Earnings Release • Oct 22, 2020
Earnings Release
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REGULATED INFORMATION / EMBARGO UNTIL 22 OCTOBER 2020, 6.00 PM ANTWERP, 22 OCTOBER 2020
1 With unchanged composition of the real estate portfolio compared with 31 December 2019.
2 In accordance with the guidelines issued by the European Securities and Market Authority (ESMA), which have been applicable since 3 July 2016, the Alternative Performance Measures (APM) used by Vastned Retail Belgium are now included. The definitions and use of the APMs, as well as the reconciliation tables, are set out in the chapter "Alternative Performance Measures" of the Annual Report 2019 and a separate Lexicon regarding these APMs is available on the website www.vastned.be.
As already indicated in the interim management report of 2020, Belgium is being hit by the COVID-19 pandemic. Combating this pandemic requires far-reaching measures that are taken by the government. One of the measures concerned the closure of non-essential shops as from 13 March 2020, which was lifted on Monday 11 May 2020.
Throughout the summer, multiple-person shopping was once again permitted, which had a positive impact on the number of visitors that retailers had in shopping cities.
Since the reopening of the shops, Vastned Retail Belgium has entered into dialogue with all its affected lessees and has reached with 95% of these affected lessees a final agreement regarding the rent owed during the lockdown period. It was agreed with most lessees that one month's rent would be waived.
For Vastned Retail Belgium, this waiver of unpaid rent amounted €1.2 million.
In addition, a repayment plan was concluded with a limited number of tenants. These tenants accurately follow the proposed repayment plan.
Vastned Retail Belgium is confident that reaching agreements with the lessees about waivers of unpaid rent contributed to a restart of retail activities after the lockdown period. This is reflected in the rental income for the third quarter, which is again in line with the rental income before 13 March 2020. Management's focus on timely collection of rent resulted in a collection rate3 (excluding waivers of unpaid rent that have been granted) of 97.3% for the first 9 months of 2020. Finally, the occupancy rate (97.3%) remains in line with the occupancy rate as at 30 June 2020.
Graanmarkt - Antwerp
Rental activity was limited in the third quarter of 2020.
Vastned Retail Belgium realised three rental transactions in the third quarter, representing approximately 0.2% of the total rental income.
This concerns three rental transactions concluded with new tenants, of which one was the lease of an empty commercial unit and two rental transaction were the lease of residential units.
As at 30 September 2020, the majority of the real estate portfolio consisted of high-quality inner-city real estate located in the cities of Antwerp, Brussels, Ghent and Bruges and state-of-the-art retail parks.
During the first semester of 2020, Vastned Retail Belgium signed a commitment to purchase/sell one retail property under the suspensive condition of granting the required permit. This commitment concerns a stand-alone retail warehouse in Leopoldsburg. The suspensive condition has not yet been met at the end of the third quarter.
On 12 October 2020, Vastned Retail Belgium concluded a sales agreement for the sale of a non-strategic retail park located in Schaarbeek. This sale is made for an amount of €8.2 million. Vastned Retail Belgium achieves a capital gain of €1.5 million on this transaction. As at 30 September 2020, this result was not yet incorporated in the changes in the fair value of investment properties.
| REAL ESTATE PORTFOLIO | 30.09.2020 | 31.12.2019 |
|---|---|---|
| Fair value of investment properties (€ 000) | 344,191 | 360,752 |
| Total leasable space (m²) | 85,915 | 85,915 |
As at 30 September 2020, the fair value of the investment properties amounted to €344.2 million, which is a decrease of the fair value by €16.5 million compared to 31 December 2019 (€360.7 million as at 31 December 2019). Of this decrease, €14.1 million was already recognised in the first semester of 2020, limiting the effect of the third quarter to €2.6 million (excluding €0.2 million investments). The capital gain of €1.5 million on the sale of a non-strategic retail park has not yet been recognised in the third quarter.
This decrease, mainly incorporated in the first semester of 2020, is the result of a decrease of the estimated rental values for all future periods on the one hand and a yield adjustment on the other hand. The yield adjustment is due to the reduced activity in the retail property market as a result of the COVID-19 pandemic and the negative reports on retailers that have hit hard times.
| OCCUPANCY RATE (EXCLUDING BUILDINGS UNDERGOING RENOVATION) | 30.09.2020 | 31.12.2019 |
|---|---|---|
| Occupancy rate of the real estate portfolio | 97.3% | 98.8% |
The occupancy rate of the real estate portfolio amounted to 97.3% as at 30 September 2020 and remains stable compared to 30 June 2020.
| IN THOUSANDS € | 30.09.2020 | 30.09.2019 |
|---|---|---|
| Rental income | 12,787 | 14,517 |
| Rental-related expenses | -141 | -5 |
| Property management costs and income | 64 | 41 |
| PROPERTY RESULT | 12,710 | 14,553 |
| Property charges | -1,446 | -1,221 |
| General costs and other operating income and costs | -939 | -920 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 10,325 | 12,412 |
| Result on disposal of investment properties | 0 | -154 |
| Changes in fair value of investment properties | -16,792 | -8,823 |
| Other result on portfolio | -515 | 35 |
| OPERATING RESULT | -6,982 | 3,470 |
| Financial result (excl. changes in fair value of financial instruments) | -1,257 | -1,336 |
| Changes in fair value of financial instruments | 222 | -588 |
| Taxes | 3 | -30 |
| NET RESULT | -8,014 | 1,516 |
| Note: | ||
| EPRA earnings | 9,085 | 11,045 |
| Result on portfolio | -17,307 | -8,942 |
| Changes in fair value of financial instruments and other non-distributable elements | 208 | -587 |
4 The occupancy rate is calculated as the ratio between the rental income and the sum of this income and the estimated rental income of unoccupied rental premises.
The rental income of Vastned Retail Belgium amounted to €12.8 million (€14.5 million) in the first nine months of 2020 and has therefore decreased compared to the same period last year. This decrease is, on the one hand, due to the rent arrears that have already been waived as a result of the COVID-19 pandemic and, on the other hand, due to the disposal of one non-strategic retail park at the end of October 2019.
Rental-related expenses amounted to €0.1 million and are fully attributable to the provision for estimated credit losses on outstanding lease receivables as at 30 September 2020. This provision concerns an estimate of potential waivers still to be granted or possible bankruptcies.
The property charges amount to €1.4 million (€1.2 million) and have increased by €0.2 million. This change is the combined effect of an increase in technical costs (€0.3 million) and a decrease in commercial costs (€-0.1 million). Note that all budgeted maintenance works for 2020 were largely carried out in the first nine months of this financial year.
The general costs and other operating income and costs amount to €0.9 million (€0.9 million) and are in line with the same period last year.
The fair value of the real estate portfolio decreased in the first nine months of 2020. The changes in the fair value of investment properties are negative and amount to €-16.8 million (€-8.8 million). This decrease is entirely attributable to the decrease in the fair value of the existing real estate portfolio, as a result of a decrease in estimated rental values and an increase in the capitalisation rate. The further decrease compared to the first semester of 2020 remains limited to €-2.6 million. Taking into account the capital gain of €1.5 million on the property in Schaarbeek, the decrease would have been limited to €-1.1 million in the third quarter.
The financial result (excluding changes in the fair value of financial instruments) for the first nine months of 2020 amounted to €-1.3 million (€-1.3 million) and is thus fully in line with the same period last year. The average interest rate for financing amounts to 1.6%, including bank margins for the first nine months of 2020 (1.7%).
The changes in the fair value of financial instruments for the first nine months of 2020 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 €0.2 million (€-0.6 million).
The net result of Vastned Retail Belgium for the first nine months of 2020 amounts to €-8.0 million (€1.5 million) and may be divided into:
The EPRA earnings per share amount to €1.79 for the first nine months of 2020 compared to €2.17 for the same period last year. As at 30 June 2020, the EPRA earnings per share amounted to €1.09.
The significant increase in the EPRA earnings per share in the third quarter (compared to 30 June 2020) is the result of a stable occupancy rate, a good collection rate of rental income and no additional COVID-19 rent waivers.
| KEY FIGURES PER SHARE | 30.09.2020 | 31.12.2019 | 30.09.2019 |
|---|---|---|---|
| Number of shares entitled to dividend | 5,078,525 | 5,078,525 | 5,078,525 |
| Net result (9 months/1year/9 months) (€) | -1.58 | 0.85 | 0.30 |
| EPRA earnings (9 months/1year/9 months) (€) | 1.79 | 2.90 | 2.17 |
| Net value (fair value) (€) | 46.38 | 50.86 | 50.31 |
| Net value (investment value) (€) | 48.22 | 52.78 | 52.23 |
| Share price on closing date (€) | 20.50 | 44.70 | 44.80 |
| Premium (+) / Discount (-) with regard to fair net value (%) | -55.8% | -12.1% | -11.0% |
As at 30 September 2020, the net value (fair value) of a share was €46.38 (€50.86 as at 31 December 2019). Given that the share price of Vastned Retail Belgium (VASTB) on 30 September 2020 amounted to €20.50, the share was on that date quoted at a discount of 55.8% compared to the net value (fair value).
The debt ratio of Vastned Retail Belgium amounted to 30.9% as at 30 September 2020 and has thus increased by 3.0% in the first nine months of 2019 (27.9% as at 31 December 2019). The increase in debt ratio is the result of a decrease in the fair value of the real estate portfolio.
Compared to 30 June 2020, the net value (fair value) of the share increased by €0.18 and the debt ratio decreased by -0.7% due to the stable occupancy rate, timely collection of rental income and no additional COVID-19 rent waivers.
The Board of Directors of Vastned Retail Belgium nominates Reinier Walta as strategic CEO ad interim, as of 1 December 2020.
Vastned Retail Belgium had a stable financial structure as at 30 September 2020, allowing it to continue to carry out its activities in 2020. There are no credit lines maturing within the year, which means that the company does not need to refinance its credit lines.
The financial structure can be summarised as follows:
In addition, Reinier Walta will, ad interim, take over the tasks of the strategic CEO within the executive committee, as of 1 December 2020 and subject to approval of the Financial Services and Market Authority (FSMA).
The most important event this year is undoubtedly the outbreak of the COVID-19 pandemic, which led to a closure of shops for a period of two months. The COVID-19 pandemic stimulated several retailers to accelerate the further digitisation of their sales in the short term. Retailers are not only opting for delivery by post, but also opt for a model in which customers place an order online that can picked up at the shop of their choice within a specified period of time. This model allows clear integration of online shopping with the physical shopping experience. In most cases, customers also buy items they see in shops.
Conversely, some online retailers open physical shops in prime locations. Recently, Coolblue opened a physical shop in the central shopping district in Brussels. This once again confirms the synergy between physical shops and online shopping.
Following the loosening of measures announced by the Belgian National Security Council, and more specifically allowing multiple-person shopping again, the number of visitors in the high streets has started to rise. However the shadow of COVID-19 still hangs over our economy and more specifically over the retail sector, partly because tourism is falling short.
Except for unexpected changes, such as large-scale bankruptcies of tenants, unforeseen increases in interest rates or new measures to combat the COVID-19 pandemic, Vastned Retail Belgium expects an EPRA earnings per share between € 2.35 and € 2.45 for financial year 2020. Due to the uncertain economic climate and the recent rise of the COVID-19 virus, Vastned Retail Belgium will communicate the dividend to be paid during the presentation of the annual results for 2020.
Despite the COVID-19 pandemic, Vastned Retail Belgium intends to pursue its strategy further in 2020 by focusing explicitly on the very best retail property in the most popular shopping streets in the major cities in Belgium. The focus of management remains on the timely collection of the rents and maintaining a good occupancy rate.
Veldstraat - Ghent
About Vastned Retail Belgium. Vastned Retail Belgium is a public regulated real estate company (RREC), the shares of which are listed on Euronext Brussels (VASTB). Vastned Retail Belgium invests exclusively in Belgian commercial real estate, more specifically in prime retail properties located on the best shopping streets in the major cities of Antwerp, Brussels, Ghent and Bruges. Furthermore, the real estate portfolio consists of inner-city shops outside of the premium cities, high-end retail parks and retail warehouses.
VASTNED RETAIL BELGIUM NV, a public regulated real estate company under Belgian law, Rudi Taelemans - CEO or Sven Bosman - Financial Director, tel. +32 3 361 05 90 www.vastned.be
This press release contains prospective information, forecasts, convictions and estimates prepared by Vastned Retail Belgium on the expected future performance of Vastned Retail Belgium and 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, tax, competitive along with environmental factors
| IN THOUSANDS € | 30.09.2020 | 30.09.2019 |
|---|---|---|
| Rental income | 12,787 | 14,517 |
| Rental-related expenses | -141 | -5 |
| NET RENTAL INCOME | 12,646 | 14,512 |
| Other rental-related income and expenses | 64 | 41 |
| PROPERTY RESULT | 12,710 | 14,553 |
| Technical costs | -503 | -203 |
| Commercial costs | -103 | -226 |
| Charges and taxes on unlet properties | -112 | -97 |
| Property management costs | -689 | -691 |
| Other property charges | -39 | -4 |
| Property charges | -1,446 | -1,221 |
| OPERATING PROPERTY RESULT | 11,264 | 13,332 |
| General expenses | -945 | -924 |
| Other operating income and expenses | 6 | 4 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 10,325 | 12,412 |
| Result on disposal of investment properties | 0 | -154 |
| Changes in fair value of investment properties | -16,792 | -8,823 |
| Other result on portfolio | -515 | 35 |
| OPERATING RESULT | -6,982 | 3,470 |
| Financial income | 17 | 4 |
| Net interest charges | -1,272 | -1,339 |
| Other financial charges | -2 | -1 |
| Changes in fair value of financial instruments | 222 | -588 |
| Financial result | -1,035 | -1,924 |
| RESULT BEFORE TAXES | -8,017 | 1,516 |
| Taxes | 3 | -30 |
| NET RESULT | -8,014 | 1,516 |
| IN THOUSANDS € | 30.09.2020 | 30.09.2019 |
|---|---|---|
| Note: | ||
| EPRA earnings | 9,085 | 11,045 |
| Result on portfolio | -17,307 | -8,942 |
| Changes in fair value of financial instruments and other non-distributable elements | 208 | -587 |
| Attributable to: | ||
| Shareholders of the parent company | -8,014 | 1,516 |
| Non-controlling interests | 0 | 0 |
| INFORMATION PER SHARE | 30.09.2020 | 30.09.2019 |
|---|---|---|
| Number of shares entitled to dividend | 5,078,525 | 5,078,525 |
| NET RESULT (€) | -1.58 | 0.30 |
| Diluted net result (€) | -1.58 | 0.30 |
| EPRA earnings (€) | 1.79 | 2.17 |
| IN THOUSANDS € | 30.09.2020 | 30.09.2019 |
|---|---|---|
| NET RESULT | -8,014 | 1,516 |
| 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 | -8,014 | 1,516 |
| Attributable to: | ||
| Shareholders of the parent company | -8,014 | 1,516 |
| Non-controlling interests | 0 | 0 |
PRESS RELEASE ANTWERP, 22 OCTOBER 2020
| ASSETS IN THOUSANDS € | 30.09.2020 | 31.12.2019 |
|---|---|---|
| Non-current assets | 344,995 | 361,630 |
| Intangible assets | 196 | 209 |
| Investment properties | 344,191 | 360,752 |
| Other tangible assets | 605 | 666 |
| Trade receivables and other non-current assets | 3 | 3 |
| Current assets | 5,037 | 1,685 |
| Asset held for sale | 0 | 0 |
| Trade receivables6 | 3,279 | 651 |
| Tax receivables and other current assets | 0 | 0 |
| Cash and cash equivalents | 694 | 554 |
| Deferred charges and accrued income | 1,064 | 480 |
| TOTAL ASSETS | 350,032 | 363,315 |
| SHAREHOLDERS' EQUITY AND LIABILITIES IN THOUSANDS € | 30.09.2020 | 31.12.2019 |
|---|---|---|
| Shareholders' equity | 235,543 | 258,285 |
| Shareholders' equity attributable to the shareholders of the parent company | 235,543 | 258,285 |
| Share capital | 97,213 | 97,213 |
| Share premium | 4,183 | 4,183 |
| Reserves | 142,161 | 152,572 |
| Net result of the financial year | -8,014 | 4,317 |
| Non-controlling interests | 0 | 0 |
| Liabilities | 114,489 | 105,030 |
| Non-current liabilities | 102,757 | 96,362 |
| Non-current financial debts Credit institutions |
100,094 99,134 |
93,405 92,454 |
| Financial Leasing | 960 | 951 |
| Other non-current financial liabilities | 2,157 | 2,379 |
| Other non-current liabilities | 159 | 151 |
| Deferred tax - liabilities | 347 | 427 |
| Current liabilities | 11,732 | 8,668 |
| Provisions | 269 | 269 |
| Current financial debts | 5,738 | 6,104 |
| Credit institutions | 5,700 | 5,950 |
| Financial Leasing | 38 | 154 |
| Trade debts and other current debts | 1,819 | 953 |
| Other current liabilities | 551 | 603 |
| Deferred income and accrued charges6 | 3,355 | 739 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 350,032 | 363,315 |
6 The increase in trade receivables and deferred income and accrued charges (liabilities) is caused. by the implementation of a new accounting system and the accompanying change in the process by which rental invoices are recognized at the date of creation of the rent invoices, in other words, prior to the period to which the invoice relates.
Generaal Lemanstraat 74 2600 Berchem - Antwerp T +32 3 361 05 90 [email protected]
WWW.VASTNED.BE
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