Earnings Release • Apr 27, 2011
Earnings Release
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Regulated information - embargo 27/04/2011, 17:45
Antwerp, 27 April 2011
Operating distributable result per share: € 0,37 (- 31 %)
Stable value of the real estate portfolio1
Low debt ratio: 43 %
On 31 March 2011, the occupancy rate2 of Intervest Offices amounts to 82 % (85 % on 31 December 2010).
The office portfolio has an occupancy rate of 84 % compared to 85 % on 31 December 2010. This decrease results mainly from the renegotiation of the lease contract with Ingram Micro who leases since 1 January 2011 less space in the building 3T Estate in Vilvorde.
In April 2011, Intervest Offices has obtained with Biocartis an agreement in principle regarding the conclusion of a lease contract for 1.333 m² laboratories and 2.154 m² offices in Intercity Business Park in Malines. The lease contract has a fixed duration of 15 years, with a possibility of termination after 9 years and starts on 15 May 2011. This contract is concluded at market rent. Biocartis is a biotechnology company from Swiss origin founded in 2007 by, among others, Rudi Pauwels (who is also at the basis of Tibotec, Virco and Galapagos). Biocartis has decided to establish in Malines its R&D centre and the first production line for the further development and production of a medical diagnosis platform in one of the buildings formerly occupied by Tibotec-Virco. For the period from May 2011 till November 2013 half of the net rental income from this lease contract will be shared with Tibotec-Virco in the framework of an agreement from 2010 regarding the retrocession of rental income (see press release of 3 June 2010).
Further, the market circumstances for new lettings in the office market remain difficult. The most important lettings in the first quarter of 2011 are concluded in Mechelen Campus with MC Square for a surface area of 717 m² and also in Intercity Business Park with SGS Belgium for an extension of 826 m².
The occupancy rate of the semi-industrial portfolio decreases by 7 % and reaches 77 % on 31 March 2011 compared to 84 % on 31 December 2010. This decrease results from the departure of tenants in Duffel Notmeir and Herentals Logistics 1 and 2, that was temporary let.
Herentals Logistics 1 - Herentals
1 By unchanged composition of the real estate portfolio.
2 The occupancy rate is calculated as the ratio of the commercial rental income to the same rental income plus the estimated rental value of the vacant locations for rent. The commercial rental income is the contractual rental income (including the spread rental income from early termination of lease contracts) and the rental income of already signed lease contracts regarding locations which are contractually vacant on balance sheet date.
On 16 February 2011, Intervest Offices acquired a logistic site in Huizingen through a saleand-rent-back transaction with DHL - Pharma Logistics. The logistic site is located on the industrial area 'De Gijzeleer' in the southern periphery of Brussels and is easily accessible by the E19 Brussels-Mons-Paris.
The site mainly consists of 3 buildings, build in 1987 and 1993. Since then, a lot of modifications and renovations have been made to the buildings in order to use them as warehouses for pharmaceutical products. In this way, there is an entire warehouse equipped with air conditioning. The total surface area of these buildings amounts to 14.878 m² warehouses, 2.151 m² office space and 85 parking spaces.
The site is integrally re-let by DHL - Pharma Logistics on the basis of a lease contract of 9 years with the possibility of termination after six years. The rental income amounts to € 605.000 on an annual basis. The acquisition was subject to registration rights. The purchase price amounts to € 7,7 million (registration rights included), which corresponds to a gross initial yield of 7,85 %. The investment value determined by the independent property expert of the property investment fund also amounts to € 7,7 million. The transaction is financed with the existing credit lines of the property investment fund.
| REAL ESTATE PATRIMONY | 31.3.2011 | 31.12.2010 |
|---|---|---|
| Fair value of investment properties (€ 000) | 534.194 | 526.680 |
| Investment value of investment properties (€ 000) | 547.631 | 539.929 |
| Occupancy rate (%) | 82 % | 85 % |
| Total leasable space (m²) | 553.221 | 535.420 |
On 31 March 2011, the fair value of the investment properties of Intervest Offices amounts to € 534 million compared to € 527 million on 31 December 2010. This increase in fair value by 1,4 % or € 7,5 million is mainly due to the acquisition of the logistic site in Huizingen with a fair value of € 7,5 million.
DHL - Pharma Logistics - Huizingen
| 31.3.2011 | 31.3.2010 |
|---|---|
| 9.003 | 10.063 |
| -34 | -18 |
| 398 | 168 |
| 9.367 | 10.213 |
| -1.195 | -749 |
| -291 | -273 |
| 7.881 | 9.191 |
| -455 | -3.313 |
| 7.426 | 5.878 |
| -2.770 | -1.838 |
| 1.561 | -401 |
| -5 | 0 |
| 6.212 | 3.639 |
| 5.106 | 7.353 |
| -455 | -3.313 |
| 1.561 | -401 |
| Data per share |
31.3.2011 | 31.3.2010 |
|---|---|---|
| Number of shares entitled to dividend | 13.907.267 | 13.907.267 |
| Net result per share (€) | 0,45 | 0,26 |
| Operating distributable result per share (€) | 0,37 | 0,53 |
3 Between brackets comparable figures for the first quarter 2010.
The property result of Intervest Offices decreases during the first quarter 2011 by € 0,8 million to € 9,4 million (€ 10,2 million) mainly as a result of the decrease of the rental income. In the first quarter of 2011 the rental income is € 0,3 million lower than in the fourth quarter of 2010. Compared to the first quarter of 2010 the rental income of the property investment fund is € 1,1 million lower, mainly as a result of the departure of tenants and of the renegotiation of lease contracts at lower rental prices.
In the first quarter of 2011, the property charges amount to € 1,2 million (€ 0,7 million). This increase of € 0,5 million comes mainly from the higher maintenance and repair costs and the rise of the management costs of the property investment fund.
In the first quarter of 2011, the general costs of the property investment fund amount to € 0,3 million which is unchanged compared to the same period of previous year.
The decrease of the rental income and the increase of property charges lead to a decrease of the operating result before result on portfolio of 14 % or € 1,3 million to € 7,9 million (€ 9,2 million).
In the first quarter of 2011, the changes in fair value of the investment properties are limited to - € 0,5 million (- € 3,3 million).
The financial result (excl. the changes in fair value - IAS 39) amounts for the first quarter of 2011 to - € 2,8 million (- € 1,8 million). The increase in interest charges comes from the issuance of the bond loan in June 2010 at an interest rate of 5,1 %. For the first quarter of 2011, the average interest rate of the property investment fund amounts to approximately 4,9 % including bank margins (3,2 %).
The changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) comprise the change of the market value of interest rate swaps which, in accordance with IAS 39, cannot be classified as cash flow hedging instrument, for an amount of € 1,6 million (- € 0,4 million).
For the first quarter of 2011, the net result of the property investment fund Intervest Offices amounts to € 6,2 million (€ 3,6 million) and can be divided in:
This generates per share for the first quarter 2011 an operating distributable result4 of € 0,37 per share (€ 0,53).
4 As legally speaking only the profit of the statutory annual accounts can be distributed and not the consolidated profit, the profit distribution has been based on the statutory figures.
On 31 March 2011, the debt ratio of the property investment fund is unchanged compared to 31 December 2010 and amounts to 43 %, calculated in accordance with the Royal Decree of 7 December 2010.
| Balan ce sheet data per share |
31.3.2011 | 31.12.2010 |
|---|---|---|
| Number of shares entitled to dividend | 13.907.267 | 13.907.267 |
| Net asset value (fair value) (€) | 21,15 | 20,59 |
| Net asset value (investment value) (€) | 22,13 | 21,57 |
| Share price on closing date (€) | 25,24 | 23,49 |
| Premium to net asset value (fair value) (%) | 19 % | 14 % |
On 31 March 2011, the net asset value (fair value) of the share is € 21,15 (€ 20,59 on 31 December 2010). As on 31 March 2011, the share price of Intervest Offices is € 25,24, the share is quoted at the end of the first quarter 2011 at a premium of 19 % compared to the net asset value (fair value).
Intervest Offices expects that the rental market for logistic real estate as well as for offices will recover in 2011. The increasing interest of candidate tenants in several available logistic and office buildings of the property investment fund indicates the recovering of the rental market.
Currently, several investment opportunities are analysed. The focus of the property investment fund remains on offices and logistic real estate, targeting a portfolio growth of approximately 5 % in 2011.
Mechelen Campus - Malines
Note to the editors: for more information, please contact: INTERVEST OFFICES SA, public property investment fund under Belgian law, Jean-Paul Sols - CEO or Inge Tas - CFO, T + 32 3 287 67 87, www.intervestoffices.be
| in thousands € | 31.3.2011 | 31.3.2010 |
|---|---|---|
| Rental income | 9.003 | 10.063 |
| Rental related expenses | -34 | -18 |
| NET RENTAL RESULT | 8.969 | 10.045 |
| Recovery of property charges | 427 | 157 |
| Recovery of rental charges and taxes normally payable by tenants on let properties | 1.662 | 2.554 |
| Costs payable by tenants and borne by the landlord for rental damage and refurbishment | -31 | -3 |
| Rental charges and taxes normally payable by tenants on let properties | -1.664 | -2.547 |
| Other rental related income and expenses | 4 | 7 |
| PROPERTY RESULT | 9.367 | 10.213 |
| Technical costs | -342 | -63 |
| Commercial costs | -47 | -68 |
| Charges and taxes on unlet properties | -214 | -179 |
| Property management costs | -511 | -432 |
| Other property charges | -81 | -7 |
| PROPERTY CHARGES | -1.195 | -749 |
| OPERATING PROPERTY RESULT | 8.172 | 9.464 |
| General costs | -296 | -279 |
| Other operating income and costs | 5 | 6 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 7.881 | 9.191 |
| Changes in fair value of investment properties | -455 | -3.313 |
| OPERATING RESULT | 7.426 | 5.878 |
| Financial income | 25 | 12 |
| Interest charges | -2.790 | -1.805 |
| Other financial charges | -5 | -45 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | 1.561 | -401 |
| FINANCIAL RESULT | -1.209 | -2.239 |
| RESULT BEFORE TAXES | 6.217 | 3.639 |
| TAXES | -5 | 0 |
| NET RESULT | 6.212 | 3.639 |
| Attributable to: | ||
| Equity holders of the parent company | 6.212 | 3.639 |
| Minority interests | 0 | 0 |
| Note: | ||
| Operating distributable result | 5.106 | 7.353 |
| Result on portfolio | -455 | -3.313 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | 1.561 | -401 |
| in thousands € | 31.3.2011 | 31.3.2010 |
|---|---|---|
| NET RESULT | 6.212 | 3.639 |
| Changes in fair value of financial assets and liabilities (effective hedges - IAS 39) | 1.591 | -951 |
| COMPREHENSIVE INCOME | 7.803 | 2.688 |
| Attributable to: | ||
| Equity holders of the parent company | 7.803 | 2.688 |
| Minority interests | 0 | 0 |
| ASSETS in thousands € | 31.3.2011 | 31.12.2010 |
|---|---|---|
| Non-current assets | 534.481 | 526.959 |
| Intangible assets | 42 | 47 |
| Investment properties | 534.194 | 526.680 |
| Other tangible assets | 231 | 218 |
| Trade receivables and other non-current assets | 14 | 14 |
| Current assets | 6.834 | 5.644 |
| Trade receivables | 1.938 | 1.726 |
| Tax receivables and other current assets | 1.908 | 1.943 |
| Cash and cash equivalents | 1.252 | 816 |
| Deferred charges and accrued income | 1.736 | 1.159 |
| TOTAL ASSETS | 541.315 | 532.603 |
| SHAREHOLDERS' EQUITY AND LIABILITIES in thousands € | 31.3.2011 | 31.12.2010 |
| Shareholders' equity | 294.127 | 286.324 |
| Shareholders' equity attributable to the shareholders of the parent company | 294.086 | 286.283 |
| Share capital | 126.729 | 126.729 |
| Share premium | 60.833 | 60.833 |
| Reserves | 98.621 | 98.621 |
| Net result of previous financial year | 17.432 | 17.432 |
| Net result of the financial year - first quarter | 6.212 | 0 |
| Impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
-13.606 | -13.606 |
| Changes in fair value of financial assets and liabilities | -2.135 | -3.726 |
| Minority interests | 41 | 41 |
| Liabilities | 247.188 | 246.279 |
| Non-current liabilities | 137.781 | 177.239 |
| Provisions | 990 | 990 |
| Non-current financial debts | 136.226 | 175.659 |
| Credit institutions | 61.852 | 101.322 |
| Bond loan | 74.363 | 74.325 |
| Financial lease | 11 | 12 |
| Other non-current liabilities | 565 | 590 |
| Current liabilities | 109.407 | 69.040 |
| Provisions | 426 | 426 |
| Current financial debts | 92.372 | 53.425 |
| Credit institutions | 92.367 | 53.419 |
| Financial lease | 5 | 6 |
| Trade debts and other current debts | 3.027 | 2.110 |
| Other current liabilities | 439 | 476 |
| Accrued charges and deferred income | 13.143 | 12.603 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 541.315 | 532.603 |
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