Earnings Release • Jul 30, 2018
Earnings Release
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REGULATED INFORMATION / UNDER EMBARGO UNTIL 30 JULY 2018, 18U00 ANTWERP, 30 JULY 2018
1 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 2017 and a separate Lexicon regarding these APMs is available on the website www.vastned.be. A consequence of these guidelines is that the term used prior to this, "operating distributable result", was no longer usable and has been changed to "EPRA earnings". However, with regard to content there is no difference with "operating distributable result", the term used previously.
2 With unchanged composition of the real estate portfolio compared with 31 December 2017.
| 1. | Interim management report for the first semester of 2018 |
p. 3 |
|---|---|---|
| 1.1. | Operational result | p. 3 |
| 1.2. | Rental activities | p. 3 |
| 1.3. | Redevelopment | p. 4 |
| 1.4. | Composition and evolution of the real estate portfolio as at 30 June 2018 | p. 4 |
| 1.5. | Market situation of Belgian retail real estate in 2018 | p. 7 |
| 1.6. | Analysis of the results | p. 8 |
| 1.7. | Financial structure as at 30 June 2018 | p. 9 |
| 1.8. | Takeover bid by Vastned Retail N.V. | p. 11 |
| 1.9. | Risks for the remaining months of 2018 | p. 11 |
| 1.10. | Outlook for 2018 | p. 11 |
| 2. | Consolidated condensed half-yearly figures |
p. 13 |
| 2.1. | Condensed consolidated income statement | p. 13 |
| 2.2. | Condensed consolidated comprehensive income | p. 14 |
| 2.3. | Condensed consolidated balance sheet | p. 15 |
| 2.4. | Condensed consolidated cash flow statement | p. 16 |
| 2.5. | Condensed statement of changes in the consolidated shareholders' equity | p. 17 |
| 2.6. | Notes to the consolidated condensed half-yearly figures | p. 18 |
| 2.7. | Statutory auditor's report | p. 25 |
| 2.8. | Financial calendar | p. 26 |
In the first semester of 2018, Vastned Retail Belgium remained true to its investment strategy of focusing on core city assets. These are the prime retail properties located on the best shopping streets of the major cities of Antwerp, Brussels, Ghent and Bruges. Furthermore, the real estate portfolio consists of mixed retail locations, i.e. city centre shops outside the premium cities, retail parks and retail warehouses.
In the first semester of 2018 there was a slight increase in rental income compared to the first semester of 2017, with a relatively unchanged composition of the real estate portfolio.
The EPRA earnings of Vastned Retail Belgium increased in the first semester of 2018 and amounted to € 7,0 million compared to € 6,3 million in the first semester of 2017. This increase of € 0,7 million is primarily due to the refinancing of the total loan portfolio as at 31/07/2017 on better terms. (0,6 million)
This represents EPRA earnings of € 1,38 per share compared to € 1,24 in the first semester of the previous financial year.
Mechelen - Bruul
In the first semester of 2018, Vastned Retail Belgium completed 10 rental transactions, 4 of which were in core city assets, which represent approximately 6% of the total annual rental income.
In the first semester of 2018, 4 rental transactions were concluded with new tenants for a total rental volume of € 0,2 million on an annual basis. This concerns 2 leases by splitting up an existing retail property, 1 lease following the departure of the previous tenant and 1 lease of an unoccupied unit. These 4 lease agreements represent roughly 1% of the company's total rental income. The new rent for these lease agreements is on average 9% lower than the rent for the previous rental agreements. This decrease in rental price represents only € 21.000, or 0,1% of the total annual rental income.
This decrease is mainly due to the re-leasing of a shop already leased where the current rent was brought down to the level of the current market rent.
Vastned Retail Belgium renewed 6 lease agreements with existing tenants in the first semester of 2018 for a total annual rental volume of € 1,1 million. These 6 lease agreements represent roughly 5% of the company's total rental income. On average, the new rental price for these lease agreements is 2% higher than the rent of the previous rental agreements.
| OCCUPANCY RATE (EXCLUDING BUILDINGS UNDERGOING RENOVATION) | 30.06.2018 | 31.12.2017 | 30.06.2017 |
|---|---|---|---|
| Core city assets | 98% | 100% | 99% |
| Mixed retail assets | 97% | 98% | 98% |
| Occupancy rate of the real estate portfolio | 97% | 99% | 98% |
The occupancy rate3 of the real estate portfolio as at 30 June 2018 was 97%, compared to 99% as at 31 December 2017. The fall in the occupancy rate is largely due to the completion of the premises located in Veldstraat, Ghent, where renovation
work was carried out to increase the leasability of the premises. Vastned Retail Belgium expects to lease these premises shortly.
The redevelopment of this building, which started at the end of March 2017, into state-of-the-art retail premises and two residential apartments is gradually being completed.
In the meantime, the commercial premises have been taken up by the women's clothing brand YAYA and opened on 9 March 2018. The apartments above are expected to be completed in the course of the third quarter of 2018.
Ghent - Zonnestraat
As at 30 June 2018, 59% of the real estate portfolio of Vastned Retail Belgium consisted of core city assets, i.e. prime retail properties located in the best shopping streets of the major cities of Antwerp, Brussels, Ghent and Bruges (59% as at 31 December 2017). 41% of the portfolio consisted of mixed retail locations, i.e. city centre shops outside the premium cities, retail parks and retail warehouses (41% as at 31 December 2017).
As at 30 June 2018, the fair value of the investment properties amounted to € 379 million (€ 378 million as at 31 December 2017). This slight increase is mainly due to the CAPEX absorption of the premises located in Ghent, Veldstraat and Zonnestraat.
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.
| REAL ESTATE PORTFOLIO | 30.06.2018 | 31.12.2017 | 30.06.2017 |
|---|---|---|---|
| Fair value of investment properties (in thousands €) | 378.555 | 378.195 | 364.263 |
| Investment value of investment properties (in thousands €) | 388.019 | 387.650 | 373.369 |
| Total leasable space (m²) | 89.868 | 89.877 | 88.684 |
The average yield in the real estate company's portfolio is 5.41% in the first semester of 2018 and has increased slightly compared to 31 December 2017 (5,28% as at 31 December 2017). This increase is largely due to the completion of the 2 properties in the city centre of Ghent. As at 30 June 2018, the average yield in the Vastned Retail Belgium portfolio was 4,66% for its core city assets (4,47% as at 31 December 2017) and 6,49% for its mixed retail locations (6,45% as at 31 December 2017).
Brussels - Elsenesteenweg Antwerp - Steenhouwersvest
Vastned Retail Belgium focuses on a strategy based on commercial real estate, with respect for the criteria of risk spread in the real estate portfolio, relating to the type of building as well as to the geographic spread and the nature of the tenants.
As at 30 June 2018 this risk spread was as follows:
Vastned Retail Belgium intends to achieve a 75% investment ratio in core city assets in Belgium in due course. The company believes that these top locations guarantee the most
authentic and unique experience and also provide the most certainty as an investment object in the long run.
PRESS RELEASE ANTWERP, 30 JULY 2018
| Property expert | Fair value of investment properties (in thousands €) |
|---|---|
| Cushman & Wakefield | 208.772 |
| CB Richard Ellis | 169.783 |
| Total | 378.555 |
Rental activity during the first semester was below the annual average with a take up of 178.395 m².
Rents are under pressure in all segments (high street shops, shopping centres and out of town retail). Retailers' margins are under pressure and they are trying to renegotiate current rents or to link them to realised turnover. However, the prime rent for shops of 150 m² in Brussels and Antwerp remains stable. Rents for large shops are falling, even in top cities such as Antwerp and Brussels.
In the short and medium term, we expect this trend to continue and that market rents in commercial real estate will experience stagnation to slight decline.
Antwerp - Meir
During the first semester of 2018, the investment volume amounted to €1.300 million, which is exceptionally high. This was mainly due to the sale of Dockx Brussels, Woluwe Shopping Centre in Brussels and Rive Gauche in Charleroi. These 3 shopping centres were sold to international institutional investors.
The rental income of Vastned Retail Belgium amounted to € 9,7 million in the first semester of 2018 (€ 9,5 million). The increase of € 0,2 million is mainly due to the indexation of the existing rental agreements and rent Steenhouwersvest.
The real estate costs amount to € 0,9 million (€ 1,0 million) and decreased by € 0,1 million mainly due to a decrease in commercial costs, specifically those relating to commissions and lawyers' fees. General costs amount to € 0,8 million (€ 0,6 million) and have increased by € 0,2 million compared to the first semester of 2017 as a result of additional (interim) personnel costs for continuity during 2 interruptions of fixed FTEs and an increase in consultancy costs relating to the takeover bid by the majority shareholder.
The fair value of the real estate portfolio decreased slightly in the first semester of 2018. The decrease in the fair value of the investment properties amounted to € 0,7 million. (increase € 13,7 million).
The financial result (excl. changes in the fair value of financial assets and liabilities (ineffective hedges - IAS 39)) for the first semester of 2018 amounted to € 0,9 million (€ 1,5 million). The fall of 0,6 million is the result of refinancing of the total loan portfolio on better terms as at 31/07/2017.
Investment returns are no longer decreasing and are expected to increase slightly in the future, in line with bond interest.
The average interest rate for financing amounted to 1,72%, including bank margins, for the first semester of 2018 (3,1%).
Changes in the fair value of financial assets and liabilities (ineffective hedges - IAS 39) in the first semester of 2017 include the decrease in the negative market value of the interest rate swaps that, in accordance with IAS 39, cannot be classified as a cash flow hedging instrument, for an amount of € 0,9 million. The negative effect for the first semester of 2018 amounts to - € 68K.
The net result of Vastned Retail Belgium for the first semester of 2018 amounted to € 6,3 million (€ 20,7 million) and can be split up into:
For the first semester of 2018, this means EPRA earnings of € 1,38 (€ 1,24) per share, an increase of approximately 11%.
| KEY FIGURES PER SHARE | 30.06.2018 | 31.12.2017 | 30.06.2017 |
|---|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 | 5.078.525 |
| Net result (6 months/1 year/6 months) (€) | 1,25 | 6,83 | 4,08 |
| EPRA earnings (6 months/1 year/6 months) (€) | 1,38 | 2,62 | 1,24 |
| Net value (fair value) (€) | 52,68 | 54,05 | 51,31 |
| Net value (investment value) (€) | 54,57 | 55,83 | 53,09 |
| Share price on closing date (€) | 49,5 | 45 | 46,26 |
| Premium (+) / discount (-) to net value (fair value) (%) | -6% | -17% | -10% |
5 The figures between brackets are the comparative figures for the first semester of 2017.
As at 30 June 2018, the net value (fair value) of the share was € 52,68 (€ 54,05 as at 31 December 2017). Given that the share price as at 30 June 2018 was € 49,50, the share of Vastned Retail Belgium (VASTB) is quoted at a discount of 6% with respect to this net value (fair value). The debt ratio of the RREC amounted to 29% as at 30 June 2018 (27% as at 31 December 2017). The increase stems from the dividend payment for financial year 2017 in May 2018 for an amount of € 13,3 million.
| EPRA - KEY FIGURES* | 30.06.2018 | 31.12.2017 | 30.06.2017 |
|---|---|---|---|
| EPRA Earnings per share (€) | 1,38 | 2,62 | 1,24 |
| EPRA NAV per share (€) | 53,17 | 54,52 | 51,79 |
| EPRA NNNAV per share (€) | 52,68 | 54,05 | 51,31 |
| EPRA Net Initial Yield (NIY) (%) | 4,6% | 4,6% | 4,6% |
| EPRA Topped-up NIY (%) | 4,7% | 4,7% | 4,8% |
| EPRA Vacancy rate (%) | 3,1% | 0,9% | 1,6% |
| EPRA Cost Ratio (including direct vacancy costs) | 18,0% | 14,7% | 17,3% |
| EPRA Cost Ratio (excluding direct vacancy costs) | 17,7% | 14,7% | 16,8% |
Vastned Retail Belgium has a conservative financial structure as at 30 June 2018 allowing it to continue to carry out its activities in 2018. In the first semester of 2017, Vastned Retail Belgium began refinancing its entire loans portfolio. This refinancing had its impact in the course of the third quarter of 2017. The result of this refinancing is an extension of the term of the credit lines, a good spread of maturity dates and a drop in average interest rates.
The most important characteristics of the financial structure as at 30 June 2018 are:
92% Long-term credit facilities
Short-term credit facilities, of which 100% with limited maturity
* The statutory auditor has verified whether the "EPRA earnings", "EPRA NAV" and "EPRA NNNAV" ratios were calculated according to the EPRA BPR definitions of December 2014, and whether the data used for the calculation of these ratios correspond with the accounting data of the consolidated financial statements..
Brussels - Elsenesteenweg
On 12 April 2018, Vastned Retail N.V., which directly and indirectly holds 65.49% of the shares in Vastned Retail Belgium, issued a voluntary and conditional takeover bid on all shares in Vastned Retail Belgium that are not yet in its possession. One of the conditions of the offer was that shareholders had to offer at least 90% of the free float during the only accep-
tance period which ran from 2 May through 1 June 2018. During this period, 1.2 million shares were contributed to the takeover bid, or 70% of the free float. This means that the minimum acceptance percentage of 90% has not been achieved and the takeover bid will not proceed any further.
Vastned Retail Belgium estimates the main risk factors and uncertainties for the remaining months of the 2018 financial year as follows:
Given the nature of the buildings which are mainly let to national and international retailers, the real estate portfolio is to a certain degree sensitive to the economic situation. However, in the short term no direct risks are recognised that could fundamentally influence the results of the 2018 financial year. Furthermore, there are clear and efficient internal control procedures within the company to limit this risk of default.
To a certain degree, the value of the investment properties of Vastned Retail Belgium is sensitive to the economic situation. In the current economic situation there is an increased risk of vacancy outside the absolute prime locations. This increased risk could lead to a decrease in the value of the real estate portfolio in the second half of 2018.
Due to financing with borrowed capital, the return generated by the company depends on changes in interest rates. To limit this risk an appropriate ratio between borrowed capital with a variable interest rate and borrowed capital with a fixed interest rate is pursued during the composition of the credit facilities portfolio. As at 30 June 2018, 75% of the utilised credit facilities portfolio had a fixed interest rate, or the rate was fixed by means of interest rate swaps. 25% of the credit facilities portfolio has a variable interest rate which is subject to (un)foreseen rises of the currently low interest rates.
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 e-commerce.
The supply of top-sellers in the "core cities" is thin. By maintaining close contacts with all players on the retail property market,
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 has a good insight into available investment objects.
Further growth in the premium segment can also be achieved by renovating and upgrading properties in the existing portfolio.
The redevelopment of the building at Zonnestraat 10 is gradually being completed. In the meantime, the commercial premises have been taken up by the women's clothing brand YAYA. The apartments above are expected to be completed in the course of the third quarter of 2018.
Brussels - Elsensesteenweg
With the current high-quality portfolio of the real estate company, divestments are not a priority within the strategy. Nevertheless, opportunistic divestments of non-core city assets - such as non-strategic mixed retail locations (i.e. city centre shops outside the premium cities, retail parks and retail warehouses) - are being considered
Based on the half-yearly results and the forecasts as at 30 June 2018, Vastned Retail Belgium expects to be able to propose to its shareholders a gross dividend per share of between € 2,70 and € 2,80 for the 2018 financial year (compared to € 2,62 for the 2017 financial year). Based on the closing price on 30 June 2018 (€ 49,50), this equates to a gross dividend yield of between 5,6% and 5,8%.
Ghent - Zonnestraat
| IN THOUSANDS € | 30.06.2018 | 30.06.2017 |
|---|---|---|
| Rental income | 9.672 | 9.460 |
| Rental-related expenses | -70 | -67 |
| NET RENTAL INCOME | 9.602 | 9.393 |
| Recovery of rental charges and taxes normally payable by tenants on let properties | 1.110 | 1.140 |
| Rental charges and taxes normally payable by tenants on let properties | -1.110 | -1.140 |
| Other rental-related income and expenses | 45 | 30 |
| PROPERTY RESULT | 9.647 | 9.423 |
| Technical costs | -260 | -210 |
| Commercial costs | -69 | -178 |
| Charges and taxes on unlet properties | -35 | -47 |
| Property management costs | -528 | -528 |
| Other property charges | -2 | -17 |
| Property charges | -894 | -980 |
| OPERATING PROPERTY RESULT | 8.753 | 8.443 |
| General costs | -820 | -634 |
| Other operating income and costs | 6 | 16 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 7.939 | 7.825 |
| Result on disposals of investment properties | 0 | -21 |
| Changes in fair value of investment properties | -742 | 13.705 |
| Other result on portfolio | 107 | -196 |
| OPERATING RESULT | 7.304 | 21.313 |
| Financial income | 10 | 4 |
| Net interest costs | -867 | -1.468 |
| Other financial charges | -2 | -2 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | -68 | 942 |
| Financial result | -927 | -524 |
| RESULT BEFORE TAXES | 6.377 | 20.789 |
| Taxes | -30 | -61 |
| NET RESULT | 6.347 | 20.728 |
| IN THOUSANDS € | 30.06.2018 | 30.06.2017 |
|---|---|---|
| NET INCOME | 6.347 | 20.728 |
| Note:: | ||
| EPRA earnings | 7.021 | 6.290 |
| Result on portfolio | -635 | 13.488 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
-39 | 950 |
| Attributable to: | ||
| Shareholders of the parent company | 6.347 | 20.728 |
| Minority interests | 0 | 0 |
| BALANCE SHEET INFORMATION PER SHARE | 30.06.2018 | 30.06.2017 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net result (€) | 1,25 | 4,08 |
| Diluted net result (€) | 1,25 | 4,08 |
| EPRA earnings (€) | 1,38 | 1,24 |
| IN THOUSANDS € | 30.06.2018 | 30.06.2017 |
|---|---|---|
| NET RESULT | 6.347 | 20.728 |
| 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 | 6.347 | 20.728 |
| Attributable to: | ||
| Shareholders of the parent company | 6.347 | 20.728 |
| Minority interests | 0 | 0 |
| ASSETS IN THOUSANDS € | 30.06.2018 | 31.12.2017 |
|---|---|---|
| Non-current assets | 379.079 | 378.759 |
| Intangible non-current assets | 17 | 15 |
| Investment properties | 378.555 | 378.195 |
| Other tangible non-current assets | 504 | 546 |
| Trade receivables and other non-current assets | 3 | 3 |
| Current assets | 2.907 | 1.907 |
| Assets held for sale | 0 | 0 |
| Trade receivables | 439 | 373 |
| Tax receivables and other current assets | 51 | 151 |
| Cash and cash equivalents | 617 | 367 |
| Deferred charges and accrued income | 1.800 | 1.016 |
| TOTAL ASSETS | 381.986 | 380.666 |
| SHAREHOLDERS' EQUITY AND LIABILITIES IN THOUSANDS € | 30.06.2018 | 31.12.2017 |
| Shareholders' equity | 267.548 | 274.508 |
| Shareholders' equity attributable to shareholders of the parent company | 267.548 | 274.508 |
| Share capital | 97.213 | 97.213 |
| Share premiums | 4.183 | 4.183 |
| Reserves | 159.805 | 138.443 |
| Net result of the financial year | 6.347 | 34.669 |
| Minority interests | 0 | 0 |
| Liabilities | 114.438 | 106.158 |
| Non-current liabilities | 100.740 | 98.146 |
| Non-current financial debts | 98.125 | 95.625 |
| Credit institutions | 98.125 | 95.625 |
| Other non-current financial liabilities | 1.949 | 1.880 |
| Other non-current liabilities | 147 | 145 |
| Deferred tax - liabilities | 519 | 496 |
| Current liabilities | 13.698 | 8.012 |
| Provisions | 269 | 269 |
| Current financial debts | 9.000 | 4.400 |
| Credit institutions | 9.000 | 4.400 |
| Other current financial debts | 0 | 0 |
| Trade debts and other current debts | 2.193 | 2.107 |
| Other current liabilities | 575 | 625 |
| Deferred charges and accrued income | 1.661 | 611 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 381.986 | 380.666 |
| IN THOUSANDS € | 30.06.2018 | 30.06.2017 |
|---|---|---|
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR | 367 | 320 |
| 1. Cash flow from operating activities | 7.635 | 5.909 |
| Operational result | 7.304 | 21.313 |
| Interest paid | -873 | -1.457 |
| Other non-operating elements | -90 | 883 |
| Adjustment of result for non-cash flow transactions | 879 | -14.509 |
| • Depreciations on intangible and other tangible fixed assets |
46 | 44 |
| • Income from disposal of investment properties |
0 | 21 |
| • Spread of rental discounts and benefits granted to tenants |
131 | -124 |
| • Changes in fair value of investment properties |
742 | -13.705 |
| • Other result on portfolio |
-107 | 196 |
| • Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) |
68 | -942 |
| Change in working capital | 415 | -320 |
| • Movements of assets |
231 | 551 |
| • Movements of liabilities |
184 | -871 |
| 2. Cash flow from investment activities | -1.131 | 80 |
| Acquisitions of intangible and other tangible fixed assets | -6 | -51 |
| Acquisitions of investment properties | 0 | 0 |
| Investments in existing investment properties | -1.116 | -400 |
| Income from disposal of investment properties | 0 | 541 |
| Prepaid investment invoices | -9 | -9 |
| 3. Cash flow from financing activities | -6.254 | -5.162 |
| Repayment of loans | 0 | 0 |
| Drawdown of loans | 7.100 | 7.250 |
| Resolution of IRS | 0 | 0 |
| Repayment of financial lease liabilities | 0 | 0 |
| Receipts from non-current liabilities as guarantee | 2 | 30 |
| Dividend paid | -13.356 | -12.442 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE SEMESTER | 617 | 1.147 |
| IN THOUSANDS € | Share capital |
Share premium |
Reserves | Net result of the financial year |
Minority interests |
Total sha reholders' equity |
|---|---|---|---|---|---|---|
| Balance sheet as at 31 December 2016 | 97.213 | 4.183 | 130.352 | 20.533 | 0 | 252.281 |
| Comprehensive income 2017 | 34.669 | 34.669 | ||||
| Transfer because of profit appropriation 2016: | ||||||
| Transfer from result on portfolio to reserves | 7.136 | -7.136 | 0 | |||
| Transfer of changes in fair value of financial assets and liabilities |
889 | -889 | 0 | |||
| Other changes | 66 | -66 | 0 | |||
| Dividends financial year 2016 | -12.442 | -12.442 | ||||
| Balance sheet as at 31 December 2017 | 97.213 | 4.183 | 138.443 | 34.669 | 0 | 274.508 |
| Comprehensive income of first semester 2018 | 6.347 | 6.347 | ||||
| Transfer because of profit appropriation 2017: | ||||||
| Transfer from result on portfolio to reserves | 20.003 | -20.003 | 0 | |||
| Transfer of changes in fair value of financial assets and liabilities |
885 | -885 | 0 | |||
| Other changes | 474 | -474 | 0 | |||
| Dividends financial year 2017 | -13.306 | -13.305 | ||||
| Balance sheet as at 30 June 2018 | 97.213 | 4.183 | 159.805 | 6.347 | 0 | 267.549 |
| BUSINESS SEGMENT | Core city assets | Mixed retail locations |
Corporate | TOTAL | ||||
|---|---|---|---|---|---|---|---|---|
| IN THOUSANDS € | 30.06.2018 | 30.06.2017 | 30.06.2018 | 30.06.2017 | 30.06.2018 | 30.06.2017 | 30.06.2018 | 30.06.2017 |
| Rental income | 4.907 | 4.736 | 4.764 | 4.724 | 9.672 | 9.460 | ||
| Rental-related expenses | 5 | 0 | -74 | -67 | -70 | -67 | ||
| Property management costs and income | 0 | 45 | 30 | 45 | 30 | |||
| PROPERTY RESULT | 4.912 | 4.736 | 4.735 | 4.687 | 9.647 | 9.423 | ||
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO |
4.366 | 4.169 | 4.312 | 4.198 | -740 | 7.939 | 7.825 | |
| Result on disposals of investment properties |
0 | 0 | 0 | -21 | 0 | -21 | ||
| Changes in fair value of investment properties |
-1.313 | 6.490 | 571 | 7.215 | -742 | 13.705 | ||
| Other result on portfolio | 55 | 36 | 53 | -232 | 107 | -196 | ||
| OPERATING RESULT OF THE SEGMENT |
3.108 | 10.695 | 4.936 | 11.160 | -740 | 7.304 | 21.313 | |
| Financial result | -927 | -927 | -524 | |||||
| Taxes | -30 | -30 | -61 | |||||
| NET RESULT | 3.108 | 10.695 | 4.936 | 11.160 | -1.697 | 6.347 | 20.728 |
| BUSINESS SEGMENT: KEY FIGURES | Core city assets | Mixed retail locations |
TOTAL | |||
|---|---|---|---|---|---|---|
| IN THOUSANDS € | 30.06.2018 | 30.06.2017 | 30.06.2018 | 30.06.2017 | 30.06.2018 | 30.06.2017 |
| Fair value of investment properties | 223.976 | 213.791 | 154.580 | 150.472 | 378.555 | 364.263 |
| Investments during the financial year | 1.002 | 3 | 101 | 397 | 1.103 | 400 |
| Divestments during the financial year (fair value) | 0 | 0 | 0 | -561 | 0 | -561 |
| Investment value of investment properties | 229.576 | 219.135 | 158.444 | 154.234 | 388.019 | 373.369 |
| Total leasable space (m²) | 24.535 | 23.634 | 65.333 | 65.050 | 89.868 | 88.684 |
| Occupancy rate (%) | 98% | 99% | 97% | 98% | 97% | 98% |
The condensed consolidated half-yearly figures are prepared on the basis of the principles of financial reporting in accordance with IAS 34 "Interim financial reporting". In these condensed half-yearly figures the same principles of financial information and calculation methods are used as those used for the consolidated annual accounts as at 31 December 2017.
The following amendments have no material impact on the presentation, explanation or results of the RREC:
IFRS 9 was published by the IASB in July 2014 and adopted by the EU in November 2016. IFRS 9 includes provisions about the classification and valuation of financial assets and financial liabilities, impairments of financial assets and general provisions of hedge accounting. IFRS 9 largely replaces IAS 39 - Financial instruments Recognition and Measurement.
Based on an analysis of Vastned Retail Belgium's situation as at 30 June 2018, IFRS 9 has no material impact on the consolidated financial statements.
IFRS 15 provides a unique and all-encompassing model of principles that an entity must apply for the accounting treatment of revenue arising from a contract with a customer. Upon entering into force, this new standard replaces both IAS 18 with respect to revenue from the sale of goods and the provision of services as well as IAS 11 with respect to projects in progress commissioned by third parties and the related interpretations.
Based on an analysis of Vastned Retail Belgium's situation as at 30 June 2018, IFRS 15 has no material impact on the consolidated financial statements.
IFRS 16 provides a comprehensive model for the identification of lease agreements and their accounting treatment in the financial statements of both lessor and lessee. Upon entering into force, this standard replaces IAS 17 - Lease agreements and the accompanying interpretations. IFRS 16 has not yet been approved within the European Union.
IFRS 16 introduces significant changes with respect to the accounting treatment of lease agreements by the lessee, eliminating the distinction between operating and financial leases and recognising assets and liabilities for all lease agreements (except exceptions for short term leases or low value assets). In contrast to the treatment of lease agreements by the lessee, IFRS 16 retains virtually all of the provisions of IAS 17 - Lease agreements relating to the lessor's treatment of
lease agreements. This means that the lessors must permanently classify the lease agreements as operating or financial lease agreements.
Since Vastned Retail Belgium acts almost exclusively as lessor and has not opted to re-evaluate whether a contract is or contains a lease agreement in comparison with IAS 17, it is expected that IFRS 16 will not have a material impact on the consolidated financial statements. In the limited number of cases where Vastned Retail Belgium is the lessee in lease agreements classified as operational leases under IAS 17 and these contracts are not among the exceptions provided for in IFRS 16 (e.g. real estate used by the group), a right of use and corresponding obligation will have to be recognised in the consolidated financial statements.
| 30.06.2018 | 30.06.2017 | |||||
|---|---|---|---|---|---|---|
| IN THOUSANDS € | Core city assets |
Mixed retail locations |
Total | Core city assets |
Mixed retail locations |
Total |
| Balance sheet as at 1 January | 224.288 | 153.907 | 378.195 | 207.297 | 143.422 | 350.719 |
| Investments in existing investment properties | 1.002 | 101 | 1.103 | 3 | 397 | 400 |
| Acquisition of shares of real estate companies | 0 | 0 | 0 | |||
| Acquisitions of investment properties | 0 | 0 | 0 | |||
| Disposals of investment properties | 0 | -561 | -561 | |||
| Changes in fair value of investment properties | -1.313 | 571 | -742 | 6.491 | 7.214 | 13.705 |
| Balance sheet as at 30 June | 223.976 | 154.579 | 378.555 | 213.791 | 150.472 | 364.263 |
| OTHER INFORMATION | ||||||
| Investment value of real estate properties | 229.576 | 158.444 | 388.019 | 219.136 | 154.233 | 373.369 |
Investment properties are recorded at fair value. The fair value is determined based on one of the following levels of the fair value hierarchy:
The cash value of the future minimum rental income until the first expiry date of the lease contracts has as at 30 June 2017 the following collection terms:
| IN THOUSANDS € | 30.06.2018 | 30.06.2017 |
|---|---|---|
| Receivables with a remaining duration of: | ||
| • Less than one year | 18.165 | 18.482 |
| • Between one and five years |
15.542 | 21.057 |
| • More than five years | 0 | 0 |
| Total of the future minimum rental income | 33.707 | 39.539 |
An update of the financial structure as at 30 June 2018 is given in paragraph 1.7. (supra) of the interim report.
In the first semester of 2017, Vastned Retail Belgium began refinancing its entire loans portfolio. This refinancing had its impact in the course of the third quarter of 2017. The result of this refinancing is an extension of the term of the credit lines, a good spread of maturity dates and a drop in average interest rates.
The major financial instruments of Vastned Retail Belgium consist of financial and commercial receivables and debts, cash and cash equivalents as well as financial instruments of the interest rate swap type (IRS).
IFRS 13 classifies investment properties as level 3.
| Summary of financial instruments | 30.06.2018 | 31.12.2017 | ||||
|---|---|---|---|---|---|---|
| (IN THOUSAND €) | Catego ries |
Level | Book value |
Fair value |
Book value |
Fair value |
| FINANCIAL INSTRUMENTS (ASSETS) | ||||||
| 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 | A | 2 | 439 | 439 | 373 | 373 |
| Tax receivables and other current assets | A | 2 | 51 | 51 | 151 | 151 |
| Cash and cash equivalents | B | 2 | 617 | 617 | 367 | 367 |
| FINANCIAL INSTRUMENTS - LIABILITIES | ||||||
| Non-current liabilities | ||||||
| Non-current financial debts (interest-bearing) | A | 2 | 98.125 | 98.125 | 95.625 | 95.625 |
| Other non-current financial liabilities | C | 2 | 1.948 | 1.948 | 1.880 | 1.880 |
| Other non-current liabilities | A | 2 | 147 | 147 | 145 | 145 |
| Current liabilities | ||||||
| Current financial debts (interest-bearing) | A | 2 | 9.000 | 9.000 | 4.400 | 4.400 |
| Other current financial debts | C | 2 | 0 | 0 | 0 | 0 |
| Trade debts and other current debts | A | 2 | 2.193 | 2.193 | 2.107 | 2.107 |
| Other current liabilities | A | 2 | 575 | 575 | 626 | 626 |
The categories correspond to the following financial instruments:
Financial instruments are recognised at fair value. The fair value is determined based on one of the following levels in the fair value hierarchy:
The financial instruments of Vastned Retail Belgium correspond to Level 2 of the fair value hierarchy. The valuation techniques relating to the fair value of level 2 financial instruments are mentioned in the 2017 annual report in Note 19 Financial instruments.
| IN THOUSANDS € | Start date | End date | Interest rate | Contractual notional amount |
Hedge accounting |
Fair value | ||
|---|---|---|---|---|---|---|---|---|
| Yes/No | 30.06.18 | 31.12.17 | ||||||
| 1 | IRS | 31/07/17 | 31/07/22 | 0,9100% | € 15.000 | No | -385 | -375 |
| 2 | IRS | 31/07/17 | 31/07/22 | 1,0100% | € 10.000 | No | -298 | -296 |
| 3 | IRS | 28/07/17 | 31/07/22 | 0,8850% | € 5.000 | No | -125 | -121 |
| 4 | IRS | 31/07/17 | 31/07/23 | 0,9520% | € 15.000 | No | -413 | -394 |
| 5 | IRS | 31/07/17 | 31/07/24 | 0,9550% | € 10.000 | No | -230 | -208 |
| 6 | IRS | 31/07/17 | 31/07/24 | 1,0940% | € 15.000 | No | -497 | -486 |
| Other non-current financial liabilities | -1.948 | -1.880 | ||||||
| Other current financial debts | 0 | 0 | ||||||
| Total fair value of financial derivatives | -1.948 | -1.880 |
As at 30 June 2018, the company was in possession of the following financial derivatives:
As at 30 June 2018, these interest rate swaps had a negative market value of € -1,9 million (contractual notional amount of € 70 million), which is determined by the issuing financial institution on a quarterly basis.
Vastned Retail Belgium did not classify any interest rate swaps as a cash flow hedge as at 30 June 2018. The value fluctuations of all existing interest rate swaps are directly included in the income statement
No modifications have occurred during the first semester of 2018 regarding the type of transactions with related parties as described in Note 21 of the Financial report of the 2017 annual report.
In the first semester of 2018, there have been no changes in the off-balance sheet obligations as described in Note 25 of the Financial report of the Annual report 2017.
There are no significant events to be mentioned that occurred after the closing of the accounts as at 30 June 2018.
Antwerp - Steenhouwersvest
Report of the statutory auditor to the shareholders of Vastned Retail Belgium nv on the review of the Condensed Consolidated Half-yearly Figures as of 30 June 2018 and for the six-month period then ended.
We have reviewed the accompanying interim condensed consolidated balance sheet of Vastned Retail Belgium nv (the "Company"), and its subsidiaries (collectively referred to as "the Group") as at 30 June 2018 and the related condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated cash flow statement and condensed statement of changes in consolidated equity for the six-month period then ended, and explanatory notes, collectively, the "Condensed Consolidated Half-yearly Figures". These statements show a consolidated balance sheet total of € 381.986 thousand and a consolidated profit for the six-month period of € 6.347 thousand. The board of directors is responsible for the preparation and presentation of these Condensed Consolidated Half-yearly Figures in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting ("IAS 34") as adopted by the European Union. Our responsibility is to express a conclusion on these Condensed Consolidated Half-yearly Figures based on our 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 the 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.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying Condensed Consolidated Half-yearly Figures are not prepared, in all material aspects, in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union.
Brussels, 30 July 2018
Ernst & Young Bedrijfsrevisoren bcvba/Ernst & Young Réviseurs d'Entreprises sccrl Auditor represented by
Joeri Klaykens* Partner
* Acting on behalf of a bvba/sprl
In accordance with Article 13 § 2 of the Royal Decree of 14 November 2007, the Board of Directors, composed of Jean-Pierre Blumberg (chairman), Taco de Groot, Reinier Walta, Peggy Deraedt, Anka Reijnen and Lieven Cuvelier, declares that according to its knowledge:
months of the current financial year, their influence on the condensed half-yearly figures, the main risk factors and uncertainties regarding the remaining months of the financial year, as well as the main transactions between related parties and their possible effect on the condensed half-yearly figures if these transactions should have a significant importance and were not concluded at normal market conditions.
c. the information in the interim management report coincides with reality and no information has been omitted the statement of which could modify the tenor of the interim management report.
These condensed half-yearly figures were approved for publication by the board of directors on 30 July 2018.
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 property, more specifically in core city assets (prime retail properties located on the best shopping streets in the major cities of Antwerp, Brussels, Ghent and Bruges) and mixed retail locations (city centre shops outside the premium cities, retail parks and high quality retail warehouses). The RREC intends to achieve a 75% investment ratio in core city assets in due course.
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
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, and tax, competitive along with environmental factors. Vastned Retail Belgium cannot guarantee that the assumptions underlying the prospective information are free of error.
Generaal Lemanstraat 74 2600 Berchem - Antwerp T +32 3 361 05 90 [email protected]
WWW.VASTNED.BE
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