AFC Promotion #3

Presentation of the company

AFC Promotion is the holding company set up in 1997 of the AFC Promotion group active in the real estate development sector. The AFC Promotion group, managed by Alexandra François-Cuxac, has 39 employees and is based in Biarritz. AFC Promotion is a key promoter in the South West of France and is present in 4 major cities : Bordeaux, Biarritz, Toulouse and recently with its development in Paris and in the genevan region.

The group’s main activity is the creation of residences or grouped houses divided into three categories :

• The “accessimes”: balance between reasonable prices and contemporary designs
• The “belles résidences”: profitable investment in intermediate housing
• The “collection”: high-end apartments

AFC stands out from its competitors by the abitability of its housing, each apartment is designed and furnished with taste.

Alexandra François Cuxac has more than 25 years of experience in promotion and is also President of the National Federation of Real Estate Developers (FPI).

Project Description

The company requests a loan of 900 000 € over 36 months with 6 months of deferred repayment to finance the group’s communication, the open of Paris and Genevan region branches. This project will be realised in the next few months.

As a reminder, the October lending community supported AFC Promotion in September 2016 and July 2017 with 1 000 000 € and 1 050 000 € to finance the development of programmes, in Paris and the recruitements.

This project is a Flexible Bridge Loan, an amortizable loan with a standard commitment for the first 9 months and the possibility of early repayment at no cost for the remainder of the loan term, even in the event of refinancing by other financial institutions.

This project is a medium-term loan with a capital amortisation deferment and as such presents a different method of capital repayment than standard projects. The first 6 months, the lenders will only receive interest; the following 30 months, the lenders will receive interest and principal amortization. This principal repayment profile matches the borrower’s financing needs while allowing lenders to earn a higher amount of interest.

The amount offered on the platform is limited to 441 000€, which is in line with the regulatory limits.

Analyst’s Opinion

The borrower is a holding company whose revenues are derived from services invoiced to its subsidiaries. The financial analysis was carried-out on consolidated financial statements, which reflect the group’s performance.

With a turnover of 37 716 000 € in 2017 and an experienced team, the group has a good track record combined with an acceptable operating margin.

The varation of the revenue is linked to the postponement of programmes from one year to the next. In 2018, the revenue is in decrease because of postponement of programmes. However the numbers of bookings increased of 17%, the order book is of 298 millions € in operations to be carried out in the coming years. The forecast is based on the 2019 planned performance .

The group has a correct repayment capacity with a forecast FCCR (Fixed Charge Cover Ratio *) at 1,17 and a strong financial structure, with a forecast net debt / ebitda ratio of 3,30 and a net debt / shareholder equity of 70%.

The analysis of the project leads to a credit rating of B and a 7,75% annual interest rate.

*The multiple of FCCR at 1,17 means that the company has a safety margin of 17% relative to its ability to repay its credit maturities.

The expert opinion is given as an indication on the basis of the elements provided by the project holder and information from our databases (External data provider). This opinion is only an element of reflection in the decision making of a lender to participate in the financing of a project.

Strong points:

• Good historical performance based on diversified client base.
• Correct repayment ability with a forecasted FCCR of 1,17 reinforced by the support of banking pool.
• Manager of 25 experience years in the sector and president of the National Federation of Real Estate Developers.

Point of caution:

• Cyclical real estate development activity.