board: ww CA Grands Crus SAS Permanent representative of Predica, Chairman: ww Fonds Stratégique Participations SICAV Non-voting member of the Board of Directors: ww CA Immobilier, La Médicale de France SA Chairman: ww CA Life Greece SA (foreign company) Number of shares held at 31 December 2014: None Terms of office expired within the last five fiscal years: Offices held within Foncière des Régions group: Vice-Chairman: Permanent representative of Predica, Director ww BES Vida Member of the Strategic and Investment Committee Director: ww CA Indosuez Private Banking, CA Cheuvreux, Cedicam, Ubaf, Newedge Group, LCL Obligation Euro Member of the Appointments and Remunerations Committee Date of appointment: 31 January 2011 Deputy General Manager, member of the Executive Committee: ww Calyon Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Managing Director: ww CLSA BV, Stiching CLSA Foundation Permanent representative of Calyon, Director: Other offices held within the Foncière des Régions group: ww Fletirec None Permanent representative of Predica, Director: ww Siparex Associés, La Médicale de France Offices held outside the Foncière des Régions group: Director, Chairman of the Board of Directors: Permanent representative of Predica, member of the Supervisory Board: ww Spirica SA ww Cape Member of the Executive Committee: Chairman and Chief Executive Officer, Director: ww Crédit Agricole SA (public company) ww Mescas Chief Executive Officer: Chairman: ww Crédit Agricole Insurance SA (public company), Predica SA ww SNGI, CA Assurances Italie Holding Director: Chairman: ww Caagis SAS, Crédit Agricole Vita SpA (foreign company), Pacifica SA, Korian SA (public company), Icade SA (public company) Foncière des Régions ww Dolcea Vie Non-voting member of the Board of Directors: ww Aéroports de Paris 120 Reference Document 2014 Management report 2014 Corporate officers Pierre Vaquier Born 30 December 1956 in Bourganeuf (23) French national Business address: Cœur Défense, Tour B, La Défense 4 100, Esplanade du Général-de-Gaulle – 92932 Paris-La Défense Cedex Main function: Chief Executive Officer of Axa REIM Biography: Chairman of the Board of Directors: Pierre Vaquier has over 30 years of experience in finance and real estate investment. He is currently Chief Executive Officer of AXA REIM, where he chairs the Board of Directors and the Executive Committee. He is also Vice-Chairman and member of the Supervisory Board of Logement Français. Permanent representative of AXA Reim France: ww FDV Venture SA (foreign company) AXA Reim SGP SA, FDV Venture SA (foreign company) ww AXA Aedificandi SICAV Member of the Management Committee: ww Axa Suduiraut SAS Pierre Vaquier has held several positions at Paribas and at AXA in France and in the United States. He graduated from the H.E.C. in 1980 and became a Partner at the Paribas investment bank’s international department for two years. He then went to New York as Manager of real estate-related investment activities, before being named CEO of Paribas Properties Inc. until 1992, then Partner of Paribas Asset Management. Vice-Chairman and member of the Supervisory Board: ww Logement Français SA (formerly SAPE) Director: ww AXA Selectiv’immo SPPICAV, Axa Real Estate Investment Managers US LLC (foreign company), FDV II Participation Company SA, DV III General Partner SA, FSIF, Ahorro Familiar SA (foreign company) In 1993, he returned to AXA as Director of Development for AXA Immobilier in Paris. Chairman and member of the Supervisory Board: He became Chairman and CEO of Colisées Services (AXA group) in 1995. In 1999, he was named Chairman and CEO of AXA REIM. ww AXA Investment Managers Deutschland GmbH (foreign company) Director and Chairman of the Investments Committee: Pierre Vaquier is a member of the ”Royal Institution of Chartered Surveyors”. ww Carmilla SAS Member of the Supervisory Board: ww Sefricime Activité et Services SAS Number of shares held at 31 December 2014: 272 Terms of office expired within the last five fiscal years: Offices held within Foncière des Régions group: Director Director, Member of the Audit Committee and Member of the Investment Committee: Chairman of the Appointments and Remunerations Committee ww Mercialys SA (public company) Date of appointment: 31 January 2011 Director at foreign companies: Date of expiration of the term of office: General Meeting in 2015 to approve the financial statements for the fiscal year ending 31 December 2014 Chairman of the Board of Directors: ww EOIV Management Company, European Retail Venture SA, FDV II Participation Company SA ww AXA Reim Italia SARL (foreign company), Dolmea Real Estate SA Other offices held within the Foncière des Régions group: Permanent representative of AXA Reim France: None ww AXA Reim SGP SA, IPD France SAS Permanent representative of AXA France Vie, Director: Offices held outside the Foncière des Régions group: ww Segece SCS Director and Chief Executive Officer: Director: ww Axa Reim SA ww Drouot Pierre SPPICAV, Pierre Croissance SPPICAV, and Ugimmo SPPICAV Chairman and Chief Executive Officer: ww Axa Reim France SA Member of the Supervisory Board: Chairman: ww Foncière des Régions SA (public company – form changed in 2011) ww Colisée Gérance SAS Foncière des Régions 121 Reference Document 2014 1 1 Management report 2014 Corporate officers Micaela Le Divelec Lemmi Born on 3 June 1968 in Florence, Italy Italian national Business address: 6, Via Don Lorenzo Perosi – 50018 Scandicci (Florence) – Italy Main function: Executive Vice President and Chief Corporate Operations Officer of Gucci Foreign company Director: Biography: ww Caravel Pelli Pregiate SpA (until 15 October 2014), Design Management Srl (until 25 September 2014), G Commerce Europe SpA (ended in 2012), GT Srl (until 15 October 2014), Guccio Gucci SpA (until 26 May 2014), Kering Italia SpA (ended in 2011), Kering Service Italia SpA (ended in 2012), Luxury Goods Italia SpA (until 15 December 2014), Gucci Asia Company Limited (until 1 November 2014), Gucci Group (HK) LTD (until 1 November 2014), Gucci Group Watches Inc (until 1 November 2014), Gucci Group Guam Inc (until 1 November 2014), Gucci Australia (until 1 November 2014), Lux. Timepieces (UK) Ltd (until 1 November 2014), Gucci Macau Limited (until 1 November 2014), Lux. Timepieces Japan Ltd (until 1 November 2014), Gucci Malaysia (until 1 November 2014), Gucci New Zealand Ltd (until 1 November 2014), Gucci Singapore Ltd (until 1 November 2014), Lux. Timepieces Espana (until 1 November 2014), Gucci Thailand Limited (until 1 November 2014), Gucci Group Korea Ltd (until 1 November 2014) Micaela Le Divelec Lemmi Executive Vice-President CCOO at Gucci, member of the Kering group. She is responsible for compliance, legal affairs, human resources, safety and Corporate Social Responsibility (CSR) aspects. She was appointed in September 2014 as CEO of Richard Ginori (part of the Kering Group). Before being appointed to her current position, she was the Chief Financial Officer of Gucci and some of its subsidiaries in Italy, after having held various positions in the finance and management control department. She began her career as an auditor with Ernst & Young. Number of shares held at 31 December 2014: 90 Offices held within Foncière des Régions group: CEO of foreign companies: Director ww Branch Alex Mcqueen Trad. Ltd (ended in 2010), GG Luxury Goods Maximilianstrass (ended in 2010), GG Luxury Goods GmbH (ended in 2010) Member of the Audit Committee Date of appointment: 25 April 2012 Member of foreign companies: Date of expiration of the term of office: General Meeting of Shareholders of 2016 approving the annual financial statements for the year ended 31 December 2015 ww GPA SRL (formerly Real Estate INV. – until 15 October 2014) Chairman of the Board of foreign companies: ww Gucci Belgium (ended in 2010) Other offices held within the Foncière des Régions group: Chairman of the Board of Directors: None ww Gucci France SAS (ended in 2013) Offices held outside the Foncière des Régions group: ww Gucci Group Watches France (ended in 2013) None Chief Executive Officer: Terms of office expired within the last five fiscal years: Permanent representative of Gucci International NV, member of the Board: Chairman: ww Gucci Group Watches France (ended in 2011) Foreign company chairperson: ww Gucci Belgium (ended in 2013) ww Calzaturificio Flora Srl (until 15 October 2014), Caravel Pelli Pregiate SpA (until 15 October 2014), Conceria Blutonic SpA (until 15 October 2014), Design Management Srl (until 25 September 2014), Garpe Srl (until 5 May 2014), Gauguin Srl (until 5 May 2014), GPA Srl (-formerly Real Estate Inv.- until 15 October 2014), Guccio Gucci SpA (until 26 May 2014), G Commerce Europa SpA (ended in 2012), Ggw Italia Srl (formerly Deimos Srl – ended in 2012), GT Srl (until 15 October 2014) Foncière des Régions 122 Reference Document 2014 Management report 2014 Corporate officers Sylvie Ouziel Born 18 March 1970 in Boulogne-Billancourt (92) French national Business address: Königinstrasse 28 – Munich 80802 – Germany Main function: Chairperson and Chief Executive Officer of Allianz Managed Operations & Services (Amos) Biography: Other offices held within the Foncière des Régions group: Sylvie Ouziel has been the Chief Executive Officer of Allianz Managed Operations & Services (Amos) since 2012, the shared services entity set up by Allianz to build synergies amongst its various subsidiaries. None Sylvie Ouziel is a Centrale Paris graduate who rose to Deputy CEO World for Accenture Management Consulting (formerly Andersen Consulting), where she started her management career, and where she occupied various leadership posts over twenty years affording her heavy exposure to the international scene. ww Allianz Managed Operations & Services (Amos) (foreign company) Offices held outside the Foncière des Régions group: Chairman and Chief Executive Officer: Member of the Board: ww AMOSA (Amos of America – foreign company) Terms of office expired within the last five fiscal years: Number of shares held at 31 December 2014: 400 Member of the Board of Directors: Aperam (ended in 2011) Offices held within Foncière des Régions group: Director Member of the Audit Committee (since 26 February 2014) Date of appointment: 24 April 2013 Date of expiration of the term of office: General Meeting in 2017 to approve the financial statements for the fiscal year ending 31 December 2016 Foncière des Régions 123 Reference Document 2014 1 1 Management report 2014 Corporate officers Sigrid Duhamel Born on 1 December 1965 in Paris (75) French national Business address: 11, place Édouard-VII, 75009 Paris Main function: Chair of CBRE Global Investors France Biography: Other offices held within the Foncière des Régions group: Sigrid Duhamel has been Chairwoman of CBRE Global Investors France since 1 December 2014. Previously, she was Group Real Estate Director at PSA Peugeot Citroën. None After graduating from ESTP in 1990, she joined Bouygues Construction and spent 4 years managing major industrial renovation and construction projects. She then picked up an MBA at INSEAD and joined the US group, United Technologies, where she spent three years managing mergers and acquisitions. After four years’ experience in executive recruitment at Eric Salmon & Partners, in 2005, she moved into the real estate business at Tishman Speyer in London, where she spent four years in charge of business development in Europe. In 2008, she joined Carrefour Property, where she was international portfolio director for three years. Member of the Supervisory Board: Offices held outside the Foncière des Régions group: ww SA Selectirente (public company) Chairman: ww Urban Land Institute (ULI) France (association) Member of the Board of Directors: ww Association des Directeurs Immobiliers (ADI) Terms of office expired within the last five fiscal years: None Number of shares held at 31 December 2014: 1 Offices held within Foncière des Régions group: Director Date of appointment: 28 April 2014 Date of expiration of the term of office: General Meeting in 2018 to approve the financial statements for the fiscal year ending 31 December 2017 Foncière des Régions 124 Reference Document 2014 Management report 2014 Information about the company and its interests 1.15. INFORMATION ABOUT THE COMPANY AND ITS INTERESTS We have presented the main activities of our principal subsidiaries and investments in point 1.6 of this report. 1.15.1. Group organisation ww Asset development services: this function consists of assisting group companies in activities to enhance the value of assets in the portfolio through real estate development. This function requires extensive expertise in real estate development Foncière des Régions is an investor in the office real estate sector in France and Italy (via its subsidiary Beni Stabili), with investments in commercial and residential real estate companies: ww investments in commercial real estate through Foncière des Murs (SIIC), which owns service sector properties in France, Germany, the Netherlands, Belgium and Portugal, through Foncière Europe Logistique (a private company), which owns logistics platforms and retail premises in France, and through Urbis Park (a private company), which owns parking facilities ww Property Management services: management of all aspects of the life cycle of real estate assets (payments, ongoing and preventive maintenance, etc.). Property Management requires extensive expertise in leases, expense management, technical management, etc. ww an investment in residential real estate in France via Foncière Développement Logements (SIIC) and in Germany via Immeo AG (a private company). For portfolio transactions on large projects, Foncière des Régions has a dedicated team, via its subsidiary, Foncière des Régions Développement. As at 31 December 2014, the Foncière des Régions group consisted of 280 separate legal entities, of which 116 were in the commercial sector, 74 in retail premises, six in the logistics sector, 64 in the residential sector, 14 in parking facilities and six were service companies. As regards rental property, the Property Management of Foncière des Régions, Foncière des Murs et Foncière Europe Logistique (except for the German and Luxembourg real estate portfolio), is provided by Foncière des Régions Property, a subsidiary of Foncière des Régions, which constitutes a common platform consisting of central services and personnel operating in regional agencies. Foncière Développement Logements (FDL), which had managed its French residential portfolio directly since 1 January 2009, turned over the management of its assets to Quadral Property, effective as of 1 April 2012. Foncière des Régions has teams responsible for managing its growth and for the management of its assets throughout the territory. Each main group company relies upon a dedicated asset management team. This services provider activity developed within the Foncière des Régions group concentrates on enhancing portfolio value through: The service agreements are simple and non-exclusive contracts. The specialisation of the various sector companies of the Foncière des Régions group by type of asset means that the companies concerned are not exposed to potential conflicts of interest, in terms of investments, divestments or asset management. ww Asset Management services: this function focuses on the real estate strategy to be adopted for the assets held (disposal, renovations, financial management, etc.). Asset by asset, it consists of creating value to meet the expectations of the Group’s companies by optimizing the ”profitability/risk” ratio Foncière des Régions 125 Reference Document 2014 1 1 Management report 2014 Information about social and environmental impact 1.15.2. Results of subsidiaries and investments The table of results of subsidiaries and investments is shown in the individual financial statements (3.5.6.6.). 1.15.3. Information on cross-shareholding None. 1.15.4. Extrordinary events and litigation The Group may be involved in court or administrative proceedings and is liable to be subject to a notice of deficiency from the French Tax administration. To the company’s knowledge, to date, except for the main proceedings under way set out in 3.2.2.9.4 and 3.2.4.12 in part 3, there are no other extraordinary events or litigation likely to materially affect the portfolio, financial position, business or results of Foncière des Regions or its subsidiaries. 1.15.5. Ratings On 28 September 2012, Foncière des Régions received a rating of BBB-, outlook stable by rating agency Standard & Poor’s. 1.16. INFORMATION ABOUT SOCIAL AND ENVIRONMENTAL IMPACT Information on social and environmental impact is discussed in detail in part two of the Reference Document, ”Sustainable Development”. 1.17. AGREEMENTS OF ARTICLE L. 225-102-1 LAST PARAGRAPH OF THE FRENCH COMMERCIAL CODE Pursuant to the provisions of Article L. 225-102-1, last paragraph of the French Commercial Code, there are no agreements concluded, directly or via an intermediary, between a manager, director, or shareholder owning over 10% of the company’s voting rights, and a subsidiary whose capital is owned over 50% directly or indirectly by the company, it being specified that the stipulations of the aforementioned article do not include agreements relating to ongoing transactions and those concluded under normal conditions. Foncière des Régions 126 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 1.18. REPORT OF THE BOARD OF DIRECTORS ON THE DRAFT RESOLUTIONS TO BE SUBMITTED TO THE ORDINARY AND EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS ON 17 APRIL 2015 Ladies and Gentlemen, We have convened an Ordinary and Extraordinary General Meeting of Shareholders for the purpose of submitting draft Resolutions to you. The purpose of this report is to provide you with comments on these drafts, the complete text of which will later be sent to you in the company Reference Document that will be submitted to the Autorité des Marchés Financiers in accordance with legal and regulatory requirements. 1.18.1. Ordinary resolutions Resolutions 1 to 21 concern the sphere of the Ordinary General Meeting of Shareholders. 1.18.1.1. Approval of the annual and consolidated financial statements, allocation of income and dividend (Resolutions 1, 2 and 3) This technical agreement was entered into as part of the separation of the French and German structures in the Residential portfolio under the terms of which Foncière des Régions acquired 54.96% of the capital of the German company Immeo AG through its fully-owned German subsidiary Immeo Rewo. They acquired this company from Batisica, a subsidiary of Foncière Développement Logements – FDL. As part of this transaction, Batisica granted a vendor loan in the amount of €536,181,663 to Immeo Rewo and concurrently reduced its capital. Foncière Développement Logements – FDL launched a public share buyback offer to its shareholders to which Foncière des Régions subscribed. The payment delegation agreement defines the conditions under which Immeo Rewo delegates Foncière des Régions to pay its receivable corresponding to the vendor loan granted by Batisica, thus offsetting the amounts due for the acquisition of shares of Immeo AG by Immeo Rewo and those received by Foncière des Régions for the pubic buyout offer of shares of Foncière Développement Logements – FDL. As an agreement entered into between companies with co-venturers, the sale should be be approved in accordance with Article L. 225-38 of the French Commercial Code. The drafts of Resolutions 1 and 2 concern approval of the annual and consolidated financial statements for the fiscal year ending 31 December 2014, approved by the Board of Directors on 19 February 2015, in accordance with the provisions of Article L. 232-1 of the French Commercial Code. In Resolution 3, it is proposed to you that an allocation be made of the income for the 2014 fiscal year in the amount of €186,513,136.94 and that a dividend be distributed in the unit amount of €4.30 per share. The dividend for the 2014 fiscal year will be removed from the share on 24 April 2015 and will be paid out on 28 April 2015. Based on the number of existing shares as at 31 December 2014, i.e. 62,683,557 shares, a total dividend of €269,539,295.10 will therefore be awarded. ww Service agreements entered into on 10 and 18 December 2014 between Foncière des Régions and Immeo Wohnen Service GmbH 1.18.1.2. Approval of the commitments covered in Articles L. 225-38 and L. 225-42-1 of the French Commercial Code (Resolutions 4, 5, and 6) This contract, which concluded after Immeo AG was acquired by Immeo Rewo pertains to Foncière des Régions providing assistance for budgetary, financing, accounting, treasury, legal, Chief Operating Officer, internal audit and communication advising and reporting matters in order to optimise the management of the Immeo group and adapts its operating procedure. It should be approved in accordance with Article L. 225-38 of the French Commercial Code. The purpose of Resolution 4 is to approve (i) the special Statutory Auditors’ report on the agreements described in Article L. 225-38 of the French Commercial Code, as well as (ii) agreements entered into or executed by the company during the fiscal year ended 31 December 2014. For more information, please see the Statutory Auditors’ report concerning regulated agreements, appearing in part 3 of the Reference Document, entitled ”Financial Information”. ww Amendment no. 3 to the network expense agreement entered into between Foncière des Régions and Foncière Développement Logements – FDL on 14 February 2014 It involves an amendment to the network expense agreement under the terms of which the company reinvoices certain centralised services to Foncière Développement Logements – FDL. The purpose of this amendment was to adapt the distribution of network costs to change the way the Foncière des Régions group is organised, starting from 1 January 2014, in particular, following the centralisation of certain services Details of the regulated party agreements entered into in the year ended 31 December 2014, and not yet subject to the approval of the General Meeting are provided below: ww Payment delegation agreement entered into on 12 June 2014 between Foncière des Régions and the companies Immeo Rewo and Batisica Foncière des Régions 127 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 to a table of preset criteria. If the average rate of fulfilment of the objectives over the last three years is less than 80%, the fraction of the severance pay linked to that criterion is not paid. Otherwise, the amount of the theoretical compensation will be adjusted by the average of the coefficients of achievement of the last three variable portions. at the parent company level. This rider updates the original agreement that was approved under the form of a regulated agreement. ww Amendments to the intra-group service agreements entered into between Foncière des Régions and some of its subsidiaries In any case, although the exceeding of one of the two fractions of the compensation may compensate for a possible deduction from the other fraction, the total amount of the end-of-office compensation is capped at two years of total remuneration. This cap rule applies to all forms of severance pay and includes any other compensation paid for any other reason at the end of a term of office, it being specified that the Chief Executive Officer and Deputy General Manager shall not receive any remuneration from Foncière des Régions other than that paid for their term of office. ww amendment no. 1 dated 19 December 2014 to the initial agreement entered into with FDL Deutschland effective 16 October 2006 concerning the assistance of Foncière de Régions in legal, administration, accounting and financial matters as well as for budgets and insurance ww amendment no. 1 dated 19 December 2014 to the initial agreement entered into with Gespar effective on 9 July 2004 concerning the assistance of Foncière de Régions in legal, administration, accounting and financial matters. As a result of the performance criteria listed above being set, the Board will be able, where appropriate, to reflect on the severance pay and the target and actual performance of the Chief Executive and Deputy Chief Executive. Since the targets that are the conditions for payment of the variable portion are themselves linked to operational performance, staying within budgets and implementing strategy, the compensation paid cannot help but be proportional to the results obtained, thus more fully meeting the requirements of the recommendations made by the Afep-Medef Code. In order to simplify management, these amendments were entered into to modify the procedures for continuing these agreements previously entered into for an automatically renewable fixed term and which are henceforth entered into as open-ended agreements. Resolutions 5 and 6 that we are proposing pertain to the renewal of the terms of office for the Chief Executive Officer and Deputy General Managers by the Board of Directors as of 1 January 2015, which implies that the conditional commitments made by Foncière des Régions in favour of Christophe Kullmann as Chief Executive Officer and Olivier Estève as Deputy General Manager shall be subject to approval by the General Meeting. These commitments correspond to compensation that could be paid to them in the event of termination of their functions as a result of a forced departure associated with a change in strategy or control, pursuant to the provisions of II and III of Article L. 233-16 of the French Commercial Code. The compensation of the Chief Executive Officer and Deputy General Manager were approved by the Board of Directors on 5 December 2014. The amount and the conditions for awarding this compensation were disclosed on 15 December 2014. 1.18.1.3. Consultation of shareholders on elements of individual remuneration due or allocated to the company’s executive officers for the year ended 31 December 2014 (Resolutions 7, 8, 9 and 10) To meet the recommendations of the Afep-Medef Code, the Board of Directors took the opportunity to exclude the long-term incentive plan (paid in performance shares) from the base for calculating the compensation amount henceforth. As a result, the theoretical compensation amount would be equal to 12 months of overall remuneration, including the fixed salary and the annual variable portion, plus one month of additional remuneration per year of seniority within the company for all functions combined. In accordance with Article 24.3 of the Afep-Medef Code, revised in June 2014, and with the guide to its application compiled by the High Committee on corporate Governance, the Board of Directors is pleased to present the remuneration elements due to each of the company’s executive officers for the fiscal year ended on 31 December 2014. In accordance with the provisions of Article L. 225-42-1 of the French Commercial Code and the recommendations of the Afep-Medef Code, this compensation would be conditional upon fulfilling challenging internal and external performance criteria: By voting on Resolutions 7 to 10, you have the opportunity to approve the remuneration elements described below: ww 50% of the theoretical compensation amount is linked to the change in NAV over the last three fiscal years prior to the cessation of functions: if the change in the EPRA NAV of Foncière des Régions is below 25% of the average REITs which make up the EPRA index, the fraction of the severance pay linked to this criterion will not be paid. Otherwise, the theoretical amount of this fraction of the compensation will be adjusted by the variation in the NAV for the period considered. ww Jean Laurent, Chairman of the Board of Directors (Resolution 7) ww Christophe Kullmann, Chief Executive Officer (Resolution 8) ww Olivier Estève, Deputy General Manager (Resolution 9), and ww Aldo Mazzocco, Deputy General Manager (Resolution 10). Please note that, should the General Meeting to be held on 17 April 2015 fail to give its approval on the advice of the Appointments and Remunerations Committee, the Board of Directors would be forced to decide on the matter at its next Meeting and would immediately publish a press release on the company website stating the follow-up that it intends to provide with regard to the expectations expressed by shareholders at the General Meeting. ww 50% of the theoretical benefit amount is linked to the achievement of target performance during the three years prior to the termination of office. The criteria for allocation of the target bonus are reviewed every year by the Appointments and Remunerations Committee, based on ambitious operational and strategic targets. Their achievement is assessed according Foncière des Régions 128 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 The general remuneration policy for executive officers and a detailed standardised presentation of said policy, are shown in 1.14.1. of the 2014 Reference Document. ww a balance between the various components, short term and long term, fixed and variable 1.18.1.3.1. Chairman of the Board of Directors’ remuneration for 2014 ww a variable portion based on objective quantifiable performance criteria that combine the interests of the organisation, its staff and its shareholders, at the same time providing an incentive for outperformance and a ”circuit breaker” system to sanction any deterioration of key company indicators ww a strong link between remuneration and operational performance The Chairman, in close coordination with the Chief Executive Officer, leads the Board of Directors and its Committees. He provides the Chief Executive Officer with help and advice in designing and implementing strategy. He ensures that all Directors are always kept fully notified of any information relevant to the strategy and its implementation. In close coordination with the Chief Executive Officer, he ensures that the quality of the Board’s relationships with the company’s shareholders, major partners or group customers, as well as with public authorities, institutional and regulatory authorities, the media and investors deemed to be economic players, is maintained. He helps to promote the image and values of Foncière des Régions, both inside and outside the Group. ww a financial alignment with the long-term interests of shareholders ww remuneration correctly situated in the market and designed to encourage loyalty. The Committee and the Board use industry-based benchmarks and general research studies simply to check that overall remuneration packages are in line with market rates. Fixed portion The Appointments and Remunerations Committee and the Board of Directors ensure, on a regular basis, by using benchmarks relating to Directors of SBF80 companies and those companies with equivalent stock market capitalisation to that of Foncière des Régions, supplemented by French and European sector-based research, that the amount of fixed remuneration paid to corporate officers is positioned correctly in relation to the market. As a matter of principle, the Board is keen only to review this remuneration at regular intervals and on fixed expiry dates, increases normally being associated with events affecting the company. Remuneration of the Chairman of the Board of Directors of Foncière des Régions was set on 31 January 2011 by the Board for his full term of office. It has not been reviewed since that date. It comprises a single fixed amount totalling €400,000 which includes attendance fees. In 2014, this €400,000 compensation broke down as follows: ww €362,000 fixed remuneration ww €7,000 benefits in kind (company car) The Chief Executive Officer’s fixed salary was, therefore, set in January 2011, at the commencement of his term of office, at €540,000. It remained unchanged in 2012, 2013 and 2014. ww €31,000 attendance fees (detailed in 1.14.2 of the 2014 Reference Document). Such fixed remuneration is not accompanied by any variable remuneration, performance bonus or remuneration paid in company shares. In 2011, the Board had also decided to gradually raise the Deputy General Manager’s fixed remuneration to €350,000 over a threeyear period. This level was reached in 2013 and Olivier Estève’s fixed remuneration will remain unchanged in 2014. This remuneration is in line with the average remuneration for non-executive chairmen in the SBF 120. It is noted that Jean Laurent is waiving his right to attendance fees for his participation in the Foncière des Régions’ Strategy and Investment Committee. In 2014, he also received €50,000 by way of attendance fees paid by Beni Stabili, an Italian subsidiary of Foncière des Régions, in which he has an active oversight role. Variable portion With respect to the variable portion of remuneration (bonuses), the Appointments and Remunerations Committee wished for each Director to be assessed and compensated on the basis of targets that are clear, precise, quantifiable and operational. These targets are determined every year, in February, by the Board of Directors based on proposals put forward by the Appointments and Remunerations Committee. They are determined according to the strategic plan, the budget approved by the Board of Directors for the year under way, and the company’s priorities at the time. 1.18.1.3.2. Remuneration of the Chief Executive Officer and the Deputy General Manager, France for 2014 The remuneration policy for the Chief Executive Officer and Deputy General Manager, France, is determined by the Board of Directors based on work carried out and proposals made by the Appointments and Remunerations Committee. This Committee met three times in 2014, to ensure the compliance of this policy with the principles listed by the latest changes to the Afep-Medef Code of corporate governance. The target bonus for the CEO equals 100% of his/her fixed annual salary. The target bonus for the Deputy General Manager in France equals 75% of the fixed annual salary. In an effort to provide differentiation, motivation and an incentive to outperform, provision is made for an upside of as much as 50% of the target bonus to reward performance that goes beyond the targets set at the beginning of the year. In an effort to align this with the interests of shareholders, the Committee proposes that this upside portion of the bonus be paid, if at all, not in cash but in bonus shares, which are to be conditional on the recipient remaining in the company’s employ for three years after the award. The Committee and the Board are particularly keen to follow these guidelines: ww the remuneration is granted exhaustively via all of its components: fixed portion, variable portion, allocation of performance shares, benefits in kind and, if applicable, attendance fees ww the basic principles sought are: Foncière des Régions 129 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 For 2014, the criteria for awarding the variable portion of the Chief Executive Officer’s compensation were set as follows: Finally, this ”circuit breaker” system provides for bonuses to be withheld in the event of a significant deterioration in the company’s performance over the year. For 2014, the ”circuit breaker” was based on a Loan To Value (LTV) threshold, the crossing of which would have entailed non-payment of the bonus. ww 70% for quantitative targets relating to recurring net income per share, net revalued assets per share, a strategic shift in focus on the portfolio and improving its quality, development projects, strengthening of German residential and hotels in Europe ww 30% for qualitative targets relating to management, leadership of European teams and CSR policy. On 11 February 2015, the Appointments and Remunerations Committee reviewed all these criteria using precise analytical frameworks, and recorded the following levels of attainment for each objective: Actual (in €K) % of bonus Min. EPRA RNI/share 15% 0 EPRA NAV/share 15% 0 40% 0 30% 100% Chief Executive Officer Quantitative = 70% of the variable Max. (as a % of target) 81 122 115% 93 81 122 88% 71 216 324 140% 302 0 162 243 140% 227 0 540 810 128% 694 Target (in €K) Strategic shift in focus on portfolio and quality improvement: improving environmental performance, arbitration of non-strategic activities and non-core assets, location Pipeline of real estate development – Offices France: deliveries (details, budget), creating value, committed projects Reinforcement of residential in Germany of hotels in Europe: acquisitions, partnerships Shift in focus: cost of debt, maturity structure Qualitative = 30% of the variable Management, leadership and development of France, Germany and Italy teams CSR policy TOTAL The details of these objectives cannot however be made public for reasons of confidentiality. The 2014 bonus for the Deputy General Manager was calculated as follows: Consequently, the Committee made a proposal to the Board, which was then approved on 19 February 2015, that the 2014 bonus should be paid at 128% of the target. This €694,000 variable part represents a 10% increase compared with 2013 and is 1% lower than in 2012. ww 80% based on quantitative targets: Recurring net income per share, net revalued assets per share (targets shared with the Chief Executive Officer), pre-marketing of ongoing development projects and launch of new pre-marketed projects, occupancy rate of assets, improvement of the portfolio’s energy and environmental performance, asset management, disposals plan. This variable remuneration of €540,000 will be paid in cash with the upside of €154,000 being paid in company shares allocated, at the end of the vesting period, in 2018. ww 20% based on qualitative criteria: management and leadership of real estate teams, crossover Group leadership, representation of Foncière des Régions vis-à-vis the sector and stakeholders of Foncière des Régions, leadership of the CSR policy. The remuneration component for Christophe Kullmann paid in cash has thus not increased from 2013 to 2014. His overall fixed and variable remuneration increased by 4.8%. This increase was paid in the form of a bonus share award for the upside part of the bonus, with these shares being delivered in 2018. Foncière des Régions 130 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 On 11 February 2015, the Appointments and Remunerations Committee reviewed all these criteria using precise analytical frameworks, and recorded the following levels of attainment for each objective: Actual (in €K) % of bonus Min. Target Max. (as a % of target) (in €K) EPRA RNI/share 15% 0 39 59 115% 45 EPRA NAV/share 15% 0 39 59 88% 35 50% 0 131 197 131% 172 20% 0 52 79 125% 66 100% 0 262 393 121% 317 Deputy General Manager Quantitative = 80% of the variable Marketing of development projects Launch of turnkey rentals Value creation on projects delivered Occupation rate Disposals Acquisitions Asset management: lease terms, changes in lease payments Disengagement from non-strategic activities Improvement of the portfolio’s energy performances Qualitative = 20% of the variable Management, leadership of real estate teams Internal and external representation CSR policy TOTAL The details of these objectives cannot however be made public for reasons of confidentiality. The principles used to award performance shares to corporate officers are as follows: Consequently, the Committee made a proposal to the Board, which was then approved on 19 February 2015, that the bonus should be paid at 121% of the target. This €317,000 variable part represents a 12% increase compared with 2013 and is 6% higher than in 2012. ww the allocation of bonus shares is a long-term incentive plan comprising a third component of remuneration, in addition to the fixed and variable portions of salary This variable remuneration of €262,000 will be paid in cash with the upside of €55,000 being paid in company shares awarded, at the end of the vesting period, in 2018. ww this delay, suggested by the Appointments and Remunerations Committee, makes it possible to award shares contingent on the achievement of operational results and the achievement of individual targets, and to determine performances also in consideration of the closing of the accounts for year N ww for executive officers, the LTI for year-N is awarded once the accounts are closed, at the start of year N+1 The remuneration component for Olivier Esteve paid in cash has thus not increased from 2013 to 2014. His overall fixed and variable remuneration increased by 4.4%. This increase was paid in the form of a bonus share award for the upside part of the bonus, with these shares being delivered in 2018. ww the Appointments and Remunerations Committee, in setting this annual allocation period for share awards to corporate officers, has made it possible to avoid any windfall effect through any share price volatility. This long-term incentive plan has the following aims as regards the recipients of the shares: Long-term incentive plan As regards the long-term incentive (LTI) component of the remuneration, the Appointments and Remunerations Committee proposed on 19 February 2015 to the Board of Directors, which approved the proposal that performance-based bonus shares be allocated under the following conditions: ww employee retention: shares are not definitively allocated until the end of the vesting period, on the condition that beneficiaries are still employed by the company ww motivation and involvement: share values ultimately depend on the company’s performance in its sector, which is reflected in the share price ww the share vesting period shall be three years in France and four years in Italy, counting from the date of the Board’s allocation decision ww alignment of Director’s interests with those of the shareholders: shares are only definitively allocated if the performance criteria are met. ww the share retention period shall be two years in France from the time of their vesting. In Italy, beneficiaries shall not be subject to any mandatory share retention period. Foncière des Régions 131 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 100% of share awards are subject to the following performance criteria, each analysed over the three-year vesting period, given that the number of shares awarded, subject to performance requirements, may not exceed the number listed at the time of allocation: 50% Presence requirement and market performance condition: wwOverall stock market performance of Foncière des Régions in relation to the EPRA index, defined as the change in the share price over the reference period, taking account of all dividends or interim dividends (gross) reinvested on the distribution date or other distributions reinvested on the distribution date. wwThe performance rate will be applied to the number of shares. 50% Presence requirement and internal performance condition not affected by the market: wwThe number of performance shares is weighted by a coefficient corresponding to the average rate of achievement of the bonus objectives between the year of allocation and the year preceding the acknowledgement of the achievement of the performance target. wwThis average performance rate will be applied to the target number of shares. Share retention obligation for executive officers These conditions combine external and internal performances, thus providing shareholders with assurances that: ww it is also linked to the company’s operating performance: yearly bonuses are linked to targets in line with budgets, the implementation of the strategy, growth of indicators, the financial policy, etc. The Board of Directors of Foncière des Régions has set a retention obligation of 50% for performance shares throughout the term of office, until executive officers hold shares equivalent to two years’ worth of fixed remuneration. Beyond that threshold, Directors and officers will again be free to transfer shares. This share retention obligation ensures a long-term alignment between corporate officers and shareholders. The LTI 2014 distributed in February 2015 took place in line with all of these principles. Attendance fees ww that Directors’ long-term compensation is directly linked to Foncière des Régions’ stock market performance The Chief Executive Officer is a Director of Beni Stabili, a 48.31% controlled Italian subsidiary of Foncière des Régions. As such, he received attendance fees for his directorship, amounting to €56,000 in 2014. The number of shares allocated is as follows: ww Christophe Kullmann: 13,000 performance shares (potentially amounting to a maximum of 0.02% of equity) ww Olivier Estève: 7,000 performance shares (potentially amounting to a maximum of 0.01% of equity) The Chief Executive Officer and Deputy General Manager, France, received €9,500 and €9,300 respectively, by way of attendance fees paid by the Group’s French subsidiaries. The number of shares awarded is lower than in 2013 (15,000 and 8,000 respectively). This drop is due to the rise in the Foncière des Régions share price of 39% in one year, which led the Appointments and Remunerations Committee to suggest to the Board that the number of shares allocated be decreased. The Board has decided that, as of 2015, corporate officers will no longer receive attendance fees from French subsidiaries. Global position of such compensation in the marketplace The number of performance shares awarded to corporate officers accounted for 15% of all shares awarded for 2014. Chief Executive Officer The overall remuneration for 2014 paid to the Chief Executive Officer, including all of these components (€2,010,000) is below the average (€2,359,000) paid to the top executive directors of SBF 80 companies. Executive Officers receiving performance shares have undertaken not to hedge their risk. The performance conditions for shares subject to said condition were reviewed for the first time in 2015. The Appointments and Remunerations Committee noted that the overall stock market performance of Foncière des Régions exceeded that of the EPRA Eurozone index, and that the attainment rate of these targets over the period exceeded the target, both for Christophe Kullmann and Olivier Estève. Therefore, all shares awarded in February 2012 (8,900 shares for Christophe Kullmann and 5,000 shares for Olivier Estève) were received in February 2012. Since the start of the term of office, i.e. from 2011 to 2014 inclusive, the cash part of the remuneration remained stable. The par-value increase from 2013 to 2014 affected the non-cash and long term part paid in performance shares. It comes from a rise in the bonus, particularly the rise in the Foncière des Régions share price (39% in one year). Finally, it is noted that since 2008, the Board of Directors, on the recommendation of the Appointments and Remunerations Committee, has put an end to schemes for allocation of stock options that were previously activated in parallel with the schemes for allocation of bonus shares. Foncière des Régions 132 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 The tables below show the change in the cash/non-cash mix from 2013 to 2014. 2013 2014 32% No Cash 42% 68% No Cash Cash 58% Cash The change in the fixed/variable/LTI mix between 2013 and 2014 illustrates the same phenomenon. 2013 28% LTI 2014 33% 42% LTI Fixed 37% Fixed 30% 30% Variable Variable 68% of the remuneration paid to the Chief Executive Officer is subject to performance conditions. Deputy General Manager, France The overall remuneration for 2014 paid to the Deputy General Manager (€1,070,000) is in line with the average (€1,031,000) paid to peers from SBF 120 companies. The cash part of the remuneration remained stable in 2014 compared with 2013. The par-value increase from 2013 to 2014 affected the non-cash and long term part paid in performance shares. It comes from a rise in the bonus, particularly the rise in the Foncière des Régions share price (39% in one year). The tables below show the change in the cash/non-cash mix from 2013 to 2014. 2013 2014 30% No Cash 37% No Cash Cash 70% Cash Foncière des Régions 63% 133 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 The change in the fixed/variable/LTI mix between 2013 and 2014 illustrates the same phenomenon. 2013 2014 28% 33% 42% LTI LTI Fixed 37% Fixed 30% 30% Variable Variable 63% of the remuneration paid to the Deputy General Manager is subject to performance conditions. Plurality of employment contract and holding office Optional supplementary pension schemes or non‑compete clause Pursuant to the Afep-Medef recommendation, which provides that: ”when a Director becomes a corporate officer of the company, [it is recommended] that their employment contract with the company is terminated, or that they resign.”, the employment contract of Christophe Kullmann was terminated by joint agreement between Foncière des Régions and Mr Kullmann, on 26 November 2008, without payment of any compensation. No Company Officer within the Group has a specific defined benefit or defined contribution retirement scheme, nor a noncompete clause. 1.18.1.3.3. Remuneration of the Deputy General Manager, Italy for 2014 Christophe Kullmann has since that date received GSC unemployment insurance. Aldo Mazzocco, Deputy General Manager, Italy of Foncière des Régions, earns fixed and variable remuneration from Beni Stabili as Chief Executive Officer of this company. The remuneration is determined by the Board of Directors of Beni Stabili, on the basis of a proposal put forward by the Beni Stabili Appointments and Remunerations Committee. It remained stable in 2014 compared to 2013. Details are provided in the Foncière des Régions’ Reference Document. He also has supplementary group mutual insurance covering health-care expenses. He does not benefit from the Group Incentive Plan. Similarly, the employment contract with Olivier Estève, Deputy General Manager, was terminated on 1 November 2012, without payment of compensation. Since that date, he also benefits from GSC unemployment insurance, as well as supplementary group mutual insurance covering health-care expenses. He benefitted for the last time in 2013 from the Group’s 2012 incentive plan. Under its long-term incentive plan, Foncière des Régions awards Aldo Mazzocco performance shares, which directly aligns his corporate office at Foncière des Régions with the interests of the company’s shareholders. End-of-service benefit For 2014, this long-term incentive stood at 5,500 bonus shares, 100% subject to the same performance criteria as those of the Chief Executive Officer and Deputy General Manager, France. After the abandonment without compensation of their employment contracts, which provided for the payment of a termination benefit in the event of forced departure, the Board of Directors proposed implementing an end-of-service benefit for the Chief Executive Officer and the Deputy General Manager. This award, made in February 2015, potentially amounts to a maximum of 0.009% of the capital. The par value increase in Aldo Mazzocco’s overall remuneration from 2013 to 2014, as indicated in the Reference Document, affected the non-cash and long term part paid in performance shares. It comes from a rise in the Foncière des Régions share price (39% in one year). Such benefit would be paid only in the event of forced departure due to a change of control or a change of strategy, which would exclude cases in which they were to leave the company at their own initiative, change functions within the Group or be able to claim their retirement rights in short order. Aldo Mazzocco does not have the benefit of a severance pay clause in the event of forced departure under the terms of his appointment to office at Foncière des Régions. Compensation for the Chief Executive Officer and Deputy General Manager are covered in Resolutions 5 and 6. Foncière des Régions 134 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 SUMMARY TABLE OF THE REMUNERATION OF CHRISTOPHE KULLMANN, CHIEF EXECUTIVE OFFICER, FOR 2014 Amounts, or valuation for accounting purposes, subject to vote Presentation Fixed remuneration €540,000 paid in 2014 The Chief Executive Officer’s fixed salary was set in January 2011, at the commencement of his term of office, at €540,000. It was unchanged during the entire term, from 2011 to 2014. Annual variable remuneration €694,000 awarded, including €540,000 paid in 03/2015 The target variable remuneration equals 100% of the fixed annual salary. An upside of as much as 50% of the target, is provided for in the event of objectives being exceeded. In an effort to align this with the interests of shareholders, the Committee proposes that this upside portion of the bonus be paid, if at all, not in cash but in bonus shares, which are to be conditional on the recipient remaining in the company’s employ for three years after the award. Finally, a "circuit breaker" provides for bonuses to be withheld in the event of a significant deterioration in the company’s performance over the year. For 2014, passing the Loan To Value (LTV) ratio threshold would have entailed the non-payment of bonuses. Further to the 2014 performance review described above, the Board approved a bonus representing 128% of the target. This bonus is increasing 10% from 2013 and less than 1% from 2012. This variable remuneration of €540,000 is paid in cash with the upside of €154,000 being paid in company shares awarded, at the end of the vesting period, in 2018. The remuneration paid in cash thus remained unchanged between 2011 and 2014. Deferred variable remuneration €0 Not applicable Multiannual variable remuneration €0 Not applicable Extraordinary remuneration €0 Not applicable Share options N/A Not applicable The Board of Directors has not offered share subscription options since 2008. Performance shares €664,000 (valuation for accounting purposes) The principles used to award performance shares are described below. 100% of share awards are subject to the following performance criteria, each analysed over the three-year vesting period and indicated in the report above. The number of performance shares awarded to the Deputy General Manager, Italy, for 2014, reported as a percentage of equity, potentially amounts to a maximum of 0.02% of equity. The 2014 award (in February 2015) was made within the context of the resolution adopted by the General Meeting on 28 May 2014, granting the Board of Directors the option to award bonus shares to employees and corporate officers, amounting to a maximum of 0.5% of the share capital. The Board of Directors of Foncière des Régions has set a retention obligation of 50% for bonus shares throughout the term of office, until the Chief Executive Officer holds shares equivalent to two years’ worth of fixed remuneration. Attendance fees €65,000 The Chief Executive Officer is a Director of Beni Stabili, a 48.3%-controlled Italian subsidiary of Foncière des Régions. As such, in 2014, he received €56,000 in attendance fees for his directorship. He also received €9,500 in attendance fees paid by the Group’s listed French subsidiaries. The Board has decided that, starting from 2015, corporate officers will no longer receive attendance fees from French subsidiaries. Valuation of benefits of any kind €47,000 This amount primarily comprises a company car and GSC unemployment insurance. Elements of remuneration due for the fiscal year ended Breakdown of overall remuneration The breakdown is provided in the report appearing above. Foncière des Régions 135 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 Elements of remuneration due or granted for the fiscal year ended which are subject, or have been subject, to a vote by the General Meeting under the related party agreements and commitments procedure Amount subject to a vote Severance pay €0 The potential benefits, as described above, would only be paid in the event of forced departure due to a change of control or a change of strategy, which would exclude cases in which the Chief Executive Officer were to leave the company at his own initiative, change functions within the Group or be able to claim his retirement rights in short order. It was approved by the Board of Directors on 5 December 2014 and will be subject to the approval of shareholders at the General Meeting on 17 April 2015, by voting on Resolution 5. Compensation for non-compete clause Not applicable There is no non-compete clause. Supplementary pension scheme €0 No supplementary pension scheme is in place. Employment contract €0 There is no employment contract. Presentation SUMMARY TABLE OF THE REMUNERATION OF OLIVIER ESTÈVE, DEPUTY GENERAL MANAGER, FOR 2014 Elements of remuneration due for the fiscal year ended Amounts, or valuation for accounting purposes, subject to vote Presentation Fixed remuneration €350,000 paid in 2014 In 2011, the Board decided to gradually raise the Deputy General Manager’s fixed remuneration to €350,000 over a three-year period. This level was reached in 2013 and Olivier Estève’s fixed remuneration will remain unchanged in 2014. Annual variable remuneration €317,000 awarded including €262,000 paid in 03/2015 The target variable remuneration equals 75% of the fixed annual salary. An upside of as much as 50% of the target, is provided for in the event of objectives being exceeded. In an effort to align this with the interests of shareholders, the Committee proposes that this upside portion of the bonus be paid, if at all, not in cash but in bonus shares, which are to be conditional on the recipient remaining in the company’s employ for three years after the award. Finally, a ”circuit breaker” provides for bonuses to be withheld in the event of a significant deterioration in the company’s performance over the year. For 2014, passing the Loan To Value (LTV) ratio threshold would have entailed the non-payment of bonuses. Further to the 2013 performance review described above, the Board ordered a 2014 bonus representing 121% of the target. This variable remuneration of €262,000 is paid in cash with the upside of €55,000 being paid in company shares awarded, at the end of the vesting period, in 2018. Deferred variable remuneration €0 Not applicable Multiannual variable remuneration €0 Not applicable Extraordinary remuneration €0 Not applicable Share options N/A Not applicable The Board of Directors has not offered share subscription options since 2008. Foncière des Régions 136 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 Elements of remuneration due for the fiscal year ended Amounts, or valuation for accounting purposes, subject to vote Presentation Performance shares €357,000 (valuation for accounting purposes) The principles used to award performance shares are described below. 100% of the shares granted are subject to performance criteria, identical to those granted to the Chief Executive Officer. The number of performance shares awarded to the Deputy General Manager, Italy, for 2014, reported as a percentage of equity, potentially amounts to a maximum of 0.01% of share capital. The 2014 award (in February 2015) was made within the context of the resolution adopted by the General Meeting on 28 May 2014, granting the Board of Directors the option to award bonus shares to employees and corporate officers amounting to a maximum of 0.5% of the share capital. The Board of Directors of Foncière des Régions has set a retention obligation of 50% for bonus shares throughout the term of office, until the Deputy General Manager holds shares equivalent to two years’ worth of fixed remuneration. Attendance fees €9,000 The Deputy General Manager received €9,300 in attendance fees paid by the Group’s listed French subsidiaries. The Board has decided that, starting from 2015, corporate officers will no longer receive attendance fees from French subsidiaries. Valuation of benefits of any kind €36,000 This amount primarily comprises a company car and GSC unemployment insurance. Breakdown of overall remuneration The breakdown is provided in the report appearing above. Elements of remuneration due or granted for the fiscal year ended which are subject, or have been subject, to a vote by the General Meeting under the related party agreements and commitments procedure Amount subject to a vote Severance pay €0 This potential benefit is exactly the same as that of the Chief Executive Officer. It is described in the report below. It was approved by the Board of Directors on 5 December 2014 and will be subject to the approval of shareholders at the General Meeting on 17 April 2015, by voting on Resolution 6. Remuneration for non-compete clause Not applicable There is no non-compete clause. Supplementary pension scheme €0 No supplementary pension scheme is in place. Employment contract €0 There is no employment contract. Foncière des Régions Presentation 137 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 SUMMARY TABLE OF THE REMUNERATION OF ALDO MAZZOCCO, DEPUTY GENERAL MANAGER, FOR 2014 Elements of remuneration due for the fiscal year ended Amounts, or valuation for accounting purposes, subject to vote Fixed remuneration Not applicable Not applicable Aldo Mazzocco earns fixed and variable remuneration from Beni Stabili as Chief Executive Officer of this company. The remuneration is determined by the Board of Directors of Beni Stabili, on the basis of a proposal put forward by the Beni Stabili Appointments and Remunerations Committee. Details are provided in the Reference Document. Annual variable remuneration Not applicable Not applicable Deferred variable remuneration Not applicable Not applicable Multiannual variable remuneration Not applicable Not applicable Extraordinary remuneration Not applicable Not applicable Share options Not applicable Not applicable Performance shares €255,000 (valuation for accounting purposes) The principles used to award performance shares are described below. 100% of share awards are subject to the same performance criteria as those set for the Chief Executive Officer, each analysed over the three-year vesting period and shown in the report above. The number of performance shares awarded to the Deputy General Manager, Italy, for 2014, reported as a percentage of equity, potentially amounts to a maximum of 0.009% of share capital. The 2014 award (in February 2015) was made within the context of the resolution adopted by the General Meeting on 28 May 2014, granting the Board of Directors the option to award bonus shares to employees and corporate officers amounting to a maximum of 0.5% of the share capital. The Board of Directors of Foncière des Régions has set a retention obligation of 50% for bonus shares throughout the term of office, until the Deputy General Manager holds shares equivalent to two years’ worth of fixed remuneration. Attendance fees €0 Not applicable Valuation of benefits of any kind €0 Not applicable Presentation Elements of remuneration due or granted for the fiscal year ended which are subject, or have been subject, to a vote by the General Meeting under the related party agreements and commitments procedure Amount subject to a vote Severance pay €0 Aldo Mazzocco does not have the benefit of a severance pay clause in the event of forced departure under the terms of his appointment to office at Foncière des Régions. Compensation for non-compete clause €0 Not applicable Supplementary pension scheme €0 No supplementary pension scheme is in place. Employment contract €0 There is no employment contract with Foncière des Régions. Foncière des Régions Presentation 138 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 1.18.1.4. Renewal of terms of Directors (Resolutions 11 to 18) Mr Sergio Erede did not seek renewal of his term expiring at the end of the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015. The company Aterno also did not seek renewal of its term, and the appointment of Mr Romolo Bardin who represented it, is being presented to you. The terms of office for the Directors appointed on 31 January 2011 expire at the end of the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015, under Resolutions 11 to 18, you will be asked to renew the terms of office for the below-mentioned Directors. In order to set up regular and seamless staggering of the terms of office of Directors, the Board of Directors, upon proposal from the Appointments and Remunerations Committee, at its meeting on 19 February 2015, determined the duration for staggering the different terms of office for Directors whose renewal or appointment is proposed by the General Meeting, proposing to exceptionally reduce the duration of some of these terms of office, over two or three years, rather than four years. 1.18.1.5. Appointment of Mr Romolo Bardin and Ms Delphine Benchetrit as Directors (Resolutions 19 and 20) In Resolution 19, it is proposed that you appoint Mr Romolo Bardin as Director of the company. Subject to the adoption of Resolution 23 relative to amending Article 13 of the Articles of Association, Mr Romolo Bardin’s term of office will be for a period of three (3) years to expire at the end of the General Meeting of Shareholders convened in 2018 to approve the financial statements for the fiscal year ending 31 December 2017. Consequently, subject to the adoption of Resolution 23 concerning the modification of Article 13 of the company’s Articles of Association, the terms for renewal of these Directors would be as follows: Mr Romolo Bardin 36 years old ww the term for Mr Jean Laurent (Resolution 11) will be maintained for a term of four (4) years expiring at the end of the General Meeting of Shareholders called in 2019 to approve the financial statements for the fiscal year ending 31 December 2018 Romolo Bardin is a graduate of Business Management at Ca’Foscari University in Venice. He is Deputy Financial Director of Delfin SARL. Prior to that he held positions at Sunglass Hut Europe in London, and Luxottica Group in Italy. He has already been sitting on the Board of Directors of Foncière des Régions since 31 January 2011 as a representative of Aterno. ww the term for Mr Leonardo Del Vecchio (Resolution 12) will be maintained for a term of four (4) years expiring at the end of the General Meeting of Shareholders called in 2019 to approve the financial statements for the fiscal year ending 31 December 2018 Employment and functions exercised at the company: Permanent representative of Aterno, Director and member of the Audit Committee. ww the term for the company ACM Vie (Resolution 13) will be reduced to a term of three (3) years expiring at the end of the General Meeting of Shareholders called in 2018 to approve the financial statements for the fiscal year ending 31 December 2017 Number of company shares held: 3,200. In Resolution 20, it is proposed that you appoint Mrs Delphine Benchetrit as Director of the company. Subject to the adoption of Resolution 23 relative to amending Article 13 of the Articles of Association, Mrs Delphine Benchetrit’s term of office will be for three (3) years to expire at the end of the General Meeting of Shareholders convened in 2018 to approve the financial statements for the fiscal year ending 31 December 2017. ww the term for Mr Jean-Luc Biamonti (Resolution 14) will be reduced to a term of two (2) years expiring at the end of the General Meeting of Shareholders called in 2017 to approve the financial statements for the fiscal year ending 31 December 2016 Mrs Delphine Benchetrit ww the term for the company GMF Vie (Resolution 15) will be maintained for a term of four (4) years expiring at the end of the General Meeting of Shareholders called in 2019 to approve the financial statements for the fiscal year ending 31 December 2018 46 years old Delphine Benchetrit is a graduate of the École Supérieure de Commerce de Paris and has a Master’s in Corporate Finance. She began her career in 1994 as an investor within the Affine group, then was a banker at Natixis. As Executive Director, in 2004 she created the real estate department of Lehman Brothers France. Since 2009, Delphine Benchetrit has founded and manages the company Finae Advisors, an independent financial advisory company for real estate investors. ww the term for Mr Bertrand de Feydeau (Resolution 16) will be maintained for a term of four (4) years expiring at the end of the General Meeting of Shareholders called in 2019 to approve the financial statements for the fiscal year ending 31 December 2018 ww the term for the company Predica (Resolution 17) will be reduced to a term of two (2) years expiring at the end of the General Meeting of Shareholders called in 2017 to approve the financial statements for the fiscal year ending 31 December 2016 Employment and functions at the company: None. Number of company shares held: None. On 19 February 2015, the Board examined Delphine Benchetrit’s independence criteria. She has never directly or indirectly been in significant business relations or occupied any executive function within Foncière des Régions or a company in its group or division. She also meets all the Afep-Medef independence criteria. ww the term for Mr Pierre Vaquier (Resolution 18) will be reduced to a term of two (2) years expiring at the end of the General Meeting of Shareholders called in 2017 to approve the financial statements for the fiscal year ending 31 December 2016. The Board thus deemed that Delphine Benchetrit could be considered an independent Director. Biographical details and a list of all of the terms and functions exercised by the latter individuals at 31 December 2014, as well as for the last five fiscal years, appears in 1.14.3 of the 2014 Reference Document. Foncière des Régions 139 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 The Board of Directors noted that if Resolutions 11 to 20 are approved by the General Meeting, the changes in the composition of the Board will make it possible to continue to improve the Governance of the company: The buyback by the company of its treasury shares would result in: ww awarding shares to corporate officers or employees of the company and/or of companies belonging to its group ww delivering shares upon the exercise of rights attached to securities entitled to the award of company shares ww the proportion of independent Directors would thus increase from 50% to 57% ww delivering as payment or exchange (up to a limit of 5% of the capital), specifically within the context of external growth, merger, spinoff or contribution operations ww the percentage of female Directors would rise from 29% to 36% ww the percentage of international Directors would decrease from 36% to 29%. ww cancelling shares in whole or in part, subject to the adoption of Resolution 26 1.18.1.6. Authorisation to be granted to the Board of Directors for the company to purchase treasury shares (Resolution 21) ww setting up a liquidity agreement, noting that by law, in the event of acquisition under a liquidity agreement, the number of shares considered for calculation of the 10% limit of the share capital amount would match the number of shares purchased, deducting the number of shares resold during the authorisation granted by the General Meeting. In Resolution 21, it is proposed that you authorise a share buyback programme. The principal characteristics of this programme will be the following: This authorisation would be given to the Board of Directors for a period of 18 months with effect from the date of the General Meeting on 17 April 2015 and would immediately terminate the authorisation for the unused portion, given by the Ordinary and Extraordinary General Meeting of Shareholders on 28 April 2014. ww the number of shares bought back may not exceed 10% of the company’s share capital ww the purchase price may not exceed €100 per share (excluding acquisition costs) Prior to implementing it, the company would publish a description of the programme in the form set out under Article 241-1 of the AMF Regulations. ww the maximum amount of funds allocated to the buyback programme would be €150,000,000 ww this programme may not be implemented during a public takeover bid. 1.18.2. Extraordinary resolutions 1.18.2.1. Changes to the Articles of Association (Resolutions 22 to 24) 1.18.2.2. Financial authorisations to confer upon the Board of Directors (Resolutions 25 to 29) The purpose of Resolution 22 is to modify Article 10 of the Articles of Association so as not to confer double voting rights, established by French law no. 2014-384 of 29 March 2014, known as the ”Florange” law (effective 1 April 2014), to fully paid-up shares held in registered form for at least two years by the same shareholder, and in accordance with the option conferred by Article L. 225-123 paragraph 3 of the French Commercial Code. This is so that each shareholder will continue to have the same number of votes as he or she has shares. You will be asked to renew, in the Extraordinary General Meeting, certain financial authorisations granted to your Board of Directors and to authorise it, within the limits and conditions that you will set, to decide on the issuance of shares and/or securities directly or indirectly providing access to the company’s share capital. The Board of Directors wishes to continue having the means that enable it, if necessary, by calling upon the markets, to quickly and flexibly gather the financial resources needed for the development of your company. You are being asked, under Resolution 23, to modify Article 13 of the Articles of Association introducing the provisions necessary to implement and maintain staggered terms of office for Directors. As the Appointments and Remunerations Committee has considered it advisable to allow staggered and balanced renewals of the terms of office of Directors, it is proposed to the shareholders to appoint or renew certain Directors for a term of two (2) or three (3) years, in exceptional circumstances, You will also be asked to authorise the Board of Directors to reduce the company’s share capital by cancelling shares purchased within share buyback programmes adopted by the company. In proposing to you that you grant it these authorisations, the Board of Directors seeks to clearly explain to you the impact of the corresponding resolutions submitted to your approval. Resolution 24 amends the Articles of Association to harmonise and/or update a number of provisions. You will be asked to adopt the complete text of the Articles of Association thus amended. Foncière des Régions The company auditors will prepare their own reports on the financial authorisations, which will be made available to you in accordance with legal and regulatory conditions. 140 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 1.18.2.2.1. Authorisation to be granted to the Board of Directors to increase the share capital of the company through the capitalisation of reserves, earnings or premiums (Resolution 25) 1.18.2.2.3. Authorisation to be granted to the Board of Directors to issue shares and/or securities giving access to the company’s capital, maintaining shareholders’ preferential subscription rights (Resolution 27) Under Resolution 25, you will be called upon to decide on the authorisation to be given to the Board of Directors, who may sub-delegate its authority, to carry out a capital increase, through capitalisation of all or part of the reserves, earnings, premiums or other sums for which capitalisation would be permitted. This transaction would not necessarily translate into the issue of new shares. In Resolution 27, it is proposed that you delegate to the Board of Directors, who may sub-delegate this authority, powers to issue shares in the company and/or other securities (including warrants for new or existing shares), giving access by any means, immediately or in the future, to capital in the company, in a subsidiary in which the company holds more than 50% of the shares directly or indirectly, or in a company directly or indirectly holding more than 50% of the company’s shares, issued for free or against payment, maintaining shareholders’ preferential subscription rights. This authorisation, which would be granted for a period of 26 months, would enable the Board of Directors to decide on one or more capital increases, up to a maximum nominal amount of €20,000,000 (excluding adjustments to protect holders of transferable securities eventually providing access to shares). This cap is set independently and separately from the capital increase ceilings resulting from share or security issues approved under Resolutions 27 and 29. The Board of Directors may use this authority, in order to have the necessary funds available at the appropriate time to develop the company’s business. In case of deferred access to shares of the company, i.e. by transferable securities providing access to company shares by any means, your decision would involve waiver by the shareholders of their preferential right to subscribe for the shares to which these securities would be entitled. All powers, in particular to determine the nature and the amount of the sums to be capitalised, as well as the procedure(s) in which the capital will be increased (increasing the face value of existing shares and/or awards of bonus shares), will be granted to the Board of Directors to ascertain the execution of any capital increase and amend the Articles of Association accordingly, as well as to make any adjustments required by law. The maximum nominal amount of capital increases liable to be made would be set at €50,000,000. This amount would be independent of, and separate from the capital increase ceilings resulting from share and/or security issues approved under Resolutions 25, 28 and 29. This authorisation may not be used without your formal agreement during a public purchase or exchange bid on the company’s shares. This authorisation would immediately terminate the authorisation given by the Ordinary and Extraordinary General Meeting on 28 April 2014, for the unused portion. The nominal amount of debt instruments providing access to the company’s capital that are liable to be issued may not exceed a total amount of €750,000,000. This amount would also constitute an overall nominal ceiling for securities issues made under Resolutions 27 and 28. 1.18.2.2.2. Authorisation to be granted to the Board of Directors to reduce the company’s share capital through the cancellation of shares (Resolution 26) The issue price of securities providing access to the company’s capital would be determined by the Board of Directors if and when it implements this authorisation, in keeping with legal and regulatory provisions. Shareholders would have a preferential right, in proportion to the value of their shares, to subscribe the shares and securities issued under this Resolution. Concurrently with the authorisation given to the company to conduct transactions in its own shares under Resolution 21, it is proposed in Resolution 26, that you should authorise the Board of Directors, who may sub-delegate this authority, to cancel shares acquired by the company under the buyback programme authorisation submitted in Resolution 21, or in any Resolution having the same purpose and the same legal basis. This authorisation could not be used without your formal agreement during periods of pubic purchase or exchange offers on the company’s shares. This authorisation would be given to the Board of Directors for a period of 26 months with effect from the General Meeting on 17 April 2015 and would immediately terminate the authorisations given by the Ordinary and Extraordinary Meeting of Shareholders of 28 April 2014, for the unused portion. As provided for under French law, shares may only be cancelled up to a limit of no more than 10% of the share capital per 24 month period. Consequently, you will be asked to authorise the Board of Directors to reduce the share capital under applicable legal conditions. This authorisation, given for a period of 18 months, would immediately terminate the authorisation given by the Ordinary and Extraordinary Meeting of Shareholders on 28 April 2014, for the unused portion. Foncière des Régions 141 Reference Document 2014 1 1 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 1.18.2.2.4. Authorisation to be granted to the Board of Directors to issue, through public offerings, debt securities providing access to the company’s capital, without preferential subscription rights (Resolution 28) 1.18.2.2.5. Authorisation to be granted to the Board of Directors to undertake capital increases reserved to employees of the company and of companies of the Foncière des Régions group that are members of a company savings plan, with waiving of shareholders’ preferential right of subscription (Resolution 29) The Board of Directors may, in the interest of the company and its shareholders, in order to seize the opportunities offered by the financial markets, be led to issue such securities without preferential subscription rights. The renewal of this authorisation is, in particular, part of a wider aim in respect of a bond issue, which may take the form of bonds redeemable in cash/and or in new or existing shares (ORNANE). You will be asked, under Resolution 29, to delegate to the Board of Directors your power to decide on increasing capital according to the provisions of the French Commercial Code (Articles L. 225-129-2, L. 225-129-6, L. 225-138 et seq. of the Labour Code (Article L. 3331-1 et seq.) concerning issues of shares or transferable securities giving access to company shares either in existence or to be issued that are reserved for employees participating in the savings plan of the company and/ or of affiliated companies under Article L. 225-180 of the French Commercial Code. You are also asked, by voting on Resolution 28, to authorise the Board of Directors to issue, by means of a public offering, without preferential subscription rights for shareholders, debt securities providing access to existing or new company shares, for a period of twenty six months. Your decision would imply a waiver of your preferential subscription right to the shares or other equity instruments of the company to which the debt securities issued on the basis of this authorisation may entitles you. This authorisation would be granted for a maximum nominal capital increase amount, immediately or in the future, resulting from the issues made pursuant to this authorisation (including the capitalisation of reserves, earnings or premiums), of €500,000, set irrespective of the par value of the shares that may be issued as a result of adjustments made to protect the holders of transferable securities giving future access to shares. This cap would be independent of any other authorisation granted by the General Meeting. The nominal amount of the total debt securities issued may not exceed €750,000,000, the overall ceiling for all debt instruments set by Resolution 27. The maximum nominal amount of capital increases of the company that may be made in the future under this authorisation may not exceed €25,000,000 and would be independent and separate from the caps for capital increases resulting from the issuance of shares and/or transferable securities authorised by Resolutions 25, 27 and 29. You will be requested to expressly waive your shareholder’s preferential subscription right to new shares or to securities giving access to the company’s equity in favour of these employees. The subscription price of the shares and the discount offered will be set by the Board of Directors on the understanding that the discount offered may not exceed 20% of the average share price for the twenty trading days preceding the date of the decision to open the subscription period, and 30% of this same average when the retention period provided for in the plan is greater than or equal to 10 years, provided that the Board may also replace all or part of said discount by the allocation of shares or other securities. The Board of Directors would set the issue price for the securities and the terms of remuneration of debt securities, in the best interests of the company and its shareholders. To this end, it would take into consideration, in particular, the nature of the securities issued, the trends in the stock markets and in the markets where the company shares are traded, the possible existence of preferential rights granted to shareholders, interest rates applied to debt instruments, the number of shares that such debt instruments would be entitled to, and more generally the characteristics of the issued securities. The Board may likewise provide for the allocation of bonus shares or other securities giving access to the company’s equity, it being understood that the total benefit resulting from this allocation as a company contribution or, where applicable, the discount on the subscription price, may not exceed the legal and regulatory limits and that the shareholders waive all rights to shares or other securities giving access to the company’s capital that may be issued by virtue of this Resolution. This authorisation may not be used without your formal agreement during a public purchase or exchange bid on the company’s shares. This authorisation would be given to the Board of Directors for a period of 26 months with effect from the General Meeting on 17 April 2015 and would immediately terminate the authorisations given by the Ordinary and Extraordinary Meeting of Shareholders on 28 April 2014, for the unused portion. Foncière des Régions This authorisation would be given to the Board of Directors for a period of 26 months with effect from the General Meeting on 17 April 2015 and would immediately terminate the authorisations given by the Ordinary and Extraordinary Meeting of Shareholders on 28 April 2014, for the unused portion. 142 Reference Document 2014 Management report 2014 Report of the board of directors on the draft resolutions to be submitted to the Ordinary and Extraordinary General Meeting of Shareholders on 17 April 2015 1.18.2.3. Powers for formalities (Resolution 30) Resolution 30 is a standard resolution concerning the granting of the powers required to make announcements and perform legal formalities relating to holding the General Meeting. We believe that these transactions, under these conditions, are a timely measure and we ask you to approve the resolutions to be presented to you. The Board of Directors Foncière des Régions 143 Reference Document 2014 1 2 SUSTAINABLE DEVELOPMENT 2.1. 50% OF GREEN ASSETS, 2.4. STRONG PARTNERSHIPS WITH ONE YEAR AHEAD OF OUR GOAL!146 TENANTS THAT STRENGTHEN THE HOTELS AND SERVICE SECTOR BUSINESS 2.4.1. 2.4.2. 2.4.3. 2.2. FONCIÈRE DES RÉGIONS, A SUSTAINABLE GROWTH MODEL 147 2.2.1. 2.2.2. 2.2.3. 2.2.4. 2.2.5. Partnership, the cornerstone of a long-term strategy147 A business model for sustainable value creation149 Turning risks into opportunities 154 The materiality matrix: a strategic tool to help CSR steering156 A sustainable development strategy for value creation 158 2.5.1. 2.5.2. Challenges specific to logistics 180 Reducing the environmental footprint 180 2.6. DYNAMIC MANAGEMENT OF THE RESIDENTIAL PORTFOLIO 182 2.6.1. 2.6.2. Towards 100% green assets 164 An ever-changing portfolio 165 Innovation, a value-creation driver 168 Improving the energy performance of buildings169 Reducing the climate footprint 171 Controlling health and climate risks 172 Limiting environmental impacts by anticipating regulations173 2.6.3. 2.6.4. Issues specific to housing 182 A comprehensive sustainable development policy 183 Immeo AG, the German model of integrated CSR183 French housing at a time of ecological transition186 2.7. AN APPROACH SHARED WITH ALL SUBSIDIARIES190 2.7.1. 2.7.2. Foncière des Régions 177 OUR LOGISTICS BUSINESS180 OF GREEN OFFICES164 2.3.5. 2.3.6. 2.3.7. 176 177 2.5. THE PERFORMANCE OF 2.3. A PORTFOLIO 2.3.1. 2.3.2. 2.3.3. 2.3.4. Innovating to support users Designing eco-friendly assets Speeding up the environmental transition of the portfolio 176 144 Beni Stabili plays a major role in the sustainable commercial real estate market in Italy190 Urbis Park, a global car park operator and player in urban mobility solutions 193 Reference Document 2014 2.8. PROMOTING REGIONAL 2.11. CSR PERFORMANCE EXPANSION195 2.8.1. 2.8.2. 2.8.3. 2.9. HUMAN CAPITAL 2.9.1. 2.9.2. 2.9.3. 2.9.4. 2.9.5. 2.9.6. 2.11.1. Accelerating regional transformation 195 Turning each site into a biodiversity driver199 Capitalising on trust-based 199 relationships with our suppliers 2.11.2. 2.11.3. 2.11.4. 2.11.5. 2.11.6. 2.11.7. 202 A human resources policy that supports the group strategy202 Ensuring the development of skills and rewarding the performance 204 of each employee Act for Quality of Life at Work 206 Promoting diversity and equality 207 Guaranteeing transparent social dialogue207 Joining forces for sustainable development208 Recognition of our performance by analysts217 A clear and transparent methodology 218 Environmental indicators 218 Social indicators 251 Article 225 of the Grenelle 2 Law Concordance Table 262 GRI 4 Content Index and CRESD 264 Annex: Foncière des Régions materiality concordance table and GRI 4 indicators269 2.12. VERIFICATION BY AN INDEPENDENT THIRD PARTY AUDITOR271 2.10. OPEN AND TRANSPARENT GOVERNANCE210 2.10.1. 2.10.2. 2.10.3. 2.10.4. 2.10.5. 2.10.6. A governance structure that adheres to the requirements of the Afep‑Medef Code and ensures its effectiveness 210 Corporate governance around the Board of Directors211 An Executive Committee interested in CSR performance213 General Meetings 213 Addressing shareholder concerns and ensuring transparency of financial information214 Promoting fair and ethical practices 214 Foncière des Régions 217 145 Reference Document 2014 2 Sustainable development 50% of green assets, one year ahead of our goal! 2.1. 50% OF GREEN ASSETS, ONE YEAR AHEAD OF OUR GOAL! In 2014, Foncière des Régions proceeded to implement its strategy focusing on our French and Italian office portfolios together with our two areas of diversification, the residential segment in Germany and hotels Europe-wide. In practical terms, this has meant the ramping-up of our real estate developments in major European cities, in particular the delivery of more than 34,953 m2 in green properties(1). We have strengthened our operations in Germany through our residential subsidiary Immeo AG and diversified our hotel partnerships with leading brands in the sector in Europe (NH Hotel Group, Meininger, Motel One). We also have expanded our service offer in the market with the creation of an investment vehicle for premises and business assets. Finally, we have increased our disposals in non-core activities (logistics, car parks), and improved our financial indicators (renegotiating debt at favourable conditions and diversifying financing sources, raising capital, etc.). All these strategic achievements have enabled us to boast strong and longlasting real estate and financial fundamentals. In preparing this new road map, we also studied the expectations of our stakeholders and analysed the most important CSR challenges for our company. These considerations also enrich our extra-financial reporting approach, which applies the best international standards, such as GRI 4(2) (reaching “Core” level with the CRESD sector supplement(3)) and the framework introduced by the International Integrated Reporting Council (IIRC) at the end of 2013. Focused on the best reporting practices, we decided to follow the principles of Integrated Reporting (<IR>) in order to better reflect the company’s performance. This choice also highlights the interconnected nature of the business and CSR dimensions of our expertise and industries. We are convinced that the innovation and development of our expertise represent a special driver of value creation, in particular against the difficult economic environment in France and the rest of Europe. Our CSR policy is currently recognised by rating agencies (DJSI, FTSE4Good, GRESB, Vigeo, etc.) and received numerous awards this year: Trophée France GBC, Trophée des SIIC, EPRA Gold Award, Grand Prix de l’Agefi. In addition to this considerable progress, Foncière des Régions has reached the goal we set in 2010 one year ahead of schedule: 50% of our assets are now green (50.1% at the end of 2014). This headway reflects the long-standing ambition of Foncière des Régions to design and offer its partners (companies and regions) real estate that is ever more suitable and effective. We will draw on this comprehensive approach to fully integrate CSR considerations into our business activities in 2015, a year that will be marked by the 21st conference on climate change (COP 21) to be held in Paris. This global event will set the course for environmental policy up to 2050. Our long-term vision of value creation includes these developments and forces us to constantly look towards the future to identify and interpret the key trends likely to have an impact on our business segments. For this reason, we pledge to continue our ambitious sustainable development policy by establishing a new road map for the 2015/2020 period (see Chapter 2.2.5.3), in particular by increasing our target for greening our portfolio, with the aim of reaching 100% green properties by the end of 2020. Convinced of the transformative and cross-disciplinary nature of sustainable development and CSR, Foncière des Régions includes the social and societal dimensions of its business activity in this process. Backed by one of the most dynamic human resources policies within our industry, we will continue to help our employees grow by focusing on the development of skills, work/life balance, the prevention of psychosocial risks and the involvement of employees in the company’s performance. From a societal perspective, it is extremely important to us that the impact of our business activity on regional economies is taken into account, and that our stakeholders (suppliers, partners and shareholders) are included in every stage of our considerations. (1) (2) (3) Christophe Kullmann Chief Executive Officer HQE and/or BREEAM certified assets (construction and/or operation) and/or labelled assets (BBC, HPE or THPE). Global Reporting Initiative – version 4. CRESD: Construction and Real Estate Sector Disclosure. Foncière des Régions 146 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model 2.2. FONCIÈRE DES RÉGIONS, A SUSTAINABLE GROWTH MODEL Established in the early 2000s, Foncière des Régions quickly became a major player in the European listed REIT sector. Operating globally, Foncière des Régions develops, manages, renovates, and trades primarily commercial assets. It has built its success around one key value: partnership. 2.2.1. Partnership, the cornerstone of a long-term strategy As a SIIC (Société d’Investissement Immobilier Cotée – French Listed Real Estate Investment Trust), Foncière des Régions aims to create value for its stakeholders over the long term using a number of levers: appreciation of assets held, sustainable development, construction, etc. The quality of the partnerships that Foncière des Régions has built up with its Key Accounts tenants (such as Orange, EDF, Thales, Accor, B&B Hôtels and Suez Environnement), combined with a very long-term commitment, represents the basis for its strategy and a major differentiator vis-à-vis its peers. reduced mobility, to biodiversity etc. The real estate market has changed in France in favour of “green” products, namely those which are HQE, BREEAM and LEED certified(2). Germany, and more recently Italy, have also seen this shift, initially concentrated in prime real estate. Since 2009, Foncière des Régions has had a sustainable development strategy, including goals and ambitious action plans, which have required us to build up new expertise (energy and environmental mapping of assets since 2009/2010, first life cycle analyses (LCA) in 2010, building information modelling (BIM) since 2012 etc.), and carry out innovative works (air quality, biodiversity, responsible purchasing, functionality economy etc.), making it a pioneer in many CSR segments. In 2014, Foncière des Régions was actively involved in the development of the “Building and Biodiversity” guide published by the HQE and Orée associations; we drew up two charters on biodiversity for internal use, as well as a Green Works Charter for tenants, demonstrating our desire to involve and support our stakeholders (partners, tenants, local authorities, neighbourhood, etc.) in rolling out our CSR approach. This partnership approach enables us to both deepen the trust and legitimacy we enjoy, to help cut operational costs and charges and to enhance the quality of our assets over the long term. Against a background of economic uncertainty, the French real estate market remained buoyant in 2014, with customers becoming more demanding in terms of services, environmental performance and accessibility. Foncière des Régions has unique experience supporting occupiers with the joint construction of innovative real estate solutions, both as regards construction and financing. Since 2007, the various aspects of sustainable development have been rapidly incorporated into all stages of the business model of the group’s various business lines (acquisition, development, management, renovation). 2.2.1.1. Keeping pace with the fast-moving market Managed and tracked via comprehensive and accurate reporting, this key strategy is now the cornerstone of the group’s overall asset management strategy, which is focused on innovation driving differentiation and value creation for each of its activities. Foncière des Régions is active in markets that offer strong potential, including France, Italy (via our subsidiary Beni Stabili, which is a leading player in the Italian office real estate market, primarily in Milan and Rome), and Germany (via our subsidiary Immeo AG, which owns and manages 41,000 housing units). Conscious of the role REITs play in supporting companies and the economy, the group has introduced the SIIC regime in all three countries. This European tax regime is suited to their financial constraints, both in terms of financing and the distribution of income to shareholders. 2.2.1.2. An asset management strategy based on excellence The growth model of Foncière des Régions is based on a firm commitment to our tenants, enabling them to make changes to their real estate assets with the goals of streamlining and enhancing performance. Driven by key European directives including the energy performance of buildings (EPBD(1)) and the transparency of non-financial reporting, national regulations are adapting evolving rapidly in response to the urgency of climate change issues and social imperatives. The change seen by the building and real estate sectors is unprecedented, with the establishment of a regulatory framework that is progressively targeting all aspects of construction, ranging from energy to accessibility for people with (1) (2) At year end 2014, Foncière des Régions owned and managed a €16 billion (€10 billion group share) portfolio and was a European leader in the office and hotel segments, via our subsidiary Foncière des Murs. Since 2008, the development of green buildings with Key Accounts (Dassault Systèmes, Eiffage, Thales, B&B Hôtels etc.) made it possible to establish beneficial partnerships for both parties (owner and tenant), while continually EPBD: Energy Performance of Buildings Directive. HQE: High Environmental Quality – BREEAM: British Research Establishment Environmental Assessment Method – LEED: Leadership in Energy and Environmental Design. Foncière des Régions 147 Reference Document 2014 2 2 Sustainable development Foncière des Régions, a sustainable growth model improving the quality of our portfolio in favour of high performing assets. Foncière des Régions has been able to take advantage of sale and lease-back operations (where the seller becomes the tenant) of individual assets (e.g. Citroën, Dégremont) or of portfolios (including more than 300 assets with Orange, over 150 with Accor, 160 with B&B Hôtels). These players, leaders in their sectors, are looking to work with a capable structure in order to hold and finance assets over the long term. Even in an environment with prolonged low interest rates, these internationally-recognised groups are electing to rent their operating assets, turning to Foncière des Régions to design and hold their properties, in line with their own property and CSR policies. To pursue its development plan, Foncière des Régions has chosen profitable, promising markets such as Greater Paris; major French regional cities; Northern Italy (via our subsidiary Beni Stabili) and fast-growing regions of Germany. In 2014, Foncière des Régions took direct control of its German residential subsidiary, Immeo AG (unlisted) and continued to expand its hotel activities, particularly in Germany (B&B Hôtels) and the Netherlands (NH Amsterdam let to NH Hotel Group). €16 BILLION PORTFOLIO (GROUP SHARE €10 BILLION) GEOGRAPHIC BREAKDOWN IN VALUE (GROUP SHARE) The portfolio changes in 2014 saw a rebalancing of the various asset classes; whilst offices remain the core business (two thirds of the portfolio), there was a significant increase in hotels in Europe and residential property in Germany (+100 basis points). 9% Hotels and Service Sector 17% Germany 9% 2% Other Other 17% German Residential 20% 20% Italy 45% 61% France France Offices Italy Offices 2.2.1.3. Secured cash flows Our sustainable development initiatives are designed to improve, among other things, the comfort and well-being of occupants; the control of operating expenses and the image and reputation of the companies that occupy our buildings. They are playing an increasing part in maintaining and improving the overall satisfaction of our tenants. These concrete contributions represent major intangible assets for the group’s long-term success. In 2014, the satisfaction of tenants and the quality of partnerships made it possible to renew 8.2% of rental agreements, coming on top of the 20% renewed in 2013. With an average residual lease term of 5.8 years (6.8 years for the Hotels and Service Sector business) and with debt contained at 46.1%, Foncière des Régions enjoys strong cash flow visibility over the coming years. The group is highly trusted, particularly by its tenants, banks and shareholders. This is clear from the success of the capital increases (Hotels and Service Sector: €200 million, Immeo AG: €200 million, Beni Stabili: €150 million) and fundraising through the issue of ORNANE bonds (issue of bonds redeemable for cash and/or new and/or existing shares) in 2011 and 2013. In addition, with an average occupancy rate of 97.1% group wide, and 100% for Foncière des Murs, Foncière des Régions benefits from an investment strategy that favours single tenant sites, without any structural vacancy or non-payments. Foncière des Régions can plan for the future with confidence, with a pipeline of projects under development of €1.5 billion (group share) including €532 million already launched and 63% pre-let. In 2014, this performance resulted in an increased dividend of €4.30(1) offering a yield of 4.6%. (1) Subject to a vote at the General Shareholders’ Meeting of 17 April 2015. Foncière des Régions 148 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model ONGOING PORTFOLIO ADJUSTMENT Committed Pipeline 2014 Projects Controlled Pipeline 2013 2014 2013 14 15 25 19 Pre-let 63% 68% Budget €532 M €631 M €1 BN €895 M Additional rental income Launched at signing €38 M €40 M €70 M €65 M Targeted yield >7% >7% >7% >7% Value creation >10% >10% >10% >10% 2.2.2. A business model for sustainable value creation More specifically, the table on the next page shows how the Foncière des Régions business lines create value over the medium and long-term for each of the six capitals defined by the International Integrated Reporting Council (IIRC). These capitals can be tangible (e.g. industrial, natural) or intangible (e.g. intellectual, human). Foncière des Régions has been able to ensure value creation at each stage of its business cycle, through innovation and new partnership tools. 2.2.2.1. Foncière des Régions, active throughout the business cycle The company’s strategy, its areas of expertise, objectives and action plans for each of these capitals help create long-term tangible and intangible value for Foncière des Régions, its stakeholders and society. The introduction of environmental legislation in France via the Grenelle and energy transition laws; the growing expectations of tenants for buildings offering high levels of quality, comfort and environmental performance, as well as pressure to reduce operating costs and optimise asset value, make greening our asset portfolio a key component of our strategy across all asset life cycle stages. Foncière des Régions 149 Reference Document 2014 2 2 Sustainable development Foncière des Régions, a sustainable growth model 2.2.2.1.1. A business model for value creation FINANCIAL Contributions wwCapital investment wwLiquidity wwDebt wwShareholders’ equity wwStable financial markets wwFinancial stability of clients MANUFACTURED Contributions wwBuildings wwConstruction materials wwInvestment, development and asset management infrastructure and equipment INTELLECTUAL HUMAN RELATIONSHIP Contributions wwProperty, financial and technical expertise wwMarket knowledge and prevention of asset obsolescence Contributions wwQualified, productive, flexible, reliable and connected teams (both within the company and with tenants and other stakeholders) Contributions wwKey Accounts Tenants wwClients, suppliers, partners, local communities, etc. Foncière des Régions invests in assets and then carries out high performance development projects from environmental and societal perspectives Value creation: value is captured upstream by controlling projects Creation of green value: projects that meet the highest construction standards such as HQE, BREEAM, etc., and based on an overall analysis taking into account the asset’s entire life cycle INVEST/ DEVELOP OPERATE/ OPTIMISE NATURAL Contributions wwLand wwFossil fuel wwMinerals and forests wwWater wwClimate change Partnerships with its tenants + optimised portfolio management = ww control of expenses + tenant satisfaction ww aids the assets’ continued attractiveness and liquidity Value creation: extending and renewing leases + optimising rents compared to the market = securing revenues Creation of green value: improving the portfolio performance via three drivers: building (renovations), operation (HQE Exploitation, BREEAM In-Use certification) and eco-occupation (environmental annexes, etc.) NEGOTIATE/ SALE The replacement of assets that have reached maturity makes it possible to rebalance the portfolio towards better performing assets Value creation: upon disposal, helping to fund the group’s development Sustainable value creation: the business model vehicles the medium- and long-term vision of Foncière des Régions, historically based on decisive partnerships with Key Accounts clients. It is enhanced by its sustainable development policy, including long-term objectives and action plans which strengthen ties with tenants and the group’s various other stakeholders FINANCIAL Benefits wwBenefits for shareholders wwPayment of employees, suppliers and public administrations wwOptimise asset value wwOptimise costs for clients MANUFACTURED Benefits wwRenovate and improve urban infrastructure wwOffer buildings with high environmental performance levels INTELLECTUAL Benefits wwIntellectual property wwInternal management and procedural management systems wwImprovement in know-how and expertise Foncière des Régions HUMAN RELATIONSHIP NATURAL Benefits wwImproved know-how and expertise wwHeightened connectivity wwProfessional opportunities for employees and suppliers wwImprovement in productivity and well-being (e.g.: by means of greening, HR policy etc.) wwImprovement in working conditions and reduction in health/safety risks Benefits wwStrong and longterm partnerships wwJob creation wwDevelopment of infrastructure and living spaces that can benefit stakeholders wwSupport the national and local economy through our properties wwPromote training via sponsorship and partnerships Benefits wwReduce the use of natural capital by cutting carbon emissions, usage of fossil fuel, natural resources and ground; limit air, water and ground pollution, as well as waste 150 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model ww Green value concerns building and operating conditions: associated with the market and rental values of its real estate assets, it can be seen as added value arising from the achievement of objective sustainable development criteria (certifications, labels, energy and environmental performance) which are increasingly based on measured performance and not only modelled as part of the design of the overall project. ww through the capitalisation rate: green buildings have a lower risk premium, notably to reflect deferred obsolescence and greater liquidity. Thus, at equal rents, a green building has added value as a result of its characteristics ww value in use: in addition to the performance of the building and control of expenses, the level of comfort and well-being of the employee are of utmost important to the tenant, on the grounds of image, health and productivity, which can be substantial in certain instances. These criteria are not tangible, (they are called “intangible”) and are currently the subject of work designed to identify the parameters and best solutions for optimising value in use ww Sustainable value goes beyond the context of the building and looks at the value to the company of a CSR policy that makes it possible to make its business model more sustainable in the long-term. These two values continue to be difficult to estimate since many parameters (including employee health and productivity, image, impact on biodiversity and services for the community, etc.) cannot be quantified or stated as numbers. ww regional economic impact of an asset, or of a whole portfolio of assets. In 2014, Foncière des Régions analysed the economic impact on the basis of the spending over a 12-month period, including the development, management and renovation of its office assets in France. The jobs supported, including direct (on-site) and indirect (suppliers, services etc.), were thus modelled (see Chapter 2.8.1.4). 2.2.2.2. Foncière des Régions, at the cutting edge in terms of measuring green value 2.2.2.2.1. Broader economic assessment of projects with Decadiese Of the three dimensions of sustainable development, Environmental, Social and Societal, green value is primarily focussed on the first area, and in particular on the performance of buildings and their mode of operation. A range of work has been carried out on this concept for close to a decade; various efforts in France and Europe have looked to determine the added value of a “green building”, namely HQE and/or BREEAM certified and/or awarded the BBC label for example, with a high energy and environmental performance. Foncière des Régions participates in the Decadiese project designed to develop a method for assessing the broader economic impact of a project (new or renovation) across its entire life cycle (or from the point renovation). This ambitious approach is based on the functionality economy and, in each instance, requires a survey of the various players involved in a real estate project in order to assess the weightings of each aspect of sustainable development: Environmental, Economic, Social and Societal. The other two dimensions are analysed and considered on the basis of asset usage and its urban integration. With respect to social value, research has been carried out on the concepts of occupier well-being, comfort and health; as regards societal value studies have been undertaken on the extent to which assets are integrated with their surroundings from a town-planning, economic and cultural perspective. For Foncière des Régions, it is the consideration of all three of these dimensions that helps create a long-term vision, representing a “sustainable” value that can be attributed to the asset. The method results in the development of a decision-making tool, in the form of a spreadsheet, that allows the various construction or renovation scenarios or technical solutions to be assessed on the basis of seven functions (space – atmosphere – relationship – goods and tools – site – protection – aesthetics (the image of the asset), which are weighted on the basis of the needs of the tenant, owner or other stakeholders. The Decadiese project (2012-2014) brings together the various stakeholders of Foncière des Régions, tenants or suppliers (EDF, Bouygues, Vinci) and scholars (ARMINES, École Centrale Paris and Paris VII-Diderot via LADYSS and ATEMIS). The approach followed by Foncière des Régions covers all three dimensions: ww green value: although it is not currently singled out by real estate appraisers, appraisal values have implicitly factored it in for a number of years: ww using the cash-flow method: green value notably represents the reduction in support work and compliance with standards, time to let or indeed a reduction in the rent-free period, all of which have a direct positive effect on cash flow Foncière des Régions 151 Reference Document 2014 2 Sustainable development Foncière des Régions, a sustainable growth model COMPLEMENTARY APPROACHES THAT DECADIESE BRINGS TOGETHER REGULAR ECONOMIC IMPACT DECADIESE Function Use Function Use Function Use Function Use Owner 2.2.2.2.2. Testing a concrete approach to value in use Asset Tenant Localisation Localisation Localisation Seven variables were included in the estimation of employee productivity: motivation, physical well-being, possible delays, absenteeism, time in the building not worked, calmness and turnover. Each of these variables was cross-linked with the characteristics of the asset (architectural identity, condition of the building, quality of the work areas, presence of nature, acoustic comfort, quality of the break areas etc.) and the advantages of its environment. Foncière des Régions, together with Bouygues Construction, analysed the value in use of the Green Corner asset, under construction in Saint-Denis (delivery mid-2015). The goal was to study the impact of the design and location of the building on the comfort and productivity of occupants, characterising and quantifying this performance, by comparison with a new standard asset (2012 Thermal Regulation but with a less advanced design) and an old standard asset (from the 1980s). On the basis of these initial findings, the method developed by Bouygues Construction together with the Goodwill Management firm to characterise and quantify the impact of a building on the productivity of occupants provided an initial appraisal (ratings and weightings), translating into a performance assessment in euros for the occupant. This assessment includes the gains and losses relating to the building’s direct costs and the gains and losses relating to the performance of occupants. This performance study looked at the whole asset (18,780 m2/ 1,560 occupants), and considered: ww the future performance of occupants: impact on occupants of the technical and functional design of the building and the impact of its location For Foncière des Régions, this study represents an initial approach to value in use. The results, even though they paint a positive picture of the asset’s performance, remain experimental and in the realm of R&D. They provide new insight and open up new avenues for asset design and for work on usage and value. ww the direct building costs: rent, fixed charges and water and energy consumption. Foncière des Régions Asset Tenant Localisation Asset Tenant Asset Owner VALUE IN USE Owner GREEN VALUE Tenant Owner 2 152 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model 2.2.2.3. Innovation and R&D, value-creation drivers The forward-looking projects of Foncière des Régions target three major areas: the building, its environment and green value. The R&D projects of Foncière des Régions are focussed on issues of importance for its business sector: energy efficiency, mobility, biodiversity, materials, natural and artificial lighting, etc. BUILDING THE BUILDING ENVIRONMENT • Portfolio energy and environment mapping • LCA: Life Cycle Analysis • Metrology • Air quality • BIM: Building Information Modelling • Disabled access • Biodiversity • Sustainable city • Transport • Emissions into the air and into the water GREEN VALUE • Reflection, participation in working groups (SB alliance, RICS, s-i-r-e) • Studies and research work (Decadiese program) 2.2.2.4.1. 100% of annexes signed by 2013 Through innovation and the acquisition of new expertise, Foncière des Régions anticipates future changes, whether technical, societal or regulatory, with the development and testing of trailblazing tools for each of the three areas, including for example: Foncière des Régions and its subsidiary Foncière des Murs, signed their first environmental annexes in 2010, anticipating the future requirements, taking advantage of the dynamics of the “sustainable development” meetings (which subsequently became the Partnership Committees) to complete the environmental and energy mapping of the portfolio with CSTB. ww analysis of its regional economic impact and study of the value in use (2014) ww testing of BREEAM In-Use certification on a sample representing 11% of the value of the office portfolio (2013) Designed to supplement the lease without having to renegotiate it, the environmental annex sets out the various information that the parties must provide, in line with the provisions of the Decree of 31 December 2011 (energy, water, waste) or above and beyond them (transport, biodiversity etc.). A mere year after the publication of this legislation, Foncière des Régions had already signed environmental annexes for 82.2% of the affected office building leases. For its staff, the annex is a vector of progress, enabling the definition of shared goals and the implementation of in-use certification, chosen in coordination with the tenants. Accordingly, at 31 December 2014, 31.6% of the Office portfolio (in value) already had in-use certification (14.1% HQE Exploitation and 17.5% BREEAM In-Use). ww the initial trial of BIM (2012) ww implementing a responsible purchasing policy (2011) ww signing of the first environmental annexes from 2010 ww energy and environmental mapping of the portfolio (2009), etc. 2.2.2.4. The environmental annexe, progress in partnership The environmental annexe was made mandatory by Article 8 of the Grenelle 2 Law of 12 July 2010, which introduced a requirement for every new or renewed lease for premises exceeding 2,000 m2 intended for office or retail use, to have an environmental annexe. Supplemented by the Decree of 30 December 2011, which fleshed out the details, this requirement came into effect from 1 January 2012 for new leases, with parties having until 13 July 2013 to bring affected existing agreements into line. At that date, only 25% of the leases affected by this measure out of the asset portfolio of 15 million m2 tracked by the OID(1) (Observatoire de l’Immobilier Durable) had a signed annexe. Within the regulatory deadline, Foncière des Régions had signed 100% of the environmental annexes targeted by this regulation. (1) The partnership approach of Foncière des Régions is a key factor in achieving customer satisfaction. This is reflected in the occupancy rate of close to 97% for its Offices France business and 100% for the subsidiary dedicated to the Hotels and Service Sector. OID – Annexe Environnementale – Les enseignements, October 2013. Foncière des Régions 153 Reference Document 2014 2 2 Sustainable development Foncière des Régions, a sustainable growth model 2.2.3. Turning risks into opportunities 2.2.3.2. Ensuring regulatory compliance Risk factors that could have a significant effect on the company’s financial and non-financial position or on its earnings are described in Chapter 4.1.2.2.3.1 of this 2014 Reference Document. Foncière des Régions also has recourse to risk mapping to monitor and rank the group’s main risks; this is shared with General Management members and with the Audit Committee. Four mapping exercises have already been carried out (2006, 2009, 2012 and 2014). Each of these gave rise to proposals and action plans designed to improve risk management. A growing number of regulations govern the construction and maintenance of building installations, and require assessments, or even audits, to be carried out when selling or letting. Responsible portfolio management goes beyond merely ensuring the compliance of the installations (electricity, gas, etc.), and involves an increasing range of aspects including health (indoor air quality, asbestos, legionnaires’ disease, lead), environmental (energy, greenhouse gases, water, waste), or indeed physical and geological aspects (risk of flooding, subsidence, coastal submersion, Seveso risks). The obsolescence of assets or indeed the continuity of the business in exceptional circumstances (fire, pandemic, etc.) are some of the CSR risks identified and covered by an action plan designed to prevent or limit the consequences on corporate life, its cash position or valuation. We employ a dedicated, interdisciplinary team to meticulously monitor our portfolio’s compliance with environmental safety regulations. This team is involved from the analysis of acquisitions and throughout asset ownership, to the creation of data-rooms for sales. Two tools are used to monitor these risks: the Provexi platform which, among other things, contains asbestos-related data and the module developed by the Centre Scientifique et Technique du Bâtiment (CSTB) containing environmental mapping data which allows new sites to be rated. 2.2.3.1. Avoiding the risk of obsolescence by means of a dynamic policy Buildings are central to the environmental, social, economic and regional development concerns of the responsible governments, which seek to limit their impact. The real estate sector has a significant environmental footprint, from the extraction of the raw materials required to build assets and manufacture materials, to operating a building, all of which entail water and energy consumption and the production of waste, as well as other direct impacts on the natural environment (soil sealing, altered biodiversity etc.). In addition, Foncière des Régions conducts studies that allow us to better take into account of the potential incidence of emerging subjects, such as air quality (see Chapter 2.3.7.4), climate change (see Chapter 2.3.5), etc. within our multi-year works plans. 2.2.3.3. Investing in fast-growing regions To meet these challenges, the sector is making a paradigm shift: by 2020, all new buildings will have to be “energy positive” (BEPOS), meaning that they will need to produce more energy than they consume. Besides relying on a ramp-up in ecodesign and on renewable energies, the energy sources must be pooled within smart grids in order to optimise production and consumption. Other underlying questions arising from European directives will place a particular emphasis on indoor air quality or discharges in the air and water. In line with its economic model, Foncière des Régions pursues its portfolio management strategy, aiming to be positioned in the best locations and to maintain attractive and secure rental income growth. Foncière des Régions retains over 60% exposure to France, our core market, with a portfolio concentrated primarily in Île-de-France and in the major regional cities (Lyon, Marseille, Lille, Montpellier, etc.). Active in the German residential market since 2005, Foncière des Régions has increased its exposure to this market, an economically stable country at the heart of Europe, holding a 60% direct interest in its residential subsidiary Immeo AG, thereby helping to secure cash flows from markets with positive outlooks (e.g. Berlin, Dresden). Foncière des Régions is also considering a number of hotel projects in Europe and already agreed a number of new acquisitions in 2014 (see Chapter 2.4). In order to manage the risk of obsolescence of its buildings and to transform this into an opportunity to set its property policy apart, the projects of Foncière des Régions anticipate these sweeping changes and play a part in urban renewal by incorporating the challenges and goals of the sustainable city. The performance of the assets developed by the group requires, among other things, considering accessibility, eco-friendly transport, on-site biodiversity and embodied biodiversity (for example: the impact due to the manufacture of materials) and makes the well-being and health of end-users key priorities. The percentage of green assets within the Foncière des Régions portfolio reflects its ability to seize market opportunities in this regard (see Chapter 2.3.1). 2.2.3.4. Maintaining strong and attractive financial fundamentals By the very nature of its activity, based on the holding, development and renovation of assets, Foncière des Régions manages different building-related risks, at all lifecycle stages, from acquisition to sale and including works and maintenance (Chapters 2.2.5.1 and 2.2.5.2). Thus, the rental and market values of the assets of Foncière des Régions are broadly unaffected by the risk of obsolescence; the greening of its portfolio via improvements in the ongoing performance of assets and their progressive replacement represent the best means of combating the obsolescence of its portfolio. Foncière des Régions 154 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model Real estate investments require significant own funds; the economic model of Foncière des Régions provides for controlled indebtedness (46.1% at 31 December 2014), and the implementation of financial instruments to hedge the risks of fluctuating interest rates. Capital is tapped either through the financial partners of Foncière des Régions or through bond issues. Rated BBB- with a “stable” outlook by Standard & Poor’s, Foncière des Régions successfully carried out a new bond issuance in 2014, raising €500 million at a rate of 1.75%. Foncière des Régions refinanced or issued €3.1 billion in debt (€1.9 billion group share) in 2014. The group came out of this period with LTV under control at 46.1%. Over the past three years, the debt ratio has been brought under control, going from 47% in 2011 to 46.1% at the end of 2014. In order to limit its exposure to risks from the development of new projects, Foncière des Régions invests mostly in pre-leased operations. The vacancy rates of sites and tenant non-payment, the top financial risks for lessors, remain low across the various activities of Foncière des Régions, despite the unfavourable economic climate. Our commercial assets generally let to single tenants which are highly creditworthy. The remaining term of the leases signed by Foncière des Régions is one of the longest in France and even in Europe: 5.8 years at end-2014 (same as at end-2013), this stability being due to early lease renewals, enhancing long-term rental income visibility. STAKEHOLDERS INVOLVED PERFORMANCE / INDICATORS wwMarkets/economic models wwLong-term partnerships wwCash wwSecurity of cash flows wwTax regime wwGeographic diversification wwShareholders/Directors wwBuyers wwEmployees wwBanks and rating agencies (analysts, investors) wwDividends wwEPRA NAV per share/Loan to Value ratio wwRNI wwRental income MANUFACTURED wwObsolescence wwLocation of assets wwAttractiveness/liquidity wwDevelopment of higher performance and more sustainable buildings wwMeet the changing needs of tenants wwRent/value optimisation wwTenants wwInsurance wwRegulators wwLocal authorities/Civil society wwIndustry bodies wwTotal value of portfolio wwOccupation rate ww% of “green” assets wwInvestment in renovation/ certifying the portfolio INTELLECTUAL <IR> summary of the risks and opportunities of Foncière des Régions wwRegulatory changes wwTechnological development wwIT/digital wwInnovation and anticipating change wwLearning/sharing experiences wwCompetition wwSuppliers wwEmployees wwEducation and research community (patents) wwR&D investment wwParticipation in working groups wwHealth/safety wwProductivity/attracting talent wwSocial climate wwTalent retention and development wwDiversity wwDialogue wwEmployees wwShareholders wwNon-financial rating agencies wwNGOs, Global Compact wwEmployee turnover wwRate of absenteeism wwAverage number of hours of training wwWorkplace accidents and occupational illnesses wwKey Accounts Relations wwSupply chain wwRelations with local authorities wwLong-term tenant partnerships wwResponsible purchasing policy wwIdentification as a major player in urban renewal wwTenants/Buyers wwSuppliers wwLocal authorities/ Civil society wwEmployees wwNon-financial rating agencies wwResidual term leases wwEnvironmental annexes wwNumber of suppliers signing the responsible purchasing charter wwRegional economic impact wwNatural resources/ energy/water wwClimate wwPollution/waste ww“Green” building offering wwComprehensive sustainable development policy wwSustainable business model wwTenants/Buyers wwLocal authorities wwShareholders wwNon-financial rating agencies ww“Environmental” NGOs wwEnergy and carbon performance wwEnvironmental safety wwBiodiversity policy wwWater consumption NATURAL RELATIONSHIP HUMAN FINANCIAL MATERIAL RISKS OPPORTUNITIES/VALUE CREATION DRIVERS Studying the various risks and their implications in environmental, social, financial and organisational terms and cross-referencing them with the expectations of stakeholders identified during the mapping work has resulted in a ranking of the CSR challenges of Foncière des Régions under the “materiality” matrix. Foncière des Régions 155 Reference Document 2014 2 2 Sustainable development Foncière des Régions, a sustainable growth model 2.2.4. The materiality matrix: a strategic tool to help CSR steering (G4-18; G4-22; G4-23) In 2014, Foncière des Régions was awarded the Trophée France GBC in the “Stakeholders” category in recognition of its policy and the various actions undertaken in this field. 2.2.4.1. Listening to stakeholders to identify issues (G4-24; G4-25; G4-26; G4-27) We identified and then interviewed our main internal and external stakeholders, which allowed us to identify and prioritise major CSR issues. The identified stakeholders were then classified on the basis of their weight in the company’s business. This analysis made it possible to map the stakeholders of Foncière des Régions, distinguishing between three spheres of influence (chart below). In order to accurately determine the CSR impact of its activities, Foncière des Régions undertook an initial materiality analysis in 2011. This enabled us to better focus on the most significant issues facing the business and to improve our response to stakeholder expectations. This ranking of CSR issues is in line with the GRI 4 Guidelines on materiality and makes it possible to identify the most critical issues along with their associated monitoring indicators. Foncière des Régions Internal interview Identification of stakeholders Classification of stakeholders ww Inner circle: core stakeholders: shareholders, tenants, etc. ww Middle circle: other players with a formal link: banks, suppliers, etc. ww Outer circle: national and international players with no formal link but with influence over the company: media, local governments, NGOs, etc. Definition of key stakeholders Other opinion leaders Local authorities Religious communities Competitors International financial institutions Architects Insurances Media Banks World of education Auditors World of health Consultants NGO Suppliers Shareholders United Nations Organisations Lawmakers Buyers Tenants Employees Mapping of stakeholders The responses provided by Foncière des Régions to the following stakeholders can be found in the various chapters of the document: Rating agencies financial and non-financial Directors Prioritisation of stakeholders Chapter 2.2.1 ”Partnership, the cornerstone of a long-term strategy” Directors Chapter 2.10.2 ”Corporate governance around the Board of Directors” Shareholders/ Financial Community Chapter 2.10.5 ”Responding to shareholder concerns and ensuring transparency of financial information” Employees Chapter 2.9 ”Human Capital” Local authorities Chapter 2.8 ”Promoting regional expansion” Suppliers Chapter 2.8.3 ”Capitalising on relationships of trust with our suppliers” Certification organisations Regulators Political parties Subcontractors Unions Tenants/Buyers Locals Civil society Subsequently, the mapping of stakeholders made it possible to develop the materiality matrix, as follows: Mapping of stakeholders Interviews with external stakeholders Interviews with employees and Foncière des Régions General Management Foncière des Régions Analysis of internal and external answers 156 Weighting of challenges Reference Document 2014 Prioritisation of challenges Materiality matrix Sustainable development Foncière des Régions, a sustainable growth model 2.2.4.2. Ranking of material issues (G4-18; G4-22; G4-23) This process enabled Foncière des Régions to rank its CSR issues for its various activities. The scope of the study is limited to the French and German operations. Beni Stabili has carried out a similar study, which can be found in its 2013 Sustainable Development Report. MATERIALITY MATRIX OF FONCIÈRE DES RÉGIONS Sustainable value Sustainable city w Very strong Governance Climate change w ww w Risk management Ethics/Transparency w w User Energy Health /Safety w Tenant ww Green value partnership www ww Strong Waste w Local employment Biodiversity w w Skills/Talent Responsible Procurement Diversity/Equality www w ww Human Rights w Average Important CSR subjects for stakeholders Water wwww Philanthropy/Sponsorship ww Average Very strong Strong Important CSR subjects for Foncière des Régions E S G w w w w Environment/Sustainable Building (see Chapters 2.3 to 2.7) Corporate (see Chapter 2.8 “Promoting regional expansion“) Social (see Chapter 2.9 “Human Capital“) Governance (see Chapter 2.10 “Open and transparent Governance“) The appended table, in Chapter 2.11.7, matches up the themes in the materiality matrix and the aspects and indicators defined in GRI 4. The aspects identified in the course of the materiality study and the CSR reporting put in place by Foncière des Régions enable us to achieve ‘Core’ level compliance under the GRI G4 reporting framework. Foncière des Régions 157 Reference Document 2014 2 2 Sustainable development Foncière des Régions, a sustainable growth model 2.2.5. A sustainable development strategy for value creation 2.2.5.1. A CSR strategy at the heart of the business strategy 2.2.5.2. Managing sustainable development in order to further the strategy Foncière des Régions’ sustainable development strategy is a component of its overall business strategy. This strategy is built around a property policy involving a long-term vision and a progressive renewal in favour of assets which demonstrate strong performance against three core criteria: market (location, liquidity); financial (strong risk-adjusted profitability with an average return of 6.3%, moderate indebtedness) and technical (green assets anticipating the expectations of tenants). When preparing this strategy, the risks and opportunities described in Chapter 2.2.3 were factored in, encompassing all areas of CSR: environment, social, societal, governance. The group houses a Sustainable Development Department which reports to and is supported by the General Management. This Department has given new momentum to the group’s various different activities via projects and action plans structured around the four areas described in Chapter 2.2.5. This dedicated team provides technical expertise, primarily to help guide development-related decisions and respond to requests from across the group. Sustainable development is incorporated into all levels of governance within the group and its activities. The chart on the next page shows the involvement of the Board of Directors and its Chairman Jean Laurent, who pay close attention to these matters and are regularly updated on progress made. The Chief Executive Officer, Christophe Kullmann and, Deputy General Manager, Olivier Estève both report on CSR subjects to the Board of Directors, which is informed of and validates the main initiatives in this area on a regular basis. Our sustainable development strategy is deployed around four key areas, designed to: ww combat climate change by reducing the environmental footprint of the portfolio, maintaining the attractiveness of assets and preserve their value, through a green value creation model. This area includes both environmental and economic dimensions which prevents them from being pitted against each other In order to deploy the group’s sustainable development policy, four types of committees have been created. The Sustainable Development Steering Committee meets monthly and includes CEO Christophe Kullmann and Chief Operating Officer Yves Marque, who relay CSR subjects to the Management Committee and the Executive Committee. Deputy Chief Operating Officer Marion Pignol and Sustainable Development Director Jean-Éric Fournier are also part of the Committee. The latter leads monthly meetings of the Sustainable Development and Environmental Safety (DDSE) Committee, which brings together 20 representatives across each of the activities and subsidiaries. He also attends quarterly results meetings for each activity (Offices, Hotels and Service Sector, Residential). ww contribute to the dissemination of eco-responsible practices and to innovation in construction, especially through the promotion of health and safety and customer satisfaction, as well as supporting the emergence of sustainable cities as a committed economic entity alongside local stakeholders ww enhance employees’ skills, mobility, diversity and ability to adapt to a changing environment by adopting innovative policies ww guarantee an ethical and transparent framework which ensures exemplary practices at all levels of the company. These four areas comprise an action plan described in Chapter 2.2.5.3. Foncière des Régions The success of these efforts requires the involvement of all levels of the company; this is facilitated by the network of contacts in the business lines, the project Steering Committees (responsible purchasing, biodiversity, etc.), the group Intranet and monthly awareness and information meetings (Green Meetings). 158 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model In connection with the environmental annexes, the Sustainable Development Director jointly chairs the Sustainable Development Partnership Committees along with the Asset Manager and the Technical Manager concerned, as well as with representatives of Key Accounts tenants. Chairman of the Board of Directors Board of Directors SD Department Executive Committee Steering Committee General Management Results Meeting Activity departments Strategy Management Committee Steering Asset, Property, Development, etc. CSR Committee Activities Operational SD partnership committees Tenants Foncière des Régions 159 Reference Document 2014 2 2 Sustainable development Foncière des Régions, a sustainable growth model 2.2.5.3. Towards a new Action Plan: from 2010-2015 to 2015-2020 The multi-annual goals set in 2010 are regularly monitored at different levels of corporate governance, from the operating stage, as a steering tool, on up to the Board of Directors from the strategic standpoint. In 2014, Foncière des Régions has adopted a new roadmap for the period 2015 to 2020, and has upgraded its commitments to offer an even more demanding group-wide CSR. status at 31/12/2013 Subject yet to be done status at 31/12/2014 2015 objectives Progress Scope covered AREA 1 – REDUCING PROPERTIES’ ENVIRONMENTAL FOOTPRINT, MAINTAINING THEIR ATTRACTIVENESS AND RETAINING THEIR VALUE Hold 50% green assets Offices France 100% “green” developments Offices France Cut energy consumption by 25% over the 2008/2015 period Offices France Measure and reduce energy consumption and CO2 emissions Offices France Keep GHS emissions at < 26 kgCO2e/year Offices France Measure and monitor water consumption across the entire reporting scope Offices France Measure and monitor waste management Offices France Turn each site into a biodiversity driver Group Control health and safety related risks Control health and environmental risks Group Improve disabled access 80% of assets accessible to people with reduced mobility by end-2020 Offices France Promote clean transport Have 80% of Office assets owned accessible by public transport Offices France Greening the portfolio Improve energy performance Lead the eco-transition Foncière des Régions 160 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model 2014 results 2015/2020 objectives Deadlines Chapter 2/3 green assets 2017 100% green assets 2020 ww100% 100% ”green” developments and renovation 2020 2.3.2 wwWith climate adjustment: wwin 2008: 490 kWhpe/m2/year wwin 2013: 402 kWhpe/m2SHON/year i.e. -18.0% wwin 2014: 374 kWhpe/m2SHON/year i.e. -23.7% Cut energy consumption by 15% over the 2015/2020 period i.e. a total of -40% over 2008/2020 Objective: 295 kWhfe/m2SHON/year 2020 2.3.4 wwCoverage ratio: wwOperation control: 96% wwHeadquarter buildings: 100% Carry out pilot tests into the introduction of systems for the remote monitoring of consumption (smart metering) 2017 2.11.3.1 2.11.3.6 wwWith adjustment: wwin 2008: 25 kgCO2e/m2/year wwin 2014: 23 kgCO2e/m2/year (i.e. -8% vs. 2008) Cut CO2 emissions by 20% between 2008 and 2020 Objective: 20 kgCO2e /m2SHON/year 2020 2.3.5 wwIn the Offices scope (operational control): wwIn 2013: 93% wwIn 2014: 90% Keep consumption under 0.5 m3/m2/year + introduce systems to collect water across 100% of development projects 2020 2.3.7.1 wwSite waste already monitored on development and renovation projects Cut waste production and promote recycling across 100% of the portfolio and 100% of development and renovation projects 2020 2.7.3 wwCompleted: wwspecifications and indicators wwalready launched: biodiversity studies (BREEAM) and mapping Secure Biodiversity label across 100% of new projects Offices France Ongoing wwOpening up of the Provexi tool to all employees Control health and environmental risks Ongoing 2.3.6 wwCompliance with standards as part of every renovation project 80% of assets accessible to people with reduced mobility 2020 2.10.2.5 ww96% in value at 31/12/2014 Have 90% of Office assets owned located within 10 minutes on foot of public transport 2020 2.8.1.2 ww50.1% green buildings at 31/12/2014 Foncière des Régions 161 Reference Document 2014 2.3.1 2.3.7.2 2.8.2 2 2 Sustainable development Foncière des Régions, a sustainable growth model Subject 2015 objectives Progress Scope covered AREA 2 – CONTRIBUTING TO THE DISSEMINATION OF ECO-FRIENDLY PRACTICES AND TAKING AN ACTIVE ROLE IN CITY LIFE IN PARTNERSHIP WITH Act for sustainable construction and cities Promote clean and public transport solutions Act for sustainable cities Group Take part in R&D studies Promote regional economic development Group Defend respect for Human Rights Dialogue with our stakeholders Group Discuss with our stakeholders Conduct a sponsorship programme Conduct a responsible purchasing policy Corporate Offices AREA 3 – ENHANCING EMPLOYEES’ SKILLS, MOBILITY, DIVERSITY AND CAPACITY TO ADAPT TO A CHANGING ENVIRONMENT BY ADOPTING INNOVA Attract and develop talent Develop our human capital Manage and develop skills in line with changes in our business ESU Foncière des Régions Develop a policy of equality and diversity Be exemplary in the application of our CSR values Reduce our CO2 emissions per employee ESU (Paris and Metz) Training and raising awareness of sustainable development and eco-behaviour ESU Foncière des Régions AREA 4 – GUARANTEEING AN ETHICAL AND TRANSPARENT FRAMEWORK ENSURING EXEMPLARY PRACTICES AT ALL LEVELS OF THE COMPANY Monitor the performance of the Board of Directors Conduct effective governance To be transparent and exemplary in our business activities reporting Increase the proportion of women sitting on the Board of Directors Group Anti-corruption awareness and training Promote ethical values Adhere to an ethical framework Foncière des Régions 162 Reference Document 2014 Sustainable development Foncière des Régions, a sustainable growth model 2014 results 2015/2020 objectives Deadlines Chapter wwIn 2014, participation in various conferences on the city of the future (e.g. Chaire Essec) wwStudy on value in use (Green Corner asset in Saint-Denis) Jointly build with our stakeholders a coherent and collaborative urban space ww87% (in value) of offices accessible by public transport ww89% (in value) of hotels accessible by public transport Anticipate and facilitate the emergence of new forms of transport wwVarious work on the LCA and embodied energy, in conjunction with the CSTB wwWork on Biodiversity with the Orée and HQE associations Develop innovation and undertake forward-looking studies with a view to value creation 2.3.3 2.8.2 wwStudy on the economic impact of the Office portfolio on the regions Participate in initiatives to boost the regions 2.8.1.4 wwPromotion of the Global Compact: Publication of the 3rd COP (”Communication On Progress”) Promote respect for Human Rights wwContinuation of stakeholder analysis and materiality matrix with GRI 4 compliance Develop targeted actions per stakeholder wwEssec, Palladio partnerships wwPasserelle Participate in cultural and social collaborative measures ww245 suppliers rated, verification of responses from 30 of them wwStudies/innovations in partnership with some twenty suppliers: including CSTB, EDF, Vinci, Bouygues. Innovate with our suppliers on group values 2.8.3 wwAnnual interviews and training plans wwTraining Week in September 2014 Attract, develop and retain talent 2.9.2 wwSigning of agreements/negotiation wwSigning of a new diversity agreement Promote diversity and equality wwSigning of a new Quality of Life at Work agreement Improve the quality of life at work and find a work-life balance wwCarbon footprint: carried out every three years at most wwPaper policy: reduce paper consumption by 30% between April 2013 and end-2014 Cut our CO2 emissions per employee by 25% over the 2010/2020 period 2020 2.9.6 wwSince end-2013, sustainable development has been incorporated into all integration programmes wwMonthly green meetings Make every employee a player in sustainable development 2020 H STAKEHOLDERS 2.9.6 wwEvaluation of members of the Board of Directors: internally annually + every three years by an independent third party Optimise the performance of the Board of Directors wwEPRA Best Practices Recommendations. Afep-Medef Recommendations, Code of Ethics, FSIF, GRI Guidelines Remain the leader in terms of the transparency of our business activities reporting wwIn 2014, 29% women on the Board of Directors (vs. the required 20%) 40% women on the Board of Directors wwIn 2014, 50% independents on the Board of Directors (vs. 42% at end-2012) 45% independents on the Board of Directors Ongoing Ongoing 2.8.1.3 2.8.1.2 2.9.4 Ongoing 2.2.4 2.8.1.3 wwUpdating of the Code of Ethics in 2014. Raising of employee awareness (process morning sessions attended by 150 employees) Disseminate and share ethical/anti-corruption best practices with all employees Foncière des Régions 2.9.4 2016 Ongoing 2.9.3 2.10.2.4 2.10.2 2.10.2.3 2.10.2.2 Ongoing wwAt end-2014: 150 employees trained (in particular risk of fraud/calls for tender) wwAudit and internal control procedures Ongoing ATIVE POLICIES 2.10.6 2.10.6 163 Reference Document 2014 2 2 Sustainable development A portfolio of green offices 2.3. A PORTFOLIO OF GREEN OFFICES Foncière des Régions is a Listed Real Estate Investment Company (SIIC) with a strategic focus on Office assets, which account for 65% of the €10 billion in assets that the group held as at 31 December 2014. Foncière des Régions is gradually renewing its portfolio with a strategy based on three areas to improve the environmental performance of its assets: continually enhancing asset quality (particularly with an active management policy), defending their value (rental and market value) to prevent obsolescence and strengthening partnerships with tenants. Foncière des Régions has become one of the leading developers in France in just a few years, with emblematic projects and a dedicated team with renowned expertise. The goal of greening our assets is significant for both development and renovation operations as well as for the portfolio in use. Our comprehensive sustainable development policy goes beyond energy and carbon performance to include all environmental and social aspects of Foncière des Régions’ assets, which follow the comprehensive sustainable development policy and which fall under the French Charter for commercial building energy efficiency, of which Foncière des Régions is a signatory. 2.3.1. Towards 100% green assets Based on the appraisal values of its offices in France as at 31 December 2014, 50.1% of Foncière des Régions’ assets are green. The greening rate for the “Core” asset portfolio, namely assets intended to remain in the portfolio long-term, reached 68.6% at end-2014 (vs 58.7% at end-2013). Foncière des Régions achieved one of its major objectives one year early in 2014, which involved making 50% of its Office assets portfolio in France “green” by the end of 2015. During 2014, two new certified constructions and the obtaining of four operating certifications (BREEAM In-Use) increased the green portfolio by 8.8%, enabling us to surpass the 50% green portfolio threshold. The chart below shows the rapid change in the greening rate, as well as future targets: the portfolio will comprise at least twothirds green assets by the end of 2017, and nearly 100% by the end of 2020. Gradually, the whole portfolio will be overhauled and will benefit from this momentum in environmental performance improvement. Assets whose buildings and/or operations have undergone certification (HQE + BREEAM, LEED, etc.) and/or have a well-known energy performance level (BBC-effinergie®, HPE, THPE or RT Globale labels) are considered “green”. Beyond this definition shared with IPD, the assets developed or restructured by Foncière des Régions often obtain both HQE and BREEAM certification. For now, the two trials initiated with LEED only involve the Italian subsidiary Beni Stabili, specifically to adapt to LEED Italia standards (see 2.7.1.3). PERCENTAGE OF GREEN ASSETS (OFFICES FRANCE) IN THE PORTFOLIO: GREENING OUR ASSETS ONE YEAR AHEAD OF OUR GOAL 100% 66.0% 50.1% 41.3% 23.6% 17.8% 20.2% 7.4% 2009 2010 2011 2012 2013 2014 2015 2016 2017 Target 2018 2019 2020 Target Our efforts to accelerate the “greening” of our assets since 2013 has impacted the delivery of new build and renovations and has resulted in the delivery of improvement works and certifications for sites in operation. Foncière des Régions 164 Reference Document 2014 Sustainable development A portfolio of green offices 2.3.2. An ever-changing portfolio 2.3.2.1. 100% green developments and renovations Foncière des Régions’ portfolio is constantly changing in order to anticipate upcoming regulations, changes in tenants’ needs and to adapt to market trends. The mapping carried out on the portfolio highlighted each of the three drivers’ potential to improve energy and environmental performance, summarised as follows: All of Foncière des Régions’ development operations have been HQE and/or BREEAM certified since 2010, often with a double certification for assets located in the Paris region. ww The building: eco-design ww 100% of asset developments and renovations are green (see 2.3.1). Renovations have the same greening priority, with reliance on HQE Exploitation certification and/or on the BBC(1) Renovation, HPE, THPE(2), or RT(3) Globale labels. For each operation, assumptions are modelled to reach the best standard possible while respecting an economic equation in compliance with the company’s financial profitability criteria. Decisions are adopted by integrating a long-term occupation and ownership approach, so Foncière des Régions most often relies on nine to even twelveyear leases. ww Progressive improvement through maintenance or multiyear work: the work carried out “mechanically” contributes to improving environmental performance. ww Operational maintenance: eco-management ww The roll-out of the operating certification process (HQE Exploitation or BREEAM In-Use) helps the greening of our assets in use, by defining and monitoring concrete objectives to improve each building’s performance (see 2.3.4). As such, the Carré Suffren asset underwent BREEAM Fit-Out certification (similar to the BREEAM construction certification in the end), which evaluates the quality of construction and services, the materials selected and layout. ww Without a strong commitment from the entire chain of suppliers, it would be pointless to hope to achieve the longterm performance expected of green buildings. Likewise, the responsible procurement policy launched in 2011 brings suppliers together and thus helps reach environmental footprint reduction goals (see 2.8.3). In this way, Foncière des Régions is striving to design buildings adapted to their environment, from a social, economic and environmental point of view, and increasingly uses the operating certification (HQE Exploitation or BREEAM In-Use) in order to distinguish the level reached and progress made. These processes are designed to ensure continuous improvement in the technical maintenance of buildings. ww Uses: eco-occupation ww The final building user’s involvement is vital, and best practices must be shared with tenants; it was with this goal in mind that environmental annexes were implemented throughout the portfolio starting in 2010 (see 2.2.4). Foncière des Régions’ new or restructured assets thus embody a real estate company that incorporates social and societal issues by offering better integration with their surrounding environment in terms of transport, biodiversity, etc. ECO-DESIGN + ECO MANAGEMENT + ECO-OCCUPATION = ECO-PERFORMANCE (1) (2) (3) Low consumption building. Very High Energy Performance. Thermal Regulation. Foncière des Régions 165 Reference Document 2014 2 2 Sustainable development A portfolio of green offices 2.3.2.2. Certifying operations so we can move forward together 2.3.2.3. State of progress on the greening of the portfolio Foncière des Régions chooses operational certifications for its assets by taking into account its tenants’ CSR policies. As a result, after having obtained the “NF HQE™ Commercial Buildings in use” certification for Tour CB 21 in early 2012 (68,000 m2 in La Défense), then for Carré Suffren in late 2012 (25,000 m2 close to the Eiffel Tower in the 15th Arrondissement of Paris), 11 assets have since obtained the BREEAM In-Use certification, representing 138,497 m2 and an appraisal value of €761.6 million as at 31 December 2014. The percentage of green assets is calculated as a value on the entire Offices portfolio held in France. This indicator is part of the monthly CSR reporting. The chart below illustrates the breakdown of certifications as at 31 December 2014, and in particular how a significant portion of assets (14.1%) have both HQE and BREEAM certifications. In addition, the portion of assets with BREEAM In-Use certification increased from 11.3% at the end of 2013 to 17.5% at the end of 2014. These two types of processes require the involvement of teams, suppliers and tenants to collect data, define and monitor quantified objectives and maintain the momentum that they generate from these processes. The HQE Exploitation certification is issued for five years with annual follow-up audits. Its British counterpart provides for renewal audits every three years, and intermediary audits can be conducted if significant work is carried out. BREAKDOWN OF CERTIFICATIONS IN VALUE 5% These processes support the shared dynamic under the environmental annexes and involve adjusting communication tools (awareness meetings, screens located in the buildings’ halls or elevators, posters, flyers, etc.) in order to encourage the enduser’s support. 14.1% 17.5% 13.5% Certified building (HQE or BREEAM) Certified exploitation (HQE Exploitation) – (2 buildings) Certified building (HQE or BREEAM) and/or labelised (BBC…) – (13 buildings) Building not certified and certified exploitation (BREEAM in-use) – (11 buildings) Building under development already expertised with a certification target – (7 buildings) The HQE (High Environmental Quality) certification characterises the virtuous practices that sum up at least three Highly Efficient (HE) targets and four Efficient (E) targets out of a total of fourteen targets set out in the Reference guide. Foncière des Régions 166 Reference Document 2014 Sustainable development A portfolio of green offices 2011 HQE Construction BBC RT 2005 NC 9,819 m² HE E HE HE HE HE HE HE HE E HE HE HE E 2012 HQE Construction BBC RT 2005 NC 5,298 m² HE B HE HE B E HE HE B 2012 HQE Renovation BBC Overall RT NC 9,420 m² HE HE HE HE E B HE HE HE HE HE B HE E 2012 HQE Construction HPE RT 2005 NC 6,533 m² HE B HE HE B HE E 2013 HQE Renovation BBC BREEAM 2013 HQE Construction BBC RT 2005 NC 4,998 m² 2014 HQE Construction BREEAM Very Good RT 2012 NC 2014 HQE Construction BREEAM Very Good RT 2012 6,335 m² BBC Renovation - NC BBC Effinergie + RT 2005 11,183 m² 11,506 m² HE E HE HE B Effinergie + BREEAM RT 2012 23,553 m² BBC BREEAM Very Good RT 2005 NC 2015 HQE Construction BBC RT 2005 - 2016 HQE Construction - RT 2012 12,684 m² - HE E HE E E 2016 HQE Construction BREEAM RT 2012 11,000 m² NC HQE Construction - RT 2012 4,254 m² HQE Construction - RT 2012 4,953 m² Water 24,864 m² Air NC 6 Space RT 2000 5 Olfactory - 4 Visual 2011 HQE Exploitation 3 Acoustics 68,077 m² HE E HE E 2 Hygrothermie NC 1 Maintenance RT 2000 Waste BREEAM Good Water 2010 HQE Exploitation Energy Usable area 56,193 m² HE E HE HE HE E HE B Work site Thermal regulation NC Procedure Label (BBC, THPE, etc.) or other certification RT 2000 Environmental HQE Certification - Net living area Delivery date 2008 HQE Construction 2016 City Health Quality Comfort 2016 Asset name Ecomanagement Construction HQE certifications obtained Target 7 8 9 10 11 12 13 14 B E Number of HE or E targets As indicated in the table below, Foncière des Régions maintains its focus on targets 1, 3, 4, 6, 7 and 8, thus highlighting its requirements in the area of eco-construction and respect for the environment, eco-management and energy performance, in addition to user comfort. Siège Eiffage Construction Vélizy-V. Le Divo Metz Le Floria Fontenaysous-Bois SICRA ChevillyLarue Le Patio LyonVilleurbanne Le Pégase Clichy New Vélizy Thales Vélizy-V. Montpellier Egis Montpellier E B HE B RT 2005 13,277 m² 14,369 m² HE E E HE HE HE HE HE HE B E HE B HE HE HE B E E HE B HE E HE E B E E E E B E E B B B E B E HE B HE HE B B E B E B B B HE E E E E B E E B E 45,262 m² HE E HE E E HE HE E B E B E B HE 6,073 m² HE E HE E B HE HE E B E E B E HE 3,690 m² HE B HE HE HE E HE HE E 9/14 Carré Suffren Paris E 12/14 La Défense B 9/14 Tour CB 21 E 8/14 Vélizy-V. 11/14 11/14 10/14 Dassault Systèmes 14/14 10/14 13/14 10/14 Operations delivered HQE Construction Green Corner Saint-Denis Euromed Center Marseille Extension DS Campus Vélizy-V. Silex 1 Lyon Avignon Avignon Bose SaintGermainen-Laye NC B B B HE HE E HE HE HE HE HE HE HE HE HE HE HE HE 11/14 2015 HQE B 8/14 Vélizy-V. B 14/14 Campus Eiffage E HE E 13/14 2015 HQE 22,120 m² HE E HE HE HE E HE B E E E E E E 47,494 m² HE B B B E B B E E HE B B B B B B E HE E HE E E HE HE E B E E B E E NC HE E HE E B HE HE E E E E E E E NC HE B HE E E B E B B B E E HE E HE HE B E HE E 8/14 Nanterre 8/14 Respiro B HE B HE HE 12/14 2014 HQE Renovation 13/14 Paris 9/14 Steel 2015 Operations in progress - HQE profiles targeted HE: Highly efficient; E: Efficient; B: Basic Foncière des Régions has obtained the certifications and (BBC) labels for which it has applied, for all its development and renovation operations. CERTIFICATION OBTAINMENT RATE: 100% OF APPLICATIONS PROCESSED HAVE BEEN SUCCESSFUL Foncière des Régions 167 Reference Document 2014 2 2 Sustainable development A portfolio of green offices 2.3.3. Innovation, a value-creation driver With each new development and renovation project we research new innovative solutions to optimise the quality of the building and services over the long-term while controlling costs. By operating under the assumption that we will hold our portfolio for several years, Foncière des Régions prioritises solutions that are consistent with our entire sustainable development policy and which will ensure our clients’ comfort and satisfaction. Prior to delivery, Foncière des Régions uses “commissioning”, a process which enables us to carry out an assessment at each stage of the building’s completion in order to confirm that the energy and environmental performance scenario modelled during the design phase will be effectively met once the building is in operation. . As a landlord concerned with the economic and environmental performance of its assets, Foncière des Régions practices an approach that consists of questioning the overall cost, which enables it to take into account both construction or renovation expenses as well as current operating expenses (rental costs, maintenance work). Energy or ecological impacts must also be considered for the entire life of the asset. Lastly, new tools must be invented and shared to control the work site, then to manage the asset. Foncière des Régions anticipates regulations and innovates in areas as diverse as energy (box below and Chapter 2.3.4), tools (Chapters 2.2.3.1 and 2.2.3.2), biodiversity (see Chapter 2.3.7.2) and air quality (Chapter 2.3.7.4). Since 2010, Foncière des Régions has used Life Cycle Analysis (LCA) to measure the footprint of its development programmes. In 2013, we broke new ground by completing one of the first LCAs (if not the first) on a building renovation (the Steel building in the 16th arrondissement of Paris) and on a hotel (see Chapter 2.4.2). Assigned to the HQE Performance programme, these studies helped make the ELODIE software (developed by the CSTB) calculation methods more reliable, helped build a database and helped fine tune key indicators, which will be used in the next version of the HQE certification. 2.3.3.1. Understanding impacts with LCA By being a step ahead, Foncière des Régions is leading the way, protecting our assets from rapid obsolescence and providing its teams access to learning future solutions. In a number of respects, innovation constitutes a value-creation driver for Foncière des Régions. The LCA performed for the Steel building with the RFR Eléments Research firm became the pilot used by the Building Scientific and Technical Centre (CSTB) in late 2014/early 2015 to create the LCA Renovation Reference Guide, which will be tested in 2015/2016. Euromed Center starts using ocean geothermal energy Euromed Center is located in the middle of the Euroméditerranée business district in Marseille and is being developed by Foncière des Régions and Crédit Agricole Assurances. It includes the construction of 70,000 m2 divided up into four office buildings, the 4* hotel Golden Tulip and a public car park. The different LCAs are built from the analysis of six modules (materials, energy, water, travel, work site and waste), based on nine environmental indicators: total primary energy consumption (kWh) and non-renewable primary energy consumption (kWh), climate change (kgCO2e), water consumption (m3), hazardous waste (t), radioactive waste (t), non-hazardous waste (t), atmospheric acidification (kg equivalent SO2) and formation of photochemical ozone (kg equivalent C2H4). Starting in 2016, this programme will be put together with one of the largest ocean geothermal energy power stations in Europe, called “Thassalia”, for four of the five assets remaining to be built. It will pump seawater from the Port of Marseille to feed heat exchangers and pumps that will produce either heat or refrigeration to meet demand for both heating and cooling systems in the buildings. This installation will reduce greenhouse gas emissions by 70% and water consumption used in the cooling systems by two-thirds. Compared to a classic system, joining this installation will enable: -40% of electrical consumption +70% renewable energy -70% of CO2 emissions In addition to optimising impacts from thermal building regulations, these innovative approaches enable Foncière des Régions to identify the areas that require more effort: energy and water consumption during the work site stage, CO2 emissions and transport. LCA is a decision-making tool that considers environmental restrictions, especially in the choice of materials and equipment, taking into account their manufacture and their impacts in terms of energy (embodied energy) and biodiversity (embodied biodiversity). -90% of refrigerants -65% of water consumption -80% of chemical product use (Source Cofely) Foncière des Régions 168 Reference Document 2014 Sustainable development A portfolio of green offices 2.3.3.2. Building and Managing in 3D with BIM Going forward, using these procedures and tools should allow for construction that is quicker, less expensive and takes all environmental matters into account. In the case of the New Vélizy operation, 3D modelling has even allowed for better integration of the asset into the block where it sits, thanks to modelling of the land surrounding it. The New Vélizy campus, developed by Foncière des Régions in Vélizy-Villacoublay close to Paris, is one of the first French buildings whose construction has benefited from Building Information Modelling, called BIM since 2012. Delivered in the autumn of 2014, this Thales headquarters, comprising three office buildings totalling 49,000 m2, currently uses the BIM mock-up for its maintenance and operation. Using this type of collaborative platform can also be useful for handling challenges related to “cleantech” (renewable energy, smart grids, etc.), waste treatment, transport, etc. For Foncière des Régions, the BIM is a tool that helps in decisionmaking, design and management, and could make it easier to monitor operations at every stage of the life cycle. Once again, innovation is long-lasting and meets a triple objective of continually improving service quality provided to tenants, improving asset performance at all stages of its life cycle and creating synergies between the parties involved in the asset. Building Information Modelling (BIM) builds and sustains a comprehensive and coherent 3D building database, throughout the life of the project: design, completion, operation, deconstruction. This database allows all participants in the project to collaborate through one same platform, at each stage of the project. With 3D tools, precise plans and metrics can be prepared. 2.3.4. Improving the energy performance of buildings 2.3.4.1. Leading an ambitious works policy Foncière des Régions’ goal is to reduce primary energy consumption per m2 on average for its entire portfolio by the end of 2015 (the reference year being 2008); for the 2015-2020 period, the goal is an additional decrease set at 15% (see action plan Chapter 2.5.3). Multi-annual work plans help keep up momentum in monitoring improvements to energy performance in the portfolio: without creating new expenses and simply ensuring that the work carried out helps control costs and saves energy. Thanks to this, every terrace waterproofing renovation job includes insulation criteria, every heating, air conditioning or lighting project is carried out featuring low energy consumption equipment, etc. Foncière des Régions also uses low-consumption lighting, materials and products (paint, carpeting, etc.) that are low in emissions of volatile organic compounds (class A+), and it upgrades systems (heating, air, etc.), which helps continuously improve the environmental performance of its portfolio. This work is performed while ensuring that they are eligible for energy savings certificates. In less than three years, close to €267,000 has been saved thanks to this mechanism. In order to reach these ambitious goals, the overall energy policy applied to the portfolio enables us to use different drivers simultaneously: asset development and renovation, negotiations to acquire higher-performance assets, optimisation of site maintenance by using lessons learned from the first operating certifications obtained or in progress, annual work programmes (earmarking 15-20% for materials or equipment that improves building performance). All of these initiatives “mechanically” reduce energy consumption. As a signatory of the French Charter for commercial and private building energy efficiency, Foncière des Régions communicates its energy consumption to the Sustainable Building Plan as part of an annual follow-up for the Charter. In 2014, Foncière des Régions created a Green Work Site Charter for its tenants (covering all environmental aspects), which will ensure that their work takes into account matters related to energy, water, waste, noise, pollution risks, emissions into air and water as well as relations with locals, as best as it can. The Decree of 24 November 2014 This legislation requires companies with more than 250 employees whose annual revenue exceeds €50 million, or whose total balance sheet exceeds €43 million, to conduct energy audits by 5 December 2015. The audits must pertain to assets representing 80% of invoices (65% for the first year) and must be conducted every four years. This requirement applies to the party that “manages the energy” – in other words, specifically the entity, analysed by SIREN, that pays the invoices and is able to carry out improvement work. In practice, Foncière des Régions is subject to this requirement for French, multi-let buildings that it directly manages. Tenants are managing this subject for single-let buildings. Foncière des Régions 169 Reference Document 2014 2 2 Sustainable development A portfolio of green offices 2.3.4.2. Monitoring improvements to energy performance in the portfolio climatic variations has fallen between 2008 and 2014 from 220 to 181 kWfe/m2SHON/year, and from 490 to 374 kWpe/m2SHON/year, representing a drop of 18% and 24% respectively, which is in line with the improvement of the portfolio’s environmental quality and with the 25% reduction target by the end of 2015. These figures concern our French office portfolio in its entirety. Monitoring consumption trends is carried out through an energy mapping programme conducted with CSTB, drawing a distinction between three asset “families”: Orange, EDF and “other offices”. From 10% in 2008 (sample of initial study), the collection rate increased to reach 79% of the portfolio’s surface area by 2014, enabling the company to better understand its actual performance. At the same time, the level of energy consumption adjusted for The reduction recorded in 2014 was due to efforts to reduce the portfolio’s energy footprint as well as changes in the composition of the portfolio. The two charts below show the results taking climate adjustments (summer and winter) into account, as calculated by the CSTB, so as to make consumption since 2008, the benchmark year, comparable. CHANGE IN THE FINAL ENERGY RATIO (kWfe/m2SHON/year) 254 222 220 2008 275 231 2009 241 209 220 2010 Without climate adjustment 2011 CHANGE IN PRIMARY ENERGY RATIO (kWpe/m2SHON/year) 498 490 196 194 189 178 166 181 2012 2013 2014 2008 584 639 530 2009 560 498 516 2010 Without climate adjustment With climate adjustment 2011 429 420 425 402 2012 2013 348 374 2014 With climate adjustment Consumption for the Office portfolio fell again between 2013 and 2014. Like-for-like, energy consumption with climate adjustment showed a slight increase in final energy (consumed) and in primary energy (gross energy before transformation), theoretically reflecting the fact that improving the overall performance of Foncière des Régions’ portfolio occurs by rotating the portfolio. LIKE-FOR-LIKE BUILDING ENERGY INTENSITY (WITH CLIMATE ADJUSTMENT) 379 404 181 194 kWhef/m²SHON/year kWhep/m²SHON/year 2013 2014 In addition to monitoring actual consumption (from invoices), monitoring Energy Performance Diagnostics carried out to meet regulatory requirements provides additional insight, albeit less qualitative. These tests are required for all locations and all asset sales. Valid for 10 years, they thus present a snapshot. The table below shows a breakdown of Foncière des Régions’ Office portfolio according to Energy Labels from the EPC performed on the portfolio owned as at 31 December 2014. The percentage of assets tested accounted for 69% in value as at the end of 2014 (vs 65% as at the end of 2013). Foncière des Régions 170 Reference Document 2014 Sustainable development A portfolio of green offices BREAKDOWN OF THE FONCIÈRE DES RÉGIONS’ OFFICE PORTFOLIO ACCORDING TO ENERGY PERFORMANCE CERTIFICATE ENERGY LABELS Energy Label: energy consumption (kWhpe/m2/year) Value (€m) Energy Label ≤ 50 A 51-110 111-210 211-350 351-540 541-750 > 750 B C D E F G Surface area (m2) 2014 A 244 B C 2014 6.5% 57,399 168 4.5% 112,516 6.5% 774 20.6% 194,222 11.2% D 311 8.3% 181,749 10.5% E 358 9.6% 243,308 14.0% F 262 7.0% 142,194 8.2% G 462 12.3% 260,341 15.0% 2,579 69% 1,191,728 69% Total 3.3% 2.3.5. Reducing the climate footprint For instance, based on regulatory calculations, renovations carried out on our operational portfolio resulted in a reduction of emissions in the Le Patio building in Lyon-Villeurbanne to 3 kgCO2e/m2/year, those of the Le Floria building in Fontenaysous-Bois to 3 kgCO2e/m2/year and the Clermont-Ferrand ERDF site to 5 kgCO2e/m2/year. The decline reached -92% in the case of the last operation. The Intergovernmental Panel on Climate Change (IPCC) has highlighted a link between the acceleration of greenhouse gas emissions released into the atmosphere, which has been exponential since the Industrial Revolution, and climatic changes observed worldwide, including drought, desertification, melting glaciers, arctic warming, elevated sea levels, etc. A two to four degree rise in temperature on average is expected during the 21st century, and the consequences of this on flora and fauna, including species extinctions, are incalculable today. This trend is in addition to different environmental degradations (pollution, deforestation, etc.) associated with human activity. 2.3.5.2. Measuring to reduce In order to ensure maximum transparency, Foncière des Régions’ carbon reporting follows EPRA and GHG Protocol recommendations. In addition, Foncière des Régions asked CSTB, responsible for all of the group’s environmental indicator calculations, to estimate each business activity’s largest greenhouse gas emissions. The results showed a substantial percentage of carbon among them. In addition to World Climate Summits (the next of which will be held in Paris in late 2015) and European or national initiatives, Foncière des Régions believes that it is everyone’s responsibility to adopt responsible behaviour. In order to reduce our carbon footprint and combat climate change, the group adopted a global carbon and reporting policy in 2010 enabling us to monitor the progress against our action plans. The carbon footprint adjusted for climactic differences has declined from 25 kgCO2e/m2SHON/year for the portfolio in 2008 to 23 kg kgCO2e in 2014 (vs 21 kgCO2e in 2013), i.e. a decrease of 8%. Over the 2013/2014 period, the increase recorded reflects a more carbon-heavy energy mix over the entire reporting scope. 2.3.5.1. Reducing carbon emissions from buildings Since 2010, Foncière des Régions has also aimed to control greenhouse gas emissions to levels below 26 kg CO2/m2SHON/ year on average in our French operational offices portfolio. Carbon emissions and embodied energy are systematically and extensively analysed for all new operations, renovations and work carried out on the portfolio. The LCAs (see Chapter 2.3.1.1) supplement this process in order to adopt the best solutions at an equivalent price. Modelling based on technical solutions, cross-referenced with financial feasibility studies, optimises the balance between environmental and financial performance. CARBON INTENSITY OF THE OFFICE PORTFOLIO (kgCO2e/m2SHON/year) 25 25 2008 27 29 25 2009 25 22 23 23 23 22 21 2011 2012 2013 2010 Without climate adjustment Foncière des Régions 171 Reference Document 2014 21 23 2014 With climate adjustment 26 2 2 Sustainable development A portfolio of green offices On a like-for-like scope, carbon emissions increased 8.6%, with climate adjustment. These results are broken down by greenhouse gas in the table below. GHG emissions like-for-like CO₂ CH₄ NO₂ HFCs PFCs SF₆ NF₃ Other Total emissions (kgCO2e/m2SHON/year) 2013 2014 20,867 0.015 0.283 0.000 0.010 0.097 0.000 1.446 22,712 0.015 0.302 0.000 0.011 0.102 0.000 1.539 22.7 24.7 Lastly, Foncière des Régions’ carbon footprint approach for the Offices portfolio according to the EPCs performed on 68% of the surface area owned as at 31 December 2014. The table below presents the breakdown according to the Carbon Label called the “Climate Label”: Climate Label: greenhouse gas emissions (kgCO2e/m2/year) Value (€m) Climate Label ≤5 A 6-15 16-30 31-60 61-100 101-145 ≥ 145 B C D E F G Surface area (m2) 2014 2014 A 21 1% 29,235 1.7% B 406 11% 168,057 9.7% C 1,310 35% 509,994 29.4% D 563 15% 231,030 13.3% E 194 5% 161,077 9.3% F 10 0% 12,536 0.7% G 76 2% 79,798 4.6% 2,579 69% 1,191,728 69% Total 2.3.6. Controlling health and climate risks Asset acquisition and management require carrying out a certain number of diagnostic tests, which may be mandatory depending on the asset’s construction date, and include asbestos, pest report according to the municipality (e.g., termites), physical and geological risks report (e.g. risks of flood, subsidence, coastal submersion, Seveso risks, etc.), energy performance certificate, as well as lead, electricity and gas for housing units. des Régions strives to control the health and environmental risks of all its office assets. These risks may be subjected to additional investigations (ground contamination, etc.), periodic monitoring (asbestos, for example) or specific analysis (legionella, etc.). Each asset undergoes all regulatory diagnostic testing. Foncière des Régions has a dedicated team responsible for matters related to environmental safety. It is involved in the analysis of acquisitions, and again during the management period, up to the creation of data rooms for sale. With attention to the specific requirements for ICPE sites (i.e. establishment classified for environmental protection) Foncière As at 31 December 2014, the main risks for the Foncière des Régions Offices portfolio related to 375 sites (vs 423 at 31 December 2013 – a difference due to disposals), were as follows: Diagnostic procedures in place Area (1) (2) (3) 2014 2013 Technological and natural risks – number of cases surveyed: Polluted sites and ground: pollution risks – number of sensitive sites: Cooling towers – number of sites concerned: 423(1) 125(2) 2(3) 100% 100% 100% 375 121 2 100% 100% 100% Status of risk surveys in place. Sites where the history and use suggest a ground pollution problem. Sites where the operator of the tower is the owner. As in previous years, in 2014, Foncière des Régions was not convicted nor had any judgement against it for failure to comply with environmental regulations. Foncière des Régions has therefore never had to book provisions or guarantees for contingencies in the environmental domain. Foncière des Régions 172 Reference Document 2014 Sustainable development A portfolio of green offices 2.3.7. Limiting environmental impacts by anticipating regulations 2.3.7.1. Reducing water consumption 2.3.7.2.1. Sensitivity of site location in relation to ecological interest areas A building consumes water both during its construction (concrete, cleaning, etc.) and during its operation (occupier usage, housekeeping, watering, cooking, etc.). The new operations developed by Foncière des Régions most often recover rain water and use it for watering. The G4-EN11 indicator provides information on “operational sites owned, leased or managed in protected areas or adjacent to protected areas, as well as areas with high levels of biodiversity outside protected areas”. Protected areas (Natura 2000, Protection Decrees and Biotope), and areas with high levels of biodiversity (natural areas of ecological, flora and fauna interest, called ZNIEFF) were identified within 1, 2, and 5 km radii of each site studied using analysis and mapping data. Regarding its operating Offices segment, Foncière des Régions has set an objective of measuring and monitoring water consumption across the entire reporting scope. With the operating portfolio, reducing our water footprint involves systematically using water-saving equipment and carefully monitoring consumption, whether this concerns the occupants or, where applicable, company restaurants and green spaces. Result: none of the sites in the research scope were located in ecological interest areas as defined by the GRI, and only 25% of sites were located close to several areas subject to regulations or with high levels of biodiversity. To this end, a water usage reporting campaign is carried out each year among tenants. It has reached 90% for assets falling under “operational control”, namely the multi-let sites managed directly by Foncière des Régions teams, and 40% of single-let buildings, for which the tenants report their usage. All of these consumption figures are detailed in Chapter 2.11.3.1. 6% 25% Low sensitivity High sensitivity For the 2015/2020 period, Foncière des Régions’ goal will be to keep water consumption below 0.5 m3/m2/year in its France Offices operating portfolio, and monitor volumes used as part of development and renovation operations. 69% Moderate sensitivity Breakdown of sites according to their ecological sensitivity: 2.3.7.2. Analysing the impacts of business activities on biodiversity ww Low sensitivity: no ecological interest area within a 5 km radius. ww Moderate sensitivity: between one and three ecological interest areas, including at least one Natura 2000 protected area. Foncière des Régions aims to manage the sites that it holds in such a manner as to make them true drivers of biodiversity. Chapter 2.8.2 presents Foncière des Régions’ policy on biodiversity. ww High sensitivity: more than three ecological interest areas, including several Natura 2000 protected areas. With the operational offices portfolio, the BREEAM In-Use certification procedures carried out in 2013 and 2014 led to the completion of advanced environmental studies by a specialised firm. These allow for defining areas of progress for each site concerned and for progressively creating a biodiversity map for the portfolio. 2.3.7.2.2. Impact of sites on ecological interest areas Furthermore, an analysis was carried out in 2014 on 16 out of 20 Office sites whose green spaces Foncière des Régions’ teams directly manage (the green spaces of single let sites are managed by the tenants), in order to assess the impact of business activities on biodiversity. Most of these sites are located in the Paris region and the other assets are spread out across France. Result: at the end of the mapping analyses, no site in the study was located in an ecological interest area, which means that the impact of sites studied on these areas is very low. The G4-EN12 indicator describes “significant impacts of activities, products, and services on biodiversity in protected areas and areas with high levels of biodiversity outside protected areas”. Foncière des Régions’ business does, however, have an impact on biodiversity. The construction of new buildings can cause the destruction or fragmentation of natural areas. Work site stages are also sources of disruption for flora and fauna, especially if the work site stage is taking place during breeding periods. An analysis was carried out regarding four GRI 4 Biodiversity indicators. The consumption of construction materials also indirectly impacts biodiversity. The type of material (renewable or not) and conditions of their use (pollution, habitat destruction, not restoring habitat after use) are both criteria to take into consideration to reduce the impacts of this “embodied biodiversity” (ex-situ). Foncière des Régions 173 Reference Document 2014 2 2 Sustainable development A portfolio of green offices its domestic equivalent and whose habitats are located in areas affected by business activities, by level of extinction risk”. Lastly, in designing and managing building green spaces, it is possible, for instance, to encourage the implementation of continuous green space areas that are more favourable to biodiversity than several small and broken up plots; to limit glass surfaces, which can cause bird collisions and to reduce light pollution, harmful to nocturnal insects and a certain number of bat species. Result: the ecological diagnostic tests performed under BREEAM In-Use certifications obtained did not observe animal species appearing on the IUCN’s red lists. Therefore, there was no impact. Arranging green spaces helps make sites favourable areas for biodiversity through: 2.3.7.3. Producing less and less waste ww landscaping Aware of the advent of the circular economy, Foncière des Régions is committed to raising awareness of waste-related challenges among its tenants and its staff at its own premises by promoting waste recycling (see Chapter 2.9.6.2), as well as at its work sites (developments, renovations and major repairs). ww surface area of green spaces and continuity ww selecting planted and seeded varieties ww presence of areas favourable to biodiversity ww managing green spaces In France, the municipalities manage waste removal in almost all of the assets owned by Foncière des Régions. The only information likely to be collected from the company concerns the selective nature (or not) of the collection. Out of the entire portfolio of assets owned by Foncière des Régions as at 31 December 2014, 100% benefit from selective collection (i.e., separate collection of different waste streams to allow for it to be recycled or disposed of most appropriately). ww maintenance schedules (e.g. grass cutting) ww using plant protection products. 2.3.7.2.3. Presence of sites in protected or restored habitats The G4-EN13 indicator “Presence of sites in protected or restored habitats” aims to indicate the surface area and location of protected or restored habitats under the influence of the company’s business activities. However, on a few sites, there are private companies that are responsible for waste removal, which enables us to monitor waste tonnage by type and percentage of waste recycled (see Chapter 2.11.3.1). This is the case in Foncière des Régions locations where 100% of paper and cardboard have been recycled for more than five years. Result: out of all the habitats present on Foncière des Régions’ sites that underwent analysis and ecological visits, none were in protected or restored habitats. Therefore, these sites have no impact on protected or restored habitats. Lastly, development and renovation operations are strictly monitored in terms of waste production, just like energy and water consumption. 2.3.7.2.4. Impact of sites on species appearing on the IUCN’s red lists The G4-EN14 indicator “Impact of sites on species appearing on the IUCN’s red lists” aims to define the ‘total number of threatened species appearing on IUCN’s global red list and on For example, the table below presents an extract from a work site’s consolidated environmental reporting. New Vélizy in Vélizy-Villacoublay Offices surface area (m SHON) 45,262 2 Energy consumption 2,299,296 kWh Water N/A Non-hazardous waste (DIB) (tonnes) 658 Of which % recycled/reused 74% Of which % incinerated for recycling as energy 21% Of which % buried/dumped 5% Of which % managed by the municipality N/A Hazardous Waste (tonnes) 23.4 Inert Waste (tonnes) 734 Foncière des Régions 174 Reference Document 2014 Sustainable development A portfolio of green offices 2.3.7.4. Consumer health, indoor air quality for occupants, while taking into account the growing demand for open space and modular locations as well as urban density: protecting occupants from exterior noise and reducing the building’s noise nuisance (rooftop equipment, etc.) for third parties (locals, etc.). After home, the office is the most frequented place for a fair amount of French people. There are several factors related to quality of work environment that influence employee health, well-being and performance, such as air quality, acoustics, lighting, etc. At the same time, there is currently little data on these spaces in comparison to homes and living areas welcoming children. The European OFFICAIR research project thus set the objective of studying air quality and comfort in new or recently renovated office buildings in Europe. In France, 21 office buildings participated in the project between 2012 and 2014 (out of a total of 167 spread across eight countries), two of which were buildings of Foncière des Régions. 2.3.7.6. Land use Aware of the decreased availability of fertile/food-producing land and ground water (soil sealing), as well as of flood risks, Foncière des Régions strives to limit urban sprawl by including its developments in requalification operations that encourage “rebuilding the city on top of the city”. For instance, the operations in Cœur d’Orly, Green Corner (Saint-Denis), New Vélizy (Vélizy-Villacoublay) or Euromed Center (Marseille), illustrate this approach: they add value to already urbanised land and to existing assets, thus helping to safeguard still untouched areas with strong potential for biodiversity. Several lessons were learnt from this project. For example, the first reference framework of data pertaining to the air quality inside office buildings, is available today due to measures implemented (volatile organic compounds, ozone, nitrogen dioxide, particles, etc.). Reproduced during two contrasting seasons (summer/winter) and under various configurations, particularly on different floors of a building, these measures help us to understand the effect of certain parameters: proximity to the road, influence of the temperature, etc. Additionally, an intervention study conducted in one building per country (eight buildings in all) revealed the emission of volatile organic compounds by floor cleaning products for the first time. A decrease in aldehyde concentration in the air was observed in the air of the spaces where a lower-emission product was used to clean the floors every day. The contribution of office equipment, printers and photocopiers, was not shown in the project, as ozone and particle concentrations are more often associated with concentrations measured in outside air. This can be related to the fact that this equipment is often placed in dedicated rooms, a location that remains preferable. As at 31 December 2014, Foncière des Régions is not concerned by an obligation to decontaminate or clean up one of its sites in operation. Once again this year, Foncière des Régions has not had a conviction or judgement rendered against it for not complying with environmental regulations and has never had to book provisions or provide guarantees for environmental contingencies. 2.3.7.7. Adapting to the consequences of climate change Following the 5th Assessment Report published in 2014, the Intergovernmental Panel on Climate Change (GIEC), and the work of the National Observatory on the effects of global warming (ONERC), Foncière des Régions has identified the main paragraphs which could have an impact on its business activities and has implemented measures to prevent and adapt as necessary, which aim to: The currently available data remains limited to a few buildings for France, including the two Parisian headquarters of Foncière des Régions. In order to enlarge the sample, the Observatory of Interior Air Quality (OQAI) launched a national campaign to measure interior air quality and comfort in 300 office buildings spread out across all of France. Foncière des Régions is also a participant in this unique campaign. ww reduce the vulnerability of occupants to the effects of heat waves and increase summer comfort requirements in buildings ww analyse the risks of temporary or permanent river or sea flooding (flood risk prevention plan – PPRI) resulting from rising sea levels and due to storms 2.3.7.5. Noise nuisance pollution ww study land quality and its vulnerability to flooding prior to any acquisition, and adapt building foundations to ground instability (shrinking and swelling of clay-based soils) Noise is one of the factors related to a building which has one of the largest impacts on employee productivity. Comfort and user well-being are key concerns for Foncière des Régions, so the company strives to make buildings that optimise acoustics Foncière des Régions ww implementing recommended provisions in regulations of Natural Risk Prevention Plans. 175 Reference Document 2014 2 2 Sustainable development Strong partnerships with tenants that strengthen the Hotels and Service Sector business Foncière des Régions has implemented reporting on various risks considered as relevant to its business activities: Number of sites concerned 2013 2014 Subsidence 44 46 Earthquake 2 2 Risks Flood 84 75 Thermal effect 3 3 Waiver effect 3 3 Toxic effect 2 2 13 10 Avalanche 0 0 Forest fires 9 10 Torrential rain 0 0 Cyclone 0 0 Rise in groundwater level 2 2 Volcano 0 0 Mining 0 0 Other mining risks 1 1 Drought Other natural risks TOTAL 32 30 195 184 2.4. STRONG PARTNERSHIPS WITH TENANTS THAT STRENGTHEN THE HOTELS AND SERVICE SECTOR BUSINESS With over 400 hotels in Europe, Foncière des Régions is now in the top tier of leading European players in the Hotels and Service Sector via its subsidiary Foncière des Murs. 28.5% owned by Foncière des Régions and controlled via a partnership structure, Foncière des Murs has built up recognised expertise in acquiring and increasing the value of real estate portfolios outsourced by leading players in the various sub-sectors, including hotels (Accor, B&B Hôtels, Louvre Hotels Group, NH Hotel Group and Meininger), restaurants (Courtepaille, Quick), health (Korian) and retail (Jardiland). The occupancy rate of the assets remained at 100% at year end 2014, with long leases offering a residual term of 6.8 years on average. As at 31 December 2014, the Hotels and Service Sector portfolio was valued at €3.2 billion, covering a total area of 1.45 million m2. The Hotels and Service Sector’s staff belongs to the Foncière des Régions Economic and Social Unit. 2.4.1. Innovating to support users In 2014, Foncière des Régions expanded its presence in hotels, assisting the French hotel group B&B Hôtels with the financing of its organic growth in Germany through the development of 10 or so hotels in Berlin, Frankfurt, Hamburg and Munich, representing almost €50 million. Other geographic diversification by the group were the acquisition of the 4* NH Amsterdam hotel for €48.3 million, let to the NH Hotel Group under an indexed, fixed-rent, 20-year, firm, triple net lease, the development of a partnership with Meininger, a chain which rolling out across Europe a hybrid hotel concept where rooms or beds can be rented, targeting both families and business travellers. certain number of operators are looking to sell businesses as well as premises. Always looking to innovate and support its partners, Foncière des Régions decided to innovate by establishing a new structure, led by hotel management specialists, dedicated to investing in hotel premises and businesses. With an investment capacity of at least €300 million in 2015, this new structure will expand its delivery models in conjunction with leading European hotel chains, starting with the purchase of two Motel One hotels in Germany, for €104 million, with a view to transforming them into “Première Classe” hotels (via a management contract with Louvre Hotels Group), as well as the off-plan purchase from Eiffage of a 305-room Pullman hotel (€55 million) in Roissypole (Roissy-Charles de Gaulle airport), which will be run by Accor, also under a management contract. The needs and strategies of tenants have changed since Foncière des Régions started this business in the early 2000s. Now, a Foncière des Régions 176 Reference Document 2014 Sustainable development Strong partnerships with tenants that strengthen the Hotels and Service Sector business 2.4.2. Designing eco-friendly assets Since 2010, Foncière des Régions has set itself the goal of having all new developments in its hotels and service sector portfolio designated “green”, namely having the construction and/or usage certified (HQE or BREEAM, or LEED, or equivalent) and/or designed in line with recognised energy performance standards (BBC-effinergie, HPE, THPE, RT Globale). collected. This hotel boasts very high-performance equipment: production of domestic hot water (DHW) using a Heliopac system covering 50% of DHW needs; Technical Building Management (TBM) to manage equipment; dual-flow air treatment unit with energy recovery and full exterior insulation. Moreover, this building is the first hotel in France to have undergone a life cycle analysis (LCA). Reporting to CSTB as part of the HQE Performance programme, this LCA covered the 11 programme indicators and constitutes a unique tool for analysing the various areas of impact: energy and embodied energy, carbon, materials, water, waste etc. This analysis showed that the Heliopac system made it possible to reduce the impact of the Energy Module by 33% and to save 118 kWhpe m2SHON/year, thereby avoiding the production of 2.5 tonnes of radioactive waste during the asset life cycle, modelled over 50 years. The construction of the B&B Porte des Lilas hotel, completed in June 2014, is an example of this, with receipt of HQE “Commercial Buildings-HQE Approach-Hotels” certification, the Clé VerteHôtel label, and a level of conventional energy consumption around 45% below the 2005 French thermal regulation, equivalent to the THPE EnR label. This 7,104 m2 and 265-room complex was built in an urban renewal zone. The rooftop equipment was carefully considered in order to limit noise nuisance and the terrace of one of the two buildings was planted and the rainwater 2.4.3. Speeding up the environmental transition of the portfolio In the Hotels and Service Sector segment, Foncière des Régions has so-called “triple net” leases, meaning that the tenant is responsible for ongoing maintenance, the major works in Article 606 of the French civil code as well as taxation. Foncière des Régions therefore has very limited scope for managing the energy and environmental performance of single-let buildings outside of specific works programmes, such as those agreed in return for an extension to the lease and/or an increase in rent. These annexes in particular cover rules governing the communication of data on utility consumption required for the detailed reporting in Chapter 2.11.3.2. In such cases, tenants are asked to participate in studies (energy, biodiversity etc.) or provide feedback (asset certification, metrology-metering, carbon footprint etc.). 2.4.3.2. Improving the energy performance of our assets The sustainable development partnership committees, established since 2009, have nevertheless facilitated the signing of environmental annexes, as well as the energy and environmental mapping of assets, which has involved measuring their environmental footprint across some twenty indicators. Since operating expenses are often second among expense items after payroll for businesses in the hotel and health sectors, the tenants in the Hotels and Service Sector portfolio are particularly sensitive to matters involving energy or water use. While in-use certification (HQE Exploitation, BREEAM In-Use, LEED EBOM) has not yet been rolled out in the hotel sector, Foncière des Régions has nevertheless decided to carry out a number of tests in 2015, in coordination with four of its tenants, in order to make them aware of these new tools. In addition, a number of them prefer ISO 14001 certification, in order to ensure widespread application of best practices and CSR reporting on their portfolios. Accor has thus rolled it out across its Ibis and Novotel hotel portfolios. At year end 2014, 34.1% of the Hotels and Service Sector portfolio was already ISO 14001 certified. 2.4.3.1. Improving the environmental performance of our assets through environmental annexes The partnerships developed with tenants have enabled the inclusion of environmental annexes in all leases for premises over 2,000 m2. Since 2013, environmental annexes have been included in 100% of the leases covered by this requirement (new or in progress). Furthermore, portfolios comprising assets that are individually under the regulatory threshold of 2,000 m2 (e.g. Quick, Courtepaille) also added environmental annexes. Foncière des Régions 177 Reference Document 2014 2 2 Sustainable development Strong partnerships with tenants that strengthen the Hotels and Service Sector business 2.4.3.3. Measuring in order to reduce the footprint Each asset is occupied by a single tenant, who retains operational control of maintenance, with no “operational control” (direct management) over the building by the owner. Foncière des Régions does not have any energy supply contract for the Hotels and Service Sector portfolio. The energy and environmental mapping done with CSTB in 2009-2010 on the Accor, Courtepaille and Quick portfolios was extended in 2011 to the Jardiland and Korian portfolios, and in 2014 to the B&B Hotels one. Updated each year, for energy and water it covers circa 85% of the total surface area of the consolidated reporting scope of the Hotels and Service Sector portfolio as at 31 December 2014. The twenty indicators used are common to the different activities of Foncière des Régions and its subsidiaries; similarly, an IT tool, designed by CSTB, allows asset and property managers to consult summary files for each asset or to analyse them again. The two charts below show the results with and without climate adjustments (summer and winter), as calculated by the CSTB, so as to render them more comparable since 2008, the baseline year for Foncière des Régions. Overall consumption shows a slight increase in final energy (energy consumption) and a further reduction in primary energy (gross energy before transformation), as a result of changes to the portfolio and an energy mix that used a little less electricity and more gas in 2014 compared to 2013. CHANGE IN FINAL ENERGY RATIO CHANGE IN PRIMARY ENERGY RATIO (with and without climate adjustment) (kWhfe/m2SHON/year) 370 377 368 359 354 2008 2009 (with and without climate adjustment) (kWhpe/m2SHON/year) 334 320 333 316 2010 2011 Without climate adjustment 286 2012 693 690 687 647 239 233 233 246 2013 2014 2008 With climate adjustment CHANGE IN THE CARBON RATIO OF THE PORTFOLIO 2008 2009 53 50 48 2010 Without climate adjustment 2011 2011 2012 2013 2014 With climate adjustment CARBON INTENSITY OF THE PORTFOLIO LIKE-FOR-LIKE 35.9 34.5 2013 2014 44 47 2012 473 464 442 459 (with climate adjustment) (kgCO2e/m2SHON/year) (with and without climate adjustment) (kgCO2e/m2SHON/year) 49 2010 534 reduction. The increase in the emission ratio per m2 reflects a greater proportion of assets heated with gas in 2014 compared to 2013. However, like-for-like, a reduction of close to 1.5 kgCO2e/ m2SHON/year was achieved over the period. Since 2008, the baseline year for the calculation of the carbon footprint of the Hotels and Service Sector portfolio of Foncière des Régions, CO2 emissions have gone from 57 kgCO2e/m2SHON/ year in 2008 to 35 kgCO2e/m2SHON/year in 2014, a 38.6% 54 56 2009 Without climate adjustment 2.4.3.4. Mitigating climate impact 57 56 646 616 608 609 598 31 32 32 35 2013 2014 With climate adjustment Foncière des Régions 178 Reference Document 2014 Sustainable development Strong partnerships with tenants that strengthen the Hotels and Service Sector business 2.4.3.6. Optimising waste management and treatment ENERGY MIX OF THE PORTFOLIO IN 2014 1% Strict regulations govern the removal of food waste (requirement to install grease traps, etc.); these provisions apply to hotel (Accor, B&B Hôtels) and restaurant tenants (Courtepaille, Quick), in the same way as hygiene considerations in general and consumer health in particular. Similarly, health assets (Korian) are subject to the rules governing health establishments that ensure waste is treated in an optimal manner. Fuel oil 3% Wood 5% Heating network 55% 36% Apart from this specific waste, the collection of non-hazardous waste in France is generally done by local authorities, which do not provide information on the volumes or tonnages collected. Municipalities are moving towards widespread waste sorting: at year end 2014, of the 75% of assets within the entire reporting scope providing information on the existence or otherwise of selective sorting, 100% had selective collection. These issues are reviewed at the partnership committee meetings with tenants in line with the provisions of the environmental annexe in order to identify paths toward progress. Electricity Gas 2.4.3.5. Saving water The tenants of the Hotels and Service Sector portfolio of Foncière des Régions have implemented water usage reduction programmes, which involved raising awareness among their staff and among their clients. 2.4.3.7. Preserving biodiversity As each asset is let to a single tenant, the leases assign responsibility for building use to the user. While Foncière des Régions does not control day-to-day management and in particular matters relating to landscaped areas, it is nevertheless committed to rolling out the biodiversity policy across the group, with the objective of better designing its future locations and reducing the environmental impact of its assets. When an asset is occupied by a single tenant, it is the latter who signs a water supply contract. All of the water consumption figures used for the calculations reported in Chapter 2.11.3.2 are taken from invoices. Nevertheless, Foncière des Régions is focussed on gaining a deeper understanding of its portfolio through having an environmental footprint of it. It thus set itself the goal of measuring and monitoring water consumption across 100% of the entire reporting scope, which represents 94.8% in value (81.8% of the area) of the portfolio owned at year end 2014. It is therefore by raising tenant awareness and the exchange of tools and analysis, in particular through the sustainable development committees, that issues such as biodiversity, transportation, etc. are addressed. Many major partners of Foncière des Régions thus took part in the mapping of corporate gardens carried out between 2012 and 2014 at a certain number of sites, in order to look at the existing biodiversity drivers and, above and beyond the ecological inventory, at what could be done to help conserve animal and vegetable species. For 2014, the water consumption data collected covered 84% of the entire reporting scope (in area) vs 87% in 2013. The graph below shows flat consumption like-for-like between 2013 and 2014. The portion of hotels with restaurants directly affects this ratio, in line with acquisitions and disposals. The existence or otherwise of landscaped areas affects asset consumption to a lesser extent. On the other hand, the water consumption ratio like-for-like was unchanged between 2013 and 2014. WATER INTENSITY OF THE PORTFOLIO, LIKE-FOR-LIKE (m3/m2/year) 2.01 1.98 2013 2014 Foncière des Régions 179 Reference Document 2014 2 2 Sustainable development The performance of our Logistics business 2.4.3.8. Managing environmental risks At 31 December 2014, no land within the Hotels and Service Sector portfolio owned by Foncière des Régions was required to be cleaned up or decontaminated for legal site operation. Like in previous years, in 2014 the business was not convicted nor had any judgment against it for failure to comply with environmental regulations and did not need to book provisions or provide guarantees for environmental contingencies. Leases of the Hotels and Service Sector of Foncière des Régions systematically stipulate that the tenant retains control of and responsibility for environmental risks, the user or the site manager being responsible for the premises for the purposes of regulations governing environmental risks. Nevertheless, upon acquisition and throughout the ownership of each asset, Hotels and Service Sector staff examine environmental safety issues (ground pollution, asbestos, etc.). 2.5. THE PERFORMANCE OF OUR LOGISTICS BUSINESS As part of Foncière des Régions’ strategic shift in focus, the logistics business was subject to new changes to its portfolio in 2014, which meant reducing the portfolio from €791 million in value at year end 2013 (87.1% France and 12.9% Germany) to €288 million at 31 December 2014 (100% France). Within this framework, and bearing in mind the sales programme, the environmental initiatives on the Logistics portfolio focus on fluid monitoring and cost control, biodiversity challenges that overlap with the group’s policy, the monitoring of health and environmental risks, and, in all cases, operating permits and ICPE sites (installations classified for environmental protection), which are among the most important challenges related to logistics. The most significant disposal concerned 17 logistics platforms, representing a total surface area of nearly 750,000 m2 located in France and Germany, which were sold to Blackstone for €473 million. These sites form part of Logicor, Blackstone’s European logistics platform, and include in particular “Garonor”, a platform that has benefited from several environmental investments, with in particular building renovations aimed at BREEAM certification and a Biodiversity policy that earned the EVE label®. The teams in charge of the logistics portfolios form part of the Foncière des Régions ESU. 2.5.1. Challenges specific to logistics Logistics assets most often comprise a main component dedicated to storage, and an office component. Only the office component is subject to Thermal Regulations, as storage areas kept below 12° (in order to frost-protect inventories) are not targeted. Logistics assets have relevant locations in terms of road, rail, river or sea connections. Besides being accessible to multiple modes of transport, the sites are close to city centres, facilitating the use of electric vehicles. The energy and environmental mapping study conducted on this portfolio in 2009, which is updated and fleshed out each year, has revealed the fact that, considering the cost of building logistics assets, the drivers for improving energy efficiency mainly focus on lighting and the insulation of facades (frost-free double skin). From an energy consumption and carbon emissions perspective, greenhouse gas footprints and the life cycle analysis of Logistics buildings show that the buildings have a marginal impact compared with that of the related transport methods. The quality of locations is thus decisive in Logistics. Foncière des Régions’ 2.5.2. Reducing the environmental footprint For each of these portfolios, Foncière des Régions strives to reduce its entire environmental footprint, which entails the measurement of several indicators: energy and water consumption, carbon emissions and waste management. Foncière des Régions The energy and water consumption monitored as part of the Logistics portfolio are those covered by Foncière des Régions and re-invoiced to tenants: they concern collective equipment and the common areas of multi-let sites, managed by the group’s property management teams. 180 Reference Document 2014 Sustainable development The performance of our Logistics business 2.5.2.1. Improving energy performance 2.5.2.2. Reducing climate impacts Energy consumption is subject to careful monitoring, based on the use of two types of information: Carbon emissions are monitored according to the aforementioned scope. ww Consumption for the scope managed directly saw a slight increase between 2013 and 2014, from 86 to 91 kWh/m2SHON/ year. Like-for-like, the data recorded shows a considerable decrease in gas consumption (‑20%) and an increase in electricity consumption (+5%). This decrease, which includes no climate adjustment, is partly due to milder temperatures in 2014, combined with reduced requirements for frost-protecting inventories. ww Carbon emissions are calculated by the CSTB based on energy bills (see Chapter 2.11.3.3). Due to reduced energy consumption, carbon emissions were reduced by 19.5% like-for-like between 2013 and 2014. The table below presents the proportionate share of each greenhouse gas in these emissions. TOTAL CARBON EMISSIONS – OPERATIONAL CONTROL SCOPE (kgCO2e/m2SHON/year) INTENSITY OF FINAL ENERGY LIKE-FOR-LIKE 26.35 (kWhfe/m2SHON/year) 21.21 120 98 2013 GHG emissions like-for-like 2013 CO₂ CH₄ NO₂ HFCs PFCs SF₆ NF₃ Other 2014 ww The EPCs also demonstrate the strong performance of our assets, since 93.8% of the assets (in surface area) were awarded a grade between A and C. At 31 December 2014, the portfolio was broken down as shown in the chart in the chapter below. Total emissions (kgCO2e/m2SHON/year) 2014 2013 2014 23.583 0.002 0.090 0.000 0.002 0.010 0.000 2.662 18.991 0.002 0.077 0.000 0.002 0.010 0.000 2.127 26.35 21.21 ww The EPCs also show the strong performance of our assets, since 95.8% of the assets (in surface area) were awarded a grade of between A and D. At 31 December 2014, the portfolio was broken down as shown in the chart in the chapter below. Energy consumption Greenhouse gas emissions In number In surface area Climate label (kgCO2e /m2/year) Label (kWh/m /year) 2 ≤ 50 7.7% 9.9% 46.2% 65.8% 6-15 30.8% 18.2% 16-30 0% 0% 31-60 0% 0% 61-100 7.7% 0.7% 101-145 7.7% 5.5% ≥ 145 100% 100% EPC performed A 51-110 111-210 B C 211-350 351-540 541-750 > 750 EPC performed D E F G 2.5.2.3. Preserving biodiversity B C D E F G 15.4% 25.7% 15.4% 12.2% 46.2% 47.2% 15.4% 10.6% 0% 0% 0% 0% 7.7% 4.2% 100% 100% in particular to roadways, soil sealing and the choice of materials. Accordingly, good practices include the very limited use of chemical products (herbicides, plant protection products and synthetic fertilizers), the use of native plants that consume little water, etc. These environmentally-sound actions also contribute to better cost control. Logistics assets are often located in peri-urban areas, except in the case of so-called urban logistics, where they are located in denser areas covering a smaller surface area. Biodiversity challenges concern both types of site, and involve issues relating Foncière des Régions A ≤5 In number In surface area 181 Reference Document 2014 2 2 Sustainable development Dynamic management of the Residential portfolio 2.5.2.4. Optimising waste management and treatment 2.5.2.6. Specific management for specific risks In France, waste removal is often handled by municipalities, which do not provide any information on the volumes or tonnages that they collect with their services or with concessionaires. For Foncière des Régions, the prevention of environmental risks to ensure the safety of people and goods is at the heart of the obligations for site management, in particular for its Logistics activity. The environmental mapping conducted with the CSTB made it possible to prepare a detailed review of the environmental and health risks and to set targets for improvement. In keeping with the principles of the circular economy, which aims to produce goods and services while strongly limiting the use of raw materials and non-renewable energies, Foncière des Régions makes its tenants aware of waste recycling, which is now becoming a general practice throughout the portfolio. In addition to the ICPE sites (installations classified for environmental protection), which already represent a major challenge for the Logistics business, the various compulsory analyses (EPC, DTA, etc.) are also applicable. As with the Offices business, the DTA analyses are managed via the Provexi platform. 2.5.2.5. Progress report on operating permits held directly The studies and analyses regarding the various risks are coordinated by a team dedicated to service portfolios, which centralises and monitors 23 identified risks, in particular: floods, (2 sites), subsidence (2), earthquakes (1), waiver effect (1), toxic effect (1), droughts (0), cyclones (0), rise in groundwater level (0), etc. In Logistics, environmental risk is mainly monitored via operating declarations and permits for classified facilities and the management of fire risks. Foncière des Régions’ Logistics objective is to hold operating declarations and permits for all its sites. This measure is a long-term process because reviewing new applications can only be done when operators change. As at 31 December 2014, Foncière des Régions held 90% of the authorisation decrees and declarations for its Logistics business, compared to 84% at the end of 2013; it has not been convicted or judged for non-compliance in 2014. 2.6. DYNAMIC MANAGEMENT OF THE RESIDENTIAL PORTFOLIO In 2014, Foncière des Régions further strengthened its presence in the Residential sector in Germany by purchasing a direct investment (60.9%) in its German subsidiary, Immeo AG (41,000 units in Germany) to capitalise on the positive outlook for this market. At the same time, Foncière des Régions maintained its shareholding of 60.1% of Foncière Développement Logements capital (2,069 units in France). The following pages provide insight on common environmental issues in the residential sector and give further details about the performance of the two “Residential” subsidiaries of Foncière des Régions. 2.6.1. Issues specific to housing The Residential sector is involved in issues related to urban planning, urban diversity, use of land and even to accessibility and transport issues. It is at the heart of environmental concerns because it must both respond to common types of buildings issues (energy and water consumption, carbon emissions, materials, waste, interior air quality, biodiversity, etc.), as well as to more specific topics, which are subject to regulations specific to it (lead, safety requirements, compliance of gas facilities, electricity, etc.) or related to tenant conditions (purchasing power, health, etc.). It addresses all dimensions of sustainable development. In the European Union, housing is considered to be a strong issue in the environmental and social policies of each Member State. Regulations with respect to construction and renovation are gradually becoming more stringent to encourage the emergence of healthy and energy and water-efficient habitats with a smaller environmental footprint. The energy and environmental policies of Germany and France are an expression of the EU Sustainable Development Strategy (EU SDS) adopted in June 2001 in Gothenburg by EU heads of States and Governments and the European directives that it has engendered since then. The EU SDS targets the environment, employment, economic reform and social cohesion, with five major objectives in the long term: climate change, transport, health, natural resources and poverty and social exclusion. Similarly, the European Energy Efficiency Directive (2012/27/EU) also applies to both sides of the Rhine. Foncière des Régions 182 Reference Document 2014 Sustainable development Dynamic management of the Residential portfolio 2.6.2. A comprehensive sustainable development policy The housing sector is marked by a strong social dimension, which includes taking into account the tenant’s individual situation and his or her comfort and health, via accessibility criteria (proximity to public transport), energy and water performance, environmental security (asbestos and lead prevention), as well as thermal and sound insulation (such as double glazing). The Immeo AG and Foncière Développement Logement asset portfolios were also part of the energy and environmental mapping study conducted in 2009/2010 with the Building Scientific and Technical Centre (CSTB) and based on 20 indicators. Each year, the reporting was monitored and enriched to allow a better understanding of portfolio performance. 2.6.3. Immeo AG, the German model of integrated CSR The measurement of Immeo AG’s portfolio energy performance is based on two types of information collected: As at 31 December 2014, Immeo AG held 41,000 housing units in Germany and provided expertise in the management of buildings for other group entities, such as hotels. ww a representative sample that was selected in 2014 of 126 buildings, in which changes in energy consumption over several years are monitored. The perimeter is comprised exclusively of assets over which Immeo AG has operational control, i.e. the management of common equipment and common areas of the assets, which excludes apartments owned in assets under joint ownership. In 2014, its geographical diversification accelerated with the acquisition of 2,373 housing units in Berlin (€222 million) and 2,225 housing units in Dresden (€116 million). When these new transactions were completed, Foncière des Régions’ residential portfolio in Germany reached €2.7 billion, of which 21% were in Berlin and 3% in Dresden. This expansion into booming and attractive markets is helping to secure potential capital gains and to improve the property portfolio. Like-for-like, consumption has decreased by 12%. Since data were not corrected for climate, the results were due to temperatures that were milder in 2014 than in 2013. 2.6.3.1. Reducing energy consumption BUILDING ENERGY INTENSITY LIKE-FOR-LIKE (kWhfe/m2/year) Housing tenants are increasingly attentive to energy consumption. In Germany, the Integrated Energy and Climate Plan adopted in August 2008 aims to reduce greenhouse gases (GHG) by 40% between 1990 and 2020. From 2021, building permit applications in Germany will be exclusively for the construction of passive buildings, with energy production and consumption to achieve zero emissions, with a balance that should be between 10 and 15 kWh/m2/year, as the European Energy Performance of Buildings Directive (EPBD) states “nearly zero energy”. This has given rise to subsequent thermal building regulations on building energy performance known as EnEv (Energieeinsparverordnung for 2007, 2009 and 2014), which transpose the European Directive of 16 December 2002 into German law. EnEv 2014 states that: 276 2013 2014 ww across the housing portfolio, through the Energieausweis. These are mandatory for any rental or transfer, and they are updated for each renovation so that an updated vision of portfolio performance is available. The Energieausweis uses a different calculation method (see box) to the French EPC. In addition, these calculations multiply surface areas by a regulatory factor of 1.2 in order to take common areas, cellars, etc. into account. ww new builds: obligation to improve buildings’ energy performance by 12.5% compared with the 2009 EnEv regulation ww renovations: obligation to improve post-work energy efficiency by 30%. Foncière des Régions 242 183 Reference Document 2014 2 2 Sustainable development Dynamic management of the Residential portfolio Was ist ein Energieausweis? (What is an energy certificate?) Energieausweise are energy certificates that have been made compulsory since January 2009 in Germany for all residential and commercial buildings by the European Energy Performance of Buildings Directive. These certificates must be drawn up when new buildings are delivered, and every time a landlord leases premises or sells an asset. They only take a portion of consumption into account, primarily heating and domestic hot water, and specifically exclude lighting and household appliances. German law provides for two kinds of certificates, depending on the landlord’s choice: ww a certificate based on the building’s energy requirements – Bedarfsausweis – which must be drawn up by approved consultancies according to a standardised calculation method. This is the option selected by Immeo AG, where the qualifications held by some engineers enable it to perform these assessments ww a certificate based on energy consumption – Verbrauchsausweis – which is drawn up by reading the previous occupants’ meters (more similar to the French EPCs). DISTRIBUTION OF HOUSING BY ENERGY LABEL (Energieausweis) As at 31/12/2014 As at 31/12/2013 In number As a % As a % of total portfolio In number As a % As a % of total portfolio A+ - - - 10 0.03% 0.02% A - - - - 0.00% 0.00% B 265 0.90% 0.70% 1,094 3.00% 2.60% C 3,300 11.70% 8.80% 4,023 11.00% 9.70% D 7,483 26.40% 20.00% 9,367 25.60% 22.70% E 7,536 26.60% 20.20% 8,469 23.10% 20.50% F 5,542 19.60% 14.80% 6,029 16.50% 14.60% G 3,788 13.40% 10.10% 6,559 17.90% 15.90% 386 1.40% 1.00% 1,039 2.80% 2.50% 28,300 100% 75.70% 36,590 100% 88.50% 9,074 24.30% 4,756 12% 11.50% 37,374 100.00% 41,346 Label H TOTAL No diagnostic TOTAL Each year, several rehabilitations of housing units or common equipment (such as boilers) or insulation (such as façades and double glazing) improve portfolio performance in a sustainable manner. Accordingly, for €155,000, renovation carried out in 2014 on a building purchased in Duisburg in 2013, which consisted of insulating the façade and roofing, led to a reduction in energy consumption from 230 to 155 kWh/m2/year, i.e. a decrease of 32.6%. Alongside these initiatives, Immeo AG is promoting a circular economy by using recycled materials when carrying out works on the portfolio. This was specifically the case for the materials used for external building insulation. 2.6.3.2. Reducing the GHG footprint The energy mix in France (with its dominant nuclear component) and Germany (with its dominant fossil fuel component) is very different, and this has a significant impact on indirect CO2 emissions. In 2014, 2,928 Immeo AG housing units were renovated and modernised in order to re-let them more easily and add to their value. Among these, 425 units received replacement windows in PVC double glazing. In addition, 12,000 m2 of ceilings were insulated in the upper floors of some assets. At the same time, 23,500 m2 of outside walls were insulated externally. Boiler systems are also regularly modernised, and in 2014, 35 condensation boilers were installed to replace less efficient systems. In Essen and Berlin, 96 buildings were connected to urban systems that receive heat from cogeneration systems. Foncière des Régions 100.00% Carbon emissions are tracked using a representative sample of 126 assets, explained in further detail in Chapter 2.6.3.1. The results, which are detailed in Chapter 2.11.3.4, show a reduction in such emissions, like-for-like, of 13.8% between 2013 and 2014, which is slightly higher than the energy consumption decrease, because of the low carbon energy mix. 184 Reference Document 2014 Sustainable development Dynamic management of the Residential portfolio BUILDING CARBON INTENSITY LIKE-FOR-LIKE At Immeo AG, GHG emissions have been reduced through various initiatives, primarily consisting in the insulation of outside walls and the replacement of 35 gas boilers with gas condensation boilers. In Oberhausen and Mülheim, six buildings had their night accumulation heating replaced by a connection to the urban heat cogeneration network. (kgCO2e/m2SHON/year) 58 2013 50 2014 2.6.3.3. Producing renewable energies to reduce carbon footprints Photovoltaic facilities have been installed in six assets located mainly in the west of the country. The power from them, as detailed below, slightly exceeds the estimates provided by feasibility studies. The solar panels have been installed on (sloping) roofs, and provide Immeo AG with an additional income stream. The equipment is depreciated over nine years. Immeo AG, as a long-term player, preferred to be the owner of facilities in order to capture all of the revenues generated by electricity production and to develop new know-how, based on the outlook for passive buildings through 2020. IMMEO AG 2013/2014 PHOTOVOLTAIC PRODUCTION AND GAINS (kWh) (€) 163,294 400,000 170,000 118,596 300,000 120,000 200,000 100,000 70,000 43,490 43,449 33,604 31,785 10,917 20,000 8,073 0 0 Essen Oberhausen Duisburg Production 2013 (kWh) Gain 2013 (€) Production 2014 (kWh) Key figures: 5,200 m2 of panels distributed over six sites in Essen, Duisbourg, Oberhausen and Mülheim 608,370 kWh of theoretical production in 2014, vs. 552,000 kWh(1) in 2013 €262,000 excluding VAT generated in 2014, i.e., €50.40 excl. VAT/m2 Average investment ➡ €436 excl. VAT/m2 Return on investment ➡ 9 years on average (20 years of panel estimated useful life) (1) Value revised following a meter replacement. Foncière des Régions 185 Reference Document 2014 Mülheim Gain 2014 (€) 2 2 Sustainable development Dynamic management of the Residential portfolio 2.6.3.4. Reducing water consumption Like-for-like, (85% of the representative panel), 100% of assets have selective collection. Water consumption is monitored carefully for the reduction of the ecological footprint and control of expenses. In addition to raising tenant and employee awareness, efficient systems are routinely installed during renovations to reduce water consumption (dual flush buttons, flow reduction, etc.). 2.6.3.6. Health risks at the heart of concerns Out of concern for the safety of the occupants and their property, an increasing number of assessments are performed before any acquisition and are the subject of regular monitoring by specialised staff. Special attention is paid to business-related health and environmental risks, such as the presence of asbestos or lead, and soil, water and air pollution, as well as natural and technological risks (flooding, etc.). Immeo AG’s historical portfolio contained large amounts of green spaces. The acquisitions made in 2013, which have accelerated since 2014 in Berlin and Dresden, relate to assets in the city centre, where there is far less land. Reporting on water consumption is conducted on 100% of the representative sample, on the basis of the general meter, which counts consumption in common areas (cleaning, green spaces, etc.) and tenant areas (tenant consumption). Consumption is increasingly distributed through individual meters by housing unit, thus helping to raise tenant awareness and increase fairness. From 2012, Immeo AG launched a campaign to install monitoring devices on the collective domestic hot water equipment, thus anticipating by a year the drinking water legislation that has applied in Germany since December 2013, and which aims to avoid legionnaire’s disease in residential or commercial buildings. Like-for-like, water consumption has stabilised at around 1.6 m3/ m2/year. In 2014, no cases of soil pollution were identified on the managed portfolio and no provision for environmental and health risks needed to be incorporated. WATER CONSUMPTION IN CUBIC METRES LIKE-FOR-LIKE 2.6.3.7. A social and societal dynamic (in m3/m2/year) 1.61 2013 Since entering the Foncière des Régions group in 2007, employees of Immeo AG have continued to benefit from the specific characteristics of German law and have not been linked to the Foncière des Régions ESU. Immeo AG’s social policy is described in Chapter 2.11.4.2. 1.64 In terms of its societal policy, Immeo AG has been conducting specific measures, such as, for example, a social information awareness day at its Oberhausen offices in June 2014. This day gave inhabitants of the city access to a housing advice service, home assistance and aid to persons in situations of dependency. Medical examinations were also offered to the inhabitants, along with a road safety awareness programme by a local association. This day was also an opportunity to inform residents about two initiatives involving Immeo AG. The first, “Probewohnen”, is a project for mentally disabled persons that enables them to test their own autonomy in suitable housing. The second, “Wohnen im Pott”, consists of opening a local office in Oberhausen to enable people with disabilities to come to learn about the rights and solutions they can enjoy with respect to housing. This multipurpose room is open to all inhabitants and encourages inhabitants of the same neighbourhood to socialise with one another. 2014 2.6.3.5. Managing waste production Since waste removal is performed by municipal services that do not produce any information as to the tonnage removed, it is not possible to conduct exhaustive monitoring. Nevertheless, in each building, waste sorting has been organised in connection with the city, with the setting up of containers of various colours. Awareness has been raised among tenants regarding the sorting of waste by a service provider. If they do not put their waste in the right containers, penalties are applied by their municipality. The service provider has been paid based on the decline in the amount of penalties issued. 2.6.4. French housing at a time of ecological transition Foncière Développement Logements, a subsidiary of Foncière des Régions that specialises in the Residential sector in France, is continuing its real estate strategy, with asset recovery work and the active rotation of the portfolio. Its 2014 portfolio of 2,069 housing units was valued at approximately €860 million at 31 December 2014. More than 70% of it was located in Paris and Île-de-France, and its net triple net asset value (NAV) was about €500 million. Foncière des Régions Foncière Développement Logements staff are part of the Foncière des Régions ESU (see Chapter 2.9). 186 Reference Document 2014 Sustainable development Dynamic management of the Residential portfolio 2.6.4.1. Reducing energy consumption Ultimately, only an analysis “like-for-like” on assets held during the 24-month period covering 2013/2014 offers a comparable basis. It shows a decrease in energy consumption of 15.9% between 2013 and 2014, which can be explained by overestimates made by suppliers of gas and of the district heating in 2013 and improvements made to the assets. In France, the residential sector represents nearly 30% of energy consumption (source: ADEME), which explains why it is subject to various regulatory measures to improve the performance of buildings, such as the Grenelle 1 and 2 Laws (of 2009 and 2010) and “RT 2012” thermal regulation, which introduced a ceiling of 50 kWhpe/m2SHAB/year for new assets. ENERGY CONSUMPTION INTENSITY LIKE-FOR-LIKE For existing buildings, the granting of energy performance certificates (EPCs) based on EU directives is obligatory for any sale or rental. Though it could stand to be improved, this document provides an initial level of information on energy consumption levels and carbon emissions from housing. (kWhfe/m2 living space/year) 53.4 44.9 The energy performance of the portfolio is monitored at two levels: ww buildings 100% owned by Foncière Développement Logements, whose management is outsourced to a specialised structure. Energy consumption by collective equipment and common areas is under the operational management of the owner. The reporting tables in Chapter 2.11.3.5 refer to this perimeter. Equipment varies from one asset to the next and the control exercised over the equipment varies for collective heating for some, and individual heating for others, with different types of energy (gas, electricity, etc.). 2013 2014 ww for housing, via the EPCs; at 31 December 2014, 1,755 EPCs were issued, covering 90% of housing units in the Foncière Développement Logements portfolio. The following table breaks down the allocation of housing by energy label. 2014 – PERFORMANCE AS A % OF THE NUMBER OF HOUS0G UNITS Energy label (kWh/m2SHAB/year) ≤ 50 A 51-90 91-150 151-230 231-330 331-450 > 450 B C D E F G Energy Label 2012 2013 2014 A 0% 0% 0.1% B 2.3% 2.1% 0.7% C 6.7% 7.5% 8.90% D 40.8% 38.5% 43% E 31.2% 29.7% 34.7% F 8.3% 10.2% 8.5% G 10.8% 12.0% 4.1% Diagnostic procedures in place 1,807 1,938 1,755 2.6.4.2. A reduced GHG footprint Work that improve the performance of the portfolio, in terms of both energy and carbon, may involve: As with energy consumption, on the basis of which they are calculated, carbon emissions are monitored: ww rehabilitation of vacated housing: in this case, rehabilitation is carried out on equipment (energy-efficient heaters, installation of double-glazing, high-efficiency water fixtures, etc.) ww in fully-owned assets; the reporting tables in Chapter 2.11.3.5 are based on this perimeter. The data collected show a decrease in the carbon footprint of the portfolio like-for-like in 2014 of 18.3% (7.8 kgCO2e/m2 living space/year), which is mainly related to overestimates by gas and district heating suppliers in 2013 for certain assets. This situation was rectified with 2014 invoices. ww building renovation or the replacement of equipment to enhance the performance of the asset (boiler replacement, low-consumption lighting, etc.). For example, for the asset in rue Marcadet in Paris, the replacement of the air handling unit with a heat pump in 2012 led to a reduction in energy consumption of more than 40% in 2014 compared with 2011. This decrease is even more remarkable since the new equipment produces not only heating, like the previous one, but also provides cooling during the summer. Foncière des Régions 187 Reference Document 2014 2 2 Sustainable development Dynamic management of the Residential portfolio In 2014, for the sake of transparency and in order to include more emissions from various greenhouse gases, the latter were assessed according to the recommendations of the Carbon Disclosure Project (CDP), as decomposed, like-for-like, in the table below: BUILDING CARBON INTENSITY LIKE-FOR-LIKE GHG emissions like-for-like (kgCO2e/m2 living space/year) CO₂ CH₄ NO₂ HFCs PFCs SF₆ NF₃ Other 9.54 7.80 2013 Total emissions (kgCO2e/m2GIA/year) 2014 2013 2014 8.717 0.002 0.072 0.000 0.001 0.012 0.000 0.732 7.128 0.002 0.061 0.000 0.001 0.011 0.000 0.591 9.54 7.80 ww Carbon emissions are tracked from the EPCs and established from tenant energy invoices (electricity, gas, etc.), which indiscriminately include all of their consumption. The table below shows that as at 31 December 2014, 50.3% of EPC climate labels range from A to D. The target set in 2010 that at least 50% of the portfolio should receive a D climate level by the end of 2015 has thus been exceeded. 2014 – PERFORMANCE AS A % OF THE NUMBER OF HOUSING UNITS Climate label (kgCO2e/m2SHAB/year) ≤5 6-10 11-20 21-35 36-55 56-80 91-110 A B C D E F G Climate Label 2012 2013 2014 A 0.8% 0.6% 0.6% B 14.2% 12.6% 14.7% C 21.9% 21.5% 17.4% D 12.4% 12.6% 17.6% E 25.3% 24.3% 26.8% F 14.8% 13.8% 16.1% G 10.6% 14.6% 6.9% Diagnostic procedures in place 1,807 1,938 1,755 2.6.4.3. Monitoring water savings precautions in mind, 2014’s collection saw a slight increase in consumption like-for-like in 2014, with 1.31 m3/m2SHAB/year (vs. 1.23 m3/m2SHAB/year in 2013). Reporting of water consumption includes fully-owned assets as at 31 December 2014, with a data collection rate that, like last year, covers 100% of assets within this scope. It is based on the invoices paid by the owner or his or her manager, for each building from this perimeter, for water for which there was single metering for the site. Since this consumption relates both to common areas and tenant areas, they are distributed by tenant, increasingly by using individual meters per apartment. 2.6.4.4. Optimised waste management Like-for-like, 88% of Foncière Développement Logements directly-managed assets had selective collection in 2014 (the same as in 2013). In France, even though the sorting of waste now occurs in almost all cities, there unfortunately is not yet a system in place to quantify its weight. Waste from construction sites is managed by the suppliers, with a growing concern for recycling. The change in the portfolio via acquisitions and disposals of assets with or without large green spaces, more or less large common areas (entrance hall, landings, etc.), and tenants, whose number varies considerably from one site to another (due to the size of housing units, occupancy density, etc.), water consumption comparisons are difficult from one year to the next. With these Foncière des Régions 188 Reference Document 2014 Sustainable development Dynamic management of the Residential portfolio 2.6.4.5. Health risks at the heart of concerns and there is strict follow-up, to ensure the comfort and satisfaction of tenants and longevity of facilities, as well as for safety reasons (avoiding carbon monoxide emissions). In France, many diagnostics have to be performed for a sale or a rental. In 2014, Foncière Développement Logements has never had a conviction or judgement rendered against it for not complying with environmental regulations and has never had to book provisions or provide guarantees for environmental contingencies. Finally, no cases of soil pollution were identified in 2014 and no land held by Foncière Développement Logements is under an obligation to be remediated or cleared to allow its legal use. Foncière Développement Logements pays especially close attention to health and environmental risks, from the acquisition of the assets and while they are held, with precise monitoring for each asset. More than 20 risks are managed, including asbestos; lead; soil pollution; physical and geological risks (such as flooding), etc. Gas boiler installations are covered by maintenance agreements % of assets with an assessment as at 31/12/2014 Number of assets concerned as at 31/12/2013 Number of assets concerned as at 31/12/2014 Technical Asbestos Assessment (DTA) 100% 26 14 Lead Assessment 100% 16 Relevant risks Lead confinement (D3) (1) / Number of housing units that still need to be assessed. Foncière des Régions 189 Reference Document 2014 5 (1) 9 5 (1) 2 2 Sustainable development An approach shared with all subsidiaries 2.7. AN APPROACH SHARED WITH ALL SUBSIDIARIES 2.7.1. Beni Stabili plays a major role in the sustainable commercial real estate market in Italy At the same time, international operators are also having an impact on the Italian real estate market through their determination to achieve high environmental quality and comfort levels. The sector is also benefiting from the environmental commitment of a small number of developers, with Beni Stabili foremost among them. In Milan, where Beni Stabili’s development teams are headquartered, the market is active and gaining traction from the World Expo due to be held in the city in 2015. Beni Stabili is a leading REIT in Italy in the field of office real estate, and 92.1% of its portfolio was long-term (Core) as at 31 December 2014. 91% of that Core portfolio is office assets, with a total area of 1,621,305 m2GLA (Gross Leasing Area) worth €3,334.4 million, and the remaining 9% is comprised of 92,430 m2GLA of retail premises with a value of €336.1 million. A 48.3% subsidiary of Foncière des Régions, Beni Stabili has a portfolio located mainly in city centres in Northern and Central Italy, including Milan and Rome that it leases to key accounts such as Telecom Italia, Intesa San Paolo, Maire Tecnimont, the Italian Government, Boscolo Group, Auchan and Coin. 2.7.1.2. Beni Stabili and the challenges of tomorrow’s cities An active partner in imagining the city of the future, Beni Stabili supports the European “EC Horizon 2020 Lighthouse cities” sustainable cities project. Led by the city of Milan, the initiative is shared with London and Lisbon and enjoys the support of a number of committed operators in Italy, including Beni Stabili and Politecnico di Milano. Besides its activity as an investor, Beni Stabili also provides asset and property management for its assets and develops environmentally ambitious office assets through its development team. Beni Stabili is a public company listed on the Milan and Paris stock exchanges. An engaged player, its sustainable development strategy is based around three major concepts: transparency, professional expertise and innovation. It publishes a Sustainable Development Report in line with GRI G4 guidelines and EPRA Best Practices Recommendations, for which it was rewarded with an EPRA Gold Award in 2014. The report is available on line at http://www.benistabili.it/Azienda.aspx?prd=1486&lng=1. The project for Milan combines protection of the environment, promotion of quality urban planning and development of biodiversity, for example, by transforming land occupied by disused railways (Porta Romana Railway Yard) into a latest-generation tram, a bicycle path and a pedestrian promenade. This re-appropriation of urban space has a strong societal dimension, with the redevelopment of the ancient district of Ripamonti and the economic revival that the site will offer, combining commercial (offices and retail premises) and cultural (Foundation Prada) activities and an upgraded habitat. The district will benefit from multimodal transport that will link it with the rest of the city of Milan, since the barrier posed by the disused tracks will have been removed. 2.7.1.1. Major changes in environmental regulation Italy’s National Sustainable Development Strategy (Strategia Nazionale dello Sviluppo Sostenibile) was introduced in 2002 and supplemented in 2012 by the National Energy Efficiency Action Plan, which was updated in 2014 to cover the 2014-2020 period. The Symbiosis programme developed by Beni Stabili forms the core of this project and is set to deliver 119,000 m2 of Prime offices, on completion of the rehabilitation of the Ripamonti brownfield area. The project, designed by architects Citterio & Partners, will see the construction of ten new modular buildings combining offices and commercial space. It aims to achieve LEED Gold certification and an A energy rating from the Italian energy rating agency (ACE – Attestato di Certificazione Energetica). The technologies used for this ambitious Symbiosis development are showcased in the building that currently houses the Symbiosis marketing team: earthquake-proof walls, windows made from recycled glass recovered from the Garibaldi Towers site, sound-proofing materials made from vegetable fibre, CO2 absorbent concrete, as well as vegetable fibre flooring materials. The first building in this office programme, with an area of 12,072 m2GLA, will be LEED Gold certified. Several companies in the world of fashion have expressed interest in Symbiosis, which will be adjacent to the Prada Foundation and form a creative cluster with it. Environmental legislation in Italy derives from the transposition of European directives. Environmental policy and laws are then developed at regional or even city level, and cover the environment, energy, human capital, governance, and more. Italy has set a national target of 25% for the reduction of primary energy consumption by 2020 (i.e. 20 Mtoe(1)), a target that exceeds European commitments to cut primary energy consumption by 20% over the same period. In addition, the measures adopted are aimed at reducing CO2 emissions by approximately 55 million tonnes per year, to reduce imports of fossil fuels (fuel oil, gas, coal, etc.) and to promote renewable energy and low-GHG emission solutions. These measures impact both new projects and existing assets through the implementation of energy performance assessments (ACE: Attestato di Certificazione Energetica), new thermal regulations which are mandatory as of the 2012, tax incentives, etc. (1) Mtoe: Mega tonne oil equivalent. Foncière des Régions 190 Reference Document 2014 Sustainable development An approach shared with all subsidiaries 2.7.1.3. Successful projects and ambitious objectives Urban renewal: the major challenge for tomorrow’s cities Beni Stabili is firmly committed to improving the quality of new developments and renovations and to measure their environmental performance (energy, carbon footprint, water, waste, health and safety). In return for a construction permit for the last Garibaldi Tower in 2013, Beni Stabili developed a 20,000 m2 leisure park on the abandoned “Monluè” site, a building that was started to coincide with the 1990 FIFA World Cup but was never completed. Working in cooperation with the WWF, Beni Stabili planted 166 trees (poplar, cherry, oak, maple and linden) once the demolition was completed, creating a park for the people in the locality: residents, children, patients in the Monzino cardiology facility, etc. The company has set a target to develop at least 100,000 m2 of green offices by 2020. Symbiosis (see Chapter 2.7.1.2) counts among these, and it is currently being assessed according to the LEED Italia certification process. For its new developments, Beni Stabili’s goal is to obtain AA rating according to the BRaVE rating system developed by Politecnico di Milano in an initiative supported by the company. After renovation, the Garibaldi Towers was awarded an AA rating. In addition, Green Rating™ studies were conducted on some assets to analyse their strengths and weaknesses, as well as their potential with respect to a certain number of criteria. Green assets – certifications/labels Name City Symbiosis – Building A Milan Certifications (BREEAM, ITACA, LEED, etc.) or labels Level Date obtained Surface (m2GLA) LEED Gold In progress 8,320 m2 Green assets – Ratings Type of rating BRaVE/Green Rating Rating obtained Date obtained Surface (m2GLA) Name City Piazza San Fedele 2 Milan BRaVe(1) AA – 83.7 31 October 2014 5,619 m2 Piazza Cadorna 3 Milan BRaVe(1) AAA – 90.4 11 September 2014 11,705 m2 Via dell’Arte 68 Rome BRaVe(1) A – 72.3 31 October 2014 6,400 m2 16,349 m2 Garibaldi – Tower A Milan BRaVe(1) AA – 81.1 27 December 2012 Garibaldi – Tower B Milan BRaVe A – 74.8 26 July 2010 16,567 m2 Via Dante 7 Milan Green Rating Intrinsic: 6.1 Potential Intrinsic: 6.9 9 July 2012 6,199 m2 Green Rating(2) Intrinsic: 6.4 Potential Intrinsic: 6.8 18 June 2012 5,619 m2 Piazza San Fedele 2 (1) (2) Milan Evaluation by the Politecnico di Milano. Before 2014 renovation. Conscious of the fact that the performance of new or renovated buildings requires streamlined maintenance, Beni Stabili decided in 2012 to set up a team dedicated to commissioning, a first in Italy. 2.7.1.4. Measuring to optimise performance The portfolio’s energy performance is measured on the basis of invoices, without climate adjustment, which allows precise monitoring. Further details are presented in Chapter 2.11.3.7. The monitoring like-for-like shows a decrease in consumption of 9% between 2013 and 2014. Beni Stabili has established environmental reporting that covers the 19 assets under full management (EPRA scope). Beni Stabili is carrying out improvement works on its assets, based on the energy mapping that was prepared in 2009 for the most representative assets in terms of value through its work with Politecnico di Milano. Foncière des Régions 191 Reference Document 2014 2 2 Sustainable development An approach shared with all subsidiaries ENERGY CONSUMPTION LIKE-FOR-LIKE (kWhfe/m2GLA/year) 108 2013 Electric vehicles, a challenge for urban mobility 98 Air pollution caused by dense city-centre traffic is a serious concern in Italy. However, air quality has improved in recent years in Milan as a result of a series of socio-economic measures introduced in 2008, including: urban congestion charges, improved public transport, and large-scale public awareness campaigns. Electric cars are exempt from the congestion charge because the number of recharging stations in the centre of the city remains very limited. To support this initiative, 2013 saw Beni Stabili install charging stations for electric cars (provided free for its tenants) in eight of its Milan properties, including its head office, where an electric company car is also available. Moreover, all the energy supply to these properties is green energy. 2014 Knowledge of the portfolio also involves the use of ratings in conjunction with BRaVE (with three new ones introduced in 2014) and with Green Ratings studies. Lastly, Italian regulations require the performance of the Attestato di Certificazione Energetica (ACE), which are the Italian counterpart of the French EPCs. They do not use the same calculation methods as the EPCs, which makes comparison irrelevant. In addition, they do not have climate (CO2) labels. They are mandatory for all real estate rentals or sales. 2.7.1.6. Sharing building history Beni Stabili has developed apps for smartphones and tablets to give stakeholders information on the Garibaldi Towers and the Symbiosis project. The two apps also include a Chapter on the environmental performance of these buildings. 2.7.1.5. Sustainable development as innovation Developments and renovations also provide the ideal opportunity to combine the twin aims of innovation and sustainability. As a result, for the development of Piazza Cardona, some of the roofs will be green and deliver environmental benefits (increase of biodiversity in the city centre, heat absorption and regulation of carbon dioxide), energy savings (a reduction of 1°C in surface temperature leads to a 5% reduction in electricity consumption for air conditioning), and improvements in occupant productivity and well-being (e.g., sound and heat insulation, space for socialising and relaxation). 2.7.1.7. Control of environmental risks Beni Stabili has a separate department specialising in examining and auditing the environmental risks associated with the purchase of properties and development projects: it examines factors such as the presence of asbestos, soil pollution, elevator compliance, etc. This risk control is a guarantee of safety for Beni Stabili’s clients. Taking measures a step further, two health and safety audits were conducted in 2014 aimed at ensuring that procedures are correctly applied and that all relevant documents are up-to-date. Energy efficiency and innovation also feature prominently in the Garibaldi Towers, specifically through bioclimatic architectural principles and an outdoor air pre-cooling system using geothermal technologies. 2.7.1.8. A proactive social policy Green electricity is also produced on-site by the 804 m2 of solar panels. The regulatory framework in Italy is based on national industry agreements, which take the form of collective bargaining agreements negotiated by representatives of staff affiliated with representative unions, within each company. As Beni Stabili is a subsidiary of Foncière des Régions, it is not included in the Human Resources Chapter (see Chapter 2.9) which covers the staff of the Foncière des Régions ESU. Information relating to Beni Stabili employee relations is set out in Chapter 2.11.4.3. PRODUCTION OF PHOTOVOLTAIC ELECTRICITY (kWh) 50,000 40,000 30,000 20,000 10,000 0 2011 2012 2013 2014 Foncière des Régions 192 Reference Document 2014 Sustainable development An approach shared with all subsidiaries 2.7.2. Urbis Park, a global car park operator and player in urban mobility solutions 2.7.2.1.2. A policy for the management of car parks in line with environmental issues A 60% subsidiary of Foncière des Régions, Urbis Park has managed to find its place among the main operators in the sector via a range of services based on innovation and CSR dynamics. For the management of its car parks as regards both roads and construction, Urbis Park incorporates environmental impact mitigation strategies into its activities, via measures to save energy (installation of LED lighting systems to reduce energy consumption by about 30%), analysis of air quality (deployment of controls and improvement of air quality in construction: NO/NO2 detectors, installation of carbon monoxide analysers to detect and treat stale air), waste reduction and sorting (installation of waste sorting bins in car parks and the recycling of batteries used in ticket machines), use of biodegradable cleaning products and a responsible purchasing policy, and waste management in partnership with the public entity Eco Systèmes, an eco-organisation recognised by the public authorities for the collection, pollution control and recycling of waste from electric and electronic equipment (WEEE). Urbis Park develops its activities in partnership with local authorities in the cities of the Greater Paris region as well as the metropolitan areas of Marseille, Bordeaux, Nancy, Reims and also Metz, where the company was founded and currently manages five car parks in the city centre. Even though it is no longer in fashion to adapt the city to the car, cars remain an essential part of travel policy, which is currently developed using a comprehensive, intermodal mobility approach. Parking is thus at the heart of urban mobility policies, whether to regulate traffic, determine road sharing practices, promote modal shifts, or strengthen the economic or touristic attractiveness of a city centre. As a leading car park operator in France (60,000 spaces managed – €38 million in revenue), Urbis Park is firmly positioned as a player in urban mobility. As such, its CSR policy is structured around four priority concepts: 2.7.2.1.3. Increasingly energy-efficient parking facilities ww environmental responsibility Fluid consumption and CO2 emissions from the works managed by Urbis Park are detailed in annual reports. The reporting effort is monitored by Urbis Park executives on the basis of invoicing and is centralised at the Department of Sustainable Development at Foncière des Régions and analysed by CSTB. ww innovation to improve urban mobility ww customer satisfaction and responsiveness ww a proactive human resources policy based on solidarity and respect for the individual. Average electricity consumption by location over the portfolio decreased by 5% between 2013 and 2014, from 605 to 575 kWhfe/ space/year, which can be explained by the arbitration of locations in favour of new, more efficient sites. Like-for-like, energy consumption remained stable, around 580 kWhfe/space/year. Since electricity is the only form of energy consumed in these car parks, carbon emissions, like-for-like, changed in the same proportion, around 49 kgCO2e/space/year. Finally, car parks do not receive EPCs. 2.7.2.1. Controlling the environmental impacts associated with Parking business 2.7.2.1.1. Low-nuisance work sites There are no environmental certifications, HQE or otherwise, for parking assets. Nevertheless, the construction and renovations carried out by Urbis Park meet demanding specifications. This translates into quality requirements and a voluntary “Low-nuisance Work Site” protocol that promotes sorting and reusing rubble. It seeks to preserve and secure the lifestyle of the neighbourhood during the works. Energy consumption like-for-like (kWhfe/space/year) The signing of a “clean site” charter by businesses guarantees environmental monitoring, which requires the cleaning of work areas and site accommodations, limiting the production of dust (through regular watering of the ground, etc.) and noise nuisances, while promoting the use of products that pollute less. At each major work site, a waste organisation and disposal monitoring chart (SOSED) is implemented in order to evaluate and classify waste by category, thus ensuring that it will be routed for reuse and recycling. Foncière des Régions 193 582 579 2013 2014 Reference Document 2014 Carbon emissions like-for-like (kgCO2e/space/year) 48.91 48.66 2013 2014 2 2 Sustainable development An approach shared with all subsidiaries CO2 EMISSION INTENSITY RATIO GHG emissions like-for-like (kgCO2e/space/year) 2013 2014 CO2 45.680 45.441 CH4 0.064 0.064 NO2 1.069 1.063 HFCs 0.000 0.000 PFCs 0.046 0.045 SF6 0.438 0.436 NF3 0.000 0.000 Other Total emissions 1.617 48.91 1.608 48.66 2.7.2.2. Car parks, urban mobility challenges 2.7.2.3. Client interactions and responsiveness Urbis Park clients can be motorists and cyclists, or pedestrians or users of public transit. Depending on their restrictions, they go from one method of transport to another and need car parks to be able to adapt to these new forms of mobility. Every year, Urbis Park conducts several types of customer satisfaction surveys. BVA, a specialised body, conducts these onsite investigations. Through several regional offices, Urbis Park clients are surveyed on cleanliness, safety, quality of commercial premises, services and so on. The results of these surveys measure the level of overall satisfaction and serve as the basis for improvement efforts. In Metz, in the République car park (2,100 spaces in the heart of town), Urbis Park will, in spring 2015, open a Mobility Space, a place specially arranged so that customers can find information, practical services and solutions all in one place to easily get them to where they want to go. Finally, for its client responsiveness and relations activity, Urbis Park has set up a number (09 70 60 99 55) to receive calls from its clients six days a week. On social networks, Urbis Park has created a Twitter account (@urbisparking) to interact directly with its clients. In this specially redesigned space, a range of mobility services will be on offer: ww carpooling: in partnership with Citiz Lorraine ww car sharing Finally, a quality management plan was put in place for the major public service delegation agreements, which resulted in the establishment of regular controls for both operations and car park safety. ww secure bike garages ww electric bike rental ww recharging points for electric vehicles: five car parks in all will be equipped, with a total of about 50 spaces ww a reception area to view the mobility offer and information sites to manage travel in Metz and the surrounding Sillon Lorrain region. 2.7.2.4. Innovation to improve urban mobility Urbis Park was the first company in France to introduce parking payments by mobile, in Metz in early 2011. Since that date, via the Urbis Mobile solution (urbismobile.com), Urbis Park manages the cities of Metz, Nancy, Laval and Bordeaux, a total of nearly 20,000 road spaces. The Urbis Mobile system also allows parking fees to be paid in car parks using “contactless” NFC technology. In Metz, Urbis Park deployed seven ticket machines equipped with this technology as well as 120 smart sensors to transmit, in real time, the availability of parking spaces in an area of the city. Urbis Mobile allows for payment of parking time actually consumed (payment by the minute) and keeps motorists from having to handle money on public roads. The accessibility law for institutions receiving public funding adopted on 26 June 2014 requires all owners and managers of institutions receiving public funding (including operators of car parks) to adapt their portfolios. The programmed accessibility agenda also says that compliance work must be completed no later than October 2018. Urbis Park has anticipated these new regulations and has begun compliance work. For 2014 and 2015, more than €600,000 excluding VAT was invested under this new regulatory context. Foncière des Régions This innovative system optimises income and the rate of adherence and allows payments and any claims to be traced. Finally, Urbis Park place QR codes on walls and/or posts that can be scanned by clients to send information to their smartphones about their parking level and space number even if no network is available. 194 Reference Document 2014 Sustainable development Promoting regional expansion 2.7.2.5. A committed company At the end of 2013, Urbis Park signed the Business and Regional Charter with the Plaine Commune District and the City of SaintOuen, which urges businesses established in this region to integrate youths unable to find a job. The company regularly calls on local job insertion and/or social agencies for workers through the Local Job Insertion Plan (PLIE). For certain administrative jobs, Urbis Park contacts Work Aid Centres (CAT) first in order to promote certain categories of persons finding work. Information relating to Urbis Park’s employee relations is set out in Chapter 2.11.4.4. As Urbis Park is a subsidiary of Foncière des Régions, it is not concerned by the Social Chapter (2.9) relating to the Foncière des Régions ESU. 2.8. PROMOTING REGIONAL EXPANSION Foncière des Régions helps transform cities by developing high-performance real estate that is sensitive to the environment, users and all stakeholders. Foncière des Régions has had a strong regional foothold since its creation, which has been developed by expanding our asset ownership activities nationally and developing often-times emblematic operations in major French cities. In 2014, in line with this momentum, Foncière des Régions led a study on the attractiveness of major regional cities as well as several works that have resulted in a better understanding of regional stakeholders, particularly with the completion of the first analysis of the company’s economic impacts, which supports its biodiversity policy and the continued roll-out of its responsible procurement policy. 2.8.1. Accelerating regional transformation The programmes developed by Foncière des Régions are designed with an eye towards rebuilding previously urbanised areas by restructuring existing assets, repositioning obsolete sites and working closely with public players and local authorities. By contributing substantially towards urban regeneration through innovative and high-performance projects, Foncière des Régions is contributing to the emergence of a sustainable, collaborative and intelligent city. Currently, the challenge is not to continue urban sprawl or increase the number of m2, but to develop or restructure the existing surface area as well as possible. This is what the group is doing in France in its strategic markets. Study on major regional cities Every year, Foncière des Régions conducts a study on major trends in the commercial real estate market. For its 2014 edition, office real estate and the allure of French metropolises were put into perspective. When the law on regional public action and metropolitan assertion was announced in January 2014, proposing the creation of future metropolitan region maps, Foncière des Régions wanted to bring a new perspective to the logic behind corporate location to a national level. While companies are managing their real estate more and more carefully and expanding the geographic scope of their location strategy and at a time when building users develop new relations with space and distances, what is the perception of management and employees on new metropolitan dynamics? 2.8.1.1. A strong regional foothold in major regional cities With more than two thirds of the our French office portfolio located in Paris, Foncière des Régions pays close attention to developments in this market. Through the Greater Paris initiative, the priority is not to create new districts, but to create a coherent and integrated urban area. For a long-term investor like Foncière des Régions, the Greater Paris initiative is vital and necessary to boost the allure of the Capital Region internationally, by better connecting the different Paris regions and thus ensuring greater regional coherence. Carried out with 1,012 employees and 500 managers of companies with more than 250 employees, the study revealed three major lessons: 1.Employees, and company managers even more so, expressed a strong attachment to the region in which they work or are located Foncière des Régions is historically present in major regional cities, and its metropolitan approach is largely the same as in Île-de-France. It involves offering the best office assets in the best locations that best meet expectations. 2.Quality of life, public transportation and economic strength were common determining factors of a region’s appeal 3.Reasons for moving or relocating are economic in nature first and foremost, for management as well as employees. Detailed results of the study on office real estate and French metropolitan appeal are available on Foncière des Régions’ website. Foncière des Régions 195 Reference Document 2014 2 2 Sustainable development Promoting regional expansion 2.8.1.2. Promoting the development of sustainable transport the impact of a real estate in terms of carbon, due to the proximity of public transport. Conscious of the increasing impact of these topics, Foncière des Régions encourages the urban integration of its sites, and has been studying the distance from each of its sites in the French office and hotels portfolio to public transport options since 2011. Asset location plays a central role in their use and remains a major concern for tenants. In terms of environmental responsibility, taking accessibility criteria into consideration helps decrease PROXIMITY TO PUBLIC TRANSPORT – OFFICES PROXIMITY TO PUBLIC TRANSPORT – HOTELS AND SERVICE SECTOR (in surface area) (in surface area) 30% 13% Accessible between 0.5 to 1km Accessible between 0.5 and 1km 58% 76% Within 500 meters Within 500 meters 11% 13% Over 1km away Over 1km away At the end of 2014, 87% of office assets (vs. 81% in 2013) were located less than 10 minutes by foot (1 km) from public transportation; for the hotel portfolio, the percentage was 89% on the same date (vs. 90% in 2013). between colleagues and workplace well-being. Detailed results of this study are available on Foncière des Régions’ website. The second study related to challenges pertaining to company location, the details of which are located in Chapter 2.8.1.1. Within our first greenhouse gas assessment (Chapter 2.9.6.1) conducted in 2011 and renewed in 2013 and 2014 on locations we occupy and on our employees’ commutes, Foncière des Régions was able to identify its activities with the highest CO2 emissions. The findings of this assessment led to initiatives such as reduced use of taxis in favour of Autolib’, the first self-service, shortterm vehicle rental system with 100% electric cars, serving 46 districts in Paris. 2.8.1.3.2. Leading a collaborative policy on skill-based sponsorships Sponsor of the Real Estate and Sustainable development Chair of ESSEC since 2011, Foncière des Régions actively participates in the Chair’s work, and in particular, in its annual conference organised for the MIPIM. Foncière des Régions has also participated in the panel of experts during the Chair’s conference with the theme: “Vegetated buildings: utopia or reality? A sustainable and profitable asset?” and provided input to the Chair on drafting the working paper on this subject. By participating in this discussion, Foncière des Régions is positioning itself on this subject of global urbanisation and is providing its property expertise from an investor’s point of view. By engaging in this partnership, Foncière des Régions is also involved in teaching students by providing financial support, special contacts and a reception for the 20 or so students of the Chair. In 2014, three managers and Directors of Foncière des Régions helped six students with their essays, and three interns were welcomed during the year. 2.8.1.3. Acting together to promote a sustainable city Since 2010, Foncière des Régions has invested in many industry initiatives on commercial real estate, from conducting industryrelated studies to being pro-actively involved as a sponsor of various organisations. In 2014, its initiatives were intensified on several levels. 2.8.1.3.1. Anticipating industry-related challenges As a founding sponsor of the Fondation Palladio, a benchmark think tank for property issues, Foncière des Régions is supporting and getting involved with rolling out initiatives pertaining to one of the biggest challenges of the 21st century – construction of a city and its living areas. Created under the aegis of the Fondation de France in 2008, the Fondation Palladio brings together investors, thinkers and other players in the city of tomorrow. It undertakes educational initiatives for the future decision-makers of the real estate industry by organising seminars and conferences. By supporting applied research, notably through Palladio Scholarships, the Foundation supports those who will be building the city of tomorrow and, With the desire to always better anticipate major property and socio-economic trends in commercial real estate, Foncière des Régions published two qualitative studies in 2014. The first one focused on office neighbours, putting into perspective the relevance of workplace well-being for its end-users – employees. Against the backdrop of an economic crisis, life in the workplace often conjures up the difficulties that it represents (insecurity, performance obligations, burn out, etc.). The study conducted by OpinionWay on behalf of Foncière des Régions highlighted the main positive aspects of life in the workplace: relationships Foncière des Régions 196 Reference Document 2014 Sustainable development Promoting regional expansion via the Institut Palladio, brings together all real estate players in order to face major challenges pertaining to sustainable cities and identifies areas of research and development in order to encourage far-reaching actions with the goal of working more cohesively. In addition to substantial financial support, more than 15 Foncière des Régions employees were actively involved in Fondation’s initiatives and governance in 2014. participated in the Association des Directeurs Immobiliers (ADI) working group on rehabilitating brownfield areas, among other things. As both an investor and player in the new regions of tomorrow, Foncière des Régions provides unique expertise to the working group on topics such as rebuilding the city on the city, thanks to its large-scale renovation operations in Marseille, for example, and presenting its economic and financial point of view on these urban development projects. The other organisations to which Foncière des Régions is providing assistance are shown in Chapter 2.10.6.5. 2.8.1.3.3. Bridging Education and Enterprise Since 2008, Foncière des Régions has been involved in an innovative and concrete skills-based sponsorship programme to promote equal opportunities. The “Passerelle” programme enables young high school students located in priority educational zones (ZEP) in Bobigny (French Department 93) and Forbach (Department 57) to meet professionals (IT, accounting, human resources, general management, real estate, etc.). During a time in their life when they must start making committed choices about their course of study, more than 2,000 high school students, technical school students or students of preparatory classes for both schools took part in various activities (career counselling interviews, CV workshops, internships, participation in round-table discussions and visits to buildings, etc.) through the volunteer actions of some 50 group employees. In 2014, Foncière des Régions supported the university training of a student who received a summer job through the Passerelle programme in 2013, this time under the professional internship status, with a view to obtaining her undergraduate degree. 2.8.1.4. Measuring the local economic impact of our business activities In order to characterise its regional foothold, notably in France, in 2014, Foncière des Régions broke new ground by being one of the first players in its sector to quantify its socio-economic impact. This initial study was conducted using the LOCAL FOOTPRINT® methodology in order to estimate the economic benefits of its Offices business in France (in operation or under development). This model is based on the national trade statistics tables between business sectors (from the World Input Output Database, a project funded by the European Commission) and well-known scientific work (Wassily Leontief’s algorithm, winner of the Nobel Prize in Economics in 1973 and the University of Bristol’s research on regional economics). Based on data from Foncière des Régions’ Offices business (from 1 November 2013 to 31 October 2014), the economic benefits (jobs created) were calculated with top-tier suppliers, then simulated consecutively for the entire chain of suppliers, according to the business sectors and French regional departments impacted. Regional economic impacts from duties and taxes paid to public authorities were also evaluated. Furthermore, paid internships are opened up to high school students every year at Foncière des Régions, offering them an introduction to the workplace. 2.8.1.3.4. An industry-specific partnership approach The analysis of the footprint was based on a scope that included 395 Office assets in 76 French regional departments representing more than 1.5 million m2 in surface area. Foncière des Régions contributes to French government building policy through strong commitments within various French and European working groups and professional associations, which enables it to develop its expertise and discussions on its sustainable development policy. In 2014, Foncière des Régions Foncière des Régions 197 Reference Document 2014 2 2 Sustainable development Promoting regional expansion The total impact is represented in the chart below: CATALYTIC IMPACTS Total jobs by department Around 150,000 jobs supported thanks to Foncière des Régions – Offices activity TOTAL IDF 48% of total jobs 6,075 FTE SUPPORTED DIRECT IMPACTS €283 million in expenses + €32.5 million in taxes INDIRECT IMPACTS INDUCED IMPACTS Household consumption Tier 1 supplier 1,968 FTE 846 FTE Operating expenses for public administration 1,746 FTE Tier 2, 3, 4, 5, etc. supplier 1,515 FTE Bouches-du-Rhône 8% of total jobs LOCAL IMPACTS K€4-20 K€20-50 MAIN SECTOR IMPACTED K€50-100 Business services 17% of total jobs K€100-200 K€200-1,090 Construction and works 28% of total jobs FTE: Full-time Equivalent ww impacts resulting from government spending: economic activity generated in the chain of suppliers resulted in the payment of duties and taxes, which added €32.5 million paid by Foncière des Régions. Government operating expenditure caused by Foncière des Régions’ Offices business supported a total of 1,746 FTE over the entire country. The main industries impacted were healthcare and social action, with 518 FTE, public administrations, with 511 FTE, then education, with 371 FTE. These impacts can be broken down as follows: ww direct impacts, which include expenses with Foncière des Régions’ suppliers, for €283 million (excluding tax) and €32.5 million in duties and taxes paid. This enabled the creation or perpetuation of a total of 6,075 FTE jobs (full-time equivalent for one year) for all of the regional departments in France. The added value (GDP) generated in France thus rose approximately €392 million. 48% of these total jobs were located in the departments of Île-de-France, followed by the Bouches-du-Rhône department, which accounted for 8% of total jobs. The industries most impacted were construction and works, which represented 28% of total jobs, and business services for 17% This study on socio-economic footprint was supplemented by an analysis of “catalyst” impacts related to the occupation of Foncière des Régions’ offices. This involves measuring the total economic contribution of those occupying offices, produced by their indirect and induced impacts (estimated from spending and taxes paid on the regions). This contribution is therefore not directly attributed to Foncière des Régions, nor is it added to or compared with the socio-economic benefits from the Offices business. ww indirect impacts, which refer to jobs supported by Foncière des Régions’ clients as well as the suppliers of these suppliers throughout the entire chain, amounted to 3,483 FTE (1,968 FTE at Foncière des Régions’ suppliers and 1,515 FTE along the rest of the chain). The main industries impacted were construction and business services These initial works highlighted the following information: ww inferred impacts, which include two levels: ww 1.5 million m2 of office surface area accommodates approximately 60,000 people ww impacts caused by household consumption: the salaries paid by the entire chain of suppliers increases purchasing power in homes, which, in turn, supported 846 FTE through their consumption. The main industries impacted were business services, with 113 FTE, retail, with 98 FTE, then hotel and restaurant businesses with 75 FTE Foncière des Régions ww spending brought about from the activities of the companies using the office spaces supported around 35,000 FTE in the chain of suppliers. This activity also support jobs created by household consumption for approximately 20,000 FTE. Lastly, jobs induced by government spending via taxes and duties paid by any activity described above represented around 34,000 FTE. 198 Reference Document 2014 Sustainable development Promoting regional expansion 2.8.2. Turning each site into a biodiversity driver Biodiversity is also one of the topics discussed during civic actions conducted by Foncière des Régions, such as the Passerelle project (see “First look at the business world” Chapter 2.8.1.3): secondary school students carry out a study, with the support of Foncière des Régions and one of its biodiversity consultants (Astrance), which will feed national biodiversity databases used by researchers at the National Museum of Natural History (MNHN). Today, biodiversity constitutes an important and coherent component of Foncière des Régions’ sustainable development policy. Protecting biodiversity as a social commitment also helps increase the intangible value of assets by enhancing the well-being of their occupants (thermal comfort, scenery, recreation, etc.). Since 2013, Foncière des Régions has particularly collaborated in work led jointly by the associations HQE and Orée, of which it is a member; this work resulted in the production of a general public educational handbook with players in construction and real estate (http://www.oree.org/_script/ntsp-document-file_download. php?document_file_id=3528), and in 2015, it highlighted the biodiversity indicators for the next HQE certification reference guide. 2.8.2.2. Two internal Charters to promote biodiversity In order to ensure that challenges related to biodiversity are taken into consideration, and to obtain labels in this area, two internal Charters were written in 2014 in relation to operational teams, enabling Foncière des Régions to manage a tool that assists with every stage in its property chain: At the same time, an analysis of the impacts of business activities on biodiversity was led in 2014 using criteria defined by version 4 of the GRI, and two “Blue Butterfly” Charters (see 2.8.2.2) were drafted internally with the help of a specialised research firm to outline the process in conjunction with the various teams concerned. ww one charter concerning the creation of green spaces, intended for green space development or total renovation operations. Compliance with its provisions will make it easier to obtain the BiodiverCity label 2.8.2.1. A comprehensive policy on biodiversity ww a second charter concerning the management of green spaces, targeting operations in use. Compliance with its provisions will enable the company to receive the Eve or EcoJardins label. Foncière des Régions’ biodiversity policy focuses on five main areas and takes into consideration the different stages in the useful life of an asset: These two charters describe the way in which Foncière des Régions intends to manage challenges pertaining to biodiversity and landscaping, by integrating these challenges both during the creation of green spaces and in their management. These two documents ensure strong cohesion between the development and management phases, and in addition to paying particular attention to butterflies, which are indicators of biodiversity, they implement a well thought-out maintenance and attentive management plan of grounds and green waste, prioritising customised selections of plant species, environmentally-friendly watering and no use of plant protection products. ww development and renovation eco-design very early on taking into account biodiversity and interactions with the urban fabric as a whole, stakeholders and green corridors ww planting native plant species and preserving butterflies and birds ww enhancing the functions of green spaces for building users ww adapting the upkeep of green spaces to meet eco-responsible criteria, such as modifying maintenance schedules, limiting the use of chemicals, etc. Foncière des Régions’ biodiversity policy, promoted by the Sustainable Development Department, involves all departments concerned (developments, property and asset management) as well as all players: architects, developers, builders, ecologists, landscape architects and green space companies. For biodiversity, as for all other subjects, environmental and social performance hinges upon suppliers’ compliance with the company’s objectives. ww participating in research, in particular to create a mapping of biodiversity on the commercial portfolio in the Greater Paris region. 2.8.3. Capitalising on trust-based relationships with our suppliers 2.8.3.1. Challenges A member of the United Nations Global Compact since 2011 (see Chapter 2.9.4), Foncière des Régions has designed tools for its responsible purchasing policy as ways to comply with and encourage its commitments, in its chain of suppliers and internally, in complying with principles related to human rights, labour standards and the environment, and combating corruption. Considering that purchases must make up part of its environmental and operational performance, Foncière des Régions has implemented a responsible procurement policy since 2011, which covers both business-related activities (building development and management) and support (IT, service providers, consulting, etc.) with the decision to exclude a certain number of purchasing items: insurance, banks, co-ownership entities, tenants, taxes, duties and fees. Foncière des Régions 199 Reference Document 2014 2 2 Sustainable development Promoting regional expansion 2.8.3.2. Policy 2.8.3.3.1. 245 committed suppliers The responsible procurement policy was rolled out in France and within the Offices business (building development and management), Logistics and Car parks, as well as for the group’s corporate scope. It was suspended for the housing business whose management has been outsourced, and for the hotels and service sector, where management is the tenant’s responsibility. It is intended to guarantee: At the end of 2014, 245 suppliers (vs. 207 at the end of 2013 and 107 at the end of 2012) had responded to the survey and signed Foncière des Régions’ responsible procurement charter. This process is useful to Foncière des Régions in better understanding the CSR profiles of its suppliers and characterising their positioning with regard to the group’s core values. Responses to the survey led to a grade weighted according to the supplier’s revenues and number of employees, with an average grade of 11.2/20 (vs.11.3/20 last year). ww respect for the safety of people and property ww compliance with legislation regarding labour law and Human Rights BREAKDOWN OF GRADES AS AT 31 DECEMBER 2014 ww use of secure technologies that respect the environment, promote the fight against climate change, help conserve energy and water and encourage the recycling of waste 100 ww technical and economic competitiveness ww the quality of the contractual relationship with suppliers 86 75 ww promoting local economic and social life by understanding regions better. 49 50 2.8.3.3. Progress and action plan The responsible procurement policy led by Foncière des Régions relies on three additional tools: 25 ww a survey form: handled with the utmost confidentiality, the responses to this survey enable the company to map out suppliers’ CSR performance 0 43 29 25 11 1 1 Between Between Between Between Between Between Between Between 17.6 0 2.6 5.1 7.6 10.1 12.6 15.1 and 2.5 and 5 and 7.5 and 10 and 12.5 and 15 and 17.5 and 20 ww in the new contracts, five contractual clauses embody suppliers’ CSR commitments ww Foncière des Régions’ responsible procurement charter: a commitment based on ten principles which cover all aspects pertaining to sustainable development, taken from the Global Compact and the International Labour Organisation (ILO). The chart above shows that, as a trend, the commitment of companies in the area of CSR is correlated to their revenue (all customers together). CSR COMMITMENTS OF COMPANIES AND REVENUE 100% 80% 60% 40% 20% 0% Listed CSR companies policy Less than €0.5 million CSR Responsible Diversity Global Social Disability Stress Carbon indicators procurement Charter Compact measures in the footprint programme workplace Between €0.5 and 5 milion Between €5 and 20 million Foncière des Régions Between €20 and 100 million 200 ISO 26001 SA 8001 Between €100 and 500 million Reference Document 2014 ISO 9001 ISO 18001 More than €500 million Sustainable development Promoting regional expansion In order to systematise the process, an IT module was developed in conjunction with the management tool: when an order amounting to more than €200,000 (excluding tax) is involved, the purchaser must then state the contact information of that supplier’s Sustainable Development Manager if they have not yet been assessed. Once contact information has been entered, a message is automatically sent to the supplier with the survey form, the five contractual clauses that embody CSR commitments of suppliers, and Foncière des Régions’ responsible-purchasing Charter. The process started by Foncière des Régions with its suppliers also translates into R&D or societal actions, with partnerships which involve both research (e.g., CSTB, Vinci, etc.), the development of tools (e.g., BIM with Petit-Lainé-Delau, etc.) and even studies (value in use with Bouygues, etc.). Certain suppliers have participated in initiatives from the Passerelle programme (see Chapter 2.8.1.3) and Green Meetings at Foncière des Régions (Chapter 2.9.6.3). Every year, ten audits are conducted by a third-party specialist with suppliers who responded to the survey. To date, no suppliers have been removed from the list as no serious anomaly has been recorded. Feedback to suppliers focuses on progress rather than exclusion. STATISTICS Number of suppliers Queried Evaluated Response rate Checked Received recommendations ”De-listed” Total at 31/12/2014 377 245 65% 30 23 0 Total at 31/12/2013 327 207 63% 20 14 0 Total as at 31/12/2012 159 107 67% 10 4 0 +15% +18% Change as a % 2014/2013 GRI 4 +50% G4-LA15 G4-SO10 G4-EN33 G4-EN32 G4-LA14 G4-SO9 2.8.3.3.2. In 2014, focus on subcontracting ww zero-tolerance policies for wearing PPE (Personal Protective Equipment) Foncière des Régions pays very close attention to its own suppliers’ use of subcontracting (construction, facility management, maintenance) and reserves the right, by contract, to approve the potential subcontractors based on a detailed file of their skills and practices. The policies developed and applied internally by the suppliers must also be distributed to their subcontractors (called “tier 2”) to ensure the long-term viability and consistency of the process. ww the implementation of “Responsible work site” charters ww conducting work site audits, etc. Certain suppliers have implemented their own responsible procurement process. Platforms dedicated to monitoring subcontractors are often implemented in order to obtain reliable reporting data. Some organisations (for the large work sites) include the performance of their subcontractors in their own reporting, particularly regarding employee safety (accident frequency and severity rates, for example). Suppliers generally handle waste safety and sorting well with their subcontractors. Some groups go even further, by supporting their subcontractors: updating for small businesses, use of social inclusion clauses, etc. The 10 suppliers who underwent an audit in 2014 had their use of subcontractors analysed. Overall, the organisations interviewed take into account the roll-out of certain initiatives with their subcontractors very well, notably in terms of work safety and reducing environmental impacts (often with increased vigilance on waste or hazardous products). Certain virtuous practices were thus noted: ww the implementation of 15-minute safety meetings or 15-minute environmental meetings for both the suppliers’ employees as well as their subcontractors Foncière des Régions 201 Reference Document 2014 2 2 Sustainable development Human capital 2.9. HUMAN CAPITAL The human resources policy of Foncière des Régions is based on four pillars, defined in 2012, which form part of the strategic 2015-2020 targets set out in Chapter 2.2.5.3, namely: ww raising levels of professionalism and seeking excellence at every level ww fair-remuneration policy, directly related to performance and achievement ww transparent and exemplary management at local team level ww a transparent and constructive social climate. 2.9.1. A human resources policy that supports the group strategy Foncière des Régions’ human resources management helps to constantly adapt the company to the economic context and its corporate strategy by maintaining strong and ongoing actions in terms of skills development, responsible assistance with strategic changes and the adaptation of its organisation. 2.9.1.1. A slight decrease in the workforce The regional breakdown of the teams remains stable, with nearly a quarter of the workforce based in Metz. The breakdown by gender is also stable. The breakdown by socio-professional category has changed slightly, with a slight increase in the shares of Managers and Employees (73% and 9% respectively, compared with 71% and 8% in 2013) in relation to the Supervisors and Building Caretakers categories, which is due to promotions, more Apprentices (Employee category), and fewer caretakers with the modifications to the French Residential portfolio. In 2014, the workforce of the Economic and Social Unit (ESU) of Foncière des Régions was down compared with 2013. This decrease is due to the accelerated disposal of the logistics portfolio, in particular the sale of the Garonor platform, acquired in 2007. It was also accompanied by the voluntary transfer of employees to the buyer’s workforce (see Chapter 2.9.1.2), thereby ensuring continued employment. In the same way, the disposal of residential assets led to the transfer of their caretakers, who left the group’s workforce in 2014. Accordingly, the decrease in the size of the workforce has entailed no loss of employment, since the employees affected by these transfers have kept their positions. Restated for these transfers associated with disposals, turnover amounted to 8.5%. BREAKDOWN OF WORKFORCE IN 2014 42% 43% Women managers Men 57% 58% Men managers Women BREAKDOWN OF WORKFORCE BY TYPE OF CONTRACT 290 277 10 10 17 5 276 255 2013 Permanent contracts Fixed-term contracts are down (1.8% versus 3.4% in 2013) and 60% of them concern absent employees (maternity leave or parental leave). Likewise, the percentage of permanent contracts is slightly down, due to an increasing number of apprentices in 2014, which amounted to 17 work-study contracts in the year (6.1% of the workforce), including three renewals of apprentices working with the company since 2013. These students are systematically given a tutor – a recognised professional in his/her field – and are monitored throughout the year by the Human Resources department, which monitors the successful conduct of the apprenticeship in terms of the assignments entrusted to the apprentice, his/her integration in the company and his/her workload. 2014 Fixed-term contracts Learning contracts Foncière des Régions 202 Reference Document 2014 Sustainable development Human capital 2.9.1.3. An active recruitment policy The company’s support for young people in employment is also reflected in the seasonal recruitment of students, 50% of whom are recruited as part of the Passerelle partnership (see Chapter 2.8.1.3) on the sites in Paris and Metz. Young people from two schools, namely Louise Michel (Bobigny) and Blaise Pascal (Forbach), are thereby offered their first professional experience. In 2014, Foncière des Régions supported the university training of a student met through a summer job with Passerelle in 2013, this time under the professional internship status, with a view to obtaining her undergraduate degree. The number of permanent contract hires was kept at a high level, and in more than half of the cases reflected the creation of a position corresponding to the development of the activity in question, thereby attesting to the group’s dynamic momentum, and in particular to that of the Development, Tenant Relations and Property Engineering divisions, in addition to the Hotels and Service Sector Teams, which were strengthened in 2014. Foncière des Régions continued its graduate training scheme to recruit young people: 35% of hires under permanent contracts in 2014 were young graduates, and more than half of such contracts benefited young people under 30 years of age. Among the young graduates hired in 2014, two former Foncière des Régions apprentices joined the teams under permanent contracts. 2.9.1.2. Disposal of Garonor: responsible support As part of the strategy to focus on offices, German residential property and hotels, the disposal of logistic assets has accelerated, in particular with the disposal of the Garonor platform in June 2014. As ten employees working at the site were directly affected by the disposal, the project was prepared beforehand with the staff representative bodies, in particular the Works Council. Accordingly, the project was subject to a memorandum from the Works Council in October 2013, followed by a consultation in April 2014, which was ultimately approved in terms of the economic and social aspects. The commitments of the Generation Contract in terms of recruitment The company has set itself the goal of recruiting, before the end of the agreement, at least 10 young people under 30 years of age under permanent contracts. The company has also undertaken to foster the recruitment of young hires under open-ended contracts within the company under work-study contracts. Lastly, the company has undertaken to recruit one employee of at least 55 years of age, and to ensure the continued employment of employees aged 55 and over, accounting for 5% of its workforce. The procedures for employee transfers were subject to a memorandum and sustained support was provided to the employees affected throughout the project. In particular, Foncière des Régions offered specific support measures to foster the voluntary transfer to the buyer of each employee concerned, thereby ensuring continued employment. The recruitment commitments made in the Generation Contract agreement (which entered into force on 7 August 2013), valid for a period of three years, have been achieved in 2014, in particular through the recruitment of an employee over 55 years of age under an permanent contract. After the period of reflection, 80% of the employees concerned decided to join the buyer. Adapting the organisation An induction programme has been implemented within the group and adapted to each profile to facilitate the reception and integration of new employees. This programme combines cross-disciplinary participation in team meetings, the meeting of managers and corporate officers, and even participation in General Shareholders’ Meetings. Accordingly, each year it enables new hires to discover the group’s diversity and business lines and to meet its various players. Each new hire benefits in particular from an hour-long interview with the Sustainable Development Director as a first step to raising awareness of CSR issues and policy. The programme ends with an informal exchange in the form of a discovery report with a member of the Executive Committee. Following the “Chorus” project carried out in 2013, Foncière des Régions continued the alignment of its organisation with strategic guidelines in 2014 (creation of a Sales division in particular), in addition to its communication on the changes, through cross-disciplinary workshops and conferences bringing together all group employees in July 2014. The staff representatives were actively involved and followed the changes introduced through a specific Commission that met twice in 2014. Foncière des Régions 203 Reference Document 2014 2 2 Sustainable development Human capital 2.9.2. Ensuring the development of skills and rewarding the performance of each employee The challenge of developing individual and collective skills within Foncière des Régions is one of its main concerns to offer the best service to its clients and partners, in addition to ensuring the appropriate and motivating development of each employee’s career. to the field and to operating conditions. 15% of employees helped to coordinate internal training sessions in 2014 (5% outside of the Training Week), and some employees continued their “trainer training” course in 2014. Nearly 40% of the training budget is devoted to the development of management and behavioural skills (personal effectiveness, communication, public speaking, etc.). For example, a significant programme on training in negotiation was implemented this year for the asset management and sales & marketing business lines, and will be extended to other business lines in 2015. 2.9.2.1. Ambitious training policy Foncière des Régions takes special care to develop each individual’s skills: in all, 95% of employees have attended training programmes during the year, whether internal/external or collective/individual. On average, each trained employee has benefited from nearly three days of training during the year (20 hours), i.e. a sharp increase compared with 2013 (due in part to the semi-annual frequency of the Training Week). As in 2013, the appropriation of IT tools forms an important part of the training programme, with 16% of shares and 10% of the total budget. 3.48% OF PAYROLL WAS ALLOCATED TO TRAINING 2014 Training Week With a view toward ongoing improvement and the selection of the best training bodies and programmes, each training session is assessed via an online questionnaire sent to the relevant trainee. In terms of collective programmes, specific assessments are performed in two stages: immediately afterwards, followed by a few months later, in order to measure their impact on employee skills development. The People Reviews of each business line help to assess 1) the programmes rolled out for a business line over the last two years, 2) the skills of the employees comprising the business lines, 3) their initial training, and 4) their strengths and paths for development, thereby determining the strategic avenues for skills development over the next few years. During one week, after the summer holidays, Foncière des Régions makes an effort to share its internal expertise, deepen mutual knowledge of business lines and promote its talent. 15 training modules, prepared and presented by internal coordinators, are alternated throughout one week, representing 56 hours of training open to all. Nearly three out of four employees attended this second edition in 2014, thereby ensuring the post-holiday return to work was at once studious, social and fun. Business training sessions accounted for 70% of the initiatives, thereby reflecting a continued effort to develop our real estate expertise for our clients. In this respect, Foncière des Régions is focusing in particular on internal training, in line with its conviction that the best skills are acquired as closely as possible Foncière des Régions 204 Reference Document 2014 Sustainable development Human capital 2.9.2.2. Integrated and dynamic career management used to draw up a full report on skills acquired and those that must be developed in the position or in view of a professional project. The annual appraisal and development meeting provides information to Human Resources regarding training, career management, remuneration and action plans concerning work organisation. During these meetings, employees are also encouraged to provide feedback to their managers on their managerial practices and to determine avenues of progress with them with a view to improving the functioning of the employee-manager team. In January 2014, a seminar held by the extended Executive Committee was dedicated to the subject of evaluation, thereby offering improvements to the evaluation process and form. Employees’ annual appraisal meetings with their managers and the various interviews conducted by the Human Resources department are at the heart of Foncière des Régions’ career development programme and go beyond the requirements of the French Labour Code. In 2014, 98% of the employees present were able to perform an Annual Evaluation and Development Interview (AEDI) with their managers. These appraisal meetings, in addition to assessing achievements and setting targets for the year to come, are also INTEGRATION AEDI Integration process for new hires position Annual Evaluation and Development Interview wwIntegration programme wwSix month progress report with HR wwPerformance evaluation wwSkills assessment wwTraining requirements wwCareer plan and development goals TRAINING PLAN MOBILITY Framework for year n+1 Changing business line, promotion, assumption of managerial wwAdapting to the job wwChange in business lines wwStrategic areas determined for the year wwSupport in assuming functions wwTraining or coaching as required PEOPLE REVIEWS HR INTERVIEW Periodic meeting for each business line Interview offered by HR depending on individual situations wwEvaluation of available skills wwAnticipating changes in the business wwIdentifying collective training requirements wwCareer path appraisal From 2015, regulatory developments will supplement this programme through new interviews: interviews to monitor workload, and professional interviews (periodic review of employees’ careers and their aspirations for development), which are separate from the performance evaluation. In addition, the interviews planned within the framework of the various collective agreements will be maintained: interviews conducted after a long absence (maternity leave, individual training leave, etc.), interviews dedicated to employees aged 55 and over, career interviews upon request, mobility monitoring interviews, etc. Accordingly, the HR team met with 12% of the workforce in 2014, formally and with a personalised approach. Foncière des Régions wwSenior employees wwPrior to and after return from long absences wwSupport and monitoring of mobility 2014 People Review Management Each of the group’s business lines is periodically subject to a detailed skills review: the files of all employees of a single mobility area are assessed collectively by the managers and corporate officers of the business line in question, in order to determine their strengths, avenues of progress, and the individual and collective actions plans to be implemented (mobility, training, recruitment, specific guidance, etc.). In 2014, this exercise was carried out with the Executive Committee for the entire management population (excluding support staff), based on new “management standards”. This People Review resulted in an ambitious management development plan which will be rolled out in 2015. 205 Reference Document 2014 2 2 Sustainable development Human capital 2.9.2.3. Compensating performance Employee investments, profit-sharing schemes and savings agreements have been rolled out within the group as part of the agreements negotiated and signed in 2013. An average incentive of 9.65% of annual salary averages was paid to employees in 2014 based on their performance in 2013. 88% of beneficiaries opted to invest all or part of their awards in the group Savings Plan. 64% of beneficiaries chose to invest in Foncière des Régions shares, as such an investment leads to an additional amount of group share, thereby encouraging employee shareholding. The bonus-pay policy is incorporated into the concept of individual performance, based on the extent to which the business objectives determined during the annual appraisal meeting were achieved. The challenge is to make this essential element of an employee’s contribution to the group more objective and more transparent to our employees. 70% of individual bonuses awarded in 2014 thus varied compared with 2013. In addition to the individual approach, Foncière des Régions once again allocated bonus shares to all its employees in 2014. The idea was to enable the entire staff to share in the financial achievements of 2013. The promotion of employee shareholding is an effort to provide a long-term link between employees and group income. As of 2013, the bonus criteria of several senior executives include a CSR component, particularly in terms of improvement in portfolio quality and in the percentage of green portfolio achieved. 2.9.3. Act for Quality of Life at Work Foncière des Régions undertakes to promote Quality of Life at Work, in particular through an agreement signed on 19 December, 2014. Recurring or occasional problems related to workload, organisational changes, ongoing and necessary skills development, and the widespread use of New Technologies of Information and Communication (N.T.I.C.) may cause stress and unease for some employees. “Quality of life and work and NTIC” (Extract from Art. 7.3.3 – reorganisation and reduction of working hours agreement) “The New Technologies of Information and Communication (email, laptops, mobile telephones, smartphones, extranet portal, etc.) are working methods that form part of the working environment, and are essential for the proper functioning of the company. However, it is important to ensure that their use does not infringe on employees’ resting times and private lives. [...] The Quality of Life at Work agreement provides for the establishment, as of 2015, of tools allowing the prevention and treatment of psychosocial risks. An external and confidential telephone counselling unit is available 24/7; the freephone number brings employees into contact with qualified psychologists only. An alert procedure has been established internally, covering in particular any incidents of harassment. A training plan aimed at identifying hazardous situations and action drivers to prevent and manage such situations will be rolled out in 2015 for all ESU employees, in accordance with the procedures specific to each type of player: Executive Committee, Human Resources and staff representatives, managers and employees. Employees have a right to disconnect remote communication tools in order to benefit from minimum rest periods. In the absence of exceptional circumstances, based on the urgency and importance of the subjects under consideration, and with the exception of senior managers, Foncière des Régions’ employees must strive not to use working tools connected remotely outside of conventional working hours. In the context of Quality of Life at Work, the agreement on the reorganisation and reduction of working hours of 25 November 2014 specifies the individual and collective responsibilities and guarantees regarding the monitoring of workload and the organisation of working hours, in particular the “right to disconnect”, a strong driver for the primary prevention of psychosocial risks. It also provides for workload monitoring, which will become a reality in 2015 through two follow-up interviews that will be held on this subject. In any event, outside of special circumstances when the employees need to be available, the right to disconnect is ensured for all Foncière des Régions employees, who may in no case be penalised for not replying to a message or any other professional request not during their working hours.” In terms of work safety, Foncière des Régions is committed beyond statutory regulations, with 11% of employees holding first-aid rescue worker (SST) certificates, and 8% of the workforce trained in 2014, whether through initial training in Health and Safety at Work or through a refresher course to maintain their level of expertise and the validity of their certificate. The work accident rate remains very low at 0.72%. Health and safety risks related to the group’s business activity concern mainly business travel. The group’s business travel policy, updated in 2014, provides that “public transport must systematically be used for all business travel”. Company vehicles Foncière des Régions 206 Reference Document 2014 Sustainable development Human capital be made via public transport, in order to limit the risk of fatigue and road accidents. are provided to employees in business lines with high mobility (technical managers and development project managers, for example), but all journeys of more than 250 km must necessarily 2.9.4. Promoting diversity and equality A signatory of the Diversity Charter in 2010 and of the Global Compact in 2011, Foncière des Régions renewed the Professional Equality and Diversity agreement of 21 December 2011 in 2014. In terms of disabilities, Foncière des Régions prepared a thorough review in 2014 (which was shared with staff representatives) concerning the employment of people with disabilities, potential obstacles to their integration, and the means to ensure the group is more open to this population. Two major avenues for action have emerged for 2015: renewing the systematic use of centres providing assistance for employment (ESAT), and increasing contact with associations and organisations connecting companies with students with disabilities. Given that the great majority of the group’s employees work as managers and hold university degrees, the integration of people with disabilities (77% of whom have not completed secondary school) is very difficult. Accordingly, Foncière des Régions wishes to help young people with disabilities to graduate, whether through internships, apprenticeship contracts, or even by offering them permanent contracts at the end of their studies. In terms of recruitment, the review of candidacies and invitations for job interviews has been under analysis since 2013 to ensure diversity amongst profiles of those being considered for each job. The recruiting team received awareness training on this issue when the recruitment management computer resource was implemented. In 2014, it presented a report to the members of the Equality Diversity Commission (staff representatives) regarding the number of candidacies processed by gender, age and disability, at each stage of the recruitment process (sorting through CVs, feedback following the job interview, final decision). In terms of remuneration, the implementation of the Professional Equality and Diversity agreement of 21 December 2011 continued in 2014. The analysis of compensation gaps was repeated, but the corrective measures to be implemented were marginal given the progress made in previous years. Foncière des Régions applies ILO conventions Foncière des Régions is also committed to parenthood. In 2014, 100% of male employees took the paternity leave offered to them. At the same time, the Flexi Crèche programme, which offers backup infant care solutions to employees (as parents or grand-parents), continues to support families in need for up to ten days per year. A guide on parenthood in the company was prepared as part of the Equality Diversity agreement and will be distributed in early 2015. It is intended to inform employees about the rights of parents and future parents, and about the programmes implemented by the company. Moreover, Foncière des Régions will sign the Parenthood Charter in 2015. Foncière des Régions currently applies the eight International Labour Organisation (ILO) conventions, including those concerning the right to organise, effective recognition of collective bargaining, eliminating all forms of forced labour, ending child labour and suppressing discrimination in employment and professions, among others. 2.9.5. Guaranteeing transparent social dialogue The Works Council was in great demand in 2014, due to major projects such as the disposal of Garonor (Chapter 2.9.1.2), the creation of a new structure to develop the Hotels business, and even recurring topics of information and consultation. Transparent and effective social dialogue was guaranteed through the provision of information well ahead of any changes, and the special attention devoted to employee expectations and group challenges. broadening its scope of application to include all psychosocial risks and by acquiring new tools for the group (psychological support unit, wider role of the CHSCT, etc.). Mandatory annual negotiations (N.A.O.) were entered into in November 2014 via an agreement with social partners. In particular, it determines the budget for increases in fixed salaries and the terms for such increases, and provides for the award of 30 bonus shares to all employees of the ESU. Organisations such as the Health, Safety and Working Conditions Committee (CHSCT), the Training Commission and even Prospective Employment and Skills Management (GPEC) – dedicated in 2014 to the implementation of the Chorus organisation – met on several occasions to deal with topics in depth and to follow action plans within the framework of dedicated meetings. List of agreements signed in 2014 2014 Mandatory Annual Negotiations Agreement: 25 November 2014 Amendment No. 1 to the ARTT Agreement: 29 November 2014 By working with trade union organisations throughout the year, the company was also able to negotiate and sign four collective agreements. Two of them were intended to adjust previous agreements (Agreement on the Reduction of Working Hours or Equality Diversity), taking into account the conclusions of monitoring committees, for example. The Quality of Life at Work agreement built on the success of the anti-stress agreement of 2009, while Foncière des Régions Quality of Life at Work Agreement: 19 December 2014 Amendment No.1 to the Professional Equality and Diversity Agreement: 19 December 2014 207 Reference Document 2014 2 2 Sustainable development Human capital 2.9.6. Joining forces for sustainable development The process of change regarding the various challenges for sustainable development entails the strong commitment of each Foncière des Régions employee. Foncière des Régions strives to set an example through the management of its assets and its internal operations. Accordingly, the various initiatives undertaken by its teams (the main initiatives are listed below) are carried out in keeping with the sustainable development policy. 3 0.54 0.16 2 0.28 0.30 0.34 0.28 0.25 1.35 1.18 1.33 2010 2013 2014 1 2.9.6.1. Measuring carbon emissions 0.54 0.71 0 The first greenhouse gas report produced for Foncière des Régions was conducted in 2011 based on 2010 energy consumption. In January 2015, the practice was repeated based on 2014 energy consumption, once again in keeping with the recommendations of the GHG Protocol (Greenhouse Gas Protocol), as in 2011 and 2013. This reporting and evaluation standard for greenhouse gases is currently one of the most widespread in the international arena. Business travel Commuting Gas Electricity and cooling/heating networks The three studies conducted since 2011 analyse the emissions generated by the business trips and commuter travel of employees with the Foncière des Régions ESU, working in Paris and Metz, and by the offices occupied by employees in the capital (two buildings) and in Metz (two of the seven floors of the Le Divo building). In 2014, this scope covered 95% of the workforce (vs. 93% in 2013). The results are monitored by an independent third party, Ernst & Young, as part of its assignment to verify the CSR information. Calculating greenhouse gas emissions follows the GHG Protocol by distinguishing between the following three sources of emissions: The average level of emissions per employee is 2.2 tonnes of CO2 equivalent for 2014 (vs. 2.26 tonnes of CO2 equivalent for 2013 and 2.75 tonnes of CO2 equivalent in 2010), i.e. a 20% decrease compared with 2010, due to the various actions related to the carbon policy (renovation of the boiler room at 30 Kléber, etc.) and to the teams from Metz being moved from two less eco-friendly buildings to a single site, the Le Divo building. ww Scope 2 – indirect emissions related to the purchase of electricity and to heat/cold from district heating: for Foncière des Régions, such emissions come from the consumption of electricity (79 tonnes of CO2 equivalent per year) and to district cooling and heating (11 tonnes of CO2 equivalent per year). ww Scope 1 – direct emissions: these emissions are related to the burning of fossil fuels from buildings or company vehicles. For Foncière des Régions, direct emissions come from the consumption of natural gas (73 tonnes of CO2 equivalent per year) and of fuel by fleet vehicles (89 tonnes of CO2 equivalent per year). ww Scope 3 – other indirect emissions: these are all other indirect emissions, including passenger transport. For Foncière des Régions, other indirect emissions come primarily from transport inherent to the business (259 tonnes of CO2 equivalent per year), as well as commuting to work (65 tonnes of CO2 equivalent per year). The greenhouse gas footprint is calculated based on the ADEME V6 carbon footprint table. Foncière des Régions 208 Reference Document 2014 Sustainable development Human capital Total 575 tonnes of CO2e Foncière des Régions breakdown: CO2 SF6 CH4 N2O HFCs PCFs NF3 98.8% 0% 0.8% Scope 2 INDIRECT 0.4% 0% Scope 1 DIRECT 15.6% 28.1% 0% 0% Scope 3 INDIRECT 56.3% 30.25% 13.58% 12.22% District Heating/Cooling 87.78% 54.94% Gas central heating Plane 36.11% 20.06% Taxi Expenses 45.06% Train Electricity Commuting Company car petrol 2.9.6.2. Eco-behaviour on company premises Canibal, a fun approach to recycling The company’s commitment to sustainable development is based on active involvement at all levels, both in its business performance and through environmental reflexes that are gradually becoming essential in everyday life. Employees are demanding more and more practical efforts from the company in favour of the environment and city life. For an increasing number of them, initiatives taken in this area contribute to their pride in working for the company. Located at the Paris headquarters of Foncière des Régions since the end of 2011, Canibal has enabled the collection of nearly 6,000 waste units, of which 49% plastic bottles, 29% cans and 22% water cups in 2014. The 2014 waste collection has prevented the emission of 63 kg of CO2 and enabled 458 donations to be collected (€0.05) towards the planting of trees. These donations made a direct contribution to the planting of five trees by local producers in the Alto Huayabamba region of the Peruvian Amazon. This initiative is backed by an organisation invested in fair trade, environmental conservation and the socio-economic development of communities. The practical initiatives implemented in Paris and Metz as part of this eco-friendly approach include the following: ww HQE certification for the Le Divo building and BREEAM In-Use certification for the headquarters premises at 30 and 10 avenue Kléber in Paris (16th arrondissement), obtained in 2012, 2013 and 2014 respectively ww waste sorting at the premises to separate and recycle paper and cardboard (approximately 80% of office waste). Accordingly, 21 tonnes of paper waste were collected at the two sites in Paris in 2014. A collection area was also introduced at the Metz site, where employees could dispose of printer toner cartridges, batteries and plastic bottle caps for recycling 2.9.6.3. Raise awareness, inform and train through Green Meetings In addition to the initiatives indicated in the previous chapter and the renovation works to improve building performance (replacement of heating equipment, motion detectors in common areas, etc.), information and awareness-raising meetings – called Green Meetings – have been organised every month since 2009 at Foncière des Régions. Open to all employees, these meetings foster discussions between professionals in the sector (lawyers, architects, design offices, etc.) regarding cross-disciplinary topics. In 2014, these meetings focused on the following topics in particular: energy performance tools, BIM, wooden constructions, urban biodiversity, etc. ww water savings thanks to the introduction of motion-detector taps, and dual-flush toilets enabling significant reductions in water consumption ww good practices and awareness-raising articles regularly disseminated via the group Intranet ww the collection of plastic bottle caps in favour of the Bouchons d’Amour association, in order to purchase equipment (wheelchairs, etc.) for people with disabilities ww the Canibal waste compactor, which is used to collect aluminium cans, water cups and bottles, with an incentive system enabling users to make donations towards tree-planting projects (see insert below). Foncière des Régions In addition to real estate topics, employees are regularly encouraged to adopt eco-responsible behaviour: besides selective waste collection in offices, aimed at recycling 100% of paper and cardboard, a genuine paper policy was introduced in 2013. This policy 209 Reference Document 2014 2 2 Sustainable development Open and transparent governance 2.9.6.5. Implementing Green IT solutions organises the exclusive use of PEFC-certified(1) paper (guaranteeing that the paper is sourced from sustainably managed forests), and benefits from the European Eco-label (taking into account the full product life-cycle, its quality and its use). This paper policy applies to all print-outs and external publications related to administration (reports, etc.) and marketing (brochures, etc.). At the same time, an awareness-raising campaign was launched to encourage all employees to reduce printing by more than 30% between April 2013 and the end of 2014. Foncière des Régions confirms its commitment to sustainable development through changes to its information system. By rolling out the last phase of its paperless project, Foncière des Régions fully subscribes to a strategy to reduce the use of paper documents within the group. The implementation of the Office365 solution, initially for its email service, but also for all its other features, represents a significant step towards Cloud Computing solutions, mobility and information security. These features can be accessed at any time from a tablet, smartphone or any workstation via the Internet. 2.9.6.4. Travel policy Given that commuting and business travel account for 61% of Foncière des Régions’ overall carbon footprint, they represent an important driver for improving its carbon footprint. Accordingly, employees are encouraged to use public transport: for business trips of under three hours by train, employees may not travel by air. For Paris and surrounds, the Autolib’ solution is offered as an alternative to taxi travel, and 50% of public transport and bicycle passes are paid for by the company. Sensitive business data is managed and secured within a dedicated data centre. Such data is made reliable through a regularly tried and tested business continuity plan. 2.10. OPEN AND TRANSPARENT GOVERNANCE Foncière des Régions has a governance process characterised by a desire to ensure that corporate entities are effective. By opting to separate the roles of Chairman and Chief Executive Officer, the company chose to allow the CEO to focus on executive management. The Chairman of the Board of Directors, who is also an independent Director, ensures governance bodies are transparent and effective. Foncière des Régions continuously analyses the best practices in corporate governance in the Afep-Medef Code and endeavours to follow its recommendations. As a result, the company simultaneously increased the proportion of independent and female Directors on the Board. It also capitalised on an initial independent evaluation by an external agency, all in accordance with commitments undertaken. 2.10.1. A governance structure that adheres to the requirements of the Afep‑Medef Code and ensures its effectiveness The corporate governance code of public companies, published by the Afep-Medef, was adopted in November 2008 as a reference for Foncière des Régions corporate governance. It currently refers to the revised version of that Code, which was published on 16 June 2013, and relies on the work of the High Committee on Corporate Governance. These efforts were applauded by analysts and rating agencies and awarded with a Bronze medal in the AGEFI Governance Process Competition for Dynamic Governance. Foncière des Régions will pursue this strategy in 2015, again increasing the share of female and independent Directors on the Board, while endeavouring to achieve the best balance between French and foreign Directors and emphasising skills that ensure efficient corporate governance. The mass expiry of ten terms of Directors in 2015 will also provide an opportunity to stagger Directors’ terms starting in 2016. In 2014, this new Governance system for Foncière des Régions was strengthened with the addition of a new Board member and more transparency in communications on the application of Afep and Medef recommendations. This progress helped to maintain dynamic Governance oriented toward serving the long-term interests of the company, its shareholders, tenants, stakeholders and employees. (1) Programme for the Endorsement of Forest Certification. Foncière des Régions 210 Reference Document 2014 Sustainable development Open and transparent governance 2.10.2. Corporate governance around the Board of Directors In order to adopt an open, transparent, ethical, efficient and appropriate governance system for the way it functions and for its shareholding structure, Foncière des Régions changed its governance structure in January 2011, impacting its composition, organisation and functioning, in line with the recommendations of the Afep-Medef, EPRA and the Code of Ethics of the European Public Real Estate Association (FSIF). 2.10.2.1. Composition and operation of the Board of Directors and its Committees The governance of Foncière des Régions is based on a Board structure that has opted to separate the functions of Chairman of the Board and Chief Executive Officer. Board of Directors Independent/total members Chairman Term of office Proportion of women Performance review Audit Committee Appointments and Remunerations Committee 1/6 (17%) 4/6 (67%) 2/4 (50%) 7/14 (50%) Independent Director Independent Director Independent Director 4 years N/A N/A N/A (2) 29% 16% 33% 0% 57 63 49 61 36% 33% 50% 50% Annually Annually Annually Annually 7 1 3 3 93% 83% 94% 100% Number of meetings in 2014 2014 attendance rate Strategic and Investment Committee (1) Average age of Board members Percentage of international Directors The following table summarises some of the corporate governance best practices adopted by the company regarding the recommendations of the Afep-Medef Code: Vs 46% in 2013 and potentially 57% in 2015. (2) Vs 23% in 2013 and potentially 36% in 2015. N/A: Not Applicable. (1) Details of the composition of the Board of Directors and the Committees are shown in the Chapter on Control of the company of this report (see Chapter 4.1), and the list of terms held by each Board member is shown in the Chapter on Terms and Functions of corporate officers (see Chapter 1.14.3). as non-independent with regard to one of the criteria, Directors could still be considered to be free from restrictions. In addition, during its 19 February 2015 meeting, the Board decided to recommend the appointment of Delphine Benchetrit as a new independent Director, subject to the approval of the shareholders at their meeting on 17 April 2015. Assuming that this appointment is approved by the shareholders, the percentage of independent members will increase to 57%, insofar as the Board of Directors has qualified her character as independent. The independence criteria used are those shown in the Internal Regulations of Foncière des Régions published on its Internet site (http://www. en.foncieredesregions.fr/finance_en/financial_information/ regulated_information/). 2.10.2.2. A Board of Directors increasingly based on the independence of its members Based on recommendations from the Remunerations and Appointments Committee, the Board of Directors analyses the independence of the serving Directors on an annual basis. The Board of Directors classified 50% of Directors as independent following a review performed by the Board during the 19 February 2015 meeting. To carry out this analysis, the Board applied the Afep-Medef Code criteria, which specifically require that, in order to be classified as independent, Directors may not have any sort of relationship with the company, its group or its management that may compromise them in exercising their free judgment. Based on its criteria, the Board conducts an in concreto assessment to determine if, despite complying with the Afep-Medef Code criteria, Directors have no other links (professional or personal relationships) that may impede their freedom of analysis and decision or if, conversely, although they can be classified Foncière des Régions 2.10.2.3. A better balance of men and women The percentage of women serving on the Board, which was 29% following the Combined General Shareholders’ Meeting on 28 April 2014, should increase to 36%, providing the General Meeting of Shareholders of April 2015 approves the appointment of Delphine Benchetrit as Board member. The company’s Board has set the objective of continuing to increase membership of women on the Board so as to quickly achieve a better balance of men and women, with a view to achieving early compliance with legal provisions in this area. 211 Reference Document 2014 2 2 Sustainable development Open and transparent governance 2.10.2.4. An effective Board of Directors This applies in particular when, for any transaction being considered or undertaken by the company, a member of the Board or a company of which a Director is an employee or corporate officer might have competing interests or interests opposed to those of the company or the companies in its group. In this case, the relevant Board member must refrain from participating in the deliberations of the Board or any Committee relating to the transaction, and more generally observe a strict duty of confidentiality. After producing two internal assessments, in 2011 and 2012, the company undertook an initial independent evaluation at the end of 2013, performed by the specialised agency Egon Zehnder, to review the capacity of the Board of Directors to meet the expectations of shareholders and assess the contribution of each member through a review of its organisational structure and its method of functioning. All Directors expressed their satisfaction with the functioning of the Board as well as the Chairman – Chief Executive Officer two-man team, notably because of the quality and relevance of information available to it. The results highlighted the Board’s ability to take decisions, while recommending increased outside contributions, especially on macroeconomic issues. They were presented to the Board of Directors on 26 February 2014 and are detailed in the Report of the Chairman of the Board on corporate governance and internal controls (see Chapter 4.1.1.4.6). 2.10.2.5. A Board of Directors attentive to CSR challenges Given the importance of the challenges posed by sustainable development for Foncière des Régions and its stakeholders, the Board is regularly consulted on CSR matters, so that they may be integrated into the company’s strategic focus. Since 2013, the April meeting of the Board of Directors is devoted to CSR subjects. On this occasion, the Board will review the company’s performance in the area of the environment and will monitor progress of the objectives it has set, confirm the major opportunities of improving CSR performance in the group and compare results and progress achieved by the company with that of other companies in the real estate sector. In 2014, the Chairman of the Board of Directors focused on implementing all of the recommendations in this evaluation, including the strengthening of real estate and international skills with the arrival of Sigrid Duhamel, and by extending consultation on risk management. An induction programme for new Directors has been in place since 2012. It helps new Directors, particularly through meetings with management, increase their knowledge of the company and its sector of activity. Furthermore, the members of the Governance Committees cooperate from time to time with certain support departments such as Human Resources and Internal Audit. The Board of Directors will also examine the group’s social policy as well as the non-financial information it publishes, particularly in corporate and environmental areas. It will analyse the ratings awarded by non-financial rating agencies. Lastly, it ensures that ethical rules set out by the group are applied and evaluates sponsoring policies and sponsoring and philanthropic activities that have been implemented. Since 2013, measures approved during a Board meeting are systematically monitored in successive meetings. Furthermore, more regular strategy and market updates were implemented in 2013 and continued in 2014. In April 2014, the state of progress with regard to the four lines of Foncière des Régions’ sustainable development policy was presented to the Board of Directors: In consideration for their work with the Board, Directors receive attendance fees, the value of which is determined by the Board of Directors based on an overall amount for all Directors that is approved by the Shareholders’ General Meeting. The attendance fees include a fixed rate and a variable portion linked to attendance at meetings and effective contribution to the work of the Board. The remuneration of Directors is presented and detailed in the management report contained in Part 1 of the Reference Document. ww sustainable building: greening of the asset base, reducing energy consumption in assets, accessibility of buildings to persons with reduced mobility and the status of environmental schedule signatures ww governance: the objective of an increased proportion of women on the Board, the breakdown of independent Directors, adherence to recommendations for the composition of Committees, etc. The Works Council designates two of its members as representatives at meetings of the Board of Directors. These members attend all the Board’s meetings in a consultative capacity. They receive the same documents that are circulated to Directors. ww employee-related: employee development initiatives, such as Training Week, training of Managers; and ww corporate: responsible purchasing policy, financial and skills assistance through the ESSEC’s Real Estate and Sustainable Development Chair, the Palladio Foundation, the Passerelle programme, etc. The Board’s rules of procedure provide a mechanism to prevent conflicts of interest arising when investment projects are submitted to the Board and/or the Strategy and Investment Committee. More specifically, it states that all Directors have the obligation to do their best to determine in good faith whether or not a conflict of interest exists and to report it to the Chairman as soon as they are aware of any situation that may constitute such a conflict between the company and themselves or the company they represent, or any company of which they are employees or corporate officers. Foncière des Régions In November 2013, the AMF (Autorité des Marchés Financiers) produced a report on information published by public companies in the area of employee-related, societal and Governance responsibilities, highlighting twelve recommendations and three points for consideration. This report is a follow-up to the application of Article 225 of the Grenelle 2 Law since the publication of the decree dated 24 April 2012. Foncière des Régions is part of a panel of 60 public companies that were analysed as part of this report. The company adheres to nearly every one of the recommendations. 212 Reference Document 2014 Sustainable development Open and transparent governance Nevertheless, it strives to make further progress in reporting. The main point of improvement, which is considered in this report, is to describe further the process of identification, analysis and treatment of risks. The AMF did not publish a similar report in 2014, as it prefers to publish such reports at a less frequent rate. 2.10.3. An Executive Committee interested in CSR performance In addition, Chief Operating Officer Yves Marque also participates in the Executive Committee as Chief Operating Officer for meetings. The Executive Committee is the management body consulted for each major decision or transaction of Foncière des Régions in terms of Governance, monitoring of subsidiaries/holdings and financial/asset turnover policies. It is formed by the company’s corporate officers listed below: Each member of the Executive Committee is in charge of implementing the CSR objectives of the group within their particular area of responsibility in coordination with the Sustainable Development Department. Their achievements in this domain are now systematically incorporated into the criteria for determining bonuses for each person. ww Christophe Kullmann – Chief Executive Officer ww Olivier Estève – Deputy General Manager ww Aldo Mazzocco – Deputy General Manager of Foncière des Régions, and Managing Director of Beni Stabili. 2.10.4. General Meetings The company encourages shareholder participation in the General Meetings of Shareholders. With this perspective, it decided as from the 2013 meeting to make an internet tool available to shareholders for receiving the notice of the Meeting, obtaining information about the General Meeting of Shareholders and entering voting instructions before the General Meeting directly through the Internet. This approach has helped to increase shareholder investment, as evidenced by the following results: Combined General Meeting of Shareholders of 24 April 2013 Combined General Meeting of Shareholders of 24 April 2014 2013/2014 change Ordinary Resolutions Extraordinary Resolutions Ordinary Resolutions Extraordinary Resolutions Ordinary Resolutions Extraordinary Resolutions 941 942 1,316 1,310 +39.85% +39.06% 45,147,143 45,143,231 50,620,471 50,583,266 +12.2% +12.05% Attendance rate 78.74% 78.75% 80.94% 80.88% +3 points +3 points Rate of approval of Resolutions 92.70% 98.60% 97.60% 96.46% +5.3 points -2.2 points Number of shareholders present, represented or having a postal vote Number of shares that voted 2.10.4.1. Implementation of “Say on pay” Apart from the financial delegations, the main items submitted to the shareholders’ vote generally related to the approval of the company’s financial statements, allocation of income and the distribution of dividends to all shareholders, decisions regarding the appointment and renewal of Directors as well as the approval of regulated agreements. In application of Article 24.3 of the Afep-Medef Code, shareholders attending the 28 April 2014 General Meeting were consulted about individual remuneration through the “Say on pay” scheme due for the year ended 31 December 2013 and pertaining to the Chairman of the Board of Directors, the Chief Executive Officer and the Deputy General Manager. Shareholders spoke very approvingly of these resolutions, thus welcoming the transparency efforts accomplished and the balance of the remuneration policy. The 2014 General Meeting provided an opportunity to respond to questions from shareholders regarding dividends and related taxation, the company’s shareholding structure, operating costs, the consequences of adoption of the Alur law on Residential and the pursuit of the investment strategy in this business sector. Percentage of votes for Jean Laurent Chairman of the Board of Directors 99.63% Chief Executive Officer 97.14% Olivier Estève Deputy General Manager 96.81% Aldo Mazzocco Deputy General Manager 83.81% Christophe Kullmann Foncière des Régions 213 Reference Document 2014 2 2 Sustainable development Open and transparent governance 2.10.5. Addressing shareholder concerns and ensuring transparency of financial information 2.10.5.1. Foncière des Régions listening to individual shareholders Foncière des Régions does its utmost to provide institutional investors and individual shareholders with quality information regarding its business and strategy. It is conducting a substantive piece of work to consolidate its long-term relationship of trust with the financial community and to develop its market transparency. Foncière des Régions posts an annual letter to its 12,000 individual shareholders. Foncière des Régions also provides them with a dedicated chapter on the company’s website, a documentation service as well as a shareholders’ freephone number (0 805 400 865). Foncière des Régions has no mechanisms to strengthen control by certain shareholders and plans to propose the abandonment of the automatic assignment of double voting rights provided by the Florange law of 29 March 2014 at the next meeting. This specific multimedia-type communication, which is available on a permanent basis, enables Foncière des Régions to answer its shareholders’ questions more efficiently. The company is also helping to raise the level of professionalism within the industry and to issue high quality information by means of its active involvement with the IEIF (Real Estate Savings Institution), the FSIF, EPRA (European Public Real Estate Association) and IPD (Investment Property Databank). Lastly, since the General Meeting of Shareholders of 24 April 2013, Foncière des Régions allows its shareholders to receive their notice of meeting and also related documentation via the Internet. Shareholders can now vote via the Internet. This initiative promotes the participation of individual shareholders in General Meetings of Shareholders. Foncière des Régions also takes a proactive attitude in dealings with institutional investors. As a result, management holds some 250 meetings every year with their main representatives, particularly when the annual and semi-annual results are released in the major European and US markets, and sets up some 15 site visits of representative assets in its portfolio for these groups. Foncière des Régions has also been a partner of FFCI (Fédération Française des Clubs d’Investissement – French Federation of Investment Clubs) since 2010. In parallel, Foncière des Régions participates annually in around a dozen conferences intended for international investors that are set up by well-known companies working in the financial markets such as J.P. Morgan, Merrill Lynch, etc. 2.10.5.2. A process recognized by the 2014 EPRA Awards The quality and transparency of Foncière des Régions financial and non-financial reporting was recognised twice at the EPRA Annual Conference of 2014, with two EPRA Gold Awards. The first trophy was for the financial portion of the 2013 Reference Document, and the second was for the non-financial portion of the same document as well as the 2013 Sustainable Development Report. 2.10.6. Promoting fair and ethical practices Foncière des Régions updated its risk mapping in 2014 to include changes to the company and the environment in which it operates. Other mapping had previously been carried out in 2006, 2009 and 2012. The methodology and the results of this update are presented in greater detail in the Report of the Chairman of the Board of Directors on corporate governance and internal control (see Chapter 1.11). During its mapping, Foncière des Régions reviewed the risks related to the environment and to the group’s social and societal policy. Action plans were defined for these topics, in particular to strengthen their level of control. The group is also a signatory of the Diversity Charter and, at the international level, it has been a member of the Global Compact since October 2011. Initiated by the United Nations (UN) and signed on a voluntary basis by companies, this Compact covers ten universal principles relating to Human Rights, labour, environmental standards and corruption. Foncière des Régions incorporates these principles into its strategy, reviews their progress and promotes the Global Compact with its stakeholders, in particular suppliers, by appending the document to its responsible purchasing charter. In 2013, Foncière des Régions renewed its commitment by publishing its third “Communication On Progress” report, which is available on the group’s site: http://www.en.foncieredesregions. fr/ and on the Global Compact site: http://www.unglobalcompact. or/participant/15495-Fonciere-des-Regions. Foncière des Régions 214 Reference Document 2014 Sustainable development Open and transparent governance 2.10.6.1. A Code of Ethics for greater responsibility The Code of Ethics was fully reviewed in 2014. Some points were expanded, such as the inclusion of a chapter relating to the implementation of a warning system within the group, which is explained in the following paragraph. This new Code of Ethics will be resubmitted to the employee representative bodies in 2015, then distributed to all employees. The Foncière des Régions Code of Ethics, which was implemented in 2011 as part of its ethical and compliance strategy, is intended for all employees in the Economic and Social Unit, and Code of Ethics were also put in place for staff in Germany and Italy. It may be consulted on the Foncière des Régions website: www.foncieredesregions.fr). 2.10.6.2. Preventing the risk of fraud and corruption with the establishment of an whistle blowing system The Code of Ethics defines the ethical principles that all Foncière des Régions employees must apply to their professional practices and behaviour vis-à-vis all their outside contacts. Lastly, the Code of Ethics describes ethical Governance, as implemented in the company’s various business lines. The basic principles contained in this Code of Ethics are: In compliance with the 10th principle of the Global Compact, which urges companies to act against corruption in all its forms, including the extortion of funds and bribes, Foncière des Régions has increased its vigilance on these matters. ww compliance with laws and regulations In view of the findings of the risk mapping process in December 2012, the Board of Directors deemed that, given its business activities and organisation, the potential risk of fraud and corruption were adequately reviewed and addressed. Transactions that are deemed sensitive, such as sales of assets or companies, major construction or renovation works or calls for tender are guided by stringent procedures, especially regarding contact with intermediaries, which is subject to regular monitoring. Moreover, the separation between orders and payments reduces the risk of fraud. ww respect for individuals (health and safety at work, prevention of discrimination, respect for third parties) ww respect for the environment ww compliance with rules concerning insider dealing ww prevention of conflicts of interest (links with competitors, clients, suppliers, compliance with anti-corruption rules) ww protection of Foncière des Régions’ activities (protection of information, assets and resources) ww transparency and integrity of information. Since 2011, the company has also implemented, during the Process Morning sessions (see Chapter 4.1.2), training for employees managing transactions that involve a risk of fraud. Anti-fraud audits are carried out regularly within the group and have revealed no significant dysfunctions. The Audit and Internal Control department ensures that the Code of Ethics is distributed to all employees of the Foncière des Régions ESU. When new hires arrive at Foncière des Régions, individual interviews are set up with the Audit and Internal Control, and Human Resources departments specifically review this Code. Furthermore, training on the procedures, known as “Process Mornings” is dispensed to employees, which focuses on the major principles of the Code of Ethics and on the role of compliance officers. In 2014, close to 50% of employees participated in these awareness meetings, and they will continue in 2015 for other employees. 2.10.6.2.1.Establishment of a warning system In order to strengthen its risk prevention tools, Foncière des Régions established a warning system in late 2014. It is restricted to specific cases of serious and intentional acts that may affect the company exclusively in the following areas: The Chief Operating Officer was appointed as the ethics officer. The Chief Operating Officer is involved in determining rules and duties in terms of professional ethics and ensures compliance across the company. He provides assistance and advice on ethics to any employee who asks for it and helps in adopting and deploying the Code of Ethics. The Chief Operating Officer was consulted on around ten occasions in 2014, primarily by staff who wished to clarify their situation regarding invitations received from group partners, the purchase of group shares outside of black out date periods or regarding a personal relationship with one of the group’s partners. Foncière des Régions ww accounting ww banking ww financial ww fighting corruption ww breaches of competition law ww efforts against discrimination and harassment in the workplace ww protection of the environment. In this way, any group employee can report a risk that he or she has identified in these areas by contacting the compliance officer by any convenient means, including via a dedicated e-mail address. 215 Reference Document 2014 2 2 Sustainable development Open and transparent governance 2.10.6.4. Combating money laundering The compliance officer will systematically examine any declaration and take any measures necessary to the processing of the alert. In 2010, Foncière des Régions and its subsidiaries introduced a system for combating money laundering and the financing of terrorism, in the form of a procedure that lists and describes actions to be taken by the employees concerned. The procedure was reviewed in 2012 to clarify its scope of application. The Director of Audits and Internal Control is the designated LAB/LFT Manager. Two Tracfin Correspondents and Registrants, the group Legal Director and the Corporate Life Legal Affairs Manager were appointed at the end of 2010 and early 2012 respectively. Anonymous alerts will not be processed. However, the identity of the person reporting it will be kept strictly confidential. If the actions that triggered the alert are not confirmed, the data from the alert is destroyed without delay, with no penalty for the person who alerted the company. Data relating to alerts requiring verification will not be retained beyond two months after completion of the audit, except for initiations of disciplinary or judicial proceedings against the person in question or someone who makes a false alert. Until the destruction of the data, persons identified under the mechanism will have a right to access and correct data concerning them, within the limits of preservation of the whistleblower’s anonymity. This system is based on a vigilant stance adopted when thirdparty contracts are initiated, in all cases in which a company of the group is involved as an intermediary for a third party and as a part of the sale or purchase of an asset, securities or stakes in real estate companies. The implementation of the LAB mechanism was supported by an extensive training campaign that was initiated in 2010 involving some 60 employees via a dedicated training module set up by the Legal Department, which contributes to continued adjustments to the system. Training more specifically for asset managers took place in 2012 and a refresher during “Process Mornings” was carried out in 2014. 2.10.6.3. Guaranteeing fair competition Foncière des Régions, in its business and more specifically in its sales, acquisition and construction work, complies with the provision of Articles L. 410-1 et seq. of the French Commercial Code relating to competition. As such, the company has set up procedures to address this risk. Consequently, work involving sums above a certain euro threshold necessitate a mandatory competitive bidding process and the procedures put in place and validated by General Management set the bidding conditions. 2.10.6.5. Association with, or membership of, domestic or international organisations Employees carrying out this work by this are briefed about the risk during the Process Morning sessions (see Chapter 4.1.2). The major control and validation principles were reviewed, notably the obligation of setting up bidding procedures for work, procurement, markets and also for the sale of assets. In this way, depending on the amounts and type of transaction, bids from one, two or three companies must be accepted and reviewed prior to awarding a job. In the same manner, the company uses a procedure for opening bids involving a minimum of two employees and the drafting of a record of the opening of bids for some tender processes in order to ensure the widest degree of transparency and fair competition possible. Audits were carried out in 2013 and 2014 on certain development operations in order to ensure compliance with the tender procedure. These audits revealed no significant issues. Foncière des Régions undertakes no direct lobbying activity. In contrast, the company contributes to French government building policy through a strong commitment in working groups and professional associations. As a member of the Sustainable Development commissions of EPRA, the Fédération des Sociétés Immobilières et Foncières (FSIF), of which Christophe Kullmann, Chief Executive Officer of Foncière des Régions, has been president since 2011, it is also a founding member of SB Alliance and France GBC, under whose aegis it contributed to the drafting of the “CSR Reporting Guide – Article 225 Real Estate Construction”. Foncière des Régions is also a member of the HQE Association and a signatory of the HQE Performance Charter of Commitment. Through involvement in these entities, Foncière des Régions plays a major role in promoting the assimilation of the environment and CSR. Its commitments in working groups such as Plan Bâtiment Durable and Orée, as well as its participation in nationwide and European studies such as RICS, EPRA, Officair and s-i-r-e bear witness to the company’s commitment to contribute to the sustainable real estate discussions. The risk of anti-trust behaviour is limited within the framework of group activities as ownership of real estate assets is widely fragmented. Foncière des Régions and its subsidiaries contribute no funds and provide no services to any political party whatsoever, nor to any government incumbent or candidate for any public position. Notwithstanding, the company acknowledges the commitments of those of its staff who participate or wish to participate in public life in the capacity of private citizens. Foncière des Régions 216 Reference Document 2014 Sustainable development CSR performance 2.11. CSR PERFORMANCE 2.11.1. Recognition of our performance by analysts Foncière des Régions made the decision in 2014 to update its reporting framework from GRI 3.1 to G4 and the GRI CRESD (Construction and Real Estate Sector Supplement). This new methodology focuses on materiality, in contrast to the previous guidelines which concentrated on comprehensive reporting. G4 refocuses attention on the companies’ core CSR strategy and management indicators. Having achieved “Core” compliance and now using the “GRI Materiality Disclosure Service”, Foncière des Régions reaffirms its commitment to quantitative and qualitative monitoring of its CSR strategy, in line with policy overall. Our reporting also complies with the provisions of the French Decree of 24 April 2012 of the Grenelle 2 Law on CSR transparency, and with the European Directive of 15 April 2014 and the principles of Integrated Reporting. Similarly, the group follows the recommendations of the CSR Reporting Guide, Article 225 of France GBC and the 2014 version of Best Practices Recommendations issued by EPRA. Foncière des Régions’ sustainable development policy has not gone unnoticed and was evaluated by the main non-financial rating agencies and research bodies, as illustrated in the chart below. Grades obtained 100 90 80 30 FTSE4Good Asset4 CDP DJSI Novéthic Vigéo GRESB 20 EPRA Award 70 60 50 40 10 Report publication year 2009 2010 2011 2012 2013 2014 EPRA EPRA EPRA Bronze Gold ww EPRA BPRs Sustainability Awards: the European Public Real Estate Association has awarded prizes each year since 2012 to property companies that implement EPRA best practices and key indicators in their non-financial reporting (Best Practices Recommendations). For the third edition, Foncière des Régions distinguished itself in 2014 by earning the EPRA Gold Award, having won the EPRA Silver Award in 2013. The highlights of the year included being singled out for an EPRA Gold award for non-financial reporting, and the marked 10-point improvement in our GRESB score, which consolidates the Green Star rating obtained in 2013. ww Asset 4: this index prepared by Thomson Reuters, a CSR strategy consultant, evaluates companies according to ESG (2) criteria. Foncière des Régions scores progressed greatly, moving from 20/100 in 2009 to 90/100 in 2012 and 2013. Foncière des Régions is included in the index once again in 2014. ww Carbon Disclosure Project: with a score of 72C in 2014, up from 70C the previous year, Foncière des Régions’ performance continued its steady improvement since 2012. ww Ethibel: rated “B”, Foncière des Régions was selected for the 370-company Ethibel Excellence Investment Register index in 2013 and 2014 and the Ethibel Pioneer index, a best-in-class index containing the best evaluations out of 370. ww DJSI: the Dow Jones Sustainability Indexes come out of annual analyses done by RobecoSAM for the Robeco bank. Foncière des Régions was selected for the DJSI World Index in 2013 and 2014 with stable ratings, based on a questionnaire submitted voluntarily since 2011. Foncière des Régions Silver 217 Reference Document 2014 2 2 Sustainable development CSR performance ww Oekom: Oekom research AG rates more than 3,500 companies throughout the world, assigning grades ranging from D- to A+. Most of the 191 companies in the real estate sector are rated between D+ and D-. Based on the 2011 report, Foncière des Régions was ranked 19th out of 191 companies with an overall grade of D+. ww FTSE4Good: a CSR index developed by the Financial Times Stock Exchange and known for its categories of stock market indices. Foncière des Régions has been selected for the FTSE4Good index since 2010. ww GRESB: Foncière des Régions was top of the GRESB 2014 ranking in the “Offices France” category, and was ranked 38th out of the 362 European property companies and 80th out of the 637 companies analysed worldwide. For the second time, the group achieved a GRESB “Green Star” rating. While its grades improved for each of the ESG criteria, there is still room for improvement with regard to how the results are presented to bring them into line with the frameworks used by some of the organisations in their surveys (CDP, GRESB and others). In addition, the methodologies of the agencies implement Anglo-Saxon methods that in certain cases cannot be transposed in France. For example, some data, such as origin of employees, have not been monitored due to the legal context, in this case the IT laws of 1978 and 2004, and the desires of companies in this regard. ww Novéthic survey: in 2014, Foncière des Régions was ranked as a “Committed” REIT in this eco-performance index for buildings. For three years, Foncière des Régions has been one of the main leaders in this domain. ww NYSE Euronext Vigeo: in 2014, Foncière des Régions retained its listing in the NYSE Euronext Vigeo France 20, Europe 120, Eurozone 120 and the World 120 indices. 2.11.2. A clear and transparent methodology 2.11.3.1. External verification by an independent consultant Every year since 2006, the theme of sustainable development has taken up a chapter of Foncière des Régions’ Reference Document. 2010 was the first year for which a standalone Sustainable Development Report was published. In compliance with the Decree of 24 April 2012 on CSR transparency, arising from Article 225 of the Grenelle 2 Law, Foncière des Régions’ CSR reporting was verified by an external independent consultant, Ernst & Young, in the interest of monitoring reporting reliability. This verification was also used to measure the application of the EPRA’s BPRs as well as ‘Core’ compliance under GRI 4 CRESD. This advisor’s statement is included at the end of the chapter. The tables presented in the following pages provide a summary of the indicators used by Foncière des Régions to measure environmental and corporate performance, particularly with respect to the targets that have been set. These indicators have been selected based on the following international standards: GRI 4 and its sector-specific CRESD, EPRA Best Practices Recommendations on Sustainability Reporting, as well as the annual studies: Carbon Disclosure Project (CDP), Global Real Estate Sustainability Benchmark (GRESB). Application of GRI 4 – CRESD Comprehensive Core Self-declaration √ External opinion Ernst & Young √ 2.11.3. Environmental indicators Processing and analysis of consumption data by CSTB In compliance with the Decree dated 24 April 2012, the non-financial reporting scope is based on Foncière des Régions’ financial scope and includes the following activities: in France: Offices, Hotels, Service sector, Residential, Logistics and Parking; in Germany: Residential (Immeo AG); in Italy: Offices (Beni Stabili). Once consumption figures are collected and consolidated by the Sustainable Development Department of Foncière des Régions, they are then processed by the CSTB, Scientific and Technical Centre for Building, a public organisation for innovation in buildings, which acts on two levels: In order to follow Foncière des Régions’ financial approach, assets under construction or renovation are excluded from the reporting scope, as are assets acquired or sold during the year. ww by applying calculations to energy consumption data for the assets of Offices France (including headquarters assets), and the Hotels and Service Sector, to take summer and winter weather-driven demand into account. This method is applied to the assets of Offices France and Hotels and Service Sector, Potential material variations in the scope of each portfolio held, other than those arising from rotating the portfolio via disposals and acquisitions, are detailed below and the number of assets involved is specified where relevant. Foncière des Régions 218 Reference Document 2014 Sustainable development CSR performance Compliance with EPRA Sustainability Best Practices Recommendations (BPRs) enabling us to adjust the consumption levels of a given year under baseline weather conditions (statistics for each of the three major weather zones in metropolitan France have been gathered over a thirty-year period). This adjustment is carried out for consumption of both heating and air conditioning. It is not applied to other consumption and allows meaningful comparison of results from one year to another in line with the CSTB’s scientific rigour As a member of the EPRA Sustainable Development Commission, Foncière des Régions helps promote good practices in sustainable reporting for the real estate sector. Since April 2011, Foncière des Régions has included EPRA recommendations in its internal and external reporting. ww by extrapolating a number of data to the complete portfolio, based on intensity ratios per m2 on the basis of actual consumption, data is extrapolated for information purposes only to the surface area of the entire scope. In the table below, Foncière des Régions summarises its reporting method and process in connection with the EPRA’s Best Practices Recommendations (BPR’s) and its General Principles in order to achieve the highest level of compliance. With regard to energy, such as electricity, gas, heating and cooling systems, as well as water, data is collected in conformity with the process described in the box below. Reporting tables In order to simplify the reading of Foncière des Régions’ environmental performance, the indicators were grouped using the following colour code: Data collection in compliance with EPRA BPRs ww Blue background: this is the scope covered by EPRA recommendations and represents properties over which Foncière des Régions or its agent (property manager for FDL) have “operational control”, meaning that it manages them directly. This involves: For assets under Operational Control that are directly managed by Foncière des Régions, consumption data is collected based on invoices by the Properties department. This is indicated by the blue background in the tables below. For tenant areas in multi-let buildings and for the whole building in single-let buildings, data is collected by the tenants (or the energy or water supplier with the tenant’s approval). ww multi-let buildings: Offices France and Italy, Logistics and Residential France, for which environmental information concerning common areas is managed by property managers (internal or external in the case of Foncière Développement Logements) ww car parks, for which all energy and water consumption data is managed directly by Urbis Park staff and in which there are no tenant areas. This data collected refers to calendar years, from 1 January to 31 December. In order to ensure maximum accuracy and transparency, where consumption data is unavailable for any utility, it is not estimated and thus impacts the portfolio’s coverage rate. ww White background: this involves buildings or parts of buildings over which Foncière des Régions or its subsidiaries do not have “operational control”. In these cases, the tenant manages the building and obtains directly all energy, water consumption and waste. This information has been collected from the tenant where available. This refers to either: Information was estimated for only one family in 2014, but this concerns a portfolio held by the Hotels and Service Sector business, for which reporting is optional under the EPRA BPRs (single-let buildings which fall outside the scope of Operational Control). ww the tenant areas of multi-let buildings: the data collected in this category either wholly or partially supplement data recorded under operational control of common areas ww single-let buildings: Offices France, Hotels and Service Sector are all included in this category. The extrapolated data is clearly identified and appear on specific lines (against a white background outside EPRA BPR reporting). The reporting period for environmental and social information is the calendar year, except for Car Parks, where the reporting period runs from 1 October to 30 September of the following year. The types of surfaces used to calculate the ratio is identical to those used in the portfolios for each activity: m2SHON in France – m2GLA in Italy – m2Nütz in Germany. For Car Parks, the ratios are calculated relative to parking space in accordance with common practices in the sector. Foncière des Régions 219 Reference Document 2014 2 2 Sustainable development CSR performance COMPLIANCE WITH EPRA RECOMMENDATIONS (2014 VERSION) Compliant Partially compliant EPRA Performance Indicators Non-compliant Compliance self-assessment The Foncière des Régions approach Total energy consumption from electricity (annual kWh) Elec-Abs – Foncière des Régions reports its energy consumption for all of its portfolios, taking into account renewable energy production. Annual total energy consumption data is gathered on the basis of invoice statements using the process described in the box on the previous page. Consumption is presented in terms of final energy. Primary energy equivalencies are indicated for the total, as this is obligatory in France under Thermal Regulations. Total energy consumption from district heating and cooling (annual kWh) DH&C-Abs – Foncière des Régions reports its energy consumption for all of its portfolios in operation and for the headquarters buildings occupied by its teams. Annual total energy consumption data for district heating and cooling is gathered on the basis of invoice statements using the process described in the box on the previous page. Consumption is presented in terms of final energy. Primary energy equivalencies are indicated for the total, as this is obligatory in France under Thermal Regulations. Total energy consumption from fuels (annual kWh) Fuel-Abs – Foncière des Régions reports its energy consumption for all of its portfolios in operation and for the headquarters buildings occupied by its teams. Annual total energy consumption data for natural gas, fuel oil and wood is gathered on the basis of invoice statements using the process described in the box on the previous page. Consumption is presented in terms of final energy. Primary energy equivalencies are indicated for the total, as this is obligatory in France under Thermal Regulations. Building energy intensity (kWh/m2/year) Energy-Int – Foncière des Régions reports its energy intensity ratios for all of its portfolios in operation and for the headquarters buildings occupied by its teams. Intensity ratio per m2 are calculated directly from invoice statements: energy in kWh is divided by corresponding occupied areas (in m2SHON). Consumption is presented in terms of final energy and primary energy. Total direct GHG emissions (tCO2e/year) GHG-Dir-Abs – Foncière des Régions reports on its carbon emissions for each of its portfolios in operation and on the headquarters buildings occupied by its teams. This data is reported in tonnes of CO2 equivalent (tCO2e/year) on the basis of energy invoices including natural gas, fuel oil and wood, for all buildings in the portfolio. These are Scope 1 emissions as described in the GHG protocol. Total indirect GHG emissions (tCO2e/year) GHG-Indir-Abs – This data is reported in tonnes of CO2 equivalent (tCO2e/year) for all of the portfolios. The data is reported in tonnes of CO2 equivalent (tCO2e/year) on the basis of energy invoices for electricity and district heating and cooling. These are Scope 2 emissions as described in the GHG protocol. Building carbon intensity (kgCO2e/m2/year) GHG-Int – Foncière des Régions reports on the carbon intensity ratios in kgCO2e/ m2SHON/year for all of its buildings in operation. Intensity ratios per m2 are calculated directly from invoice statements divided by corresponding occupied surface areas (in m2SHON). Total water withdrawal by source (annual m3) Water-Abs – Foncière des Régions reports its total annual water consumption in m3 for all of its portfolios in operation and the headquarters buildings occupied by its teams. Annual total water consumption data is directly gathered on the basis of invoice statements using the process described in the box on the previous page. Building water intensity (litres/person/year, or m3/m2/year) Water-Int – Data is reported in m3/m2/SHON/year. The intensity ratios per m2 are calculated by comparing the volumes collected to the corresponding surface areas occupied (in m2SHON). Total mass of waste by treatment method (tonnes per year) Waste-Abs – In most cases, waste is collected by public organisations directly linked to the municipalities. Foncière des Régions then pays for this service through local taxes. It is not possible to establish monitoring procedures in terms of total mass, except for buildings with private waste contractors, of which there are four in the French Offices portfolio as well as the two Foncière des Régions headquarters buildings in Paris. The proportion of waste by disposal rate (% of total waste) is indicated when it can be monitored by service providers. Foncière des Régions 220 Reference Document 2014 Sustainable development CSR performance EPRA Overarching Recommendations Compliance self-assessment EPRA BPRs and methodology references Organisational boundaries As in previous years, reporting is based on what is known as “Operational Control”, which corresponds to the scope within which Foncière des Régions, its subsidiaries and investments directly manage energy, water and waste. The results for this scope are given on a blue background in the tables in Chapters 2.11.3.1 to 2.11.3.8. This environmental reporting is based on Foncière des Régions’ financial reporting boundaries and scope for consistency and in compliance with the Decree dated 24 April 2012. The scope encompasses the following activities: Offices France, Hotels and Service Sector, Logistics, Residential and the Urbis Park (Car Parks) and Beni Stabili (Offices Italy) investments. The reporting scope for year N includes all assets owned at 31/12/N. Assets under construction, in redevelopment, vacant and acquired or sold during the year are not included. If an asset is sold during the year, the tenant will not necessarily provide consumption data if no legal connection exists with the former owner of the asset. The environmental reporting period is from 1 January to 31 December, except for parking facilities, which are reported from 1 October to 30 September, as energy and water consumption data for this activity is not correlated to climate or to a period of a year. Breakdown of Landlord – Tenant consumption Foncière des Régions’ reporting is separated into three levels of data collection and analysis: wwCorporate scope: this includes headquarters buildings. wwOperational control scope: this includes buildings under full management over which Foncière des Régions or a contracted Property Manager have control of the management of shared equipment, i.e. equipment located in common areas of the building, and over consumption of water and energy, to include lighting, collective heating, etc. These are Scope 1 and 2 emissions as described in the GHG protocol. Reporting is done from invoices, with no estimates. wwTenant areas scope: this relates to the tenant areas of multi-let buildings for which Foncière des Régions has operational control over common areas of the building. Tenants are responsible for consumption of energy and individual water use. It also relates to single-let buildings, for which users are wholly responsible for managing building equipment and energy and water consumption of the building. Foncière des Régions does not rebill its tenants for energy, unless it is consumed in the common areas in multi-let buildings. Estimates are not made: however data may be extrapolated based on intensity ratios. These cases are highlighted on a white background. Consumption reporting – headquarters buildings As previously indicated, Foncière des Régions reports the consumption for the assets occupied by its teams. The results are presented in Chapter 2.11.3.6 under the Headquarters heading. Intensity normalisation Intensity ratios by m2 are calculated by dividing environmental data for a year N concerning energy, water and carbon to corresponding occupied areas in terms of m2SHON. These calculations are used to measure efficiency for each indicator. In France, a distinction is drawn between final energy, which is consumed and invoiced, and primary energy, which is required to product final energy. Year-on-year like-for-like comparison Elec-LfL, DH&C-LfL, Fuels-LfL, GHG-Dir-LfL, GHG-Indir-LfL, Water-LfL Waste-LfL – Like-for-like data is calculated for energy, greenhouse gas emissions, water and waste and are used to assess changes from one year to the next of the various indicators on a strictly comparable portfolio comprising the same assets. The calculation uses consumption data collected over 24 months, from 1 January 2013 to 31 December 2014, for assets held at 31 December 2014 and in operation over the same 24-month period. Example: wwin 2013, consumption data collected on 70 assets, with a possible reporting scope of 90 assets wwin 2014, consumption data collected on 95 assets with a possible reporting scope of 100 assets wwof these, data was collected on 65 assets in 2013 and 2014; while 93 assets were held in 2013 and 2014 and are considered as applicable. ➡ The like-for-like basis therefore relates to 65 of 93 assets. Foncière des Régions 221 Reference Document 2014 2 2 Sustainable development CSR performance EPRA Overarching Recommendations Compliance self-assessment EPRA BPRs and methodology references Segmental analysis Foncière des Régions has structured its analysis by segment and by business type: Offices France, Hotels and Service Sector, Logistics, Residential and the Urbis Park (Car Parks) and Beni Stabili (Offices Italy) investments. Coverage ratio of data collection The coverage ratio is indicated by segment and business type in each reporting table (energy, carbon, water and waste). For each indicator, this coverage ratio is calculated as an area (% of m2SHON and as a number of assets. Narrative on performance Foncière des Régions provides comments and explanations on environmental performance trends and data: wwin the body of the report (Chapter 2.3) wwin the chapter containing data relative to assessing performance for each business (Chapter 2.11). Assurance – external verification by an independent consultant Since the report for the 2010 fiscal year, the environmental, social, and societal data is verified by an independent third party. The EPRA indicators and compliance with its methodology are verified as part of the process, as are compliance with GRI4 CRESD and the GHG emissions report. The advisor’s statement is included in Foncière des Régions’ annual Reference Document and its Sustainability Report. You will find these documents in both English and French on the Foncière des Régions website. Location of EPRA Sustainability Performance Measurements The EPRA performance measurements and correspondence to principles are disclosed and reported annually in the Foncière des Régions Sustainability Report and in its Reference Document. You will find these documents in both English and French on the Foncière des Régions website. Type and number of assets certified Cer-Tot – This indicator is expressed by dividing the value of the assets with certification, accreditation or a grade at 31 December 2014 by the value of the total portfolio held by a business on the same date (for example Offices France: 50.1%). 2.11.3.1. Offices France All consumption data is taken from invoice statements, with no estimates used at all. As an exception to the “process included” principle of energy consumption, the energy consumed by telephone equipment in the buildings rented to Orange is not included in the calculations based on an assessment performed by the CSTB. The scope of reporting for Offices France at 31 December 2014 relates to 211 out of the 432 sites included in the scope of financial reporting, excluding assets under construction, renovation, or disposed of during the year. A portfolio of 101 non-core assets representing 2% of the value of the total was not included within the scope, since portfolio energy and environmental mapping has not yet been performed. The results are presented below with climate adjustment (winter and summer). Weather-related adjustments are calculated by the CSTB in order to make like-for-like performance more comparable; energy and carbon results are presented in the charts in Chapter 2.3.2. CERTIFICATIONS – (CERT-TOT) (SEE CHAPTER 2.3.1) At 31 December 2014, 50.1% (in value) of the Office assets owned by Foncière des Régions had HQE and/or BREEAM certification (construction and/or operation) and/or were certified as low energy consumption buildings (BBC) or Overall TR. This percentage is expressed relative to all the assets held on this date, including both assets under construction and in operation. Foncière des Régions The rate rose to 68.6% at the end of 2014 if we take the ratio of certified and or accredited buildings to the total core portfolio, i.e. those intended to remain in the portfolio in the long term. 222 Reference Document 2014 Sustainable development CSR performance ENERGY – DIRECT ENERGY CONSUMPTION BY PRIMARY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR BUILDINGS IN OPERATION ww non-operational control scope: reporting is done on the basis of the energy invoices provided by tenants, concerning: The results are presented with climate adjustment. The consumption values reported below are based on the data collected according to two scopes: ww the tenant areas of multi-let buildings ww all energy consumption in single-let buildings. ww operational control scope: assets managed by Foncière des Régions’ teams (multi-let buildings). Reporting is done from invoices, with no estimates. This is the scope involving EPRA BPRs Within the “operational control” scope, the coverage ratio of the data collected is 96% of the area. Multi-let buildings Total energy consumption (Abs) Operational control scope GRI 4 EPRA BPRs Coverage of reporting scope in area (% of m2SHON) Coverage of scope as a number of assets Intensity (kWhfe/m2SHON/year) CRE1 Energy-Int Intensity (kWhfe/m2SHON/year) Tenant areas scope Single let buildings Portfolio total 2013 2014 2013 2014 2013 2014 2013 2014 188,886 100% 160,281 96% 82,076 45% 111,926 93% 1,109,404 77% 818,710 77% 1,298,290 76% 978,991 79% 15/15 13/14 4/14 7/14 211/278 147/197 230/307 160/211 198 211 84 101 164 161 178 181 304 326 218 259 374 348 402 374 Total direct energy (kWhfe) G4-EN3 Fuels-Abs 9,748,123 7,817,944 0 0 24,565,669 31,189,766 34,313,792 39,007,710 Natural gas (direct energy) G4-EN3 Fuels-Abs 9,748,123 7,817,944 0 0 21,674,837 26,941,161 31,422,960 34,759,105 Fuel oil (direct energy) G4-EN3 Fuels-Abs 0 0 0 0 2,570,372 4,164,067 2,570,372 4,164,067 Wood (direct energy) G4-EN3 Fuels-Abs 0 0 0 0 320,460 84,538 320,460 84,538 Total indirect energy (kWhfe) G4-EN3 Elec-Abs 27,695,677 25,938,916 6,957,840 11,257,339 157,259,532 100,964,488 191,913,049 138,160,744 Electricity (indirect energy) G4-EN3 Elec-Abs 12,606,219 11,753,738 6,957,840 11,257,339 147,390,821 Renewable energy production G4-EN3 Elec-Abs o/w solar 96,853,604 166,954,880 119,864,682 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o/w wind 0 0 0 0 0 0 0 0 o/w hydraulic 0 0 0 0 0 0 0 0 o/w geothermal 0 0 0 0 0 0 0 0 15,089,458 14,185,178 0 0 9,868,711 4,110,884 24,958,169 18,296,062 37,443,800 33,756,860 6,957,840 134,798 121,525 25,048 District heating and cooling (indirect energy) Total energy consumption (kWfe) Total energy (GJ) Total energy consumption (kWhpe) G4-EN3 DH&C-Abs 57,347,989 52,327,767 17,900,947 Estimated consumption for vacant space (kWhpe) 0 0 0 Estimated consumption for occupied areas where no data is available (kWhpe) 0 2,378,695 25,903,351 57,347,989 54,706,461 43,804,298 Total extrapolated energy consumption (kWhpe) Foncière des Régions 223 11,257,339 181,825,201 132,154,254 226,226,841 177,168,454 40,526 654,571 475,755 814,417 637,806 29,043,936 414,574,514 285,149,133 489,823,450 366,520,835 0 0 0 0 86,269,030 150,059,029 90,733,000 31,129,211 538,730,192 371,418,163 639,882,479 457,253,836 2,085,275 124,155,678 Reference Document 2014 0 2 Sustainable development CSR performance The table below details the energy consumption paid for by the owner and reinvoiced for shared facilities and common areas in buildings. The landlord does not invoice tenants for private energy consumption. The energy consumption paid for by the owner relates to shared facilities, such as lighting and lifts and when provided on a collective basis: boiler, air conditioning, etc. on the basis of a breakdown of charges between the tenants. Like-for-like (LfL) – Operational control scope Total consumption (Abs) – Operational control scope 2013 15/15 188,886 Proportion of estimated data Total district heating and cooling consumption data collected, paid by the owner Owner scope ”operational control” Consumption re-invoiced to tenants Total Gas-Fuel oil-Wood data collected, paid by the owner Electricity Elec-Abs DH&C-Abs Consumption re-invoiced to tenants kWh 2013 -7% 2014 Change (%) 131/211 79% 132,529 0% 0 792,510 64% 79% 0% 0% 7,947,626 9,702,532 0 0 0% 22% 99,438,198 105,452,344 0 6% 0 12,606,219 11,753,738 -7% 7,947,626 9,702,532 22% 99,438,198 105,452,344 6% 15,089,458 14,185,178 -6% 14,250,697 13,732,558 -4% 14,456,827 15,514,450 7% 0 0 0 0 -6% 14,250,697 13,732,558 -4% 14,456,827 15,514,450 7% -20% 8,582,713 7,328,911 -15% 29,381,941 32,536,646 11% 0 0 0 0 -20% 8,582,713 7,328,911 -15% 29,381,941 32,536,646 11% INTENSITY (kWhfe/m SHON/year) 232.3 232.1 193.7 7% 0 0 15,089,458 14,185,178 Fuels-Abs Owner scope ”operational control” 132,529 0% 0 Change (%) 9/14 160,281 96% 12,606,219 11,753,738 District heating and cooling Total electricity consumption paid by the owner 100% 0% Owner scope ”operational control” Consumption in tenant areas re-invoiced to tenants (metering) 13/14 Like-for-like (LfL) – Portfolio total 2014 2013 DH&C-LfL Coverage of reporting scope in area (m2SHON) Change (%) 9,748,123 7,817,944 0 0 9,748,123 7,817,944 Fuels-LfL Number of applicable assets 2014 Elec-LfL EPRA BPRs Gas-Fuel oil-Wood 2 2 Foncière des Régions 224 Reference Document 2014 -0.06% 180.8 Sustainable development CSR performance CARBON – TOTAL DIRECT OR INDIRECT GREENHOUSE GAS EMISSIONS FROM BUILDINGS IN OPERATION The data is calculated by the Building Scientific and Technical Centre (CSTB) based on the invoice statements, as detailed above. The scopes covered are identical. Within the “operational control” scope, in accordance with EPRA recommendations, the coverage ratio of the data collected is 96% of the area. Multi-let buildings Total carbon emissions (Abs) GHG Protocol GRI 4 EPRA BPRs Coverage of reporting scope in area (% of m2SHON) Tenant areas scope Single-let buildings Portfolio total Scopes 1 & 2 Scope 3 Scope 3 Scopes 1, 2 and 3 2014 2013 188,886 100% 160,281 Number of applicable assets Carbon intensity (kgCO₂e/m2SHON/year) Operational control scope 15/15 CRE3 GHG-Int Total emissions (tCO₂e) 2013 2014 2013 96% 82,076 45% 111,926 93% 1,109,404 77% 818,710 13/14 4/15 7/14 211/278 2014 2013 2014 77% 76% 79% 147/197 230/307 160/211 33 34 7 8 18 20 20.7 23 6,207 5,512 574 946 20,175 16,471 26,956 22,929 of which direct emissions (tCO₂e) G4-EN15 GHG-Dir-Abs 2,281 1,829 0 0 5,851 7,555 8,132 9,384 of which indirect emissions (tCO₂e) G4-EN16 GHG-Indir-Abs 3,925 3,682 574 946 14,324 8,917 18,823 13,545 Estimated emissions for vacant space (tCO₂e) 0 0 0 0 0 0 0 0 Estimated emissions for occupied areas where no data is available (tCO₂e) 0 0 831 68 6,041 4,983 6,872 5,051 Total extrapolated carbon emissions (tCO₂e) 6,207 5,762 1,405 1,014 26,216 21,455 333,828 28,231 Foncière des Régions 225 Reference Document 2014 2 2 Sustainable development CSR performance Within the operational control scope, the results shows a reduction of 11.2% in total carbon emissions and a reduction of 4.5% like-for-like. This presentation is based on the table on page 224. Like-for-like (LfL) – Operational control scope Total emissions (Abs) – Operational control scope GRI 4 EPRA BPRs Number of applicable assets 15/15 Coverage of reporting scope in area (m2SHON) Proportion of estimated data 0% 33 GHG-Dir-LfL Scope 2 – Total indirect emissions G4-EN16 GHG-Indir-LfL Scope 3 – Other emissions (tCO₂e) GHG-Indir-LfL Total emissions (tCO2e/year) CHANGE IN CARBON EMISSIONS 2014/2013 Change (%) 2014 2013 13/14 188,886 100% 160,281 Carbon intensity (kgCO₂e/m2SHON/year) Scope 1 – Total direct emissions G4-EN15 2014 2013 79% 132,529 0% 0% 79% 0% 0% 8.7% -15% 6,904 7,756 12% 1% 11,100 11,806 6% 0 0 1,715 -15% 3,925 3,682 -6% 3,375 3,424 0 0 0 0 1% 5,139 -4.5% Reference Document 2014 0% 24.7 2,008 226 792,510 22.7 -20% Foncière des Régions Change (%) -4.5% 1,829 5,384 2014 39 2,281 5,512 2013 131/211 132,529 41 34 -11.2% Change (%) 9/14 96% 0% 6,207 Like-for-like (LfL) – Portfolio total 18,004 19,562 8.7% Sustainable development CSR performance WATER – TOTAL WATER CONSUMPTION AND WATER INTENSITY OF OPERATING BUILDINGS Water used in the portfolio comes from a single source, municipal water supplies. Multi-let buildings: the landlord receives the invoices; tenants do not have individual contracts. Single-let buildings: the tenant has an individual contract with the water supply concessionaire. All elements reported below originate with invoices. In 2014, data was consolidated for 90% of the operational control scope based on the information collected, corresponding to the EPRA BPRs. Multi-let buildings Operational control scope Total water consumption (Abs) GRI 4 EPRA BPRs Coverage of reporting scope in area (% m2SHON) Tenant areas scope 2014 2013 2014 2013 175,579 93% 150,374 90% Coverage of scope as a number of assets 13/15 2014 2013 104/278 CRE2 Water-Int 0.35 0.44 Total consumption of water (m3) G4-EN8 Water-Abs 61,195 66,722 Portfolio total 2014 2013 751,048 52% 422,103 40% 926,927 57% 572,477 46% 11/14 WATER INTENSITY (m3/m2SHON/year) Estimated water consumption in vacant space (m3) Single-let buildings N/A 46/197 118/307 57/211 0.27 0.32 0.28 0.35 70,275 134,689 131,470 201,410 0 0 0 0 0 0 Estimated consumption in occupied areas for which data is not available (m3) 4,638 7,629 428,872 205,589 433,510 232,728 Total extrapolated consumption of water (m3) 65,833 74,350 499,147 340,278 564,980 434,138 Water consumption – Like-for-like (LfL) Number of applicable assets Coverage of scope of reporting (m2SHON) 8/14 15/197 23/211 124,888 75% 175,295 16% 300,183 24% Proportion of estimated data 0% 0% 0% 0% 0% 0% WATER INTENSITY (m3/m2SHON/year) 0.38 0.45 0.27 0.28 0.31 0.35 47,736 56,178 46,700 49,345 94,437 105,523 Water consumption in cubic metres like-for-like (m3) G4-EN8 Water-LfL CHANGE IN WATER INTENSITY 2014/2013 N/A 18% Foncière des Régions 6% 227 Reference Document 2014 12% 2 2 Sustainable development CSR performance WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD In France, waste is collected by municipal services that do not weigh or monitor data. Recording tonnage data is possible only where waste is managed by private waste contractors. Four buildings in the Offices France scope, representing 66% of multi-let surface area, contract private waste suppliers, making monitoring as recorded below possible. Multi-let buildings Operational controle scope Total waste production (Abs) GRI 4 EPRA BPRs Number of applicable assets in area (% m2SHON) 111,050 100% Number of applicable assets 111,050 4/4 Estimated share Waste-Abs 316 of which waste recycled, reused or composted G4-EN23 Waste-Abs 250 of which incinerated (including with energy recovery) G4-EN23 Waste-Abs N/A N/A of which landfill G4-EN23 Waste-Abs N/A N/A of which other disposal methods G4-EN23 Waste-Abs N/A N/A 100% 100% 0 0 Total extrapolated production of waste (tonne) 100% 0% G4-EN23 Rate of selective collection 2013 4/4 0% Total waste (tonnes) Tenant areas scope 2014 2013 502 79% 336 67% Production of waste – Like-for-like (LfL) Number of applicable assets (number of buildings) 4/4 Coverage of scope (m SHON) 111,050 2 100% Proportion of estimated data 0% 0% Rate of selective collection 60% 100% 369 502 Total waste (tonnes) G4-EN23 Waste-LfL of which waste recycled, reused or composted 290 of which incinerated (including with energy recovery) N/A 79% 336 N/A of which landfill N/A N/A of which other disposal methods N/A N/A CHANGE IN TOTAL WASTE 2014/2013 36.0% Foncière des Régions 228 Reference Document 2014 67% N/A 2014 Sustainable development CSR performance 2.11.3.2. Hotels & Service Sector The scope of environmental reporting is based on the consolidated financial reporting scope for Foncière des Murs. Any assets excluded from this scope are detailed below. The reporting scope includes portfolios in operation in France, excluding the buildings purchased in advance of future completion: Accor, B&B, Courtepaille, Jardiland, Korian and Quick (excluding franchised establishments), account for 94.8% of the total portfolio value at 31 December 2014, and 81.8% of the area. The following assets have been excluded from the reporting scope: 1 Hotel NH in Amsterdam, 1 Club Med site in Portugal, 4 Sunparks sites and the B&B hotels in Germany. The Hotels and Service Sector portfolio of Foncière des Régions is made up entirely of single let buildings. The tenants are responsible for the operation and management of energy, water and waste for each asset. As such, Foncière des Régions does not have operational control of the assets and is thus exempted from environmental reporting in light of EPRA recommendations. Nonetheless, Foncière des Régions is determined to monitor and reduce the environmental footprint of its portfolio and organises reporting with its tenants, who provide their data on waste production, energy and water consumption each year. CERTIFICATIONS AND ACCREDITATION (CERT-TOT) At 31 December 2014, 36.8% of the reporting scope (in value group share) had HQE, BREEAM or ISO 14001 certification. ENERGY – DIRECT ENERGY CONSUMPTION BY PRIMARY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR BUILDINGS IN OPERATION The reporting scope coverage rate is 85% for energy, which allows relevant comparison like-for-like, making the results directly comparable from one year to the next. The results are presented with climate adjustment. These are Scope 3 emissions as described in the GHG protocol. Since none of this consumption is managed or paid for by the owner (operational control), all data is based on energy invoices paid by the tenants, giving the volume GRI 4 consumed (kWh), with the exception of one hotel portfolio. For this portfolio, the consumption volumes were calculated based on the invoice amounts paid to the energy companies, taking an average of €0.48/kWh for electricity and €0.376/kWh for gas. Consumption of primary energy fell 1%, while final energy consumption rose 6%, due to the change in the energy mix inherent in the changes in the portfolio. EPRA BPRs Coverage of scope (m2SHON) Number of applicable assets 2008 2012 2013 2014 10% 81% 85% 85% NC 230/385 385/477 343/426 377 286 233 246 CRE1 Energy-Int 690 534 464 459 Total direct energy (kWhfe) G4-EN3 Fuels-Abs ND 78,119,049 77,919,945 90,461,340 Natural gas (direct energy) G4-EN3 Fuels-Abs ND 73,489,932 69,858,559 82,319,311 Fuel oil (direct energy) G4-EN3 Fuels-Abs ND 348,213 1,420,304 1,402,708 Wood (direct energy) G4-EN3 Fuels-Abs ND 4,280,904 6,641,082 6,739,320 Total indirect energy (kWhfe) G4-EN3 Elec-Abs 30,200,862 137,354,946 162,362,690 139,600,209 Electricity (indirect energy) G4-EN3 Elec-Abs 28,341,446 125,381,923 149,310,942 127,623,102 Intensity (kWhfe/m2SHON/year) Intensity (kWhpe/m2SHON/year) Renewable energy production G4-EN3 Elec-Abs 0 0 0 0 District heating and cooling (indirect energy) G4-EN3 DH&C-Abs 1,859,416 11,973,023 13,051,748 11,977,108 51,786,937 215,473,995 240,282,635 230,061,549 186,433 775,706 865,017 828,222 94,879,071 412,350,943 473,617,157 429,010,322 0 0 0 0 Total extrapolated consumption of energy (assets for which no data is available) (kWhpe) 845,336,042 98,372,504 86,873,628 74,512,584 Total consumption of energy, including estimated and extrapolated consumption (kWhpe) 940,215,113 510,723,447 560,490,785 503,522,905 Total energy consumption (kWhfe) Total energy (GJ) Total energy consumption (kWhpe) Estimated consumption for vacant space (kWhpe) Foncière des Régions 229 Reference Document 2014 2 2 Sustainable development CSR performance The table below presents total energy consumption, as well as like-for-like, and shows a reduction of 5%. Total consumption (Abs) EPRA BPRs Number of applicable assets Coverage of reporting scope in area (m2SHON) 2013 2014 385/477 343/426 1,027,278 85% 934,068 Proportion of estimated data 0% Owner scope “Operational control” Electricity Consumption managed and paid for by tenants Elec-Abs Total electricity consumption Total district heating and cooling consumption data collected Owner scope “Operational control” Consumption managed and paid for by tenants District heating and DH&C-Abs cooling kWh Gas-Fuel oilFuels-Abs Wood Total gas-fuel oil-wood data Change (%) Change (%) 2014 2013 309/423 85% 863,681 79% 863,681 0% 0 0 149,310,942 127,623,102 -15% 149,310,942 127,623,102 -15% 0 0 13,051,748 11,977,108 13,051,748 11,977,108 0 0 Owner scope “Operational control” Consumption managed and paid for by tenants Like-for-like Elec-LfL 79% 0% 0% 0 0 129,897,657 119,384,885 -8% 129,897,657 119,384,885 -8% 0 0 -8% DH&C-LfL 12,657,710 11,977,108 -5% -8% 12,657,710 11,977,108 -5% 0 0 81,340,819 80,563,756 81,340,819 80,563,756 -1% 259 245 -5% 77,919,945 90,461,340 16% 77,919,945 90,461,340 16% Fuels-LfL INTENSITY (kWhfe m2/year) -1% CARBON – TOTAL DIRECT OR INDIRECT GREENHOUSE GAS EMISSIONS FROM BUILDINGS IN OPERATION Carbon emissions are calculated according to the provisions of the Decree of 15 September 2006. The reduction in emissions since 2008 is significant taken in terms of both absolute volume and intensity. This improvement is due to a combination of the group’s carbon policy, the acquisition of energy-efficient assets and changes to the energy mix to less carbon-intensive energy products. The coverage of the reporting scope for carbon emissions is also 85%, since it is based on energy invoices. Like-for-like, the coverage rate is 79% from one year to the next, with a carbon intensity ratio remaining at around 35 kgCO₂e/m2SHON/year. Total emissions (Abs) GRI 4 EPRA BPRs Number of applicable assets Coverage of reporting scope in area (m2SHON) 1,027,278 Proportion of estimated data Carbon intensity (kgCO₂e/m2SHON/year) CRE3 GHG-Int GHG Protocol Scope 1 – Total direct emissions G4-EN15 GHG-Dir-Abs Scope 2 – Total indirect emissions G4-EN16 GHG-Indir-Abs Scope 3 – Other emissions 2013 2014 385/477 343/426 85% 934,068 Total emissions (tCO₂e/year) Change (%) 2013 863,681 79% 0% 0% 0% 31 31 35.9 34.5 2013 2014 2013 2014 13% Change (%) 0 0 GHG-Dir-LfL 0 0 0 0 GHG-Indir-LfL 0 0 32,023 32,767 2% GHG-Indir-LfL 31,047 29,817 32,023 32,767 31,047 29,817 2.3% 230 Change (%) 309/423 85% CHANGE IN CARBON EMISSIONS 2014/2013 Foncière des Régions 2014 0% (tCO₂e) GHG-Indir-Abs Like-for-like Reference Document 2014 -4.0% -4% Change (%) -4% Sustainable development CSR performance WATER – TOTAL WATER CONSUMPTION AND BUILDING WATER INTENSITY Water used in the portfolio comes from a single source, municipal water supplies. Missing consumption data were not included in the evaluation, with the exception of a hotel portfolio for which the volumes were calculated based on invoices (amounts in euro), taking an average price per cubic metre of water of €1.83/m3 (based on INSEE data). GRI 4 EPRA BPRs Total water consumption (Abs) Number of applicable assets Coverage of scope (m2SHON) Total water consumption (m ) 2012 2013 NC 247/385 384/450 2014 343/426 8% 79% 87% CRE2 Water-Int 2.34 1.76 1.50 1.99 G4-EN8 Water-Abs 250,847 1,285,048 1,583,643 1,836,643 3,135,588 1,626,643 1,820,279 2,180,821 WATER INTENSITY (m3/m2SHON/year) 3 2008 923,283 84% Estimated water consumption in vacant space (m3) Total extrapolated water consumption (m3) Water consumption – Like-for-like (LfL) 2014 2013 Number of applicable assets 328/423 Coverage of reporting scope in area (m2SHON) 898,406 Proportion of estimated data 82% 0% WATER INTENSITY (m3/m2SHON/year) Water consumption in cubic metres like-for-like (m3) G4-EN8 Water-LfL 2.01 1.98 1,807,012 1,776,191 CHANGE IN WATER INTENSITY 2014/2013 -2% WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD In France, the municipalities provide waste removal services. They provide no data with regard to the weight or exact disposal route. Foncière des Régions is looking to identify the proportion of assets with selective waste collection. GRI 4 Total waste production (Abs) EPRA BPRs Number of applicable assets 2013 2014 266/477 Coverage of scope (m2SHON and %) 258/426 60% Estimated proportion 821,764 0% TOTAL WASTE (tonnes) G4-EN23 Waste-Abs Rate of selective collection Total production of waste – Like-for-like (LfL) 0% NC NC 100% 100% 2014 2013 Number of applicable assets 229/423 Coverage of scope (m SHON) 707,756 2 Proportion of estimated data 65% 0% Rate of selective collection 100% Foncière des Régions 231 Reference Document 2014 75% 2 2 Sustainable development CSR performance 2.11.3.3. Logistic In view of the assets disposed of in 2014, there are far fewer assets included in the reporting for 2014 than in the prior year. The reporting scope includes multi-let buildings owned in France and managed by Foncière des Régions staff. The consumption data appearing below relates exclusively to the operational control scope. Consumption data of tenants in tenant areas (energy) or concerning single-let buildings (all energy types) are not dealt with here. Data is not adjusted for climate. CERTIFICATIONS AND ACCREDITATION (CERT-TOT) Since the disposal of the asset portfolio in 2014, Foncière des Régions no longer holds certified and/or accredited logistics assets. ENERGY – DIRECT ENERGY CONSUMPTION BY PRIMARY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR BUILDINGS IN OPERATION The data below relates to landlord obtained energy in multi-let buildings. It is difficult to compare consumption data between 2013 and 2014 since the facilities managed within the operational control scope vary significantly from one asset to another (collective or individual heating, extent of exterior lighting, etc.), and the change in the size of the portfolio. Moreover, a large percentage of the area in one of the assets was vacated and gas consumption fell by 25% at this site as a result. The results are presented without climate adjustment. GRI 4 EPRA BPRs 2012 2013 2014 Coverage of scope (m2SHON) 68% 75% 100% Number of applicable assets 4/11 4/10 7/7 86 91 Intensity (kWhfe/m2SHON/year) CRE1 Energy-Int 78 89 97 118 Total direct energy (kWhfe) G4-EN3 Fuels-Abs 15,015,156 14,100,403 13,352,582 Natural gas (direct energy) G4-EN3 Fuels-Abs 15,015,156 14,100,403 13,352,582 Fuel oil (direct energy) G4-EN3 Fuels-Abs 0 0 0 Wood (direct energy) G4-EN3 Fuels-Abs 0 0 0 Intensity (kWhpe/m2SHON/year) Total indirect energy (kWhfe) G4-EN3 Elec-Abs 1,406,287 2,846,573 3,027,432 Electricity (indirect energy) G4-EN3 Elec-Abs 1,406,287 1,435,420 3,027,432 Renewable energy production G4-EN3 Elec-Abs 0 0 0 o/w solar 0 0 0 o/w wind 0 0 0 o/w hydraulic 0 0 0 o/w geothermal 0 0 0 District heating and cooling (indirect energy) G4-EN3 Total energy consumption (kWhfe) Total energy (GJ) Total energy consumption (kWhpe) Foncière des Régions 232 DH&C-Abs 0 1,411,153 0 16,421,443 16,946,976 16,380,014 59,117 61,009 58,968 18,643,376 19,214,940 21,163,357 Reference Document 2014 Sustainable development CSR performance The table below details the energy consumption paid for by the owner and reinvoiced for shared facilities and common areas in buildings. The landlord does not invoice tenants for private energy consumption. The energy consumption paid for by the owner relates to shared facilities, such as lighting and lifts and when provided on a collective basis: boiler, air conditioning, etc. on the basis of a breakdown of charges between the tenants. Total consumption (Abs) EPRA BPRs Number of applicable assets Coverage of reporting scope in area (m2SHON) Electricity Owner scope “Operational control” District heating and cooling DH&CAbs Owner scope “Operational control” Consumption re-invoiced to tenants Total Gas-Fuel oil-Wood data collected, paid by the owner 7/7 75% Gas-Fuel oil-Wood Change (%) 3,027,432 0 0 1,435,420 3,027,432 1,411,153 0 0 0 1,411,153 0 14,100,403 13,352,582 0 0 14,100,403 13,352,582 kWh Fuels-Abs 129,719 72% 0% 111% 233 129,719 72% 0% 1,411,705 1,485,037 0 0 111% 1,411,705 1,485,037 5% -100% 0 0 0% 0 0 -100% 0 0 0% -5% 14,100,403 11,224,194 -20% 0 0 14,100,403 11,224,194 -,20% 120 98 -18% Elec-LfL DH&C-LfL Fuels-LfL -5% Intensity (kWhfe/m2/year) Foncière des Régions (%) 3/6 179,260 100% 1,435,420 Change 2014 2013 0% Elec-Abs Total electricity consumption paid by the owner Total district heating and cooling consumption data collected, paid by the owner 4/10 0% Owner scope “Operational control” Consumption re-invoiced to tenants 2014 197,825 Proportion of estimated data Consumption in tenant areas re-invoiced to tenants (metering) 2013 Like-for-like (LfL) Reference Document 2014 5% 2 2 Sustainable development CSR performance CARBON – TOTAL DIRECT OR INDIRECT GREENHOUSE GAS EMISSIONS FROM BUILDINGS IN OPERATION Carbon emissions are calculated using energy consumption data analysed above and therefore the reservations expressed concerning the change to the portfolio and the partial vacancy of one of the assets also apply to carbon emissions. Total carbon emissions were down 8.4% and fell 19.5% like-for-like. Total emissions (Abs) GRI 4 EPRA BPRs Number of applicable assets Coverage of reporting scope in area (m2SHON) 2014 4/10 7/7 197,825 Proportion of estimated data Carbon intensity (kgCO₂e/m2SHON/year) 2013 CRE3 GHG-Int GHG Protocol 75% G4-EN15 Scope 2 – Total indirect emissions G4-EN16 Scope 3 – Other emissions 179,260 100% 129,719 72% 129,719 72% -25% 26.35 21.21 2014 Change (%) 2013 2014 3,299 3,125 -5% GHG-Dir-LfL 3,299 389 254 -35% GHG-Indir-LfL 119 0 0 GHG-Indir-LfL 0 3,688 CHANGE IN CARBON EMISSIONS 2014/2013 (%) 3/6 19 (tCO₂e) Change 2014 2013 19 GHG-Indir-Abs Total emissions (tCO₂e/year) (%) 0% GHG-Dir-Abs GHG-Indir-Abs Change 0% 2013 Scope 1 – Total direct emissions Like-for-like (LfL) 0% 3,379 0% 2,626 3,418 -8.4% -20% Change (%) -20% 125 5% 0 0% 2,751 -19.5% WATER – TOTAL WATER CONSUMPTION AND BUILDING WATER INTENSITY Water used in the portfolio comes from a single source, municipal water supplies. Total water consumption (Abs) GRI 4 EPRA BPRs Number of applicable assets Coverage of scope (m SHON) Total water consumption (m ) 3 2014 6/6 7/7 100% 100% CRE2 Water-Int 0.12 0.16 G4-EN8 Water-Abs 31,401 28,034 2013 2014 2 WATER INTENSITY (m3/m2SHON/year) 2013 Water consumption – Like-for-like (LfL) Number of applicable assets 6/7 Coverage of reporting scope in area (m2SHON) 126,376 Proportion of estimated data 70% 0% WATER INTENSITY (m3/m2SHON/year) Water consumption in cubic metres like-for-like (m ) G4-EN8 3 Water-LfL CHANGE IN WATER INTENSITY 2014/2013 0.24 0.21 29,754 26,138 -12% Foncière des Régions 234 Reference Document 2014 Sustainable development CSR performance WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD As sorting is done by public authorities, it is not possible to obtain relevant information concerning waste tonnage. On the other hand, selective collection is in operation for the entire reporting scope. 2.11.3.4. Residential Germany In 2014, the group decided to monitor energy consumption and waste production in a representative sample of this residential portfolio. Please see Chapter 2.6.3.1 for an explanation of this methodology. All reported consumption relates to the operational control scope. CERTIFICATIONS AND ACCREDITATION (CERT-TOT) German residential assets were purchased in operation and without certifications. ENERGY – DIRECT AND INDIRECT ENERGY CONSUMPTION BY PRIMARY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR BUILDINGS IN OPERATION (OPERATIONAL CONTROL SCOPE) The data relates to the owner scope and is based on invoices with no estimates. The results are presented without climate adjustment. In most cases, the tenants do not provide the data. Initial trends show a drop in consumption without climate adjustment (down 12% like-for-like), due mainly to the mild weather in 2014. 2013 2014 Coverage of scope (m2SHON) 100% 100% Number of applicable assets 124/124 126/126 GRI 4 CRE1 INTENSITY (kWhfe/m2SHON/year) EPRA BPRs Energy-int INTENSITY (kWhpe/m2SHON/year) 276 243 289 256 Total direct energy (kWhfe) G4-EN3 Fuels-Abs 13,588,755 12,067,178 Natural gas (direct energy) G4-EN3 Fuels-Abs 13,091,173 11,599,963 Fuel oil (direct energy) G4-EN3 Fuels-Abs 497,582 467,215 Wood (direct energy) G4-EN3 Fuels-Abs 0 0 Total indirect energy (kWhfe) G4-EN3 Elec-Abs 5,868,561 4,995,206 Electricity (indirect energy) G4-EN3 Elec-Abs 255,855 257,046 Renewable energy production G4-EN3 Elec-Abs 160,218 174,533 o/w solar 160,218 174,533 o/w wind 0 0 o/w hydraulic 0 0 o/w geothermal 0 0 District heating and cooling (indirect energy) G4-EN3 DH&C-Abs TOTAL ENERGY CONSUMPTION (kWhfe) Total energy (GJ) TOTAL ENERGY CONSUMPTION (kWhpe) Foncière des Régions 235 Reference Document 2014 5,772,924 4,912,693 19,457,316 17,062,385 70,046 61,425 19,540,380 18,133,744 2 2 Sustainable development CSR performance Like-for-like (LfL) Total consumption (Abs) EPRA BPRs Number of applicable assets 124/124 Coverage of reporting scope in area (m2) 69,212 Proportion of estimated data 255,855 District heating and DH&C-Abs cooling Gas-Fuel oil-Wood 69,212 0% 0.5% 100% N/A 230,636 -10% 0% 255,855 257,046 0.5% 255,855 230,636 -10% 5,772,924 4,912,693 -15% 5,248,648 4,912,693 -6% kWh Owner scope “operational control” Consumption re-invoiced to tenants 100% N/A Elec-LfL Owner scope “operational control” Total district heating and cooling consumption data collected, paid by the owner 69,212 Elec-Abs Total electricity consumption paid by the owner Consumption re-invoiced to tenants 257,046 (%) 124/124 0% 255,855 Change 2014 2013 70,917 100% 100% Owner scope “operational control” Electricity (%) 126/126 0% Consumption in tenant areas re-invoiced to tenants (metering) Total Gas-Fuel oil-Wood data collected, paid by the owner 2014 2013 Change DH&C-LfL 5,772,924 4,912,693 -15% 5,248,648 4,912,693 -6% 13,588,755 12,067,178 -11% 13,588,755 11,572,047 -15% 13,588,755 11,572,047 -15% 275.86 241.51 -12% Fuels-Abs Fuels-LfL 13,588,755 12,067,178 -11% INTENSITY (kWhfe/m2/year) CARBON – TOTAL DIRECT OR INDIRECT GREENHOUSE GAS EMISSIONS FROM BUILDINGS IN OPERATION (OPERATIONAL CONTROL SCOPE) Carbon emissions are calculated according to energy invoices. Emissions fell 9.9% across the representative sample of assets, and by 13% like-for-like in assets for which data was obtained over a 24-month consecutive period. Total emissions (Abs) GRI 4 EPRA BPRs Number of applicable assets 124/124 Coverage of reporting scope in area (m2) 69,212 Proportion of estimated data Carbon intensity (kgCO₂e/m2SHON/year) CRE3 GHG-Int 100% 70,917 100% 0% 0% G4-EN15 GHG-Dir-Abs Scope 3 – Other emissions Total emissions (tCO₂e/year) (tCO₂e) GHG-Indir-Abs 69,212 100% 0% 0% 50 -13% 2014 Change (%) 124/124 69,212 100% 0% 2014 Change (%) 3,213 2,855 -11% GHG-Dir-LfL 3,213 2,739 -15% 787 747 -5% GHG-Indir-LfL 787 731 -7% GHG-Indir-LfL 0 0 58 2013 2013 3,602 -9.9% Foncière des Régions Change (%) -12% 3,999 CHANGE IN CARBON EMISSIONS 2014/2013 2014 51 2013 Scope 2 – Total indirect emissions G4-EN16 GHG-Indir-Abs 2013 126/126 58 GHG Protocol Scope 1 – Total direct emissions 2014 2013 Like-for-like (LfL) Change (%) 236 Reference Document 2014 3,999 0 3,469 -13% Sustainable development CSR performance WATER – TOTAL WATER CONSUMPTION AND ASSET WATER INTENSITY (OPERATIONAL CONTROL SCOPE) Water used in the portfolio comes from a single source, municipal water supplies. Total water consumption (Abs) GRI 4 EPRA BPRs Number of applicable assets 2014 2013 124/124 Coverage of scope (m2SHON) 69,212 WATER INTENSITY (m /m2SHON/year) 3 Total water consumption (m3) 126/126 100% 70,917 100% CRE2 Water-Int 1.61 1.70 G4-EN8 Water-Abs 111,654 120,394 Water consumption – Like-for-like (LfL) Number of applicable assets 124/124 Coverage of reporting scope (m2SHON) 69,212 Proportion of estimated data WATER INTENSITY (m3/m2SHON/year) Water consumption in cubic metres like-for-like (m3) G4-EN8 Water-LfL CHANGE IN WATER INTENSITY 2014/2013 100% 69,212 0% 0% 1.61 1.64 111,654 113,552 100% 2% WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD (OPERATIONAL CONTROL SCOPE) Waste data is collected in volume (litres) and converted to cubic metres in the table below. The data collected shows that waste production remained practically stable year-on-year, with a slight 1.1% increase between 2013 and 2014. Selective collection is in operation for all of the assets in the reporting sample. Total waste production (Abs) GRI 4 EPRA BPRs Number of applicable assets Coverage of scope (m2) 2013 2014 109/124 115/126 61,287 Estimated share 89% 64,789 0% TOTAL WASTE (tonnes) G4-EN23 Waste-Abs 9,168,068 100% 0% 9,462,180 of which recycled, re-used or composted waste G4-EN23 Waste-Abs of which incinerated (including with energy recovery) G4-EN23 Waste-Abs N/A N/A of which landfill G4-EN23 Waste-Abs N/A N/A of which other disposal methods G4-EN23 Waste-Abs N/A N/A 100% 100% Rate of selective collection N/A 91% 100% N/A Production of waste – Like-for-like (LfL) Number of applicable assets 105/124 Coverage of scope (m2) 58,533 Proportion of estimated data 0% Rate of selective collection Total waste (tonnes) 85% G4-EN23 Waste-LfL 0% 100% 100% 8,810,828 8,904,740 CHANGE IN TOTAL WASTE 2014/2013 1.1% Foncière des Régions 237 58,533 Reference Document 2014 85% 2 2 Sustainable development CSR performance 2.11.3.5. Residential France CERTIFICATIONS AND ACCREDITATION (CERT-TOT) French residential assets were purchased in operation and without building certification for the most part. ENERGY – DIRECT AND INDIRECT ENERGY CONSUMPTION BY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR FULLY-OWNED ASSETS (OPERATIONAL CONTROL SCOPE) Consumption data is based on actual invoices obtained from the property management company or energy supply companies. No estimates were made. Up a slight 1% like-for-like in the period 2013 to 2014 for electricity, consumption was stable overall for the properties over which Foncière Développement Logements has operational control. District heating and gas usage declined significantly. The fall in the former was due to a substantial reduction in one of the two assets supplied with district heating, while gas was lower, because the supplier’s estimates in 2013 were far higher than the actual consumption metered in 2014. GRI 4 EPRA BPRs 2013 2014 Coverage of scope (m SHAB) 100% 100% Number of applicable assets 28/28 17/17 45 2 Intensity (kWhfe/m2SHAB/year) CRE1 Energy-Int 67 85 65 Total direct energy (kWhfe) G4-EN3 Fuels-Abs 1,996,029 591,803 Natural gas (direct energy) G4-EN3 Fuels-Abs 1,996,029 591,803 Fuel oil (direct energy) G4-EN3 Fuels-Abs 0 0 Wood (direct energy) G4-EN3 Fuels-Abs 0 0 Intensity (kWhpe/m SHAB/year) 2 Total indirect energy (kWhfe) G4-EN3 Elec-Abs 4,211,519 1,422,399 Electricity (indirect energy) G4-EN3 Elec-Abs 1,064,430 557,075 Renewable energy production G4-EN3 Elec-Abs 0 0 o/w solar 0 0 o/w wind 0 0 o/w hydraulic 0 0 o/w geothermal District heating and cooling (indirect energy) G4-EN3 DH&C-Abs TOTAL ENERGY CONSUMPTION (kWhfe) Total energy (GJ) TOTAL ENERGY CONSUMPTION (kWhpe) Foncière des Régions 238 Reference Document 2014 0 0 3,147,089 865,324 6,207,548 2,014,202 22,347 7,251 7,889,347 2,894,381 Sustainable development CSR performance Total consumption (Abs) EPRA BPRs 28/28 Coverage of reporting scope in area (m2SHAB) 92,902 Proportion of estimated data 100% Electricity 44,859 100% 44,859 100% 44,859 0% 557,075 Change (%) 17/17 0% 1,064,430 2014 2013 17/17 0% Owner scope “Operational control” Consumption in tenant areas re-invoiced to tenants (metering) Change (%) 2014 2013 Number of applicable assets Like-for-like (LfL) -48% Elec-Abs 100% 0% 562,480 557,075 -1% Elec-LfL Total electricity consumption paid by the owner 1,064,430 557,075 - 48% 562,480 557,075 -1% Owner scope “Operational control” 3,147,089 865,324 -73% 1,101,393 865,324 -21% Consumption re-invoiced to tenants Total district heating and cooling consumption data collected, paid by the owner District heating and DH&C-Abs cooling kWh Owner scope Operational scope Consumption re-invoiced to tenants Total Gas-Fuel oil-Wood data collected, paid by the owner Gas-Fuel oil-Wood DH&C-LfL 3,147,089 865,324 -73% 1,101,393 865,324 -21% 1,996,029 591,803 -70% 731,894 591,803 -19% 591,803 -19% Fuels-Abs Fuels-LfL 1,996,029 591,803 -70% 731,894 53 INTENSITY (kWhfe/m2SHAB/year) 45 -16% CARBON – TOTAL GREENHOUSE GAS EMISSIONS FROM FULLY-OWNED ASSETS (OPERATIONAL CONTROL SCOPE) Carbon emissions are calculated according to actual energy consumption. Emissions were down in 2014, reflecting the policy of more energy efficient facilities and the fact that fuel oil is no longer used in the buildings within the operational control scope. Total emissions (Abs) GRI 4 EPRA BPRs 28/28 92,902 Proportion of estimated data Carbon intensity (kgCO₂e/m2SHAB/year) 2014 2013 Number of applicable assets Coverage of reporting scope in area (m2SHAB) 100% GHG-Int 2013 Scope 1 – Total direct emissions G4-EN15 GHG-Dir-Abs Scope 1 – Total indirect emissions G4-EN16 GHG-Indir-Abs Scope 3 – Other emissions (tCO₂e) GHG-Indir-Abs CHANGE IN CARBON EMISSIONS 2014/2013 100% 44,859 0% 8 -35% 2014 Change (%) 9.54 2013 239 7.80 -18% 2014 Change (%) 467 138 -70% GHG-Dir-LfL 171 138 -19% 211 -69% GHG-Indir-LfL 257 211 -18% 0 0 GHG-Indir-LfL 350 -69.7% Foncière des Régions 100% 687 1,154 Total emissions (tCO₂e/year) Change (%) 17/17 0% 12 GHG Protocol 44,859 2014 2013 17/17 0% CRE3 Like-for-like (LfL) Change (%) Reference Document 2014 0 0 428 350 -18.3% 2 2 Sustainable development CSR performance WATER – TOTAL WATER CONSUMPTION AND INTENSITY RATIO FOR FULLY-OWNED BUILDINGS (OPERATIONAL CONTROL SCOPE) Water used in the portfolio comes from a single source, municipal water supplies. Water is supplied by contracts to entire buildings. Invoices corresponding to consumption (common areas: cleaning, landscaped areas, etc., and tenant areas) are paid by the landlord. The water is then re-invoiced to tenants in the form of charges. The consumption data is based on the invoices provided by the water supply companies. The total water consumption ratio per m2 rose 15% for the portfolio, which should be seen relative to the more modest 7% increase like-for-like. GRI 4 Total water consumption (Abs) EPRA BPRs Number of applicable assets Coverage of scope (m2SHAB) 2014 17/17 81,708 WATER INTENSITY (m /m SHAB/year) 3 2013 26/26 2 Total water consumption (m3) 100% 44,859 100% CRE2 Water-int 1.14 1.31 G4-EN8 Water-Abs 93,130 58,826 Water consumption – Like-for-like (LfL) Number of applicable assets 17/17 Coverage of reporting scope (m2SHAB) 44,859 Proportion of estimated data 0% 1.23 WATER INTENSITY (m3/m2SHAB/year) Water consumption in cubic metres like-for-like (m3) G4-EN8 Water-LfL 1.31 55,083 58,826 CHANGE IN WATER INTENSITY 2014/2013 7% WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD (OPERATIONAL CONTROL SCOPE) It is difficult to quantify production of waste insofar as the information is not available from the majority of public waste management companies. The only information that can be reported for all of the assets within the reporting scope is the rate of selective collection, which amounted to 88% in 2014. Total waste production (Abs) GRI 4 EPRA BPRs Number of applicable assets Coverage of scope (m SHAB) 2013 2014 28/28 17/17 92,902 2 Estimated share 100% 0% G4-EN23 TOTAL WASTE (tonnes) Waste-Abs 44,859 0% N/A N/A of which recycled, re-used or composted waste G4-EN23 Waste-Abs N/A N/A of which incinerated (including with energy recovery) G4-EN23 Waste-Abs N/A N/A of which landfill G4-EN23 Waste-Abs N/A N/A of which other disposal methods G4-EN23 Waste-Abs N/A N/A 87% 88% Rate of selective collection Production of waste – Like-for-like (LfL) Number of applicable properties 17/17 Coverage of scope (m2SHAB) 44,859 100% Proportion of estimated data 0% 0% Rate of selective collection 88% 88% Total waste (tonnes) G4-EN23 Waste-LfL N/A CHANGE IN TOTAL WASTE 2014/2013 N/A N/A Foncière des Régions 240 Reference Document 2014 100% Sustainable development CSR performance 2.11.3.6. Headquarters CERTIFICATIONS AND ACCREDITATION (CERT-TOT): 100% The three assets occupied by Foncière des Régions’ teams in France have the following certifications: HQE for the Divo building in Metz, and BREEAM In-Use for 10 and 30 avenue Kléber in Paris, which brings to 100% the number of certified corporate buildings. ENERGY – DIRECT AND INDIRECT ENERGY CONSUMPTION BY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR “CORPORATE” BUILDINGS OCCUPIED BY FONCIÈRE DES RÉGIONS’ TEAMS (OPERATIONAL CONTROL SCOPE) Consumption data is based on actual invoices obtained from the property management company or energy supply companies. The area was adjusted in one of the assets to reflect common areas used by tenants, which increased the total by 6%. No estimates were made. The results are presented without climate adjustment. Consumption remained stable in the 2013 to 2014 period. GRI 4 EPRA BPRs Coverage of scope (m2SHON) Number of applicable assets 2014 2013 6,721 100% 3/3 Intensity (kWhfe/m2SHON/year) CRE1 Energy-Int Intensity (kWhpe/m SHON/year) 2 7,196 100% 3/3 230 230 426 424 Total direct energy (kWhfe) G4-EN3 Fuels-Abs 378,001 389,820 Natural gas (direct energy) G4-EN3 Fuels-Abs 378,001 389,820 Fuel oil (direct energy) G4-EN3 Fuels-Abs 0 0 Wood (direct energy) G4-EN3 Fuels-Abs 0 0 Total indirect energy (kWhfe) G4-EN3 Elec-Abs 1,166,536 1,262,887 Electricity (indirect energy) G4-EN3 Elec-Abs 836,788 886,318 Renewable energy production G4-EN3 Elec-Abs 0 0 District heating and cooling (indirect energy) G4-EN3 DH&C-Abs 329,748 376,570 1,544,537 1,652,707 5,560 5,950 2,866,663 3,053,089 TOTAL ENERGY CONSUMPTION (kWhfe) Total energy (GJ) TOTAL ENERGY CONSUMPTION (kWhpe) Foncière des Régions 241 Reference Document 2014 2 2 Sustainable development CSR performance The table below shows that the surface areas owned as of 2014 increased slightly as a result of incorporating the private use of some of the surface area in the Metz building. Accordingly, like-for-like calculations are based on the new total surface area (i.e. 7,196 m2). Total consumption (Abs) EPRA BPRs Number of applicable assets 3/3 Number of applicable assets in area (m2SHON) 6,721 Proportion of estimated data Change (%) 3/3 100% 7,196 0% 836,788 Electricity 7,196 2014 2013 3/3 100% 0% Owner scope “Operational control” Consumption in tenant areas re-invoiced to tenants (metering) 2014 2013 Like-for-like (LfL) Change (%) 100% 0% 886,318 6% 0% 889,385 886,318 0.3% Elec-LfL Elec-Abs Total electricity consumption paid by the owner 836,788 886,318 6% 889,385 886,318 0.3% Owner scope “Operational control” 329,748 376,570 14% 260,224 376,570 45% Consumption re-invoiced to tenants Total district heating and cooling consumption data collected and paid by the owner District heating and DH&C-Abs cooling Owner scope “Operational control” Consumption re-invoiced to tenants Total Gas-Fuel oil-Wood data collected, paid by the owner Gas-Fuel oil-Wood kWh DH&C-LfL 329,748 376,570 14% 260.224 376.570 45% 378,001 389,820 3% 405,517 389,820 -4% 405,517 389,820 -4% 216 229 6% Fuels-Abs Fuels-LfL 378,001 389,820 3% INTENSITY (kWhfe/m2SHON/year) Foncière des Régions 242 Reference Document 2014 Sustainable development CSR performance CARBON – TOTAL DIRECT OR INDIRECT GREENHOUSE GAS EMISSIONS FROM CORPORATE BUILDINGS (OPERATIONAL CONTROL SCOPE) The increase in carbon emissions like-for-like was generated by higher usage of district heating and cooling in 2014 compared with the previous year, in line with occupant demand. Total emissions (Abs) GRI 4 EPRA BPRs 2014 2013 Number of applicable assets 3/3 Coverage of reporting scope in area (m2SHON) Like-for-like (LfL) Change (%) 3/3 Proportion of estimated data CRE3 GHG-Int Scope 1 – Total direct emissions G4-EN15 GHG-Dir-Abs Scope 2 – Total indirect emissions G4-EN16 GHG-Indir-Abs Change (%) 3/3 6,721 100% 7,196 100% Building carbon (kgCO₂e/m2SHON/year) 2014 2013 7,196 100% 0% 0% 0% 0% 28 33 18% 30 33 8% 91 23% GHG-Dir-LfL 95 91 -3.9% 111 146 0 0 32% GHG-Indir-LfL 124 146 18% GHG-Indir-LfL 0 0 GHG Protocol: Scope 3 – Other emissions 74 (tCO₂e) GHG-Indir-Abs Total emissions (tCO₂ e/year) 185 CHANGE IN CARBON EMISSIONS 2014/2013 237 219 28.2% 237 8.3% WATER – TOTAL WATER CONSUMPTION AND CORPORATE BUILDING WATER INTENSITY (OPERATIONAL CONTROL SCOPE) Water used in the portfolio comes from a single source, municipal water supplies. Water consumption data was collected for all three Foncière des Régions locations in 2014: in addition to the two buildings in Paris, for which water consumption remained stable at around 25 m3/m2SHON/year), data was also compiled for water volumes consumed in the Metz building. Landscaped areas on terraces go some way to explaining the increase in total consumption in 2014. Total water consumption (Abs) GRI 4 EPRA BPRs Number of applicable assets Coverage of scope (m SHON) 2013 2014 3/3 3/3 6,721 2 WATER INTENSITY (m3/m2SHON/year) Total water consumption (m3) 100% 7,196 CRE2 Water-Int 0.20 0.31 G4-EN8 Water-Abs 1,317 2,254 Water consumption – Like-for-like (LfL) Number of applicable assets 2/3 Coverage of reporting scope (m SHON) 5,475 2 76% Proportion of estimated data 0% 0% WATER INTENSITY (m2/m2SHON/year) 0.24 0.25 1,290 1,368 Water consumption in cubic metres like-for-like (m3) G4-EN3 Water-LfL CHANGE IN WATER INTENSITY 2014/2013 6% Foncière des Régions 243 Reference Document 2014 100% 2 2 Sustainable development CSR performance WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD FOR CORPORATE BUILDINGS (OPERATIONAL CONTROL SCOPE) Tonnage of waste produced by the two assets in Paris is monitored monthly, as well as the total paper and cardboard (100% recycled). A large volume of paper was disposed of in 2013 as a result of reorganising the teams and the layout of the offices. This tonnage dropped sharply in 2014, as shown in the table below. Total waste production (Abs) GRI 4 EPRA BPRs 2014 2013 Number of applicable assets 2/2 Coverage of scope (m2SHON) 5,475 Total waste (tonnes) G4-EN23 Waste-Abs 56 of which recycled, re-used or composted waste G4-EN23 Waste-Abs 43.68 of which incinerated (including with energy recovery) G4-EN23 Water-Abs 0 of which landfill G4-EN23 Water-Abs 0 of which other disposal methods G4-EN23 Waste-Abs 12.32 Rate of selective collection 100% 5,475 100% 33 78% 20.94 63% 0 0 22% 100% 12.56 37% 100% Production of waste – Like-for-like (LfL) Number of applicable assets 2/2 Coverage of scope (m SHON) 5,475 2 Proportion of estimated data Rate of selective collection Total waste (tonnes) G4-EN23 of which recycled, re-used or composted waste 0% 0% 100% 100% Waste-LfL 56 43.68 of which incinerated (including with energy recovery) 100% 78% 0 of which landfill 12.32 CHANGE IN TOTAL WASTE 2014/2013 0 22% -40.1% Foncière des Régions 244 Reference Document 2014 63% 0 0 of which other disposal methods 33 20.94 12.56 37% Sustainable development CSR performance 2.11.3.7. Beni Stabili CERTIFICATIONS AND ACCREDITATION (CERT-TOT) The rate of building certification for the EPRA Cert-Tot indicator is detailed in the Beni Stabili Sustainable Development Report. ENERGY – DIRECT AND INDIRECT ENERGY CONSUMPTION BY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR FULLY-OWNED BUILDINGS (OPERATIONAL CONTROL SCOPE) Consumption data is based on actual invoices obtained from the property management company or energy supply companies. The results are presented without climate adjustment. Consumption of gas in 2013 was invoiced on an estimated basis using the metering method. Following improvements to this method, 2013 and 2014 invoices were updated. Consumption like-for-like takes this adjustment into account, but total 2013 consumption remains unchanged in the energy and carbon reporting tables below. GRI 4 EPRA BPRs Coverage of scope (m2GLA) Number of applicable assets 2014 2013 111,945 100% 16/16 Intensity (kWhfe/m GLA/year) CRE1 2 Energy-Int Intensity (kWhpe/m2GLA/year) 150,683 95% 18/19 81 95 162 146 TOTAL DIRECT ENERGY (kWhfe) G4-EN3 Fuels-Abs 1,324,757 7,861,362 Natural gas (direct energy) G4-EN3 Fuels-Abs 747,077 7,038,072 Fuel oil (direct energy) G4-EN3 Fuels-Abs 577,680 823,290 Wood (direct energy) G4-EN3 Fuels-Abs 0 0 TOTAL INDIRECT ENERGY (kWhfe) G4-EN3 Elec-Abs 7,724,192 6,478,730 Electricity (indirect energy) G4-EN3 Elec-Abs 7,724,192 6,478,730 Renewable energy production G4-EN3 Elec-Abs 0 0 o/w solar 0 0 o/w wind 0 0 o/w hydraulic 0 0 0 0 0 0 9,048,949 14,340,092 o/w geothermal District heating and cooling (indirect energy) G4-EN3 DH&C-Abs Total energy consumption (kWhfe) Total energy (GJ) Total energy consumption (kWhpe) 32,576 51,624 18,163,496 21,984,993 The coverage of the reporting scope was 100% in 2013 and 95% in 2014. Consumption was down 9% like-for-like. Foncière des Régions 245 Reference Document 2014 2 2 Sustainable development CSR performance Total consumption (Abs) EPRA BPRs 2014 2013 16/16 Number of applicable assets Coverage of reporting scope in area (m2GLA) 111,945 Proportion of estimated data 100% 150,683 Owner scope “operational control” Electricity Total district heating and cooling consumption data collected, paid by the owner 116,665 100% N/A 5,629,404 5,032,101 -11% 0 0 0% 0 7,724,192 6,478,730 5,629,404 5,032,101 0 0 0 0 0 0 0 0 0 Gas-Fuel oil-Wood 100% 0% 0 Elec-LfL DH&C-LfL 0 1,324,757 Consumption re-invoiced to tenants 116,665 6,478,730 kWh Owner scope “operational control” Total Gas-Fuel oil-Wood data collected, paid by the owner 95% 7,861,362 Change (%) N/A 7,724,192 Owner scope “operational control” District heating and DH&C-Abs cooling 2014 2013 14/14 0% Elec-Abs Total consumption of electricity paid by the owner Consumption re-invoiced to tenants Change (%) 18/19 0% Consumption in tenant areas re-invoiced to tenants (metering) Like-for-like (LfL) 0 0 6,957,713 6,446,045 0 0 -11% -7% 0 0 1,324,757 7,861,362 6,957,713 6,446,045 -7% INTENSITY (kWhfe/m2GLA/year) 108 98 -9% Fuels-Abs Fuels-LfL CARBON – TOTAL GREENHOUSE GAS EMISSIONS FROM FULLY-OWNED ASSETS (OPERATIONAL CONTROL SCOPE) Carbon emissions are calculated based on energy invoices. Emissions fell 9.3% like-for-like, a performance related directly to lower consumption. Total emissions (Abs) GRI 4 EPRA BPRs Number of applicable assets 16/16 Coverage of reporting scope in area (m2GLA) 111,945 Proportion of estimated data CARBON INTENSITY (KgCO₂e/m2GLA/year) CRE3 100% G4-EN15 Scope 3 – Other emissions Total emissions (tCO₂e/year) 116,665 39 29 -25% 2014 Change (%) GHG-Dir-Abs Scope 2 – Total indirect emissions G4-EN16 GHG-Indir-Abs 14/14 0% 2013 (tCO₂e) GHG-Indir-Abs 116,665 0% 0% 25 22 2014 2013 100% -9% Change (%) 311 1,624 422% GHG-Dir-LfL 1,517 1,410 -7% 2,807 -32% GHG-Indir-LfL 2,439 2,180 -11% 0 0 GHG-Indir-LfL 0 0 4,430 3,956 0.4% Foncière des Régions 100% 4,102 4,413 CHANGE IN CARBON EMISSIONS 2014/2013 Change (%) 2014 2013 18/19 150,683 95% 0% GHG-INT GHG Protocol Scope 1 – Total direct emissions 2014 2013 Like-for-like (LfL) Change (%) 246 3,590 -9.3% Reference Document 2014 Sustainable development CSR performance WATER – TOTAL WATER CONSUMPTION AND INTENSITY RATIO FOR FULLY-OWNED BUILDINGS (OPERATIONAL CONTROL SCOPE) Water used in the portfolio comes from a single source, municipal water supplies. The increase across the entire reporting scope should be seen relative to the like-for-like 7% increase. Total water consumption (Abs) GRI 4 EPRA BPRs Number of applicable assets Coverage of scope (m GLA) Total water consumption (m3) 2014 14/16 15/19 106,134 2 WATER INTENSITY (m3/m2GLA/year) 2013 CRE2 Water-Int G4-EN8 Water-Abs 95% 139,098 0.92 1.26 97,247 175,071 93% Water consumption – Like-for-like (LfL) 12/14 Number of applicable assets Coverage of reporting scope (m2 GLA) 108,650 Proportion of estimated data Water intensity (m3/m2GLA/year) Water consumption like-for-like (m3) 93% 0% G4-EN8 Water-LfL 108,650 1.04 1.12 113,446 121,199 CHANGE IN WATER INTENSITY 2014/2013 93% 0% 7% WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD Selective collection is available in an increasing number of assets included in the reporting scope (40% at end 2014) and waste is collected for recycling and composting. Foncière des Régions 247 Reference Document 2014 2 2 Sustainable development CSR performance 2.11.3.8. Urbis Park Reporting was carried out for 17 managed sites as of 31 December 2014 through a Public Service Delegation, a concession or a commercial lease for parking spaces. The ratios are expressed per parking space and not per m2 to reflect the particular characteristics of this business. Assets delivered or disposed of during the year are excluded from the reporting scope. In the same way, assets under lease contracts are not used as the Urbis Park corporate purpose does not include work and operations. This reporting is based on the periods of 1 October N to 1/30 September N, i.e. 12 months on a sliding scale. There are no tenant areas in the car parks. Consumption therefore exclusively concerns the scope of management of Urbis Park staff, within the scope covered by the EPRA recommendations (in blue in the tables). CERTIFICATIONS AND ACCREDITATION (CERT-TOT) In France, there is no system of certification covering the construction or operation of car parks. ENERGY – DIRECT AND INDIRECT ENERGY CONSUMPTION BY PRIMARY ENERGY SOURCE AND ENERGY INTENSITY RATIO FOR BUILDINGS IN OPERATION (OPERATIONAL CONTROL SCOPE) Electricity was the only energy consumed in the Urbis Park portfolio in 2011 and 2012. Due to the absence of air conditioning and heating, electricity consumption does not take into account adjustments for climate conditions. The actions taken on the portfolio including audits, replacement of lighting, etc. resulted in a reduction in consumption of 9% between 2012 and 2013. GRI 4 EPRA BPRs Coverage of scope (m2SHON) Number of applicable assets Intensity (kWfe/parking space/year) CRE1 2012 2013 2014 100% 100% 100% 18/18 17/17 17/17 739 605 575 1,905 1,561 1,483 Energy-Int Intensity(kWpe/parking space/year) Total direct energy (kWhfe) G4-EN3 Fuels-Abs 0 0 0 Natural gas (direct energy) G4-EN3 Fuels-Abs 0 0 0 Fuel oil (direct energy) G4-EN3 Fuels-Abs 0 0 0 Wood (direct energy) G4-EN3 Fuels-Abs 0 0 0 Total indirect energy (kWhfe) G4-EN3 Elec-Abs 8,383,465 6,603,956 5,807,906 Electricity (indirect energy) G4-EN3 Elec-Abs 8,383,465 6,603,956 5,807,906 Renewable energy production G4-EN3 Elec-Abs 0 0 0 District heating and cooling (indirect energy) G4-EN3 DH&C-Abs TOTAL ENERGY CONSUMPTION (kWhfe) Total energy (GJ) TOTAL ENERGY CONSUMPTION (kWhpe) Foncière des Régions 248 0 0 0 8,383,465 6,603,956 5,807,906 30,180 23,774 20,908 21,629,340 17,038,206 14,984,396 Reference Document 2014 Sustainable development CSR performance Total consumption (Abs) EPRA BPRs 2013 Number of applicable assets 17/17 Coverage of reporting scope (number of parking spaces) 10,913 Consumption in tenant areas re-invoiced to tenants (metering) Change (%) 2014 15/15 10,103 100% 0% 0% 0% 6,603,956 5,807,906 -12% Electricity Elec-Abs 6,603,956 5,807,906 Owner scope Operational scope 0 District heating DH&C-Abs and cooling Total district heating and cooling consumption data collected, paid by the owner Total Gas-Fuel oil-Wood data collected, paid by the owner 100% 9,280 100% N/A 5,403,759 5,375,479 -0.5% 5,403,759 5,375,479 -0.5% 0 0 0% -12% 0% 0 kWh 0% DH&C-LfL Operational control by owner scope Consumption re-invoiced to tenants 9,280 N/A Elec-LfL Total electricity consumption paid by the owner Consumption re-invoiced to tenants Change (%) 2014 2013 17/17 100% Proportion of estimated data Owner scope Operational scope Like-for-like (LfL) 0 0 0% 0 0 0% 0 0 0% 0 0 0% Gas-Fuel Fuels-Abs oil-Wood Fuels-LfL 0 0 0% INTENSITY (kWfe/parking space/year) 0 0 0% 582 579 -0.5% CARBON – TOTAL GREENHOUSE GAS EMISSIONS FROM FULLY-OWNED ASSETS (OPERATIONAL CONTROL SCOPE) Total direct and indirect and greenhouse gas emissions from buildings in operation. In as much as the sites use a single type of energy utility, the drop observed in carbon emissions is the same as for energy consumption, i.e. 1% like-for-like between 2013 and 2014. Total emissions (Abs) GRI 4 EPRA BPRs Number of applicable assets 17/17 Coverage of scope of reporting (number of parking spaces) 10,913 Proportion of estimated data Carbon intensity (kgCO₂e/parking space/year) CRE3 100% G4-EN15 Scope 3 – Other emissions 15/15 10,103 100% 9,280 0% 51 48 -5% 2014 Change (%) GHG-Dir-Abs (tCO₂e) GHG-Indir-Abs 100% 100% 0% 49 49 -1% Change (%) 2014 2013 0 0 GHG-Dir-LfL 0 0 555 488 -12% GHG-Indir-LfL 454 452 -1% -1% 0 0 0% GHG-Indir-LfL 0 0 0% 0% -12.1% Foncière des Régions 9,280 0% Total emissions (tCO₂e/year) CHANGE IN CARBON EMISSIONS 2014/2013 Change (%) 2014 2013 17/17 2013 Scope 2 – Total indirect emissions G4-EN16 GHG-Indir-Abs Change (%) 0% GHG-Int GHG Protocol Scope 1 – Total direct emissions 2014 2013 Like-for-like (LfL) 249 -1% Reference Document 2014 0% 2 2 Sustainable development CSR performance WATER – TOTAL WATER CONSUMPTION AND INTENSITY RATIO FOR FULLY-OWNED BUILDINGS (OPERATIONAL CONTROL SCOPE) Water used in the portfolio comes from a single source, municipal water supplies. Quantities of water consumed in car parks are very low, as shown below. GRI 4 Total water consumption (Abs) EPRA BPRs Number of applicable assets Coverage of scope (parking space) Total water consumption (m ) 2013 2014 16/16 15/15 15/17 100% 100% 90% CRE2 Water-Int 0.23 0.19 0.17 G4-EN8 Water-Abs 2,590 2,057 1,590 2013 2014 WATER INTENSITY (m3/parking space/year) 3 2012 Water consumption – Like-for-like (LfL) Number of applicable assets (number of buildings) 14/15 Number of applicable assets (number of parking space) 93% Proportion of estimated data Water intensity (m /parking space/year) 3 Water consumption in cubic metres like-for-like (m3) G4-EN8 Water-LfL CHANGE IN WATER INTENSITY 2014/2013 0% 0% 0.20 0.17 1,696 1,426 -16% WASTE – TOTAL WEIGHT OF WASTE IN TONNES BY TYPE AND DISPOSAL METHOD (OPERATIONAL CONTROL SCOPE) Volumes of waste collected in car parks are negligible and are not included in reported data. Furthermore, waste in all car parks included in the reporting scope is removed by municipal services who do not communicate any data relating to tonnage collected and proportions recycled or incinerated. Foncière des Régions 250 Reference Document 2014 Sustainable development CSR performance 2.11.4. Social indicators 2.11.4.1. ESU Foncière des Régions GRI 4 2012 2013 2014 290 290 277 Permanent 95% 93.1% 92.1% Men 46% 44% 45% Women 54% 56% 55% 2% 3.4% 1.8% Men 50% 60% 20% Women 50% 40% 80% 3% 3.4% 6.1% 63% 10% 18% Numbers of employees Temporary Total workforce by type of employment contract broken down by gender CAP (vocational training certificate) Men Total workforce by type of job broken down by gender Distribution of workforce by geographic area and broken down by gender Women 38% 90% 82% Full-time 92% 90% 90% Men 50% 46% 47% Women 50% 54% 53% 8% 10% 10% Men 13% 17% 10% Women 88% 83% 90% Paris 70% 70% 71% Men 47% 43% 44% Women 53% 57% 56% Metz 23% 23% 23% Men 46% 45% 43% Women 54% 55% 57% Part-time G4-10 Regional offices Breakdown of workforce by professional category 6% 7% 5% Men 44% 40% 40% Women 56% 60% 60% Managers 70% 71% 73% Men 55% 51% 51% Women 45% 49% 49% Supervisors 18% 17% 16% Men 25% 24% 23% Women 75% 76% 77% 7% 8% 9% Men 40% 17% 20% Women 60% 83% 80% 4% 4% 3% Men 23% 25% 25% Women 77% 75% 75% Employees Building caretakers Foncière des Régions 251 Reference Document 2014 2 2 Sustainable development CSR performance 2012 2013 2014 Breakdown of workforce by gender Men 47% 43% 43% Women 53% 57% 57% Breakdown of managerial staff Men Managers 63% 58% 58% Women Managers 37% 42% 42% Makeup of Governance bodies (Committee or Council in charge of Strategic Leadership, Control, Management) G4-LA12 Men in Governance bodies See Chapter 2.10.2.1 on Governance Women in Governance bodies Breakdown of workforce by age group Age < 30 14% 16% 19% 30-50 years old 65% 63% 58% Age > 50 21% 21% 23% 54 26 36 6%* 9.4% 8.5%* 7% 5.4% 5.5% Women 10% 4.0% 7.8% Age < 30 2% 1% 2% 30-50 years old 8% 5% 7% Total Permanent Contract departures Rate of Permanent contract departure turnover Staff turnover M/W Men Turnover by age group Age > 50 Turnover by geographic area G4-LA1 Turnover rate for less than 2 year Rate of new hires by contract type Average number of hours of training per employee by gender and professional category Percentage of employees receiving regular performance and career development reviews, by gender and professional category * 7% 3% 4% Paris 11% 6% 9% Metz 2% 1% 1% Regional offices 4% 2% 3% Rate of permanent contract departure turnover after less than 2 years 9% 10.0% 17.6% Total entries (first contract for staff position excluding replacement caretaker staff) 58 50 57 Total recruitment permanent contracts 17 20 21 7 6 Of which Youth Policy (summer jobs or apprentices) 23 26 Of which medium term/ replacement temporary contracts 14 10 Of which conversion to permanent contract G4-LA9 G4-LA11 Per employee 22.4 17.6 20.0 Per man 22.4 18.3 23.0 Per woman 22.4 17.0 18.0 Per manager 22.9 18.4 21 Per supervisor 22.4 19.7 20 Per employee 17.0 7.1 10 Total 96% 99% 98% Per man 46% 45% 44% Per woman 50% 54% 55% Per manager 72% Per supervisor 17% Per employee 9% Turnover including the impacts of disposals and transfers of building caretakers was 17% in 2012 and 13.3% in 2014. Foncière des Régions 252 Reference Document 2014 Sustainable development CSR performance Rate of absenteeism by geographic area and broken down by gender 2012 2013 2014 Total 2.4% 2.9% 2.6% Men 0.6% 0.8% 0.9% Women 1.7% 2.1% 1.8% Paris 1.7% 1.6% 1.5% Metz 0.4% 0.6% 0.6% Regional offices 0.3% 0.7% 0.6% 1.38% 0.69% 0.72% 0.03 0.01 0.05 Total Severity rate Work accident rate by geographic area and broken down by gender G4-LA6 Occupational illness rate by geographic area and broken down by gender Percentage of all employees covered by collective bargaining agreements Frequency rate 2.13 4.55 2.36 Men 0.3% 0.2% 0.4% Women 1.0% 0.5% 0.4% Paris 1.0% 0.5% 0.7% Metz 0.0% 0.0% 0.0% Regional offices 0.3% 0.2% 0.0% Total 0% 0% 0% Men 0% 0% 0% Women 0% 0% 0% Paris 0% 0% 0% Metz 0% 0% 0% Regional offices 0% 0% 0% 100% 100% 100% Base salary for men (average) (before vocational training certificate contracts (CAP) and suspension) 63,229 62,411 64,727 Base salary for women (average) (before vocational training certificate contracts (CAP) and suspension) 44,041 45,594 47,517 0.70 0.73 0.73 Base salary, men, executive 68,973 67,923 69,204 Base salary, women, executive 53,503 57,757 55,525 Executive women-to-men ratio 0,78 0.85 0,80 Average base salary, men, supervisors 31,345 32,133 33,848 Average base salary, women, supervisors 31,563 31,722 31,971 G4-11 M/W ratio (excluding vocational training certificate contracts and suspension of contract) Ratio between the base salary and remuneration for women compared with the ratio for men, by professional category and by main operating site G4-LA13 Ratio M/W Supervisors 1.01 0.99 0.94 Base salary, men, office staff 24,193 24,345 26,064 Base salary, women, office staff 24,200 23,536 24,635 Office staff women-to-men ratio 1.00 0.97 0,95 Average base salary, men, property agent 25,988 26,846 29,495 Average base salary, women, property agent 22,483 26,339 25,097 0.87 0.98 0.85 Ratio M/W property agent Foncière des Régions 253 Reference Document 2014 2 2 Sustainable development CSR performance 2012 2013 2014 19% 18% 17% 8% 10% 9% Men 11% 9% 7% Number of employees who had children during the year 6.6% 5.9% 6.5% Women 3.1% 3.4% 4.0% Men 3.4% 2,4% 2.5% Employees who took parental leave (worked part time or took full parental leave) 21% 19% 44% Women 44% 33% 55% 0% 0% 29% Employees who returned to their jobs (full-time) 74% 81% 56% Women 44% 67% 45% 0% 100% 71% Employees who returned to work following parental leave (excluding renewals) 100% 100% 100% Women 100% 100% 100% - - 100% 100% 100% 100% Number of employees with right to parental leave (with children younger than 3 years) Women Return to work and retention rates after parental leave, by gender G4-LA3 Men Men Men Percentage of total workforce represented in mixed Management-employee committees for health and safety at work monitoring and submitting opinions on the Health and Safety at Work (HSW) programme G4-LA5 % of employees who received training Foncière des Régions indicators 92% 90% 95% % of payroll dedicated to training Foncière des Régions indicators 4% 3.38% 3.48% Internal mobility Foncière des Régions indicators 18 18 14 Loans to personnel (% of employees who took out loans compared to total staff) Foncière des Régions indicators 5% 5% 3% Works Council subsidies (percent of payroll) Foncière des Régions indicators 2% 2% 2% Foncière des Régions 254 Reference Document 2014 Sustainable development CSR performance 2.11.4.2. Immeo AG As at 31 December 2014, Immeo AG was staffed by 388 employees, most of whom are located in Oberhausen. In 2014, 37 new employees were taken on, mainly to run the agencies in Berlin, Dresden and Leipzig in order to extend the local administration of buildings. As Immeo AG is not a member of the Foncière des Régions economic and social unit (ESU) the company has its own HR policy. G4-10 AND G4-LA12: TOTAL WORKFORCE BY TYPE OF EMPLOYMENT CONTRACT, BY PROFESSIONAL CATEGORY AND TYPE OF JOB, DIVIDED INTO MEN AND WOMEN, BROKEN DOWN BY GENDER AND AGE GROUP GRI 4 Total workforce by type of employment contract broken down by gender Total workforce by type of job broken down by gender G4-10 2012 2013 2014 Numbers of employees 369 372 388 Permanent 76% 75% 74% Men 58% 59% 57% Women 43% 41% 43% Temporary 22% 23% 23% Men 47% 32% 40% Women 53% 68% 60% CAP 2% 2% 2% Men 20% 20% 10% Women 80% 80% 90% Full-time 89% 88% 90% Men 61% 59% 59% Women 39% 41% 41% Part-time 11% 12% 10% 5% 9% 20% 95% 91% 80% 5% 4% Men 88% 88% Women 12% 12% 2% 2% Men 86% 78% Women 14% 22% Employees 82% 83% Men 45% 46% Women 55% 54% Building caretakers 12% 10% Men 90% 92% Women 10% 8% Men Women Managers Supervisors Total workforce by professional category divided by gender Breakdown of workforce by gender Breakdown of workforce by age group G4-LA12 Men 54% 53% 52% Women 46% 47% 48% Age < 30 17% 9% 12% 30-50 years old 53% 54% 56% Age > 50 30% 37% 32% The workforce grew by 4% in 2014 in comparison with 2013, reflecting an increase in business, particularly through the purchase of new portfolios in Berlin (25 people taken on in 2014), Dresden (four people taken on in 2014) and Leipzig (three people taken on in 2014). Foncière des Régions 255 Reference Document 2014 2 2 Sustainable development CSR performance G4-LA1: STAFF TURNOVER BY GENDER AND AGE GROUP, AND LEVELS OF NEW STAFF RECRUITMENT 2012 Staff turnover M/W Turnover by age group Rate of new recruitment by gender and age groups 2013 2014 Total departures 24 32 36 Rate of departure turnover 6% 8.8% 9.2% Men 3% 4% 3% Women 4% 4% 6% Age < 30 3% 3% 3% 30-50 years old 3% 5% 5% Age > 50 4% 4% 5% G4-LA1 Total incoming staff 48 27 48 13% 7% 12% Men 5% 1% 6% Women 8% 6% 6% Age < 30 6% 3% 6% 30-50 years old 6% 3% 5% Age > 50 2% 1% 3% Recruitment rate In 2014, the rate of recruitment exceeded staff turnover which explains the increase in our workforce in 2014. Immeo AG has strengthened its position with the arrival of new employees taken on as account managers. This is primarily due to increased business activity in 2014 in the regions mentioned in the previous paragraph, which also led to 33 positions being filled via internal mobility. These figures take account of all incoming staff i.e. permanent contracts, fixed-term contracts and students. G4-LA6: RATE OF ABSENTEEISM/RATE OF INDUSTRIAL ACCIDENTS AND RATE OF JOB-RELATED ILLNESSES BY GENDER Rate of absenteeism by gender G4-LA6 2012 2013 2014 Total 2.2% 2.0% 1.6% Men 1.2% 1.0% 0.7% Women 1.0% 1.0% 0.9% The rate of absenteeism fell by 0.4% between 2014 and 2013. No cases of work-related illness or industrial accident were reported in 2014. G4-LA9 – AVERAGE NUMBER OF HOURS OF TRAINING PER EMPLOYEE, BY GENDER AND PROFESSIONAL CATEGORY Per employee Average number of hours of training per employee by gender and professional category G4-LA9 2012 2013 2014 15.0 7.6 18.0 Per man 9.7 4.8 10.0 Per woman 5.3 2.8 8.0 Per manager 0.3 0.2 0.4 Per supervisor 1.6 0.3 0.7 Per employee 13.1 5.7 16.8 0 1 0 Per building caretakers Training remains a major component of Immeo AG’s Human Resources policy. The average number of hours per employee rose in 2014 thanks to the benefits of the training given to employees on tenant relations and the handling of real estate disputes, linked to the opening of new agencies in Berlin and Dresden. Foncière des Régions 256 Reference Document 2014 Sustainable development CSR performance G4-LA13: RATIO BETWEEN THE BASE SALARY AND REMUNERATION FOR WOMEN AND THAT OF MEN, BY PROFESSIONAL CATEGORY Work has also been conducted regarding employee health and safety with training being delivered concerning first aid and fire prevention, as well as workshops open to all in 2014 focusing on the quality of life in the workplace, adapting workstations and employee behaviour from an ergonomic viewpoint. In 2014, the average basic wage within the company rose by over 10% for women and by 3% for men, thereby readjusting the balance between wages and reducing differences between men and women in terms of remuneration. The ratio between Men/ Women in terms of basic wage, all job categories included, stood at 0.80 in 2014, showing that we must continue to work on this theme in the years to come. The difference is explained primarily by differences in the number of years of company service and the fact that some women work flexible hours, after maternity leave, representing the majority of part-time workers within the group. 2.11.4.3. Beni Stabili The workforce of Beni Stabili, the Italian subsidiary of Foncière des Régions, is divided evenly between Milan and Rome, with an overall total of 59 employees as at 31 December 2014. Beni Stabili has its own management team and Human Resources strategy. Consequently, its workforce is not part of the Foncière des Régions ESU. The HR strategy of Beni Stabili is based on respect for nationwide collective bargaining agreements for real estate professions, respect for work-life balance, a remuneration policy tuned to each individual profile, business ethics disseminated to each employee via a dedicated code of ethics, an appropriate health and safety policy, and ambitious career development plans. G4-11: PERCENTAGE OF EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS As at the end of 2014, 88% of Immeo AG staff were covered by the sector’s labour agreements regarding real estate management (the remaining 12% concern employees covered by other agreements, such as managers). The group is also bound by the AGG act concerning equality of treatment. Employees are regularly informed of new industrial agreements, most notably by means of meetings which they are invited to attend from time to time. Additionally, Beni Stabili began to build its own Sustainable Development policy in 2014, a move that led to the implementation of a more finely detailed Human Resources policy with, in particular, an employee training policy. G4-10 AND G4-LA12: BREAKDOWN OF WORKFORCE BY TYPE OF CONTRACT, GENDER AND AGE GRI 4 Total workforce by type of employment contract broken down by gender G4-10 2012 2013 2014 62 58 59 Permanent 97% 91% 92% Men 42% 38% 44% Women 58% 62% 56% Numbers of employees Temporary 3% 9% 8% Men 50% 60% 60% Women 50% 40% 40% 95.5% 97% 100% Men 42% 41% 46% Women 58% 59% 54% Part-time 4.5% 3% 0% 0% 0% 0% Women 100% 100% 0% Men 43.0% 39.7% 45.8% Women 57.0% 60.3% 54.2% Full-time Total workforce by type of job broken down by gender Men Breakdown of workforce by gender Breakdown of managerial staff Men Managers G4-LA12 Breakdown of workforce by age group Foncière des Régions 75% Women Managers 25% Age < 30 10% 12% 14% 30-50 years old 71% 76% 72% Age > 50 19% 12% 14% 257 Reference Document 2014 2 2 Sustainable development CSR performance As at 31 December 2014, Beni Stabili had 59 employees on its books, with 31 of them in Rome and 38 in Milan. Published figures do not take into account certain forms of employee status, such as students, although Beni Stabili enabled 10 students to gain company work experience in 2013, followed by five in 2014. There are still more women than men, except on the Board of Directors, where the applicable legislation is nonetheless respected with three women out of the nine members of the Board. All Beni Stabili employees work full-time, but the Human Resources Department is always attentive to the flexibility of working hours, depending on individual cases. G4-LA1: STAFF TURNOVER AND LEVELS OF INCOMING STAFF Staff turnover M/W G4-LA1 Turnover by age group 2012 2013 2014 Total Permanent Contract departures 7 5 6 Rate of Permanent contract departure turnover 12% 9.0% 11% Men 5% 5% 4% Women 7% 4% 7% Age < 30 3% 0% 2% 30-50 years old 2% 8% 7% Age > 50 7% 2% 2% 2 1 2 Total incoming staff with Permanent Employment Contracts Level of incoming staff Beni Stabili benefits from a high rate of retention as the average length of service of employees is slightly above five years. Six employees left the company in 2014. The rate of absenteeism is rather high but does not only reflect sick leave; there are also absences for personal reasons, provided for under Italian labour law allowing absences in cases of major family events. In 2014, no workplace accidents or cases of workrelated illness were reported. G4-LA13: RATIO BETWEEN THE BASE SALARY AND REMUNERATION FOR WOMEN AND THAT OF MEN, BY PROFESSIONAL CATEGORY 2012 2013 2014 Base salary for men (average) €3,300 €3,300 €3,300 Base salary for women (average) €3,350 €3,350 €3,350 Women-to-men ratio Ratio between the base salary and remuneration for women compared with the ratio for men, by professional category and for each main operating site G4-LA13 1.02 1.02 1.02 Base salary, men, executive €54,300 €54,300 €54,300 Base salary, women, executive €54,000 €54,000 €54,000 Executive women-to-men ratio 0.99 0.99 0.99 Average base salary, men, supervisors €31,700 €31,700 €31,700 Average base salary, women, supervisors €32,300 €32,300 €32,300 1.02 1.02 1.02 Base salary, men, office staff €31,700 €31,700.00 Base salary, women, office staff €32,300 €32,300.00 Office staff women-to-men ratio 1.02 1.02 Ratio M/W Supervisors Base salaries have changed very little over the past three years; this apparent wage stability may be explained by the fact that salaries are set by a national branch agreement. The Beni Stabili remuneration policy is also based on performance-related Foncière des Régions bonuses awarded to employees geared to the achievement of their objectives. Salaries are still above the minimum levels provided for by the sector’s collective bargaining agreement. Gender equality is respected in all categories of employment. 258 Reference Document 2014 Sustainable development CSR performance 2.11.4.4. Urbis Park area, including Saint-Ouen where the company is located), and its commitments to employment and integration in the labour force, Ubris Park ensures the following: Urbis Park is a subsidiary of Foncière des Régions, and its workforce is not part of the group’s Economic and Social Unit (ESU). Urbis Park has its own Human Resources policy in line with its car park holding and management business. ww particular focus on local job applicants ww the use of local job market integration services ww mentoring young people to enter the workforce Its workforce remained stable between 2013 and 2014, reflecting consistent business volume and a balance between new hires and staff leaving. In 2014, Urbis Park continued its policy of promoting local employment and hiring young people. In particular, through its charter as a “Local Company” in the Plaine Commune (which comprises several towns and cities in the Seine-Saint-Denis ww stands at job fairs and/or participation in local forums. The breakdown of the workforce by professional category is dominated by employees who account for the majority of the staff at its sites. 2012 GRI 4 251 236 237 Permanent 92% 86.4% 90.3% Men 85% 82% 83% Women 15% 18% 17% 7% 11.4% 7.2% Men 83% 81% 94% Women 17% 19% 6% CAP (vocational training certificate) + Emploi d’Avenir contracts 0% 2.1% 2.5% Men 0% 20% 67% 100% 80% 33% Full-time 89% 90% 91% Men 85% 82% 86% Women Total workforce by type of job broken down by gender G4-10 Women 15% 18% 14% Part-time 11% 10% 9% Men 79% 71% 57% Women 21% 29% 43% 9% 10% 10% 83% 71% 71% Managers Men Breakdown of workforce by professional category 2014 Numbers of employees Temporary Total workforce by type of employment contract broken down by gender 2013 Women 17% 29% 29% Supervisors 10% 12% 11% Men 58% 61% 67% Women 42% 39% 33% Employees 81% 78% 79% Men 88% 85% 85% Women 12% 15% 15% Foncière des Régions 259 Reference Document 2014 2 2 Sustainable development CSR performance G4-LA13: RATIO BETWEEN THE BASE SALARY AND REMUNERATION FOR WOMEN AND THAT OF MEN Ratio between the base salary and remuneration for women compared with the ratio for men G4-LA13 2012 2013 2014 Base salary for men (average) (before vocational training certificate contracts (CAP) and suspension) €1,829 €1,878 €1,965 Base salary for women (average) (before vocational training certificate contracts and suspension) €2,057 €2,149 €2,170 1.125 1.144 1.104 M/W ratio (excluding vocational training certificate contracts and suspension of contract) Average salary increased 4% between 2013 and 2014 and the difference between remuneration paid to men and women narrowed. These indicators on remuneration, career development and training are defined ahead of time and analysed during professional gender equality committee meetings in order to adjust our improvement plan where relevant. Issues of equal pay are analysed consistently during annual salary reviews. G4-LA1: TURNOVER AND RECRUITMENT BY GENDER AND AGE GROUP Staff turnover M/W 2012 2013 2014 Total Permanent Contract departures 37 73 32 Rate of Permanent contract departure turnover 20% 31% 16% Men 17% 29% 11% Women Turnover by age group G4-LA1 Level of incoming staff Number and rate of new hires by age group 3% 3% 5% Age < 30 6.0% 3.9% 3.4% 30-50 years old 9.3% 14.2% 8.3% Age > 50 4.9% 13.4% 3.9% Total recruitment 88 35 36 Recruitment rate 48% 15% 17% Men 90% 83% 80% Women 10% 17% 20% Age < 30 38% 31% 34% 30-50 years old 48% 60% 52% Age > 50 15% 9% 14% Employee turnover reduced markedly between 2013 and 2014 from 31% (more than half of which was accounted for by the non-renewal of a Public Service Delegation contract) to 16%. term contracts as replacement or temporary personnel. This year, three new employees were hired on Emplois d’Avenir contracts (service personnel), bringing the total for this type of contract to four. The number of new hires remained stable year-on-year with 36 people hired on permanent contracts in 2014. Excluding permanent contracts, 71% of new hires in 2014 were on fixed- Foncière des Régions Two employees were offered internal mobility opportunities in 2014. 260 Reference Document 2014 Sustainable development CSR performance G4-LA6 AND G4-11: ABSENTEEISM, WORKPLACE ACCIDENTS AND OCCUPATIONAL ILLNESSES BY GENDER AND PERCENTAGE OF EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS Rate of absenteeism by gender G4-LA6 Workplace accident rate 2012 2013 2014 Total 3.2% 4.5% 4.9% Men 2.2% 2.7% 3% Women 1.1% 1.8% 1.9% Total 4% 3% 3% Severity rate 0.9 1 0.2 20.69 16.56 14.22 100% 100% 100% Frequency rate Percentage of all employees covered by collective bargaining agreements G4-11 The absenteeism rate remained stable (up 0.4%) between 2013 and 2014. However, we note a reduction in the severity rates (down 0.8 points) and frequency of workplace accidents (down 2.34 points), indicating shorter and less serious work stoppages. There were no occupational illnesses reported in the three years of reporting. G4-LA9 – AVERAGE NUMBER OF HOURS OF TRAINING PER EMPLOYEE, BY GENDER AND PROFESSIONAL CATEGORY Average number of hours of training per employee by gender and professional category G4-LA9 2012 2013 2014 Per employee 5.8 6.9 7.2 Per man 5.7 6.6 7.1 Per woman 3.6 3.5 3.6 Per manager 11 6 11.2 Per supervisor 10.5 11.1 16.2 Per employee 4.1 5.1 4.6 The average number of training hours in 2014 was up 7% to a total of 1,530 hours of training delivered for an investment that represented 1.35% of payroll. The Urbis Park training plan includes all training actions by the company over the period of one year. Training is planned according to the company’s strategy. Urbis Park trains the workforce with a view to adapting to changes in their position and also to maintain their employability. The training priorities for 2014/2015 are: fire safety, first aid, electrical, customer relations, operations accreditation, management and administration. Foncière des Régions In addition 98% of the annual evaluation and development interviews were conducted in 2014. Particular attention is paid to women when it comes to training. They are given priority in some business line training initiatives introduced by the national automobile training association (Association Nationale pour la Formation Automobile – ANFA), for professional development, skills assessment and raising levels of professionalism in order to promote gender equality in the workplace. 261 Reference Document 2014 2 2 Sustainable development CSR performance 2.11.5. Article 225 of the Grenelle 2 Law Concordance Table Foncière des Régions (Offices France) Foncière des Murs (Hotels and Service Sector) Immeo AG (Residential Germany) The total workforce and breakdown of employees by gender, age and geographic area 2.11.4.1 2.11.4.1 2.11.4.2 2.11.4.1 2.11.4.3 2.11.4.4 New Hires and redundancies 2.11.4.1 2.11.4.1 2.11.4.2 2.11.4.1 2.11.4.3 2.11.4.4 Remuneration and changes in remuneration 2.11.4.1 2.11.4.1 2.11.4.2 2.11.4.1 2.11.4.3 2.11.4.4 Organisation of working hours 2.11.4.1 2.11.4.1 2.11.4.2 2.11.4.1 2.11.4.3 2.11.4.4 Absenteeism 2.11.4.1 2.11.4.1 2.11.4.2 2.11.4.1 2.11.4.3 2.11.4.4 Organisation of staff dialogue, specifically information, employee consultation and employee negotiation procedures 2.9.5 2.9.5 2.11.4.2 2.9.5 2.11.4.3 2.11.4.4 Analysis of collective labour agreements 2.9.5 2.9.5 2.11.4.2 2.9.5 2.11.4.3 2.11.4.4 Workplace health and safety conditions 2.9.3 2.9.3 2.11.4.2 2.9.3 2.11.4.3 2.11.4.4 Analysis of workplace health and safety agreements signed with trade union organisations or employee representatives 2.9.5 2.9.5 2.11.4.2 2.9.5 2.11.4.3 2.11.4.4 2.11.4.1 2.11.4.1 2.11.4.2 2.11.4.1 2.11.4.3 2.11.4.4 Topics and sub-topics arising from the order of Article 225 Foncière Dév. Housing Beni Stabili (Residential (Offices Urbis Park France) Italy) (Car parks) Employment Organisation of work Labour/management relations Health and safety Workplace accidents, specifically their frequency and severity, and occupational illnesses Training Training policies implemented 2.9.2.1 2.9.2.1 2.11.4.2 2.9.2.1 2.11.4.3 2.11.4.4 2.11.4.1 2.11.4.1 2.11.4.2 2.11.4.1 2.11.4.3 2.11.4.4 Policy implemented and steps taken to promote gender equality 2.9.4 2.9.4 2.11.4.2 2.9.4 2.11.4.3 2.11.4.4 Policy implemented and steps taken to promote hiring and integration of the disabled 2.9.4 2.9.4 2.11.4.2 2.9.4 2.11.4.3 2.11.4.4 Policy implemented and steps taken in the area of anti-discrimination 2.9.4 2.9.4 2.11.4.2 2.9.4 2.11.4.3 2.11.4.4 Total number of hours of training Diversity and equal opportunities/equal treatment Promotion of and compliance with the provisions of basic ILO agreements regarding Freedom of association and the right to bargain collectively 2.9.5 2.9.5 2.11.5 2.9.5 2.11.5 2.11.5 The elimination of discrimination in respect of employment and occupation 2.9.5 2.9.5 2.11.5 2.9.5 2.11.5 2.11.5 The elimination of forced or obligatory labour 2.9.5 2.9.5 2.11.5 2.9.5 2.11.5 2.11.5 The effective abolition of child labour 2.9.5 2.9.5 2.11.5 2.9.5 2.11.5 2.11.5 2.2.5 2.2.5 2.6.2 2.2.5 2.7.1 2.7.2 2.9.6.3 2.9.6.3 2.11.4.2 2.9.6.3 2.11.4.3 2.11.4.4 2.3.6 2.4.3.8 2.6.3.6 2.6.4.5 2.7.1.7 2.7.2.1 General environmental policy Company organisation to take environmental issues into account and, as necessary, environmental evaluation and certification processes Employee environmental protection training and information Resources dedicated to preventing environmental and pollution risks Foncière des Régions 262 Reference Document 2014 Sustainable development CSR performance Foncière des Régions (Offices France) Foncière des Murs (Hotels and Service Sector) Immeo AG (Residential Germany) 2.3.6 2.4.3.8 2.6.3.6 2.6.4.1 Measures to prevent, reduce or remedy discharges into the water, air and soil that have serious environmental effects 2.3.7.6 2.4.3.8 2.6.3.6 2.6.4.5 2.7.1.7 2.7.2.1 Measures to prevent, recycle and eliminate waste 2.3.7.3 2.4.3.6 2.6.3.5 2.6.4.4 2.11.3.7 2.7.2.1 Consideration of noise and other forms of pollution specific to a particular activity 2.3.7.5 2.4.3.6 2.6.3.6 2.6.4.5 2.7.1.7 2.7.2.1 Water consumption and water supplies based on local constraints 2.3.7.1 2.4.3.5 2.6.3.4 2.6.4.3 2.11.3.7 2.11.4.4 Consumption of raw materials and steps taken to improve efficiency of use 2.3.4.1 2.4.3.1 2.6.3.1 2.6.4.5 2.7.1.2 2.11.4.4 Energy consumption, steps taken to improve energy efficiency and use of renewable energy 2.3.4.2. 2.4.3.3 2.6.3.3 2.6.4.1 2.7.1.4 2.7.2.1 Land use 2.3.7.6 2.4.3.8 2.6.3.6 2.6.4.5 2.7.1.7 2.7.2.1 2.3.5 2.4.3.4 2.6.3.2 2.6.4.2 2.11.3.7 2.7.2.1 2.3.7.7 2.4.3.4 2.6.3.2 2.6.4.2 2.11.3.7 2.7.2.1 2.3.7.2 2.4.3.7 2.6.1 2.6.1 2.7.1.2 2.7.2.1 Topics and sub-topics arising from the order of Article 225 The amount of provisions and insurance for environmental risks, except if the nature of this information would cause serious harm to the company in connection with on-going litigation Foncière Dév. Housing Beni Stabili (Residential (Offices Urbis Park France) Italy) (Car parks) Pollution and waste management Sustainable use of resources Climate change Greenhouse gas emissions Adaptation to climate change impacts Protection of biodiversity Steps taken to develop biodiversity Territorial, economic and social impact of the company’s operations On employment and regional development 2.8.1.4 2.8.1.4 2.6.3.7 2.8.1.4 2.7.1.2 2.7.2.5 On neighbouring and local populations 2.8.1.4 2.8.1.4 2.6.3.7 2.8.1.4 2.7.1.2 2.7.2.5 Relationships with individuals or organisations affected by the company’s operations Conditions for dialogue with these individuals or organisations 2.2.4.1 2.2.4.1 2.6.3.7 2.2.4.1 2.7.1 2.7.2.3 Partnership and sponsorship activities 2.8.1.3 2.8.1.3 2.6.3.7 2.8.1.3 2.7.1.6 2.7.2.2 Consideration of social and environmental issues in the company’s purchasing policy 2.8.3 2.8.3 2.8.3 2.8.3 2.8.3 2.8.3 Significance of sub-contracting and consideration, in relationships with sub-contractors and suppliers, of their social and environmental responsibility 2.8.3 2.8.3 2.8.3 2.8.3 2.8.3 2.8.3 2.10.6.2 2.10.6.2 2.10.6.2 2.10.6.2 2.10.6.2 2.10.6.2 2.3.7.4 2.4.3.8 2.6.3.6 2.6.4.5 2.7.1.7 2.7.2.3 2.9.4 2.9.4 2.11.5 2.9.4 2.11.5 2.11.5 Sub-contracting and suppliers Fair business practices Actions taken to prevent corruption Steps taken to ensure consumer health and safety Human Rights Steps taken to support human rights Foncière des Régions 263 Reference Document 2014 2 2 Sustainable development CSR performance 2.11.6. GRI 4 Content Index and CRESD The table below provides the indicators which Foncière des Régions has chosen to report in order to comply with version four of the GRI guidelines and its sector-specific supplement (CRESD). The table in the Annex in 2.11.7 compares the topics emerging from the materiality analysis conducted by Foncière des Régions on the material aspects and the indicators proposed by GRI 4. Accordingly, the list presented hereafter does not include all the indicators in the framework in order to concentrate on those deemed material in 2014, with respect to the challenges identified for the group (see 2.2.4). Foncière des Régions selected compliance with the “essential criteria” of GRI 4 and achieved GRI 4 ‘Core’ compliance. = examination as part of external verification = in-depth examination as part of external verification (advisor’s statement: Chapter 2.12) GENERAL DISCLOSURES Chapter of the Reference Document General disclosures Indicator content Strategy and Analysis G4-1 Statement from the most senior decision-maker of the organisation G4-2 Description of key impacts, risks, and opportunities 2.1 2.2.3 Organisational Profile G4-3 Name of the organisation 2.1 G4-4 Primary brands, products and services 2.2 G4-5 Location of organisation’s headquarters G4-6 Number of countries where the organisation operates, and names of countries that are specifically relevant to the sustainability topics covered in the report G4-7 Nature of ownership and legal form G4-8 Markets served G4-9 Scale of the reporting organisation G4-10 Total workforce by gender, employment contract, geographic breakdown, and change, where necessary 2.9.1 G4-11 Percentage of all employees covered by collective bargaining agreements 2.9.1 G4-12 Organisation’s supply chain 2.8.3 G4-13 Significant changes during the reporting period regarding the organisation’s size, structure, ownership, or its supply chain 2.2.1 G4-14 Whether and how the precautionary approach or principle is addressed by the organisation G4-15 Externally developed economic, environmental and social charters, principles, or other initiatives G4-16 Memberships of associations and national or international organisations Back cover 2.2.1 2.3 2.2.1 2.2.1 & 2.9.1 2.4.3.8 2.9.4 2.10.6.5 Material aspects and scopes identified G4-17 Entities included in the organisation’s consolidated financial statements G4-18 Definition of the report content and the aspect boundaries, and implementation of the reporting principles for defining the report content G4-19 Material aspects identified in the process for defining report content 2.11.7 G4-20 Aspect boundary within the organisation for the material aspects 2.11.7 G4-21 Aspect boundary outside the organisation for each material aspect 2 .11.7 G4-22 Effect of any restatements of information provided in previous reports, and the reasons for such restatements 2.2.4 G4-23 Significant changes from previous reporting periods in the scope and aspect boundaries 2.2.4 Foncière des Régions 264 Reference Document 2014 2.2.1.2 2.2.4 External verification Sustainable development CSR performance = examination as part of external verification = in-depth examination as part of external verification (advisor’s statement: Chapter 2.12) Chapter of the Reference Document General disclosures Indicator content Involvement of stakeholders G4-24 List of stakeholder groups engaged by the organisation 2.2.4.1 G4-25 Criteria for identification and selection of stakeholders with whom to engage 2.2.4.1 G4-26 Organisation’s approach to stakeholder engagement 2.2.4.1 G4-27 Key subjects and concerns raised during dialogue with stakeholders 2.2.4.1 G4-28 Reporting period 2.11.3. G4-29 Date of most recent report published G4-30 Reporting cycle G4-31 Person to contact for questions regarding the report or its content G4-32 ”Compliance with” option chosen, GRI Index, reference to the External Verification Report 2.11.3.1 G4-33 External verification policy 2.11.3.1 & 2.11.7 Report profile 2014 2.11.3. Back cover Governance G4-34 Governance structure of the organisation 2.10.2 G4-38 Composition of the highest governance body and its committees 2.10.2 G4-39 Independence of the Chairman and the highest governance body from management 2.10.2 G4-41 Processes for the highest governance body to ensure conflicts of interest are avoided and managed 2.10.2.4 G4-42 Highest governance body’s and senior executives’ roles in CSR policy 2.10.2.5 G4-43 Measures taken to develop and enhance the highest governance body’s collective knowledge of the organisation’s CSR policy 2.10.2.5 G4-49 Process for informing the highest governance body about critical concerns 2.10.4.1 G4-53 How stakeholders’ views are sought and taken into account regarding remuneration of the members of the highest governance bodies 2.10.4.1 G4-56 The organisation’s values, principles, standards and norms of behaviour 2.10.6.5 G4-57 Internal and external mechanisms for seeking advice on ethical and lawful behaviour, and matters related to organisational integrity 2.10.6.5 G4-58 Internal and external mechanisms for reporting concerns about unethical or unlawful behaviour, and matters related to organisational integrity 2.10.6.2 Ethics and integrity Foncière des Régions 265 Reference Document 2014 External verification 2 2 Sustainable development CSR performance SPECIFIC STANDARD DISCLOSURES = examination as part of external verification = in-depth examination as part of external verification (advisor’s statement: Chapter 2.12) Material aspects Chapter of the Reference Document Indicator content CATEGORY: ECONOMIC Material aspect: Indirect economic impact G4-DMA Managerial approach 2.8.1.4 G4-EC7 Development and impact of infrastructure investments and services supported 2.8.1.4 Material aspect: Purchasing practices G4-DMA Managerial approach 2.8.3 G4-EC9 Proportion of spending on local suppliers at significant operating locations 2.8.3 CATEGORY: ENVIRONMENT Material aspect: Energy G4-DMA Managerial approach G4-EN3 Energy consumption within the organisation 2.3.4 2.11.3 G4-EN5 Building energy 2.11.3 CRE1 Energy intensity of buildings in operation 2.11.3 Material aspect: Water G4-DMA Managerial approach 2.3.7.1 G4-EN8 Total water withdrawal by source 2.11.3 CRE2 Water intensity of buildings in operation 2.11.3 Material aspect: Biodiversity G4-DMA Managerial approach 2.3.7.2 G4-EN11 Operational sites held, leased or managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas 2.3.7.2 G4-EN12 Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas 2.3.7.2 G4-EN13 Habitats protected or restored 2.3.7.2 G4-EN14 Total number of IUCN Red List species and National Conservation List species with habitats in areas affected by operations, by level of extinction risk 2.3.7.2 Material aspect: Emissions G4-DMA Managerial approach 2.3.5 G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 2.11.3 G4-EN16 Indirect greenhouse gas (GHG) emissions (Scope 2) related to energy 2.11.3 G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) G4-EN18 Greenhouse gas (GHG) emissions intensity 2.11.3 G4-EN21 NOx, SOx, and other significant air emissions 2.9.6.1 CRE3 Carbon intensity of buildings in operation 2.11.3. CRE4 Greenhouse gas intensity from buildings in construction or renovation 2.3.3.1 2.9.6.1 & 2.11.3 Material aspect: Waste G4-DMA Managerial approach 2.3.7.3 G4-EN23 Total weight of waste by type and disposal method 2.11.3 Foncière des Régions 266 Reference Document 2014 External verification Sustainable development CSR performance = examination as part of external verification = in-depth examination as part of external verification (advisor’s statement: Chapter 2.12) Material aspects Chapter of the Reference Document Indicator content Material aspect: Compliance G4-DMA Managerial approach G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations Material aspect: Environmental evaluation of suppliers G4-DMA Managerial approach 2.8.3 G4-EN32 Percentage of new suppliers that were screened using environmental criteria 2.8.3 CATEGORY: SOCIAL Sub-category: Labour Practices and Decent Work Material aspect: Employment G4-DMA Managerial approach 2.9.1. G4-LA1 Total number and percentage of new employee hires and employee turnover by age group, gender and geographic area 2.11.4. G4-LA3 Return to work and retention rates after parental leave, by gender 2.11.4. Material aspect: Employee relations/management G4-DMA Managerial approach 2.9.1.2 G4-LA4 Minimum notice periods regarding operational changes including whether they are specified in collective agreements 2.9.1.2 Material aspect: Health and safety at work G4-DMA Managerial approach 2.9.5 G4-LA5 Percentage of total workforce represented by informal joint management-worker Health and Safety Committees that advise on workplace health and safety conditions 2.11.4. G4-LA6 Type of injury and rates of injury, occupational diseases, absenteeism, lost days, and total work-related fatalities, by geographic area and by gender 2.11.4. G4-LA8 Health and safety topics covered in formal agreements with trade unions CRE6 Percentage of the organisation operating under a certified health and safety management system 2.9.3 2.4.3.2 Material aspect: Training and education G4-DMA Managerial approach 2.9.2.1 G4-LA9 Average hours of training per year per employee by gender, and by employee category 2.11.4. G4-LA10 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings 2.11.4. G4-LA11 Percentage of employees receiving regular performance and career development reviews, by gender and professional category 2.11.4. Material aspect: Diversity and equal opportunity G4-DMA Managerial approach 2.9.4 G4-LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity 2.10.2.1 Material aspect: Equal remuneration from men and women G4-DMA Managerial approach G4-LA13 Ratio between the base salary and remuneration for women compared with the ratio for men, by professional category and by main operating site Foncière des Régions 2.9.4 267 Reference Document 2014 2.11.4. External verification 2 2 Sustainable development CSR performance = examination as part of external verification = in-depth examination as part of external verification (advisor’s statement: Chapter 2.12) Material aspects Chapter of the Reference Document Indicator content Material aspect: Supplier assessment for labour practices G4-DMA Managerial approach 2.8.3 G4-LA14 Percentage of new suppliers that were screened using labour practices criteria 2.8.3 Sub-category: Human rights Material aspect: Non discrimination G4-DMA Managerial approach 2.9.4 G4-HR3 Total number of incidents of discrimination and corrective actions taken 2.9.4 Material aspect: Assessment of respect for human rights by suppliers G4-DMA Managerial approach 2.8.3 G4-HR10 Percentage of new suppliers that were screened using human rights criteria 2.8.3 Sub-category: society Material aspect: Anti-corruption G4-DMA Managerial approach 2.10.6.5 G4-SO4 Communication and training on anti-corruption policies and procedures 2.10.6.5 Material aspect: Public policy G4-DMA Managerial approach 2.10.6.5 G4-SO6 Total value of political contributions by country and recipient/beneficiary 2.10.6.5 Material aspect: Compliance G4-DMA Managerial approach G4-SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations No fines or sanctions in 2014 Material aspect: Assessment of suppliers’ impact on society G4-DMA Managerial approach 2.8.3 G4-SO9 Percentage of new suppliers that were screened using criteria relating to impacts on society 2.8.3 Sub-category: Product responsibility Material aspect: Customer health and safety G4-DMA Managerial approach 2.3.6 G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during the life cycle, by type of outcomes CRE5 Land and other assets remediated and in need of remediation for the existing or intended land use according to applicable legal designations CRE7 Number of people voluntarily or involuntarily displaced and/or rehoused as part of development projects, by project No incident of this type 2.3.6 Nobody was displaced Material aspect: Product and service labelling G4-DMA Managerial approach 2.3.1 CRE8 Type and number of certifications and accreditations for new buildings, operations, and renovation 2.3.1 G4-PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcome No incident Foncière des Régions 268 Reference Document 2014 External verification Sustainable development CSR performance 2.11.7. Annex: Foncière des Régions materiality concordance table and GRI 4 indicators Foncière des Régions’ topics Sustainable value Climate change GRI G4 aspects Aspect boundaries (G4 20 and 21) Related GRI 4 indicators Non-GRI 4 definition (see 2.2.2.2) All portfolios N/A Emissions All portfolios (internal and external impacts) G4-EN15 – Direct greenhouse gas emissions (Scope 1) See Chapter on GHG emissions for each business, 2.11.3. Other G4 indicators: G4-EN 16, G4-EN 21 G4-EN3 – Energy consumption within the organisation Energy Energy All portfolios (internal and external impacts) Green value Non-GRI 4 definition (see 2.2.2.2) All portfolios N/A User Health/ Safety Customer health and safety All portfolios (internal and external impacts) G4-PR2 – Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during the life cycle, by type of outcomes Tenant partnership Non-GRI 4 definition (see 2.2.1) All portfolios N/A Sustainable cities Indirect economic impact General information Governance Ethics and integrity/ Combat corruption All portfolios (internal and external impacts) Foncière des Régions (internal impacts) Foncière des Régions 269 Other indicators: G4-EN5; CRE1 See the Chapter on Energy for each business and 2.11.3 G4-EC8 – Material indirect economic impacts, including the importance of these impacts See 2.8.1.4 CRE7 – Number of people voluntarily or involuntarily displaced and/or rehoused by portfolio, detailed by project G4-34 – Governance structure of the organisation See 2.10 G4-56/G4-SO4 – Communication and training on anti-corruption policies and procedures See 2.10 Reference Document 2014 2 2 Sustainable development CSR performance Foncière des Régions’ topics Risk management Aspect boundaries (G4 20 and 21) GRI G4 aspects Consumer health and safety All portfolios (internal and external impacts) Related GRI 4 indicators G4-PR2 – Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during the life cycle, by type of outcomes See 2.11.6 CRE-5 – Land and other assets remediated and in need of remediation for the existing or intended land use according to applicable legal designations See 2.2.6. G4-SO4 – Communication and training on anticorruption policies and procedures See 2.10.6 Ethics/ Transparency Ethics and integrity/ Combat corruption/ Compliance Foncière des Régions Beni Stabili (internal impacts) Water All portfolios (internal and external impacts) G4-EN8 – Total water withdrawal by source Water Waste Effluents and waste All portfolios (internal and external impacts) G4-EN23 – Total weight of waste by type and disposal method See Chapter on Waste for each business, 2.11.3. Biodiversity All portfolios (internal and external impacts) G4-EN13 – Habitats protected or restored Biodiversity Responsible Procurements Purchasing practices/ Environmental assessment/ Human rights/ Suppliers’ employment practices Offices France, Logistic, Urbis Park Corporate France (internal and external impacts) G4-EN32 – Percentage of new suppliers that were screened using environmental criteria See 2.8.4 Diversity and equal opportunity Diversity/ Equality Equal remuneration for men and women Employer/employee relations Local employment Skills/Talent Human Rights Philanthropy/ Sponsorship Indirect economic impacts Employment Training/Education Non discrimination Non-GRI 4 definition (see 2.8.1.3 & 2.6.3.7) G4-56 – The organisation’s values, principles, standards and norms of behaviour See 2.10 CRE-2 – Water intensity of buildings in operation See Chapter on Water for each business, 2.11.3. G4-EN11/G4-EN12/G4-EN14 See 2.3.7.2 G4-SO9/G4-LA14/G4-HR10 G4-LA1 – Total number and percentage of new Foncière des Régions employee hires and employee turnover by age group, ESU, Beni Stabili, gender and geographic area Immeo AG, Urbis Park G4-LA3/G4-LA4/G4-LA5/G4-LA13 (external impacts) See 2.9; 2.11.4 Offices France (external impacts) G4-EC7 – Development and impact of infrastructure investments and services supported See 2.8.1.4 Foncière des Régions ESU, Beni Stabili, Immeo AG (internal impacts) G4-LA9 – Average number of hours of training per employee per year, by gender and professional category See 2.9 and 2.11.4 Foncière des Régions ESU, Beni Stabili, Immeo AG, Urbis Park (internal and external impacts) G4-HR3 – Total number of incidents of discrimination and corrective actions taken See 2.9 and 2.11.4 Foncière des Régions ESU and Immeo AG Foncière des Régions 270 G4-HR1/G4-HR6/G4-HR10 N/A Reference Document 2014 Sustainable development Verification by an independent third party auditor 2.12. VERIFICATION BY AN INDEPENDENT THIRD PARTY AUDITOR Independent verifier’s report on consolidated social, environmental and societal information presented in the management report This is a free translation into English of the original report issued in the French language and it is provided solely for the convenience of English speaking users. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France. To the shareholders, In our quality as an independent verifier accredited by the COFRAC(1), under the number n° 3-1050, and as a member of the network of one of the statutory auditors of the company Foncière des Régions we present our report on the consolidated social, environmental and societal information established for the year ended on the 31/12/2014, presented in Chapter 2 of the management report, hereafter referred to as the “CSR Information,” pursuant to the provisions of the article L.225-102-1 of the French Commercial code (Code de commerce). Responsibility of the company It is the responsibility of the Board of Directors to establish a management report including CSR Information referred to in the article R. 225-105 of the French Commercial code (Code de commerce), in accordance with the reporting protocols used by the company (hereafter referred to as the “Criteria”), and of which a summary is included in introduction to Chapter 2 of the management report and available on request at the company’s headquarters. Independence and quality control Our independence is defined by regulatory requirements, the Code of Ethics of our profession as well as the provisions in the article L. 822-11 of the French Commercial code (Code de commerce). In addition, we have implemented a quality control system, including documented policies and procedures to ensure compliance with ethical standards, professional standards and applicable laws and regulations. Responsibility of the independent verifier It is our role, based on our work: ww to attest whether the required CSR Information is present in the management report or, in the case of its omission, that an appropriate explanation has been provided, in accordance with the third paragraph of R. 225-105 of the French Commercial code (Code de commerce) (Attestation of presence of CSR Information); ww to express a limited assurance conclusion, that the CSR Information, overall, is fairly presented, in all material aspects, in according with the Criteria. Our verification work was undertaken by a team of four people between October 2014 and March 2015 for an estimated duration of nine weeks. We conducted the work described below in accordance with the professional standards applicable in France and the Order of 13 May 2013 determining the conditions under which an independent third-party verifier conducts its mission, and in relation to the opinion of fairness and the reasonable assurance report, in accordance with the international standard ISAE 3000(2). (1) (2) Scope available at www.cofrac.fr ISAE 3000 – Assurance engagements other than audits or reviews of historical information. Foncière des Régions 271 Reference Document 2014 2 2 Sustainable development Verification by an independent third party auditor 1. Attestation of presence of CSR Information We obtained an understanding of the company’s CSR issues, based on interviews with the management of relevant departments, a presentation of the company’s strategy on sustainable development based on the social and environmental consequences linked to the activities of the company and its societal commitments, as well as, where appropriate, resulting actions or programmes. We have compared the information presented in the management report with the list as provided for in the Article R. 225-105-1 of the French Commercial code (Code de commerce). In the absence of certain consolidated information, we have verified that the explanations were provided in accordance with the provisions in Article R. 225-105-1, paragraph 3, of the French Commercial code (Code de commerce). We verified that the information covers the consolidated perimeter, namely the entity and its subsidiaries, as aligned with the meaning of the Article L.233-1 and the entities which it controls, as aligned with the meaning of the Article L.233-3 of the French Commercial code (Code de commerce) with the limitations specified in the Methodological Note in Chapter 2 of the management report, notably. Based on this work, and given the limitations mentioned above we confirm the presence in the management report of the required CSR information. 2. Limited assurance on CSR Information Nature and scope of the work We undertook nine interviews with the people responsible for the preparation of the CSR Information in the different departments in charge of the data collection process and, if applicable, the people responsible for internal control processes and risk management, in order to: ww Assess the suitability of the Criteria for reporting, in relation to their relevance, completeness, reliability, neutrality, and understandability, taking into consideration, if relevant, industry standards; ww Verify the implementation of the process for the collection, compilation, processing and control for completeness and consistency of the CSR Information and identify the procedures for internal control and risk management related to the preparation of the CSR Information. We determined the nature and extent of our tests and inspections based on the nature and importance of the CSR Information, in relation to the characteristics of the Company, its social and environmental issues, its strategy in relation to sustainable development and industry best practices. Concerning the CSR Information that we deemed to be the most important(1): ww We consulted documentary sources and conducted interviews to corroborate the qualitative information (organisation, policies, actions, etc.), we implemented analytical procedures on the quantitative information and verified, on a test basis, the calculations and the compilation of the information, and also verified their coherence and consistency with the other information presented in the management report; ww We undertook interviews to verify the correct application of the procedures and to identify potential omissions and undertook detailed tests on the basis of samples, consisting in verifying the calculations made and linking them with supporting documentation. For the other consolidated CSR information, we assessed their consistency in relation to our knowledge of the company. Finally, we assessed the relevance of the explanations provided, if appropriate, in the partial or total absence of certain information taking into account, if relevant, professional best practices. We consider that the sample methods and sizes of the samples that we considered by exercising our professional judgment allow us to express a limited assurance conclusion; an assurance of a higher level would have required more extensive verification work. Due to the necessary use of sampling techniques and other limitations inherent in the functioning of any information and internal control system, the risk of non-detection of a significant anomaly in the CSR Information cannot be entirely eliminated. (1) Environmental and societal information : the overall environment policy (the company’s organisation to take into account environmental issues and the environmental assessment approaches or certifications), sustainable use of resources and climate change (energy consumption and greenhouse gas emissions of the portfolio, measures taken to improve energy efficiency and use of renewable energy), relations with stakeholders (dialogue conditions with stakeholders, including environmental schedules) and taking into account social and environmental issues in responsible purchasing. Social Information : employment (total number of employees and breakdown by gender, by age and by geographic region), absenteeism and total number of training hours per trained employee. Foncière des Régions 272 Reference Document 2014 Sustainable development Verification by an independent third party auditor Conclusion Based on our work, we have not identified any significant misstatement that causes us to believe that the CSR Information, taken together, has not been fairly presented, in compliance with the Criteria. Observations Without qualifying our conclusion above, we draw your attention to the following points: ww The reporting scope of the Offices business represents 79% of the surface area of the company’s asset base and 96% of the portfolio concerned by the EPRA’s Best Practices Recommendations on Sustainability Reporting. The scope of the Service Sector represents 94,8% of the portfolio value and information was assembled on 81,8% in terms of surface area of this reporting scope. ww The energy consumption reported for Immeo Wohnen is based on 126 assets representing about 2% of the total portfolio value of Immeo Wohnen, which represents 17% of the portfolio value, group share. ww Furthermore, the ratios of energy and carbon intensity per square meter are calculated based on the consumption data of the tenants of these surfaces; their reliability depends on the quality of internal and external controls implemented by the tenants. In addition, and according to a specific request, we designated with a V sign in Chapter 2 of the management report the consolidated CSR information required by the GRI 4 guidelines (Global Reporting Initiative) in accordance with the Core option, as well as sector information in accordance with the GRI 4 “Construction and Real Estate” sector supplement. Paris-La Défense, March 5th, 2015 French original signed by: ERNST & YOUNG et Associés Éric Duvaud Sustainable Development Partner Bruno Perrin Partner Foncière des Régions 273 Reference Document 2014 2 3 FINANCIAL INFORMATION 3.1. CONSOLIDATED 3.4. PARENT COMPANY FINANCIAL STATEMENTS AS AT 31 DECEMBER 2014276 3.1.1. 3.1.2. 3.1.3. 3.1.4. 3.1.5. FINANCIAL STATEMENTS 3.2.7. 3.2.8. 3.2.9. 3.2.10. 3.2.11. 3.4.1. 3.4.2. Statement of financial position 276 Statement of net income (EPRA format)278 Statement of comprehensive income 279 Statement of changes in shareholders’ equity 280 Statement of cash flows 281 3.2. NOTES TO THE CONSOLIDATED 3.2.1. 3.2.2. 3.2.3. 3.2.4. 3.2.5. 3.2.6. FINANCIAL STATEMENTS AS AT 31 DECEMBER 2014 3.5. NOTES TO THE COMPANY FINANCIAL STATEMENTS 3.5.1. 3.5.2. 3.5.3. 3.5.4. 3.5.5. 3.5.6. 283 Accounting principles and policies 283 Financial risk management 291 Scope of consolidation 295 Evaluation of control 303 Significant events during the period 304 Notes to the statement of financial position306 Notes to the statement of net income 325 Other information 329 Segment reporting 338 Comparative information for 2013 345 Post-balance sheet events 348 355 Significant events during the year 355 Accounting principles, rules and methods356 Explanation of balance sheet items 359 Notes to the income statement 368 Off-balance sheet commitments 373 Sundry information 375 ON THE ANNUAL FINANCIAL STATEMENTS384 3.7. STATUTORY AUDITORS’ REPORT ON RELATEDPARTY AGREEMENTS AND COMMITMENTS386 3.8. AGENDA AND DRAFT 349 RESOLUTIONS391 3.8.1. 3.8.2. Foncière des Régions 351 353 3.6. STATUTORY AUDITORS’ REPORT 3.3. STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS Balance sheet Income statement 351 274 Agenda391 Text of the resolutions 392 Reference Document 2014 3.9. STATUTORY AUDITORS’ REPORT ON THE CAPITAL REDUCTION 3.11. STATUTORY AUDITORS’ REPORT 410 ON THE ISSUE OF SHARES AND VARIOUS SECURITIES WITH MAINTENANCE AND/OR WAIVER OF THE PREFERENTIAL SUBSCRIPTION RIGHT 412 3.10. STATUTORY AUDITORS’ REPORT ON THE ISSUE OF SHARES AND/ OR SECURITIESGIVING ACCESS TO THE CAPITAL RESERVED FOR MEMBERS OF A COMPANY SAVINGS PLAN 411 Foncière des Régions 275 Reference Document 2014 3 Financial information Consolidated financial statements as at 31 December 2014 3.1. CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2014 3.1.1. Statement of financial position ASSETS 31/12/2014 before reclass. Discontinued operations(1) 31/12/2014 31/12/2013 8,194 0 8,194 8,194 136,701 0 136,701 145,974 68,916 0 68,916 96,255 Other tangible fixed assets 7,066 0 7,066 6,620 Fixed assets in progress 3,654 0 3,654 5,297 3.2.6.1.2 14,535,291 0 14,535,291 14,297,538 Non-current financial assets 3.2.6.2 184,782 0 184,782 155,624 Investments in associates 3.2.6.3 188,718 0 188,718 184,764 3.2.6.4 16,628 0 16,628 90,049 3.2.6.11.3 39,283 0 39,283 11,697 15,189,233 0 15,189,233 15,002,012 Note (€K) INTANGIBLE FIXED ASSETS 3.2.6.1.1 Goodwill Other intangible fixed assets TANGIBLE FIXED ASSETS 3.2.6.1.1 Operating assets Investment assets Deferred tax assets Long-term derivative instruments Total non-current assets Assets held for sale 3.2.6.1.2 824,805 287,840 536,965 1,196,495 Loans and lease receivables 3.2.6.5 8,044 0 8,044 9,636 Inventories and work-in-progress 3.2.6.6 72,928 0 72,928 80,033 Short term derivatives 3.2.6.11.3 20,963 0 20,963 11,421 3.2.6.7 276,962 12,689 264,273 282,556 7,331 4,214 3,117 2,999 3.2.6.8 126,782 4,005 122,777 202,089 9,970 41 9,929 11,920 1,028,642 2,135 1,026,507 381,541 0 0 310,924 0 Total current assets 2,376,427 310,924 2,376,427 2,178,690 TOTAL ASSETS 17,565,660 310,924 17,565,660 17,180,702 Trade receivables Tax receivables Other receivables Prepaid expenses Cash and cash equivalents 3.2.6.9 Discontinued operations (1) Given its disengagement in the Logistics segment with the disposal of nearly 63% of its portfolio over the first half of 2014, this segment is presented as ”discontinued operations” as from 1 January 2014. Foncière des Régions 276 Reference Document 2014 Financial information Consolidated financial statements as at 31 December 2014 LIABILITIES Note (€K) Share capital Share premium account Treasury share Consolidated reserves Net profit (loss) Total shareholders’ equity, group share 3.2.6.10 Minority interests Total shareholders’ equity Long term borrowings Long-term derivative instruments Discontinued operations 31/12/2014 31/12/2013 188,051 0 188,051 188,049 2,291,130 0 2,291,130 2,370,863 -3,632 0 -3,632 -10,961 1,563,979 0 1,563,979 1,402,064 118,479 -0 118,479 340,126 4,158,007 -0 4,158,007 4,290,141 3,141,678 0 3,141,678 2,925,030 7,299,685 -0 7,299,685 7,215,171 3.2.6.11 7,708,710 0 7,708,710 7,519,639 3.2.6.11.3 539,771 19,981 519,790 476,047 3.2.6.4 261,232 0 261,232 294,811 3.2.6.12 43,829 0 43,829 40,640 Deferred tax liabilities Pension and other liabilities 31/12/2014 before reclass. Other long-term liabilities 10,387 3,553 6,834 37,563 8,563,929 23,534 8,540,395 8,368,700 3.2.6.1.4 2,447 0 2,447 0 90,094 3,267 86,827 109,541 Short-term borrowings 3.2.6.11 1,204,213 6 1,204,207 978,922 Short-term derivatives 3.2.6.11.3 100,702 2,565 98,137 94,555 Total non-current liabilities Liabilities held for sale Trade payables Guarantee deposits 5,365 0 5,365 5,663 146,042 6,954 139,088 134,367 17,195 90 17,105 17,282 6,067 0 6,067 4,994 Other short-term liabilities 92,761 10,937 81,824 204,316 Prepaid expenses 37,160 0 37,160 47,191 0 0 47,353 0 Total current liabilities 1,702,046 23,819 1,725,580 1,596,831 TOTAL LIABILITIES 17,565,660 47,353 17,565,660 17,180,702 Advances and prepayments Short-term provisions 3.2.6.12 Current tax Discontinued operations Foncière des Régions 277 Reference Document 2014 3 3 Financial information Consolidated financial statements as at 31 December 2014 3.1.2. Statement of net income (EPRA format) Note 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Rental income 3.2.7.1.1 908,422 33,054 875,368 831,963 Unrecovered rental costs 3.2.7.1.2 -44,021 -4,579 -39,442 -40,035 Expenses on assets 3.2.7.1.2 -28,950 -930 -28,020 -18,286 Net losses on unrecoverable receivables 3.2.7.1.2 -8,578 123 -8,701 -8,820 826,873 27,667 799,206 764,822 22,190 (€K) Net rental income Management and administration income 23,660 335 23,325 Business expenses -5,712 -297 -5,415 -4,891 -104,012 -1,033 -102,979 -82,714 Overheads Development costs Net operating costs 3.2.7.1.3 Income from other activities Expenses of other activities Net income from other activities 3.2.7.1.4 Depreciation of operating assets Net allowances to provisions and other 3.2.7.1.5 CURRENT OPERATING INCOME Income from disposals of trading assets Exit value and/or amortisations and provisions of trading assets Gain (loss) from disposal of trading assets Income from asset disposals Carrying value of investment assets sold -228 -2 -226 -520 -86,292 -997 -85,295 -65,935 56,416 0 56,416 48,304 -29,475 0 -29,475 -28,777 26,941 0 26,941 19,527 -15,612 -3 -15,609 -14,999 -19,055 -2,687 -16,368 2,332 732,855 23,980 708,875 705,747 13,764 0 13,764 12,173 -15,814 0 -15,814 -17,335 -2,050 0 -2,050 -5,162 740,896 84,138 656,758 506,740 -503,266 -746,831 -92,113 -654,718 Net gain (loss) from asset disposals -5,935 -7,975 2,040 3,474 Gains in value of investment assets 290,897 2,672 288,225 195,027 -132,182 -11,315 -120,867 -232,707 158,715 -8,643 167,358 -37,680 0 0 0 3,779 Losses in value of investment assets Net valuation gains and losses 3.2.7.2 Income (loss) from disposal of securities Income from changes in scope 3.2.7.3 OPERATING INCOME Net gains on deconsolidation 32,510 30,562 1,948 48,796 916,095 37,924 878,171 718,954 883 0 883 10,121 Net financing cost 3.2.7.4 -289,138 -6,964 -282,174 -307,353 Fair value adjustment on derivatives 3.2.7.5 -311,441 -7,705 -303,736 109,993 Discounting of liabilities and receivables 3.2.7.5 -3,426 -135 -3,291 -2,938 Net change in financial and other provisions 3.2.7.5 -123,970 0 -123,970 -47,676 Share in earnings of associates 3.2.6.3 21,120 0 21,120 32,505 210,123 23,120 187,002 513,606 NET INCOME BEFORE TAXES Deferred tax 3.2.7.6.3 -80,640 452 -81,092 6,174 Current income tax 3.2.7.6.2 -9,882 392 -10,274 -7,637 512,143 119,601 0 95,636 Profit (loss) after tax of discontinued operations NET INCOME FROM CONTINUING OPERATIONS FOR THE PERIOD 0 0 23,964 0 Income from discontinued operations 0 23,964 23,964 0 119,601 23,964 119,601 512,143 -1,121 0 -1,121 -172,017 118,479 23,964 NET INCOME FOR THE PERIOD Minority interests 118,479 340,126 Group net income (loss) per share in euros NET INCOME FOR THE PERIOD (GROUP SHARE) 3.2.8.2 1.89 1.89 5.72 Group diluted net income (loss) per share in euros 3.2.8.2 1.88 1.88 5.70 Foncière des Régions 278 Reference Document 2014 Financial information Consolidated financial statements as at 31 December 2014 3.1.3. Statement of comprehensive income (€K) NET INCOME FOR THE PERIOD 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 119,601 23,964 119,601 512,143 -2,960 -2,960 -2,924 0 0 9,086 85,521 85,521 86,172 31 31 59 Other items in the comprehensive income statement recognised directly in shareholders’ equity and: Destined for subsequent reclassification in the “Net income” section of the income statement Actuarial losses on personnel benefits Changes due to revaluation of financial assets available for sale Effective portion of gains/losses on hedging instruments Tax on other items of comprehensive income Of which not destined for subsequent reclassification in the “Net income” section Other items of comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 0 0 0 0 82,592 0 82,592 92,393 202,193 23,964 202,193 604,536 159,494 23,964 159,494 392,900 42,698 211,636 23,964 202,193 604,536 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE To the owners of the parent company To minority interests 42,698 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 202,193 Group net income per share 2.55 2.55 6.61 Group diluted net income per share 2.54 2.54 6.59 Foncière des Régions 279 Reference Document 2014 3 3 Financial information Consolidated financial statements as at 31 December 2014 3.1.4. Statement of changes in shareholders’ equity Capital (€K) Position as at 31 December 2012 173,690 Non Share distributed premium Treasury reserves account shares and income 2,172,659 Securities transactions Distribution of dividends Capital increase Capital reduction – cancellation of shares 302,605 -942 -13,667 Allocation to the legal reserve -136,489 Total Minority shareholders’ interests equity -30,503 1,638,715 5,300 -5,300 0 -151,706 -240,910 -105,961 -346,871 317,906 25,871 343,777 -367 79 -288 -89,204 15,301 Gains and losses recognised Group directly in share total shareholders’ shareholders’ equity equity 14,242 -1,530 3,818,072 2,243,574 6,061,646 0 1,530 0 -73 -73 38 -35 52,774 392,900 211,636 604,536 9,086 9,086 Of which actuarial gains and losses on employee benefits (Amendment to IAS 19) -1,274 -1,274 -1,135 -2,409 Of which effective portion of gains or losses on hedging instruments 44,962 44,962 40,754 85,716 Other Total comprehensive income for the period 340,126 Of which changes due to revaluation of financial assets available for sale 0 9,086 Valuation of bonus shares 2,689 2,689 78 2,767 Impact of asset division – Eiffage Campus -76 -76 7,067 6,991 0 542,648 542,648 4,290,141 2,925,030 7,215,171 Impact of FDL public exchange offer Position as at 31 December 2013 Securities transactions 188,049 2,370,863 -10,961 2 36 2,302 Distribution of dividends -79,810 Other 41 5,027 Total comprehensive income for the period 1,825,905 -83,715 2,340 -85 2,255 -182,911 -262,721 -163,698 -426,419 -5,565 -497 -1,432 -1,929 41,015 159,494 42,698 202,192 Of which actuarial gains and losses on employee benefits (Amendment to IAS 19) 118,479 -1,518 -1,518 -975 -2,493 Of which effective portion of gains or losses on hedging instruments 42,533 42,533 42,552 85,085 118,479 118,479 1,121 119,600 -33,723 -33,723 339,165 305,442 2,974 2,974 Of which net income Impact of change in shareholding/ capital increase Valuation of bonus shares POSITION AS AT 31 DECEMBER 2014 188,051 2,291,130 -3,632 1,725,159 -42,700 4,158,007 2,974 3,141,678 7,299,685 Dividends paid in cash during the fiscal year amounted to €262.7 million, of which €79.8 million was charged to the share premium account and €182.9 million was charged to net income and retained earnings. Foncière des Régions 280 Reference Document 2014 Financial information Consolidated financial statements as at 31 December 2014 3.1.5. Statement of cash flows Note (€K) Total consolidated net income of continuing operations 95,636 Total consolidated net income of discontinued operations Net amortisation, depreciation and provisions (excluding provisions relating to current assets) 3.2.6.11.3 & 3.2.7.2 Income and expenses calculated on stock options and related share-based payments Gains or losses on disposals Gain or loss from dilution and accretion Share in income of associates Dividends (non-consolidated shares) 31/12/2013 23,965 119,601 23,965 119,601 512,143 40,997 -573 41,570 -27,601 152,697 16,348 136,349 -73,626 2,974 2,767 2,974 Other calculated income and expenses 31/12/2014 95,636 23,965 Net consolidated income (including minority interests) Unrealised gains and losses related to changes in fair value 31/12/2014 before Discontinued reclass. operations 38,840 -198 39,038 34,282 -31,151 -23,494 -7,657 -14,048 0 0 6,533 -21,124 -21,124 -34,016 -896 -896 -10,168 Cash flow from continuing operations after cost of net financial debt and taxes 285,890 Cash flow from discontinued operations after cost of net financial debt and taxes 16,048 Cash flow after cost of net financial debt and taxes 301,938 16,048 0 301,938 396,266 Net financing cost 3.2.7.4 289,083 1,441 287,642 307,353 Income tax expense (including deferred taxes) 3.2.7.6 90,522 -844 91,366 1,463 Cash flow from continuing operations before cost of net financial debt and taxes 664,898 Cash flow from discontinued operations before cost of net financial debt and taxes 16,645 Cash flow before cost of net financial debt and taxes 681,543 Taxes paid -31,999 Change in working capital requirements on continuing operations (including employee benefit liabilities) 105,559 16,645 681,543 705,082 -4,230 -27,769 -26,569 91,666 13,893 -46,066 Net cash flow from continuing operating activities 651,022 Net cash flow from discontinued operating activities 104,081 104,081 Net cash flow from operating activities 755,103 755,103 632,447 Impact of changes in the scope of consolidation(1) -193,596 44,388 -237,984 154,171 Disbursements for acquisitions of tangible and intangible fixed assets 3.2.6.1.1 -561,490 -9,535 -551,955 -385,501 Proceeds from the disposal of tangible and intangible fixed assets 3.2.6.1.1 679,648 82,273 597,375 509,588 -458 -9,177 Disbursements for acquisitions of financial assets (non-consolidated securities) -458 Proceeds from the disposal of financial assets (non-consolidated securities) Dividends received (equity affiliates, non-consolidated securities) Change in loans and advances granted Foncière des Régions 281 2,792 1,580 1,212 115,849 13,022 0 13,022 43,605 187,923 74,312 113,611 20,625 Reference Document 2014 3 3 Financial information Consolidated financial statements as at 31 December 2014 Note (€K) Investment grants received Other cash flows related to investment operations 31/12/2014 before Discontinued reclass. operations 31/12/2014 31/12/2013 500 0 0 0 -4,526 0 -4,526 Net cash flow from continuing operations related to investment activities -69,703 Net cash flow from discontinued operations related to investment activities 193,018 Net cash flow from investment activities 123,315 193,018 123,315 449,660 301,729 0 Amounts received from shareholders in connection with capital increases: Paid by parent company shareholders Paid by minority shareholders of consolidated companies Purchases and sales of treasury shares 301,729 0 0 0 2,217 0 11,492 2,217 -285 Dividends paid during the fiscal year: Dividends paid to parent company shareholders 3.1.4 Dividends paid to minority shareholders -262,720 0 -262,720 -240,910 -163,698 0 -163,698 -105,961 Proceeds related to new borrowings 3.2.6.11 3,258,294 0 3,258,294 2,322,684 Repayment of borrowings (including finance lease agreements) 3.2.6.11 -2,838,347 -298 -2,838,049 -2,465,047 3.2.7.4 -275,535 -275,535 -285,033 -176,885 -75,891 Net interest paid (including finance lease agreements) Other cash flows from financing activities -198,716 -21,831 Net cash flow from continuing operations related to financing activities -154,647 Net cash flow from discontinued operations related to financing activities -22,129 Net cash flow from financing activities -176,776 Impact of changes in accounting policies 3.2.6.9 -22,129 -176,776 -3,302 0 Change in net cash of continuing operations -838,951 -3,302 423,371 Change in net cash of discontinued operations 274,970 274,970 CHANGE IN NET CASH 698,341 698,341 243,156 Opening cash position 228,161 228,161 -14,994 Closing cash position 926,502 926,502 228,162 CHANGE IN CASH AND CASH EQUIVALENTS 698,341 698,341 243,156 31/12/2014 31/12/2013 Note Gross cash and cash equivalents (a) 31/12/2014 before Discontinued reclass. operations 3.2.6.9 1,028,642 1,028,642 381,541 3.2.6.11 -94,312 -94,312 -153,378 Net cash and equivalents (c) = (a) - (b) 934,330 934,330 228,161 Of which available net cash and cash equivalents 926,502 926,502 7,828 7,828 Debit balances and bank overdrafts (b) Of which unavailable net cash and cash equivalents Gross debt (d) 8,892,922 Amortisation of financing costs (e) NET DEBT (D) - (C) + (E) (1) 6 -74,311 7,884,281 6 8,892,916 8,428,157 -74,311 -82,974 7,884,275 8,117,022 The impact of the changes in the scope of consolidation (-€193.6 million) mainly reflect the disbursements for the acquisition of two companies in the German Residential segment and in the Service sector (Amsterdam -€48.3 million, Germany -€265.2 million) and the sale of securities in the German Residential segment (+€84.2 million) and the Logistics segment (+€44.4 million). Foncière des Régions 282 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3.2.1. Accounting principles and policies 3.2.1.1. General principles – Accounting references 29 December 2012. This standard requires that entities under significant influence or investments in “joint ventures” over which the entity exercises joint control be consolidated using the equity method. The revision concerns, among other things, a few clarifications pertaining to the unit of account of certain equity investments and the recognition of fluctuations in interest rates The consolidated financial statements of the Foncière des Régions group at 31 December 2014 were prepared in compliance with the international accounting standards and interpretations issued by the IASB (International Accounting Standards Board) and adopted by the European Union as of the preparation date. These standards comprise IFRS (International Financial Reporting Standards) and IAS (International Accounting Standards) principles as well as their interpretations. ww amendment to IAS 32 “Financial instruments: Presentation” adopted by the European Union on 29 December 2012. The amendment aims to clarify offsetting requirements for financial instruments mentioned in paragraph 42 of IAS 32, by stating what having a legally enforceable right of set-off involves and indicating the circumstances under which some gross settlement systems may be considered equivalent to net settlements. This amendment has not had a significant impact on the financial statements as at 31 December 2014 They were approved by the Board of Directors on 19 February 2015. 3.2.1.1.1. Accounting principles and policies The accounting principles applied to the consolidated financial statements as at 31 December 2014 are identical to those used for the consolidated financial statements as at 31 December 2013, with the exception of new standards and amendments whose application is mandatory as from 1 January 2014 and which were not applied early by the group. ww amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” published by the IASB on 29 May 2013 and adopted by the European Union on 19 December 2013. These amendments have not had a significant impact on the financial statements as at 31 December 2014 ww amendments to IAS 39 and IFRS 9 “Novation of Derivatives and Continuation of Hedge Accounting” published by the IASB on 27 June 2013 and adopted by the European Union on 19 December 2013. These amendments have not had a significant impact on the financial statements as at 31 December 2014. New standards for which application is mandatory on or after 1 January 2014 include: ww IFRS 10 “Consolidated financial statements” published by the IASB on 12 May 2011 and adopted by the European Union on 29 December 2012 As part of the adoption of IFRS 10, 11 and 12, the group conducted a comprehensive analysis of companies that have governance agreements in place with external investors in order to assess the level of control that the group has over the assets concerned. This analysis did not lead to any modification in the assessment of control of the group’s companies or the consolidation methods. ww IFRS 11 “Joint Arrangements”, published by the IASB on 12 May 2011 and adopted by the European Union on 29 December 2012. This standard introduces a distinction between joint operations and joint ventures. For the latter, it provides for a single accounting method – equity accounting – and eliminates the option of proportionate consolidation The new amendments and standards adopted by the European Union for which application was not mandatory until 1 January 2014 and which were not applied early by the Foncière des Régions group were: ww IFRS 12 “Disclosure of Interests in Other Entities” published by the IASB on 12 May 2011 and adopted by the European Union on 29 December 2012. The purpose of IFRS 12 is to require disclosures that enable users of financial statements to assess the basis of control, any restriction on consolidated assets and liabilities, exposure to risk resulting from interests in unconsolidated structured entities, and the participation of minority interests in the activities of consolidated entities ww IFRIC 21 “Levies charged by public authorities”, dated 20 May 2013, adopted by the European Union on 13 June 2014, IAS interpretation 37 “Provisions, Contingent Liabilities and Contingent Assets”: states that the obligating event which creates a liability for a duty or a tax payable is the activity that makes the duty or tax chargeable, as defined in legal or regulatory provisions. This interpretation goes into effect for companies no later than the opening date of their first fiscal year beginning on or after 17 June 2014. The group is currently studying the impact of applying the IFRIC 21 interpretation on the consolidated financial statements as at 1 January 2015 ww investment entities: amendments to IFRS 10, IFRS 12 and IAS 27 “Consolidated Financial Statements, Disclosure of Interests in Other Entities, and Separate Financial Statements”, published by the IASB on 31 October 2012 and adopted by the European Union on 20 November 2013 ww amendments to the transitional provisions of IFRS 10, 11 and 12 “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: transitional provisions” published by the IASB on 28 June 2012 and adopted by the European Union on 4 April 2013 ww amendments to IAS 19 “Defined Benefit Plans – Employee contributions” ww annual improvements to IFRS (2010-2012 cycle) ww annual improvements to IFRS (2011-2013 cycle). ww amendments to IAS 28 (revised in 2011) “Investments in associates and joint ventures” published by the IASB on 11 December 2012 and adopted by the European Union on Foncière des Régions 283 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements group takes into consideration any facts and circumstances when it evaluates whether the voting rights that it holds in the issuing entity are sufficient to confer power to the group, including the following: IFRS standards and amendments published by the IASB but not adopted by the European Union, not yet mandatory for fiscal years starting 1 January 2014: ww IFRS 15: “Income from contracts with customers”. According to the IASB, the enforcement date has been set at 1 January 2017 ww the number of voting rights that the group holds compared to the number of rights held respectively by the other holders of voting rights and their dispersion ww IFRS 9 “Financial instruments: hedge accounting and modifications to IFRS 9, IFRS 7 and IAS 39”; According to the IASB, the enforcement date has been set at 1 January 2018 ww the potential voting rights held by the group, other holders of voting rights or other parties ww annual improvements to IFRS (2012-2014 cycle) ww the rights under other contractual agreements ww amendments to IFRS 11 “Amendments: Recognition of acquisitions of interests in joint operations” ww the other facts and circumstances, where applicable, which indicate that the group has or does not have the actual ability to manage relevant business activities at the moment when decisions must be made, including voting patterns during previous General Meetings. ww amendments to IAS 16 and IAS 38 – Amendments: Clarifications on methods of depreciation and amortisation” ww amendments to IFRS 10 and IAS 28 “Investments in associates and joint ventures” ww amendments to IAS 1 “Presentation of financial statements”. Subsidiaries and structured entities are fully consolidated. 3.2.1.2. Presentation of the financial statements 3.2.1.3.2.Associates An associate is an entity in which the group has significant control. Significant control is the power to participate in decisions relating to the financial and operational policy of an issuing entity without exercising joint control on these policies. The Foncière des Régions group has applied the EPRA recommendations since the presentation of its consolidated financial statements for the year ended 31 December 2010. The results and the assets and liabilities of associates were accounted for in these consolidated financial statements using the equity method. 3.2.1.3. Consolidation principles As part of the application of the new standards under IFRS 10, 11 and 12, the group updated its definition of control. 3.2.1.3.3. Partnerships (or joint control) Joint control means the contractual agreement to share the control exercised over a company, which only exists in the event where the decisions concerning relevant business activities require the unanimous consent of the parties sharing the control. 3.2.1.3.1. Consolidated subsidiaries and structured entities These financial statements include the financial statements of Foncière des Régions and the financial statements of the entities (including structured entities) that it controls and its subsidiaries. 3.2.1.3.3.1. Joint ventures A joint venture is a partnership in which the parties who exercise joint control over the operation have rights to said operation’s net assets. The Foncière des Régions group hold control when it: ww has power over the issuing entity ww is exposed or is entitled to variable returns due to its ties with the issuing entity The results and the assets and liabilities of joint ventures were accounted for in these consolidated financial statements using the equity method. ww has the ability to exercise its power in such as manner as to affect the amount of returns that it receives. 3.2.1.3.3.2. Joint operations The Foncière des Régions group must reassess whether it controls the issuing entity when facts and circumstances indicate that one or more of the three elements of control listed above have changed. A joint operation is a partnership in which the parties who exercise joint control over the operation have rights to the assets and obligations for the liabilities pertaining to said operation. These parties are called co-participants. A structured entity is an entity designed so that voting rights or similar rights are not the determining factor to establish control of the entity; this is the case when voting rights solely concern administrative tasks while the relevant activities are managed through contractual agreements. Each co-participant must account for the following items in proportion to its interests in the joint operation: ww its assets, including its proportionate share of assets held jointly, where applicable If the group does not hold the majority of the voting rights in an issuing entity in order to determine the power exercised over an entity, it analyses whether it has sufficient rights to unilaterally manage the issuing entity’s relevant business activities. The Foncière des Régions ww its liabilities, including its proportionate share of liabilities assumed jointly, where applicable 284 Reference Document 2014 Financial information Notes to the consolidated financial statements ww the income that it made from the sale of its proportionate share in the yield generated by the joint operation In accordance with IFRS 8, the group presented comparative information for the new operating segments. ww its proportionate share of income made from the sale of the yield generated by the joint operation As a result, the operating segments are as follows: ww France Offices: office real estate assets located in France ww the expenses that it has committed, including its proportionate share of expenses committed jointly, where applicable. ww Italy Offices: office and commercial real estate assets located in Italy The co-participant accounts for the assets, liabilities, income and expenses pertaining to its interests in a joint operation in accordance with the IFRS that apply to these assets, liabilities, income and expenses. ww Service Sector: service sector in the hotel, retail premises and health sectors held by Foncière des Murs ww Germany Residential: residential real estate assets in Germany held by Immeo AG No group company is considered a joint operation. ww France Residential: residential real estate assets in France and in Luxembourg held by Foncière Développement Logements 3.2.1.4. Estimates and Judgments ww Car Parks: the parking facilities owned outright or leased by Urbis Park, and related business activities. The financial statements have been prepared in accordance with the historic cost convention, with the exception of investment properties and certain financial instruments, which were accounted for in accordance with the fair value convention. In accordance with the conceptual framework for IFRS, preparation of the financial statements requires making estimates and using assumptions that affect the amounts shown in these financial statements. These segments are reported on and analysed regularly by the management of the Foncière des Régions group in order to make decisions on what resources to allocate to the segment and to evaluate their performance. As at 31 December 2014, Logistics no longer appears under operating segments. In accordance with the application of IFRS 5, the Logistics business activity, which is being sold, is presented in the financial statements as discontinued operations. Significant estimates made by the Foncière des Régions group in preparing the financial statements primarily apply to: In Section 3.2.10, the group presented the financial statements for the comparative fiscal year (excluding discontinued operations). ww valuations used for testing impairment, in particular assessing the recoverable value of goodwill and intangible fixed assets 3.2.1.6. Valuation methods and principles applied by Foncière des Régions ww the assessment of the fair value of investment properties ww the assessment of the fair value of financial instruments ww the assessment of provisions. 3.2.1.6.1. Intangible fixed assets Because of the uncertainties inherent in any valuation process, the Foncière des Régions group reviews its estimates based on regularly updated information. The future results of the transactions in question may differ from these estimates. Identifiable intangible fixed assets are amortised on a straightline basis over their expected useful lives. Intangible fixed assets acquired appear on the balance sheet at acquisition cost. They primarily include entry fees (long-term leases conferring ad rem rights and occupancy rights for car parks), and computer software. In addition to the use of estimates, the group’s management makes use of judgements to define the appropriate accounting treatment of certain business activities and transactions when the IFRS standards and interpretations in effect do not precisely handle the accounting issues involved. Specifically, management exercises its judgment in classifying leasing agreements (operating and finance leases). Intangible fixed assets are amortised on a straight-line basis, as follows: ww software: over a period of 1 to 3 years ww occupancy rights: 30 years. 3.2.1.6.1.1. Fixed assets in the concession segment – Concession activity 3.2.1.5. Operating segments The Foncière des Régions group holds a diverse real estate portfolio to collect rental income and benefit from appreciation in the assets held. Segment reporting has been organised around client type and asset type. The Foncière des Régions group has applied IFRIC 12 to the consolidated financial statements since 1 January 2008. An analysis of the group’s concession agreements results in classifying agreements as intangible assets as the group is paid directly by users for all car parks operated without a subsidy from public authorities. These concession assets are assessed at historical cost less accumulated depreciation and any impairment. Wholly-owned car parks remain classified under property, plant and equipment. The Foncière des Régions group modified its operating segments in the presentation of its consolidated financial statements as at 31 December 2014, in keeping with the reporting segments and strategy followed by management at the end of 2014. The Residential segment was divided into France Residential and Germany Residential. Foncière des Régions 285 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.1.6.2. Business combinations (IFRS 3) The assets are accounted for at their net market value. An entity must determine whether a transaction or event constitutes a business combination within the meaning of the definition of IFRS 3, which stipulates that a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return directly to investors in the form of dividends, lower costs or other economic advantages. ww For France Offices, Italy Offices and Logistics, valuations are performed via two methods: ww the yield (or income capitalisation) method: This approach consists of capitalising an annual income, which, in general, is rental income from occupied assets, with the possible impact of a reversion potential, and market rent for vacant assets, taking into account the time needed to find new tenants, any renovation work and other costs In this case, acquisition costs are set at fair value on the date of the exchange of assets and liabilities and equity instruments issued for the purpose of acquiring the entity. Goodwill is accounted for as an asset for the surplus of the acquisition cost on the portion of the buyer’s interest in the fair value of assets and liabilities acquired, net of any deferred taxes. Negative goodwill is recorded in the income statement. ww the discounted cash flow (DCF) method This method consists of determining the useful value of an asset by discounting the forecast cash flows that it is likely to generate over a given time frame. The discount rate is determined on the basis of the risk-free rate plus a risk premium associated with the asset and defined by comparison with the discount rates applied to cash flows generated by similar assets. To determine whether a transaction constitutes a business combination, the group considers whether an integrated set of businesses is acquired in addition to real estate whose criteria may be the number of assets and the existence of a process such as asset management or sales and marketing units. ww For the Service Sector, the methodology changes according to the type of asset: ww the rent capitalisation method is used for retirement homes, clinics, restaurants, garden centres and Club Méditerranée holiday villages If the group concludes that the transaction is not a business combination, it is accounted for as acquisition of assets and applies the standards appropriate to acquired assets. ww the DCF method is used for hotels (including the revenue forecasts determined by the appraiser) and Sunparks holiday villages. 3.2.1.6.3. Investment properties (IAS 40) ww For the Residential segment, the methodology changes according to the type of asset: Investment properties are real estate properties held for purposes of leasing within the context of operating leases or long-term capital appreciation (or both). The assets are accounted for at their net fair value. The fair value is determined based on: Investment properties represent the majority of the group’s portfolio. Assets occupied by the Foncière des Régions group are accounted for under tangible fixed assets. ww a block value for assets for which no sales strategy has been developed or which have not been marketed ww an occupied retail value for assets on which at least one offer has been made before the closing date. Under the option offered by IAS 40, investment properties are assessed at fair value. Changes in fair value are recorded in the income statement. Investment properties are not depreciated. Appraisers assume a lump-sum transfer duty of 6.2% in France and between 4.5% and 5.0% in Germany, on average. The following valuation methods were used: Valuation work is carried out in accordance with the code of conduct applicable to SIICs, and in accordance with the Charter of property valuation appraisal, the recommendations of the COB/CNCC working group chaired by Mr Barthès de Ruyther and the international plan in accordance with European TEGoVA standards as well as those of the Red Book of the Royal Institution of Chartered Surveyors (RICS). ww for assets located in France: the leasing revenue discount method and the comparison method ww for assets located in Luxembourg: the leasing revenue discount method ww for assets located in Germany: the discounted cash flow method. The real estate portfolio directly held by the group underwent a complete valuation on 31 December 2014 by independent real estate experts such as REAG, DTZ Eurexi, CBRE, JLL, BNP Paribas Real Estate, Cushman and Yard Valtech. The resulting values are also compared with the initial rate of return and the monetary values per square metre of comparable transactions and transactions carried out by the group. Assets were estimated at values excluding and/or including duties, and rental income at market value. Estimates were made using the comparative method, the rent capitalisation method and the discounted future cash flows method. Foncière des Régions 286 Reference Document 2014 Financial information Notes to the consolidated financial statements For the Foncière des Régions group, only assets corresponding to the above criteria and included in a planned sales programme drawn up by the Board of Directors are classified as non-current assets held for sale. IFRS 13 – Fair Value Measurement establishes a fair value hierarchy that categorises the inputs used in valuation techniques into three levels: ww Level 1: the valuation refers to quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date The conditions for valuing these assets are identical to those expressed above for investment properties if no sale commitment has been signed. If a sale commitment exists on the account closing date, the price of the commitment net of expenses constitutes the fair value of the asset held for sale. ww Level 2: the valuation refers to valuation methods using inputs that are observable for the asset or liability, either directly or indirectly, in an active market ww Level 3: the valuation refers to valuation methods using inputs that are unobservable in an active market. 3.2.1.6.7. Financial assets The fair value measurement of investment properties requires the use of different valuation methods using unobservable or observable inputs to which some adjustments have been applied. Accordingly, the group’s portfolio are mainly categorised as Level 3 in respect of the IFRS 13 fair value hierarchy. 3.2.1.6.7.1. Other financial assets Other financial assets consist of investment-fund holdings, which cannot be classified as cash or cash equivalents. These securities are accounted for upon acquisition at acquisition cost plus transaction costs. They are then valued at fair value in the income statement on the closing date. The fair value is arrived at on the basis of recognised valuation techniques (reference to recent transactions, discounted cash flows, etc.). Some securities that cannot be reliably valued at fair value are valued at acquisition cost. 3.2.1.6.4. Assets under development (revised IAS 40) Since 1 January 2009, in accordance with amended IAS 40, assets under construction are valued according to the general fair-value principle, except where it is not possible to determine this fair value on a reliable and ongoing basis. In such cases, the asset is valued at cost. Securities available for sale of public and private companies are recorded at their stock-market price with an offsetting entry in shareholders’ equity in accordance with IAS 39. As a result, development programmes and extensions or remodelling of existing assets that are not yet commissioned are valued at their fair value, and are treated as investment properties whenever the administrative and technical fair-value reliability criteria – i.e. administrative, technical and commercial criteria – are met. Dividends received are recognised when they have been approved by vote. 3.2.1.6.7.2.Loans When they are initially accounted for, loans are valued at their fair value increased by the transaction costs directly attributable to them. In accordance with revised IAS 23, the borrowing cost during a period of construction and renovation is included in the cost of the assets. The capitalised amount is determined on the basis of fees paid for specific borrowings and, where applicable, for financing from general borrowings based on the weighted average rate of the particular debt. At each closing, loans are recorded at their amortised value. Moreover, provisions for impairment are made and accounted for on the income statement when there is an objective indication of impairment as a result of an event occurring after the initial recording of the asset. 3.2.1.6.5. Tangible fixed assets (IAS 16) 3.2.1.6.7.3. Cash and cash equivalents Pursuant to the preferred method proposed by IAS 16, operating assets and wholly-owned car parks are valued at historical cost less accumulated depreciation and any potential impairment. Cash and cash equivalents include cash, short-term deposits, and money-market funds. These are short-term, highly liquid assets that are easily convertible into a known cash amount, and for which the risk of a change in value is negligible. 3.2.1.6.6. Non-current assets held for sale (IFRS 5) 3.2.1.6.8. Investments in associates (IAS 28) In accordance with IFRS 5, when Foncière des Régions decides to dispose of an asset or group of assets, it classifies it/them as an asset or assets held for sale if: In accordance with IAS 28, and IFRS 10, 11 and 12, an associate is an entity in which the group has significant influence on its financial and operational policies without having control. ww the asset or group of assets is available for immediate sale in its current condition, subject only to normal and customary conditions for the sale of such assets ww its sale is likely within one year and marketing for the property has been initiated. Foncière des Régions 287 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements Moreover, finance-lease assets related to doubtful contracts manifesting termination risks that are considered significant are independently appraised at market value. When these valuations, net of transfer taxes, and line-by-line, are lower than the net financial value, an impairment provision equal to the difference is accounted for. Investments in associates are accounted for by the equity method. According to this method, the group’s investment in the associate is initially accounted for at cost, increased or reduced by changes subsequent to acquisition in the share of the net assets of the associate. The goodwill related to an associate is included in the book value of the investment, if it is not impaired. The share in earnings for the period is shown on the line item “Share in income of equity affiliates”. 3.2.1.6.11. Treasury stock The financial statements of associates are prepared for the same accounting period as for the parent company, and adjustments are made, where relevant, to adapt the accounting methods to those of the Foncière des Régions group. If the group buys back its own equity instruments (treasury shares), these are deducted from shareholders’ equity. No profit or loss is accounted for in the income statement when group equity capital instruments are purchased, sold, issued or cancelled. 3.2.1.6.9.Inventories 3.2.1.6.12. Retirement commitments The inventories held by the Foncière des Régions group relate mainly to Beni Stabili’s Trading portfolio. They are intended to be sold during the normal course of business. They are recorded at acquisition price and, as applicable, are subject to depreciation in relation to the sale value (independent appraisal value). Retirement commitments are accounted for in accordance with revised IAS 19. Liabilities arising from defined benefit pension schemes are provisioned on the balance sheet for existing staff at the closing date. They are calculated according to the projected credit units method based on valuations made at each year-end. The past service cost corresponds to benefits granted, either when the company adopts a new defined-benefits scheme, or when it changes the level of benefits of an existing scheme. When new benefits are granted upon adoption of a new scheme or change in an existing scheme, the past service cost is immediately accounted for in the income statement. 3.2.1.6.10. Trade receivables Receivables consist mainly of operating and finance lease receivables. These items are valued at amortised cost. In the event that the recoverable value is lower than net book value, the group may be required to account for an impairment charge through profit or loss. Conversely, when adoption of a new scheme or change in an existing scheme gives rise to the vesting of benefits after its implementation date, the past service cost is accounted for as an expense on a straight-line basis over the average remaining period until the benefits become fully vested. Actuarial gains and losses result from the effects of changes in actuarial assumptions and experience adjustments (differences between actuarial assumptions and what has actually occurred). The change in actuarial gains and losses is accounted in other comprehensive income. The expense recognised in operating income includes the cost of services rendered during the year, amortisation of past service costs and the effects of any reduction or liquidation of the scheme; the cost of discounting is accounted for in net financial income. Valuations are made taking into account the Collective Agreements applicable in each country and in keeping with various local regulations. For each employee, the retirement age is the social security eligibility age. 3.2.1.6.10.1. Receivables from operating-lease transactions For operating-lease receivables, a provision is made at the first non-payment. The impairment rates applied by Foncière des Régions are as follows: ww 10% of the total amount of the receivable for tenants whose receivables are less than three months overdue ww 50% of the total amount of the receivable for tenants whose receivables are between three and six months overdue ww 100% of the total amount of the receivable for tenants whose receivables are more than six months overdue, or involving a vacated tenant. Receivables and the theoretical provisions resulting from the rules set out above are reviewed on a case-by-case basis in order to factor in any specific situations. 3.2.1.6.13. Financial liabilities 3.2.1.6.10.2. Receivables from finance-lease transactions Financial liabilities include borrowings and other interest-bearing debt. Receivables are accounted for at their amortised value. When the financial position of the debtor gives grounds for the likelihood of non-recovery, a provision is made. When they are first accounted for, financial liabilities are measured at fair value in accordance with the transaction costs directly attributable to the issue of the liability. They are then accounted for at amortised cost based on the effective interest rate. The effective rate includes the nominal rate and actuarial amortisation of issue expenses and issue and redemption premiums. Provisions for doubtful unpaid receivables in relation to financial contracts are made for at least the interest billed according to the terms of the contract. Termination fees are accounted for when invoiced. Given the significant possibility of non-recovery, these revenues are generally subject to depreciation by an identical amount. Foncière des Régions 288 Reference Document 2014 Financial information Notes to the consolidated financial statements Financial liabilities of less than one year are posted under “Current financial liabilities”. 3.2.1.6.15. Current taxation and deferred taxes (including the exit tax) Convertible bonds (ORNANE-type) issued by the Foncière des Régions group are either (i) accounted for at fair value through in the income statement or (ii) accounted for separately as a financial liability at amortised cost and an embedded derivative measured at fair value in the income statement. 3.2.1.6.15.1. SIIC tax regime (French companies) Opting for the SIIC tax regime involves the immediate liability for an exit tax at the reduced rate of 19% on unrealised capital gains relating to assets and securities of entities not subject to corporation tax. Exit tax is payable over four years, in four instalments, starting with the year the option is taken up. In return, the company is exempted from income tax on the SIIC business and is then subject to distribution obligations. For Foncière des Régions, the fair value is determined according to the average monthly bond price. In the case of financial liabilities resulting from the recognition of finance lease agreements, the financial liability recognised against the tangible fixed asset is initially accounted for at the leased asset’s fair value, or if lower, at the discounted value of the minimum lease payments. 1. Exemption of SIIC revenues SIIC revenues are exempt from taxes concerning: ww revenue derived from asset leasing ww capital gains realised on asset disposals, investments in companies having opted for the tax treatment or companies not subject to corporation tax in the same business, as well as the rights adhering to a lease contract and real estate rights under certain conditions 3.2.1.6.13.1. Tenant security deposits The Foncière des Régions group discounts security deposits at the average financing rate of the structure and over the average remaining term of the leases determined for each type of asset. ww dividends of SIIC and non-SIIC subsidiaries under certain conditions. 3.2.1.6.14. Derivatives and hedging instruments 2. Distribution obligations The distribution obligations associated with exemption profits are the following: The Foncière des Régions group uses derivatives to hedge its floating rate debt against interest rate risk (hedging of future cash flows). ww 95% of earnings derived from asset leasing Derivative financial instruments are recorded on the balance sheet at fair value. Fair value is calculated using valuation techniques that use mathematical calculations based on recognised financial theories and parameters that incorporate the prices of market-traded instruments. This valuation is carried out by an external service provider. ww 60% of the capital gains from disposals of assets and shares in subsidiaries having opted for the tax treatment or subsidiaries not subject to corporation tax for two years ww 100% of dividends from subsidiaries that have opted for the tax treatment or subsidiaries under Article 8 of the French General Tax Code with identical corporate purposes as SIICs. The group has been applying IFRS 13 since 1 January 2013. This standard requires accounting for counterparty risk (i.e. the risk of a counterparty defaulting on its commitments) in the assessment of the fair value of financial assets and liabilities. The exit tax liability is discounted on the basis of the initial payment schedule determined from the first day the relevant entities adopted SIIC status. The liability initially accounted for is discounted and an interest charge is applied at each closing, allowing the liability to reflect the net discounted value as at the closing date. The discount rate used is based on the yield curve, given the deferred payment. The majority of the financial instruments in the Italy Offices segment qualify for hedge accounting as defined by IAS 39. Since 1 January 2010, FDR4, a company 75% indirectly owned by Foncière des Régions and fully consolidated, also qualifies for hedge accounting as defined by IAS 39. In fact, Beni Stabili and FDR4 use derivatives to hedge their floating rate debt against interest rate risk (hedging of future cash flows) and apply hedge accounting when the terms of documentation and effectiveness (ex-ante and ex-post) are met. In this case, changes in fair value of the effective portion of the hedge are accounted for net of tax in shareholders’ equity until the hedged transaction occurs. The ineffective portion is recorded on the income statement. 3.2.1.6.15.2. Ordinary law regime and deferred taxes Deferred taxes result from temporary differences in taxation or deduction and are calculated using the liability method, and on all temporary differences in individual accounts, or resulting from consolidation adjustments. The valuation of the deferred tax assets and liabilities must reflect the tax consequences that would result from the method by which the company seeks to recover or settle the book value of its assets and liabilities at year-end. Deferred taxes are applicable to Foncière des Régions’ entities that are not eligible for or have not opted for the SIIC tax regime. In other cases, given the characteristics of its debt, as at 1 January 2007, the Foncière des Régions group no longer qualifies for hedge accounting under IAS 39. All derivative instruments are therefore accounted for at their fair value, and changes are reflected in the income statement. The revaluation reserve for financial instruments recorded in shareholders’ equity until 31 December 2006 is amortised over the remaining maturity of the hedges. Foncière des Régions 289 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements Stock options and bonus shares are valued by Foncière des Régions at the date of their award under a binomial valuation model. This model takes into account the features of the plan (price and exercise period), market data upon award (risk free rate, share price, volatility and expected dividends), and assumptions of beneficiary behaviour. The benefits thus granted are accounted for as expenses for the vesting period, and offset by an increase in shareholders’ equity. A deferred tax asset is recognised in the case of deferrable tax losses in the likely event that the entity in question, not eligible for the SIIC regime, will have taxable future profits against which the tax losses may be applied. In the case where a French company intends to opt directly or indirectly for SIIC tax treatment in the near future, an exception under the ordinary law regime is applied by anticipating the application of the reduced rate (exit tax) in the valuation of deferred taxes. In 2014, a total of 66,471 bonus shares were awarded to certain categories of employees. This expense is recorded under net financial income for the period. 3.2.1.6.15.3. SIIQ tax regime (Italian companies) Opting for the SIIQ tax treatment triggers immediate liability for exit tax at a reduced 20% tax rate on the unrealised capital gains relating to the assets eligible for SIIQ tax treatment. The exit tax is payable over a maximum of five years. 3.2.1.6.18. Earnings per share (IAS 33) Basic earnings per share are calculated by dividing the income attributable to holders of ordinary Foncière des Régions shares (the numerator) by the average weighted number of ordinary shares outstanding (the denominator) over the period. In 2014, a new decree was promulgated (Law Decree No. 133/2014). Previously, the company was exempted from tax on the SIIQ revenues (“rental” asset rental income and dividends of subsidiaries subject to the tax treatment) on condition of an 85% distribution ceiling. This ceiling has now been lowered to 70%. To calculate diluted earnings per share, the average number of shares outstanding is adjusted to reflect the conversion of all dilutive potential ordinary shares, including share subscription options and bonus shares being vested and convertible bonds (ORNANE-type). Moreover, the decree requires that 50% of the capital gains on the disposal of assets eligible for the SIIQ regime be distributed within two years following their recognition. The dilutive effect is calculated using the treasury stock method. The number calculated through this method is added to the average number of shares outstanding and becomes the denominator. To calculate diluted earnings, income attributable to holders of ordinary Foncière des Régions shares is adjusted by: In compensation, no tax is payable on capital gains from asset disposals and earnings from this business activity. 3.2.1.6.16. Rental income According to the presentation of the income statement recommended by the EPRA, rental income is treated as revenues. Car-park receipts, disposals of assets in inventory and service charges are thenceforth shown in specific lines of the income statement below net rental income. ww all dividends or other items under dilutive potential ordinary shares that were deducted to arrive at the income attributable to holders of ordinary shares As a general rule, invoicing is quarterly. The rental income of investment properties is straight-line accounted for over the term of ongoing leases. Any benefits granted to tenants (rentfree periods, step rental leases) are amortised on a straight-line basis over the duration of the lease agreement, in compliance with SIC 15. ww any change in income and expenses resulting from the conversion of dilutive potential ordinary shares. ww interest accounted for during the fiscal year to dilutive potential ordinary shares 3.2.1.6.19. IFRS 7 – Reference table 3.2.1.6.17. Share-based payments (IFRS 2) The application of IFRS 2 has resulted in the recognition of an expense for benefits granted to employees in the form of sharebased payments. This expense is recorded as non-recurring income for the year. ww Market risk § 3.2.2.1 ww Liquidity risk § 3.2.2.2 ww Financial expense sensitivity § 3.2.2.3 ww Credit risk § 3.2.2.4 ww Sensitivity of the fair value of investment properties ww Covenants Foncière des Régions 290 Reference Document 2014 § 3.2.6.1.2 § 3.2.6.11.4 Financial information Notes to the consolidated financial statements 3.2.2. Financial risk management ww the Italy Offices business is based mainly in the Milan and Rome areas, where economic activity is the most robust, and where the assets are rented to top-tier tenants, including Telecom Italia, which accounts for 53.5% of Beni Stabili’s annual rental income The operating and financial activities of the company are exposed to the following risks: 3.2.2.1. Market risk ww the holding of real estate assets intended for leasing exposes the Residential segment to the risk of fluctuation in the value of real estate assets and lease payments. Despite the uncertainty created by the economic downturn, this exposure is limited to the extent that the rentals invoiced are derived from rental agreements, the term and diversification of which mitigate the effects of fluctuations in the rental market. The holding of real estate assets intended for leasing exposes Foncière des Régions to the risk of fluctuation in the value of real estate assets and lease payments. Despite the uncertainty created by the economic downturn, this exposure is limited to the extent that the rentals invoiced are derived from rental agreements, the term and diversification of which mitigate the effects of fluctuations in the rental market. The sensitivity of the fair value of investment properties to changes in capitalisation rates is analysed in Section 3.2.6.1.2. Nevertheless, it is important to note the specific features relating to certain Foncière des Régions segments or geographical areas: ww fluctuations in rental income in the Service Sector are based on indices used as the basis for the indexation of lease payments and fluctuations in Accor revenue for the hotels in question. In the event of a deterioration in the real estate investment market, Foncière des Murs might experience corrections in value, the extent of which would be limited by the protection provided by agreements made with its tenants 3.2.2.2. Liquidity risk The management of liquidity risk is performed in the medium and long term in the form of multi-year cash management plans and, in the short term, by recourse to confirmed and undrawn lines of credit. At the end of 2014, Foncière des Regions’ available cash and cash equivalents amounted to €2,449 million, including €1,261 million in unconditional credit lines, €1,029 million in investments, and €183 million in unused overdraft facilities. The graph below summarises borrowing maturities in €m, including treasury bills existing at 31 December 2014: 2,500 2,000 1,500 1,000 500 0 2015 Maturities 2016 2017 2018 2019 2020 2021 2022 2023 and later Interests Details concerning debt maturities are provided in Note 3.2.6.11.1, and a description of banking covenants and accelerated payment clauses included in the loan agreements is presented in Note 3.2.6.11.4. extend their maturity. As a result, €260 million in corporate credit facilities were renegotiated or refinanced. In addition, €39 million in new corporate debts were taken out. In September 2014, Foncière des Régions issued a bond of €500 million with a maturity of September 2021 and a fixed coupon of 1.75%, for a spread of 105 bps. This supports the ongoing strategy of extensive diversification of financing sources, reduction in the cost of the debt and the extension of its maturity. The group set up or renegotiated the following financing facilities in 2014: ww France Offices: During the second half of 2014, Foncière des Régions continued the process of renegotiating its corporate credit facilities initiated in 2013 to optimise their financial conditions and Foncière des Régions 291 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.2.3. Interest rate risk ww Italy Offices: Beni Stabili placed a €350 million, unsecured inaugural bond issue in January 2014 with an annual coupon of 4.125% and maturing in four years, i.e. in January 2018. The group’s exposure to the risk of changes in market interest rate rates is linked to its floating rate and long-term financial debt. As part of the diversification of its sources of financing, in March 2014, Beni Stabili successfully completed a private placement with institutional investors for a total of €250 million with a 3.50% coupon. The bond matures in April 2019. To the extent possible, bank debt is almost always hedged via financial instruments (see 3.2.6.11.3). At 31 December 2014, after taking interest rate swaps into account, approximately 87% of the group’s debt was hedged, and most of the remainder is covered by interest rate caps, which resulted in the following sensitivity to changes in interest rates: These new lines also free assets secured by the repayment of mortgage financing. In September 2014, Beni Stabili also launched the refinancing of the IMSER securitisation backed by the €1.7 billion Telecom Italia asset portfolio via bank financing of €500 million, including mortgage financing of €300 million. This refinancing significantly reduces the average cost of its debt and increases its financial flexibility and profitability. The impact of a 100 bps rate increase as at 31 December 2014 is a loss of -€6,896,000 on the 2015 net recurring income, group share. The impact of a 50 bps rate increase as at 31 December 2014 is a loss of -€3,582,000 on the 2015 net recurring income, group share. The impact of a 50 bps rate reduction as at 31 December 2014 is a rise of +€454,000 on the 2015 net recurring income, group share. Finally, during the year, Beni Stabili renegotiated three existing funding sources totalling €116 million, and took out €60 million in new bank borrowings. 3.2.2.4. Financial counterparty risk ww Service Sector: In May 2014, Foncière des Murs took out €208.6 million in loans backed by a diversified asset portfolio mainly comprised of hotel assets, to: Given Foncière des Regions’ contractual relationships with its financial partners, the company is exposed to counterparty risk. If one of its partners is not in a position to honour their undertakings, the group’s net income could suffer adverse impacts. ww refinance the balance of mortgage loans set up in 2007 ww refinance the €60.2 million mortgage loan taken out in 2013 to optimise the financial conditions of the facility. This risk primarily involves the hedging instruments entered into by the group and where default of the counterparty could result in the need to replace a hedging transaction at the current market rate. In December 2014, Foncière des Murs added another two years to the maturity of its covered bond backed by hotel assets. The bond now matures on 16 November 2021, with a coupon of 2.7540% from 16 February 2015 (initial coupon: 3.682%). The counterparty risk is limited by the fact that Foncière des Régions is a borrower, from a structural standpoint. The risk is therefore mainly restricted to the investments made by the group, and to its counterparties in derivative product transactions. The company continually monitors its exposure to financial counterparty risk. The company’s policy is to deal only with top-tier counterparties, while diversifying its financial partners and its sources of funding. Foncière des Murs also raised €35 million in new mortgage loans for its acquisitions, including that of the NH Amsterdam Centre hotel (Netherlands) for €27 million. ww Germany Residential: Immeo raised €68 million in new financing for four- and fiveyear maturities, which are to be used to finance the acquisition of residential portfolios in Berlin, Dresden and Leipzig. 3.2.2.5. Lease counterparty risk In October 2014, Immeo also took out mortgage acquisition loans totalling €145 million with a ten-year maturity, backed by an asset portfolio consisting of 3,500 residential units in Berlin and Dresden. The rental income of Foncière des Régions is subject to a certain degree of concentration, to the extent that the principal tenants (Orange, Telecom Italia, Suez Environnement, EDF, Accor, and Korian) generate the main part of the annual rental income. ww France Residential: Foncière Développement Logements refinanced almost all of its French debt through a five-year €350 million loan signed in mid-January 2014. This loan will refinance the balance of the historical debt, all of the debt taken out at the end of 2012 (both in order to improve financial conditions and lengthen the maturity), whilst gaining some room to manoeuvre in support of new acquisitions. Foncière des Régions does not believe it is significantly exposed to the risk of insolvency, since its tenants are selected based on their creditworthiness and the economic prospects of their market segments. The operational and financial performance of the largest tenants is monitored regularly. In addition, tenants grant the group financial guarantees when leases are signed. The group has not recorded any significant overdue payments. Foncière des Régions 292 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.2.6. Risks related to changes in the value of the portfolio 3.2.2.8. Risks related to changes in the value of shares and bonds Changes in fair value of real estate investments are accounted for in the income statement. Changes in property values can thus have a material impact on the operating performance of the group. The group is exposed to risks for two classes of shares (see Note 3.2.6.2). This primarily concerns listed securities in companies consolidated using the equity method, which are valued according to their value in use. Value in use is determined based on independent assessments of real estate assets and financial instruments and there is no Goodwill attached to these companies. In addition, part of the company’s operating income is generated by sales plan, the income from which is equally dependent on real estate property values and on the volume of possible transactions. In addition, Foncière des Régions and Beni Stabili issued bonds (ORNANE) valued at their fair value in the income statement at each closing. The fair value corresponds to the average monthly bond price, which exposes the group to fluctuations in the value of the bonds. The specific features of the ORNANE are described in Note 3.2.6.11.2. Rentals and real estate property values are cyclical in nature, the duration of the cycles being variable but generally long-term. Different national markets have differing cycles that vary from each other in relation to specific economic and market conditions. Within each national market, prices also follow the cycle in different ways and with varying degrees of intensity, depending on the location and category of the assets. 3.2.2.9. Tax environment The macroeconomic factors that have the greatest influence on real estate property values and determine the various cyclical trends include the following: 3.2.2.9.1. Changes in the French tax environment The tax environment has been subjected to changes that may affect the group’s tax situation: ww interest rates ww liquidity on the market and the availability of profitable alternative investments ww creation of a new 3% tax on dividend distributions (limited to the portion that exceeds the legal mandatory distribution), which has been applicable to SIIC companies since 2013 ww economic growth. Low interest rates, abundant liquidity on the market and a lack of profitable alternative investments generally lead to an increase in real estate property values. ww posting deficits is limited to 50% of the profit made. In view of the tax scheme in use by most of the group’s companies, the impact is limited to the activities of the Car Parks segment Economic growth generally increases demand for leased space and paves the way for rent levels to rise, particularly in the office sector. These two consequences lead to an increase in the price of real estate assets. Nevertheless, in the medium term, economic growth generally leads to an increase in inflation and then an increase in interest rates, expanding the availability of profitable alternative investments. Such factors exert downward pressure on real estate values. ww the 15% deduction for net interest expenses was not allowed for 2013 and it was increased to 25% starting in 2014 The investment policy of Foncière des Régions is to minimise the impact of various stages of the cycle by choosing investments that: 3.2.2.9.2. Changes in the Italian tax environment ww progressive increase of the Corporate Value Added Tax (CVAE). There are also changes in the area of social charges, including increased contributions for bonus shares granted to employees and incentive pay. The Italian tax environment was impacted by the following changes: ww are comprised of long-term leases and quality tenants, mitigating the impact of the reduction in market rental income and the resulting decline in real estate prices ww modification of the Italian SIIQ tax regime following the publication of Law Decree No. 133/2014 (see Note 3.2.1.6.15) ww creation of a new IMU local tax in 2012 equivalent to a real estate tax ww are located in major city centres ww have low vacancy rates, in order to avoid the risk of having to re-let vacant space in an environment where demand may be limited. ww new calculation rules for municipal property taxes, with the introduction of the tax for municipal services (TASI). 3.2.2.7. Exchange rate risk The company operates in the euro zone. It is therefore not exposed to exchange rate risk. Foncière des Régions 293 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.2.9.3. Changes in the German tax environment SNC Otello underwent an accounting audit for the 2011, 2012 and 2013 fiscal years, which resulted in a reassessment proposal for the CVAE in the amount of €0.5 million. This proposed reassessment is being challenged in its entirety. It is currently being contested via the various administrative review procedures and, based on the analysis of the company’s tax consultants, the proposed reassessment was not provisioned as at 31 December 2014. The group has not observed any significant change in the German tax environment. 3.2.2.9.4. Tax risk Given the ongoing changes to tax legislation, the group is likely to be subject to reassessment proposals from the Tax Administration. If an adjustment presents a risk of reassessment in the opinion of our Advisors, a provision is made at that point. The list of the main ongoing proceedings includes the following: ww Urbis Park tax inspection Urbis Park underwent a tax inspection for the 2008, 2009 and 2010 fiscal years. A tax reassessment proposal for 2008, which had no impact on income tax due, was received in December 2011. As part of the administrative reviews, a departmental contact person rejected the Urbis Park argument. The matter was referred to the Commission for direct and revenue tax and it declared that it did not have jurisdiction over the matter. A claim against it is in progress. ww Foncière des Régions tax inspection Foncière des Régions underwent a tax inspection for the 2007, 2008, 2009 and 2010 fiscal years. A tax reassessment proposal was submitted in December 2012 that may result in a tax adjustment on wages and a reduction of unadjusted reportable tax loss carry forwards in the amount of €14 million. The proposed adjustment was contested and the inspection was closed in July 2014 with a withdrawal of the tax adjustment on salaries and a €9 million reduction in tax losses on a total of €240 million at 31 December 2013. The provision of €155,000 accounted for at 31 December 2012 for the tax risk on salaries was reversed. ww Tax inspection of the Germany Residential segment Immeo and all of its subsidiaries underwent a tax inspection for the 2008, 2009 and 2010 fiscal years. A provision of €1.35 million was booked at 31 December 2014 for the three fiscal years. ww Tax inspection of France Residential segment In June 2014, FEL received a notice of accounting audit pertaining to the 2011, 2012 and 2013 fiscal years. The inspection is ongoing. ww Foncière Europe Logistique tax inspection In June 2014, FEL received a notice of accounting audit pertaining to the 2012 and 2013 fiscal years. The inspection is ongoing. ww Comit Fund tax dispute: Beni Stabili On 17 April 2012, following a court decision, the Italian Tax Administration refunded the debt borne by Beni Stabili for the Comit Fund dispute (principal: €58.2 million and interest: €2.3 million) In April 2012, the Tax Administration appealed this decision. No provision was recorded against this, based on the advice of the company’s tax consultants. There were no new developments on this issue at 31 December 2014. A tax reassessment proposal on the corporate tax was received by FEL amounting to €3.2 million for the 2007 and 2008 fiscal years, followed by a tax collection procedure and a payment following the various administrative reviews during the first half of 2012. FEL nonetheless is contesting this reassessment and has filed a claim against it. The tax administration rejected the claim on the merits but nevertheless granted an abatement of €2.4 million in principal and interest to take into account the fact that the financial consequences were spread out over 2008, 2009, 2010 and 2011. Since 2009 was required, a final abatement of €0.8 million was obtained. The case was referred to the Administrative Court and the proceeding is under way. In Italy, a tax inspection began during the first half of 2013 on Beni Stabili (2009, 2010 and 2011 fiscal years). The administration issued a tax adjustment of €3.7 million for the 2009 and 2010 fiscal years, which the company disputed in its entirety. As at 31 December 2014, the tax administration had started the verifications concerning the IRES, IRAP and VAT for 2011. An accounting audit pertaining to the 2010 and 2011 fiscal years took place during the 2013 fiscal year, which ended in a reassessment proposal on the corporate tax for €3.5 million on the same grounds as the previous adjustment proposal for 2007 and 2008. This notification was followed by a tax collection procedure and payment. FEL is contesting this notification nonetheless, and a claim against it is in progress. Moreover, the tax inspection for the 2008 fiscal year, for which the tax administration had proposed a reassessment on the non-deductibility of interest payments on mortgage loans, was reviewed by the administration and the amount reduced to €3.7 million. However, Beni Stabili and its advisors believe that this reassessment is unfounded and the company is contesting the entire adjustment. ww Foncière des Murs tax inspection Foncière des Murs underwent an accounting audit for the 2010 and 2011 fiscal years, which resulted in a reassessment proposal for the CVAE in the amount of €2.4 million. This proposed reassessment is being challenged in its entirety. It is currently being contested via the various administrative review procedures and, based on the analysis of the company’s tax consultants, the proposed reassessment was not provisioned as at 31 December 2014. As at 31 December 2014, the proceeding had not progressed. 3.2.2.9.5. Deferred tax liabilities Most of the group’s real estate companies have opted for the SIIC regime in France and the SIIQ regime in Italy. The impact of deferred tax liabilities is thus limited, except for certain business activities, mainly in Belgium, and the Residential segment in Germany. ww Tax inspection of SNC Otello (a subsidiary of Foncière des Murs) Foncière des Régions 294 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.3. Scope of consolidation 3.2.3.1. Newly consolidated entities 3.2.3.3. Internal restructuring 3.2.3.1.1. France Offices segment 3.2.3.3.1. France Offices segment Creation of SCI Charenton, a fully consolidated company, 100% controlled. Full transfer of the portfolio of the SCI of 32/50 rue Parmentier to Foncière des Régions. This company owns three properties leased to Natixis. Full transfer of the portfolio of the SCI of 1 rue de Verdun to SAS Blériot. 3.2.3.1.2. Service Sector segment Full transfer of the portfolio of SCI Tostel to Foncière des Régions. Creation of the company “NH Amsterdam Center Hôtel HLD” to acquire the shares of Stadhouderskade Amsterdam BV. Full transfer of the portfolio of the SARL Foncière Electimmo to Foncière des Régions. This company is fully consolidated and 100% controlled. 3.2.3.3.2. Service Sector segment Staddhouderskade Amsterdam BV, fully consolidated and 100% controlled. Simplified mergers of Castel Immo, Pontlieue Tironneau and SCI De La Noue with Foncière des Murs SCA on 26 May 2014 with retroactive effect as of 1 January 2014. This company has an NH hotel located in Amsterdam’s city centre. Full transfer of the portfolio of the companies Nouvelle Lacépède, Nouvelle Victor Hugo, 105-107 avenue Victor Hugo and Kérinou Immobilier to Foncière des Murs. 3.2.3.1.3. Germany Residential segment Immeo Berlin C GmbH: Fully consolidated, 94.65% controlled. 3.2.3.3.3. France Residential segment Immeo Dansk Holdings Aps: Fully consolidated, 99.73% controlled. Full transfer of the portfolio of FDL Deutschland to Foncière Développement Logements. Immeo Dansk L Aps: Fully consolidated, 94.65% controlled. Full transfer of the portfolio of IMEFA 59 to Foncière Développement Logements. Solis GmbH: Fully consolidated, 99.73% controlled. Jupp Grundstückgesellschaft mbH: Fully consolidated, 99.73% controlled. Rheinweg Grundstückgesellschaft mbH: Fully consolidated, 99.73% controlled. 3.2.3.4. Change in holding and/or in consolidation method Immeo Berlin C GmbH acquired a portfolio of assets in Berlin. 3.2.3.4.1. Germany Residential segment Immeo Dansk Holdings Aps and Immeo Dansk L. Aps were created for the acquisition of a portfolio of assets in Berlin and Dresden. The sale of Foncière Développement Logements’ investment in Immeo to its shareholders had an impact on the Residential holding in Germany. Foncière Développement Logements sold its investment in the Germany Residential segment to its shareholders (excluding Macif and the free float representing 2.5% of FDL’s share capital). Foncière des Régions directly holds 60.9% of the Germany Residential segment, compared with an indirect holding of 59.6% before the transaction. 3.2.3.2. Deconsolidations 3.2.3.2.1. Logistics segment Disposal of Garonor France 3, Melun 7 and nine German companies on 2 June 2014. The company which holds the Germany Residential segment is Immeo Rewo Holding GmbH, a fully-owned subsidiary of Foncière des Régions. 3.2.3.2.2. Germany Residential segment Creation of Duha via a partial transfer of assets. Disposal of 95% of Duha shares. At the time of its disposal, this company had an asset portfolio of €96 million. Foncière des Régions 295 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.3.4.2. Share buyback by Foncière Développement Logements and cancellation of shares – Impact on the Foncière Développement Logements holding Following Foncière Développement Logements’ cancellation of its own shares in September 2014, Foncière des Régions increased its holding to 61.3% (versus 59.7% at 31 December 2013). 3.2.3.4.3. Beni Stabili capital increase – Impact on the Beni Stabili holding On 27 October 2014, Foncière des Régions participated in the Beni Stabili capital increase to the tune of €51.7 million (out of €150 million). This had a dilutive effect on its holding (48.3% versus 50.9% prior to the transaction) due to the participation of the holders of ORNANE convertible bonds. 3.2.3.4.4. Foncière des Murs capital increase – Impact on the Foncière des Murs holding On 21 November 2014, Foncière des Régions participated in the Foncière des Murs capital increase to the tune of €58.4 million (out of €197.6 million), generating a slight increase in its holding, which now stands at 28.5% versus 28.3% before the transaction. 3.2.3.5. List of consolidated companies 86 companies in the France Offices segment Country Consolidation method in 2014 Foncière des Régions France Parent company GFR Ravinelle France SAS Blériot SCI du 288 rue Duguesclin Percentage held in 2014 Percentage held in 2013 FC 100.00 100.00 France FC 100.00 100.00 France FC 100.00 100.00 SCI du 15 rue des Cuirassiers France FC 100.00 100.00 SCI du 1 rue de Verdun France Merger - 100.00 SCI Fédérimmo France FC 60.00 60.00 Iméfa 127 France FC 100.00 100.00 SCI Atlantis France FC 100.00 100.00 EURL Fédération France FC 100.00 100.00 SCI Raphaël France FC 100.00 99.99 FDR Property SNC France FC 100.00 100.00 FDR Développement France FC 100.00 100.00 GFR Services France FC 100.00 100.00 SARL Foncière Electimmo France Merger - 100.00 SARL Foncière Margaux France FC 100.00 100.00 Foncière SGP France FC 100.00 100.00 SCI du 32 avenue P Grenier France FC 100.00 100.00 SCI du 57/59 rue du CDT R Mouchotte France FC 100.00 100.00 SCI du 40 rue JJ Rousseau France FC 100.00 100.00 SCI du 3 place A Chaussy France FC 100.00 100.00 SARL BGA Transactions France FC 100.00 100.00 SCI du 9 rue des Cuirassiers France FC 100.00 100.00 SCI 35/37 rue Louis Guérin France FC 100.00 100.00 SARL du 25-27 quai Félix Faure France FC 100.00 100.00 SCI du 10B et 11A 13 allée des Tanneurs France FC 100.00 100.00 SCI du 125 avenue du Brancolar France FC 100.00 100.00 SCI du 11 avenue de Sully France FC 100.00 100.00 SCI du 8 rue M. Paul France FC 100.00 100.00 SCI du 1 rue de Châteaudun France FC 100.00 100.00 SCI du 1630 Avenue De La Croix Rouge France FC 100.00 100.00 Foncière des Régions 296 Reference Document 2014 - Financial information Notes to the consolidated financial statements 86 companies in the France Offices segment Country Consolidation method in 2014 SCI du 2 rue de Verdun France FC 100.00 100.00 SCI du 682 cours de la Libération France FC 100.00 100.00 SARI du 106-110 rue des Troënes France FC 100.00 100.00 SARL du 11 rue Victor Leroy France FC 100.00 100.00 SCI du 2 rue de L’Ill France FC 100.00 100.00 SCI du 20 avenue Victor Hugo France FC 100.00 100.00 SARL du 2 rue Saint-Charles France FC 100.00 100.00 SNC Télimob Paris France FC 100.00 100.00 SNC Télimob Nord France FC 100.00 100.00 SNC Télimob Rhône Alpes France FC 100.00 100.00 SNC Télimob Sud Ouest France FC 100.00 100.00 SNC Télimob Est France FC 100.00 100.00 SNC Télimob Paca France FC 100.00 100.00 SNC Télimob Ouest France FC 100.00 100.00 SARL Télimob Paris France FC 100.00 100.00 SNC Latécoère France EM/JV 50.10 50.10 Palmer Transactions SNC France FC 100.00 100.00 Foncière Palmer SNC France FC 100.00 100.00 Palmer Plage SNC France FC 100.00 100.00 SCI Palmer Montpellier France FC 100.00 100.00 SCI Dual Center France FC 100.00 100.00 SAS Cœur d’Orly Promotion France EM/EA 50.00 50.00 SCI 32/50 rue des Parmentiers France Merger - 100.00 France Offices segment companies Country Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 FDR2 France FC 100.00 100.00 SCI bureaux Cœur d’Orly France EM/EA 25.00 25.00 SCI Holding Bureaux Cœur d’Orly France EM/EA 50.00 50.00 SNC Commerces Cœur d’Orly France EM/EA 25.00 25.00 SNC Holding Commerces Cœur d’Orly France EM/EA 50.00 50.00 FDR4 France FC 75.00 75.00 FDR5 France FC 100.00 100.00 FDR6 France FC 100.00 100.00 SCI Euromarseille 1 France EM/JV 50.00 50.00 SCI Euromarseille 2 France EM/JV 50.00 50.00 SCI Euromarseille BI France EM/JV 50.00 50.00 SCI Euromarseille BH France EM/JV 50.00 50.00 SCI Euromarseille BL France EM/JV 50.00 50.00 SCI Euromarseille M France EM/JV 50.00 50.00 SCI Euromarseille PK France EM/JV 50.00 50.00 SCI Euromarseille Invest France EM/JV 50.00 50.00 SCI Euromarseille H France EM/JV 50.00 50.00 SCI Euromarseille BH2 France EM/JV 50.00 50.00 FDR 7 France FC 100.00 100.00 SNC Sup 3 France FC 100.00 100.00 Technical France FC 100.00 100.00 GFR Kléber France FC 100.00 100.00 Foncière des Régions 297 Reference Document 2014 Percentage held in 2014 Percentage held in 2013 3 3 Financial information Notes to the consolidated financial statements Percentage held in 2014 Percentage held in 2013 Merger - 100.00 FC 100.00 100.00 France FC 100.00 100.00 Le Ponant 1986 France FC 100.00 100.00 Ruhl Côte D’Azur France FC 100.00 100.00 SCI Pompidou France FC 100.00 100.00 OPCI Office CB21 France FC 75.00 75.00 SCI 11 place de l’Europe France FC 50.10 50.10 EURL Languedoc 34 France FC 100.00 100.00 SCI Lenovilla France EM/JV 50.09 50.09 SNC Lenopromo France FC 100.00 100.00 SCI Latécoère 2 France FC 100.00 100.00 SCI Meudon Saulnier France FC 100.00 100.00 SCI Charenton France FC 100.00 - 22 companies in the Italy Offices segment Country Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 Beni Stabili S.p.A. SIIQ (parent company) 100% controlled Italy FC 48.33 50.88 NPLs RE_Solutions Srl Italy EM 24.17 25.44 RGD Ferrara Srl Italy EM 24.17 24.17 Beni Stabili 7 S.p.A. Italy FC 48.33 50.88 Imser S.R.L. Italy FC 29.00 30.53 Imser 60 S.I.N.Q. S.P.A. Italy FC 48.33 49.76 Beni Stabili Development S.p.A. Italy FC 48.33 50.88 B.S. Actività commercial 1 S.r.L. Italy FC 48.33 50.88 B.S. Actività commercial 2 S.r.L. Italy FC 48.33 50.88 B.S. Actività commercial 3 S.r.L. Italy FC 48.33 50.88 B.S. Immobiliare 8 S.p.A. Italy FC 48.33 50.88 B.S. Immobiliare 9 S.p.A. Italy FC 48.33 50.88 RGD Gestioni S.r.L Italy FC 48.33 50.88 Beni Stabili Gestioni S.p.A. S.G.R. S.G.R. Italy FC 36.25 38.16 Beni Stabili Retail S.r.l. Italy FC 26.58 28.00 Beni Stabili Real Estate Advisory S.r.L. Italy FC 48.33 50.88 Beni Stabili Development Milano Greenway S.p.A. Italy FC 38.67 40.70 Sviluppo Ripamonti S.r.L. Italy FC 48.33 50.88 B.S. Immobiliare 5 S.r.L. Italy FC 48.33 50.88 B.S. Engineering S.r.l. Italy FC 48.33 50.88 Imser Securitisation S.r.L. Italy FC 48.33 50.88 Imser Securitisation 2 S.r.L. Italy FC 48.33 50.88 France Offices segment companies Country Consolidation method in 2014 Tostel France Oméga A France Oméga C Foncière des Régions 298 Reference Document 2014 Financial information Notes to the consolidated financial statements Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 France FC 28.47 28.30 France FC 28.47 28.30 FDM Gestion France FC 100 100.00 SCI Le Chesnay France FC 28.05 27.89 SCI Marq en Barœul France FC 28.37 28.21 SCI Kerinou Immobilier France Merger - 28.30 SCI Les Mimosas France FC 28.47 28.30 Foncière Otello France FC 28.47 28.30 SCI Pontlieue Tironneau France Merged - 28.30 SCI Castel Immo France Merged - 28.30 SCI Actifoncier France FC 28.47 28.30 SCI De La Noue France Merged - 28.30 SNC Hôtel René Clair France FC 28.47 28.30 Foncière Manon France FC 28.47 28.30 Foncière Ulysse France FC 28.47 28.30 Ulysse Belgique Belgium FC 28.47 28.30 Ulysse Trefonds Belgium FC 28.47 28.30 Foncière No Bruxelles Grand-Place Belgium FC 28.47 28.30 Foncière No Bruxelles Aéroport Belgium FC 28.47 28.30 Foncière No Bruges Centre Belgium FC 28.47 28.30 Foncière Gand Centre Belgium FC 28.47 28.30 Foncière Gand Opéra Belgium FC 28.47 28.30 Foncière IB Bruxelles Grand-Place Belgium FC 28.47 28.30 Foncière IB Bruxelles Aéroport Belgium FC 28.47 28.30 Foncière IB Bruges Centre Belgium FC 28.47 28.30 Foncière Antwerp Centre Belgium FC 28.47 28.30 Foncière Bruxelles Expo Atomium Belgium FC 28.47 28.30 Foncière IGK Belgium FC 28.47 28.30 Murdelux SARL Luxembourg FC 28.47 28.30 Portmurs Portugal FC 28.47 28.30 Beni Stabili Hôtel Luxembourg FC 32.44 32.81 Nouvelle Lacépède France Merger - 28.30 SCI Victor Hugo France Merger - 28.30 SCI Nouvelle Victor Hugo France Merger - 28.30 Sunparks de Haan Belgium FC 28.47 28.30 Sunparks Oostduinkerke Belgium FC 28.47 28.30 Foncière Vielsam Belgium FC 28.47 28.30 Sunparks Trefonds Belgium FC 28.47 28.30 Foncière Kempense Meren Belgium FC 28.47 28.30 FDM Gestion Immobilière France FC 28.47 28.30 Iris Holding France France EM/EA 5.66 5.63 OPCI Iris Invest. 2010 France EM/EA 5.66 5.63 Foncière Iris SAS France EM/EA 5.66 5.63 Sables d’Olonne SAS France EM/EA 5.66 5.63 Iris Investor Holding GmbH Germany EM/EA 5.66 5.63 69 Service Sector companies Country SCA Foncière des Murs (parent company) 100% controlled SARL Loire Foncière des Régions 299 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 Germany EM/EA 2.85 2.82 Germany EM/EA 5.66 5.63 Iris Bochum & Essen GmbH Germany EM/EA 5.66 5.63 Iris Frankfurt GmbH Germany EM/EA 5.66 5.63 Iris Verwaltungs GmbH & co KG Germany EM/EA 5.66 5.63 Iris Nurnberg GmbH Germany EM/EA 5.66 5.63 Iris Stuttgart GmbH Germany EM/EA 5.66 5.63 Narcisse Holding Belgique Belgium EM/EA 5.66 5.63 Foncière B3 Hôtel Invest France FC 14.29 14.21 B&B Invest Lux 4 Germany FC 28.47 28.30 NH Amsterdam Center Hötel HLD Netherlands FC 28.47 - Stadhouderskade Amsterdam BV Netherlands FC 28.47 - Foncière Bruxelles Tour Noire Belgium EM/EA 5.66 5.63 Foncière Louvain Belgium EM/EA 5.66 5.63 Foncière Malines Belgium EM/EA 5.66 5.63 Foncière Bruxelles Centre Gare Belgium EM/EA 5.66 5.63 Foncière Namur Belgium EM/EA 5.66 5.63 Tulipe Holding Belgique Belgium EM/EA 5.66 5.63 Iris Tréfonds Belgium EM/EA 5.66 5.63 Foncière Louvain Centre Belgium EM/EA 5.66 5.63 Foncière Liège Belgium EM/EA 5.66 5.63 Foncière Bruxelles Aéroport Belgium EM/EA 5.66 5.63 Foncière Bruxelles Sud Belgium EM/EA 5.66 5.63 Foncière Brugge Station Belgium EM/EA 5.66 5.63 B&B Lux 1 Germany FC 28.46 28.30 B&B Lux 2 Germany FC 28.46 28.30 B&B Lux 3 Germany FC 28.46 28.30 OPCI Camp Invest France EM/EA 5.66 5.63 SAS Campeli France EM/EA 5.66 5.63 SCI Dahlia France EM/EA 5.69 5.66 Foncière B2 Hôtel Invest France FC 14.29 14.21 OPCI B2 Hôtel Invest France FC 14.29 14.21 6 companies in the Logistics segment Country Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 FEL (parent company) 100% controlled France FC 100.00 100.00 Immobilière Pantin Bobigny (IPB) France FC 100.00 100.00 SCI Bollène logistique France FC 100.00 100.00 SCI Immopora France FC 100.00 100.00 Garonor France III France Sold - 100.00 SNC Garonor Melun 7 France Sold - 100.00 SCI Bollène Logistique T4 France FC 100.00 100.00 FEL III Holding GmbH Germany Sold - 100.00 FEL III Bingen GmbH Germany Sold - 100.00 FEL III Kassel GmbH Germany Sold - 100.00 GSS III Hoking GmbH & CO Verwaltungs KG Germany FC 94.87 94.87 CCP Duisberg GP SARL & Co KG Luxembourg Sold - 100.00 69 Service Sector companies Country Iris General partner GmbH Iris Berlin GmbH Foncière des Régions 300 Reference Document 2014 Financial information Notes to the consolidated financial statements Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 Luxembourg Sold - 100.00 FEL Partners (Duisberg GP) Luxembourg Sold - 100.00 FEL Partners SNFH Luxembourg Sold - 100.00 FEL Partners Wuppertal Luxembourg Sold - 100.00 FEL Partners SN Luxembourg Sold - 100.00 13 companies in the Car Parks segment Country Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 SAS Urbis Park (parent company) 100% controlled France FC 59.50 59.50 Urbis Park Services France FC 59.50 59.50 SNC Comédie France FC 59.54 59.54 SNC Gare France FC 30.23 30.23 SCI Esplanade Belvédère II France FC 100.00 100.00 SC Gespar France FC 50.00 50.00 BP 3000 France FC 59.50 59.50 Trinité France FC 59.50 59.50 Société du Parking du boulevard de la Reine France FC 59.50 29.16 SEVM France FC 59.50 59.50 SAS SPHVA France FC 59.50 59.50 Médipark France FC 59.50 59.50 Laval Urbis Park France FC 59.50 59.50 40 companies in the Germany Residential segment Country Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 Immeo AG (parent company) 99.74% controlled Germany FC 60.91 59.58 Immeo Wohnen Verwaltungs GmbH Germany FC 60.91 59.58 Immeo Grundstücks GmbH Germany FC 60.91 59.58 Immeo Grundvermögen GmbH Germany FC 60.91 59.58 Immeo Wohnen Service GmbH Germany FC 60.91 59.58 Immeo AG & CO KG 1 Germany FC 60.91 59.58 Immeo AG & CO KG 2 Germany FC 60.91 59.58 Immeo AG & CO KG 3 Germany FC 60.91 59.58 Immeo AG & CO KG 4 Germany FC 60.91 59.58 FDL Wohnen GmbH Germany FC 60.91 59.58 RRR Wohnen GmbH Germany FC 57.25 56.00 Immeo Gewo Datteln GmbH Germany FC 60.69 59.36 Immeo Stadthaus GmbH Germany FC 60.69 59.36 Immeo Stadtwohnung GmbH Germany FC 60.91 59.58 Immeo Wohnbau GmbH Germany FC 60.72 59.39 Immeo Wohnungsgesellechaft GmbH Dümpten Germany FC 60.72 59.39 Immobilien GmbH Germany FC 60.91 59.58 Immeo Lux Germany FC 60.72 59.39 Berolinum 1 Germany FC 60.72 59.39 Berolinum 2 Germany FC 60.72 59.39 Berolinum 3 Germany FC 60.72 59.39 FDR Remscheid Germany FC 60.72 59.39 Valore 4 Germany FC 60.71 59.39 6 companies in the Logistics segment Country FEL Partners Duisberg Foncière des Régions 301 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements Consolidation method in 2014 Percentage held in 2014 Percentage held in 2013 Germany FC 60.71 59.39 Immeo AG&Co Residential KG Germany FC 60.91 59.58 Immeo Berlin 67 GmbH Germany FC 57.25 56.00 Immeo Berlin 78 GmbH Germany FC 57.25 56.00 Immeo Berlin 79 GmbH Germany FC 57.25 56.00 Immeo Dresden GmbH Germany FC 57.80 56.53 Immeo Berlin I SARL Germany FC 57.80 56.54 Immeo Berlin V SARL Germany FC 57.50 56.24 Immeo Berlin C GmbH Germany FC 57.80 - Immeo Dansk Holding Aps Denmark FC 60.91 - Immeo Dansk L Aps Denmark FC 57.80 - Solis GmbH Germany FC 60.91 - Jupp Grundstückgesellschaft mbH Germany FC 60.91 - Rheinweg Grundstückgesellschaft mbH Germany FC 60.91 - Immeo Rewo Holding GmbH Germany FC 100.00 59.58 FDR Zehnte GMBH Germany FC 98.02 59.73 IWKG Germany FC 93.03 56.69 21 companies in the France Residential segment Country FC Percentage held in 2014 Percentage held in 2013 FDL (parent company) 100% controlled France FC 61.27 59.73 Iméfa 97 France FC 61.27 59.73 Bagatelle Courbevoie France FC 61.27 59.73 Iméfa 59 France Merger - 59.73 Iméfa 93 France FC 61.27 59.73 Iméfa 88 France FC 61.27 59.73 Iméfa 46 France FC 61.27 59.73 Iméfa 95 France FC 61.27 59.73 Suresnes 2 France FC 61.27 59.73 25 rue Abbé Carton France FC 61.27 59.73 40 rue Abbé Groult France FC 61.27 59.73 24-26 rue Duranton France FC 61.27 59.73 25 rue Gutenberg France FC 61.27 59.73 Montrouge 3 France FC 61.27 59.73 SCI Le Chesnay 1 France FC 61.27 59.73 Rueil 1 France FC 61.27 59.73 Saint-Maurice 2 France FC 61.27 59.73 FDL Deutschland France Merger - 59.73 SCI Saint-Jacques France FC 61.27 59.73 SCI Dulud France FC 61.27 59.73 Immeo Finance Lux SARL Luxembourg FC 61.27 59.73 Immeo Finance Lux 2 SARL Luxembourg FC 61.27 59.73 Batisica Luxembourg FC 61.27 59.73 40 companies in the Germany Residential segment Country Valore 6 FC: Full Consolidation (210 companies). EM/EA: Equity Method – Associates. EM/JV: Equity Method – Joint Ventures. NI: Not Included. PC: Proportionate Consolidation. Foncière des Régions 302 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.4. Evaluation of control 3.2.4.1. Foncière des Murs (consolidated structured entity) 3.2.4.3. SCI 11 place de l’Europe (consolidated structured entity) Foncière des Murs SCA, in which Foncière des Régions held a 28.5% stake as at 31 December 2014, is a fully consolidated entity. As at 31 December 2014, SCI 11 place de l’Europe was 50.1% owned by Foncière des Régions and fully consolidated. The partnership with the Crédit Agricole Assurances group (49.9%) was set up on 18 December 2013 as part of the Eiffage Campus project. Given the governance rules which give Foncière des Régions the powers to influence the return on assets, the company is fully consolidated. The limited partner FDM Gestion which manages Foncière des Murs SCA is fully-owned by Foncière des Régions. The Articles of Association of Foncière des Murs give the manager the power to set the company’s financial and operating policies. As a result, Foncière des Régions controls Foncière des Murs SCA and the subsidiaries that are themselves controlled by Foncière des Murs. 3.2.4.4. Lénovilla (joint venture) 3.2.4.2. Beni Stabili (consolidated structured entity) As at 31 December 2014, Lénovilla was 50.09% owned by Foncière des Régions and consolidated via the equity method. The partnership with the Crédit Agricole Assurances group (49.91%) was set up in January 2013 as part of the New Vélizy project (Thalès Campus). The shareholder agreement stipulates that decisions must be made unanimously. The parties which exercise joint control have rights to the net assets of the joint venture. The partnership meets the joint venture criteria and the undertaking is consolidated via the equity method. In October 2014, Beni Stabili carried out a capital increase, which had a dilutive effect on the group’s holding. At 31 December 2014, Beni Stabili was 48.3% held, compared with 50.9% at 31 December 2013. It is fully consolidated. The Board of Directors remained unchanged after the capital increase. Control is established when Foncière des Régions directly holds more than 40% of the voting rights, provided no other single shareholder holds more voting rights than Foncière des Régions. In effect, given the spread of the other shareholders, the conditions for control of the entity are met. Foncière des Régions 3.2.4.5. Latécoère (joint venture) At 31 December 2014, Latécoère was 50.10% owned by Foncière des Régions and consolidated via the equity method. The partnership with the Crédit Agricole Assurances group (49.90%) was set up in October 2012 as part of the Dassault Systèmes Campus project. The shareholder agreement stipulates that decisions must be made unanimously. The parties which exercise joint control have rights to the net assets of the joint venture. The partnership meets the joint venture criteria and the undertaking is consolidated via the equity method. 303 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.5. Significant events during the period 3.2.5.2.2.Refinancing As a reminder, the 2014 income statement reflects the impact of France and Germany Residential operations over a full year, compared with only five months in 2013 (switch from equity accounting to full consolidation in August 2013). As part of its finance diversification policy, in January, Beni Stabili issued a €350 million private placement with a 4.125% interest rate maturing in four years. In accordance with the application of IFRS 5, the Logistics business activity, which is being sold, is presented in the financial statements as discontinued operations. In March 2014, it issued a new €250 million private placement with a 3.5% interest rate maturing in five years. These two bond issues allowed the company to pay off existing debt, i.e. €344.2 million. All of the recorded assets and liabilities on the balance sheet as at 31 December 2014 are presented on a single “discontinued operations” line in both assets and liabilities. This reclassification is also carried out on the income statement, for which all of the items from the Logistics business activity is presented in “Net income from discontinued operations”. On 18 September 2014, Beni Stabili proceeded with the refinancing of the IMSER portfolio (leased to Telecom Italia) by taking out two variable-rate borrowings (six-year mortgage loan of €300 million and two-year corporate loan of €200 million). The securitisation unwinding costs (termination costs concerning swaps, inflation swaps, fixed-rate liabilities and penalties) amounted to €150 million. Apart from the changes in holdings and/or changes in consolidation methods mentioned in Section 3.2.3.4 above, the other significant events are as follows: 3.2.5.2.3. Change in Italian SIIQ regime 3.2.5.1. France Offices segment The implementation of the Decreto Legge 133/2014 in September 2014 brought about a modification of the Italian REIT regime. The main change concerns the extension of capital gains on the sale of assets by Italian public companies (SIIQs). In 2014, this change had a negative impact (-€61 million) on the income statement following the cancellation of previously recognised deferred tax assets. 3.2.5.1.1. Disposals and assets under protocol In 2014, Foncière des Régions sold 65 assets for a sale price of €248.7 million, including the assets of Lille Arcuriale (€41 million) and Paris Ségur (€38 million). As at 31 December 2014, assets under preliminary agreement amounted to €126.8 million. 3.2.5.3. Service Sector segment 3.2.5.1.2.Acquisitions Foncière des Régions purchased three assets in Charenton which are leased to Natixis for €161.8 million, including duties. 3.2.5.3.1. Disposals and assets under preliminary agreement 3.2.5.1.3.Refinancing Foncière des Murs disposed of 19 assets for €135 million in 2014. These disposals were made at a price similar to that booked in the financial statements at 31 December 2013, excluding disposal costs. In September, under its policy aimed at diversifying its sources of funding, Foncière des Régions issued seven-year bonds totalling €500 million with an interest rate of 1.75%. As at 31 December 2014, the company signed preliminary sales agreements totalling €7.7 million concerning two assets. 3.2.5.1.4. Assets under development 3.2.5.3.2.Acquisitions The Thalès Campus located in Vélizy was delivered during the year. This asset covering 45,000 m2 is held by Lenovilla, consolidated via the equity method. During the first half of the year, Foncière des Murs acquired three B&B hotels (Valenciennes, Salon de Provence and Euralille) for €11.4 million, The asset development programme continued in 2014, with over 20 projects in France. They are presented in Note 3.2.6.1.3 and detailed in the EPRA Reporting section. and in June 2014, it also acquired a Dutch company that has an NH Hotel located in Amsterdam’s city centre for €48.3 million. This transaction was handled as an asset deal.). 3.2.5.3.3. Debt refinancing 3.2.5.2. Italy Offices segment In May 2014, Foncière des Murs refinanced its existing debt through a five-year borrowing of €208 million. 3.2.5.2.1. Disposals and assets under protocol In 2014, the Italy Offices segment disposed of assets for a total sales price of €108 million, including “Via Fogazzaro” located in Milan for €61.5 million. In December 2014, Foncière des Murs added another two years to the maturity of its covered bond backed by hotel assets. The bond now matures on 16 November 2021, with a coupon set at 2.754% starting from 16 February 2015 (initial coupon: 3.682%). As at 31 December 2014, assets under preliminary agreement amounted to €4.7 million. Foncière des Régions It also took out a mortgage loan of €27.2 million in December 2014 to finance the acquisition of the NH Amsterdam centre hotel. 304 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.5.4. Germany Residential segment 3.2.5.5.2. Restructuring of holdings in the Germany Residential segment 3.2.5.4.1. Investment in a vehicle dedicated to the Germany Residential segment On 9 July 2014, Foncière Développement Logements disposed of the shares of its German subsidiary Immeo AG to its main shareholders (Foncière des Régions 59.7%, Crédit Agricole Assurances 15.1%, Cardif Assurance Vie 13.7% and Generali 8.9%) for up to their share of FDL’s capital. For Foncière des Régions, 2014 was marked by an increase in its exposure to the Germany Residential segment through its acquisition of a direct interest in the capital of Immeo AG alongside Predica, Generali Vie and Cardif Assurance Vie following the separation of Foncière Développement Logements’ France and Germany business activities. Batisica granted balance of sale financing for this disposal to the buyers. This financing was transferred to FDL through a distribution and reduction of the capital of Batisica and of FDL Deutschland. Furthermore, to support the development of Immeo AG in Germany, Foncière des Régions contributed €120 million to Immeo’s €200 million capital increase. This capital increase was carried out via Immeo ReWo Holding GmbH and IW FDL Beteiligungs GmBH. Under a public offer to buy back its own shares, Foncière Développement Logements repurchased 1,737,550 shares from non-participating shareholders for their cancellation. The Foncière des Régions group now holds 60.9% of the Germany Residential segment and 61.3% of the France Residential segment. 3.2.5.4.2. Asset disposals In 2014, Immeo AG sold €152 million worth of assets, either directly or via the disposal of interests in holding companies, mainly in North Rhine-Westphalia. 3.2.5.5.3.Refinancing In January 2014, Foncière Développement Logements refinanced the Stockholm 1 and 2 debt with outstanding capital of €279 million via a €350 million borrowing over a five-year period. 3.2.5.4.3.Acquisitions During the fiscal year, Immeo AG made €374 million in investments including costs and taxes. In line with the German portfolio geographical diversification strategy in Germany, these direct asset acquisitions and investments in company securities were carried out in the promising markets of Berlin, Dresden and Leipzig. 3.2.5.6. Car Parks segment 3.2.5.6.1. Asset disposals At the end of the year, two car parks located in Lyon Vaise and Trinité Paris were sold. The net book value of these car parks amounted to €24.8 million. 3.2.5.4.4. Financing and refinancing The acquisitions were partly financed through equity from the €200 million capital increase, and partly through bank borrowings amounting to €209 million. 3.2.5.7. Logistics segment 3.2.5.7.1. Asset and company disposals These borrowings were taken out with German banks under favourable financial conditions for average terms of nine years. In June 2014, Foncière Europe Logistique disposed of seven assets and 11 companies to the Blackstone group (Garonor France III, Melun 7 and 9 Palier Soviet companies). All together, the appraised value of these disposals totalled €473 million. 3.2.5.5. France Residential segment The disposal of the companies generated a positive impact of €27.9 million (the difference between the net sales price and the net assets sold). 3.2.5.5.1. Asset disposals In France, Foncière Développement Logements continued its sales plan and made disposals for a sales price of €96.3 million (net of costs). In addition to this transaction, the company disposed of three assets for €25.8 million. As at 31 December 2014, another asset is under preliminary sales agreement for €106.9 million. Foncière des Régions 305 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.6. Notes to the statement of financial position 3.2.6.1. Portfolio 3.2.6.1.1. Table of changes in the portfolio (€K) Goodwill Intangible fixed assets Gross amounts Amortisation Tangible fixed assets 31/12/2013 Change in scope and interest Increase/ rates Allocation 8,194 0 0 145,974 1 247,980 3 -102,006 -2 Disposal/ Recovery Change 31/12/2014 in fair before Discontinued value Transfers reclass. operations 31/12/2014 0 0 0 8,194 0 8,194 -7,012 -808 0 -1,454 136,701 0 136,701 3,687 -5,328 0 -1,456 244,886 0 244,886 -10,699 4,520 0 2 -108,185 0 -108,185 0 -24,152 0 -4,392 79,636 0 79,636 -3,131 -24,840(2) 0 632 68,916 0 68,916 108,172 8 Operating assets 96,255 0 Gross amounts 117,009 0 56 -34,686 0 615 82,994 0 82,994 Amortisation -20,754 0 -3,187 9,846 0 17 -14,078 0 -14,078 6,620 8 -1,163 720 0 881 7,066 0 7,066 Other tangible fixed assets Gross amounts Amortisation Fixed assets in progress Gross amounts Amortisation 17,383 82 589 85 0 -23 18,116 0 18,116 -10,763 -74 -1,752 635 0 904 -11,050 0 -11,050 5,297 0 4,294 -32 0 -5,905 3,654 0 3,654 5,297 0 4,294 -32 0 -5,905 3,654 0 3,654 0 0 0 0 0 0 0 0 0 Investment properties 14,297,538 331,286 556,577 -71,611 166,749 -745,248 14,535,291 0 14,535,291 Operating assets 13,826,291 331,286(1) 358,610 -71,611 161,839 -617,124 13,989,291 0 13,989,291 471,247 0 197,967 0 4,910 -128,124 546,000 0 546,000 Assets held for sale 1,196,495 - 382,221 8,819 -736,365 - 8,034 746,111 824,805 287,840 536,965 Assets held for sale (operating assets) 1,196,495 -382,221(1) 8,819 -736,365 - 8,034 746,111 824,805 287,840 536,965 558,384 -832,936 158,715 -4,983 15,584,627 287,840 15,296,787 Assets under development TOTAL (1) (2) 15,756,373 -50,926 Corresponds to the acquisition of the NH at Amsterdam centre hotel for €48.3 million, the acquisition of residential assets in Germany for €289.6 million, the disposal of Logistics companies for -€412,2 million and the reclassification of the assets of Beni Stabili Gestioni SGR into assets held for sale for €23.3 million (see Note 3.2.6.1.4). Sale of Lyon Vaise and Trinité car parks. The amount of the “Disbursements related to acquisitions of tangible and intangible assets” line item in the Statement of Cash Flows totalled €561.5 million. This item corresponds to (i) increases in the table of changes in the portfolio, excluding depreciation (€574.0 million), (ii) changes in the inventories of real estate companies (€2.9 million) and (iii) adjustments for the change in trade payables to suppliers of fixed assets (-€15.4 million). Foncière des Régions The “Proceeds relating to the disposal of tangible and intangible fixed assets” line item in the Statement of Cash Flows (€679.6 million) primarily corresponds to income from disposals as presented in the net income statement (€740.9 million), proceeds from the disposal of assets in inventory, asset disposal costs (-€14.1 million), restated for changes in receivables from asset disposals (-€60.7 million). 306 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.6.1.2. Investment properties (€K) 31/12/2013 Change in scope and interest rates Investment properties 14,297,538 331,286 556,577 -71,611 166,749 -745,248 14,535,291 Operating assets 13,826,291 331,286 358,610 -71,611 161,839 -617,124 13,989,291 0 13,989,291 France Offices 3,545,651 0 180,835(1) -8 78,426 -80,031 3,724,873 0 3,724,873 Italy Offices 3,611,315 0 19,813 -71,603 -4,742 181,977 3,736,760 0 3,736,760 Service Sector 2,989,471 48,338 (3) 21,262 0 52,834 67,173 3,179,078 0 3,179,078 Germany Residential 2,293,722 289,650 126,371(4) 0 29,079 -127,651 2,611,171 0 2,611,171 Increase (2) Disposal Change in fair value 31/12/2014 before Discontinued Transfers reclass. operations 31/12/2014 0 14,535,291 France Residential 737,370 0 10,327 0 6,242 -16,530 737,409 0 737,409 Logistics 648,762 -6,702 2 0 0 -642,062 0 0 0 471,247 0 197,967 0 4,910 -128,124 546,000 0 546,000 France Offices 137,224 0 137,823 0 9,529 59,296 343,872 0 343,872 Italy Offices 258,300 0 28,854 0 -4,958 -132,456 149,740 0 149,740 29,198 0 21,495 0 5,337 -26,322 29,708 0 29,708 0 0 0 0 0 0 0 0 0 22,250 0 5,428 0 -4,998 0 22,680 0 22,680 4,367 Assets under development Service Sector Germany Residential France Residential 24,275 0 0 0 -28,642 0 0 0 Assets held for sale Logistics 1,196,495 -382,221 8,819 -736,365 -8,034 746,111 824,805 287,840 536,965 Assets held for sale 1,196,495 -382,221 8,819 -736,365 -8,034 746,111 824,805 287,840 536,965 2,839 -243,068 France Offices 319,685 0 Italy Offices 195,717 23,316 Service Sector 213,342 Germany Residential 146,239 France Residential Logistics TOTAL (1) (2) (3) (4) -1,789 115,347 193,014 0 193,014 -24,037 15 -49,521 146,252 0 146,252 0 0 -135,148 -2,929 -40,851 34,414 0 34,414 0 0 -148,733 741 130,497 128,744 0 128,744 111,022 0 0 -94,619 5,603 12,535 34,541 0 34,541 210,490 -405,537 5,218 -90,760 -9,675 578,104 287,840 287,840 0 15,494,033 -50,935 565,396 -807,976 158,715 863 15,360,096 287,840 15,072,256 762 €19 million for work carried out and €161.8 million for the acquisition of three assets in Charenton leased to Natixis. Work carried out on assets located mainly in Milan. €9.8 million for work carried out and €11.4 million for the acquisition of three B&B hotels. Corresponds to acquisitions of assets in the residential portfolio in Dresden, Leipzig and Berlin for €81.6 million and work during the period for €44.8 million. The total increase for the period (€565 million) mainly comprises work completed for €288 million, the capitalisation of financial expenses on development projects (€23 million), and acquisitions during the year for €254 million. Note that the group has not identified an optimal use of an asset that differs from its current use and therefore the implementation of IFRS 13 has not altered the assumptions used in the valuation of a portfolio. The amounts of disposals correspond to the appraisal figures published as at 31 December 2013. Foncière des Régions 307 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements In accordance with IFRS 13, the tables below provide details of the ranges of unobservable inputs by business segment (level 3) used by real estate appraisers: 3.2.6.1.2.1. France Offices Grouping of similar assets Level Portfolio (in €m) Net yield rate Discount rate Market rental value West Central Paris Level 3 596 4.25% – 7.65% 5.15% – 6.5% N/A Northeast Paris Level 3 306 5.6% – 6.5% 5.15% – 6.5% N/A Southern Paris Level 3 584 4.3% – 6.5% 5.15% – 7.75% N/A Western Paris Level 3 1,201 5.7% – 7.8% 5.15% – 7.75% N/A Inner suburbs Level 3 579 5.9% – 9.5% 5.15% – 8.5% N/A Ourter suburbs Level 3 170 6.3% – 10.25% 5.15% – 10.0% N/A 486 6.5% – 10.1% 5.15% – 10.5% N/A 340 7.0% – 13% 5.15% – 13.1% N/A Total Île-de-France (Paris Region) 3,436 MRT Level 3 Regions Level 3 Total Regions 826 TOTAL FRANCE OFFICES 4,262 3.2.6.1.2.2. Italy Offices Grouping of similar assets Milan Level Portfolio (in €m) Net yield rate Discount rate Market rental value Level 2 381 5.0% – 6.2% 5.3% – 6.0% 270 – 510 Milan Level 3 1,322 4.6% – 7.2% 4.0% – 7.0% 74 – 2,000 Rome Level 3 350 3.6% – 7.8% 3.2% – 8.7% 41 – 350 Other Level 2 151 6.2% – 6.7% 5.7% – 7.0% 120 – 170 Other Level 3 1,656 2.1% – 8.9% 2.4% – 9.2% 33 – 1,028 6.9% 6.0% N/A Total in operation Assets under development 3,860 Level 3 TOTAL ITALY OFFICES 150 4,009 3.2.6.1.2.3. Service Sector Grouping of similar assets Hotels Level Portfolio (in €m) Net yield rate Rate of discount Market rental value Level 3 2,381 5.6% – 8.1% 6.2% – 8.2% N/A Health care Level 3 235 5.4% – 6.9% 5.6% – 7.9% N/A Retail premises Level 3 598 5.5% – 6.9% 6.0% – 7.8% N/A 3,214 5.7% – 8.1% 6.0% – 8.2% Total in operation Assets under development Level 3 TOTAL SERVICE SECTOR Foncière des Régions 29 6.7% – 8.6% 3,243 6.0% – 8.2% 308 Reference Document 2014 N/A Financial information Notes to the consolidated financial statements 3.2.6.1.2.4. Germany Residential Net yield rate Level Portfolio (in €m) Total portfolio Block value of assets Discount rate Average value (in €/m2) Duisbourg Level 3 509 3.6% – 25.9% 3.6% – 25.9% 5.3% – 11.5% 767 Essen Level 3 505 4.4% – 22.5% 4.4% – 22.5% 5.0% – 7.8% 1,043 Mülheim Level 3 185 3.6% – 11.0% 3.6% – 11.0% 4.8% – 7.5% 959 Oberhausen Level 3 136 5.1% – 10.4% 5.1% – 10.4% 5.5% – 7.1% 764 Datteln Level 3 107 3.1% – 10.3% 3.1% – 10.3% 4.8% – 7.2% 766 Berlin Level 3 773 3.7% – 9.4% 3.7% – 9.4% 3.6% – 7.2% 1,218 Düsseldorf Level 3 39 4.1% – 6.6% 4.1% – 6.6% 4.4% – 6.9% 2,000 Dresden Level 3 208 3.4% – 8.1% 3.4% – 8.1% 5.3% – 7.1% 1,068 Leipzig Level 3 21 4.9% – 9.0% 4.9% – 9.0% 5.3% – 7.1% 1,069 Level 3 256 4.9% – 10.9% 4.9% – 10.9% 5.1% – 8.0% 872 LEVEL 3 2,740 3.1% – 25.9% 3.1% – 25.9% 3.6% – 11.5% 935 Grouping of similar assets Other tangible fixed assets TOTAL GERMANY RESIDENTIAL Potential yield rate assumed excluding taxes (actual rents/appraisal values excluding taxes) across the portfolio held by Immeo in Germany (including commercial premises) 3.2.6.1.2.5. France Residential Net yield rate Grouping of similar assets Level Portfolio (in €m) Total portfolio Block value of assets Discount rate Average value (in €/m2) Eastern France Level 3 7 5.1% – 6.2% N/A N/A 1,514 Luxembourg Level 3 10 5.9% 5.9% N/A 4,491 PACA Level 3 117 2.4% – 4.8% 1.9% – 4.7% N/A 2,187 Paris Neuilly Level 3 425 1.5% – 4.0% 1.5% – 3.25% N/A 7,542 Rest of Paris Region Level 3 136 3.2% – 4.5% 3.4% – 3.7% N/A 4,781 Rhône-Alpes Level 3 74 2.6% – 4.2% 2.6% – 4.0% N/A 3,048 Level 3 26 3.0% – 7.5% N/A N/A 2,080 LEVEL 3 794 1.5% – 7.5% 1.5% – 5.9% N/A 4,312 Southwest – Greater West TOTAL FRANCE RESIDENTIAL Potential yield rate assumed excluding taxes (actual rents/appraisal values excluding taxes) across the portfolio held by Foncière Développement Logements in France (including commercial premises) Foncière des Régions 309 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements IMPACT OF FLUCTUATIONS IN THE RATE OF RETURN ON CHANGES IN THE FAIR VALUE OF REAL ESTATE ASSETS, BY OPERATING SEGMENT Yield(2) Yield rate -50 bps Yield rate +50 bps Yield rate +100 bps France Offices(1) 6.6% 329.0 -282.5 -527.6 Italy Offices 6.1% 355.2 -301.0 -559.4 Hotels and Service Sector 6.1% 262.9 -223.1 -414.7 Germany Residential 6.5% 225.2 -193.2 -360.7 France Residential 3.2% 146.6 -107.3 -189.2 Logistics 7.2% 21.5 -18.7 -35.2 TOTAL 6.3% 1,340.4 -1,125.7 -2,086.8 (in €m) (1) (2) Including DS Campus. Yield on operating portfolio (Offices and Service Sector – France) and core portfolio (Italy Offices). ww If the yield rate (excluding charges) drops by 50 bps (-0.5 point), the market value of the real estate assets (excluding charges) will increase by €1,340.4 million. ww If the yield rate (excluding charges) rises by 100 bps (+1.0 point), the market value of the real estate assets (excluding charges) will drop by 2,086.8 million. ww If the yield rate (excluding charges) rises by 50 bps (+0.5 point), the market value of the real estate assets (excluding charges) will drop by €1,125.7 million. 3.2.6.1.3. Assets under development Assets under development relate to building or redevelopment programmes that are subject to the application of IAS 40 (revised). 31/12/2013 Change in scope Works Capitalised interest Change in fair value France Offices 137,224 0 128,654 9,169 Italy Offices 258,300 0 17,385 11,469 (5) (€K) 9,529 59,296 343,872 -4,958 -132,456(2) 149,740 (3) -26,322 29,708 0 22,680 (4) 0 - 128,124 546,000 Service Sector 29,198 0 898 5,337 22,250 0 4,574 854 -4,998 Logistics 24,275 0 3,874 493 0 471,247 0 175,084 22,883 4,910 TOTAL (2) (3) (4) (5) 31/12/2014 (1) France Residential (1) 20,597 Transfers and disposals -28,642 The Montpellier B&B and Egis assets on the Pompignane site were delivered in 2014, generating a transfer of -€21.2 million. Four new projects under development (Lyon Silex 2nd phase, Saint-Mandé, Levallois Anatole France and the Dassault extension) generated a transfer of +€80.5 million. Delivery of the «Via Dell’Arte» asset in Rome and San Nicolao» assets located in Milan. Delivery of the Porte des Lilas B&B lease in advance of future completion generating a transfer of -€26.3 million. Deliveries on the Garonor asset before the disposal of the company. Including disbursements in 2014 of €6.1 million concerning the three new projects under development in France (B&B Romainville, B&B Torcy and B&B Lyon Caluire) and €4.4 million for the three new projects under development in Germany (B&B Mülheim, B&B Erfurt et B&B Duisbourg). Information relating to ongoing construction costs (off-balance sheet) can be found in Note 3.2.8.3.1. 3.2.6.1.4. Assets held for sale In accordance with IFRS 5, all of this entity’s assets and liabilities were classed as assets and liabilities held for sale at 31 December 2014: In May 2014, Beni Stabili Gestioni SGR, Banca Fimat and Polaris Real Estate SGR signed a letter of intent to create a joint-venture to which Beni Stabili Gestioni SGR securities will be contributed. The company will be 17.9% held by Beni Stabili and 50.20% by Banca Fimat. ww assets held for sale: €23.3 million ww liabilities held for sale: €2.4 million. After reclassification of the discontinued operation, the other assets are assets held for sale for €513,649,000 at 31 December 2014, versus €1,196,495,000 at 31 December 2013. This transaction will take effect in January 2015. This company will be acquired based on the contract contribution value and consolidated via the equity method. Foncière des Régions 310 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.6.2. Financial assets 31/12/2013 net Increase Decrease (€K) Ordinary loans(1) Change in fair Change value in scope Transfers(3) 31/12/2014 Gross Amortisations 31/12/2014 Net 87,932 47,546 -75,023 0 -7 74,282 134,730 0 134,730 0 302 0 0 0 0 302 0 302 Total loans and current accounts 87,932 47,848 -75,023 0 -7 74,282 135,032 0 135,032 Securities at fair value through profit or loss 19,488 0 0 -439 0 0 19,048 0 19,048 42,477 458 -3,183 0 3,281 -2,674 40,373 -18,287 22,086 Current accounts Securities at historical cost Total other financial assets 61,965 458 -3,183 -439 3,281 - 2,674 59,421 -18,287 41,134 Outstanding amount of leases (LT) 2,506 0 -378 0 0 146 2,274 0 2,274 Total finance-lease receivables 2,506 0 -378 0 0 146 2,274 0 2,274 Receivables on financial assets 3,221 0 -108,624 0 0 117,717 13,334 -6,992 6,342 Total receivables on financial assets 3,221 0 -108,624 0 0 117,717 13,334 -6,992 6,342 155,624 48,306 -187,208 -439 3,274 189,471 210,061 -25,279 184,782 (2) TOTAL NON-CURRENT FINANCIAL ASSETS (1) (2) (3) Ordinary loans include receivables from investments held in equity consolidated companies. Total other financial assets are broken down as follows: --securities at fair value through net income: securities from the Technical Fund OPCI were accounted for on the balance sheet at the OPCI’s net asset value in the income statement --Securities at cost: investments held by Beni Stabili in real estate funds are valued at their historical cost. Potential impairments are accounted for in the income statement The Transfers column mainly concerns the reclassification of non-current loans and receivables into short-term loans and receivables (see Note 3.2.6.5). 3.2.6.3. Investments in associates (€K) % held Operating segment Country 31/12/2013 31/12/2014 Changes Of which share of Of which net income distributions Iris Holding France 19.90% Service Sector Belgium, Germany 9,232 9,665 433 1,081 - 648 OPCI IRIS Invest 2010 19.90% Service Sector France 28,651 25,888 -2,763 -1,400 -1,363 OPCI Camp Invest 19.90% Service Sector France 18,357 18,039 -318 785 -1,103 Dalhia 20.00% Service Sector France 15,563 15,658 95 856 -761 Latécoère (DS Campus) 50.10% France Offices France 95,341 92,849 -2,492 5,360 -7,852 Lenovilla (New Vélizy) 50.10% France Offices France 6,873 13,841 6,968 6,968 0 50.00% France Offices (assets under development) France 6,497 10,346 3,849 3,849 0 25.00% France Offices (assets under development) France 590 1,170 580 2,951 -2,371 Italy Offices Italy 3,659 1,262 -2,397 675 -398 184,764 188,718 3,954 21,124 -14,496 Euromarseille (Euromed) Cœur d’Orly (Askia) Beni Stabili TOTAL Foncière des Régions 311 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements Investments in associates as at 31 December 2014 amounted to €188.7 million, compared with €184.7 million as at 31 December 2013. The major change in the period involved the following: ww Lenovilla (New Vélizy): a partnership set up beginning in January 2013 with the Crédit Agricole Assurances group (49.91%). The +€7.0 million change corresponds to the net income for the period ww Iris, Dalhia and Camp Invest OPCIs: investments held by Foncière des Murs (20%) in partnership with Crédit Agricole Assurances (80%). The -€2.5 million change corresponds to the distribution of dividends for -€3.8 million and income of +€1.3 million for the year ww Euromarseille (Euromed): partnership with Crédit Agricole Assurances (50%) under the Euromed project. The +€3.9 million change corresponds to the net income for the period ww Cœur d’Orly: partnership with Altaréa under the Askia project. The €0.6 million change corresponds to the distribution of dividends for -€2.3 million and income of +€2.9 million for the year ww Latécoère (DS Campus): a partnership set up beginning on 19 October 2012 with Crédit Agricole Assurances (49.90%). The -€2.5 million change corresponds to the distribution of dividends for -€7.8 million and income of +€5.3 million for the year ww Beni Stabili: the change includes a reclassification of -€2.7 million in investment securities. 3.2.6.3.1. Breakdown of shareholding of principal associates Cœur d’Orly Euromed Group Latécoère (DS Campus) SCI Lenovilla (New Vélizy) Foncière des Régions 25% 50% 50.10% 50.09% Non-group third parties 75% 50% 49.90% 49.91% Altaréa 25% 50% 49.90% 49.91% 100% 100% 100% 100% Iris Holding France OPCI Iris Invest. 2010 OPCI Campinvest SCI Dahlia Foncière des Murs 19.9% 19.9% 19.9% 20.0% Non-group third parties 80.1% 80.1% 80.1% 80.0% Crédit Agricole Assurances 80.1% 80.1% 68.8% 80.0% 100% 100% Shareholding as at 31 December 2014 Crédit Agricole Assurances Aéroports de Paris 50% TOTAL Indirect shareholding as at 31 December 2014 Pacifica 11.3% TOTAL 100% 100% 3.2.6.3.2. Key financial information on associates Total current liabilities excluding financial Cash liabilities (€K) Total Total Balance non-current sheet assets Cœur d’Orly 146,188 77,195 29,318 Latécoère 349,358 323,111 Lenovilla 259,994 215,349 Euromed 139,484 IRIS Holding France 174,128 OPCI Iris Invest. 2010 Total non-current liabilities excluding financial liabilities 73,166 3,289 7,241 35 480 49,278 122,530 5,149 123,244 0 170,599 3,032 4,332 10,586 249,795 238,436 10,766 756 3,949 OPCI Campinvest 178,018 167,862 8,548 690 0 SCI Dalhia 135,528 122,829 4,107 683 745 Foncière des Régions 312 Financial Rental liabilities income 64,646 Net financing Net Income cost consolidated 0 0 3,199 0 163,995 18,023 -3,750 10,698 0 183,083 2,249 0 13,911 0 0 0 7,626 110,595 11,626 -2,812 5,432 115,000 15,981 -4,141 -7,035 86,679 11,302 -3,286 3,943 55,808 -2,051 4,281 Reference Document 2014 7,273 Financial information Notes to the consolidated financial statements 3.2.6.4. Deferred taxes at year-end (€K) Total at 31/12/2013 Increase Other First-time Net changes Net consoli- income for Shareholders’ and income for dations the year equity transfers the year Decrease Shareholders’ Deconsoequity lidations Total at 31/12/2014 DTA Tax loss carryforwards 29,337 262 4,941 0 0 -3,378 0 -5,174 25,988 Fair value of assets 81,400 0 1,364 0 0 -71,252 0 -293 11,219 Derivative instruments 20,910 0 1,403 0 0 -4,938 -444 -2,719 14,212 Temporary differences 21,245 0 1,991 506 -2,314 -5,792 0 0 15,636 152,892 DTA/DTL offset TOTAL DTA 67,055 -62,843 90,049 -50,427 262 9,699 506 Increase (€K) Total at 31/12/2013 First-time Net consoli- income for Shareholders’ dations the year equity -2,314 -85,360 -444 -8,186 16,628 Decrease Other changes Net and income for Shareholders’ DeconsoTotal at transfers the year equity lidations 31/12/2014 DTL Fair value of assets 346,974 15,796 Derivative instruments 20,192 9 1,029 Temporary differences 9,651 0 19 0 0 8,801 1 0 -17,946 0 -66,385 28 -228 -8 0 840 -28 -5,859 0 -387 12,179 357,654 298,640 311,659 DTA/DTL offset -62,843 Total DTL 294,811 15,796 29,012 10 -50,427 -204,762 -15,534 -19,313 0 -24,033 496 -2,314 -61,327 TOTAL IMPACT ON THE INCOME STATEMENT: -80 640 - 8 -66,772 -436 58,586 261,232 -244,604 At 31 December 2014, the consolidated deferred tax position showed a deferred tax asset of €16 million (versus €90 million as at 31 December 2013) and a deferred tax liability of €261 million (versus €295 million as at 31 December 2013). In view of the SIIC tax scheme applicable in France, potential tax savings on tax losses carried forward on real estate activity in France are not accounted for. Foncière des Régions 313 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements (€K) Non-recognised DTA Non-recognised tax loss carryforwards 86,949 252,513 France Offices Italy Offices 3,876 12,343 Service Sector 24,276 70,502 Germany Residential 24,707 156,122 France Residential 76,608 222,481 Logistics 33,245 96,548 Car Parks TOTAL 4,661 13,536 254,322 824,045 At the end of 2014, non-recognised tax loss carryforwards, calculated at the standard rate, amounted to €824 million. Given the change in the SIIQ tax regime applicable to disposals in Italy, net deferred tax assets of €61 million were cancelled in 2014. The primary contributors to the balance of deferred tax liabilities are: ww Germany Residential: €180 million ww Service Sector: €63 million (primarily in Belgium). In accordance with IAS 12, deferred tax assets and liabilities are offset for each tax entity when they involve taxes paid to the same tax authority. 3.2.6.5. Short-term loans and finance-lease receivables – current portion 31/12/2014 Gross Amortisations 31/12/2014 Net 31/12/2013 Net Change in scope Increase Decrease Transfers 9,168 0 7,758 -159,156 150,013 7,796 Finance-lease receivables 468 0 0 -61 -146 261 261 Dividend to be distributed 0 0 0 0 0 0 0 9,636 0 7,758 -159,217 149,867 8,057 (€K) Short-term loans TOTAL -13 -13 7,783 8,044 3.2.6.6. Inventories Inventories consist mainly of assets dedicated to the trading business activity within Italy Offices (€63.3 million), assets dedicated to the trading business and real estate development within the Residential business activity in Germany (€5.4 million), assets dedicated to the trading business activity within the Residential business activity in France (€3.2 million) and land in Orleans (€0.8 million). 3.2.6.7. Trade receivables (€K) Trade receivables 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Change 311,719 17,401 294,318 314,647 -20,329 Impairment of receivables -34,757 -4,712 -30,045 -32,091 2,046 NET TOTAL FOR TRADE RECEIVABLES IN DEBT 276,962 12,689 264,273 282,556 - 18,283 After the reclassification of discontinued operations, the balance of trade receivables includes expenses to invoice to tenants for €118.9 million, rental income receivables for €50.7 million and receivables related to the linearisation of relief granted on rent for €94.7 million. Foncière des Régions 314 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.6.8. Other receivables 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Change Government receivables 35,491 936 34,555 51,015 -16,460 Other receivables 15,615 1,052 14,563 138,534 -123,971 Receivables on disposals 72,778 2,017 70,761 12,412 58,349 2,898 0 2,898 128 2,770 126,782 4,005 122,777 202,089 -79,312 (€K) Current accounts TOTAL ww Government receivables of €34.5 million include €17 million in France, €17.2 million in Italy and €0.3 million in Germany. In France, the receivables are mainly VAT. In Italy, this item includes, in particular, receivables from payment on tax litigation for €7.4 million. ww The decrease in other receivables is due to the termination of the €102 million guarantee given to IMSER by Beni Stabili. Note that this receivable was offset by a payable in liabilities for the same amount. ww The change in receivables on disposals is primarily due to the disposal of the Fogazzaro asset in Milan for €55 million. 3.2.6.9. Cash and cash equivalents 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Money-market instruments available for sale 686,865 0 686,865 155,926 Cash at bank 341,777 2,135 339,642 225,615 1,028,642 2,135 1,026,507 381,541 (€K) TOTAL Foncière des Régions holds no investments subject to capital risk. At 31 December 2014, the portfolio of money market securities available for sale consisted mainly of traditional money market funds (Level 2). Note that in 2014, €3,302,000 in cash and cash equivalents was reclassified as unavailable cash and cash equivalents. ww Level 1 corresponds to the portfolio instruments whose price is quoted on an active market for an identical instrument. ww Level 2 corresponds to instruments whose fair value is determined using data other than the prices mentioned for level 1 and observable directly or indirectly (i.e. price-related data). 3.2.6.10. Changes in shareholders’ equity The capital of Foncière des Régions totalled €188 million as at 31 December 2014. Reserves correspond to parent-company reserves and amounts carried forward, as well as reserves from consolidation. As at 31 December 2014, the share capital broke down as follows: Number of authorised shares 62,683,557 Number of shares issued and fully paid-up 62,683,557 Number of shares issued and not fully paid-up 0 Par value of shares €3.00 Share classes none Restriction on payment of dividends none Shares held by the company or its subsidiaries Foncière des Régions 78,968 315 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements CHANGES IN THE NUMBER OF SHARES DURING THE PERIOD Date Transaction 31/12/2013 Stock options Shares issued Treasury stock Shares outstanding 62,683,088 194,889 62,488,199 469 Treasury shares – Liquidity agreement -32,092 Treasury shares – Employee awards -83,829 31/12/2014 62,683,557 78,968 62,604,589 The changes in shareholders’ equity are presented in Note 3.1.4. 3.2.6.11. Indebtedness (€K) Borrowings Other borrowings 31/12/2013 Increase Decrease Change in scope Other 31/12/2014 Discontinued changes before reclass. operations 5,287,006 1,924,037 -2,342,632 15,709 0 4,884,120 0 31/12/2014 4,884,120 45,244 8,689 -275 0 -2 53,656 0 53,656 Treasury bills 201,030 260,120 -15,000 0 0 446,150 0 446,150 Securitised loans 475,892 0 -471,914 0 0 3,978 0 3,978 Non-convertible bonds 935,000 1,100,096 -14,580 0 0 2,020,516 0 2,020,516 27,657 0 -9,013 0 0 18,644 0 18,644 Convertible bonds 1,396,642 0 0 0 0 1,396,642 0 1,396,642 Interest-bearing loans sub-total 8,368,471 3,292,942 -2,853,414 15,709 -2 8,823,706 0 8,823,706 Accrued interest 59,686 69,904 -59,229 -1,147 2 69,216 6 69,210 Deferral of loan expenses - 82,974 36,037 -27,374 0 0 -74,311 0 -74,311 Creditor banks 153,378 0 0 0 -59,066 94,312 0 94,312 3,398,883 -2,940,017 14,562 -59,066 Finance leases Total loans (LT/ST) excl. JV of ORNANE-type BONDS 8,912,923 6 8,912,917 Long-term 7,519,639 7,708,710 0 7,708,710 Short term 978,922 1,204,213 6 1,204,207 Valuation of financial instruments Derivatives of convertible bonds Total derivative instruments 8,498,561 529,278 0 0 0 -36,422 492,856 22,546 470,310 18,206 0 0 0 69,165 87,371 0 87,371 547,484 0 0 0 32,743 580,227 22,546 557,681 Assets -23,118 -60,246 0 -60,246 Liabilities 570,602 640,473 22,546 617,927 9,493,150 22,552 9,470,598 TOTAL BANK DEBT 9,046,045 3,398,883 -2,940,017 14,562 -26,323 The new financings taken out during the year are presented in 3.2.6.11.1 – Bank borrowings. The “Proceeds from new borrowings” line in the Statement of Cash Flows (+€3,258.3 million) includes: ww increases in interest-bearing borrowings” (+€3,292.9 million) ww less new debt issuance costs (-€27.4 million). The “Repayments of borrowings” line of the Statement of Cash Flows (-€2,838.3 million) mainly corresponds to decreases in interestbearing borrowings (-€2,853.4 million). Foncière des Régions 316 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.6.11.1. Bank borrowings The below table outlines the characteristics of the borrowings taken out by Foncière des Régions and the amount of guarantees that go with it (principal amount over €100 million): (€K) France Offices Debt balance (> or < €100 m) Backed debt Total appraisal value for block of assets 31/12/2014 > €100 m 878,000 401,100 €275 million (2012) – Orange 534,609 254,432 09/05/2012 19/09/2020 > €100 m 1,412,609 655,532 < €100 m 205,880 53,801 1,618,489 709,333 10/09/2014 29/07/2020 > €100 m REFI 2 Babel 300,000 > €100 m €340 million (2013) – formerly Milano Zerosei 162,596 19/12/2006 19/12/2015 > €100 m €156 million (2011) – TORRI 152,544 27/07/2011 27/07/2016 1,182,270 615,140 643,300 321,810 1,825,570 936,950 €350 million (2013) 567,835 233,545 15/07/2013 15/07/2020 > €100 m €447 million (2013) 799,379 383,832 25/10/2013 25/10/2020 > €100 m €255 million (2012) – Covered bond 486,403 242,570 14/11/2012 16/11/2021 > €100 m €235 million (2013) – OPCI B2 HI (B&B) 540,150 229,545 20/12/2013 20/12/2018 > €100 m €208 million (2014) 377,033 144,591 07/05/2014 30/04/2019 2,770,800 1,234,083 15/01/2014 31/10/2018 Total Italy Offices > €100 m > €100 m < €100 m 267,472 126,290 3,038,272 1,360,373 595,621 299,133 > €100 m 595,621 299,133 < €100 m 173,841 67,564 769,462 366,697 Total Service Sector > €100 m €350 million (2014) Total France Residential Germany Residential > €100 m > €100 m Car Parks 270,000 10/10/2017 and and 140,000 11/07/2018 Maturity date > €100 m < €100 m France Residential Date of signature 10/10/2010 and 11/07/2011 > €100 m Service Sector Debt balance 31/12/2014 €270 million (2010) and €140 million (2011) Tour CB 21 and Carré Suffren Total France Offices Italy Offices Initial amount of the debt Wohnbau/Dümpten 326,769 162,589 08/12/2010 14/12/2017 Lyndon Immeo 02 299,126 174,726 07/12/2011 14/12/2021 > €100 m Lyndon Immeo 01 271,692 172,916 12/12/2011 12/12/2021 > €100 m Lyndon Immeo 04 715,324 388,170 09/03/2012 14/03/2022 > €100 m Indigo 210,233 119,063 13/12/2013 19/12/2018 > €100 m 1,823,144 1,017,464 < €100 m 902,026 393,508 Total Germany Residential 2,725,170 1,410,972 Total Residential 3,494,632 1,777,669 185,260 66,292 10,162,223 4,850,617 < €100 m Total Car Parks Collateral Total Foncière des Régions 317 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements (€K) Debt balance (> or < €100 m) Backed debt Total appraisal value for block of assets 31/12/2014 €550 million (2011) – ORNANE-type bonds France Offices 01/05/2011 01/01/2017 345,000 20/11/2013 01/04/2019 16/10/2012 16/01/2018 Treasury bills 446,150 €180 million (2013) – Private placement 180,000 28/03/2013 30/04/2020 497,946 10/09/2014 30/09/2021 2,616,539 2,420,200 95,300 Total France Offices 2,711,839 2,420,200 €225 million (2010) – Convertible bond 105,538 23/04/2010 23/04/2015 €225 million (2013) – Convertible bond 225,000 17/01/2013 17/01/2018 €270 million (2013) – Convertible bond 270,000 17/10/2013 17/04/2019 €350 million (2014) – Bond 350,000 22/01/2014 22/01/2018 €250 million (2014) – Bond 250,000 31/03/2014 01/04/2019 €200 million (2014) – Corporate borrowing 200,000 10/09/2014 21/07/2016 > €100 m 1,400,538 < €100 m 3,978 Total Italy Offices Total Service Sector 2,267,457 1,404,516 204,928 0 Total Germany Residential 0 Total France Residential Logistics Total discontinued operations Car Parks Total Car Parks Total unencumbered France Residential 451,104 Maturity date 500,000 < €100 m < €100 m Date of signature €500 million (2012) – Bonds €500 million (2014) – Bonds Service Sector Debt balance 31/12/2014 €345 million (2013) – ORNANE-type bonds > €100 m Italy Offices Initial amount of the debt 29,823 100,000 287,840 0 25,160 0 5,527,047 3,924,716 15,689,270 8,823,706 Other bank borrowings Other liabilities 48,374 OVERALL TOTAL Borrowings are valued after their initial recognition at cost, amortised based on the effective interest rate. The average interest rate on consolidated debt for Foncière des Régions was 3.41% as at 31 December 2014. Foncière des Régions 318 Reference Document 2014 Financial information Notes to the consolidated financial statements BREAKDOWN OF BORROWINGS AT PAR VALUE ACCORDING TO TIME LEFT TO MATURITY AND INTEREST-RATE TYPE Balance as at 31/12/2014 (€K) Fixed-rate long-term financial liabilities Maturity Less than 1 Balance as at Balance as at Balance as at year 31/12/2015 2 to 5 years 31/12/2019 4,946,526 560,688 4,385,838 France Offices – Bank borrowings 191,178 3,795 France Offices – ORNANE-type bonds 796,104 0 France Offices – Other Italy Offices – Convertible bonds Service Sector Service Sector – Other Maturity Over 5 years 2,581,140 1,804,698 1,804,698 187,383 14,441 172,942 172,942 796,104 796,104 0 0 32,438 0 32,438 0 32,438 32,438 600,538 105,538 495,000 495,000 0 0 38,644 785 37,858 37,858 0 0 15,936 0 15,936 15,936 0 0 807,763 12,307 795,456 118,897 676,559 676,559 5,283 135 5,148 4,438 710 710 Total borrowings and convertible bonds 2,487,882 122,560 2,365,322 1,482,674 882,648 882,648 France Offices – Bonds 1,177,946 0 1,177,946 498,466 679,480 679,480 France Offices – Treasury bills 434,150 434,150 0 0 0 0 Italy Offices – Bonds 600,000 0 600,000 600,000 0 0 3,978 3,978 0 0 0 0 Germany Residential – Bank borrowings Germany Residential– Other Italy Offices – Securitisation Service Sector – Bonds 242,570 0 242,570 0 242,570 242,570 Total debt represented by securities 2,458,644 438,128 2,020,516 1,098,466 922,050 922,050 Floating-rate long-term financial debt 3,877,180 492,846 3,384,334 2,291,131 1,093,203 1,093,203 France Offices – Bank borrowings 518,155 27,688 490,468 407,892 82,575 82,575 Italy Offices – Bank borrowings 1,136,950 347,299 789,651 529,400 260,250 260,250 Service Sector 1,079,159 16,354 1,062,805 450,447 612,357 612,357 France Residential – Bank borrowings 466,697 76,050 390,647 390,647 0 0 Germany Residential – Bank borrowings 597,927 11,659 586,268 505,363 80,905 80,905 Car Parks Total borrowings and convertible bonds France Offices – Treasury bills Total debt represented by securities TOTAL AT 31 DECEMBER 2014 66,292 1,796 64,496 7,381 57,115 57,115 3,865,180 480,846 3,384,334 2,291,131 1,093,203 1,093,203 12,000 12,000 0 0 0 0 12,000 12,000 0 0 0 0 8,823,706 1,053,535 7,770,172 4,872,271 2,897,901 2,897,901 The ORNANE bonds are presented at par value. Foncière des Régions 319 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.6.11.2. Convertible bond issues 3.2.6.11.2.1. France Offices The specific features of the bond issues are as follows: Features ORNANE France Offices ORNANE France Offices 24/05/2011 20/11/2013 550 345 85.86 84.73 Issue date Issue amount (in €m) Issue/Conversion price (in €) 1.10 1.03 Number of securities issued Conversion rate 6,405,776 4,071,757 Number of securities redeemed 1,151,832 Securities outstanding at 31 December 2014 5,253,944 Amount of the issue after redemption (in €m) 4,071,757 451 Nominal rate 3.34% Maturity date 01/01/2017 0,88% Bond holders will have the option to convert their bonds either into cash and existing and/or new shares, or only into shares, based on the stock market prices over a determined period, at the company’s discretion. Interest is payable every six months on 1 January and 1 July for the ORNANE issued in 2011, and on 1 April and 1 October for the ORNANE issued in 2013. The fair value of the ORNANE as at 31 December 2014 is based on the quoted price (December average): 3.2.6.11.2.2. Italy Offices ww €93.00 for the ORNANE issued in 2011, for a fair value at 31 December 2014 of €488.6 million (5,253,944 bonds outstanding) In accordance with section 11A of IAS 39, the ORNANEs for the Italy Offices segment are made up of hybrid instruments and are accounted for as a host contract (liability at amortised cost) and an embedded derivative (financial instrument at fair value through profit or loss). ww €90.43 for the ORNANE issued in 2013, for a fair value at 31 December 2014 of €368.2 million (4,071,757 bonds). The fair value of the ORNANE issued by Foncière des Régions is €856.8 million. At 31 December 2014, derivatives of Beni Stabili convertible bonds were valued at €53.5 million. The specific features of these bond issues are as follows: Features Issue date Issue amount (in €m) Issue/Conversion price (in €) Conversion rate ORNANE Italy Offices ORNANE Italy Offices 01/2013 10/2013 225 270 0,5991 0,6591 1.00 1.00 Number of securities issued 375,536,345 409,649,522 Securities outstanding at 31 December 2014 375,536,345 409,649,522 Nominal rate 3.375% 2.625% Maturity 01/2018 03/2019 Foncière des Régions 320 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.6.11.3. Derivative instruments Derivative instruments consist mainly of interest rate hedges set up as part of the group’s interest rate hedging policy. FAIR VALUE OF NET DERIVATIVE INSTRUMENTS 31/12/2013 net 31/12/2014 Net before reclassification France Offices 197,060 248,037 Italy Offices 113,965 63,706 63,706 Service Sector 131,353 169,083 169,083 57,773 58,105 58,105 (€K) Germany Residential France Residential Logistics Car Parks TOTAL OF WHICH COUNTERPARTY RISK The total impact of value adjustments on derivatives in the income statement amounted to -€303.7 million, after reclassifying -€7.7 million to discontinued operations. It primarily consists of changes in value of cash instruments (-€238.6 million), the change in value of the ORNANEs (-€63.0 million), the change in value of fixed-rate liabilities recognised during business combinations in 2013 (-€1.7 million) and the change in value of other financial assets (-€0.4 million). In accordance with IFRS 13, the fair values include counterparty default risk. -722 7,938 36,619 22,546 Discontinued operations 31/12/2014 net 248,037 7,938 22,546 0 11,436 10,812 547,484 580,227 22,546 557,681 10,812 18,467 14,154 556 13,598 The “Unrealised gains and losses relating to changes in fair value” line of the Statement of Cash Flows (€152.7 million), which calculates cash flow, mainly integrates the impact of changes in value of cash instruments on income (€246.3 million), the change in value of ORNANEs (€63.0 million), the change in value of long-term investment securities (€0.4 million), the change in the fixed-rate liabilities recognised during business combinations in 2013 (€1.7 million) and the change in value of investment properties (-€158.7 million) (see Note 3.2.7.2). BREAKDOWN OF HEDGING INSTRUMENTS BY MATURITY OF NOTIONALS As at 31/12/2014 Less than 1 year 1 to 5 years Over 5 years Fixed rate payer swap 3,830,307 434,880 1,713,475 1,681,952 Fixed rate receiver swap 1,493,781 250,000 723,781 520,000 Purchase of fixed rate payer swaption 0 -31,000 -275,000 306,000 Sale of fixed rate borrower swaption 0 -15,500 -200,000 215,500 1,351,471 62,285 1,247,448 41,738 (€K) FIXED HEDGE OPTIONAL HEDGE Cap purchase Floor purchase Floor sale TOTAL Foncière des Régions 321 60,000 0 60,000 0 147,615 -60,000 195,500 12,115 6,883,174 640,665 3,465,204 2,777,305 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements BALANCE AS AT 31 DECEMBER 2014 (€K) Fixed rate Floating rate Gross borrowings and financial debt (including creditor banks) 4,946,526 3,971,492 NET FINANCIAL LIABILITIES BEFORE HEDGING 4,946,526 3,971,492 Swaps -2,336,526 Caps -1,351,471 TOTAL HEDGES -3,687,997 3.2.6.11.4. Bank covenants All these LTV or ICR covenants were in strict compliance as at 31 December 2014. Excluding debts raised without recourse to the group’s property companies, the debts of Foncière des Régions and its subsidiaries generally include bank covenants (ICR and LTV) applying to the borrower’s consolidated financial statements. If these covenants are breached, early debt repayment may be required. These convenants were established in group share for Foncière des Régions and for Foncière des Murs (regarding refinance loans for historical borrowings) and on a consolidated basis for Foncière Développement Logements and Beni Stabili (if their debts include them). Concerning Foncière des Régions, the bank consolidated leverage ratios at 31 December 2014 were 50.3% for the LTV in group share and 276% for the ICR in group share (compared to 51% and 249% respectively at the end of 2013). Two types of covenants were added to the consolidated LTV and ICR Group share covenants of Foncière des Régions as part of the corporate loans taken out by Foncière des Régions: ww mainly an portfolio-secured debt covenant (100% scope), the cap on which is set at between 22.5% and 25% and which measures the ratio of secured debt (or debt with guarantees of any nature) to portfolio value. With respect to Immeo, for which the debt raised is “nonrecourse” debt, there are no consolidated covenants associated with portfolio financing. This covenant is in strict compliance and is maintained at a very comfortable level given the new corporate bond issue in 2014 along with the repayment of mortgage loans The most restrictive consolidated LTV covenants at 31 December 2014 amounted to 60% for Foncière des Régions, Foncière des Murs and Foncière Développement Logements. Lastly, a limited portion (36%) of Beni Stabili financing included a consolidated LTV covenant (Beni Stabili scope), the most restrictive level of which was also 60%. ww secondarily, unencumbered portfolio covenants, for which the ceiling is 50%, or an LTV real estate covenant with a 65% ceiling that assesses the relationship between the debt of Foncière des Régions and that of its fully-owned subsidiaries and the portfolio value. At 31 December 2014, these covenants solely remained applicable to three long-standing corporate credit facilities, which were either renegotiated since 31 December 2014 within the scope of their extension (termination of the LTV real estate covenant), or have a short maturity. The threshold for consolidated ICR covenants differs from one REIT to another, depending on the type of assets, and may be different from one debt to another even for the same REIT, depending on debt seniority. Lastly, only a portion of the Beni Stabili loans has a consolidated ICR covenant. These covenants were also complied with at 31 December 2014. The most restrictive ICR consolidated covenant applicable to the property investment companies are the following: No loan has an accelerated payment clause contingent on a Foncière des Régions rating. ww for Foncière des Régions: 200% ww for Foncière des Murs: 200% ww for Foncière Développement Logements: 150% ww for Beni Stabili: 140%. Consolidated LTV Scope Covenant threshold Ratio €350 million (2013) Foncière des Murs ≤ 60% In compliance €447 million (2013) Foncière des Murs < 60% In compliance €208 million (2014) Foncière des Murs < 60% In compliance €255 million (2012) – Covered bond Foncière des Murs ≤ 65% In compliance €350 million (2014) France Residential ≤ 60% In compliance €156 million (2011) – TORRI Italy Offices ≤ 60% In compliance €300 million (2014) – REFI 2 Babel Italy Offices ≤ 60% In compliance Foncière des Régions 322 Reference Document 2014 Financial information Notes to the consolidated financial statements Consolidated ICR Covenant threshold Scope Ratio €350 million (2013) Foncière des Murs > 200% In compliance €447 million (2013) Foncière des Murs > 200% In compliance €208 million (2014) Foncière des Murs > 200% In compliance €255 million (2012) – Covered bond Foncière des Murs ≥ 200% In compliance €350 million (2014) France Residential ≥ 150% In compliance €156 million (2011) – TORRI Italy Offices > 140% In compliance €300 million (2014) – REFI 2 Babel Italy Offices > 140% In compliance These covenants, based on the separate and consolidated financial statements, are also most often applied together with specific covenants for the portfolios financed. These “Scope” convenants, or to a lesser extent, the interest coverage ratios, usually have less restrictive thresholds for the group’s companies than consolidated convenant thresholds. Their purpose is mainly to supervise the use of financing by correlating it with the value of underlying assets provided as collateral. 3.2.6.12. Provisions for contingencies and losses Reversal of provisions Other tangible fixed 31/12/2014 Discontinued Unused assets before reclass. operations 31/12/2014 31/12/2013 Change in scope Charge Used Other provisions for litigation 1,785 0 169 0 -435 0 1,519 90 1,429 Provisions for guarantees 1,000 0 0 0 -1,000 0 0 0 0 Provisions for taxes 2,377 0 1,422 0 0 0 3,799 0 3,799 (€K) Provisions for sustainable development 423 0 0 0 -78 0 345 0 345 Provisions for property charges 7,153 0 640 0 -2 0 7,791 0 7,791 Other provisions 4,544 -100 724 -433 -613 -381 3,741 0 3,741 Provision sub-total – current liabilities 17,282 -100 2,955 -433 -2,128 -381 17,195 90 17,105 Provisions for pensions 39,942 0 2,694 0 -1,855 -581 43,160 0 43,160 698 0 57 0 -86 0 669 0 669 Provisions for long-service awards Provision sub-total – non-current liabilities 40,640 0 2,751 0 -1,941 -581 43,829 0 43,829 TOTAL PROVISIONS 57,922 -100 5,706 -433 -4,069 -962 61,024 90 60,934 The provision for retirement benefits amounted to €43.2 million at 31 December 2014, versus €39.9 million at 31 December 2013. Provisions for litigation break down as follows: €0.9 million for France Offices, €0.3 million for Italy Offices and €0.1 million for France Residential and €0.2 million for the Car Park segment. The main actuarial assumptions used to estimate Foncière des Régions’ commitments in France were as follows: Provisions for taxes exclusively concern the Italy Offices segment for €3.8 million ww salary increase rates of 4% for managerial staff and 3% for non-managerial staff Provisions for expenses on assets (€7.8 million) stem from the Car Park segment and concern provisions for renewal of works. ww discount rate: 1.63%, TEC 10 n +50 bps Other provisions consist primarily of the following: ww other provisions for contingencies and liabilities in Italy Offices: €2.9 million ww provision relating to grantor rights in Car Parks: €0.6 million. Foncière des Régions 323 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements The main actuarial assumptions used to estimate commitments in Germany were as follows: 31/12/2014 31/12/2013 Discount rate 2.5% 3.5% Annual wage growth 2.5% 2.5% Rate of social security charges 1.0% 1.0% -567 -407 -1,297 -1,193 -1,864 -1,600 Assumptions for retirement benefits provisions in Germany IMPACT OF PROVISIONS FOR RETIREMENT BENEFITS ON THE INCOME STATEMENT (€K) Cost of services rendered during the year Financial cost Effects of plan reductions/liquidations TOTAL IMPACT ON THE INCOME STATEMENT NB: impacts are stated on a full-year basis. 3.2.6.13. Recognition of financial assets and liabilities 31/12/2014 Net (€K) Amount shown in the statement of financial position measured at: At fair value through At fair value shareholders’ through profit or equity loss Fair value (€K) 19,048 19,048 IAS 39 categories Line item in statement of financial position Assets at fair value through profit or loss Financial assets non-current 19,048 Assets at amortised cost Financial assets non-current 22,086 22,086 22,086 Loans and receivables Financial assets non-current 143,648 143,648 143,648 Total non-current financial assets Amortised cost 184,782 Loans and receivables Trade receivables Assets at fair value through profit or loss Derivatives at fair value through profit or loss Assets at fair value through profit or loss Cash and cash equivalents (1) TOTAL FINANCIAL ASSETS 182,179 184,782 182,179 60,246 60,246 60,246 686,865 686,865 686,865 766,159 1,114,072 910,271 1,415,112 1,114,072 347,913 Liabilities at fair value through profit or loss ORNANE 1,378,475 468,204 Liabilities at amortised cost Financial liabilities (excluding ORNANE) 7,472,027 7,472,027 Liabilities at fair value through profit or loss Financial instruments (excluding ORNANE) Liabilities at amortised cost Guarantee deposits Liabilities at amortised cost Supplier debt TOTAL FINANCIAL LIABILITIES (1) (2) 182,179 553,102 15,752 0 7,580,747(2) 50,532 15,752 90,094 90,094 9,509,450 8,046,077 324 553,102 15,752 90,094 50,532 Excluding deductible amount. The difference between the net book value and the fair value of fixed-rate debt is €108,720,000. Foncière des Régions 502,570 Reference Document 2014 1,412,841 9,654,807 Financial information Notes to the consolidated financial statements 3.2.6.13.1. Breakdown of financial assets and liabilities at fair value of similar instruments or based on an evaluation method for which the variables comprise solely data from observable markets The table below shows financial instruments at fair value broken down by level: ww Level 3: financial instruments for which the fair value is evaluated wholly or partially using an evaluation method based on an unsubstantiated estimate of market transaction prices for similar instruments. ww Level 1: financial instruments listed on an active market ww Level 2: financial instruments for which the fair value is evaluated by means of comparisons with market transactions Level 1 (€K) Level 2 Level 3 Total Derivatives at fair value through profit or loss 60,246 60,246 Money-market instruments available for sale 686,865 686,865 Total financial assets 0 ORNANE 747,111 0 1,415,112 Derivatives at fair value through profit or loss 553,102 Total financial liabilities 747,111 1,415,112 553,102 1,415,112 553,102 0 1,968,214 3.2.7. Notes to the statement of net income 3.2.7.1. Operating income 3.2.7.1.1. Rental income 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Change (€K) Change (as a %) France Offices 250,730 0 250,730 265,248 -14,518 -5.5% Italy Offices 228,656 0 228,656 231,699 -3,043 -1.3% Total Office rental income 479,386 0 479,386 496,947 -17,561 -3.5% Service Sector 196,057 0 196,057 203,973 -7,916 -3.9% Germany Residential 171,121 0 171,121 63,820 107,301 N/A 28,804 0 28,804 12,992 15,812 N/A 33,054 33,054 0 54,231 -54,231 -100% 908,422 33,054 875,368 831,963 43,405 5.2% (€K) France Residential Logistics TOTAL RENTAL INCOME Rental income consists of rental and similar income (e.g.: occupancy fees and entry rights) invoiced for investment properties during the period. Rent holidays, common areas and entry rights are spread out over the fixed term of the lease. for their renovation (-€3.1 million), acquisition and delivery of assets under development (+€4.0 million) and various indexations and lease renewals (+€1.5 million) ww a drop in rental income in Italy Offices (-1.3%) due to the impact of asset deliveries, asset management work and the effect of indexation (+€2.3 million), less disposals (-€6.6 million) The three tenants who each account for over 10% of overall turnover are: ww a drop in Service Sector rental income (-3.9%), i.e. -€7.9 million, mainly due to disposals and a drop in Accor and Jardiland rental income (-€11.0 million), offset by the impact of the NH hotel in Amsterdam and the B&B hotels acquired in 2014 (+€3.1 million) ww Telecom Italia in the Italy Offices segment (€117.0 million) ww Orange in the France Offices segment (€87.7 million) ww Accor in the Service Sector (€83.9 million). Rental income amounted to €875.4 million at 31 December 2014, versus €832.0 million at 31 December 2013, up 5.2%. ww the impact of the full consolidation of the France and Germany Residential segments over the full year compared with five months in 2013, amounting to +€123.1 million. The changes by type of asset break down as follows: ww a decrease in rental income for France Offices (-5.5%), mainly due to asset disposals (-€18.6 million), the vacating of assets Foncière des Régions 325 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.7.1.2. Real estate expenses 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Change (€K) Change (as a %) Rental income 908,422 33,054 875,368 831,963 43,405 5.2% Unrecovered rental costs -44,021 -4,579 -39,442 -40,035 593 -1.5% Expenses on assets -28,950 -930 -28,020 -18,286 -9,734 53.2% -8,578 123 -8,701 -8,820 119 -1.4% 826,873 27,667 799,206 764,822 34,384 4.5% -9.0% - 16,3% -8.7% -8.1% (€K) Net losses on unrecoverable receivables Net rental income RATE FOR REAL EXPENSES change in expenses on assets would amount to +€3.4 million at 31 December 2014. ww Unrecovered rental costs: these expenses are net of re-invoicing to tenants, and basically correspond to charges on vacant premises. ww Net expenses on unrecoverable receivables: these consist of losses on unrecoverable receivables and net provisions on doubtful receivables. The amount for the year primarily concerns the Italy Offices segment (€2.4 million) and the Residential segment (€5.9 million). ww Expenses on assets: these consist of rental expenses that are borne by the owner, expenses related to works and expenses related to property management. Excluding the impact of the consolidation of the Residential segment (-€13.1 million), the 3.2.7.1.3. Net operating costs These consist of head office expenses and operating costs net of revenues from management and administration activities. (€K) 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Change (€K) Change (as a %) Management and administration income 23,660 335 23,325 22,190 1,135 5.1% Business expenses -5,712 -297 -5,415 -4,891 -524 10.7% -104,012 -1,033 -102,979 -82,714 -20,265 24.5% Overheads Development costs TOTAL NET OPERATING COSTS -228 -2 -226 -520 294 -56.5% -86,292 -997 -85,295 -65,935 -19,360 22.7% 3.2.7.1.4. Income from other activities Business activity-related expenses consist primarily of appraisal expenses totalling €2.5 million, asset management fees totalling €2.0 million, as well as expenses related to inspections totalling €0.7 million. Net income from other activities includes: ww income of €12.4 million (excluding depreciation and interest) from the Car Parks segment at 31 December 2014, compared to €13.1 million at 31 December 2013. Note that this result includes personnel expenses of €10.0 million (see 3.2.8.1.1) Overheads included -€59.9 million in payroll expenses as at 31 December 2014 (-€60.3 million before reclassification of discontinued operations) versus -€47.6 million at 31 December 2013, i.e. a change of -€12.3 million (see 3.2.8.1.1). Excluding the impact of the consolidation of the Residential segment, the change in payroll expenses would amount to +€1.8 million. ww €14.3 million in income from the real estate development business at 31 December 2014 (versus €7.9 million at 31 December 2013) recognised by reference to the stage of completion, in accordance with IAS 11 – Construction contracts ww income of €0.2 million from financial leasing at 31 December 2014, versus a loss of -€1.4 million at 31 December 2013. Foncière des Régions 326 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.7.2. Change in the fair value of assets 31/12/2014 before reclass. Discontinued operations 31/12/2014 France Offices 85,134 0 Italy Offices -9,685 0 Service Sector 55,242 Germany Residential (€K) France Residential Logistics TOTAL CHANGE IN FAIR VALUE OF ASSETS 31/12/2013 Change (€K) 85,134 14,780 70,354 -9,685 -76,321 66,636 0 55,242 31,137 24,105 29,820 0 29,820 -249 30,069 6,847 0 6,847 31,227 -24,380 -8,643 -8,643 0 -38,254 38,254 158,715 -8,643 167,358 -37,680 205,038 3.2.7.3. Income from changes in scope Income from changes in the scope of consolidation amounted to €32.5 million before the reclassification of discontinued operations. It mainly stems for the sale of Logistics companies, including Garonor France III. The sale price of the securities, net of expenses, was €51.9 million, for total net asset disposals of €23.2 million. 3.2.7.4. Net financing cost (€K) Interest income on cash transactions Interest expense on financing operations Net swap expenses NET FINANCING COST 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Change (€K) Change (as a %) 13,997 206 13,791 5,399 8,392 155.4% -241,424 -5,048 -236,376 -235,882 -494 0.2% -61,711 -2,122 -59,589 -76,870 17,281 -22.5% -289,138 -6,964 -282,174 -307,353 25,179 -8.2% Excluding the impact of the full consolidation of the France and Germany Residential segments over the full year in 2014 versus five months in 2013 (-€33.6 million), the net financing cost would improve by +€58.8 million due to effect of disposals and refinancing. 3.2.7.5. Net financial income (€K) Net financing cost Positive changes in the fair value of financial instruments 31/12/2014 before reclass. Discontinued operations 31/12/2014 31/12/2013 Change (€K) Change (as a %) -289,138 -6,964 -282,174 -307,353 25,179 -8.2% 7,125 0 7,125 103,052 - 95,927 Negative changes in the fair value of financial instruments -318,566 -7,705 -310,861 6,941 -317,802 Changes in the fair value of financial instruments -311,441 -7,705 -303,736 109,993 -413,729 99 4 95 264 -169 Financial income from discounting -376.1% Financial expenses from discounting -3,525 -139 -3,386 -3,202 -184 Discounting -3,426 -135 -3,291 -2,938 -353 12.0% Impact of discounting and changes in fair value -314,867 -7,840 -307,027 107,055 -414,082 -386.8% Expenses net of financial provisions and other -123,970 0 -123,970 -47,676 -76,294 160.0% TOTAL NET FINANCIAL INCOME -727,975 -14,804 -713,171 -247,974 -465,197 187.6% Foncière des Régions 327 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements Expenses net of financial and other provisions include financial asset impairments, the deferral of bond issue costs and the cost of refinancing Beni Stabili’s Imser debt. 3.2.7.6. Taxes 3.2.7.6.1. Exit tax Liability for exit tax amounted to €20.0 million (on Beni Stabili only) as at 31 December 2014. This liability, which matures in 2015, generates accrued interest, which is directly accounted for in income tax expense. 3.2.7.6.2. Taxes and theoretical tax rate by geographical area Taxes payable (€K) Deferred tax Total Tax rate France -2,339 -40 -2,379 34.43% Italy -4,149 -56,123 -60,272 31.40% Germany -3,350 -18,054 -21,404 15.83% Belgium -173 -4,507 -4,680 33.99% 7 1,103 1,110 30.00% -148 -2,849 -2,997 23.00% 25.00% Luxembourg Portugal Netherlands TOTAL -122 -622 -744 -10,274 -81,092 -91,366 (-) corresponds to an income tax expense; (+) corresponds to tax income. ww The income tax expense payable in France takes account of a capital gain made in 2011 and spread over 4 years (note that this is the last instalment). ww The income tax payable in Italy breaks down as follows: €2.8 million for the rental business and €1.3 million for capital gains on disposals. ww The income tax payable in the Germany Residential segment breaks down as follows: €1.5 million for the rental business and €1.8 million for capital gains on disposals. 3.2.7.6.3. Deferred tax impact on income (€K) 31/12/2014 before reclass. Discontinued operations France Offices Italy Offices Service Sector Germany Residential France Residential Logistics Car Parks TOTAL 31/12/2014 31/12/2013 Change 29 0 29 -439 468 -56,123 0 -56,123 25,271 -81,394 -8,478 0 -8,478 -3,645 -4,833 -17,832 0 -17,832 -13,231 -4,601 1,312 0 1,312 -43 1,355 452 452 0 -2,299 2,299 0 0 0 560 -560 - 80,640 452 -81,092 6,174 -87,266 ww Following the modification of the Italian SIIQ regime, Beni Stabili cancelled nearly €61 million in deferred tax assets. ww The deferred tax expense of the Germany Residential segment is mainly attributable to increases in the fair value of investment properties. ww The deferred tax expense of the Service Sector was impacted by the change in the value of the NH hotel in Amsterdam. Foncière des Régions 328 Reference Document 2014 Financial information Notes to the consolidated financial statements 3.2.7.6.4. Tax proof The real estate management companies that opted for the SIIC tax regime in previous years do not pay corporate income tax, except for those that also have a taxable business activity. 31/12/2014 (€K) Net income before tax 210,123 Theoretical tax rate of 34.43% (a) 72,353 Impact of rate differentials between France and other countries -37,284 Impact of rate differential between the statutory tax rate and the reduced tax rate -1,505 Impact of rate differential on companies not subject to the 3.3% contribution 806 Impact of tax credits and fixed tax rates -690 Impact of permanent differences 36,337 Equity affiliates -7,272 Changes in goodwill (negative goodwill) 564 Impact of SIIC regime -142,310 Charged to prior year losses without DTA -3,338 Tax losses for the year without DTA 114,515 Total tax impacts (b) Corrected theoretical tax for the year (a) + (b) Effective tax rate for the year -40,177 32,176 15.31% Netting off income and adjustment for previous years 790 3% contribution on dividends paid 135 Prior tax loss carryforwards used to reduce or modify the deferred tax expense -233 Deferred tax expense (and/or income) relating to the SIIC regime 56,123 Deferred tax expenses or income pertaining to future expenses 1,531 Income tax not related to the fiscal year (c) Total tax impacts and income tax not related to the fiscal year Income tax expense recorded 58,346 (d) = (b) + (c) 18,169 (a) + (d) 90,522 Overall effective tax rate 43.08% 3.2.8. Other information 3.2.8.1. Personnel remuneration and benefits 3.2.8.1.1.1.Workforce The actual headcount as at 31 December 2014 for the fully consolidated companies, excluding the Car Parks segment, where personnel expense is stated in “Expenses of other activities”, amounted to 718 employees, divided between France (260), Germany (369) and Italy (89). 3.2.8.1.1. Personnel expenses At 31 December 2014, personnel expenses amounted to €70.3 million, against €57.2 million at 31 December 2013. With regard to the Net Income Statement in the EPRA format, personnel expenses are included under “Overheads” in the amount of €60.3 million, and in the “Expenses in other businesses” line item, amounting to €10.0 million for the Car Park segment. Foncière des Régions The average headcount for 2014 was 725.5 employees. The average headcount in the Car Parks segment in 2014 was 229 employees. 329 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.8.1.2. Details of share-based payments At 31 December 2014, there were no longer any stock option plans. In 2014, bonus shares were awarded by Foncière des Régions. The following fair-value assumptions were made for the bonus shares: February 2014 plan Award date Number of shares awarded France without performance condition France with a performance condition France with performance condition Italy, subject to performance condition Italy, subject to performance condition Germany, not subject to performance condition Without market-related performance condition Part 1 – with market-related condition Part 2 – with internal performance condition Part 1 – with market-related condition Part 2 – with market-related performance condition Without market-related condition 26/02/2014 26/02/2014 26/02/2014 26/02/2014 26/02/2014 26/02/2014 5,812 11,500 11,500 3,000 3,000 2,000 Share price at award date €67.50 €67.50 €67.50 €67.50 €67.50 €67.50 Exercise period 3 years 3 years 3 years 4 years 4 years 4 years Cost of non-collection of dividends -€12.97 -€12.97 -€12.97 -€17.31 -€17.31 -€17.31 €54.53 €54.53 €54.53 €50.19 €50.19 €50.19 Actuarial value of the share net of dividends not collected during the vesting period Forward price method – non-transferability discount (2-year lock-up period) €3.69 €3.69 €3.69 Actuarial value of the share net of dividends not collected during the vesting period and non-transferability discount €50.84 €50.84 €50.84 €50.19 €50.19 €50.19 Actuarial value of the share net of dividends not collected during the vesting period, non-transferability discount, turnover and any performance conditions that may be applicable €43.59 €32.69 €32.69 €30.66 €30.66 €40.88 France with performance condition France with performance condition Italy with performance condition Italy with performance condition Part 1 – with market-related performance condition Part 2 – with internal performance condition Part 1 – with market-related performance condition Part 2 – with internal performance condition Part 1 – with market-related performance condition Part 2 – with internal performance condition 25/06/2014 25/06/2014 25/06/2014 25/06/2014 25/06/2014 25/06/2014 38,750 38,750 2,500 2,500 10,750 10,750 June 2014 plan Award date Number of shares awarded Germany with Germany without performance performance condition condition Share price at award date €77.55 €77.55 €77.55 €77.55 €77.55 €77.55 Exercise period 4 years 4 years 4 years 4 years 4 years 4 years Cost of non-collection of dividends -€17.51 -€17.51 -€17.51 -€17.51 -€17.51 -€17.51 €60.04 €60.04 €60.04 €60.04 €60.04 €60.04 €33.68 €33.68 €33.68 €33.68 €33.68 €33.68 Actuarial value of the share net of dividends not collected during the vesting period Forward price method – non-transferability discount (2-year lock-up period) Actuarial value of the share net of dividends not collected during the vesting period and non-transferability discount Actuarial value of the share net of dividends not collected during the vesting period, non-transferability discount, turnover and any performance conditions that may be applicable Foncière des Régions 330 Reference Document 2014 Financial information Notes to the consolidated financial statements December 2014 plan Award date France Italy Germany 05/12/2014 05/12/2014 05/12/2014 Number of shares awarded 42,280 5,650 1,800 Share price at award date €76.31 €76.31 €76.31 Exercise period 3 years 4 years 4 years Cost of non-collection of dividends -€13.20 -€17.58 -€17.58 Actuarial value of the share net of dividends not collected during the vesting period and non-transferability discount €63.11 €58.73 €58.73 Actuarial value of the share net of dividends not collected during the vesting period, non-transferability discount, turnover and any performance conditions that may be applicable €54.11 €47.84 €47.84 The cost of bonus share awards accounted for at 31 December 2014 was €2,974,000. It is presented in the EPRA-format income statement on the “Discounting of liabilities and receivables” line. It includes the impacts of the following: the 2010 and 2011 plans in Germany and Italy and 2012 plan (€1,006,000), the 2013 plan (€1,004,000) and the 2014 plan (€964,000). 3.2.8.2. Earnings per share and diluted earnings per share The net income per share is calculated by dividing the net income attributable to shareholders by the weighted average number of ordinary shares outstanding during the fiscal year. The diluted earnings per share take into account the dilution induced by the bonus shares not yet issued but already awarded and the conversion of ORNANE bonds in France as at 1 January 2014. To meet the requirements of paragraph 9 of IAS 33, the calculation of earnings per share is based on the group’s share of net income from continuing operations. Net Income Net income from continuing operations 118,479 94,515 62,538,274 62,538,274 337,123 337,123 337,123 337,123 62,875,397 62,875,397 GROUP SHARE (€K) Undiluted average number of shares Total dilution impact Number of bonus shares(1) Diluted average number of shares Non-diluted earnings per share (in €) Impact of dilution – Bonus shares (in €) DILUTED EARNINGS PER SHARE (in €) (1) 1.89 1.51 -0.01 -0.01 1.88 1.50 The number of shares awarded breaks down as follows: 2011 Plan 11,650 2012 Plan 60,127 2013 Plan 74,804 2014 Plan 190,542 Total 337,123 In accordance with IAS 33 “Earnings per share”, the dilution impact is only kept when the latter is accretive. Foncière des Régions 331 Reference Document 2014 3 3 Financial information Notes to the consolidated financial statements 3.2.8.3. Off-balance sheet commitments 3.2.8.3.1. Commitments given Financial guarantees given are detailed in Note 3.2.6.11.1. 3.2.8.3.1.1. Fully consolidated companies Off-balance sheet commitments given (€M) 31/12/2014 31/12/2013 59.5 0.0 Investment commitments 0.0 0.0 Commitments relating to ad hoc non-consolidated entities likely to have significant impacts on the financial statements 0.0 0.0 Maturity Off-balance sheet commitments related to consolidated companies Commitments giv