Earnings Release • Oct 26, 2012
Earnings Release
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of the board of directors for the period 01.07.2012 to 30.09.2012
Increase of operating distributable result: 4 % in the first nine months of 20121 (4 % in the third quarter of 20122)
Increase in fair value of real estate portfolio of 1,5 % for the first nine months of 20123 (0,4 % in the third quarter of 20124)
Expected gross dividend for financial year 2012 higher than for financial year 2011: between € 2,58 and € 2,63 per share
In the third quarter of 2012 the operating distributable result of Intervest Retail increases to € 0,67 per share compared to € 0,64 in the third quarter of previous financial year. This represents an increase of 4 % per share. This positive result is due to the acquisition of Jardin d'Harscamp in Namur in October 2011, the letting to Desigual in Jardin d'Harscamp and to indexations and rental renewals in the real estate portfolio. Recently concluded rental renewals still provide attractive rental increases. Furthermore, financing costs of the property investment fund have decreased, even after the acquisition of Jardin d'Harscamp, as a result of the further decrease of the interest rates on the financial market.
For the first nine months of 2012 the operating distributable result per share amounts to € 1,96 compared to € 1,89 for the same period of previous year. Except for unexpected evolutions, such as important bankruptcies of tenants or unforeseen rental increases, Intervest Retail estimates to be able to propose its shareholders a gross dividend per share between € 2,58 and € 2,63 for the financial year 2012. This represents a gross dividend yield of approximately 5,5 %, based on the closing share price on 30 September 2012 (€ 47,95).
Stability problems occurred at the end of August 2012 in the innercity shop of Intervest Retail, located Bruul 40/44 in Malines. The conclusions of the architectural engineers show a local building problem at the height of the separation between the shop let to Coolcat and the one let to H&M. Locally the steel structure has been overloaded and it has moved. A local subsidence caused large cracks in the facade. Until now, the reason of this subsidence is not yet clearly determined.
Necessary consolidation works have been carried out and the security of the premises is guaranteed. The H&M shop reopened after two weeks. However, the Coolcat shop remains closed as the shop has been shored up. The termination of the lease contract with Coolcat was already planned for the end of 2012 in the framework of the planned renovation works to the building.
Intervest Retail has obtained the building permit for the concerned premises for the realization of a residential project of 19 lofts above the shops, the renovation of the facade of the H&M building and the reconstruction of the corner building where Coolcat is located. Given the planned demolition of the Coolcat shop for this residential project, the repair costs for this part of the building will remain limited.
Intervest Retail has concluded an insurance "PublicLiability Buildings" for the intervention in damages against third parties, for which Intervest Retail could possibly be liable.
Based on its contractual responsibility against its tenants, which does not fall under the public liability insurance, a possible indemnity may be due by Intervest Retail to Coolcat and H&M. Presently the responsibility of Intervest Retail has not been determined and the amount of the suffered damages is not yet known. A legal expert has been designated to determine within the next months the cause of the damage and to define the consequential responsibility.
On 30 September 2012, the fair value of the real estate portfolio amounts to € 367 million (€ 362 million on 31 December 2011).
| REAL ESTATE PATRIMONY | 30.09.2012 | 31.12.2011 | 30.09.2011 |
|---|---|---|---|
| Fair value of investment properties (€ 000) | 367.338 | 362.213 | 346.079 |
| Investment value of investment properties (€ 000) | 376.577 | 371.268 | 354.731 |
| Total leasable space (m²) | 159.533 | 161.573 | 158.992 |
| Occupancy rate (%) | 97,4 % | 96,6 % | 97,5 % |
The occupancy rate5 of the real estate portfolio amounts to 97,4 % on 30 September 2012. The increase compared to 31 December 2011 results mainly from the letting to Desigual in Namur and some temporary lettings of vacant units.
The fair value of the real estate portfolio of Intervest Retail has increased by approximately 1,5 %6 in the first nine months of 2012 mainly through rental indexations, rental renewals and new lease contracts and through decreasing yields for innercity shops as a result of the favourable situation on the Belgian investment market. In the third quarter of 2012 the property investment fund also sold a nonstrategic building, located Genkersteenweg in Hasselt. The building has a fair value of € 1,5 million and has been sold with a gain of approximately 4 %.
5 The occupancy rate is calculated as the ratio of the rental income to the same rental income plus the estimated rental value of the vacant locations for rent.
6 Based on an unchanged composition of the real estate portfolio compared to 31 December 2011.
| RESULTS in thousands € | 01.07 - 30.09 2012 |
01.07 - 30.09 2011 |
|---|---|---|
| Rental income | 5.613 | 5.349 |
| Rental-related expenses | -36 | 39 |
| Property management costs and income | 6 | 14 |
| Property result | 5.583 | 5.402 |
| Property charges | -677 | -531 |
| General costs and other operating costs and income | -244 | -229 |
| Operating property result before result on the portfolio | 4.662 | 4.642 |
| Result on disposals of investment properties | 66 | 4 |
| Changes in fair value of investment properties | 1.501 | 4.384 |
| Other result on portfolio | 10 | -119 |
| Operating result | 6.239 | 8.911 |
| Financial result (excl. changes in fair value - IAS 39) | -1.256 | -1.347 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | -612 | -302 |
| Taxes | -10 | -9 |
| Net result | 4.361 | 7.253 |
| Operating distributable result | 3.383 | 3.260 |
| Result on portfolio | 1.577 | 4.269 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
-599 | -276 |
In the third quarter of 2012, the rental income of Intervest Retail amounts to € 5,6 million (€ 5,3 million). This increase of 5 % results mainly from the acquisition of Jardin d'Harscamp shopping complex in Namur in October 2011, from the letting to Desigual in Jardin d'Harscamp and from indexations and rental renewals of existing lease contracts.
The property charges of the property investment fund amount for the third quarter of 2012 to - € 0,7 million (- € 0,5 million). This increase is due to higher maintenance and repair costs and to the increase of vacancy costs and other property charges for Jardin d'Harscamp in Namur and Julianus Shopping in Tongres.
The positive changes in fair value of investment properties for the third quarter of 2012 amount to € 1,5 million (€ 4,4 million) or approximately 0,4 % (on the fair value of the portfolio on 30 June 2012). This positive effect comes from decreasing yields for some inner-city shops as a result of the favourable situation on the Belgian investment market.
The financial result (excl. changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39)) amounts for the third quarter of 2012 to - € 1,3 million (- € 1,3 million). Through the reduction of the interest rates on the financial market, the financing costs of the property investment fund decrease, despite the acquisition of Jardin d'Harscamp. The average interest rate of the property investment fund for the third quarter of 2012 is approximately 3,8 %, including bank margins (4,4 %).
On 30 September 2012, 80 % of the credit lines are long-term financings, with an average remaining period of 3,4 years. 20 % of the credit lines are shortterm financings, of which 13 % consists of financings with unlimited duration progressing each time for 364 days (€ 17,4 million) and 7 % of a bilateral credit facility which has to be prolonged or repaid within the year (€ 10 million). On 30 September 2012, 66 % of the credit lines have a fixed interest rate or are fixed by interest rate swaps. The interest rates of the credit lines of the property investment fund are fixed for a remaining period of 4,1 years in average.
The debt ratio of the property investment fund amounts to 36 % on 30 September 2012 and decreases herewith by 1 % compared to 30 June 2012 (calculated in accordance with the Royal Decree of 7 December 2010).
The changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) in the third quarter of 2012 include the decrease in the market value of interest rate swaps that, in line with IAS 39, cannot be classified as cash flow hedging instruments, for an amount of - € 0,6 million (- € 0,3 million).
The net result of the property investment fund Intervest Retail amounts to € 4,4 million (€ 7,3 million) in the third quarter of 2012 and can be divided in:
7 Between brackets comparable figures of the third quarter 2011 (01.07.2011 – 30.09.2011).
| RESULTS in thousands € | 30.09.2012 | 30.09.2011 |
|---|---|---|
| Operating distributable result | 9.976 | 9.583 |
| Result on portfolio | 6.143 | 17.772 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and | ||
| other non-distributable elements | -1.746 | 530 |
| Net result | 14.373 | 27.885 |
| RESULT PER SHARE | 30.09.2012 | 30.09.2011 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net result (€) | 2,83 | 5,49 |
| Operating distributable result (€) | 1,96 | 1,89 |
In the first nine months of 2012 the operating distributable result of Intervest Retail increases to € 10,0 million (€ 9,6 million). This increase of 4 % gives an operating distributable result per share of € 1,96 for the first nine months of 2012 compared to € 1,89 for the same period of previous year.
| KEY FIGURES PER SHARE | 30.09.2012 | 31.12.2011 | 30.09.2011 |
|---|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 | 5.078.525 |
| Net asset value (fair value) (€) | 45,38 | 45,04 | 43,39 |
| Net asset value (investment value) (€) | 47,16 | 46,66 | 45,01 |
| Share price on closing date (€) | 47,95 | 44,98 | 43,60 |
| Premium to net asset value (fair value) (%) | 6 % | 0 % | 1 % |
On 30 September 2012, the net asset value (fair value) is € 45,38 per share (€ 45,04 on 31 December 2011). As the share price of Intervest Retail is € 47,95 on 30 September 2012, the share is listed at a premium of 6 % compared to the net asset value (fair value).
In the last quarter of 2012 Intervest Retail intends to sell a number of nonstrategic premises. In the long term the aim is to increase the share of innercity shops on prime locations in larger cities to 65 % of the real estate portfolio.
Except for unexpected evolutions, such as important bankruptcies of tenants or unforeseen increases of interest rates, Intervest Retail estimates to be able to propose its shareholders a gross dividend per share between € 2,58 and € 2,63. This represents a gross dividend yield of approximately 5,5 %, based on the closing share price on 30 September 2012 (€ 47,95).
INTERVEST RETAIL SA, public property investment fund under Belgian law, JeanPaul Sols CEO or Inge Tas CFO, T + 32 3 287 67 87, www.intervestretail.be
| in thousands € | 30.09.2012 | 30.09.2011 |
|---|---|---|
| Rental income | 16.686 | 15.923 |
| Rental-related expenses | -97 | -34 |
| NET RENTAL INCOME |
16.589 | 15.889 |
| Property management costs and income | 5 | 13 |
| PROPERT Y RESULT |
16.594 | 15.902 |
| Technical costs | -578 | -524 |
| Commercial costs | -157 | -126 |
| Charges and taxes on unlet properties | -77 | 14 |
| Property management costs | -924 | -914 |
| Other property charges | -189 | -38 |
| PROPERT Y CHARGES |
-1.925 | -1.588 |
| OPERATING PROPERT Y RESULT |
14.669 | 14.314 |
| General costs | -807 | -793 |
| Other operating income and costs | 56 | 30 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO |
13.918 | 13.551 |
| Result on disposals of investment properties | 560 | 415 |
| Changes in fair value of investment properties | 5.507 | 17.556 |
| Other result on portfolio | 76 | -200 |
| OPERATING RESULT | 20.061 | 31.322 |
| in thousands € | 30.09.2012 | 30.09.2011 |
|---|---|---|
| OPERATING RESULT | 20.061 | 31.322 |
| Financial income | 37 | 10 |
| Net interest charges | -3.916 | -3.895 |
| Other financial charges | -4 | -13 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | -1.779 | 485 |
| FINANCIAL RESULT | -5.662 | -3.413 |
| RESULT BEFORE TAXES |
14.399 | 27.909 |
| TAXES | -26 | -24 |
| NET RESULT |
14.373 | 27.885 |
| Note: | ||
| Operating distributable result | 9.976 | 9.583 |
| Result on portfolio | 6.143 | 17.772 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | ||
| and other non-distributable elements | -1.746 | 530 |
| Attributable to: | ||
| Equity holders of the parent company | 14.373 | 27.885 |
| Minority interests | 0 | 0 |
| in thousands € | 30.09.2012 | 30.09.2011 |
|---|---|---|
| NET RESULT |
14.373 | 27.885 |
| Changes in the effective part of fair value of allowed hedging instruments for cash flow hedges |
178 | -54 |
| COMPREHENSIVE INCOME Attributable to: |
14.551 | 27.831 |
| Equity holders of the parent company | 14.551 | 27.831 |
| Minority interests | 0 | 0 |
| ASSETS in thousands € | 30.09.2012 | 31.12.2011 |
|---|---|---|
| Non-current assets | 367.970 | 362.406 |
| Intangible assets | 7 | 13 |
| Investment properties | 367.338 | 362.213 |
| Other tangible assets | 622 | 162 |
| Trade receivables and other non-current assets | 3 | 18 |
| Current assets | 3.648 | 1.866 |
| Assets held for sale | 1.699 | 333 |
| Trade receivables | 364 | 275 |
| Tax receivables and other current assets | 194 | 218 |
| Cash and cash equivalents | 720 | 379 |
| Deferred charges and accrued income | 671 | 661 |
| SHAREHOLDERS' EQUITY AND LIABILITIES in thousands € | 30.09.2012 | 31.12.2011 |
|---|---|---|
| Shareholders' equity | 230.442 | 228.739 |
| Shareholders' equity attributable to the shareholders of the parent company | 230.442 | 228.739 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 114.673 | 91.035 |
| Net result of financial year | 14.373 | 36.308 |
| Minority interests | 0 | 0 |
| Liabilities | 141.176 | 135.533 |
| Non-current liabilities | 109.730 | 94.244 |
| Non-current financial debts | 103.068 | 89.022 |
| Credit institutions | 103.050 | 89.000 |
| Financial lease | 18 | 22 |
| Other non-current financial liabilities | 6.526 | 5.129 |
| Other non-current liabilities | 114 | 51 |
| Deferred taxes - liabilities | 22 | 42 |
| Current liabilities | 31.446 | 41.289 |
| Current financial debts | 27.399 | 37.619 |
| Credit institutions | 27.394 | 37.614 |
| Financial lease | 5 | 5 |
| Other current financial liabilities | 205 | 0 |
| Trade debts and other current debts | 2.508 | 2.573 |
| Other current liabilities | 225 | 211 |
| Accrued charges and deferred income | 1.109 | 886 |
| TOTAL SHAREHOLDERS ' EQUITY AND LIABILITIES |
371.618 | 364.272 |
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