SEMAPA : investors overview Société d'etude, de Maîtrise d'ouvrage et d'aménagement Parisienne, "Subsidiary" of the City of Paris

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1 Fitch Ratings : AA-/stable/F1+ (2017 june 7th) : investors overview Société d'etude, de Maîtrise d'ouvrage et d'aménagement Parisienne, "Subsidiary" of the City of Paris Prospectus EMTN : visas AMF & DPF NEuCP du 2017 july 21th autorisation Banque de France du /2014 nov,21th About Us Our Activities Financial information Funding 2018 January

2 Semapa: a subsidiary of the City of PARIS Equity structure: the City of Paris has 92% of the capital : - municipal authority : 66%, the Department of Paris : 26% (becoming on 2019 January 1 st The City of Paris ) - The Region Île-de-France : 8% Semapa is a Public Local Company: - Provides services in-house (Contrats de quasi régie in French). - Can be entrusted with missions without competition. The Regional Chamber of Accounts has the right to review Semapa. Semapa: a subsidiary of PARIS 2

3 The status of Local Public Company Its legal status was established by a couple of laws (2006 and 2010) inspired by European jurisprudence on in-house competition. Its structure is similar to the German Stadtwerke. Its legal status is very close to the Local Mixed Economy Company (established by the 1983 Act). Semapa: a subsidiary of PARIS 3

4 Legal characteristics of the company The legal form for the Public Society of Local Development (SPLA) created by the Development Act of 13/07/2006. Semapa is a special kind of Public Limited Company (Société Anonyme in French) governed by private law (no obligatory deposits with the Treasury, no public accountant). The control exercised over the PLC by the shareholders is similar to that exercised over their own departments. Shareholdership is reserved exclusively for the local public authorities (the minimum number of shareholders is 2 (art L CGCT)). The SPL is a contracting authority, subject to European competition legislation. Semapa: a subsidiary of PARIS 4

5 Strong involvement of the City of Paris Equipment and construction programs are determined by the City of Paris. Subsidies or participations by the City of Paris contribute to the overall balance of operations. In case the City of Paris modifies the programs, the economic balance must remain unchanged. Ex: In 2003, the programs were modified following a change in orientation related to the 2001 local elections. When an economic imbalance occurred (eg in 1997 following the real estate crisis of the 1990s), the city restored the equilibrium by reducing the equipment (expenses) to be realized Semapa: a subsidiary of PARIS 5

6 Institutional Framework Semapa carries out urban development projects that fall within the competence of the City of Paris. These projects: Happen within the framework of administrative contracts. Are usually defined as Concessions Agreements according to Article of the Code of Urban Development or within the framework of mandates. & are always asigned by Semapa s public shareholders (local authorities). Semapa: a subsidiary of PARIS 6

7 The activity of development and planning law Building permits are generally issued by the municipalities Within the metropolitan area of Greater Paris, the urban planning competence is exercised by the territorial public establishments (EPT) The City of Paris has all the skills of a municipality, a department, and an EPT as well. Semapa: a subsidiary of PARIS 7

8 Partnership Framework for Paris Rive Gauche (PRG) PRG is a project carried out under an agreement between the City of Paris and the SNCF (French National Railway Company). A Partnership Agreement was signed in 1991 and renewed in 2011 The land rights, land prices and the timing of transactions being determined in advance, the risk is reduced on these charges (approximately 40% of total charges). Semapa: a subsidiary of PARIS 8

9 Semapa s Business Lines Land Management (acquisitions, disposals). Public Works (roads, networks, structures). Urban Design and Architecture Studies. Operational Urban Planning : Regeneration of urban neighborhoods through the delivery of facilities funded by the sale of land and volumes. Financing of these operations. Semapa: a subsidiary of PARIS 9

10 Simplified flowchart of Semapa Board of Directors General Managing Directorate of Infrastructures and Construction Directorate of Planning and Urban Developpement Directorate for Development Corporate Communication Directorate Land and Legal Administration and Finance Semapa: a subsidiary of PARIS 10

11 Business Model & Activities PRG - Secteur Austerlitz 11

12 Economic model & developer s main tasks The developer performs two main tasks : - The implementation of a construction program. - The delivery of public facilities. Which are economically interlinked : - The constructability of the construction program generates revenues through the sale of equipped land to developers. - The construction of public facilities and spaces represents the charges that the revenues are supposed to cover, topped up by subsidies provided by the local authority. Semapa achieves added value through the purchase and resale of the land which is thereafter used to cover the development charges activities 12

13 The main operations in progress ZAC Paris Rive Gauche (PRG) : Urban Development Concession program to plan and develop 2.4 million m² of land, budget Bn 4.4. ZAC Bedier : Urban Development Concession, construction program: 74,000 m², budget : M 90. ZAC Rungis station : Urban Development Concession, construction program: 39,900 m², Budget : M 94. activities 13

14 key processes Urban design falling under the scope of the ZAC: Semapa defines the urban patterns, public spaces and constructible land plots (case studies, calls for projects / competition) and monitoring of the whole process (from authorization to realization). Implementation of public works (case studies, draft proposals, APS, APD, PRO, DCE, markets, conditions, DOE, DGD), followed by a public facilities program. Land acquisitions: planning, plot division, land surveying, decommissioning of publicly owned land, follow up to the land register (land plots acquired or to be acquired) Sale of building rights (land plots assigned to a construction program): sheet lot, consultation, negotiation, pre-contract, act of sale. Annual budget monitoring (reported to the City): Realised and forecasted income and expenses. Financing of the project cycle by debt guaranteed up to 80% by the City of Paris. Accountability reporting at the end of concession: justification of the implementation of of facilities and buildings, justification of the land register (acquisitions and disposals). activities 14

15 Paris Rive Gauche : principaux chiffres Concession of approximately 130 ha of land from the Austerlitz train station to Ivry. Total budget: Bn 4.4, Duration: Land acquisitions and development: Bn 1.6 ; - Transport networks and equipment: Bn 1.9 ; - Sale of building rights (2,400,000 m²): Bn 3.4 ; - Land transferred to the City of Paris: Bn 0.5 ; - Participations: Bn 0.3 ; - Financing via External Debt : Bn 0,4. activities 15

16 Paris Rive Gauche : the operation plan activities 16

17 PRG program equipment Semapa provides all the roads, networks, open spaces, parks and other facilities necessary for the life of the inhabitants of the neighborhood. The program includes: - The National Library of France; - Higher education buildings and facilities; - Diverse range of public facilities. The area contains about 50 ha of railway land, about 50% of which will be covered with concrete slabs on which buildings, roads and other facilities will be built. activities 17

18 Land Use (PRG) Housing: 585,000 m² - 7,500 housing units or about 20,000 inhabitants. - 6,000 are family dwellings of which 3,000 are social housing units and 3,000 private; - 1,500 are student housing units of which 750 social and 750 private. Public facilities: 665,000 m² - The National Library of France: 250,000 m²; - Higher education facilities: 210,000 m²; - Railway installations: 150,000 m²; - neighborhood facilities: 55,000 m². Offices: 745,000 m² - Hosting approximately 60,000 professionals. Commercial/Industrial land use: 405,000 m² - Craftwork; - Liberal activities; - Retail; - Research etc. Green space: 98,000 m² activities 18

19 Examples of ongoing projects (PRG) T6C: A building-bridge called Panorama - Designed by Marc Mimram / Icade. - Located in front of the National Library of France, Panorama stands above the railway. - The crossing distance (58m) and the space between the railway and the ground level of the public space being insufficient in this location, the aboveground construction cannot be supported with the usual concrete slabs. B3A: A Duo of skyscrapers: - Two sky rise buildings, one 175 m and the other 115 m high. - Designed by Ateliers Jean Nouvel / Ivanhoe Cambridge / Hines. - Located at the corner of the Bruneseau Street and the General Jean Simon boulevard. - Together they make up a duo symbolising the link between the city and its neighborhoods and between the urban space and its users. activities 19

20 Main tasks and processes Land acquisition Construction of facilities (roads, networks, including bridges, galleries..., gardens & other public spaces, as defined by the program of the ZAC (record of achievement) Preparation of the plots of land destined for sale (demolition works, depollution, earthworks...) including the coverage of railways where needed. Sale of the plots of land or (volume) with permission / possibility to build a defined program (offices, housing..., utilities) by the City (building program of the ZAC) Sale of public right-of-ways (land under roads...) to the City, whether against payment or free of charge. Transfer, free of charge, of the facilities (roads, bridges...) to the City, with some exceptions (example: buildings). activities 20

21 Accounts and financial information PRG - Secteur Tolbiac 21

22 Income statement summary 2016 accounts 22

23 P&L diagram accounts 23

24 2016 summary balance sheet : assets accounts 24

25 2016 summary balance sheet : liabilities accounts 25

26 Flow chart reflecting the business plan Les comptes 26

27 Rating, funding, City guarantee PRG - Secteur Masséna 27

28 Financial rating Semapa (Press release Fitch Ratings on 2017/06/07) Ratings Semapa : directly linked to those of the City of Paris Short-term rating : 'F1 +' : best rating, identical to the City of Paris Long-term rating : 'AA-, outlook stable, 1 notch below that of the City of Paris financial rating prepared with the City of Paris in a coordinated agenda, 1st rating 2014/07/21 Semapa s EMTN program rated by Fitch 'AA-/F1+' with or without City of Paris guarantee funding 28

29 The City provides a guarantee covering up to 80% of the debt bonds or bank loans can benefit from an explicit 80% guarantee from the City of Paris, as stipulated in the Prospectus (signed by the City as guarantor) The explicit guarantee requires a specific deliberation of the City for each guaranteed issue. This deliberation, which can only take place in view of the precise characteristics of the issue concerned, takes place after the issue. funding 29

30 Guarantee of the City Deliberation by the Council of Paris 2016 DFA 15 added to deliberation 2014 DFA 1028 Guarantees the debt to be issued ( ) to 456 Mn (80% of 570 Mn Covers the medium / long term financing ; does not guarantee ST funding funding 30

31 Monitoring and control by the City The City has over its subsidiary to control similar to that exercised over its own departments, under the SPLA Act (control specified by the bylaws) City's guarantee subject to the audit of the ratios "Galland Act" for development (guaranteed percentage : 80%, annuity limited to 5% of actual operating revenues) financial rating prepared with the City of Paris in a coordinated agenda bond issuance prepared with the City of Paris Quarterly forecasts and reports. funding 31

32 Issue of securities financing (EMTN) Bond program EMTN approved by the AMF (Financial markets regulator) ; 1 st Prospectus 2015/03/30, now n on 2017/02/02 Arranger: HSBC France Maximum amount of 340 ME Expected emission rate: 1 consultation per year (in January - February), which may include several programs; durations: 2 to 10 years Amounts issued: 70 ME in 2015 (EMTN 20, NSV 50), 2016: EMTN 80 ME, 2017: EMTN 60 ME Indicative margin levels: OATs %, or Eur % 1st issue and1st Prospectus approved by the AMF on 2015 funding 32

33 Issuing commercial paper (NEuCP Program) Securities not guaranteed by the City of Paris Program covered by the Banque de France; financial documentation of 2017/07/21 Arranger: HSBC France maximum amount 250 ME Issues within the limit of the back up, currently 160 ME Outstanding amounts usually between 100 and 160 ME, usual periods 1 to 6 months, levels close to the Euribor 1st issue on 2015; authorized by the Banque de France of 2014 funding 33

34 Financing currently in progress BORROWINGS (excluding NEUCP) and GUARANTEES City of Paris ( Mn ) 2017/09/30 type of loan subscribed on Deadline Amount loan Guaranteed quota Guaranteed capital Remaining capital fixed / variable rate Depreciable / in fine bank credit % variable in fine bank credit % variable in fine bond. NSV % fixed in fine bond. EMTN % fixed in fine bond. EMTN % variable in fine bond. EMTN % fixed in fine bank credit % (undrown) variable Depreciable Cash line N applic (undrown) variable in fine bond. EMTN % variable in fine bond. EMTN % variable in fine bond. EMTN % variable in fine total Of witch secured loans % Max guarantee : 570 * 80% = 456 ME % guarantee.awailable % funding 34

35 funding 35

36 funding 36

37 Financing requirement - Context The financing requirement stems directly from: - The nature of the urban planning activity. - The magnitude of the operations, especially PRG. As an urban planner, needs to: - Finance the facilities (construction works for roads and networks ( ) and land acquisitions) before it can collect revenues from building rights (sale of the plots of land) or subsidies (envisaged by the convention). The financing requirement (WCR) amounts to several hundred Mn, resulting from: - The amount of expenses (tens of Mn). - The duration of the project lifecycle: several years. - Financing strategy cannot be based solely on equity or on advances from shareholders; external funding is therefore necessary. History : : banking pools guaranteed by the City of Paris 473 Mn - Refinancing of the residual (142 Mn), Additional financing provided by banks in 2010 (215 Mn) and in 2014 (150 Mn). - Direct Funding in 2015 (70 Mn), 2016 (80 Mn and in 2017 (60 Mn) funding 37

38 Information & contact : 69/71 rue du Chevaleret PARIS Tel : (33) Annual Reports and financial documents Chief Financial Officer : Mr. Dominique ADAM 38