Primonial REIM : 2020 results and 2021 outlook

Paris, 25/02/2021

Primonial REIM key points at 31/12/2020
 

• Remarkable resilience in the face of the health crisis thanks to strategic asset allocations made from the start
• €1.89 billion raised¹ for all retail property funds which include SCPIs, OPCIs and SCIs
• No. 1 in the market² in terms of funds raised for SCPIs with €971 million in gross inflows
• Large-scale property acquisitions carried out, which contributed significantly to the dynamism of the office space investment market
• €26.8 billion³ in assets under management as at 31/12/2020

Primonial REIM Board Chairman Grégory Frapet said: “In the midst of a health crisis that walloped the world economy in 2020, I can’t but pay tribute to the work of the Primonial REIM teams to keep our business going in a context where agility, adaptability and the ability to decide and act fast have been decisive assets, now more than ever. Thanks to the strategic choices that Primonial REIM made from the outset – core positioning, conviction-based management, sectoral and European diversification – our funds have remained resilient and we feel confident about investment choices for the years to come: positioning ourselves in prime/core office assets in the heart of Greater Paris, remaining the European leader in healthcare real estate, accelerating our growth in residential real estate in cities driven by strong rental demand. With confidence in Primonial REIM’s fundamentals, we are convinced that we are in an excellent position to achieve our goals in 2021 and continue on a path of solid growth.”

Primonial REIM CEO Stéphanie Lacroix added: “2020 is proof of our model’s resilience and our ability to act to keep our commitments to our investor customers, protect their savings and continue to pay potential recurring income. Our action is evident in the performance of our funds and in particular our SCPIs, which didn’t just resist – they delivered an average of 4.60%, above the market average (4.18%). Our real estate portfolio, made up of 90% of core office, healthcare and residential assets, has shown optimal resilience. In a year when solidarity has been more necessary than ever, we decided to contribute to the national effort by civic engagement intended to help our most vulnerable tenants through targeted support solutions. We also dialled up our commitments to the Apprentis d'Auteuil and the Necker–Enfants Malades Hospital, two partners that we have long supported and to which we reaffirm our full confidence and warmly thank for their commitment to the most vulnerable. Lastly, as a pioneer of socially responsible investments, we were naturally among the first to undergo the SRI labelling process for real estate funds, and obtained the SRI label for our SCPI Primopierre and for our OPCI PREIM ISR. In 2021, we intend to expand our responsible approach and accelerate the deployment of our ESG strategy in France and in Europe”.

I/ 2020 A POSITIVE YEAR ON THE WHOLE

Inflows were in line with the volume of recent years for retail funds

With €1.89 billion collected in 2020 for its retail real estate savings solutions, Primonial REIM’s fund-raising was in line with the average raised in recent years (except for 2019 which was a record year for the entire market).

SCPI gross inflows  

The French real estate investment companies (SCPI) managed by Primonial REIM raised €971 million in 2020. Primonial REIM, is once again leader in the market in terms of funds raised for SCPIs, thereby reinforcing the appeal of its savings solutions to its distribution partners and savers.
These results can be explained in particular by the success of the SCPI Primovie, which is mainly invested in health and education properties and raised a total of €473 million, and SCPI Primopierre, mainly invested in office properties within the Paris inner ring and which raised €424 million.
At 31/12/2020, the capitalisation of all managed SCPI stood at more than €8 billion , which places Primonial REIM in the top three management companies in this market.

Gross inflows for investment vehicles in OPCI and SCI accumulation units

Investment vehicles in Real Estate Accumulation Units, such as Primonial Capimmo and the retail OPCI PREIMium available in life insurance contracts, raised €921 million in 2020.

Flows from the Real Estate Clubs Deals business were drastically lower in 2020 for operational reasons related to the pandemic (difficulty in conducting due diligence, foreign investors’ inability to travel and visit the asset, etc.). However, these transactions will take place in 2021, with a catch-up effect already observed at the start of the year.

Real estate investments continued with major acquisitions

2020 was a very active year in terms of real estate investments. Primonial REIM teams made 41 acquisitions representing a total of €2.6 billion, on behalf of managed real estate funds on the different asset classes, almost a quarter of which were in Europe (excluding France).

There were several emblematic transactions including:

In Offices:

• ‘Le Valmy’, 29,000 m², Montreuil (€216 million)
• ‘One Monceau’, 29,000 m², Paris 8e (€400 million)
• ‘Shift’, 47,200 m², Issy-les-Moulineaux (€620 million – preliminary agreement signed in 2020 and acquisition completed in January 2021)

In Health:

• A portfolio of 8 establishments for seniors, 52,000 m², in Germany (€145 million)
• The acquisition of 6 establishments for seniors, 44,000 m², in Northern Italy (€110 million)

In Residential:

• Long-term strategic partnership signed with In'li, a leader in intermediate housing in Île-de-France, for the development of a housing offering in the heart of Greater Paris

Asset disposals

At the same time, the Asset Management teams engaged in arbitrage in 2020 with the sale of 9 office assets, for a total volume of more than €350 million (already sold or with a preliminary agreement in place).

Appraisal values hold steady, rental recovery rate close to 95%

Appraisal values at 12/31/2020 have held steady regarding the values of 12/31/2019, which shows the resilience of Primonial REIM’s assets, 90% of which are office assets (located in Paris/inner ring and occupied by large companies), health/education in Europe, and residential buildings (located in metropolitan areas where demand is high).

The work by the asset management teams to collect rent or do fit out work for the tenants most vulnerable to the crisis has made it possible to achieve a 95% collection rate for rent receipts for all the buildings managed for the year 2020.

II/ THE 2021 OUTLOOK IS FAVOURABLE

The year 2020 had backed up Primonial REIM’s strategic asset allocation choices. For 2021, the management company intends to continue its development strategy and strengthen its presence in the major sectors it operates in, which are:

• Core office real estate located mainly in Paris and in the inner ring, in mature areas with very low vacancy rates, still sought after by large tenant companies;
• European health and education real estate, which is not very vulnerable to economic cycles and in great demand by investors looking for rental income secured by long-term leases;
• Residential real estate in European cities driven by strong rental demand and supported by favourable demographic trends, which generates returns and long-term capital gains.

While uncertainties remain at the start of the year, the context nevertheless offers more visibility in an environment of long-lasting low interest rates favourable to the real estate sector. Primonial REIM remains confident in the ability of its funds to meet their targets for 2021.

In addition, the Management Company intends to continue and accelerate the implementation of ESG best practices across all of its real estate assets in order to enhance the quality of its assets over time, report on its ESG progress to its investor customers, and strengthen its ties with its tenants.

¹ Funds raised includes amounts subscribed within retail funds. Source: Primonial Group
² Source: ASPIM-IEIF statistics on the market for units and the performance of SCPIs and OPCIs at 31/12/2020
³ Scope: assets under management correspond to the appraisal values of managed assets as well as the share of appraisals of unmanaged club deal assets and the values of other investments (listed property companies, UCITS, etc.) as well as crossed shareholdings.
⁴ All Primonial REIM SCPIs
*The performance and income of property assets/AIFs are not guaranteed

About Primonial REIM

Primonial REIM is a portfolio management company that was authorised by the Autorité des Marchés Financiers (AMF) in 2011. Its purpose is to design and manage a range of investment vehicles that reflect its strong convictions about real-estate markets. Its aim is to make SCPI real-estate funds – investing in office, retail, healthcare/education and residential properties – available to the widest possible audience.

As a portfolio management company, Primonial REIM creates and manages real-estate CIUs for institutional and retail investors. On 10 June 2014, Primonial REIM obtained AIFM (Alternative Investment Fund Manager) authorisation from the AMF, under which it is subject to increased obligations in areas such as reporting, liquidity monitoring and risk management. Its Executive Board consists of Grégory Frapet, Chairman, Stéphanie Lacroix, CEO and Tristan Mahaut, Corporate Secretary.