Earnings Release • Feb 22, 2011
Earnings Release
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Regulated information - embargo untill 22/02/2011, 8.15 am
Antwerp, 22 February 2011
Gross dividend per share: € 2,50 (+ 2,5 %) Operating distributable result increases by 2,5 % Increase of fair value of the real estate portfolio by 1,5 %1 Low debt ratio: 37 %
Julianus Shopping - Tongres
The value of Belgian commercial real estate has recovered strongly in 2010. Private investors as well as professional investors consider qualitative commercial real estate as a limited-risk investment. On the one hand, this is good news as the fair value of the patrimony of Intervest Retail has hereby increased. The fair value of the real estate portfolio has increased in 2010 in total by 1,5 % and amounts on 31 December 2010 to € 329 million.
On the other hand, this strong demand and the limited offer reduce the possibilities for expansion of Intervest Retail in a small and mature market. In 2010, the property investment fund did not realise additional investments due to the lack of sufficiently qualitative opportunities compared to the existing real estate portfolio of the property investment fund.
In 2010, the property investment fund once more paid attention to an active asset management in order to realize rental renewals and to optimize the value of the real estate portfolio.
In the commercial centre Shopping Julianus in Tongres an extensive marketing campaign has been run and the branch mix has also been adapted. It is important to note that the commercial centre will welcome the third quarter of 2011 a supermarket (Smatch). Except for a few tenants (380 m²) who will leave the commercial centre in the middle of March, the larger part of the commercial surface area (7.842 m²) remains occupied by existing or new tenants, however often with adapted rental conditions in favour of the tenants.
The other rental renewals concluded in 2010, have always been realized at better rental conditions. The occupancy rate2 of the real estate portfolio of Intervest Retail amounts to 98,8 % on 31 December 2010, which confirms the quality of the portfolio.
1 By unchanged composition of the real estate portfolio.
2 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.
Retail Park - Andenne
In 2010, the operating distributable result of Intervest Retail increases to € 12,7 million (€ 12,4 million in 2009). Consequently, for the financial year 2010 the property investment fund can distribute to its shareholders a gross dividend3 of € 2,50 per share compared to € 2,44 per share for the financial year 2009, which represents an increase by 2,5 %. As a result, the gross dividend yield per share amounts to 5,8 % based on the share price on 31 December 2010.
Previous year sustainability has also been on the agenda of the property investment fund. These activities focused on a thorough analysis of the health and safety risks in the buildings of the property investment fund and more precisely on the inventory of asbestos and fire protection risks. The results of these analyses are satisfying and where necessary appropriate measures are taken for improvement.
In 2010, the basis has been laid for a number of redevelopment projects to be realised in 2011. A request for a building permit has been submitted for the redevelopment and upgrading of the retail park Roosevelt in Vilvorde as well as for the renovation of the premises located on the Bruul 42-44 in Malines.
3 As legally speaking only the operating distributable result of the statutory annual accounts can be distributed and not of the consolidated annual accounts, the present profit distribution is based on the statutory figures.
Property investment fund intervest retail focuses on an investment policy based on commercial real estate, with respect for criteria of risk spread in the real estate portfolio, relating to the type of building as well as to the geographic spread and to the sector of the tenants.
On 31 December 2010 the risk spread is as follows:
Sector of tenants
H&M - Bruges
| REAL ESTATE PATRIMONY | 31.12.2010 | 31.12.2009 |
|---|---|---|
| Fair value of the portfolio (€ 000) | 329.142 | 324.338 |
| Total leasable space (m²) | 159.581 | 159.633 |
| Occupancy rate (%) | 98,8 % | 99,1 % |
On 31 December 2010, the fair value of the real estate portfolio amounts to € 329 million (€ 324 million on 31 December 2009). The shortage on the investment market of commercial real estate results in 2010 in an increase in value of the real estate portfolio by € 5 million or 1,5 % on the fair value of the investment properties. This value growth mainly comes from the lowering of yields but is also favourably influenced by the effect of different new lease contracts and rental renewals concluded at higher rents.
Zara - Brussels
"In 2010, the fair value of the real estate portfolio increases by
1,5 % as a result of the demand of qualitative real estate
on the investment market and lettings concluded at higher rents."
Despite market rental levels on the market remaining stable in 2010, there is sufficient potential to adjust the rental levels of Intervest Retail, which are in some cases below market rents, to market price levels. During the second semester of 2010, six lease contracts were signed with an average rental growth of 10 % (13 % for the entire year). One of these contracts has already started in the course of 2010 and five will take effect in 2011 or at the beginning of 2012.
An exception is Shopping Julianus in Tongres where rental levels and modalities of lease contracts have been lowered. In the fourth quarter of 2010, a lease contract was signed with the Group Delfipar that wishes to open a supermarket under the 'Smatch'- concept in the commercial centre (surface area 850 m²) in the third quarter of 2011.
| in thousands € | 2010 | 2009 |
|---|---|---|
| Rental income | 21.050 | 20.847 |
| Rental-related expenses | -50 | -141 |
| Property management costs and income | -14 | -1 |
| Property res ult |
20.986 | 20.705 |
| Property charges | -2.047 | -2.182 |
| General costs and other operating income and costs | -1.016 | -1.056 |
| Operating res ult before res ult on port folio |
17.923 | 17.467 |
| Result on sales of investment properties and development projects |
167 | -1.199 |
| Changes in fair value of investment properties and development projects |
4.859 | 1.729 |
| Operating res ult |
22.949 | 17.997 |
| Financial result (excl. change in fair value - IAS 39) | -5.032 | -5.019 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) |
-126 | -822 |
| Taxes | -159 | 6 |
| Net res ult |
17.632 | 12.162 |
| Operating distributable result | 12.710 | 12.400 |
| Result on portfolio | 5.026 | 530 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
-104 | -768 |
| Result per share |
2010 | 2009 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net result (€) | 3,47 | 2,39 |
| Gross dividend (€) | 2,50 | 2,44 |
| Net dividend (€) | 2,13 | 2,07 |
Bakker Bart - Antwerp
4 Between brackets comparable figures for the financial year 2009.
Charles Vögele - Turnhout
The property result of Intervest Retail increases in 2010 by € 0,3 million to € 21,0 million (€ 20,7 million). This rise results from the increase of rental income through rental renewals and indexations in the existing real portfolio.
In 2010, the property charges of the property investment fund decrease to € 2,0 million (€ 2,2 million). The decrease by € 0,2 million results mainly from lower property management costs and lower commercial costs, partly compensated by higher technical costs arising from the inventory of asbestos and fire protection risks in the buildings of the property investment fund.
Through the decrease of the property charges and the increase of the property result, the operating result before result on portfolio increases in 2010 by € 0,4 million to € 17,9 million (€ 17,5 million).
During the financial year 2010, the positive changes in fair value of the investments properties amount to € 4,9 million (€ 1,7 million) or 1,5 % on the fair value of the real estate portfolio. This is due to the increase in fair value of the commercial portfolio as valuated by the independent property experts. This increase in value is caused by a decrease in yields as a result of the growing demand for qualitative real estate on the investment market and the rent renewals and rental indexations in 2010.
"The changes in fair value of the investment properties
amount to 1,5 % compared to 0,5 % in 2009."
The financial result (excl. change in fair value - IAS 39) of the financial year 2010 amounts to - € 5,0 million (- € 5,0 million). The financial result remains at the same level as in 2009 through the currently low interest rates on the financial markets and the refinancings in 2010.
"For the financial year 2010, the average interest rate of the current credit facilities of the property investment fund amounts to 4,1 % including bank margins (3,9 %)."
In 2010, the changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) comprise the change of the market value of the interest rate swaps which in accordance with IAS 39 cannot be classified as cash flow hedge instrument, for an amount of - € 0,1 million (- € 0,8 million).
For the financial year 2010, the net result of Intervest Retail amounts to € 17,6 million (€ 12,2 million) and can be divided in:
Hence, for the financial year 2010, the operating distributable result of Intervest Retail increases to € 12,7 million (€ 12,4 million). With the 5.078.525 shares having been issued, this represents a gross dividend of € 2,50 per share for the financial year 2010 compared to € 2,44 in 2009. This means an increase of the dividend by 2,5 % per share.
| in thousands € | 31.12.2010 | 31.12.2009 |
|---|---|---|
| Non-current assets | 329.341 | 324.574 |
| Current assets | 3.915 | 12.643 |
| ASSETS | 333.256 | 337.217 |
| Shareholders' equity | 205.206 | 199.588 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 99.119 | 98.526 |
| Net result of the financial year | 17.632 | 12.162 |
| Impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
-8.108 | -8.108 |
| Changes in fair value of financial assets and liabilities | -4.833 | -4.388 |
| Liabilities | 128.050 | 137.629 |
| Non-current liabilities | 75.544 | 88.477 |
| Current liabilities | 52.506 | 49.152 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | 333.256 | 337.217 |
| Debt ratio (max. 65%) (%) | 37 % | 39 % |
portfolio amounts to € 329 million."
In 2010, the non-current assets increase by € 5 million. This rise is the effect of an increase of the investments properties as a result of the positive changes in fair value of the investment properties on the basis of the valuations by the independent property experts for € 5 million or 1,5 % on the fair value of the investments properties.
On 31 December 2010, the real estate properties are valued at € 337 million (investment value) by the independent property experts. The fair value (i.e. investment value minus the hypothetical transaction rights and costs that must be paid in the event of any future disposal) of the portfolio on 31 December 2010 amounts to € 329 million.
"Thanks to a strict credit control the number of days of outstanding customers' credit is only 6 days."
The current assets amount to € 4 million (€ 13 million) and consist mainly of € 2 million other receivables and of € 1 million in cash on bank accounts.
G-star - Gent
The shareholders' equity of the property investment fund amounts to € 205 million (€ 200 million). The share capital of € 97 million remains unchanged. The share premium of € 4 million is unchanged from prior year. The reserves amount to € 99 million (€ 99 million).
In accordance with the Beama-interpretation of IAS 40 (publication of the Belgian Association of Asset Managers of 8 February 2006), the real estate portfolio is valued at fair value. The difference with the investment value is shown separately in the shareholders' equity. On 31 December 2010, this difference amounts to € 8 million.
The changes in fair value of financial fixed assets and liabilities in the amount of - € 5 million represent the market value of the cash flow hedge instruments (effective hedges on 31 December 2010 and ineffective hedges on 31 December 2009) that Intervest Retail concluded to hedge the variable interest rates on the long-term financial debts. The negative market value of these financial derivatives is the result of the low interest rates in 2010.
Compared to 2009, the non-current liabilities decrease to € 76 million (€ 88 million) and consist mainly of long term bank financings as well as the negative market value of the financial derivatives. This decrease is due to two long-term credit facilities expiring in the second half of 2011 as well as to a lower credit withdrawal resulting from the sale of Shopping Park Olen, on the one hand, and the refinancing of a current financial debt into a non-current credit facility on the other hand.
The current liabilities amount to € 53 million (€ 49 million) and consist of € 47 million in bank loans which expire within the year and have to be repaid or prolonged. Further, the current liabilities consist of € 4 million in trade debts and VAT to be regularized for the sale of Factory Shopping Messancy, of € 1 million in miscellaneous debts, and of € 1 million of accrued charges and deferred income.
"A relatively low debt ratio of 37 % on 31 December 2010 (39 % on 31 December 2009) and well-spread interest rate risks offer Intervest Retail a stable balance-sheet position."
| balan ce Sheet DATA PER SHARE |
31.12.2010 | 31.12.2009 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net asset value (fair value) (€) | 40,41 | 39,30 |
| Net asset value (investment value) (€) | 42,00 | 40,90 |
| Share price on closing date (€) | 43,00 | 37,60 |
| Premium (+) / discount (-) to net asset value (fair value) (%) | 6 % | - 4 % |
On 31 December 2010, the net asset value (fair value) of the share is € 40,41 (€ 39,30). Given that the share price on 31 December 2010 is € 43,00, the share is quoted at a premium of 6 % compared to this net asset value (fair value).
H&M - Turnhout
On 31 December 2010, Intervest Retail has a conservative financial structure allowing it to continue to carry out its activities in 2011.
The most important characteristics of the financial structure on 31 December 2010 are:
On 31 December 2010, 51 % of the credit lines of Intervest Retail are long-term financings. 49 % of the credit lines are short-term financings, with 13 % consisting of financing with an unlimited duration (progressing each time for 364 days) and 36 % of two credit facilities which expire in the second semester of 2011 and have to be renegotiated.
In 2011, Intervest Retail will continue to pay attention to the optimization of the existing real estate portfolio in view of the long-term return of the property investment fund.
The first generation of retail parks developed in the eighties, were mainly meant to be discount concepts, focussing essentially on an easy accessibility and large parking facilities. Since then, the sector of peripheral commercial real estate has undergone an important evolution and it is no longer the exclusive playground of discount concepts. The tenants, who are meanwhile much diversified, as well as the consumers expect that shopping takes place in a pleasant environment corresponding to the image of the brand. Not only the accessibility and easy parking facilities are important, but meanwhile also the quality of the building has become decisive.
In order to respond to this evolution and to guarantee the value of the buildings in the future, an upgrading of a number of retail parks in the real estate portfolio of Intervest Retail is taking place with regard to architecture, lay-out and management. These modifications take into account relevant sustainability aspects. For inner-city shops the optimization of the patrimony is aimed towards the use of the good filling-in of vacant floors. The planned renovation of the façades of the building and the creation of 19 lofts in the building located in Malines at Bruul 42-44, is one of these optimizations. Therefore the request for a building permit for the development and upgrading of the retail park Roosevelt in Vilvorde has been submitted.
Besides the optimization of the existing real estate portfolio, Intervest Retail tries to extend the fund in a scarce market and to realise additional acquisitions. Given the limited debt ratio and the relatively easy availability of bank credit facilities, there is sufficient room for additional investments. In this segment Intervest Retail focuses by preference on buildings or portfolios with a range of minimum € 5 million to maximum € 50 million.
The annual report for the financial year 2010 will be available as from 23 March 2011 on the website of the company (www.intervestretail.be).
INTERVEST RETAIL SA, public property investment fund under Belgian law, Jean-Paul Sols - CEO or Inge Tas - CFO, T + 32 3 287 67 87, www.intervestretail.be
| in thousands € | 2010 | 2009 |
|---|---|---|
| Rental income | 21.050 | 20.847 |
| Rental-related expenses | -50 | -141 |
| NET RENTAL INCOME | 21.000 | 20.706 |
| Recovery of rental charges and taxes normally payable by tenants on let properties | 1.339 | 1.284 |
| Rental charges and taxes normally payable by tenants on let properties | -1.339 | -1.284 |
| Other rental related income and expenses | -14 | -1 |
| PROPERTY RESULT | 20.986 | 20.705 |
| Technical costs | -620 | -575 |
| Commercial costs | -185 | -247 |
| Charges and taxes on unlet properties | -135 | -129 |
| Property management costs | -1.104 | -1.226 |
| Other property charges | -3 | -5 |
| PROPERTY CHARGES | -2.047 | -2.182 |
| OPERATING PROPERTY RESULT | 18.939 | 18.523 |
| General costs | -1.044 | -1.107 |
| Other operating income and costs | 28 | 51 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 17.923 | 17.467 |
| Result on sales of investment properties and development projects | 167 | -1.199 |
| Changes in fair value of investment properties and development projects | 4.859 | 1.729 |
| OPERATING RESULT | 22.949 | 17.997 |
| Financial income | 10 | 23 |
| Interest charges | -5.028 | -5.013 |
| Other financial charges | -14 | -29 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | -126 | -822 |
| FINANCIAL RESULT | -5.158 | -5.841 |
| RESULT BEFORE TAXES | 17.791 | 12.156 |
| Corporate taxes | -159 | 6 |
| Taxes | -159 | 6 |
| NET RESULT | 17.632 | 12.162 |
| Note: | ||
| Operating distributable result | 12.710 | 12.400 |
| Result on portfolio | 5.026 | 530 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
-104 | -768 |
| Attributable to: | ||
| Equity holders of the parent company | 17.632 | 12.162 |
| Minority interests | 0 | 0 |
5 The statutory auditor has confirmed that his full audit, which has been substantially completed, has not revealed material adjustments which would have to be made to the accounting information disclosed in this press release and that an unqualified auditor's report will be issued.
| in thousands € | 2010 | 2009 |
|---|---|---|
| NET RESULT | 17.632 | 12.162 |
| Changes in fair value of financial assets and liabilities (effective hedges - IAS 39) | 378 | -952 |
| COMPREHENSIVE INCOME | 18.010 | 11.210 |
| Attributable to: | ||
| Equity holders of the parent company | 18.010 | 11.210 |
| Minority interests | 0 | 0 |
| ASSETS in thousands € | 31.12.2010 | 31.12.2009 |
|---|---|---|
| Non-current assets | 329.341 | 324.574 |
| Intangible assets | 16 | 27 |
| Investment properties | 329.142 | 324.338 |
| Other tangible assets | 165 | 191 |
| Trade receivables and other non-current assets | 18 | 18 |
| Current assets | 3.915 | 12.643 |
| Assets held for sale | 287 | 7.649 |
| Trade receivables | 376 | 357 |
| Tax receivables and other current assets | 2.249 | 3.403 |
| Cash and cash equivalents | 766 | 1.074 |
| Deferred charges and accrued income | 237 | 160 |
| total assets |
333.256 | 337.217 |
| SHAREHOLDERS' EQUITY AND LIABILITIES in thousands € | 31.12.2010 | 31.12.2009 |
|---|---|---|
| Shareholders' equity | 205.206 | 199.588 |
| Shareholders' equity attributable to the shareholders of the parent company | 205.206 | 199.588 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 99.119 | 98.526 |
| Net result of the financial year | 17.632 | 12.162 |
| Impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
-8.108 | -8.108 |
| Changes in fair value of financial assets and liabilities | -4.833 | -4.388 |
| Minority interests | 0 | 0 |
| Liabilities | 128.050 | 137.629 |
| Non-current liabilities | 75.544 | 88.477 |
| Provisions | 195 | 320 |
| Non-current financial debts | 75.193 | 88.010 |
| Credit institutions | 75.179 | 87.993 |
| Financial lease | 14 | 17 |
| Other non-current liabilities | 48 | 51 |
| Deferred taxes - liabilities | 108 | 96 |
| Current liabilities | 52.506 | 49.152 |
| Provisions | 56 | 0 |
| Current financial debts | 46.548 | 43.002 |
| Credit institutions | 46.545 | 42.999 |
| Financial lease | 3 | 3 |
| Trade debts and other current debts | 4.079 | 4.301 |
| Other current liabilities | 632 | 681 |
| Accrued charges and deferred income | 1.191 | 1.168 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 333.256 | 337.217 |
| in thousands € | Share capital |
Share premium | Reserves | Net result of the financial year |
Impact on the fair value* |
Changes in fair value of financial assets and liabilities |
Minority interests |
olders' otal ity equ T areh sh |
|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2008 | 97.213 | 4.183 | 87.484 | 21.986 | -8.185 | -3.436 | 3 | 199.248 |
| Comprehensive income 2009 | 12.162 | -952 | 11.210 | |||||
| Transfers: | ||||||||
| Impact on fair value* | -77 | 77 | 0 | |||||
| Transfer from the result on portfolio to the reserves |
11.502 | -11.502 | 0 | |||||
| Changes in fair value of financial assets and liabilities through the income statement |
-461 | 461 | 0 | |||||
| Other mutations | 77 | -77 | 3 | -3 | ||||
| Dividends financial year 2008 | -10.868 | -10.868 | ||||||
| Balance at 31 December 20096 | 97.213 | 4.183 | 98.526 | 12.162 | -8.108 | -4.388 | 0 | 199.588 |
| Comprehensive income 2010 | 17.632 | 378 | 18.010 | |||||
| Transfers: | ||||||||
| Transfer from the result on portfolio to the reserves |
530 | -530 | 0 | |||||
| assets and liabilities through the income Changes in fair value of financial statement 2009 |
823 | -823 | 0 | |||||
| Other mutations | 63 | -63 | 0 | |||||
| Dividends financial year 2009 | -12.392 | -12.392 | ||||||
| Balance at 31 December 2010 | 97.213 | 4.183 | 99.119 | 17.632 | -8.108 | -4.833 | 0 | 205.206 |
| *of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
S
tatement of changes in consolidated equity
The transfer of "the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties" as well as of " the changes in fair value of financial assets and liabilities through the income statement" are no longer, as from the financial year 2010, recorded during the financial year but only after approval of the profit distribution by the general meeting of shareholders (in April of next financial year). As this concerns transfers within two items of shareholders' equity, it has no impact on the total shareholders' equity of the property investment fund.
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