Simco/Société des Immeubles de France will work together as the second largest property grouping in France, but they will retain separate stock exchange listings
French property company Simco extended its reach in its domestic market last year with the acquisition of Société des Immeubles de France (SIF).
The former subsidiary of Crédit Foncier de France (CFF) was taken over by Simco in June 2000. Simco now owns 98.5% of the equity in SIF, and in January the company launched an offer to buy out the remaining minority shareholders in SIF at a price of €21 (Ffr138) per share.
Overall, SIF owns around 220,000m2 of properties, about two thirds of which are offices and other business premises, and the remaining one third residential premises. Nearly all of the company’s holdings are in the higher quality western areas of Paris – the 1st, 2nd, 3rd, 7th, 8th and 16th districts – and the popular suburb Neuilly. The total value of SIF’s property portfolio was estimated at some €1.04bn (FFr6.813bn) on 31 December 1999.
Simco, whose principal shareholder is the insurance group Axa, plans to develop the activities of Simco and SIF jointly, and to optimise synergies between the two. However, there are no immediate plans to merge SIF legally into Simco, and SIF will for now retain its separate stock exchange listing. Jean Paul Sorend, vice-chairman of Simco, has also been appointed chairman of SIF. From March this year, the two management teams will be brought together in Simco’s head office, and the property holdings of the two companies are being rationalised to maximise their complementary natures.
For example, Simco aims to further increase the commercial make-up of its portfolio. As a result of acquiring SIF and buying additional office premises in 2000, the weighting of residential properties in this portfolio has already dropped from 70% to 50%.
Also, Simco is now selling off residential holdings in the French provinces and the outer Paris suburbs, together with interests in commercial buildings that it only part owns. Overall, this will increase concentration of the portfolio on central Paris, in which most of SIF’s interests are already situated.
The Simco takeover of SIF involved an exchange of shares. Following this move, Axa owned 31.7% of the equity in Simco, CFF 20.96%, Predica 4.10%, non-French shareholders 9.72%, individual French shareholders 9.6%, and miscellaneous French institutions including mutual funds 23.9%. Prior to the takeover by Simco, the CFF owned 72.73% of the equity in the SIF. Doubts as to SIF’s strategy have been long-running, arising when the CFF ran into financial difficulties during the French property crisis of the early 1990s. Its position was improved when the CFF was acquired by the Groupe des Caisses d’Epargne (the French savings banks federation) in 1999.
Since then SIF has strengthened its development strategy, principally by making new acquisitions of business premises in central Paris. Purchases during 2000 included buildings in boulevard Haussmann, rue Tronchet and rue Hérold worth €40.6m (FFr266.5m) in total, and the acquisition through its Rente Immobilière subsidiary of a building in the Paris 8th district in rue Jean Giraudoux at a price of €4.2m (FFr27.5m).
Moreover, the acquisition of SIF by Simco creates a group with a much bigger market presence. Together, the two companies represent the second largest listed property company grouping in France, with a combined market capitalisation of around €2.1bn (FFr13.8bn) – Unibail occupies the number one slot in France. The new Simco-SIF group also ranks amongst the top 10-listed property groups in Europe.
Simco
34 rue de la Fédération
Paris 75015
Tel 33 1 40 61 66 20
Fax 33 1 45 79 11 60
www.simco.fr
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Consolidated figures for 1999* |
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Acquisitions in central Paris should boost rental income for 2000 |
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€m |
FFr |
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Rental income |
51.5 |
338.0 |
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Group profit |
24.7 |
162.4 |
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*before acquisition of WBN portfolio Source: SIF |
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