SFL: solid 2024 results, but merger parity disappoints

(CercleFinance.com) - Société Foncière Lyonnaise reported solid annual results for 2024 last night, but its shares were down on the Paris Bourse on Thursday due to a merger parity deemed unfavorable.


Rental income for the commercial real estate group, which has a strong presence in Paris's central business district, rose by 6.1% last year to 248.8 million euros, including a 7.1% increase on a like-for-like basis.

The physical occupancy rate of its offices in operation was maintained at a record level, reaching 99.4% at the end of 2024, compared with 99.7% a year earlier.

Its portfolio - including the Edouard VII and Washington Plaza buildings - is valued at almost 7.6 billion euros at market value, representing a year-on-year increase of 3.3%.

In a simultaneous press release, SFL unveiled the terms of its merger with Spain's Colonial, based on the exchange of 13 Colonial shares for one SFL share.

"These terms seem unfavorable to us, given current property prices and the non-compensation of net asset value", commented analysts at Allinvest Securities.

SFL's closing price was 82 euros last night, and Colonial's was 5.49 euros, meaning that the proposed exchange ratio would value SFL at 71.3 euros, a 14% discount to last night's closing price.

The share, whose free float is limited to 1.7%, lost 6.5% on Thursday on the Paris Bourse in the wake of these announcements.

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