Officiis Properties, which was founded on April 18, 2003, was acquired by the Swiss real estate company Züblin Immobilien Holding AG (“ZIHAG”) at the end of 2005 and was listed on Euronext stock exchange in March 2006. Officiis Properties opted for the status of a listed real estate investment company (SIIC) in April 2006.
Financial difficulties following the 2008 crisis
- The financial crisis of 2008 significantly impacted the commercial real estate sector, causing an erosion of Officiis Properties’ rental revenues. This decline in revenues was exacerbated in 2011, with the departure of its two main tenants, which accounted for 47% of its rental revenues.
- In addition, the obsolescence of the buildings, built in the 1970s, required major renovation to attract new tenants, delaying their lease up during the renovation phase.
- Officiis Properties’ results, as well as its financial standing, were thus strongly affected by the vacancy of its assets and the need to renovate them.
- On March 31, 2015, Officiis Properties had a 60% vacancy rate, a net loss of €66 million, an LTV ratio of 95%, and could not afford to repay its €146.4 million in bank loans maturing in June and August 2016.
- It is in this context that ZIHAG took the decision to divest from Officiis Properties by appointing BNP Paribas to find a strategic investor.
Financial rescue in July 2015
- The takeover of Officiis Properties and its financial bailout in July 2015 by REOF Holding and TwentyTwo Credit I were approved by the AMF in its visa n°15-402 dated July 22, 2015 (Link to AMF website, Link to operation note).
- REOF Holding was exempted from launching a public tender offer for the capital of Officiis Properties pursuant to the provisions of Article 234-9 2°) of the AMF’s General Regulations, which provides for such an exemption in the event of a subscription to a capital increase of a company in proven financial difficulty.
- REOF Holding and TwentyTwo Credit I contributed 41 million euros of new capital in the form of new shares, convertible bonds and an unsecured subordinated loan between July 2015 and August 2017. These sums were used to (i) reduce Officiis Properties’ bank debt, (ii) refinance that debt with a new 5-year mortgage loan, (iii) finance the renovation of its properties, and (iv) finance its operating losses until the re-letting of its properties.
- In September 2016, TwentyTwo Credit I continued to support Officiis Properties by renewing until July 2020 a €100 million subordinated and unsecured loan purchased in July 2015 from ZIHAG. The terms of the renewal of this loan were approved by Officiis Properties’ board of directors on September 21, 2016, a majority of whose voting members had no relationship with REOF Holding, TwentyTwo Credit I or their respective ownership groups. The terms and conditions of this renewal were analyzed by an independent financial expert who concluded that they were consistent with the terms that the market could then offer for this type of loan. These terms were overwhelmingly ratified at a general meeting on July 7, 2017 by 99.7% of Officiis Properties’ shareholders.
Exit from the public market and current situation
- Officiis Properties was delisted by way of a public repurchase offer and a squeeze-out on October 16, 2019, following approval of the operation by the AMF on September 3, 2019 (Link to AMF website).
- A very small number of former minority shareholders, all finance professionals, invested in Officiis Properties in the first half of 2018 speculating on a delisting following Officiis Properties’s decision to dispose of most of its real estate assets. In the context of this delisting, these former shareholders made several criticisms, the main ones relating to elements which they were fully aware of at the time of their investment. The AMF emphasized that it had taken these main criticisms into account in its approval, which was moreover not subject to any appeal.
- Officiis Properties is currently wholly owned by REOF Holding and no longer has any minority shareholder.
- Officiis Properties’ financial statements have always been approved without reservation by its auditors, and Officiis Properties has repaid all of its bank debt in accordance with its terms.
- The unsecured subordinated loan granted and renewed by TwentyTwo Credit I in September 2016 was fully repaid on August 30, 2019.
- The transactions carried out since July 31, 2015 have enabled the shareholders present on that date to benefit from an increase in the value of Officiis Properties’ shares from €0.9/share to €1.2/share at the time of the mandatory squeeze-out, i.e. an increase of 33%.