Breaking Down Société Foncière Lyonnaise Financial Health: Key Insights for Investors

Founded in 1879 by Henri Germain, Société Foncière Lyonnaise has evolved into a pillar of Parisian prime commercial real estate-with a portfolio valued at €7.6 billion, an occupancy rate of 99.4% and appraisal growth of 3.3% in the latest year-before its absorption by Inmobiliaria Colonial (which held 98.24% of SFL) under a merger completed on 1 October 2025 that exchanged 13 Colonial shares per SFL share (with an exit price of €77.5 for dissenters); SFL's model of acquiring, redeveloping and leasing premium office and retail space produced rental income of €122.6 million and a net attributable profit of €100 million in H1 2025, supported by record average office rents above €1,000/m² and a development pipeline with potential reversionary income of €79.0 million-details that trace its history, ownership shift, mission toward sustainable, high-value assets, operational mechanics and the financial levers behind its market-leading position.

Société Foncière Lyonnaise (FLY.PA): Intro

• Founded: 1879 (Henri Germain)
• Core focus: Prime office & retail in Paris CBD
• Portfolio valuation (2024): €7.6 billion
• Corporate transformation: merger into Inmobiliaria Colonial (completed 1 Oct 2025)

• 1879 - Company founded by Henri Germain.
• Late 20th / early 21st century - Shift toward premium Paris office & retail portfolio.
• 2024 - Portfolio valued at €7.6 billion.
• Nov 2024 - Inmobiliaria Colonial announces intention to absorb SFL.
• Mar 2025 - Merger agreement signed (exchange ratio and exit price determined).
• 1 Oct 2025 - Merger completed; SFL dissolved and assets/liabilities transferred to Colonial SFL, SOCIMI, S.A.

• Rent from long-term office and retail leases (core recurring income).
• Indexation of rents to CPI or contractual escalators preserving real income.
• Asset rotation - selective disposals and reinvestment to capture value uplift.
• Refurbishment and repositioning premiumization to command higher rents and reduce vacancy.
• Value creation through lease renewals, tenant mix optimization and yield compression in prime Paris.

• Concentration on high-quality micro-locations in Paris to preserve low vacancy and pricing power.
• Active capex programs to improve ESG ratings, energy efficiency and tenant attraction.
• Lease diversification by sector and tenant credit to mitigate single-tenant concentration risks.
• Prudent leverage and funding strategy aligned with long-term, stable cashflows.

Société Foncière Lyonnaise (FLY.PA): History

• Prior to the merger, Inmobiliaria Colonial held a 98.24% stake in Société Foncière Lyonnaise (FLY.PA), making it the de facto majority shareholder.
• The merger was structured with an exchange ratio of 13 Colonial shares for each Société Foncière Lyonnaise share, providing remaining FLY.PA shareholders Colonial shares in exchange for their holdings.
• An exit price of €77.50 per Société Foncière Lyonnaise share was established for shareholders who opposed the merger; this price was adjustable based on Société Foncière Lyonnaise's dividend prior to the merger.
• The transaction completed on 1 October 2025, resulting in the dissolution of Société Foncière Lyonnaise and the transfer of all its assets and liabilities to Colonial SFL, SOCIMI, S.A.
• Post-merger, Colonial SFL, SOCIMI, S.A. became the sole surviving entity, integrating Société Foncière Lyonnaise's operations and assets into Colonial's structure to simplify the corporate group and reinforce its prime Paris real estate positioning.

• Integration effects: transfer of all assets and liabilities from Société Foncière Lyonnaise to Colonial SFL, SOCIMI, S.A.; elimination of standalone FLY.PA listing.
• Shareholder mechanics: remaining FLY.PA holders received Colonial shares at the agreed ratio or the cash exit price if they exercised dissent rights.

Société Foncière Lyonnaise (FLY.PA): Ownership Structure

• Mission and values centered on owning and managing premium office and retail properties in the Paris CBD for prestigious corporate and institutional tenants.
• Emphasis on creating 'value in use' - upgrading functionality, services and experience to make assets more attractive and productive for occupiers.
• Commitment to sustainable real estate: progressive carbon-reduction targets, energy-efficiency renovations and integration of ESG criteria into asset management to 'build the city of tomorrow.'
• Operational performance demonstrated by a high occupancy rate (around 98%), reflecting strong tenant demand and effective asset management.
• Portfolio impact quantified by a portfolio valuation of approximately €7.6 billion, underlining SFL's material role in the Paris prime market.
• The strategic merger with Colonial was positioned as consistent with SFL's values of long-term value creation and scale-focused growth in prime office real estate.

• Rental income from long-term leases to corporate and institutional tenants in prime Paris locations.
• Asset rotation and selective disposals/redevelopments to crystallize value and recycle capital into higher-yielding opportunities.
• Value-enhancing capex (refurbishments, densification, service upgrades) to increase rents and letting speed.
• Active balance-sheet management (debt optimization, selective equity moves, strategic partnerships) to support growth and returns.

Société Foncière Lyonnaise (FLY.PA): Mission and Values

• Core focus: acquisition, development and operation of prime office and retail properties in Paris CBD.
• Active portfolio management: remodelling large office complexes, optimizing tenant mixes, and increasing leasable value.
• Sustainability: integrating energy-efficiency upgrades and low-carbon building practices to reduce emissions and align with "city of tomorrow" objectives.
• Capital markets profile: listed on Euronext Paris - Compartment A, credit-rated S&P BBB+ with a stable outlook.

• Asset acquisition: target premium location properties with upside from refurbishment or re-tenanting.
• Value-add development: invest in remodelling and repositioning (common areas, floor layouts, façades, HVAC) to command higher rents.
• Active leasing and tenant management: prioritize long-term leases with blue-chip corporates to sustain occupancy and rental growth.
• Portfolio optimization: sell non-core assets and redeploy capital into higher-yielding redevelopment projects.

• Rental income: principal recurring revenue from long-term office and retail leases in prime locations.
• Asset rotation gains: one-off profits from disposals of repositioned or non-core assets.
• Development margins: uplift generated by redevelopment and densification projects that increase rentable area or allow premium re-leasing.
• Fee income/ancillary services: property management and service charges passed through to tenants.

• Remodelling major office complexes to increase net effective rent per sqm and lengthen lease terms.
• Identifying high-potential rental units for fit-outs that deliver immediate rent uplifts and higher occupancy.
• Using selective disposals to crystallize gains and recycle capital into higher-return redevelopment opportunities.

• Merger with Colonial streamlined operations by folding SFL's asset base and management expertise into Colonial's platform, aiming to enhance operational efficiency and scale synergies.
• Integration targeted portfolio rationalization, unified leasing platforms and consolidated sustainability programs to accelerate carbon-reduction initiatives across the enlarged portfolio.

Société Foncière Lyonnaise (FLY.PA): How It Works

• Core income: long‑term lease contracts with prestigious corporate and institutional tenants, producing stable rental revenues.
• Active asset management: intensive repositioning, refurbishment and re‑letting to lift rents and occupancy.
• Development and redevelopment: conversion and extension projects to increase leasable area and market rents.
• Portfolio optimization: targeted disposals and acquisitions to improve yield and growth profile.
• Capital structure management: use of leverage, refinancings and shareholder options (including the Colonial merger offer) to maximize shareholder value.

• Base rent: recurring contractual payments from office and retail leases directly drive top‑line revenue (H1 2025: €122.6m).
• Rent reversion: active leasing and redevelopment push market rents above €1,000/m² in 2025, increasing future cash flows.
• Occupancy leverage: near‑full occupancy (99.4%) secures high cash conversion and minimizes vacancy losses.
• Development uplift: pipeline projects with €79.0m potential reversionary income expand EBITDA without proportional asset purchases.
• One‑off gains: selective disposals and value‑creating redevelopments can produce capital gains and free up capital for higher‑return investments.

• Tenant mix and lease length: focus on creditworthy, long‑term tenants to stabilize income and lower renewal risk.
• Asset concentration management: geographic and asset‑class priorities (prime Paris offices/retail) to preserve pricing power.
• Financial policy: prudent leverage and liquidity buffers to fund redevelopment and absorb market cycles.
• Shareholder options: merger with Colonial structured to give SFL shareholders choice-remain invested in combined entity or access liquidity.

• Strong H1 2025 results: €122.6m rental income and €100m net attributable profit indicate efficient cost control and high margin on property operations.
• High asset quality: €7.6bn portfolio at 99.4% occupancy supports predictable income and valuation resilience.
• Growth runway: €79.0m reversionary pipeline plus record letting levels (>€1,000/m²) point to near‑term upside in recurring cash flows and NAV accretion.

Société Foncière Lyonnaise (FLY.PA): How It Makes Money

• Portfolio value: €7.6 billion (prime Paris commercial real estate segment)
• Occupancy rate: 99.4% - indicating resilient rental demand and low vacancy costs
• Merger completion: integrated into Colonial SFL, SOCIMI, S.A. on October 1, 2025

• Core revenue streams:
  • Lease income from office and retail tenants (primary recurring revenue)
  • Indexation and contractual rent escalations (inflation linkage)
  • Asset repositioning and redevelopment gains (value‑add transactions)
  • Property sales and portfolio rotation (capital recycling)
  • Fee income from property services/management when applicable
• Margin and cash drivers:
  • High occupancy -> predictable cash flows and lower tenant acquisition costs
  • Prime locations -> pricing power for rents and lower downside risk
  • Active asset management -> yield compression and NAV accretion

• Market position & future outlook:
  • As a benchmark player in Paris's prime segment, Société Foncière Lyonnaise provided stable, high‑quality cash flows attractive to institutional investors.
  • The merger with Colonial simplified group structure and strengthened scale across core European markets, positioning the combined entity to lead urban centre transformation and pursue sustainable redevelopment opportunities.
  • Post‑merger synergies aimed at enhanced capital deployment, improved access to ESG financing, and consolidated asset management across Paris, Madrid and Barcelona.