Quarterly Report • Nov 9, 2012
Quarterly Report
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Interim report per 30 September 2012
Report of the Management Board
"Almost one year ago we started to manage the combined portfolio of Vastned Offices and NSI. We have integrated the operations, capitalized upon the cost synergies, and most importantly, introduced our client focused approach to VNOI tenants and properties. We are pleased that the VNOI portfolio turned out to be significantly accretive to our direct result per share within one year after the merger. Our forecast indicates that our active leasing management will lead us, after the initial anticipated decline in 2012, to a turning point in terms of occupancy in the Dutch office portfolio. Occupancy in sqm is expected to improve marginally in Q4 and is expected to continue to improve in 2013. Moreover, we have recently launched our first HNK property, which enables us to utilize the trend of full service and flexible demand in the office market. Our approach proves to work well in this market that remains challenging, as demonstrated by our 6% market share in total market take up in the Dutch office portfolio, while our portfolio represents 1.3% of the market."
Grontmij moved to property K.P. van der Mandele laan in Rotterdam Impression of the interior of De Rode Olifant
• The sale of the remaining Swiss assets is in progress and expected to be largely finalized before year end 2012.
| Q3 2012 | Q2 2012 | 30-09-2012 | 31-12-2011 | |
|---|---|---|---|---|
| Results (x €1,000) | ||||
| Gross rental income | 38,879 | 39,850 | 120,228 | 119,964 |
| Net rental income | 33,541 | 34,421 | 103,042 | 101,497 |
| Direct investment result | 15,877 | 16,388 | 48,447 | 56,030 |
| Indirect investment result | - 45,991 |
- 45,002 |
- 124,296 |
6,675 |
| Result after tax | - 30,114 |
- 28,614 |
- 75,849 |
62,705 |
| Occupancy rate (in %) | 80.5 | 81.8 | 80.5 | 84.1 |
| Loan-to-value (debts to credit-institutions/real | 57.6 | 56.4 | 57.6 | 57.2 |
| estate investments in %) | ||||
| Issued share capital | ||||
| Ordinary shares with a nominal value of €0.46 | 66,897,112 | 65,964,770 | 66,897,112 | 60,282,917 |
| on 30 September | ||||
| Average number of outstanding ordinary shares | 63,346,375 | 61,956,195 | 63,346,375 | 46,978,800 |
| during period under review | ||||
| Data per average outstanding ordinary share (x | ||||
| €1) | ||||
| Direct investment result | 0.24 | 0.26 | 0.76 | 1.19 |
| Indirect investment result | - 0.70 |
- 0.71 |
- 1.96 |
0.14 |
| Total investment result | - 0.46 |
- 0.45 |
- 1.20 |
1.33 |
| Data per average outstanding ordinary share (x | ||||
| €1) | ||||
| (Interim-) dividend | 0.24 | 0.25 | 0.75 | 1.19 |
| Net asset value | 10.50 | 11.26 | 10.50 | 12.96 |
| Net asset value according to EPRA | 11.73 | 12.38 | 11.73 | 14.02 |
The Dutch office market is currently characterized by tenants postponing relocation decisions and fewer companies looking for new business premises. At the same time, total supply volume in the office market decreased slightly and appears to be stabilizing. This decrease is mainly caused by office transformations in De Randstad into residential units for students and hotels and due to limited new constructions. Demand is shifting towards sustainable real estate, which offers opportunities for redevelopment of existing real estate. The (financial) ability to invest in the quality of properties and to deliver upon tenant specific requirements is key.
Also the retail sector is experiencing challenging times due to decreasing consumer spending and increasing internet shopping.
In this market environment, NSI is well equipped to further exploit its unique competitive competencies. Its active leasing management, appealing business concepts and ability to invest in properties to match tenants' requirements prove to be crucial in the current market. In the retail market, NSI's strategy to target a balanced mix of chains and local entrepreneurs, supported by a strong presence of food, clearly pays off. NSI's retail portfolio has a vacancy of 5.5% (nation wide 6.8%).
In the remainder of the of the year NSI will be focusing on:
Based on the above mentioned areas of focus, NSI expects its direct investment result in the range of €0.98- €1.01 per average outstanding share for the full year 2012. This might be influenced by the amount of newly issued shares through the stock dividend program.
NSI's Q3 2012 total investment result was - €30.1 million and - €75.8 million for the first three quarters 2012. This mainly results from a positive operational result and negative revaluations of properties, in particular in the Dutch office portfolio.
In Q3 2012, NSI achieved a direct investment result of €15.9 million, and €48.4 million in the first three quarters of 2012 (€39.1 million in same period in 2011). Compared to Q2 2012 (€16.4 million), the direct investment result showed a slight decrease, mainly due to the lower contribution from Switzerland as a result of the disposal of Thalwil and Perolles Centre (sold in June 2012, annualized gross rental income of €2.4 million and €2.6 million respectively). On balance, gross rental income showed a stable development in the Dutch and Belgian portfolio, despite lower occupancy levels. Furthermore, NSI continued its focus on cost control, delivering upon cost synergies from the merger and controlling financing costs. The achieved synergies from the merger related to overhead cost reduction has reached the targeted level €0.5 million per quarter.
The overall occupancy rate decreased to 80.5% on 30 September 2012 from 81.8% on 30 June 2012, mainly caused by the Dutch office portfolio.
The (financial) occupancy level of the Dutch office portfolio decreased to 70% (Q2 2012: 71.7%). As indicated earlier, an above average number of contracts expired in 2012 (23% annualized), which are not fully compensated for by the current level of (re)lettings. In addition, quite a number of these expiries concerned large single-tenant properties, which generally have a longer 'lead time' before being relet. Moreover, NSI adjusted its leasing strategy towards multi-tenancy in a number of properties, causing temporary (strategic) vacancy during the redevelopment phase. The most compelling example is the 18,000 sqm property at the Vasteland in Rotterdam, that has been transformed on the basis of the HNK concept ("Het Nieuwe Kantoor"/"The New Office"). The HNK concept anticipates the growing need for full service and flexible concepts in the office market. NSI will continue to roll out the HNK concept in its Dutch office portfolio. The redevelopment of De Rode Olifant (10,000 sqm in The Hague) is progressing according to plan and expected to be completed by mid December 2012.
The table below shows the development of occupancy in square meters. In financial reporting, NSI reports the financial occupancy, which is defined as equation of contractual rent / (contractual rent + vacancy * market rent).
| Total area 1 /1/12 |
Leased 1/1/2012 | Leased in period |
Vacated in period |
Total area 30/9/12 |
Leased 30/9/12 | Expected in Q4 2012 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Area | Area | sqm% | Area | Area | Area | Area | sqm % |
Expiry/ given notice |
New leases |
Renewals | sqm% |
| 644,590 | 488,540 | 75.8 | 36,561 | 97,015 | 642,956 | 426,452 | 66.3 | 7,899/ 6,775 |
17,650 | 4,761 | 67.8% |
The effective rent level, taking incentives into account, of new leases remained stable at € 120 per sqm over the first three quarters of 2012. The effective rent level of newly signed leases in the third quarter amounted to approximatley €100 per sqm, which does not indicate a trend as the average level in a quarter vary as a result of type of contract, property and region. The average lease duration of the portfolio developed from 3.0 year as per 30 June 2012 to 2.9 as per 30 September 2012.
Q3 was characterized by the usual seasonal pattern; the Dutch market saw a strong decrease in take up compared to Q2 2012 (source: Dynamis), which was also reflected in NSI's Dutch office portfolio. NSI signed approximately 37,274 sqm of new lettings (take up) in its Dutch office portfolio in the first three quarters of 2012, representing approximately 6% of the total uptake in the Dutch office market1 , while NSI's portfolio represents 1.3% of the market. In Q3, NSI signed 4,160 sqm of new lettings, representing 2.6% of the Dutch market take up in Q3 2012.
Recent transactions include a lease agreement with Danfoss for 1,931 sqm at the Vareseweg 105 in Rotterdam. In Arnhem, NSI has signed a lease with the rapidly growing Beslist.nl for 773 sqm. In Eindhoven, NSI welcomed the Open University as tenant (538 sqm). NSI welcomed two new tenants at the Burgemeester Stramanweg in Amsterdam; Norbain Netherlands (442sqm) and ADV Market Research (444 sqm).
Next to attracting new tenants, NSI was also able to realize significant expansions with existing tenants, e.g. SNT Netherlands (1,481 sqm expansion and 2,439 extension in Zoetermeer), BetonSon (2,500 sqm in Son) and Robert Bosch (606 sqm expansion and 2.915 sqm extension in Hoevelaken). Tenant Eleos moved within NSI's portfolio from Nieuwegein to Amersfoort (Hoefse Wing), where Eleos also expands from 1,271 sqm to 1,946sqm.
Furthermore, NSI continued its focus on renewals. NSI renewed 64,347 sqm in the first three quarters of 2012. In addition, driven by its pro-active approach and continuous dialogue with tenants, NSI renewed contracts with a future expiration date. This demonstrates NSI's approach to actively manage the expiration calendar and to create a more balanced negotiation momentum. As a result, the expiration level decreased this quarter from 17% to 16% for 2013 and from 16% to 15% for 2014. Furthermore, levels for 2013 and 2014 are substantially below average (20%).
| Expiry sqm 2012 | Renewed sqm |
Retention |
|---|---|---|
| 150,299 | 64,347 | 43% |
The lower retention rate than usual is caused by the expiring of an above average number of large (single) tenant contracts in 2012.
HNK-R (Het Nieuwe Kantoor- Rotterdam) was opened on 18 October 2012. The transformation process took 4 months and an investment of €3.0 million; according to plan and budget. HNK-R provides flexibility in rental space and duration, ICT facilities, meeting rooms, meeting accommodations, flexible workplaces, catering and support services. HNK is 10% pre-let, with marketing activities being intensified after opening, resulting in an increasing pipeline of potential tenants (for more information see www.hnkr.nl).
The retail portfolio continued its solid occupancy (94.5%), with vacancy remaining at friction levels. The occupancy level and high retention show that NSI's leasing strategy succeeds in attracting healthy tenants at one hand, and its ability to provide the right environment to its tenants to run their businesses on the other hand.
The table below shows the development of occupancy in square meters. In financial reporting, NSI reports the financial occupancy (see below), which is defined as equation of contractual rent / (contractual rent + vacancy * market rent).
| Total area | Leased 1/1/12 | Leased in | Vacated in | Total area | Leased 30/9/ 2012 | Expected in Q4 2012 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1/1/12 | period | period | 30/9/12 | ||||||||
| Area | Area | % | Area | Area | Area | Area | % | Expiry/ | New | Renewa | Sqm% |
| given notice | leases | ls | |||||||||
| 292,843 | 275,720 | 94.2 | 11,020 | 11,862 | 292,843 | 274,878 | 93.8 | 9,745/ | 2,249 | 6,390 | 94,4% |
| 2,367 |
1 In the first three quarters of 2012, total take up in the Dutch office market amounted to 663,857 sqm (of which 161,228 in Q3) according to Dynamis.
In addition to strong retention, the focus on renting out vacant space paid off. Shopping center Zuidplein in Rotterdam for example, recently welcomed three new tenants and nationwide retailer Bruynzeel Kitchens will open its doors at the Woonboulevard Apeldoorn soon. Furthermore, NSI could facilitate a number of supermarkets in their expansion requirement, supporting NSI's strategy to have a strong share of supermarkets within its portfolio. In Alphen aan de Rijn (shopping centre Euromarkt), NSI cooperated with the municipality and its tenant Aldi to redevelop one of its units (approx. 1,000 sqm) to a supermarket, for which the permit has been granted by the municipality recently.
| Expiry sqm 2012 | Renewed | Retention |
|---|---|---|
| 48,857 | 43,825 | 90% |
The average lease duration of the portfolio developed from 3.2 year as per 30 June 2012 to 3.0 as per 30 September 2012.
The overall occupancy in the Belgian portfolio slightly decreased to 84.4% (from 85.6% at 30 June 2012). The occupancy of the logistics portfolio decreased to 85.2% from 88.3% at 30 June 2012, mainly due to a loss of a tenant in Merchtem Cargo Center. Intervest Offices & Warehouses kept its occupancy level for Offices stable at 85%.
Intervest Offices & Warehouses extended the contract with its largest tenant, PwC, which represents 10% of its gross rental income. The contract for 21,272 sqm in Woluwe Garden (in- Sint- Stevens- Woluwe) is extended until 31 December 2021, In its Logistics portfolio, Intervest Offices & warehouses progressed in its redevelopment of the logistic site in Oevel. The site will be expanded with 5,036 sqm and is already let to UTi Belgium, effective from the third quarter 2013 until 31 december 2023. Moreover the other existing contracts with UTi Belgium for the Oevel site have been extended until 31 December 2023.
The indirect investment result in Q3 amounted to €46.0 million negative (first three quarters of 2012 €124.3 million negative and € 31.8 million negative over the same period in 2011) predominantly derived from revaluations of real estate of - €38 million and an effect of - €8.3 million of the valuation of derivatives.
The downward revaluation of real estate mainly relates to the Dutch office portfolio (- € 32.6 million). This development is partly driven by the increased vacancy in NSI's portfolio, but valuations are also impacted by the vacancy level and oversupply situation in the market in general, resulting in ongoing pressure on property values. In addition, due to a lackluster number of real estate transactions, and distressed sales not being appropriate to serve as reference value, there is less reference available for the purpose of determining market yields or market rents. As a result , the influence of assumptions on valuations has increased.
The number of outstanding shares increased from €66.0 million (30 June 2012) to 66.9 million as per 30 September 2012 as a result of stock dividend.
Net asset value per share, including deferred taxes and the market value of the derivatives, decreased from €11.26 on 30 June 2012 to € 10.50 on 30 September 2012. If the deferred taxes and the value of the derivatives are excluded (the net asset value according to EPRA), the net asset value amounts to €11.73 compared to €12.38 on 30 June 2012. NSI utilizes interest-rate hedging instruments exclusively for hedging of operational interest rate risks. NSI is not overhedged (nominal value of derivatives are lower than nominal values of interest-bearing debts) and does not receive margin calls from its hedge counter parties to deposit cash in case of changing hedge derivative valuations. The value of the financial derivatives automatically reverts to zero at the end of the duration of these instruments.
NSI is committed to reduce its LTV (loan-to-value) to below 55% in the medium term and below 50% in the long term.
The LTV increased from 56.4% at 30 June 2012 to 57.6% at 30 September 2012, mainly as result of the revaluations of - €38 million in Q3 2012. The process of selling the two remaining assets (book value CHF43.9 million) in Switzerland is ongoing, which will reduce LTV.
Furthermore, NSI works diligently on its refinancing requirements and improving its debt maturity. In August 2012 NSI refinanced its full facility with Deutsche Bank, extending €121 million of debt maturing in 2012 and 2013 until 2015 and 2016.
Due to a higher awareness within financing partners in relation with real estate related risks, in combination with the overall economic situation and changing regulation (Basel III/ Solvency II), NSI notes a general decreased availability of real estate financing in the market. Processes of refinancing take materially longer to complete. Margins and costs have been rising substantially since the beginning of the crisis as a result of before-mentioned trends. Loan covenants tend to become more restrictive and are more diligently monitored to the effects of real estate valuations, property sales and vacancy. NSI notes that listed real estate benefit from its transparency versus non listed real estate in the appetite for financing. NSI works closely with a group of longstanding relationship banks. In order to address the related uncertainty on refinancing, NSI is pro-actively and early negotiating its upcoming maturities for 2013 (€281.5 million) and 2014. The last € 17.7 million remaining part of debt maturing in 2012 is expected to be refinanced shortly.
The average remaining maturity of the loans remained stable at 2.2 years (30 June 2012: 2.2 years).
Whilst overall costs of debt funding increased to 4.7%, total financing costs decreased slightly as higher bank charges were compensated by lower interest base rates, lower hedging cost rates and a reduction in outstanding loans (including repayment of relatively low interest rate loans in Switzerland).
The interest coverage ratio remained stable at 2.5 at 30 September 2012.
The proposed interim dividend for Q3 2012 is €0.24 per share, which totals the year to date dividend to € 0.75 for the first three quarters 2012. Following the dividend policy, as adopted by the Annual General Meeting of Shareholders, NSI offers shareholders optional dividend; shareholders can choose to receive dividend in cash, in shares, or a combination of both. NSI aims to distribute 30-50% of the total 2012 dividend in stock. Since the introduction of stock dividend, on average 47% of the dividend rights opted for stock dividend.. On 23 November 2012, NSI will set the interim dividend and announce further details regarding the distribution of dividend.
Hoofddorp, 9 November 2012 The Management Board
For additional information: Johan Buijs, CEO Daniël van Dongen, CFO T + 31 20 76 30 300 [email protected]
On 14 October 2011, NSI and Vastned Offices (VNOI) completed the merger of their companies. This merger has been processed in this quarterly results as follows:
The total investment result, consisting of the sum of the direct and indirect investment results amounted to - €75.8 million over the first three quarters of 2012 (first three quarters 2011: €7.4 million).
NSI uses the direct investment result (rental income less operating costs, service costs not recharged, administrative costs and financing costs) as a measure for the success of its core business and for determining its dividend.
The direct investment result for the first three quarters of 2012 amounted to €48.4 million (first three quarters 2011: €39.1 million). The direct investment result in Q3 2012 decreased to €15.9 million compared to €16.4 million in Q2 2012.
Gross rental income in the first three quarters of 2012 increased to €120.2 million compared to €77.4 million in the same period of 2011 as a result of the merger with VNOI. Compared to Q2 2012 gross rental income declined by 2.4% in Q3 2012, mainly as a result of the disposal of Swiss assets. The Swiss assets that have been sold at the end of Q2 2012 (70% of Swiss portfolio) delivered annual gross rental income of approximately €5.0 million, which is also reflected in the gross rental income of the retail portfolio (Perolles-Centre; annualized rent €2.6 million) and the office portfolio (Silvergate; annualized rent €2.4 million). Gross rental income of the logistics portfolio increased in Q3 2012 compared to Q2 2012 by 7% as a result of a one-off effect (reimbursement of lost rental income due to a fire in Rotterdam in April 2012), despite a decreased occupancy to 86% (Q2 2012: 88.5%).
The occupancy rate of the total portfolio decreased to 80.5% on 30 September 2012 compared to 81.8.% on 30 June 2012. The increase in vacancy is mainly caused by the Dutch office portfolio. The occupancy level in the office portfolio declined from 75.2% in Q2 2012 to 73.8% in Q3 2012, while retail remained fairly stable at a solid level of 94.5% in retail
NSI continued its focus on strict cost discipline and achieving further cost synergies from the merger with VNOI. The achieved synergies from the merger related to overhead cost reduction has reached the targeted level of €0.5 million per quarter. Service costs not recharged to tenants decreased, despite higher vacancy, due to the sales of Swiss assets. The financing costs decreased slightly despite higher bank charges, which were compensated by lower interest base rates, lower average hedging costs and a reduction in outstanding loans.
x €1,000
| rd quarter 2012 up to 3 |
rd quarter 2011 up to 3 |
|
|---|---|---|
| Netherlands | ||
| Gross rental income | 84,959 | 71,900 |
| Net rental income | 70,123 | 61,195 |
| Switzerland | ||
| Gross rental income | 4,384 | 5,489 |
| Net rental income | 3,179 | 4,098 |
| Belgium | ||
| Gross rental income | 30,885 | - |
| Net rental income | 29,740 | - |
Gross rental income by segment in the Netherlands, Belgium and Switzerland
| x €1,000 | up to Q3 2011 | acquired through |
Purchases | Disposals | organic growth |
up to Q3 2012 | |
|---|---|---|---|---|---|---|---|
| business | |||||||
| combinations | |||||||
| The Netherlands | |||||||
| Offices | 36,818 | 18,562 | - | - | 91 | - 6,515 |
48,774 |
| Retail | 31,451 | - | 132 | - | 63 | - 1,022 |
30,498 |
| Industrial | 3,154 | 1,998 | - | - | 31 | 5,183 | |
| Residential | 477 | - | - | - | 27 | 504 | |
| Total | 71,900 | 20,560 | 132 | - | 154 | - 7,479 |
84,959 |
| Switzerland | |||||||
| Offices | 2,327 | - | - | - | 716 | 22 | 1,633 |
| Retail | 3,162 | - | - | - | 508 | 97 | 2,751 |
| Total | 5,489 | - | - | - | 1,224*) | 119 | 4,384 |
| Belgium | |||||||
| Offices | - | 19,733 | - | - | - | 19,733 | |
| Industrial | - | 11,152 | - | - | - | 11,152 | |
| Total | - | 30,885 | - | - | - | 30,885 | |
| Total NSI | 77.389 | 51,445 | 132 | - | 1,378 | - 7,360 |
120,228 |
* Including exchange-rate differences of €0.1 million.
Compared to the first three quarters of 2011 (€24.9 million), financing costs developed in line with the increased portfolio to €41.5 million in the first three quarters of 2012. Compared to Q2 2012, financing costs slightly decreased by 0.7% in Q3 2012 despite higher bank charges, which were compensated by lower interest base rates, lower average hedging costs and a reduction in outstanding loans.
The indirect investment result for the first three quarters of 2012 amounted to €124.3 million negative. The indirect investment result consists of both realized revaluations (sales results on investments sold) and unrealized revaluations. These unrealized revaluations concern the changes in the market value of the property portfolio (- €98.3 million) and the derivatives (-€19.2 million). The realized revaluations contain the sales result of sold assets. In Q3 2012, one Industrial asset in Antwerp (Kaaien 218-220) in Belgium has been sold slightly above book value.
The value of derivatives further decreased due to an ongoing reduction in Euro market interest curves as a result of the economic situation in the Eurozone.
NSI utilizes interest-rate hedging instruments exclusively to limit operational interest rate risks. There is no situation of "over hedging" (nominal value of derivatives are lower than nominal values of interest-bearing debts) nor is NSI exposed to margin calls. The value of the financial derivatives automatically reverts to zero at the end of the duration of these instruments.
The revaluation of the Dutch property portfolio in Q3 2012 amounted to - €37.6 million (Q2 2012: - €30.8 million), which totals the revaluation in the first three quarters in 2012 to - €92.3 million (first three quarters 2011: - €18.4 million). These revaluations were mainly caused by the decrease in value of the Dutch offices portfolio by €32.6 million in Q3 2012 (first three quarters €78.8 million). Lower occupancy rates and the oversupply situation in the Dutch office market in general result in ongoing pressure on property values.
The value of the Belgian portfolio remained stable in Q3 2012 (- €0.3 million, first three quarters 2012 -€0.5 million). The increased valuation in the industrial portfolio in Q3 2012 (€2.5 million) was offset by a negative revaluation in its office portfolio (€2.8 million).
The value of the Swiss properties are reclassified into assets held for sale; as a result of this reclassification, the expected sales costs have been deducted from the value of the portfolio.
| Total | Q3 | Q2 | Q1 | 2011* | Q4 | Q3 | Q2 | Q1 | 2010* | 2009* | 2008* | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2011 | 2011* | 2011* | 2011* | ||||||
| Offices | - 214,407 | - 32,583 |
- 25,434 | - 20,809 | - 31,400 | - 10,278 | - 5,667 - |
8,795 | - 6,660 |
- 21,435 | - 37,875 | - 44,871 |
| Retail | - 11,623 |
- 2,893 |
- 3,951 |
- 2,828 |
- 622 |
- 3,525 |
317 | 925 | 1,661 | - 1,179 |
- 7,920 |
7,770 |
| Industrial | - 17,265 |
- 2,145 |
- 1,285 |
- 197 |
- 1,351 |
- 1,071 |
- 265 |
135 | - 150 |
- 2,416 |
- 5,504 | - 4,367 |
| Residential | - 1,971 |
- 25 |
- 125 |
- 5 |
135 | 65 | - 10 |
20 | 60 | - 1,747 |
44 | - 248 |
| Total | - 245,266 | - 37,646 | - 30,795 | - 23,839 | - 33,238 | - 14,809 | - 5,625 |
- 7,715 |
- 5,089 | - 26,777 | - 51,255 | - 41,716 |
*) In accordance with IFRS; the figures prior to the merger (over the period 2008- first three quarters of 2011) have not been amended and represent only NSI. As of the fourth quarter of 2011 all results of NSI and VNOI are fully consolidated. VNOI revaluations in this pre-merger period (2008-Q3YTD 2011), related to the properties that are included in the portfolio at the date of merger, amounted to €116.9 million, bringing the total adjusted revaluation level to €362.2 million.
| Q3 2012 | Q2 2012 | Q1 2012 | 2011 | Q4 2011 | |
|---|---|---|---|---|---|
| Offices | - 2,847 |
- 3,587 |
426 | 2,555 | 2,555 |
| Industrial | 2,529 | 1,872 | 1,125 | - 6,126 |
- 6,126 |
| Total | - 318 |
- 1,715 |
1,551 | - 3,571 |
- 3,571 |
| Q3 | Q2 | Q1 | 2011 | Q4 | Q3 | Q2 | Q1 | 2010 | 2009 | 2008 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2011 | 2011 | 2011 | 2011 | ||||||
| Offices | 3 | - 265 |
- 2,559 | 208 | 263 | - 47 |
- | 7 | - | 1 980 |
- 278 |
802 |
| Retail | 6 | - 1,011 |
- 1,734 |
- 1,152 |
- 762 |
- 347 |
- | 36 | - | 7 1,036 |
- 749 |
- 1,800 |
| Total | 9 | - 1,276 |
- 4,293 | - 944 |
- 499 |
- 394 |
- | 43 | - | 8 2,016 |
- 1,027 |
- 998 |
| gross yield* | net yield** | gross yield* | net yield** | |
|---|---|---|---|---|
| 30-09-2012 | 30-09-2012 | 31-12-2011 | 31-12-2011 | |
| Offices | 9.8 | 8.3 | 9.9 | 8.4 |
| Retail | 7.6 | 6.5 | 7.5 | 6.3 |
| Industrial | 8.9 | 8.2 | 8.6 | 7.5 |
| Residential | 7.2 | 6.7 | 7.0 | 6.0 |
| Total | 9.1 | 7.8 | 9.0 | 7.6 |
* gross yield: the theoretical annual rent expressed as a percentage of the market value of the property.
** net yield: the theoretical net rental income expressed as a percentage of the market value of the property.
| gross yield* | net yield** | gross yield* | net yield** | |
|---|---|---|---|---|
| 30-09-2012 | 30-09-2012 | 31-12-2011 | 31-12-2011 | |
| The Netherlands | 9.3 | 8.1 | 9.4 | 8.0 |
| Switzerland | 6.8 | 4.9 | 6.6 | 4.9 |
| Belgium | 8.7 | 8.4 | 8.5 | 7.9 |
| Total | 9.1 | 7.8 | 9.0 | 7.6 |
The value of the real estate investments amounted to €2,154.8 million on 30 September 2012 (30 September 2011: €1,351 million, 30 June 2012: €2,189 million). This is the result of the balance of purchases, disposals, revaluations and investments, but in particular of the merger with VNOI and the subsequent sale of predominantly Swiss assets.
The loan-to-value increased to 57.6% at 30 September 2012 compared to 56.4% at 30 June 2012 (30 September 2011: 56.4%), mainly as a result of revaluations. NSI will remain focused on reducing loan-to-value by disposing of assets that do not fit its strategy. NSI reduced it debts to credit institutions to €1,242.0 million on 30 September 2012 (31 December 2011: €1,329 million).
Furthermore, NSI works diligently on its refinancing requirements and improving its debt maturity. In August 2012 NSI refinanced its full facility with Deutsche Bank, extending €121 million of debt maturing in 2012 and 2013 until 2015 and 2016.
NSI's equity decreased during the first three quarters of 2012 to €828.6 million (31 December 2011: €909.6 million). This was the result of the balance of net loss of €69.2 million, the equity issue of €24.3 million, the paid cash dividend payments of €35.7 million, including the full 2011 dividend of Intervest Warehouses & Offices, and the increase of the other reserves due to exchange-rate differences.
The number of outstanding shares increased from 60.3 million ultimo 2011 to 66.9 million on 30 September 2012. The net asset value, including deferred tax and the market value of the derivatives, amounted to €10.50 per share on 30 September 2012 (31 December 2011: €12.96). If the deferred tax and the value of the derivatives are excluded (the net asset value according to EPRA), the net asset value amounts to €11.73 per share (31 December 2011: €14.02).
The funding available to the company under the credit facilities committed as at 30 September 2012 amounted to €109.2 million (31 December 2011: €102.7 million). Net debts to credit institutions fell from €1,329.2 million at year-end 2011 to €1,242.0 million as at 30 September 2012. The average remaining maturity of the loans slightly improved to 2.2 years and the fixed-interest part of the mortgage loans increased from 91.3% at year-end 2011 to 97.8% as at 30 September 2012. The average interest rate on the loans and derivatives increased from 4.2% as per ultimo 2011 to 4.7% on 30 September 2012, predominantly as a result of refinancing low interest loans at higher market based margins and repayment of relatively low interest rate loans in Switzerland. However, due to overall loan repayments, total financing costs decreased. As a result, the interest-rate coverage ratio remained stable at 2.5 on 30 September 2012 (31 December 2011: 2.4).
The basic principle of the company's dividend policy is to distribute almost the entire direct investment result to shareholders as dividend. For the first three quarters of 2012 the interim dividend will be €0.75 per share of which a €0.51 has already been distributed. The Q3 2012 interim dividend will therefore amount to €0.24 per share.
NSI offers shareholders the option to receive dividend in cash, in shares, or a combination of both. On 23 November 2012, NSI will set the interim dividend and announce further details regarding the distribution of dividend.
The value of the real estate portfolio decreased by €167.0 million during the first three quarters of 2012, from €2,321.8 million at year-end 2011 to €2,154.8 million. This decrease is the result of revaluations of - €98.3 million, sales of €91 million, acquisitions of €8.0 million, investments of €13.4 million and exchange-rate differences of €0.9 million.
In Q3 an industrial asset in Antwerp (Kaaien 218-220) in Belgium has been sold for € 1.3 million. NSI is still in the process of selling the two remaining Swiss properties, which are intended to be finalized before year-end. The sale of the Plein van de Verenigde Naties in Zoetermeer was finalized in October 2012.
The most important investments took place in the redevelopment of 'De Rode Olifant' in Den Haag (€2.9 million) and the transformation of the Vasteland in Rotterdam into HNK-R (€3.0 million).
NSI continues its efforts to divest non strategic assets. NSI notes that the market is still very soft with limited transactions. In addition, transactions take longer to complete.
As at 30 September 2012 the portfolio consisted of 94 residential units and 271 commercial properties, spread across:
| in % | x € 1.000 | |
|---|---|---|
| Sector spread | ||
| Offices | 56 | 1,216,683 |
| Retail | 28 | 608,993 |
| Industrial | 15 | 319,388 |
| Residential | 1 | 9,690 |
| Total real estate investments | 100 | 2,154,754 |
| Geographical spread | ||
| The Nederlands | 70 | 1,517,000 |
| Switzerland | 2 | 36,319 |
| Belgium | 28 | 601,435 |
| Total real estate investments | 100 | 2,154,754 |
The occupancy in the entire portfolio as at 30 September 2012 amounted to 80.5% (30 September 2011: 89.0%, which does not include VNOI). Occupancy levels per sector were: 73.8% in offices, 86.0% in industrial premises and 94.5% in retail. Per country occupancy was 78.8% in the Netherlands, 95.3% in Switzerland and 84.4 % in Belgium.
The retail portfolio continued its solid occupancy (94.5%), with vacancy remaining at around friction levels.
The occupancy rate in the office portfolio decreased from 75.2% at 30 June 2012 to 73.8% at 30 September 2012, mainly due to the Dutch office portfolio. The occupancy rate in the Dutch office portfolio decreased to 70% (Q2 2012: 71.7%).
The occupancy rate in the logistics portfolio decreased from 88.5% at 30 June 2012 to 86.0% at 30 September 2012.
| The Netherlands | Belgium | Switzerland | Total | |
|---|---|---|---|---|
| Offices | 88,554 | 33,577 | 507 | 122,638 |
| Retail | 44,534 | - | 1,959 | 46,493 |
| Industrial | 9,940 | 18,544 | - | 28,484 |
| Residential | 700 | - | - | 700 |
| Total | 143,728 | 52,121 | 2,466 | 198,315 |
Contractual rental income from the portfolio amounted to €159.6 million as at 30 September 2012.
| 30-09-2012 | 30-09-2011 | 2011 | |
|---|---|---|---|
| Results (x €1,000) | |||
| Gross rental income | 120,228 | 77,389 | 119,964 |
| Net rental income | 103,042 | 65,293 | 101,497 |
| Direct investment result | 48,447 | 39,142 | 56,030 |
| Indirect investment result | - 124,296 | - 31,754 |
6,675 |
| Result after tax | - 75,849 | 7,388 | 62,705 |
| Occupancy rate (in %) | 80.5 | 89.0 | 84.1 |
| Balance sheet data (x €1,000) | |||
| Real estate investments | 2,154,754 | 1,348,991 | 2,321,813 |
| Equity including minority interests | 828,575 | 550,210 | 909,620 |
| Shareholders' equity attributable to NSI | 702,304 | 550,210 | 781,218 |
| shareholders | |||
| Net debts to credit institutions | 1,241,966 | 760,228 | 1,329,166 |
| (exluding other investments) | |||
| Loan-to-value (debts to credit institutions/real | 57.6 | 56.4 | 57.2 |
| estate investments in %) | |||
| Issued share capital | |||
| Ordinary shares with a nominal value of €0.46 | 66,897,112 | 43,286,677 | 60,282,917 |
| on 30 September | |||
| Average number of outstanding ordinary shares | 63,346,375 | 43,286,677 | 46,978,800 |
| during period under review | |||
| Data per average outstanding ordinary share (x | |||
| €1) | |||
| Direct investment result | 0.76 | 0.90 | 1.19 |
| Indirect investment result | - 1.96 |
- 0.73 |
0.14 |
| Total investment result | - 1.20 |
0.17 | 1.33 |
| Data per share (x €1) | |||
| (Interim-) dividend | 0.75 | 0.90 | 1.19 |
| Net asset value | 10.50 | 12.71 | 12.96 |
| Net asset value according to EPRA | 11.73 | 13.58 | 14.02 |
| Average stock-exchange turnover (shares per day, without double counting)) |
94,672 | 67,660 | 77,675 |
| High price | 9.70 | 15.34 | 15.34 |
| Low price | 5.95 | 10.33 | 8.28 |
| Closing price | 6.37 | 11.19 | 9.45 |
| up to 3rd quarter | up to 3rd quarter | rd quarter 3 |
3 | rd quarter | ||||
|---|---|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |||||
| Gross rental income | 120,228 | 77,389 | 38,879 | 25,695 | ||||
| Service costs not recharged to tenants | - | 3,613 | - | 1,282 | - | 1,026 | - | 467 |
| Operating costs | - | 13,573 | - | 10,814 | - | 4,312 | - | 3,515 |
| Net rental income | 103,042 | 65,293 | 33,541 | 21,713 | ||||
| Financing income | 84 | 1,184 | 32 | 316 | ||||
| Financing costs | - | 41,466 | - | 24,922 | - | 13,679 | - | 8,508 |
| Administrative costs | - | 4,539 | - | 2,361 | - | 1,386 | - | 713 |
| Direct investment result before tax | 57,121 | 39,194 | 18,508 | 12,808 | ||||
| Corporate income tax | - | 231 | - | 52 | - | 5 | 18 | |
| Direct investment result after tax | 56,890 | 39,142 | 18,503 | 12,826 | ||||
| Direct investment result attributable to non | ||||||||
| controlling interest | - | 8,443 | - | - | 2,626 | - | ||
| Direct investment result | 48,447 | 39,142 | 15,877 | 12,826 | ||||
| Revaluation of real estate investments | - | 98,322 | - | 18,873 | - | 37,955 | - | 6,018 |
| Elimination of rental incentives | 46 | - | 137 | - | ||||
| Net result on sales of investments | - | 7,754* | 707 | 47 | 694 | |||
| Revaluation of other investments | - | - | 2,603 | - | - | 2,263 | ||
| Movements in market value of financial derivatives | - | 19,176 | - | 7,681 | - | 8,283 | - | 15,390 |
| Exchange-rate differences | - | 139 | - | 93 | - | 17 | 63 | |
| Allocated management costs | - | 1,741 | - | 1,019 | - | 580 | - | 340 |
| Acquisition cost of merger | - | - | 1,584 | - | - | 896 | ||
| Indirect investment result before tax | - | 127,086 | - | 31,146 | - | 46,651 | - | 24,150 |
| Corporate income tax | 1,015** | - | 608 | - | 46 | - | 299 | |
| Indirect investment result after tax | - | 126,071 | - | 31,754 | - | 46,697 | - | 24,449 |
| Indirect investment result attributable to non | 1,775 - |
706 | - | |||||
| controlling interest | ||||||||
| Indirect investment result | - | 124,296 | - | 31,754 | - | 45,991 | - | 24,449 |
| Total investment result | - | 75,849 | 7,388 | - | 30,114 | - | 11,623 | |
| Data per average outstanding share (x €1) | ||||||||
| Direct investment result | 0.76 | 0.90 | 0.24 | 0.30 | ||||
| Indirect investment result | - | 1.96 | - | 0.73 | - | 0.70 | - | 0.56 |
| Total investment result | - | 1.20 | 0.17 | - | 0.46 | - | 0.27 |
* including breakage costs (€1.9 million) on fixed interest rate CHF loans and the provision of a rental guarantee (€1.2 million).
** including €1.3 million release of a provision for deferred tax liabilities to sold Swiss assets.
| note | up to 3rd quarter | up to 3rd quarter | rd quarter 2012 3 |
rd 3 |
|
|---|---|---|---|---|---|
| 2012 | 2011 | quarter | |||
| 2011 | |||||
| Gross rental income | 120,228 | 77,389 | 38,879 | 25,695 | |
| Service costs recharged to tenants | 17,051 | 9,511 | 6,373 | 3,112 | |
| Service costs | - 20,664 | -10,793 | - 7,399 |
- 3,579 | |
| Service costs not recharged | - 3,613 | - 1,282 | - 1,026 | - 467 |
|
| Operating costs | 4 | -13,573 | -10,814 | - 4,312 | - 3,515 |
| Net rental income | 2 | 103,042 | 65,293 | 33,541 | 21,713 |
| Revaluation of investments | -98,276 | -18,873 | -37,818 | - 6,018 | |
| Net result on sales of investments | 5 | - 7,754 | 707 | 47 | 694 |
| Total net proceeds from investments | - 2,988 | 47,127 | - 4,230 | 16,389 | |
| Administrative expenses | 6 | - 6,280 | - 4,964 | - 1,966 | - 1,949 |
| Financing income | 84 | 28 | 32 | 15 | |
| Financing expenses | - 41,605 | -25,015 | - 13,696 |
- 8,445 | |
| Result from other investments | - | - 1,447 | - | - 1,962 | |
| Movements in market value of financial | - 19,176 | - 7,681 | - 8,283 |
-15,390 | |
| Net financing result | -60,697 | - 34,115 | -21,947 | -25,782 | |
| Result before tax | -69,965 | 8,048 | - 28,143 | - 11,342 | |
| Corporate income tax | 13 | 784 | - 660 |
- 51 |
- 281 |
| Result after tax | -69,181 | 7,388 | -28,194 | - 11,623 | |
| Exchange-rate differences on foreign | |||||
| participations | 70 | 159 | 39 | - 60 |
|
| Total non-realised result | 70 | 159 | 39 | - 60 |
|
| Total realised and non-realised result | - 69,111 | 7,547 | - 28,155 | - 11,683 | |
| Result after tax attributable to: | |||||
| NSI shareholders | -75,849 | 7,388 | - 30,114 | - 11,623 | |
| Non-controlling interest | 6,668 | - | 1,920 | - | |
| Result after tax | -69,181 | 7,388 | -28,194 | - 11,623 | |
| Total realised and non-realised results | |||||
| attributable to: | |||||
| NSI shareholders | -75,779 | 7,547 | -30,075 | - 11,683 | |
| Non-controlling interest | 6,668 | - | 19,620 | - | |
| Total comprehensive income | - 69,111 | 7,547 | - 28,155 | - 11,683 | |
| Data per average outstanding share | |||||
| (x €1) | |||||
| Diluted as well as non-diluted result after tax | - 1.20 |
0.17 | - 0.46 | - 0.27 |
Before proposed profit appropriation Q3 2012 (x €1,000)
| note | 30-09-2012 | 31-12-2011 | 30-09-2011 | |
|---|---|---|---|---|
| Assets | ||||
| Real estate investments | 7 | 2,117,210 | 2,321,813 | 1,351,263 |
| Intangible assets | 8,486 | 8,509 | 8,483 | |
| Tangible fixed assets | 3, 836 | 3,890 | 3,337 | |
| Financial derivatives | - | - | - | |
| Total fixed assets | 2,129,532 | 2,334,212 | 1,363,083 | |
| Assets held for sale | 8 | 37,544 | - | - |
| Other investments | - | - | 9,232 | |
| Debtors and other accounts receivable | 9 | 21,554 | 13,957 | 3,174 |
| Cash | 7,601 | 4,399 | 3,872 | |
| Total current assets | 66,699 | 18,356 | 16,278 | |
| Total assets | 2,196,231 | 2,352,568 | 1,379,361 | |
| Shareholders' equity | ||||
| Issued share capital | 30,773 | 27,732 | 19,914 | |
| Share premium reserve | 658,527 | 637,054 | 451,076 | |
| Other reserves | 88,854 | 53,727 | 97,807 | |
| Retained earnings | - 75,849 |
62,705 | - 18,587 |
|
| Total shareholders' equity attributable to | ||||
| shareholders | 702,305 | 781,218 | 550,210 | |
| Non-controlling interest | 126,270 | 128,402 | - | |
| Total shareholders' equity | 10 | 828,575 | 909,620 | 550,210 |
| Liabilities | ||||
| Interest-bearing loans | 11 | 847,931 | 1,122,648 | 579,314 |
| Financial derivatives | 12 | 81,133 | 62,297 | 35,532 |
| Deferred tax liabilities | 13 | 670 | 1,678 | 1,562 |
| Total long-term liabilities | 929,734 | 1,186,623 | 616,408 | |
| Redemption requirement long-term liabilities | 11 | 306,644 | 137,189 | 155,821 |
| Financial derivatives | 12 | 436 | 96 | 401 |
| Debts to credit institutions | 94,992 | 73,727 | 38,197 | |
| Other accounts payable and deferred income | 14 | 35,850 | 45,313 | 18,324 |
| Total current liabilities | 437,922 | 256,325 | 212,743 | |
| Total liabilities | 1,367,656 | 1,442,948 | 829,151 | |
| Total shareholders' equity and liabilities | 2,196,231 | 2,352,568 | 1,379,361 |
| Note | 30-09-2012 | 30-09-2011 | ||
|---|---|---|---|---|
| Result after tax | - 69,181 |
7,388 | ||
| Adjusted for: | ||||
| Revaluation of real estate investments | 5 | 98,322 | 18,873 | |
| Revaluation of other investments | - | 2,603 | ||
| Net result on sales of investments | 7,754 | - 712 |
||
| Net financing expenses | 60,697 | 32,639 | ||
| Deferred tax liabilities | 13 | - 1,015 |
608 | |
| Depreciation | 389 | 609 | ||
| Cash flow from operating activities | 166,147 | 54,620 | ||
| Movements in debtors and other accounts receivable | 9 | - 7,597 |
- 868 |
|
| Movements in other liabilities, accrued expenses and | - 6,309 |
- 1,305 |
||
| deferred income | ||||
| Financing income | 84 | 28 | ||
| Financing expenses | - 44,621 |
- 25,207 | ||
| Cash flow from operations | 38,523 | 34,656 | ||
| Purchases of real estate and investments in existing | 7 | - 21,419 |
- 10,189 | |
| properties | ||||
| Proceeds of sale of real estate investments | 83,287 | 4,355 | ||
| Investments in tangible fixed assets | - 344 |
- 209 |
||
| Divestments of tangible fixed assets | 31 | 19 | ||
| Cash flow from investment activities | 61,555 | - 6,024 |
||
| Dividend paid | - 35,712 |
- 38,963 | ||
| Costs related to optional dividend | - 68 |
- | ||
| Share issue | 24,348 | - | ||
| Repurchase of own shares | - 502 |
- | ||
| Drawdown of loans | 11 | 30,043 | 31,010 | |
| Redemption of loans | 11 | - 136,382 |
- 12,783 |
|
| Cash flow from financing activities | - 118,273 |
- 20,736 | ||
| Net cash flow | - 18,195 |
7,896 | ||
| Exchange-rate differences | 132 | 194 | ||
| Cash and debts to credit institutions as of 1 January | - 69,328 |
- 42,415 | ||
| Cash and debts to credit institutions as of 30 | ||||
| September | - 87,391 |
- 34,325 |
The development of the item shareholders' equity up to Q3 2012 was as follows:
| issued share capital |
share premium reserve |
other reserves | retained earnings |
total share holders' equity attributable to shareholders |
non controlling interest |
total share holders'- equity |
|
|---|---|---|---|---|---|---|---|
| Balance as of 1 January 2012 | 27,732 | 637,054 | 53,727 | 62,705 | 781,218 | 128,402 | 909,620 |
| Result Q3 2012 Exchange rate differences on foreign |
- | - | - | - 75,849 | - 75,849 |
6,668 | - 69,181 |
| participations | - | - | 70 | - | 70 | - | 70 |
| Total comprehensive income | |||||||
| Q3 2012 | - | - | 70 | - 75,849 | - 75,779 | 6,668 | - 69,111 |
| Final cash dividend for 2011 | - | - | - 7,539 |
- | - 7,539 |
- 8,800 | - 16,339 |
| Stock dividend | 685 | - 685 |
- | - | - | - | - |
| Costs related to optional dividend | - | - 25 |
- 10 |
- | - 35 |
- | - 35 |
| 2011 profit appropriation | - | - | 62,705 | - 62,705 |
- | - | - |
| Distributed cash interim dividend | - | - | - 19,373 |
- | - 19,373 | - | - 19,373 |
| 2012 | |||||||
| Stock dividend | 995 | - 995 |
- | - | - | - | - |
| Costs related to optional dividend | - | - 25 |
- 8 |
- | - 33 |
- | - 33 |
| Issue of shares | 1,389 | 23,677 | - 718 |
- | 24,348 | - | 24,348 |
| Own shares acquired | - 28 |
- 474 |
- | - | - 502 |
- | - 502 |
| Total contributions by and to shareholders |
3,041 | 21,473 | 35,057 | - 62,705 | -3,134 | - 8,800 | - 11,934 |
| Situation as of 30 September 2012 | 30,773 | 658,527 | 88,854 | - 75,849 | 702,305 | 126,270 | 828,575 |
The development of the item shareholders' equity up to Q3 2011 was as follows:
| issued share capital |
share premium reserve |
other reserves | retained earnings |
total share holders' equity attributable to shareholders |
non controlling interest |
total share holders'- equity |
|
|---|---|---|---|---|---|---|---|
| Balance as of 1 January 2011 | 19,914 451,076 |
85,552 | 25,084 | 581,626 | - 581,626 |
||
| Result financial Q3 2011 | - | - | - 7,388 |
7,388 | 7,388 | ||
| Exchange rate differences on foreign | - | - | 159 | - 159 |
159 | ||
| participations | |||||||
| Total comprehensive income Q3 2011 | - | - | 159 7,388 |
7,547 | - 7,547 |
||
| Final cash dividend for 2010 | - | - - 12,988 |
- - 12,988 |
- - 12,988 |
|||
| 2010 Profit appropriation | 25,084 | - 25,084 |
- | - - |
|||
| Distributed cash interim dividend 2011 | - | - | - - 25,975 |
- 25,975 |
- - 25,975 |
||
| Total contributions by and to | |||||||
| shareholders | - | - 12,096 |
- 51,059 |
- 38,963 - |
- - 38,963 |
||
| Situation as of 30 September 2011 | 19,914 451,076 |
97,807 | - 18,587 |
550,210 | - 550,210 |
The financial statements of NSI N.V. for the first three quarters of 2012 were drawn up in compliance with International Financial Reporting Standards, IFRS, as approved within the European Union. This report on the first three quarters of 2012 has been drawn up in accordance with IAS 34, 'Interim Financial Reporting'.
For the most important principles for consolidation, valuation and determination of the result applied in this report, please refer to the published 2011 financial statements (see www.nsi.nl). The consolidated figures are drawn up on the basis of historical cost, except for property investments and financial derivatives, which are recognised at fair value. Unless stated otherwise, the figures are presented in thousands of euros rounded to the nearest thousand.
This report on the first three quarters of 2012 was approved by the Management Board and Supervisory Board on 9 November 2012.
The compilation of this interim report in accordance with IFRS requires that the Management Board forms opinions, estimates and assumptions that affect the application of the accounting principles and the reported figures for assets, liabilities, income and expenses. The estimates and the related assumptions are based on experience and various other factors that are considered appropriate. Actual results from these estimates. The estimates and underlying assumptions are continually assessed. Revisions to estimates are wholly included in the period in which the revision is made, if the effect has only applies to that period.
Below, a summary of the results of each of the reporting segments is included.
| Per country | The Netherlands up to 3rd quarter |
up to 3rd quarter |
Switzerland up to 3rd quarter |
up to 3rd quarter |
Belgium up to 3rd quarter |
up to 3rd quarter |
Total | up to 3rd quarter |
up to 3rd quarter |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||
| Gross rental income | 84,959 | 71,900 | 4,384 | 5,489 | 30,885 | - | 120,228 | 77,389 | ||||||||
| Service costs not recharged to | ||||||||||||||||
| tenants | - | 2,719 | - | 1,092 | - | 160 | - | 190 | - | 734 | - | - | 3,613 | - | 1,282 | |
| Operating costs | - | 12,117 | - | 9,613 | - | 1,045 | - 1,201 | - | 411 | - | - | 13,573 | - | 10,814 | ||
| Net rental income | 70,123 | 61,195 | 3,179 | 4,098 | 29,740 | - | 103,042 | 65,293 | ||||||||
| Revaluation result | - | 91,586 | - 18,428 | - | 5,559 | - | 445 | - | 1,131 | - | - | 98,276 | - | 18,873 | ||
| Net result on sales | - | 123 | 729 | - | 7,771 | - | 22 | 140 | - | - | 7,754 | 707 | ||||
| Segment result | - | 21,586 | 43,496 | - | 10,151 | 3,631 | 28,749 | - | - | 2,988 | 47,127 | |||||
| Reconcilation | ||||||||||||||||
| Administrative costs | - | 3,067 | - | - | 471 | - | - | 2,742 | - | - | 6,280 | - | 4,964 | |||
| Net financing costs | - | 47,855 | - | - | 1,534 | - | - | 11,308 | - | - | 60,697 | - | 34,115 | |||
| Result before tax | - | 72,508 | - | - | 12,156 | - | 14,699 | - | - | 69,965 | 8,048 | |||||
| Corporate income tax | - | - | 862 | - | - | 78 | - | 784 | - | 660 | ||||||
| Result after tax | - | 72,508 | - | - | 11,294 | - | 14,621 | - | - | 69,181 | 7,388 | |||||
| Non-controlling interest | - | - | - | - | - | - 6,668 | - | - | 6,668 | - | ||||||
| Investment income | - | 72,508 | - | - | 11,294 | - | 7,953 | - | - | 75,849 | - | |||||
| attributable to shareholders | ||||||||||||||||
| Purchases and investments in existing properties |
7,010 | 8,191 | 166 | 1,998 | 14,243 | - | 21,419 | 10,189 |
In order to hedge currency risks, real estate investments in currencies other than the euro are generally funded by loans in the currency of the investment (in this case Swiss Francs). As at 30 September 2012, the exchange rate for the Swiss franc was: CHF1 = €0.82651 (30 September 2011: €0.82843).
The operating costs for the properties can be specified as follows:
| rd Quarter 2012 up to 3 |
rd Quarter 2011 up to 3 |
|
|---|---|---|
| Municipal taxes | 3,483 | 2,706 |
| Insurance premiums | 605 | 483 |
| Maintance costs | 2,867 | 1,883 |
| Contributions to owners' assocations | 370 | 453 |
| Property management (including attributed | 3,607 | 2,322 |
| administrative expenses) | ||
| Letting costs | 1,307 | 2,104 |
| Other expenses | 1,334 | 863 |
| Total | 13,573 | 10,814 |
| rd Quarter 2012 up to 3 |
up to 3rd Quarter 2011 | |
|---|---|---|
| Sales of real estate investments | 88,517 | 4,407 |
| Book value at time of sale | 92,266 | 3,648 |
| Total | - 3,749 |
759 |
| Sales costs | - 4,005 |
- 52 |
| Toaal | - 7,754 |
707 |
The sales costs are including broker costs, legal costs, breakage costs for loan redemption and a rental guarantee.
The administrative expenses can be specified as follows:
| rd Quarter 2012 up to 3 |
rd Quarter 2011 up to 3 |
|
|---|---|---|
| Management costs | 8,936 | 4,913 |
| Audit costs | 322 | 112 |
| Consultancy costs | 537 | 241 |
| Appraisal costs | 335 | 172 |
| Compensation of Supervisory Directors, members of the | ||
| Investments Advisory Board and Stichting Prioriteit NSI | 189 | 196 |
| Acquisition costs of merger | - | 1.584 |
| Other expenses | 339 | 347 |
| Total | 10,658 | 7,565 |
| Allocated to operating costs | - 4,108 |
- 2,406 |
| Allocated to real estate portfolio | - 270 |
- 195 |
| Total | 6,280 | 4,964 |
The development of the real estate investments in operation and under development was as follows:
| 30-09-2012 | 30-09-2011 | |
|---|---|---|
| Real estate investments in operation | 2,101,565 | 1,351,263 |
| Real estate investmetns under development | 15,645 | - |
| Total | 2,117,210 | 1,351,263 |
The book value of the properties until the time of revaluation is equal to the acquisition price plus the costs of any improvements made, including attributable costs of acquisition, such as legal costs, transfer tax, agents' charges, the costs of due diligence investigations and other transaction charges, and thereafter equal to the market value.
Due to the financial downturn, the number of real estate transactions (both in terms of signed leases as well as property sales) has significantly decreased in recent years and even more in 2012. As a result of which there are less comparables available for the purpose of determining market yields or market rents. Due to the lack of clear comparables, the influence of assumptions on valuations has increased. This in turn increases volatility on valuations in the market.
Distressed sales cannot be adequately used as reference value for the valuation of real estate. In order to address this, NSI makes use of a number of well-established external appraisers, values all its properties internally each quarter and rotates external appraisers over time and properties.
| The | Switzerland | Belgium | Total | The | Switzerland | Belgium | Total | |
|---|---|---|---|---|---|---|---|---|
| Netherlands | 2012 | Netherlands | 2011 | |||||
| Balance on 1 January | 1,605,790 | 123,084 | 587,889 | 2,316,763 | 1,243,167 | 117,522 | - | 1,360,689 |
| Purchases | - | - | 7,966 | 7,966 | 7,331 | - | - | 7,331 |
| Investments | 7,010 | - | 6,277 | 13,287 | 860 | 1,998 | - | 2,858 |
| Reclassification into | ||||||||
| real estate investments | ||||||||
| under development | - 10,595 |
- | - | - 10,595 |
- | - | - | - |
| Reclassification into | ||||||||
| assets held for sale | - | - 119,925 |
- 1,225 |
- 121,150 |
- | - | - | - |
| Sales | - 4,920 |
- | - 3,865 | - 8,785 |
- 3,648 | - | - | - 3,648 |
| Revaluations | - 92,280 |
- 4,293 |
- 482 |
- 97,055 |
-18,748 | - 445 |
- | - 19,193 |
| Exchange rate | ||||||||
| differences | - | 1,134 | - | 1,134 | - | 3,226 | - | 3,226 |
| Balance on 30 | 1,505,005 | - | 596,560 | 2,101,565 | 1,228,962 | 122,301 | - | 1,351,263 |
| September |
The development of the real estate investments in operation per country was as follows:
| The | Switzerland | Belgium | Total | The | Switzerland | Belgium | Total | |
|---|---|---|---|---|---|---|---|---|
| Netherlands | 2012 | Netherlands | 2011 | |||||
| Prepayment and | ||||||||
| accrued income | ||||||||
| in relation to | ||||||||
| incentives | 8,099 | - | 4,720 | 12,819 | 2,272 | - | - | 2,272 |
| Retail | Offices | Industrial | Residential | Total 2012 | ||
|---|---|---|---|---|---|---|
| Balance on 1 January 2012 | 664,897 | 1,331,525 | 310,496 | 9,845 | 2,316,763 | |
| Purchases | - | - | 7,966 | - | 7,966 | |
| Investments | 758 | 9,637 | 2,892 | - | 13,287 | |
| Reclassification into real estate | - | - 10,595 | - | - | - | 10,595 |
| investments under | ||||||
| development | ||||||
| Reclassification into assets | - 74,066 |
- 45,859 | - 1,225 |
- | - | 121,150 |
| held for sale | ||||||
| Sales | - | - 4,920 |
- 3,865 |
- | - | 8,785 |
| Revaluations | - 11,406 |
- 87,393 |
1,899 | - 155 |
- | 97,055 |
| Exchange rate differences | 692 | 442 | - | - | 1,134 | |
| Balance on 30 September 2012 | 580,875 | 1,192,837 | 318,163 | 9,690 | 2,101,565 |
The development of the investments by real estate type was as follows:
On 30 September 2012, properties with a book value of €1,545.5 million (30 September 2011: €1,322.1 million) were mortgaged as security for loans taken out and credit facilities at banks amounting to €967.4 million (30 September 2011: €805,8million).
| Real estate investments under development | 30-09-2012 | 30-09-2011 |
|---|---|---|
| Balance on 1 January | 5,050 | - |
| Reclassification of real estate investments in | 10,595 | - |
| operation | ||
| Balance on 30 September | 15.645 | - |
| Swiss real estate portfolio | 30-09-2012 | 30-09-2011 |
|---|---|---|
| Balance on 1 January | - | - |
| Reclassification of real estate investments in | 121,150 | - |
| operation | ||
| Investments | 166 | - |
| Sales | - 82,256 |
- |
| Revaluations | - 1,266 |
- |
| Exchange rate differences | - 250 |
- |
| Balance on 30 September | 37,544 | - |
The main items concern prepaid costs 2012 for an amount of €6.2 million, corporate income tax (€3.3 million) and rental income overdue for an amount of €6.0 million.
The number of issued shares increased due to a share issue on 12 April 2012 (3,020,000 shares), the 2011 final dividend (as stock: 1,489,976 shares), the Q1 and Q2 2012 interim-dividend (as stock: 1,229,255 and 932,342 shares) and own shares acquired (57,378 shares) by 6,614,19 shares.
The Stichting Prioriteit NSI was dissolved on 30 June 2012. The priority shares were changed into ordinary shares that were acquired by the company.
The development of the loans during the period under review was as follows:
| 2012 | 2011 | |
|---|---|---|
| Balance on 1 January | 1,259,837 | 713,607 |
| Drawdowns | 30,043 | 31,010 |
| Redemptions | - 136,382 |
- 12,783 |
| Exchange-rate differences | 1,077 | 3,301 |
| Balance on 30 September | 1,154,575 | 735,135 |
| Redemption requirement long-term debt up to 1 year | 306,644 | 155,821 |
| Balance on 30 September | 847,931 | 579,314 |
Remaining maturities of the loans at 30 September 2012 were as follows:
| Fixed interest | variable interest | total | |
|---|---|---|---|
| Up to 1 year | 46,237 | 260,407 | 306,644 |
| From 1 to 2 year | - | 265,659 | 265,659 |
| From 2 to 5 year | 227,521 | 342,524 | 570,045 |
| From 5 to 10 year | - | 7,436 | 7,436 |
| More than 10 years | - | 4,791 | 4,791 |
| Total loans | 273,758 | 880,817 | 1,154,575 |
The interest-bearing debt are loans from banks with an average remaining maturity of 2.2 years. The weighted average interest on outstanding mortgages and interest-rate swaps at 30 September 2012 was 4.7% per annum including margin. The interest coverage ratio amounted to 2.5 as at 30 September 2012.
As collateral for the loans and the current account facilities at the banks, mortgages are registered on real estate with a value of €1,545.5 million, together with a possessory lien on the rental income in some cases.
Furthermore, NSI works diligently on its refinancing requirements and improving its debt maturity. In August 2012 NSI refinanced its full facility with Deutsche Bank, extending €121 million of debt maturing in 2012 and 2013 until 2015 and 2016.
Due to a higher awareness within financing partners in relation with real estate related risks, in combination with the overall economic situation and changing regulation (Basel III/ Solvency II), NSI notes a general decreased availability of real estate financing in the market. Processes of refinancing take materially longer to complete. Margins and costs have been rising substantially since the beginning of the crisis as a result of before-mentioned trends. Loan covenants tend to become more restrictive and are more diligently monitored to the effects of real estate valuations, property sales and vacancy. Listed real estate benefits from its transparency versus non listed real estate in the appetite for financing. NSI works closely with a group of longstanding relationship banks. In order to address the related uncertainty on refinancing, NSI is proactively and early negotiating its upcoming maturities for 2013 (€281,5 million) and 2014. The last €17.7 million remaining part of debt maturing in 2012 is expected to be refinanced shortly.
NSI closely monitors its framework of covenants, which vary per bank, related to its loan facilities.
NSI limits its interest-rate risk by swapping the majority of the variable interest it pays on its loans into a fixed interest rate, by means of contracts with fixed interest rates varying from 1.995% to 4.613% and with maturity dates between 2013 and 2022. The market value of the financial derivatives amounted to - €81.6 million as at 30 September 2012.
| number of contracts |
nominal | negative market value |
positive market value |
|
|---|---|---|---|---|
| Up to 1 year | 2 | 22,500 | 436 | - |
| From 1 to 5 year | 37 | 679,939 | 57,253 | - |
| From 5 to 10 year | 8 | 154,300 | 23,880 | - |
| Total swaps | 47 | 856,739 | 81,569 | - |
The weighted average remaining maturity of the financial derivatives is 4.2 years. NSI is hedged at a weighted interest rate of 3.1%, excluding margin. 2.2% of the current interest bearing debts, excluding debts to credit institutions, are not hedged.
Deferred tax liabilities are recognized at nominal value for the corporate income tax payable in future periods that arise because of the differences between market value and value for tax purposes of the properties in Switzerland.
The largest items recognized under the other payables and accrued liabilities concern prepaid rent of €7,9 million, payable operational costs of €9.2 million and payable interest of €4.7 million.
NSI reached an agreement about the sale of an office property in the Plein van de Verenigde Naties in Zoetermeer. The sales price amounted to €4.5 million and the transfer took place in October 2012.
Hoofddorp, 9 November 2012
Management Board Supervisory Board J. Buijs, CEO H. Habas, chairman D.S.M. van Dongen , CFO H.J. van den Bosch
H.W. Breukink G.L.B. de Greef W.M. Steenstra Toussaint
The Netherlands Authority for the Financial Markets granted a licence to NSI N.V. on 13 July 2006. A copy of this license can be obtained at the company's office as well as via its website: www.nsi.nl
The members of NSI's Supervisory Board and Management Board have no personal interests in any of the investments made by NSI. Furthermore, they never had any such interest at any time during the period under review. The company is not aware of any property transactions during the period under review with any people or organisations that could be considered to have a direct relationship with the company.
NSI had one major investor, Stichting Prioriteit NSI, holder of all 5,000 preference shares. The Stichting Prioriteit NSI was dissolved on 30 June 2012. The priority shares were changed into ordinary shares that were acquired by the company. In accordance with the Financial Supervision Act, the Netherlands Authority for the Financial Markets received a notification of a shareholder with an interest of more than 5% in the company. According to the most recent notification, this interest was as follows: Habas Investments (1960) Ltd. and it subsidiaries (20.5%). The date of the notification mentioned above was 18 September 2012.
No significant events that NSI is required to disclose have occurred after the balance sheet date.
Establishment and details of interim-dividend Q3 2012 23 November 2012 Listing ex-dividend 27 November 2012 Interim-dividend for Q3 2012 made payable 18 December 2012
We have reviewed the accompanying condensed consolidated interim financial information of NSI N.V. in Hoofddorp, statutory seat Hoorn, as included in the interim report on pages 18 to 29, which comprises the consolidated statement of financial position as at 30 September 2012, the consolidated statement of comprehensive income for the period of 9 months ended 30 September 2012, and for the period of 3 months ended 30 September 2012, and the consolidated statement of movements in shareholders' equity, and consolidated cash flow statement for the period of 9 months ended 30 September 2012, and the notes. Management of the Company is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. Our responsibility is to express a conclusion on this interim financial
We conducted our review in accordance with Dutch law including standard 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information as at 30 September 2012 is not prepared, in all material respects, in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.
Amstelveen, 9 November 2012
KPMG Accountants N.V.
H.D. Grönloh RA
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