Earnings Release • Oct 25, 2021
Earnings Release
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The COVID-19 pandemic also continued to affect our daily lives in the first nine months of 2021. For example, the government imposed a 'partial lockdown' for the period from 27 March 2021 till 25 April 2021 and the hospitality industry, which had already been closed since 18 October 2020, was only able to fully reopen on 9 June 2021.
As already stated in the half-yearly financial report, Vastned Belgium did not grant any rental waivers for the period of the 'partial lockdown'. An agreement was concluded with all the tenants in the hospitality industry for the full period of closure. The final arrangement resulted in a waiver of approximately 50% of the rental income for the period concerned. This resulted in an impact of € 0.2 million on the rental income.
ending up on 1 October 2021 with the abolition of mandatory face masks in Flanders when shopping or eating out. In addition, home-working is no longer mandatory and events with multiple persons are permitted. This easing of restrictions has had a noticeable effect on optimism among the population. Shoppers are back in the high streets in inner-city areas and listed retailers are again showing revenue increases in their communications.
Over the summer, restrictions continued to be relaxed,
Similar to 2020, management's primary focus in the first three quarters of 2021 was on timely collection of rental income. The Company was able to collect 97.8% of the rental income2.
Vastned Belgium concluded six (6) rental agreements in the third quarter of 2021, representing a total rental volume of € 0.6 million. This corresponds to approximately 3.3% of Vastned Belgium's total rental income. In total, four (4) lease agreements were concluded with new tenants, of which two (2) agreements were with a residential tenant and two (2) were commercial lease agreements. In addition to these, one (1) rental agreement was renewed with an existing tenant and one (1) pop-up agreement was concluded.
The rental prices negotiated by Vastned Belgium are in line with the market rental prices determined by valuation experts.
On an annual basis, Vastned Belgium concluded twentysix (26) rental agreements, representing a total rental volume of € 2.8 million. This corresponds to approximately 15.7% of Vastned Belgium's total rental income. In the current economic environment, which is heavily impacted by the COVID-19 pandemic, the conclusion of these twenty-six (26) rental agreements is the result of the great work of a committed asset management department.
Regulated information / Embargo until 25 October 2021, 6.00 pm Antwerp, 25 October 2021
As at 30 September 2021, the majority of the portfolio consists of high-quality inner-city properties located in the cities of Antwerp, Brussels, Ghent and Bruges, as well as high-quality retail parks and retail warehouses.
In the course of the first nine months of 2021, three (3) retail properties were divested. This pertains to three (3) non-strategic retail properties in the portfolio of Vastned Belgium. The retail properties in Boechout and Grivegnée were divested in the first half of 2021. The third retail
property, located in Leopoldsburg, was divested at the beginning of the third quarter. The total sale price for these properties amounted to € 6.2 million, on which Vastned Belgium realised a capital gain of € 0.4 million.
These divestments are fully in line with the real estate company's strategy to focus on the top shopping cities in Belgium, in particular Antwerp, Brussels, Ghent and Bruges.
| Real estate portfolio | 30.09.2021 | 31.12.2020 |
|---|---|---|
| Fair value of investment properties (in thousands €) | 315,680 | 330,427 |
| Total leasable space (m²) | 76,086 | 81,166 |
As at 30 September 2021, the fair value of the real estate portfolio of Vastned Belgium amounted to € 315.7 million, which is a € 14.7 million decrease in fair value compared to 31 December 2020 (€ 330.4 million as of 31 December 2020).
The decrease (€ -14.7 million) in the fair value of the investment properties compared to 31 December 2020 is the combined effect of:
| Occupancy rate | 30.09.2021 | 31.12.2020 |
|---|---|---|
| Occupancy rate of the real estate portfolio | 98.4% | 96.2% |
The occupancy rate of the real estate portfolio amounts to 98.4% as at 30 September 2021, which is an increase of 2.2% compared to 31 December 2020 (96.2%). In today's retail market, the increase in occupancy rate is the result of the good work of a committed asset management department.
| (in thousands €) | 30.09.2021 | 30.09.2020 |
|---|---|---|
| Rental income Rental-related expenses Other rental-related income and expenses |
12,475 276 141 |
12,787 -141 64 |
| PROPERTY RESULT | 12,892 | 12,710 |
| Property charges General costs and other operating income and costs |
-1,223 -617 |
-1,446 -939 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 11,052 | 10,325 |
| Result on disposal of investment properties Changes in fair value of investment properties Other result on portfolio |
362 -9,017 96 |
0 -16,792 -515 |
| OPERATING RESULT | 2,493 | -6,982 |
| Financial result (excl. changes in financial instruments) Changes in fair value of financial instruments Taxes |
-1,198 484 -25 |
-1,257 222 3 |
| NET RESULT | 1,754 | -8,014 |
| Note: • EPRA earnings • Result on porfolio • Changes in fair value of financial instruments • Non-distributable result subsidiaries |
9,838 -8,559 484 -9 |
9,085 -17,307 222 -14 |
The rental income of Vastned Belgium amounted to € 12.5 million for the first nine months of 2021, a decrease of € -0.3 million compared to the same period last year (€ 12.8 million). This decrease is for an amount of € -0.3 million due to the disposal of a non-strategic retail park in Schaarbeek and a solitary retail warehouse in Balen at the end of December 2020, and for an amount of € -0.1 million due to the disposal of three (3) non-strategic retail warehouses in 2021. The renewal of commercial lease agreements in 2020, at lower terms, resulted in a decrease in rental income of € -0.4 million. The conclusion of lease agreements with new tenants at lower rental terms and conditions, and the effect of temporary vacancy in the first nine months of 2021, resulted in a further decrease in rental income of € -0.5 million. Finally, rental waivers were granted to a very limited extent in the first nine months of 2021, as a result of which rental income increased by € 1.0 million compared to the same period in the previous financial year.
Rental-related expenses amount to € -0.3 million (income) and pertain to the reversal of the provision for potential losses on outstanding trade receivables as at 31 December 2020. This provision was reversed in the first half of 2021 when the final rental waivers for the second lockdown were granted (recognised under rental income). At the end of the third quarter of 2021 the provision for expected credit losses, as defined in IFRS 9 'Financial Instruments', amounts to € 0.1 million (expense).
Over the course of the first nine months of 2021, Vastned Belgium recognised one-off income of € 0.1 million under the heading other rent-related income and expenses. This income pertains to money received by Vastned Belgium from the conclusion of bankruptcies. The bankruptcies themselves date from before 2021.
The property charges amounted to € 1.2 million (€ 1.4 million) and decreased by € -0.2 million compared to the same period last year. This decrease pertains primarily to a reduction in technical costs.
The general costs and other operating income and
costs amounted to € 0.6 million (€ 0.9 million), which is a decrease of € -0.3 million compared to the same period last year. The main reason for this decrease is a reduction in the stock exchange tax and additional management focus on a reduction in general costs.
The result on the disposal of investment properties amounts to € 0.4 million and relates to the capital gain realised on the divestment of the retail warehouses located in Boechout, Grivegnée and Leopoldsburg.
The fair value of Vastned Belgium's existing real estate portfolio decreased by 2.6%5 in the first nine months of 2021 compared to 31 December 2020. The changes in fair value of investment properties were negative for an amount of € -9.0 million (€ -16.8 million) and consist on the one hand of a write-down of the existing real estate portfolio of € -8.5 million and, on the other hand of an impairment on the IFRS 16 right-of-use assets for an amount of € -0.5 million. The decrease in the fair value of the existing real estate portfolio is the result of a decrease in estimated market rents and an increase in the capitalisation rate for a limited number of properties.
The financial result (excl. changes in the fair value of financial instruments) amounted to € -1.2 million (€ -1.3 million) for the first nine months of 2021, which is slightly down compared to the same period last year. The decrease is a consequence of the lower drawdown on the credit facilities in the current financial year. The average interest rate for financing amounts to 1.7%, including bank margins for the first nine months of 2021 (1.7%).
The changes in the fair value of financial instruments include a further decrease in the negative market value of the interest rate swaps that cannot be classified as cash flow hedging instruments in accordance with
IFRS 9 'Financial Instruments'. This decrease amounts to € 0.5 million (€ 0.2 million). The net result of Vastned Belgium for the first nine
months of 2021 amounts to € 1.8 million (€ -8.0 million) and may be divided into:
4) The comparable figures on 30 September 2020 are parenthesised.
5) On a like-for-like basis (excluding divestments that took place in 2021) and excluding IFRS 16 right-of-use assets.
| Key figures per share | 30.09.2021 | 31.12.2020 | 30.09.2020 |
|---|---|---|---|
| Number of shares entitled to dividend | 5,078,525 | 5,078,525 | 5,078,525 |
| Net result (9 months/1 year/9 months) (€) | 0.35 | -1.68 | -1.58 |
| EPRA earnings (9 months/1 year/9 months) (€) | 1.94 | 2.44 | 1.79 |
| Net value (fair value) (€) | 44.58 | 46.28 | 46.38 |
| Net value (investment value) (€) | 46.13 | 48.12 | 48.22 |
| EPRA NRV (€) | 46.48 | 48.34 | 48.56 |
| EPRA NTA (€) | 44.90 | 46.68 | 46.83 |
| EPRA NDV (€) | 44.58 | 46.28 | 46.38 |
| Share price on closing date (€) | 30.50 | 24.00 | 20.50 |
| Premium (+)/Discount (-) with regard to fair net value (%) | -31.6% | -48.1% | -55.8% |
As at 30 September 2021, the net value (fair value) of the share amounted to € 44.58 (€ 46.28 as at 31 December 2020). Given that the share price of Vastned Belgium (VASTB) amounted to € 30.50 on 30 September 2021, the share was listed on 30 September 2021 at a discount of 31.6% compared to the net value (fair value).
Vastned Belgium's debt ratio amounts to 27.6% on 30 September 2021, a decrease of 0.9% compared to the end of the financial year 2020 (28.5% on 31 December 2020). The decrease is the result of a lower drawdown of the credit facilities, partly compensated by the decrease in the fair value of the real estate portfolio.
As of 30 September 2021, Vastned Belgium has a stable financial structure that allows it to continue its operations in 2021. No credit facilities are due to mature within the year, which means that the Company does not need to refinance its credit facilities.
The financial structure can be summarised as follows:
After a hectic eighteen-month period of measures to combat the COVID-19 pandemic, which put a brake on our freedom of movement and restricted visits to shops and hospitality facilities, social life resumed and the economy got back on course.
We are seeing that listed retailers are again experiencing a growth in sales. Various new hospitality concepts are establishing themselves in high streets and e-commerce players like Coolblue are opening bricks-and-mortar shops, including a shop with Vastned Belgium. These trends enhance the shopping experience and are also responsible for increased rental activity for property owners.
Vastned Belgium continues to operate on a solid basis with a stable, low debt ratio and the availability of unused credit facilities. Over the coming months, the Company will continue to look for new investment and divestment opportunities and possible redevelopment of existing properties, in line with the strategy update.
Barring unexpected developments such as bankruptcies of important tenants, unforeseen interest rate rise or new measures to combat the COVID-19 pandemic, Vastned Belgium expects for the financial year 2021 to realise EPRA earnings per share between € 2.45 and € 2.50. Vastned Belgium will communicate during the presentation of the annual results for 2021 about the dividend to be paid.
About Vastned Belgium: Vastned Belgium is a public regulated real estate company (RREC), the shares of which are listed on Euronext Brussels (VASTB). Vastned Belgium invests exclusively in Belgian commercial real estate, more specifically in multi-functional retail properties located in the popular shopping cities of Antwerp, Brussels, Ghent and Bruges. The real estate portfolio also comprises high-end retail parks and retail warehouses. A smaller part of the portfolio is invested in hospitality and residential units.
For more information, please contact: Vastned Belgium nv, a public regulated real estate company under Belgian law, Rudi Taelemans – CEO or Sven Bosman – Financial Director, ph. +32 3 361 05 90 // www.vastned.be
Disclaimer: This press release contains prospective information, forecasts, views and estimates prepared by Vastned Belgium on the expected future performance of Vastned Belgium and of the markets in which it operates. Readers are advised that such prospects are subject to risks and uncertainties which can cause the actual results to differ considerably from those expressed in such prospective statements. Prospective statements such as these can be impacted by significant factors such as changes in the economic situation as well as to factors pertaining to taxation, competition and environment. Vastned Belgium cannot guarantee that the assumptions underlying the prospective information are free of misstatements.
| (in thousands €) | 30.09.2021 | 30.09.2020 |
|---|---|---|
| Rental income Rental-related expenses |
12,475 276 |
12,787 -141 |
| NET RENTAL INCOME | 12,751 | 12,646 |
| Recovery of rental charges and taxes normally payable by tenants on let properties Rental charges and taxes normally payable by tenants on let properties Other rental-related income and expenses |
1,123 -1,123 141 |
1,188 -1,188 64 |
| PROPERTY RESULT | 12,892 | 12,710 |
| Technical costs Commercial costs Charges and taxes on unlet properties Property management costs Other property charges Property charges |
-215 -198 -103 -678 -29 -1,223 |
-503 -103 -112 -689 -39 -1,446 |
| OPERATING PROPERTY RESULT | 11,669 | 11,264 |
| General expenses Other operating income and expenses |
-645 28 |
-945 6 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 11,052 | 10,325 |
| Result on disposal of investment properties Changes in fair value of investment properties Other result on portfolio |
362 -9,017 96 |
0 -16,792 -515 |
| OPERATING RESULT | 2,493 | -6,982 |
| Financial income Net interest charges Other financial charges Changes in fair value of financial instruments Financial result |
8 -1,204 -2 484 -714 |
17 -1,272 -2 222 -1,035 |
| RESULT BEFORE TAXES | 1,779 | -8,017 |
| Taxes | -25 | 3 |
| NET RESULT | 1,754 | -8,014 |
Regulated information / Embargo until 25 October 2021, 6.00 pm Antwerp, 25 October 2021
| (in thousands €) | 30.09.2021 | 30.09.2020 |
|---|---|---|
| NET RESULT | 1,754 | -8,014 |
| Note: • EPRA earnings • Result on portfolio • Changes in fair value of financial instruments • Non-distributable result subsidiaries |
9,838 -8,559 484 -9 |
9,085 -17,307 222 -14 |
| Attributable to: • Shareholders of the parent company • Minority interests |
1,754 0 |
-8,014 0 |
| 30.09.2021 | 30.09.2020 | |
|---|---|---|
| Number of shares entitled to dividend | 5,078,525 | 5,078,525 |
| Net result (€) | 0.35 | -1.58 |
| Diluted net result (€) | 0.35 | -1.58 |
| EPRA earnings (€) | 1.94 | 1.79 |
| (in thousands €) | 30.09.2021 | 30.09.2020 |
|---|---|---|
| NET RESULT | 1,754 | -8,014 |
| Other components of comprehensive income (recyclable through income statement) Changes in the effective part of fair value of authorised hedging instruments that are subject to hedge accounting |
0 | 0 |
| COMPREHENSIVE INCOME | 1,754 | -8,014 |
| Attributable to: • Shareholders of the parent company • Minority interests |
1,754 0 |
-8,014 0 |
| Assets (in thousands €) | 30.09.2021 | 31.12.2020 |
|---|---|---|
| Non-current assets | 316,422 | 331,182 |
| Intangible assets | 148 | 183 |
| Investment properties | 315,680 | 330,427 |
| Other tangible assets | 591 | 569 |
| Trade receivables and other non-current assets | 3 | 3 |
| Current assets | 3,264 | 2,312 |
| Trade receivables 6 | 2,222 | 566 |
| Tax receivables and other current assets | 0 | 785 |
| Cash and cash equivalents | 370 | 428 |
| Deferred charges and accrued income | 672 | 533 |
| TOTAL ASSETS | 319,686 | 333,494 |
| Shareholders' equity and liabilities (in thousands €) | 30.09.2021 | 31.12.2020 |
|---|---|---|
| SHAREHOLDERS' EQUITY | 226,376 | 235,033 |
| Shareholders' equity attributable to the shareholders of the parent company Share capital Share premium Reserves Net result of the financial year |
226,376 97,213 4,183 123,226 1,754 |
235,033 97,213 4,183 142,161 -8,524 |
| Minority interests | 0 | 0 |
| LIABILITIES | 93,310 | 98,461 |
| Non-current liabilities Non-current financial debts • Credit institutions • Financial leasing Other non-current financial liabilities Other non-current liabilities Deferred tax - liabilities |
88,504 86,545 85,773 772 1,547 169 243 |
94,811 92,405 91,601 804 2,031 175 200 |
| Current liabilities Provisions Current financial debts • Credit institutions • Financial leasing Trade debts and other current debts Other current liabilities Deferred income and accrued charges 6 |
4,806 269 110 0 110 800 549 3,078 |
3,650 269 656 500 156 1,205 570 950 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 319,686 | 333,494 |
6) The increase in deferred income and accrued charges and trade receivables is explained by the time of invoicing (rent invoiced in advance).
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