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Nextensa SA — Interim / Quarterly Report 2018
Aug 22, 2018
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Interim / Quarterly Report
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Regulated information Under embargo till 22 August 2018 at 17.40h (5.40 PM)
Half-year financial report 2018
Company profile
Public regulated real estate company (B-REIT) Leasinvest Real Estate SCA invests in high quality and well-located retail and office buildings in the Grand Duchy of Luxembourg, in Belgium and in Austria.
At present the total fair value of the directly held real estate portfolio of Leasinvest amounts to € 922 million spread across the Grand Duchy of Luxembourg (54%), Belgium (35%) and Austria (11%).
Moreover, Leasinvest is one of the largest real estate investors in the Grand Duchy of Luxembourg.
The real estate portfolio consists of retail (48%), offices (44%) and logistics (7%).
The public RREC is listed on Euronext Brussels and has a market capitalization of approximately € 489 million (value 21 August 2018).
Alternative Performance Measures
Following the entry into force of the 'ESMA directives on Alternative Performance Measures' of the European Securities and Market Authority (ESMA), the Alternative Performance Measures (APM) in this half-year financial report are indicated by the the symbol3. For the definition and the detailed calculation of the Alternative Performance Measures used, we refer to page 42 et seq of this half-year financial report.
Statement according to article 12, § 2, 3° of the RD of 14 November 2007
Mr Michel Van Geyte, permanent representative of the statutory manager of Leasinvest Real Estate, declares, on behalf and for the account of the statutory manager, that, to his knowledge:
(i) the condensed financial statements, established in accordance with the applicable accounting standards for annual accounts, present a fair view of the assets, financial situation and the results of Leasinvest Real Estate and the companies included in the consolidation;
(ii) the interim management report presents a fair overview of the development and the results of Leasinvest Real Estate, and of the position of the company and the companies included in the consolidation, and also comprises a description of the main risks and uncertainties which the company is confronted with.
MICHEL VAN GEYTE
Permanent representative Leasinvest Real Estate Management SA Schermersstraat 42 BE-2000 Antwerp Statutory manager
Key figures
| Key figures real estate portfolio (1) | 30/06/2018 | 31/12/2017 |
|---|---|---|
| Fair value real estate portfolio (€ 1,000) (2) | 921 836 | 902 994 |
| Fair value investment properties, incl. participation Retail Estates (€ 1,000) (2) | 1 012 818 | 976 338 |
| Investment value investment properties (€ 1,000) (3) | 940 484 | 921 141 |
| Rental yield based on fair value (4) (5) | 6.61% | 6.44% |
| Rental yield based on investment value (4) (5) | 6.48% | 6.32% |
| Occupancy rate (5) (6) | 94.44% | 94.80% |
| Average duration of leases (years) | 4.19 | 4.74 |
(1) The real estate portfolio comprises the buildings in operation, the development projects, the assets held for sale, as well as the buildings presented as financial leasing under IFRS. (2) Fair value: the investment value as defined by an independent real estate expert and of which the transfer rights have been deducted. The fair value is the accounting value under IFRS. The fair value of Retail Estates has been defined based on the share price on 30/06/2018.
(3) The investment value is the value as defined by an independent real estate expert and of which the transfer rights have not yet been deducted.
(4) Fair value and investment value estimated by real estate experts Cushman & Wakefield, de Crombrugghe&Partners and Stadim (BeLux) and Oerag (Austria).
(5) For the calculation of the rental yield and the occupancy rate only the buildings in operation are taken account of, excluding the assets held for sale and the development projects. (6) The occupancy rate has been calculated based on the estimated rental value.
| Key figures income statement | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Rental income (€ 1,000) | 27 858 | 28 084 |
| Net rental result per share | 5.64 | 5.69 |
| EPRA Earnings3(1) | 13 968 | 13 261 |
| EPRA Earnings3per share (1) | 2.83 | 2.69 |
| Net result group share (€ 1,000) | 19 683 | 15 595 |
| Net result group share per share | 3.99 | 3.16 |
| Comprehensive income group share (€ 1,000) | 19 082 | 32 243 |
| Comprehensive income group share per share | 3.86 | 6.53 |
(1) De EPRA Earnings3, previously the net current result, consists of the net result excluding the portfolio result* and the changes in fair value of the ineffective hedges.
| Key figures balance sheet | 30/06/2018 | 31/12/2017 |
|---|---|---|
| Net asset value group share (€ 1,000) | 376 595 | 382 206 |
| Number of issued shares | 4 938 870 | 4 938 870 |
| Number of shares entitled to the result of the period | 4 938 870 | 4 938 870 |
| Net asset value group share per share | 76.3 | 77.4 |
| Net asset value group share per share based on investment val-ue | 80.0 | 81.1 |
| Net asset value group share per share EPRA | 82.8 | 84.0 |
| Total assets (€ 1,000) | 1 036 886 | 999 293 |
| Financial debt | 594 550 | 540 440 |
| Financial debt ratio (in accordance with BE-REIT/GVV-SIR regulation) | 59.31% | 57.14% |
| Average duration credit lines (years) | 3.00 | 3.34 |
| Average funding cost (excl. fair value changes financial instru-ments) | 2.79% | 2.99% |
| Average duration hedges (years) | 5.02 | 5.15 |
| EPRA performance measures3(1) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| EPRA Earnings3(in € per share) (2) | 2.83 | 2.69 |
| EPRA NAV3(in € per share) (3) | 82.8 | 81.6 |
| EPRA NNNAV3(in € per share) (4) | 75.5 | 73.1 |
| EPRA Net Initial Yield3(in %) (5) | 5.49% | 5.39% |
| EPRA Topped up Net Initial Yield3(in %) (6) | 5.50% | 5.41% |
| EPRA Vacancy3(in %) (7) | 5.54% | 9.12% |
| EPRA Cost ratio3(incl. direct vacancy costs) (in %) (8) | 22.96% | 24.26% |
| EPRA Cost ratio3(excl. direct vacancy costs) (in %) (8) | 21.09% | 21.00% |
(1) These figures were not audited by the auditor.
(2) The EPRA Earnings3, previously net current result, consists of the net result excluding the portfolio result3and the changes in fair value of the ineffective hedges.
(3) EPRA Net Asset Value3(NAV) consists of the adjusted Net Asset Value3, excluding certain elements that do not fit within a financial model of long-term real estate investments; see also www.epra.com.
(4) EPRA NNNAV3(triple Net Asset Value3) consists of the EPRA NAV3, adjusted to take account of the fair value of the financial instruments, the debts and the deferred taxes; see also www.epra.com.
(5) EPRA Net Initial Yield3comprises the annualized gross rental income based on the current rents at the closing date of the financial statements, excluding the property charges, divided by the market value of the portfolio, increased by the estimated transfer rights and costs for hypothetical disposal of investment properties; see also www.epra.com.
(6) EPRA Topped up Net Initial Yield3corrects the EPRA Net Initial Yield3with regard to the ending of gratuities and other rental incentives granted; see also www.epra.com.
(7) EPRA Vacancy3is calculated on the basis of the Estimated Rental Value (ERV) of vacant surfaces divided by the ERV of the total portfolio; see also www.epra.com.
(8) EPRA Cost ratio3consists of the relation of the operating and general charges versus the gross rental income (including and excluding direct vacancy costs); see also www.epra.com.
Contents
Company profile
| Alternative performance measures | |
|---|---|
| Statement of responsible persons | |
| Key figures | |
| Interim annual report | 4 |
| Leasinvest Real Estate on the stock exchange | 14 |
| Real estate report Market information Composition and analysis of the real estate portfolio Valuation report |
18 19 20 23 |
| Condensed financial statements | 24 |
| Report of the auditor | 41 |
| Annexes APMs | 42 |
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Interim annual report
Treesquare Brussels CBD • Belgium
Highlights first half-year 2018
Michel Van Geyte, CEO: "Leasinvest Real Estate realizes half-year figures corresponding to the outlook. The redevelopments Treesquare in the CBD of Brussels (BE) and the extension of the Frun® Park in Asten (AT) were successfully deliverd in the meantime, and the leases are in line with expectations."
For the first half-year of the financial year 2018 we record the following key data:
y The EPRA earnings3increase by 5.3% from € 13.3 million end 1H 2017 to € 14.0 million
y Rise (+26%) of the net result from € 15.6 million end 1H 2017 to € 19.7 million or € 3.99 per share
y Rental income in line with first half-year of 2017
y The rental yield (based on fair value) increases from 6.44% end 2017 to 6.61%
y The funding costs decreases considerably from 2.99% on 31/12/2017 to 2.79%
y Treesquare in the CBD of Brussels and the extension of the Frun® Park Asten were successfully delivered
y The current developments in Belgium and Luxembourg progress as planned
Activity report for the period 01/01/2018- 30/06/2018
INVESTMENT
Belgium
Participation to capital increase of BE-REIT (GVV/SIR) Retail Estates
Leasinvest participated in April 2018 to the capital increase of Retail Estates, a BE-TEIT (GVV/SIR) in which a stake of a little over 10% is held for a while now. Leasinvest subscribed all granted subscription rights for an amount of € 12.9 million and received 198,736 new Retail Estates shares in exchange, that are fully entitled to dividends. The dividend amounted to € 3.60 per share and was received end July.
REDEVELOPMENTS
Grand Duchy of Luxembourg
Boomerang Strassen shopping center
The retail site of 22,721 m², located Route d'Arlon in Strassen, is partially redeveloped into a retail park that will, besides shops, also comprise a restaurant. This site will become the largest retail park in the Luxembourg periphery at the entrance of the city of Luxembourg.
After the redevelopment of the first phase delivered end 2017, the renovation of the parking and the office space (470 m2) have nearly been finalized. The office space has in the meantime been occupied by different tenants.
The delivery of the second phase, comprising the construction of an additional 10.000 m², spread across six commercial units, is foreseen in the course of 2020 after the departure of Bâtiself.
Shopping center Pommerloch
For the shopping center Pommerloch located in the North of the Grand Duchy of Luxembourg, nearby the Belgian border, the building permit was granted for the extension of the parking, in order to respond to the growing number of visitors.
Shopping center Schmiede
With the objective of aligning the Knauf shopping center to consumers' current expectations, the revamping and renovation works of the shopping center will start in September. In the course of the first quarter of 2019 will subsequently start the profound renovation works including an extension of 8,000 m² in order to offer more catering opportunities, shops and room for events.
Schmiede • Luxembourg
Belgium
Current developments in Brussels CBD - Treesquare and Montoyer 63
The office buildings Treesquare and Montoyer 63, both located in the Brussels CBD, are entirely reconstructed. Due to their location in the European district, these office buildings need to perfectly meet the high demands of the occupiers in this district.
Therefore, an original architecture was chosen for Treesquare based on modularity and great attention for interior design. Within the building grows a real tree, symbolizing Europe's growth, and the different spaces and high-end finishing have attracted prime tenants for this building. An occupation rate of 64% before its final delivery and the current negociations demonstrate the success of this development.
The Montoyer 63 office building will be occupied end Q3 2018 by the European Parliament, as announced previously1 . This building was constructed in accordance with the tender issued by the European Parliament to realize its training center at walking distance of the parliament. This means that this building has to perfectly comply with the demands relating to technical performance, such as cooling and ventilation, and equipment, and this, within a strict timing. The construction works evolve as planned.
1 For more information on this, we refer to the press release of 16/02/2017 on the website www.leasinvest.be.
Business center The Crescent and coworking space Motstraat Malines
In the course of the first half-year of 2018 different new agreements could be concluded for the business center The Crescent in the building Motstraat Malines
The Crescent is a co-working & business center concept that was developed years ago by Leasinvest in Anderlecht, focusing on community building, professional support and quality service.
The co-working space "De Mot" is declined from that concept, and was inaugurated in the meanwhile by the mayor of Malines, Bart Somers, and is highly appreciated by the tenants of the building and other users.
The total occupancy rate consequently amounts to 86.4% at present.
This concept fits within the policy of renovation and redevelopment of buildings, permitting us to create value.
OCCUPANCY RATE AND LEASES
Evolution occupancy rate and rental renewals
Over the last couple of years, the total occupancy rate remained constantly high and has slightly decreased on 30/06/2018 to 94.44% coming from 94.80% end 2017, mainly due to the transfer of Treesquare from development projects, not recorded in the calculation of the occupancy rate, to investment properties in operation. The leases in Treesquare have again increased after 30/06/2018, which will also slightly increase the occupancy rate.
Leases
Grand Duchy of Luxembourg
The rental agreement with international retailer Carrefour for 1,715 m2 in the Boomerang Shopping Center in Strassen started on 2 April 2018, as of when the refurbishment works started in view of opening the store in December 2018.
Shopping center Pommerloch in the North of Luxembourg is still very appreciated by national and international retailers, with the opening of a new SportsDirect shop and the conclusion of an agreement with H&M for realizing the largest H&M shop in the North of Luxembourg by 2019. The occupancy rate of the shopping center remains very high.
For the office building Mercator a new rental contract could be concluded for 2,770 m², for a 6.5-year period, the building consequently maintaining its 100% occupancy.
Belgium
Treesquare, that was delivered in the meantime (see 'Redevelopments' above), could welcome over the first half-year 3 additional new tenants for a total of 1,500 m2 and an average duration of over 6 years, at prime rents, the occupancy rate currently standing at 64% (see 'Redevelopments' above).
For Tour & Taxis Royal Depot a number of renegotiations and extensions could be concluded, the occupancy rate of this building remaining at a very high level.
Austria
The extension of over 1,000 m2 of Frun® Park Asten, gradually delivered as of April, is in the meantime fully let, and could recently attract the Wok King restaurant, contributing to the global experience of the rising number of shoppers in this successful retail park that recorded a footfall rate of 1.2 million end 2017.
All rental contracts with sitting tenants in the Frun® Park Asten that would have expired in 2018, were successfully renewed, the occupancy rate of this retail park maintaining its 100% occupancy rate.
Consolidated results period 01/01/2018- 30/06/2018
In the course of the first 6 months, results corresponding to the outlook were recorded. Despite the number of important divestments in the second half of 2017 (4 Belgian logistics buildings and 3 Swiss retail buildings), the rental income remained nearly constant compared to mid-2017, the proceeds of last year's divestments being reinvested (Mercator in Luxembourg and 2 Stadlau buildings in Austria).
The rental income has slightly decreased in comparison with the first half-year of the previous year: € 27.9 million in 1H 2018 vs € 28.1 million in 1H 2017; the decrease of the rental income following the sales of different logistics buildings and the Swiss portfolio in 2017 is to a large extent compensated by the rental income of the newly acquired buildings in Austria and Luxembourg in the course of that same year, and following the fact that the coupon received on the real estate certificate "Lux Airport" (€ 1.3 million) can be considered as rental income.
Like-for-like the rental income is steady (- 0.05%): the decrease by € 0.5 million in Belgium, mainly linked to De Mot, is compensated by an increase of € 0.5 million in Luxembourg (higher income from CFM and Esch).
The gross rental yields have increased in comparison with end 2017 and amount to 6.61% (6.44% end 2017) based on the fair value, and to 6.48% (6.32% end 2017) based on the investment value; the occupancy rate has slightly decreased from 94.8% end 2017 to 94.4% at 30/06/2018, mainly due to the transfer of the building Treesquare (64% occupied) from projects to leased buildings.
The property charges have decreased (- € 0.4 million) from - € 4.6 million in 1H 2017 to - € 4.2 million in 1H 2018, mainly because of lower technical costs (- € 0.2 million) and lower vacancy costs (- € 0.4 million), partially compensated by higher property management costs (+ € 0.2 million). The management costs are calculated in function of the size of the real estate portfolio, that was larger in 1H 2018 than in 1H 2017. The general costs reach the same level as last year. The operating margin (operating result before the portfolio result/rental income) rises from 75.8% in 1H 2017 to 77.3% in 1H 2018.
The changes in fair value of investment properties amount to + € 25 thousand (30/06/2017: € 3.7 million) (or - € 3.7 million) on 30/06/2018. Capital gains were a/o recognized on the project Montoyer, Frun® Park Asten and Boomerang Strassen. On the other hand, losses were recorded on a/o CFM and Riverside.
The financial result amounts to € -1.6 million on 30/06/2018 in comparison with € -7.3 million for 1H 2017. The net interest charges dropped by € 0.5 million despite more credits withdrawn on average than in 1H 2017, following the recent restructuring of the derivatives portfolio. The changes in fair value of the financial assets and liabilites (€ 5.7 million) comprises for the first time the revaluation of the participation in Retail Estates (€ 4.7 million). Until in 2017 it was indeed directly revalued in shareholders' equity (IFRS 9 entered into force since 1/1/2018). The revaluation of the derivatives in the income statement amounts to € 0.8 million in 1H 2018 vs € 0.6 million in 1H 2017.
The net result over 1H 2018 reaches € 19.7 million compared to € 15.6 million on 30/06/2017. In terms of net result per share, this results in € 3.99 per share on 30/06/2018 compared to € 3.16 on 30/06/2017.
The EPRA earnings amount to € 14.0 million (€ 2.83 per share) end June 2018, which represents an important rise compared to 30/06/17 (€ 13.3 million or € 2.69 per share). The slightly lower rental income compared to the first half-year of 2017 (- € 0.2 million) is largely compensated by the combined effect of lower property charges (€ 0.4 million) and lower funding costs (€ 0.5 million).
At the end of the second quarter of the financial year 2018 shareholders' equity, group share (based on the fair value of the investment properties) amounts to € 376.6 million (year-end 2017 € 382.2 million). On 30 June 2018 a decrease of the shareholders' equity of € 5.6 million is recorded because of the dividend distributed, for an amount of € 24.7 million, partially compensated by the positive net result over the first halfyear 2018 of € 19.7 million. Furthermore, there was a negative revaluation of the derivatives for an amount of € -0.6 million, directly booked in shareholders' equity.
The net asset value per share excluding the impact of fair value adjustments on financial instruments (EPRA NAV) reaches € 82.8 end June 2018 in comparison with € 84.0 end 2017.
End June 2018 the net asset value including the impact of fair value adjustments on financial instruments (IAS 39) amounts to € 76.3 per share (31/12/17: € 77.4). The closing price of the Leasinvest Real Estate share on 30 June 2018 amounted to € 95.80.
End June 2018 the debt ratio had increased to 59.31% in comparison with 57.14% end 2017, mainly due to a combination of the dividen distribution and the additional investment in Retail Estates and in the projects Treesquare and Montoyer 63.
Management of financial resources
Per 30/06/2018 the nominal financial debts recorded in the balance sheet amount to € 594.6 million compared to € 540.4 million on 31/12/2017. This increase is attributable to the distribution of the dividend over the past financial year 2017 in combination with the investments in the projects Treesquare and Montoyer 63, and the participation to the capital increase of Retail Estates in April 2018.
On 30/06/2018 these financial debts for an amount of € 594.6 million comprise € 302.8 million of bank credits at variable rate, € 55.0 million of bank credits at fixed rate, € 95,0 million of bonds and € 141.8 million of commercial paper issues.
The spread of the credit portfolio according to the type of funding sources and to the number of credit institutions (currently spread across 8 different credit institutions) is an important element to be able to count on a continuous funding base limiting to a maximum concentrations and counterparty risks. The withdrawals mentioned below are reproduced in a graph in combination with a reproduction of the maturity dates of the credit lines.
Credit lines 30/06/2018
Drawn credits 30/06/2018
The commercial paper issues usually fluctuate around € 165 million, but given the highs and lows, the issues vary between € 140 and € 190 million. Given the short-term nature of this funding source, available, undrawn bank credits are at all time foreseen to cover the issued amount in the commercial paper programme. After decuction of this buffer, Leasinvest Real Estate disposes of over € 56.2 million of available undrawn credit lines on 30/06/2018.
In August a credit line of € 15 million was already extended till in 2023. Furthermore, a fixed-rate credit with initial maturity in 2020 was extended by 3 more years, decreasing the fixed interest rate.
The non-expired maturity dates of credit lines in 2018 fall due around yearend; the negotiations for refunding have already started and will lead to a further spread of the maturity profile below.
The weighted average duration of the granted credit lines amounts to 3.0 years per 30/06/2018; this duration will increase after refunding the lines that fall due at the end of 2018.
Maturities credit lines
The hedge ratio on 30/06/2018 amounts to 71% and is calculated based on the total nominal withdrawn hedge amount of the Interest Rate Swaps and Interest caps (€ 272.5 million), augmented by the credits at fixed rate including the bonds (€ 150.0 million) over the total withdrawn amount of financial debts per 30 June 2018 (€ 594.6 million). The ratio is slightly lower than the 75%-target, although we have to take account of the fact that 2 more Interest Rate Swaps with a global notional amount of € 20 million become active as of 15 July 2018. As of that date, the hedge ratio stands at 74%. The weighted average duration of the hedges amounts to 5.0 years on 30/06/2018.
The weighted average funding cost has significantly dropper per 30 June 2018 to 2.79%, in comparison with 2.94% over the first half-year of 2017, following an early sale of the Cross Currency Swaps end 2017 in combination with the current restructuring program of the Interest Rate Swaps. These restructurings will reach their full effect on the results as of Q3 2018.
Important events after the closing of the period 01/01/2018-30/06/2018
In the course of July and August 2018 2 credits were extended:
- A variable rate credit line of € 15 million with initial maturity in August 2018 was extended till August 2023 at interesting conditions;
- A fixed rate credit of € 10 million with initial maturity in August 2020 was extended till August 2023 at a lower fixed interest rate. Both extensions will lead to a further drop in funding costs.
Corporate Governance
COMPOSITION OF THE BOARD OF DIRECTORS OF THE STATUTORY MANAGER OF LRE
At the general meeting of Leasinvest Real Estate Management SA, statutory manager of Leasinvest Real Estate SCA, held on 22 May 2018, the following amendments to the board of directors were approved:
- The directors' mandates of Jan Suykens, Piet Dejonghe, Michel Van Geyte, Sonja Rottiers and Eric Van Dyck were extended for a period of 4 years, i.e. till the general meeting of May 2022 that will decide on the approval of the financial statements closed at 31 December 2021;
- Dirk Adriaenssen was nominated director for a period of 4 years, i.e. till the general meeting of May 2022 that will decide on the approval of the financial statements closed at 31 December 2021.
The director's mandate of Jean-Louis Appelmans also ended on 22 May, but he was again nominated director as of 1 June 2018, this time as a non-executive director. His mandate ends at the general meeting of May 2019 that will decide on the approval of the financial statements closed at 31 December 2018.
A number of the abovementioned extensions of mandates and nominations are still subject to approval by FSMA.
That same general meeting also ratified the director's mandate of Nicolas Renders who was previously co-opted as director, to replace Guy van Wymersch-Moons, who resigned as a director end October 2017. Following the end of the mandate for which he was co-opted, Nicolas Renders was again nominated director at that same general meeting for a period of 4 years, till the general meeting of May 2022 that will decide on the approval of the financial statements closed at 31 December 2021.
The mandates of Michel Eeckhout and Mark Leysen ended at that general meeting and were not extended.
The abovementioned nominations also lead to amendments to the composition of the different committees of the board of directors. These changes are also still subject to approval by FSMA.
The audit committee is still chaired by Sonja Rottiers, henceforth acting as an independent director. The other members are Dirk Adriaenssen and Piet Dejonghe.
The nomination and remuneration committee is still chaired by Jan Suykens. The other members are Eric Van Dyck and Sonja Rottiers.
The committee of independent directors is composed of Eric Van Dyck, Sonja Rottiers and Dirk Adriaenssen.
AMENDMENTS TO THE MANAGEMENT TEAM
Till 22 May 2018 Jean-Louis Appelmans was permanent representative of the statutory manager of LRE. Hij was also co-CEO until his retirement end May 2018. As of 22 May 2018, Michel Van Geyte is permanent representative of the statutory manager and also CEO. He also remains an effective officer of LRE.
Since his retirement, Jean-Louis Appelmans is no longer an effective officer, and he is replaced by Tim Rens, CFO of LRE. Unlike what was previously stated in the annual report 2017, Sven Janssens will not be an effective officer.
Since June, the executive committee consists of 3 people: Michel Van Geyte (CEO), Sven Janssens1 (COO) and Tim Rens (CFO).
Since 1 June 2018, Michel Van Geyte takes over the internal audit function from Tim Rens. The latter becomes in his turn responsible for risk management of the BE-REIT (GVV/SIR), a function previously exercised by Jean-Louis Appelmans. The compliance officer is Paul Van Lierde since 1 June 2018, taking over this task from Jean-Louis Appelmans.
Some of the amendments to the management team are still subject to approval by FSMA.
RENEWAL OF THE AUDITOR'S MANDATE
The ordinary general meeting of 22/05/2018 approved the renewal of the mandate of Ernst & Young bedrijfsrevisoren, represented by Mr Joeri Klaykens, and this for a term of 3 financial years, i.e. till after the general meeting of May 2021 that will decide on the approval of the financial statements closed at 31 December 2020.
Overview of main relatedparty transactions
In the period 01/01/2018-30/06/2018 no transactions with related parties, which had material consequences with regard to the financial position or the results of Leasinvest Real Estate, took place.
Main risks and uncertainties for the remaining months of the financial year
For an overview of the main risks and uncertainties we refer to the financial risk management in the condensed financial statements.
Outlook financial year 2018
As already mentioned in the annual financial report 2017, Leasinvest Real Estate expects for 2018, on the one hand, a rental income in line with 2017. The funding costs, on the other hand, will decrease, also by restructuring the hedges portfolio. Except for extraordinary and unexpected events, this should result in the possibility to maintain the dividend at least at the same level.
The Crescent - De Mot Malines • Belgium
Shareholder structure
The Leasinvest Real Estate shares are listed in Belgium on Euronext Brussels (BEL MID).
Extensa Group SA (Ackermans & van Haaren Group) was the founder and promoter of the public BE-REIT (GVV/SIR). Ackermans & van Haaren SA holds 100% of the shares of the statutory manager, Leasinvest Real Estate Management SA.
Number of listed shares (4,938,870)
Notes to the key figures and graphs
In the first half-year of 2018 the price of the Leasinvest Real Estate share increased to € 101.5, followed by a decrease after payment of the dividend over the 2017 financial year in May 2018. The premium compared to the net asset value (based on fair value) amounted to +26% on 30/06/2018.
The average monthly traded volume of the share over the first half of 2018 decreased and amounted to 26,857 shares (31/12/2017: 28,728). The velocity for 6 months (6.53% over the first half of 2018) also decreased but is relatively limited due to the limited free float of the share (35%). If we only take account of the freely traded shares, the free float velocity for six months amounts to 18.64% over the first half-year of 2018.
Since the beginning of 2016 (31/03/2016: inclusion of the Leasinvest Real Estate share in the BEL MID index), we record a permanently higher return of the share in comparison with the index, till end 2017. Since then, the BEL MID records a higher return than the Leasinvest Real Estate share. In comparison with the EPRA Belgium index the Leasinvest Real Estate share still records a noticeably higher return. The return of the EPRA Eurozone Index showed an important rise in the first half-year of 2017 en records a substantially higher return than the Leasinvest Real Estate share.
Key figures
| 30/06/2018 | 31/12/2017 | |
|---|---|---|
| Number of listed shares (#) | 4,938,870 | 4,938,870 |
| Number of issued shares (#) | 4,938,870 | 4,938,870 |
| Number of shares entitled to the result of the period (#) | 4,938,870 | 4,938,870 |
| Market capitalisation based on closing price (€ million) | 473 | 474 |
| Free float (%) | 35% | 35% |
| Closing price (€) (1) | 95.80 | 96.0 |
| Highest price (€) (1) | 101.50 | 107.95 |
| Lowest price (€) (1) | 92.40 | 93.99 |
| Average monthly volume (#) (1) | 26,857 | 28,728 |
| Velocity (%) (1) (2) | 6.53% | 6.98% |
| Free float velocity (%) (1) (3) | 18.64% | 19.94% |
| Premium based on closing price vs NAV (fair value) | 26% | 24% |
(1) For the financial year 31/12/2017 the data are calculated over a period of 12 months and for 30/06/2018 over a period of 6 months.
(2) Number of traded shares / total number of listed shares.
(3) Number of traded shares / (total number of listed shares * free float).
Price premium/discount Leasinvest Real Estate share price versus net asset values
Comparison of return on the Leasinvest Real Estate share versus return BEL MID1
Comparison of return on the Leasinvest Real Estate share versus the return on the EPRA indices (www.epra.com)2
Information from EPRA, not verified by any authority.
Real estate report
Montoyer 63 Brussels CBD • Belgium
Real estate market over the first half-year of 2018
The information on the real estate market below comprises extracts from the real estate market reports of Cushman & Wakefield for the Grand Duchy of Luxembourg and Belgium, and from CBRE for Austria, reproduced with their consent, and of which the contents have not been verified.
Grand Duchy of Luxembourg
Office market
Rental market: record number of transactions
The total take-up for 1H 2018 amounts to a solid 102,000 m², which is however lower than in 1H 2017. Despite slightly lower than 2016 and 2017 in terms of surfaces, the number of deals observed stands at a record 156 transactions since January.
As a result of steady performances and a very limited speculative pipeline, the vacancy rate is still to be found around 3.3%, amongst the lowest rates in Europe. Important disparities exist between districts, with a vacancy rate around 1% in the CBD and close to 20% in some peripheral locations.
Prime rents increased from € 46 to € 50/m2 /month in 2017 in the CBD and they should remain stable in the coming months.
Investment market: historic low yields
Invested volumes stand to a high € 723 million since the start of the year.
Prime yields currently stand at a historically low 4.2% in the CBD and the trend is on the stabilization for the coming months.
Retail market
Rental market: take-up nearly reached total for 2017
After reaching a stable 28,000 m2 in 2017, retail take-up already stands around 27,000 m2 (44 transactions) since January 2018.
Rents are stable compared to the previous quarter, at € 180/m2 /month in the Grand Rue, around € 115/m2 /month in the prime shopping centers and at € 21/m2 /month for prime out-of-town locations.
Investment market: low volumes due to a lack of opportunities
The invested volumes are still at a low € 11 million with only one transaction observed. Appetite remains strong though few opportunities currently exist in the market.
Belgium
Office market
Rental market: low activity on the Brussels office market
Activity is at a very low level with 144,000 m2 recorded in 1H 2018 as a result of a lack of significant transactions and a decrease in the number of deals recorded. Year-to-date, co-working operators confirm their expansion and represent close to 20% of the total take-up.
The vacancy rate continues its slow decrease to stand at 8.2%, its lowest since 2007. In the CBD, the vacancy rate is recorded at 5.3%, while it is around 13% and 14% respectively in the decentralized areas and in the periphery. Furthermore, the vacant spaces in grade A buildings post a new decrease and reach a low 33,000 m2 currently available. As the speculative pipeline is important, the vacancy rate could witness a first slight uptick before the end of the year.
No changes are to mention regarding the prime rental levels which remained unchanged at € 305/m2 /year in the Leopold district. The average rents are also stable, around € 170/m2 /year on the Brussels office market.
As to regional markets, every market apart from Mechelen (10,000 m2 ), where Leasinvest launched its successful business & co-working concept, declined in Q2. Indeed, Mechelen has recently been buoyed by co-working operators looking to benefit from its central location in Flanders and on the Brussels-Antwerp axis as well as occupiers expanding their presence on this market.
Investment market: high volumes
Year-to-date, € 994 million have been invested in Brussels, a high volume mainly helped by some significant transactions. As appetite remains buoyant and the competition between investors fierce, 2018 should overtake the € 1.4 billion recorded in 2017 as significant transactions are in the pipeline.
Prime yields remained unchanged in Q2 at 4.40% and 3.65% for long-term prime office yields. They are however forecasted to compress further to 4.25% given the abovementioned strong appetite and competition.
Retail market
Rental market: weak demand
After a disappointing first quarter, occupier activity was relatively strong over Q2 2018 with 113,000 m2 of take-up registered. Still, demand is weak overall and there is vacancy, especially in smaller towns and shopping galleries.
Investment market: boosted by sale of shopping centers
A total of € 360 million was transacted in the retail market in Q2 bringing the half-year volume to € 1.300 million. This volume was boosted to an exceptional level because of the sales of three important shopping centers: W Shopping Centre (Woluwe Brussels), Rive Gauche in Charleroi, and Docks Bruxsel in Brussels. These centers were acquired by international institutional investors. The volume of purchases in other asset classes is lower than in the previous years.
The hardening of yields for prime products seems to have bottomed out as bond interest rates are expected to pick up again. Prime yields for the out of town segment remain stable at 5.25%.
Austria
Investment market: retail on the rise
In the first half-year 2018 total investment volume in Austrian institutional real estate achieved around € 2.3 billion (-9% compared to 1H 2017). Almost 62% of the transaction volume was registered in Vienna, where Leasinvest invested in two major retail parks in 2017, in the Stadlau district. Investments in Austrian retail properties represented a substantially high 38% of total investments, compared to only 12% and ca. 11% in 2016 and 2017 respectively.
In 1H 2018 the prime yields for retail parks remained stable at 5.60%.
Composition & analysis of the real estate portfolio
GEOGRAPHICAL BREAKDOWN GRAND DUCHY OF LUXEMBOURG – BELGIUM - AUSTRIA
| Fair value (€ M) |
Investment value (€ M) |
Share in portfolio (%) based on FV |
Contractual rent (€ M/year) |
Rental yield based on FV (%) |
Rental yield based on IV (%) |
Occupancy rate (%) |
Duration | |
|---|---|---|---|---|---|---|---|---|
| Grand Duchy of Luxembourg | 492.14 | 500.31 | 53 | 34.56 | 7.02 | 6.91 | 96.18 | 3.75 |
| Belgium | 290.86 | 297.87 | 32 | 18.53 | 6.37 | 6.22 | 89.63 | 4.32 |
| Austria | 104.16 | 106.76 | 11 | 5.52 | 5.30 | 5.17 | 100.00 | 6.61 |
| Real estate available for lease | 887.16 | 904.94 | 96 | 58.61 | 6.61 | 6.48 | 94.44 | 4.19 |
| Assets held for sale | 0 | 0 | 0 | 0 | ||||
| Projects Belgium | 34.68 | 35.55 | 4 | 0.00 | ||||
| Total investment properties | 921.84 | 940.49 | 100 | 58.61 |
BREAKDOWN ACCORDING TO ASSET CLASSES
| Fair value (€ M) |
Investment value (€ M) |
Share in portfolio (%) based on FV |
Contractual rent (€ M/year) |
Rental yield based on FV (%) |
Rental yield based on IV (%) |
Occupancy rate (%) |
Duration | |
|---|---|---|---|---|---|---|---|---|
| Retail | ||||||||
| Retail Grand Duchy of Luxembourg | 287.36 | 290.39 | 31 | 19.84 | 6.90% | 6.83% | 96.58 | 3.86 |
| Retail Belgium | 50.44 | 51.71 | 5 | 3.48 | 6.90% | 6.73% | 99.43 | 2.47 |
| Retail Austria | 104.16 | 106.76 | 11 | 5.52 | 5.30% | 5.17% | 100.00 | 6.61 |
| Total retail | 441.96 | 448.86 | 48 | 28.84 | 6.53 | 6.43 | 97.53 | 4.35 |
| Offices | ||||||||
| Offices Grand Duchy of Luxembourg | 184.77 | 189.41 | 20 | 13.40 | 7.25% | 7.07% | 95.86 | 3.53 |
| Offices Brussels | 176.71 | 181.14 | 19 | 10.49 | 5.94% | 5.79% | 86.19 | 3.41 |
| Offices rest of Belgium | 21.28 | 21.81 | 2 | 1.66 | 7.80% | 7.61% | 86.40 | 4.80 |
| Total offices | 382.76 | 392.36 | 42 | 25.55 | 6.68 | 6.51 | 91.08 | 3.55 |
| Logistics/Semi-industrial | ||||||||
| Logistics/Semi-industrial Belgium | 42.43 | 43.21 | 5 | 2.90 | 6.83 | 6.71 | 95.29 | 11.32 |
| Logistics/Semi-industrial Grand Duchy of Luxembourg |
20.01 | 20.51 | 2 | 1.32 | 6.60 | 6.44 | 93.29 | 4.51 |
| Total Logistics/Semi-industrial | 62.44 | 63.72 | 7 | 4.22 | 6.76 | 6.62 | 93.51 | 9.13 |
| Investment properties | 887.16 | 904.94 | 96 | 58.61 | 6.61 | 6.48 | 94.44 | 4.19 |
| Assets held for sale | 0 | 0 | 0 | 0 | ||||
| Real estate available for lease | 887.16 | 904.94 | 96 | |||||
| Projects Belgium | 34.68 | 35.55 | 4 | |||||
| Total investment properties | 921.84 | 940.49 | 100 |
EVOLUTION OF THE FAIR VALUE
OCCUPANCY RATE
(1) A moving average is a type of average value based on a weight of the current occupancy rate and 1% the previous occupancy rates.
RENTAL BREAKS (FIRST BREAK DATE) AND CONTRACTUALLY GUARANTEED RENTAL INCOME
Conclusions of the real estate expert1
VALUATION UPDATE AS AT 30 JUNE 2018 OF THE LEASINVEST REAL ESTATE SCA PORTFOLIO
REPORT BY THE EXTERNAL VALUER CUSHMAN & WAKEFIELD
We are pleased to report our valuation of the investment and fair values of the Leasinvest Real Estate SCA portfolio as at 30 June 2018.
Our valuation has been prepared on the basis of the information provided by Leasinvest Real Estate SCA. We assume this information is correct and complete, and that there are no undisclosed matters which could affect our valuation.
Our valuation methodology is the capitalisation of the market rent with corrections to take account of the difference between the current rent and the market rent. We have also based ourselves on comparables that were available at the date of valuation.
The values were determined taking current market parameters into account.
We would like to draw your attention on the following points:
-
- The portfolio consists of business parks, offices and semi-industrial buildings or distribution centres and shops, located in Belgium, in the Grand Duchy of Luxembourg and in Austria.
-
- The total occupancy rate2 of the portfolio (including the projects) is 92.06% (respectively 82.94%, 96.18% and 100% for the Belgian, the Luxembourg and the Austrian portfolios.
-
- The total occupancy rate of the portfolio (excluding the projects) is 94.44% (respectively 89.63%, 96.18% and 100% for the Belgian, the Luxembourg and the Austrian portfolios.
-
- The remaining weighted average duration of the current leases for the whole portfolio equals to 16.74 quarters or 4.19 years. The projects and assets 'to be sold' were not taken into account in this parameter.
-
- A total investment value of € 940.484.000 (nine hundred and forty million four hundred eighty-four thousand euro) has been determined, with respectively € 333,411,000, € 500,313,000 and € 106,760,000 as investment values for the Belgian, Luxembourg and Austrian portfolios.
-
- A total fair value of € 921.836.000 (nine hundred and twenty-one million eight hundred and thirty-six thousand euro) has been determined, with respectively € 325,537,000, € 492,142,000 and € 104,157,000 as fair values for the Belgian, Luxembourg and Austrian portfolios.
On this basis, the initial yield of the complete portfolio (including the Projects and assets 'to be sold') in terms of investment value is 6.23% (respectively 5.56%, 6.91% and 5.18% for the Belgian, Luxembourg and Austrian portfolios) and the initial yield of the complete portfolio in terms of fair value is 6.36% (respectievelijk 5.69%, 7.02% and 5.30% for the Belgian, Luxembourg and Austrian portfolios).
GREGORY LAMARCHE Associate Valuation & Advisory For Cushman & Wakefield
KOEN NEVENS MRICS Managing Partner For Cushman & Wakefield
1 The conclusions of the valuation report were reproduced with the agreement of Cushman & Wakefield. 2 The occupancy rate is valid on the date of the valuation and does not take into account future availability (already known or not) nor with future new contracts (signed or not). This figure is calculated on the basis of the following formula: (market rent of all let areas)/ (market rent of the complete portfolio).
The condensed consolidated financial statements of Leasinvest Real Estate have been approved for publication by the board of directors on 21 August 2018.
The half-year report of the board of directors should be read jointly with the condensed financial statements of Leasinvest Real Estate. The condensed financial statements have been subject to a limited review by the auditor.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| (in € 1,000) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Rental income | 27 858 | 28 084 |
| Write-back of lease payments sold and discounted | 0 | 0 |
| Related-rental expenses | 0 | 0 |
| NET RENTAL INCOME | 27 858 | 28 084 |
| Recovery of property charges | 76 | 21 |
| Recovery income of charges and taxes normally payable by tenants on let properties | 1 524 | 1 184 |
| Costs payable by tenants and borne by the landlord for rental damage and refurbishment at end of lease |
0 | 0 |
| Charges and taxes normally payable by tenants on let properties | -1 524 | -1 184 |
| Other rental-related income and expenditure | -903 | -992 |
| PROPERTY RESULT | 27 031 | 27 113 |
| Technical costs | -508 | -750 |
| Commercial costs | -371 | -386 |
| Charges and taxes on un-let properties | -520 | -915 |
| Property management costs | -2 555 | -2 321 |
| Other property charges | -222 | -208 |
| PROPERTY CHARGES | -4 176 | -4 580 |
| PROPERTY OPERATING RESULT | 22 855 | 22 533 |
| Corporate operating charges | -1 438 | -1 515 |
| Other operating charges and income | 122 | 275 |
| OPERATING RESULT BEFORE RESULT ON THE PORTFOLIO | 21 539 | 21 293 |
| Result on disposal of investment properties | 0 | -1 924 |
| Changes in fair value of investment properties | 25 | 3 693 |
| OPERATING RESULT | 21 564 | 23 062 |
| Financial income | 59 | 59 |
| Net interest charges | -6 803 | -7 348 |
| Other financial charges | -563 | -539 |
| Changes in fair value of financial assets and liabilities | 5 690 | 565 |
| FINANCIAL RESULT | -1 617 | -7 263 |
| PRE-TAX RESULT | 19 947 | 15 799 |
| Corporate taxes | -264 | -204 |
| Exit tax | 0 | 0 |
| TAXES | -264 | -204 |
| NET RESULT | 19 683 | 15 595 |
| Attributable to: | ||
| Minority interests | 0 | 0 |
| Net result - Group share | 19 683 | 15 595 |
OTHER ELEMENTS OF COMPREHENSIVE INCOME
| (in € 1,000) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Reserve for treasury shares | 0 | 281 |
| Other | 0 | 71 |
| Changes in the effective part of the fair value of authorized cash flow hedges according to IFRS | -601 | 8 624 |
| Changes in the effective part of the fair value of financial assets available for sale | 0 | 7 672 |
| Other elements of comprehensive income | -601 | 16 648 |
| Minority interests | ||
| Other elements of comprehensive income – Group share | -601 | 16 648 |
| COMPREHENSIVE INCOME | 19 082 | 32 243 |
| Attributable to: | ||
| Minority interests | 0 | 0 |
| Comprehensive income – Group share | 19 082 | 32 243 |
| NET RESULT | 19 683 | 15 595 |
| To be eliminated | ||
| - Result on disposal of investment properties | 0 | -1 924 |
| - Changes in fair value of investment properties | 25 | 3 693 |
| - Changes in fair value of financial assets and liabilities | 5 690 | 565 |
| EPRA earnings3 | 13 968 | 13 261 |
| RESULTATEN PER AANDEEL (1) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| (in €) | (6 months) | (6 months) |
| Comprehensive income per share, group share (1) | 3.86 | 6.53 |
| Comprehensive income per share entitled to dividends | 3.86 | 6.53 |
| Net result per share, group share (1) | 3.99 | 3.16 |
| Net result per share entitled to dividends | 3.99 | 3.16 |
| EPRA earnings3per share | 2.83 | 2.69 |
(1) Based on the number of shares at closing date (30/06/2018).
CONSOLIDATED BALANCE SHEET
| (in € 1,000) | 30/06/2018 | 31/12/2017 |
|---|---|---|
| ASSETS | ||
| I. NON-CURRENT ASSETS | 1 015 949 | 979 104 |
| Intangible assets | 1 | 2 |
| Investment properties | 903 996 | 885 151 |
| Other tangible assets | 922 | 354 |
| Non-current financial assets | 93 190 | 75 757 |
| Finance lease receivables | 17 840 | 17 840 |
| Trade receivables and other non-current assets | 0 | 0 |
| Deferred taxes - assets | 0 | 0 |
| II. CURRENT ASSETS | 20 937 | 20 189 |
| Assets held for sale | 0 | 0 |
| Current financial assets | 0 | 0 |
| Finance lease receivables | 0 | 0 |
| Trade receivables | 12 859 | 11 471 |
| Tax receivables and other current assets | 2 566 | 2 533 |
| Cash and cash equivalents | 4 298 | 5 702 |
| Deferred charges and accrued income | 1 214 | 483 |
| TOTAL ASSETS | 1 036 886 | 999 293 |
| LIABILITIES | ||
| TOTAL SHAREHOLDERS' EQUITY | 376 595 | 382 206 |
| I. SHAREHOLDERS' EQUITY ATTRIBUTABLE TO THE SHAREHOLDERS OF THE PARENT COMPANY | 376 595 | 382 206 |
| Capital | 54 315 | 54 315 |
| Share premium account | 121 091 | 121 091 |
| Purchase of treasury shares | -12 | -12 |
| Reserves | 181 518 | 159 267 |
| Net result of the financial year | 19 683 | 47 545 |
| Translation differences | 0 | 0 |
| II. MINORITY INTERESTS | 0 | 0 |
| LIABILITIES | 660 291 | 617 088 |
| I. NON-CURRENT LIABILITIES | 463 560 | 384 626 |
| Provisions | 11 | 11 |
| Non-current financial debts | 427 413 | 348 156 |
| - Credit institutions | 328 693 | 251 168 |
| - Other | 98 720 | 96 988 |
| Other non-current financial liabilities | 33 364 | 33 696 |
| Deferred taxes - liabilities | 2 772 | 2 763 |
| II. CURRENT LIABILITIES | 196 730 | 232 461 |
| Provisions | 0 | 0 |
| - Pensions | 0 | 0 |
| - Other | 0 | 0 |
| Current financial debts | 171 761 | 192 284 |
| - Credit institutions | 30 061 | 24 053 |
| - Other | 141 700 | 168 231 |
| Other current financial liabilities | 0 | 160 |
| Trade debts and other current debts | 13 290 | 28 193 |
| - Exit tax | 0 | 12 907 |
| - Other | 13 290 | 15 286 |
| Other current liabilities | 2 030 | 1 716 |
| Accrued charges and deferred income | 9 650 | 10 108 |
| TOTAL EQUITY AND LIABILITIES | 1 036 886 | 999 293 |
CONSOLIDATED CASH FLOW STATEMENT
| (in € 1,000) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| (6 months) | (6 months) | |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR | 5 702 | 20 768 |
| 1. Cash flow from operating activities | 3 757 | 21 242 |
| Net result | 19 683 | 15 595 |
| Adjustment of the profit for non-cash and non-operating elements | 1 397 | 5 527 |
| Depreciations, write-downs and taxes | -195 | 33 |
| - Depreciations and write-downs on intangible and other tangible assets (+/-) | 70 | 83 |
| - Taxes | -215 | 0 |
| - Taxes paid | -50 | -50 |
| Other non-cash elements | -5 715 | -4 258 |
| - Changes in fair value of investment properties (+/-) | -25 | -3 693 |
| - Increase (+) / Decrease (-) in fair value of financial assets and liabilities | -5 690 | -565 |
| Non-operating elements | 7 307 | 9 752 |
| Gains on disposals of non-current assets | 0 | 1 924 |
| Dividends received | 0 | 0 |
| Write-back of financial income and financial charges | 7 307 | 7 828 |
| Change in working capital requirements | -17 323 | 120 |
| Movements in asset items | -2 153 | 1 355 |
| Movements in liability items | -15 170 | -1 235 |
| 2. Cash flow from investment activities | -31 711 | -44 490 |
| Investments | -31 711 | -47 746 |
| Investment properties in operation | -6 343 | -40 834 |
| Development projects | -11 793 | -6 374 |
| Intangible and other tangible assets | -637 | -91 |
| Non-current financial assets | -12 938 | -447 |
| Divestments | 0 | 3 256 |
| 3. Cash flow from financing activities | 26 550 | 12 878 |
| Change in financial liabilities and financial debts | 58 734 | 45 012 |
| Increase (+) / Decrease (-) of financial debts | 58 734 | 45 012 |
| Increase (+) / Decrease (-) of other financial liabilities | 0 | 0 |
| Financial income received | 59 | 59 |
| Financial charges paid | -7 550 | -7 887 |
| Change in shareholders' equity | -24 693 | -24 306 |
| Changes in reserves | 0 | -388 |
| Increase (+) / Decrease (-) of treasury shares | 0 | 281 |
| Dividend of the previous financial year | -24 693 | -24 199 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 4 298 | 10 398 |
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL AND RESERVES
| Reserves | |||||||
|---|---|---|---|---|---|---|---|
| (in € 1,000) | Capital | Share premium | Legal reserve | Reserve from the balance of changes in fair value of investment properties (+/-) |
Reserve from the balance of changes in fair value of authorized hedges subject to hedge ac counting under IFRS |
Reserve for translation dif ferences from the conversion of a foreign activity (+/-) |
|
| IFRS BALANCE SHEET 31/12/17 | 54 315 | 121 091 | 5 431 | 27 956 | -31 888 | 8 | |
| Distribution closing dividend of previous financial year |
|||||||
| Transfer net result 2017 to reserves | 22 348 | ||||||
| Transfer historic revaluation of sold buildings | 5 782 | ||||||
| Global result financial year 2018 (6 months) | -601 | ||||||
| IFRS BALANCE SHEET 30/06/18 | 54 315 | 121 091 | 5 431 | 56 086 | -32 489 | 8 |
End June 2018 shareholders' equity, group share (based on the fair value of the investment properties) amounts to € 376.60 million (31/12/2017: € 382.21 million) or € 76.3 per share (31/12/2017: € 77.4).
The decrease in shareholders' equity in comparison with end 2017 is attributable to the dividend distribution over 2017, in May 2018, for an amount of € 24.69 million. On the other hand, there was a positive net result over the first half of 2018 of € 19.68 million. Furthermore, there was a negative revaluation of the derivatives held within the framework of effective hedging, of € 0.60 million. That revaluation is booked directly in shareholders' equity in conformity with IAS 39.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 Basis for presentation
These interim condensed consolidated financial statements have been established in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union. These interim condensed consolidated financial statements are in accordance with IAS 34 'Interim financial reporting'.
For establishing the interim condensed consolidated financial statements, the same accounting standards and methods have been used as for the financial statements per 31 December 2017, as described in note 2 to the financial statements in the Annual financial report 2017, to be consulted on the website www.leasinvest.be.
Since 1 January 2018 two new standards entered into force: IFRS 9 (Financial Instruments) and IFRS 15 (Revenue from Contracts with Customers). The latter standard has no impact on the financial statements, unlike IFRS 9, where a (limited) impact is recorded:
- The financial assets available for sale will nog longer be booked in shareholders' equity, but in the income statement. On 30 June 2018 an amount of € 4.7 million was consequently recorded in the income statement under the item "Changes in fair value of financial assets and liabilities". This concerns the revaluation of the participation in Retail Estates. The historic revaluation reserve of € 20.4 million accumulated till 31 December 2017, is now part of the result carried forward, and will be considered as a non-distributable reserve in accordance with the RD on BE-REIT (GVV/SIR).
- There are no material depreciations recorded on financial assets valued at amortized cost. Consequently, no credit losses were yet anticipatively recognized in the income statement per 30 juni 2018.
| Minority Total share interests holders' equity |
Shareholders' equity attribut able to the shareholders of the parent company |
Net result of the financial year |
Result carried forward |
Other reserves | Reserve for treasury shares |
Reserve from the balance of changes in fair value of author ized hedges not subject to hedge ac counting under IFRS (+/-) |
|---|---|---|---|---|---|---|
| 0 382 206 |
382 206 | 47 545 | 145 087 | 20 379 | -11 | -7 706 |
| -24 694 | -24 694 | -24 694 | ||||
| 0 | 0 | -47 545 | 24 705 | 492 | ||
| 0 | 0 | -5 782 | ||||
| 19 082 | 19 082 | 19 683 | ||||
| 0 376 595 |
376 595 | 19 683 | 139 316 | 20 379 | -11 | -7 214 |
2 Segment reporting
CONDENSED CONSOLIDATED INCOME STATEMENT (GEOGRAPHICAL SEGMENTATION)
| (in € 1,000) | Belgium | |
|---|---|---|
| 30/06/2018 | 30/06/2017 | |
| (+) Rental income | 8 363 | 11 518 |
| (+) Write-back of lease payments sold and discounted | ||
| (+/-) Related-rental expenses | 0 | |
| NET RENTAL INCOME | 8 363 | 11 518 |
| (+) Recovery of property charges | 76 | |
| (+) Recovery income of charges and taxes normally payable by tenants on let properties | 1 071 | 555 |
| (-) Costs payable by tenants and borne by the landlord for rental damage and refurbishment at end of lease | ||
| (-) Charges and taxes normally payable by tenants on let properties | -1 071 | -555 |
| (+/-) Other rental-related income and expenditure | -597 | -507 |
| PROPERTY RESULT | 7 842 | 11 011 |
| (-) Technical costs | -229 | -406 |
| (-) Commercial costs | -178 | -75 |
| (-) Charges and taxes on un-let properties | -409 | -819 |
| (-) Property management costs (1) | -2 298 | -2 136 |
| (-) Other property charges | -177 | -106 |
| PROPERTY CHARGES | -3 291 | -3 542 |
| PROPERTY OPERATING RESULT | 4 551 | 7 469 |
| (-) Corporate operating charges | -777 | -797 |
| (+/-) Other operating charges and income | -314 | 29 |
| OPERATING RESULT BEFORE RESULT ON THE PORTFOLIO | 3 460 | 6 701 |
| (+/-) Result on disposal of investment properties | -1 924 | |
| (+/-) Changes in fair value of investment properties | 52 | 4 176 |
| OPERATING RESULT | 3 512 | 8 953 |
| (+) Financial income | ||
| (-) Interest charges | ||
| (-) Other financial charges | ||
| (+/-) Changes in fair value of financial assets and liabilities | ||
| FINANCIAL RESULT PRE-TAX RESULT |
0 3 512 |
0 8 953 |
| (+/-) Corporate taxes | ||
| (+/-) Exit tax | ||
| TAXES | 0 | 0 |
| NET RESULT | 3 512 | 8 953 |
| Attributable to: | ||
| Minority interests | ||
| Group share |
(1) The property management costs consist a/o of the fee paid by Leasinvest Real Estate and its Belgian subsidiaries to the statutory manager Leasinvest Real Estate Management SA. Of the total fee paid by Leasinvest Real Estate for the first 6 months of the financial year 2018 (€ 2.1 million) € 0.9 million is related to the Luxembourg real estate portfolio. The fee is however fully recorded in the Belgian segment because Leasinvest Real Estate is the actual debtor.
| Luxembourg | Switzerland | Austria | Corporate | TOTAL | |||||
|---|---|---|---|---|---|---|---|---|---|
| 30/06/2018 | 30/06/2017 | 30/06/2018 | 30/06/2017 | 30/06/2018 | 30/06/2017 | 30/06/2018 | 30/06/2017 | 30/06/2018 | 30/06/2017 |
| (6 months) | (6 months) | ||||||||
| 16 558 | 13 938 | 1 323 | 2 937 | 1 305 | 27 858 | 28 084 | |||
| 0 | 0 | ||||||||
| 16 558 | 13 938 | 0 | 1 323 | 2 937 | 1 305 | 0 | 0 | 27 858 | 28 084 |
| 21 | 76 | 21 | |||||||
| 170 | 629 | 283 | 1 524 | 1 184 | |||||
| 0 | |||||||||
| -170 | -629 | -283 | -1 524 | -1 184 | |||||
| -220 | -207 | -26 | -86 | -252 | -903 | -992 | |||
| 16 338 | 13 752 | 0 | 1 297 | 2 851 | 1 053 | 0 | 0 | 27 031 | 27 113 |
| -212 | -338 | -6 | -67 | -508 | -750 | ||||
| -100 | -245 | -92 | -66 | -370 | -386 | ||||
| -112 | -97 | -521 | -916 | ||||||
| -257 | -184 | -2 555 | -2 320 -208 |
||||||
| -45 | -60 | -42 | -222 | ||||||
| -726 | -924 | 0 | -48 | -159 | -66 | 0 | 0 | -4 176 | -4 580 |
| 15 612 | 12 828 | 0 | 1 249 | 2 692 | 987 | 0 | 0 | 22 855 | 22 533 |
| -422 | -502 | -9 | -240 | -207 | -1 439 | -1 515 | |||
| 12 | 240 | 425 | 6 | 123 | |||||
| 15 202 | 12 566 | 0 | 1 240 | 2 877 | 786 | 0 | 0 | 21 539 | 21 293 |
| 0 | -1 924 | ||||||||
| -451 | -502 | 424 | 19 | 25 | |||||
| 14 751 | 12 064 | 0 | 1 240 | 3 301 | 805 | 0 | 0 | 21 564 | 3 693 23 062 |
| 59 | 59 | 59 | |||||||
| -6 803 | -7 348 | -6 803 | -7 348 | ||||||
| -563 | -539 | -563 | -539 | ||||||
| 5 690 | 565 | 5 690 | |||||||
| 0 | 0 | 0 | 0 | 0 | 0 | -1 617 | -7 263 | -1 617 | -7 263 |
| 14 751 | 12 064 | 0 | 1 240 | 3 301 | 805 | -1 617 | -7 263 | 19 947 | 15 799 |
| -264 | -204 | -264 | |||||||
| 0 | 0 | ||||||||
| 0 | 0 | 0 | 0 | 0 | 0 | -264 | -204 | -264 | |
| 14 751 | 12 064 | 0 | 1 240 | 3 301 | 805 | -1 881 | -7 467 | 19 683 | 15 595 |
| 0 | |||||||||
| 19 683 | 15 595 | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEET (GEOGRAPHICAL SEGMENTATION)
| (in € 1,000) | Belgium | |
|---|---|---|
| 30/06/2018 | 31/12/2017 | |
| ASSETS | ||
| Intangible assets | 1 | 2 |
| Investment properties (incl. devel-opment projects, excl. financial leasing) | 307 696 | 293 404 |
| Assets held for sale | 0 | |
| Other assets | 116 877 | 105 200 |
| ASSETS PER SEGMENT | 424 574 | 398 606 |
| LIABILITIES | ||
| Non-current financial debts | ||
| Current financial debts | ||
| Other liabilities | ||
| LIABILITIES PER SEGMENT | ||
| SHAREHOLDERS' EQUITY |
SEGMENTATION PER ASSET CLASS (MAIN KEY FIGURES)
The real estate portfolio comprises both the buildings in operation and the development projects. For the calculation of the other key figures (rental income, rental yield, occupancy rate and weighted average duration of the leases) only the buildings in operation are taken into account.
| (in € 1,000) | Retail | Offices | Logistics (and semi industrial) |
TOTAL | |||||
|---|---|---|---|---|---|---|---|---|---|
| 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 (incl. fee and leasing and excl. compensation for termination and incentives) |
15 099 | 13 686 | 10 714 | 9 712 | 1 978 | 4 602 | 27 791 | 28 000 | |
| Fair value of the real estate portfolio | 441 960 | 412 200 | 417 439 | 364 860 | 62 437 | 129 921 | 921 836 | 906 981 | |
| Investment value of the real estate portfolio |
448 858 | 418 340 | 427 910 | 373 970 | 63 717 | 132 915 | 940 485 | 925 225 | |
| Occupancy rate | 97.53% | 98.00% | 91.08% | 84.00% | 93.51% | 95.50% | 94.44% | 91.80% | |
| Rental yield (in fair value) of the seg ment |
6.53% | 6.65% | 6.68% | 5.98% | 6.76% | 7.60% | 6.61% | 6.41% | |
| Rental yield (in investment value) of the segment |
6.43% | 6.55% | 6.51% | 5.83% | 6.62% | 7.45% | 6.48% | 6.29% | |
| Weighted average duration till first break (# years) |
4.35 | 4.80 | 3.56 | 3.20 | 9.13 | 7.70 | 4.19 | 4.50 |
| Belgium | Luxembourg | Austria | Corporate | TOTAL | ||||
|---|---|---|---|---|---|---|---|---|
| 30/06/2018 31/12/2017 |
30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 |
| 1 2 |
1 | 2 | ||||||
| Investment properties (incl. devel-opment projects, excl. financial leasing) 307 696 293 404 |
492 142 | 489 098 | 104 157 | 102 650 | 903 995 | 885 152 | ||
| 0 | 0 | 0 | ||||||
| 116 877 105 200 |
14 171 | 8 247 | 1 841 | 692 | 132 889 | 114 139 | ||
| 424 574 398 606 |
506 313 | 497 345 | 105 998 | 103 342 | 0 | 0 | 1 036 885 | 999 293 |
| 427 412 | 348 156 | 427 412 | 348 156 | |||||
| 171 761 | 192 283 | 171 761 | 192 283 | |||||
| 61 117 | 76 648 | 61 117 | 76 648 | |||||
| 660 290 | 617 087 | 660 290 | 617 088 | |||||
| 376 595 | 382 205 |
3 Net rental result
The rental income has slightly decreased to € 27.9 million compared to € 28.1 million on 30 June 2017. In 2017 an important part of the logistics portfolio was sold, and also the Swiss buildings. The lack of this rental income in 2018 was nearly entirely compensated by the acquisition in 2017 of the buildings Mercator (Luxembourg) and both retail buildings in Stadlau (Austria). The coupon received from the real estate certificate "Lux Airport" could also be recognized as rental income, as more than two-thirds of the certificates are held by LRE. Like-for-like the rental income is nearly identical (- 0.05%).
| (in € 1,000) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Rental income | ||
| Rents | 27 248 | 27 192 |
| Guaranteed income | 0 | 0 |
| Rent-free periods | -119 | 159 |
| Rental incentives | 0 | 0 |
| Indemnities for early termination of the leases | 67 | 83 |
| Income from finance leases and comparable items | 662 | 650 |
| TOTAL | 27 858 | 28 084 |
| Write-back of lease payments sold and discounted | 0 | 0 |
| Rental-related expenses | ||
| Rent payable on rented premises | 0 | 0 |
| Write-downs on trade receivables | 0 | 0 |
| Write-backs of write-downs on trade receivables | 0 | 0 |
| TOTAL | 0 | 0 |
| NET RENTAL RESULT | 27 858 | 28 084 |
4 Investment properties and assets held for sale
The fair value(1) of the directly held real estate portfolio has increased and amounts to € 921.8 million end June 2018 compared to € 903.0 million end December 2017.
| Real estate available for lease | Development projects | Total Investment properties | |||||
|---|---|---|---|---|---|---|---|
| (in € 1,000) | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | |
| BALANCE AT THE END OF THE PREVIOUS FINANCIAL YEAR |
830 751 | 756 402 | 54 400 | 30 663 | 885 151 | 787 065 | |
| Investments | 6 518 | 13 068 | 12 186 | 15 528 | 18 704 | 28 596 | |
| Divestments | 0 | 0 | 0 | ||||
| Translation effects | 0 | 0 | 0 | ||||
| Acquisitions of real estate | 112 118 | 0 | 112 118 | ||||
| Transfer from/(to) other items | 32 744 | -60 833 | -32 744 | 0 | -60 833 | ||
| Increase/(decrease) in fair value | -702 | 9 996 | 842 | 8 209 | 140 | 18 205 | |
| BALANCE AT THE END OF THE PERIOD | 869 311 | 830 751 | 34 684 | 54 400 | 903 995 | 885 151 |
(1) Fair value: the investment value as defined by an independent real estate expert and of which the transfer rights have been deducted. The fair value is the accounting value under IFRS.
| Finance lease receivables | finance lease receivables | Total investment properties and | Assets held for sale | Total investment properties, finance lease receivables and assets held for sale |
|||
|---|---|---|---|---|---|---|---|
| 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 | 30/06/2018 | 31/12/2017 |
| 17 841 | 17 900 | 902 992 | 804 965 | 0 | 54 966 | 902 992 | 859 931 |
| 18 704 | 28 596 | 1 441 | 18 704 | 30 037 | |||
| 0 | 0 | -115 641 | 0 | -115 641 | |||
| 0 | 0 | 0 | 0 | ||||
| 0 | 112 118 | 0 | 112 118 | ||||
| -59 | 0 | -60 892 | 60 892 | 0 | 0 | ||
| 140 | 18 205 | -1 658 | 140 | 16 547 | |||
| 17 841 | 17 841 | 921 836 | 902 992 | 0 | 0 | 921 836 | 902 992 |
The following table gives an overview of the valuation techniques applied per asset class, and of the main variables used:
| Asset class | Fair value 30/06/2018 (€ 1000) |
Valuation technique | Important input data | 30/06/2018 Min-Max (weighted average) |
|---|---|---|---|---|
| Retail (Grand Duchy of Luxembourg & Belgium) |
337 800 | Actualization of estimated rental income |
a) Spread ERV b) Weighted average estimated rental value c) Capitalization rate spread d) Weighted average capita lization rate |
a) [8.35 €/m² - 19.93 €/m²] b) [13.17 € /m²] c) [5.60% - 7.15%] d) [6.22%] |
| Retail Switzerland | 0 | Actualization of estimated rental income |
a) Spread ERV b) Weighted average estimated rental value c) Capitalization rate spread d) Weighted average capita lization rate |
a) [19 €/m² -> 23€/m²] b) [5.8% -> 6.4%] |
| Retail Austria | 104 160 | DCF (discounted cash flow) | a) Weighted average esti mated rental value b) Capitalization rate spread c) Capitalization rate calcu lation end value after 10y |
a) [9.88 €/m²] b) [5.02% - 5.72%] c) [5.36%] |
| Offices Grand Duchy of Luxembourg | 184 770 | Actualization of estimated rental income |
a) Spread ERV b) Weighted average estimated rental value c) Capitalization rate spread d) Weighted average capita lization rate |
a) [23.42 €/m² - 39.99 €/m²] b) [29.93 €/m²] c) [5.15% - 8.65%] d) [6.6%] |
| Offices Belgium | 197 990 | Actualization of estimated rental income |
a) Spread ERV b) Weighted average estimated rental value c) Capitalization rate spread d) Weighted average capita lization rate |
a) [9.77 €/m² - 11.76 €/m²] b) [10.83 €/m²] c) [5.60% - 9.00%] d) [7.22%] |
| Logistics | 62 440 | DCF (discounted cash flow or actualization of cash flows at discount rate) |
a) Spread ERV b) Weighted average estimated rental value c) Average discount rate d) Economic life |
a) [3.35 €/m² - 16.88 €/m²] b) [4.82 € /m²] c) 7.32% d) 30 years |
| Projects Belgium | 34 680 | DCF (discounted cash flow or actualization of cash flows at discount rate) |
a) Weighted average esti mated rental value b) Capitalization rate c) Estimated construction period |
a) 20.75 €/m²] b) 5.15% c) 15 to 18 months |
| Total investment properties | 921 840 |
The forecasted long-term inflation rate applied to the valuation techniques amounts to 1.25%.
Based on the balance sheet at 30 June 2018, an increase of the average yield by 0.10% would have had an impact of € - 14.3 million on the net result and of € - 2.89 on the net asset value per share, in combination with an increase of the debt ratio by 0.83% (namely from 59.31% to 60.14%) at a constant credit drawdown.
Based on that same balance sheet, a decrease of the average ERV by 10% would have an impact of approximately € - 92.2 million on the net result, which corresponds to € - 18.7 on the net asset value per share. At a constant level of credit drawdown this would lead to an increase of the debt ratio by 4.42% (namely from 59.31% to 63.73%).
5 Information on the financial debt
On 30/06/2018 the financial debts of € 58.7 million have increased in comparison with end 2017. This increase can be explained by the dividend distribution in May 2018 (€ 24.7 million), the investment in the capital increase of Retail Estates in April 2018 (€ 12.9 million) and the payment of the exit tax that was due on the merger of T&T Koninklijk Pakhuis SA with LRE end 2016 (€ 12.9 million). Besides this, there were the current investments in the projects (Montoyer 63 and Treesquare) leading to a higher level of drawn credits.
The item other loans comprises for € 98.7 million the bond loans issued by Leasinvest in 2013.
The confirmed credit lines (excl. the € 98.7 million bond loans and € 141.7 million of commercial paper) amount to € 552 million (end 2017: € 552 million) at the end of June 2018.
6 Calculation and further comments on the debt ratio
In accordance with art 24 of the RD of 13 July 2014, the public RREC has to establish a financial plan with an execution calendar, whenever the consolidated debt ratio exceeds 50%. Herein it describes the measures that will be taken to prevent the consolidated debt ratio from exceeding 65% of the consolidated assets.
On the financial plan, a special report is drawn up by the auditor, in which is confirmed that the latter has verified the way the plan has been drawn up, namely with regard to its economic fundamentals, and that the figures comprised in this plan correspond to those of the accounts of the public RREC. The general guidelines of the financial plan are recorded in the annual and half-year financial reports. In the annual and half-year financial reports is described and justified how the financial plan was executed in the course of the relevant period and how the public RREC will execute the plan in the future.
Debt ratio overview
As commented in the table below, historically, Leasinvest Real Estate's debt ratio has in general remained below 50% till 2011, but crossed the 50%-threshold as of 2012 as a consequence of the investment programme that was executed over the past years (more specifically within the framework of the development and later sale of the Bian office building in Luxembourg, the investment in the real estate certificates issued by Porte des Ardennes Schmiede SA and Porte des Ardennes Pommerlach SA for the refinancing of the shopping centers Knauf located in Schmiede and in Pommerloch, the acquisition of the building Tour & Taxis Royal Depot, the development of the completed project Royal20, the acquisition of the Mercator building, the acquisition of the buildings in Stadlau and the additional investment in the BE-REIT (GVV/SIR) Retail Estates.
| H1 2018 |
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 59.31% | 57.14% | 58.05% | 58.03% | 54.27% | 53.53% | 56.19% | 47.29% | 44.13% | 47.61% | 52.06% | 40.93% (•) |
44.15% (•) |
32.23% (•) |
41.06% (•) |
(•) Closing per 30/06
In the course of the first half of the financial year 2018 the debt ratio has increased from 57.14% per end 2017 to 59.31% on 30 June 2018. This is mainly due to the dividend distribution of € 24,7 million in May 2018, the balance sheet always presenting a higher debt ratio on 30 June, merely due to timing. To a lesser extent, the further investment in Retail Estates in April 2018 and the current investments in the projects Montoyer 63 and Treesquare also contributed to a higher debt ratio.
Evolution of the debt ratio in the long term
The board of directors considers a debt ratio of maximum 50%-55% as being optimal for, and in the interest of the shareholders of Leasinvest Real Estate, and this both with regard to return, net result per share and to mitigating the liquidity and solvency risks.
For each investment the impact on the debt ratio is analysed, and the investment is potentially not selected should it unilaterally influence the debt ratio in a too negative way.
Based on the debt ratio of 59.31% end June 2018 Leasinvest Real Estate has a proportional investment potential based on debt financing of € 168.5 million without exceeding the 65%-debt ratio, and an investment potential of € 20.3 million without exceeding the 60%-debt ratio.
Evolution of the debt ratio in the short term
Each quarter a projection of the debt ratio is presented to the board of directors in the scope of the presentation of the budget, in function of the forecasted results and the planned acquisitions and sales. Based on these elements, a projection is made per end 2018. Taking account of the current investment program (e.g. the project Montoyer 63, but also the planned renovation works to other buildings listed under the item "investment properties") and the result forecasted over the second half-year of 2018, the debt ratio is expected to slightly decrease compared to its level at the end of June 2018.
Other elements influencing the debt ratio
The valuation of the real estate portfolio has a direct impact on the debt ratio.
As of today there are no indications in the market of strong negative evolutions. Through the diversification of the portfolio of Leasinvest Real Estate, both in terms of assets as geographically, the risk is also mitigated.
Should substantial value decreases take place in the real estate portfolio, with the risk that the debt ratio would exceed 65%, Leasinvest Real Estate can proceed to the sale of a number of its buildings to solve that issue.
It is the opinion of the board of directors that no additional measures are necessary to avoid the debt ratio from exceeding 65%.
7 Definition of the fair value of assets and liabilities per level
Assets and liabilities valued at fair value after their initial booking can be presented in three levels (1-3), that each correspond to a different input level to observe the fair value:
- Level 1 inputs are (non-adjusted) quoted prices in active markets for identical assets or liabilities;
- Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. deducted from prices);
- Level 3 inputs are unobservable inputs for the asset or liability based on valuations techniques comprising data for the asset or liability.
Concretely, the company appeals to comparable market data for the valuation of the credits, such as an approximation of the applied reference rate and an approximation of the evolution of the credit margin based on recent comparable observations.
With regard to the financial derivatives, the valuations of the different counterparty banks have been recorded, meaning that a detailed description of these data, as required by level 3, is not possible. However, these instruments were classified under level 2 as we calculate a CVA or a DVA on these received valuations, and this on the basis of data, that are an approximation of the underlying credit risk. The valuation of the private bond is based on an approximation of an observable CDS spread and the evolution of the corresponding Euribor rate.
The financial leasing is valued based on a discounted cash flow principle.
Fair value disclosures:
There were no transfers between items in 2018 in comparison with 31/12/2017.
| per 30 June 2018 (in € 1,000) | Level 1 | Level 2 | Level 3 | Fair value | Book value |
|---|---|---|---|---|---|
| Non-current financial assets | |||||
| - Participations in other BE-REIT (GVV/SIR)/real estate certificates | 90 982 | 1 203 | 92 185 | 92 185 | |
| - Other derivative instruments non-qualified as cash flow hedge | 0 | 0 | 0 | ||
| - Other derivative instruments qualified as fair value hedge | 841 | 841 | 841 | ||
| Finance-lease receivables | 17 841 | 17 841 | 17 841 | ||
| Current financial assets | |||||
| Trade receivables | 12 859 | 12 859 | 12 859 | ||
| Tax receivables and other current assets | 2 566 | 2 566 | 2 566 | ||
| Cash and cash equivalents | 4 298 | 4 298 | 4 298 | ||
| Deferred charges and accrued income | 1 214 | 1 214 | 1 214 | ||
| Non-current financial debts | |||||
| - Credit institutions | 330 859 | 330 859 | 328 391 | ||
| - Other | 77 728 | 21 221 | 98 949 | 97 857 | |
| Other non-current financial liabilities | |||||
| - Other financial derivatives through the income statement | |||||
| - Other financial derivatives through other equity components | 33 364 | 33 364 | 33 364 | ||
| Current financial debts | |||||
| - Credit institutions | 30 061 | 30 061 | 30 061 | ||
| - Other | 141 700 | 141 700 | 141 700 | ||
| Other current financial liabilities | |||||
| - Other financial derivatives through other equity components | |||||
| Trade debts and other current debts | |||||
| - Exit tax | |||||
| - Other | 13 290 | 13 290 | 13 290 | ||
| Other current liabilities | 2 031 | 2 031 | 2 031 |
| per end 2017 (in € 1,000) | Level 1 | Level 2 | Level 3 | Fair value | Book value |
|---|---|---|---|---|---|
| Non-current financial assets | |||||
| - Participations in other BE-REIT (GVV/SIR)/real estate certificates | 73 344 | 1 203 | 74 547 | 74 547 | |
| - Other derivative instruments non-qualified as cash flow hedge | |||||
| - Other derivative instruments qualified as fair value hedge | 1 584 | 1 584 | 1 584 | ||
| Finance-lease receivables | 17 841 | 17 841 | 17 841 | ||
| Current financial assets | |||||
| Trade receivables | 11 471 | 11 471 | 11 471 | ||
| Tax receivables and other current assets | 2 533 | 2 533 | 2 533 | ||
| Cash and cash equivalents | 5 702 | 5 702 | 5 702 | ||
| Deferred charges and accrued income | 482 | 482 | 482 | ||
| Non-current financial debts | |||||
| - Credit institutions | 252 569 | 252 569 | 251 168 | ||
| - Other | 77 535 | 20 374 | 97 909 | 96 266 | |
| Other non-current financial liabilities | |||||
| - Other financial derivatives through the income statement | |||||
| - Other financial derivatives through other equity components | 33 696 | 33 696 | 33 696 | ||
| Current financial debts | |||||
| - Credit institutions | 24 322 | 24 322 | 24 503 | ||
| - Other | 168 231 | 168 231 | 168 231 | ||
| Other current financial liabilities | |||||
| - Other financial derivatives through other equity components | 160 | 160 | 160 | ||
| Trade debts and other current debts | |||||
| - Exit tax | |||||
| - Other | 15 286 | 15 286 | 15 286 | ||
| Other current liabilities | 1 716 | 1 716 | 1 716 |
8 Important events after the closing of the period 01/01/2018-30/06/2018
In the course of July and August 2018 2 credits were extended:
• A variable rate credit line of € 15 million with initial maturity in August 2018 was extended till August 2023 at interesting conditions;
• A fixed rate credit of € 10 million with initial maturity in August 2020 was extended till August 2023 at a lower fixed interest rate.
Both extensions will lead to a further drop in funding costs.
9 Overview of the main related-party transactions
In the period 01/01/2018-30/06/2018 no transactions with related parties, which had material consequences with regard to the financial position or the results of Leasinvest Real Estate, took place.
10 Risks and uncertainties
With regard to the risks and uncertainties, management refers to the Annual Financial Report 2017, and more specifically to pages 5-17.
REPORT OF THE STATUTORY AUDITOR TO THE SHAREHOLDERS OF LEASINVEST REAL ESTATE SCA ON THE REVIEW OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 JUNE 2018 AND FOR THE SIX-MONTH PERIOD THEN ENDED
Introduction
We have reviewed the accompanying interim condensed consolidated balance sheet of Leasinvest Real Estate SCA (the "Company"), and its subsidiaries (collectively referred to as "the Group") as at 30 June 2018 and the related interim condensed consolidated income statement, the statement of comprehensive income, the statement of changes in shareholders' equity and the cash flow statement for the six-month period then ended, and explanatory notes, collectively, the "Interim Condensed Consolidated Financial Statements". These statements show a consolidated balance sheet total of € 1,036,886 thousand and a consolidated profit for the six-month period of € 19,683 thousand. The board of directors is responsible for the preparation and presentation of these Interim Condensed Consolidated Financial Statements 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 Interim Condensed Consolidated Financial Statements based on our review.
Scope of 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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying Interim Condensed Consolidated Financial Statements are not prepared, in all material aspects, in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union.
Brussels, 21 August 2018 Ernst & Young Bedrijfsrevisoren bcvba/Ernst & Young Réviseurs d'Entreprises sccrl Statutory auditor represented by
Joeri Klaykens* Partner * Acting on behalf of a bvba/sprl
ANNEX I: Reconciliation tables EPRA APMs per 30/06/20181
| EPRA Earnings 3(€ 1 000) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Net Result – Group share as mentioned in the financial statements | 19 683 | 15.595 |
| Net Result per share - Group share as mentioned in the financial statements (in €) | 3.99 | 3.16 |
| Adjustments to calculate the EPRA Earnings3 | -5 715 | -2.334 |
| To exclude: | ||
| (i) Changes in fair value of investment properties and assets held for sale | -25 | -3.693 |
| (ii) Result on the sale of investment properties | 0 | 1.924 |
| (vi) Changes in fair value of financial instruments | -5 690 | -565 |
| EPRA Earnings3 | 13 968 | 13.261 |
| Number of registered shares in the result of the period | 4 938 870 | 4.938.870 |
| EPRA Earnings 3per share (in €) | 2.83 | 2.69 |
| EPRA NAV3(€ 1 000) | 30/06/2018 | 31/12/2017 |
|---|---|---|
| NAV according to the financial statements | 376 595 | 382 206 |
| NAV per share according to the financial statements (in €) | 76.3 | 77.4 |
| To exclude | ||
| (i) Fair value of the financial instruments | 32 523 | 32 630 |
| EPRA NAV3 | 409 118 | 414 836 |
| Number of registered shares in the result of the period | 4 938 870 | 4 938 870 |
| EPRA NAV3per share (in €) | 82.8 | 84.0 |
| EPRA Triple Net Asset Value3(€ 1 000) | 30/06/2018 | 31/12/2017 |
|---|---|---|
| EPRA NAV3 | 409 118 | 414 836 |
| Corrections: | ||
| (i) Fair value of the financial instruments | -32 523 | -32 630 |
| (ii) Revaluation of debts at FV | -3 893 | -1 245 |
| EPRA NNNAV3 | 372 702 | 380 961 |
| Number of registered shares in the result of the period | 4 938 870 | 4 938 870 |
| EPRA NNNAV3per share (in €) | 75,5 | 77,1 |
| EPRA Net Initial Yield (NIY)3and Topped up Net Initial Yield (topped up NIY)3(€ 1 000) |
30/06/2018 | 31/12/2017 | |
|---|---|---|---|
| Investment properties and assets held for sale | 921 836 | 902 994 | |
| To exclude: | |||
| Development projects | -34 683 | -54 400 | |
| Real estate available for lease | 887 153 | 848 594 | |
| Impact FV of estimated transfer rights and costs resulting from hypothetical disposal of invest ment properties |
- | -518 | |
| Estimated transfer rights and costs resulting from hypothetical disposal of investment properties | 18 648 | 7 598 | |
| Investment value of properties available for lease | B | 905 801 | 855 674 |
| Annualized gross rental income | 58 620 | 56 892 | |
| Annualized property charges | -8 896 | -12 253 | |
| Annualized net rental income | A | 49 724 | 44 639 |
| Gratuities expiring within 12 months and other lease incentives | 129 | 293 | |
| Annualized and adjusted net rental income | C | 49 853 | 44 932 |
| EPRA NIY3 | A/B | 5.49% | 5.22% |
| EPRA Topped up NIY3 | C/B | 5.50% | 5.25% |
| EPRA Vacancy3(€ 1 000) | 30/06/2018 | ||||
|---|---|---|---|---|---|
| Offices | Logistics | Retail | Total | ||
| Rental surface (in m²) | 163 581 | 132 831 | 188 733 | 485 145 | |
| Estimated Rental Value of vacant spaces | A | 2.41 | 0.22 | 0.71 | 3.34 |
| Estimated Rental Value of total portfolio | B | 27.06 | 4.18 | 29.07 | 60.31 |
| EPRA Vacancy3 | A/B | 8.91% | 5.26% | 2.44% | 5.54% |
| EPRA Vacancy3(€ 1 000) | 31/12/2017 | ||||
|---|---|---|---|---|---|
| Offices | Logistics | Retail | Total | ||
| Rental surface (in m²) | 163 581 | 132 831 | 188 733 | 485 145 | |
| Estimated Rental Value of vacant spaces | A | 1.90 | 0.26 | 0.53 | 2.69 |
| Estimated Rental Value of total portfolio | B | 24.03 | 4.13 | 23.57 | 51.73 |
| EPRA Vacancy3 | A/B | 7.91% | 6.30% | 2.25% | 5.20% |
| EPRA cost ratio3(€ 1 000) | 30/06/2018 | 31/12/2017 | |
|---|---|---|---|
| Other rental-related income and expenses | -903 | -3 213 | |
| Property charges | -4 176 | -9 922 | |
| General corporate overhead | -1 438 | -2 913 | |
| Other operating charges and income | 122 | -453 | |
| EPRA costs including rental vacancy costs | A | -6 395 | -16 501 |
| Direct costs of rental vacancy | 520 | 1 226 | |
| EPRA costs excluding rental vacancy costs | B | -5 875 | -15 275 |
| Rental income | C | 27 858 | 56 892 |
| EPRA Cost ratio3(including direct vacancy) | A/C | -22.96% | -29.00% |
| EPRA Cost ratio3(excluding direct vacancy) | B/C | -21.09% | -26.85% |
ANNEX II: Reconciliation tables other APMs per 30/06/20181
| Result on the portfolio3(€ 1 000) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Result on sale of investment properties | - | -1 924 |
| Changes in fair value of investment properties | 268 | 3 693 |
| Latent taxes on portfolio result | -243 | 0 |
| Result on the Portfolio3 | 25 | 1 769 |
| Net result – group share (amount per share)3 | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Net Result - group share 3(€ 1000) | 19 683 | 15.595 |
| Number of registered shares in circulation | 4 938 870 | 4.938.870 |
| Net Result - group share per share3 | 3.99 | 3.16 |
| Net Asset value based on fair value (amount per share)3 | 30/06/2018 | 31/12/2017 |
|---|---|---|
| Shareholders' equity attributable to the shareholders of the parent company (€ 1 000) | 376 595 | 382 206 |
| Number of registered shares in circulation | 4 938 870 | 4 938 870 |
| Net Asset Value (FV) group share per share3 | 76.3 | 77.4 |
| Net Asset Value based on investment value (amount per share)3 |
30/06/2018 | 31/12/2017 |
|---|---|---|
| Shareholders' equity attributable to the shareholders of the parent company (€ 1 000) | 376 595 | 382 206 |
| Investment value of the investment properties per 31/12 (€ 1 000) | 940 484 | 921 141 |
| Fair value of the investment properties per 31/12 (€ 1 000) | 921 836 | 902 994 |
| Difference Investment value – Fair value per 31/12 (€ 1 000) | 18 648 | 18 147 |
| TOTAL | 395 243 | 400 353 |
| Number of registered shares in circulation | 4 938 870 | 4 938 870 |
| Net Asset Value group share per share3 | 80.0 | 81.1 |
| Changes in gross rental income at constant portfolio | 30/06/2018 | 30/06/2017 |
|---|---|---|
| (like-for-like)3 | vs. 30/06/2017 |
vs. 30/06/2016 |
| Gross rental income at the end of the previous reporting period (€ 1 000) | 27 842 | 28 170 |
| 2016 – 2017 changes to be excluded | 83 | 1 230 |
| - Changes following acquisitions | 3 878 | 1 410 |
| - Changes following divestments | -3 795 | -180 |
| Gross rental income at closing date reporting period (€ 1 000) | 27 911 | 27 842 |
| Change like for like3(€ 1 000) | -14 | -1 558 |
| Change like for like3(%) | -0.1% | -5.5% |
| Average funding cost3in % | 30/06/2018 | 31/12/2017 |
|---|---|---|
| Interest charges on an annual basis (€ 1 000) | -14 616 | -14 905 |
| Commitment fees on an annual basis (€ 1 000) | -976 | -1 127 |
| Interest paid incl. commitment fees on an annual basis (€ 1 000) | -15 592 | -16 032 |
| Weighted average drawn debt (€ 1 000) | 559 500 | 536 071 |
| Average funding cost3in % | 2.79% | 2.99% |
| Comprehensive income – group share3(amount per share) | 30/06/2018 | 30/06/2017 |
|---|---|---|
| Net Result – group share (€ 1 000) | 19 683 | 15.595 |
| Other elements of realized and unrealized results | -601 | 16.648 |
| Changes in the effective part of the fair value of authorized hedges in cash-flow hedging as defined IFRS |
-601 | 8.624 |
| Changes in the effective part of the fair value of financial assets available for sale | 0 | 7.672 |
| Changes in the reserve for treasury shares | 0 | 281 |
| Other | 0 | 71 |
| Comprehensive income – group share3 | 19 083 | 32.243 |
| Number of registered shares in circulation | 4 938 870 | 4.938.870 |
| Comprehensive income – group share per share3 | 3.86 | 6.53 |
Identity card Leasinvest Real Estate
| Public REIT (SIR/GVV) under Belgian Law | Leasinvest Real Estate SCA |
|---|---|
| Legal entity | Limited partnership by shares |
| Registered office | Route de Lennik 451, 1070 Brussels, Belgium |
| Administrative office | Schermersstraat 42, 2000 Antwerp, Belgium |
| Contact | T +32 3 238 98 77 – F +32 3 237 52 99 |
| [email protected] | |
| Web | http://www.leasinvest.be |
| Register of legal entities | Brussels |
| VAT | BE 0436.323.915 |
| Established | 8 June 1999, publication MB 26 June 1999 (conversion into real estate investment trust) (nr. |
| 990626-330) | |
| 6 November, publication Official Belgian Gazette 3 December 2014 (change into a BE-REIT (SIR/ | |
| GVV)) (no 20141203-14216372) | |
| Term | Unspecified |
| Financial year | 1 January – 31 December |
| Listing | Euronext Brussels, BEL MID |
| Liquidity provider | Bank Degroof Petercam |
| Financial service | Main paying agent Bank Delen |
| Auditor | Ernst & Young Réviseurs d'entreprises, represented by company auditor Joeri Klaykens |
| Real estate experts | Cushman & Wakefield – Stadim – Oerag – de Crombrugghe & Partners |
| Supervision | FSMA |
Financial calendar
| 22/08/2018 | Half-year financial report 2018 |
|---|---|
| 19/11/2018 | Interim statement Q3 (30/09/2018) |
| 20/02/2019 | Annual results 2018 (31/12/2018) |
| 29/03/2019 | Annual financial report 2018 |
| 20/05/2019 | Interim statement Q1 (31/03/2019) |
| 20/05/2019 | Annual meeting of shareholders |
| 27/05/2019 | Dividend payment |
| 21/08/2019 | Half-year financial report 2019 |
Contact investor relations
Leasinvest Real Estate Management SA MICHEL VAN GEYTE CEO T +32 3 238 98 77 E [email protected] www.leasinvest.be
This half-year financial report is available on www.leasinvest.be: www.leasinvest.be - investor relations - reports - half-year results.
You can request a printed copy via registration on www.leasinvest.be.
Registered office The Crescent Route de Lennik 451 BE-1070 Brussels
Administrative office Schermersstraat 42 BE-2000 Antwerp T +32 3 238 98 77 F +32 3 237 52 99 E [email protected] W www.leasinvest.be
Register of legal entities: 0436.323.915 ISIN code BE0003770840 LEI 549300BPHBCHEODTG670