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Vastned Belgium NV

Quarterly Report Jul 27, 2021

4021_ir_2021-07-27_7dfeb7a1-905c-4f97-8a6b-9ee54cd1657f.pdf

Quarterly Report

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Half-yearly financial report 2021

Antwerp Graanmarkt 13

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

Strong operational results and a high stable collection rate

  • High stable collection rate (97.9%) of rental income during the first half of 2021.
  • Occupancy rate during the first half of 2021 (97.4%) increased by 1.2% compared to 31 December 2020.
  • Limited debt ratio of 28.6%, in line with 31 December 2020 (28.5%).
  • € 34.7 million of unused credit facilities available.
  • Decrease in the fair value of the existing real estate portfolio 1 (-2.2%) compared to the previous financial year.
  • Management focus in 2021 mainly on the timely collection of rental income and maintaining a strong occupancy rate.

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

Table of Contents

1. Interim half-yearly report for the first half of 2021 3
1.1.
COVID-19 update
3
1.2.
Operating result
3
1.3.
Rental activities
4
1.4.
Composition and evolution of the real estate portfolio
4
1.5.
Investments
6
1.6.
Divestments
7
1.7.
Occupancy rate
7
1.8.
Valuation of the portfolio by the independent property experts as at 30 June 2021
8
1.9.
State of the Belgian retail real estate market in 2021
8
2. Financial results for the first half of 2021 9
2.1.
Analysis of the results
10
2.2.
Financial structure as at 30 June 2021
12
2.3.
Risks during the remaining months of 2021
13
3. Outlook for 2021 14
4. Consolidated condensed half-yearly figures 15
4.1.
Condensed consolidated Profit and Loss Statement
15
4.2.
Condensed consolidated of comprehensive income
16
4.3.
Condensed consolidated balance sheet
17
4.4.
Condensed consolidated cash flow statement
18
4.5.
Condensed statement of changes in the consolidated equity
19
4.6.
Statement accompanying the consolidated half-yearly report
20
4.7.
Notes to the consolidated condensed half-yearly figures
20
4.8.
Report of the statutory auditor
29
4.9.
Financial calendar
30
5. Alternative Performance Measures 31
5.1.
Glossary of Alternative Performance Measures
31
5.2.
Reconciliation tables of the Alternative Performance Measures
34

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

1. Interim management report for the first semester of 2021

1.1. COVID-19 update

In the first half of 2021 the government imposed a 'partial lockdown' commencing on 27 March 2021 and ending on 25 April 2021. During this 'partial lockdown', shopping in non-essential shops was allowed, provided that it was done by appointment and with a maximum of 50 customers per shop. Online orders could also be collected at the shops. During this period of 'partial lockdown', Vastned Belgium did not grant any rental waivers.

There was also a mandatory closure of the hospitality industry on 18 October 2020, with a partial reopening on 8 May 2021 and a full reopening from 9 June 2021. Vastned Belgium entered into dialogue with its tenants in the

1.2. Operating result

Rental income decreased slightly (€ -0.3 million) in the first semester of 2021, compared to the same period in the previous financial year. This decrease is largely (€ -0.2 million) due to the altered composition of the real estate portfolio, as Vastned Belgium sold a non-strategic retail park in Schaarbeek and a solitary retail unit in Balen at the end of December 2020.

Furthermore, rental income decreased by € -0.3 million due to the renewal of commercial lease agreements in 2020. The conclusion of lease agreements with new tenants at lower rental terms and conditions, and an increased vacancy rate in the first half of 2021, resulted in a further decrease in rental income of € -0.3 million. Finally, rental waivers were granted to a very limited extent in

hospitality industry in order to make arrangements for the full period of mandatory closure (+/- 8 months). 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. These rental waivers were largely recognised in previous quarters, and only affect the numbers of the second quarter of 2021 to a minor extent.

Management's primary focus in the first semester of 2021 was again on timely collection of rental income. The Company was able to collect 97.9% of the rental income from the first semester of the year 2.

the first half of 2021, as a result of which rental income increased by € 0.5 million compared to the same period in the previous financial year.

Vastned Belgium's EPRA earnings amounts to € 6.6 million for the first half of 2021 compared to € 5.5 million over the same period last year. This increase is primarily due to the provision for doubtful debts, which was provisioned in the first semester of 2020. Property expenses and general company expenses have also decreased.

Per share, this amounts to an EPRA earnings of € 1.31 compared to € 1.09 in the first half of the previous financial year.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

1.3. Rental activities

Vastned Belgium concluded twenty (20) rental agreements in the first half of 2021, representing a total rental volume of € 2.2 million. This corresponds to approximately 12.6% 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 (20) rental agreements is the result of the great work of a committed asset management department.

In total, thirteen (13) lease agreements were concluded with new tenants, of which five (5) pop-up agreements and one (1) agreement with a residential tenant. Concluding

rental agreements with a retailer of garden furniture, an electronics chain and an Apple reseller resulted in a reduction of the share of 'fashion' in Vastned Belgium's real estate portfolio.

In addition, seven (7) rental agreements, with existing tenants, were renewed.

The rental prices negotiated by Vastned Belgium are in line with the market rental prices determined by valuation experts.

1.4. Composition and evolution of the real estate portfolio

As at 30 June 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 highquality retail parks and retail warehouses.

In the course of the first half of 2021, two retail properties were divested. This pertains to two (2) non-strategic retail properties in the portfolio of Vastned Belgium. The sale agreement for one (1) property was already concluded

in 2019 under the condition precedent of obtaining the necessary permits. In addition, a third store was divested on 15 July 2021. This property is presented at the end of the first semester as 'asset held for sale', and no longer as investment property.

More information about the divestments can be found at '1.6. Divestments'.

Investment properties

Real estate portfolio 30.06.2021 31.12.2020
Fair value of investment properties 3 (in thousands €) 316,952 330,427
Total leasable space 3 (m²) 76,086 81,166

As at 30 June 2021, the fair value of the investment properties amounted to € 317.0 million, which is a € 13.4 million decrease in fair value compared to 31 December 2020 (€ 330.4 million as at 31 December 2020).

The decrease (€ -13.4 million) in the fair value of the investment properties compared to 31 December 2020 is the combined effect of:

  • Investments (€ 0.1 million) in the existing real estate portfolio.
  • Divestment (€ -3.6 million) of two (2) non-strategic retail locations.

  • Reclassification (€ -2.2 million) of the property in Leopoldsburg from investment property to asset held for sale.

  • Decrease in the fair value of existing investment properties (€ -7.2 million). This decrease is the result of a decrease in the estimated market rental income on the one hand, and an adjustment in yields on the other hand.
  • Impairment of the IFRS 16 right-of-use assets (€ -0.5 million).

The average yield in the real estate company's portfolio amounted to 5.65% on 30 June 2021, which is in line with the average yield as at 31 December 2020 (5.64%).

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

Sensitivity analysis

In the case of a hypothetical negative adjustment of the yield as used by the property experts in valuing the Company's real estate portfolio (yield or capitalisation rate) by 1.0% (from 5.65% to 6.65% on average), the fair value of the real estate portfolio would decrease by € -47.7 million or 15.0%. This would increase the Company's debt ratio by 5.0% to 33.6%.

In the reverse case of a hypothetical positive adjustment of this yield by 1.0% (from 5.65% to 4.65% on average), the fair value of the real estate portfolio would increase by € 68.2 million or 21.5%. This would reduce the Company's debt ratio by 5.0% to 23.6%.

In the case of a hypothetical decline in the current passing rents of the Company (with equal yield) with € 1.0 million

(from € 17.9 million to € 16.9 million), the fair value of the real estate portfolio would decrease by € 17.7 million or 5.6%. This would increase the Company's debt ratio by 1.7% to 30.3%.

In the reverse case of a hypothetical increase in the current passing rents of the Company (at constant yield) of € 1.0 million (from € 17.9 million to € 18.9 million), the fair value of the real estate portfolio would increase by €17.7 million or 5.6%. This would reduce the Company's debt ratio by 1.5% to approximately 27.1%.

There is a correlation between the evolutions of the current passing rents and the yields used in the estimates of the investment properties. This correlation is disregarded in above sensitivity analysis.

Investment policy and risk spread of the real estate portfolio

Vastned Belgium's investment policy concentrates on multi-functional retail properties in Belgium, more specifically in the popular shopping cities of Antwerp, Brussels, Ghent and Bruges. The following criteria are important for spreading the risk of the property portfolio: the geographical location and the sector and the quality of the tenants.

The risk spread is summarised as follows on 30 June 2021:

Geographical spread

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

Spread according to sector and quality of the tenants

1.5. Investments

Vastned Belgium's asset management team maintains close contact with real estate agents and local owners, so that interesting investment opportunities can be assessed immediately. Vastned Belgium will also continue to be on an active lookout for interesting investment opportunities in the second half of 2021 in order to create added value within the real estate portfolio.

In the first half of 2021, Vastned Belgium invested € 0.1 million in the development of residential units located above existing retail properties.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

1.6. Divestments

In the course of the first half of 2021, two (2) retail properties were divested. This pertains to two (2) nonstrategic retail properties in the portfolio of Vastned Belgium. The sale agreement for one (1) property was already concluded in 2019 under the condition precedent of obtaining the necessary permits.

The first sale pertains to a solitary retail warehouse located in Boechout. This sale took place for an amount of € 2.1 million, on which Vastned Belgium realised a capital gain of € 0.2 million. This solitary retail warehouse has a total retail area of 1,230 m² and consists of one rentable unit.

The second sale concerns a retail warehouse in Grivegnée, following a spontaneous offer from a private investor. The property is situated in a retail park with five (5) retail units, of which Vastned Belgium only owns one (1) unit. This sale took place for an amount of € 2.0 million, on which Vastned Belgium realised a capital gain of € 0.2 million.

This retail warehouse has a total retail area of 2,000 m² and consists of one rentable unit.

Finally, Vastned Belgium divested a retail warehouse in Leopoldsburg on 15 July 2021. The sale agreement for this retail warehouse was concluded in 2019 under the condition precedent of obtaining the necessary permits. These permits were received during the second quarter of 2021 and the notarial deed was signed on 15 July 2021. The sale price amounted to € 2.2 million, on which Vastned Belgium realised a limited capital loss. This retail warehouse has a total retail area of 1,850 m² and consists of one rentable unit.

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.

1.7. Occupancy rate4

Occupancy rate 30.06.2021 31.12.2020
Occupancy rate of the real estate portfolio 97.4% 96.2%

The occupancy rate of the real estate portfolio amounts to 97.4% per 30 June 2021, which is an increase of 1.2% 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.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

1.8. Valuation of the portfolio by the independent property experts as at 30 June 2021

In 2021, all retail properties of Vastned Belgium were valued partly by Cushman & Wakefield and partly by CBRE Belgium. The total fair value of the portfolio amounted to € 317.0 million, including IFRS 16 right-of-use assets, at the end of the first semester of 2021. The net book value of IFRS 16 right-of-use assets amounts to € 0.2 million.

When preparing the annual report for the financial year 2020, the independent property experts included an explanatory note and material uncertainty clause regarding the COVID-19 pandemic. This material uncertainty clause was disclosed in the chapter 'Valuation of the portfolio by the property experts' (pages 100-102 of the annual financial report 2020).

As at 30 June 2021, the independent property experts are of the opinion that the explanatory note and material uncertainty clause no longer apply. This means that the transaction volumes and other relevant market indicators are at a level where it can be argued that there is sufficient market information available for a judgement to be based on. Given that market conditions can change quickly, due to the COVID-19 pandemic, they do emphasise the importance of the valuation date.

In the report of 30 June 2021, the fair value of the retail properties amounts to:

Property expert Fair value of investment properties (in thousands €)
Cushman & Wakefield
CBRE Belgium
162,913
154,039
Total 5 316,952

1.9. State of the Belgian retail real estate market in 2021

Rental market

The leasing of retail space picked up again during the first half of 2021 and reached 214,500 m². This represents an increase of 40% compared to the first half of 2020, and these figures are also the best of the last ten years.

Especially the segment of retail warehousing scored high, while the inner-city market remained stable. In the inner cities, the amount of m² leased equals last year, but the number of transactions increased by 39%. This indicates that tenants are looking for smaller retail units. The average leased area decreased from 329 m² to 238 m² per rental transaction.

In total, 418 rental transactions were completed during the first half of 2021: 186 in the High Streets, 95 in Shopping Centres and 137 in Out-of-Town retail. Action and Dunkin' were the most active retailers with 8 transactions each.

Investment market

In the first half of 2021, the investment volume in retail properties did not exceed € 200 million. The governmentimposed lockdowns certainly played a role in this, causing investors to adopt a wait-and-see attitude. The supermarket segment, which did not suffer in 2020 and 2021 from a drop in turnover due to COVID-19 pandemic, accounts for 40% of all retail investment properties.

The highest yields in the High Streets rose by 25 basis points to 4.25%

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

2. Financial results for the first half of 2021

Condensed consolidated statement of profit or loss

(in thousands €) 30.06.2021 30.06.2020
Rental income
Rental-related expenses
8,423
187
8,698
-666
NET RENTAL INCOME 8,610 8,032
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
1,127
-1,127
125
1,072
-1,072
42
PROPERTY RESULT 8,735 8,074
Technical costs
Commercial costs
Charges and taxes on unlet properties
Property management costs
Other property charges
Property charges
-142
-107
-97
-449
-37
-832
-418
-76
-87
-457
-22
-1,060
OPERATING PROPERTY RESULT 7,903 7,014
General costs -452 -671
Other operating income and costs 4 4
OPERATING RESULT BEFORE RESULT ON PORTFOLIO 7,455 6,347
Result on disposal of investment properties
Changes in fair value of investment properties
Other result on portfolio
398
-7,781
53
0
-14,249
-296
OPERATING RESULT 125 -8,198
Financial income
Net interest charges
Other financial charges
Changes in fair value of financial instruments
Financial results
0
-801
-3
336
-468
0
-837
-2
129
-710
RESULT BEFORE TAXES -343 -8,908
Taxes -20 -6

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

30.06.2021 30.06.2020
NET RESULT -363 -8,914
Note:
• EPRA earnings
• Result on portfolio
• Changes in fair value of financial instruments
• Non-distributable result subsidiaries
6,633
-7,329
336
-3
5,517
-14,545
129
-15
Attributable to:
• Shareholders of the parent company
• Minority interests
-363
0
-8,914
0
30.06.2021 30.06.2020
BALANCE SHEET INFORMATION PER SHARE
Number of shares entitled to dividend
Net result (€)
Diluted net result (€)
EPRA earnings (€)
5,078,525
-0.07
-0.07
1.31
5,078,525
-1.76
-1.76
1.09

2.1. Analysis of the results6

The rental income of Vastned Belgium amounted to € 8.4 million for the first half of 2021, a decrease of € -0.3 million compared to the same period last year (€ 8.7 million). This decrease is for an amount of € -0.2 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 € -0.3 million due to the renewal of commercial lease agreements in 2020. The conclusion of lease agreements with new tenants at lower rental terms and conditions, and an increased vacancy rate in the first half of 2021, resulted in a further decrease in rental income of € -0.3 million. Finally, rental waivers were granted to a very limited extent in the first half of 2021, as a result of which rental income increased by € 0.5 million compared to the same period in the previous financial year.

Rental-related expenses amount to € -0.2 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 (November 2020) were granted (recognised under rental income). At the end of the first half of 2020, a provision (€ 0.6 million) was recorded for outstanding receivables related to the first lockdown in 2020.

Over the course of the first half 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 € 0.8 million (€ 1.0 million), and decreased by € -0.2 million. This decrease pertains primarily to a reduction in technical costs.

The general costs and other operating income and

costs amounted to € 0.5 million (€ 0.7 million), which is a decrease of € -0.2 million compared to the same period last year. The main reason for this decrease is a reduction in the other costs and the stock exchange tax.

The result on the disposals 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 and Grivegnée.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

The fair value of Vastned Belgium's existing real estate portfolio decreased by 2.2% 7 in the first half of 2021 compared to 31 December 2020. The changes in fair value of investment properties were negative for an amount of € -7.7 million (€ -14.2 million) and consist on the one hand of a write-down of the existing real estate portfolio of € -7.2 million and, on the other hand, of an amortization of the IFRS 16 right-of-use assets for an amount of € -0.5 million. This 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 number of properties.

The financial result (excl. changes in the fair value of financial instruments) amounted to € -0.8 million for the first half year of 2021, which puts it completely in line with the same period last year (€ -0.8 million). The average interest rate for financing amounted to 1.7%, including bank margins for the first half of 2021 (1.7%) which is equal compared to the same period last year.

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 € 0.3 million (€ 0.1 million).

The net result of Vastned Belgium for the first half of 2021 amounted to € -0.4 million (€ -8.9 million) and may be divided into:

  • The EPRA earnings of € 6.6 million (€ 5.5 million) or an increase of € 1.1 million, which is mainly due to:
  • A change in the provision for doubtful debts (€ 0.8 million as a result of compensations for the lockdown);
  • An increase in net rental income of € 0.5 million, relating to rental waivers that were granted to a limited extent in 2021;
  • A decrease of € -0.6 million in the net rental income due to renewal/concluding of (existing and new) rental agreements at lower rental terms and conditions;
  • A decrease of € -0.2 million in net rental income due to the disposal of non-strategic retail properties;
  • A decrease of € 0.2 million in property charges;
  • A decrease of € 0.2 million in general costs; and
  • An increase of € 0.1 million in other rental-related income and expenses as a result of the conclusion of bankruptcies.
  • result on the portfolio (incl. result on disposal of investment properties) of € -7.3 million (€ -14.5 million);
  • the changes in the fair value of financial instruments for an amount of € 0.3 million (€ 0.1 million).

The EPRA earnings per share amount to € 1.31 for the first half year of 2021 compared to € 1.09 for the same period last year.

The significant increase in the EPRA earnings per share compared to the same period in the previous financial year is mainly due to the doubtful debt provision that was recognised last year as a result of the first lockdown.

Key figures per share 30.06.2021 31.12.2020 30.06.2020
Number of shares entitled to dividend 5,078,525 5,078,525 5,078,525
Net result (6 months/1 year/6 months) (€) -0.07 -1.68 -1.76
EPRA earnings (6 months/1 year/6 months) (€) 1.31 2.44 1.09
Net value (fair value) (€) 44.16 46.28 46.20
Net value (investment value) (€) 45.90 48.12 48.05
Share price on closing date (€) 30.60 24.00 34.00
Premium (+) / Discount (-) with regard to fair net value (%) -30.7% -48.1% -26.4%

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

As at 30 June 2021, the net value (fair value) of the share amounted to € 44.16 (€ 46.28 as at 31 December 2020). Given that the share price of Vastned Belgium (VASTB) amounted to € 30.60 on 30 June 2021, the share was listed on 30 June 2021 at a discount of 30.7% compared to the net value (fair value).

Vastned Belgium's debt ratio amounted to 28.6% on 30 June 2021, which brings it in line with the debt ratio at the end of the financial year 2020 (28.5% on 31 December 2020).

EPRA - Key figures 8 30.06.2021 31.12.2020
EPRA Earnings per share 1.31 2.44
EPRA NRV (€) 46.10 48.34
EPRA NTA (€) 44.51 46.68
EPRA NDV (€) 44.16 46.28
EPRA Net Initial Yield (NIY) (%) 4.8% 4.7%
EPRA Adjusted NIY (%) 4.9% 4.9%
EPRA Rental Vacancy Percentage (%) 2.8% 4.1%
EPRA Cost Ratio (including direct vacancy costs) (%) 13.0% 16.9%
EPRA Cost Ratio (excluding direct vacancy costs) (%) 11.8% 16.2%

2.2. Financial structure as at 30 June 2021

As at 30 June 2021, Vastned Belgium has a stable financial structure that allows it to continue its operations during the second half of 2021. No credit lines are due to mature within the year, which means that the Company does not need to refinance its credit lines.

The financial structure can be summarised as follows:

  • Withdrawn financial debts: € 90.3 million.
  • 92% of the available credit facilities with financial institutions are long-term financing with a weighted average term of 3.0 years.
  • Unused credit facilities of € 34.7 million available in order to cover the fluctuations of cash needs and for financing future investments.

  • For 64% of the available credit facilities, the interest rate is fixed through interest rate swaps or through fixed interest rates, 36% has a variable interest rate; of the credit facilities drawn, this amounts to 89% and 11% respectively.

  • Fixed interest rates are fixed for a remaining period of 2.9 years on average.
  • Average interest rate for the first half of 2021: 1.7% including bank margins.
  • Market value of the financial derivatives: € -1.7 million.
  • Limited debt ratio of 28.6% (legal maximum of 65.0%).
  • In the first half of 2021, there have been no contractual changes to the existing covenants of the Company. Vastned Belgium complied with all covenants as at 30 June 2021.

8) The statutory auditor assessed whether the "EPRA earnings", "EPRA NRV", "EPRA NTA" en "EPRA NDV" ratios were calculated in accordance with the definitions of the EPRA BPR of October 2019, and whether the data employed for the calculation of these ratios match the accounting data of the consolidated financial statements.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

2.3. Risks during the remaining months of 2021

Vastned Belgium estimates the risks during the remaining months of 2021 to be as follows:

Evolution of the value of the real estate portfolio

The COVID-19 pandemic and government-imposed closures of non-essential shops have had a significant impact on retailers' operating results in the first half of 2021. Despite this, there has been a significant revival and optimism since the reopening of the shops and the hospitality industry. Inner-city trade is also gradually starting to revive. However, the inner-city buildings measuring over 1,000 m² that are becoming vacant are experiencing difficulties with reletting. Therefore, the rents of such large properties are under pressure.

Evolution of interest rates

As a result of financing with borrowed capital, the Company's yield also depends on interest rate developments. In order to mitigate this risk, the Company strives for a loan portfolio with a ratio of onethird borrowed capital with a variable interest rate and two-thirds borrowed capital with a fixed interest rate. Depending on developments in interest rates, this may be temporarily deviated from.

As at 30 June 2021, 89% of the drawn-down credit facilities consists of fixed-rate financing or financing fixed by means of interest rate swaps. The remaining 11% are loans with a variable interest rate.

Ghent Zonnestraat • YAYA

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

3. Outlook for 2021

During the first half of 2021, the COVID-19 pandemic and associated lockdowns continued to be reflected in the lower turnover results for retailers. However, our population is gradually getting vaccinated and social life is starting to resume day after day. There is an undeniable optimism among the population and everyone is gradually getting back on track. Shoppers are returning to the high streets and listed retailers are once again showing revenue increases in their communications.

As e-commerce continues to grow, retailers maintain fewer points of sale. The vacant properties are gradually being taken over by food & beverage concepts, albeit at lower rent than the usual fashion rental income. As a result, pressure on inner-city rental income will continue for some time to come.

Subject to unexpected developments such as bankruptcies of important tenants, unforeseen interest rate rises or new measures to combat the COVID-19 pandemic, Vastned Belgium expects for the financial year 2021 to realise EPRA earnings per share between € 2.40 and € 2.50.

Brussels Elsensesteenweg • Medi Market

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4. Consolidated condensed interim financial statements

4.1. Condensed consolidated statement of profit and loss

(in thousands €) Note 30.06.2021 30.06.2020
Rental income
Rental-related expenses
4.7.5.
4.7.7.
8,423
187
8,698
-666
NET RENTAL INCOME 8,610 8,032
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
1,127
-1,127
125
1,072
-1,072
42
PROPERTY RESULT 8,735 8,074
Technical costs
Commercial costs
Charges and taxes on unlet properties
Property management costs
Other property charges
Property charges
-142
-107
-97
-449
-37
-832
-418
-76
-87
-457
-22
-1,060
OPERATING PROPERTY RESULT 7,903 7,014
General costs
Other operating income and costs
-452
4
-671
4
OPERATING RESULT BEFORE RESULT ON PORTFOLIO 7,455 6,347
Result on disposal of investment properties
Changes in fair value of investment properties
Other result on portfolio
4.7.8. 398
-7,781
53
0
-14,249
-296
OPERATING RESULT 125 -8,198
Financial income
Net interest charges
Other financial charges
Changes in fair value of financial instruments
Financial results
0
-801
-3
336
-468
0
-837
-2
129
-710
RESULT BEFORE TAXES -343 -8,908
Taxes -20 -6
NET RESULT -363 -8,914

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30.06.2021 30.06.2020
NET RESULT -363 -8,914
Note:
• EPRA earnings
• Result on portfolio
• Changes in fair value of financial instruments
• Non-distributable result subsidiaries
6,633
-7,329
336
-3
5,517
-14,545
129
-15
Attributable to:
• Shareholders of the parent company
• Minority interests
-363
0
-8,914
0
30.06.2021 30.06.2020
BALANCE SHEET INFORMATION PER SHARE
Number of shares entitled to dividend
Net result (€)
Diluted net result (€)
EPRA earnings (€)
5,078,525
-0.07
-0.07
1.31
5,078,525
-1.76
-1.76
1.09

4.2. Condensed consolidated statement of comprehensive income

(in thousands €) 30.06.2021 30.06.2020
NET RESULT -363 -8,914
Other components of comprehensive income (recyclable through income statement) 0 0
Changes in the effective part of fair value of authorised hedging instruments that are subject to
hedge accounting
0 0
COMPREHENSIVE INCOME -363 -8,914
Attributable to:
• Shareholders of the parent company
• Minority interests
-363
0
-8,914
0

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4.3. Condensed consolidated balance sheet

TOTAL ASSETS 322,902 333,494
Deferred charges and accrued income 1,492 533
Cash and cash equivalents 412 428
Tax receivables and other current assets 0 785
Trade receivables 4.7.9. 1,157 566
Asset held for sale 2,150 0
Current assets 5,211 2,312
Trade receivables and other non-current assets 3 3
Other tangible assets 576 569
Investment properties 4.7.4. 316,952 330,427
Intangible assets 160 183
Non-current assets 317,691 331,182
Assets (in thousands €) Note 30.06.2021 31.12.2020
Shareholders' equity and liabilities (in thousands €) Note 30.06.2021 31.12.2020
Shareholders' equity 224,259 235,033
Shareholders' equity attributable to shareholders of the parent company
Share capital
Share premium
Reserves
Net result of the financial year
224,259
97,213
4,183
123,226
-363
235,033
97,213
4,183
142,161
-8,524
Minority interests 0 0
Liabilities 98,643 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
4.7.10.
4.7.11.
93,187
91,070
90,332
738
1,695
179
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
4.7.10. 5,456
269
147
0
147
485
531
4,024
3,650
269
656
500
156
1,205
570
950
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 322,902 333,494
17 / 38

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4.4. Condensed consolidated cash flow statement

(in thousands €) Note 30.06.2021 30.06.2020
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 4.3. 428 554
1. Cash flow from operating activities 8,253 4,276
Operational result 125 -8,198
Interest paid -781 -800
Other non-operating elements 313 121
Adjustment of result for non-cash flow transactions 4.7.8. 7,110 14,107
• Depreciations on intangible and other tangible fixed assets 62 46
• Income from disposal of investment properties -398 0
• Spread of rental discounts and benefits granted to tenants 97 -366
• Changes in fair value of investment properties 7,781 14,190
• Other result on portfolio -97 296
• Changes in fair value of financial instruments -335 -129
• Other non-cash flow transactions 0 70
Change in working capital 1,486 -954
• Movement of assets -860 -3,192
• Trade receivables -591 -3,046
• Tax receivables and other non-currents assets 785 0
• Deferred charges and accrued income -1,054 -146
• Movement of liabilities 2,346 2,238
• Deferred tax - liabilities 43 -71
• Trade debts and other current debts -720 -11
• Other current liabilities -38 -70
• Deferred income and accrued charges 3,061 2,390
2. Cash flow from investment activities
Acquisitions of intangible and other tangible fixed assets
Acquisitions of investment properties
Investments in existing investment properties
Income from disposal of investment properties
Prepaid investment invoices
4.7.4.
4.7.8.
3,993
-47
0
-117
4,062
95
-130
-1
0
-129
0
0
3. Cash flow from financing activities -12,262 -4,272
Repayment of loans -5,500 -329
Drawdown of loans 3,730 10,775
Resolution of IRS 0 0
Repayment of financial lease liabilities -86 7
Receipts from non-current liabilities as guarantee 5 3
Dividend paid -10,411 -14,728
CASH AND CASH EQUIVALENTS AT THE END OF THE SEMESTER 4.3. 412 428

Half-yearly financial report 2021

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4.5. Condensed statement of changes in the consolidated equity

(in thousands €) Share
capital
Share
premium
Reserves Net result
of the
financial
year
Minority
interests
Total
share
holders'
equity
Balance at 31 December 2019 97,213 4,183 152,572 4,317 0 258,285
Comprehensive income of 2020
Transfer through result allocation 2019:
-8,524 -8,524
• Transfer from result on portfolio to reserves
• Transfer from changes in fair value of
financials assets and liabilities
-11,847
-289
11,847
289
-
-
• Other movements 1,725 -1,725 -
Dividends financial year 2019 -14,728 -14,728
Balance at 31 December 2020 97,213 4,183 142,161 -8,524 0 235,033
Comprehensive income of the first semester 2021
Transfer through result allocation 2020:
-363 -363
• Transfer from result on portfolio to reserves
• Transfer from changes in fair value of
-22,747 22,747 -
financials assets and liabilities 348 -348 -
• Other movements
Dividends financial year 2020
3,463 3,463
-10,411
-
-10,411
Balance at 30 June 2021 97,213 4,183 123,226 -363 0 224,259

Half-yearly financial report 2021

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4.6. Statement accompanying the condensed consolidated interim financial statements

In accordance with Article 13 §2 of the Royal Decree of 14 November 2007, the Board of Directors, composed of Lieven Cuvelier (chairman), Anka Reijnen, Ludo Ruysen, Reinier Walta and Peggy Deraedt, declares that according to their knowledge:

  • a) The condensed consolidated interim financial statements, prepared in accordance with the "International Financial Reporting Standards" (IFRS) and more specifically in accordance with IAS 34 "Interim Financial Reporting" as adopted within the European Union and according to the legislation of 12 May 2014 regarding regulated real estate companies, give a true and fair view of the net assets, financial position and results of Vastned Belgium and the companies included in the consolidation;
  • b) The condensed consolidated interim financial statements give a true and fair view of the main events that occurred during the first half of the current financial year, their influence on the condensed consolidated interim financial statements, the main risk factors and uncertainties with regard to the coming months of the current financial year, as well as the principal transactions between the related parties and their possible effect on the condensed consolidated interim financial statements if these transactions are of substantial significance and were not concluded under normal market conditions;
  • c) The information stated in the condensed consolidated interim financial statements is in accordance with reality and that no information has been omitted whose disclosure would alter the purpose of the condensed consolidated interim financial statements.

4.7. Notes to the condensed consolidated interim financial statements

4.7.1. Basis for presentation and declaration of conformity

Vastned Belgium NV (the "Company") is a public Regulated Real Estate Company (RREC), which is subject to the RREC legislation9 and whose registered office is located in Belgium, at 2600 Antwerp (Berchem). The Company's shares are listed on NYSE Euronext Brussels under the code VASTB. The condensed consolidated interim financial statements for the reporting period ended 30 June 2021, include the Company and its subsidiaries (the "Group").

The condensed consolidated interim financial statements pertain to the period from 1 January 2021 to 30 June 2021, and were approved for publication by the Board of Directors on 27 July 2021.

The condensed consolidated interim financial statements of Vastned Belgium have been prepared in accordance with the "International Financial Reporting Standards" (IFRS) and more specifically in accordance with IAS 34 "Interim Financial Reporting" as adopted within the European Union and in accordance with the legislation of 12 May 2014 on Regulated Real Estate Companies. These condensed consolidated interim financial statements do not contain all the information required for full reporting and should be read in conjunction with the consolidated financial statements for financial year 2020.

The condensed consolidated interim financial statements are expressed in thousands of euro, rounded to the nearest thousand. Due to the rounding, the total of certain figures in the tables may differ to figures in the primary financial statements or between different notes.

9) The RREC Act comprises both the Act of 12 May 2014 regarding Regulated Real Estate Companies and the Royal Decree of 13 July 2014 regarding Regulated Real Estate Companies

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4.7.2. Principles for the preparation of the condensed consolidated interim financial statements

The principles employed by Vastned Belgium in this condensed consolidated interim financial statements are the same as those applied by the Group in the consolidated financial statements for the financial year 2020.

However, the Company would like to the specify the principles for the accounting of rental waivers, following the mandatory closure of non-essential stores and the hospitality industry, in more detail.

Vastned Belgium made the accounting policy choice to process rental waivers on the basis of 'IFRS 9 - Financial Instruments'. As a result, the rental waiver is not regarded as a 'Lease modification' according to 'IFRS 16 – Lease Agreements'. The rental waiver is considered as a forgiveness of past lease payments that is an extinguishment of the operating lease receivable. For the period of closing, a provision for expected credit losses is recognized under the line "Other rental-related costs". At the moment that a final agreement is reached with the tenant regarding the amount of the rent waiver, a credit note is issued which is presented as a deduction from 'Rental Income'. At the same time, the provision for expected credit losses is reversed.

Since 1 January 2021, the following (amended) standards and interpretations have been applicable to Vastned Belgium:

  • IFRS 4 (Amendment) 'Insurance Contracts'
  • IFRS 9 (Amendment) 'Financial Instruments', IFRS 7 (Amendment) 'Financial Instruments: Notes', IAS 39 (Amendment) 'Financial Instruments: Recognition and Valuation', IFRS 4 (Amendment) 'Insurance Contracts' and IFRS 16 (Amendment) 'Lease Agreements'.

These new or amended standards and interpretations have no material impact on these condensed consolidated interim financial statements.

The following published (amended) standards will only become effective after 31 December 2021 and have not been adopted earlier by the Group:

  • IAS 16 (Amendment) 'Tangible fixed assets' (effective date 1 January 2022)
  • IAS 37 (Amendment) 'Provisions, Contingent Liabilities and Contingent Assets' (effective date 1 January 2022)
  • IFRS 3 (Amendment) 'Business Combinations' (effective date 1 January 2022)
  • Improvements to the IFRS 2018-2020 Cycle (effective 1 January 2022)
  • IFRS 1 (Amendment) 'Presentation of Financial Statements' (effective date 1 January 2023)
  • IFRS 17 'Insurance Contracts' (effective date 1 January 2023)

These amended standards and interpretations will have no material impact on Vastned Belgium's consolidated financial statements for 2021.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4.7.3. Condensed consolidated income statement per operating segment

Vastned Belgium uses the geographical region for segment reporting. This segmentation basis reflects the three (3) geographic markets in which the Group is active: Flanders, Brussels and Walloon Region.

The category 'corporate' includes all non-segment attributable costs that are borne at Group level.

Geographical segmentation Flanders Walloon Region Brussels Corporate Total
(in thousands €) 30.06.'21 30.06.'20 30.06.'21 30.06.'20 30.06.'21 30.06.'20 30.06.'21 30.06.'20 30.06.'21 30.06.'20
Rental income
Rental-related expenses
6,111
200
6,128
-32
988
6
1,027
0
1,324
-19
1,543
0
0
0
0
-635
8,423
187
8,698
-666
NET RENTAL INCOME 6,311 6,096 994 1,027 1,305 1,543 0 -635 8,610 8,032
Property management costs
and income
102 42 23 0 0 0 0 0 125 42
PROPERTY RESULT 6,413 6,138 1,017 1,027 1,305 1,543 0 -635 8,735 8,074
Operating result before
result on portfolio
5,939 5,300 841 865 1,123 1,409 -448 -1,227 7,455 6,347
Result on disposals of
investment properties
Changes in fair value of
investment properties
Other result on portfolio
231
-6,860
95
0
-10,506
-153
167
-491
-92
0
-3,893
54
0
-430
50
0
150
-196
0
0
0
0
0
0
398
-7,781
53
0
-14,219
-296
Operating result of
the segment
-595 -5,359 425 -2,974 743 1,363 -448 -1,227 125 -8,198
Financial result
Taxes
-5
0
-5
0
-1
0
-1
0
0
0
0
0
-462
-20
-703
-6
-468
-20
-710
-6
NET RESULT -600 -5,365 424 -2,976 743 1,363 -930 -1,936 -363 -8,914
Geographical segmentation 10 Flanders
Walloon Region
Brussels Total
(in thousands €) 30.06.'21 31.12.'20 30.06.'21 31.12.'20 30.06.'21 31.12.'20 30.06.'21 31.12.'20
Fair value of investment properties
• of which are investments during
229,641 240,401 29,504 31,790 57,807 58,237 316,952 330,427
the financial year (fair value)
• of which are acquisitions of
117 295 0 0 0 6 117 301
investment properties
Disposals during the financial year
0 0 0 0 0 0 0 0
(fair value)
Investment value of real estate
1,863 1,631 1,799 0 0 6,644 3,662 8,275
properties
Totale leasable space (m²)
235,379
56,305
246,397
59,439
30,239
10,880
32,580
12,879
59,252
8,901
59,693
8,848
324,871
76,086
338,670
81,166

10) Excluding assets held for sale.

Half-yearly financial report 2021

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The fair value of investment properties decreased the most in Flanders. The decrease is explained by a limited number of large (> 1,000 m²) inner-city retail properties. More information can be found at '2.3. Risks for the remaining months of 2021'.

4.7.4. Evolution of the investment properties

(in thousands €) 2021
Total
2020
Total
Balance sheet as at 1 January 330,427 360,752
Investments in existing investment properties
Acquisition of shares of real estate companies
Acquisitions of investment properties
Disposals of investment properties
Reclassification to assets held for sale
Indexation of right-of-use assets according to IFRS 16
Changes in fair value of investment properties 11
117
0
0
-3,664
-2,150
3
-7,781
129
0
0
0
0
0
-14,243
Balance sheet as at 30 June 316,952 346,638
Other information
Investment value of real estate properties
324,871 355,284

Investment properties are valued, by an independent real estate expert, at fair value in accordance with IAS 40 'Investment Property'. The fair value is determined on the basis of one of the following levels of the hierarchy.

  • Level 1: Officially quoted (unadjusted) market prices for identical assets or liabilities in an active market.
  • Level 2: The fair value of assets or liabilities that are not traded in an active market is determined using valuation

techniques. These techniques make maximum use of observable market data, where available, and rely as little as possible on entity-specific estimates.

• Level 3: Assets and liabilities of which the fair value is determined using valuation techniques of which some parameters are based on non-observable market data.

Investment properties are valued at fair value according to level 3.

4.7.5. Rental income

(in thousands €) 30.06.2021 30.06.2020
Rents
Rental discounts
Compensation for early termination of lease agreements
8,705
-332
50
9,062
-364
0
Total rental income 8,423 8,698

Rental income includes rent and revenues directly related to rent, such as compensations for early termination of lease contracts, less the granted rental discounts and rental benefits. Rental discounts are spread in the income statement from the start of the lease agreement until the next possible termination date of the lease.

11) Also contains the revaluation of the right-of-use assets according to IFRS 16 for an amount of € -521 thousand (€ -59 thousand previous financial year).

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4.7.6. Overview of the future minimum rental income

The table below provides an overview of the undiscounted value of the future rental income up to the first expiry date of the lease agreement. This takes into account the option of termination granted by law to the tenant12 after the end of the current three-year period.

(in thousands €) 30.06.2021 30.06.2020
Receivables with a remaining duration of:
• Less than one year
• Between one and two years
• Between two and three years
• Between three and four years
• Between four and five years
• More than five years
15,616
9,408
4,157
1,243
74
0
18,530
14,499
6,298
580
0
0
Total of the future minimum rental income 30,498 39,907

If we assume that the tenants will not make use of this three-year cancellation option, then the undiscounted value of the future rental income amounts to € 89.6 million (€ 82.6 million as at 31 December 2020). The increase is due to the strong work of the asset management department, which renewed a significant number of contracts in the first half of 2021.

4.7.7. Rental-related expenses

(in thousands €) 30.06.2021 30.06.2020
Write-downs on trade receivables
Reversal of write-downs on trade receivables
-79
266
-666
0
Total rental-related expenses 187 -666

Rental-related expenses contain write-downs of trade receivables that are included in profit or loss if the book value is higher than the estimated realisable value.

In the first half of 2021, the write-downs that were recognized on 31 December 2020, as a result of the mandatory closure of non-essential stores in November 2020, have been reversed. This reversal is the result of the rental waivers that are deducted from the rental income when agreed with the tenant.

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4.7.8. Result on the disposal of investment properties

(in thousands €) 30.06.2021 30.06.2020
Carrying amount (fair value) of investment properties sold 3,664 0
Selling price 4,064 0
Selling costs -2 0
Net selling price 4,062 0
Total result on the disposal of investment properties 398 0

In the first half of 2021, Vastned Belgium realised two (2) divestments for a total sales price of € 4.1 million. The fair value of these properties amounted to € 3.7 million on 31 March 2021, as a result of which the Company realised a capital gain of € 0.4 million.

A detailed description of these divestments can be found at '1.6. divestments' (see above).

The properties represented 1.1% of the total fair value of the Company's real estate portfolio and represented approximately € 0.3 million in rental income, or 1.5% of Vastned Belgium's total annual rental income.

4.7.9. Trade receivables

(in thousands €) 30.06.2021 31.12.2020
Outstanding trade receivable
Invoices to be issued and credit notes to be received
Doubtful debtors
Provision doubtful debtors
1,336
83
221
-483
1,011
3
224
-672
Total trade receivables 1,157 566

The slight increase in outstanding trade receivables is caused by a change to the process whereby the rental invoices are already accounted for at the end of the previous month (corrected in deferred income and accrued charges). At the end of the previous financial year, several rental invoices were outstanding as a result of mandatory closure of non-essential shops in November 2020.

4.7.10. Long term and short term financial debt

For a detailed description of the Company's financial structure, reference is made to '2.2 Financial structure as at 30 June 2021' (see above).

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4.7.11. Financial instruments

Vastned Belgium's main financial instruments consist of financial and commercial receivables and debts, cash and cash equivalents as well as financial instruments of the interest rate swap (IRS) type.

Summary of financial instruments

(in thousand €) 30.06.2021 31.12.2020
Financial instruments (assets) Categories Level Book value Fair value Book value Fair value
Non-current assets
Non-current financial assets
C 2 0 0 0 0
Trade receivables and other non-current assets A 2 3 3 3 3
Current assets
Trade receivables
Tax receivables and other current assets
Cash and cash equivalents
A
A
B
2
2
1
1,157
0
412
1,157
0
412
566
785
428
566
785
428
Financial instruments - liabilities
Non-current liabilities
Non-current financial debts (interest-bearing)
• Credit institutions
• Financial leasing
Other non-current financial liabilities
Other non-current liabilities
A
A
A
C
A
2
2
2
2
2
91,070
90,332
738
1,695
179
90,407
89,669
738
1,695
179
92,405
91,602
804
2,031
175
91,503
90,699
804
2,031
175
Current liabilities
Current financial debts (interest-bearing)
• Credit institutions
• Financial leasing
Other current financial debts
Trade debts and other current debts
A
A
A
C
A
2
2
2
2
2
147
0
147
0
485
147
0
147
0
485
656
500
156
0
1,205
656
500
156
0
1,205
570
Other current liabilities A 2 531 531 570

In accordance with IFRS 9 'Financial Instruments', all financial assets and financial liabilities are measured at amortised cost or fair value. The valuation is depending on the proposed classification of the financial assets and financial liabilities. The Group has defined the following categories:

  • A. Financial assets or liabilities (including receivables and loans) at amortised cost;
  • B. Financial assets held to maturity at amortised cost;
  • C. Assets or liabilities, held at fair value through profit and loss, except for financial instruments defined as hedging instruments that are subject to a hedging relation.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

Financial instruments are stated at fair value. The fair value hierarchy is based on data for the valuation of financial assets and liabilities at the valuation date. The distinction between the three (3) levels is as follows:

  • Level 1: Officially quoted (unadjusted) market prices for identical assets or liabilities in an active market.
  • Level 2: The fair value of assets or liabilities that are not traded in an active market is determined using valuation techniques. These techniques make maximum use of observable market data, where available, and rely as little as possible on entity-specific estimates.
  • Level 3: Financial instruments whose fair value is determined using valuation techniques, some parameters of which are based on unobservable market data.

Vastned Belgium's financial instruments correspond to level 2 in the hierarchy of fair values. The valuation techniques related to the fair value of level 2 financial instruments are as follows:

  • For the items 'Other Non-current financial liabilities' and 'Other current financial liabilities', that relate to interest rate swaps, the fair value is determined using observable data, namely the forward interest rates applicable to active markets, generally provided by financial institutions.
  • The fair value of the other level 2 financial assets and liabilities is approximately equal to their book value, either because they have a short-term maturity (such as trade receivables and payables) or because they bear a variable interest rate. When calculating the fair value of the interest-bearing financial debts with a fixed interest rate, the fair value is calculated as the future cash flows (interest and capital repayment) discounted at a market yield.

On 30 June 2021, the Company owns the following financial derivatives:

(in thousands €) Start date End date Interest rate Contractual
notional
amount
Hedge
accounting
Fair value
Yes/No 30.06.2021 31.12.2020
1 IRS 31.10.2019 31.07.2024 0.6725% € 15,000 No -295 -352
2 IRS 31.10.2019 31.07.2024 0.7375% € 10,000 No -217 -258
3 IRS 14.11.2019 31.07.2024 0.7250% € 5,000 No -107 -127
4 IRS 31.07.2017 31.07.2023 0.9520% € 15,000 No -297 -370
5 IRS 31.07.2017 31.07.2024 0.9550% € 10,000 No -285 -339
6 IRS 31.07.2017 31.07.2024 1.0940% € 15,000 No -494 -585
Other non current financial liabilities -1,695 -2,031
Other current financial liabilities 0 0
Total fair value of financial derivatives -1,695 -2,031

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4.7.12. Affiliated Parties

The affiliated parties with whom the Company trades are its majority shareholder, its subsidiary (EuroInvest Retail Properties NV), its directors and members of the Executive Committee.

As at 30 June 2021, Vastned Belgium has no debts to affiliated companies.

On 3 May 2021, Reinier Walta announced that he had a potential conflict of interest of a proprietary nature pertaining to the intended decision to approve the management agreement between the Company and Mr. Walta with regard to his position as strategic CEO and strategic CFO of the Company.

The parties merely wish to officialise the existing agreements. This agreement aligns with the agreements of the other members of the Executive Committee, which contain the usual provisions for this type of agreement. Reinier Walta's positions as strategic CEO and strategic CFO remains unpaid at Vastned Belgium; however, the contractual, non-contractual or other liability as a member of the Executive Committee towards Vastned Belgium in connection with the performance of his function, together with the liability of the other members of the Executive Committee towards Vastned Belgium, will be limited to € 12,000,000. This (limited) liability is analogous to the liability that Reinier Walta would have if the Company had opted for a dual management structure, with a Supervisory Board and a Board of Directors, and Mr. Walta had been a member of the Supervisory Board.

4.7.13. Contingent liabilities

In the first half of 2021, there were no changes in the contingent liabilities as described in 'Note 22 – Contingent liabilities' of the Financial Report in the Annual Report 2020.

4.7.14. Events after the balance sheet date

Divestment of Leopoldsburg

On 15 July 2021, Vastned Belgium divested a retail warehouse, located in Leopoldsburg, for an amount of € 2.2 million. The sale agreement for this retail warehouse was concluded in 2019 under the condition precedent of obtaining the necessary permits. These permits were received during the second quarter of 2021 and the notarial deed was signed on 15 July 2021. Vastned Belgium realises a limited capital loss on this sale. This solitary retail warehouse has a total retail area of 1,850 m² and consists of one (1) rentable unit.

This building represented 0.7% of the total fair value of the Company's real estate portfolio, and represented approximately € 0.2 million in rental income or 0.9% of Vastned Belgium's total annual rental income.

There were no other significant events after the balance sheet date.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

4.8. Report of the statutory auditor

Statutory auditor's report to the board of directors of Vastned Belgium nv on the review of the Condensed Consolidated Half-yearly Figures as at 30 June 2021 and for the six-month period then ended.

Introduction

We have reviewed the accompanying interim condensed consolidated balance sheet of Vastned Belgium nv (the "Company"), and its subsidiaries (collectively referred to as "the Group") as at 30 June 2021, the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated cash flow statement and condensed statement of changes in consolidated shareholders' equity for the six-month period then ended, and notes ("the Condensed Consolidated Half-yearly Figures"). The board of directors is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying Condensed Consolidated Half-yearly Figures as at 30 June 2021 and for the six-month period then ended is not prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.

Brussels, 27 July 2021

EY Bedrijfsrevisoren bv/EY Réviseurs d'Entreprises srl Statutory auditor represented by

Joeri Klaykens* Partner

* Acting on behalf of a bv/srl

Half-yearly financial report 2021

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4.9. Financial calendar

Half-yearly financial report 2021

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5. Alternative Performance Measures

5.1. Glossary of Alternative Performance Measures

A complete overview of the alternative performance measures can be found at 'Chapter 8. Alternative performance measures' of the annual report for 2020, or to the Company's website www.vastned.be.

The table below provides an overview of the alternative performance measures employed throughout the half-yearly financial report.

Alternative
Performance Measure
Definition Use
Result per share • Net result per share:
Net result divided by the number of shares entitled to
dividend
• Gross dividend per share:
EPRA earnings divided by the number of shares entitled to
dividend
Measure the result of the share and
enable comparison with the dividend
paid per share.
Net value per share in
investment value
This pertains to the book value of the share before deduction
of the transaction costs (mainly transfer rights) from the
value of the investment properties. It is calculated by dividing
the amount of equity attributable to the shareholders of the
parent company, where the transfer rights that are
recognised under equity at the balance sheet date are
deducted, by the number of shares entitled to dividend.
Measure the investment value of
the share and enable comparison
with its stock market value.
Net value per share in
fair value
This pertains to the book value of the share after deduction
of the transaction costs (mainly transfer rights) from the
value of the investment properties. It is calculated by dividing
the amount of equity attributable to the shareholders of the
parent company by the number of shares entitled to
dividend.
Measure the fair value of the share
and enable comparison with its stock
market value.
Financial result
(excluding changes in
the fair value of the
financial assets and
liabilities)
The 'Financial Result' from which the heading 'Changes in the
fair value of financial assets and liabilities' is deducted.
Reflect the Company's actual cost of
financing.
Average interest rate
of financing
The average interest rate on the Company's financing is
calculated by dividing the net interest charges (on an annual
basis) by the weighted average debt of the period (based on
the daily drawdowns of the financing). Financing includes
draw-downs from credit institutions, recognized under the
line 'Credit institutions' in the long-term and short-term
financial debts of the consolidated balance sheet.
The average interest rate of financing
measures the average financing cost
of the debts and allows following its
evolution over time, depending on the
evolution of the company and of the
financial markets.

Half-yearly financial report 2021

Regulated information / embargo until 27 July 2021, 6.00 pm Antwerp, 27 July 2021

Alternative
Performance Measure
Definition Use
Average yield
of the portfolio
The average yield of the portfolio is calculated as the ratio
between the rental income and the fair value of investments
properties.
Evaluate the income from investment
properties.
Portfolio result The portfolio result includes (i) the result on the disposal of
investment properties, (ii) the changes in the fair value of
investment properties, and (iii) the other portfolio result.
The portfolio result measures the
realised and unrealised profit and loss
related to investment properties
compared to the valuation of the
independent property experts at the
end of the previous financial year.
EPRA earnings EPRA earnings is the operating result before the result on the
portfolio from which the financial result, taxes, changes in
the fair value of financial derivatives (non-effective hedges in
accordance with IFRS 9) and the non-distributable result of
subsidiaries are eliminated.
The EPRA earnings measures the
result of the strategic operational
activities, excluding the following
elements (i) the changes in the fair
value of financial assets and liabilities
(ineffective hedges in accordance with
IFRS 9) and (ii) the portfolio result.
EPRA earnings
per Share
EPRA earnings per share is the EPRA earnings divided by the
number of shares entitled to dividend.
The EPRA earnings per share
measures the EPRA earnings per share
entitled to dividend and makes it
possible to compare it with the gross
dividend paid per share.
EPRA NRV EPRA Net Reinstatement Value (NRV) provide an estimation
of the amount required to rebuild the Company through the
investment markets based on its current capital and
financing structure.
Measure the fair value of the share
and enable comparison with its stock
market value.
EPRA NTA EPRA Net Tangible Assets (NTA) assumes that the Company
buys and sells assets, which would result in the realization of
certain levels of unavoidable deferred tax.
Measure the fair value of the share
and enable comparison with its stock
market value.
EPRA NDV The EPRA Net Disposal Value (NDV) represents the value
accruing to the Company's shareholders under an asset
disposal scenario, resulting in the settlement of deferred
taxes, the liquidation of financial instruments and the
recognition of other liabilities for their maximum amount,
net of any resulting tax.
Measure the fair value of the share
and enable comparison with its stock
market value.
EPRA Net Initial Yield
(NIR)
Annualised gross rental income based on the contractual
rents passing as at the closing date of the annual accounts,
less the property charges, divided by the market value of the
portfolio, increased by the estimated transaction rights and
costs resulting from the hypothetical disposal of investment
properties.
This measure offers investors the
opportunity to compare portfolio
valuations within Europe.

Half-yearly financial report 2021

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Alternative
Performance Measure
Definition Use
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).
This measure, which includes an
adjustment to the EPRA NIR before
the end of rent-free periods (or other
unexpired lease incentives), offers
investors the opportunity to compare
portfolio valuations within Europe.
EPRA vacancy rate Estimated market rental value (ERV) of vacant space divided
by ERV of the whole portfolio available upon rental.
Displays the percentage of vacancy
based on estimated market rental
value.
EPRA cost ratio
(including direct
vacancy costs)
EPRA costs (including direct vacancy costs) divided by gross
rental income less compensations for leasehold estate and
long-lease rights.
Measurement of changes in the
company's operating costs.
EPRA cost ratio
(excluding direct
vacancy costs)
EPRA costs (excluding direct vacancy costs) divided by gross
rental income less compensations for leasehold estate and
long-lease rights.
Measurement of changes in the
company's operating costs.

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5.2. Reconciliation tables of the Alternative Performance Measures

Result per share 30.06.2021 30.06.2020
Net result (€ thousands) A -363 -8,914
Number of shares entitled to dividend B 5,078,525 5,078,525
(Diluted) Net result (€) A/B -0.07 -1.76
30.06.2021 30.06.2020
EPRA earnings (€ thousands) A 6,633 5,517
Number of shares entitled to dividend B 5,078,525 5,078,525
EPRA earnings per share (€) A/B 1.31 1.09
30.06.2021 30.06.2020
224,259 235,033
-8,840 -9,363
244,396
5,078,525 5,078,525
45.90 48.12
30.06.2021 30.06.2020
224,259
5,078,525
235,033
5,078,525
46.28
233,099
44.16

Financial result (excluding changes in the fair value of the financial assets and liabilities)

30.06.2021 30.06.2020
A -468 -710
B
A-B
336
-804
129
-839

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Average interest rate of financing

30.06.2021 30.06.2020
Net interest charges (€ thousands)
A
801 837
Average debt over the period (€ thousands)
B
89,768 100,229
Average interest rate of financing (based on 360/365) (%)
A/B
1.7% 1.7%

Result on portfolio

(€ thousands) 30.06.2021 30.06.2020
Result on the disposal of investment properties A 398 0
Variations in the fair value of investment properties B -7,781 -14,249
Other result on portfolio C 53 -296
Result on portfolio A+B+C -7,330 -14,545

EPRA earnings

(€ thousands) 30.06.2021 30.06.2020
Net result A -363 -8,914
On condition of elimination from the net result (+/-):
• Variations in the fair value of investment properties B 7,781 14,249
• Result on the disposal of investment properties C -398 0
• Variations in the fair value of financial assets and liabilities D -336 -129
• Other result on portfolio E -53 296
• Non-distributable result subsidiaries F 3 15
EPRA earnings A-B-C-D-E-F 6,633 5,517

EPRA earnings per share

30.06.2021 30.06.2020
EPRA earnings (€ thousands)
A
6,633 5,517
Weighted average number of shares
B
5,078,525 5,078,525
EPRA earnings (€/share)
A/B
1.31 1.09

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EPRA Net Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA) and EPRA Net Disposal Value (NDV)

30.06.2021
(€ thousands) EPRA NRV EPRA NTA EPRA NDV
IFRS equity attributable to the shareholders of the parent
company:
A 224,259 224,259 224,259
Diluted NAV of fair value B 224,259 224,259 224,259
To be excluded:
• Deferred taxes pertaining to the revaluation of fair value of
real estate investments
• Fair value of the financial instruments
• Intangible fixed assets according to the IFRS Balance Sheet
C = D+E+F
D
E
F
1,938
243
1,695
1,778
243
1,695
-160
-
To be added:
• Fair value of fixed interest rate debt
• Real estate transfer tax
G = H+I
H
I
7,919
7,919
- -
NAV J = B+C+G 234,116 226,037 224,259
Diluted number of shares K 5,078,525 5,078,525 5,078,525
NAV (€/share) J/K 46.10 44.51 44.16
31.12.2020
(€ thousands) EPRA NRV EPRA NTA EPRA NDV
IFRS equity attributable to the shareholders of the parent
company:
A 235,033 235,033 235,033
Diluted NAV of fair value B 235,033 235,033 235,033
To be excluded:
• Deferred taxes pertaining to the revaluation of fair value of
real estate investments
• Fair value of the financial instruments
• Intangible fixed assets according to the IFRS Balance Sheet
C = D+E+F
D
E
F
2,231
200
2,031
2,048
200
2,031
-183
-
To be added:
• Fair value of fixed interest rate debt
• Real estate transfer tax
G = H+I
H
I
8,243
8,243
- -
NAV J = B+C+G 245,507 237,081 235,033
Diluted number of shares K 5,078,525 5,078,525 5,078,525
NAV (€/share) J/K 48.34 46.68 46.28

Half-yearly financial report 2021

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EPRA Net Initial Yield (NIR) and EPRA adjusted NIY

(€ thousands) 30.06.2021 31.12.2020
Investment properties 13 A 316,952 330,427
To be excluded:
• IFRS 16 right-of-use assets
• Project developments intended for lease
B
C
-207
0
-725
0
Real estate available for lease D = A+B+C 316.745 329,702
To be added:
• Investment value of properties available for lease -
including property held by right of use
E 7,919 8,243
Investment value of properties available for lease F = D+E 324.664 337,945
Annualised gross rental income 13 G 17,102 17,351
To be excluded:
• Property charges 14
H -1,571 -1,456
Annualised net rental income I = G+H 15,532 15,895
Adjustments:
• Rent expiration of rent free periods or other lease incentives
J 313 555
Annualised "topped-up" net rental income K = I+J 15,845 16,450
(in %)
EPRA NET INITIAL YIELD I/F 4.8% 4.7%
EPRA ADJUSTED NET INITIAL YIELD K/F 4.9% 4.9%

13) Excluding assets held for sale.

14) The perimeter of the property charges to be excluded for the calculation of the EPRA Net Initial Yield is set out in the EPRA Best Practices and does not correspond to the "Property charges" as presented in the consolidated IFRS accounts.

Half-yearly financial report 2021

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Total real estate available for lease 76,086 466 16,804 2.8% 4.1%
Walloon Region 10,880 291 1,927 15.1% 10.5%
Brussels 8,901 0 2,814 0.0% 7.8%
Flanders 56,305 175 12,063 1.5% 2.1%
A B A/B
Leasable space
(in m²)
Estimated
rental value
(ERV) on
vacancy
(€ thousands)
Estimated
rental value
(ERV)
(€ thousands)
EPRA
vacancy rate
(in %)
EPRA
vacancy rate
(in %)
EPRA vacancy rate 30.06.2021 31.12.2020

EPRA Cost Ratios

(€ thousands) 30.06.2021 31.12.2020
General costs
Write-downs on trade receivables
Property charges
A
B
C
448
-187
832
510
455
1,864
EPRA costs (including direct vacancy costs) D = A+B+C 1,094 2,829
Direct vacancy costs E -97 -116
EPRA costs (excluding direct vacancy costs) F = D+E 997 2,713
Rental income less compensations for leasehold estate and
long-lease rights
G 8,423 16,713
(in %)
EPRA Cost ratio (including direct vacancy costs) D/G 13.0% 16.9%
EPRA Cost ratio (excluding direct vacancy costs) F/G 11.8% 16.2%

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 05 900 // 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 held to observe 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.

Only the Dutch version is the official version. The English version is a translation of the original Dutch version.

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