Societe Fonciere Lyonnaise : 2022 integrated report

SFL offers an innovative vision for commercial property in the heart of Paris. Thanks to its exceptional talent for redeveloping distinctive properties, SFL holds a unique position in the prime segment of Paris' commercial property market.

Located in Paris, SFL's buildings stand out for their remarkable architecture that combines modernity, heritage and innovation with sustainability.

SFL considers the transformation of these buildings and their present and future uses to be a long-term commitment. In designing and adapting its properties, it ensures they are attuned to the women and men that use them and are in harmony with the surrounding neighbourhood.

In its first integrated report, SFL presents the vision, commitments and convictions that drive it to transform its properties in a sustainable, valuable way - in line with the strictest environmental standards - and tackle the environmental challenges of its time.

VALUES & VISION

A look back at 2022

Significant events of the yearRobust, engaged governance

CONVICTIONS & STRATEGY

Value creation model

Paris, the endless source of inspiration at the heart of SFL's strategy

Projecting ourselves into a low-carbon future

02 04

The art of sustainable transformationBiome, a compelling embodiment of SFL's expertise

06

08

Rives de Seine, a quintessence of renovation and greenery

10 12 14 16 18 20 24

PORTFOLIO & PROJECTS

Locations and key figures

Our business centres

Our office buildings

Our projects

RESULTS & PERFORMANCE

Lettings

Development

Property purchases and sales

26

Rental income

Our tenants

28 30 38 42 44

Financial performance

Debt and financing

Property portfolio and NAV

EPRA performance indicators

Ownership structure

46

48

49 50

51 52 54 56 58 60

Values & Vision

1

Values

SFL IS A COMMERCIAL PROPERTY COMPANY THAT MANAGES AN €8.2 BILLION PORTFOLIO OF PRIME ASSETS FOR PRESTIGIOUS TENANTS AND THEIR EMPLOYEES. IT IS PURSUING A GROWTH STRATEGY INFORMED BY AN INNOVATIVE VISION, DRAWING ITS STRENGTH FROM THE PROVEN

RESILIENCE OF ITS BUSINESS MODEL.

&

2022SFL Integrated Report

Vision

Cézanne Saint-Honoré

> Pere Viñolas Serra

Chairman of SFL

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ere are a multitude of powerful synergies between SFL and Colonial. How do they contribute to each other's growth?

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2022SFL Integrated Report

P.V.S.: We share the same vision. For both SFL and Colonial, quality and high standards always have to be part of the equation. We feel that position-ing ourselves in the prime segment is the best way to meet company needs in their leased offices and work spaces. Our strength and resilience are derived from this belief. SFL has extensive experience in this segment, and its presence in Par-is - one of the highest quality markets in Europe, but less volatile than London and Madrid, for example - attracts high-value tenants.

over 99.5%

occupancy rate

-

What does it mean to be a prime commercial property company?

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P.V.S.: For us, it's not just about collect-ing beautiful buildings in a beautiful city. Above all, we believe in the high-end pri-marily because we feel that it is the best way, indeed, the only way to meet the real needs of the market. What are companies looking for today? ey want offices that convey an experience, premises that are designed and managed to protect the en-vironment and work spaces that are effi-cient, i.e., easily accessible, modular and high-performance. Only the most premi-um, well located offices can meet all these criteria. Location has a high human value. In reality, it's not luxury that counts, but efficiency.

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As Chairman of EPRA*, what is your vision of the European commercial property market?

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P.V.S.: Our business is experiencing sev-eral paradoxes. e first is the mismatch between the increasingly uncertain im-age of the office - people everywhere are questioning its future, its usefulness, etc. - and SFL's extraordinary performance in terms of projects, occupancy rates, rental income, etc. SFL enjoyed its best year ever in 2022. e second paradox is reflected in the success of prime offices at a time when financial markets have been particularly negative across the board this year. Inflation has spurred a rise in interest rates, but this hasn't dampened investor interest in prime commercial property. When a property company is able to demonstrate its resilience, its assets and financial per-formance take on extraordinary strategic value, which is highly appealing and very promising.

* European Public Real Estate Association (EPRA).

> Dimitri Boulte

Chief Executive Officer

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In 2022, SFL delivered its best performance ever. What were the driving factors?

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D.B.: is was indeed an historic year for SFL. Our occupancy rate exceeded 99%, half our leases are locked in for five years or more, and our rental income topped €200 million. is is an outstanding per-formance. ese results mean that we can move forward today and tomorrow with peace of mind, secure in the knowledge that our unique positioning is valid and our business model is robust. ey also confirm three of our convictions: first, that demand for prime office space remains very strong (the office is not dead!); second, Paris has never been so attractive to our tenants; and third, companies have shifted the way they look at their offices, which are strategic for most of them and represent a real investment, not just a cost centre. e prime office, which enhances social cohe-sion and fosters collective intelligence, is becoming a key value for companies.

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Is the notion of value-creating offices a core component in the

SFL model?

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D.B.: Yes. We've been advocating this con-cept for a long time and we've now made it a reality. For SFL, the office is more than just a workplace. It's a place for interaction and socialising, that demands a special ap-proach, guided by a dedication to offering a nice place to work and get together, a space with all the amenities needed to support a healthy work-life balance. is is regu-larly confirmed by Paris area office users in our Paris Workplace surveys**. Today, we're proud that our tenants are choosing prime offices capable of delivering all these features. Plus another major criterion: an ambitious environmental commitment. e office has to become a company's man-ifesto.

** See page 15.

"We have mastered the art of sustainable transformation, both technically and architecturally, and are a major player in Paris' prime office market."

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What is SFL's position on corporate social responsibility?

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D.B.: Here too, this has long been one of our most deeply held beliefs, and it's a real change in our industry. We can no longer continue to build and transform assets as we did in the 90s or 2000s. A building's life cycle is very long, just like its transformation process. Our up-grades and refurbishments are designed and built to last as long as possible. ey enable the building to be renovated and improved to meet new needs and future uses, no matter what they are. All that without having to undertake extensive structural works, which would be high-ly carbon intensive. Today, all our assets have been certified or awarded a green label. We were pioneers in this area, be-cause we felt that certification was a deep underlying strategic trend that would be increasingly demanded by our tenants. We are constantly raising the bar in this regard. With Biome, for example, we led one of the first over 20,000 sq.m. projects in Paris to be BBCA Rénovation-certified. Sustainable transformation is embedded in SFL's DNA.

100%

of assets certified

Significant events of the year

- ACQUISITIONS AND DISPOSALS -

An asset rotation strategy designed to refocus on inner Paris and increase average asset size

2022SFL Integrated Report

In April 2022, SFL acquired the Pasteur building from Primonial REIM France for €484 million (excluding transfer costs paid by the vendor). e near-ly 40,000 sq.m. property is located at 91-93 boulevard Pasteur in the 15th ar-rondissement of Paris, right next to the Montparnasse train station, and is cur-rently let to Amundi under a 12-year non-cancellable lease.

In May 2022, SFL sold the 6,300 sq.m. Le Vaisseau building in Issy-les-Moulineaux to the Institut Catholique de Lille for €27 million excluding transfer costs.

On 31 January 2023, a sale agreement was signed for the 6 Hanover building.

€457m

in net property purchases

- LETTINGS -

Occupancy rate at an all-time high

Despite the sharp deterioration in the geopolitical and economic situation and contrary to the trends observed in oth-er markets in the Paris region, the Paris commercial property rental market was very active in 2022, particularly for high quality properties in prime locations. In this environment, the Group signed leases on some 47,000 sq.m. of space during the year, including the pre-let-ting in full of the Biome office building.

99.5%

occupancy rate

€716/sq.m.

average nominal office rent

36,900 sq.m.

of office space let

8,600 sq.m.

of leased retail space

Find out more about all our highlights in the presentation of our 2022 annual results

- DEVELOPMENT -

Louvre Saint-Honoré and Rives de Seine

At year-end 2022, properties undergo-ing redevelopment represented 14% of the total portfolio, with the Group's two major projects in progress accounting for 75% of the pipeline:the retail space in the Louvre

Saint-Honoré building, whose nearly 20,000 sq.m. are scheduled for de-livery in late 2023 to the Richemont group (Cartier);

the 23,000 sq.m. Rives de Seine office building, which was vacated by the tenant and is being extensively rede-veloped for delivery in first-half 2026.

- DELIVERY -

Biome, SFL's environmental performance benchmark

In November 2022, SFL delivered the Biome building to tenants Sfil and La Banque Postale following its ambi-tious architectural transformation. e 24,000 sq.m. of office space was entirely pre-let prior to delivery, demonstrating its outstanding appeal forged by the tal-ented collaboration between SFL, Jouin Manku (architectural concept and de-sign) and Yrieix Martineau Architecture (lead architect). One of the first low-car-bon BBCA Rénovation projects in Paris, Biome has also set the new benchmark in environmental performance.

e Cézanne Saint-Honoré building was also delivered during the year, in June, and was 90% pre-let.

- FINANCING -

Disciplined financing strategy with a strong environmental focus

In an environment shaped by a steep rise in interest rates, the Group carried out a number of operations during the year, including mainly:

€198moftapsissued; €350millioninnewfive-yearrevolv

-ing lines of credit;€175 million in a rolled-over three-year revolving line of credit;€300 million in a new term loan.

e vast majority (€725 million) of these new facilities are loans whose interest rates depend on the Group's progress in reducing its carbon footprint and other environmental performance criteria. In addition, in early 2022, SFL converted all of its bond issues to green bonds.

80%

of debt classified as "green"