Apart City & Park and Suites reduce rent

Since Appart'City and Park & ​​Suite merged one year ago there are now 118 residences under this group. According to a letter (dated January 30, 2015) from the group president, Pierre Denizet, rents will be renegotiated at the end of leases and owners will also have to pay renovation costs. Owners are already suffering from late rent payments. The letter states:

“proposer des loyers adaptés au marché actuel ainsi que des rénovations des biens, indispensables pour la reconquête de parts de marché”

“to propose rents adjusted to the current market current as well as renovations of properties, which is essential to regaining market share”

The aim being:

“maîtriser notre charge de loyer qui représente 41% de notre chiffre d’affaires.”

“to control our rent expense which represents 41% of our turnover. “

This letter also indicates parts of the group strategy.

To summarise:

“2014 results have forced us, to pool rent payments for all of the Group's residences so that they can spread the quarterly payments. “

The group implies that performance is bad, but does not quantify. For now, the only data available are those of the two groups separately in 2013: Park & ​​Suites recorded a net profit of 920,000 euros and Appart'City a net loss of 6.9 million.

Without notifying owners, the operator has announced the pooling of rents on all residences. This seems to mean that rents will be modified so that the operating surplus of some residences will cover the losses of weak residences.

Therefore a general decline in rents is forecast for all owners at the time of lease renewal, that is to say, 9 or 11 years after the date of purchase.  

The same thing has already happened to many tourist residence homeowners, starting with a large % of Pierre & Vacances owners. In 2012 and 2013, the group (headed by Gerard Bremond) also undertook a comprehensive renegotiation of all rents at lease end. In addition major renovations at the expense of owners, up to 6% of the amount invested were requested.

Appart'City (unlike P&V) is not on the stock market. Their goal is to improve the balance sheets in order to schedule a sale or to float on the stock market after 3-4 years. The objective, a maximum return on investment ... for shareholders.