Annual Report • Sep 21, 2018
Annual Report
Open in ViewerOpens in native device viewer
ANNUAL FINANCIAL REPORT 2017/2018
AEDIFICAISPOSITIONEDASA LEADINGBELGIAN LISTEDCOMPANYINVESTING IN HEALTHCARE REAL ESTATE IN EUROPE – SENIOR HOUSING IN PARTICULAR.
IT AIMS TO CREATE A BALANCED PORTFOLIO THAT GENERATES RECURRING REVENUES AND OFFERS POTENTIAL FOR CAPITAL GAINS.
AEDIFICA'S STRATEGY IS FOCUSED ON THE DEMOGRAPHIC TREND OF POPULATION AGEING IN EUROPE AND THE SPECIFIC CARE AND HOUSING NEEDS THIS TREND IMPLIES.
ACTIVITIES ARE MAINLY CONCENTRATED IN THE HEALTHCARE REAL ESTATE SEGMENT (WITH A FOCUS ON SENIOR HOUSING), BUT THE GROUP IS ALSO ACTIVE IN APARTMENT BUILDINGS AND HOTELS.
AEDIFICAHASBEENQUOTEDONEURONEXTBRUSSELS(REGULATEDMARKET) SINCE 2006.
AEDIFICA OFFERS THE INVESTOR AN ALTERNATIVE TO DIRECT INVESTMENT IN REAL ESTATE.
TABLE OF CONTENTS
| RISK FACTORS | 2 | |
|---|---|---|
| 1. | Market risks | 2 |
| 2. | Risks related to Aedifica's property portfolio | 4 |
| 3. | Financial risks | 6 |
| 4. | Regulatory risks | 9 |
| 5. | Corporate risks | 10 |
| 6. | Risks related to support processes | 11 |
| KEY FIGURES 2017/2018 | 12 | |
| LETTER TO THE SHAREHOLDERS | 14 | |
| TIMELINE | 16 | |
| EVOLUTION SINCE 2006 | 18 | |
| CONSOLIDATED BOARD OF DIRECTORS' REPORT | 24 | |
| 1. | Strategy | 27 |
| 2. | Operations carried out before and after the 30 June 2018 closure | 29 |
| 3. | Analysis of the 30 June 2018 consolidated financial statements | 45 |
| 4. | Appropriation of the result | 52 |
| 5. | Key risks (excluding those linked to financial instruments) | 52 |
| 6. | Use of financial instruments | 52 |
| 7. | Related party transactions | 52 |
| 8. | Subsidiaries | 53 |
| 9. | Research and development | 54 |
| 10. Treasury shares | 54 | |
| 11. Outlook for 2018/2019 | 54 | |
| 12. Conflicts of interest | 57 | |
| 13. Capital increases carried out within the framework of the authorised | 58 | |
| capital | ||
| 14. Environmental, ethical, and social matters | 58 | |
| 15. In case of a takeover bid | 60 | |
| 16. Independence and competence of at least one member of the Audit | 63 | |
| Committee with respect to audit and accounting | ||
| 17. Corporate governance statement | 63 | |
| EPRA | 64 | |
| PROPERTYREPORT | 74 | |
| 1. | The real estate market | 76 |
| 2. | Evolution of the consolidated property portfolio as of 30 June 2018 | 82 |
| 3. | Portfolio analysis as of 30 June 2018 | 82 |
| 4. | Summary table of investment properties as of 30 June 2018 | 89 |
| 5. | Investment property fact sheets | 98 |
| 6. | Management team | 129 |
| 7 | Experts' report | 130 |
| AEDIFICA ON THE STOCK MARKET | 132 | |
| 1. | Stock price and volume | 135 |
| 2. | Dividend policy | 136 |
| 3. | Shareholding structure | 136 |
| 4. | Shareholders' calendar | 137 |
| CORPORATE GOVERNANCE STATEMENT° | 138 | |
| 1. | Code of reference | 140 |
| 2. | Internal audit and risk management | 140 |
| 3. | Shareholder structure | 144 |
| 4. | Board of Directors and Committees | 144 |
| 5. | Diversity policy | 152 |
| 6. | Preventing conflicts of interest | 153 |
| 7. | Evaluation process | 154 |
| 8. | Rights to acquire shares | 155 |
| 9. | Remuneration report | 155 |
| FINANCIAL STATEMENTS | 158 | |
| STANDING DOCUMENTS | 224 | |
| GLOSSARY | 239 |
* Alternative Performance Measure (APM) in accordance with ESMA (European Securities and Market Authority) guidelines published on 5 October 2015. For many years, Aedifica has been using Alternative Performance Measures in its financial communications based on the guidelines issued by the ESMA. Some of these APM are recommended by the European Public Real Estate Association (EPRA) while others have been defined by the industry or by Aedifica; the aim is to provide readers with a better understanding of the Company's results and performance. The APM used in this Annual Financial Report are identified with an asterisk (*). Performance measures defined by IFRS standards or by Law are not considered APM, nor are those measures that are not based on the consolidated income statement or the balance sheet. The APM are defined, annotated and connected with the most relevant line, total or subtotal of the financial statements, in Note 57 of the consolidated financial statements below.
AEDIFICA CARRIES OUT ITS ACTIVITIES IN A CONSTANTLY CHANGING ENVIRONMENT, WHICH IMPLIES CERTAIN RISKS. THE OCCURRENCE OF THESE RISKS COULD HAVE A NEGATIVE IMPACT ON THE COMPANY AS A WHOLE, OR ON ITS OPERATIONS, OUTLOOK, FINANCIAL POSITION OR FINANCIAL RESULT. THUS, THESE RISKS MUST BE DULY CONSIDERED AS PART OF ANY INVESTMENT DECISION.
Aedifica aims to manage these risks to the best of its ability, in order to generate recurring rental income and realise future capital gains.
The Executive Managers and the Board of Directors monitor Aedifica's main risk factors closely. They set conservative policies in this respect, which are updated and adapted as necessary to reflect changing risk factors and circumstances. Please note that completeness in respect of risk factors cannot be assured, and that the following list is based on information available as of 4 September 2018. It is acknowledged that other risk factors may exist, which are currently unknown, remote or considered as benign for the Company, its operations and/or its financial position.
Given the fact that supply and demand in the real estate market is impacted by general economic conditions, any negative shift in the main macro-economic indicators could hurt Aedifica's activity level and outlook. The Company's operations are indeed subject to economic cycles, since these affect the available income of existing tenants (and hence their ability to meet their financial commitments), new demand, and the availability of funds for new investments. The Company can also be affected by the default of its various partners: service providers, credit providers, hedge providers, contractors, etc. To mitigate these risks, Aedifica continues to diversify its investments in accordance with various "diversification axes" (including building types, tenants, segments of the healthcare market, initial yields, changes in value, possibilities for alternative use, public funding, etc.), which are fully aligned with Aedifica's investment strategy. Since 2013, the Company also diversifies its investments from a geographical point of view (Belgium, Germany, The Netherlands). The Company has internalised certain functions which were previously outsourced (property management, project management); it ensures strategic monitoring and endeavours to manage information flows so as to anticipate risks. Finally, it should be noted that the Group's most important asset segment (in particular healthcare real estate) has a strong growth potential, given that, in the countries where Aedifica is active, healthcare real estate faces increasing demand while supply tends to slow or stagnate due to the various restrictions imposed by public authorities.
Rent levels, vacancy rates, and property values are highly influenced by supply and demand in the real estate market, both in terms of space for sale and for let. The main risk factors faced by the Company arise from lower occupancy rates, decreases in contractual rents or building values on contract renewal, and capital losses when properties are disposed of. An increase in acquisition prices could also cause a decrease in rental yield.
— Molenenk – Deventer – The Netherlands —
— Molenenk – Deventer – The Netherlands —
To mitigate these risks, Aedifica's investment strategy is diversified, both geographically (having extended operations beyond Belgium's borders in 2013) and by sector. Aedifica has been active in the healthcare real estate market in Germany since 2013. In early 2016, it entered the Dutch healthcare real estate market.
Each segment of the market in which Aedifica invests targets different types of tenants and has distinctive characteristics (with respect to regulation, lease terms, funding of tenants, etc.). Given the high proportion of long-term contracts (e.g. Belgian irrevocable contracts with a minimum initial maturity of 27 years called "emphytéoses / erfpachten"), which represent 88% of the fair value of marketable investment properties including assets classified as held for sale* as of 30 June 2018, the weighted average lease term of Aedifica's contracts stands at 20 years. This gives the Company a good view on future revenue streams over the long term.
Aedifica also intends to grow its portfolio in order to reduce the weight of each individual property, improve asset management, and increase the operating margin* by realising economies of scale. To this end, the Company maintains close relations with its main tenants and is advised by qualified local experts in each country.
At constant interest rates, inflation risk is low for Aedifica, since rents are subject to indexation (in Belgium and The Netherlands: on an annual basis, largely in line with the local full CPI or, in Belgium, the health CPI; in Germany: the indexation formula is specific to each contract). The impact of inflation on rental income can be summarised as follows: an increase of the index of 100 bps would generate additional rental income of approximately €1.0 million.
In the context of increasing nominal interest rates, lower inflation implies higher real interest rates, which in turn implies that financial charges are growing faster than indexation of rental income. Aedifica has taken some important steps to mitigate this risk (see 3.3 below).
In the event of negative inflation, most contracts set a floor at the level of the initial rent.
Given the dynamism of the large group of professional operators active in the healthcare real estate segment, and the ongoing consolidation of this market, it is highly likely that one or more business combinations will occur among groups related to legal entities with which the Company has entered into lease agreements. This may impact the diversification level of the Company's tenant base. Such business combinations have occurred in the past among Aedifica's portfolio operators, and have served to improve the professionalism of these legal entities. The impact of these consolidations on the diversification of Aedifica's tenant base has been offset by the growth in the portfolio, which has led to the addition of new operators. Data concerning these groups is provided in the Property Report included in the Annual Financial Report and in Note 3 of the Consolidated Financial Statements.
Recall that (see Aedifica's 2015/2016 Annual Financial Report), as a result of the combination of Armonea and Soprim@ groups, two Belgian operators in the senior care segment, the share of consolidated assets invested by Aedifica in properties made available to entities of the Armonea group, represented approx. 21% (situation as of 30 June 2016). This share was subsequently reduced to 15% (situation as of 30 June 2018) due to the Company's investment policy. Moreover, the Company can confirm that as of 30 June 2018 and as of 4 September 2018 no group (connected to legal entities with which the Company has entered into lease or leasehold agreement) existed that exceeds the limit of 20% of the consolidated assets of the Company.
Lastly, it should be noted that, during the 2017/2018 financial year, the Group did not identify any ongoing merger or takeover of tenants which might impact the concentration of operators in Aedifica's portfolio.
Aedifica pursues an investment strategy which was initially focused on the Belgian market. Since 2013, Aedifica has been active in the healthcare real estate segment in Germany. Early 2016, it entered the Dutch healthcare real estate market.
The Board of Directors and the members of the Board of Directors of Aedifica are aware of the risks linked to the management and quality of the Company's assets and have set clear and strict standards for building improve ment, commercial and technical management, and invest ment and divestment, all with a view to limit vacancy and increase property values.
Up to 31 July 2013, Aedifica's properties were exclu sively located in Belgium and consisted mainly of market able properties used or intended to be used for housing. The composition (number of properties, surface area) and breakdown (by type of property, by segment, geo graphical) of its real estate portfolio as of 30 June 2018 is provided in section 3.1 of the Consolidated Board of Directors' Report included in this Annual Financial Report. Since 2013, Aedifica's portfolio has expanded to include properties located in Germany, as well as properties located in The Netherlands starting in 2016.
Aedifica is also carrying out renovation and extension works on a portfolio of approx. fifty development projects (see section 4.2. of the Property Report included in this Annual Financial Report). Marketable investment prop erties and development projects are presented together on the balance sheet, under the heading "I.C. Investment properties" among non-current assets, and real estate offered for sale is recognised under line "II.A. Assets clas sified as held for sale" among current assets.
Aedifica's turnover is completely made up of rental income generated on properties that are rented out to third par ties (natural persons, companies, operators of rest homes or assisted-living apartments, or hotels). Bad debt provi sions and vacancy rates could have an adverse impact on the income statement. Moreover, when a rental con tract matures and a new tenant is found, the new contract may generate lower rental income. A gloomy economic climate can also lead to renegotiations of current leases, in particular to reduce the rent under current contracts in order to rebalance tenants' rent levels compared to their future income potential, and therefore to maintain the sustainability of the cash flows generated by the building for the benefit of the Company. As property costs cannot always be reduced in line with rental incomes, the Com pany's income and cash flows could be further affected as a result.
In order to mitigate these risks, Aedifica diversifies its investments in terms of location, tenant types, possibilities for alternative use, reliance on public funding and contact types. In the healthcare real estate segment for example, Aedifica enters into long leases (mainly under the form of long-term "emphytéoses/erfpachten" in Belgium) with specialised professional operators for its residential care facilities (e.g. rest homes) as well as its apartment build ings designed for seniors opting to live independently with care services available on demand. By doing so, Aedifica can offset most risks associated with investing in just one specific asset class.
The Company is not credit-insured and is, thus, also exposed to the risk of default of its tenants. Procedures have been put in place to monitor the payment pattern of the tenants with whom long leases ("emphytéoses/ erfpachten" or others) have been signed, and to closely follow-up on any doubtful debtors. In addition, Aedifica benefits from rental guarantees set up in accordance with market standards and Belgian law, under the form of war ranties issued by banks, cash deposits on bank accounts, or other securities.
Nevertheless, the Group continues to face a risk of lost rental income, and this risk may increase in the future. Charges to provisions for bad debts for the financial year amount to less than €0.1 million on €92 million in rental income.
The attractiveness of Aedifica's rental properties, as well as their valuation, depends on the perceived quality of the buildings, the effectiveness of the maintenance pro gramme, and the security level achieved.
For this reason, Aedifica has developed an internal
Technical management of the buildings is assigned to employees of Aedifica. In certain cases, the Group employs external service providers who act as asset managers and are continually monitored by the Company's own prop erty management team. Administrative and accounting management of buildings has been internalised almost entirely; related tasks (with respect to the apartment build ings located in Belgium) are now performed internally by Aedifica's property accounting team.
The Company is the sole owner of most of its buildings. However, for buildings held in co-ownership or those which are subsequently divided, specific risks related to the rules of co-ownership or split sales could arise.
The Company may be involved in court procedures arising in the normal course of business. There are currently no ongoing judicial cases for which the Group had to raise a provision. Given the uncertainties arising from court procedures, however, the Company could face new liabilities in the future.
In order to sustain and even increase rental income, and to facilitate new lettings and/or building disposals, Aedifica carries out repair and maintenance works on its real estate portfolio on an ongoing basis. Nevertheless, these investments cannot fully eliminate the risk of impairment of the assets. The contracts established with tenants in the healthcare real estate segment are often "triple net" (Belgium, The Netherlands) or "double net" (Germany, The Netherlands); thus, maintenance costs are either completely ("triple net") or mainly ("double net") at the expense of the tenants.
Aedifica also acquires buildings under development and develops projects itself (to a limited extent), which positions the Company to oversee the development works and ensure that buildings delivered are of high quality. This approach to property acquisition is consistent with the Company's long-term vision.
A team of architects/engineers is charged with managing the development and renovation projects, and ensures that works contracted to third parties are properly carried out. Even as the Company does its best to negotiate contracts that minimise the risks arising from major works (e.g. delays compared to the expected completion date, deviation from budget, organisational issues, etc.), these cannot be totally avoided.
When a building requiring major renovation works is acquired, the fair value of the building at the acquisition date generally reflects its state at that time. The cost of the renovation works to be carried out is included in the Company's financial planning.
The risk that buildings may be destroyed by fire or other calamity is insured for a total reconstruction value of €1,616 million (including the value of furnishings in the furnished apartments, and excluding the value of the lands). This represents approx. 95% of the fair value of marketable investment properties including assets classified as held for sale* (including lands) as of 30 June 2018. In the healthcare real estate segment, Aedifica enters into long term leases with specialised professional operators.
— Residentie Poortvelden – Aarschot – Belgium —
Insurance contracts are signed by Aedifica, or by the tenants in the case of long leases. The insurance contracts cover vacancy costs during the reconstruction of a building, but do not cover other risks, such as voluntary acts of the insured person, the risk of war, nuclear risks, hidden defects, deterioration, decrepitude, asbestos, etc. Insurance premiums paid by Aedifica amount to €110 thousand for the 2017/2018 financial year.
The fair value of investment properties, as assessed quarterly by independent experts, changes over time and is recognised in accordance with IAS 40. Information contained in the independent valuation experts' reports permits taking corrective measures, as appropriate, when faced with a potential impairment loss on a building. Moreover, the Company employs a Senior Valuation & Asset Manager who monitors the valuation of the buildings on a daily basis. A change of 1% in the fair value of investment properties would have an impact of €17 million on the Company's net income and of approximately €0.95 on the net asset value per share. This would also impact the debt-to-assets ratio by 0.4%.
At any time, property can be expropriated by Belgian public authorities, in line with applicable laws.
A major part of Aedifica's assets were acquired through mergers, de-mergers, or acquisitions of shares in other real estate companies. Aedifica takes all necessary steps to ensure proper due diligence at the time of acquisition (e.g. by carrying out due diligence audits regarding the buildings and/or real estate companies, by obtaining certain warranties and representations, etc.). Nevertheless, it is unavoidable that, as a result of these transactions, hidden liabilities may be transferred to the Company, which are not recoverable from the transferor.
Aedifica's financial management practices aim to ensure permanent access to financing, and to monitor and minimise the interest rate risk.
Aedifica's debt-to-assets ratio (as defined in the Royal Decree of 13 July 2014 on Belgian RRECs) is included in section 3.3 of the Consolidated Board of Director's Report included in this Annual Financial Report. As of 30 June 2018, it amounts to 42.5% on statutory level and to 44.3% on consolidated level. This section also discloses the maximum ratio permitted before the Company reaches the maximum debt-to-assets ratio permitted for Belgian REITs (65% of total assets) or arising due to bank covenants (60% of total assets). The debt-to-assets ratio is monitored in the context of monthly closings and its evolution is estimated during the approval process of each major investment project; it is published quarterly. When exceeding the debt-to-assets threshold of 50%, a financial plan with an implementation schedule must be elaborated, describing the measures taken to prevent the consolidated debt-to-assets ratio from exceeding the maximum permissible threshold of 65% (Article 24 of the Royal Decree of 13 July 2014). The Company has indicated in each of its last four Securities Notes (2010, 2012, 2015 and 2017) that its policy in this area focuses on maintaining an appropriate debt-to-assets ratio over the long term in the range of 50 to 55%.
Aedifica's financial model relies on a structural indebtedness. As a result, cash balances are usually low, amounting to €11 million as of 30 June 2018.
As of 30 June 2018, Aedifica has neither pledged any Belgian or Dutch building as collateral for its debts, nor has it granted any other securities to debt-holders. Note that in Germany, it is customary that real estate buildings financed by bank credit are linked to a mortgage in favour to the creditor bank. As such, 12 out of 30 buildings in Germany are linked to a mortgage as of 30 June 2018, respecting the requirements laid down in Article 43 of the Belgian Law of 12 May 2014 (the total amount that is linked to a mortgage cannot exceed 50% of the total fair value and no mortgage linked to a certain building can exceed 75% of that building's value). In the context of supplementary financing of assets located in Germany, it is possible that supplementary mortgages will be obtained.
Aedifica enjoys a strong and stable relationship with its banks, which form a diversified pool, comprising an annually increasing number of European institutions. Details of Aedifica's credit facilities are disclosed in Note 40 of the Consolidated Financial Statements included in this Annual Financial Report.
As of 30 June 2018, Aedifica is using committed credit facilities totalling €742 million (2017: €615 million), out of €1,215 million in total available confirmed credit. The remaining headroom of €473 million is sufficient to cover Aedifica's short-term financial needs (including the development projects in progress) until the end of the 2018/2019 financial year. The investment amount that is budgeted in the Company's financial plan for the existing projects as of 30 June 2018 is estimated at €459 million, to be invested over a three-year period. €23 million should be added to that amount for the acquisitions announced on 12 July (€19 million) and 19 July (€4 million), as well as €150 million for a hypothetical investment, which brings the total net investment included in the financial plan for the 2018/2019 financial year to €400 million. This amount does not include any positive cash flow corresponding to possible disinvestments including the possible sale of Immobe shares.
Given the regulatory status of Belgian REITs/RRECs, and the type of property in which Aedifica invests, the risk of non-renewal of mature credit facilities is remote even in the context of a credit crunch, except in the event of unforeseen and extreme circumstances. There is a risk of increasing credit spreads should market conditions deteriorate as compared to those present at the time the current credit facilities were signed.
The Company may be exposed to a liquidity risk which could arise due to a lack of cash flow in the event of early termination of the credit facilities. Should the Company fail to comply with the provisions (covenants), which were included in the credit facility arrangements to take into account key financial ratios, the facilities might indeed be cancelled, renegotiated, or forced into repayment. The covenants in place are in line with market practice and notably require that the debt-to-assets ratio (as defined by the Royal Decree of 13 July 2014) does not exceed 60%. Moreover, there is a risk of early termination in the event of a change of control, in case of non-compliance with the Company's obligations, and, more generally speaking, in the event of default as defined in these arrangements. A default situation related to one contract can lead to a default situation related to all contracts ("cross-default clauses"). Based on the information available to date, and the prospects for the foreseeable future, there is no indication of a possible early termination of one or more of the existing credit facilities. However, this risk cannot be ignored completely. Moreover, Aedifica does not itself retain control over certain commitments which could lead to the early termination of credit facilities, such as in the event of a change of control.
— Pflegeteam Odenwald – Wald-Michelbach – Germany —
Internally, Aedifica is organised so as to regularly monitor the evolution of the financial markets, optimise the Company's financial structure over both short and long term, and manage financial risks (liquidity risk, interest rate risk). Aedifica aims to further diversify its funding sources, given market conditions. For this reason, Aedifica started a multi-term treasury notes programme in late June 2018. The treasury notes are fully hedged by the available funds on confirmed long term credit lines. As such, they do not increase the liquidity risk.
Almost all of Aedifica's financial debts are floating-rate borrowings. This allows Aedifica to benefit from low interest rates on the non-hedged part of its borrowings. To mitigate the risk of increasing interest rates, Aedifica follows a policy aimed at securing for a period of several years the interest rates related to at least 60% of its current or highly probable indebtedness. It should be noted that the Company assumed certain fixed-rate debts which came from pre-existing investment credits tied to real estate companies which were acquired or absorbed by the Company. On 30 June 2018, 95% of the drawings on the variable-rate credit facilities (30 June 2017: 82%) are covered by hedging instruments (swaps and caps).
This policy is supported by the fact that an increase in nominal interest rates, when not coupled with a simultaneous increase in inflation, implies an increase in real interest rates that cannot be offset by increasing rental incomes through indexation alone. Moreover, in case of accelerating inflation, there is a delay between the timing of the increase of the nominal interest rates and the timing of the indexation of rental incomes. When the interest rate curve is sufficiently flat (i.e. when interest does not vary a lot in relation to the maturity date), Aedifica aims to enter into hedges over longer periods, in line with its investment.
For example, assuming that the structure and level of financial debts remain unchanged, and assuming that no hedges have been entered into, simulations show that a 100 bps positive deviation (increase) in the 2018/2019 interest rates over the forecast rates would lead to an To mitigate the risk of increasing interest rates, Aedifica follows a policy aimed at securing the interest rates related to at least 60% of its current or highly probable indebtness over a period of several years.
approx. additional €8.3 million interest expense for the year ended 30 June 2019. Taking into account the hedging instruments at present, the interest expense would amount to just €2.2 million.
In order to manage the interest rate risk, Aedifica has put in place hedges (interest rate swaps and caps). All hedges are entered into with leading banks and relate to existing or highly probable risks. An analysis of the Company's hedges is provided in the Consolidated Board of Directors' Report and in Note 33 of the Consolidated Financial Statements included in this Annual Financial Report. The hedges are entered into for long periods; however, hedge agreements include provisions (in line with market practice) that could lead the issuing banks to terminate the hedges early or initiate margin calls (in cash for example) in their own favour in certain circumstances.
— Bremerhaven I – Bremerhaven – Germany —
Changes in the interest rate curve have a limited impact on the future interest expense, since at least 60% of the financial debts are hedged by IRS or caps. Each change in the interest rate curve has an impact on the fair value of hedging instruments against income statement and/ or equity (balance lines "I.C.d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS" and line "I.C.e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS"). A sensitivity analysis is provided in Note 33 of the Consolidated Financial Statements included in this Annual Financial Report.
Certain external developments could cause an increase of the credit spreads at the Group's expense, in accordance with the "increased cost" clauses included in the banking agreements. Such clauses allow the lending banks to increase the cost price of the granted credit at the expense of the Company and its subsidiaries, among other things, in case these banks are subjected by their supervisory authority to more severe solvability, liquidity or other capital requirements. However, it should be noted that during the crises which have hit the financial markets since 2007, no bank has ever invoked one of these clauses towards the Group.
Signing a credit facility or hedging instrument with a bank generates a counterparty risk in the event of counterparty default. In order to mitigate this risk, Aedifica trades with several leading national and European banks to diversify its funding and hedging sources, while remaining cautious about the balance between cost and quality of the services provided. One should bear in mind that one or several counterparties could default.
In line with market practice, the agreements signed with banks include market shock clauses and material adverse change clauses ("MAC" clauses) which could lead to, in extreme circumstances, additional costs for the Company or possibly the early termination of the credit facility. However, it should be noted that during the crises which have hit the financial markets since 2007, no bank has ever invoked one of these clauses towards the Group.
Aedifica has an ongoing relationship with the banks listed in Note 40 of the Consolidated Financial Statements included in this Annual Financial Report. With respect to hedging, the main providers (by order of magnitude) are ING, BNP Paribas Fortis, KBC and Banque Européenne du Crédit Mutuel.
Aedifica earns all rental income and incurs all expenses within the euro-zone (except for certain small suppliers which charge for their services in USD). The borrowings of the Company are all denominated in euros. Thus, Aedifica is not exposed to significant foreign exchange risk.
The yearly budget and long-term financial plan are important tools used in the decision-making process and in daily management activities. The budget and financial plan are derived from a computerised model that incorporates a number of assumptions; this model can suffer from programming errors, and human errors which may arise when using it. The potential for wrong assumptions, and undetected programming or human errors might put pressure on Aedifica's performance and the market's confidence in the Company, or threaten its compliance with regulatory (e.g. legal covenants associated to the Belgian RREC status, such as the debt-to-assets ratio) and contractual provisions (e.g. bank covenants).
Furthermore, it may become apparent that some of the past financial prospects are no longer relevant, given that circumstances may change. Moreover, financial prospects are based on assumptions that remain outside the Company's control.
The Company is exposed to changes in the law and increasingly numerous and complex regulations, and possible changes in their interpretation or application by the authorities or the courts, most notably fiscal regulations (e.g. provisions and circulars relating to withholding tax or anti-abuse provisions) and environmental, urban-development and public-procurement regulations.
Regulatory changes and new related obligations arising for the Company and/or its service-providers could influence the profitability of the Company or its property values (e.g. through additional obligations at the expense of the Company and/or its tenants).
The Company has a legal team with the necessary skills to ensure strict compliance with regulations and proactively anticipate changes in legislation. It also calls upon external consultants.
Since 17 October 2014, the Company has been authorised by the FSMA as a "Regulated Real Estate Company" ("RREC") under Belgian law (French: "société immobilière réglementée" or SIR, and Dutch: "gereglementeerde vastgoedvennootschap" or "GVV"). As a Public RREC, and in order to keep this status, the Company is subject (on a consolidated or non-consolidated basis) to the requirements of the Law of 12 May 2014 and to the Royal Decree of 13 July 2014 (hereinafter together referred to as the "RREC legislation"). These include restrictions on operations, debt-to-assets ratio, appropriation account, conflicts of interest, corporate governance, etc. (Continued) compliance with these specific requirements depends, among other things, on the Company's capacity to manage its assets and its indebtedness successfully, and on its compliance with strict internal control procedures. In the event of significant changes in its financial or other situation, it is possible that the Company could become unable to comply with these requirements.
As a public RREC, the Company is exposed to the risk of future changes in legislation relating to Regulated Real Estate Companies. The Company informs itself in a systematic way of local and European legislation's evolution (Belgium, Germany, The Netherlands), e.g. through the non-profit organisation BE-REIT Association, established in 2016, of which it is a founding member.
Furthermore, there is also the risk that, in the event of violation of the applicable rules, the supervisory authority (the FSMA) imposes sanctions, including the loss of the Company's public RREC status. In this case, the Company would lose its specific tax regime for public RRECs (see also section 4.2. below). Furthermore, the loss of the public RREC status is, pursuant to the Company's credit facilities, generally considered an event of default or acceleration, thus triggering the reimbursement of all credit facilities established by the Company. The loss of this status would also have a negative impact on the Company's operations, results, profitability, financial situation and forecast.
As a public RREC, the Company benefits from a specific tax regime under which its annual result (rental income and capital gains on disposals, after deduction of operat ing costs and financial expenses) is not subject to corpor ate tax at the level of the public RREC (while subsidiaries remain subject to corporate tax as is any other company). To the extent that the Company directly holds real estate abroad, it is possible that the Company is subject to local taxes. The subsidiaries of the Company in Germany, Luxembourg and The Netherlands are also subject to the provisions of the common corporate tax laws that are applicable there.
Companies – other than RRECs or specialised real estate investment funds – which were, or are, absorbed by the Company, owe an exit tax of 16.995% payable on their unrealised capital gains and exempted reserves (16.5% plus the crisis contribution of 3%). The rate is reduced to 12.5% (plus the crisis contribution of 2%) in 2018 and 2019 and will be increased to 15% as from 1 Janu ary 2020. The exit tax is calculated taking into account the provisions of the circular Ci. RH. 423/567.729 of 23 December 2004; the prescribed interpretation or prac tical application of this circular is subject to change at the Government's discretion at any time. The "real value" of a property as stated in the circular is calculated after deduc tion of the registration duties or of the VAT. This "real value" varies from (and can therefore be inferior to) the fair value of the property as listed in the financial statements under IFRS. The Group considers itself compliant with the points of the administrative circular concerning the calculation of its exit taxes payable.
The withholding tax on dividends distributed by Aedifica amounts to 15% since 1 January 2017.
Pursuant to Articles 171, 3° quarter and 269, §1, 3° of the Belgian Income Tax Code (introduced by the Articles 89, 90 and 91 of the Law of 18 December 2016 which came into effect as of 1 January 2017, RRECs benefit from a reduced withholding tax rate of 15% (instead of 30%), provided that at least 60% of the Company's real estate portfolio is (directly or indirectly) invested in real estate properties which are situated in a member state of the European Economic Area and which are exclusively or primarily destined for care and housing units suited for healthcare. Aedifica's shareholders have benefitted from this reduced rate since 1 January 2017, as more than 60% of the Company's portfolio is invested in healthcare real estate (in particular in the senior housing segment); the administrative modalities to prove the abovementioned conditions remain to be established by Royal Decree.
Moreover, regulatory risks also include the effects of enacted or foreseen provisions, namely in respect of changes in taxation.
In the event that the Company's status as a RREC is lost (this would suppose major and re-iterated disregard for the provisions of the Belgian Law of 12 May 2014 and/or of the Royal Decree of 13 July 2014), the Company would also lose its specific tax status. This risk is considered to be very remote, since the Company undertakes all neces sary steps to comply with the legal requirements. Further more, the loss of the RREC status is generally considered an event of default, thus triggering the repayment of all loans granted to the Company.
Even with RREC status, the Company acts within the broader framework established by the Belgian Companies Code. The reserves available for distribution, computed in accordance with Article 617 of the Belgian Companies Code and with the Royal Decree of 13 July 2014 (i.e. the reserves that the law and the articles of association allow to be paid-out), amount to €24 million as of 30 June 2018 (see Note 38 of the Consolidated Financial Statements included in this Annual Financial Report).
For its activity in The Netherlands (managed through Aedi fica Nederland BV, a 100% subsidiary of Aedifica SA), the Group has applied to be recognised as a "Fiscale Beleggingsinstelling" ("FBI"), a transparent tax regime. Nevertheless, as a precautionary measure, the Group recognised a generally applicable corporate income tax burden in the income statement to account for the possi bility that the Company does not receive authorisation as an "FBI". In the meantime, Aedifica will continue to claim the "FBI" status, which could have a positive impact on the Group's results. That said, the recently formed Dutch cabinet approved in its coalition agreement to abolish the "FBI" tax regime for real estate companies in the future.
The steady growth of the Company could cause a scarcity of available funding (either as equity or debt). To counter this risk, the Company develops an expanding network of actual and potential suppliers and financial partners. The rate of growth could also give rise to operational risks, such as costs increasing faster than revenues, execution errors or incidents, gaps in the monitoring activities of acquisi tions ("post-closing") or even an inadequate management of the increasing information flow. To counter these risks, the Company upgrades its procedures and its information system on a regular basis; it addresses the challenges of its growth and internationalisation by further formalising its processes, without compromising its flexibility or its agility in execution. Additionally, the Company expands its team by adding individuals with specialised profiles.
Lack of growth also constitutes a risk for a company like Aedifica; it could affect the stock market's expectations, a loss of confidence of the company's partners, and more difficult access to capital. However, the Company shows a strong determination to preserve its dynamic and entrepreneurial spirit, and key members of the team are continuously developing their network in order to stay in touch with the market and to examine all opportunities worthy of consideration.
Internationalisation of the Group's activities, which began in 2013 (first investments in Germany) and which accelerated in 2016 (first investments in The Netherlands), could bring new risks related to the increased complexity in the Group's daily operations management (specific nature of each foreign market, physical barriers, cultural and linguistic barriers, etc.) and the combination of regulatory risks in the different countries. However, the Company makes sure to call upon local experts for assistance regarding its international development, and establishes the required structures and procedures to ensure a harmonious international development (such as the establishment of local management teams).
Reputation is a key element for a fast-growing listed company. Any damage to the Group's reputation could cause a downward review of its growth prospects and make it harder to access capital. Thanks to its track record of more than 10 years, Aedifica enjoys an excellent reputation, and intends to maintain close contact with its various stakeholders in order to preserve this reputation.
A discrepancy between the stock market's expectations and the Group's performance could cause a downward review of the Group's prospects, and consequently a loss of confidence among financial analysts and investors. Aedifica's Board of Directors aims to avoid this type of situation.
Moreover, the distribution of privileged information before publication to all shareholders could have an impact on the share price; the compliance officer establishes the necessary procedures in order to ensure the confidentiality of privileged information up to publication.
Deficiencies with regard to reporting could compromise the adequacy of information available to the decision makers. The Group has developed an adequate internal and external reporting process, with rotating reviews performed at different levels, both internally (staff members, board of directors, audit committee and management committee) and by external parties (audit).
Data processing is a key requirement for a company of Aedifica's scale. A loss or unavailability of data could cause an interruption of the commercial activity (primarily in the apartment buildings segment, where the follow-up of cash inflows and outflows are the most important), an interruption of the investment activities, and/or an interruption of the internal and external reporting process. The management of ICT infrastructure (hardware and software), access security and continuity of data management was entrusted to an external partner on the basis of a "service level agreement"; moreover, responsibility for each technological application is assigned to one of the Company's employees.
Given the limited number of people employed by Aedifica, the organisation could be affected by the departure of key personnel. The unexpected departure of some members of its team could also negatively impact the Company's ability to grow.
Consequently, the Company has developed a human resources policy which focuses on retaining key personnel to the greatest extent possible, and has provided for the duplication ("back-ups") of certain functions. The Company also carries out a proactive recruitment policy, which has led to the creation of several new positions in recent years.
Geographic breakdown in fair value (%)
fair value of investment properties including assets classified as held for sale*
weighted average lease term of current contracts, providing an excellent view toward future income streams
Based on the fair value (re-assessed every three months, increased by the goodwill and the furniture for the furnished apartments). In the healthcare real estate segment, the gross yield and the net yield are generally equal ("triple net" contracts), with operating charges, maintenance costs and rents on empty spaces generally being, in Belgium and (often) The Netherlands, the operator's responsability (the same applies for hotel lease contracts). In Germany (and The Netherlands, in some cases), the net yield is generally lower than the gross yield, with certain charges, such as the repair and maintenance of the roof, structure and facades of the building ("double net" contacts), remaining the responsibility of the owner.
Forecast (see section 11 of the Consolidated Board of Directors' Report in this Annual Financial Report).
| Investment properties (x €1,000) | 30 June 2018 | 30 June 2017 |
|---|---|---|
| Marketable investment properties including assets classified as held for sale* | 1,705,350 | 1,527,675 |
| Development projects | 35,183 | 17,174 |
| Total of investment properties including assets classified as held for sale* | 1,740,533 | 1,544,849 |
| Net asset value per share (in €) | 30 June 2018 | 30 June 2017 |
| Net asset value after deduction of the dividend 2016/20171 , |
53.68 | 49.38 |
| excl. cha,nges in fair value of hedging instruments* | ||
| Effect of the changes in fair value of hedging instruments | -1.95 | -1.89 |
| Net asset value after distribution of dividend 2016/20171 | 51.74 | 47.48 |
| 1. See Note 57.6. | ||
| Consolidated income statement - analytical format (x €1,000) | 30 June 2018 | 30 June 2017 |
| Rental income | 91,677 | 78,983 |
| Rental-related charges | -80 | -48 |
| Net rental income | 91,597 | 78,935 |
| Operating charges* | -14,322 | -13,158 |
| Operating result before result on portfolio | 77,275 | 65,777 |
| EBIT margin* (%) | 84 | 83 |
| Financial result excl. changes in fair value* | -15,319 | -16,538 |
| Corporate tax | -3,553 | -1,275 |
| EPRA Earnings* | 58,403 | 47,964 |
| Denominator (IAS 33) | 17,990,607 | 15,235,696 |
| EPRA Earnings* per share (€/share) | 3.25 | 3.15 |
| EPRA Earnings* | 58,403 | 47,964 |
| Changes in fair value of financial assets and liabilities | -2,157 | 5,119 |
| Changes in fair value of investment properties | 15,018 | 10,357 |
| Gains and losseson disposal | 789 | 1,459 |
| Negative goodwill/goodwill impairment | -344 | 0 |
| Deferred tax in respect of EPRA adjustments | 146 | -1,541 |
| Roundings | 0 | 0 |
| Profit (owners of the parent) | 71,855 | 63,358 |
| Denominator (IAS 33) | 17,990,607 | 15,235,696 |
| Earnings per share (owners of the parent - IAS 33 - €/share) | 3.99 | 4.16 |
| 30 June 2018 | 30 June 2017 | |
| Consolidated balance sheet (x €1,000) | ||
| Investment properties including assets classified as held for sale* | 1,740,533 | 1,544,849 |
| Other assets included in debt-to-assets ratio | 24,418 | 22,566 |
| Other assets | 1,692 | 2,707 |
| Total assets | 1,766,643 | 1,570,122 |
| Equity | ||
| Equity excl. changes in fair value of hedging instruments* | 977,086 | 922,094 |
| Effect of the changes in fair value of hedging instruments | -35,439 | -34,055 |
| Equity | 941,647 | 888,039 |
| Liabilities included in debt-to-assets ratio | 781,449 | 639,077 |
| Other liabilities | 43,547 | 43,006 |
| Total equity and liabilities | 1,766,643 | 1,570,122 |
| Debt-to-assets ratio (%) | 44.3 | 40.8 |
| 30 June 2018 | 30 June 2017 | |
| Key performance indicators according to the EPRA principles | ||
| EPRA Earnings* (in €/share) | 3.25 | 3.15 |
| EPRA NAV* (in €/share) | 54.02 | 51.47 |
| EPRA NNNAV* (in €/share) | 51.36 | 48.93 |
| EPRA Net Initial Yield (NIY) (in%) | 5.2 | 5.2 |
| EPRA Topped-up NIY (in%) | 5.2 | 5.2 |
| EPRA Vacancy Rate (in%) | 1 | 1 |
| EPRA Cost Ratio (including direct vacancy costs)* (in%) | 16 | 17 |
| EPRA Cost Ratio (excluding direct vacancy costs)* (in%) | 16 | 17 |
Aedifica's investment strategy is mainly built on the strength of the demographic trend toward population ageing in Europe. This strategy has contributed to the market's confidence in Aedifica, as demonstrated by the increasing stock price, which rose from €76.37 (30 June 2017) to €78.10 (30 June 2018). Taking the stock price on 30 June 2018 as a baseline, the Aedifica share shows a 45% premium as compared to the net asset value per share excluding changes in fair value of hedging instruments*, or a 51% premium as compared to the net asset value per share.
Two major items have marked the 2017/2018 financial year:
Aedifica's strategy allows to maintain a portfolio of highquality buildings that generate attractive net yields and to anchor the Group as a "pure play" investor in European healthcare real estate. -The Group's international healthcare real estate portfolio expanded significantly, in Germany as well as in The Netherlands. Not only was Aedifica the most active private investor in Dutch healthcare real estate in 2017 (according to a study by CBRE, published on 31 January 2018), but it also received the German "Investor des Jahres 2018" award at the Altenheim Expo in Berlin in June 2018. These two achievements reflect the multiple investments that followed the €219 million capital increase that was successfully completed in March 2017. The investments carried out in Germany, The Netherlands and Belgium (a total of 25 sites) during the 2017/2018 financial year, have expanded Aedifica's portfolio to 135 sites, with a total capacity of more than 11,000 residents (as of 30 June 2018). At the end of the financial year, Aedifica's pipeline of construction and renovation projects and acquisitions subject to outstanding conditions reached a new record level of €459 million, consisting exclusively of investments in healthcare real estate.
-Last May, Aedifica announced the signing of an agreement in principle with a strategic partner who will ultimately acquire the control of Immobe SA, the subsidiary into which the apartment buildings branch will soon be transferred. This disposal is aligned with the strategic development of Aedifica as a pure play healthcare real estate investor, and allows Aedifica to use its capital to pursue continued growth in its core activities.
With regard to the growth in Aedifica's real estate portfolio, the fair value of marketable investment properties including assets classified as held for sale* increased by €178 million (i.e. +12%) during the 2017/2018 financial
Stefaan Gielens, CEO
year, reaching €1,705 million (€1,528 million at the beginning of the period). As of 30 June 2018, the total investment budget (which mainly includes investments in ongoing construction and renovation projects and acquisitions subject to outstanding conditions) reached a record level of €459 million, a €336 million increase as compared to 30 June 2017. These development projects are primarily located in The Netherlands and Germany. Given the fair value of Aedifica's investment properties and the development projects to be carried out over the next three years, the Company's total portfolio will approach the €2 billion mark in the near future.
In addition to its investments and growth, Aedifica also strives for optimal management of its real estate portfolio. The Company's portfolio provides for excellent rental incomes (a 16% increase), an increasing EBIT margin* (84%), and a well-controlled financial result excl. changes in fair value*. The EPRA Earnings* has reached €58.4 million (30 June 2017: €48.0 million; an increase of 22%), i.e. €3.25 per share (30 June 2017: €3.15 per share, an increase of 3%). This result (absolute and per share) is above budget (in terms of rental income as well as EPRA Earnings*). It should be noted that the dilution of the EPRA Earnings* per share, a mathematical effect of the March 2017 capital increase, was more than compensated by the Company's performance in just one financial year.
As of 30 June 2018, the consolidated debt-to-assets ratio amounts to 44.3% (30 June 2017: 40.8%). Establishment of a €118 million credit facility with Groupe BPCE in June 2018 demonstrates once again the strong and durable relationship Aedifica maintains with its credit providers and its ability to carry out its commitments.
Of the items that have had no effect on the size of the proposed dividend, the change in the fair value of investment properties (as valued by independent valuation experts) gave rise to unrealised capital gains (non-cash) of which approx. €15 million has been recognised in the income statement. However, fluctuations in the interest rates on the financial markets during the 2017/2018 financial year resulted in €1 million in unrealised capital losses (noncash) on hedging instruments.
Taking these items into account, Aedifica's total profit amounts to €72 million (30 June 2017: €63 million).
Aedifica owes its strong results for the 2017/2018 financial year to the enthusiasm, competence and commitment of its staff who have yet again demonstrated their efforts to ensure the Company's continued growth. Again this year, the Board of Directors expresses its sincere congratulations to the Aedifica team.
Given the performance and achievements described above, Aedifica's Board of Directors proposes to the At the end of the financial year, Aedifica's pipeline of construction and renovation projects and acquisitions subject to outstanding conditions reached a new record level of €459 million, consisting exclusively of investments in healthcare real estate.
Serge Wibaut, Chairman of the Board of Directors
Annual General Meeting to distribute a gross dividend of €2.50 per share (subject to a reduced withholding tax rate of 15%), in line with guidance. This is an increase of 11% compared to the prior year dividend distribution.
Given the current consolidated debt-to-assets ratio and the anticipated decrease of the consolidated debt-toassets ratio as a result of the disposal of a portion of the shares of Immobe SA (the subsidiary into which the apartment building branch will be transferred), the Company is set to continue on its path, pursuing continued growth at the pace shareholders have appreciated since its IPO in October 2006. New investment opportunities for 2018/2019, fully aligned with Aedifica's investment strategy, were already under negotiation in Belgium, Germany and The Netherlands at the end of the 2017/2018 financial year. The acquisitions announced since 1 July 2018, amounting to €23 million, provide clear evidence of this. Before even considering new opportunities in Belgium, Germany and The Netherlands, the Company's future growth is ensured given its existing commitments to acquire, renovate, extend, and/or redevelop multiple sites. As mentioned above, the pipeline for these commitments (as of 30 June 2018) represented a total committed budget of approx. €459 million, to be invested over the next three years. This strategy allows Aedifica to maintain a portfolio of high-quality buildings that generate attractive net yields and to anchor itself as a "pure play" investor in European healthcare real estate.
Based on Aedifica's excellent performance, the Board of Directors expects a higher dividend for the 2018/2019 financial year, at €2.80 gross per share (subject to a reduced withholding tax rate of 15%), a 12% increase.
Stefaan Gielens, Chief Executive Officer
Serge Wibaut,
Chairman of the Board of Directors
Comparison – indices in total return from 23 October 2006 (IPO) to 30 June 2018
Value creation (in € million)
By the end of June 2018, Aedifica's market capitalisation amounted to approx. €1.4 billion.
Since Aedifica's IPO on 23 October 2006, the Company's market capitalisation has grown significantly, not only as a result of subsequent capital increases, but also due to value creation, notwithstanding annual dividend pay-outs.
1,750
Aedifica's portfolio primarily comprises healthcare real estate. This segment represents 84% of the marketable investment properties' portfolio as of 30 June 2018, whereas it represented only 25% in 2007.
200 0 111
While being non-existent as of 30 June 2013, the portion of Aedifica's portfolio located abroad represents 30% as of 30 June 2018 (30 June 2017: 23%). These buildings are situated in Germany and The Netherlands and consist exclusively of healthcare real estate.
The Netherlands Germany Belgium
June June June June June June June June June June June June June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
The fair value of the investment properties including assets classified as held for sale* averaged a compounded annual growth rate of 26% over 12 years and reached €1.7 billion as of 30 June 2018.
Thanks to the funds raised through the capital increases of 2010 (€67 million), 2012 (€100 million), 2015 (€153 million) and 2017 (€219 million), investment properties were able to grow by more than €1 billion between 2010 and 2018.
Investment properties
THE AGEING OF THE BABYBOOM GENERATION IS PROGRESSING AT A RAPID PACE IN EUROPE, AND WILL REACH ITS PEAK BY 2060. PROFESSIONALISATION AND CONSOLIDATION IN THE CARE MARKET IS EVIDENT AT A EUROPEAN LEVEL. AEDIFICA PARTICIPATES ACTIVELY AS A REAL ESTATE INVESTOR IN BELGIUM AS WELL AS IN GERMANY AND THE NETHERLANDS. AEDIFICA PUTS ITS BUILDINGS AT THE DISPOSAL OF PROFESSIONAL AND SPECIALISED OPERATORS UNDER LONG-TERM CONTRACTS THAT GENERATE HIGH NET RENTAL YIELDS.
Portfolio of 73 buildings:
"Aedifica continues its international expansion at a steady pace. Already 30% of Aedifica's portfolio is now located in Germany and The Netherlands."
Stefaan Gielens, CEO
Portfolio of 32 buildings:
Portfolio of 30 buildings:
— Seniorenheim am Dom – Halberstadt – Germany —
THE APARTMENT BUILDING PORTFOLIO WILL BE TRANSFERRED INTO IMMOBE SA/NV, A NEW SUBSIDIARY. AEDIFICA SIGNED AN AGREEMENT WITH A STRATEGIC PARTNER, WHO WILL SHARE IN THE CAPITAL OF IMMOBE.
"Immobe SA has been recognised as an institutional regulated real estate company ("IRREC"). Through this IRREC, Aedifica will continue managing its apartment building branch, in cooperation with a strategic partner who will ultimately acquire the control of Immobe."
Stefaan Gielens, CEO
— Résidence Palace – Brussels – Belgium —
— Bataves 71 – Brussels – Belgium —
— Carbon – Genk – Belgium —
AEDIFICA ACQUIRED SIX HOTELS IN PRIOR YEARS, ALL LOCATED IN BELGIUM, WHICH ARE OPERATED BY TWO PROFESSIONAL AND SPECIALISED OPERATORS UNDER LONG-TERM CONTRACTS.
6,3% gross rental yield
The Carbon hotel is a 4-star design hotel located in the centre of Genk, which won the European prize for best interior restaurant design in 2008.
Located in Leuven's historical centre, the Martin's Klooster constitutes a unique 4-star hotel. Following a renovation in 2012, it contains 103 rooms.
€1.7 billion fair value of investment properties as of 30 June 2018
of 30 June 2018
44.3% consolidated debt-to-assets ratio as of 30 June 2018
+16% increase in consolidated rental income as compared to 30 June 2017
+22% EPRA Earnings* as compared to 30 June 2017
99.0%
high occupancy rate for the unfurnished portion of the portfolio
Establishment of Immobe SA, a 100% subsidiary which has been recognised as an IRREC and into which the apartment building branch will be transferred
This Board of Directors' report is based on the Consolidated Financial Statements. It includes, however, some data on the statutory accounts and this is mentioned when the case. Full statutory financial statements and the statutory Board of Directors' report will be registered at the National Bank of Belgium within the legal deadlines and may be obtained free of charge via the internet (www.aedifica.eu) or upon request at the Company's headquarters.
Belgian Federal Planning Bureau, 2018.
Change in German population by age group
Statistisches Bundesamt (Deutschland), 2015.
Source: "Prognose bevolking kerncijfers 2015-2060", Centrale Bureau voor de Statistiek (CBS), 29 January 2016.
Aedifica is positioned as a leading Belgian listed company investing in healthcare real estate in Europe, particularly in terms of senior housing.
It aims to create a balanced portfolio that generates recurring revenues and offers potential for capital gains.
Aedifica's strategy is focused on the demographic trend of population ageing in Europe and the specific needs this trend implies in terms of care and housing. As evidence to support these trends, Belgium's Federal Planning Bureau anticipates that population ageing for the babyboom generation will continue until it reaches its peak, in Belgium, by 2060. A similar trend is observed in Germany and The Netherlands.
These trends underlie long-term needs in terms of specialised real estate infrastructure. With regard to senior housing in particular, two additional factors should be taken into consideration: (i) consolidation of care operators on a European level and (ii) scarcity of public funding to finance such specialised real estate infrastructure.
The combined long-term effects of population ageing, consolidation of operators and a lack of public funds, shape Aedifica's strategy.
The Group mainly concentrates its activity in the healthcare real estate segment (with a focus on senior housing), but is also active in apartment buildings and hotels. The Group's stated policy is to continue to grow exclusively in the senior housing segment and other segments of healthcare real estate in Europe ("pure play strategy").
Aedifica's strategy – specialising in healthcare real estate – constitutes its most unique feature and greatest strength. The Company strives to be innovative and constructive in order to provide its shareholders with a safe real estate investment over the long run, one that generates recurring revenues for their benefit.
Aedifica's strategy is primarily of the "buy and hold" type, which is, by definition, focused on the long-term; of course, this does not preclude certain disposals.
The ageing of the babyboom generation is progressing at a rapid pace in Belgium and Europe, and will reach its peak by 2060.
— Het Gouden Hart van Leersum – Leersum – The Netherlands —
Professionalisation and consolidation in the senior housing market is evident at a European level. Aedifica participates actively in Belgium as well as in Germany and The Netherlands by acquiring buildings, engaging in sale and rent-back arrangements for existing buildings, by investing in construction of new buildings, or by undertaking renovations and/or extensions of existing sites.
The Company puts its buildings at the disposal of professional and specialised operators under long-term contracts that generate high net rental yields.
Considerable growth potential remains in this sector. As a portion of the number of approved rest home beds in Belgium, Aedifica is a market leader, holding approximately 5% of the market as of 30 June 2018.
Aedifica responds to the needs of its operators, and to the growing demand arising due to shifting demographics, by holding both rest homes and assisted-living buildings.
The senior housing market generates stable and recurring revenues, which provide for the distribution of dividends to Aedifica shareholders. According to a study published by Cushman & Wakefield in January 2016, Aedifica held the 1st position in terms of private real estate investors in rest homes in Belgium for the period 2005-2015, representing 36% of the total amount invested by RRECs, insurers, banks and other types of investors. According by a study published on 31 January 2018, Aedifica was the most active private investor in Dutch healthcare real estate in 2017. Moreover, Aedifica received the German "Investor des Jahres 2018" award at the Altenheim Expo in Berlin in June 2018.
The increasing international expansion of the Group's activity (since 2013 in Germany, and since 2016 in The Netherlands) is consistent with the Company's strategy. It allows for better diversification of tenants and extends the Company's operations in a market which tends to structure itself at a European level. The Company positions its ambitions with respect to healthcare real estate in a European context (see chapter on "Risk Factors" of this Annual Financial Report). Information on the German and Dutch senior housing markets is given in the "Property Report" chapter of this Annual Financial Report.
On 30 June 2018, healthcare real estate/senior housing represents 84% of the Group's portfolio.
Aedifica holds apartment buildings primarily situated in Brussels. The buildings are primarily residential but may also include office or retail space, given their urban locations which commonly feature mixed-use buildings.
Most apartments are furnished by the occupants under traditional rental contracts. Others are furnished by Aedifica and tend to be let under short-term rental contracts.
As of 30 June 2018, apartment buildings represent 12% of the group's portfolio.
The apartment building branch will be transferred into Immobe SA, a new subsidiary. Immobe SA has been recognised as an institutional regulated real estate company ("IRREC"). Through this IRREC, Aedifica will continue managing its apartment portfolio, in cooperation with a strategic partner who will ultimately acquire the control of Immobe.
In prior years, Aedifica acquired six hotels that are operated by two professional and specialised operators under long-term contracts.
The portfolio contains two large hotels situated in two of the most touristic cities in Flanders (Bruges and Leuven), and four hotels in Limburg (Genk, Tongeren, and in close proximity to Maastricht).
On 30 June 2018, hotels represent 4% of the group's portfolio.
award received at the Altenheim Expo in Berlin
Aedifica applies a growth strategy; the fair value of the investment properties including assets classified as held for sale* averaged a compounded annual growth rate of 26% over 12 years and reached €1.7 billion as of 30 June 2018. The Company intends to continue on this growth trajectory in order to derive benefits linked to its scale, including:
Within the sphere of European healthcare real estate, senior housing is currently the most developed and therefore most relevant segment for Aedifica. Population ageing will probably have a significant impact on care "consumption" and this trend could encourage the development of other segments, which are more oriented towards "cure" (care hotels, rehabilitation centres, hospitals, medical facilities, etc.) than "care". Aedifica is therefore studying the possibility of investing in new sectors of the healthcare real estate market and is continually evaluating the needs and opportunities generated by shifting demographics.
Aedifica is also studying the possibility of investing in geographic markets within Europe outside of Belgium, Germany and The Netherlands, with a continued focus on healthcare real estate.
Investments carried out during the financial year are detailed in sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 The different operations are also described in the Company's press releases, which are available online at www.aedifica.eu. The contractual value of acquisitions disclosed in this section complies with the provisions of article 49 §1 of the Law of 12 May 2014 on Regulated Real Estate Companies.
On 8 September 2017, Aedifica announced the acquisition of a rest home in Belgium, pursuant to a previously established agreement (see half year financial report of 23 Feb-
— Martha Flora Hilversum – Hilversum – The Netherlands —
ruary 2016). The De Duinpieper rest home is located in the "Vuurtorenwijk" neighbourhood in Ostend (70,000 inhabitants, Province of West Flanders). The building, designed by Lucien Kroll, a famous Belgian architect, was built in 1989. The site will be renovated into a modern residential care facility intended for seniors requiring continuous care, and extension works will be carried out for the construction of a new wing. Upon completion of the works, anticipated for summer 2019, the rest home will be able to welcome 115 residents. The site will remain operational during the works. Aedifica SA and its subsidiary Aedifica Invest SA have acquired 100% of the shares of Dujofin SPRL owner of the building and plot of land. The contractual value of the site amounts to approx. €10 million. Aedifica has budgeted approx. €2 million for renovation and extension works. Aedifica's total investment (including the works) will amount to approx. €12 million. The operation was financed using Aedifica's credit facilities. The care residence is operated by Fipromat SPRL, an entity of the Dorian group, a private player in the Belgian senior care market. The lease established for this site is an irrevocable 27-year triple net long lease. The initial gross yield amounts to approx. 5.5%.
On 28 July 2017, Aedifica acquired a rest home in Ger many (as announced in the press release of 13 June 2017) given fulfillment of the outstanding conditions. The pur chase price was paid and Aedifica SA acquired the property and full use of the building at this time. The operation was financed using Aedifica's credit facilities. The Seniorenheim am Dom rest home benefits from an excellent location in the historic centre of Halberstadt (40,000 inhabitants, State of Saxony-Anhalt). The residen tial care facility is intended for seniors requiring continuous care ("Pflegeheim"). The rest home has approximately one hundred rooms and also includes several recreational and physical therapy rooms. The building was constructed in 2008 and can welcome 126 residents. The contractual value amounts to approx. €9 million. The site is operated by an entity of the Deutsche Pflege und Wohnen group (Deutsche Pflege und Wohnstift GmbH, controlled by the Belgian group Armonea since 2016) under an irrevoc able 25-year double net long lease. The initial gross yield amounts to approx. 7%.
On 17 August 2017, Aedifica announced the signing of a cooperation agreement with Specht Gruppe for the con struction of 17 rest homes in Germany. The rest homes (to be constructed) will be located in urban and rural areas in several states of northern Germany (Lower Saxony, North Rhine-Westphalia, Schleswig-Holstein, Mecklenburg-Vor pommern and Bremen). These residential care facilities will be designed for seniors requiring continuous care ("Pfle geheim") and will consist primarily of single rooms. In addi tion to the standard single rooms, larger rooms (suites) will be included to cater to the high-end market segment. The buildings will also house complementary services, such as day centres for seniors and, in some cases, childcare ser vices or a pharmacy. Upon completion of all buildings, this portfolio will have a total capacity of approx. 1,500 units. The rest homes will generally be located on care cam puses, which also contain buildings offering apartments for seniors opting to live independently with care services available on demand (see announcement of the expansion of the cooperation agreement on 5 June 2018 below). Aedifica will acquire the plots of land through the takeover of companies owned by Specht Gruppe (after receipt of the development permits). After each takeover is com pleted, construction of the new buildings will begin. An agreement will be signed with Residenz Baugesellschaft, an entity of Specht Gruppe, to carry out the construc tion of the new buildings for a fixed price. Assuming all development permits are received, Aedifica's total invest ment will amount to approx. €200 million. The first build ings are expected to be completed in 2019. The operation will be financed using Aedifica's credit facilities. All sites will be rented out to Residenz Management GmbH, an entity of Specht Gruppe, and will be operated by high quality operators. The sites will be rented out on the basis of irrevocable 30-year long leases and, in addition, will bene fit from a triple net warranty of limited duration that will cover the buildings' maintenance. Upon completion of the works, gross yields will amount to approx. 5.5%.
On 11 September 2017, Aedifica announced the signing of an agreement for the acquisition of a senior housing site in Germany. This agreement was subject to outstanding conditions, which were fulfilled as of 30 November 2017. The purchase price was paid and Aedifica SA acquired the property and full use of the site. Seniorenresidenz an den Kienfichten is located near the centre of Dessau-Rosslau (83,000 inhabitants, State of Saxony-Anhalt) within a large private park. The site comprises a villa, which was com pletely renovated in 2009, and a new building that was completed early 2017. The site has a capacity of 88 units, including 62 units serving seniors requiring continuous care ("Pflegeheim", situated in the new building) and 26 units serving seniors opting to live independently, with access to care services on demand ("betreutes Wohnen", situated in the villa). The contractual value amounts to approx. €6 million. The operation was financed using Aedifica's credit facilities. The site is operated by Cosiq GmbH, a private player in the German senior care market. The lease established for the site is an irrevocable 25-year double net long lease. The initial gross yield amounts to approx. 7%.
On 8 December 2017, Aedifica announced the acquisition of three senior housing sites in Germany. The Bremer haven I (110 units), Bremerhaven II (42 units) and Cux haven (34 units) senior housing sites benefit from excellent locations in the centre of Bremerhaven (110,000 inhabit ants, State of Bremen) and Cuxhaven (50,000 inhabitants, State of Lower Saxony). They were constructed in 2016, 2003 and 2010, respectively, and comprise housing units for independent living with care services available on demand ("betreutes Wohnen", seniors apartments), as well as housing units offering continuous residential care ("Pflege-Wohngemeinschaft"), a day centre and a home care office. The Bremerhaven I site also includes a retail space of approx. 900 m² situated on the ground floor. Aedifica Invest SA acquired the control of a company based in Germany, which currently owns the buildings. The total contractual value of the sites amounts to approx. €27.5 million. The leases established for the sites are irrevocable 20-year double net long leases. The Bremerhaven I site benefits from a triple net warranty of limited duration, which covers the buildings' maintenance. The initial yields amount to approx. 5%. The operation was financed using Aedifica's credit facilities. The sites are fully let and primarily operated by Ambulanter Pflegedienst Weser, an entity of Specht Gruppe. APW is a private player active for home and day care fior seniors.The commercial space situated on the ground floor of Bremerhaven I is sublet by the operator to Rossmann (a drugstore chain with approx. 3,600 stores).
On 15 February 2018, Aedifica announced the signing of an agreement for the acquisition of a senior housing site in Germany. This agreement was subject to outstanding conditions, which were fulfilled as of 17 April 2018. The purchase price was paid and Aedifica SA acquired the property and full use of the site at this time. The advita Haus Zur Alten Berufsschule senior housing site benefits from an excellent location in a residential area of Zschopau (10,000 inhabitants, State of Saxony), approx. 15 km from Chemnitz. The site is a former school building (a protected monument) that was entirely redeveloped into a modern residential care facility in 2016. The site comprises 67 housing units for independent living (senior apartments) with care services available on demand, 24 housing units offering continuous residential care ("Pflege-Wohngemeinschaften"), 36 day centre units, and a home care office. The contractual value amounts to approx. €9 million. The operation was financed using Aedifica's credit facilities. The site is rented out to Zusammen Zuhause GmbH, and operated in cooperation with advita Pflegedienst GmbH, a private player in the German senior care market. advita is primarily a provider of daily home care, but also provides housing for seniors requiring care services. Sites operated by advita combine housing units oriented toward seniors opting to live independently and other types of housing and services (housing units oriented toward seniors requiring continuous care, day centres and home care offices). The site is rented out on the basis of an irrevocable 30-year long lease and benefits from a triple net warranty of limited duration. The initial gross yield amounts to approx. 5%.
On 3 May 2018, Aedifica announced the signing of an agreement for the acquisition of a residential care facility located in Germany and intended for people with severe neurological damage. This agreement was subject to outstanding conditions, which were fulfilled as of 31 May 2018. The purchase price was paid and Aedifica SA acquired the property and full use of the site. Pflegeteam Odenwald is located in a green area near the centre of Wald-Michelbach (11,000 inhabitants, State of Hesse), approx. 70 km from Frankfurt am Main. The site, a former hotel that was redeveloped into a residential care facility in 1995, has been completely renovated in 2012. The building has a capacity of 32 units intended for people with severe neurological damage. The contractual value amounts to approx. €3 million. The operation was financed using Aedifica's credit facilities. The site is operated by Cosiq GmbH, a private German player on the care market. The lease established for the site is an irrevocable 25-year double net long lease. The initial gross yield amounts to approx. 7%.
On 3 May 2018, Aedifica announced the signing of an agreement for the acquisition of a senior apartment complex in Germany. This agreement was subject to outstanding conditions, which were fulfilled as of 1 June 2018. The purchase price was paid and Aedifica SA acquired the property and full use of the site at this time. The Park Residenz senior apartment complex is situated in a private park and benefits from an excellent location in a residential area in the centre of Neumünster (78,000 inhabitants, State of Schleswig-Holstein). The site is a former barracks (a protected monument) and was entirely redeveloped into a modern residential care facility in 2001. The site comprises four buildings, including 79 housing units (apartments) for independent living with care services available on demand, a day centre and a home care office. The contractual value amounts to approx. €11 million. The operation was financed using Aedifica's credit facilities. The site is operated by the Convivo group, a private player with more than 20 years of experience in the German senior care market. The lease established for the site is an irrevocable 25-year double net long lease. The initial gross yield amounts to approx. 5.5%.
On 4 June 2018, Aedifica announced the signing of an agreement for the acquisition of four fully operational sites and the construction of a new rest home in Germany. The four operational sites are intended for seniors requiring continuous care; the buildings were constructed in differ ent years and have undergone several renovations, most recently in 2018. Seniorenzentrum Sonneberg benefits from an excellent location in the centre of Sonneberg (24,000 inhabitants, State of Thuringia); it has a capacity of 101 units and is intended for seniors requiring continuous care. Seniorenzentrum Haus Cordula I and II are located in Rothenberg, part of Oberzent (10,000 inhabitants, State of Hesse); they have capacities of 75 and 39 units, respectively, and are intended for seniors requiring continu ous care. Hansa Pflege- und Betreuungszentrum Dornum is situated in Dornum (5,000 inhabitants, State of Lower Saxony) near the North Sea; the site has a total capacity of 106 units, of which 56 units are intended for seniors requir ing continuous care and 50 units are intended for people suffering from mental health disorders. The Seniorenzen trum Weimar rest home will be constructed near the cen tre of Weimar (65,000 inhabitants, State of Thuringia); the building is expected to be completed in the beginning of 2020 and will have a capacity of 144 units intended for seniors requiring continuous care. The agreement for the acquisition of the four fully operational sites by Aedifica SA was subject to the usual conditions in Germany (mainly of administrative nature), which were fulfilled in late August 2018. The purchase price was paid and the property and full use of the buildings were automatically acquired. The contractual value of these four sites amounts to approx. €23 million. The agreement for the acquisition of the rest home to be constructed is subject to the usual outstand ing conditions, which should be fulfilled upon completion of the construction works (expected in 2020). The pur chase price will be paid and the property and full use of the rest home will automatically be acquired at that time. The contractual value will amount to approx. €16 million. The operation will be financed using Aedifica's credit facili ties. The five sites are operated by entities of the Azurit group, a private player in the German senior care mar ket. The leases established for the four operational sites are irrevocable 20-year double net long leases. The initial gross yields amount to approx. 6.0%. The lease estab lished for the rest home to be constructed is an irrevoc able 25-year double net long lease. The initial gross yield will amount to approx. 6.0%.
On 5 June 2018, Aedifica announced the expansion of the cooperation agreement with Specht Gruppe. The expanded agreement provides for new construction in addition to that announced in the cooperation agreement with Specht Gruppe on 17 August 2017 (see above). Spe cifically, seniors apartment buildings and houses for sen iors will be added to 8 of the 17 sites in Germany included in the initial cooperation agreement. The seniors apart ment buildings and houses for seniors will be constructed in urban and rural areas in northern Germany (Lower Sax ony, Mecklenburg-Vorpommern, North Rhine-Westphalia and Schleswig-Holstein). The housing units are designed for independent living with care services available on demand and will cater to the mid- to high-end market segment. They will be located on care campuses that also feature complementary services, such as housing for seniors requiring continuous care, a day centre for sen iors and, in some cases, childcare services or a pharmacy (Aedifica will own all buildings on these care campuses). The seniors apartment buildings and houses for seniors located on these sites will have a total capacity of approx. 220 units. With this expansion of their cooperation agree ment, Aedifica and Specht Gruppe are now develop ing a portfolio totaling approx. 1,800 units. Aedifica will acquire the plots of land through the takeover of compan ies owned by Specht Gruppe (in principle after receipt of the development permits). After each takeover, construc tion of the new buildings will begin. An agreement will be signed with Residenz Baugesellschaft, an entity of Specht Gruppe, to carry out the construction of the new buildings for a fixed price. Assuming all development permits will be received, Aedifica's investment will ultimately amount to approx. €44 million. Aedifica's total investment in the entire portfolio of care campuses that is being developed with Specht Gruppe, will amount to approx. €245 million. The operation will be financed using Aedifica's credit facili ties. All sites will be rented out to Residenz Management GmbH, an entity of Specht Gruppe, and will be operated by high quality operators. They will be rented out on the basis of irrevocable 30-year long leases and, in addition, will benefit from a triple net warranty of limited duration that will cover the buildings' maintenance. Upon comple tion of the works, gross yields of the seniors apartments and houses for seniors will amount to approx. 5.0%. The gross yield of the entire portfolio that is being developed with Specht Gruppe will amount to approx. 5.5%.
On 26 June 2018, Aedifica announced the signing of an agreement for the acquisition of a senior housing site in Germany. SARA Seniorenresidenz is located in a residen tial area of Bitterfeld-Wolfen (40,000 inhabitants, State of Saxony-Anhalt). The site comprises a building that was completely renovated in 2017, and an adjacent building that was completed in 2011. The site has a capacity of 126 units, including 90 units catering to seniors requir ing continuous care ("Pflegeheim" and "Pflege-Wohnge meinschaften") and 36 units (apartments) serving seniors opting to live independently with care services available on demand. The site, which will be acquired by Aedifica SA also offers extension potential. Given certain specific con ditions of this transaction, the site will enter into Aedifica's portfolio during the second quarter of 2019. The purchase price will be paid and the property and full use of the site will automatically be acquired at that time. The contrac tual value amounts to approx. €10 million. The operation will be financed using Aedifica's credit facilities. The site is operated by SARA Betreuungsgesellschaft mbH, a private German player in the local senior care market. The lease established for this site is an irrevocable 30-year double net long lease. The initial gross yield will amount to approx. 6.0%.
On 10 July 2017, Aedifica announced the signing of an agreement for the construction of a care resi dence in The Netherlands. The future Huize De Com pagnie care residence is located near the centre of Ede (114,000 inhabitants, Province of Gelderland) on the site of a former barracks that will be entirely redeveloped. A portion of this site will be renovated into a modern resi dential care facility for seniors requiring continuous care. The care residence is expected to be completed in late 2018 and will be able to welcome 42 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the plot of land (including the build ings located thereon). The contractual value amounts to approx. €2 million. The construction will be carried out by IDBB Vastgoed BV and delivered turnkey to Aedifica. Aedifica has budgeted approx. €6 million for renovation works; the total investment (including renovation) will ultimately amount to approx. €9 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by an entity of the Compartijn group, a private player in the Dutch senior care market. Compartijn is a subsidiary of Incluzio BV, owned by the Facilicom Services Group. The lease established for this site is an irrevocable 20-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 19 July 2017, Aedifica announced the signing of a cooperation agreement between Aedifica, Stichting Rendant and HEVO, for the construction of new buildings on two of Stichting Rendant's sites, which will replace the existing buildings that have become obsolete. The sites are located in the cities of Leeuwarden (96,000 inhabitants, Province of Friesland) and Heerenveen (50,000 inhabit ants, Province of Friesland). Both sites will comprise approx. 130 housing units oriented toward seniors opt ing to live independently, with access to care services on demand. Completion of the buildings is expected during the first half of 2020. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, will acquire the full property of the plots of land (including the buildings located thereon) in late 2018 or early 2019 (after receipt of the develop ment permits). The existing buildings will be demolished and replaced by new constructions. The works will be carried out and delivered turnkey by HEVO BV. Aedifica's total investment will amount to approx. €40 million. The operation will be financed using Aedifica's credit facilities. The sites will be operated by Stichting Rendant, a not-forprofit organisation that is active in the Dutch senior care market. The leases that will be established for these sites are irrevocable 25-year triple net long leases. Upon com pletion of the works, gross yields will amount to approx. 5.5%.
On 24 August 2017, Aedifica announced the acquisi tion of a care residence in The Netherlands. The Huize Hoog Kerckebosch care residence is located in a green, residential area near the centre of Zeist (63,000 inhabit ants, Province of Utrecht), approx. 10 km from the city of Utrecht. It is a modern residential care facility cater ing to seniors requiring continuous care in the middle to high-end market segment. The site is able to welcome 32 residents in its exceptional environment. It was com pleted in early July 2017 and has been operational since August 2017. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the site. The contractual value amounts to approx. €8 million. The operation was financed using Aedifica's credit facilities. The care residence is operated by an entity of the Com partijn group under an irrevocable 20-year triple net long lease. The initial gross yield amounts to approx. 6.5%.
4
36 AEDIFICA - ANNUAL FINANCIAL REPORT 2017/2018
On 12 September 2017, Aedifica announced the acquisition of a care residence in The Netherlands. The Martha Flora Den Haag care residence is located in a green, residential area of The Hague (526,000 inhabitants, Province of South Holland), within walking distance of two parks and the North Sea. In 2013, the building (which dates from the first half of the 20th century) was entirely redeveloped into a modern residential care facility intended for seniors requiring continuous care. It has a capacity of 28 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the site. The contractual value amounts to approx. €8.5 million. The operation was financed using Aedifica's credit facilities. The care residence is operated by the Martha Flora group under an irrevocable 25-year triple net long lease. The initial gross yield amounts to approx. 6.5%.
On 12 September 2017, Aedifica announced the signing of an agreement for the construction of a care residence in The Netherlands. The Huize Ter Beegden care residence is located on the site of a former farmhouse near Roermond (Beegden, in the municipality of Maasgouw, 24,000 inhabitants, Province of Limburg); it will be entirely redeveloped into a modern residential care facility intended for seniors requiring continuous care. The care residence is expected to be completed in late
— Aarschot-Wissenstraat – Aarschot - Belgium —
2018 and will have a capacity of 19 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the plot of land (including the buildings located thereon). The contractual value amounts to approx. €0.5 million. The construction will be carried out by IDBB Vastgoed BV and delivered turnkey to Aedifica. Aedifica has budgeted approx. €4 million for construction works; the total investment (including works) will ultimately amount to approx. €5 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by an entity of the Compartijn group under an irrevocable 20-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 26 September 2017, Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of a plot of land (including the buildings located thereon) pursuant to a previously established agreement (see press release of 2 June 2016). The contractual value amounts to approx. €2 million. The new Martha Flora Rotterdam care residence with a capacity of 29 units will be constructed on this site. The construction will be carried out by HD Projectrealisatie and delivered turnkey to Aedifica; the total investment (including works) will ultimately amount to approx. €8 million. The care residence will be operated by the Martha Flora group under an irrevocable 20-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 8 November 2017, Aedifica announced the signing of an agreement for the construction of a care residence in The Netherlands. The Martha Flora Bosch en Duin site will be located in Bosch en Duin, a green, residential area in the municipality of Zeist (63,000 inhabitants, Province of Utrecht), approx. 10 km from the city of Utrecht. A modern residential care facility intended for seniors requiring continuous care will be constructed on the site. It is expected to be completed during the third quarter of 2018 and will have a capacity of 27 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the plot of land. The contractual value amounts to approx. €2 million. The construction will be carried out by GREEN Real Estate, in cooperation with Bogor Projectontwikkeling, and delivered turnkey to Aedifica. Approx. €5 million has been budgeted for demolition and construction works; the total investment (including works) will ultimately amount to approx. €7 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by the Martha Flora group under an irrevocable 25-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 19 December 2017, Aedifica announced the acquisi tion and renovation of a rest home in The Netherlands. The De Merenhoef rest home is located in a residential area of Maarssen (13,000 inhabitants, Province of Utrecht), approx. 8 km from the city of Utrecht. The rest home will be entirely renovated into a modern residential care facility for seniors requiring continuous care, and extension works will be carried out for the construction of new reception and service areas (including a restaurant and a day cen tre). Upon completion of the works (expected in the third quarter of 2019), the rest home will have a capacity of 75 residents. Operations will continue during the works. In addition to the rest home being acquired by Aedifica, the site will also feature senior apartments, a medical cen tre and housing for seniors opting to live independently; these additional facilities will not be acquired by Aedifica. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the building. The contractual value amounts to approx. €2 million. The renovation and construction was designed and will be carried out by Koolstof Vastgoed BV and delivered turnkey to Aedifica. Aedifica has budgeted approx. €7 million for works; the total investment (including works) will ultimately amount to approx. €9 million. The operation will be financed using Aedifica's credit facilities. The rest home will be operated by the Stichting Leger des Heils Welzijns- en Gezond heidszorg foundation, a not-for-profit organisation that is active in the Dutch senior care market. The foundation, which is responsible for the Salvation Army's healthcare activities and social services in The Netherlands, oper ates 256 facilities. Its activities include emergency hous ing, healthcare and senior care, mental health services, youth support services, addiction treatment, prevention and social integration services. The lease established for the site is an irrevocable 15-year double net long lease (with an option to extend in favour of the tenant). Upon completion of the works, the gross yield will amount to approx. 7%.
On 9 January 2018, Aedifica announced the signing of an agreement for the construction of a care residence in The Netherlands. Huize Roosdael will be located in the centre of Roosendaal (77,000 inhabitants, Province of North Brabant) on the site of a former school building that will be entirely redeveloped. A portion of this site will be renovated into a modern residential care facility for seniors requiring continuous care. The care residence is expected to be completed during the first quarter of 2019 and will have a capacity of 26 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA acquired the full property of the plot of land (including the buildings located thereon). The contractual value amounts to approx. €1 million. The construction will be carried out by IDBB Vastgoed BV and delivered turnkey to Aedifica. Approx. €5 million has been budgeted for works; the total investment (including works) will ultimately amount to approx. €6 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by an entity of the Compartijn group under an irrevocable 20-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 24 January 2018, Aedifica announced the signing of an agreement for the construction of a care residence in The Netherlands. The care residence will be located in a residential area of the centre of Leusden (30,000 inhabit ants, Province of Utrecht), approx. 25 km from the city of Utrecht. A modern residential care facility for seniors requiring continuous care will be constructed on the site. Upon completion of the works (expected in the third quarter of 2019), the care residence will have a capacity of 21 residents. The building is part of a larger housing project. In addition to the care residence being acquired by Aedifica, the developer will also build apartments and family homes on the site; these additional properties will not be acquired by Aedifica. The full property of the plot of land was acquired by Aedifica Nederland BV, a 100% subsidiary of Aedifica SA. The contractual value amounts to approx. €1 million. The construction will be carried out by Heilijgers Projectontwikkeling BV and delivered turn key to Aedifica. Approx. €3 million has been budgeted for construction works; the total investment (including works) will amount to approx. €4 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by an entity of the Stepping Stones Home & Care group under an irrevocable 25-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 1 February 2018, Aedifica acquired a care residence in The Netherlands. The Martha Flora Hoorn care residence (locally known as "Villa Wilgaerden") is located in a resi dential area of Hoorn (73,000 inhabitants, Province of North Holland), approx. 35 km from Amsterdam. The site comprises a historic villa (dating from the 17th century) that was redeveloped into a modern residential care facility in 2012, and a new building that was completed in the same year. The care residence has a capacity of 12 units intended for seniors requiring continuous care. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA acquired the full property of the site. The contractual value amounts to approx. €1 million. The operation was financed using Aedifica's credit facilities. The care residence is operated by the Martha Flora group under an irrevocable 25-year triple net long lease. The initial gross yield amounts to approx. 7%.
On 16 February 2018, Aedifica announced the signing of an agreement for the construction of a care residence in The Netherlands. The September Nijverdal care residence will be located in a green, residential area near the centre of Nijverdal (28,500 inhabitants, Province of Overijssel). A modern residential care facility intended for seniors requiring continuous care will be constructed on the site. The building is expected to be completed in late 2018 or early 2019 and will have a capacity of 20 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA acquired the full property of the plot of land. The contractual value amounts to approx. €1 million. The construction will be carried out by Thuismakers Nijverdal BV and delivered turnkey to Aedifica. Approx. €3 million has been budgeted for construction works; the total investment (including works) will ultimately amount to approx. €4 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by an entity of the Wonen bij September group, a private player in the Dutch senior care market that provides small-scale housing and private care services, serving the middle market segment. The lease established for the site is an irrevocable 20-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 27 February 2018, Aedifica announced the signing of an agreement for the construction of a care residence in The Netherlands. The Huize Groot Waardijn care residence, a modern residential care facility intended for seniors requiring continuous care, will be constructed in a well-located residential area near the centre of Tilburg (214,000 inhabitants, Province of North Brabant). Upon completion (expected in the first quarter of 2019), the care residence will have a capacity of 26 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the plot of land. The contractual value amounts to approx. €1 million. The construction will be carried out by IDBB Vastgoed BV and delivered turnkey to Aedifica. Approx. €5 million has been budgeted for construction works; the total investment (including works) will ultimately amount to approx. €6 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by an entity of the Compartijn group under an irrevocable 20-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 16 March 2018, Aedifica announced the signing of an agreement for the construction of a care residence in The Netherlands. The Huize Eresloo care residence, a modern residential care facility intended for seniors requiring continuous care, will be constructed within a private park near the centre of Eersel (19,000 inhabitants, Province of North Brabant), approx. 20 km from the city of Eindhoven. Upon completion, (expected in the second quarter of 2019), the care residence will have a capacity of 26 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA acquired the full property of the plot of land. The contractual value amounts to approx. €1 million. The construction will be carried out by IDBB Vastgoed BV and delivered turnkey to Aedifica. Approx. €5 million has been budgeted for construction works; the total investment (including works) will ultimately amount to approx. €6 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by an entity of the Compartijn group under an irrevocable 20-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
On 7 June 2018, Aedifica announced the acquisition of two healthcare sites in The Netherlands by way of a contribution in kind. Zorghuis Smakt is located in Smakt, part of Venray (44,000 inhabitants, Province of Limburg). In 2010, the site was entirely redeveloped into a modern residential care facility for seniors requiring continuous care with a capacity of 32 units. Zorgresidentie Mariëndaal is located in Velp, part of Grave (12,000 inhabitants, Province of North Brabant). In 2011, the building was entirely redeveloped into a modern residential care facility. The site comprises 31 units for independent living (senior apartments) with care services available on demand, 44 units for seniors requiring continuous care on shortterm (rehabilitation) and long-term care (dementia care), and a day centre. The sites are operated by two entities of Blueprint Group, a private player in the Dutch senior care market, which operates its sites under five different brands. Zorghuis Smakt is operated under the Zorghuis Nederland brand, which provides small-scale care in the mid-market segment. Zorgresidentie Mariëndaal is operated under the Samen Aangenaam Ouder Worden brand, with apartments offered to seniors opting to live independently with care services available on demand. The leases established for the two sites are irrevocable double net long leases with a remaining lease term of 19 years. The initial gross yields amount to approx. 6.5%. Aedifica Nederland BV (a 100% subsidiary of Aedifica SA) acquired the two healthcare sites by way of a purchase in The Netherlands on a deferred payment basis which was followed by a contribution in kind in Aedifica SA of the receivable (which corresponds to the purchase price) resulting from the acquisition. The contractual value (contribution value of the receivable) amounts to approx. €16 million. As consideration for the contribution, 225,009 new shares were issued.
— Martha Flora Hoorn – Hoorn – The Netherlands —
On 18 August 2017, phase II of the works at the Villa Temporis senior housing site in Hasselt (Province of Limburg, Belgium) – specifically, the renovation of the assisted-living apartment building (approx. €2 million invested) – was completed. The site is operated by an entity of the Vulpia group.
The construction of the new Molenenk care residence in Deventer (Province of Overijssel, The Netherlands) was completed on 21 August 2017 (approx. €11 million invested). The site was developed by Panta Rhei Health-Care BV and is operated by an entity of the Domus Magnus group.
The renovation works of the Genderstate and Petruspark rest homes in Eindhoven and the Parc Imstenrade rest home in Heerlen were completed during the third quarter of 2017/2018. Both sites are operated by an entity of the Vitalis group.
On 30 March 2018, Aedifica announced the completion of the extension works on the Résidence l'Air du Temps rest home located in Chênée, part of Liège (198,000 inhabitants, Province of Liège, Belgium). Works included the construction of a new wing to bring the site's total capacity to 137 units (88 units before the works). The Résidence l'Air du Temps rest home, which was acquired in 2008, is located in a green area of Chênée. The site is leased to an entity of Senior Living Group on the basis of a long lease which was renewed for a period of 27 years and which generates a triple net yield of approx. 6%. The contractual value of the site after works amounts to approx. €14 million (i.e. a contractual value of approx. €7 million for the initial building and plot of land, and approx. €7 million for the works).
On 30 March 2018, Aedifica announced the completion of the extension works on the Résidence Les Cheveux d'Argent rest home located in Sart-lez-Spa (9,000 inhabitants, Province of Liège, Belgium). Works included the construction of a new wing to bring the total capacity of the site to 99 units (80 units before the works). The Résidence Les Cheveux d'Argent rest home, which was acquired in 2012, is located in a green area on the hillside of Spa. The site is leased to an entity of Senior Living Group on the basis of a long lease which was renewed for a period of 27 years and which generates a triple net yield of approx. 5.5%. The contractual value of the site after works amounts to approx. €7 million (i.e. a contractual value of approx. €4 million for the initial building and plot of land, and approx. €3 million for the works).
On 16 April 2018, the Het Gouden Hart van Leersum care residence in Leersum (8,000 inhabitants, Province of Utrecht) was completed. The care residence, a former town hall that has been entirely redeveloped into a modern residential care facility, has a capacity of 26 units intended for seniors requiring continuous care. The construction (announced in May 2017) was carried out by Legemaat van Elst BV according to a design by Arcom Partners. The site is operated by an entity of the Het Gouden Hart group. Aedifica's total investment amounts to approx. €6 million (i.e. approx. €2 million for the initial building and plot of land, and approx. €4 million for the works) and was financed using Aedifica's credit facilities. The lease established for this site is an irrevocable 20-year triple net long lease.
On 23 April 2018, the Martha Flora Hilversum care residence in Hilversum (88,000 inhabitants, Province of North Holland) was completed. A former office building was entirely redeveloped into a modern residential care facility with a capacity for 31 residents requiring continuous care. The construction (announced in March 2017) was carried out by Aalberts Bouw BV. The site is operated by the Martha Flora group. Aedifica's total investment amounts to approx. €8 million (i.e. approx. €2 million for the initial building and plot of land, and approx. €6 million for the works) and was financed using Aedifica's credit facilities. The lease established for this site is an irrevocable 25-year triple net long lease.
8 development projets completed in 2017/2018
— Huize Hoog Kerckebosch – Zeist – The Netherlands —
The Property Report included in this Annual Financial Report includes a table describing all projects in progress as of 30 June 2018.
As of 30 June 2018, the following development projects are in progress:
-Huize Groot Waardijn (construction of a care residence in Tilburg, North Brabant, The Netherlands);
-Huize Eresloo (construction of a care residence in Eersel, North Brabant, The Netherlands);
In terms of financing, the following transactions have taken place since the beginning of the 2017/2018 financial year:
-May 2018: a new bilateral credit facility was established with BECM (€15 million, maturing in 2023);
-May 2018: a new bilateral credit facility was established with BECM (€25 million, maturing in 2023);
Taking into account the above-mentioned financing arrangements, the timetable showing the maturity of Aedifica's current credit facilities is as follows (in € million):
| Lines | Use | |
|---|---|---|
| 2018/2019 : | 38 | 18 |
| 2019/2020 : | 80 | 80 |
| 2020/2021 : | 90 | 90 |
| 2021/2022 : | 171 | 122 |
| 2022/2023 : | 195 | 90 |
| 2023/2024 : | 185 | 74 |
| > 2024/2025 : | 455 | 268 |
| Total as of 30 June 2018 | 1,215 | 742 |
| Weighted Average Maturity (years) |
5.1 | 4.9 |
Hence, no less than €450 million in bank financing was established or renegotiated during the 2017/2018 finan cial year.
In late June 2018, Aedifica started a multi-term treasury notes programme for a maximum amount of €150 million (of which €100 million with a duration of less than one year and €50 million with a duration of longer than one year). The treasury notes are fully hedged by the available funds on confirmed long-term credit lines. Belfius Bank and BNP Paribas Fortis act as dealers.
Establishment of these credit facilities demonstrates once again the strong and durable relationship Aedifica maintains with its credit providers. The new credit facili ties issued by the Argenta group have initiated a divers ification of funding sources, coupled with an extension of the weighted average debt maturity. Moreover, the newly started multi-term treasury notes programme will further diversify Aedifica's funding sources at a reduced cost.
The remaining apartments in the apartment building located at avenue de Broqueville 8 in Brussels (presented in the segment "apartment buildings") were sold in two transactions (one apartment sold on 19 September 2017 and five apartments sold on 25 October 2017) for a total amount of approx. €1.3 million.
The plot of land located between avenue Louise, rue Vilain XIIII and rue du Lac in Brussels (presented in the segment "hotels") was sold on 4 December 2017 for approx. €1.0 million.
On 27 June 2018, the Ring building located in Antwerp (presented in the segment "hotels") was sold for approx. €12.8 million.
Disposal of the assisted-living apartments located at the Residentie Poortvelden site in Aarschot is on-going. As of 30 June 2018, 2 of the 24 apartments have been sold. The remaining assisted-living apartments to be sold amount to approx. €4.1 million and represent the full value of assets classified as held for sale as of 30 June 2018.
On 7 September 2017, Aedifica received a 3rd consecu tive "EPRA Gold Award" for its Annual Financial Report (financial year 2015/2016), keeping the Company at the top of the 104 real estate companies assessed by EPRA, the European association of listed real estate companies.
On 28 September 2017, Aedifica's Board of Directors appointed Mr. Charles-Antoine van Aelst as Chief Invest ment Officer and Mr. Sven Bogaerts as Chief Mergers & Acquisitions Officer, with effect from 1 October 2017. They are also members of the Management Committee and Executive Managers.
On 2 March 2018, the Group announced that Aedifica SA acquired 100% of the shares of Schloss Bens berg Management GmbH ("SBM"). Recall that in 2015, Aedifica SA acquired the "Service-Residenz Schloss Bensberg" apartment complex in North Rhine-Westphalia (Germany). Aedifica SA leased most of the apartments in this complex to SBM to be operated as apartments for seniors ("independent living"). Aedifica acquired all of the shares of SBM, for approx. €0.2 million. This takeover will have no significant recurring net impact on Aedifica's consolidated financial statements, given that SBM's oper ational costs (staff-related costs, among others) are cov ered by its rental income the cooperation agreement with Specht Gruppe ). >€450Mio
As of 2 March 2018, Aedifica established a new German subsidiary: Aedifica Project Management GmbH. This subsidiary advises and supports Aedifica in the growth and management of its real estate portfolio in Germany by overseeing project management of the German con struction sites (including the 17 construction projects of
Aedifica is preparing to transfer its "apartment buildings" branch of activities to Immobe SA, a new subsidiary that has been recognised as an IRREC since 1 July 2018. The Group has discussed with several parties the possibility of opening up the capital of this subsidiary to a strategic partner through a sale (in one or several phases) of up to 75% (minus one share) of the capital of this subsidiary. On 18 May 2018, Aedifica signed an agreement in principle with one of the candidate-partners for the sale (in one or several phases) of up to 75% (minus one share) in the new subsidiary. The final agreement (subject to outstanding conditions, such as conducting a due diligence) with the strategic partner was signed on 12 July 2018 (see section 2.2 below). Within the framework of this agreement, the branch of activities is valued taking into account the book value of the assets (including the fair value of the buildings) and a portfolio premium of approx. 7%. This transaction fits perfectly within the strategic development of Aedifica as a pure play healthcare real estate investor and allows Aedifica to use its capital to pursue continued growth in its core activities.
On 1 June 2018, Aedifica's Board of Directors has appointed Ms. Ingrid Daerden as Chief Financial Offi cer. She joined the team as of 1 September 2018. Ms. Daerden is also a member of the Management Com mittee and Executive Manager of Aedifica. Recall that Mr. Jean Kotarakos ended his mandate as Director of the Aedifica group on 28 March 2018 and his function as CFO on 31 May 2018.
On 19 June 2018, Aedifica received the "Investor des Jahres 2018" award in Germany. The award was granted by a panel of eleven professionals and the visitors of Alten heim Expo in Berlin, an event for the German senior care market.
On 11 July 2018, Aedifica acquired the plots of land on which three of the seventeen rest homes announced in the cooperation agreement with Specht Gruppe will be built (see section 2.1.2 above). The acquisition took place through the takeover of Specht Gruppe Eins mbH (by Aedifica Invest SA). Aedifica also signed an agreement with Residenz Baugesellschaft (an entity of Specht Gruppe) for the construction of these three rest homes, which will be located in Kaltenkirchen, Schwerin and Lübbecke. Con struction works have already begun. The first buildings are expected to be completed during the second half of 2019. The contractual value of these three plots of land amounts to approx. €4 million. Aedifica's total investment (includ ing works) will ultimately amount to approx. €40 million. The operation will be financed using Aedifica's credit facili ties. Upon completion, all sites will be leased to Residenz Management GmbH, also an entity of Specht Gruppe, and will be operated by high quality operators. They will be leased on the basis of irrevocable 30-year long leases and, in addition, will benefit from a triple net warranty of limited duration that will cover the buildings' maintenance. Gross yields will amount to approx. 5.5%.
On 12 July 2018, Aedifica announced the signing of an agreement for the acquisition of four healthcare sites in Germany. The four sites benefit from a central location in Bad Sachsa (7,500 inhabitants, State of Lower-Saxony, Germany). The buildings were constructed in different years and have undergone several renovations and exten sions. They can welcome 221 residents in total. The first site has a capacity of 70 units catering to seniors requiring continuous care, while the second site has a capacity of 64 units intended for individuals with severe neurological damage or suffering from mental health disorders. The third and fourth sites have capacities of 74 and 13 units, respectively, and are intended for individuals suffering from mental health disorders. The agreement for the acquisition of these four sites by Aedifica SA is subject to the usual conditions in Germany, which are mainly of administrative nature and which should be fulfilled soon. The purchase price will be paid and the property and full use of the build ings will automatically be acquired at that time. The con tractual value amounts to approx. €19 million. The oper ation will be financed using Aedifica's credit facilities. The sites will be operated by an entity of Argentum Holding GmbH under irrevocable 30-year double net long leases. The initial gross yield amounts to approx. 7%.
As previously announced, Aedifica is preparing to trans fer its "apartment buildings" branch of activities to a new subsidiary, Immobe SA. Effective 1 July 2018, Immobe is authorised by the FSMA as an Institutional Regulated Real Estate Company ("IRREC") under Belgian law. Aedifica anticipates that the transfer of this branch of activities could take place at the end of the third quarter of 2018. On 12 July 2018, after conducting the due diligence, Aedifica and the candidate-partner (which is an inter national investor represented by CODABEL) signed the final agreement, subject to usual outstanding conditions, for the sale (in two phases) of up to 75% (minus one share) in Immobe SA. The first phase comprises the transfer of 50% (minus one share) of the shares in Immobe SA. The completion of this phase is expected to take place during the fourth quarter of 2018.
On 19 July 2018, Aedifica announced the acquisition and redevelopment of a care residence in The Netherlands. The Sorghuys Tilburg care residence is located in a green, residential area of Berkel-Enschot, part of Tilburg (214,000 inhabitants, Province of North Brabant). Extension works will be carried out and the current villa will be entirely redeveloped into a modern residential care facility for seniors requiring continuous care. The care residence is expected to be completed in the third quarter of 2019 and will have a capacity of 22 residents. Aedifica Nederland BV, a 100% subsidiary of Aedifica SA, acquired the full property of the plot of land (including the building located thereon). The contractual value amounts to approx. €1 million. The construction will be carried out by Sorghuys Tilburg BV and delivered turnkey to Aedifica. Approx. €3 million has been budgeted for construction works; the total investment (including works) will amount to approx. €4 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by Blueprint Group in partnership with Boeijend Huys, under the Zorghuis Nederland brand, under an irrevocable 25-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5%.
Late August 2018, Aedifica acquired four healthcare sites in Germany given fulfillment of the outstanding conditions, as announced in the press release of 4 June 2018. See section 2.1.2 for a more detailed account of the acquired sites. The purchase price was paid and Aedifica SA acquired the property and full use of the building. The operation was financed using Aedifica's credit facilities.
The commentary and analysis presented below refer to the Consolidated Financial Statements included in this Annual Financial Report.
During the 2017/2018 financial year (1 July 2017 – 30 June 2018), Aedifica increased its portfolio of marketable investment properties including assets classified as held for sale* by €178 million, from a fair value of €1,528 million to €1,705 million (€1,741 million for the investment properties including assets classified as held for sale*). This 12% growth comes mainly from net acquisitions (see sections 2.1.1, 2.1.2 and 2.1.3 above), completion of development projects (see section 2.1.4 above) and changes in the fair value of marketable invest-
— Martha Flora Hilversum – Hilversum – The Netherlands —
ment properties recognised in income (+€25.2 million, or +1.5%). The fair value of marketable investment properties, as assessed by independent valuation experts, is broken down as follows:
As of 30 June 2018, Aedifica has 214 marketable investment properties including assets classified as held for sale*, with a total surface area of approx. 875,000 m2 , consisting mainly of:
The breakdown by sector is as follows (in terms of fair value):
The geographical breakdown is as follows (in terms of fair value):
The occupancy rate (see glossary) of the total unfurnished portion of the portfolio (representing 96% of the fair value of marketable investment properties including assets classified as held for sale*) amounts to 99.0% as of 30 June 2018. This is an increase, even compared to the record level reached at the end of the previous financial year (30 June 2017: 98.7%).
The occupancy rate of the furnished portion of the portfolio (representing only 4% of the fair value of marketable investment properties) reached 84.1% for the year ended 30 June 2018. This is an increase as compared to
| 30 June 2018 | 30 June 2017 | |
|---|---|---|
| Rental income | 91,677 | 78,983 |
| Rental-related charges | -80 | -48 |
| Net rental income | 91,597 | 78,935 |
| Operating charges* | -14,322 | -13,158 |
| Operating result before result on portfolio | 77,275 | 65,777 |
| EBIT margin* (%) | 84 | 83 |
| Financial result excl. changes in fair value* | -15,319 | -16,538 |
| Corporate tax | -3,553 | -1,275 |
| EPRA Earnings* | 58,403 | 47,964 |
| Denominator (IAS 33) | 17,990,607 | 15,235,696 |
| EPRA Earnings* per share (€/share) | 3.25 | 3.15 |
| EPRA Earnings* | 58,403 | 47,964 |
| Changes in fair value of financial assets and liabilities | -2,157 | 5,119 |
| Changes in fair value of investment properties | 15,018 | 10,357 |
| Gains and losses on disposals of investment properties |
789 | 1,459 |
| Negative goodwill/goodwill impairment | -344 | 0 |
| Deferred tax in respect of EPRA adjustments | 146 | -1,541 |
| Roundings | 0 | 0 |
| Profit (owners of the parent) | 71,855 | 63,358 |
| Denominator (IAS 33) | 17,990,607 | 15,235,696 |
| Earnings per share (owners of the parent - IAS 33 - €/share) |
3.99 | 4.16 |
the occupancy rate realised in the previous financial year (73.5%) and the most recent published occupancy rate (81.3% as of 31 March 2018). Note that the occupancy rate of the last quarter of the financial year under review reached 92.5%, a level which has not been recorded since 2008.
The overall occupancy rate of the total portfolio reached 99% for the year ending 30 June 2018.
The weighted average lease term for all buildings in the Company's portfolio is 20 years, the same as on 30 June 2017. This impressive aggregate performance is explained by the large proportion of long-term contracts in the Company's portfolio.
The Consolidated Financial Statements are provided as part of this Annual Financial Report. The following sections of this Consolidated Board of Directors' Report analyse the financial statements using an analytical framework that is aligned with the Company's internal reporting structure. The consolidated income statement covers the 12-months period from 1 July 2017 to 30 June 2018. Acquisitions are accounted for on the date of the effective transfer of control. Therefore, these operations present different impacts on the income statement, depending on whether they took place at the beginning, during, or end of the period.
The consolidated turnover (consolidated rental income) for the year amounts to €91.7 million, an increase of 16% as compared to the prior year. This is above budget (as derived from the annual outlook for the 2017/2018 financial year presented in 2016/2017 Annual Financial Report), owing to the timing of acquisitions in the healthcare real estate segment as compared to what was budgeted, as well as to the good performance of the apartment buildings on a like-for-like basis*.
Changes in total consolidated rental income (€13 million, i.e. +16.1% as compared to the same period of the previous financial year overall or +2.4% on a like-for-like basis*) are presented below by segment:
The increasing rental income in the healthcare real estate segment (+€12.5 million; +19.6% and +1.6% on a likefor-like basis*) demonstrates the relevance of Aedifica's investment strategy in this segment, which now generates more than 83% of the Group's turnover.
Rental income of apartment buildings has decreased due to the disposal of a building (Tervueren 13 in June 2017, having an effect of -€0.3 million) and the transfer (on 1 July 2017) of the Ring building to the hotels segment (having an effect of -€0.6 million). However, on a likefor-like basis*, rental income of apartment buildings has increased and is above budget.
Rental income of hotels and other building types is analysed as follows:
— Villa Temporis – Hasselt – Belgium —
EPRA Earnings * in fair value (30 June 2018) (in € million)
84% operating result* on 30 June 2018
After deducting rental-related charges, the net rental income for the year ended 30 June 2018 amounts to €91.6 million (+16% as compared to 30 June 2017).
The property result is €90.7 million (30 June 2017: €78.1 million). This result, less other direct costs, provides a property operating result of €86.1 million (30 June 2017: €74.1 million), which represents an operating margin* of 94% (30 June 2017: 94%).
After deducting overheads of €11.0 million (30 June 2017: €8.5 million) and taking into account other operating income and charges of €2.2 million (30 June 2017: €-0.3 million), the operating result before result on portfolio has increased by 17% to reach €77.3 million (30 June 2017: €65.8 million). This result represents an EBIT margin* (see Note 57.3) of 84% (30 June 2017: 83%) and is above budget.
After taking into account the cash flows generated by hedging instruments (described below), Aedifica's net interest charges amount to €14.3 million (30 June 2017: €15.4 million). The average effective interest rate* (2.1% before capitalised interest on development projects) is below that reported in 2016/2017 (2.3%) and is in line with budget (2.1%). Taking into account other income and charges of a financial nature, and excluding the net impact of the revaluation of hedging instruments to their fair value (non-cash movements accounted for in accordance with IAS 39 are not included in the EPRA Earnings* as explained below), the financial result excluding changes in fair value* represents a net charge of €15.3 million (30 June 2017: €16.5 million), below budget.
Corporate taxes are composed of current taxes, deferred taxes and exit tax. In conformity with the Company's legal status (i.e. as a RREC), current taxes (charge of €3.6 million; 30 June 2017: charge of €1.3 million) consist primarily of Belgian tax on the Company's non-deductible expenditures, tax on the result generated abroad by Aedifica and tax on the result of consolidated subsidiaries. These taxes are above budget, mainly because Aedifica recognised a generally applicable corporate income tax burden for its Dutch subsidiary (Aedifica Nederland BV) in the income statement. Aedifica took this precautionary measure despite the fact that this subsidiary claims to be a "Fiscale Belegginsinstelling", a transparent tax regime. Deferred taxes are described below.
EPRA Earnings* (see Note 57.7) reached €58.4 million (30 June 2017: €48.0 million), or €3.25 per share, based on the weighted average number of shares outstanding (30 June 2017: €3.15 per share). This profit (absolute and per share) is above budget, notwithstanding the temporary dilutive effect of the capital increase of 28 March 2017.
The income statement also includes items with no monetary impact (that is to say, non-cash) that vary as a function of market parameters. These consist of the changes in the fair value of investment properties (accounted for in accordance with IAS 40), changes in the fair value of financial assets and liabilities (accounted for in accordance with IAS 39), other results on portfolio, exit tax and deferred taxes (arising from IAS 40):
Given the non-monetary items described above, the profit (attributable to owners of the parent) amounts to €71.9 million (30 June 2017: €63.4 million). The earn ings per share (basic earnings per share, as defined in IAS 33 and calculated in Note 26 to the Consolidated Financial Statements) is €3.99 (30 June 2017: €4.16).
The adjusted statutory result as defined in the annex to the Royal Decree of 13 July 2014 regarding RRECs, is €55.4 million (30 June 2017: €42.1 million), an increase of 32% (as calculated in Note 50). Taking into account the dividend rights for the shares issued during the finan cial year, this represents an amount of €3.05 per share (30 June 2017: €2.74 per share).
As of 30 June 2018, investment properties includ ing assets classified as held for sale* represent 99% (30 June 2017: 98%) of the assets recognised on Aedifica's balance sheet, valued in accordance with IAS 40 (that is to say, accounted for at their fair value as determined by valuation experts, namely de Winssinger & Associés SA, Deloitte Consulting & Advisory SCRL, IP Belgium SPRL, CBRE GmbH and DTZ Zadelhoff VOF) at a value of €1,741 million (30 June 2017: €1,545 million). This heading includes:
Since Aedifica's incorporation, its capital has increased steadily along with its real estate activities (contributions, mergers, etc.) and as a result of capital increases (in cash) in October 2010, December 2012, June 2015 and March 2017. It has increased to €480 million as of 30 June 2018 (30 June 2017: €474 million). The share premium amounts to €298 million as of 30 June 2018 (30 June 2017: €287 million). Recall that IFRS requires that the costs incurred to raise capital are recognised as a decrease in the statutory capital reserves. Equity (also
| 30 June 2018 | 30 June 2017 | |
|---|---|---|
| Investment properties including assets classified as held for sale* |
1,740,533 | 1,544,849 |
| Other assets included in debt-to-assets ratio | 24,418 | 22,566 |
| Other assets | 1,692 | 2,707 |
| Total assets | 1,766,643 | 1,570,122 |
| Equity | ||
| Equity excl. changes in fair value of hedging instruments* |
977,086 | 922,094 |
| Effect of the changes in fair value of hedging instruments |
-35,439 | -34,055 |
| Equity | 941,647 | 888,039 |
| Liabilities included in debt-to-assets ratio | 781,449 | 639,077 |
| Other liabilities | 43,547 | 43,006 |
| Total equity and liabilities | 1,766,643 | 1,570,122 |
| Debt-to-assets ratio (%) | 44.3 | 40.8 |
| 30 June 2018 | 30 June 2017 | |
|---|---|---|
| Net asset value after deduction of dividend 2016/20171 , excl. changes in fair value of hedging instruments* |
53.68 | 49.38 |
| Effect of the changes in fair value of hedging instruments |
-1.95 | -1.89 |
| Net asset value after distribution of dividend 2016/20171 |
51.74 | 47.48 |
| Number of share outstanding (excl. treasury shares) |
18,200,829 | 17,975,820 |
Debt-to-assets ratio (%)
called net assets), which represents the intrinsic net value of Aedifica and takes into account the fair value of its investment portfolio, amounts to:
As of 30 June 2018, liabilities included in the debtto-assets ratio (as defined in the Royal Decree of 13 July 2014 regarding RRECs) reached €781 million (30 June 2017: €639 million), of which €740 million (30 June 2017: €614 million) represent amounts drawn on the Company's credit facilities, detailed in Note 40. The debt-to-assets ratio amounts to 44.3% on a consolidated level (30 June 2017: 40.8%) and 42.5% on a statutory level (30 June 2017: 38.6%). The maximum ratio permitted for Belgian REITs is set at 65% of total assets, thus, Aedifica maintains an additional consolidated debt capacity of €366 million in constant assets (that is, excluding growth in the real estate portfolio) or €1,045 million in variable assets (that is, taking into account growth in the real estate portfolio). Conversely, the balance sheet structure permits, all else being equal, the Company to absorb a decrease of up to 32% in the fair values of its investment properties before reaching the maximum debt-to-assets ratio. Given Aedifica's existing bank commitments, which further limit the maximum debt-to-assets ratio to 60%, the headroom available amounts to €278 million in constant assets, €694 million in variable assets, and 27% in the fair value of investment properties.
Other liabilities of €44 million (30 June 2017: €43 million) represent primarily the fair value of hedging instruments (30 June 2018: €33 million; 30 June 2017: €34 million).
The opposite table presents the change in the net asset value per share.
Recall that IFRS requires the presentation of the annual accounts before appropriation. The net asset value in the amount of €51.30 per share as of 30 June 2017 thus included the dividend distributed in November 2017, and should be adjusted by €1.92 per share in order to compare with the value as of 30 June 2018. This amount corresponds to the amount of the total dividend (€34 million) divided by the total number of shares outstanding as of 30 June 2017 (17,975,820).
Excluding the non-monetary effects (that is to say, noncash) of the changes in fair value of hedging instruments and after accounting for the distribution of the 2016/2017 dividend in November 2017, the net asset value per share based on the fair value of investment properties is €53.68 as of 30 June 2018 (30 June 2017: €49.38 per share).
The cash flow statement included in the attached Consolidated Financial Statements shows total cash flows for the period of +€2.5 million (30 June 2017: +€3.2 million), which is made up of net cash from operating activities of +€85.0 million (30 June 2017: +€69.2 million), net cash from investing activities of -€159.5 million (30 June 2017: -€279.6 million), and net cash from financing activities of +€76.9 million (30 June 2017: +€213.6 million).
Rental income in this segment amounts to €76.5 million (30 June 2017: €63.9 million), or 83% of Aedifica's total rental income. These buildings are usually operated under triple net long leases (see glossary) and, as such, the property operating result for this segment is almost equal to the rental income. The fair value of investment properties including assets classified as held for sale* attributed to this segment under IFRS 8 has been established at €1,431 million (30 June 2017: €1,244 million), or 84% of the fair value of Aedifica's total marketable investment properties including assets classified as held for sale*.
| 30 June 2018 | 30 June 2017 | |
|---|---|---|
| A. Profit (loss) | 63,357 | 57,040 |
| B. Transfer to/from the reserves (-/+) | 12,345 | 15,000 |
| 1. Transfer to/from the reserve of the (positive or negative) balance of changes in fair value of investment properties (-/+) | ||
| - fiscal year | 14,203 | 7,408 |
| - previous fiscal years | 0 | 0 |
| - disposals of investment properties | 790 | 1,485 |
| 2. Transfer to/from the reserve of the estimated transaction costs resulting from hypothetical disposal of investment properties (-/+) |
-2,563 | 815 |
| 3. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting as defined by IFRS (-) |
||
| - fiscal year | -11 | 0 |
| - previous years | 0 | 0 |
| 4. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting as defined by IFRS (+) |
||
| - fiscal year | 0 | 22 |
| - previous years | 0 | 0 |
| 5. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (-) |
||
| - fiscal year | -1,332 | 0 |
| - previous years | 0 | 0 |
| 6. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (+) |
||
| - fiscal year | 0 | 6,053 |
| - previous years | 0 | 0 |
| 7. Transfer to/from the reserve of the balance of currency translation differences on monetary assets and liabilities (-/+) | 0 | 0 |
| 8. Transfer to the reserve of the fiscal latencies related to investment properties abroad (-/+) | -698 | -783 |
| 9. Transfer to the reserve of the received dividends aimed at the reimbursement of financial debts (-/+) | 0 | 0 |
| 10. Transfer to/from other reserves (-/+) | 1,957 | 0 |
| 11. Transfer to/from the result carried forward of the previous years (-/+) | 0 | 0 |
| C. Remuneration of the capital provided in article 13, § 1, para. 1 | 44,340 | 33,642 |
| D. Remuneration of the capital - other than C | 1,162 | 836 |
| Result to be carried forward | 5,509 | 7,562 |
Rental income in this segment amounts to €10.5 million (30 June 2017: €11.0 million), or 11% of Aedifica's total rental income. After deducting direct costs related to this activity, the property operating result for apartment buildings amounts to €6.3 million (30 June 2017: €7.0 million). The fair value of investment properties attributed to this segment under IFRS 8 has been established at €207 million (30 June 2017: €215 million), or 12% of the fair value of Aedifica's total marketable investment properties including assets classified as held for sale*.
2,50 €/ action
proposed gross dividend for 2017/2018, representing a statutory pay-out ratio of 82%
3.5.3. Hotels
Rental income in this segment amounts to €4.9 million (30 June 2017: €4.2 million), or 5% of Aedifica's total rental income. After deducting direct costs related to this activity the property operating result for these buildings amounts to €4.9 million (30 June 2017: €4.2 million). The fair value of investment properties attributed to this segment under IFRS 8 has been established at €68 million (30 June 2017: €68 million), or 4% of the fair value of Aedifica's total marketable investment properties including assets classified as held for sale*.
The Board of Directors proposes to the Annual General Meeting of 23 October 2018 to approve the Aedifica SA Annual Accounts of 30 June 2018 (for which a summary is provided in the chapter "Abridged Statutory Annual Accounts" of this Annual Financial Report) and to distribute a gross dividend of €2.50 per share. The statutory pay-out ratio is 82%.
The statutory result for the 2017/2018 financial year will be submitted as presented in the table at page 51.
The proposed dividend respects the requirements laid down in Article 13, § 1, paragraph 1 of the Royal Decree of 13 July 2014 regarding RRECs in that it is greater than the required minimum pay-out of 80% of the adjusted statutory result, after deduction of the debt reduction over the financial year.
After approval at the Annual General Meeting, the proposed dividend is due to be paid as from 31 October 2018 ("payment date" of the dividend related to the 2017/2018 financial year). The dividend will be paid by bank transfer as from the same date. The net dividend per share after deduction of 15% withholding tax will amount to €2.125.
Effective 1 January 2017, the withholding tax rate is 15%. The reader is referred to section 5.2 of the chapter entitled "Standing Documents" of the Annual Financial Report for more information on the tax treatment of dividends, as well as to section 4.2 of the chapter entitled "Risk Factors".
Aedifica carries out its activities in a constantly changing environment, which implies certain risks. The occurrence of these risks could have a negative impact on the Company as a whole, or on its operations, outlook, financial position or financial result. Thus, these risks must be duly considered as part of any investment decision.
Aedifica aims to manage these risks to the greatest extent possible in order to generate recurring rental income and maximise the potential for gains on disposals.
The key risk factors are the focus of a specific section of the Annual Financial Report and summarised here in accordance with Article 119 of the Belgian Companies Code. Key risk factors with which Aedifica is confronted are the focus of regular monitoring both by Management and by the Board of Directors, who have developed prudent policies that are continuously reviewed and adapted as necessary.
The following risks are presented in detail in the chapter "Risk Factors" of this Annual Financial Report: market risks (economic risks, risks related to the real estate market, inflation risk, concentration risk of operators in the senior housing segment); risks related to Aedifica's property portfolio (rents, asset management, quality and valuation of buildings, risk of expropriation, and risks arising from mergers, acquisitions and de-mergers), regulatory risks (corporate status and tax regime), corporate risks (growth management risk, risk of non-growth, risk related to the Group's internationalisation, reputation risk and risk related to managing market expectations) and risks related to support processes (reporting risk, risk related to data processing and risk related to team members). Risks related to financial instruments are described in the following section.
Aedifica's financial management activities are aimed at ensuring permanent access to credit and to monitor and minimise the interest rate risk.
The use of financial instruments as described under "financial risks" in the "Risk Factors" chapter of this Annual Financial Report) is detailed in Note 44 of the attached Consolidated Financial Statements. The following elements are presented: debt structure, liquidity risk, interest rate risk, counterparty risk, foreign exchange risk, and financial planning risks.
Related party transactions, as defined under IAS 24 and in the Belgian Companies Code, are the object of Note 48 of the attached Consolidated Financial Statements. These transactions comprise the remuneration of Aedifica's Directors and Executive Managers.
Moreover, certain types of transactions are covered by Article 37 of the Law of 12 May 2014 (with the exception of cases explicitly covered by Article 38 of the same Act). Over the course of the 2017/2018 financial year, no transactions covered by this Article and outside of normal business transactions were executed between Aedifica and its regular service providers.
As of 30 June 2018, Aedifica SA holds 23 subsidiaries, of which twelve are established in Belgium, six in Luxemburg, four in Germany, and one in The Netherlands. The figures mentioned below represent Aedifica's share in the capital, as well as its share in voting rights.
Aedifica SA
| 1OO% | Aedifica Invest SA |
|---|---|
| 94% | Aedifica Residenzen Nord GmbH |
| 1OO% | Aedifica Invest Brugge SA |
| 1OO% | Immobe SA |
| 94% | Aedifica Luxemburg I SCS |
| 94% | Aedifica Luxemburg II SCS |
| 94% | Aedifica Luxemburg III SCS |
| 94% | Aedifica Luxemburg IV SCS |
| 94% | Aedifica Luxemburg V SCS |
| 94% | Aedifica Luxemburg VI SCS |
| 1OO% | Aedifica Asset Management GmbH |
| 1OO% | Aedifica Project Management GmbH |
| 1OO% | Schloss Bensberg Management GmbH |
| 1OO% | Aedifica Nederland BV |
| 1OO% | VSP SA |
| 1OO% | VSP Kasterlee SPRL |
| 1OO% | Het Seniorenhof SA |
| 1OO% | CI Beerzelhof SA |
| 1OO% | Avorum SA |
| 1OO% | Coham SA |
| 1OO% | Residentie Sorgvliet SPRL |
| 1OO% | WZC Arcadia SPRL |
— Bonn – Bonn – Germany —
Furthermore, as of 30 June 2018, Aedifica SA (together with Aedifica Invest SA) holds nine subsidiaries that are located in Belgium and hold real estate assets; these subsidiaries will be merged with Aedifica in the following months. These subsidiaries are: VSP SA, VSP Kasterlee SPRL, Het Seniorenhof SA, Compagnie Immobilière Beerzelhof SA, Avorum SA, Coham SA, Residentie Sorgvliet SPRL, WZC Arcadia SPRL and Dujofin SPRL.
The organisational chart on page 53 shows the Group's subsidiaries as well as its share in each subsidiary.
Aedifica is not engaged in any research and development activities covered by Articles 96 and 119 of the Belgian Companies Code.
Aedifica applies IFRS both for the preparation of its Consolidated Financial Statements and for its Statutory Accounts. In accordance with IAS 32 and the Annex C of the Royal Decree of 13 July 2014, treasury shares held by Aedifica are presented as a reduction to total equity. As of 30 June 2018, the Aedifica Group held no treasury shares.
In addition, Aedifica SA benefits occasionally from pledges on shares of the Company, constituted in connection with buildings acquisitions. If necessary, these guarantees are detailed in Note 45.3.2 of the Consolidated Financial Statements.
The projections presented below have been developed by the Board of Directors with a view to establish the budget for the 2018/2019 financial year on a comparable basis with the Company's historical financial information.
a) Rents: rent forecasts are based on current contractual rates and take indexation into account. Vacancy rates, charges on unoccupied properties and agency fees (commissions) from the time of relocation are also taken into consideration in the projections. Forecasts of rents are revised in light of the latest operational trends and the actual state of the markets in which the Company is active.
In addition, the rental income from healthcare real estate includes assumptions regarding future portfolio additions (completion of buildings currently under development and possible acquisitions for which the timing cannot be determined with certainty).
The Board of Directors continues to pay close attention to the evolution of the economic and financial context and the associated impacts on the Company's activities.
In the current economic climate, Aedifica's key strengths include the following:
Considering the Company's strengths and the assumptions listed above (see section 11.1), the Board of Directors projects to generate rental income of €104 million for the 2018/2019 financial year, leading to an EPRA Earnings* of €63 million or €3.45 per share, and permitting a gross dividend of €2.80 per share (an increase of 12%) to be distributed to shareholders. These projections are based on the expected perimeter of the real estate portfolio, excluding unexpected events, and stand to generate an increasing dividend as compared to that proposed by the Board of Directors for the 2017/2018 financial year. On this basis, net profit would reach €72 million.
— Zorghuis Smakt – Smakt – The Netherlands —
The projected financial information presented above consists of estimates for which the actual realisation will vary, most notably, depending on the evolution of the real estate and financial markets. They do not constitute a commitment by the Company's Executive Managers and have not been certified by an external auditor. However, the Company's auditor, Ernst & Young Réviseurs d'Entreprises Sc s.f.d. SCRL, represented by Mr. Joeri Klaykens, has issued the following report (this auditor's report has been faithfully reproduced and, to Aedifica's knowledge, no facts have been omitted which would render the information reproduced inexact or misleading):
"As a statutory auditor of the company, we have prepared the present report on the forecasts of the consolidated balance sheet and income statement of the company, included in chapter 11 of its annual report, as approved by the Board of Directors of the company on 4 September 2018. The assumptions included in paragraph 11.1 result in the following profit forecast (excluding changes in fair value) for the year 2018-2019:
-Date: 30 June 2019 -EPRA Earnings: 63 million €
It is the Board of Directors' responsibility to prepare the profit forecast, together with the material assumptions upon which it is based, in accordance with the requirements of EU Regulation n° 809/2004.
It is our responsibility to provide an opinion on the forecasts as required by Annex I, item 13.2 of the EU Regulation n° 809/2004. We are not required nor do we express an opinion on the possibility to achieve that result or on the assumptions underlying these forecasts.
We performed our work in accordance with the auditing standards applicable in Belgium, as issued by the Institute of Registered Auditors (Institut des Réviseurs d'Entreprises/Instituut van de Bedrijfsrevisoren), including the related guidance of its research institute and the standard "International Standard on Assurance Engagements 3400" related to the examination of forecast information. Our work included an evaluation of the procedures undertaken by the Board of Directors in compiling the forecasts and procedures aimed at verifying the consistency of the methods used for the forecasts with the accounting policies normally adopted by Aedifica SA.
We planned and performed our work so as to obtain all the information and explanations that we considered necessary in order to provide us with reasonable assurance that the forecasts have been properly compiled on the basis stated.
Since the forecasts and the assumptions on which they are based relate to the future and may therefore be affected by unforeseen events, we can express no opinion as to whether the actual results reported will correspond to those shown in the forecasts. Any differences may be material.
In our opinion:
Ernst & Young Réviseurs d'Entreprises SCCRL, Statutory auditor represented by Joeri Klaykens (acting on behalf of a SPRL), Partner"
Two conflicts of interest occurred over the course of the 2017/2018 financial year, as explained below.
"Pursuant to Article 523 of the Belgian Companies Code, the Management Committee's members present (Ms. Sarah Everaert, Ms. Laurence Gacoin, Mr. Stefaan Gielens and Mr. Jean Kotarakos) announced that they had interests contrary to those of the Company (about which they will inform the statutory auditor) and left the meeting.
Ms. Adeline Simont, Chairman of the Nomination and Remuneration Committee, made a report to the Board on the deliberation of the afore-mentioned committee, which proposed to establish the gross variable remuneration of the Management Committee as follows:
Ms. Adeline Simont subsequently reported to the Board on the Committee's deliberations with respect to the other aspects of the remuneration of the Management Commit tee members:
The Board approved the Committee's proposals. The members of the Management Committee re-entered the meeting and heard the Board's decisions concerning executive management remuneration."
"Pursuant to Article 523 of the Belgian Companies Code, Article 37 of the Act on Regulated Real Estate Companies and article 2.5.4 of the Corporate Governance Charter, the executive Director (Mr. Stefaan Gielens) announced that he had interests contrary to those of the Company (about which he will inform the statutory auditor). The other Management Committee's members present (Ms. Lau rence Gacoin, Ms. Sarah Everaert, Mr. Charles-Antoine Van Aelst and Mr. Sven Bogaerts) also had interests con trary to those of the Company. The executive Director and the other members of the Management Committee left the meeting.
The Chairman of the Nomination and Remuneration Com mittee made a report to the Board on the meetings of the aforementioned committee, where the following topics were discussed:
The executive Director and the other members of the Management Committee re-entered the meeting; the Chairman of the Board provided them with a summary of the Board's discussion."
In accordance with Article 608 of the Belgian Companies Code, the Board of Directors comments on (i) the cap ital increases decided by the Board of Directors during the financial year; and (ii) the conditions and the effect ive impacts of the capital increases for which the Board of Directors limited or cancelled preferential rights (when applicable).
Following the decision of the Board of Directors of 7 June 2018, the capital was increased, in the framework of the authorised capital, by way of contribution in kind (see section 2 of this Consolidated Board of Director's report), by €5,937,488.85 (from €474,342,051.82 to €480,279,540.67). 225,009 new shares without par value were issued. The shares have the same rights as existing shares. These new shares participate in the Company's results for the 2017/2018 financial year as of 1 July 2017.
In the framework of capital increases by contribu tion-in-kind, shareholders do not have preferential rights.
Environmental, ethical, and social matters are an integral part of Aedifica's daily management and blend into the Company's continual efforts to achieve and maintain qual ity standards.
Aedifica follows a pragmatic approach to environmental issues, paying close and constant attention to find the right balance in its use of human and financial resources to generate maximum value-added.
Before each potential building acquisition, Aedifica exam ines the environmental risks. In the event that risks are identified, plans are put in place to mitigate or eliminate risks entirely. In order to identify and control pollution risks, the Company studies the soil quality for all sites that host risky activities (e.g. fuel tanks, printing industries, etc.) or which have done so in the past.
Aedifica holds environmental permits for operations relat ing to listed elements of its buildings or takes the neces sary steps in case of extensions and renewals. It holds urban development permits, the majority of which were obtained by the former owners of buildings under develop ment. Where the responsibility for environmental and urban development permits falls to its tenants, Aedifica endeavors to encourage the tenants to obtain the required permits on a timely basis.
For the buildings managed by Aedifica (directly or indirectly through external service providers), the technical and sec urity installations are periodically inspected for conformity with applicable legislation. Regarding buildings for which the tenants assume responsibility for the property and its technical systems, Aedifica makes every effort to ensure that the required inspections are organised in due time.
A study is conducted for each new investment to deter mine the likelihood of asbestos and identify the related risks. All the devices identified as being at risk of containing asbestos and deemed harmful for humans are removed from the buildings. The remaining devices become the object of a management plan which is re-evaluated annu ally by accredited experts. The Company also uses regular maintenance works and planned upgrades to remove any remaining insignificant residues. With regard to triple net leases, the Company ensures that the management plan is carried out by the operators of the buildings through regular monitoring visits.
Regarding the buildings located in Belgium, the regulation on the energy performance of buildings ("PEB") requires that a study on energy performance is conducted for all new construction projects. For existing buildings, the regulation has introduced a certificate to attest to the energy performance of buildings, with reference to the energy performance coefficient. For buildings managed by Aedifica (directly or indirectly through external managers), a programme is in place to obtain this certification. Regarding buildings for which the tenant assumes responsibility for the property and its technical systems, Aedifica makes every effort to ensure that the necessary certificates are obtained.
Regarding its buildings located outside Belgium, Aedifica ensures the follow-up of local regulation. The Company is increasingly making use of sustainability solutions for its new constructions in The Netherlands (for example, heat pumps, solar thermal collectors and solar panels).
As a priority item for apartment building renovations, Aedifica replaces oil burning heating systems with natural gas systems, and seeks to improve the overall level of thermal insulation in its buildings (level K). A number of buildings is also equipped with solar panels, namely Complexe Louise 331-333, Résidence Palace and Héliotropes.
Given the Company's growth, Aedifica decided to move its headquarters to a modern building in the centre of the European district in Brussels. Conveniently located near several public transportation options (train and metro stations), the new head office is more easily accessible to Aedifica's staff as well as its international clients. Moreover, the building has a BREAAM "Excellent" certificate, which permits measurement of the building's environmental performance. It guarantees reduced power consumption and increased well-being of the Company's collaborators.
At its head office, Aedifica uses certified paper (including for printing the Annual Financial Report), and encourages its staff to recycle waste to the greatest extent possible.
Aedifica's special attention to diversity is reflected in the composition of its Board of Directors and Management Committee. A significant level of gender diversity (as required by article 518bis of the Belgian Companies Code, regarding gender diversity within the Board of Directors) has been achieved given the current composition of the Board of Directors. The Board, comprising four women and five men, has a gender diversity ratio of 44%, which significantly exceeds the threshold of one third set by law. Gender diversity is also clearly manifested in the current composition of the Management Committee, which consists of three women and three men (a gender diversity ratio of 50%). The reader is referred to section 5 of the "Corporate Governance Statement" for more information about Aedifica's diversity policy.
Aedifica aims to promote personal development of its employees by offering a work environment that is motivating, comfortable, and adapted to their needs. The Company strives to identify and further reinforce the talents of its staff in favour of promoting diversity and equal opportunity in the workplace. As of 30 June 2018, the Aedifica team consists of 59.8 full-time equivalent positions (FTEs), or 66 individuals (48 individuals on 30 June 2017). Total staff breakdown by gender is 34 women and 32 men, and by position type is 52 staff, 13 labourers and one student. During the 2016/2017 financial year, Aedifica recorded an average of 22 hours of training per FTE (24 hours as of 30 June 2017). The average age of the Aedifica team is 42 years (30 June 2017: 40 years).
Aedifica functions in the framework of Joint Committees 100 (labourers) and 200 (staff). The remuneration proposed by Aedifica remains positioned with reference to market remuneration for similar functions. For the 2017/2018 financial year remuneration includes a plan for non-recurring benefits linked to the Company's profitability, as has been the case from 2008/2009 onwards. In addition, other recurring benefits are offered, such as a defined contribution group insurance plan and hospitalisation coverage.
Each member of the team participates in at least one performance review per year with his/her manager; this review is based on a multi-dimensional template that covers relations between the Company and its employees.
— Molenenk – Deventer – The Netherlands —
— Résidence l'Air du Temps – Chênée – Belgium —
In 2010, Aedifica adopted a Charter of Ethics which formalised the code of conduct already in place. This charter addresses conflicts of interest, confidentiality, share purchase and sales, abuse of company property, business gifts, and respect for others. It is included in the Corporate Governance Charter.
Aedifica's investments respond to multiple housing needs and the Company contributes to the renewal of certain districts. The Group also offers solutions to the challenges associated with the ageing population through its investments in senior housing. Furthermore, Aedifica contributes to the perseveration of national heritage in Belgium and abroad, as the owner of several listed buildings in Belgium and protected buildings in Germany and The Netherlands (e.g. in Belgium: the Résidence Palace and building in rue du Lombard in Brussels, Hotel Martin's Brugge, hotel Martin's Klooster in Leuven, Koning Albert I in Dilbeek, Plantijn in Kapellen, Salve in Brasschaat, Residentie Blaret in Sint-Genesius-Rode and De Duinpieper in Ostend; in Germany: the entire Seniorenresidenz Laurentiusplatz site in Wuppertal-Elberfeld and Park Residenz in Neumünster, some parts of the Service-Residenz Schloss Bensberg site in Bergisch Gladbach, St. Anna in Höchstadt, Seniorenheim am Dom in Halberstadt, Seniorenresidenz an den Kienfichten in Dessau-Rosslau and advita Haus Zur Alten Berufsschule in Zschopau; in The Netherlands: Holland in Baarn, Benvenuta in Hilversum, Villa Walgaerde in Hilversum, Saksen Weimar in Arnhem, Parc Imstenrade in Heerlen, Spes Nostra in Vleuten, the Het Gouden Hart sites in Kampen and Leersum, Huize De Compagnie in Ede, Martha Flora Den Haag in The Hague, Huize Ter Beegden in Beegden, Huize Roosdael in Roosendaal, Zorghuis Smakt in Smakt and Zorgresidentie Mariëndaal in Velp).
Aedifica presents a series of semi-annual and annual roadshows in Belgium and abroad (Amsterdam, Frankfurt, London, Paris, Zürich, etc.), which attract foreign investment to Belgian capital markets.
Aedifica participates in debates related to the legislation regarding Regulated Real Estate Companies (SIR/GVV); it is a member of the Association of Belgian listed companies (via the "Association Belge des Sociétés cotées" or ABSC) and a founding member of the ASBL BE-REIT Association. The Company is also a member of the "Union Professionnelle du Secteur Immobilier" (UPSI) and sponsors the VFB federation and investment association.
Members of Aedifica's Executive Management participate personally as speakers for post-graduate programmes offered by the University of Leuven (KU Leuven).
In accordance with Article 34 of the Royal Decree of 14 November 2007 regarding the obligations of issuers of financial instruments admitted to trading on a regulated market, items that can be of influence in the event of a takeover bid are summarised below.
There is one single category of shares without par value: all shares are fully paid-up. As of 30 June 2018, the share capital amounts to €480,279,540.67, consisting of 18,200,829 shares, each representing 1/18,200,829th of the share capital.
All holders of shares have equal rights and obligations.
Please refer to applicable laws, including the Belgian Companies Code, the Law of 12 May 2014 on Regulated Real Estate Companies, as amended by the Law of 22 October 2017, and the Royal Decree of 13 July 2014 on Regulated Real Estate Companies, as amended by the Royal Decree of 23 April 2018. Moreover, attention should be paid to the Company's Articles of Association (see section 4 of the chapter "Standing Documents" in the Annual Financial Report).
There are no legal or statutory limits for share transfers.
In order to provide sufficient liquidity to the shareholders, Article 21 of the Law of 12 May 2014 quoted above requires that the shares of Belgian REITs are listed on a regulated stock exchange.
The totality of the 18,200,829 Aedifica shares are listed on the regulated market of Euronext Brussels.
There are no shareholders benefiting from specific control rights.
Aedifica has not put in place any mechanism in relation to employee shareholdings.
As of 30 June 2018, Aedifica holds no treasury shares.
Aedifica is not aware of any agreement between shareholders that could limit the transfer of shares and/or voting rights.
Pursuant to Article 11 to the Articles of Association, the members of the Board of Directors are elected for a term of up to 3 years by the shareholders at the Annual General Meeting. They are always revocable and can be re-elected.
If not re-elected, the office of director ends just after the general meeting that decides on re-elections.
In case of vacancy of one or several director seats, the remaining directors have the power to provisionally elect one or several persons, to act as director(s) until the next general meeting, when shareholders will decide on the re-election. This right of re-election by the remaining directors becomes an obligation when the number of directors falls below the statutory minimum number.
A director elected to replace another director finishes the original term of the replaced director.
Please refer to the regulations applicable to RRECs. In particular, the reader should bear in mind that any contemplated change to the Articles of Association must be approved by the market authority (FSMA).
Pursuant to Article 6.4 of the Articles of Association, the Board of Directors is authorised to increase the share capital the share capital in one or more transactions by a maximum amount of:
it being understood that the share capital can never be increased within the framework of the authorised capital in excess of €374,000,000 on such dates and in accordance with such terms and conditions as will be determined by the Board of Directors, in accordance with Section 603 of the Belgian Companies Code and as set out in Note 38 of the Consolidated Financial Statements.
On the date of this Consolidated Board of Directors' report, the remaining balance of the authorised capital as of 30 June 2018 amounts to 1) €271,453,773.66 if the capital increase to be effected is a capital increase whereby the shareholders of the Company have the possibility to exercise a preferential subscription right or a priority allocation right, or 2) €67,122,184.03 for any other type of capital increase.
Moreover, Aedifica may, in accordance with Article 6.2 of the Articles of Association, repurchase, or receive as security, treasury shares under the conditions set out in the Belgian Companies Code; the Company must also inform the market authority (FSMA) in due time. As of 30 June 2018, Aedifica has pledged 3,258 treasury shares.
The credit facilities of 10 July 2014, 15 June 2016, 24 February 2017 and 14 November 2017 (bilateral cred its issued by BNP Paribas Fortis), provide for early ter mination in the event of a change in control (control being defined as the concentration of 50% plus one share in the hands of a single shareholder, or as the concentration of 50% plus one voting right in the hands of a single share holder).
The credit facilities of 28 June 2016 issued by KBC Bank provide for early termination in case of substantial change in the shareholding structure that could result in a change in the composition of the Board of Directors or in the risk assessment carried out by the bank.
The credit facilities of 7 June 2016 issued by Caisse d'Epargne Hauts De France ("CEHDF") provide for early termination in the event of a substantial change in con trol. Control is defined with reference to the capital hold ings of Aedifica (more than 50%) or by reference to the right or possibility to control, either directly or indirectly, the management activities or the majority of the Board of Directors.
The credit facility of 4 January 2018 issued by Caisse d'Epargne Hauts De France ("CEHDF") provides for early termination in the event of a substantial change in control. Control being defined as (i) the concentration, either dir ectly or indirectly, of more than 50% of shares in the hands of one or more investors acting in concert, or (ii) the power to have a decisive impact on the appointment of a majority of Aedifica's Directors or on the management direction.
The credit facilities of 14 June 2014, 13 November 2014 and 25 May 2018 issued by Banque Européenne du Crédit Mutuel provide for early termination in the event of a substantial change in control in favour of one or more investors acting in concert. "Control" and "action in con cert" are defined with reference to the Belgian Companies Code.
The credit facilities of 27 November 2014, 27 June 2016 and 14 May 2018 issued by Belfius Banque SA provide for early termination if the administration of the Company is modified or if one of the working partners of a partner with joint and several liability or one of the majority share holders withdraws or passes away.
The credit facilities of 19 February 2016, 20 September 2016, 14 February 2017 and 15 May 2018 issued by ING Belgium provide for immediate payment without notice of all amounts due related to these credit facilities (interests, fees, associated costs), and immediate cancellation of all obligations awaiting execution, unless otherwise agreed by the banks, in the event of a change in control. Con trol being defined as (i) the concentration, either directly or indirectly, of more than 50% of shares, voting rights of similar rights in the hands of a single shareholder or (ii) the possibility to control, either directly or indirectly, the management activities or the composition of the majority of the Board of Directors, pursuant to an agreement and through the exercise of voting rights.
The credit facilities of 24 October 2016 issued by BNP Paribas SA Niederlassung Deutschland provide for early termination in case of a change in control of Aedifica. Change in control being defined as the concentration, either directly or indirectly, of more than 50% of shares or voting rights in the hands of a single shareholder or multiple shareholders acting in concert ("multiple share holders acting in concert" being defined as shareholders who align themselves with respect to the acquisition of shares or voting rights, or who discuss the exercise of their voting rights.
The credit facilities of 3 February 2017 and 15 May 2018 issued by Banque Triodos SA provide for early termination in case of substantial change in the shareholding structure that could result in a change in the risk assessment carried out by the bank; or in case of a disagreement between directors or associates; or if the Company is ungovern able, regardless of the reason.
The credit facility of 20 December 2017 issued by the Argenta Spaarbank savings bank and the Argenta Assuranties insurance company provides for early ter mination in case of a change in control of Aedifica. Con trol being defined as the concentration, either directly or indirectly, of more than 50% of shares in the hands of a single shareholder.
The syndicated credit facility of 29 June 2018 issued by Groupe BPCE (including Natixis Caisse d'Epargne et de Prévoyance Hauts De France, Caisse d'Epargne et de Prévoyance de Bourgogne Franche-Comté, Caisse d'Epar gne et de Prévoyance de Rhône Alpes, Caisse d'Epargne et de Prévoyance Grand Est Europe, Caisse d'Epargne Loire Drôme Ardèche, Caisse d'Epargne et de Prévoyance d'Auvergne et du Limousin, Banque Populaire Bourgogne Franche Comté, Banque Populaire Val de France and Ban que Populaire Alsace Lorraine Champagne) provides for early termination in case of a change in control of Aedifica. Change of control being defined as the acquisition of con trol by a single shareholder, as defined in Article 5 of the Belgian Companies Code.
If the management agreement signed with the CEO is terminated by the CEO or by the Company within a period of 6 months after the launch of a takeover bid, the CEO will receive an indemnity amounting to 18 months of benefits (except in case of serious misconduct).
No such clause has been included in contracts signed with other members of the Management Committee and the Aedifica staff.
The Audit Committee of the Company is made up of three non-executive directors who meet the independence criteria set out by Article 526ter of the Belgian Companies Code. Namely, Ms. Marleen Willekens, Ms. Katrien Kesteloot and Mr. Serge Wibaut:
7° have not been, over the last three years, a partner of or employee of the statutory auditor of Aedifica, or of a related party of Aedifica;
8° are not executive directors in another entity in which Mr. Stefaan Gielens and/or Ms. Laurence Gacoin and/ or Ms. Sarah Everaert and/or Mr. Charles-Antoine van Aelst and/or Mr. Sven Bogaerts and/or Ms. Ingrid Daerden act as non-executive directors. Furthermore, they do not have major relationships with Mr. Stefaan Gielens and/or Ms. Laurence Gacoin and/or Ms. Sarah Everaert and/or Mr. Charles-Antoine van Aelst and/or Mr. Sven Bogaerts and/or Ms. Ingrid Daerden through other duties in other entities;
Moreover, all members of the Audit Committee have the necessary competencies with respect to accounting and audit, given their level of education and their broad experience in these matters.
The statement of corporate governance (including the remuneration report and the description of the main features of systems of internal control and risk management) is provided in the chapter "Corporate Governance Statement", on pages 140 to 157 of this Annual Financial Report.
1% EPRA Vacancy Rate
17.1% weighting in the Belgian EPRA Index
AEDIFICA PASSED ALL ELIGIBILITY CRITERIA FOR INCLUSION IN THE EPRA INDICES DURING THE MARCH 2013 QUARTERLY REVIEW. AS A RESULT, AEDIFICA'S SHARES WERE ADDED TO THE "FTSE EPRA/NAREIT DEVELOPED EUROPE INDEX" ON 18 MARCH 2013.
The EPRA ("European Public Real Estate Association") is the voice of Europe's publicly traded real estate sector and the most widely used global benchmark for listed real estate. It represents more than 260 active members and over €450 billion in real estate assets. The European indices include more than 100 constituents, with a freefloat market capitalisation of more than €200 billion. The criteria for inclusion in the indices are publicly available on the EPRA website (www.epra.com).
As of 30 June 2018, Aedifica is registered in the European EPRA Index with a weighting of approx. 0.6% and in the Belgian EPRA Index with a weighting of approx. 17.1%.
In November 2016, the Board of Directors of the European Public Real Estate Association ("EPRA") published an update of the report entitled "EPRA Reporting: Best Practices Recommendations Guidelines" ("EPRA Best Practices"). The report is available on the EPRA website.
This document contains EPRA's recommendations for defining the main financial performance indicators applicable to listed real estate companies. Aedifica supports this approach to reporting standardisation, which has been designed to improve the quality and comparability of information. The Company supplies its investors with most of the information recommended by EPRA. Some of the EPRA indicators are considered to be alternative performance measures (APM). They are described in Note 57 of the Consolidated Financial Statements included in this Annual Financial Report.
On 24 September 2014, Aedifica was rewarded the "EPRA Silver Award" and the "EPRA Most Improved Award" for its 2012/2013 Annual Financial Report.
On 9 September 2015, Aedifica was rewarded the "EPRA Gold Award" for its 2013/2014 Annual Financial Report, bringing the Company to the forefront of the 104 companies surveyed. This performance was repeated with receipt of the same award in September 2016 for the 2014/2015 Annual Financial Report, in September 2017 for the 2015/2016 Annual Financial Report, and in September 2018 for the 2016/2017 Annual Financial Report.
— SZ AGO Kreischa – Kreischa - Germany —
2014
2017 - 2018
| 30 June 2018 | 30 June 2017 | ||
|---|---|---|---|
| EPRA Earnings* | x €1,000 | 58,403 | 47,964 |
| Earnings from operational activities | € / share | 3.25 | 3.15 |
| EPRA NAV* Net Asset Value adjusted to include properties and other investment |
x €1,000 | 983,297 | 890,714 |
| interests at fair value and to exclude certain items not expected to crystallise in a long-term investment property business model |
€ / share | 54.02 | 49.55 |
| EPRA NNNAV EPRA NAV adjusted to include the fair values of financial instruments, |
x €1,000 | 934,781 | 845,038 |
| debt and deferred taxes | € / share | 51.36 | 47.01 |
| EPRA Net Initial Yield (NIY) Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchaser's costs |
% | 5.2 | 5.2 |
| EPRA Topped-up NIY This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods or other unexpired lease incentives such as discounted rent periods and step rents |
% | 5.2 | 5.2 |
| EPRA Vacancy Rate Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio |
% | 1 | 1 |
| EPRA Cost Ratio (including direct vacancy costs)* Administrative & operating costs (including costs of direct vacancy) divided by gross rental income |
% | 16 | 17 |
| EPRA Cost Ratio (excluding direct vacancy costs)* Administrative & operating costs (excluding costs of direct vacancy) divided by gross rental income |
% | 16 | 17 |
These data are not compulsory according to the RREC regulation and are not subject to verification by public authorities. The auditor verified (through a limited review) whether these data EPRA are calculated according to the definitions included in the EPRA Best Practices Recommendations Guidelines and whether the financial data used in the calculation of these figures comply with the accounting data included in the audited consolidated financial statements.
"Inclusion in the EPRA index has always been a key milestone for Aedifica. It displays a wider recognition of Aedifica's commitment to best practice, and provides an opportunity for global investors to play a part in the Company's continued success."
Stefaan Gielens, CEO
| EPRA Earnings* (x €1,000) | ||
|---|---|---|
| 30 June 2018 | 30 June 2017 | |
| Earnings (owners of the parent) per IFRS income statement | 71,855 | 63,358 |
| Adjustments to calculate EPRA Earnings*, exclude: | ||
| (i) Changes in value of investment properties, development properties held for investment and other interests |
-15,018 | -10,357 |
| (ii) Profits or losses on disposal of investment properties, development properties held for investment and other interests |
-789 | -1,459 |
| (iii) Profits or losses on sales of trading properties including impairment charges in respect of trading properties |
0 | 0 |
| (iv) Tax on profits or losses on disposals | 0 | 0 |
| (v) Negative goodwill / goodwill impairment | 344 | 0 |
| (vi) Changes in fair value of financial instruments and associated close-out costs | 2,157 | -5,119 |
| (vii) Acquisition costs on share deals and non-controlling joint-venture interests (IFRS 3) | 0 | 0 |
| (viii) Deferred tax in respect of EPRA adjustments | -146 | 1,541 |
| (ix) Adjustments (i) to (viii) above in respect of joint-ventures | 0 | 0 |
| (x) Non-controlling interests in respect of the above | 0 | 0 |
| EPRA Earnings* (owners of the parent) | 58,403 | 47,964 |
| Number of shares (Denominator IAS 33) | 17,990,607 | 15,235,696 |
EPRA Earnings* per Share (EPRA EPS* - in €/share) 3.25 3.15
| 30 June 2018 | 30 June 2017 | |
|---|---|---|
| EPRA NAV* (owners of the parent) | 983,297 | 890,714 |
| Include: | ||
| (i) Fair value of financial instruments | -35,439 | -34,055 |
| (ii) Fair value of debt | -6,866 | -8,523 |
| (iii) Deferred tax | -6,211 | -3,098 |
| EPRA NNNAV* (owners of the parent) | 934,781 | 845,038 |
| Number of shares | 18,200,829 | 17,975,820 |
| EPRA NNNAV* (in €/share) (owners of the parent) | 51.36 | 47.01 |
| 30 June 2018 | |||||
|---|---|---|---|---|---|
| Healthcare real estate |
Apartment buildings |
Hotels | Non allocated |
Intersegment items |
Total |
| 1,426,736 | 206,938 | 67,606 | 35,183 | 0 | 1,736,463 |
| 0 | 0 | 0 | 0 | 0 | 0 |
| 4,070 | 0 | 0 | - | - | 4,070 |
| - | - | - | -35,183 | - | -35,183 |
| 1,430,806 | 206,938 | 67,606 | 0 | 0 | 1,705,350 |
| 51,721 | 5,175 | 1,749 | 0 | 0 | 58,645 |
| 1,482,527 | 212,113 | 69,355 | 0 | 0 | 1,763,995 |
| 81,610 | 10,681 | 4,233 | 0 | 0 | 96,524 |
| -1,477 | -3,623 | -28 | 0 | -182 | -5,311 |
| 80,133 | 7,058 | 4,205 | 0 | -182 | 91,213 |
| 0 | 0 | 0 | 0 | 0 | 0 |
| 80,133 | 7,058 | 4,205 | 0 | -182 | 91,213 |
| 5.4 | 3.3 | 6.1 | 0.0 | - | 5.2 |
| 5.4 | 3.3 | 6.1 | 0.0 | - | 5.2 |
| 30 June 2017 | |||||||
|---|---|---|---|---|---|---|---|
| Healthcare real estate |
Apartment buildings |
Hotels | Non allocated |
Intersegment items |
Total | ||
| Investment properties - wholly owned |
1,240,021 | 215,205 | 68,009 | 17,174 | 0 | 1,540,409 | |
| Investment properties - share of joint-ventures/funds |
0 | 0 | 0 | 0 | 0 | 0 | |
| Trading properties (including share of jopint-ventures) |
4,440 | 0 | 0 | - | - | 4,440 | |
| Less: developments | - | - | - | -17,174 | - | -17,174 | |
| Completed property portfolio | 1,244,461 | 215,205 | 68,009 | 0 | 0 | 1,527,675 | |
| Allowance for estimated purchasers' costs |
42,165 | 5,914 | 1,779 | 0 | 0 | 49,858 | |
| Gross up completed property portfolio valuation |
1,286,626 | 221,119 | 69,788 | 0 | 0 | 1,577,533 | |
| Annualised cash passing rental income |
71,372 | 10,702 | 4,451 | 0 | 0 | 86,525 | |
| Property outgoings1 | -909 | -3,413 | -34 | 0 | -197 | -4,552 | |
| Annualised net rents | 70,463 | 7,289 | 4,417 | 0 | -197 | 81,973 | |
| Add: notional rent expiration of rent free periods or other lease incentives |
0 | 0 | 0 | 0 | 0 | 0 | |
| Topped-up net annualised rent | 70,463 | 7,289 | 4,417 | 0 | -197 | 81,973 | |
| EPRA NIY (in%) | 5.5 | 3.3 | 6.3 | 0.0 | - | 5.2 | |
| EPRA Topped-up NIY (in%) | 5.5 | 3.3 | 6.3 | 0.0 | - | 5.2 |
| Investment properties - Rental data (x €1,000) | |||||||
|---|---|---|---|---|---|---|---|
| 30 June 2018 | |||||||
| Gross rental income |
Net rental income |
Lettable space (in m²) |
Contractual rents3 |
Estimated rental value (ERV) on empty spaces |
Estimated rental value (ERV) |
EPRA Vacancy rate (in%) |
|
| Segment | |||||||
| Healthcare real estate | 76,446 | 75,057 | 743,453 | 81,610 | 0 | 86,346 | 0 |
| Apartment buildings | 10,418 | 6,323 | 95,683 | 10,682 | 939 | 10,7994 | 9 |
| Hotels | 4,186 | 4,179 | 35,564 | 4,233 | 0 | 4,042 | 0 |
| Non-allocated | 0 | 0 | |||||
| Intersegment items | -182 | -182 | |||||
| Total marketable investment properties |
90,868 | 85,377 | 874,699 | 96,525 | 939 | 101,187 | 1 |
| Reconciliation with the consolidated IFRS income statement |
|||||||
| Properties sold during the 2017/2018 financial year |
729 | 698 | |||||
| Properties held for sale | 0 | 0 | |||||
| Other Ajustments | 0 | 0 | |||||
| Total marketable investment properties |
91,5971 | 86,0752 |
| 30 June 2017 | |||||||
|---|---|---|---|---|---|---|---|
| Gross rental income |
Net rental income |
Lettable space (in m²) |
Contractual rents3 |
Estimated rental value (ERV) on empty spaces |
Estimated rental value (ERV) |
EPRA Vacancy rate (in%) |
|
| Segment | |||||||
| Healthcare real estate | 63,933 | 63,062 | 656,704 | 71,372 | 0 | 77,319 | 0 |
| Apartment buildings | 10,587 | 6,645 | 105,597 | 10,702 | 1,073 | 11,8724 | 9 |
| Hotels | 4,095 | 4,065 | 35,564 | 4,451 | 16 | 4,137 | 0 |
| Non-allocated | 0 | 0 | |||||
| Intersegment items | -197 | -197 | |||||
| Total marketable investment properties |
78,419 | 73,575 | 797,865 | 86,525 | 1,089 | 93,328 | 1 |
| Reconciliation with the consolidated IFRS income statement |
|||||||
| Properties sold during the 2016/2017 financial year |
516 | 480 | |||||
| Properties held for sale | 0 | 0 | |||||
| Other adjustments | 0 | 0 | |||||
| Total marketable investment properties |
78,9351 | 74,0552 |
The total "gross rental income" defined in EPRA Best Practices, reconciled with the consolidated IFRS income statement, corresponds to the "net rental income" of the consolidated IFRS accounts.
The total "net rental income" defined in EPRA Best Practices, reconciled with the consolidated IFRS income statement, corresponds to the "property operating result" of the consolidated IFRS accounts. 3. The current rent at the closing date plus future rent on leases signed as at 30 June 2017 or 30 June 2018.
This ERV does not take into account a furnished occupancy.
| 30 June 2018 | 30 June 2017 | ||||||
|---|---|---|---|---|---|---|---|
| Net rental income on a like-for like basis1 |
Acquisitions | Disposals | Transfers due to completion |
Net rental income of the period2 |
Net rental income on a like-for like basis1 |
Like-for-like net rental income |
|
| Segment | |||||||
| Healthcare real estate | 49,221 | 22,239 | 0 | 3,597 | 75,057 | 48,597 | 1% |
| Apartment buildings | 6,157 | 0 | -2 | 166 | 6,321 | 5,738 | 7% |
| Hotels | 4,106 | 0 | 696 | 78 | 4,879 | 3,871 | 6% |
| Non-allocated | 0 | 0 | 0 | 0 | 0 | 0 | - |
| Intersegment items | -16 | 0 | 0 | -166 | -182 | -16 | - |
| Total marketable investment properties |
59,468 | 22,239 | 693 | 3,675 | 86,075 | 58,190 | 2% |
| Reconciliation with the consolidated IFRS income statement |
|||||||
| Properties sold during the financial year |
0 | ||||||
| Properties held for sale | 0 | ||||||
| Other adjustments | 0 | ||||||
| Total marketable investment properties |
86,075 |
Marketable investment properties owend throughout the 2 financial years.
The total "net rental income" of the period defined in EPRA Best Practices, reconciled with the consolidated IFRS income statement, corresponds to the "property operating result" of the consolidated IFRS accounts.
| 30 June 2018 | ||||
|---|---|---|---|---|
| Fair value | Changes in fair value |
EPRA NIY (in%) |
Reversion rate1 (in%) |
|
| Segment | ||||
| Healthcare real estate | 1,430,806 | 22,475 | 5.4 | 5 |
| Apartment buildings | 206,938 | 2,474 | 3.3 | -81 |
| Hotels | 67,606 | 277 | 6.1 | -5 |
| Total marketable investment properties including assets as held for sale* |
1,705,350 | 25,226 | 5.2 | 4 |
| Reconciliation to the consolidated IFRS balance sheet |
||||
| Development projects | 35,183 | -10,208 | ||
| Total marketable investment properties including assets as held for sale* |
1,740,533 | 15,018 |
| 30 June 2017 | ||||
|---|---|---|---|---|
| Fair value | Changes in fair value |
EPRA NIY (in%) |
Reversion rate1 (in%) |
|
| Segment | ||||
| Healthcare real estate | 1,244,461 | 18,782 | 5.5 | 8 |
| Apartment buildings | 215,205 | 217 | 6.4 | 11 |
| Hotels | 68,009 | -2,880 | 6.3 | -8 |
| Total marketable investment properties including assets as held for sale* |
1,527,675 | 16,119 | 5.2 | 6 |
| Reconciliation to the consolidated IFRS balance sheet |
||||
| Development projects | 17,174 | -5,762 | ||
| Total marketable investment properties including assets as held for sale* |
1,544,849 | 10,357 |
| 30 June 2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Current rent of leases expiring (x €1,000) | |||||||||
| Weighted average lease term1 (in years) |
Not later than one year |
Later than one year and not later than two years |
Later than two years and not later than five years |
Later than five years |
|||||
| Segment | |||||||||
| Healthcare real estate | 22 | 0 | 0 | 899 | 80,711 | ||||
| Apartment buildings | 4 | 4,605 | 6,077 | 0 | 0 | ||||
| Hotels | 25 | 0 | 31 | 0 | 4,202 | ||||
| Total marketable investment properties including assets as held for sale* |
20 | 4,605 | 6,108 | 899 | 84,913 |
| Properties being constructed or developed (in million €) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 30 June 2018 | |||||||||
| Cost to date | Costs to completion |
Future interest to be capitalised |
Forecast total cost |
Forecast completion date |
Lettable space (in m²) |
% Pre-let | ERV on completion |
||
| Total | 37 | 417 | 5 | 459 | 2021/2022 | ± 118,000 | 100 | 25.4 | |
| 30 June 2017 | |||||||||
| Cost to date | Costs to completion |
Future interest to be capitalised |
Forecast total cost |
Forecast completion date |
Lettable space (in m²) |
% Pre-let | ERV on completion |
||
| Total | 17 | 104 | 1 | 122 | 2019/2020 | ± 95,000 | 98 | 7.5 |
The breakdown of the projects is provided in section 4.2 of the Property Report.
| 30 June 2018 | 30 June 2017 | |
|---|---|---|
| Administrative/operating expense line per IFRS statement | -14,402 | -13,206 |
| Rental-related charges | -80 | -48 |
| Recovery of property charges | 84 | 40 |
| Rental charges and taxes normally paid by tenants on let properties | -985 | -917 |
| Technical costs | -1,379 | -1,247 |
| Commercial costs | -552 | -567 |
| Charges and taxes on unlet properties | -136 | -165 |
| Property management costs | -1,273 | -998 |
| Other property charges | -1,281 | -1,026 |
| Overheads | -10,963 | -8,544 |
| Other operating income and charges | 2,163 | 266 |
| EPRA Costs (including direct vacancy costs)* (A) | -14,402 | -13,206 |
| Charges and taxes on unlet properties | 136 | 165 |
| EPRA Costs (excluding direct vacancy costs)* (B) | -14,266 | -13,041 |
| Gross Rental Income (C) | 91,677 | 78,983 |
| EPRA Cost Ratio (including direct vacancy costs)* (A/C) | 16% | 17% |
| EPRA Cost Ratio (excluding direct vacancy costs)* (B/C) | 16% | 17% |
| Overhead and operating expenses capitalised (including share of joint ventures) | 85 | 78 |
Aedifica capitalises certain project management costs.
| 30 June 2018 | 30 June 2017 | |
|---|---|---|
| Property related capex | ||
| (1) Acquisitions | 127,250 | 333,028 |
| (2) Development | 63,900 | 47,451 |
| (3) Like-for-like portfolio | 3,677 | 6,364 |
| (4) Other (capitalised interests and project management) | 567 | 400 |
| Capital expenditure | 195,394 | 387,243 |
The data in the table come from Note 29 of the Consolidated Financial Statements.
5,7% average gross yield in terms of fair value
30% portion of the portfolio in Germany and The Netherlands
20 years weighted average lease term of current contracts
€1,7billion real value of investment properties
All data presented in sections 1.1 and 1.2.1 of this chapter is based on information publicly available through the Belgian Ministry of Economy as of 31 March 2018.
After steady growth in 2017, economic activity in the eurozone slowed at the beginning of this year. The Belgian economy grew by 1.7% in 2017. According to projections published in the ECB's economic Bulletin (published on 15 June 2018), the Belgian economy is expected to grow by 1.5% in 2018.
In 2016 and 2017, economic growth went in hand with more intensive job creation than in the past. According to forecasts, the unemployment rate will stabilise at approx. 6.7 %, while inflation should settle at 2.1 %.
The consumer confidence index has shown a slight decrease in the first trimester of 2018, after an upward trend over the 2013-2017 period.
After exceptional market conditions over the last 20 years, and despite a downturn in 2009 as a result of the "subprime" crisis, Belgian residential real estate continued to grow in 2017, thanks to favorable economic conditions. Prices, however, began to stabilise at the start of 2018.
According to Statbel, the Belgian National Institute of Statistics, the average price of houses in Belgium was €221,061 in the first quarter of 2018 (an increase of 3.5 % compared to the first quarter of 2017). The average price of a detached home was €362,913 (an increase of 1.3 %) and an apartment averaged €226,901 (an increase of 1.5 %). Also in the first quarter of 2018, the sales volume of apartments decreased by 3 %, while sales of single-family and detached homes increased by 3.3 % and 4.1 %, respectively.
In Flanders, a standard home had an average cost of €240,319 in the first quarter of 2018 (a 2.7 % increase as compared to the same period in 2017). The price of a detached home stood at €384,952 (a 0.5 % rise), while the average cost of an apartment was €232.564 (a 1.5 % increase).
In Wallonia, the average price of a standard home reached €164,583 in the first quarter of 2018 (a 3.2 % increase as compared to the first quarter of 2017). The price of a detached home stood at €289,618 (a 2.2 % rise), while the average cost of an apartment was €172,186 (a 4.2 % decrease).
The most significant increases were registered in the Brussels-Capital Region. The average cost of a standard home was €442,726 in the first quarter of 2018, an increase of 12.0 % over the first quarter of 2017. The price of a detached home stood at €1,122,510 (a 12.9 % increase), and that of an apartment was €250,137 (a 5.9 % increase).
The rental market volume in Belgium remains stable. However, prices continue to show an upward trend due to several factors. For one, rents benefit from indexation which guarantees a rental increase every year. In addition, the shortage of units available for rent on the residential market, as well as improvements in terms of the quality of housing (owing to recent refurbishments of secondary properties and a strong increase in new buildings available for rent). Simultaneously, the number of dwellings managed by the Social Real Estate Agency has increased considerably given the growing demand.
Belgium has one of the highest home-ownership rates in Europe, at over 70 %. This rate is is even higher in Flanders. By contrast, the home-ownership rate in Brussels, as in most big cities, is much lower at less than 50 %. The balance of real estate properties in Brussels are put up for rent.
Gross yields on rental real estate assets in Brussels fall within a range of 2.5 % to 5.0 % for properties in good condition. Outside the big city centres, these yields tend to increase slightly, especially in Wallonia.
Rents are higher for furnished rental properties. The owner often offers additional services which are included in the rental amount (internet, TV, cleaning, laundry, etc.). After deduction of different costs for the owner (taking into account a vacancy periods linked to the turnover rate, and management and refurbishment costs) net rental yields are often similar to those of traditional or "non-furnished" rentals.
The usual factors, which have supported and contributed to the stability of the Belgian residential market in recent years are the following:
gians has been maintained due to the indexation of salaries. This stability may be curtailed in the years to come, as governments, like companies, are forced to reduce their costs.
The exceptional factors underlying Belgium's price dynamics are the following:
-Interest rates, standing at an average of 2.0 % for new property contracts, remain at a historically low levels. These low rates are probably the primary motor for supporting prices on the residential market, inducing the increased use of mortgage loans.
However, growth of mortgage credits is not perfectly in line with real estate prices, given the restrictive credit policy of banks that require more personal resources (on average approx. 20 %) for property purchases. The National Bank requires Belgian banks to create supplementary capital reserves to cover risks linked to their mortgage portfolio.
Since young households often struggle to find funds, more and more parents are contributing to bring in the necessary equity. Moreover, to reduce the monthly payments, an increasing number of loans are being granted with maturities exceeding 25 years.
Based on demographic perspectives and OCDE data, estimates indicate a need for 3,000 to 4,000 new nursing home beds every year in Belgium by 2030.
In recent years, the number of rest home beds in Belgium has steadily increased to reach a capacity of 146,000 units. According to demographic forecasts, and given the increased life expectancy, a deficit between this increased supply (2,000 to 2,500 units per year) and demand seems to persist. The split of these beds between different types of operators remains relatively stable. In Flanders, public operators manage 30 % of the beds, while not-for-profit operators and private operators manage 37 % and 33 %, respectively. In Wallonia, public operators manage 29 % of the beds, not-for-profit operators manage 21 % and private operators manage 50 %. Given the increasing trend toward professionalisation, private operators are urged to consolidate and to improve their organisation. At present, the three main private operators (Armonea, Orpea and Senior Living Group) manage more than 23,000 beds – approx. 15 % of all beds in Belgium.
Considering the latest data, life expectancy in Belgium and Europe is increasing, reaching 78.2 years for men and 83.2 years for women. This trend will continue during the coming years, reaching 81 years for men, and 85.7 years for women, by 2030. Given the fact that the period during which elderly people suffer from health problems remains stable (about 15 years for men and 18 years for women), progress in terms of health care, home automation and home care will play an increasingly important role in limiting an early relocation to residential care facilities. As a result, people tend to transfer to a rest home after the age of 80; their average stay remains stable at 580 to 590 days.
Moreover, lthe latest Eurostat demographic perspectives show that aging is continuing in both Europe and Belgium. The number of Belgians aged 80 and over is expected to grow from 610,000 to 790,000 by 2030, an increase of 180,000 people in 15 years or 12,000 per year. According to the OCDE, the need for care in rest homes increases with age: 25 % of 75-year-olds, 30 % to 40 % of 80-yearolds, and more than 50 % of those aged 85 and above. Based on this data, the need for new beds in residential care facilities is estimated at 3,000 to 4,000 per year. In Flanders, the need for new beds is significantly higher than in Brussels or Wallonia.
In this regard, it seems logical that health care real estate is becoming increasingly attractive to investors. The (very) long-term contracts with operators, indexed rents, and triple A leases are key factors for REITs, which were the first to enter this market, as well as for insurance companies and pension funds. The main issues for investors are the operator's solvency and the future sustainability of subsidies given the sixth reform of the State, which transferred responsibilities for elderly have been transferred from the federal level to the regional level.
Since 2012, an average of more than €200 million has been invested annually in the Belgian healthcare real estate sector (approx. €300 million in 2015 and 2016). This trend is increasing. Given the attractiveness of investments in healthcare real estate, the increased professionalisation of operators and historically low interest rates, gross rental yields are decreasing. While prime yields (based on longterm triple net leases) amounted to more than 6 % in 2011-2012, they are now below the 5 % threshold. In this context, the quality, versatility and overall sustainability of investment properties are becoming even more important; current yields leave no room for error.
To increase the flexibility and complementarity of real estate properties, several initiatives have been undertaken in recent years to bring together residential sites so as to provide service to several types of dependent persons. (such as service-residences or accommodation for youth with disabilities).
Given the above-mentioned demographic perspectives and the specificity of the healthcare real estate sector, it seems clear that the investment market can be expected to continue to thrive in the years to come. It is possible new actors will be attracted to the market, but the presence of the existing actors (REITs and insurance companies) is ensured, given the benefits arising from their profound knowledge of the sector. It should be noted, however, that yields are not expected to experience further compression in the months to come.
— Seniorenrezidenz Laurentiusplatz – Wuppertal – Germany —
The German healthcare market is a growth market. According to the German Statistical Office, around three million people in Germany are currently in need of care given the terms of the German social security code. Within the next years, the share of people in need of care within the total population is estimated to grow significantly. According to the most recent data, as of the end of 2015, Germany had approx. 82.2 million inhabitants, of which around 17.3 million with the age over 65 and a total of 2.9 million people in need of care. Of these 2.9 million, 2.08 million (73 %) were cared for at home (67 % by caregiving relatives and 33 % by out-patient care services). 783,000 of the people in need of care were cared for in full-time care homes. By the year 2030, up to 3.5 million people in need of care are expected, but the number of caregiving relatives for informal care however, is set to decline. This is caused by the changes of the demographic structure within the population, altered family structures, greater distances between the homes of family members and the increased number of middle-age and older employed women. Population ageing will be further amplified by the generation of babyboomers, born between 1956 and 1965, who have already reached the age 60 or will turn 60 in the coming years. Consequently, the need for senior housing will increase over the next decades.
Currently, there are approx. 930,000 beds in more than 13,500 care homes in Germany, of which 94 % cater to seniors and 6 % cater to disabled persons or people who suffer from mental health disorders or terminal illness. These care homes are operated by not-for-profit operators (approx. 53 %), private operators (approx. 42 %) and public operators (approx. 5 %) in a very fragmented market. It is estimated that the market share of the five biggest operators is approx. 11 %.
According to various market studies, the capacity of care homes should increase by approx. 340,000 units by 2030. Thus, the ageing population offers significant growth potential and consolidation opportunities in the collective healthcare property sector in Germany.
— La Ferme Blanche – Remicourt – Belgium —
The German investment market for healthcare properties had a buoyant start into the year 2018. In the first quarter, the generated volume for care homes and senior centers amounted to approx. €339 million and doubled in comparison to last year's transaction volume at €166 million.
Compared to the previous year, domestic investors increased their transaction volume by €50 million to approx. €149 million. Despite the growth of the transaction volume, the share of domestic investors decreased within the transaction activity to 44 %. This is explained by the high activity by international investors, which have more than doubled their generated volume to €190 million. Correspondingly, international investors were responsible for 56 % of the total volume of the German investment market for healthcare properties. Market participants from Belgium appeared to be especially active, accounting for 44 % of the transaction volume, followed by buyers from Luxemburg and France at 5 % and 4 %, respectively.
The prime yield remained stable at 5.0 % compared to the end of the year of 2017. Healthcare properties are increasingly seen as a sustainable and common asset class, wherefore occasional transactions below the five-percent-mark could already be registered. Given their higher quality, healthcare properties are no longer so dilapidated as they once were. Accordingly, the risk premium for care properties as an asset class is continuously declining.
Population ageing and increasing life expectancies have especially an effect on the German market. The capacity of care homes should increase by approx. 340,000 units by 2030.
2. Written in English on 29 June 2018 by CBRE GmbH, and reproduced with permission.
Over the remainder of the year, the German market for care facilities is not expected to lose its strong momentum. This is ensured by the favourable conditions as well as the high need for investment resources (for the construction of new buildings and the renovation of existing sites). The demographic change is an additional crucial element for the increasing demand for care spaces and therefore also healthcare properties. However, the lack of construction sites and caregivers will contribute to the continued scarcity of beds on offer. For the year as a whole, a strong result with an investment volume of more than €1 billion can be expected once again.
— Het Gouden Hart van Leersum – Leersum – The Netherlands —
The Netherlands currently has apopulation of more than 17.2 million inhabitants. The Central Bureau of Statistics predicts a slight growth in the population, to reach 18.1 million inhabitants by 2040. Population growth beyond 2040 remains uncertain.
It is certain, however, that the number of elderly will increase sharply over this period, from 3.1 million persons over 65 years of age to 4.8 million in 2040 (i.e. 26% of the population), and from 0.7 million persons over 80 years of age to 2 million persons in 2040 (i.e. 11% of the population). About 20% of this group requires care, and over 5% need continuous assistance (as provided in traditional care facilities). This latter group often includes individuals suffering from dementia. According to "Alzheimer Nederland", this number will double by 2040. Consequently, senior care constitutes a significant growth area in The Netherlands.
An increasing portion of these people do not opt for traditional care facilities, but prefer to obtain in-home care or care in private residential care facilities (such as the care residences offered by Domus Magnus, Martha Flora, Compartijn and Stepping Stones). This is due to a number of factors:
Dutch private care providers have anticipated these trends: there are already approx. 300 private residential care facilities in the country and it is foreseen that dozens more will open their doors by 2025.
According to these trends, it appears that an increasing group of seniors seek – and are able to pay for – higher quality services.
On average, aprivate residential care facility in The Netherlands contains 18 units. The limited number of units is what strengthens and distinguishes them from traditional care facilities and assisted-living apartment facilities, which house between 60 and 200 residents.
More than half of the country's private residential care facilities are independently operated. It is expected that an increasing number of operators will manage multiple sites.
The economic upturn had apositive impact on the hotel industry in 2017, with occupancy rates reaching record levels in the biggest European cities. The Brussels hotel market, returning to its own cruising speed, saw an average occupancy rate of 72.0% over the last 12 months and aRevPAR (Revenue Per Available Room) of €80 in March 2018. According to 'Visiter Bruxelles' these two figures increased by 13.1% and 20.0% respectively, in just one year. The increase of the average price over 12 months (€111) levelled out and reached 6.4%. At the end of 2011, Brussels had 184 hotels and 37,034 beds (IBSA data), of which 57% in the mid- to high-end market segment, which is in line with amarket targeting business travel and international politics. The total number of rooms increased by 6% over aperiod of four years. Only the five-star segment saw adecline, as a result of renovation works. Taking into account a significant pipeline, the outdated hotel park should undergo renovations in order to remain competitive with new entrants arriving on the market and offering differentiated products.
The positive trend is also be noted in Flanders, where figures provided by Toerisme Vlaanderen (Tourism Flanders) for March 2018 show a7.9% increase in the number of overnight stays (12 months cumulated), and where the share of international tourists increased considerably. Among Flemish cities (latest data from December 2017), Bruges displays the strongest growth at 14.7%, followed by Ghent (7.7%), Mechelen (6.9%), Leuven (5.0%) and Antwerp (4.9%).
As in other European cities, Airbnb is also growing rapidly in Belgium. The local authorities have tightened regulations by introducing a tourist tax and stricter monitoring, among other measures.
The trend toward the 'unique experience' is on the rise in the hotel industry. Established hotel chains are launching new brands to meet the expectations of newcomers in the market. Boutique/lifestyle hotels that can offer a full package, complete with experience, atmosphere, and F&B ("food & beverages") (which are equally becoming increasingly significant) are the winners. In the cities, common areas and social aspects are gaining importance, even if this means rooms become smaller. Notions of short/prolonged stays also continues to evolve.
New developments and openings are riding these trends. In Antwerp, three boutique hotels have opened in 2017: Franq Hotel (39 rooms), Pilar Hotel (17 rooms) and Indigo Hotel Antwerp (82 rooms). Buildings with a history, so-called "storytelling hotels", also fit with this trend. Examples include the four-star hotel Rentmeesterij (72 rooms – opened mid-2018), which is part of the Com-
— Het Gouden Hart van Leersum – Leersum – The Netherlands —
manderie of Alden Biesen (part of the Martin's Hotel Group in Bilzen), and The Post 1898 Hotel in Ghent (38 rooms – opened in 2017), which has transformed the upper floors of the old post office.
The investment climate for hotel real estate is favourable. As tourism is developing all over the world and building operators and owners are splitting, the hotel sector is becoming amore important source of investment. In 2017, the investment volume in Europe reached €22 billion (an increase of 16% on a year-over-year basis, according to CBRE). As just two examples in Brussels, the Swedish hotel group Pandox bought the Silken Berlaymont hotel (212 rooms) in the Leopold district and the Bervoets family acquired the Metropôle hotel at Place de Brouckère.
1. Written in Dutch on 21 June 2018, by DTZ Zadelhoff VOF, and reproduced with permission. Translation by Aedifica.
2. Written in French on 1 August 2018 by Deloitte Consulting & Advisory SCRL, and reproduced with permission. Translation by Aedifica.
| (x €1,000) | 30 June 2018 | 31 March 2018 | 31 Dec. 2017 | 30 Sept. 2017 | 30 June 2017 |
|---|---|---|---|---|---|
| Investment properties in fair value | |||||
| Healthcare real estate1 | 1,430,806 | 1,374,270 | 1,348,558 | 1,300,558 | 1,244,461 |
| Apartment buildings | 206,938 | 206,258 | 203,045 | 203,366 | 215,205 |
| Hotels | 67,606 | 79,434 | 79,597 | 80,386 | 68,009 |
| Total of marketable investment properties in fair value | 1,705,350 | 1,659,962 | 1,631,200 | 1,584,309 | 1,527,675 |
| Development projects | 35,183 | 32,823 | 16,482 | 16,055 | 17,175 |
| Total of investments properties in fair value | 1,740,533 | 1,692,785 | 1,647,682 | 1,600,364 | 1,544,849 |
| Contractual rents2 | 96,525 | 93,550 | 92,284 | 90,081 | 86,525 |
| Contractual rents + ERV on empty spaces | 97,464 | 94,596 | 93,399 | 91,330 | 87,614 |
| Valeur locative estimée (ERV)2 | 101,186 | 99,000 | 98,654 | 96,709 | 93,328 |
| Occupancy rate2 of the investment properties (in%) |
|||||
| Total portfolio (excl. furnished apartments) | 99.0% | 98.8% | 98.7% | 98.6% | 98.7% |
| Furnished apartments | 84.1% | 83.3% | 77.0% | 73.9% | 73.5% |
Including assets classified as held for sale*.
See glossary.
None of the buildings represents more than 3% of total consolidated assets.
Overall occupancy rate for the year ended 30 June 2018 is 99%
Aedifica's investment properties are insured for a total value of €1,616 million (including furniture in the furnished apartments, and excluding lands), i.e. €1,340 million for healthcare real estate, €189 million for apartment buildings and €86 million for hotels.
Remaining lease term: 20 years
| Group controlling the legal | |||||
|---|---|---|---|---|---|
| entities in contractual relation | Number | ||||
| Segment Country | with Aedifica | Tenants | of sites | 30/06/2018 | 30/06/2017 |
| Senior housing | 135 | 85% | 83% | ||
| Belgium | 73 | 54% | 57% | ||
| Armonea | 19 | 15% | 17% | ||
| Armonea SA | 8 | 7% | 8% | ||
| Restel Flats SPRL | 1 | 1% | 1% | ||
| LDC De Wimilingen ASBL | 1 | 0% | 0% | ||
| Happy Old People SPRL | 1 | 1% | 1% | ||
| Citadelle Mosane SPRL | 1 | 1% | 1% | ||
| Huize Lieve Moenssens ASBL | 5 | 3% | 4% | ||
| Eyckenborgh ASBL | 2 | 2% | 2% | ||
| Senior Living Group1 | 27 | 18% | 19% | ||
| Ennea Rustoord ASBL | 1 | 0% | 0% | ||
| Residentie Kasteelhof SCS | 1 | 0% | 0% | ||
| Wielant-Futuro SCS | 1 | 1% | 1% | ||
| Home Residence du Plateau SPRL | 1 | 1% | 1% | ||
| Seniorie de Maretak SA | 1 | 1% | 1% | ||
| Senior Living Group SA | 7 | 4% | 4% | ||
| Résidence Au Bon Vieux Temps SA | 1 | 1% | 1% | ||
| Résidence Les Cheveux d'Argent SA | 1 | 0% | 0% | ||
| Helianthus ASBL | 1 | 0% | 1% | ||
| Rustoord 't Hoge ASBL | 1 | 1% | 1% | ||
| Vinkenbosch ASBL | 1 | 1% | 1% | ||
| Residentie Sporenpark SPRL | 1 | 1% | 1% | ||
| FDL Group SCA | 1 | 1% | 1% | ||
| Foyer De Lork ASBL | 6 | 4% | 4% | ||
| Prodinvest SPRL | 1 | 0% | 0% | ||
| Les Jardins de la Mémoire ASBL | 1 | 1% | 1% | ||
| Orpea | 9 | 7% | 8% | ||
| Château Chenois Gestion SPRL | 3 | 2% | 2% | ||
| New Philip SA | 3 | 2% | 2% | ||
| Parc Palace SA | 1 | 1% | 1% | ||
| Progestimmob SA | 1 | 1% | 1% | ||
| Résidence du Golf SA | 1 | 1% | 1% | ||
| Vulpia | 10 | 9% | 10% | ||
| Vulpia Vlaanderen ASBL | 9 | 9% | 9% | ||
| Vulpia Wallonie ASBL | 1 | 1% | 1% | ||
| Time for Quality | 1 | 1% | 1% | ||
| Service Flat Residenties ASBL | 1 | 1% | 1% | ||
| Autres | 7 | 4% | 3% | ||
| Le Château de Tintagel SPRL Résidence Bois de la Pierre SA |
1 1 |
0% 0% |
0% 1% |
||
| Buitenhof ASBL | 1 | 1% | 1% | ||
| Résidence de la Houssière SA | 1 | 1% | 1% | ||
| Heydeveld Woon- en Zorgcentrum ASBL | 1 | 1% | 1% | ||
| WZC Prinsenhof ASBL | 1 | 1% | 1% | ||
| Fipromat SPRL | 1 | 1% | 0% | ||
| Germany | 30 | 18% | 16% | ||
| Armonea | Deutsche Pflege und Wohnstift GmbH | 1 1 |
1% 1% |
0% 0% |
|
| Orpea | 5 | 3% | 4% | ||
| Senioren Wohnpark Weser GmbH | 3 | 2% | 2% | ||
| Bonifatius Seniorendienstr GmbH³ | 1 | 1% | 1% | ||
| Seniorenresidenz Kierspe GmbH3 | 1 | 1% | 1% | ||
| Alloheim2 | 4 | 2% | 3% | ||
| AGO Herkenrath Betriebsgesellschaft für Sozialeinrichtungen | 1 | 1% | 1% | ||
| mbH | |||||
| AGO Dresden Betriebsgesellschaft für Sozialeinrichtungen mbH AGO Weisseritz Betriebsgesellschaft für Sozialeinrichtungen mbH |
1 1 |
1% 0% |
1% 0% |
||
| Senator Senioren- und Pflegeeinrichtungen GmbH | 1 | 1% | 1% | ||
| Residenz Management | 6 | 3% | 2% | ||
| Residenz Management GmbH | 1 | 1% | 1% | ||
| & Seniorenresidenz Kalletal GmbH4 | |||||
| Katholische Hospitalgesellschaft Südwestfalen gGmbH Olpe4 | 2 | 1% | 1% | ||
| Ambulanter Pflegedienst Weser GmbH | 3 | 1% | 0% |
Korian Group.
With AGO.
Sub-tenant of Senioren Wohnpark Weser GmbH.
Sub-tenant of Residenz Management GmbH.
| Group controlling the legal entities in contractual relation |
Number | ||||
|---|---|---|---|---|---|
| Segment Country | with Aedifica | Tenants | of sites | 30/06/2018 | 30/06/2017 |
| Senior housing | |||||
| Volkssolidarität | 1 | 0% | 0% | ||
| DRK Kreisverband Nordfries- | Volkssolidarität Südthüringen e. V | 1 | 0% | 0% | |
| land e. V. | 1 | 1% | 1% | ||
| DRK Pflegedienste Nordfriesland gGmbH | 1 | 1% | 1% | ||
| Vitanas | 5 | 4% | 4% | ||
| Vitanas GmbH & Co. KGaA | 5 | 4% | 4% | ||
| EMVIA Beteiligungs GmbH | 1 | 1% | 1% | ||
| Residenz Zehlendorf Kranken- und Pflegeheim GmbH | 1 | 1% | 1% | ||
| Cosiq | 2 | 1% | 1% | ||
| Cosiq GmbH | 1 | 0% | 0% | ||
| Pflegeteam Odenwald GmbH | 1 | 0% | 0% | ||
| advita Pflegedienst | 1 | 0% | 0% | ||
| Zusammen Zuhause GmbH | 1 | 0% | 0% | ||
| Convivo | 1 | 1% | 0% | ||
| Parkresidenz Pflege & Betreuung GmbH | 1 | 1% | 0% | ||
| Other | 2 | 1% | 1% | ||
| Schloss Bensberg Management GmbH + | 1 | 1% | 1% | ||
| AachenMünchener Lebensversicherung AG | |||||
| Seniorenresidenz Laurentiusplatz GmbH | 1 | 0% | 0% | ||
| The Netherlands | Compartijn | 32 6 |
13% 1% |
10% 0% |
|
| Compartijn Exploitatie BV | 6 | 1% | 0% | ||
| Domus Magnus | 4 | 2% | 2% | ||
| Panta Rhei V BV | 1 | 1% | 1% | ||
| DM Benvenuta BV | 1 | 0% | 0% | ||
| DM Walgaerde BV | 1 | 0% | 0% | ||
| DM Molenenk BV | 1 | 1% | 0% | ||
| Het Gouden Hart | 3 | 1% | 1% | ||
| Het Gouden Hart Driebergen BV | 1 | 0% | 0% | ||
| Het Gouden Hart Kampen BV | 1 | 1% | 1% | ||
| Het Gouden Hart Leersum BV | 1 | 0% | 0% | ||
| Stepping Stones Home & | |||||
| Care | 3 | 1% | 1% | ||
| Poort van Sachsen Weimar BV | 1 | 1% | 1% | ||
| Villa Spes Nostra BV | 1 | 0% | 1% | ||
| Stepping Stones Leusden BV | 1 | 0% | 0% | ||
| Martha Flora | 6 | 2% | 0% | ||
| Martha Flora Lochem BV | 1 | 0% | 0% | ||
| Martha Flora Hilversum BV | 1 | 1% | 0% | ||
| Bronovo Martha Flora BV | 1 | 1% | 0% | ||
| Martha Flora Rotterdam BV | 1 | 0% | 0% | ||
| Martha Flora Bosch en Duin BV | 1 | 0% | 0% | ||
| Martha Flora/Wilgaerden Hoorn BV | 1 | 0% | 0% | ||
| Vitalis | 3 | 4% | 4% | ||
| Stichting Vitalis Residentiële Woonvormen | 3 | 4% | 4% | ||
| Blueprint Group (SAOW) | 2 | 1% | 0% | ||
| Residentie Mariëndaal Facilitair BV | 1 | 1% | 0% | ||
| Zorghuis Smakt Facilitair BV | 1 | 0% | 0% | ||
| Other | 5 | 2% | 1% | ||
| Stichting Oosterlengte + Multi-tenant | 2 | 0% | 1% | ||
| Stichting Zorggroep Noorderboog | 1 | 1% | 1% | ||
| Stichting Leger des Heils Welzijns- en Gezondheidszorg | 1 | 0% | 0% | ||
| September Nijverdal BV | 1 | 0% | 0% | ||
| Hotels | 8 | 4% | 5% | ||
| Belgium | 8 | 4% | 5% | ||
| Martin's Hotels | 2 | 3% | 4% | ||
| Martin's Brugge SA | 1 | 2% | 2% | ||
| Martin's Hotels SA | 1 | 1% | 2% | ||
| Different Hotel Group | 4 | 1% | 1% | ||
| Different Hotels SA | 4 | 1% | 1% | ||
| Senior Living Group2 | 1 | 0% | 0% | ||
| Senior Living Group SA | 1 | 0% | 0% | ||
| Other | 1 | 0% | 0% | ||
| Other tenants | 71 | 11% | 12% | ||
| Belgium | 71 | 11% | 12% | ||
| TOTAL | 214 | 100% | 100% |
| 13% | The Netherlands |
|---|---|
| 17% | Germany |
| 10% | Wallonia |
| 42% | Flanders |
| 18% | Brussels |
| Total surface (m²)¹ |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|
| Senior housing | ||||||
| 1 Château Chenois (B-1410 Waterloo) |
6,354 | 115 | 100.0% | 897,450 | 897,450 | 1,074,000 |
| 2 New Philip (B-1190 Brussels) |
3,914 | 111 | 100.0% | 492,128 | 492,128 | 520,000 |
| 3 Jardins de Provence (B-1070 Brussels) |
2,280 | 72 | 100.0% | 403,986 | 403,986 | 416,000 |
| 4 Bel Air (B-1030 Brussels) |
5,350 | 161 | 100.0% | 734,519 | 734,519 | 855,000 |
| 5 Résidence Grange des Champs (B-1420 Braine-l'Alleud) |
3,396 | 75 | 100.0% | 434,620 | 434,620 | 512,000 |
| 6 Résidence Augustin (B-1190 Brussels) |
4,832 | 94 | 100.0% | 546,518 | 546,518 | 658,000 |
| 7 Ennea (B-9100 Sint-Niklaas) |
1,848 | 34 | 100.0% | 199,947 | 199,947 | 139,400 |
| 8 Kasteelhof (B-9200 Dendermonde) |
3,500 | 81 | 100.0% | 361,632 | 361,632 | 443,070 |
| 9 Wielant (B-8570 Ingooigem) |
4,834 | 104 | 100.0% | 555,408 | 555,408 | 603,120 |
| 10 Résidence Parc Palace (B-1180 Brussels) |
6,719 | 162 | 100.0% | 1,269,657 | 1,269,657 | 1,223,000 |
| 11 Résidence Service (B-1180 Brussels) |
8,716 | 175 | 100.0% | 1,305,933 | 1,305,933 | 1,268,000 |
| 12 Résidence du Golf (B-1070 Brussels) |
6,424 | 194 | 100.0% | 790,266 | 790,266 | 1,034,000 |
| 13 Residentie Boneput (B-3960 Bree) |
2,993 | 78 | 100.0% | 469,002 | 469,002 | 495,140 |
| 14 Résidence Aux Deux Parcs (B-1090 Brussels) |
1,618 | 53 | 100.0% | 256,083 | 256,083 | 322,000 |
| 15 Résidence l'Air du Temps (B-4032 Chênée) |
7,197 | 137 | 100.0% | 899,239 | 899,239 | 1,020,000 |
| 16 Au Bon Vieux Temps (B-1435 Mont-Saint-Guibert) |
7,868 | 104 | 100.0% | 844,826 | 844,826 | 789,000 |
| 17 Op Haanven (B-2431 Veerle-Laakdal) |
6,587 | 111 | 100.0% | 691,114 | 691,114 | 784,000 |
| 18 Résidence Exclusiv (B-1140 Brussels) |
4,253 | 104 | 100.0% | 726,190 | 726,190 | 711,000 |
| 19 Séniorie Mélopée (B-1080 Brussels) |
2,967 | 70 | 100.0% | 502,394 | 502,394 | 489,000 |
| 20 La Boule de Cristal (B-5564 Wanlin) |
1,290 | 36 | 100.0% | 135,560 | 135,560 | 148,000 |
| 21 Les Charmes en Famenne (B-5560 Houyet) |
3,165 | 96 | 100.0% | 305,117 | 305,117 | 408,000 |
1. The surface of apartment buildings has been adapted as of 31 December 2015 in order to be in line with the Code of Measuring Practice (6th edition) published by the Roy- al Institute of Chartered Surveyors (RICS), and is computed as follows: Gross External Area (GEA) + common areas + 50% of terrace surface. It does not include parkings and other underground areas.
See glossary. As reminder, the occupancy rate of the buildings with furnished apartments can not be compared to the occupancy rate calculated on the rest of the portfolio, as the methodology is different. We also note that the occupancy rate of the residential and mixed buildings includes units in renovation and hence temporarily not rentable.
The amounts related to the buildings with furnished apartments correspond to the annualised rental income excl. VAT.
For the buildings with furnished apartments, no estimated rented value (ERV) were added for vacancy. 5. See glossary. 6. Partially presented on the balance sheet among the assets classified as held for sale.
This ERV is not comparable to the contractual rents because (for the buildings with furnished apartments) it does not take into account the fact that the apartments are
furnished. 8. Although still under construction or renovation, these sites already generate limited rental incomes. This explains why they were included in this table and why the number of residential units and/or the estimated rental value are not mentioned.
| Total surface (m²)¹ |
Number of residential units |
% Occupancy rate 2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces 4 |
Estimated rental value (ERV) 5 |
|
|---|---|---|---|---|---|---|
| 22 Seniorerie La Pairelle (B-5100 Wépion) |
6,016 | 118 | 100.0 % |
785,189 | 785,189 | 812,000 |
| 23 Residentie Gaerveld (résidence-services) (B-3500 Hasselt) |
1,504 | 20 | 100.0 % |
174,671 | 174,671 | 172,000 |
| 24 Résidence du Plateau (B-1300 Wavre) |
8,069 | 143 | 100.0 % |
1,308,799 | 1,308,799 | 1,263,000 |
| 25 Seniorie de Maretak (B-1500 Halle) |
5,684 | 122 | 100.0 % |
545,015 | 545,015 | 797,000 |
| 26 De Edelweis (B-3130 Begijnendijk) |
6,914 | 122 | 100.0 % |
779,120 | 779,120 | 943,000 |
| 27 Bois de la Pierre (B-1300 Wavre) |
2,272 | 65 | 100.0 % |
451,730 | 451,730 | 476,000 |
| 28 Buitenhof (B-2930 Brasschaat) |
4,386 | 80 | 100.0 % |
562,924 | 562,924 | 739,000 |
| 29 Klein Veldeken (B-1730 Asse) |
5,824 | 58 | 100.0 % |
529,335 | 529,335 | 625,000 |
| 30 Koning Albert I (B-1700 Dilbeek) |
7,775 | 110 | 100.0 % |
948,242 | 948,242 | 977,000 |
| 31 Eyckenborch (B-1755 Gooik) |
8,771 | 141 | 100.0 % |
1,131,403 | 1,131,403 | 990,000 |
| 32 Rietdijk (B-1800 Vilvoorde) |
2,155 | 59 | 100.0 % |
346,419 | 346,419 | 407,000 |
| 33 Marie-Louise (B-1780 Wemmel) |
1,959 | 30 | 100.0 % |
380,836 | 380,836 | 244,500 |
| 34 Gaerveld (rest home) (B-3500 Hasselt) |
6,994 | 115 | 100.0 % |
815,020 | 815,020 | 862,500 |
| 35 Larenshof (B-9270 Laarne) |
6,988 | 117 | 100.0 % |
1,047,912 | 1,047,912 | 1,028,000 |
| 36 Ter Venne (B-9830 Sint-Martens-Latem) |
6,634 | 102 | 100.0 % |
1,011,156 | 1,011,156 | 1,050,600 |
| 37 Pont d'Amour (B-5500 Dinant) |
8,984 | 150 | 100.0 % |
1,010,896 | 1,010,896 | 1,022,000 |
| 38 Résidence Les Cheveux d'Argent (B-4845 Sart-lez-Spa) |
4,996 | 99 | 100.0 % |
421,465 | 421,465 | 555,000 |
| 39 't Hoge (B-8500 Kortrijk) |
4,632 | 81 | 100.0 % |
569,425 | 569,425 | 650,000 |
| 40 Helianthus (B-9090 Melle) |
4,799 | 67 | 100.0 % |
482,017 | 482,017 | 506,000 |
| 41 Hestia (B-1780 Wemmel) |
12,682 | 222 | 100.0 % |
1,395,593 | 1,395,593 | 1,731,600 |
| 42 Plantijn (B-2950 Kapellen) |
7,310 | 110 | 100.0 % |
701,649 | 701,649 | 765,000 |
| 43 Salve (B-2930 Brasschaat) |
6,730 | 117 | 100.0 % |
1,025,089 | 1,025,089 | 1,058,000 |
| 44 SZ AGO Herkenrath (D-51429 Bergisch Gladbach) |
4,000 | 80 | 100.0 % |
577,423 | 577,423 | 613,273 |
| 45 SZ AGO Dresden (D-01159 Dresden) |
5,098 | 116 | 100.0 % |
583,234 | 583,234 | 670,950 |
| 46 De Stichel (B-1800 Vilvoorde) |
6,257 | 116 | 100.0 % |
678,781 | 678,781 | 741,175 |
| 47 Huize Lieve Moenssens (B-3650 Dilsen-Stokkem) |
4,301 | 68 | 100.0 % |
340,031 | 340,031 | 348,680 |
| 48 SZ AGO Kreischa (D-01731 Kreischa) |
3,670 | 84 | 100.0 % |
416,516 | 416,516 | 414,896 |
| 49 Bonn (D-53129 Bonn) |
5,927 | 130 | 100.0 % |
740,000 | 740,000 | 711,240 |
| 50 Goldene Au (D-96515 Sonneberg) |
4,141 | 83 | 100.0 % |
402,240 | 402,240 | 397,531 |
| 51 Residentie 't Spelthof (B-3211 Binkom) |
4,076 | 100 | 100.0 % |
786,073 | 786,073 | 707,000 |
| 52 Residentie Twee Poorten (B-3300 Tienen) |
8,413 | 129 | 100.0 % |
1,000,430 | 1,000,430 | 1,064,250 |
| 53 Residentie Demerhof (B-3200 Aarschot) |
10,657 | 120 | 100.0 % |
962,728 | 962,728 | 1,020,000 |
| 54 De Notelaar (B-2250 Olen) |
8,651 | 94 | 100.0 % |
995,218 | 995,218 | 1,117,000 |
| Total surface (m²)¹ |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|
| 55 Overbeke (B-9230 Wetteren) |
6,917 | 113 | 100.0% | 816,447 | 816,447 | 870,100 |
| 56 Halmolen (B-2980 Halle-Zoersel) |
9,200 | 140 | 100.0% | 1,051,322 | 1,051,322 | 1,150,000 |
| 57 Seniorenresidenz Mathilde (D-32130 Enger) |
3,448 | 75 | 100.0% | 558,750 | 558,750 | 579,264 |
| 58 Die Rose im Kalletal (D-32689 Kalletal) |
4,027 | 96 | 100.0% | 664,396 | 664,396 | 685,892 |
| 59 Seniorenresidenz Klosterbauerschaft (D-32278 Kirchlengern) |
3,497 | 80 | 100.0% | 594,657 | 594,657 | 608,478 |
| 60 Senioreneinrichtung Haus Matthäus (D-57462 Olpe-Rüblinghausen) |
2,391 | 50 | 100.0% | 357,259 | 357,259 | 365,823 |
| 61 Bonifatius Seniorenzentrum (D-53359 Rheinbach) |
3,967 | 80 | 100.0% | 603,091 | 603,091 | 606,951 |
| 62 Senioreneinrichtung Haus Elisabeth (D-57482 Wenden-Rothemühle) |
3,380 | 80 | 100.0% | 571,614 | 571,614 | 577,980 |
| 63 Seniorenresidenz Am Stübchenbach (D-38667 Bad Harzburg) |
5,874 | 130 | 100.0% | 788,648 | 788,648 | 828,234 |
| 64 Seniorenresidenz Kierspe (D-58566 Kierspe) |
3,721 | 79 | 100.0% | 552,404 | 552,404 | 546,987 |
| 65 La Ferme Blanche (B-4350 Remicourt) |
4,240 | 90 | 100.0% | 557,275 | 557,275 | 600,750 |
| 66 Villa Temporis (B-3500 Hasselt) |
8,354 | 103 | 100.0% | 787,729 | 787,729 | 875,000 |
| 67 Service-Residenz Schloss.Bensberg (D-51429 Bergisch Gladbach) |
8,215 | 87 | 100.0% | 974,852 | 974,852 | 1,159,496 |
| 68 Residentie Sporenpark (B-3582 Beringen) |
9,261 | 127 | 100.0% | 1,092,348 | 1,092,348 | 1,121,000 |
| 69 Résidence de la Houssière (B-7090 Braine-le-Comte) |
4,484 | 94 | 100.0% | 592,276 | 592,276 | 535,800 |
| 70 Senior Flandria (B-8310 Brugge) |
7,501 | 108 | 100.0% | 634,287 | 634,287 | 752,000 |
| 71 Vinkenbosch (B-3510 Hasselt) |
6,180 | 80 | 100.0% | 840,538 | 840,538 | 817,000 |
| 72 Heydeveld (B-1745 Opwijk) |
3,414 | 75 | 100.0% | 517,968 | 517,968 | 502,500 |
| 73 Prinsenhof (B-3582 Koersel) |
4,526 | 91 | 100.0% | 578,506 | 578,506 | 564,000 |
| 74 Käthe-Bernhardt-Haus (D-25813 Husum) |
4,088 | 83 | 100.0% | 522,000 | 522,000 | 490,560 |
| 75 Holland (NL-3743 HE Baarn) |
2,897 | 34 | 100.0% | 832,490 | 832,490 | 895,000 |
| 76 Benvenuta (NL-1217 BR Hilversum) |
924 | 10 | 100.0% | 215,831 | 215,831 | 235,000 |
| 77 Residentie Poortvelden6 (B-3200 Aarschot) |
6,924 | 82 | 100.0% | 697,468 | 697,468 | 649,465 |
| 78 Leopoldspark (B-3970 Leopoldsburg) |
10,614 | 150 | 100.0% | 1,216,539 | 1,216,539 | 1,240,220 |
| 79 Saksen Weimar (NL-6822 Arnhem) |
2,291 | 42 | 100.0% | 520,059 | 520,059 | 590,000 |
| 80 Martha Flora Lochem (NL-7241 Lochem) |
1,012 | 13 | 100.0% | 164,846 | 164,846 | 180,000 |
| 81 Oosterzonne (B-3690 Zutendaal) |
4,948 | 82 | 100.0% | 726,614 | 726,614 | 646,800 |
| 82 De Witte Bergen (B-2460 Lichtaart) |
8,262 | 119 | 100.0% | 1,011,599 | 1,011,599 | 955,150 |
| 83 Seniorenhof (B-3700 Tongeren) |
3,116 | 52 | 100.0% | 317,796 | 317,796 | 237,900 |
| 84 Beerzelhof (B-2580 Beerzel) |
5,025 | 61 | 100.0% | 328,093 | 328,093 | 488,000 |
The surface of apartment buildings has been adapted as of 31 December 2015 in order to be in line with the Code of Measuring Practice (6th edition) published by the Roy- al Institute of Chartered Surveyors (RICS), and is computed as follows: Gross External Area (GEA) + common areas + 50% of terrace surface. It does not include parkings and other underground areas.
See glossary. As reminder, the occupancy rate of the buildings with furnished apartments can not be compared to the occupancy rate calculated on the rest of the portfolio, as the methodology is different. We also note that the occupancy rate of the residential and mixed buildings includes units in renovation and hence temporarily not rentable.
The amounts related to the buildings with furnished apartments correspond to the annualised rental income excl. VAT.
For the buildings with furnished apartments, no estimated rented value (ERV) were added for vacancy. 5. See glossary.
Partially presented on the balance sheet among the assets classified as held for sale.
This ERV is not comparable to the contractual rents because (for the buildings with furnished apartments) it does not take into account the fact that the apartments are furnished.
Although still under construction or renovation, these sites already generate limited rental incomes. This explains why they were included in this table and why the number of residential units and/or the estimated rental value are not mentioned.
| Total surface (m²)¹ |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|
| 85 Uilenspiegel (B-3600 Genk) |
6,863 | 97 | 100.0% | 733,977 | 733,977 | 688,200 |
| 86 Coham (B-3945 Ham) |
6,956 | 120 | 100.0% | 884,231 | 884,231 | 842,000 |
| 87 Sorgvliet (B-3350 Linter) |
4,517 | 83 | 100.0% | 543,576 | 543,576 | 508,620 |
| 88 Ezeldijk (B-3290 Diest) |
7,101 | 105 | 100.0% | 721,614 | 721,614 | 841,575 |
| 89 Am Kloster (D-38820 Halberstadt) |
5,895 | 136 | 100.0% | 732,554 | 732,554 | 689,764 |
| 90 Rosenpark (D-91486 Uehlfeld) |
4,934 | 79 | 100.0% | 457,860 | 457,860 | 370,021 |
| 91 Patricia (D-90429 Nuremberg) |
7,556 | 174 | 100.0% | 1,023,154 | 1,023,154 | 1,156,070 |
| 92 St. Anna (D-91315 Höchstadt) |
7,176 | 161 | 100.0% | 910,066 | 910,066 | 775,004 |
| 93 Frohnau (D-13465 Berlin) |
4,101 | 107 | 100.0% | 575,534 | 575,534 | 516,745 |
| 94 Parc Imstenrade (NL-6418 PP Heerlen) |
57,181 | 263 | 100.0% | 2,025,173 | 2,025,173 | 2,545,000 |
| 95 Genderstate (NL-5616 EE Eindhoven) |
8,813 | 44 | 100.0% | 500,043 | 500,043 | 580,000 |
| 96 Petruspark (NL-5623 AP Eindhoven) |
24,987 | 139 | 100.0% | 1,300,111 | 1,300,111 | 1,540,000 |
| 97 Residentie Den Boomgaard (B-3380 Glabbeek) |
6,274 | 90 | 100.0% | 688,135 | 688,135 | 723,150 |
| 98 Les Jardins de la Mémoire (B-1070 Anderlecht) |
6,852 | 110 | 100.0% | 687,257 | 687,257 | 747,999 |
| 99 Residenz Zehlendorf (D-14165 Berlin) |
4,540 | 180 | 100.0% | 600,000 | 600,000 | 598,920 |
| 100 Spes Nostra (NL-3451 EZ Vleuten) |
2,454 | 30 | 100.0% | 450,849 | 450,849 | 495,000 |
| 101 Het Dokhuis (NL-9665 JA Oude Pekela) |
4,380 | 32 | 100.0% | 396,303 | 396,303 | 480,000 |
| 102 Villa Walgaerde (NL-1217 BR Hilversum) |
1,440 | 15 | 100.0% | 306,846 | 306,846 | 345,000 |
| 103 Huize Dennehof (NL-3971 PA Driebergen-Rijsenburg) |
353 | 9 | 100.0% | 77,963 | 77,963 | 85,000 |
| 104 Het Gouden Hart (NL-8261 JX Kampen) |
3,610 | 37 | 100.0% | 500,552 | 500,552 | 560,000 |
| 105 LTS Winschoten8 (NL-9671 EM Winschoten) |
4,560 | 0 | 100.0% | 72,000 | 72,000 | 0 |
| 106 Martha Flora Hilversum (NL-1217 KD Hilversum) |
4,055 | 31 | 100.0% | 556,320 | 556,320 | 615,000 |
| 107 Het Gouden Hart van Leersum (NL-3956 CR Leersum) |
2,280 | 26 | 100.0% | 405,125 | 405,125 | 440,000 |
| 108 Residentie Blaret (B-1640 Rhode-Saint-Genèse) |
9,578 | 107 | 100.0% | 1,089,577 | 1,089,577 | 1,057,500 |
| 109 Oeverlanden (NL-7944 BB Meppel) |
13,555 | 140 | 100.0% | 803,000 | 803,000 | 1,300,000 |
| 110 Seniorenresidenz Laurentiusplatz (D-42103 Wuppertal-Elberfeld) |
5,506 | 79 | 100.0% | 356,170 | 356,170 | 363,661 |
| 111 Seniorenheim am Dom (D-38820 Halberstadt) |
4,310 | 126 | 100.0% | 638,136 | 638,136 | 724,060 |
| 112 Huize de Compagnie8 (NL-6711 JC Ede) |
3,000 | 0 | 100.0% | 76,388 | 76,388 | 0 |
| 113 Huize Hoog Kerckebosch (NL-3708 DN Zeist) |
2,934 | 32 | 100.0% | 527,203 | 527,203 | 575,000 |
| 114 Molenenk (NL-7414 GS Deventer) |
2,811 | 40 | 100.0% | 693,557 | 693,557 | 760,000 |
| 115 De Duinpieper (B-8400 Ostend) |
4,827 | 104 | 100.0% | 667,400 | 667,400 | 738,880 |
| 116 Seniorenresidenz an den Kienfichten (D-06846 Dessau-Rosslau) |
4,332 | 88 | 100.0% | 445,480 | 445,480 | 415,879 |
| 117 Martha Flora Den Haag (NL-2597 JN The Hague) |
2,259 | 28 | 100.0% | 550,000 | 550,000 | 595,000 |
| Total surface (m²)¹ |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|
| 118 Huize Ter Beegden8 (NL-6099 AG Beegden) |
1,983 | 0 | 100.0% | 12,638 | 12,638 | 0 |
| 119 Martha Flora Rotterdam8 (NL-3055 KJ Rotterdam) |
2,441 | 0 | 100.0% | 59,130 | 59,130 | 0 |
| 120 Martha Flora Bosch en Duin8 (NL-3735 MR Bosch en Duin) |
2,241 | 0 | 100.0% | 46,737 | 46,737 | 0 |
| 121 Bremerhaven I (D-27570 Bremerhaven) |
6,077 | 85 | 100.0% | 911,415 | 911,415 | 911,490 |
| 122 Bremerhaven II (D-27570 Bremerhaven) |
2,129 | 42 | 100.0% | 297,129 | 297,129 | 293,806 |
| 123 Cuxhaven (D-27472 Cuxhaven) |
810 | 9 | 100.0% | 103,684 | 103,684 | 102,127 |
| 124 De Merenhoef8 (NL-3601 AC Maarssen) |
6,014 | 75 | 100.0% | 139,080 | 139,080 | 0 |
| 125 Huize Roosdael8 (NL-4701 CL Roosendaal) |
2,950 | 0 | 100.0% | 41,250 | 41,250 | 0 |
| 126 Stepping Stones Leusden8 (NL-3834 BC Leusden) |
1,655 | 0 | 100.0% | 43,873 | 43,873 | 0 |
| 127 Martha Flora Hoorn (NL-1624 AC Hoorn) |
780 | 12 | 100.0% | 80,000 | 80,000 | 95,000 |
| 128 September Nijverdal8 (NL-7442 AC Nijverdal) |
1,466 | 0 | 100.0% | 62,775 | 62,775 | 0 |
| 129 Huize Groot Waardijn8 (NL-5025 VB Tilburg) |
1,918 | 0 | 100.0% | 45,000 | 45,000 | 0 |
| 130 Huize Eresloo8 (NL-5525 KX Duizel) |
2,350 | 0 | 100.0% | 42,000 | 42,000 | 0 |
| 131 advita Haus Zur Alten Berufsschule (D-09405 Zschopau) |
6,422 | 91 | 100.0% | 458,421 | 458,421 | 462,384 |
| 132 Pflegeteam Odenwald (D-69483 Wald-Michelbach) |
1,202 | 32 | 100.0% | 215,328 | 215,328 | 223,563 |
| 133 Park Residenz (D-24534 Neumünster) |
6,113 | 79 | 100.0% | 640,000 | 640,000 | 696,882 |
| 134 Zorghuis Smakt (NL-5817 AD Smakt) |
2,111 | 30 | 100.0% | 200,000 | 200,000 | 230,000 |
| 135 Zorgresidentie Mariëndaal (NL-5363 TC Velp) |
8,728 | 75 | 100.0% | 800,000 | 800,000 | 910,000 |
| Total Healthcare real estate in Belgium |
426,472 | 7,425 | 100.0% | 51,791,325 | 51,791,325 | 54,737,644 |
| Total Healthcare real estate in Germany |
136,547 | 2,801 | 100.0% | 17,272,013 | 17,272,013 | 17,557,929 |
| Total Healthcare real estate in The Netherlands |
180,433 | 1,157 | 100.0% | 12,547,142 | 12,547,142 | 14,050,000 |
| Total of the segment "Healthcare real estate" |
743,453 | 11,383 | 100.0% | 81,610,480 | 81,610,480 | 86,345,573 |
The surface of apartment buildings has been adapted as of 31 December 2015 in order to be in line with the Code of Measuring Practice (6th edition) published by the Roy- al Institute of Chartered Surveyors (RICS), and is computed as follows: Gross External Area (GEA) + common areas + 50% of terrace surface. It does not include parkings and other underground areas.
See glossary. As reminder, the occupancy rate of the buildings with furnished apartments can not be compared to the occupancy rate calculated on the rest of the portfolio, as the methodology is different. We also note that the occupancy rate of the residential and mixed buildings includes units in renovation and hence temporarily not rentable.
The amounts related to the buildings with furnished apartments correspond to the annualised rental income excl. VAT.
For the buildings with furnished apartments, no estimated rented value (ERV) were added for vacancy. 5. See glossary.
Partially presented on the balance sheet among the assets classified as held for sale.
This ERV is not comparable to the contractual rents because (for the buildings with furnished apartments) it does not take into account the fact that the apartments are furnished.
Although still under construction or renovation, these sites already generate limited rental incomes. This explains why they were included in this table and why the number of residential units and/or the estimated rental value are not mentioned.
| Total surface (m²)¹ |
Number of residential units |
% Occupancy rate 2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces 4 |
Estimated rental value (ERV) 5 |
|
|---|---|---|---|---|---|---|
| Apartment buildings | ||||||
| 1 Sablon (B-1000 Brussels) |
5,546 | 30 | 80.6 % |
737,721 | 915,607 | 905,091 |
| 2 Complexe Laeken - Pont Neuf (B-1000 Brussels) |
7,130 | 42 | 82.3 % |
569,677 | 692,586 | 711,494 |
| 3 Le Bon 24-28 (B-1000 Brussels) |
2,159 | 15 | 91.3 % |
172,686 | 189,162 | 217,693 |
| 4 Lombard 32 (B-1000 Brussels) |
1,622 | 13 | 100.0 % |
227,062 | 227,062 | 221,548 |
| 5 Complexe Louise 331-333 (B-1050 Brussels) |
5,706 | 8 | 90.6 % |
597,249 | 659,161 | 638,633 |
| 6 Place du Samedi 6-10 (B-1000 Brussels) |
4,543 | 24 | 92.2 % |
303,428 | 329,183 | 379,430 |
| 7 Bataves 71 (B-1040 Brussels) |
653 | 3 | 82.1 % |
65,653 | 79,924 | 76,506 |
| 8 Tervueren 103 (B-1040 Brussels) |
1,202 | 6 | 92.9 % |
123,017 | 132,354 | 130,048 |
| 9 Louis Hap 128 (B-1040 Brussels) |
969 | 7 | 97.3 % |
87,890 | 90,290 | 89,552 |
| 10 Rue Haute (B-1000 Brussels) |
2,600 | 20 | 100.0 % |
261,493 | 261,493 | 274,687 |
| 11 Résidence Palace (B-1040 Brussels) |
6,077 | 57 | 78.1 % |
491,095 | 628,937 | 638,328 |
| 12 Churchill 157 (B-1180 Brussels) |
2,440 | 22 | 90.4 % |
247,581 | 273,843 | 293,537 |
| 13 Auderghem 237-239-241-266-272 (B-1040 Brussels) |
2,044 | 22 | 83.2 % |
169,672 | 203,823 | 206,797 |
| 14 Edison (B-5000 Namur) |
1,897 | 7 | 82.4 % |
101,012 | 122,636 | 133,878 |
| 15 Verlaine/Rimbaud/Baudelaire (B-5000 Namur) |
3,671 | 21 | 73.5 % |
233,371 | 317,422 | 285,110 |
| 16 Ionesco (B-5100 Jambes) |
1,148 | 10 | 93.4 % |
90,511 | 96,911 | 103,604 |
| 17 Musset (B-5000 Namur) |
659 | 6 | 84.4 % |
43,312 | 51,328 | 56,227 |
| 18 Giono & Hugo (B-5100 Jambes) |
1,718 | 15 | 87.8 % |
123,702 | 140,902 | 145,848 |
| 19 Antares (B-5100 Jambes) |
476 | 7 | 100.0 % |
44,462 | 44,462 | 45,177 |
| 20 Résidence Gauguin et Manet (B-6700 Arlon) |
3,496 | 35 | 94.7 % |
301,014 | 317,766 | 324,524 |
| 21 Résidence de Gerlache (B-1030 Brussels) |
7,406 | 75 | 90.5 % |
653,288 | 722,195 | 826,939 |
| 22 Ensemble Souveraine (B-1050 Brussels) |
13,880 | 116 | 92.1 % |
1,963,681 | 1,963,681 | 1,508,838 7 |
| 23 Louise 130 (B-1050 Brussels) |
944 | 9 | 88.2 % |
204,647 | 204,647 | 139,025 7 |
| 24 Louise 135 (+ 2 parkings Louise 137) (B-1050 Brussels) |
2,542 | 31 | 84.9 % |
487,648 | 487,648 | 346,277 7 |
| 25 Louise 270 (B-1050 Brussels) |
1,205 | 14 | 78.0 % |
222,843 | 222,843 | 161,018 7 |
| 26 Vallée 48 (B-1000 Brussels) |
653 | 6 | 93.9 % |
115,832 | 115,832 | 81,455 7 |
| 27 Livourne 16-18 (+ 24 parkings Livourne 7-11) (B-1000 Brussels) |
1,982 | 16 | 86.6 % |
336,804 | 336,804 | 243,790 7 |
| 28 Freesias (B-1030 Brussels) |
2,777 | 38 | 73.6 % |
376,204 | 376,204 | 361,775 7 |
| Total surface (m²)¹ |
Number of residential units |
% Occupancy rate2 |
Contractual rents³ |
Contractual rents + ERV on empty spaces4 |
Estimated rental value (ERV)5 |
|
|---|---|---|---|---|---|---|
| 29 Héliotropes (B-1030 Brussels) |
1,364 | 25 | 53.6% | 126,626 | 126,626 | 190,0387 |
| 30 Livourne 20-24 (B-1050 Brussels) |
1,407 | 15 | 85.5% | 269,955 | 269,955 | 166,3277 |
| 31 Livourne 14 (B-1050 Brussels) |
275 | 3 | 86.8% | 47,502 | 47,502 | 32,8927 |
| 32 Résidence Chamaris (B-1000 Brussels) |
2,328 | 23 | 89.9% | 452,682 | 452,682 | 330,7487 |
| 33 Stephanie's Corner (B-1060 Brussels) |
3,472 | 27 | 83.2% | 432,239 | 519,523 | 532,164 |
| Total of the segment "Apartment buildings" |
95,991 | 768 | 85.3% | 10,681,559 | 11,620,997 | 10,798,997 |
| Hotels | |||||||
|---|---|---|---|---|---|---|---|
| (B-8000 Brugge) | 1 Hotel Martin's Brugge | 11,369 | 0 | 100.0% | 1,505,510 | 1,505,510 | 1,566,130 |
| 2 Martin's Klooster (B-3000 Leuven) |
6,935 | 0 | 100.0% | 1,373,143 | 1,373,143 | 1,081,500 | |
| 3 Carbon (B-3600 Genk) |
5,715 | 0 | 100.0% | 437,322 | 437,322 | 468,000 | |
| 4 Eburon | (B-3700 Tongeren) | 4,016 | 0 | 100.0% | 314,813 | 314,813 | 330,200 |
| 5 Ecu (B-3600 Genk) |
1,960 | 0 | 100.0% | 188,778 | 188,778 | 255,000 | |
| 6 Eurotel | (B-3620 Lanaken) | 4,779 | 0 | 100.0% | 315,716 | 315,716 | 241,500 |
| (B-1300 Wavre) | 7 Villa Bois de la Pierre | 320 | 4 | 100.0% | 31,267 | 31,267 | 33,685 |
| 8 Duysburgh | (B-1090 Brussels) | 470 | 0 | 100.0% | 66,397 | 66,397 | 65,625 |
| "Hotels" | Total of the segment | 35,564 | 4 | 100.0% | 4,232,945 | 4,232,945 | 4,041,640 |
| Total marketable investment properties |
875,007 | 12,155 | 96,524,985 | 97,464,422 | 101,186,210 |
The surface of apartment buildings has been adapted as of 31 December 2015 in order to be in line with the Code of Measuring Practice (6th edition) published by the Roy- al Institute of Chartered Surveyors (RICS), and is computed as follows: Gross External Area (GEA) + common areas + 50% of terrace surface. It does not include parkings and other underground areas.
See glossary. As reminder, the occupancy rate of the buildings with furnished apartments can not be compared to the occupancy rate calculated on the rest of the portfolio, as the methodology is different. We also note that the occupancy rate of the residential and mixed buildings includes units in renovation and hence temporarily not rentable.
The amounts related to the buildings with furnished apartments correspond to the annualised rental income excl. VAT.
For the buildings with furnished apartments, no estimated rented value (ERV) were added for vacancy. 5. See glossary.
Partially presented on the balance sheet among the assets classified as held for sale.
This ERV is not comparable to the contractual rents because (for the buildings with furnished apartments) it does not take into account the fact that the apartments are furnished.
Although still under construction or renovation, these sites already generate limited rental incomes. This explains why they were included in this table and why the number of residential units and/or the estimated rental value are not mentioned.
| Projects and renovations | Adresse | Esti- mated inv. |
Inv. as of 30 June 2018 |
Future inv. |
Date of completion |
Comments |
|---|---|---|---|---|---|---|
| I. Projects in progress | ||||||
| Heydeveld | Opwijk (BE) | 4 | 3 | 0 | 2018/2019 | Extension of a rest home |
| Huize Lieve Moenssens1 | Dilsen-Stokkem (BE) | 4 | 3 | 1 | 2018/2019 | Extension and renovation of a rest home |
| Martha Flora Bosch en Duin1 | Bosch en Duin (NL) | 5 | 3 | 2 | 2018/2019 | Construction of a care residence |
| Huize Ter Beegden1 | Beegden (NL) | 4 | 2 | 3 | 2018/2019 | Construction of a care residence |
| Huize de Compagnie1 | Ede (NL) | 7 | 4 | 3 | 2018/2019 | Construction of a care residence |
| September Nijverdal1 | Nijverdal (NL) | 3 | 1 | 1 | 2018/2019 | Construction of a care residence |
| Huize Roosdael1 | Roosendaal (NL) | 5 | 3 | 3 | 2018/2019 | Construction of a care residence |
| Seniorenresidenz Laurentiusplatz |
Wuppertal (DE) | 2 | 0 | 2 | 2018/2019 | Renovation of a rest home |
| De Stichel I & II | Vilvoorde (BE) | 4 | 2 | 1 | 2018/2019 | Extension of a rest home |
| Plantijn II | Kapellen (BE) | 4 | 1 | 3 | 2018/2019 | Extension and renovation of a rest home |
| LTS Winschoten1 | Winschoten (NL) | 11 | 6 | 5 | 2018/2019 | Construction of a care residence |
| Martha Flora Rotterdam1 | Rotterdam (NL) | 6 | 1 | 5 | 2018/2019 | Construction of a care residence |
| Vinkenbosch II | Hasselt (BE) | 2 | 0 | 2 | 2018/2019 | Renovation of a rest home |
| Huize Groot Waardijn1 | Tilburg (NL) | 5 | 1 | 4 | 2018/2019 | Construction of a care residence |
| Plantijn III | Kapellen (BE) | 1 | 0 | 1 | 2018/2019 | Extension and renovation of a rest home |
| Huize Eresloo1 | Eersel (NL) | 5 | 1 | 5 | 2018/2019 | Construction of a care residence |
| Bonn | Bonn (DE) | 1 | 0 | 1 | 2019/2020 | Renovation of a rest home |
| De Merenhoef | Maarssen (NL) | 7 | 0 | 7 | 2019/2020 | Extension and renovation of a rest home |
| De Duinpieper | Ostend (BE) | 2 | 0 | 2 | 2019/2020 | Extension and renovation of a rest home |
| 't Hoge III | Kortrijk (BE) | 2 | 0 | 2 | 2019/2020 | Extension of a rest home |
| Kasteelhof | Dendermonde (BE) | 3 | 0 | 3 | 2019/2020 | Extension of a rest home |
| Leusden1 | Leusden (NL) | 3 | 1 | 2 | 2019/2020 | Construction of a care residence |
| Frohnau | Berlin (DE) | 1 | 0 | 1 | 2019/2020 | Renovation of a rest home |
| Residenz Zehlendorf | Berlin (DE) | 5 | 2 | 3 | 2019/2020 | Renovation of a rest home |
| Résidence Aux Deux Parcs | Jette (BE) | 3 | 0 | 3 | 2019/2020 | Extension of a rest home |
| Uilenspiegel | Genk (BE) | 2 | 0 | 2 | 2019/2020 | Extension of a rest home |
| Sorgvliet | Linter (BE) | 5 | 0 | 5 | 2019/2020 | Extension of a rest home |
| Projects and renovations | Adresse | Esti mated inv. |
Inv. as of 30 June 2018 |
Future inv. |
Date of completion |
Comments |
|---|---|---|---|---|---|---|
| II. Projects subject to outstanding conditions | ||||||
| - | - | - | - | - | - | - |
| III. Land reserves | ||||||
| Terrain Bois de la Pierre | Wavre (BE) | 2 | 2 | 0 | - | Réserve foncière |
| IV. Acquisitions subject to outstanding conditions | ||||||
| Azurit Seniorenresidenz Sonneberg |
Sonneberg (DE) | 9 | 0 | 9 | 2018/2019 | Acquisition of a rest home |
| Azurit Seniorenresidenz Cordula I |
Rothenberg (DE) | 4 | 0 | 4 | 2018/2019 | Acquisition of a rest home |
| Azurit Seniorenresidenz Cordula II |
Rothenberg (DE) | 2 | 0 | 2 | 2018/2019 | Acquisition of a rest home |
| Hansa Pflege- und Betreuungszentrum Dornum |
Dornum (DE) | 7 | 0 | 7 | 2018/2019 | Acquisition of a rest home |
| SARA Seniorenresidenz | Bitterfeld-Wolfen (DE) | 10 | 0 | 10 | 2018/2019 | Acquisition of a rest home |
| Mechelen | Mechelen (BE) | 15 | 0 | 15 | 2019/2020 | Acquisition of a new rest home |
| Rendant (portfolio) | Leeuwarden (NL)/ Heerenveen (NL) |
40 | 0 | 40 | 2019/2020 | Construction of two senior housing sites |
| Azurit Weimar | Weimar (DE) | 16 | 0 | 16 | 2019/2020 | Acquisition of a new rest home |
| Specht Gruppe (phase I) | Germany | 79 | 0 | 79 | 2019/2020 | Construction of care campuses |
| Specht Gruppe (phase II) | Germany | 101 | 0 | 101 | 2020/2021 | Construction of care campuses |
| Specht Gruppe (phase III) | Germany | 65 | 0 | 65 | 2021/2022 | Construction of care campuses |
| Total | 459 | 37 | 422 | |||
| Changes in fair value | - | -3 | - | |||
| Roundings | - | 2 | - | |||
| On balance sheet | 35 |
Of these projects, 100% are pre-let. It is expected that the total investment budget as of 30 June 2018 (€459 million) will be paid in cash. €23 million need to be added to the total investment budget due to the acquisitions announced on 12 July (€19 million) and 19 July (€4 million) (see section 2.2.1 of the consolidated Board of Director's Report).
Operator: an entity of the Orpea group (30-year long lease).
5 - Résidence Grange des Champs
Operator: Seniorenresidenz Kierspe (25-year long lease).
65 - La Ferme Blanche - Rue Modeste Rigo 10 -
Operator: an entity of the Vulpia group (27-year long lease).
Compagnieplaats 22 6822 Arnhem - The Netherlands
The site will be entirely redeveloped and delivered turnkey to Aedifica. More details are provided in the table in section 4.2 of the Property Report.
The site will be entirely redeveloped and delivered turnkey to Aedifica. More details are provided in the table in section 4.2 of the Property Report.
The site will be entirely redeveloped and delivered turnkey to Aedifica. More details are provided in the table in section 4.2 of the Property Report.
The site will be entirely redeveloped and delivered turnkey to Aedifica. More details are provided in the table in section 4.2 of the Property Report.
The site will be entirely redeveloped and delivered turnkey to Aedifica. More details are provided in the table in section 4.2 of the Property Report.
Schulstrasse 2, Moritz-Nietzel-Strasse 12 09405 Zschopau – Germany
De Schiervelstraat 10 - 3700 Tongeren
Year of construction / renovation: 2008
The Company is structured in four departments, as shown in the organisational chart below. Each component of the organisational chart is described in the following paragraphs.
The daily management of Aedifica's activity is led and coordinated by the Management Committee, supervised by the CEO.
The daily management of Aedifica's real estate portfolio in Belgium, Germany and The Netherlands is supervised by the COO. The Operations department, to which approx. 40 people are assigned, represents most of the Group's staff. The COO is assisted by a Senior Valuation & Asset Manager (who enhances the dialogue between the Group and the independent valuation experts that value Aedifica's real estate) and a Business Control Manager (who manages and controls the different teams within the Operations department).
Aedifica's daily activity in Belgium mainly involves managing the Group's healthcare sites (senior housing) and apartment buildings, and monitoring various projects within the real estate portfolio. Aedifica has team of 4 people managing its Belgian healthcare sites under supervision of the Senior Portfolio & Project Manager. For this part of its real estate portfolio, the Group has established long-term contracts (mainly in the form of long leases) with specialised and professional operators who, in turn, assume responsibility for building maintenance (triple net contracts). Thus, Aedifica is not responsible for the daily management and maintenance of these buildings. However, it monitors overall quality via ad hoc visits (in particular as part of periodic portfolio evaluations and monitoring of extension and renovation projects in progress). In addition to monitoring its real estate, the Company aims to both enhance and improve its sites through extensions and renovations, and to develop new projects in partnership with its tenants/operators. These projects, which are also being managed by the team under supervision of the Senior Portfolio & Project Manager, includes all aspects of the development of real estate projects, whether they are of technical, legal, organisational or other nature.
For commercial management of its apartment buildings, Aedifica has an in-house commercial team who secures rentals through direct contact with tenants or real estate agents. Technical management of Aedifica's apartment buildings ("technical property management") includes the diligent management of the buildings' common areas, implementation and follow-up of maintenance and technical control contracts, management of insurance claims, and assistance to tenants at the time of arrival and departure. Technical management is carried out by both Aedifica's own property management team and exceptionally also by external service providers who are continuously monitored by aforementioned team, which ensures that the required duties are performed and quality standards maintained. Administrative and accounting management ("administrative property management") includes managing calls for rent payments and indexations, provisions for expenses, quarterly closing of common area expenses, tax recoveries, budgeting for common area expenses, and tracking tenant payments. Administrative management is carried out by Aedifica's in-house Property Accounting team.
Over the past few years, Aedifica has gradually internalised most tasks that were previously outsourced. The only external apartment building manager currently engaged by Aedifica in Belgium for fully-owned buildings, is the following:
1, Rue des Fabriques 6747 Saint-Leger, Belgium For Résidence Gauguin et Manet.
Management of buildings in co-ownership is assigned to external building managers ("syndic") as chosen during the General Meeting of the co-owners. Hotels follow the management principles applicable for senior housing.
The buildings located in Germany follow the same management principles as those described above for the Belgian healthcare portfolio. The contracts in place with the operators are also irrevocable long-term leases, but are of a double net structure (vs. triple net structure in Bel gium). This means that the repair and maintenance of the roof, structure and facades of the buildings (and in some cases also technical systems) remains the responsibility of the owner.
Aedifica has two German subsidiaries managing its health -
During the 2017/2018 financial year, Aedifica acquired the control over Schloss Bensberg Management GmbH ("SBM"). The SBM team, to which eleven people are assigned, manages the "Service-Residenz Schloss Bens berg" apartment complex (acquired by Aedifica in 2015) in North Rhine-Westphalia. Aedifica leased most of the apartments in this complex to SBM to be operated as apartments for seniors ("independent living").
The buildings located in The Netherlands follow the same management principles as those described above for the Belgian healthcare portfolio. The contracts in place with the operators are also generally irrevocable long-term leases of a triple net structure (as in Belgium) or a double net structure (similar to leases in Germany). Aedifica has held a Dutch subsidiary (Aedifica Nederland BV) since early 2016, which holds the Dutch real estate portfolio on its balance sheet. With respect to the management of the portfolio in The Netherlands, the Group benefits from the know-how of its local experts as well as its parent com pany (the Senior Portfolio & Project Manager's team in particular). Aedifica plans on establishing a local manage ment team in The Netherlands when the scale of its Dutch portfolio justifies doing so. As of 1 August 2018, Aedifica Nederland BV hired its first staff member (Portfolio & Pro ject Manager) in order to support the administrative and technical management of the Dutch healthcare real estate portfolio.
Aedifica's investment activity is assigned to the teams of the Chief Investment Officer and the Chief Mergers & Acquisitions Officer. The CIO is the primary point of con tact for new investment opportunities: his team filters the cases, coordinates negotiations and performs assess -
ments before presenting them to the Management Com mittee and, if accepted, to the Investment Committee and Board of Directors. The Chief Mergers & Acquisitions Offi cer's team coordinates the various aspects of approved investment cases (outside of Belgium), in particular the structuring of international transactions, support of due diligence audits and legal documentation. Depending on the cases' individual characteristics, the team calls upon external specialists.
Aedifica assigns its legal issues and the follow-up of its activity to a team led by the CLO, whose mission includes the day-to-day management of the legal affairs of the Company and its subsidiaries ("corporate housekeeping") as well as legal assistance in operational activity ("legal support"). Its mission mainly involves supporting invest ment cases in Belgium (legal due diligence audits carried out with assistance of external specialists depending on the cases' individual characteristics), drafting conventions and, occasionally, dispute management. Insurance cover age is also centralised here. The CLO is also charged with the functions of Compliance Officer and Secretary-Gen eral of the Board of Directors.
The Finance department manages many disciplines placed under the CFO's supervision. The various teams in this department are responsible for financing of dayto-day activity and investments, accounting, taxation, cash management, internal reporting, controlling, external financial communication and investor relations, and credit control. Management of human resources, IT and the vehicle fleet is also centralised here.
Gentlemen,
We are pleased to send you our estimate of the fair value of investment properties held by the Aedifica group as of 30 June 2018.
Aedifica assigned to each of the five valuation experts the task of determining the fair value (from which the investment value is derived 2 ) of one part of its portfolio of investment properties. Assessments are established tak ing into account the remarks and definitions contained in the reports and following the guidelines of the International Valuation Standards issued by the "IVSC". We have acted individually as valuation expert and have a relevant and recognised qualification, as well as an ongoing experi ence for the location and the type of buildings assessed. The valuation expert's opinion of fair value was primarily derived using comparable recent market transactions at arm's length terms. Properties are considered in the context of current leases and of all rights and obligations that these commitments entail. We have evaluated each entity individually. Assessments do not take into account a 1 potential value that can be generated by offering the whole portfolio on the market. Assessments do not take into account selling costs applicable to a specific transaction, such as brokerage fees or advertising. Assessments are based on the inspection of real estate properties and information provided by Aedifica (i.e. rental status and surface area, sketches or plans, rental charges and property taxes related to the property, and compliance and pollution matters). The information provided was assumed to be accurate and complete. Assessments are made under the assumption that no non-communicated piece of information is likely to affect the value of the property.
Based on the five assessments, the consolidated fair value of the portfolio amounted to €1,740,532,6343 as of 30 June 2018, including €1,705,349,947 for marketable investment properties4 . Contractual rents amounted to €96,524,985 which corresponds to an initial rental yield of 5.66%5 compared to the fair value of marketable investment properties. Assuming that the marketable investment properties, except for furnished apartments, are 100% rented and that the currently vacant spaces are rented at market prices, contractual rents would amount to €97,464,422, i.e. an initial rental yield of 5.72%6 compared to the fair value of marketable investment properties. In the context of a reporting in compliance with the International Financial Reporting Standards, our evaluations reflect the fair value. The fair value is defined by IAS 40 and IFRS 13 as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". The IVSC considers that the definition of fair value under IAS 40 and IFRS 13 is generally consistent with market value.
The fair value of the part of Aedifica's portfolio valued by Winssinger & Associés SA is estimated as of 30 June 2018 at €458,730,000 and the investment value (before deduction of the transfer costs7 ) is estimated at €470,588,500.
Christophe Ackermans 28 August 2018
The fair value of the part of Aedifica's portfolio valued by Deloitte Consulting & Advisory SCRL is estimated as of 30 june 2018 at €546,444,634 and the investment value (before deduction of the transfer costs8 at €560,105,750.
Frédéric Sohet and Patricia Lanoije 28 August 2018
The fair value of the part of Aedifica's portfolio valued by IP Belgium SPRL is estimated as of 30 June 2018 at €206,938,000 and the investment value (before deduction of the transfer costs9 ) is estimated at €212,113,000.
Benoit Forgeur 28 August 2018
€1,741 Mio fair value of the portfolio
The fair value of the part of Aedifica's portfolio valued by CBRE GmbH is estimated as of 30 June 2018 at €285,370,000 and the investment value (before deduction of the transfer costs10) is estimated at €305,598,992.
Sandro Höselbarth and Tim Schulte 28 August 2018
The fair value of the part of Aedifica's portfolio valued by DTZ Zadelhoff VOF is estimated as of 30 June 2018 at €243,050,000 and the investment value (before deduction of the transfer costs11) is estimated at €252,700,000.
Paul Smolenaers and Fabian Pauwelse 28 August 2018
The expert report was reproduced with the agreement of Winssinger & Associés SA, Deloitte Consulting & Advisory SCRL, IP Belgium SCRL, CBRE GmbH and DTZ Zadelhoff VOF. The sum of all elements of the portfolio individually assessed by the above mentioned valuation experts constitutes Aedifica's whole consolidated portfolio.
"Investment value" is defined by Aedifica as the value assessed by avaluation expert, of which transfer costs are not deducted (also known as "gross capital value").
The above mentioned portfolio is broken down in two lines on the balance sheet (lines "I.C. Investment properties" and "II.A. Assets classified as held for sale"). 4. "Marketable investment properties" are defined by Aedifica as investment properties including assets classified as held for sale and excluding development projects.
Marketable investment properties are hence completed properties that are let or lettable.
5.65% compared to the fair value of marketable investment properties increased by the goodwill on furnished apartments and furnishings. 6. 5.71% compared to the fair value of marketable investment properties increased by the goodwill on furnished apartments and furnishings.
In this context, the transfer costs require adaptation to the market conditions. Based on the analysis of alarge number of transactions in Belgium, the Belgian experts acting at the request of publicly traded real estate companies, reunited in aworking group, came to the following conclusion: given the various ways to transfer property in Belgium, the weighted average of the transfer costs was estimated at 2.5%, for investment properties with avalue in excess of €2.5 million. The investment value corresponds therefore to the fair value plus 2.5% of transfer costs. The fair value is also calculated by dividing the investment value by 1.025. Properties in Belgium below the threshold of €2.5 million remain subject to usual transfer costs (10.0% or 12.5% depending on their location). Their fair value corresponds thus to the value excluding transfer costs. In this specific case, for residential units, the fair value reflects the potential capital gain per apartment, if sold.
Same comment on transfer costs as in footnote 7 above.
Same comment on transfer costs as in footnote 7 above.
Assets located in Germany are not concerned by the comments in footnotes 7, 8 and 9 above.
In the assessment of their investment value, the usual German transfer costs are taken into account.
€1.4 billion market capitalisation as of 30 June 2018
Aedifica's diversified investment policy (see "Strategy" section of the Consolidated Board of Directors' Report) offers the shareholder a unique investment that generates optimal rental incomes incomes while maintaining a limited risk profile. Aedifica's investment strategy generates attractive returns, opportunities for growth and capital gains, and a recurring dividend.
According to the "Weekly Value" table, published on 31 August 2018 by Bank Degroof Petercam, Aedifica is currently the 3th REIT in terms of market capitalisation.
— advita Haus Zur Alten Berufsschule – Zschopau – Germany —
EPRA Belgium total return
EPRA Europe total return
Aedifica's shares (AED) have been quoted on Euronext Brussels (regulated market) since 23 October 2006. Since then, Aedifica has completed four capital increases, in cash and with preferential rights or priority allocation rights:
On 30 June 2018, Aedifica was registered in the Bel Mid index with a weighting of 5.7%.
Taking the stock price on 30 June 2018 (€78.10) as a baseline, Aedifica shares show:
Between the date of the IPO (after deduction of the coupons which represented the preferential or priority allocation rights issued as part of the 15 October 2010, 7 December 2012, 29 June 2015 and 28 March 2017 capital increases) and 30 June 2018, Aedifica's stock price increased by 125.2%. This increase shows a very favourable contrast when compared to the Bel Mid Index, which increased by 43.0%, and when compared to the EPRA Europe index, which fell by 16.5%, over the same period.
Internationally, Aedifica shares have been included in the EPRA indices since 18 March 2013 and in the MSCI indices since 1 December 2015.
Euronext. See press release of 8 January 2018 and section 3 hereafter. 2. Total volume of share exchanged annualised divided by the total number of shares listed on the market, according to the definition of Euronext.
After deduction of the treasury shares.
225,009 shares were traded on 7 June 2018.
Based on the rights to the dividend for the shares issued during the year.
Aedifica has the obligation to distribute the majority of its profits in the form of dividends (see "income to distribute" in the glossary). The proposed gross dividend for 2017/2018 financial year amounts to €2.50 per share (the growth of the dividends that were distributed during previous financial years, is presented in the opposite chart) as detailed in Note 38 of the Consolidated Financial Statements. The dividend is payable 5 working days after the date of the ordinary general shareholder's meeting, which is fixed in the Articles of Association to be held annually on the 4th Tuesday of October. The dividend related to the 2017/2018 financial year is due to be paid as from 31 October 2018.
As a RREC investing more than 60% of its portfolio in healthcare property, the withholding tax for Aedifica investors amounts to 15%. For the tax treatment of the dividend, shareholders, in particular those who are Belgian tax payers (natural persons), are referred to section 5 of
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20191
the chapter entitled "Standing Documents" and to section 4.2. of the chapter entitled "Risk Factors" included in this Annual Financial Report. The net dividend per share after deduction of the withholding tax of 15% will amount to €2.125.
Aedifica shareholders holding more than 5% of the Company's capital are listed in the table below (as of 30 June 2018, based on the number of shares held by the shareholders concerned as of 5 January 2018). Declarations of transparency and control strings are available on Aedifica's website. As of the date of this report (4 September 2018), the Company has not received any additional declarations of transparency since 5 January 2018. According to the definition of Euronext, Aedifica's free float amounts to 100%.
| Shareholders | |||||
|---|---|---|---|---|---|
| Share in capital (in%) |
|||||
| BlackRock, Inc. | 5.09 | ||||
| Others < 5% | 94.91 | ||||
| Total | 100.00 |
— Zorgcentrum Mariëndaal – Velp – The Netherlands —
| Annual General Meeting 2018 | 23 October 2018 |
|---|---|
| Dividend payment date– Coupon related to the 2017/2018 financial year |
|
| - Ex-date | 29 October 2018 |
| - Record date | 30 October 2018 |
| - Payment date | As from 31 October 2018 |
| Interim statement | 14 November 2018 |
| Half-Year Financial Report 31.12.2018 | 20 February 2019 |
| Interim statement | 15 May 2019 |
| Annual press release | 4 September 2019 |
| Annual Financial Report 2018/2019 | September 2019 |
| Annual General Meeting 2019 | 22 October 2019 |
| Dividend– Coupon related to the 2018/2019 financial year ("ex-date") |
28 October 2019 |
Financial service for the coupon payment: Banque Degroof Petercam (main paying agent) or any other financial institutions.
9 members in the Board of Directors
44% mixed gender ratio among the Board of Directors
6 members in the Management Committee
THIS CHAPTER ON CORPORATE GOVERNANCE IS PART OF THE CONSOLI-DATED BOARD OF DIRECTORS' REPORT. THE CORPORATE GOVERNANCE STATEMENT IS ISSUED IN ACCORDANCE WITH THE PROVISIONS OF THE BELGIAN CORPORATE GOVERNANCE CODE 2009 (THE "2009 CODE") AND THE BELGIAN LAW OF 6 APRIL 2010 AMENDING THE BELGIAN COMPANIES CODE.
Aedifica acts in accordance with the principles of the 2009 Code published on 12 March 2009, while taking into consideration the Company's unique features and characteristics.
The Royal Decree of 6 June 2010 specifies that the 2009 Code is the only applicable code. The 2009 Code is available on the website of the Belgian State Gazette, as well as on www.corporategovernancecommittee.be.
— Villa Temporis – Hasselt – Belgium —
The Corporate Governance Charter was set out by the Board of Directors of Aedifica and aims to provide full disclosure regarding the governance rules in place at Aedifica. It is available on the Company's website (www.aedifica.eu) and was last updated on 18 June 2018.
This section aims to provide a description of the main features of the Company's internal control system and risk management practices.
The Board of Directors is responsible for the Company's identification and assessment of risks, as well as for monitoring the effectiveness of internal controls. Aedifica's Executive Managers are responsible for setting up an effective internal control environment and putting in place effective risk management practices.
In these respects, the Belgian legal framework is made up of the following regulations:
As of 30 June 2018, this framework is further enhanced by:
Pursuant to Article 17 of the Belgian Law of 12 May 2014, the Company has the following internal control functions:
The risk management function aims to implement measures and procedures to identify and monitor the risks to which the Company is confronted, and to avoid risks becoming reality and/or to limit the impact of these risks (if applicable) and to estimate, control and follow up their effects as much as possible.
The Board of Directors designated Ms. Sarah Everaert (CLO/Secretary-General, Executive Manager and member of the Management Committee) as interim Risk Manager. The term of Ms. Everaert expired on 1 September 2018, and Ms. Ingrid Daerden (CFO, Executive Manager and member of the Management Committee) took over the office of Risk Manager for an indefinite duration. Both Ms. Everaert and Ms. Daerden have the required professional reliability and appropriate experience to perform these duties.
The independent compliance function aims to ensure that the Company, its Directors, its Executive Managers, and its personnel or proxy holders respect the rules of law relating to the integrity of the Company's activities.
The Board of Directors appointed Ms. Sarah Everaert, CLO/Secretary-General, Executive Manager and member of the Management Committee, as Compliance Officer for an indefinite period. Ms. Everaert has the required professional reliability and appropriate experience to perform these duties.
The person in charge of the independent internal audit function is appointed to independently and permanently judge the Company's activities and to examine the quality and efficiency of the existing internal control procedures and methods.
The internal audit function is performed by an external consultant, namely PKF-VMB Risk Advisory SPRL (a subsidiary of VMB Financial Solutions SCRL, member of the PKF International network), represented by Mr. Christophe Quiévreux. The internal audit function (which is thus outsourced to an external legal person, represented by a natural person) is performed under the supervision and responsibility of Mr. Eric Hohl, a non-executive director having the required professional reliability and appropriate experience to perform these duties.
Moreover, Aedifica has put in place risk management procedures and an internal control system that are consistent with the Company's manner of operating and with the environment in which it evolves. This system is based on the internal control model called "COSO" ("Committee of Sponsoring Organisations of the Threadway Commission"). COSO is a well-known international organisation that stems from the private sector. Its purpose is to promote improvement in the quality of corporate governance rules, internal control, risk management and financial reporting.
The COSO model has 5 components:
The COSO model (2013 version) defines 17 principles underlying these five components that clarify the requirements of an efficient internal control system.
The underlying principles of the "internal control environment" component are the following:
The Board of Directors comprises 9 members, 6 of whom are independent, as defined in Article 526ter of the Belgian Companies Code and Appendix A of the 2009 Code (see below). Given their experience (see below), the Directors are sufficiently qualified for their positions, particularly in respect of accounting, finance
— Martha Flora Den Haag – The Hague – The Netherlands —
and remuneration policy. Aedifica's Board of Directors supervises the effectiveness of the risk management practices and of the internal controls implemented by the Executive Managers.
The Company's recruitment processes ensure the qualification of the Executive Managers and personnel. For each position, there is a defined profile and an appropriate training programme. Aedifica endeavours to support the personal development of its staff and associates by offering them a motivating and comfortable working environment that is adapted to their needs, by identifying their talents, and by further reinforcing these individual strengths. Succession plans are elaborated hat reflect career plans and the chance of personnel leaving temporarily (maternity leave, parental leave, etc.) or permanently (such as retirement).
-Principle 5: The organisation holds individuals accountable, in particular for their internal control responsibilities in the pursuit of objectives:
Each member of the Aedifica team has at least one performance review per year with his or her responsible, based on a framework that considers the relationships between Company and employee in a very broad way. Furthermore, the remuneration and assessment policy of Executive Managers and personnel is based on achievable and measurable targets.
The underlying principles of the component "risk analysis" are the following:
-Principle 6: The organisation specifies objectives with sufficient clarity to enable the identification and assessment of risks relating to objectives:
"Aedifica is positioned as a leading Belgian-listed company investing in healthcare real estate in Europe – senior housing in particular. It aims to create a balanced portfolio that generates recurring revenues and offers potential for capital gains. Aedifica's strategy is based on the demographic trend of population ageing in Europe and the specific care and housing needs this trend implies. Therefore, the Company acts in a conservative way with respect to risk culture."
-Principle 7: The organisation identifies risks to the achievement of its objectives across the entity and analyses these risks to determine how they should be managed:
Aedifica has a risk map. The main risks are monitored periodically by the Board of Directors and disclosed in the Annual and Half-Year Financial Reports, as well as in interim statements. The risks are also followed up during the regular meetings of the Board of Directors. Mitigating actions are undertaken as and when required. For a detailed list of the risks identified, please refer to the section "Risks Factors" of the Annual Financial Report.
-Principle 8: The organisation considers the potential for fraud in assessing risks to the achievement of objectives:
Any attempt to fraud is properly analysed to mitigate the potential effects on the Company and to avoid any new attempt.
-Principle 9: The organisation identifies and assesses changes that could significantly impact the system of internal control:
Significant changes are continuously identified and analysed, both at the level of Executive Managers and the Board of Directors. This analysis enriches the section "Risk Factors" of the Annual Financial Report.
The underlying principles of the component "control activities" are the following:
∙ Invoice approval: jointly by the manager in charge and by a member of the Management Committee;
∙ Invoice payment: jointly by the accountant in charge of daily treasury management and by the CFO (or CEO, or CLO);
Technologies employed by the Company are selected using a "best of breed" approach (as opposed to an integrated system approach). Every technological application is under the responsibility of a pilot, while the management of the infrastructure (hardware and network), the security of the access and the storage of computerised data are ensured by an external service provider, working with Aedifica on the basis of a service-level agreement ("SLA"). All rental agreements are registered. Contracts and other important documents, including notarial deeds, are stored in an appropriate way outside the Company's headquarters.
-Principle 12: The organisation deploys control activities through policies that establish what is expected and in procedures that put policies into action:
Formal documentation is carried out with an objective aimed at continual improvement. This also takes into account the balance between the level of formalisation and the size of the Company.
The underlying principles of the "information and communication" component are the following:
-Principle 13: The organisation obtains or generates and uses relevant, quality information to support the functioning of internal controls:
The Company's information management system provides relevant and complete information in a timely manner, responding to both internal control as well as external reporting needs.
-Principle 14: The organisation communicates information internally as necessary for the good functioning of other internal control components, including in relation to objectives and responsibilities for internal control:
The internal information elements regarding internal controls are disseminated in a transparent manner within the Company so as to make the Company's policies, procedures, objectives, and roles and responsibilities clear to all. The communication procedures are aligned to fit with the size of the Company. They mainly consist of general communications targeted at personnel, physical meetings and e-mail correspondence.
The Company's information management system provides relevant and complete information in a timely manner, responding to both internal control as well as external reporting needs.
The underlying principles of the "surveillance and monitoring" component are the following:
-Principle 16: The organisation selects, develops, and performs ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning:
To ensure the effectiveness of the above components of COSO, Aedifica has put in place (since the 2010/2011 financial year) an internal audit function to review the Company's main processes. The internal audit is organised over a multi-annual cycle. The specific scope of the internal audit is determined on an annual basis in consultation with the Audit Committee and the head of internal audit as defined by the Belgian Law of 12 May 2014 on Regulated Real Estate Companies (who can be no other than Mr. Eric Hohl, non-executive director – see above) and the internal audit service provider (see above). Given the independence requirements and taking the principle of proportionality into consideration, Aedifica has indeed chosen to outsource the internal audit by entrusting this function to a specialised consultant, placed under the supervision and responsibility of the head of internal audit as defined by the abovementioned Law.
-Principle 17: The organisation evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including the Management Committee and the Board of Directors, as appropriate:
The recommendations developed by the internal audit are communicated to the Audit Committee. This ensures that the Executive Managers put in place the anticipated corrective actions.
The shareholding structure, as derived from the transparency declarations received, is provided in the "Aedifica in the Stock Market" chapter of this Annual Financial Report.
The Company's directors are elected for a term of up to three years at the Annual General Meeting. They are revocable, and can be re-elected.
At the Annual General Meeting of 27 October 2017, the following Directors were appointed for a 3-year term ending after the Annual General Meeting of 2020:
— Board of directors (from left to right) — First row: Marleen Willekens, Stefaan Gielens, Jean Franken, Serge Wibaut Second row: Luc Plasman, Elisabeth May-Roberti, Eric Hohl, Adeline Simont, Katrien Kesteloot
Recall that Mr. Jean Kotarakos ended his term as Director of the Aedifica group on 28 March 2018 and his position as CFO on 31 May 2018 (see press release of 29 March 2018).
As of 30 June 2018, Aedifica was directed by a 9-member Board, which includes 6 independent Directors (in accordance with Article 526ter of the Belgian Companies Code and Appendix A of the 2009 Code), as listed below.
With respect to the composition of its Board of Directors and its Management Committee, Aedifica applies various requirements concerning diversity (gender, age, professional background, etc.), in accordance with the Law of 3 September 2017 on disclosure of non-financial and diversity information by certain large undertakings and groups. For more information on this topic, see section 5 of this Corporate Governance Statement.
The terms of Mr. Serge Wibaut, Mr. Stefaan Gielens, Ms. Katrien Kesteloot and Ms. Elisabeth May-Roberti as members of the Board of Directors will expire at the upcoming Annual General Meeting of 23 October 2018.
At the Annual General Meeting of 23 October 2018, the following will be proposed:
In case of election at the General Meeting and after approval by the market authority (FSMA), they will act as Directors for terms ending at the Annual General Meeting in October 2021.
Belgian – 18.08.1957
Belgian - 21.10.1965
Belgian – 2.10.1948
30, avenue du Joli Mai - 1332 Genval
Belgian – 6.05.1962
7, avenue des Violettes – 1970 Wezembeek-Oppem
Independent Director Belgian – 28.07.1962
47, Hoveniersdreef – 3001 Leuven
Independent Director
Belgian – 17.11.1963 22, Avenue Maurice – 1050 Bruxelles
Belgian – 15.10.1953 20, Puydt - 1547 Bever
Belgian - 16.01.1960 36, Ancien Dieweg – 1180 Brussels
Belgian – 19.10.1965 46/01.01, Edouard Remyvest – 3000 Leuven
— Het Gouden Hart van Leersum – Leersum – The Netherlands —
During the 2017/2018 financial year, the Board of Directors met 12 times and covered the following items:
The Board of Directors has established three specialised committees: the Audit Committee, the Nomination and Remuneration Committee and the Investment Committee. They are meant to assist and provide guidance to the Board in their respective domains. The committees have no decision power and are hence consultative bodies only. They report to the Board of Directors, which takes the decisions.
The Board of Directors established an Audit Committee from among its members.
The 2009 Code recommends that the majority of the members of the Audit Committee are independent directors, which is effectively the case.
Aedifica's Corporate Governance Charter provides that the Audit Committee is chaired by an independent Director. Ms. Marleen Willekens has been the chairman of the Audit Committee since 27 October 2017.
The current composition of the Audit Committee, as well as the tasks entrusted to it, meet the criteria set out in the Belgian Law of 17 December 2008 on Audit Committees of listed companies. All members of the Audit Committee hold the qualifications required by this law. Aedifica's independent Directors meet the criteria specified in Article 526ter of the Belgian Companies Code and Appendix A of the 20009 Code.
As of 30 June 2018, the Audit Committee consists of 3 independent Directors, namely:
Chairman of the Committee Independent Director
-Ms. Katrien Kesteloot Independent Director
Chairman of the Board of Directors Independent Director
The CEO and CFO are not part of the audit committee, but do participate in the committee's meetings.
During the 2017/2018 financial year, the Audit Committee met four times. The statutory auditor attended committee meetings on one occasion.
In the context of its mission (i.e. to ensure the accuracy and fair presentation of the annual and half-year reports, the quality of internal and external reporting, and the quality of the published information), the Audit Committee covered the following items:
The Board of Directors established a Nomination and Remuneration Committee from among its members. The current composition of the Nomination and Remuneration Committee, and as well as the tasks entrusted to it, meet the criteria set out in the Belgian Law of 6 April 2010 inserting Article 526quater in the Belgian Companies Code. The Nomination and Remuneration Committee is made up of exclusively independent directors, as defined by Article 526ter of the Belgian Companies Code, who are sufficiently qualified with regard to remuneration policy.
Ms. Elisabeth May-Roberti has been the chairman of the Nomination and Remuneration Committee since 27 October 2017.
As of 30 June 2018, the Nomination and Remuneration Committee consists of 3 independent Directors, namely:
Chairman of the Committee Independent Director
The Chairman of the Board of Directors, Mr. Serge Wibaut, and the CEO, Mr. Stefaan Gielens, are not part of the Nomination and Remuneration Committee, but are invited to participate in certain meetings of the committee in a limited way, depending on the topics to be discussed.
During the 2017/2018 financial year, the Committee met seven times, to cover the following items:
-assessment of the members of the Management Committee and of their remuneration, including the granting of a variable remuneration for the financial year ended 30 June 2017;
-definition of criteria for the variable remuneration of the members of the Management Committee for the 2017/2018 and 2018/2019 Financial Year;
As of 30 June 2018, the Investment Committee consists of the Executive Director and of three independent directors, namely:
-Mr. Jean Franken
Chairman of the Committee Independent Director
-Mr. Serge Wibaut
Chairman of the Board of Directors Independent Director
CEO - Executive Director
During the 2017/2018 financial year, the Investment Committee met nine times to assess investment opportunities. Many cases were analysed. In addition, a number of communications were organised (by phone or by electronic means) when formal meetings were deemed unnecessary.
| Attendance at the Board of Directors and the committees and the related remuneration | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Board of Directors | Audit Commit tee |
Nomination and Remuneration Committee |
Investment Committee |
Remuneration of the office (€) |
Attendance fees1 (€) remuneration |
||||
| Attendences | Proxy | Total | At tendences |
Attendences | Attendences | |||||
| Jean Franken | 12 | - | 12/12 | - | 11/11 | 9/9 | 25,000 | 30,000 | 55,000 | |
| Stefaan Gielens | 12 | - | 12/12 | - | - | 9/9 | 0 | 0 | 0 | |
| Eric Hohl | 11 | - | 11/12 | - | - | - | 15,000 | 11,000 | 26,000 | |
| Katrien Kesteloot | 9 | 2 | 11/12 | 3/4 | - | - | 15,000 | 11,700 | 26,700 | |
| Jean Kotarakos | 7 | - | 7/7 | - | - | 7/7 | 0 | 0 | 0 | |
| Sophie Maes | 2 | - | 2/2 | - | - | 2/2 | 4,890 | 3,800 | 8,690 | |
| Elisabeth May-Roberti | 7 | 1 | 8/12 | - | 11/11 | - | 15,000 | 16,900 | 31,900 | |
| Luc Plasman | 9 | 1 | 10/10 | - | 9/9 | 7/7 | 10,110 | 23,400 | 33,510 | |
| Adeline Simont | 11 | 1 | 12/12 | 1/1 | 2/2 | - | 26,411 | 13,700 | 40,111 | |
| Serge Wibaut | 11 | - | 11/12 | 4/4 | 7/9 | 50,000 | 20,900 | 70,900 | ||
| Marleen Willekens | 9 | 1 | 10/10 | 3/3 | - | - | 16,849 | 11,700 | 28,549 | |
| Total | 178,260 | 143,100 | 321,360 |
— Management Committee (from left to right) — Charles-Antoine van Aelst, Laurence Gacoin, Stefaan Gielens, Ingrid Daerden, Sven Bogaerts Absent: Sarah Everaert
The Board of Directors decided to set up a Management Committee as defined by Article 524bis of the Belgian Companies Code, effective 12 May 2015. The Management Committee consists of the following persons, who are all Executive Managers in accordance with the Belgian Law of 12 May 2014:
| Name | Function |
|---|---|
| Stefaan Gielens | Chief Executive Officer (CEO) |
| Ingrid Daerden | Chief Financial Officer (CFO) |
| Laurence Gacoin | Chief Operating Officer (COO) |
| Sarah Everaert | Chief Legal Officer (CLO) / Secretary-General |
| Charles-Antoine van Aelst |
Chief Investment Officer (CIO) |
| Sven Bogaerts | Chief Mergers & Acquisitions Officer (CM&AO) |
The Board of Directors has appointed Mr. Charles-Antoine van Aelst as Chief Investment Officer and Mr. Sven Bogaerts as Chief Mergers & Acquisitions Officer (see press release of 28 September 2017). They are also Executive Managers and members of the Management Committee. Mr. van Aelst and Mr. Bogaerts have been in office since 1 October 2017.
Mr. Jean Kotarakos (former CFO) ended his term as Director on 28 March 2018 and his position as CFO on 31 May 2018. The Board of Directors appointed Ms. Ingrid Daerden as the new Chief Financial Officer (see press release of 1 June 2018). She is also an Executive Manager and a member of the Management Committee. Ms. Daerden has been in office since 1 September 2018.
Mr. Stefaan Gielens has performed the duties of Chief Executive Officer for the Company since 1 February 2006. He is chairman of the Management Committee. His office as CEO and chairman of the Management Committee is of indefinite duration. He was already an Executive Manager of the Company before the establishment of the Management Committee. Moreover, he is an Executive Director (see above).
Ms. Laurence Gacoin has performed the duties of Chief Operating Officer for the Company since 1 January 2015. She is also an Executive Manager and a member of the Management Committee since 12 May 2015. Her office is of indefinite duration.
Ms. Sarah Everaert has performed the duties of Chief Legal Officer/Secretary-General for the Company since 12 May 2015. She is also an Executive Manager, a member of the Management Committee and the Company's Compliance Officer. Her office is of indefinite duration.
Mr. Charles-Antoine van Aelst has performed the duties of Chief Investment Officer for the Company since 1 October 2017. He is also an Executive Manager and a member of the Management Committee. His office is of indefinite duration.
Mr. Sven Bogaerts has performed the duties of Chief Mergers & Acquisitions Officer for the Company since 1 October 2017. He is also an Executive Manager and a member of the Management Committee. His office is of indefinite duration.
Ms. Ingrid Daerden has performed the duties of Chief Financial Officer for the Company since 1 September 2018. She is also an Executive Manager and a member of the Management Committee. Her office is of indefinite duration.
The division of tasks between the Management Committee and the Board of Directors, along with other aspects of the Management Committee's functioning is available in the Company's Corporate Governance Charter (version of 18 June 2018), published on its website (www.aedifica.eu).
Belgian - 21.10.1965 40, rue Belliard - 1040 Brussels Beginning of 1st office as Director: 1 January 2006 Term of office: October 2018
-Other offices as Director or current positions: Chairman of the Management Committee of Aedifica SA. Director of Aedifica Invest SA, Aedifica Invest Brugge SA, Immobe SA, VSP SA, Het Seniorenhof SA, CI Beerzelhof SA, Avorum SA and Coham SA), and manager of Dujofin SPRL. Permanent representative of Aedifica SA (Directord of Aedifica Invest SA, Aedifica Invest Brugge SA, VSP SA, Het Seniorenhof SA, CI Beerzelhof SA, Avorum SA and Coham SA; manager of VSP Kasterlee SPRL, Residentie Sorgvliet SPRL and WZC Arcadia SPRL).
-Offices as Director in the past 5 years and professional career: several positions and offices in several companies of the Aedifica group, the KBC group and the Almafin group, including the offices of Managing Director of Almafin Real Estate SA and Director of Immolease-Trust SA. Member of the Brussels Bar.
Belgian – 12.01.1974
40, rue Belliard - 1040 Brussels
French – 26.01.1977
40, rue Belliard - 1040 Brussels
40, rue Belliard - 1040 Brussels
-Other offices as Director or current positions: Member of the Management Committee of Aedifica SA. Director of Aedifica Invest SA, Aedifica Invest Brugge SA, Immobe SA, VSP SA, Het Seniorenhof SA, CI Beerzelhof SA, Avorum SA and Coham SA, and manager of VSP Kasterlee SPRL, Residentie Sorgvliet SPRL and WZC Arcadia SPRL. Permanent representative of Aedifica SA (manager of Dujofin SPRL). Director of the Vlaamse Maatschappij voor Sociaal Wonen agency.
-Offices as Director in the past 5 years and professional career: several positions and offices in several companies of the Aedifica group. Legal Counsel of Aedifica SA. Real estate and administrative lawyer and secretary ad interim of LRM SA. Member of the Brussels Bar.
Belgian – 11.02.1986 40, rue Belliard - 1040 Brussels
— Martha Flora Hoorn – Hoorn – The Netherlands —
Belgian – 16.12.1977
40, rue Belliard - 1040 Brussels
Please refer to the Remuneration Report presented in section 9 below.
Aedifica's Board of Directors firmly believes that diversity (based on gender, age, professional background, etc.), equal opportunities and respect for human capital are fundamental to the proper functioning of the Group at every level. These values enrich the vision, the exchange of ideas and the internal dynamic within Aedifica and thus contribute to the Company's growth.
With respect to election and renewal of Directors' terms, and appointments within the specialist committees and the Management Committee, Aedifica applies various requirements concerning diversity. These are designed to foster complementary skills, experience and profiles in the composition of these management bodies, in addition to the expertise and professional integrity required for these duties. The requirements are implemented by the Board of Directors through an assessment of the existing and required skills, knowledge and experience, prior to any election or appointment.
Aedifica's special attention to diversity is reflected in the composition of its Board of Directors and Management Committee. A significant level of gender diversity (as required by article 518bis of the Belgian Companies Code, regarding gender diversity within the Board of Directors) has been achieved given the current composition of the Board of Directors. The Board, comprising four women and five men (see chart), has a gender diversity ratio of 44 %, which significantly exceeds the threshold of one third set by law. Gender diversity is also clearly manifested in the current composition of the Management Committee, which consists of three women and three men (a gender diversity ratio of 50 %; see chart). Gender is not the only aspect of diversity considered by Aedifica, how-
ever. With respect to the composition of its Board and Management Committee, the Group also applies diversity requirements regarding age and professional background. This is reflected in the election and appointment of members of different ages, who have complementary career paths, professional experience and skills (see sections 4.1 and 4.6 above for the biographies of the members of the Board of Directors and the Management Committee).
Beyond the criteria set by law, Aedifica strongly believes that these diversity requirements should apply not only to its Board of Directors and Management Committee, but also to the staff in general. Aedifica's team has a well-balanced gender diversity ratio (see chart) and is composed of people of different ages, educational and cultural backgrounds, etc., which stimulates in-house creativity and combines experience with innovation. See section 14.2 of the Consolidated Board of Directors' Report for more information about Aedifica's staff.
Directors, members of the Management Committee, persons in charge of daily management, Executive Managers and any person who is closely related to them cannot act as counterparties in transactions with the Company or with entities controlled by the Company. They cannot earn any benefit from transactions carried out with the Company, except when the transaction is undertaken in the best interest of the Company, in accordance with the Company's investment policy, and in line with market practice. The Company must inform the market authority (FSMA) in advance of any such transactions.
These transactions are immediately disclosed in a press release and in the annual and half-year financial reports.
The market authority need not be informed of the transactions listed in Article 38 of the Belgian Law of 12 May 2014 on Regulated Real Estate Companies, as amended by the Law of 22 October 2017. Articles 523 and 524 of the Belgian Companies Code are always applicable, as is Article 37 of the above-mentioned Belgian Law.
No conflict of interest on real estate transactions occurred during the course of the 2017/2018 financial year. The only occurrences of conflicts of interest were the Management Committee's remuneration, as detailed in section 12 of the Consolidated Board of Directors' Report included in this Annual Financial Report.
The independent compliance function is carried out in accordance with Article 17 of the Belgian Law of 12 May 2014 on Regulated Real Estate Companies (see above) and with Appendix B of the 2009 Code. Ms. Sarah Everaert, CLO, acts as the Company's Compliance Officer. In this regard, she must ensure that the Deal Code is
— Villa Walgaerde – Hilversum – The Netherlands —
properly applied and that any insider trading is properly reported, in order to reduce the risk of abuse of insider trading.
The Compliance Officer updates the list of persons having access to privileged information. She ensures that the persons on this list are aware of what this implies.
Furthermore, she oversees of the definition of closed periods by the Board of Directors. During these periods, trading of Aedifica shares is prohibited for the Company's leaders, the persons listed and their relatives. The closed periods are as follows:
Directors, members of the Management Committee, or persons closely related to them must give notice to the Compliance Officer at least 48 hours in advance (by fax or e-mail) of any planned transaction on equity instruments or derivative instruments linked to Aedifica. The Compliance Officer must give notice to the Chairman of the Board of Directors at least 48 hours in advance (by fax or e-mail) of any planned transaction on equity instruments or derivatives instruments linked to the Company. Within 48 hours of the receipt of notification, the Compliance Officer (or Chairman of the Board, of Directors, if required) must inform the person concerned if there is reason to believe the planned transaction constitutes a violation of the rules. The Directors, members of the Management Committee and any person closely related to them must then confirm completion of the transaction to the Company within two working days. The Compliance Officer must keep a written record of all notifications regarding planned and realised transactions. Directors, members of the Management Committee and any person who is closely related to them must receive a written confirmation of receipt of any notification.
Directors, members of the Management Committee or any person who is closely related to them must notify the FSMA of transactions realised on their account in relation to shares of the Company. Notification must be given within three working days following the completion of the transaction(s).
Under the scrutiny of the Chairman, the Board of Directors regularly performs a self-assessment of its size, composition, way of functioning (as well as those of the committees), and interaction with the Executive Managers. This should be done at least every 2 to 3 years.
This assessment aims to perform 4 tasks:
In this respect, the Board of Directors is supported by the Nomination and Remuneration Committee, and, if needed, by external experts.
The non-executive directors regularly review their interaction with the Management Committee. To this end, they meet at least once per year in the absence of the members of the Management Committee.
A regular review of the input of each director is organised in order to adapt the composition of the Board as needed and take into account any changes in circumstances. When the re-election of a director is approaching, the input and effectiveness of the director is reviewed based on a transparent and well-defined procedure.
The Board of Directors ensures that adequate succession planning is in place. It monitors the balance of skills and experience in the Board (for both executive and non-executive directors).
The "long-term incentive plan", which grants the members of the Management Committee the right to purchase Aedifica shares (as announced in the 2008/2009 Annual Financial Report for subsequent financial years), was approved at the 27 October 2017 Annual General Meeting of the Shareholders. Thus, the members of the Management Committee received additional gross remunerations of €120,000 (CEO), €100,000 (CFO), €50,000 (COO and CLO) and €40,000 (CIO and CM&AO) which, after deducting personal withholding taxes, permitted them to purchase respectively 839 (CEO), 700 (CFO), 351 (COO),
| Stefaan Gielens - CEO |
Others | Total | |
|---|---|---|---|
| Fixed remuneration (management agreements) | 429,295 | 884,634 | 1,313,929 |
| Fixed remuneration ("long term incentive plan") | 120,000 | 280,000 | 400,000 |
| Variable remuneration | 207,500 | 387,900 | 595,400 |
| Pension scheme | 68,399 | 116,056 | 184,455 |
| Insurance premiums | 6,506 | 17,627 | 24,132 |
| Benefits in kind | 6,057 | 18,566 | 24,623 |
| Total | 837,757 | 1,704,783 | 2,542,539 |
349 (CLO) and 280 (CIO and CM&AO) shares at a unit price of €66.4167 (the last known closing share price multiplied by a factor amounting to 100/120th, in accordance with comment 36/16 of the Belgian Income Tax Code), corresponding to a total amount of €55,723.58 (CEO), €46,491.67 (CFO), €23,312.25 (COO), 23,179.42 (CLO) and €18,596.67 (CIO and CM&AO). The members of the Management Committee are irrevocably committed to hold these shares for a period of 2 years. The shares sold by Aedifica were part of the treasury shares held by the Company that were acquired on the stock exchange.
For the upcoming financial year, the Board of Directors will propose to the shareholders to approve a "long-term incentive plan" for the members of the Management Committee (namely the CEO, CFO, COO, CLO, CIO and CM&AO) under the same form previously used, with a gross value of €175,000 (CEO) and €300,000 (for the other members of the Management Committee in aggregate), in accordance with principle 7.13 of the 2009 Code and with Article 14 of the Belgian Law of 6 April 2010.
The Remuneration Report is provided in accordance with the 2009 Code and with the Belgian Law of 6 April 2010; it has been applicable to Aedifica since the beginning of the 2010/2011 financial year.
During the 2017/2018 financial year, the remuneration policy for non-executive directors and Executive Managers were set out as follows:
During the same period, the actual remuneration of the non-executive directors and Executive Managers was determined as follows:
-Non-executive directors: in accordance with the decisions taken by the shareholders during the Annual General Meeting of 28 October 2016, the actual remuneration of the non-executive directors amounted to:
1° fixed annual remuneration:
(i) a fixed annual remuneration of €50,000 for the Chairman of the Board of Directors,
(ii) a fixed annual remuneration of €25,000 for the Chairman of the Audit Committee, the Chairman of the Nomination and Remuneration Committee and the Chairman of the Investment Committee,
(iii) a fixed annual remuneration of €15,000 for the other non-executive directors; and
2° attendance fees:
For the 2017/2018 financial year, the Board of Directors will collectively receive €321,360.
-Executive Managers: the actual level of remuneration was determined based on the management agree ments signed in 2006 (CEO), 2007 (CFO), 2014 (COO), 2015 (CLO) and 2017 (CIO and CM&AO), and on the additional abovementioned agreements, in accordance with the criteria for the variable remuneration set out in section 12 of the Consolidated Board of Directors' Report. These remuneration packages were reviewed in 2009 and 2011 by specialised consultants. In light of the creation of the Management Committee on 12 May 2015, the remuneration packages of the members of the Management Committee were reviewed by a spe cialised consultant in May 2016.
The remuneration package of the Executive Managers consists of: fixed remuneration (arising from the manage ment agreements), variable remuneration (for which no claw-back in favour of the Company is applicable), post-retirement benefits (defined contribution plan and associated benefits), and other components (medical insurance, benefits-in-kind linked to the usage of a com pany car). Moreover, the fixed remuneration also consists of amounts resulting from the long-term incentive plan. The amounts are shown in the table on page 155.
The Executive Managers carry out their office as direc tor of Aedifica and its subsidiaries for free. They are not remunerated by Aedifica's subsidiaries.
The gross variable remuneration of the Executive Man agers was determined as follows:
-The variable remuneration for the 2017/2018 financial year is a (gross) amount which does not exceed 50% of the annual remuneration excluding sundry benefits and post-retirement benefits. The effective amount was determined by the Board of Directors, based on quan titative and qualitative criteria listed in the 2016/2017 Annual Financial Report as well as in the afore-men tioned additional agreements. Recall that the variable remuneration can only be paid if the actual EPRA Earn ings* (previously referred to as "consolidated profit excl. changes in fair value") per share is at least 90% of the budgeted amount. The criteria (and their weight) were as follows: EPRA Earnings* per share (30%), growth of the consolidated property portfolio (including the inter nationalisation of the Group's activities) (20%), consoli dated EBIT margin* (25%) and others (25%). The Board of Directors concluded on 4 September 2018 that the Executive Managers met the objectives and decided to grant as variable remuneration €207,500 to the CEO, and €387,900 to the other members of the Manage ment Committee in aggregate.
The Nomination and Remuneration Committee has estab lished a "long-term incentive plan" for the members of the Management Committee (see section 8 above).
For information purposes, note that the ratio between the total remuneration of the CEO for 2017/2018 and the average remuneration of personnel amounts to 10 times.
Each Executive Manager benefits from a company car as from the time of entering the Company. In 2017/2018, the cost to the Company (rental charge and petrol) was €20,000 excl. VAT for the CEO and a combined total of €56,000 excl. VAT for the other Executive Managers. Each Executive Manager also uses a laptop and a smart phone. Moreover, the Company reimburses the Executive Managers' actual professional expenses, and grants them a fixed allowance for representation expenses of €300 per month.
During the 2018/2019 financial year, Executive Man agers' remunerations will be indexed, as specified in the management agreements. Moreover, on a proposal by the Nomination and Remuneration Committee to provide the members of the Management Committee with an adequate and motivating remuneration in line with market practice, the Board of Directors decided on 4 September 2018 to adapt executive remuneration as follows (effective 1 July 2018):
-CEO's fixed annual remuneration will remain unchanged at €433,590 (indexed amount; resulting from the management agreement), plus an additional €175,000 (resulting from the long-term incentive plan) for the 2018/2019 financial year, and a maximum variable remuneration of €216,795 for the 2018/2019 financial year, based on the above-mentioned criteria;
The management agreements signed with the Executive Managers may be terminated in the following circumstances:
The management agreements provide for specific events of termination in the event of a change in control of the Company, as disclosed in section 15.10 of the Consolidated Board of Directors' Report.
The only case in which an indemnity granted to an Executive Manager could exceed 12 months of remuneration is in the event of a change in control of the Company; in this case, the CEO is eligible to obtain 18 months' remuneration. The Nomination and Remuneration Committee highlights the fact that this clause is included in the management agreement signed with the CEO in 2006 and that it is consistent with market practice. The approval of the shareholders is not required, as specified in Article 9 of the Belgian Law of 6 April 2010.
The Board of Directors expects to keep its current remuneration policy unchanged for the non-executive directors. This policy is described in 9.1 above.
| 1. | CONSOLIDATED FINANCIAL STATEMENTS 2017/2018 | 151 |
|---|---|---|
| 1.1 Consolidated income statement | 151 | |
| 1.2 Consolidated statement of comprehensive income | 152 | |
| 1.3 Consolidated balance sheet | 152 | |
| 1.4 Consolidated cash flow statement | 154 | |
| 1.5 Consolidated statement of changes in equity | 155 | |
| 1.6 Notes to the consolidated financial statements | 157 | |
| Note 1: General information Note 2: Accounting policies Note 3: Operating segments Note 4: Rental income Note 5: Rental-related charges Note 6: Recovery of property charges Note 7: Recovery of rental charges and taxes normally paid by tenants on let properties Note 8: Costs payable by the tenant and borne by the landlord on rental damage and repair of lease Note 9: Rental charges and taxes normally paid by tenants |
167 167 174 177 177 177 178 178 178 |
|
| on let properties | ||
| Note 10: Other rental-related income and charges Note 11: Technical costs Note 12: Commercial costs Note 13: Charges and taxes on unlet properties Note 14: Property management costs Note 15: Other property charges Note 16: Overheads Note 17: Other operating income and charges Note 18: Gains and losses on disposals of investment properties Note 19: Gains and losses on disposals of other non-financial assets 180 Note 20: Changes in fair value of investment properties Note 21: Financial income Note 22: Net interest charges Note 23: Other financial charges Note 24: Corporate tax Note 25: Exit tax Note 26: Earnings per share Note 27: Goodwill Note 28: Intangible assets Note 29: Investment properties Note 30: Development projects |
178 178 179 179 179 179 179 180 180 180 181 181 181 182 182 183 183 184 185 187 |
|
| Note 31: Other tangible assets | 187 |
|---|---|
| Note 32: Non-current financial assets and other non-current financial 188 | |
| liabilities | |
| Note 33: Hedges | 189 |
| Note 34: Trade receivables | 192 |
| Note 35: Tax receivables and other current assets | 192 |
| Note 36: Cash and cash equivalents | 192 |
| Note 37: Deferred charges and accrued income | 193 |
| Note 38: Equity Note 39: Provisions |
193 194 |
| Note 40: Borrowings | 195 |
| Note 41: Trade payables and other current debts | 196 |
| Note 42: Accrued charges and deferred income | 196 |
| Note 43: Employee benefits expense | 196 |
| Note 44: Financial risk management | 197 |
| Note 45: Contingencies and commitments | 199 |
| Note 46: Acquisitions and disposals of investment properties | 203 |
| Note 47: Changes in fair value of financial assets and liabilities | 204 |
| Note 48: Related party transactions | 204 |
| Note 49: Subsequent events | 205 |
| Note 50: Corrected profit as defined in the Royal Decree of 13 July 2014 |
206 |
| Note 51: List of subsidiaries, associates and joint ventures | 206 |
| Note 52: Belgian RREC status | 207 |
| Note 53: Audit fees | 207 |
| Note 54: Deferred taxes | 208 |
| Note 55: Fair value | 208 |
| Note 56: Put options granted to non-controlling shareholders | 209 |
| Note 57: Alternative Performance Measures (APM) | 209 |
| Note 58: Business Combinations | 212 |
| 1.7 Auditor's report | 213 |
| 2. ABRIDGED STATUTORY FINANCIAL STATEMENTS 2017/2018 |
218 |
| Abridged statutory income statement | 218 |
| Abridged statutory statement of comprehensive income | 219 |
| Abridged statutory balance sheet | 219 |
| Abridged statutory statement of changes in equity | 221 |
| Abridged statutory appropriation account | 223 |
| (x €1,000) | Notes | 2018 | 2017 | |
|---|---|---|---|---|
| I. | Rental income | 4 | 91,677 | 78,983 |
| II. | Writeback of lease payments sold and discounted | 0 | 0 | |
| III. | Rental-related charges | 5 | -80 | -48 |
| Net rental income | 91,597 | 78,935 | ||
| IV. | Recovery of property charges | 6 | 84 | 40 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties | 7 | 2,469 | 2,588 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease |
8 | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties | 9 | -2,469 | -2,588 |
| VIII. | Other rental-related income and charges | 10 | -985 | -917 |
| Property result | 90,696 | 78,058 | ||
| IX. | Technical costs | 11 | -1,379 | -1,247 |
| X. | Commercial costs | 12 | -552 | -567 |
| XI. | Charges and taxes on unlet properties | 13 | -136 | -165 |
| XII. | Property management costs | 14 | -1,273 | -998 |
| XIII. | Other property charges | 15 | -1,281 | -1,026 |
| Property charges | -4,621 | -4,003 | ||
| Property operating result | 86,075 | 74,055 | ||
| XIV. | Overheads | 16 | -10,963 | -8,544 |
| XV. | Other operating income and charges | 17 | 2,163 | 266 |
| Operating result before result on portfolio | 77,275 | 65,777 | ||
| XVI. | Gains and losses on disposals of investment properties | 18 | 789 | 1,459 |
| XVII. | Gains and losses on disposals of other non-financial assets | 19 | 0 | 0 |
| XVIII. | Changes in fair value of investment properties° | 20 | 15,018 | 10,357 |
| XIX. | Other result on portfolio | 20 | -344 | 0 |
| Operating result | 92,738 | 77,593 | ||
| XX. | Financial income | 21 | 554 | 155 |
| XXI. | Net interest charges | 22 | -14,321 | -15,365 |
| XXII. | Other financial charges | 23 | -1,552 | -1,328 |
| XXIII. | Changes in fair value of financial assets and liabilities | 47 | -2,157 | 5,119 |
| Net finance costs | -17,476 | -11,419 | ||
| XXIV. | Share in the profit or loss of associates and joint ventures accounted for using the equity method | 0 | 0 | |
| Profit before tax (loss) | 75,262 | 66,174 | ||
| XXV. | Corporate tax | 24 | -6,066 | -2,816 |
| XXVI. | Exit tax° | 25 | 2,659 | 0 |
| Tax expense | -3,407 | -2,816 | ||
| Profit (loss) | 71,855 | 63,358 | ||
| Attributable to: | ||||
| Non-controlling interests | 0 | 0 | ||
| Owners of the parent | 71,855 | 63,358 | ||
| Basic earnings per share (€) | 26 | 3.99 | 4.16 | |
| Diluted earnings per share (€) | 26 | 3.99 | 4.16 |
° Applying the 2018 presentation of the exit tax (separately presented on line "XXVI. Exit tax" instead of being included on line "XVIII. Changes in fair value of investment properties") to the 2017 figures, line "XVIII. Changes in fair value of investment properties" would amount to €10,833 thousand instead of €10,357 thousand and line "XXVI. Exit tax" would amount to - €526 thousand instead of €0 thousand. This change of presentation had no impact on either net profit or EPRA Earnings*.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| I. Profit (loss) |
71,855 | 63,358 |
| II. Other comprehensive income recyclable under the income statement |
||
| A. Impact on fair value of estimated transaction costs resulting from hypothetical disposal of investment properties |
0 | 0 |
| B. Changes in the effective part of the fair value of authorised cash flow hedge instruments as defined under IFRS |
-871 | 7,276 |
| H. Other comprehensive income, net of taxes (see Note 33.3.) |
831 | 0 |
| Comprehensive income | 71,815 | 70,634 |
| Attributable to: | ||
| Non-controlling interests | 0 | 0 |
| Owners of the parent | 71,815 | 70,634 |
| ASSETS | Notes | 2018 | 2017 | |
|---|---|---|---|---|
| (x €1,000) | ||||
| I. | Non-current assets | |||
| A. | Goodwill | 27 | 1,856 | 1,856 |
| B. | Intangible assets | 28 | 301 | 221 |
| C. | Investment properties | 29 | 1,736,463 | 1,540,409 |
| D. | Other tangible assets | 31 | 2,569 | 1,611 |
| E. | Non-current financial assets | 32 | 1,888 | 2,959 |
| F. | Finance lease receivables | 0 | 0 | |
| G. | Trade receivables and other non-current assets | 0 | 0 | |
| H. | Deferred tax assets | 54 | 0 | 1,208 |
| I. | Equity-accounted investments | 0 | 0 | |
| Total non-current assets | 1,743,077 | 1,548,264 | ||
| II. | Current assets | |||
| A. | Assets classified as held for sale | 29 | 4,070 | 4,440 |
| B. | Current financial assets | 0 | 0 | |
| C. | Finance lease receivables | 0 | 0 | |
| D. Trade receivables | 34 | 7,518 | 6,718 | |
| E. | Tax receivables and other current assets | 35 | 446 | 1,679 |
| F. | Cash and cash equivalents | 36 | 10,589 | 8,135 |
| G. | Deferred charges and accrued income | 37 | 943 | 886 |
| Total current assets | 23,566 | 21,858 | ||
| TOTAL ASSETS | 1,766,643 | 1,570,122 |
| EQUITY AND LIABILITIES | Notes | 2018 | 2017 | |
|---|---|---|---|---|
| (x €1,000) | ||||
| EQUITY | 38 | |||
| I. | Issued capital and reserves attributable to owners of the parent | |||
| A. | Capital | 465,126 | 459,231 | |
| B. | Share premium account | 297,569 | 287,194 | |
| C. | Reserves | 107,097 | 78,256 | |
| a. Legal reserve | 0 | 0 | ||
| b. Reserve for the balance of changes in fair value of investment properties | 153,582 | 131,253 | ||
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-37,953 | -29,397 | ||
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-16,436 | -16,418 | ||
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-17,659 | -23,712 | ||
| h. Reserve for treasury shares | 0 | 0 | ||
| k. Reserve for deferred taxes on investment properties located abroad | -1,311 | 230 | ||
| m. Other reserves | -1,957 | 0 | ||
| n. Result brought forward from previous years | 28,831 | 16,300 | ||
| D. | Profit (loss) of the year | 71,855 | 63,358 | |
| Equity attributable to owners of the parent | 941,647 | 888,039 | ||
| II. | Non-controlling interests | 0 | 0 | |
| TOTAL EQUITY | 941,647 | 888,039 | ||
| LIABILITIES | ||||
| I. | Non-current liabilities | |||
| A. | Provisions | 39 | 0 | 0 |
| B. | Non-current financial debts | |||
| a. Borrowings | 40 | 716,927 | 579,438 | |
| C. | Other non-current financial liabilities | 32 | 37,599 | 37,933 |
| a. Authorised hedges | 33,210 | 33,787 | ||
| b. Other | 4,389 | 4,146 | ||
| D. | Trade debts and other non-current debts | 0 | 0 | |
| E. | Other non-current liabilities | 0 | 0 | |
| F. | Deferred tax liabilities | 54 | 6,211 | 4,306 |
| Non-current liabilities | 760,737 | 621,677 | ||
| II. | Current liabilities | |||
| A. | Provisions | 39 | 0 | 0 |
| B. | Current financial debts | |||
| a. Borrowings | 40 | 22,830 | 34,524 | |
| C. | Other current financial liabilities | 0 | 0 | |
| D. | Trade debts and other current debts | |||
| a. Exit tax | 41 | 8,818 | 717 | |
| b. Other | 41 | 28,485 | 20,252 | |
| E. | Other current liabilities | 0 | 0 | |
| F. | Accrued charges and deferred income | 42 | 4,126 | 4,913 |
| Total current liabilities | 64,259 | 60,406 | ||
| TOTAL LIABILITIES | 824,996 | 682,083 | ||
| TOTAL EQUITY AND LIABILITIES | 1,766,643 | 1,570,122 |
| (x €1,000) | Notes | 2018 | 2017 |
|---|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Profit (loss) | 71,855 | 63,358 | |
| Non-controlling interests | 0 | 0 | |
| Tax expense | 24 | 6,066 | 2,816 |
| Amortisation and depreciation | 804 | 678 | |
| Write-downs | 5 | 57 | 28 |
| Change in fair value of investment properties (+/-) | 20 | -15,018 | -10,357 |
| Gains and losses on disposals of investment properties | 18 | -789 | -1,459 |
| Net finance costs | 17,475 | 11,419 | |
| Goodwill impairment | 335 | 0 | |
| Changes in trade receivables (+/-) | -856 | -2,866 | |
| Changes in tax receivables and other current assets (+/-) | 1,233 | 18 | |
| Changes in deferred charges and accrued income (+/-) | -58 | 173 | |
| Changes in trade payables and other current debts (excl. exit tax) (+/-) | 5,955 | 5,694 | |
| Changes in accrued charges and deferred income (+/-) | -792 | 233 | |
| Cash generated from operations | 86,267 | 69,735 | |
| Taxes paid | -1,275 | -581 | |
| Net cash from operating activities | 84,992 | 69,154 | |
| CASH FLOW RESULTING FROM INVESTING ACTIVITIES | |||
| Purchase of intangible assets | -201 | -177 | |
| Purchase of real estate companies and marketable investment properties | -115,911 | -247,585 | |
| Purchase of tangible assets | -1,591 | -592 | |
| Purchase of development projects | -57,349 | -42,343 | |
| Disposals of investment properties | 15,517 | 11,044 | |
| Net changes in non-current receivables | 56 | 46 | |
| Net investments in other assets | 0 | 0 | |
| Net cash from investing activities | -159,479 | -279,607 | |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Capital increase, net of costs° | 0 | 214,438 | |
| Disposals of treasury shares | 0 | 0 | |
| Dividend for previous fiscal year | -34,478 | -22,108 | |
| Net changes in borrowings | 40 | 125,795 | 95,127 |
| Net changes in other non-current financial liabilities | -1,092 | 0 | |
| Net financial items received (+) / paid (-) | -16,264 | -17,666 | |
| Repayment of financial debts of acquired or merged companies | -18,350 | 0 | |
| Repayment of working capital of acquired or merged companies | 21,330 | -56,150 | |
| Net cash from financing activities | 76,941 | 213,641 | |
| TOTAL CASH FLOW FOR THE PERIOD | |||
| Total cash flow for the period | 2,454 | 3,188 | |
| RECONCILIATION WITH BALANCE SHEET | |||
| Cash and cash equivalents at beginning of period | 8,135 | 4,947 | |
| Total cash flow for the period | 2,454 | 3,188 | |
| Cash and cash equivalents at end of period | 36 | 10,589 | 8,135 |
° Some types of capital increases (contributions in kind, partial demergers) do not result in any cash flow.
| (x €1,000) | 2016 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Other transfers and roundings |
2017 |
|---|---|---|---|---|---|---|---|---|
| Capital | 364,467 | 90,002 | 4,762 | 0 | 0 | 0 | 0 | 459,231 |
| Share premium account | 155,509 | 124,437 | 7,248 | 0 | 0 | 0 | 0 | 287,194 |
| Reserves | 60,507 | 0 | 0 | 0 | 7,276 | 10,473 | 0 | 78,256 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
115,366 | 0 | 0 | 0 | 0 | 15,888 | -1 | 131,253 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-25,015 | 0 | 0 | 0 | 0 | -4,382 | 0 | -29,397 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-23,560 | 0 | 0 | 0 | 7,276 | -135 | 1 | -16,418 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-18,256 | 0 | 0 | 0 | 0 | -5,456 | 0 | -23,712 |
| h. Reserve for treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| k. Reserve for deferred taxes on investment properties located abroad |
110 | 0 | 0 | 0 | 0 | 120 | 0 | 230 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| n. Result brought forward from previous years |
11,862 | 0 | 0 | 0 | 0 | 4,438 | 0 | 16,300 |
| Profit (loss) | 40,266 | 0 | 0 | 0 | 63,358 | -40,266 | 0 | 63,358 |
| Equity attributable to owners of the parent |
620,749 | 214,439 | 12,010 | 0 | 70,634 | -29,793 | 0 | 888,039 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| TOTAL EQUITY | 620,749 | 214,439 | 12,010 | 0 | 70,634 | -29,793 | 0 | 888,039 |
| (x €1,000) | 2017 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Other transfers and roundings |
2018 |
|---|---|---|---|---|---|---|---|---|
| Capital | 459,231 | 0 | 5,895 | 0 | 0 | 0 | 0 | 465,126 |
| Share premium account | 287,194 | 0 | 10,376 | 0 | 0 | 0 | -1 | 297,569 |
| Reserves | 78,256 | 0 | 0 | 0 | -40 | 28,880 | 1 | 107,097 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
131,253 | 0 | 0 | 0 | 0 | 20,842 | 1,487 | 153,582 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-29,397 | 0 | 0 | 0 | 0 | -9,026 | 470 | -37,953 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-16,418 | 0 | 0 | 0 | -40 | 22 | 0 | -16,436 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-23,712 | 0 | 0 | 0 | 0 | 6,053 | 0 | -17,659 |
| h. Reserve for treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| k. Reserve for deferred taxes on investment properties located abroad |
230 | 0 | 0 | 0 | 0 | -1,541 | 0 | -1,311 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | -1,957 | -1,957 |
| n. Result brought forward from previous years |
16,300 | 0 | 0 | 0 | 0 | 12,530 | 1 | 28,831 |
| Profit (loss) | 63,358 | 0 | 0 | 0 | 71,855 | -63,358 | 0 | 71,855 |
| Equity attributable to owners of the parent |
888,039 | 0 | 16,271 | 0 | 71,815 | -34,478 | 0 | 941,647 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| TOTAL EQUITY | 888,039 | 0 | 16,271 | 0 | 71,815 | -34,478 | 0 | 941,647 |
Aedifica SA (referred to in the financial statements as "the Company", "the Parent" or "the Group") is a limited liability company having opted for public Regulated Real Estate Company (RREC) status under Belgian law. Its primary shareholders are listed in Note 38. The address of its registered office is the following: Rue Belliard 40, B-1040 Brussels (telephone: +32 (0)2 626 07 70)
The Aedifica Group (referred to in the financial statements as "the Group") is composed of the parent-company and its subsidiaries.
Aedifica is positioned as a leading Belgian listed company investing in healthcare real estate in Europe – senior housing in particular. Its strategy is focused on the demographic trend of population ageing in Europe and the specific care and housing needs this trend implies. The Company aims to create a balanced portfolio that generates recurring revenues and offers potential for capital gains.
Aedifica's activities are mainly concentrated in the healthcare real estate segment (with a focus on senior housing), but the Group is also active in apartment buildings and hotels.
The Company's shares have been listed on Euronext Brussels (regulated market) since October 2006.
Publication of the Consolidated Financial Statements was approved by the Board of Directors on 4 September 2018. The Company's shareholders have the power to amend the Consolidated Financial Statements after issue at the Annual General Meeting, to be held on 23 October 2018.
The Consolidated Financial Statements cover the 12-month period ending 30 June 2018. They have been prepared in conformity with "International Financial Reporting Standards" ("IFRS") and the interpretations of the "International Financial Reporting Interpretations Committee" ("IFRIC"), issued as of 30 June 2018 and approved by the European Union ("EU").
These Consolidated Financial Statements are fully in line with the standards and interpretations published by the "International Accounting Standards Board" ("IASB") applicable as of 30 June 2018. Elements of IAS 39 that were rejected by the EU are not applicable for the Aedifica group. The Consolidated Financial Statements have also been prepared in accordance with the spirit and provisions of the Royal Decree of 13 July 2014 on Regulated Real Estate Companies.
The Consolidated Financial Statements are prepared in Euros, and presented in thousands of Euros.
The Consolidated Financial Statements have been prepared with application of the historical cost convention, except for the following assets and liabilities, which are measured at fair value: investment properties, investment properties held for sale, financial assets and liabilities held for hedging or held for trading (mainly derivatives), and put options granted to non-controlling shareholders.
The Consolidated Financial Statements have been prepared in accordance with accrual accounting principles on a going concern basis.
The preparation of the Consolidated Financial Statements in conformity with IFRS requires significant judgment in the application of accounting policies (including the classification of lease contracts, identification of business combinations, and calculation of deferred taxes) and the use of certain accounting estimates (such as impairment tests involving goodwill). Underlying assumptions are based on prior experience, input from third parties (notably real estate experts), and on other relevant factors. Actual results may vary on the basis of these estimations. Consequently, the assumptions and estimates are regularly revisited and modified as necessary.
The new and amended standards and interpretations listed below are obligatory and have been applied by the Group since 1 July 2017 and have no impact on the Consolidated Financial Statements presented for the 2017/2018 financial year:
Several new standards, as well as amendments and interpretations related to existing standards have been issued and will become mandatory for application in financial years beginning on or after 1 July 2018. These changes, which the Aedifica group has not adopted anticipatively, include the following (as of 6 July 2018):
The Group is currently evaluating the impacts of the above-listed changes. Among them, the most relevant elements for the Company are the following:
IFRS 9 was finalised and published by IASB in July 2014 and endorsed by the EU in November 2016. IFRS 9 contains the requirements for the classification and measurement of financial assets and financial liabilities, the impairment of financial assets, and the general hedge accounting. IFRS 9 will replace most parts of IAS 39 – Financial Instruments: Recognition and Measurement.
Based on an analysis of Aedifica's situation as at 30 June 2018, IFRS 9 is not expected to have a material impact on the statutory or consolidated financial statements. With respect to the impairment of financial assets measured at amortised cost, including trade receivables, the initial application of the expected credit loss model under IFRS 9 will result in earlier recognition of credit losses compared to the incurred loss model currently applied under IAS 39. Considering the relatively limited amount of trade receivables combined with the low associated credit risk, Aedifica does not anticipate a material impact on the statutory accounts or consolidated financial statements.
IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Upon its effective date IFRS 15 will replace IAS 18, which covers revenue arising from the sale of goods and the rendering of services, and IAS 11, which covers construction contracts, and related interpretations.
IFRS 15 is not expected to have a material impact on the statutory accounts or consolidated financial statements of Aedifica as lease contracts are excluded from the scope of the standard and represent the main source of income for Aedifica. The principles of IFRS 15 are still applicable to the non-lease components that may be contained in lease contracts or in separate agreements, such as maintenance related services charged to the lessee. Considering however that such non-lease components are relatively limited in amount and mostly represent services recognised over time under both IFRS 15 and IAS 18, Aedifica does not anticipate a material impact in that respect.
IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It will supersede IAS 17 – Leases and related interpretations upon its effective date.
Significant changes to lessee accounting are introduced by IFRS 16, with the distinction between operating and finance leases removed and assets and liabilities recognised in respect of all leases (subject to limited exceptions for short-term leases and leases of low value assets). In contrast to lessee accounting, IFRS 16 substantially carries forward the lessor accounting requirements found in IAS 17; it continues to require a lessor to classify a lease either as an operating lease or a finance lease.
As Aedifica is almost exclusively acting as lessor, IFRS 16 is not expected to have a material impact on its statutory or consolidated financial statements. In the limited cases where Aedifica is the lessee in contracts classified as operating leases under IAS 17 and not subject to the IFRS 16 exemptions (e.g. lease of cars, property used by the Group, etc.), a right-of-use asset and related liability will be recognised on the statutory and consolidated balance sheet.
The main significant accounting policies applied during the preparation of the Consolidated Financial Statements are presented below. These methods were applied consistently to all previous financial years.
The numbering of the paragraphs below refers to the lines presented on the balance sheet and income statement.
All entities for which Aedifica directly or indirectly holds more than half of the voting rights or has the power to control operations are considered subsidiaries and included in the scope of consolidation. In accordance with IFRS 10, subsidiaries are fully consolidated as from the date on which control is transferred to the Group; they are de-consolidated as from the date that control ceases. All intercompany transactions, balances, and unrealised gains and losses on transactions between the Group's companies are eliminated.
Business combinations are recognized using the purchase method in accordance with IFRS 3. The excess of the acquisition cost over the fair value of the Group's share of the net identifiable assets of the acquired business at the date of acquisition is recognized as goodwill (an asset). In the event that this value is negative, it is recognized immediately in profit. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.
Intangible assets are capitalised as assets at their acquisition cost and are amortised using the straight-line method at annual rates between 25 % and 33 %.
If the acquisition of a building takes place by cash payment, through the acquisition of shares of a real estate company, through the non-monetary contribution of a building against the issuance of new shares, by merger through takeover of a property, or by a partial de-merger, the deed costs, audit and consultancy costs, reinvestment bank fees, costs of lifting security on the financing of the absorbed company, and other costs relating to the merger are also considered part of the acquisition cost and capitalised in the asset accounts on the balance sheet.
Properties in the Group's portfolio or which enter into its portfolio, either with payment in cash or in kind, are valued by independent experts at their fair value.
The fair value of investment properties located in Belgium is calculated as follows:
The average transaction cost defined by the BE-REIT Association is revised annually and adjusted as necessary in increments of 0.5 %. Experts attest to the percentage deducted and retained in regular reports to shareholders; it currently amounts to 2.5 %.
The fair value of investment properties located abroad take into account locally applicable legal costs.
Transfer taxes on acquisitions and any change in the fair value of properties during the financial year are directly recognised in the income statement.
This rule changed effective 1 July 2015.
If, for acquisitions such as those defined in section IC 1.1 ("Acquisition value") above, the fair value determined by the independent expert is different than the acquisition value defined in section I.C.1.1, the difference is booked in the income statement under line "XVIII. Changes in fair value of investment properties".
Costs incurred by Aedifica for works carried out on investment properties are accounted for using one of two distinct methods, depending on the nature of the costs. The cost of repairs and maintenance, which neither add new functionality nor constitute a significant enhancement or upgrade to the building, are recognised as expenses as incurred and, thus, deducted from profit for the year. Subsequent expenditures related to two types of works projects are capitalised as assets on the Company's balance sheet:
a) Major renovations and extensions: these usually take place every 25 to 35 years and represent an almost complete renovation of the building, often reusing parts of the original building and applying the most up-to-date building techniques. Upon completion of these major renovation projects, the buildings are considered as new and are presented as such in the real estate portfolio.
b) Upgrades: these consist of occasional works that add new functionality, increase capacity, or significantly enhance or upgrade the building, making it possible to raise rents, and thus increasing the building's estimated rental income.
The appreciation in building values as a result of these projects is generally recognised by experts, which validates the probability that future benefits will flow to the Group as a result of the investment. Thus, all costs directly attributable to these types of works projects are capitalised in assets on the balance sheet. Attributable costs include but are not limited to: direct materials, contractor fees, technical studies, and architectural fees (up to 30 June 2006, only the cost of external architects were deemed eligible; since that time, the cost of both internal and external architects is included). Any excess of these costs over fair value is recognised as an expense in the income statement.
Borrowing costs are capitalised for all qualifying works projects with duration of more than one year.
In accordance with IAS 40, Aedifica applies the fair value model and does not recognise depreciation on its properties, the rights in rem on properties, or on properties rented to the Company under finance leases.
Real estate properties held by Aedifica and by the subsidiaries under its control are valued by experts each time the Company proceeds to issue new shares, list shares on the stock exchange, or repurchase shares other than through the stock exchange. While Aedifica is not bound by this valuation, any issue or repurchase price set below this level must be justified (in the form of a special report).
A new valuation is not required when a share issuance falls within four months of the last valuation of the property concerned, so long as the experts confirm that neither the economic situation nor the physical state of the property make a new valuation necessary.
Real estate experts perform a calculation of fair value at the end of the first three quarters of the financial year based on the conditions of the properties and on fluctuations observed in the real estate market. This valuation is carried out on a building-bybuilding basis and covers Aedifica's entire real estate portfolio, including properties held by its subsidiaries.
At the end of each financial year, an expert conducts a precise valuation of the following items:
These valuations are binding for Aedifica and must be reflected in the accounts. Thus, the carrying amount of the properties in the accounts corresponds to the fair value at which they are assessed by Aedifica's independent experts.
Changes in the fair value of real estate properties, as determined by independent experts, arise each time the value is assessed. They are accounted for in the income statement.
Upon disposal of an investment property, the gain or loss on disposal is recognised in the income statement, in line "XVI. Gains and losses on disposals of investment properties".
Any investment property occupied by Aedifica is transferred to the line "other tangible assets" of the balance sheet. Its fair value at the time of the transfer becomes its deemed acquisition cost. If the Company only occupies a small part of the building, the whole building is recognised as "investment property" in the balance sheet and continues to be carried at fair value.
Buildings under construction, renovation, or extension, which are considered development projects are recognised on the balance sheet at historical cost, including transfer taxes, non-recoverable VAT and indirect expenses (capitalised interest, insurance, legal fees, architectural fees, consulting fees, etc.). If the historical cost deviates from the fair value appraised by the independent expert, the deviation is recognised in the income statement in order to bring the carrying amount in line with the fair value. Costs incurred in the preliminary phase of development projects are recognised at their historical value.
Tangible assets with definite useful lives, which fall outside the scope of investment property, are initially recognised at their acquisition cost. The components approach is not applied (based on materiality criteria). Depreciation is charged on a linear basis using the pro rata temporis method. Thus, if the financial year does not cover 12 months (i.e. in case of a change in the Company's year-end), the depreciation charge is adjusted accordingly. As residual values are considered marginal, accumulated depreciation is expected to cover the total acquisition cost of each item included in other tangible assets.
The following depreciation rates are applied: - Plant, machinery and equipment: 20 %;
When a derivative provides cash flow hedges to cover a specific risk arising from a financial asset or a firm commitment or a highly probable transaction liability and meets the criteria for hedge accounting under IAS 39, the effective portion of the income or expense is recognised directly in equity (line "I.C.d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS"). The ineffective portion is recognised in the income statement.
When a derivative does not meet the criteria for hedge accounting under IAS 39, it is recognised on the balance sheet at its fair value, and changes in fair value are recognised in the income statement as they occur. The same treatment is applied for hedging instruments showing a negative fair value.
Financial assets available for sale are valued at fair value (market value if available, otherwise acquisition value). Changes in fair value are recognised in equity (under "I.C.i. Reserve for the balance of changes in fair value of financial assets available for sale"). Receivables are valued at amortised cost.
When a building is acquired outside of Belgium, the net income generated is subject to a foreign income tax. Deferred taxes are recognised on the balance sheet in relation to any unrealised gains (temporary difference between the fair value and the assessed value used for tax purposes of the building in question).
Properties that are considered non-strategic and which are intended to be sold are included in line II.A. They are recognised at fair value, in accordance with IFRS 5.
Receivables are measured at amortised cost. Impairments are recognised when the insolvency of the debtor is confirmed.
Costs incurred during the year, which relate partially or in full to the following year, are recognised on a proportional basis as deferred charges. Revenues and portions of revenues earned over the course of one or several subsequent financial years, but which are also related to the current year, are recognised in income for the amount earned in the current year.
A provision is recognized on the balance sheet when the Group has an implicit or explicit legal obligation as a result of a past event, and for which it is probable the resources will be used to extinguish this obligation. Provisions are measured by calculating the present value of expected cash flows using a market interest rate. They are reflected as a liability on the balance sheet.
The Company can commit itself to acquire the non-controlling shareholdings owned by third parties in subsidiaries, should these third parties wish to exercise their put options. The exercise price of such options granted to non-controlling interest is reflected on the balance sheet on line "I.C.b. Other non-current financial liabilities – Other".
When a building is acquired outside of Belgium, the net income generated is subject to a foreign income tax. Deferred taxes are recognised on the balance sheet in relation to any unrealised gains (temporary difference between the fair value and the assessed value used for tax purposes of the building in question).
Debts are recognized at amortised cost at the year-end date. Debts denominated in foreign currencies are converted into Euros using the spot rate on the year-end date.
Damages and interests paid by a lessee for breach of contract are recognised in the income statement at the time of receipt.
The objective of lines I through XV is to reflect the operating profit generated by the Company's rental property portfolio, including general operating costs.
All of Aedifica's leases are classified as operating leases for which Aedifica is the lessor. Lease income is recognised on a straightline basis over the lease term, in accordance with IAS 17.
The objective of lines XVI through XVIII is to reflect in the income statement all transactions and accounting adjustments related to the value of the Company's portfolio:
The result on disposals of investment properties represents the difference between sales proceeds (excluding transaction costs) and the latest reported fair value of the properties sold. The result is realised at the moment of the transfer of risks and rewards.
Generally, transfer taxes are to be paid by the purchasor. However, in the case of "deed in hand" disposals, the transfer taxes are to be paid by the seller and are thus deducted from the sale price and reduce the gain effectively realised.
In the event of a disposal, transfer taxes do not need to be deducted from the difference between the received amount and the carrying value of the sold properties in order to calculate the capital gain or loss effectively realised, as they have already been recognised in the income statement at the moment of acquisition.
The Board of Directors values commitments and contingencies at the nominal value of the legal obligation as stated in the contract; in the absence of a nominal value or in exceptional cases, these values are disclosed for information purposes.
Aedifica's insurance contracts are considered defined contribution plans. These contracts are analysed in Note 39.
The following operating segments have been identified with application of IFRS 8:
These three operating segments are consistent with the internal reports provided to the Group's chief operating decision-makers, as required under IFRS 8. The accounting policies presented in Note 2 are used for internal reporting purposes, including segment reporting.
All revenues are earned from external clients located in the Company's country of residence (Belgium: €65,968 thousand) with the exception of revenues from Germany (€15,593 thousand) and The Netherlands (€10,298 thousand). All non-current assets are located in Belgium, with the exception of €285,398 thousand located in Germany and €243,050 thousand in The Netherlands. In 2016/2017, all revenues were earned from external clients located in the Company's country of residence (Belgium: €61,443 thousand) with the exception of revenues from Germany (€12,290 thousand) and The Netherlands (5,447 k€). All noncurrent assets were located in Belgium, with the exception of €208,890 thousand located in Germany and €156,520 located in The Netherlands.
Each group of entities that falls under common control is considered as a single customer under IFRS 8. Revenues generated through transactions with a single customer representing more than 10 % of the Company's total revenues must be disclosed. This requirement applies to:
Rents mentioned here represent the turnover realised by the Company over the duration of the financial year, which differ from the contractual rents (representing the agreements in place at the time of the year-end closure) on which the analyses included in the Property Report of this Annual Financial Report are based (refer to sections 3.7 and 3.8 of the Property Report).
| Year ending on 30 June (x €1,000) | 2017 | ||||||
|---|---|---|---|---|---|---|---|
| Healthcare real estate |
Apartment buildings |
Hotels | Non allocated |
Inter segment items° |
TOTAL | ||
| SEGMENT RESULT | |||||||
| I. | Rental income | 63,939 | 11,021 | 4,220 | 0 | -197 | 78,983 |
| II. | Writeback of lease payments sold and discounted | 0 | 0 | 0 | 0 | 0 | 0 |
| III. | Rental-related charges | -6 | -19 | -23 | 0 | 0 | -48 |
| Net rental income | 63,933 | 11,002 | 4,197 | 0 | -197 | 78,935 | |
| IV. | Recovery of property charges | 3 | 37 | 0 | 0 | 0 | 40 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties |
1,085 | 1,398 | 105 | 0 | 0 | 2,588 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease |
0 | 0 | 0 | 0 | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties | -1,085 | -1,398 | -105 | 0 | 0 | -2,588 |
| VIII. | Other rental-related income and charges | -36 | -884 | 3 | 0 | 0 | -917 |
| Property result | 63,900 | 10,155 | 4,200 | 0 | -197 | 78,058 | |
| IX. | Technical costs | -311 | -923 | -13 | 0 | 0 | -1,247 |
| X. | Commercial costs | -61 | -502 | -4 | 0 | 0 | -567 |
| XI. | Charges and taxes on unlet properties | 0 | -165 | 0 | 0 | 0 | -165 |
| XII. | Property management costs | -438 | -560 | 0 | 0 | 0 | -998 |
| XIII. | Other property charges | -28 | -976 | -22 | 0 | 0 | -1,026 |
| Property charges | -838 | -3,126 | -39 | 0 | 0 | -4,003 | |
| Property operating result | 63,062 | 7,029 | 4,161 | 0 | -197 | 74,055 | |
| XIV. | Overheads | -78 | -85 | 0 | -8,578 | 197 | -8,544 |
| XV. | Other operating income and charges | 222 | 37 | 0 | 7 | 0 | 266 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 63,206 | 6,981 | 4,161 | -8,571 | 0 | 65,777 | |
| SEGMENT ASSETS | |||||||
| Marketable investment properties | 1,240,021 | 215,205 | 68,009 | - | - | 1,523,235 | |
| Development projects | - | - | - | 17,174 | - | 17,174 | |
| Investment properties | 1,540,409 | ||||||
| Assets classified as held for sale | 4,440 | 0 | 0 | - | - | 4,440 | |
| Other assets | - | - | - | 25,273 | - | 25,273 | |
| Total assets | 1,570,122 | ||||||
| SEGMENT DEPRECIATION | 0 | -524 | 0 | -154 | 0 | -678 | |
| SEGMENT INVESTMENTS | |||||||
| Marketable investment properties | 333,028 | 0 | 0 | - | - | 333,028 | |
| Development projects | - | - | - | 0 | - | 0 | |
| Investment properties | 333,028 | 0 | 0 | 0 | 0 | 333,028 | |
| INVESTMENT PROPERTIES IN ACQUISITION VALUE | 1,133,987 | 193,438 | 69,703 | - | - | 1,397,128 | |
| CHANGES IN FAIR VALUE OF INVESTMENT PROPERTIES | 18,782 | 217 | -2,880 | -5,762 | 0 | 10,357 | |
| VALUE INSURED | 1,123,608 | 199,835 | 83,988 | - | - | 1,407,431 | |
| GROSS YIELD IN FAIR VALUE | 5.7% | 4.9% | 6.5% | - | - | 5.7% | |
° Mainly elimination of the internal rent for the administrative offices of the Company.
| Year ending on 30 June (x €1,000) | 2018 | ||||||
|---|---|---|---|---|---|---|---|
| Healthcare real estate |
Apartment buildings |
Hotels | Non allocated |
Inter segment items° |
TOTAL | ||
| SEGMENT RESULT | |||||||
| I. | Rental income | 76,454 | 10,489 | 4,916 | 0 | -182 | 91,677 |
| II. | Writeback of lease payments sold and discounted | 0 | 0 | 0 | 0 | 0 | 0 |
| III. | Rental-related charges | -8 | -60 | -12 | 0 | 0 | -80 |
| Net rental income | 76,446 | 10,429 | 4,904 | 0 | -182 | 91,597 | |
| IV. | Recovery of property charges | 0 | 83 | 1 | 0 | 0 | 84 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties |
1,285 | 1,157 | 27 | 0 | 0 | 2,469 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease |
0 | 0 | 0 | 0 | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties |
-1,285 | -1,157 | -27 | 0 | 0 | -2,469 |
| VIII. | Other rental-related income and charges | -97 | -907 | 19 | 0 | 0 | -985 |
| Property result | 76,349 | 9,605 | 4,924 | 0 | -182 | 90,696 | |
| IX. | Technical costs | -400 | -951 | -28 | 0 | 0 | -1,379 |
| X. | Commercial costs | -13 | -539 | 0 | 0 | 0 | -552 |
| XI. | Charges and taxes on unlet properties | 5 | -142 | 1 | 0 | 0 | -136 |
| XII. | Property management costs | -658 | -613 | -2 | 0 | 0 | -1,273 |
| XIII. | Other property charges | -226 | -1,039 | -16 | 0 | 0 | -1,281 |
| Property charges | -1,292 | -3,284 | -45 | 0 | 0 | -4,621 | |
| Property operating result | 75,057 | 6,321 | 4,879 | 0 | -182 | 86,075 | |
| XIV. | Overheads | -187 | -54 | -2 | -10,902 | 182 | -10,963 |
| XV. | Other operating income and charges | 53 | 28 | -32 | 2,114 | 0 | 2,163 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 74,923 | 6,295 | 4,845 | -8,788 | 0 | 77,275 | |
| SEGMENT ASSETS | |||||||
| Marketable investment properties | 1,426,736 | 206,938 | 67,606 | - | - | 1,701,280 | |
| Development projects | - | - | - | 35,183 | - | 35,183 | |
| Investment properties | 1,736,463 | ||||||
| Assets classified as held for sale | 4,070 | 0 | 0 | - | - | 4,070 | |
| Other assets | - | - | - | 26,110 | - | 26,110 | |
| Total assets | 1,766,643 | ||||||
| SEGMENT DEPRECIATION | 0 | -569 | 0 | -235 | 0 | -804 | |
| SEGMENT INVESTMENTS | |||||||
| Marketable investment properties | 127,250 | 0 | 0 | - | - | 127,250 | |
| Development projects | - | - | - | 0 | - | 0 | |
| Investment properties | 127,250 | 0 | 0 | 0 | 0 | 127,250 | |
| INVESTMENT PROPERTIES IN ACQUISITION VALUE | 1,297,561 | 178,414 | 68,903 | - | - | 1,544,878 | |
| CHANGES IN FAIR VALUE OF INVESTMENT PROPERTIES | 22,475 | 2,474 | 277 | -10,208 | 0 | 15,018 | |
| VALUE INSURED | 1,340,428 | 189,405 | 86,397 | - | - | 1,616,230 | |
| GROSS YIELD IN FAIR VALUE | 5.7% | 5.1% | 6.3% | - | - | 5.7% |
° Mainly elimination of the internal rent for the administrative offices of the Company.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Rents earned | 91,600 | 78,908 |
| Guaranteed income | 0 | 0 |
| Cost of rent free periods | -3 | -4 |
| Indemnities for early termination of rental contracts | 80 | 79 |
| TOTAL | 91,677 | 78,983 |
The Group rents its buildings exclusively under operating leases.
The increase in rents earned is linked to the portfolio's growth during the 2017/2018 financial year.
The schedule of future minimum lease payments to be collected under non-cancellable operating leases required by IAS 17 is based on the following assumptions, which are extremely conservative:
Future minimum lease payments to be collected under non-cancellable operating leases are presented as follow:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Not later than one year | 88,437 | 79,605 |
| Later than one year and not later than five years | 342,883 | 305,113 |
| Later than five years | 1,454,681 | 1,314,214 |
| TOTAL | 1,886,001 | 1,698,932 |
Rental income includes contingent rents amounting to €124 thousand (30 June 2017: €77 thousand).
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Rents payable as lessee | -23 | -20 |
| Write-downs on trade receivables | -57 | -28 |
| TOTAL | -80 | -48 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Indemnities on rental damage | 84 | 40 |
| TOTAL | 84 | 40 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Rebilling of rental charges invoiced to the landlord | 1,443 | 1,744 |
| Rebilling of property taxes and other taxes on let properties | 1,026 | 844 |
| TOTAL | 2,469 | 2,588 |
Aedifica has not paid any amounts justifying particular mention in relation to costs payable by tenants and borne by the landlord on rental damage and/or repairs at the end of the lease term.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Rental charges invoiced to the landlord | -1,443 | -1,744 |
| Property taxes and other taxes on let properties | -1,026 | -844 |
| TOTAL | -2,469 | -2,588 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Cleaning | -280 | -196 |
| Energy | -194 | -192 |
| Depreciation of furniture | -526 | -482 |
| Employee benefits | -186 | -229 |
| Other | 201 | 182 |
| TOTAL | -985 | -917 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Recurring technical costs | ||
| Repair | -282 | -415 |
| Insurance | -110 | -100 |
| Employee benefits | -583 | -455 |
| Maintenance | -185 | -101 |
| Expert fees | -219 | -176 |
| TOTAL | -1,379 | -1,247 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Letting fees paid to real estate brokers | -313 | -264 |
| Marketing | -142 | -146 |
| Fees paid to lawyers and other legal costs | -14 | -80 |
| Other | -83 | -77 |
| TOTAL | -552 | -567 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Charges | -136 | -165 |
| TOTAL | -136 | -165 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Fees paid to external property managers | -146 | -134 |
| Internal property management expenses | -1,127 | -864 |
| TOTAL | -1,273 | -998 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Property taxes and other taxes | -1,281 | -1,026 |
| TOTAL | -1,281 | -1,026 |
A number of disputes are ongoing with respect to local taxes; Aedifica continues to defend its position in these cases. The disputed amounts have been recognised as an expense and have been paid.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Lawyers/notaries | -310 | -259 |
| Auditors | -254 | -133 |
| Real estate experts | -759 | -783 |
| IT | -203 | -186 |
| Insurance | -96 | -71 |
| Public relations, communication, marketing, publicity | -405 | -286 |
| Directors and executive management | -2,933 | -2,359 |
| Employee benefits | -2,418 | -1,926 |
| Depreciation and amortisation of other assets | -279 | -196 |
| Tax expense | -890 | -632 |
| Other | -2,416 | -1,713 |
| TOTAL | -10,963 | -8,544 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Recovery of damage expenses | 7 | 31 |
| Other | 2,156 | 235 |
| TOTAL | 2,163 | 266 |
Other operating income and charges include a non-recurrent income of €2.0 million. This income results from an agreement with an operator regarding the transfer of its operational activities to another operator.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Net sale of properties (selling price - transaction costs) | 15,517 | 11,044 |
| Carrying amount of properties sold | -14,728 | -9,585 |
| TOTAL | 789 | 1,459 |
Over the course of the current and previous financial years, Aedifica has not recognised any gains or losses from the sale of other non-financial assets.
Changes in fair value of investment properties:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Positive changes | 35,900 | 26,486 |
| Negative changes | -20,882 | -16,129 |
| TOTAL | 15,018 | 10,357 |
| of which: marketable investment properties | 25,226 | 16,119 |
| development projects | -10,208 | -5,762 |
Applying the 2018 presentation of the exit tax (separately presented on line "XXVI. Exit tax" instead of being included on line "XVIII. Changes in fair value of investment properties") to the 2017 figures, the changes in fair value of investment properties would amount to €10,833 thousand instead of €10,357 thousand.
This change of presentation had no impact on either net profit or EPRA Earnings*.
Other result on portfolio:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Goodwill impairment | -335 | 0 |
| Other | -9 | 0 |
| TOTAL | -344 | 0 |
During the financial year under review, the Group recognised a goodwill impairment of €335 thousand as a result of the annual impairment test of the cash-generating units. See Note 27 for more information on this topic.
The line "Other" refers to the difference between Aedifica SA's investment in Aedifica Project Management GmbH and this subsidiary's net assets at the time of the first consolidation.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Interests earned | 15 | 71 |
| Other | 539 | 84 |
| TOTAL | 554 | 155 |
The 2017/2018 financial income included €0.5 million of non-recurrent income. This amount represents the fee paid to Aedifica at the time of the contribution-in-kind of 7 June 2018 as compensation for the allocation of full dividend rights for the 2017/2018 financial year to the new shares issued that day.
The 2016/2017 financial income included €0.1 million of non-recurrent income. This amount represents the fee paid to Aedifica at the time of the contribution in kind of 8 December 2016 as compensation for the allocation of full dividend rights for the 2016/2017 financial year to the new shares issued that day.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Nominal interest on borrowings | -9,209 | -8,702 |
| Charges arising from authorised hedging instruments | ||
| Authorised hedging instruments qualifying for hedge accounting as defined under IFRS | -2,362 | -3,593 |
| Authorised hedging instruments not qualifying for hedge accounting as defined under IFRS | -3,229 | -3,391 |
| Subtotal | -5,591 | -6,984 |
| Income arising from authorised hedging instruments | ||
| Authorised hedging instruments qualifying for hedge accounting as defined under IFRS | 0 | 0 |
| Authorised hedging instruments not qualifying for hedge accounting as defined under IFRS | 0 | 0 |
| Subtotal | 0 | 0 |
| Capitalised borrowings costs | 483 | 321 |
| Other interest charges | -4 | 0 |
| TOTAL | -14,321 | -15,365 |
Charges and income arising from hedging instruments represents Aedifica's cash interest receipts or payments related to derivatives presented in Note 32 and detailed in Note 33. Changes in the fair value of these derivatives are listed in Note 47 and recognised in the income statement.
| (x €1,000) | 2017 | |
|---|---|---|
| Bank charges and other commissions | -1,478 | -1,262 |
| Other | -74 | -66 |
| TOTAL | -1,552 | -1,328 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Parent | ||
| Profit before tax (loss) | 65,288 | 58,273 |
| Effect of the Belgian REIT tax regime | -65,288 | -58,273 |
| Taxable result in Belgium based on non-deductible costs | 382 | 406 |
| Belgian current tax at rate of 33,99% | -130 | -138 |
| Belgian current tax regularisation for the previous year | -58 | -125 |
| Foreign current tax | -1,046 | -187 |
| Foreign deferred taxes: originations | 350 | 47 |
| Foreign deferred taxes: reversals | -1,048 | -830 |
| Subtotal | -1,932 | -1,233 |
| Subsidiaries | ||
| Belgian current tax | -625 | -208 |
| Foreign current tax | -1,694 | -617 |
| Foreign deferred taxes: originations | 700 | 446 |
| Foreign deferred taxes: reversals | -2,515 | -1,204 |
| Subtotal | -4,134 | -1,583 |
| Corporate tax | -6,066 | -2,816 |
| Exit tax | 2,659 | 0 |
| TOTAL TAX | -3,407 | -2,816 |
The corporate taxes are composed of current taxes and deferred taxes.
Current taxes consist primarily of Belgian tax on Aedifica's non-deductible expenditures (since Belgian REITs benefit from a specific tax regime, leading to the taxation of only non-deductible costs, such as regional taxes, car costs, representation costs, social costs, donations, etc.), tax generated abroad and tax on the result of the consolidated subsidiaries.
Deferred taxes arose from the recognition at fair value of buildings located abroad in conformity with IAS 40. This deferred tax (with no monetary impact, that is to say, non-cash) is thus excluded from the EPRA Earnings* (see Note 54).
Applying the 2018 presentation of the exit tax (separately presented on line "XXVI. Exit tax" instead of being included on line "XVIII. Changes in fair value of investment properties") to the 2017 figures, line "XXVI. Exit tax" would amount to -€526 thousand instead of €0 thousand. This change of presentation had no impact on either net profit or EPRA Earnings*.
The positive change in the exit tax is attributed to the reduced tax rate on capital gain (from 16.995 % to 12.75 %).
The amounts related to the exit tax are included and discussed in Note 24.
The earnings per share ("EPS" as defined by IAS 33) is calculated as follows:
| 2018 | 2017 | |
|---|---|---|
| Profit (loss) (Owners of the parent) (x €1,000) | 71,855 | 63,358 |
| Weighted average number of shares outstanding during the period | 17,990,607 | 15,235,696 |
| Basic EPS (in €) | 3.99 | 4.16 |
| Diluted EPS (in €) | 3.99 | 4.16 |
Aedifica uses EPRA Earnings* to comply with the EPRA's recommendations and to measure its operational and financial performance; however, this performance measure is not defined under IFRS (see Note 57). In Aedifica's case, it represents the profit (attributable to owners of the Parent) after removing exclusively changes in fair value of investment properties (and the movements of deferred taxes related to these) and hedging instruments.
Profit excluding changes in fair value is calculated as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Profit (loss) (Owners of the parent) | 71,855 | 63,358 |
| Less: Changes in fair value of investment properties (see Note 20) | -15,018 | -10,357 |
| Less: Gain and losses on disposal of investment properties (see Note 18) | -789 | -1,459 |
| Less: Deferred taxes in respect of EPRA adjustments (see Note 25 and 54) | -146 | 1,541 |
| Less: Changes in fair value of financial assets and liabilities (see Note 47) | 2,157 | -5,119 |
| Less: Negative goodwill / goodwill impairment (see Note 20) | 0 | |
| Roundings | 0 | 0 |
| EPRA Earnings* | 58,403 | 47,964 |
| Weighted average number of shares outstanding during the period | 17,990,607 | 15,235,696 |
|---|---|---|
| EPRA Earnings* per share (in €) | 3.25 | 3.15 |
The calculation in accordance with the model recommended by EPRA is included in the EPRA chapter of the Annual Financial Report.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Gross value at the beginning of the year | 1,856 | 1,856 |
| Cumulative impairment losses at the beginning of the year | 0 | 0 |
| Carrying amount at the beginning of the year | 1,856 | |
| Additions | 335 | 0 |
| Impairment losses | 0 | |
| CARRYING AMOUNT AT THE END OF THE YEAR | 1,856 | |
| of which: gross value | 2,191 | 1,856 |
| cumulative impairment losses | -335 | 0 |
In applying IAS 36 – Impairment of Assets, the Group primarily performed an analysis of the carrying amount of goodwill.
Goodwill arose from the acquisition of Ixelinvest SA, the original owner of a residential complex that is rented out as furnished apartments on rue Souveraine in Brussels. This complex constitutes the cash-generating unit for the purposes of the goodwill impairment test.
An impairment review, performed by calculating value in use, was carried out to ensure that the carrying value of the cashgenerating unit's assets (fair value of properties of €33 million, carrying amount of furniture of less than €1 million and carrying amount of goodwill for less than €2 million, i.e. €35 million in total) does not exceed their recoverable amount, defined as the higher of (i) the fair value less costs to sell and (ii) the value in use (estimated at €66 million).
In determining the value in use, the Group calculated the present value of the estimated future cash flows expected to arise from the continued use of the assets using a pre-tax discount rate of 4 %. The discount rate applied is based upon the weighted average cost of capital with appropriate adjustment for the relevant risks associated with the businesses, and can vary one year to another depending on market indicators. Estimated future cash flows are based on long-term plans (6 years) for each cash-generating unit, with extrapolation thereafter based on long-term average growth rates for the individual cash-generating units. This growth rate is set at 2 %, in line with expected inflation.
Future cash flows are estimated and may be revised in future periods as underlying assumptions change. Key assumptions in supporting the value of goodwill include long-term interest rates and other market data, captured in the abovementioned pre-tax discount. Should the assumptions vary adversely in the future, the value in use of goodwill may fall below the carrying amount. Based on current valuations, the headroom (estimated at €31 million) appears sufficient to absorb a normal variation of approx. 1.5 % in the pre-tax discount. An impairment on goodwill would be booked for any excess over this headroom.
In 2017, no impairment was recognised in the cash-generating units.
Goodwill arose from the acquisition of Schloss Bensberg Management GmbH, as set out in Note 58.
The impairment test resulted in an impairment of €335 thousand, which implies that goodwill is fully reduced to zero. Although the Group continues to explore ways to improve profitability, it is not certain at present whether Schloss Bensberg Management GmbH's operating model will be able to generate enough positive cash flow to absorb the loss carryforwards of this subsidiary.
This impairment was recognised in the operating result on line "XIX. Other result on portfolio" (see Note 20).
All intangible assets (consisting mainly of computer software) have a fixed useful life. Amortisation is recognised in income under the line "overheads".
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Gross value at the beginning of the year | 645 | 468 |
| Depreciation and cumulative impairment losses at the beginning of the year | -425 | -350 |
| Carrying amount at the beginning of the year | 119 | |
| Entries: items acquired separately | 177 | |
| Amortisations | -75 | |
| CARRYING AMOUNT AT THE END OF THE YEAR | 221 | |
| of which: gross value | 645 | |
| amortisations and cumulative impairment losses | -533 | -425 |
| (x €1,000) | Marketable investment properties |
Development projects |
TOTAL |
|---|---|---|---|
| CARRYING AMOUNT AS OF 1/07/2016 | 1,126,289 | 25,924 | 1,152,213 |
| Acquisitions | 333,028 | 0 | 333,028 |
| Disposals | -9,585 | 0 | -9,585 |
| Capitalised interest charges | 0 | 322 | 322 |
| Capitalised employee benefits | 0 | 78 | 78 |
| Other capitalised expenses | 6,364 | 47,451 | 53,815 |
| Transfers due to completion | 50,839 | -50,839 | 0 |
| Changes in fair value (see Note 20) | 16,119 | -5,762 | 10,357 |
| Other expenses booked in the income statement | 0 | 0 | 0 |
| Transfers to equity | 0 | 0 | 0 |
| Assets classified as held for sale | 181 | 0 | 181 |
| CARRYING AMOUNT AS OF 30/06/2017 | 1,523,235 | 17,174 | 1,540,409 |
| CARRYING AMOUNT AS OF 1/07/2017 | 1,523,235 | 17,174 | 1,540,409 |
| Acquisitions | 127,250 | 0 | 127,250 |
| Disposals | -14,728 | 0 | -14,728 |
| Capitalised interest charges | 0 | 482 | 482 |
| Capitalised employee benefits | 0 | 85 | 85 |
| Other capitalised expenses | 3,677 | 63,900 | 67,577 |
| Transfers due to completion | 36,250 | -36,250 | 0 |
| Changes in fair value (see Note 20) | 25,226 | -10,208 | 15,018 |
| Other expenses booked in the income statement | 0 | 0 | 0 |
| Transfers to equity | 0 | 0 | 0 |
| Assets classified as held for sale | 370 | 0 | 370 |
| CARRYING AMOUNT AS OF 30/06/2018 | 1,701,280 | 35,183 | 1,736,463 |
Determination of fair values depends on market factors and is based on valuations provided by valuation experts who hold relevant and recognised professional qualifications and recent experience in the geographic areas and property types included in the Group's portfolio. All investment properties are located in Belgium, in Germany and in The Netherlands.
The fair value of the Group's portfolio of marketable investment properties is assessed by valuation experts as of 30 June 2018. The average capitalisation rate applied to contractual rents is 5.66 % (in accordance with the valuation methodology – presented in the first bullet of section 1.11 of the Standing Documents included in the 2017/2018 Annual Financial Report). A positive 0.10 % change in the capitalisation rate would lead to a negative change of approx. €30 million in the portfolio's fair value.
Development projects are described in detail in the Property Report included in the 2017/2018 Annual Financial Report.
Assets classified as held for sale (line II.A. included in the assets on the balance sheet) amounts to €4.1 million as of 30 June 2018. These are assisted-living apartments (senior housing) located in Aarschot (see section 2.1.7 of the Consolidated Board of Directors' Report) and are considered as non-strategic assets.
Acquisitions made during the year are described in detail in the Consolidated Board of Directors' Report included in the 2017/2018 Annual Financial Report.
All investment properties are considered to be at "level 3" on the fair value scale defined in IFRS 13. This scale includes three levels: Level 1: observable listed prices in active markets; Level 2: observable data other than the listed prices included in level 1; Level 3: unobservable data. During the 2017/2018 financial year, there were no transfers between level 1, level 2 and level 3.
The valuation methodologies (approach under which a capitalisation rate is applied to the estimated rental value and another based on the present value of future cash flows) are described in section 1.11 of the "Standing Documents" of the 2017/2018 Annual Financial Report.
The quantitative information presented below in relation to the determination of the fair value of investment properties based on unobservable data (level 3) is taken from various reports produced by the valuation experts:
| Type of asset | Fair value as of 30 June 2018 (x €1,000) |
Assessment method |
Unobservable inputs | Min | Max | Weighted average |
|---|---|---|---|---|---|---|
| Healthcare real estate | 1,430,806 | DCF | ERV / m² | 45 | 309 | 134 |
| Inflation | 1.5% | 2.0% | 1.7% | |||
| Discount rate | 4.6% | 7.6% | 5.8% | |||
| Residual maturity (year) | 2 | 30 | 22 | |||
| Apartment buildings | 206,938 | Capitalisation | ERV / m² | 71 | 163 | 118 |
| Capitalisation rate | 4.3% | 6.2% | 4.9% | |||
| Hotels | 67,606 | DCF | ERV / m² | 51 | 156 | 130 |
| Inflation | 1.5% | 1.5% | 1.5% | |||
| Discount rate | 6.7% | 8.6% | 6.9% | |||
| Residual maturity (year) | 2 | 30 | 25 | |||
| Capitalisation | ERV / m² | 0 | 0 | 0 | ||
| Capitalisation rate | 0.0% | 0.0% | 0.0% | |||
| Development projects | 35,183 | DCF | ERV / m² | 81 | 242 | 174 |
| Inflation | 1.5% | 2.0% | 1.6% | |||
| Discount rate | 5.4% | 6.9% | 6.3% | |||
| Residual maturity (year) | 13 | 28 | 21 | |||
| Total | 1,740,533 |
| Type of asset | Fair value as of 30 June 2017 (x €1,000) |
Assessment method |
Unobservable inputs | Min | Max | Weighted average |
|---|---|---|---|---|---|---|
| Healthcare real estate | 1,244,461 | DCF | ERV / m² | 45 | 304 | 133 |
| Inflation | 1.5% | 2.0% | 1.6% | |||
| Discount rate | 5.1% | 7.0% | 5.8% | |||
| Residual maturity (year) | 3 | 29 | 22 | |||
| Apartment buildings | 215,205 | Capitalisation | ERV / m² | 71 | 175 | 119 |
| Capitalisation rate | 4.5% | 6.9% | 5.4% | |||
| Hotels | 68,009 | DCF | ERV / m² | 79 | 126 | 103 |
| Inflation | 1.5% | 1.5% | 1.5% | |||
| Discount rate | 6.3% | 6.8% | 6.7% | |||
| Residual maturity (year) | 20 | 31 | 26 | |||
| Capitalisation | ERV / m² | 86 | 165 | 129 | ||
| Capitalisation rate | 3.5% | 5.6% | 5.0% | |||
| Development projects | 17,175 | DCF | ERV / m² | 97 | 306 | 237 |
| Inflation | 1.5% | 1.6% | 1.6% | |||
| Discount rate | 5.8% | 6.9% | 6.6% | |||
| Residual maturity (year) | 15 | 27 | 21 | |||
| Total | 1,544,849 |
In accordance with legal provisions, properties are revalued four times per year based on valuation reports prepared by the five valuation experts appointed by the Company. These valuations are based on:
Reports provided by the valuation experts are reviewed by the Company's Senior Valuation & Asset Manager, the Senior Manager Group Reporting & Corporate Planning and the Executive Managers. This includes a review of the changes in fair value over the period. When the Executive Managers consider that the valuation reports of the valuation experts are coherent, the valuation report is submitted to the Audit Committee. Following a favourable opinion of the Audit Committee, these reports are submitted to the Board of Directors.
The sensitivity of the fair value measurement to a change of the abovementioned unobservable data is generally as follows (all else being equal):
| Unobservable inputs | Effect on the fair value | |||
|---|---|---|---|---|
| in case of decrease of the unobservable input value |
in case of increase of the unobservable input value |
|||
| ERV / m² | negative | positive | ||
| Capitalisation rate | positive | negative | ||
| Inflation | negative | positive | ||
| Discount rate | positive | negative | ||
| Residual maturity (year) | negative | positive |
Interrelations between unobservable data are possible, as they are determined in part by market conditions.
This Note became redundant with the introduction of the revised IAS 40 "Investment Property" on 1 July 2009. Changes in development projects are now covered in Note 29. Development projects are also described in detail in section 4.2. of the Property Report included in the 2017/2018 Annual Financial Report.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Gross value at beginning of the period | 6,544 | 5,972 |
| Depreciation and cumulative impairment losses at beginning of period | -4,933 | -4,348 |
| Carrying amount at beginning of period | 1,611 | 1,624 |
| Additions | 1,610 | 598 |
| Disposals | 0 | -8 |
| Depreciation | -603 | |
| CARRYING AMOUNT AT END OF PERIOD | 1,611 | |
| of which: gross value | 8,155 | 6,544 |
| depreciations and cumulative impairment losses | -5,586 | -4,933 |
Other tangible assets consist of capital employed in operations (mainly furniture in the furnished apartments).
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Receivables | ||
| Collateral | 0 | 0 |
| Other non-current receivables | 196 | 252 |
| Assets at fair value through profit or loss | ||
| Hedging instruments (see Note 33) | 1,692 | 2,707 |
| Other non-current financial assets | ||
| Hedging instruments (see Note 33) | 0 | 0 |
| TOTAL NON-CURRENT FINANCIAL ASSETS | 2,959 | |
| Liabilities at fair value through profit or loss | ||
| Hedging instruments (see Note 33) | -21,877 | -16,763 |
| Other | -4,389 | -4,146 |
| Total non-current financial liabilities | ||
| Hedging instruments (see Note 33) | -11,333 | -17,024 |
| TOTAL OTHER NON-CURRENT FINANCIAL LIABILITIES | -37,599 | -37,933 |
Other non-current receivables (included in "loans and receivables" under IAS 39) generate interest and will be recovered over the course of subsequent fiscal years.
Assets and liabilities recognised at fair value through profit or loss consist principally of hedging instruments for which hedge accounting in the sense of IAS 39 is not applied. However, they serve to hedge against interest rate risks. Other hedging instruments, whether assets or liabilities, meet the criteria set out in IAS 39 for application of hedge accounting. Cash flows generated by all hedges, and/or changes in the fair value recognised in income are covered in Notes 22 and 47.
The other liabilities recognised at fair value through profit or loss (€4,389 thousand; 30 June 2017: €4,146 thousand) include the put options granted to non-controlling shareholders (see Notes 47 and 56).
In order to limit the interest rate risk, Aedifica has put in place hedges that turn floating rate debts into fixed rate debt or cappedrate debt (cash flow hedges). All hedges (interest rate swaps or "IRS", caps and collars) relate to existing or highly probable risks. Hedging instruments are either derivatives that meet the strict criteria set by IAS 39 to allow hedge accounting or derivatives which do not meet these criteria but which nonetheless provide economic hedging against interest rate risk. All hedges are entered into in accordance with the hedging policy set out in Note 44. The fair value of hedges is computed by banks based on the present value of expected cash flows and is adapted in accordance with IFRS 13 to reflect the own credit risk ("DVA" or "Debit Valuation Adjustment") and the counterparty credit risk ("CVA" or "Credit Valuation Adjustment"). The table below lists the hedging instruments.
| INSTRUMENT | Notional amount | Beginning | Periodicity | Duration | First date possible | Interest rate | Fair value |
|---|---|---|---|---|---|---|---|
| Analysis as at 30 June 2017 | (x €1,000) | (months) | (years) | for the call | (in %) | (x €1,000) | |
| IRS° | 9,986 | 1/04/2011 | 3 | 32 | - | 4.89 | -5,294 |
| IRS° | 25,813 | 31/07/2014 | 3 | 29 | - | 4.39 | -10,199 |
| IRS | 15,000 | 1/07/2018 | 3 | 7 | - | 3.28 | -2,746 |
| IRS | 12,000 | 1/07/2018 | 3 | 7 | - | 3.25 | -2,171 |
| IRS | 8,000 | 1/07/2018 | 3 | 7 | - | 3.35 | -1,501 |
| Cap | 25,000 | 1/11/2015 | 3 | 2 | - | 2.50 | 0 |
| IRS | 25,000 | 3/04/2017 | 3 | 8 | - | 1.99 | -2,811 |
| Cap | 25,000 | 1/11/2014 | 3 | 3 | - | 2.50 | 0 |
| IRS | 25,000 | 2/11/2016 | 3 | 6 | - | 1.30 | -1,444 |
| IRS | 25,000 | 2/11/2016 | 3 | 6 | - | 1.68 | -1,932 |
| IRS | 25,000 | 1/01/2015 | 3 | 3 | - | 0.70 | -67 |
| Cap | 50,000 | 1/10/2015 | 3 | 3 | - | 0.50 | 7 |
| Cap | 50,000 | 1/10/2015 | 3 | 4 | - | 0.35 | 64 |
| IRS | 25,000 | 2/11/2016 | 3 | 6 | - | 1.87 | -2,187 |
| IRS | 25,000 | 1/01/2015 | 3 | 3 | - | 0.89 | -80 |
| IRS | 25,000 | 3/10/2016 | 3 | 5 | - | 2.88 | -3,306 |
| Cap | 50,000 | 1/07/2016 | 3 | 4 | - | 0.50 | 51 |
| Cap | 100,000 | 1/11/2017 | 3 | 2 | - | 0.50 | 76 |
| Cap | 50,000 | 1/07/2017 | 3 | 4 | - | 0.50 | 191 |
| Cap | 50,000 | 1/11/2016 | 3 | 5 | - | 0.50 | 460 |
| Cap | 50,000 | 1/01/2019 | 3 | 2 | - | 0.35 | 218 |
| Cap | 50,000 | 1/11/2019 | 3 | 2 | - | 0.50 | 422 |
| Cap | 50,000 | 1/11/2017 | 3 | 4 | - | 0.25 | 591 |
| IRS | 75,000 | 2/01/2020 | 3 | 2 | - | 0.33 | 120 |
| IRS | 50,000 | 1/01/2021 | 3 | 3 | - | 0.80 | 21 |
| IRS | 50,000 | 1/01/2021 | 3 | 2 | - | 0.64 | 38 |
| IRS | 50,000 | 1/11/2019 | 3 | 3 | - | 0.39 | 155 |
| IRS | 50,000 | 1/11/2019 | 3 | 5 | - | 0.78 | -49 |
| IRS | 50,000 | 3/01/2022 | 3 | 1 | - | 0.65 | 80 |
| IRS | 50,000 | 3/01/2022 | 3 | 2 | - | 0.73 | 214 |
| TOTAL | 1,170,799 | -31,080 |
° Notional amount depreciable over the duration of the swap. Aedifica and the bank may liquidate in advance these contracts every 10 years.
| INSTRUMENT | Notional amount | Beginning | Periodicity | Duration | First date possible | Interest rate | |
|---|---|---|---|---|---|---|---|
| Analysis as at 30 June 2018 | (x €1,000) | (months) | (years) | for the call | (in %) | (x €1,000) | |
| IRS° | 9,789 | 1/04/2011 | 3 | 32 | - | 4.89 | -5,081 |
| IRS° | 24,829 | 31/07/2014 | 3 | 29 | - | 4.39 | -9,619 |
| IRS | 15,000 | 1/07/2018 | 3 | 7 | - | 3.28 | -2,980 |
| IRS | 12,000 | 1/07/2018 | 3 | 7 | - | 3.25 | -2,358 |
| IRS | 8,000 | 1/07/2018 | 3 | 7 | - | 3.35 | -1,626 |
| IRS | 25,000 | 3/04/2017 | 3 | 8 | - | 1.99 | -2,567 |
| IRS | 25,000 | 2/11/2016 | 3 | 6 | - | 1.30 | -1,278 |
| IRS | 25,000 | 2/11/2016 | 3 | 6 | - | 1.68 | -1,672 |
| Cap | 50,000 | 1/10/2015 | 3 | 3 | - | 0.50 | 0 |
| Cap | 50,000 | 1/10/2015 | 3 | 4 | - | 0.35 | 3 |
| IRS | 25,000 | 2/11/2016 | 3 | 6 | - | 1.87 | -1,875 |
| IRS | 25,000 | 3/10/2016 | 3 | 5 | - | 2.88 | -2,728 |
| Cap | 50,000 | 1/07/2016 | 3 | 4 | - | 0.50 | 2 |
| Cap | 100,000 | 1/11/2017 | 3 | 2 | - | 0.50 | 2 |
| Cap | 50,000 | 1/07/2017 | 3 | 4 | - | 0.50 | 39 |
| Cap | 50,000 | 1/11/2016 | 3 | 5 | - | 0.50 | 203 |
| Cap | 50,000 | 1/01/2019 | 3 | 2 | - | 0.35 | 52 |
| Cap | 50,000 | 1/11/2019 | 3 | 2 | - | 0.50 | 202 |
| Cap | 50,000 | 1/11/2017 | 3 | 4 | - | 0.25 | 277 |
| IRS | 75,000 | 2/01/2020 | 3 | 2 | - | 0.33 | -243 |
| IRS | 50,000 | 1/01/2021 | 3 | 3 | - | 0.80 | -266 |
| IRS | 50,000 | 1/01/2021 | 3 | 2 | - | 0.64 | -155 |
| IRS | 50,000 | 1/11/2019 | 3 | 3 | - | 0.39 | -176 |
| IRS | 50,000 | 1/11/2019 | 3 | 5 | - | 0.78 | -578 |
| IRS | 50,000 | 3/01/2022 | 3 | 1 | - | 0.65 | -8 |
| IRS | 50,000 | 3/01/2022 | 3 | 2 | - | 0.73 | 31 |
| CAP | 50,000 | 1/11/2017 | 3 | 2 | - | 0.00 | 25 |
| CAP | 50,000 | 1/11/2017 | 3 | 2 | - | 0.00 | 25 |
| CAP | 100,000 | 1/04/2019 | 3 | 2 | - | 0.25 | 192 |
| CAP | 100,000 | 1/01/2019 | 3 | 2 | - | 0.00 | 216 |
| CAP | 100,000 | 1/01/2019 | 3 | 3 | - | 0.00 | 423 |
| TOTAL | 1,469,618 | -31,518 |
° Notional amount depreciable over the duration of the swap. Aedifica and the bank may liquidate in advance these contracts every 10 years.
The total notional amount of €1,470 million presented in the table above is broken down as follows:
The total fair value of the hedging instruments presented in the table above (-€31,518 thousand) can be broken down as follows: €1,692 thousand on line I.E. of the asset side of the consolidated balance sheet (see Note 32) and €33,210 thousand on line I.C.a. of the liability side of the consolidated balance sheet. Taking into account the carrying amount of the upfront premiums paid for the caps (€3,921 thousand), the IAS 39 impact on equity amounts to -€35,439 thousand.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Changes in fair of the derivatives | ||
| Beginning of the year | -16,418 | -23,560 |
| Changes in the effective portion of the fair value of hedging instruments (accrued interests) | -3,551 | 410 |
| Transfer to the income statement of interests paid on hedging instruments | 2,703 | 6,732 |
| Transfer to the reserve account regarding revoked designation | 5,976 | 0 |
| AT YEAR-END | -11,290 | -16,418 |
The amounts recorded in equity will be transferred to net finance costs, in line with the payment of interest on the hedged financial debt, between 1 July 2018 and 31 July 2043.
The year-end equity value includes the effective part (as defined in IAS 39) of the change in fair value (-€870 thousand) of derivatives for which hedge accounting is applied, and the ineffective portion of the 2016/2017 financial year (income of €22 thousand) that was appropriated in 2017/2018 by decision of the Annual General Meeting held in October 2017. These financial instruments are "level 2" derivatives (according to IFRS 13p81). The ineffective part is a charge of €11 thousand in 2017/2018. Cash flows arising from interest on the hedges are shown in Note 22.
The financial result includes a chargeof €502 thousand (30 June 2017: an income of €6,053 thousand), arising from the change in the fair value of derivatives for which hedge accounting is not applied (in line with IAS 39, as listed in the aforementioned framework) and the amortisation of the fair value of de-designated derivatives as of their date of de-designation charged on a linear basis, which amounts to €831 thousand (see Note 47). The latter is recognised on line "II. H. Other comprehensive income, net of taxes" of the consolidated comprehensive income. These financial instruments are "level 2" derivatives (as defined in IFRS 13p81). The financial result also includes the amortisation of the premiums paid at the time of the subscription to the caps, which amounts to €821 thousand (30 June 2017: €404 thousand).
The interest cash flows arising from the hedges are shown in Note 22 and the change in fair value recognised in the income statement is shown in Note 47.
The fair value of hedging instruments is a function of the interest rates on the financial markets. Changes in market interest rates explain most of the change in the fair value of hedging instruments between 1 July 2017 and 30 June 2018, which led to the recognition of a charge of €1,344 thousand in the income statement and a charge of €40 thousand directly in equity.
A change in the interest rate curve would impact the fair value of instruments for which hedge accounting is applied (in accordance with IAS 39), and recognised in equity (line "I.C.d. Reserve for the balance of changes in the fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS"). All else being equal, a positive change of 10 bps in the interest rate curve at the balance sheet date would have had a positive impact on equity in the amount of €1,389 thousand (30 June 2017: €2,022 thousand). A negative change of 10 bps in the interest rate curve at the balance sheet date would have had a negative impact on equity in the same amount. The impact of a change in the interest rate curve on the fair value (instruments for which hedge accounting under IAS 39 is not applied, cannot be determined as precisely, since options can be embedded within these instruments. The fair value of these options will change in a non-symmetric and non-linear pattern, and is a function of other parameters (e.g. volatility of interest rates). The sensitivity of the "mark-to-market" value of these instruments to an increase of 10 bps in the interest rate curve is estimated at approx. +€517 thousand (30 June 2017: +€306 thousand) in the income statement. A decrease of 10 bps in the interest rate curve would have a negative impact on the income statement in the same range.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| TRADE RECEIVABLES - NET VALUE | 7,518 | 6,718 |
It is anticipated that the carrying amount of trade receivables will be recovered within 12 months. This carrying amount represents an estimate of the fair value of assets which do not generate interest.
The credit risk associated with trade receivables is limited thanks to the diversity of the client base and rental guarantees (2018: €33.6 million; 2017: €31.8 million) received from tenants to cover their commitments. The carrying amount on the balance sheet is presented net of the provision for doubtful debts. Thus, the risk of exposure to credit risk is reflected in the carrying amount of receivables recognised on the balance sheet.
Trade receivables are analysed as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| under 90 days | 787 | 826 |
| over 90 days | 326 | 258 |
| Subtotal | 1,113 | 1,084 |
| Not due | 6,515 | 5,717 |
| Write-downs | -110 | -83 |
| CARRYING AMOUNT | 7,518 | 6,718 |
Write-downs have evolved as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| At beginning of period | -83 | -113 |
| Addition | -76 | -69 |
| Utilisation | 31 | 55 |
| Reversal | 18 | 44 |
| Mergers | 0 | 0 |
| AT END OF PERIOD | -110 | -83 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Tax | 186 | 897 |
| Other | 260 | 782 |
| TOTAL | 446 | 1,679 |
Tax receivables are composed mainly of prepayments.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Short-term deposits | 0 | 0 |
| Cash at bank and in hands | 10,589 | 8,135 |
| TOTAL | 10,589 | 8,135 |
Cash and cash equivalents are assets which generate interest at varying rates. The amounts presented above were available as of 30 June 2018 and 30 June 2017. Short-term deposits may be held during the year, normally for periods of one week to one month.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Accrued rental income | 93 | 481 |
| Deferred property charges | 818 | 405 |
| Other | 32 | 0 |
| TOTAL | 943 | 886 |
Aedifica shareholders holding more than 5% of the Company's capital are listed in the table below (as of 30 June 2018, based on the number of shares held by the shareholders concerned as of 5 January 2018 – see chapter "Aedifica on the stock market", section 3). As of the date of this report (4 September 2018), the Company has not received any additional declarations of transparency since 5 January 2018. According to the definition of Euronext, Aedifica's free float amounts to 100 %.
| SHAREHOLDERS | Share in capital (in %) |
|---|---|
| Black Rock, Inc. | 5.09 |
| Others < 5 % | 94.91 |
| Total | 100.00 |
Aedifica has completed a capital increase by way of a contribution in kind during the 2017/2018 financial year:
The capital has thus evolved as follows:
| Number of shares | Capital (x €1,000) | |
|---|---|---|
| Situation at the beginning of the previous year | 14,192,032 | 374,496 |
| Capital increase | 3,783,788 | 99,846 |
| Situation at the end of the previous year | 17,975,820 | 474,342 |
| Capital increase of 7 June 2018 | 225,009 | 5,937 |
| Situation at the end of the year | 18,200,829 | 480,280 |
Equity is presented above before subtracting the costs of raising capital; the equity value presented on the balance sheet in accordance with IFRS is shown net of these costs.
All of the 18,200,829 shares issued as of 30 June 2018 are listed on Euronext Brussels (regulated market).
Capital increases are detailed in the "Standing Documents" included in the 2017/2018 Annual Financial Report. All subscribed shares are fully paid- up, with no par value. The shares are registered, bearer, or dematerialised shares and grant one vote.
Aedifica SA holds no treasury shares.
The Board of Directors is authorised to raise share capital through one or a series of issuances up to a maximum amount of
it being understood that the share capital can never be increased within the framework of the authorised capital in excess of €374,000 thousand on the dates and following the procedures established by the Board, in accordance with Article 603 of the Belgian Companies Code. This authorisation is granted to the Board of Directors for a period of 5 years from the publication date in the annexes of the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad) of the minutes of the Extraordinary General Meeting of 28 October 2016. Each time new shares are issued, the Board of Directors determines the price, the possible issue premium and the terms of issue for the new shares (unless such decisions are made by shareholders at the Annual General Meeting). Increases in share capital decided upon by the Board of Directors may also be realised through subscriptions paid in cash or by way of in-kind incorporation of premiums, reserves, or profits, with or without the issuance of new shares. These capital increases can equally be realised through the issuance of convertible debt securities or subscription rights. As of 30 June 2018, the remaining balance of the authorised capital amounts to 1) €271,453,773.66 if the capital increase to be effected is a capital increase whereby the shareholders of the Company have the possibility to exercise a preferential subscription right or a priority allocation right, 2) €67,122,184.03 for any other type of capital increase.
The Board of Directors has proposed a dividend distribution of €2.50 gross per share for the year ended 30 June 2018, i.e. a total dividend of €45,502 thousand.
Calculated in accordance with Article 617 of the Belgian Companies Code and given the Royal Decree of 13 July 2014, reserves available for distribution (statutory) amount to €24,226 thousand as of 30 June 2018, after taking into account the dividend proposed above (2017: €19,415 thousand). Detailed calculations are provided in the notes to the attached Abridged Statutory Accounts.
Aedifica defines capital in accordance with of IAS 1p134 as the sum of all equity accounts. The equity level is monitored using a consolidated debt-to-assets ratio calculated in accordance with the provisions of the Royal Decree of 13 July 2014 (see Note 52), which cannot exceed 60 % according to the credit agreements in place with the Company's banks (see Notes 40 and 44). Equity is managed so as to permit the Group to continue as a going concern and to finance its future growth.
Aedifica contributes to a number of defined contribution plans in Belgium, which are open to new beneficiaries. These include funded pension schemes for all beneficiaries, i.e. labourers, staff members, Management and members of the Management Committee (Executive Managers). These schemes are managed through private insurances plans with a guaranteed return. No personal contributions from the beneficiaries are required.
On 23 October 2015, the Belgian government formally approved the "Group of 10" proposal regarding the guaranteed return on defined contributions plans; the new law of 18 December 2015 was published on 24 December 2015. For classic "branch 21" insurance contracts, the new guaranteed return applies to future contributions (from the employer and from the employee) paid as from 1 January 2016, but the old guarantee (3,25% on the contributions paid by the employer and 3,75% on the contributions paid by the employee) remains to be granted on the built up minimum reserve at 31 December 2015. The new guaranteed return is based on Belgian government bonds with a duration of 10 years (OLO10) with a minimum of 1,75% and a maximum of 3,75%. At this moment (since 1 January 2016), a minimum return of 1.75% applies. This could generate a liability in the balance sheet of the employer. This guarantee is not applicable to the scheme applicable for the members of the Management Committee that are self-employed.
Under these schemes, Aedifica had externalised assets amounting to 490 k€ as of 30 June 2018. During the 2018/2019 financial year, the expected contribution for the schemes will amount to 148 k€.
An actuarial valuation where the liabilities (Traditional unit credit method approach - TUC) are based on the actual build up minimum reserves projected with the minimum guaranteed return and discounted with the discount rate as described by IAS 19 and where the assets are set equal to individual mathematical reserves with addition of the reserves of the available financing funds leads to a total liability of less than 8 k€ as at 30 June 2018.
Given that the interest rates that are guaranteed by the insurers have decreased below the level of 3.25 % since 2013, there is a risk for future underfunding, however this risk is limited in view of the externalised assets.
The amounts recognised as an expense for the long-term benefits granted the members of the Management Committee are detailed in the Remuneration Report included in the 2017/2018 Annual Financial Report.
In Germany, a supplementary defined contribution plan was introduced during the 2015/2016 accounting year. For this plan, no provision has been taken into account as, according to IAS 19, it does not concern a defined benefit plan.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Non-current financial debts | ||
| Borrowings | 716,927 | 579,438 |
| Current financial debts | ||
| Borrowings | 22,830 | 34,524 |
| TOTAL | 739,757 | 613,962 |
The increase in the borrowings is linked to the growth of the real estate portfolio during the course of the 2017/2018 financial year.
As of 30 June 2018, Aedifica benefits from committed credit facilities (financial liabilities carried at amortised cost according to IAS 39 and presented as current and non-current financial debts on the balance sheet) issued by fifteen credit providers, of which twelve banks (Bank für Sozialwirtschaft, Bank Degroof Petercam, Banque Européenne du Crédit Mutuel, Belfius Bank, BNP Paribas Deutschland, BNP Paribas Fortis, Caisse d'Epargne et de Prévoyance Nord France Europe, Deutsche Postbank, Förde Sparkasse, ING, KBC Bank and Triodos Bank), an insurance company (Argenta Assuranties), a savings bank (Argenta Spaarbank) and a syndicated banking group (Groupe BPCE), totalling €1,215 million:
The average interest rate, including the spread charged by the banks and the effect of hedging instruments, was 2.0 % after deduction of capitalised interest (2.3 % in 2016/2017) and 2.1 % before deduction of capitalised interest (2.3 % in 2016/2017). Given the short duration of the withdrawals, the carrying amount of the variable-rate financial debts is an approximation for their fair value (€689 million). The hedges in place as of 30 June 2018 are detailed in Note 33. The fair value of the fixed-rate financial debts (€51 million) is estimated at €58 million.
As of 30 June 2018, the Group has neither pledged any Belgian or Dutch buildings as collateral for its debts, nor has it granted any other securities to debt-holders. Note that in Germany, it is customary that real estate buildings financed by bank credit are linked to a mortgage in favour to the creditor bank. As such, 12 of the 30 buildings in Germany are linked to a mortgage, respecting the requirements laid down in Article 43 of the Belgian Act of 12 May 2014 on Regulated Real Estate Companies.
The classification between current financial debts and non-current financial debts is made based on the maturity dates of the underlying credit facilities on which the drawings are made, rather than on the maturity date of the individual drawings.
The timetable showing the maturity of Aedifica's credit facilities is as follows (in € million):
| Lines | Utilisation | |
|---|---|---|
| - 2018/2019 : |
38 | 18 |
| - 2019/2020 : |
80 | 80 |
| - 2020/2021 : |
90 | 90 |
| - 2021/2022 : |
171 | 122 |
| - 2022/2023 : |
195 | 90 |
| - 2023/2024 : |
185 | 74 |
| - > 2024/2025 : |
455 | 268 |
| Total as of 30 June 2018 | 1,215 | 742 |
| Weighted average maturity (years) | 5.1 | 4.9 |
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Exit tax | 8,818 | 717 |
| Other | ||
| Suppliers | 15,923 | 14,896 |
| Tenants | 6,772 | 2,021 |
| Tax | 4,489 | 2,246 |
| Salaries and social charges | 1,278 | 1,066 |
| Dividends of previous years | 23 | 23 |
| TOTAL | 37,303 | 20,969 |
The majority of trade payables and other current debts (recognised as "financial liabilities at amortised cost" under IAS 39, excluding taxes covered by IAS 12 and remuneration and contributions to social security plans covered by IAS 19) will be settled within 12 months. The carrying amount constitutes an approximation of their fair value.
The increase of the "exit tax" line relates to a refund of prepayments by the tax authorities.
The increase of the "tenants" line is related to the establishment of a temporary checking account with an operator, which will be reimbursed within 12 months.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Property income received in advance | 1,349 | 1,003 |
| Financial charges accrued | 1,990 | 2,003 |
| Other accrued charges | 787 | 1,907 |
| TOTAL | 4,126 | 4,913 |
Total employee benefits (excluding Executive Managers and Directors presented in Note 16) are broken down in the income statement as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Cleaning costs (see Note 10) | -186 | -229 |
| Technical costs (see Note 11) | -583 | -455 |
| Commercial costs | -83 | -77 |
| Overheads (see Note 16) | -2,418 | -1,926 |
| Property management costs (see Note 14) | -1,127 | -864 |
| Capitalised costs | -85 | -78 |
| TOTAL | -4,482 | -3,629 |
Headcount at the year-end (excluding Executive Managers and Directors):
| 2018 | 2017 | |
|---|---|---|
| Total excluding trainees and students | 65 | 47 |
| Trainees | 0 | 1 |
| Students | 1 | 0 |
| TOTAL | 66 | 48 |
Aedifica's financial management practices aim to ensure permanent access to financing, and to monitor and minimise the interest rate risk.
Aedifica's debt-to-assets ratio (as defined in the Royal Decree of 13 July 2014 on Belgian RRECs) is included in section 3.3 of the Consolidated Board of Director's Report included in this Annual Financial Report. As of 30 June 2018, it amounts to 42.5 % on statutory level and to 44.3 % on consolidated level. This section also discloses the maximum ratio permitted before the Company reaches the maximum debt-to-assets ratio permitted for Belgian REITs (65 % of total assets) or arising due to bank covenants (60 % of total assets). The debt-to-assets ratio is monitored in the context of monthly closings and its evolution is estimated during the approval process of each major investment project; it is published quarterly. When exceeding the debt-toassets threshold of 50 %, a financial plan with an implementation schedule must be elaborated, describing the measures taken to prevent the consolidated debt-to-assets ratio from exceeding the maximum permissible threshold of 65 % (Article 24 of the Royal Decree of 13 July 2014). The Company has indicated in each of its last four Securities Notes (2010, 2012, 2015 and 2017) that its policy in this area focuses on maintaining an appropriate debt-to-assets ratio over the long term in the range of 50 to 55 %.
Aedifica's financial model relies on a structural indebtedness. As a result, cash balances are usually low, amounting to €11 million as of 30 June 2018.
As of 30 June 2018, Aedifica has neither pledged any Belgian or Dutch building as collateral for its debts, nor has it granted any other securities to debt-holders. Note that in Germany, it is customary that real estate buildings financed by bank credit are linked to a mortgage in favour to the creditor bank. As such, 12 out of 30 buildings in Germany are linked to a mortgage as of 30 June 2018, respecting the requirements laid down in Article 43 of the Belgian Law of 12 May 2014 (the total amount that is linked to a mortgage cannot exceed 50 % of the total fair value and no mortgage linked to a certain building can exceed 75 % of that building's value). In the context of supplementary financing of assets located in Germany, it is possible that supplementary mortgages will be obtained.
Aedifica enjoys a strong and stable relationship with its banks, which form a diversified pool, comprising an annually increasing number of European institutions. Details of Aedifica's credit facilities are disclosed in Note 40.
As of 30 June 2018, Aedifica is using committed credit facilities totalling €742 million (2017: €615 million), out of €1,215 million in total available confirmed credit. The remaining headroom of €473 million is sufficient to cover Aedifica's short-term financial needs (including the development projects in progress) until the end of the 2018/2019 financial year. The investment amount that is budgeted in the Company's financial plan for the existing projects as of 30 June 2018 is estimated at €459 million, to be invested over a three-year period. €23 million should be added to that amount for the acquisitions announced on 12 July (€19 million) and 19 July (€4 million), as well as €150 million for a hypothetical investment, which brings the total net investment included in the financial plan for the 2018/2019 financial year to €400 million. This amount does not include any positive cash flow corresponding to possible disinvestments (including the possible sale of Immobe shares).
Given the regulatory status of Belgian REITs/RRECs , and the type of property in which Aedifica invests, the risk of non-renewal of mature credit facilities is remote even in the context of a credit crunch, except in the event of unforeseen and extreme circumstances. There is a risk of increasing credit spreads should market conditions deteriorate as compared to those present at the time the current credit facilities were signed.
The Company may be exposed to a liquidity risk which could arise due to a lack of cash flow in the event of early termination of the credit facilities. Should the Company fail to comply with the provisions (covenants), which were included in the credit facility arrangements to take into account key financial ratios, the facilities might indeed be cancelled, renegotiated, or forced into repayment. The covenants in place are in line with market practice and notably require that the debt-to-assets ratio (as defined by the Royal Decree of 13 July 2014) does not exceed 60 %. Moreover, there is a risk of early termination in the event of a change of control, in case of non-compliance with the Company's obligations, and, more generally speaking, in the event of default as defined in these arrangements. A default situation related to one contract can lead to a default situation related to all contracts ("cross-default clauses"). Based on the information available to date, and the prospects for the foreseeable future, there is no indication of a possible early termination of one or more of the existing credit facilities. However, this risk cannot be ignored completely. Moreover, Aedifica does not itself retain control over certain commitments which could lead to the early termination of credit facilities, such as in the event of a change of control.
Internally, Aedifica is organised so as to regularly monitor the evolution of the financial markets, optimise the Company's financial structure over both short and long term, and manage financial risks (liquidity risk, interest rate risk). Aedifica aims to further diversify its funding sources, given market conditions. For this reason, Aedifica started a multi-term treasury notes programme in late June 2018. The treasury notes are fully covered by the available funds on confirmed long term credit lines. As such, they do not increase the liquidity risk.
As of 30 June 2018, the undiscounted future cash flows related to the credit facilities include €500 million maturing within 1 year, €123 million maturing within 1 to 5 years, and €119 million maturing in more than 5 years. The credit facilities also give rise to an interest expense of €6 million that is due within 1 year (2017: €530 million capital and €4.0 million interest within 1 year).
The undiscounted contractual future cash flows related to hedging instruments are analysed as follows:
| As at 30 June 2018 (x €1,000) | Due within the year |
Due between one to five years |
Due after more than five years |
TOTAL |
|---|---|---|---|---|
| Derivatives for which hedge accounting is applied | -3,359 | -10,986 | -3,414 | -17,760 |
| Derivatives for which hedge accounting is not applied | -2,121 | -8,008 | -7,372 | -17,501 |
| As at 30 June 2017 (x €1,000) | Due within the year |
Due between one to five years |
Due after more than five years |
TOTAL |
|---|---|---|---|---|
| Derivatives for which hedge accounting is applied | -3,381 | -10,556 | -3,102 | -17,039 |
| Derivatives for which hedge accounting is not applied | -1,504 | -7,941 | -8,505 | -17,950 |
Almost all of Aedifica's financial debts are floating-rate borrowings. This allows Aedifica to benefit from low interest rates on the non-hedged part of its borrowings. To mitigate the risk of increasing interest rates, Aedifica follows a policy aimed at securing for a period of several years the interest rates related to at least 60 % of its current or highly probable indebtedness. It should be noted that the Company assumed certain fixed-rate debts which came from pre-existing investment credits tied to real estate companies which were acquired or absorbed by the Company. On 30 June 2018, 95 % of the drawings on the variable-rate credit facilities (30 June 2017: 82 %) are covered by hedging instruments (swaps and caps).
This policy is supported by the fact that an increase in nominal interest rates, when not coupled with a simultaneous increase in inflation, implies an increase in real interest rates that cannot be offset by increasing rental incomes through indexation alone. Moreover, in case of accelerating inflation, there is a delay between the timing of the increase of the nominal interest rates and the timing of the indexation of rental incomes. When the interest rate curve is sufficiently flat (i.e. when interest shows little variation in relation to the maturity date), Aedifica aims to enter into hedges over longer periods, in line with its investment.
For example, assuming that the structure and level of financial debts remain unchanged, and assuming that no hedges have been entered into, simulations show that a 100 bps positive deviation (increase) in the 2018/2019 interest rates over the forecast rates would lead to an approx. additional €8.3 million interest expense for the year ended 30 June 2019. Taking into account the hedging instruments at present, the interest expense would amount to just €2.2 million.
In order to manage the interest rate risk, Aedifica has put in place hedges (interest rate swaps and caps). All hedges are entered into with leading banks and relate to existing or highly probable risks. An analysis of the Company's hedges is provided in the Consolidated Board of Directors' Report and in Note 33 of the Consolidated Financial Statements included in this Annual Financial Report. The hedges are entered into for long periods; however, hedge agreements include provisions (in line with market practice) that could lead the issuing banks to terminate the hedges early or initiate margin calls (in cash for example) in their own favour in certain circumstances.
Changes in the interest rate curve have a limited impact on the future interest expense, since at least 60 % of the financial debts are hedged by IRS or caps. Each change in the interest rate curve has an impact on the fair value of hedging instruments against income statement and/or equity (balance lines "I.C.d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS" and line "I.C.e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS"). A sensitivity analysis is provided in Note 33 of the Consolidated Financial Statements.
Certain external developments could cause an increase of the credit spreads at the Group's expense, in accordance with the "increased cost" clauses included in the banking agreements. Such clauses allow the lending banks to increase the cost price of the granted credit at the expense of the Company and its subsidiaries, among other things, in case these banks are subjected by their supervisory authority to more severe solvability, liquidity or other capital requirements. However, it should be noted that during the crises which have hit the financial markets since 2007, no bank has ever invoked one of these clauses towards the Group.
Signing a credit facility or hedging instrument with a bank generates a counterparty risk in the event of counterparty default. In order to mitigate this risk, Aedifica trades with several leading national and European banks to diversify its funding and hedging sources, while remaining cautious about the balance between cost and quality of the services provided. One should bear in mind that one or several counterparties could default.
In line with market practice, the agreements signed with banks include market shock clauses and material adverse change clauses ("MAC" clauses) which could lead to, in extreme circumstances, additional costs for the Company or possibly the early termination of the credit facility. However, it should be noted that during the crises which have hit the financial markets since 2007, no bank has ever invoked one of these clauses towards the Group.
Aedifica has an ongoing relationship with the banks listed in Note 40 of the Consolidated Financial Statements included in this Annual Financial Report. With respect to hedging, the main providers (by order of magnitude) are ING, BNP Paribas Fortis, KBC and Banque Européenne du Crédit Mutuel.
Aedifica earns all rental income and incurs all expenses within the euro-zone (except for certain small suppliers which charge for their services in USD). The borrowings of the Company are all denominated in euros. Thus, Aedifica is not exposed to significant foreign exchange risk.
The yearly budget and long-term financial plan are important tools used in the decision-making process and in daily management activities. The budget and financial plan are derived from a computerised model that incorporates a number of assumptions; this model can suffer from programming errors, and human errors which may arise when using it. The potential for wrong assumptions, and undetected programming or human errors might put pressure on Aedifica's performance and the market's confidence in the Company, or threaten its compliance with regulatory (e.g. legal covenants associated to the Belgian RREC status, such as the debt-to-assets ratio) and contractual provisions (e.g. bank covenants).
The acquisition values mentioned below respect the requirements laid down in Article 49 § 1 of the Belgian Act of 12 May 2014 on Regulated Real Estate Companies (at the time of the signing of the agreements which generated the commitment).
Aedifica committed to finance the extension of the rest home for a budget of approx. €2 million. Works are currently in progress.
Aedifica committed to finance the extension of the rest home, which includes construction of an assisted-living apartments complex, for a budget of approx. €3 million. Works are currently being prepared.
Under the long lease with the operator of the 't Hoge rest home (which includes a guarantee from Senior Living Group), Aedifica committed to finance the extension, which includes construction of a 12-unit assisted-living apartments complex), of the rest home for a budget of approx. €2 million. Works are currently in progress.
Under the long lease with Armonea, Aedifica committed to finance the renovation and extension of the rest home for a budget of approx. €5 million. Works are currently in progress.
Aedifica committed to finance the extension of the rest home for a budget of approx. €4 million. Works are currently in progress.
Aedifica committed to finance the renovation and extension of the rest home for a budget of approx. €4 million. Works are currently in progress.
Aedifica committed to finance the extension and renovation of the rest home for a budget of approx. €4 million. Works are currently in progress.
Aedifica committed to finance the renovation of the rest home located in Bonn for a budget of approx. €1 million. Works are currently in progress.
Aedifica committed to finance the renovation of the rest home for a budget of approx. €2 million. Works are currently in progress.
Aedifica Luxemburg IV SCS committed to finance the renovation of the rest home for a budget of approx. €1 million. Works are currently being prepared
Aedifica Luxemburg VI SCS committed to finance the renovation of the rest home for a budget of approx. €5 million. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Winschoten (The Netherlands), for a budget of approx. €11 million. The site will be operated by Stichting Oosterlengte. Works are currently in progress.
Aedifica committed to finance the extension of the rest home for a budget of approx. €3 million. Works are currently in progress.
Aedifica committed to finance certain extension and renovation works for a budget of approx. €2 million. Works are currently in progress.
Aedifica signed an agreement to acquire a new rest home in Mechelen. The contractual value of this property will amount to approx. €15 million.
Aedifica committed to finance the extension of the rest home, which includes construction of an assisted-living apartments complex, for a budget of approx. €2 million.
Aedifica committed to finance the extension of the rest home, which includes construction of additional rooms and an assistedliving apartments complex, for a budget of approx. €5 million.
Aedifica Nederland BV committed to finance the construction of a new care residence in Rotterdam for a budget of approx. €6 million. The site will be operated by the Martha Flora group. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Ede for a budget of approx. €7 million. The site will be operated by the Compartijn group. Works are currently in progress.
Aedifica signed a cooperation agreement (subject to outstanding conditions) for the construction and acquisition of two seniors apartment buildings in Leeuwarden and Heerenveen. The budget that will be financed by Aedifica amounts to approx. €40 million (including the amount for the plots of land). The sites will be operated by Stichting Rendant. Works are currently being prepared.
Aedifica signed a cooperation agreement (subject to outstanding conditions) with Specht Gruppe for the construction and acquisition of seventeen rest homes in northern Germany. The Company also announced an expansion of this cooperation, which includes the additional construction and acquisition of seniors apartment buildings and houses for seniors on 8 of the 17 sites. The budget that will be financed by Aedifica amounts to approx. €245 million (including the amount for the plots of land).
Aedifica Nederland BV committed to finance the construction of a new care residence in Beegden, near Roermond, for a budget of approx. €4 million. The site will be operated by the Compartijn group. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Bosch en Duin, a part of the municipality of Zeist, for a budget of approx. €5 million. The site will be operated by the Martha Flora group. Works are currently in progress.
Aedifica Nederland BV committed to finance the renovation of a rest home for a budget of approx. €8 million. The site will be operated by Stichting Leger des Heils Welzijns- en Gezondheidszorg. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Roosendaal for a budget of approx. €5 million. The site will be operated by the Compartijn group. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Leusden for a budget of approx. €3 million. The site will be operated by the Stepping Stones Home & Care group. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Nijverdal for a budget of approx. €3 million. The site will be operated by the Wonen bij September group. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Tilburg for a budget of approx. €5 million. The site will be operated by the Compartijn group. Works are currently in progress.
Aedifica Nederland BV committed to finance the construction of a new care residence in Eersel for a budget of approx. €5 million. The site will be operated by the Compartijn group. Works are currently in progress.
Aedifica signed an agreement for the acquisition of four operational senior housing sites (Seniorenzentrum Sonneberg in Sonneberg, Seniorenzentrum Haus Cordula I and II in Rothenberg and Hansa Pflege- und Betreuungszentrum Dornum in Dornum) and a rest home (upon completion of construction; Seniorenzentrum Weimar in Weimar). The sites are/will be operated by the Azurit group. The contractual value will amount to approx. €39 million in total.
Aedifica signed an agreement for the acquisition of a senior housing site in Bitterfeld-Wolfen. The site is operated by SARA, a private German player in the local senior care market. The contractual value will amount to approx. €10 million.
For some acquisition deals, a portion of the acquisition price has been set based on future contingent events, such as the payment of an earn-out, upon completion of a care residence within the limits of the maximum budget committed by Aedifica.
Security has been pledged in relation to the Company's credit agreements, and within the limits authorised by the regulation on the following buildings: SZ AGO Herkenrath, SZ AGO Dresden, SZ AGO Kreischa, Seniorenresidenz Mathilde, Die Rose im Kalletal, Seniorenresidenz Klosterbauerschaft, Senioreneinrichtung Haus Matthäus, Bonifatius Seniorenzentrum, Senioreneinrichtung Haus Elisabeth, Seniorenresidenz Am Stübchenbach, Seniorenresidenz Kierspe and Käthe-Bernhardt-Haus.
Aedifica benefits from warranties provided by the sellers of shares in property companies acquired.
Aedifica benefits from rental guarantees (in line with market practice and applicable regulations), in the form of bank guarantees, restricted bank deposits or guarantor backings.
Moreover, in certain cases, Aedifica benefits from other securities:
In case of acquisitions, contributions in kind, mergers and de-mergers, Aedifica benefits from the declarations and securities in line with market practices.
The main investment property acquisitions of the financial year are the following:
| ACQUISITIONS | Business segment | Properties valuation° (in million €) |
Register of corporations |
Acquisition date°° |
Acquisition method |
|---|---|---|---|---|---|
| Seniorenheim am Dom | Healthcare real estate | 10 | - | 28/07/2017 | Acquisition of a building |
| Huize de Compagnie | Healthcare real estate | 2 | - | 10/07/2017 | Acquisition of a building via Aedifica Nederland BV |
| Huize Hoog Kerckebosch | Healthcare real estate | 8 | - | 24/08/2017 | Acquisition of a building via Aedifica Nederland BV |
| Dujofin BVBA | Healthcare real estate | 10 | 0446.022.925 | 8/09/2017 | Acquisition of shares and acquisition of a building |
| Martha Flora Den Haag | Healthcare real estate | 9 | - | 12/09/2017 | Acquisition of a building via Aedifica Nederland BV |
| Huize Ter Beegden | Healthcare real estate | 0 | - | 12/09/2017 | Acquisition of a building via Aedifica Nederland BV |
| Martha Flora Rotterdam | Healthcare real estate | 2 | - | 26/09/2017 | Acquisition of a building via Aedifica Nederland BV |
| Martha Flora Bosch en Duin | Healthcare real estate | 2 | - | 8/11/2017 | Acquisition of a building via Aedifica Nederland BV |
| Seniorenresidenz an den Kienfichten | Healthcare real estate | 7 | - | 30/11/2017 | Acquisition of a building |
| Aedifica Residenzen Nord GmbH | Healthcare real estate | 28 | HRB110850 | 8/12/2017 | Acquisition of shares |
| De Merenhoef | Healthcare real estate | 3 | - | 19/12/2017 | Acquisition of a building via Aedifica Nederland BV |
| Huize Roosdael | Healthcare real estate | 1 | - | 9/01/2018 | Acquisition of a building via Aedifica Nederland BV |
| Leusden | Healthcare real estate | 1 | - | 24/01/2018 | Acquisition of a building via Aedifica Nederland BV |
| Martha Flora Hoorn | Healthcare real estate | 1 | - | 1/02/2018 | Acquisition of a building via Aedifica Nederland BV |
| September Nijverdal | Healthcare real estate | 1 | - | 16/02/2018 | Acquisition of a building via Aedifica Nederland BV |
| Huize Groot Waardijn | Healthcare real estate | 1 | - | 27/02/2018 | Acquisition of a building via Aedifica Nederland BV |
| Huize Eresloo | Healthcare real estate | 1 | - | 16/03/2018 | Acquisition of a building via Aedifica Nederland BV |
| Haus Zur Alten Berufsschule | Healthcare real estate | 9 | - | 17/04/2018 | Acquisition of a building |
| Pflegeteam Odenwald | Healthcare real estate | 3 | - | 31/05/2018 | Acquisition of a building |
| Park Residenz | Healthcare real estate | 11 | - | 1/06/2018 | Acquisition of a building |
| Zorghuis Smakt | Healthcare real estate | 3 | - | 7/06/2018 | Acquisition of a building via Aedifica Nederland BV |
| Zorgresidentie Mariëndaal | Healthcare real estate | 13 | - | 7/06/2018 | Acquisition of a building via Aedifica Nederland BV |
| TOTAL | 127 |
° in order to determine the number of shares issued, the exchange ratio and/or the value of the acquired shares.
°° and consolidation date in the financial statements.
The main disposals of the financial year are the following:
| DISPOSALS | Business segment | Selling price (in million €) |
Disposals date |
|---|---|---|---|
| Building located avenue de Broqueville 8 in 1150 Brussels (Belgium) | Apartment buildings | 1 | 19/09/2017 + 25/10/2017 |
| Plot of land located between avenue Louise, rue Vilain XIIII and rue du Lac in 1050 Brussels (Belgium) |
Hotels | 1 | 4/12/2017 |
| Assisted-living apartments located Jan Hammeneckerlaan 4-4A in 3200 Aarschot (Belgium) |
Healthcare real estate | 0 | 22/12/2017 |
| Building Ring located Plantin et Moretuslei 107-115 in 2018 Antwerp (Belgium) | Hotels | 13 | 27/06/2018 |
| TOTAL | 16 |
All these operations are detailed in the Consolidated Board of Directors' Report.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Authorised hedging instruments | ||
| Authorised hedging instruments qualifying for hedge accounting as defined under IFRS | -11 | 22 |
| Authorised hedging instruments not qualifying for hedge accounting as defined under IFRS | -1,332 | 6,053 |
| Subtotal | -1,343 | 6,075 |
| Other | -814 | -956 |
| TOTAL | -2,157 | 5,119 |
The Line "Other" represents the changes in fair value of the put options granted to non-controlling shareholders (see Notes 32 and 56).
Related party transactions (as defined under IAS 24 and the Belgian Companies Code) relate exclusively to the remuneration of the members of the Board of Directors and the Management Committee (€2,933 thousand in 2017/2018; €2,359 thousand in 2016/2017).
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Short-term benefits | 2,700 | 2,183 |
| Post-employment benefits | 193 | 153 |
| Other long-term benefits | 0 | 0 |
| Termination benfits | 0 | 0 |
| Share-based payments | 40 | 23 |
| Total | 2,933 | 2,359 |
On 12 July 2018, Aedifica announced the signing of an agreement for the acquisition of four healthcare sites in Germany. The four sites benefit from a central location in Bad Sachsa (State of Lower-Saxony, Germany). The buildings were constructed in different years and have undergone several renovations and extensions. They can welcome 221 residents in total. The first site has a capacity of 70 units catering to seniors requiring continuous care, while the second site has a capacity of 64 units intended for individuals with severe neurological damage or suffering from mental health disorders. The third and fourth sites have capacities of 74 and 13 units, respectively, and are intended for individuals suffering from mental health disorders. The agreement for the acquisition of these four sites by Aedifica SA is subject to the usual conditions in Germany, which are mainly of administrative nature and which should be fulfilled soon. The purchase price will be paid and the property and full use of the buildings will automatically be acquired at that time. The contractual value amounts to approx. €19 million. The operation will be financed using Aedifica's credit facilities. The sites will be operated by an entity of Argentum Holding GmbH under irrevocable 30 year double net long leases. The initial gross yield amounts to approx. 7 %.
As previously announced, Aedifica is preparing to transfer its "apartment buildings" branch of activities to a new subsidiary, Immobe SA. Effective 1 July 2018, Immobe is authorised by the FSMA as an Institutional Regulated Real Estate Company ("IRREC") under Belgian law. Aedifica anticipates that the transfer of this branch of activities could take place at the end of the third quarter of 2018. On 12 July 2018, after conducting the due diligence, Aedifica and the candidate-partner (which is an international investor represented by CODABEL) signed the final agreement, subject to usual outstanding conditions, for the sale (in two phases) of up to 75 % (minus one share) in Immobe SA. The first phase comprises the transfer of 50 % (minus one share) of the shares in Immobe SA. The completion of this phase is expected to take place during the fourth quarter of 2018.
On 19 July 2018, Aedifica announced the acquisition and redevelopment of a care residence in The Netherlands. The Sorghuys Tilburg care residence is located in a green, residential area of Berkel-Enschot, part of Tilburg (214,000 inhabitants, Province of North Brabant). Extension works will be carried out and the current villa will be entirely redeveloped into a modern residential care facility for seniors requiring continuous care. The care residence is expected to be completed in the third quarter of 2019 and will have a capacity of 22 residents. Aedifica Nederland BV, a 100 % subsidiary of Aedifica SA, acquired the full property of the plot of land (including the building located thereon). The contractual value amounts to approx. €1 million. The construction will be carried out by Sorghuys Tilburg BV and delivered turnkey to Aedifica. Approx. €3 million has been budgeted for construction works; the total investment (including works) will amount to approx. €4 million. The operation will be financed using Aedifica's credit facilities. The care residence will be operated by Blueprint Group in partnership with Boeijend Huys, under the Zorghuis Nederland brand, under an irrevocable 25-year triple net long lease. Upon completion of the works, the gross yield will amount to approx. 6.5 %.
Late August 2018, Aedifica acquired four healthcare sites in Germany given fulfilment of the outstanding conditions, as announced in the press release of 4 June 2018. See section 2.1.2 for a more detailed account of the acquired sites. The purchase price was paid and Aedifica SA acquired the property and full use of the building. The operation was financed using Aedifica's credit facilities.
The corrected profit as defined in the Royal Decree of 13 July 2014 is calculated based on the Statutory Accounts as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Profit (loss) | 63,357 | 57,040 |
| Depreciation | 798 | 678 |
| Write-downs | 55 | 28 |
| Other non-cash items | 4,702 | -4,775 |
| Gains and losses on disposals of investment properties | -790 | -1,485 |
| Changes in fair value of investment properties | -12,696 | -9,434 |
| Roundings | -1 | 1 |
| Corrected profit | 55,425 | 42,053 |
| Denominator° (in shares) | 18,200,829 | 15,323,388 |
| CORRECTED PROFIT PER SHARE° (in € per share) | 3.05 | 2.74 |
° Based on the rights to the dividend for the shares issued during the year.
The table below presents a full list of the companies covered by Articles 114 and 165 of the Royal Decree of 30 January 2001 pertaining to the execution of the Belgian Companies Code. For the subsidiaries already present in the prior year (Aedifica Invest SA, Aedifica Invest Brugge SA, Aedifica Asset Management GmbH, Aedifica Luxemburg I SCS, Aedifica Luxemburg II SCS, Aedifica Luxemburg III SCS, Aedifica Luxemburg IV SCS, Aedifica Luxemburg V SCS, Aedifica Luxemburg VI SCS, Aedifica Nederland BV, VSP SA, VSP Kasterlee SA, Het Seniorenhof SA, Compagnie Immobilière Beerzelhof SA, Avorum SA, Coham SA, Residentie Sorgvliet SPRL and WZC Arcadia SPRL), the percentage of equity held by Aedifica is unchanged as compared to 30 June 2017.
| NAME | Country | Category | Register of corporations |
Capital held (in %) |
|---|---|---|---|---|
| Aedifica Invest NV° | Belgium | Subsidiary | 0879.109.317 | 100 |
| Aedifica Invest Brugge NV° | Belgium | Subsidiary | 0899.665.397 | 100 |
| Immobe NV° | Belgium | Subsidiary | 0697.566.095 | 100 |
| Aedifica Asset Management GmbH°° | Germany | Subsidiary | HRB100562 | 100 |
| Aedifica Project Management GmbH°° | Germany | Subsidiary | HRB111389 | 100 |
| Schloss Bensberg Management GmbH°°°°° | Germany | Subsidiary | HRB47122 | 100 |
| Aedifica Residenzen Nord GmbH°° | Germany | Subsidiary | HRB110850 | 94 |
| Aedifica Luxemburg I SCS°°° | Luxembourg | Subsidiary | B128048 | 94 |
| Aedifica Luxemburg II SCS°°° | Luxembourg | Subsidiary | B139725 | 94 |
| Aedifica Luxemburg III SCS°°° | Luxembourg | Subsidiary | B143704 | 94 |
| Aedifica Luxemburg IV SCS°°° | Luxembourg | Subsidiary | B117441 | 94 |
| Aedifica Luxemburg V SCS°°° | Luxembourg | Subsidiary | B117445 | 94 |
| Aedifica Luxemburg VI SCS°°° | Luxembourg | Subsidiary | B132154 | 94 |
| Aedifica Nederland BV°°°° | The Netherlands | Subsidiary | 65422082 | 100 |
| VSP NV° | Belgium | Subsidiary | 0425.057.859 | 100 |
| VSP Kasterlee NV° | Belgium | Subsidiary | 0877.687.276 | 100 |
| Het Seniorenhof NV° | Belgium | Subsidiary | 0434.691.543 | 100 |
| Compagnie Immobilière Beerzelhof NV° | Belgium | Subsidiary | 0475.364.039 | 100 |
| Avorum NV° | Belgium | Subsidiary | 0870.199.371 | 100 |
| Coham NV° | Belgium | Subsidiary | 0456.236.332 | 100 |
| Residentie Sorgvliet BVBA° | Belgium | Subsidiary | 0470.494.639 | 100 |
| WZC Arcadia BVBA° | Belgium | Subsidiary | 0554.950.658 | 100 |
| Dujofin BVBA° | Belgium | Subsidiary | 0446.022.925 | 100 |
° Located Rue Belliard 40 in 1040 Brussels (Belgium).
°° Located Mainzer Landstr. 46 in 60325 Frankfurt am Main (Germany).
°°° Located rue Guillaume J. Kroll 7 in 1882 Luxembourg (Luxembourg).
°°°° Located Herengracht 466 in 1017 CA Amsterdam (The Netherlands).
°°°°° Located Im Schloßpark 10 in 51429 Bergisch-Gladbach (Germany).
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Consolidated debt-to-assets ratio (max. 65%) | ||
| Total liabilities | 824,996 | 682,083 |
| Corrections | -43,547 | -43,006 |
| Total liabilities according to the Royal Decree of 13 July 2014 | 781,449 | 639,077 |
| Total assets | 1,766,643 | 1,570,122 |
| Corrections | -1,692 | -2,707 |
| Total assets according to the Royal Decree of 13 July 2014 | 1,764,951 | 1,567,415 |
| Debt-to-assets ratio (in %) | 44.3% | 40.8% |
| STATUTORY PAY-OUT RATIO | ||
| Statutory corrected profit | 55,425 | 42,053 |
| Proposed dividend | 45,502 | 34,478 |
| PAY-OUT RATIO (MIN. 80%) | 82% | 82% |
See section 1.4 of the "Risk Factors" chapter of 2017/2018 Annual Financial Report.
Aedifica's properties are valued quarterly by the following valuation experts: Winssinger & Associés SA, Deloitte Consulting & Advisory SCRL, IP Belgium SPRL, CBRE GmbH and DTZ Zadelhoff VOF.
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Statutory audit (Aedifica SA) | 38 | 37 |
| Statutory audit (subsidiaries) | 191 | 78 |
| Opinion reports foreseen in the Belgian Companies Code (Aedifica SA) | 15 | 18 |
| Other opinion reports (comfort letter, etc.) (Aedifica SA) | 26 | 34 |
| Tax advice missions | 7 | 0 |
| Other missions unconnected with the statutory audit | 0 | 0 |
| TOTAL | 277 | 167 |
Deferred taxes recognised on the balance sheet arise from the acquisition of investment properties located outside of Belgium.
They arise from the temporal difference between the buildings' fair value and the assessed value used for tax purposes.
Changes in deferred taxes are presented as follows (see also Note 24):
| (x €1,000) | Assets | Liabilities |
|---|---|---|
| CARRYING AMOUNT AS OF 1/07/2016 | 676 | -2,881 |
| Originations | 446 | 47 |
| Reversals | -532 | -1,502 |
| Scope changes | 618 | 30 |
| CARRYING AMOUNT AS OF 30/06/2017 | 1,208 | -4,306 |
| (x €1,000) | Assets | Liabilities |
|---|---|---|
| CARRYING AMOUNT AS OF 1/07/2017 | 1,208 | -4,306 |
| Originations | 699 | 350 |
| Reversals | -2,225 | -1,338 |
| Scope changes | 318 | -917 |
| CARRYING AMOUNT AS OF 30/06/2018 | 0 | -6,211 |
In accordance with IFRS 13, balance sheet elements for which the fair value can be computed are presented below and broken down according to the levels defined by IFRS 13:
| (x €1,000) | Level 1 | Level 2 | Level 3 | Carrying amounts of the balance sheet 2018 |
|---|---|---|---|---|
| Investment properties | - | - | 1,736,463 | 1,736,463 |
| Assets classified as held for sale | - | - | 4,070 | 4,070 |
| Non-current financial assets | - | 1,888 | - | 1,888 |
| Trade receivables | - | 7,518 | - | 7,518 |
| Tax receivables and other current assets | - | 446 | - | 446 |
| Cash and cash equivalents | 10,589 | - | - | 10,589 |
| Non-current financial debts (a. Borrowings) | - | -723,793 | - | -716,927 |
| Other non-current financial liabilities | - | -37,599 | - | -37,599 |
| Current financial debts (a. Borrowings) | - | -22,830 | - | -22,830 |
| Trade debts and other current debts (b. Other) | - | -28,485 | - | -28,485 |
| (x €1,000) | Level 1 | Level 2 | Level 3 | Carrying amounts of the balance sheet 2017 |
| the balance sheet 2017 | ||||
|---|---|---|---|---|
| Investment properties | - | - | 1,540,409 | 1,540,409 |
| Assets classified as held for sale | - | - | 4,440 | 4,440 |
| Non-current financial assets | - | 2,959 | - | 2,959 |
| Trade receivables | - | 6,718 | - | 6,718 |
| Tax receivables and other current assets | - | 1,679 | - | 1,679 |
| Cash and cash equivalents | 8,135 | - | - | 8,135 |
| Non-current financial debts (a. Borrowings) | - | -587,961 | - | -579,438 |
| Other non-current financial liabilities | - | -37,933 | - | -37,933 |
| Current financial debts (a. Borrowings) | - | -34,524 | - | -34,524 |
| Trade debts and other current debts (b. Other) | - | -20,252 | - | -20,252 |
In the table above, the fair value of hedging instruments is included under lines "non-current financial assets" and "other noncurrent financial liabilities", as broken down in Note 32.
The Company has committed to acquire the non-controlling shareholdings (6 % of the share capital) owned by third parties in Aedifica Luxemburg I SCS, Aedifica Luxemburg II SCS, Aedifica Luxemburg III SCS, Aedifica Luxemburg IV SCS, Aedifica Luxemburg V SCS, Aedifica Luxemburg VI SCS and Aedifica Residenzen Nord GmbH, should these third parties wish to exercise their put options. The exercise price of such options granted to non-controlling interest is reflected on the liability side of balance sheet on line "I.C.b. Other non-current financial liabilities – Other" (see Notes 32 and 47).
For many years, Aedifica has been using Alternative Performance Measures in its financial communications based on ESMA (European Securities and Market Authority) guidelines published on 5 October 2015. Some of these APM are recommended by the European Public Real Estate Association (EPRA) while others have been defined by the industry or by Aedifica; the aim is to provide readers with a better understanding of the Company's results and performance. The APM used in this annual financial report are identified with an asterisk (*). Performance measures defined by IFRS standards or by Law are not considered APM, nor are those measures that are not based on the consolidated income statement or the balance sheet. In this appendix, the APM are defined, annotated and connected with the most relevant line, total or subtotal of the financial statements.
Aedifica uses the performance measures presented below to determine the value of its investment properties; however, these measures are not defined under IFRS. They reflect alternate clustering of investment properties with the aim of providing the reader with the most relevant information. The definition of these concepts, as applied to Aedifica's financial statements, may differ from those used in the financial statements of other companies. They are calculated as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Marketable investment properties | 1,701,280 | 1,523,235 |
| + Development projects | 35,183 | 17,174 |
| Investment properties | 1,540,409 | |
| + Assets classified as held for sale | 4,070 | 4,440 |
| Investment properties including assets classified as held for sale, or real estate portfolio | 1,544,849 | |
| - Development projects | -35,183 | -17,174 |
| Roundings | 0 | 0 |
| Marketable investment properties including assets classified as held for sale*, or investment properties portfolio |
1,705,350 | 1,527,675 |
uses the net rental income on a like-for-like basis* to reflect the performance of investment properties excluding the effect of scope changes; however, this performance measure is not defined under IFRS. It represents rental income excluding the effect of scope changes. The definition of this concept, as applied to Aedifica's financial statements, may differ from that used in the financial statements of other companies. It is calculated as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Rental income | 91,677 | 78,983 |
| - Scope changes | -26,957 | -15,763 |
| = Rental income on a like-for-like basis* | 64,720 | 63,220 |
Aedifica uses operating charges* to aggregate the operating charges*; however, this performance measure is not defined under IFRS. It represents items IV. to XV. of the income statement. The definition of this concept, as applied to Aedifica's financial statements, may differ from that used in the financial statements of other companies. It is calculated as indicated in the table below.
Aedifica uses the operating margin* and the EBIT margin* to reflect the profitability of its rental activities; however, these performance measures are not defined under IFRS. They represent the property operating result divided by net rental income and the operating result before result on portfolio divided by net rental income, respectively. The definition of these concepts, as applied to Aedifica's financial statements may differ from those used in the financial statements of other companies. They are calculated as indicated in the table below.
| 30 June 2018 | ||||||
|---|---|---|---|---|---|---|
| (x €1,000) | Healthcare real estate |
Apartment buildings |
Hotels | Non allocated |
Inter segment items° |
TOTAL |
| SEGMENT RESULT | ||||||
| Rental income (a) | 76,454 | 10,489 | 4,916 | 0 | -182 | 91,677 |
| Net rental income (b) | 76,446 | 10,429 | 4,904 | 0 | -182 | 91,597 |
| Property result (c) | 76,349 | 9,605 | 4,924 | 0 | -182 | 90,696 |
| Property operating result (d) | 75,057 | 6,321 | 4,879 | 0 | -182 | 86,075 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO (e) |
74,923 | 6,295 | 4,845 | -8,788 | 0 | 77,275 |
| Operating margin* (d)/(b) | 94% | |||||
| EBIT margin* (e)/(b) | 84% | |||||
| Operating charges* (e)-(b) | 14,322 |
| 30 June 2017 | ||||||
|---|---|---|---|---|---|---|
| (x €1,000) | Healthcare real estate |
Apartment buildings |
Hotels | Non allocated |
Inter segment items° |
TOTAL |
| SEGMENT RESULT | ||||||
| Rental income (a) | 63,939 | 11,021 | 4,220 | 0 | -197 | 78,983 |
| Net rental income (b) | 63,933 | 11,002 | 4,197 | 0 | -197 | 78,935 |
| Property result (c) | 63,900 | 10,155 | 4,200 | 0 | -197 | 78,058 |
| Property operating result (d) | 63,062 | 7,029 | 4,161 | 0 | -197 | 74,055 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO (e) |
63,206 | 6,981 | 4,161 | -8,571 | 0 | 65,777 |
| Operating margin* (d)/(b) | 94% | |||||
| EBIT margin* (e)/(b) | 83% | |||||
| Operating charges* (e)-(b) | 13,158 |
° Mainly elimination of the internal rent for the administrative offices of the Company.
uses the financial result excl. changes in fair value of financial instruments* to reflect its financial result before the non-cash effect of financial instruments; however, this performance measure is not defined under IFRS. It represents the total of items XX., XXI. and XXII. of the income statement. The definition of this concept, as applied to Aedifica's financial statements, may differ from that used in the financial statements of other companies. It is calculated as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| XX. Financial income | 554 | 155 |
| XXI. Net interest charges | -14,321 | -15,365 |
| XXII. Other financial charges | -1,552 | -1,328 |
| Financial result excl. changes in fair value of financial instruments* | -15,319 | -16,538 |
Aedifica uses average effective interest rate* and average effective interest rate before deduction of capitalised interests* to reflect the costs of its financial debts; however, these performance measures are not defined under IFRS. They represent annualised net interest charges (after or before capitalised interests) divided by weighted average financial debts. The definition of these concepts, as applied to Aedifica's financial statements, may differ from those used in the financial statements of other companies. They are calculated as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| XXI. Net interest charges | -14,321 | -15,365 |
| Capitalised interests | 482 | 322 |
| Annualised net interest charges (a) | -14,125 | -15,365 |
| Net interest charges before annualised capitalised interests (b) | -14,600 | -15,687 |
| Weighted average financial debts (c) | 697,832 | 662,008 |
| Average effective interest rate* (a)/(c) | 2.0% | 2.3% |
| Average effective interest rate before capitalised interests* (b)/(c) | 2.1% | 2.3% |
Aedifica uses equity excl. changes in fair value of hedging instruments* to reflect equity before non-cash effects of the revaluation of hedging instruments; however, this performance measure is not defined under IFRS. It represents the line "equity attributable to owners of the parent" without cumulated non-cash effects of the revaluation of hedging instruments. The definition of this concept, as applied to Aedifica's financial statements, may differ from that used in the financial statements of other companies. It is calculated as follows:
| (x €1,000) | 2018 | 2017 |
|---|---|---|
| Equity attributable to owners of the parent | 941,647 | 888,039 |
| - Effect of the distribution of the dividend 2016/2017 | 0 | -34,478 |
| Sub-total excl. effect of the distribution of the dividend 2016/2017 | 853,561 | |
| - Effect of the changes in fair value of hedging instruments | 941,647 35,439 |
34,055 |
| Equity excl. changes in fair value of hedging instruments* | 977,086 | 887,616 |
Aedifica uses net asset value per share excl. changes in fair value of hedging instruments* to reflect equity per share before the non-cash effect of the revaluation of hedging instruments; however, this performance measure is not defined under IFRS. It represents the line "equity attributable to owners of the parent" without cumulated non-cash effects of the revaluation of hedging instruments, divided by the number of shares outstanding (after deduction of treasury shares) at the closing date. The definition of this concept, as applied to Aedifica's financial statements, may differ from that used in the financial statements of other companies. It is calculated by dividing equity excl. changes in fair value of hedging instruments* by the number of shares outstanding (after deduction of treasury shares).
Aedifica supports reporting standardisation, which has been designed to improve the quality and comparability of information. The Company supplies its investors with most of the information recommended by EPRA. The following indicators are considered as APM:
During the 2017/2018 financial year, the Group completed the following business combination:
Information regarding the net asset acquired, goodwill and their consideration are given in the table below:
| (x €1,000) | Faire value |
|---|---|
| Investment properties | 8 |
| Other tangible assets | 49 |
| Trade receivables | 82 |
| Tax receivables and other current assets | 3 |
| Cash and cash equivalents | 340 |
| Trade debts and other current debts | -621 |
| Accrued charges and deferred income | -5 |
| Net asset acquired | -144 |
| Goodwill (see Note 27) | 335 |
| Consideration | 191 |
| of which cash consideration | 191 |
The Abridged Statutory Financial Statements of Aedifica SA, prepared under IFRS, are summarised below in accordance with Article 105 of Belgian Companies Code.
The unabridged Statutory Financial Statements of Aedifica SA, its Board of Directors' Report and its Auditors' Report will be registered at the National Bank of Belgium within the legal deadlines. They will also be available for free on the Company's website (www.aedifica.eu) or on request at the Company's headquarters.
The statutory auditor released an unqualified opinion on the Statutory Financial Statements of Aedifica SA.
| Year ending on 30 June (x €1,000) | 2018 | 2017 | |
|---|---|---|---|
| I. | Rental income | 65,806 | 61,108 |
| II. | Writeback of lease payments sold and discounted | 0 | 0 |
| III. | Rental-related charges | -83 | -53 |
| Net rental income | 65,723 | 61,055 | |
| IV. | Recovery of property charges | 84 | 38 |
| V. | Recovery of rental charges and taxes normally paid by tenants on let properties | 2,001 | 2,211 |
| VI. | Costs payable by the tenant and borne by the landlord on rental damage and repair at end of lease | 0 | 0 |
| VII. | Rental charges and taxes normally paid by tenants on let properties | -2,001 | -2,211 |
| VIII. | Other rental-related income and charges | -893 | -917 |
| Property result | 64,914 | 60,176 | |
| IX. | Technical costs | -1,400 | -1,244 |
| X. | Commercial costs | -539 | -567 |
| XI. | Charges and taxes on unlet properties | -136 | -165 |
| XII. | Property management costs | -1,051 | -937 |
| XIII. | Other property charges | -1,122 | -927 |
| Property charges | -4,248 | -3,840 | |
| Property operating result | 60,666 | 56,336 | |
| XIV. | Overheads | -9,560 | -7,732 |
| XV. | Other operating income and charges | 561 | 1,860 |
| Operating result before result on portfolio | 51,667 | 50,464 | |
| XVI. | Gains and losses on disposals of investment properties | 790 | 1,485 |
| XVII. | Gains and losses on disposals of other non-financial assets | 0 | 0 |
| XVIII. | Changes in fair value of investment properties | 12,696 | 9,434 |
| XIX. | Other result on portfolio | -1,056 | -1,211 |
| Operating result | 64,097 | 60,172 | |
| XX. | Financial income | 17,438 | 7,561 |
| XXI. | Net interest charges | -13,453 | -14,323 |
| XXII. | Other financial charges | -1,450 | -1,212 |
| XXIII. | Changes in fair value of financial assets and liabilities | -1,344 | 6,075 |
| Net finance costs | 1,191 | -1,899 | |
| Profit before tax (loss) | 65,288 | 58,273 | |
| XXIV. | Corporate tax | -1,931 | -1,233 |
| XXV. | Exit tax | 0 | 0 |
| Tax expense | -1,931 | -1,233 | |
| Profit (loss) | 63,357 | 57,040 | |
| Basic earnings per share (€) | 3.52 | 3.74 | |
| Diluted earnings per share (€) | 3.52 | 3.74 |
| Year ending on 30 June (x €1,000) | 2018 | 2017 |
|---|---|---|
| I. Profit (loss) |
63,357 | 57,040 |
| II. Other comprehensive income recyclable under the income statement |
||
| A. Impact on fair value of estimated transaction costs resulting from hypothetical disposal of investment properties |
0 | 0 |
| B. Changes in the effective part of the fair value of authorised cash flow hedge instruments as defined under IFRS |
-870 | 7,276 |
| H. Other comprehensive income, net of taxes (see Note 33.3.) |
831 | 0 |
| Comprehensive income | 63,318 | 64,316 |
| ASSETS | 2018 | 2017 |
|---|---|---|
| Year ending on 30 June (x €1,000) | ||
| I. Non-current assets |
||
| A. Goodwill |
1,856 | 1,856 |
| B. Intangible assets |
292 | 221 |
| C. Investment properties |
1,211,384 | 1,145,673 |
| D. Other tangible assets |
2,535 | 1,611 |
| E. Non-current financial assets |
429,305 | 313,629 |
| F. Finance lease receivables |
0 | 0 |
| G. Trade receivables and other non-current assets |
0 | 0 |
| H. Deferred tax assets |
0 | 0 |
| Total non-current assets | 1,645,372 | 1,462,990 |
| II. Current assets |
||
| A. Assets classified as held for sale |
4,070 | 4,440 |
| B. Current financial assets |
0 | 0 |
| C. Finance lease receivables |
0 | 0 |
| D. Trade receivables | 4,818 | 4,444 |
| E. Tax receivables and other current assets |
12,619 | 19,314 |
| F. Cash and cash equivalents |
5,350 | 3,087 |
| G. Deferred charges and accrued income |
480 | 763 |
| Total current assets | 27,337 | 32,048 |
| TOTAL ASSETS | 1,672,709 | 1,495,038 |
| EQUITY AND LIABILITIES | 2017 | ||
|---|---|---|---|
| Year ending on 30 June (x €1,000) | |||
| EQUITY | |||
| A. | Capital | 465,126 | 459,231 |
| B. | Share premium account | 297,569 | 287,194 |
| C. | Reserves | 97,333 | 74,810 |
| a. Legal reserve | 0 | 0 | |
| b. Reserve for the balance of changes in fair value of investment properties | 137,099 | 126,720 | |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties | -23,129 | -24,415 | |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-16,436 | -16,418 | |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-17,659 | -23,712 | |
| h. Reserve for treasury shares | 0 | 0 | |
| k. Reserve for deferred taxes on investment properties located abroad | -996 | -213 | |
| m. Other reserves | -1,957 | 0 | |
| n. Result brought forward from previous years | 20,411 | 12,848 | |
| D. | Profit (loss) of the year | 63,357 | 57,040 |
| TOTAL EQUITY | 923,385 | 878,275 | |
| LIABILITIES | |||
| I. | Non-current liabilities | ||
| A. | Provisions | 0 | 0 |
| B. | Non-current financial debts | ||
| a. Borrowings | 665,713 | 525,520 | |
| C. | Other non-current financial liabilities | 33,209 | 33,787 |
| a. Authorised hedges | 33,209 | 33,787 | |
| b. Other | 0 | 0 | |
| D. | Trade debts and other non-current debts | 0 | 0 |
| E. | Other non-current liabilities | 0 | 0 |
| F. | Deferred tax liabilities | 3,190 | 3,051 |
| Non-current liabilities | 702,112 | 562,358 | |
| II. | Current liabilities | ||
| A. | Provisions | 0 | 0 |
| B. | Current financial debts | ||
| a. Borrowings | 20,058 | 31,754 | |
| C. | Other current financial liabilities | 0 | 0 |
| D. | Trade debts and other current debts | ||
| a. Exit tax | 141 | 206 | |
| b. Other | 24,221 | 18,513 | |
| E. | Other current liabilities | 0 | 0 |
| F. | Accrued charges and deferred income | 2,792 | 3,932 |
| Total current liabilities | 47,212 | 54,405 | |
| TOTAL LIABILITIES | 749,324 | 616,763 | |
| TOTAL EQUITY AND LIABILITIES | 1,672,709 | 1,495,038 |
| (x €1,000) | 2016 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Other transfers and roundings |
2017 |
|---|---|---|---|---|---|---|---|---|
| Capital | 364,467 | 90,002 | 4,762 | 0 | 0 | 0 | 0 | 459,231 |
| Share premium account | 155,509 | 124,437 | 7,248 | 0 | 0 | 0 | 0 | 287,194 |
| Reserves | 56,986 | 0 | 0 | 0 | 7,276 | 10,548 | 0 | 74,810 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
107,923 | 0 | 0 | 0 | 0 | 18,797 | 0 | 126,720 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-20,032 | 0 | 0 | 0 | 0 | -4,382 | -1 | -24,415 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-23,560 | 0 | 0 | 0 | 7,276 | -135 | 1 | -16,418 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-18,256 | 0 | 0 | 0 | 0 | -5,456 | 0 | -23,712 |
| h. Reserve for treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| k. Reserve for deferred taxes on investment properties located abroad |
110 | 0 | 0 | 0 | 0 | -324 | 1 | -213 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| n. Result brought forward from previous years |
10,801 | 0 | 0 | 0 | 0 | 2,048 | -1 | 12,848 |
| Profit (loss) | 40,341 | 0 | 0 | 0 | 57,040 | -40,341 | 0 | 57,040 |
| TOTAL EQUITY | 617,303 | 214,439 | 12,010 | 0 | 64,316 | -29,793 | 0 | 878,275 |
| Year ending on 30 June (x €1,000) | 2017 | Capital increase in cash |
Capital increase in kind |
Acquisitions / disposals of treasury shares |
Consolidated comprehensive income |
Appropriation of the result |
Other transfers and roundings |
2018 |
|---|---|---|---|---|---|---|---|---|
| Capital | 459,231 | 0 | 5,895 | 0 | 0 | 0 | 0 | 465,126 |
| Share premium account | 287,194 | 0 | 10,376 | 0 | 0 | 0 | -1 | 297,569 |
| Reserves | 74,810 | 0 | 0 | 0 | -40 | 22,562 | 1 | 97,333 |
| a. Legal reserve | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| b. Reserve for the balance of changes in fair value of investment properties |
126,720 | 0 | 0 | 0 | 0 | 8,893 | 1,486 | 137,099 |
| c. Reserve for estimated transaction costs resulting from hypothetical disposal of investment properties |
-24,415 | 0 | 0 | 0 | 0 | 815 | 470 | -23,130 |
| d. Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS |
-16,418 | 0 | 0 | 0 | -40 | 22 | 0 | -16,436 |
| e. Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS |
-23,712 | 0 | 0 | 0 | 0 | 6,053 | 0 | -17,659 |
| h. Reserve for treasury shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| k. Reserve for deferred taxes on investment properties located abroad |
-213 | 0 | 0 | 0 | 0 | -783 | 0 | -996 |
| m. Other reserves | 0 | 0 | 0 | 0 | 0 | 0 | -1,955 | -1,955 |
| n. Result brought forward from previous years |
12,848 | 0 | 0 | 0 | 0 | 7,562 | 0 | 20,410 |
| Profit (loss) | 57,040 | 0 | 0 | 0 | 63,357 | -57,040 | 0 | 63,357 |
| TOTAL EQUITY | 878,275 | 0 | 16,271 | 0 | 63,317 | -34,478 | 0 | 923,385 |
| PROPOSED APPROPRIATION | 2018 | 2017 |
|---|---|---|
| Year ending on 30 June (x €1,000) | ||
| A. Profit (loss) | 63,357 | 57,040 |
| B. Transfer to/from the reserves | 12,345 | 15,000 |
| 1. Transfer to/from the reserve of the (positive or negative) balance of changes in fair value of investment properties (-/+) | ||
| - fiscal year | 14,203 | 7,408 |
| - previous fiscal years | 0 | 0 |
| - disposals of investment properties | 790 | 1,485 |
| 2. Transfer to/from the reserve of the estimated transaction costs resulting from hypothetical disposal of investment properties (-/+) |
-2,563 | 815 |
| 3. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting (-) |
||
| - fiscal year | -11 | 0 |
| - previous years | 0 | 0 |
| 4. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments qualifying for hedge accounting (+) |
||
| - fiscal year | 0 | 22 |
| - previous years | 0 | 0 |
| 5. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (-) |
||
| - fiscal year | -1,332 | 0 |
| - previous years | 0 | 0 |
| 6. Transfer to the reserve of the balance of the changes in fair value of authorised cash flow hedging instruments not qualifying for hedge accounting (+) |
||
| - fiscal year | 0 | 6,053 |
| - previous years | 0 | 0 |
| 7. Transfer to/from the reserve of the balance of currency translation differences on monetary assets and liabilities (-/+) | 0 | 0 |
| 8. Transfer to the reserve of the fiscal latencies related to investment properties abroad (-/+) | -698 | -783 |
| 9. Transfer to the reserve of the received dividends aimed at the reimbursement of financial debts (-/+) | 0 | 0 |
| 10. Transfer to/from other reserves (-/+) | 1,957 | 0 |
| 11. Transfer to/from the result carried forward of the previous years (-/+) | 0 | 0 |
| C. Remuneration of the capital provided in article 13, § 1, para. 1 | 44,340 | 33,642 |
| D. Remuneration of the capital - other than C | 1,162 | 836 |
| Result to be carried forward | 5,509 | 7,562 |
| SHAREHOLDERS' EQUITY THAT CAN NOT BE DISTRIBUTED ACCORDING TO ARTICLE 617 | 2018 | 2017 |
|---|---|---|
| OF THE COMPANY CODE | ||
| (x €1,000) | ||
| Paid-up capital or, if greater, subscribed capital (+) | 465,126 | 459,231 |
| Share premium account unavailable for distribution according to the Articles of Association (+) | 297,569 | 287,194 |
| Reserve for positive balance of changes in fair value of investment properties (+) | 152,092 | 135,613 |
| Reserve for the estimated transaction costs resulting from hypothetical disposal of investment properties (-) | -25,692 | -23,600 |
| Reserve for the balance of changes in fair value of authorised hedging instruments qualifying for hedge accounting as defined under IFRS (+/-) |
-16,447 | -16,396 |
| Reserve for the balance of changes in fair value of authorised hedging instruments not qualifying for hedge accounting as defined under IFRS (+/-) |
-18,991 | -17,659 |
| Reserve of the balance of currency translation differences on monetary assets and liabilities (+) | 0 | 0 |
| Reserve for foreign exchange differences linked to conversion of foreign operations (+/-) | 0 | 0 |
| Reserve for the balance of changes in fair value of financial assets available for sale (+/-) | 0 | 0 |
| Reserve for actuarial differences of defined benefits pension plans (+) | 0 | 0 |
| Reserve of the fiscal latencies related to investment properties abroad (+) | 0 | 0 |
| Reserve of the received dividends aimed at the reimbursement of financial debts (+) | 0 | 0 |
| Other reserves declared as non-distributable by the general meeting (+) | 0 | 0 |
| Legal reserve (+) | 0 | 0 |
| Shareholders' equity that cannot be distributed according to Article 617 of the Company Code | 853,657 | 824,383 |
| Net asset | 923,385 | 878,275 |
| Dividend to be paid out | -45,502 | -34,478 |
| Net asset after distribution | 877,883 | 843,797 |
| Headroom after distribution | 24,226 | 19,414 |
The legal form of the Company is that of a public limited liability company with the name "AEDIFICA".
The Company is a Public Regulated Real Estate Company ("PRREC"), subject to the Belgian Act of 12 May 2014 on Regulated Real Estate Companies (the "Act") as well as the Royal Decree of 13 July 2014 on Regulated Real Estate Companies (the "Royal Decree") (hereafter together "the RREC legislation").
The name of the Company and all documents that it issues must include a reference to it being a Regulated Real Estate Company under Belgian law, either written out in full as "openbare gereglementeerde vastgoedvennootschap naar Belgisch recht" / "société immobilière réglementée publique de droit belge" ("public regulated real estate company under Belgian law") or abbreviated as "openbare GVV naar Belgisch recht" or "OGGV naar Belgisch recht" / "SIR publique de droit belge" or "SIRP de droit belge" ("public RREC under Belgian law"), or be immediately followed by these words.
The Company has made a public call on savings within the meaning of Article 438 of the Belgian Companies Code.
The registered office is located at Rue Belliard / Belliardstraat 40, 1040 Brussels.
The registered office may be moved to any other place in Belgium, subject to compliance with the language legislation in administrative affairs, by means of a simple resolution of the board of directors, which is authorised to have the ensuing amendment to the articles of association recorded in an officially certified deed.
The Company may establish administrative offices, branches or agencies, both in Belgium and abroad by means of a simple resolution of the Board of Directors, insofar as it keeps its central administration in Belgium.
Aedifica was set up as a limited liability company incorporated under Belgian law (Société Anonyme/Naamloze Vennootschap) by Degroof Bank SA and GVA Finance SCA, by deed enacted on 7 November 2005 by Notary Bertrand Nerincx, Notary in Brussels, published in the annexes to the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad) of 23 November 2005, under number 20051123/05168061.
Aedifica was recognised as a Belgian REIT by the Commission Bancaire, Financière et des Assurances (CBFA), which became the FSMA, on 8 December 2005. Aedifica was recognised as a RREC by the FSMA on 17 October 2014.
The Company is entered in the Brussels Registry of Legal Entities (R.L.E., or "R.P.M." in French / "R.P.R." in Dutch) under No. 0877.248.501.
The Company is incorporated for an indefinite duration.
The Company's sole purpose is:
(i) DBF-agreements, the so-called "Design, Build, Finance" agreements;
(ii) DB(F)M-agreements, the so-called "Design, Build, (Finance) and Maintain" agreements;
In the context of making available immovable property, the Company can carry out all activities relating to the construction, conversion, renovation, development, acquisition, disposal, administration and exploitation of immovable property.
As an additional or temporary activity, the Company may invest in securities that are not real estate within the meaning of the RREC legislation, insofar as these securities may be traded on a regulated market. These investments will be made in accordance with the risk management policy adopted by the Company and will be diversified so as to ensure an appropriate risk diversification. It may also hold non-allocated liquid assets in all currencies, in the form of a call or term deposit or in the form of any monetary instrument that can be traded easily.
The Company may moreover carry out hedging transactions, insofar as the latter's exclusive purpose is to cover interest rate and exchange rate risks within the context of the financing and administration of the activities of the Company as referred to in article 4 of the Law of 12 May 2014, to the exclusion of any speculative transactions.
The Company may lease out or take a lease on (under finance leases) one or more immovable properties. Leasing out (under finance leases) immovable property with an option to purchase may only be carried out as an additional activity, unless the immovable properties are intended for purposes of public interest, including social housing and education (in this case, the activity may be carried out as main activity).
The Company may carry out all transactions and studies relating to all real estate as described above, and may perform all acts relating to real estate, such as purchase, refurbishment, laying out, letting, furnished letting, subletting, management, exchange, sale, parcelling, placing under a system of co-ownership, and have dealings with all enterprises with a corporate purpose that is similar to or complements its own by way of merger or otherwise, insofar as these acts are permitted under the RREC legislation and, generally, perform all acts that are directly or indirectly related to its purpose.
The Company may not:
The financial year commences on the 1st July of each year and ends on the 30th June of the following year. At the end of each financial year, the Board of Directors draws up an inventory and the annual accounts. The annual and half-year financial reports of the Company, which contain its consolidated accounts and the statutory auditor's report, are made available to the shareholders, in accordance with the provisions that apply to issuers of financial instruments that are admitted to trading on a regulated market. The annual and half-year financial reports of the Company and the annual accounts are published on the Company's website. The shareholders are entitled to obtain a free copy of the annual and half-year financial reports at the registered office.
The Ordinary General Meeting will be held at 3 PM on the fourth Tuesday of October.
If this day is a public holiday, the meeting will be held at the same time on the next business day, except if the next day is a Saturday or Sunday. Ordinary or Extraordinary General Meetings are held at the venue specified in the meeting notice. The General Meeting is convened by the Board of Directors. A General Meeting must be convened by the Board of Directors whenever shareholders representing one-fifth of the capital request it to do so. One or more shareholders who jointly hold at least 3% of the share capital may, subject to the conditions laid down by the Belgian Companies Code, also ask to add items to the agenda of General Meetings and submit proposals for resolutions relating to items included or to be included on the agenda. Meeting notices are drawn up and distributed in accordance with the applicable provisions of the Belgian Companies Code
The statutory auditor of the Company, accredited by the Financial Services and Markets Authority (FSMA), is Ernst & Young Réviseurs d'Entreprises SCCRL, represented by Joeri Klaykens, Partner, located at 2 De Kleetlaan in 1831 Diegem.
The statutory auditor has an unlimited right of supervision over the operations of the Company.
The accredited statutory auditor was appointed for a 3-year period by the Ordinary General Meeting on 27 October 2017, and receives an indexed audit fee of €38,000 excluding VAT per year for auditing the consolidated and statutory annual accounts.
To avoid conflicts of interest, Aedifica's real estate portfolio is assessed by five independent valuation experts, namely:
According to the RREC legislation, the valuation experts assess the entire portfolio every quarter and their assessment is recognised as the carrying amount ("fair value") of the buildings on the balance sheet.
Since 1 January 2011, the expert fee excluding VAT is determined as a fixed amount per type of property appraised.
The valuations are established on the basis of several widely used methodologies:
Aedifica has established financial service conventions with the two following banks:
The remuneration of the financial service is almost entirely based on the amount of the distributed dividend. It amounted to €58 thousand for the 2017/2018 financial year (€70 thousand for the 2016/2017 financial year).
The Company's Articles of Association are available at the Commercial Court of Brussels and on the Company's website (www.aedifica.eu).
The statutory and consolidated accounts of the Group are registered at the National Bank of Belgium, in accordance with the related legal provisions. The decisions regarding the nomination and the dismissal of the members of the Board of Directors are published in the annexes to the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad). The convening of general meetings is published in the annexes to the Belgian State Gazette (Moniteur belge/Belgisch Staatsblad) and in two financial newspapers.
These meeting notices and all documents related to the general meetings are simultaneously available on the Company's website (www.aedifica.eu). All press releases, annual and semi-annual reports, as well as all financial information published by the Aedifica Group are available on the Company's website (www.aedifica.eu).
The Auditor's Report and the valuation experts' report are available in the Annual Financial Reports provided on the Company's website (www.aedifica.eu).
During the period of validity of the registration document, the following documents are available in print at the Company's headquarters, or electronically at www.aedifica.eu:
Given the specific legal regime of RRECs, and in particular residential RRECs, the Aedifica shares can present an interesting investment for both private investors and institutional investors.
The Annual Financial Reports (which include the Consolidated Financial Statements – with an abridged version of the Statutory Accounts –, the Consolidated Board of Directors' Report, the Auditor's Report, the Property Report), the interim statements, the semi-annual reports, the description of the financial situation, the information regarding the related-parties, and the historical information regarding the subsidiaries of Aedifica, for the 2012/2013, 2013/2014, 2014/2015, 2015/2016 and 2016/2017 financial years are included by reference in this Annual Financial Report and are available at the headquarters of Aedifica. These can also be downloaded from the Company's website (www.aedifica.eu).
No significant change in the Group's financial or trading situation has occurred since the end of last financial year for which audited financial statements or half-year statements have been published.
The modification of shareholders' rights can only be done within the framework of an extraordinary general meeting, in accordance with Articles 558 and 560 of the Belgian Companies Code. The document containing the information on the rights of the shareholders referred to in Articles 533ter and 540 of the Belgian Companies Code can be downloaded from the Company's website (www.aedifica.eu).
See the "Risks factors" chapter within this Annual Financial Report.
In addition to paragraph 1.3 above, Aedifica's history was marked by its IPO on 23 October 2006 (see the chapter "Aedifica in the stock market"), and by numerous acquisitions of real estate assets that have occurred since its creation (detailed in the occasional press releases, periodic press releases and annual and half-year financial reports available on the Company's website) and that led to the formation of real estate portfolio of approx. €1.7 billion.
Voting rights for Aedifica's main shareholders are no different from those that arise from their share in the share capital.
Mr. Serge Wibaut, Chairman of the Board of Directors of Aedifica SA, and Mr. Stefaan Gielens, CEO of Aedifica SA, declare for and on behalf of Aedifica SA, that to the best of their knowledge:
Aedifica SA declares that the information provided by the valuation experts and by the accredited statutory auditor have been faithfully reproduced and included with their consent. As far as Aedifica SA knows and is able to assure, in the light of data published by these third parties, no facts have been omitted that might render the information reproduced incorrect or misleading.
This report contains forecast information. This information is based on Company's estimates and projections and is, by its nature, subject to risks, uncertainties and other factors. Consequently, the results, financial situation, performance and figures, expressed or implicitly communicated, may differ substantially from those mentioned or suggested by the forecast information. Taking into account these uncertain factors, statements regarding future developments cannot be interpreted as a guarantee in any way.
The Board of Directors of Aedifica SA declares that there exists no government intervention, proceeding or arbitration procedure that may have a significant influence, or may have had such an influence in the recent past, on the financial position or profitability of Aedifica SA and that, as far as is known, there are no situations or facts that could give rise to such government intervention, proceeding or arbitration procedure.
The Board of Directors declares that, to the best of its knowledge:
| Date | Description | Amount of capital (€) | Number of shares |
|---|---|---|---|
| 7 November 2005 | Initial capital paid up by Degroof Bank and GVA Finance | 2,500,000.00 | 2,500 |
| 2,500,000.00 | 2,500 | ||
| 29 December 2005 | Contribution in cash | 4,750,000.00 | 4,750 |
| Merger of "Jacobs Hotel Company SA" | 100,000.00 | 278 | |
| Merger of "Oude Burg Company SA" | 3,599,587.51 | 4,473 | |
| Transfer of reserves to capital | 4,119,260.93 | ||
| Capital decrease | -4,891,134.08 | ||
| 10,177,714.36 | 12,001 | ||
| 23 March 2006 | Merger of "Sablon-Résidence de l'Europe SA" | 1,487,361.15 | 11,491 |
| Merger of "Bertimo SA" | 1,415,000.00 | 3,694 | |
| Merger of "Le Manoir SA" | 1,630,000.00 | 3,474 | |
| Merger of "Olphi SA" | 800,000.00 | 2,314 | |
| Merger of "Services et Promotion de la Vallée (SPV) SA" | 65,000.00 | 1,028 | |
| Merger of "Emmane SA" | 2,035,000.00 | 5,105 | |
| Merger of "Ixelinvest SA" | 219.06 | 72 | |
| Merger of "Imfina SA" | 1,860.95 | 8 | |
| Contribution in kind of the business of "Immobe SA" | 908,000.00 | 908 | |
| Contribution in kind (Lombard 32) | 2,500,000.00 | 2,500 | |
| Contribution in kind (Laeken complex - Pont Neuf and Lebon 24-28) | 10,915,000.00 | 10,915 | |
| 31,935,155.52 | 53,510 | ||
| 24 May 2006 | Contribution in kind (Louise 331-333 complex) | 8,500,000.00 | 8,500 |
| 40,435,155.52 | 62,010 | ||
| 17 August 2006 | Contribution in kind (Laeken 119 and 123-125) | 1,285,000.00 | 1,285 |
| Partial demerger of "Financière Wavrienne SA" | 5,400,000.00 | 5,400 | |
| Mixed demerger of "Château Chenois SA" | 123,743.15 | 14,377 | |
| Merger of "Medimmo SA" | 1,000,000.00 | 2,301 | |
| Merger of "Cledixa SA" | 74,417.64 | 199 | |
| Merger of "Société de Transport et du Commerce en Afrique SA" | 62,000.00 | 1,247 | |
| Mixed merger of "Hôtel Central & Café Central SA" | 175,825.75 | 6,294 | |
| 48,556,142.06 | 93,113 | ||
| 26 September 2006 | Split by 25 of the number of shares | 48,556,142.06 | 2,327,825 |
| Contribution in kind (Rue Haute and Klooster Hotel) | 11,350,000.00 | 283,750 | |
| 59,906,142.06 | 2,611,575 | ||
| 3 October 2006 | Contribution in cash | 23,962,454.18 | 1,044,630 |
| 83,868,596.24 | 3,656,205 | ||
| 27 March 2007 | Contribution in kind (Auderghem 237, 239-241, 266 et 272, Platanes 6 and Winston Churchill 157) |
4,911,972.00 | 105,248 |
| 88,780,568.24 | 3,761,453 | ||
| 17 April 2007 | Merger of "Legrand CPI SA" | 337,092.73 | 57,879 |
| Contribution in kind (Livourne 14, 20-24) | 2,100,000.00 | 44,996 | |
| 91,217,660.97 | 3,846,328 | ||
| 28 June 2007 | Partial demerger of "Alcasena SA" | 2,704,128.00 | 342,832 |
| Contribution in kind (Plantin Moretus) | 3,000,000.00 | 68,566 | |
| 96,921,788.97 | 4,275,726 | ||
| 30 November 2007 | Partial demerger of "Feninvest SA" | 1,862,497.95 | 44,229 |
| Partial demerger of "Résidence du Golf SA" | 5,009,531.00 | 118,963 | |
| 103,793,817.92 | 4,438,918 | ||
| 30 July 2008 | Partial demerger of "Famifamenne SA" | 2,215,000.00 | 50,387 |
| Partial demerger of "Rouimmo SA" | 1,185,000.00 | 26,956 | |
| 107,193,817.92 | 4,516,261 | ||
| 30 June 2009 | Contribution in kind (Gaerveld service flats) | 2,200,000.00 | 62,786 |
| 109,393,817.92 | 4,579,047 | ||
| 30 December 2009 | Contribution in kind (Freesias) | 4,950,000.00 | 129,110 |
| 114,343,817.92 | 4,708,157 | ||
| 30 June 2010 | Partial demerger of "Carbon SA", "Eburon SA", "Hotel Ecu SA" and "Eurotel SA" | 11,239,125.00 | 273,831 |
| Partial demerger of "Carlinvest SA" | 2,200,000.00 | 51,350 | |
| 127,782,942.92 | 5,033,338 |
1
| 15 October 2010 | Contribution in cash | 51,113,114.26 | 2,013,334 |
|---|---|---|---|
| 178,896,057.18 | 7,046,672 | ||
| 8 April 2011 | Contribution in kind (Project Group Hermibouw) | 1,827,014.06 | 43,651 |
| 180,723,071.24 | 7,090,323 | ||
| 29 June 2011 | Merger of "IDM A SA" | 24,383.89 | 592 |
| 180,747,455.13 | 7,090,915 | ||
| 5 October 2011 | Contribution in kind of the shares of "SIRACAM SA" | 3,382,709.00 | 86,293 |
| 184,130,164.13 | 7,177,208 | ||
| 12 July 2012 | Mixed demerger of "S.I.F.I. LOUISE SA" | 800,000.00 | 16,868 |
| 184,930,164.13 | 7,194,076 | ||
| 7 December 2012 | Capital increase through contribution in cash | 69,348,785.78 | 2,697,777 |
| 254,278,949.91 | 9,891,853 | ||
| 24 June 2013 | Merger of limited liability company "Terinvest" | 10,398.81 | 8,622 |
| Merger of limited partnership "Kasteelhof-Futuro" | 3,182.80 | 3,215 | |
| 254,292,531.52 | 9,903,690 | ||
| 12 June 2014 | Contribution in kind (Binkom) | 12,158,952.00 | 258,475 |
| 266,451,483.52 | 10,162,165 | ||
| 30 June 2014 | Contribution in kind (plot of land in Tienen) | 4,000,000.00 | 86,952 |
| 270,451,483.52 | 10,249,117 | ||
| 24 November 2014 | Optional dividend | 5,763,329.48 | 218,409 |
| 276,214,813.00 | 10,467,526 | ||
| 4 December 2014 | Partial demerger of "La Réserve Invest SA" | 12,061,512.94 | 457,087 |
| 288,276,325.94 | 10,924,613 | ||
| 29 June 2015 | Capital increase through contribution in cash | 82,364,664.56 | 3,121,318 |
| 370,640,990.50 | 14,045,931 | ||
| 2 October 2015 | Contribution in kind (plot of land in Opwijk) | 523,955.84 | 19,856 |
| 371,164,946.34 | 14,065,787 | ||
| 17 December 2015 | Contribution in kind (Prinsenhof) | 2,748,340.46 | 104,152 |
| 373,913,286.80 | 14,169,939 | ||
| 24 March 2016 | Contribution in kind (plot of land in Aarschot Poortvelden) | 582,985.31 | 22,093 |
| 374,496,272.11 | 14,192,032 | ||
| 2 December 2016 | Optional dividend | 3,237,042.22 | 122,672 |
| 377,733,314.33 | 14,314,704 | ||
| 8 December 2016 | Contribution in kind (Jardins de la Mémoire) | 1,740,327.12 | 65,952 |
| 379,473,641.45 | 14,380,656 | ||
| 28 March 2017 | Capital increase through contribution in cash | 94,868,410.37 | 3,595,164 |
| 474,342,051.82 | 17,975,820 | ||
| 7 June 2018 | Contribution in kind (Smakt and Velp) | 5,937,488.85 | 2 225,009 |
| 480,279,540.67 | 18,200,829 |
1 Shares without par value.
2 These shares are quoted on the stock market as from 7 June 2018 and give dividend rights for the entire 2017/2018 financial year. They enjoy the same rights and benefits as the other listed shares
The capital amounts to €480,279,540.67 (four hundred eighty million two hundred seventy-nine thousand five hundred forty and sixty-seven cents). It is represented by 18,200,829 (eighteen million two hundred thousand eight hundred twenty-nine) shares without nominal value, which each represent 1/18,200,829th (eighteen million two hundred thousand eight hundred twenty-ninth) of the capital. These shares are fully subscribed and paid up.
The Company may acquire its own shares by purchasing them or may accept them in pledge in accordance with the conditions set out in the Belgian Companies Code, provided that notice of the transaction is given to the Financial Services and Markets Authority (FSMA). In accordance with the general meeting resolution of 16 April 2018, two thousand and nine, the Board of Directors is authorised to acquire own shares (which are then called treasury shares), subject to a maximum of 10 % (ten per cent) of the total number of issued shares, at a unit price that may not be lower than 90 % (ninety per cent) of the average price quoted for the last thirty days of listing of the share on NYSE Euronext Brussels, or higher than 110 % (one hundred and ten per cent) of the average price quoted for the last thirty days of listing of the share on NYSE Euronext Brussels, i.e. a maximum increase or decrease of 10 % (ten per cent) compared to that average price. This authorisation is granted for a renewable period of five years, calculated from the publication of the minutes of the Extraordinary General Meeting of 16 April 2018, two thousand and nine, in the Annexes to the Belgian Official Gazette.
The Company may dispose of its treasury shares, on or outside of the stock exchange, under the conditions determined by the Board of Directors and without the prior consent of the general meeting, provided that it observes the applicable market regulations.
The authorisations referred to above also apply to the acquisition and disposal of shares in the Company by one or more of its direct subsidiaries, within the meaning of the statutory provisions on the acquisition of shares of a parent company by its subsidiaries.
Every capital increase must take place in accordance with the applicable regulations, i.e. the Belgian Companies Code and the RREC legislation.
In case of a capital increase by means of a cash contribution pursuant to a general meeting resolution or in the context of the authorised capital as provided for in Article 6.4, and without prejudice to the application of Sections 592 to 598 of the Belgian Companies Code, the preferential subscription right of the shareholders may only be restricted or cancelled if existing shareholders are granted an irreducible right of allocation when new securities are allocated. This irreducible right of allocation must comply with the following conditions as set out in the RREC legislation:
Without prejudice to the application of Sections 595 to 599 of the Belgian Companies Code, the irreducible right of allocation does not have to be granted in case of a cash contribution with restriction or cancellation of the preferential subscription right which is made to supplement a contribution in kind for the purpose of distributing an optional dividend, insofar as this is actually made payable to all shareholders.
Without prejudice to Sections 601 and 602 of the Belgian Companies Code, the following conditions must be complied with, in accordance with the RREC legislation, in case of a contribution in kind:
the financial conditions of the transaction are explained in its Annual Financial Report.
This last provision will not apply to the contribution of the right to a dividend for the purpose of distributing an optional dividend, insofar as this will actually be made payable to all shareholders.
The board of directors is authorised to increase the share capital in one or more transactions by a maximum amount of:
1 ) €374,000,000 if the capital increase to be effected is a capital increase whereby the shareholders of the Company have the possibility to exercise a preferential subscription right or a priority allocation right,
2 ) €74,800,000 for any other type of capital increase;
it being understood that the share capital can never be increased within the framework of the authorised capital in excess of €374,000,000 on such dates and in accordance with such terms and conditions as will be determined by the board of directors, in accordance with Section 603 of the Belgian Companies Code.
This authorisation is granted for a renewable period of five years, calculated from the publication of the minutes of the extraordinary general meeting of 28 October 2016, in the Annexes to the Belgian State Gazette.
For each capital increase, the Board of Directors will determine the price, the issue premium (if any) and the terms and conditions of issue of the new securities.
The capital increases that are thus decided on by the Board of Directors may be subscribed to in cash, in kind, or by means of a mixed contribution, or by the incorporation of reserves or by issue premiums, with or without the creation of new securities. These capital increases can also be achieved through the issue of convertible bonds or warrants.
If the capital increases realized within the framework of these authorisations include an issue premium, the amount of this premium, after deduction of any costs, will be allocated to a non-disposable account («share premium account»), which will provide a guarantee for third parties in the same manner as the share capital and which, subject to its incorporation in the capital, can only be reduced or abolished by means of a resolution of the general meeting of shareholders deliberating in accordance with the quorum and majority requirements for capital reductions.
If the capital increase is accompanied by an issue premium, only the amount of the capital increase will be deducted from the remaining available amount of the authorised capital.
The Board of Directors is authorised to restrict or cancel the preferential subscription right of shareholders, including in favour of specific persons who are not employees of the company or one of its subsidiaries, provided that an irreducible right of allocation is granted to the existing shareholders when the new securities are allocated. This irreducible right of allocation must comply with the conditions that are laid down in the RREC legislation and Article 6.3 (a) of the Articles of Association. It does not have to be granted in case of a cash contribution for the purpose of distributing an optional dividend, in accordance with Article 6.3(a) of the Articles of Association. Capital increases by means of contributions in kind are carried out in accordance with the conditions of the RREC legislation and the conditions provided for in Article 6.3 (a) of the Articles of Association. These contributions may also be based on the dividend right in the context of the distribution of an optional dividend.
The Board of Directors is authorised to record the ensuing amendments to the Articles of Association in an officially certified deed.
Pursuant to the RREC legislation, the provisions of Article 6.3(b) apply mutatis mutandis to mergers, de-mergers and equivalent transactions as referred to in Sections 671 to 677, 681 to 758 and 772/1 of the Belgian Companies Code.
The Company may reduce its capital subject to compliance with the relevant statutory provisions.
The shares are registered or dematerialised shares, at the option of the shareholder and within the limits set by law.
Every dematerialised share is represented by an accounting entry in the name of the owner or holder at a recognised account holder or settlement institution.
A register of registered shares is held at the Company's registered office, and may be in electronic form. Every shareholder may consult the register in relation to his shares.
The Company may issue the securities referred to in Section 460 of the Belgian Companies Code, with the exception of profit sharing certificates and similar securities, in compliance with the Belgian Companies Code and the RREC legislation.
Every shareholder must notify the Company and the Financial Services and Markets Authority (FSMA) that he possesses voting securities, voting rights or similar financial instruments of the Company, in accordance with the legislation on the disclosure of major shareholdings (the "Transparency Legislation").
The thresholds, which if exceeded (both upwards and downwards) give rise to a notification obligation under the Transparency Legislation, are set at five per cent and multiples of five per cent of the total number of existing voting rights.
Without prejudice to Section 545 of the Belgian Companies Code, nobody may participate in voting at the general meeting of the Company with more voting rights than those associated with the securities that he has given notice of holding at least twenty (20) days prior to the date of the general meeting.
The general meeting is convened by the board of directors.
A general meeting must be convened by the board of directors whenever shareholders representing one-fifth of the capital request it to do so.
One or more shareholders who jointly hold at least 3 % of the share capital may, subject to the conditions laid down by the Belgian Companies Code, also ask to add items to the agenda of general meetings and submit proposals for resolutions relating to items included or to be included on the agenda.
Meeting notices are drawn up and distributed in accordance with the applicable provisions of the Belgian Companies Code.
The right to participate in and vote at a General Meeting is only granted on the basis of the registration for accounting purposes of the shares in the shareholder's name by midnight (Belgian time) on the fourteenth day prior to the General Meeting (hereinafter: the "record date"), either by their entry in the company's share register, their entry in the accounts of a recognised account holder or settlement institution, regardless of the number of shares that the shareholder holds on the day of the General Meeting.
Owners of registered shares who wish to participate in the meeting must communicate their intention to the Company by means of an ordinary letter, fax or e-mail, to be sent no later than the sixth day prior to the date of the meeting.
Owners of dematerialised shares who wish to participate in the meeting must submit a certificate issued by a financial intermediary or a recognised account holder which indicates with how many dematerialised shares, as entered in the name of the shareholder in his accounts on the record date, the shareholder has indicated that he wishes to participate in the General Meeting. This certificate must be filed at the locations mentioned in the meeting notices, no later than the sixth day prior to the date of the General Meeting.
Every owner of securities may be represented at the General Meeting by a proxy holder who may or may not be a shareholder. The shareholder may only designate one person as his proxy holder for any specific General Meeting, save for the exceptions set out in the Belgian Companies Code.
The Board of Directors draws up a proxy form.
The proxy must be signed by the shareholder. Notice of the proxy must be given to the company by means of an ordinary letter, fax or e-mail, in accordance with the terms and conditions laid down by the Board of Directors in the meeting notice. The proxy must reach the company or the venue indicated in the meeting notice no later than the sixth day prior to the meeting. The person granting the proxy and the proxy holder must comply with the provisions of the Belgian Companies Code in all other respects. Minors, persons declared incompetent and legal entities must be represented by their statutory representatives or representatives under the Articles of Association. Co-owners, usufructuaries and bare owners, pledgees and pledgors must in each respective case be represented by one and the same person.
Shareholders will be able to vote by letter using a form drawn up by the company, if the Board of Directors has allowed for this in its meeting notice.
The form must reach the Company no later than the sixth day prior to the date of the meeting.
All general meetings are chaired by the Chairman of the Board of Directors or, in his absence, by the Managing Director or one of the Managing Directors or, in their absence, by the person designated by the Directors in attendance. The Chairman designates the Secretary. The meeting elects two vote tellers. The other members of the Board of Directors complete the bureau.
Every share confers the right to one vote, subject to the suspension of the right to vote provided for by the Belgian Companies Code.
No meeting can validly deliberate on items that do not appear on the agenda.
The general meeting can validly deliberate and vote, regardless of the portion of the share capital that is present or represented, except in those cases for which the Belgian Companies Code requires an attendance quorum.
The general meeting can only validly deliberate on amendments to the Articles of Association if at least half of the share capital is present or represented. If this condition is not met, a new meeting must be convened. The second meeting will validly deliberate and decide regardless of the portion of the capital that is represented by the shareholders who are present or represented.
Unless a statutory provision requires otherwise, all resolutions of the general meeting will be adopted by a simple majority of votes.
Resolutions relating to the approval of the Company's annual accounts and the discharge of directors and statutory auditor(s) from liability are adopted by a majority of votes.
Notwithstanding the exceptions provided for in the Belgian Companies Code, an amendment to the Articles of Association requires a majority of three-quarters of the votes cast.
Voting takes place by a show of hands or roll call, unless the general meeting decides otherwise by means of a simple majority of the votes cast.
Copies or extracts from the minutes for use in court or otherwise will be signed by the Chairman, the Secretary and the two vote tellers or, in their absence, by two Directors.
Within the limits set out by the Belgian Companies Code and the RECC legislation, the Company distributes a dividend to its shareholders, the minimum amount of which is determined in accordance with article 13 of the Royal Decree.
The Board of Directors may adopt a resolution, under its responsibility and insofar as the results allow for it, to pay advances on dividends, in such cases and within such periods as permitted by the Belgian Companies Code.
If the capital has been reduced by half or three-quarters, the Directors must put the question of dissolution to the General Meeting, pursuant to and in accordance with the formalities set out in Section 633 of the Belgian Companies Code.
If the Company is dissolved, for any reason and at any time, it will be wound up by liquidators who are appointed for this purpose by the general meeting or, in the absence of such an appointment, by the Board of Directors that is in office at that time, acting as the liquidator.
Insofar as required by law, the liquidators will only take office after their appointment has been confirmed by the Commercial Court.
The liquidators have the most extensive powers for that purpose, granted by the provisions of Section 186 et seq. of the Belgian Companies Code.
Where applicable, the general meeting determines the remuneration of the liquidators.
After all debts, charges and costs of liquidation have been paid, the net assets will preferably be used to refund the fully paid-up, unredeemed amount of the shares, in cash or in securities.
The balance will be distributed among all shareholders in proportion to their shareholding.
The provisions on the members of administrative, management and supervisory bodies contained in the Articles of Association are presented below; the surplus is available in the Corporate Governance charter on www.aedifica.eu and we refer you to the "Corporate Governance Statement" chapter in this Annual Financial Report.
The company is managed by a Board of Directors. This Board consists of at least five members who are appointed for a maximum term of three years by the General Meeting of shareholders, which can also dismiss them at any time. The Directors are eligible for re-election.
The majority of the Directors do not perform any executive duties in the company. At least three Directors must be independent. Directors who comply with the conditions for independence as set out in Section 526ter of the Belgian Companies Code are considered to be independent Directors.
The mandate of outgoing Directors who are not re-elected ends immediately after the General Meeting that has made the new appointments.
If one or more mandates become vacant, the remaining Directors, convening as a Board, may provide for temporary replacement(s) until the next General Meeting, which will then make the final appointment(s). The Directors must ensure in this case that a sufficient number of independent Directors remain as set forth in this article and the applicable regulations. This right will become an obligation each time the number of Directors actually in office or the number of independent Directors no longer amounts to the minimum number under the Articles of Association.
Notwithstanding the transitional provisions of the RREC legislation, only natural persons can be Directors.
A Director who is appointed to replace another Director will complete the mandate of the Director whom he replaces.
Directors must possess the professional reliability and the appropriate competence which is required for the performance of their duties and may not be in a situation as referred to in article 15 of the Act. Their appointment is subject to the prior approval of the Financial Services and Markets Authority (FSMA).
Unless the General Meeting decides otherwise, the mandate of Directors is unpaid.
Any remuneration the Directors do receive, may not be determined on the basis of the activities and transactions carried out by the company or its perimeter companies.
The Board of Directors chooses a Chairman from among its members and meets at the venue specified in the meeting notice or, as appropriate, by video conferencing, telephone or internet conferencing as often as is required by the interests of the company. The Board of Directors must also be convened when two Directors make a request to that effect.
The Board of Directors can only validly deliberate and pass resolutions if the majority of its members are present or represented. Meeting notices are given by ordinary letter, by fax or by e-mail. Meetings are held at the venue specified in the meeting notices. Any Director who is unable to attend or absent, may even delegate another member of the board by letter, fax or e-mail to represent him at a specific board meeting and vote in his place. The Director granting the proxy is deemed to be present in that case.
However, a Director may not represent more than one of his colleagues in this manner.
Resolutions are adopted by a majority of votes. If the votes are tied, the Chairman of the Board has the casting vote. If the chairman is absent, the oldest Director will have the casting vote.
The resolutions of the Board of Directors are recorded in the minutes. The minutes are kept in a special register for that purpose at the company's registered office and signed by the Chairman of the meeting or, in his absence, by two Directors.
The proxies are attached to the minutes.
The members of the Board of Directors may arrange to have their comments and remarks entered on these minutes if they are of the opinion they need to relieve themselves of their responsibility, notwithstanding the application of Sections 527 and 528 of the Belgian Companies Code.
Pursuant to Section 521, paragraph 1 of the Belgian Companies Code, resolutions of the Board of Directors may be adopted by means of the unanimous written consent of the Directors in exceptional cases, when required by urgent necessity and the interests of the company. However, this procedure cannot be used to prepare the annual accounts or to make use of the authorised capital.
The Board of Directors has the most extensive powers to perform all acts that are necessary or useful to achieve the corporate purpose, with the exception of the acts that are reserved for the General Meeting by the Belgian Companies Code or the Articles of Association.
The Board of Directors may delegate all or part of its powers to any authorised representative, who need not be a shareholder or Director, with a view to achieving specific and well-defined objectives. Pursuant to the Act and the Royal Decree, the board may determine the remuneration of authorised representatives to whom special powers are delegated.
The Board of Directors draws up semi-annual financial reports as well as a draft annual financial report. The Board appoints the real estate expert(s) in accordance with the RREC legislation.
Pursuant to Sections 522 and 526bis of the Belgian Companies Code, the Board of Directors may establish advisory committees, from among its members and under its responsibility, such as an Audit Committee, a Nomination and Remuneration Committee or an Investment and Divestment Committee.
The Board of Directors determines the composition and powers of these committees, taking into account the applicable regulations.
The Board of Directors may establish a Management Committee, comprised of several people, who may or may not be Directors. The Board of Directors determines the procedures of the Committee, the conditions for the appointment of its members, their dismissal, their remuneration and the duration of their mandate.
Without prejudice to the transitional provisions of the RREC legislation, the members of the Management Committee are all natural persons. They must possess the professional reliability and the appropriate competence which is required for the performance of their duties and may not be in a situation as referred to in article 15 of the Act. Their appointment is subject to the prior approval of the Financial Services and Markets Authority (FSMA).
Notwithstanding the right of the Board of Directors or, where applicable, the Management Committee, to designate special representatives for the duties that it specifies, with the exception of those powers which, according to the Belgian Companies Code, the Act and its implementing decrees, are reserved for the Board of Directors, the Board of Directors or, where applicable, the management committee, will entrust the effective management of the company to at least two natural persons.
These natural persons must have the required professional reliability and appropriate competence to perform these duties and may not be in a situation as referred to in article 15 of the Act. Their appointment is subject to the prior approval of the Financial Services and Markets Authority (FSMA).
These delegates are entrusted with the day-to-day management of the company and may be given the title of Managing Director. They report to the Board of Directors or, where applicable, the Management Committee. They can assign powers to special representatives. These delegates designate the financial institution that is entrusted with providing financial services and distributing the dividend and the surplus after liquidation, with settling the securities issued by the company and with providing the information that must be disclosed by the company pursuant to laws and regulations. The delegates to whom the day-to-day management has been delegated may at any time suspend, withdraw or replace the institution entrusted with providing financial services. The decisions relating thereto will be published according to the statutory rules on the company's website and via press releases. The company must satisfy itself that such a suspension/withdrawal will not adversely affect the provision of the financial services.
The company is validly and legally represented in all its acts either by two Directors acting jointly, or by one Director and one member of the Management Committee acting jointly, or by two members of the Management Committee acting jointly, or within the limitations of the day-to-day management, by two persons who have been entrusted with the day-to-day management acting jointly.
The company is moreover validly represented by special representatives of the company and, within the limit of the power of attorney granted to them by the Board of Directors, by the Management Committee or by the delegates entrusted with the dayto-day management.
The audit of the company is entrusted to one or more statutory auditors who are accredited by the Financial Services and Markets Authority (FSMA).
They perform the duties that are assigned to them under the Belgian Companies Code and the RREC legislation.
Every shareholder who is domiciled abroad and every director, statutory auditor, manager and liquidator must elect domicile in Belgium for the implementation of the Articles of Association. If no election is made, these parties will be deemed to have chosen their domicile at the registered office, where all communications, demands, summonses and notifications can be validly served.
Unless expressly waived by the company, exclusive jurisdiction is granted to the courts of the company's registered office for the purpose of all disputes among the company, its shareholders, bondholders, Directors, statutory auditors and liquidators relating to the company's affairs and the implementation of these Articles of Association.
The Company is moreover governed by the Belgian Companies Code, the Act, the Royal Decree, as well as all other regulatory provisions that apply to it. Provisions that are inconsistent with the mandatory provisions of these laws and decrees will be regarded as null and void. The invalidity of one article, or part of an article, of these Articles of Association will not affect the validity of any of the other articles.
Aedifica is a limited liability Company ("SA/NV") having opted for a public Regulated Real Estate Company (RREC) status.
A Regulated Real Estate Company (RREC) is:
(a) to make immovable property available to users, directly or through a company in which it holds a participation in accordance with the provisions of the RREC legislation; and
(b) within the limits set out in the RREC legislation, to possess real estate as specified in article 2,5°, vi to xi of the Law of 12 May 2014 (the notion real estate is to be understood as "real estate" within the meaning of the RREC legislation);
(c) to conclude with a public client or to accede to, in the long term directly or through a company in which it holds a participation in accordance with the provisions of the RREC legislation, where applicable in cooperation with third parties, one or more:
(d) to develop, cause to develop, establish, cause to establish, manage, allow to manage, operate, allow to operate or make available, in the long term directly or through a company in which it holds a participation in accordance with the provisions of the RREC legislation, where applicable in cooperation with third parties:
RRECs are regulated by the Financial Services and Markets Authority (FSMA) and have to follow extremely strict rules governing conflicts of interest.
Until 17 October 2014, "REIT" or "Belgian REIT" referred to the status legally known in Belgium as "sicafi" (French) or "vastgoedbevak" (Dutch).
As from 17 October 2014, "REIT", "Belgian REIT" or "RREC" refers to "société immobilière réglementée" (SIR, in French) or "gereglementeerde vastgoedvennootschap" (GVV, in Dutch), also translated as "regulated real estate Company" (RREC).
Article 30 of the Act of 12 May 2014 specifies that a public RREC may invest a maximum of 20 % of its consolidated assets in real estate properties which form a single real estate complex. The FSMA can give an exemption under certain circumstances.
European legislation specifies that RRECs, along with all listed companies, must prepare their consolidated annual accounts in accordance with the IAS/IFRS international standards. Given that investment properties constitute their main assets, RRECs must pay particular attention to appraising the fair value of their properties, i.e., in technical terms, to applying IAS 40. This is also applied to the statutory accounts, also prepared under IFRS. In addition, IAS 39 (valuation of financial instruments) is likely to generate significant movements from one year to another in the income statement or balance sheet (statutory and consolidated) of RRECs. IAS 39 and IAS 40 refer to IFRS 13 for the definition of fair value. Aedifica uses the accounting scheme shown in Annex C of the Royal Decree of 13 July 2014.
Real estate properties are assessed at their fair value on a quarterly basis by valuation experts and recorded in the balance sheet at this value. Depreciation is not recognised on investment properties.
As return on capital, the Company is required to distribute a sum corresponding to at least the positive difference between the following amounts:
The debt-to-assets ratio of the public RREC and its subsidiaries, and the statutory debt-to-assets ratio of public RRECs, may not exceed 65 % (other than by the change in the fair value of assets) of total consolidated or statutory assets, after deduction of authorised hedging instruments. When exceeding the threshold of 50 %, a financial plan with an implementation schedule must be elaborated, describing the measures taken to prevent the consolidated debt-to-assets ratio from exceeding the threshold of 65 %.
A RREC may not provide financing, except to its subsidiaries.
A RREC is not subject to corporate tax (except on non-recoverable expenses and abnormal or benevolent benefits), provided that at least 80 % of corrected profit is distributed in the form of dividends. Refer to section 4 of chapter "Risks factors" of this Annual Financial Report.
Companies which have been absorbed by a RREC, are subject to a reduced rate of taxation on unrealised gains and on taxexempt reserves which currently stands at 12.75% (i.e. 12.5% plus the crisis contribution of 2 %), referred to as the exit tax (i.e. the rate of corporate tax which has to be paid in order to leave the common law system). This 12.5 % taxation rate will be increased to 15 % as from 1 January 2020.
As of 1 January 2017, the withholding tax on dividends distributed by Aedifica amounts to 15 %.
Pursuant to Articles 89, 90 and 91 of the Act of 18 December 2016 which came into effect as of 1 January 2017, RRECs benefit from a reduced withholding tax rate of 15 % (instead of 30 %), provided that at least 60 % of the Company's real estate portfolio is (directly or indirectly) invested in real estate properties which are situated in a member state of the European Economic Area and which are exclusively or primarily destined for care and housing units suited for healthcare. Aedifica's shareholders benefit from this reduced rate since 1 January 2017, as more than 60 % of the Company's portfolio is invested in senior housing; the administrative modalities to prove the abovementioned conditions remain to be established by Royal Decree.
Belgian RRECs (SIR/GVV) are investment instruments which can be compared to the Dutch FBI (Fiscale BeleggingsInstellingen), the French SIIC (Société d'Investissement Cotée en Immobilier) and the REIT (Real Estate Investment Trust) which exist in a number of countries, including the United States.
The Institutional Regulated Real Estate Company ("IRREC"), governed by the Law of 12 May 2014 and the Royal Decree of 13 July 2014, is a "light" version of the public RREC. It enables the public RREC to extend the taxation characteristics of its legal form to its subsidiaries and to undertake specific partnerships and projects with third parties. It is a non-listed company controlled jointly or exclusively by a public RREC. While an IRREC is obliged to distribute a dividend, it does not have any diversification or debt ratio requirements. The IRREC status is acquired upon approval by the FSMA.
Immobe SA, a 100 % subsidiary of Aedifica SA, has been recognised as an IRREC since 1 July 2018.
The acquisition value is the agreed value between parties on the basis of which the transaction is performed. If the acquisition of a building takes place by cash payment, through the acquisition of shares of a real estate Company, through the non-monetary contribution of a building against the issue of new shares, by merger through takeover of a property, or by a partial de-merger, the deed costs, audit and consultancy costs, reinvestment bank fees and costs of lifting security on the financing of the absorbed Company and other costs of the merger are also considered as part of the acquisition cost and capitalised in the asset accounts on the balance sheet. Transfer taxes are included if they were paid at the acquisition of the building.
Since many years, Aedifica uses in its financial communication Alternative Performance Measures according to the guidelines issued by the ESMA on 5 October 2015. Some of these APM are recommended by the European Public Real Estate Association (EPRA) and others have been defined by the industry or by Aedifica in order to provide readers with a better understanding of its results and performance. The APM used in this annual financial report are identified with an asterisk (*). The performance measures which are defined by IFRS standards or by Law are not considered as APM, neither are those which are not based on the consolidated income statement or the balance sheet. The APM are defined, annotated and connected with the most relevant line, total or subtotal of the financial statements, in the notes of the financial statements or in EPRA chapter.
One or more buildings forming a functional unit and including special housing for the elderly, allowing them to lead independent lives and with additional services available on demand.
Period during which any officer or any person covered on the lists established by the Company in accordance with Article 6.5 of the Corporate Governance Charter, as well as any person who is closely related to them, may not carry out any trading of Aedifica shares. Closed periods are shown in the corporate governance statement.
Indexed rents, including rental guarantees, but excluding cost of rent-free periods for occupied surface area.
The Royal Decree of 13 July 2014 regarding RRECs defines the debt-to-assets ratio as follows:
II. Current liabilities C. Other current financial liabilities Hedges
II. Current liabilities – Accrued charges and deferred income as provided in the annexes of the Royal Decree of 13 July 2014 on RRECs.
/ Total assets less authorised hedging instruments
≤ 65 %
Type of contract under which the repair and maintenance of the roof, structure and facades of the building remain the responsibility of the owner while other costs and risks are borne by the operator. This type of contract is common for senior housing in Germany.
Operating result before result on portfolio divided by net rental income.
European Public Real Estate Association is an association, founded in 1999 in order to promote, develop and regroup listed European real estate companies. EPRA establishes standards of conduct in accounting, reporting and corporate governance matters, and harmonises these rules to different countries in order to provide quality and comparable information to investors. EPRA also organises discussion forums on issues that are shaping the future of the sector. Finally, EPRA has created indices that serve as benchmarks for the real estate sector. All this information is available on the website www.epra.com.
Aedifica uses EPRA Earnings* to comply with the EPRA's recommendations and to measure its operational and financial performance; however, this performance measure is not defined under IFRS. It represents the profit (attributable to owners of the Parent) after corrections recommended by the EPRA. In Aedifica's case, the EPRA Earnings* corresponds perfectly to the result excl. changes in fair value, which was previously used in Aedifica's financial communication. The EPRA Earnings* is calculated in Note 26 (in accordance with the Aedifica model) and in the EPRA chapter of the Annual Financial Report (in accordance with the model recommended by EPRA).
The estimated rental value (ERV) is the rental value as determined by independent experts. For furnished apartment buildings, experts' assumptions take into account a hypothetical lease period of 3/6/9 years at the market rent with a single operator, and overlooking furnished occupancy, in order to avoid double assessment of furnishings and goodwill, which are excluded from property values. The rents actually received for furnished apartments are significantly higher than these estimated rental values.
Companies applying for approved RREC status, or which merge with a RREC, are subject to an exit tax. This tax, equivalent to a liquidation tax on net unrealised gains and on tax-exempt reserves, is charged at 12.5 % (increased by a supplementary crisis tax uplift of 2 % for a total of 12.75 %).
The fair value of the Belgian investment properties is calculated as following:
Fair value = investment value / (1+ average transaction cost rate defined by BEAMA)
The average transaction cost rate defined by BEAMA is reviewed annually and adjusted as necessary in 0.5 % increments.
The Belgian experts attest the deduction percentage retained in their periodic reports.
Percentage of shares held by the public, according to the Euronext definition.
Gross dividend per share divided by the stock market price as of closure.
For the total portfolio (excluding furnished apartments): (contractual rents + guaranteed income) / investment value, acquisition value or fair value of the concerned buildings.
For the furnished apartments: (Turnover of the financial year) / (Investment value, acquisition value or fair value of the concerned buildings + goodwill + furnishments).
The international accounting standards (IFRS, or International Financial Reporting Standards, previously called IAS, or International Accounting Standards) are drawn up by the International Accounting Standards Board (IASB). European listed companies have been obliged to apply these standards in their consolidated accounts since the financial year commencing on or after 1 January 2005. Since 2007, RRECs have also been required to apply IFRS in their statutory accounts.
Investment properties including buildings intended for sale and development projects.
Value assessed by the expert, of which transfer taxes are not deducted.
Contract with an initial duration of at least 27 years and less than 99 years, giving a temporary right in rem to the tenant. The tenant has full use of the property during this period and pays an annual fee (rent) in return.
Closing stock market price multiplied by the total number of shares.
Investment properties including buildings intended for sale and excluding development projects.
Total equity and liabilities divided by the number of shares outstanding (after deduction of the treasury shares).
Rental income
For the total portfolio (excluding the furnished apartments): (contractual rents + guaranteed income) / (contractual rents + estimated rental value (ERV) on vacant areas of the property portfolio). We note that this occupancy rate includes the investment properties for which units are in renovation and hence temporarily not rentable. For the furnished apartments: % rented days during the financial year. This occupancy rate can thus not be compared to the one calculated on the rest of the portfolio, as the methodology is specific to this segment.
Property operating result divided by net rental income.
The Royal Decree of 13 July 2014 regarding RRECs defines the operating result before result on portfolio as follows:
Dividend per share divided by the corrected profit per share.
The Royal Decree of 13 July 2014 regarding RRECs defines the profit to be paid out (or corrected profit) as follows: The Company must distribute, as return on capital, an amount corresponding at least to the positive difference between the following amounts:
Corrected profit (A)
Net capital gains on realisation of investment properties not exempt from the obligation of distribution (B)
± Gains and losses on disposals of investment properties during the financial year (gains and losses compared to the acquisition value plus capital expenditures)
± Gains and losses on disposals of investment properties earlier exempted from the obligation of distribution and not reinvested within 4 years (gains and losses compared to the acquisition value plus capital expenditures)
= Net capital gains on realisation of investment properties not exempt from the obligation of distribution (B)
Profit (attributable to owners of the parent)
The Royal Decree of 13 July 2014 regarding RRECs defines the property operating result as follows:
The Royal Decree of 13 July 2014 regarding RRECs defines the property result as follows:
The Royal Decree of 13 July 2014 regarding RRECs defines the result on portfolio as follows:
The transfer of ownership of a property is subject to the payment of transfer taxes. The amount of these taxes depends on the method of transfer, the type of purchaser and the location of the property. The first two elements, and therefore the total amount of taxes to be paid, are only known once the transfer has been completed.
The range of taxes for the major types of property transfer includes:
The effective rate of the transfer tax therefore varies from 0 to 12.5 %, whereby it is not possible to predict which rate would apply to the transfer of a given property before that transfer has effectively taken place.
N.B. We note that, following the interpretations of IFRS by the Belgian Asset Managers Association (BEAMA), the book value of the investment properties under IFRS on the balance sheet is calculated by the expert by deducting a fixed percentage of transfer tax (currently 2.5 %) from the investment value. However, for investment properties with a value of less than €2.5 million, the transfer taxes to be deducted vary depending on the rates applicable given the building's location.
Type of contract under which operating charges, maintenance costs and rents on empty spaces related to the operations are borne by the operator.
Total volume of shares exchanged over the year divided by the total number of listed shares, following the definition of Euronext.
APM: Alternative Performance Measures BEAMA: Belgian Asset Managers Association CEO: Chief Executive Officer CFO: Chief Financial Officer CIO: Chief Investment Officer CLO: Chief Legal Officer CM&AO: Chief Mergers & Acquisitions Officer COO: Chief Operating Officer DCF: Discounted Cash Flow EBIT: Earnings Before Interests and Taxes ECB: European Central Bank EPRA: European Public Real Estate Association ESMA: European Securities and Markets Authority ERV: Estimated Rental Value FBI: Federale Beleggingsinstelling FSMA: Financial Services and Markets Authority IAS: International Accounting Standards IFRS: International Financial Reporting Standards IPO: Initial Public Offering IRREC: Institutional Regulated Real Estate Company IRS: Interest Rate Swap REIT: Real Estate Investment Trust RREC: Regulated Real Estate Company SARL: Société à Responsabilité Limitée SCS : Société en Commandite Simple
Public Regulated Real Estate Company under Belgian law Rue Belliard 40 (box 11) in 1040 Brussels - Belgium Tel : +32 (0)2 626 07 70 - Fax : +32 (0)2 626 07 71 VAT - BE 0877 248 501 - Registry of Legal Entities of Brussels
1. The French version of this annual financial report represents the original document. The Dutch and English versions are translations and are offered for information purposes only. All documents are written and translated under the supervision of Aedifica.
www.aedifica.eu
Belliardstraat 40 Rue Belliard — Brussel 1040 Brussels tel +32 (0)2 626 07 70 — fax +32 (0)2 626 07 71 Openbare gereglementeerde vastgoedvennootschap naar Belgisch recht Société immobilière réglementée publique de droit belge BTW BE 0877 248 501 - R.P.R. Brussel — TVA BE 0877 248 501 - R.P.M. Brussels
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.