Earnings Release • Oct 25, 2018
Earnings Release
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REGULATED INFORMATION / EMBARGO UNTIL 25 OCTOBER 2018, 6.00 PM ANTWERP, 25 OCTOBER 2018
1 With unchanged composition of the real estate portfolio compared with 31 December 2017.
2 In accordance with the issued guidelines of the European Securities and Markets Authority (ESMA), which are applicable as of 3 July 2016, the Alternative Performance Measures (APM) used by Vastned Retail Belgium are included. The definitions, the use and the related reconciliation tables are included in the chapter "Alternative Performance Measures" of the Annual Report 2017 and also on the website www.vastned.be there is a separate Lexicon available with regard to these APM's. A consequence of these guidelines is that the term used prior to this, "operating distributable result", is no longer usable and has been changed to "EPRA result". However, with regard to content there is no difference from "operating distributable result", the term used previously.
As at 30 September 2018, 59% of the real estate portfolio of Vastned Retail Belgium consisted of core city assets, i.e. prime retail properties located on the best shopping streets of the major cities Antwerp, Brussels, Ghent and Bruges (59% as at 31 December 2017). 41% of the portfolio consists of mixed
retail locations, i.e. inner-city shops outside the premium cities, retail parks and retail warehouses (41% as at 31 December 2017).
| REAL ESTATE PORTFOLIO | 30.09.2018 | 31.12.2017 | 30.09.2017 |
|---|---|---|---|
| Fair value of investment properties (€ 000) | 375.480 | 378.195 | 374.923 |
| Investment value of investment properties (€ 000) | 384.867 | 387.650 | 384.296 |
| Total leasable space (m²) | 89.730 | 89.877 | 89.594 |
As at 30 September 2018, the fair value of the investment properties of Vastned Retail Belgium amounted to € 375 million (€ 378 million as at 31 December 2017). The € 3 million decrease during the first nine months of 2018 primarily follows the decrease in the fair value of the existing real estate portfolio. The fair value of the core city assets decreased by
The prominent redevelopment and thorough restoration of a core city asset in the historic city centre of Ghent, which started at the end of March 2017, has been completed in the meantime. The existing retail property at Zonnestraat 10 in Ghent was demolished and rebuild as an up-to-date retail premises with two apartments.
In the meantime, the commercial premises have been taken up by the women's clothing brand YAYA and opened on 9 March 2018. A lease promise for the residential apartments was signed at the beginning of October 2018 and they were provisionally delivered at the end of September 2018. Commencement of the lease is planned as from 1 November 2018.
0.8% among others as a result of decreased estimated rental values and slightly higher yields in certain shopping streets of certain cities. The fair value of the mixed retail locations decreased also by 0.5% that is mainly attributable to a decrease in the estimated rental values in the secondary cities.
The property, located at Veldstraat 81 in the historic centre of Ghent, was thoroughly renovated after the last tenant left. This in-depth renovation involved among other things removing differences in level in the retail space and replacing the existing shopfront with a state-of-the-art shopfront offering a nice height. These works have significantly improved the property's appearance and visibility.
This redevelopment involved an investment amount of approximately € 0.3 million. Delivery took place in the second quarter of 2018. There are currently contacts with interested parties, but these have not yet resulted in a signed lease agreement.
In the building located at Bruul 40-42 in Mechelen, a retail unit has been created along Borzestraat by breaking out the existing interior walls and creating a new shopfront with a nice free height.
Delivery of this new retail unit took place in the second quarter of 2018. This redevelopment involved an investment amount of approximately € 0.1 million. A lease agreement was signed with Magma - a renewed restaurant formula - and that lease will start on 1 November 2018.
The renovation of five apartments located at Leysstraat 28-30 and Leysstraat 17 in the centre of Antwerp began in the first quarter of 2018. It is estimated that this redevelopment will involve an investment amount of approximately € 0.4 million. Four apartments have been completed in the meantime, one of which has already been let. Visits with interested tenants are currently taking place for the other apartments. In the meantime the last apartment is being renovated with delivery of that apartment expected in the first quarter of 2019.
Antwerp - Leysstraat Antwerp - Leysstraat
| OCCUPANCY RATE (EXCLUDING BUILDINGS UNDERGOING RENOVATION) | 30.09.2018 | 31.12.2017 |
|---|---|---|
| Occupancy rate core city assets | 97% | 100% |
| Occupancy rate mixed retail locations | 98% | 98% |
| Occupancy rate of the real estate portfolio | 98% | 99% |
The occupancy rate for the real estate portfolio amounted to 98% as at 30 September 2018, which is a decrease of 1% compared to 31 December 2017. The occupancy rate for the core city assets decreased to 97% compared to 100% as at year-end 2017. This decrease can be explained by the vacant unit on Veldstraat in Ghent and the apartments in Antwerp,
all of which were recently renovated. Vastned Retail Belgium expects to be able to conclude rental agreements for these units in the short term. The occupancy rate of the mixed retail locations (98%) remained stable compared to 31 December 2017.
3 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.
| IN THOUSANDS € | 30.09.2018 | 30.09.2017 |
|---|---|---|
| Rental income | 14.486 | 14.223 |
| Rental-related expenses | -102 | -100 |
| Property management costs and income | 62 | 45 |
| PROPERTY RESULT | 14.446 | 14.168 |
| Property charges | -1.280 | -1.356 |
| General costs and other operating income and costs | -1.020 | -774 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 12.146 | 12.038 |
| Result on disposal of investment properties | 0 | -21 |
| Changes in fair value of investment properties | -3.954 | 17.852 |
| Other result on portfolio | 214 | -312 |
| OPERATING RESULT | 8.406 | 29.557 |
| Financial result (excl. changes in fair value - IAS 39) | -1.305 | -2.741 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | 206 | 1.408 |
| Taxes | -46 | -235 |
| NET RESULT | 7.261 | 27.989 |
| Note: | ||
| EPRA result | 10.750 | 9.059 |
| Result on portfolio | -3.739 | 17.520 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
250 | 1.410 |
The rental income of Vastned Retail Belgium in the first nine months of 2018 amounted to € 14.5 million (€ 14.2 million). The € 0.3 million increase is mainly attributable to the acquisition of three core city assets in the centre of Antwerp in July 2017, to new lettings contracted in the course of 2017, lease renewals carried out and the indexation of existing lease agreements. Furthermore, a one-off indemnity payment was received from a tenant who left his premises before the contractual break.
The real estate costs amounted to € 1.3 million (€ 1.4 million) and decreased by € 0.1 million due to a decrease of the commercial expenses, among others including those related to commissions, lawyers' fees and other consultancy fees. The general expenses amounted to € 1.0 million (€ 0.8 million) and increased by € 0.2 million compared to the first nine months of previous year. This increase can be explained by some one-off consultancy costs in the context of the takeover bid that was issued by the majority shareholder as well as by an increase in the interim personnel costs to maintain continuity during the absence of 2 full-time employees.
The changes in the fair value of the investment properties are negative in the first nine months and amount to € -4.0 million (€ 17.9 million). The decrease in the fair value of the investment properties is mainly attributable to a decrease in the estimated rental values.
The financial result (excl. changes in the fair value of financial assets and liabilities (ineffective hedges - IAS 39)) amounted to € -1.3 million for the first nine months of 2018 (€ -2.7 million), an increase by € 1.4 million compared to the same period in 2017, mainly due to a decrease in the average interest rates as a result of the refinancing implemented in 2017. The result as at 30 September 2017 also included the costs for settling two IRS-type interest rate hedging contracts for an amount of € 0.6 million. This cost was processed via the result on portfolio in the last quarter of 2017. Taking this into account, the financial result as at 30 September 2017 would have amounted to € -2.1 million. This means that the financial result has actually improved by € 0.8 million compared to the same period last year due to lower interest rates
The average interest rate for financing amounts to 1.7%, including bank margins for the first nine months of 2018 (3.8%). The average interest rate, excluding the one-off early termination fee and the cost of unwinding of the interest rate swaps as part of the refinancing of the loan portfolio, amounts to 2.7% in the first nine months of 2017 instead of 3.8%.
The changes in the fair value of financial assets and liabilities (ineffective hedges - IAS 39) in the first nine months of 2018 include the decrease of the negative market value of the interest rate swaps which, in line with IAS 39 - Financial instruments: Recognition and Measurement, cannot be classified as cash flow hedging instruments, in the amount of € 0.2 million (€ 1.4 million).
The net result of Vastned Retail Belgium for the first nine months of 2018 amounts to € 7.3 million (€ 28.0 million) and can be divided into:
The EPRA result per share therefore amounts to € 2.12 for the first nine months of 2018, or an increase of 34 eurocent compared to the same period last year (€ 1.78 per share).
| KEY FIGURES PER SHARE | 30.09.2018 | 31.12.2017 | 30.09.2017 |
|---|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 | 5.078.525 |
| Net result (9 months/1 year/9 months) (€) | 1,43 | 6,83 | 5,51 |
| EPRA result (9 months/1 year/9 months) (€) | 2,12 | 2,62 | 1,78 |
| Net value (fair value) (€) | 52,86 | 54,05 | 52,74 |
| Net value (investment value) (€) | 54,75 | 55,83 | 54,52 |
| Net asset value EPRA (€) | 53,30 | 54,52 | 53,15 |
| Share price on closing date (€) | 47,30 | 45,00 | 44,99 |
| Premium (+)/Discount (-) with regard to fair net value (%) | -11% | -17% | -15% |
As at 30 September 2018, the net value (fair value) of the share was € 52.86 (€ 54.05 as at 31 December 2017). As the share price of Vastned Retail Belgium was € 47.30 on 30 September 2018, the share was quoted on 30 September 2018 at a discount of 11% compared to the net value (fair value).
The debt ratio of the company amounted to 28% as at 30 September 2018 and has thus increased by 1% in the first nine months of 2018 (27% as at 31 December 2017).
During the third quarter of 2018, Vastned Retail Belgium was able to extend the duration of its revolving credit facilities by one year, at the same conditions as those entered into upon the refinancing in 2017.
As at 30 September 2018, 92% of the credit lines were longterm financing, with an average remaining term of 5.1 years. 8% of the credit lines are short-term financing, 100% of which consists of financing with an unlimited duration.
As at 30 September 2018, 78% of the withdrawn credit facilities have a fixed interest rate, or the rate was fixed by means of interest rate swaps. The interest rates on the credit facilities of the company are fixed for a remaining duration of 4.8 years. As at 30 September 2018, Vastned Retail Belgium has € 21.6 million of available non-withdrawn credit lines at its financial institutions to cover the fluctuations of cash needs and for financing future investments.
Mechelen - Bruul
The demand of retailers for available shop space remains below the annual average. This will increase vacancy rates, especially in the smaller cities. There is too little inflow of new international retailers, which means there are vacancies here and there even in the best streets. Retailer margins remain under pressure, among other things because of investments in e-commerce.
Top cities such as Antwerp, Brussels and Ghent must ensure their accessibility for interested shoppers. The hospitality sector continues to develop with nice formats that provide the necessary "look & feel" in our shopping streets.
Vastned Retail Belgium intends to pursue its strategy further in 2018 by focusing more explicitly on premium quality retail locations and retail parks. The company will continue to work towards a clear predominance of core city assets, i.e. the very best retail property in the most popular shopping streets in the major cities. The primary focus is on the acquisition of retail property in the Antwerp city center, and additionally in other major cities. By focusing on a limited number of city centers, the market knowledge of the asset team of the
company grows, thereby allowing for a good assessment of opportunities. New investments will, to a considerable extent depend on further developments on the retail property market. The supply of top-sellers in the "core cities" is thin. By maintaining close contacts with all players on the retail property market, Vastned Retail Belgium has a good insight into available investment objects.
With the current high-quality portfolio of the real estate company, divestments are not a priority within the strategy. Nevertheless, opportunistic divestments of non-strategic assets are not excluded.
Except for unexpected changes, such as large-scale bankruptcies of tenants or unforeseen increases in interest rates, Vastned Retail Belgium estimates that it will be able to offer its shareholders a gross dividend per share between € 2.75 and € 2.80 for the financial year 2018 (compared to € 2.62 for the financial year 2017). This represents a gross dividend yield of approximately 5.85%, based on the closing share price as at 30 September 2018 (€ 47.30).
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 core city assets (prime retail properties located on the best shopping streets in the major cities Antwerp, Brussels, Ghent and Bruges), and mixed retail locations (inner-city shops outside of the premium cities, high-end retail parks and retail warehouses). The RREC intends to achieve a 75% investment ratio in core city assets in due course.
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. Vastned Retail Belgium cannot guarantee that the assumptions underlying the prospective information are free of misstatements.
VASTNED RETAIL BELGIUM NV, a public regulated real estate company under Belgian law, Taco de Groot, Rudi Taelemans or Reinier Walta, tel. + 32 3 361 05 90, www.vastned.be
| IN THOUSANDS € | 30.09.2018 | 30.09.2017 |
|---|---|---|
| Rental income | 14.486 | 14.223 |
| Rental-related expenses | -102 | -100 |
| NET RENTAL INCOME | 14.384 | 14.123 |
| Other rental-related income and expenses | 62 | 45 |
| PROPERTY RESULT | 14.446 | 14.168 |
| Technical costs | -356 | -316 |
| Commercial costs | -100 | -225 |
| Charges and taxes on unlet properties | -41 | -22 |
| Property management costs | -767 | -773 |
| Other property charges | -16 | -18 |
| PROPERTY CHARGES | -1.280 | -1.356 |
| OPERATING PROPERTY RESULT | 13.166 | 12.812 |
| General expenses | -1.040 | -792 |
| Other operating income and expenses | 20 | 18 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 12.146 | 12.038 |
| Result on disposal of investment properties | 0 | -21 |
| Changes in fair value of investment properties | -3.954 | 17.852 |
| Other result on portfolio | 214 | -312 |
| OPERATING RESULT | 8.406 | 29.558 |
| Financial income | 10 | 6 |
| Net interest charges | -1.314 | -2.744 |
| Other financial charges | -1 | -3 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | 206 | 1.408 |
| FINANCIAL RESULT | -1.099 | -1.334 |
| RESULT BEFORE TAXES | 7.307 | 28.224 |
| TAXES | -46 | -235 |
| NET RESULT | 7.261 | 27.989 |
| IN THOUSANDS € | 30.09.2018 | 30.09.2017 |
|---|---|---|
| Note: | ||
| EPRA result | 10.750 | 9.059 |
| Result on portfolio | -3.739 | 17.520 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-dis tributable elements |
250 | 1.410 |
| Attributable to: | ||
| Shareholders of the parent company | 7.261 | 27.989 |
| Non-controlling interests | 0 | 0 |
| RESULT PER SHARE | 30.09.2018 | 30.09.2017 |
|---|---|---|
| Number of share entitled to dividend | 5.078.525 | 5.078.525 |
| Net result (€) | 1,43 | 5,51 |
| Diluted net result (€) | 1,43 | 5,51 |
| EPRA result (€) | 2,12 | 1,78 |
| IN THOUSANDS € | 30.09.2018 | 30.09.2017 |
|---|---|---|
| NET RESULT | 7.261 | 27.989 |
| 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 | 7.261 | 27.989 |
| Attributable to: | ||
| Shareholders of the parent company | 7.261 | 27.989 |
| Non-controlling interests | 0 | 0 |
| ASSETS IN THOUSANDS € | 30.09.2018 | 31.12.2017 |
|---|---|---|
| Non-current assets | 376.022 | 378.759 |
| Intangible assets | 15 | 15 |
| Investment properties | 375.480 | 378.195 |
| Other tangible assets | 524 | 546 |
| Trade receivables and other non-current assets | 3 | 3 |
| Current assets | 2.234 | 1.907 |
| Trade receivables | 427 | 373 |
| Tax receivables and other current assets | 0 | 151 |
| Cash and cash equivalents | 656 | 367 |
| Deferred charges and accrued income | 1.151 | 1.016 |
| TOTAL ASSETS | 378.256 | 380.666 |
| SHAREHOLDERS' EQUITY AND LIABILITIES IN THOUSANDS € | 30.09.2018 | 31.12.2017 |
|---|---|---|
| Shareholders' equity | 268.463 | 274.508 |
| Shareholders' equity attributable to the shareholders of the parent company | 268.463 | 274.508 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 159.806 | 138.443 |
| Net result of the financial year | 7.261 | 34.669 |
| Non-controlling interests | 0 | 0 |
| Liabilities | 109.793 | 106.158 |
| Non-current liabilities | 100.446 | 98.146 |
| Non-current financial debts | 98.125 | 95.625 |
| Credit institutions | 98.125 | 95.625 |
| Other non-current financial liabilities | 1.674 | 1.880 |
| Other non-current liabilities | 122 | 145 |
| Deferred tax - liabilities | 525 | 496 |
| Current liabilities | 9.347 | 8.012 |
| Provisions | 269 | 269 |
| Current financial debts | 5.250 | 4.400 |
| Credit institutions | 5.250 | 4.400 |
| Trade debts and other current debts | 2.328 | 2.107 |
| Other current liabilities | 583 | 625 |
| Deferred income and accrued charges | 917 | 611 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 378.256 | 380.666 |
Generaal Lemanstraat 74 2600 Berchem - Antwerp T +32 3 361 05 90 [email protected]
WWW.VASTNED.BE
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