Altarea : PR and activity report

Press release H1 2016 results

Paris, 28 July 2016, 5:45 pm

Strong increase in recurring income (FFO1): + 15.3% A confirmed growth dynamic over all business lines Strong results growth

• Recurring income (FFO): €92.0 million (+15.3%) i.e. €6.96/share (+10.8%)

• Diluted Going Concern NAV: €132.6/share (+4.8% over one year)

  Positive operational dynamic over all business lines

• Retail REIT: Strong rents increase to €86 million (+6.8%)

  • Tenants' revenue up by +2.2% (+70bps)2

• Development: New orders (Residential and Offices) up by +38% to €1,204 million

  • Residential sales: 4,000 units (+47%)

    A confirmed growth dynamic

• Leader in French metropolises' real estate development: €14.3 billion in the pipeline3

• Growth notably financed by the €369 million in equity raised this half-year (LTV at 40.8%)

• Short and medium term FFO/share increase driven by the strong Development growth (2016 and 2017 targets at €13.50 and €14.50 respectively)4

• Long term growth fed by the retail REIT pipeline (doubling of rent forecast)

Paris, 28 July 2016, 5:45 pm. Following review by the Supervisory Board, Management approved the H1 2016 consolidated financial statements. Limited review procedures have been carried out. The Auditors' certification report is being issued with no reservations.

1 Funds From Operations or recurring income from operations: net profit excluding changes in value, calculated costs, transaction fees and changes in differed tax.

2Iin France.

3 Estimated market value of total secured projects. Projects in this pipeline are almost all secured as options that the Group can activate according to market opportunities.

4 Despite the dilution due to the strengthening of equity: 2,514,790 shares created during the half-year, i.e. 20% of share capital as at 31 December 2015.

"We operate in a mixed economic environment with, on the one hand, a feeling of anxiety due to terrorism and uncertainty over the future of the European Union, and on the other, a context of very low interest rates that makes property investments attractive for households and institutional investors. This environment makes real estate even more seen as a safe haven. With regard to Altarea Cogedim, this half-year was marked by the confirmation of the outlook announced during the last capital increase.

Firstly, confirmation of the results driven by all business lines. We can see the impact of a more favourable economic environment for real estate, but the Group's overperformance can be explained notably by the Group's operational positioning which puts the customer at the heart of its model.

Confirmation in terms of property development, which changes dimensions. Market share gains in residential property are ahead of our strategic plan and our positioning in Office Property shows its relevance in a context of a shortage of quality products. Our Group is in the top three of French developers and has emerged as the leader in the development of French metropolises. Altarea Cogedim is the only French property group capable of offering global solutions integrating all asset classes and the major mixed- use bids won this half-year, in Issy-les-Moulineaux and Bordeaux Belvédère, are a perfect illustration (our retail expertise being key to these successes).

Equally, there is confirmation of the dynamism of retail REIT, the growth of which is driven by its project pipeline and whose size will double in the long term, as the on-going projects come into operation. Continued concentration of the portfolio on prime assets (regional shopping centers, travel retail, major retail parks) also strenghten the REIT's recurring revenues.

Confirmation in terms of the shareholder model: Altarea Cogedim was able to count on the support of its shareholders, both for the payment of the dividend in shares - an option chosen by 91.7% of them - and during the share capital increase which was massively subscribed. These combined transactions contributed to reducing the Group's LTV to 40.8% (compared to 44.5% at 31 December 2015). Our extremely solid financial structure is the basis for our ambitions, thus providing Altarea Cogedim with the means to increase our development capacities. In parallel, we will continue to be extremely attentive to risk management, which will be considerably reinforced given the context.

Confirmation lastly of our financial outlook, thanks to developments that will drive FFO growth over the coming three years at least, and thanks to a portfolio of shopping centre projects that gives a more long term visibility to FFO growth. It is for this reason that we confirm our FFO target of at least €13.50/share in 2016 and €14.50/share in 2017, despite the impact of the dilution due to the strengthening of equity."

Alain Taravella, Chairman and Founder of Altarea Cogedim

CONTENTS

1. Altarea Cogedim, building up French metropolises
2. New dimension in development
3. REIT: Target of rents' doubling thanks to the project pipeline
4. A strengthened financial structure
5. Strong growth in financial results

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1. ALTAREA COGEDIM, BUILDING UP FRENCH METROPOLISES

   A geographical focus on 12 French metropolises

   Altarea Cogedim has focused its activities on 12 French metropolises5that capture most of the country's demographic and economic growth on less than 10% of its land area. This territorial targeting allows the Group to benefit from the momentum in growth areas.

   A unique multi-product development model in France

   Altarea Cogedim is the only French property group to have development know-how in all asset classes. This positioning has enabled the Group to secure one of the largest portfolios of real estate projects in France, representing 3.4 million m²6(all products combined), or the equivalent of €14.3 billion in market value (+19% over the half-year). This project portfolio is almost exclusively secured in the form of options that the Group can activate according to market opportunities.

   Secured pipeline	Surface areas7	Potential value8
   Shopping centres	507,500 m²	€3,128m
   High-street retail	146,000 m²	€449m
   Offices	843,100 m²	€2,717m
   Residential	1,881,600 m²	€7,995m
   TOTAL	3,378,200 m²	€14,290m

   Increased leadership in major mixed-use projects

   During this half-year, the Group won two major competitions, which will feed its pipeline of major mixed- use projects:

   • Issy Cœur de ville: an eco-neighbourhood of over 100,000 m² in Issy-les-Moulineaux, which plans for a new generation retail offering, 40,000 m² of residential property and 40,000 m² of offices, organised around an urban park.

   • Bordeaux Belvédère: a development project in the Belvédère quarter of Bordeaux, with a surface area of 140,000 m² combining residential property, offices, retail and culture9.

   With these 2 major projects, the Group brings to 9 the number of on-going major mixed-use projects10in which it operates, for a total of nearly 575,000 m² and €1.7 billion of potential revenue.

   5 Greater Paris, Nice Côte d'Azur metropolitan area, Marseille-Aix-Toulon, Toulouse metropolitan area, Greater Lyon, Grenoble-Annecy, Nantes metropolitan area, Bordeaux metropolitan area, Strasbourg Euro-metropolitan area, Lille European metropolitan area, Montpellier Mediterranean metropolitan area and Rennes metropolitan area. The Group is also present in Bayonne.

   6 Floor area of shopping centres and convenience stores: m² of GLA created, Office floor area: floor surface area or usable surface area, residential surface area: habitable surface area (properties for

   sale + portfolio).

   7 Shopping centres and convenience stores: surface area: GLA in m² created. Office floor area: floor surface area or usable surface area. Surface area residential: property for sale + future offering8 Market value incl. taxes as of delivery date. Value of shopping centres: Net rental income capitalised at a market rate. High-street retail value: development revenue. Offices value: share of the amounts signed for off-plan sales/PDCs, or share of capitalised fees for DPM, or cost price at 100% for AltaFund. Value of housing: Sale offer + portfolio price.

   9 The Group takes part in this project as a 50% co-development.

   10 Bezons Cœur de Ville, Strasbourg Fischer, Hospices Civils Lyon, Toulouse Montaudran, Gif-sur-Yvette, Massy Place du Grand Ouest, Villeurbanne, Bordeaux Belvédère and Issy Cœur de ville.

2. NEW DIMENSION IN DEVELOPMENT

New orders (offices and residential property): €1,204 million, up +38%

Driven by a favourable context, particularly in terms of interest rates11, property development has seen strong growth in France. In this context, the Group has outperformed the market with growth of +38% of its half-year orders, and has strongly become one of the top three French developers.

Sales (incl. Tax)	H1 2016	H1 2015	Change
Residential	€961m	€641m	+50%
Nbr of units	4,000 units	2,717 units	+47%
Offices	€243m	€233m	+4%
TOTAL	€1,204m	€874m	+38%

Development revenue (offices and residential) was up +22% at €612 million, for net profitability of 7.7% before taxes

Given the time lag associated with the percentage of completion accounting method, the revenue growth (+22%) does not yet reflect the very strong growth in investments which should have a substantial impact from H2 2016, and in particular in 2017 and 2018.

€ millions excl. tax	H1 2016	H1 2015	Change
Development revenue	612.1	503.7	+22%
o/w Residential	506.0	450.8	+12%
o/w Offices	106.1	52.9	+101%
Cash flow from development activities	47.1	33.0	+43%
Operating margin	7.7%	6.6%	+110 bps

However, the growth in investments over the half-year has already begun to impact the Group's backlog, with growth of +30% to €2.7 billion since the end of 2015.

€ millions excl. tax	H1 2016	2015	Change
Residential backlog	2,187	1,739	+26%
Office backlog	503	328	+53%
Total Development backlog (excl. tax)	2,690	2,067	+30%
Number of months	22	22

Residential: +50% sales growth equally spread between organic and external growth (Pitch Promotion)

In a favourable context, the Group has accentuated its market share gains, in particular in entry-level and mid-range12products which now represent 70% of sales (in number). Individual reservations13were the source of most of this growth, which should have a favourable impact on the Group's average margin in the longer term.

Sales (incl. Tax)	H1 2016	H1 2015	Change
Individual reservations	€755m	€439m	+72%
Sales to institutional investors	€205m	€202m	+1%
TOTAL in value terms	€961m	€641m	+50%
Individual reservations	2,830 units	1,626 units	+50%
Sales to institutional investors	1,170 units	1,091 units	+4%
TOTAL in number of units	4,000 units	2,717 units	+38%

11 The average rate of property loans fell to under 1.70%, down by 70 bps over one year.

12 Programs priced at under €5,000/m² in the Paris Region and under €3,600/m² outside of Paris.

13 73 programs were commercially launched for around €1,300m incl. tax and 5,600 units, i.e. 73% more than in H1 2015.