Annual Report • Mar 28, 2014
Annual Report
Open in ViewerOpens in native device viewer
| Key figures | 5 |
|---|---|
| Letter to the shareholders | 10 |
| Report of the board of directors | 12 |
| Profile | 14 |
| Investment policy | 14 |
| Corporate governance statement | 16 |
| The retail property market | 32 |
|---|---|
| Important developments in 2013 | 33 |
| Financial results | 38 |
| Financial structure | 42 |
| Profit distribution 2013 | 45 |
| EPRA Best Practices | 46 |
| Forecast for 2014 | 51 |
| Report on the share | 52 |
|---|---|
| Stock market information | 54 |
| Dividend and number of shares | 56 |
| Shareholders | 57 |
Financial calendar 57
| Property report | 58 |
|---|---|
| Composition of the portfolio | 60 |
| Overview of the portfolio | 63 |
| Evolution of the portfolio | 64 |
| Valuation of the portfolio by property experts 65 |
| Consolidated income statement | 72 |
|---|---|
| Consolidated statement of comprehensive | |
| income | 73 |
| Consolidated balance sheet | 74 |
| Statement of changes in consolidated equity | 76 |
| Consolidated cash-flow statement | 78 |
| Notes to the consolidated annual accounts | 79 |
| Statutory auditor's report | 120 |
| Statutory annual accounts Vastned Retail | |
| Belgium sa | 122 |
| Identification | 128 |
|---|---|
| Extract from the articles of association | 129 |
| Statutory auditor | 132 |
| Liquidity provider | 132 |
| Property experts | 133 |
| Property investment fund - legal framework 133 | |
| Statement to the annual report | 134 |
Terminology 135
| Real estate portfolio | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Fair value of investment properties (€ 000) | 361.678 | 359.183 |
| Total leasable space (m²) | 146.962 | 151.041 |
| Occupancy rate (%) | 95,4 % | 97,3 % |
| Key fi gures | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Shareholders' equity (€ 000) | 235.467 | 235.080 |
| Liabilities (€ 000) | 129.566 | 127.854 |
| Debt ratio (%) | 34 % | 33 % |
| Key fi gures per share | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Number of shares | 5.078.525 | 5.078.525 |
| Net asset value (fair value) (€) | 46,37 | 46,29 |
| Net asset value (investment value) (€) | 48,13 | 48,07 |
| Share price on closing date (€) | 52,40 | 47,60 |
| Premium to net asset value (fair value) (%) | 13 % | 3 % |
| 31.12.2013 | 31.12.2012 | |
|---|---|---|
| EPRA Earnings per share (€) | 2,63 | 2,64 |
| EPRA NAV per share (€) | 47,08 | 47,61 |
| EPRA NNNAV per share (€) | 46,31 | 46,22 |
| EPRA Net Initial Yield (NIY) (%) | 5,2 % | 5,3 % |
| EPRA Topped-up NIY (%) | 5,3 % | 5,4 % |
| EPRA Vacancy rate (%) | 4,7 % | 2,7 % |
| EPRA Cost Ratio (including direct vacancy costs) | 15,8 % | 16,7 % |
| EPRA Cost Ratio (excluding direct vacancy costs) | 15,1 % | 16,4 % |
On 31 December 2013 the share price of Vastned Retail Belgium is € 52,40, off ering a gross dividend yield of 5 %.
Key figures
%
Distribution of gross dividend: € 2,65 per share
The gross dividend of Vastned Retail Belgium increases from € 2,62 in 2012 to € 2,65 per share
| in thousands € | 2013 | 2012 |
|---|---|---|
| Rental income | 21.743 | 22.245 |
| Rental-related charges | -72 | -133 |
| Property management costs and income | 37 | 19 |
| Property result | 21.708 | 22.131 |
| Property charges | -2.276 | -2.605 |
| General costs and other operating income and costs | -989 | -989 |
| Operating result before result on portfolio | 18.443 | 18.537 |
| Result on disposals of investment properties Changes in fair value of investment properties |
273 -3.030 |
918 6.406 |
| Other result on portfolio | -154 | 91 |
| Operating result | 15.532 | 25.952 |
| Financial result (excl. changes in fair value - IAS 39) | -4.891 | -5.166 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) | 1.586 | -2.090 |
| Taxes | -33 | -32 |
| Net result | 12.194 | 18.664 |
| Note: | ||
| Operating distributable result | 13.448 | 13.290 |
| Result on portfolio | -2.911 | 7.415 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) and other non-distributable elements |
1.657 | -2.041 |
| Result per share | 2013 | 2012 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net result (€) | 2,40 | 3,68 |
| Gross dividend (€) | 2,65 | 2,62 |
| Net dividend (€) | 1,9875 | 1,9650 |
| Announcement of annual results as at 31 December 2013: | Tuesday 11 February 2014 |
|---|---|
| General meeting of shareholders: | Wednesday 30 April 2014 at 14.30 pm |
| Dividend payable: | |
| Ex dividend date 2013 | Tuesday 6 May 2014 |
| Record date dividend 2013 | Thursday 8 May 2014 |
| Dividend payment 2013 | as from Friday 9 May 2014 |
| Interim statement on the results as at 31 March 2014: | Tuesday 6 May 2014 |
| Half-yearly fi nancial statement as at 30 June 2014: | Tuesday 29 July 2014 |
| Interim statement on the results as at 30 September 2014: | Tuesday 28 October 2014 |
The gross dividend of Vastned Retail Belgium increases to € 2,65 per share in 2013 (€ 2,62 for fi nancial year 2012). Gross dividend yield of 5 % based on the share price on closing date on 31 December 2013 (€ 52,40).
Almost stable fair value of the existing real estate portfolio in 2013 (- 0,8 %)1.
Acquisition of a premium high street shop in the inner-city of Bruges in the third quarter of 2013, let to Massimo Dutti.
Sale of a retail park in Schelle and four commercial buildings in 2013.
Letting transactions on prime locations in Brussels on avenue Louise 7 and in Antwerp on Leysstraat 28-30.
On 31 December 2013, 58 % of the real estate portfolio of the property investment fund is invested in inner-city shops.
On 31 December 2013 the occupancy rate of the real estate portfolio is 95,4 %.
In 2013, the property investment fund changed its name into "Vastned Retail Belgium" to indicate clairly its independence and that regarding the real estate investment policy it joins the strategy of its Dutch majority shareholder Vastned.
The debt ratio amounts only to 34 % on 31 December 2013.
Dear shareholder,
The past year has been an especially good year for commercial properties. The retail landscape is undergoing structural changes due in part to the increase in internet sales and the ongoing economic crisis. As a result, the turnover of some retailers is under heavy pressure.
By contrast, the prime rents of inner-city shops in the leading cities of Antwerp and Brussels have remained stable, and Vastned Retail Belgium has succeeded in concluding some nice rental transactions in absolute prime locations such as avenue Louise 7 in Brussels with ICI Paris XL and on Leysstraat 28-30 in Antwerp with Pearl Opticiens.
With top yields of 4 %, there is a high demand for retail property in the investment market, and as such it is also showing little evidence of the above-mentioned structural changes. Vastned Retail Belgium has taken advantage of these favourable market conditions in the investment market by selling a number of less strategic properties for a total sales price of € 6,8 million, more than 7 % above the carrying amount (fair value).
1 Based on an unchanged composition of the real estate portfolio compared to 31 December 2012.
In the meantime, however, the degree to which prime locations (both retail warehouses and innercity shops) are able to withstand these changing market conditions is clearly diff erent than that of the somewhat less qualitative locations. Locations that still seemed attractive last year have lost some of their shine. Much smaller cities that had previously been relatively successful are now seeing vacancies in both retail warehouse locations as well as the inner city. This is also the case in Tongeren, where Vastned Retail Belgium owns Julianus Shopping, along which Maastrichterstraat runs. A considerable number of vacancies have cropped up in both Julianus Shopping as well as on Maastrichterstraat.
Due to its scale, its diversity and above all its overall quality, our real estate portfolio is relatively immune to market trends, though this does not exclude our obligation to be vigilant and to anticipate potential changes in market conditions in time. The occupancy rate remained high at 95,4 %.
In an eff ort to take retail market trends into account, the investment strategy of the property investment fund was adjusted back in 2012. The stricter investment strategy now targets prime retail properties in the most popular high streets of the major cities. New acquisitions will only be made in major cities having strong shopping districts in which an authentic shopping experience is possible.
Vastned Retail Belgium is aiming to increase further the share of high street shops in prime locations to at least 65 % of the portfolio. At the close of 2013, the portfolio of Vastned Retail Belgium was composed of 42 % retail warehouses and 58 % inner-city shops.
The Vastned group's strategy gives major consideration to the unique character of the Belgian retail landscape, in which well-situated and easily accessible retail parks with free parking meet the expectations of both retailers and consumers.
In an eff ort to increase the overall quality of the real estate portfolio and to attain a lower risk profi le, a prime location on Steenstraat 38 in Bruges was acquired in 2013 for an investment value of € 11,5 million. The right amount of caution must nevertheless be taken when making acquisitions in prime locations; they are only attractive if suffi cient potential exists for rental growth.
The immediate return on these types of investments in prime inner-city locations is lower over the short term than compared to retail warehouses, though this does ensure a good risk spread, an overall improvement in quality and greater predictability over the long term.
The objective of the strategy, moreover, is to achieve a stronger operational partnership between the diff erent country organisations of the Vastned Group in which the various local teams exchange contacts and experiences with each other, something that could provide clear added value given the international nature of the major retailers. The combination of international experience and thorough understanding of local markets means that the property investment fund can meet the challenges of 2014 with confi dence.
For fi nancial year 2013, we can off er you a gross dividend of € 2,65 per share compared to € 2,62 per share for fi nancial year 2012.
We wish to thank you for the confi dence in our policy. We also wish to thank the management and all members of the personnel for their eff orts being the basis of these good results.
The board of directors
Taco de Groot Jean-Pierre Blumberg Director Chairman of the board of directors
Vastned Retail Belgium invests exclusively in Belgian commercial real estate, focusing primarily on inner-city locations in prime locations and high-quality retail warehouses.
At present the portfolio is made up of 245 leasable units, spread over 86 diff erent locations.
Vastned Retail Belgium has been registered as a property investment fund in the list of Belgian investment institutions since 22 December 1998. The shares of the company are listed on the regulated market on NYSE Euronext Brussels.
14
On 31 December 2013, the portfolio consists of 58 % of inner-city locations and 42 % of retail warehouses and shopping centres. The total fair value of the portfolio amounts to € 362 million at 31 December 2013.
The property investment fund maintains an investment policy focused on high-quality commercial properties which are leased to fi rst-class tenants. These properties do not require major repair work in the short term and are strategically situated on good locations.
The investment policy is based on the principle of achieving a combination of a direct yield based on rental income and an indirect return based on the increase in value of the real estate portfolio.
The retail properties consist of shops located in Belgium. These premises can be retail warehouses (located outside city centres), inner-city locations as well as shopping centres. In principle, the property investment fund does not invest in residential properties, offi ces or logistic premises.
Vastned Retail Belgium wishes in term to have 65 % of its investments on top locations in the innercity of larger cities. Vastned Retail Belgium believes that these top locations guarantee the most authentic and unique experience and also provide most certainty as investment object on the long run.
Vastned Retail Belgium's aim is to make its share more attractive by ensuring high liquidity, by expanding its property portfolio and by a better risk spread.
a ● 58 % Inner-city shops b ● 42 % Retail warehouses and shopping centers
Liquidity is determined by the extent to which the shares can be traded on the stock market. Companies with high liquidity are more likely to attract large investors, which improves growth opportunities.
Increased liquidity makes it easier to issue new shares (for increasing the capital, contributions in kind or mergers), which is also very important for growth.
To improve its liquidity, Vastned Retail Belgium has concluded a liquidity agreement with Bank Degroof. The liquidity of most Belgian property investment funds is relatively low. One major reason for this is that these funds are often too small - both in terms of market capitalisation and free fl oat - to gain the attention of professional investors. In addition, shares in property investment funds are generally purchased as longer-term investments rather than on a speculative basis, which reduces the number of transactions.
A large portfolio clearly off ers a number of benefi ts:
only in terms of the rental income, but also in the value of the portfolio. This kind of active management can lead to the renovation and optimization of the portfolio, negotiations on new terms of lease, an improvement in the quality of the tenants, off er of new services, etc.
Expansion of the property portfolio can be achieved through a dynamic approach of the market on the one hand, on an internal level through the growth potential of the current property portfolio, and through acquisitions on the other hand.
Vastned Retail Belgium is a very useful partner for investors who wish to contribute their retail properties against the issue of new shares with a view to spreading risk and cutting administrative activities. Retail chains that still own their own premises can also benefi t from concluding saleand-rent-back transactions with Vastned Retail Belgium.
Vastned Retail Belgium tries to spread its risk in a variety of ways. For example, the tenants often operate in widely divergent sectors of the economy, such as clothes, food, do-it-yourself, home interior, etc. Besides, the property investment fund strives to maximize the geographic spread of its premises.
The administration of the expiry dates and fi rst interim expiry dates of the lease contracts are submitted to the restrictions by the legislation on commercial leases (act of 30 April 1951), allowing the tenants to terminate legally their tenancy agreement every three years.
This corporate governance statement is in line with the provisions of the Belgian Corporate Governance Code 2009 ("2009 Code") and the Act of 6 April 2010 amending the Belgian Companies Code. The Royal Decree of 6 June 2010 provided that the 2009 Code is the only code applicable. This Code can be found on the Belgian Offi cial Gazette website and on
www.corporategovernancecommittee.be.
Vastned Retail Belgium treats the Belgian Corporate Governance Code 2009 as a reference code. The Vastned Retail Belgium's board of directors have laid down corporate governance principles in a number of guidelines:
16
The complete 'Corporate Governance Charter' that sets out the important internal procedures for the management entities of Vastned Retail Belgium, as well as the other directives, are available on the company website (www.vastned.be).
The terms of the Belgian Corporate Governance Code 2009 may only be deviated from when specifi c circumstances require it. If such an event occurs, the deviation is explained, in accordance with the 'comply or explain' principle, in the annual report. The board of directors of the property investment fund has judged that it is sometimes justifi ed for the company not to follow certain terms of the Corporate Governance Code 2009. According to the "comply or explain" principle it is indeed permitted to take into account the relatively small size and own characteristics of the company, particularly regarding the already rigid legislation relating to property investment funds.
Brussels 6.604 m2
Chairman, independent director Address: Plataandreef 7 2900 Schoten Term: April 2016 Function: Managing partner Linklaters LLP Attendance: 8/9
Independent director Address: Beethovenweg 50 2202 AH Noordwijk aan Zee The Netherlands Term: April 2016 Function: Director of companies Attendance: 9/9
Independent director Address: Jan Moorkensstraat 68 2600 Berchem Term: April 2014 Function: Transport economist, managing director Policy Research Corporation sa Attendance: 9/9
Director Address: Franklin Rooseveltlaan 38 4835 AB Breda The Netherlands Term: April 2014 Function:Director of companies Attendance: 9/9
Director Address: Schubertlaan 16 3723 LN Bilthoven The Netherlands Term: April 2014 Function:Chief executive offi cer Vastned Retail Attendance: 6/9
Director Address: Kamerlingh Onnesstraat 69 2984 ED Ridderkerk The Netherlands Term: April 2015 Function:Chief fi nancial offi cer Vastned Retail Attendance: 9/9
The board of directors comprises six members, three of whom are independent directors who all three fulfi l the conditions of article 526ter of the Belgian Companies Code. All directors are nonexecutive directors.
The directors are appointed for a period of three years, but their appointment can be revoked at any time by the general meeting.
The board of directors met nine times in 2013. The most important agenda items during the meetings of the board of directors and with respect to which the board has taken decisions in 2013 have been:
During financial year 2013, Taco de Groot and Tom de Witte have represented the majority shareholder Vastned Retail sa.
The corporate governance charter of the property investment fund stipulates that directors resign on the date of the general meeting of shareholders held in the year in which they turn 70 years old. Deviating from this in the interest of the company is only allowed for specifi c reasons. This is the case with Hubert Roovers who reached the maximum age. The board of directors believes that, based on his vision, competence, knowledge and years of experience in real estate, it is in the interest of the company that Hubert Roovers whose mandate expires in April 2014 will be prolonged for one year.
Since the passage of the Act of 28 July 2011, quotas have been imposed in Belgium in order to ensure that women have a seat on the board of directors of listed companies. As a result, Vastned Retail Belgium must see to it that, in the future, at least one third of the members of the board of directors are female. For companies with a free fl oat of less than 50 %, this law applies as from the fi rst day of the eighth fi nancial year that starts following the publication of this law in the Belgian Offi cial Gazette, which is 1 January 2019. In the future, when the mandate of a director ends, Vastned Retail Belgium will select a list of candidate directors on the basis of clear and objective criteria, and in so doing it will take gender diversity into account.
In 2013, the audit committee comprises three independent directors:
In 2013, these independent directors fulfi l all nine criteria of independence pursuant to article 526ter of the Belgian Companies Code. The term of their mandate in the audit committee is not specifi ed.
The members of the audit committee are experts. Each member of the committee is independently qualifi ed in the area of accountancy and/or auditing. Besides, the audit committee as a whole is qualifi ed. This on two levels: in the area of the activities of Vastned Retail Belgium and in the area of accountancy and auditing.
In 2013, the audit committee met fi ve times. The most important items on the agenda of the audit committee in 2013 have been:
The committee reports its conclusions and recommendations directly to the board of directors.
On 31 December 2013, the management committee comprises:
Jean-Paul Sols sprl, permanently represented by Jean-Paul Sols, and Inge Tas, also hold a management committee's mandate at Intervest Offi ces & Warehouses sa, public property investment fund governed by Belgian law.
Pursuant to article 524bis of the Belgian Companies Code and article 15 of the company's articles of association, the board of directors has delegated specifi c management authority. The rules pertaining to the composition and operation of the management committee are described in more detail in the company's 'Corporate Governance Charter' that is available on the website (www.vastned.be). The members of the management committee (except Rudi Taelemans sprl) are also the eff ective leaders of the company pursuant to article 39 of the Act of 3 August 2012 relating to certain forms of collective management of investment portfolios.
Management committee Jean-Paul Sols Inge Tas Rudi Taelemans
Under the direction of the chairman, the board of directors periodically reviews its size, composition, working and effi ciency. It carries out the same review with respect to the audit committee and the interaction with the management committee. For the purposes of such reviews, the board of directors can be assisted by external experts.
During this evaluation process:
If the above mentioned evaluation procedures show some weaknesses, the board of directors will have to offer appropriate solutions. This can lead to changes in the composition or the functioning of the board of directors or the audit committee.
As far as the prevention of confl icts of interest is concerned, the property investment fund is subject to legal rules (articles 523 and 524 of the Belgian Companies Code, the Act of 3 August 2012 relating to certain forms of collective management of investment portfolios and articles 17 to 19 of the Royal Decree of 7 December 2010) and to the rules defi ned in its articles of association and its Corporate Governance Charter.
In this regard, article 17 of the articles of association of the property investment fund states the following: "Directors, persons charged with the day-to-day management and authorised agents of the company shall respect the rules relating to confl icts of interest provided for in the Royal Decree of 7 December 2010 relating to property investment funds and in the Belgian Companies Code, as these may be amended, where appropriate.
The board of directors, management committee and every member strictly undertake to exclude any possible confl ict of interest, whether of a proprietary, professional or of any other nature, and intend to carefully comply with the legal rule defi ned in article 523 of the Belgian Companies Code regarding confl icts of interest between the property investment fund and a director.
If, for example, a director of the property investment fund, due to other director mandates held by him or for any other reason, has a proprietary interest that is in confl ict with a decision or transaction falling under the authority of the board of directors, article 523 of the Belgian Companies Code shall be applicable and the concerned director shall be requested not to participate in the deliberations on the decisions or transactions or in the voting (article 523, § 1 in fi ne).
If a director or member of the management committee, directly or indirectly, has a proprietary interest that is in confl ict with a transaction or decision falling under the authority of the board of directors or the management committee, the concerned member must inform the chairman and the members of this in advance. In this case, the concerned member may not participate in the deliberations and voting on the transaction in question.
The statement as well as the justifi cation for the confl ict of interest shall be recorded in the minutes. With a view to its publication in the annual report, the secretary shall describe the nature of the decision or transaction in the minutes and
Company Antwerp 684 m2
justifi es the decision taken. The minutes also outline the property-related consequences for the company resulting from this decision. The report of the statutory auditor, to be drawn up pursuant to article 143 of the Belgian Companies Code, contains a separate description of the fi nancial implications for the company.
directors
○ Confl ict of interest of a major shareholder
In case of a potential confl ict of interest with a major shareholder of the property investment fund, the procedure defined in article 524 of the Belgian Companies Code shall be applicable. Article 524 of the Belgian Companies Code requires that operations with related companies with certain exceptions - must be submitted for advice to a committee of independent directors, assisted by an independent expert.
○ Conflict of interest of certain persons mentioned in article 18 of the Royal Decree of 7 December 2010
Similarly, article 18 of the Royal Decree of 7 December 2010 states that the public property investment fund must inform the Financial Services and Markets Authority (FSMA) in advance of any planned transactions to be carried out by the public property investment fund or by one of its subsidiaries if one or more of the following persons serve, directly or indirectly, as counterparty in these transactions or derive any pecuniary advantage from it: persons who exercise control over the public property investment fund or own a share of it; the promoter of the public property investment fund; other shareholders of all subsidiaries of the public property investment fund; and the directors, business managers, members of the management committee, persons responsible for the day-to-day management, actual managers or authorised agents; and persons associated with all these parties.
These planned transactions must represent an interest for the public property investment fund, be in line with its investment policy and must be executed under normal market conditions. These transactions must be promptly disclosed.
Pursuant to article 31, §2 of the Royal Decree of 7 December 2010, when a real estate transaction takes place with the above-mentioned persons, the company is bound by the valuation made by the property expert.
The procedure for avoiding confl icts of interest has not been invoked during fi nancial year 2013.
H&M Vilvorde 1.338 m2
21 21
Vastned Retail Belgium does not have an appointment and remuneration committee. The board of directors of the property investment fund is of the opinion that the relevant tasks of the appointment committee and remuneration committee should be regarded as tasks of the entire board of directors. Herewith, Vastned Retail Belgium derogates from the recommendations of the Belgian Corporate Governance Code 2009 (also see paragraph on "Comply or Explain" principle), since the limited size of the board makes it possible to deliberate effi ciently on these topics. On the other hand, the issue of appointments or remuneration in the property investment fund requires too little additional attention to justify a separate committee and its related additional expenses.
The board of directors is responsible for the remuneration policy for its members and for the members of the management committee. The remuneration of the directors has to be proposed for approval to the general meeting.
This policy is based on the following principles:
Other things being equal, the remuneration policy shall remain applicable for the next two fi nancial years.
Gouden Kruispunt Tielt-Winge 19.096 m2
In 2013, the annual fi xed fee of the directors, who do not represent the majority shareholder, amounts to € 14.000 per year for a member of the board of directors (€ 15.000 per year for the chairman of the board of directors). No additional fees are paid for serving as a member or as a chairman of a committee. The directors representing the majority shareholder perform their duties without remuneration.
No employment contract has been concluded with any of the directors and no termination compensation is applicable. Pursuant to article 16 §2 of the Royal Decree of 7 December 2010 relating to property investment funds, the directors' fees are not related, either directly or indirectly, to the transactions carried out by the property investment fund. The directors do not own shares of the property investment fund and nor have any options been granted to the directors on shares of the property investment fund.
The amount of the fi xed fee granted as remuneration in 2013 to the members of the management committee, amounts to € 389.579, of which € 121.104 is for the chairman of the management committee. No options have been granted to the management committee on shares of the property investment fund.
The three members of the management committee may be eligible for an annual combined bonus of maximum € 39.500. The amount of bonus to be granted is determined on the basis of measurable criteria linked to agreed performance levels.
In 2012, these criteria were in the area of relettings, the occupancy rate, investments, sustainability, the commercialisation of Julianus Shopping in Tongeren and the refi nancing of credit facilities with fi nancial institutions. Based on targets achieved in 2012, a total bonus of € 35.500 was awarded in 2013. No reclamation rights are foreseen for the variable remuneration.
Besides this regular bonus, a member of the management committee may be eligible for an additional annual bonus, which may be granted for exceptional performance. No additional bonus has been paid for 2012.
The annual fi xed fee of the independent nonexecutive directors remains unchanged with respect to the above-mentioned fees of 2013.
On 1 January each year, the annual fi xed fee of the members of the management committee is (i) indexed according to the normal index of consumer prices, where the basic index is that of the month preceding the month in which the agreement came into eff ect, and the new index of the month preceding the month in which the indexation takes place (ii) increased by 1 percent. This represents an increase of 1 % as on 1 January 2014.
Bonus criteria for 2013 are in the area the improvement of the occupancy rate, investments and divestments within the framework of the strategy, attracting important retailers, the optimisation of the account management, the prolongation and diversifi cation of fi nancings, monitoring of the compliance and the optimisation of the fi scal position of the property investment fund.
The three members of the management committee may be eligible for an annual combined bonus of maximum € 47.000. Based on the target achieved in 2013, a total bonus of € 43.500 is awarded. No additional bonus will be paid for 2013.
Members of the board of directors are appointed for a period of 3 years, but their appointment may be revoked at any time by the general shareholders meeting. No termination compensation is applicable.
The members of the management committee are appointed for an indefi nite period and the termination compensation is equivalent to twelve (for the cfo) to eighteen (for the ceo and the coo) months' fi xed fee (except for gross negligence or deliberate error, in which case no compensation will be payable).
In 2013, the board of directors of Vastned Retail Belgium once again focuses attention on the risk factors with which Vastned Retail Belgium must contend.
The constant evolutions in the real estate and financial markets require a continuous monitoring of the strategic, operational and financial risks, as well as of the financial reporting and compliance risks in order to safeguard the results and the financial situation of Vastned Retail Belgium.
These risks are determined in large measure by the strategic choices made by Vastned Retail Belgium to limit the vulnerability to external factors. The size of these risks is determined by the strategic choices with respect to investment policy, such as the choice of:
○ type of real estate: Vastned Retail Belgium has mainly chosen to invest in (all types of) commercial properties, with a focus on inner-city shops. Retail warehouses and shopping centres also belong to the portfolio. Furthermore, the property investment fund tries to spread as well as possible the geographic locations of its properties.
The real estate patrimony of Vastned Retail Belgium is valued on a quarterly basis by independent property experts. These property experts have the necessary qualifi cations and signifi cant market experience. The fair value of the buildings, as estimated by them, is entered under the section "Investment properties" in the assets side of the statutory and consolidated balance sheet. Fluctuations in fair values are entered under the section "Changes in fair value of investment properties" in the consolidated and statutory income statements and these can have either a positive or negative eff ect on the net income. The values established by the experts represent the market value of the buildings. Consequently, fl uctuations in the market value of the property are refl ected in the net assets of Vastned Retail Belgium, as published on a quarterly basis. Vastned Retail Belgium is exposed to the fl uctuation of the fair value of its portfolio, as estimated by the independent assessments.
On 31 December 2013, a 1 % hypothetical negative adjustment of the yield used by property experts for the valuation of the real estate portfolio of the property investment fund (yield or capitalisation rate) would reduce the investment value of the real estate by € 53 million or 14 %. As a result, the debt ratio of the property investment fund would increase by 6 % to 40 % (in this regard, also see the "Sensitivity Analysis" in the Property Report).
○ time of investment and divestment: Based on the knowledge of economic and real estate cycles, one tries to anticipate as accurately as possible the downward and upward movements of the markets. The normally expected course of the economic cycles can be assessed to the best of one's ability based on economic indicators. The investment market and particularly, the rental market for commercial real estate respond with a certain amount of delay to the volatility of the economic climate. Clear periods of economic boom lead to higher market prices which may, at a later date, be subject to sharp negative adjustments. During this period of economic boom, Vastned Retail Belgium will pursue a fairly moderate policy on investments so as to reduce the risk of making ill-timed investments. In periods of economic recession, the value and occupancy rate of buildings usually decline. However, once the economy picks up again, a more active investment policy is followed in anticipation of the increasing value of buildings and a more active rental market. In this regard, due care is taken to prevent the debt ratio of the property investment fund from rising above the permitted levels.
These risks arise out of daily transactions and (external) events executed within the strategic framework, such as:
○ investment risks: The main risks inherent in investing in real estate are related to future negative changes in fair value of investment properties caused primarily by increasing vacancy, unpaid rents, decline in rents when concluding new lease contracts or extending existing lease contracts, and soil contamination.
At Vastned Retail Belgium, internal control measures are taken to reduce the risk of making incorrect investment decisions. For example, the risk profi le is always carefully assessed based on market research, an estimate of future yields, a screening of existing tenants, a study of environmental and permit requirements, an analysis of tax risks, etc.
Pursuant to article 31 of the Royal Decree of 7 December 2010 relating to property investment funds, an independent property expert values each acquisition or disposal of property. For each disposal, the assessment value determined by the independent property expert is an important guiding principle for the transaction value. Vastned Retail Belgium also carefully ensures that the guarantees offered during the transaction remain limited, in terms of both duration and value.
For each acquisition, Vastned Retail Belgium also carries out a technical, administrative, legal, accounting and tax "due diligence" based on continuous analysis procedures and usually with the assistance of external, specialised consultants.
○ rental risks: These risks are related to the nature and location of the property, the extent to which it must compete with nearby buildings, the intended target audience and users, the quality of the property, the quality of the tenant and the lease contract. Vastned Retail Belgium continuously records the development of these factors. Based on the above criteria, a risk profi le is allocated to each property, which is regularly evaluated (based on the property investment fund's own local knowledge and data from external parties and/or valuers). Depending on the risk profi le, a certain yield must be realised over a certain period, which is compared to the expected yield according to the internal yield model. On the basis of this, an analysis is drawn up of the objects in which additional investments should be made, where the tenant mix must be adapted and which premises are eligible for sale. Vacancy and the vacancy risk are also analysed each month, for which the expiry dates of the lease contacts are taken into account. The fund strives to maintain a balanced distribution of the duration of the lease contracts in compliance with rules defi ned in the applicable leasing legislation. This allows future lease terminations and contract revisions to be anticipated in good time.
In addition, there are internal control procedures in place to ensure timely recovery of lease receivables and adequate follow-up of rent arrears. Rents are payable in advance on a monthly or quarterly basis. The fi nancial and real estate portfolio administration pays close attention to limiting rent arrears. On 31 December 2013, the number of days of outstanding customers' credit is only 2 days.
● contracts and corporate reorganisations Before concluding contracts with third parties and depending on their complexity, these are reviewed by external consultants, to reduce the risk of fi nancial loss and damage being caused to the fund's reputation due to inadequate contracts. Vastned Retail Belgium is insured against liability arising from its activities or its investments under a third party liability insurance policy covering bodily injury up to an amount of € 12,4 million and material damage (other than that caused by fi re and explosion) of up to € 0,6 million. Furthermore, the directors and members of the management committee are insured for directors' liability, covering losses up to an amount of € 35 million.
Corporate reorganisations, in which Vastned Retail Belgium is involved (merger, demerger, partial demerger, contribution in kind, etc.), are always subject to "due diligence" activities, guided by external consultants to minimise the risk of legal and fi nancial errors.
The risk of buildings being destroyed by fi re or other disasters is insured by Vastned Retail Belgium for a total reconstruction value of € 156 million (€ 81 million for inner-city shops and € 75 million for retail warehouses and shopping centres), as compared to a fair value of investment properties of € 362 million on 31 December 2013 (€ 211 million for inner-city shops and € 150 million for retail warehouses and shopping centres). Cover is also provided for vacancy in the buildings due to these events for 36 months rent. The insurance policies also include additional guarantees for 20 % maximum of the insured value for costs for maintenance and cleaning up, claims of tenants and users and third party claims.
Taxation plays an important role in the area of property investments (VAT, registration fees, exit tax, split acquisitions, property tax, etc.). These tax risks are continuously assessed and where necessary, the assistance of external consultants is used.
The changes in regulations on urban planning and environmental protection can have an adverse eff ect on the long-term operation of a building by Vastned Retail Belgium. The strict enforcement and observance of urban planning regulations by municipal governments can negatively infl uence the attractiveness of the building. For example, a reduction in the dimensions of a building imposed as part of thorough renovation can also aff ect its fair value.
The exit tax, which is due by companies acquired by the property investment fund via merger, is calculated while taking Circular Letter Ci.RH.423/567.729 of 23 December 2004 into account. The way in which this circular letter is interpreted or applied in practice can always vary. This 'actual tax value', as the circular letter refers to it, is calculated by deducting registration fees or VAT, and diff ers from the fair value of the property as recorded on the fund's balance sheet (in accordance with IAS 40).
Finally, the introduction of new or more stringent standards for soil contamination or energy consumption can have a major impact on the costs required to continue operating the property.
The property investment fund is governed by the Act of 3 August 2012 on certain forms of collective management of investment portfolios and could therefore be considered as an alternative investment fund when the European AIFM Directive (Directive 2011/61/EU on alternative investment fund managers) is transposed into Belgian law, along with its implementing measures. This transposition should have taken place before 22 July 2013. On 31 December 2013 there are still uncertainties regarding the application of this directive to the REIT sector in the various European countries, but if the property investment funds are treated as an alternative investment fund, Vastned Retail Belgium would be subject not only to the rules arising from this directive but also to the European EMIR Regulation (Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories) or other regulations in preparation (fi nancial transaction tax as part of the common system devised by the Commission, CRD IV (new capital and liquidity requirements for credit institutions that may aff ect the relationship with alternative investment fund counterparties), etc.).
The additional requirements laid down by the AIFMD, including on systems of administrative management, internal audit, management of confl icts of interest, risk management, liquidity management and the appointment of a depositary, would compel the property investment fund to adapt its internal organisation, rules or procedures, which would make its management more cumbersome, hinder certain transactions and require additional resources to implement these new provisions, and would in any case increase management and administration costs. The EMIR Regulation would expose the property investment fund to margin calls on its hedging instruments, which would increase its fi nancing requirements and costs. The impact of other regulations (tax on fi nancial transactions, CRD IV) mainly entail higher costs for the property investment fund.
The major fi nancial risks are the fi nancing risk, the liquidity risk and the interest-rate risk and the risks associated with banking counterparties.
○ fi nancing risk: The real estate portfolio can be fi nanced partly with shareholders' equity and partly with borrowed capital. A relative increase in borrowed capital with respect to shareholders' equity can result in a higher yield (known as "leverage"), but can also imply an increased risk. In case of disappointing yields from real estate and a decrease in fair value of investment properties, a high degree of leverage can give rise to the risk of no longer being able to meet interest rate and repayment obligations of borrowed capital and other payment obligations. In such a case, it is not possible to obtain fi nancing with new borrowed capital or this can only be obtained under very unfavourable terms. To continue meeting payment obligations, real estate must then be sold, which entails the risk that this sale cannot be carried out under the most favourable conditions. The value development of the retail portfolio is largely determined by developments in the real estate market. For fi nancing real estate, Vastned Retail Belgium always strives for a balance between shareholders' equity and borrowed capital.
Vastned Retail Belgium also strives to secure access to the capital market by providing transparent information and maintaining regular contacts with bankers and current or potential shareholders and by increasing the liquidity of the share.
Finally, with respect to long-term fi nancing, it aims for a balanced spread of refi nancing dates and a weighted average duration between 3,5 and 5 years. This may be temporarily derogated from if specifi c market conditions require this. The average remaining duration of the long-term credit agreements as on 31 December 2013 is 2,8 years.
The bank credit agreements of Vastned Retail Belgium are subject to compliance with fi nancial ratios, which are primarily related to the consolidated fi nancial debt level of Vastned Retail Belgium or its fi nancial interest charges. These ratios limit the amount that could still be borrowed by Vastned Retail Belgium. These ratios were respected as on 31 December 2013. If Vastned Retail Belgium were no longer to respect these ratios, the fi nancing agreements of Vastned Retail Belgium can be cancelled, renegotiated, terminated or prematurely repaid.
Vastned Retail Belgium is limited in its borrowing capacity by the maximum debt ratio permitted by the regulations relating to property investment funds. Within the legally defi ned limits of the 65 % ratio, the theoretical additional debt capacity of Vastned Retail Belgium amounts to approximately € 320 million in case of an unchanged valuation of the existing real estate portfolio. On 31 December 2013 the debt ratio amounts to 34 %.
○ liquidity risk: Vastned Retail Belgium must generate suffi cient cash fl ow to meet its day-to-day payment obligations. On the one hand, this risk is limited by the measures mentioned under operational risks, which reduces the risk of loss of cash fl ow due to e.g. vacancy or bankruptcies of tenants. On the other hand Vastned Retail Belgium has to dispose of suffi cient credit margin to absorb fl uctuations in liquidity needs. For this purpose cash fl ow prognoses are made. In addition, Vastned Retail Belgium has provided for a suffi cient credit margin with its bankers to absorb fl uctuations in liquidity requirements. In order to avail itself of this credit margin, the convenants of credit facilities must be complied with on a continuous basis.
On 31 December 2013, Vastned Retail Belgium has non-withdrawn credit lines of € 15 million available for its operations and dividend payment.
○ interest rate risk: As a result of fi nancing with borrowed capital, the yield is also dependent on interest rate developments. In order to reduce this risk, when composing the loan portfolio, the fund aims for a ratio of onethird short-term borrowed capital (with a variable interest rate) and two-thirds longterm borrowed capital (with a fi xed interest rate). Depending on the developments in interest rates, derogation from this may occur. Additionally, the company tries, with respect to the long-term borrowed capital, to achieve a balanced spread of the dates of review of the interest rates and duration of minimum 3 years.
On 31 December 2013, 66 % of the credit lines of the property investment fund are fi nancing with a fi xed interest rate are fi xed by interest rate swaps. 34 % of the credit facilities have a variable interest rate. The fi xed interest rates are fi xed for a remaining average duration of 3,3 years.
○ risk associated with banking counterparties: The conclusion of a fi nancing contract or investment in a hedging instrument with a fi nancial institution gives rise to a counterparty risk if this institution remains in default. In order to limit this counterparty risk, Vastned Retail Belgium takes the assistance of various reference banks in the market to ensure a certain diversifi cation of its sources of fi nancing and its interest rate hedges, with particular attention for the price-quality ratio of the services provided.
Vastned Retail Belgium maintains business relations with 5 banks:
Vastned Retail Belgium regularly reviews the list of its banking relationships and the extent of its exposure to each of these. In the current context of the crisis in the banking sector, it is possible that one or more of the banking counterparties of Vastned Retail Belgium can remain in default. The fi nancial model of Vastned Retail Belgium is based on a structural debt burden, which implies that its cash position at a fi nancial institution is usually quite limited. On 31 December 2013, this cash position amounts to € 1,9 million.
The fi nancial reporting risk is the risk that the property investment's fi nancial reports contain material inaccuracies, in which case stakeholders would receive incorrect information regarding the operational and fi nancial results of the property investment, as well as the risk that the deadline imposed by the regulations for fi nancial reporting is not honoured. This can result in damage to the property investment's reputation, and stakeholders could make investment decisions which are not based on the right information, which in turn could result in claims being fi led against the property investment fund.
Each quarter, a complete closing and consolidation of the accounts is prepared and published. To optimise the fi nancial reporting process, the fi nance department always draws up a schedule with deadlines for all the tasks to be completed. Subsequently, the fi nancial team prepares the quarterly fi gures and balance sheets. These
28
quarterly fi gures are always analysed in detail and checked internally.
To reduce the risk of errors in the fi nancial reporting, these fi gures are discussed within the management committee and their accuracy and completeness checked via analyses of rental incomes, operational costs, vacancy, rental activities, the evolution of the value of the buildings, outstanding debtors, etc. Comparisons with forecasts and budgets are discussed. After this, the management committee presents the fi nancial statements to the audit committee each quarter, along with a comparison of annual fi gures, budget, and explanations for derogations. In addition, the halfyearly and annual fi gures are always checked by the statutory auditor.
This includes the risk of an inadequate level of compliance with relevant laws and regulations and the risk of employees not acting with integrity. Vastned Retail Belgium limits this risk by screening its employees at the time of recruitment, by creating awareness among them regarding this risk and by ensuring that they have suffi cient knowledge of the changes in the relevant laws and regulations, assisted in this regard by external legal advisers. To ensure a corporate culture of integrity, Vastned Retail Belgium has in the past defi ned an internal code of conduct and whistleblowing rules.
The statutory auditor, appointed by the general meeting of shareholders, is the cooperative partnership Deloitte Réviseurs d'Entreprises SC, which is represented by Kathleen De Brabander, auditor.
In 2013, the real estate portfolio is valued every quarter by three independent experts, de Crombrugghe & Partners, Cushman & Wakefi eld and CB Richard Ellis, each for a part of the portfolio, based on a rotation principle.
Pursuant to clauses 3.7. and 6.8. as well as appendix B of the Belgian Corporate Governance Code 2009, the company nominated Inge Tas, member of the management committee and cfo as "compliance offi cer", charged with the supervision of compliance with the rules on market abuse. Those rules were imposed by the Act of 2 August 2002 concerning the supervision on the fi nancial sector and the fi nancial services and Directive 2003/6/EC concerning insider trade and market manipulation.
directors
In 2013, the company deviated from the following stipulations of the code (explain):
○ Clauses 5.3 and 5.4 on the operation of committees (incl. appendix D & E)
The board of directors decided not to set up an appointment committee or a remuneration committee. It is the opinion of the board that tasks of these committees are tasks of the full board of directors. The limited size of the board makes an effi cient debate on these subjects possible.
○ Clause 2.9 Company secretary
The board of directors has not designated a company secretary, who advises the board of directors regarding all administrative matters and takes care of the communication within and between the management entities of the company, as provided for by clause 2.9. The limited size of the company and the board of directors make such a position superfl uous.
○ Determination of the age limit
The corporate governance charter of the property investment fund stipulates that directors resign on the date of the general meeting of shareholders held in the year in which they turn 70 years old. Deviating from this in the interest of the company is only allowed for specific reasons. This is the case with Hubert Roovers who reached the maximum age. The board of directors believes that, based on his vision, competence, knowledge and years of experience in real estate, it is in the interest of the company that Hubert Roovers whose mandate expires in April 2014 will be prolonged for one year.
Report of the management committee
A round table discussion among Vastned Retail Belgium's real estate experts on the subject of trends in the investment and commercial lease market in 2013, and a look ahead to 2014
Vastned Retail Belgium invited its real estate experts to come and discuss the current investment and commercial lease market. This discussion took place on 14 January 2014.
Discussion partners: Jean-Paul Sols and Rudi Taelemans (Vastned Retail Belgium), Kris Peetermans, Mathias Gerrits, Jef Van Doorslaer and Arnaud de Bergeyck (Cushman & Wakefi eld), Pieter Paepen and John Collin (CB Richard Ellis). The auditor for Vastned Retail Belgium, Deloitte Réviseurs d'Entreprises, has also followed the discussions.
Even though 2013 was not an easy year for many retailers, there was no decrease in the number of rental transactions. Compared to previous years, there were fewer candidates per rental transaction: the number of expansive retailers has declined. The number of newcomers in the market has in particular declined, something which often gives aspiring tenants the power to negotiate the rent price.
In the city centre, the diff erence between the midrange and luxury segments is notable.
The luxury segment in the high streets is characterised by a considerable number of expansive international newcomers: Mont Blanc, Tesla, Karl Lagerfeld, Twinset, etc. Rents for fl agship stores in these exceptional locations, such as Avenue Louise, Boulevard de Waterloo and Schuttershofstraat, remain high. Besides generating turnover, the positioning of one's brand image continues to be crucial when choosing a location, as well as the willingness to pay high rent.
The mid-range segment is characterised by fi erce competition among retail concepts. Large-scale chains such as Inditex, Primark and H&M are becoming more dominant in the market. This increased level of competitiveness can also be felt in the rental market. Tenants are clearly taking a more competitive and assertive stance during negotiations than they have in the past.
In the retail warehouse market, third-generation retail warehouse parks - clusters of retail warehouses with straightforward, modern architecture and centralised management - have performed especially well, sometimes at the expense of shops in the city centres of smaller towns. In more rural environments, chain stores which in the past always opted for the city centre are now sometimes preferring retail warehouse parks over smalltown city centres. The rents for retail warehouse locations have remain fairly stable.
The impact of online stores on retail properties in Belgium remains minimal for now. Even though the market share of online stores is growing swiftly, physical stores remain an essential part of the retail landscape.
The city centre had an excellent year in 2013, both in primary and secondary cities. As was the case in 2012, yields have been particularly low (top yields of 4 % or lower).
The limited supply compared to the large number of would-be buyers has put downward pressure on yields.
Two-thirds of investors are private investors, and for the most part these are newcomers to the market. They feel they can get more security and a higher yield in retail properties than in other investments, and they are willing to off er top prices.
In addition, yields are no longer determined as much on the basis of the current rent as on the potential rent, i.e. yields on the market rent as opposed to yields on the actual rent.
The demand for top-yield transactions continues to be very high. Investing in the prime locations of major cities remains a strong long-term strategy.
Sustainability is not as important for retail properties as it is in the offi ce market. In the retail market, sustainability plays a much smaller role when choosing a location. When new retail warehouses and shopping centres are built, however, attention is defi nitely paid to the sustainability aspects of the property.
This does not mean that sustainability is not important to retailers: they think about environmentally effi cient lighting and air conditioning, and sustainability is also an important issue with regard to the production process. But in terms of the property itself, sustainability is often not a criterion for them.
Jardin d'Harscamp Namur 2.270 m2
On 24 April 2013 the shareholders' general meeting changed the name of the property investment fund into Vastned Retail Belgium (formerly Intervest Retail). This change of name indicates that the property investment fund joins the strategy of its Dutch majority shareholder Vastned regarding the real estate investment policy. Also on an operational level a strengthened synergy is pursued between the countries where Vastned is active by means of frequent dialogue related to operational matters.
Vastned, the listed European real estate fund listed that focusses on "venues for premium shopping" is active in the Netherlands, France, Belgium, Spain and Turkey (Istanbul) with an invested patrimony of approximately € 2,0 billion. Vastned, the majority shareholder of Vastned Retail Belgium since 1999, was previously already associated with its predecessor legal and has currently a shareholding of 65,5 %.
The strengthened strategy of Vastned targets the best retail real estate in the most popular commercial streets in larger cities ("high streets"). New acquisitions will be realised in inner-cities with strong commercial areas providing a genuine shopping experience. Vastned Retail Belgium joins this strategy and wishes herewith to respond to the changing retail landscape.
The direct yield of such investments on top locations in inner-cities is in the short term lower than the yield of retail warehouses. Vastned Retail Belgium aims to increase the share of high street shops on prime locations from 58 % of the entire portfolio (at year-end 2013) to at least 65 % of the portfolio in view of obtaining a lower risk profi le.
For new investments the focus of Vastned Retail Belgium will be on high-quality commercial properties on top locations in the inner-city of larger cities in Belgium, such as Brussels, Antwerp, Ghent and Bruges.
In the third quarter of 2013, Vastned Retail Belgium expanded its commercial portfolio with the acquisition of a prime commercial building, let to Massimo Dutti, and located on Steenstraat 38 in Bruges for an investment value of approximately € 11,5 million. The building is situated at the very best location of the Steenstraat and has a unique facade of 17 meters. Through this and its corner location with the Zilverstraat the building enjoys the best visibility of the Steenstraat.
The building was constructed in 1763 in classical style for the craft guild of carpenters. About 1982 the building was, apart from the facades, demolished and completely rebuilt as bank offi ce. Till the middle of 2013 the building was used as KBC bank offi ce. In the fourth quarter of 2013 the building was redesigned as shop for Massimo Dutti with respect for the rich architecture of the facade. The high qualitative design of the interior increases the aura and character of the building.
The building is acquired at a market rate yield. The current rental value lies below the common market rent. The fi nancing of this transaction is funded from the existing credit lines of the property investment fund.
The commercial space of the building on the Steenstraat 38 is about 700 m² and is located on level -1 (215 m²), the ground fl oor (242 m²) and the fi rst fl oor (240 m²). On the second fl oor the additional space of 244 m² will be converted into storage and a social space. Besides this high street shop Vastned Retail Belgium lets the building on the Steenstraat 80 to H&M.
Massimo Dutti Bruges 941 m2
Massimo Dutti Bruges 941 m2
In 2013 Vastned Retail Belgium sold a retail park and four commercial buildings for a total amount of € 6,8 million or approximately 7 % above the carrying amount (fair value).
Over the long term the strategy of Vastned Retail Belgium is to reduce the share of retail warehouses in the real estate portfolio of the property investment fund and to evolve to a share of 65 % of inner-city shops in the portfolio, preferably on prime locations.
The properties of Vastned Retail Belgium are constantly being valued on the basis of their future contribution to the return. That leads to properties being put up for sale regularly, for a variety of reasons:
Vastned Retail Belgium sold in September 2013 a retail park with a total gross commercial space of 2.962 m² located on Provincieweg in Schelle. The retail park comprises two buildings with seven commercial units let to Fabrimode, Kruidvat, Electro AV, Piocheur, Depot +, Zeeman and Iguana Wana.
Furthermore, the property investment fund also sold four small commercial buildings located in Scherpenheuvel, Sint-Job-in-'t-Goor, Merksem and Diest for a total surface area of 1.865 m².
The total sales price of these fi ve properties amounts to € 6,8 million (after deduction of the sales costs). This sales price is approximately 7 % above the carrying amount which amounts to € 6,3 million (fair value as determined by the independent property expert of the property investment fund on 31 December 2012). This fair value represents approximately 2 % of the total fair value of the investment properties of the property investment fund on 31 December 2012.
The total annual rental income of the sold retail park and the four commercial buildings amounts to € 0,5 million or approximately 2 % of the total annual rental income of the property investment fund.
The acquisition of Steenstraat 38 in Bruges and the sale of the retail park in Schelle and of four small commercial buildings are in line with the strategic aim to bring the share of inner-city shops on prime locations to 65 % of the total portfolio. After these transactions 58 % of the portfolio consists of inner-city shops.
Schelle 2.962 m2
35
35
Pearle Opticiens Antwerp 193 m2
During fi nancial year 2013, a total of 8 lease contracts have been signed with new tenants for an average rental increase of 2 % over the previous rent. There also have been 13 rental renewals concluded with existing tenants for an average rental increase of 9 %. The result is an overall rental increase of 5 % for these rental transactions, which account for roughly 9 % of the total rental income of the portfolio. These transactions either have gone into eff ect in 2013 or will do so in 2014.
Yields of retail warehouses as well as those of inner-city properties have been adjusted upwards slightly by these trends on the market of commercial real estate. For retail warehouses and shopping centres, the average yield in the portfolio of the property investment fund was 7,3 % on 31 December 2013 (6,9 % on 31 December 2012), and for inner-city shops, this was 5,6 % (5,4 % on 31 December 2012).
The most important value increase in the real estate portfolio of the property investment fund has been realised in the inner-city of Namur in the commercial complex Jardin d'Harscamp through the merge of several units. Club modernized its shop in the fi rst quarter of 2013 and took the opportunity to expand it from 317 m² to 478 m². In the second quarter of 2013, Belgian fashion label Mayerline opened its new shop of 254 m² in the centre. For both lettings the rental level has increased by approximately 45 % compared to earlier prevailing rental conditions for the same space. Herewith the fair value of the gallery has increased by 22 % in 2013. Upon acquisition of this inner-city gallery by Vastned Retail Belgium at the end of 2011, 38 % of the leasable space was
vacant. Currently only one smaller unit of 101 m² is un-let (4 % of the total leasable space).
In the third quarter of 2013 Vastned Retail Belgium succeeded in realising two signifi cant rental transactions in absolute prime locations in Brussels and Antwerp. In Brussels on avenue Louise 7 a lease contract (approximately 245 m²) was concluded with ICI Paris XL. On Leysstraat 28-30 in Antwerp a lease contract (approximately 245 m²) was concluded with Pearl Opticiens.
Mayerline Namur 264 m2
In 2013, several tenants have terminated the lease contract in Julianus Shopping in Tongeren. The occupancy rate of the shopping centre amounts to 91 % on 31 December 2013. Except in case of reletting of these vacant spaces, the occupancy rate will drop considerably in 2014. In 2013 the fair value of the shopping centre has further declined because of this decreasing occupancy rate, but also owing to a lower rental value and a higher yield. The decreasing occupancy rate is related to the large supply of shops in adjacent towns.
The commercial centre is nevertheless attractive, also due to the presence of a large underground car park and its central location linked with the Maastrichterstraat. Vastned Retail Belgium aims to give the shops around the inner court of Julianus Shopping a more local function related to the adjacent Eburon hotel. Furthermore priority is given to fi nd a strong retailer in order to rebuild the confi dence of the retail market in the shopping centre.
In 2013, the fair value of the real estate portfolio evolves from € 359 million to € 362 million. This increase can be detailed as follows (in million €):
| Fair value of the portfolio at 1 January 2013 |
359 |
|---|---|
| acquisitions of investment properties | 12 |
| disposals of investment properties | - 6 |
| investments of the existing portfolio | 0 |
| unrealised capital gains | 7 |
| unrealised capital losses | - 10 |
| Fair value of the portfolio at 31 December 2013 |
362 |
Julianus Shopping Tongeren 8.459 m2
37
37
| in thousands € | 2013 | 2012 |
|---|---|---|
| Rental income | 21.743 | 22.245 |
| Rental-related expenses | -72 | -133 |
| Property management costs and income | 37 | 19 |
| Property result | 21.708 | 22.131 |
| Property charges | -2.276 | -2.605 |
| General costs and other operating income and costs | -989 | -989 |
| Operating result before result on portfolio | 18.443 | 18.537 |
| Result on disposals of investment properties | 273 | 918 |
| Changes in fair value of investment properties | -3.030 | 6.406 |
| Other result on portfolio | -154 | 91 |
| Operating result | 15.532 | 25.952 |
| Financial result (excl. changes in fair value - IAS 39) | -4.891 | -5.166 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) | 1.586 | -2.090 |
| Taxes | -33 | -32 |
| NET RESULT | 12.194 | 18.664 |
| Note: | ||
| Operating distributable result3 | 13.448 | 13.290 |
| Result on portfolio | -2.911 | 7.415 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) and other non-distributable elements |
1.657 | -2.041 |
| Result per share | 2013 | 2012 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Weighted average number of shares | 5.078.525 | 5.078.525 |
| Net result (€) | 2,40 | 3,68 |
| Gross dividend (€) | 2,65 | 2,62 |
| Net dividend (€) | 1,9875 | 1,9650 |
Rental income of Vastned Retail Belgium decreases in 2013 by 2 % through the divestment of some non-strategic buildings in the portfolio.
Rental income of Vastned Retail Belgium amounts in fi nancial year 2013 to € 21,7 million (€ 22,2 million). This decrease of € 0,5 million or 2 % results mainly from the sale of approximately 3 % of the real estate portfolio in December 2012 (3 peripheral retail warehouses in Hasselt, Beaumont and Mons and a retail park in Andenne) and further from the sale of a retail
3 For the calculation of the operating distributable result: see note 13 of the fi nancial report.
park and four commercial properties during fi nancial year 2013, representing once again approximately 2 % of the real estate portfolio. The decrease in rental income through these divestments is partly compensated by the acquisition of a premium high street shop in Bruges in the third quarter of 2013 as well as indexations and rental renewals of lease contracts in the existing real estate portfolio.
Property charges of the property investment fund which amount to € 2,3 million, have decreased by € 0,3 million in 2013 compared to previous fi nancial year (€ 2,6 million), mainly through lower maintenance and repair costs.
General costs and other operating costs and income amount to € 1,0 million in 2013 and remain at the same level as previous year (€ 1,0 million).
Through the decrease in rental income, partly compensated by the decrease of property charges, the operating result before result on portfolio decreases in 2013 by only € 0,1 million to € 18,4 million (€ 18,5 million).
The result on disposals of investment properties amounts to € 0,3 million (€ 0,9 million) and comprises mainly the gain which has been realised on the sale of a retail park in Schelle and four commercial properties, located in Sint-Job-in-'t-Goor, Scherpenheuvel, Merksem and Diest, with a total fair value of € 6,3 million (on 31 December 2012).
The changes in fair value of investment properties for fi nancial year 2013 are negative and amount to - € 3,0 million (€ 6,4 million). This eff ect comes mainly from the decrease in fair value of Julianus Shopping in Tongeren and the write-off of 2,5 % transaction costs for the acquisition of the building located on Steenstraat 38 in Bruges.
The fi nancial result (excl. changes in fair value of financial assets and liabilities (ineff ective hedges - IAS 39)) amounts for fi nancial year 2013 to - € 4,9 million (- € 5,2 million). On an annual basis the average credit facility withdrawal of the property investment fund has decreased by approximately € 9 million in 2013 compared to 2012 through the realised divestments of investment properties in December 2012 and in 2013. Through this lower credit facility withdrawal and because of new interest rate swaps at lower interest rates, the financing costs of the property investment fund have decreased by € 0,3 million in 2013.
Changes in fair value of fi nancial assets and liabilities(ineff ective hedges - IAS 39) in 2013 include the decrease of the negative market value of interest rate swaps that, in line with IAS 39, cannot be classifi ed as cash fl ow hedging instruments, for an amount of € 1,6 million (- € 2,1 million). This revaluation results from the increase of the interest rates on the fi nancial market.
For financial year 2013, the average interest rate of the withdrawn credit facilities of the property investment fund amounts to 4,0 % including bank margins (4,0 % in 2012).
The net result of Vastned Retail Belgium amounts to € 12,2 million (€ 18,7 million) for fi nancial year 2013 and can be divided in:
For fi nancial year 2013, the operating distributable result of Vastned Retail Belgium increases thus to € 13,4 million (€ 13,3 million). With 5.078.525 shares being issued, this represents a gross dividend of € 2,65 per share for fi nancial year 2013 compared to € 2,62 in 2012. Herewith the gross dividend yield amounts to 5 % based on the share price on 31 December 2013.
| in thousands € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| ASSETS | ||
| Non-current assets | 362.265 | 359.792 |
| Current assets | 2.768 | 3.142 |
| Total assets | 365.033 | 362.934 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Shareholders' equity | 235.467 | 235.080 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 121.877 | 115.020 |
| Net result of the fi nancial year | 12.194 | 18.664 |
| Liabilities | 129.566 | 127.854 |
| Non-current liabilities | 116.965 | 94.648 |
| Current liabilities | 12.601 | 33.206 |
| Total shareholders' equity and liabilities | 365.033 | 362.934 |
| Balance sheet data per share | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net asset value (fair value) (€) | 46,37 | 46,29 |
| Net asset value (investment value) (€) | 48,13 | 48,07 |
| Net asset value EPRA4 (€) | 47,08 | 47,61 |
| NNNNet asset value EPRA4 (€) | 46,31 | 46,22 |
| Share price on closing date (€) | 52,40 | 47,60 |
| Premium to net asset value (fair value) (%) | 13 % | 3 % |
| Debt ratio (max. 65 %) | 34 % | 33 % |
40
On 31 December 2013, the fair value of the investment properties of Vastned Retail Belgium amounts to € 362 million (€ 359 million). This increase of € 3 million compared to 31 December 2012 comes mainly from:
○ a decrease in value of the real estate portfolio of € 3,0 million through the decrease in fair value of Julianus Shopping in Tongeren.
On 31 December 2013, the fair value of the real estate portfolio amounts to € 362 million.
On 31 December 2013, the investment properties are valued at € 371 million (investment value) by the independent property experts. The fair value is the investment value minus the hypothetical transaction rights and costs that must be paid in the event of any future potential disposal.
Current assets amount to € 3 million (€ 3 million) and consist mainly of € 2 million of cash and cash equivalents.
Shareholders' equity of the property investment fund amounts to € 235 million (€ 235 million). The share capital (€ 97 million) and the share premium (€ 4 million) remain unchanged compared to previous year. The number of shares entitled to dividend amounts to 5.078.525 on 31 December 2013.
The reserves of the company amount to € 121 million (€ 115 million) and consist mainly of:
On 31 December 2013, the net asset value (fair value) of the share is € 46,37 (€ 46,29). Given that the share price on 31 December 2013 is € 52,40, the share of Vastned Retail Belgium is quoted with a premium of approximately 13 % compared to this net asset value (fair value).
Compared to 2012, non-current liabilities increase to € 117 million (€ 95 million) and consist mainly of € 114 million long-term bank fi nancings as well as the negative market value of € 3 million of non-current hedging instruments. The increase results mainly from the long-term refi nancing of credit facilities which had become short-term on 31 December 2012 as well as from the fi nancing of the acquisition of the premium high street shop in Bruges.
Current liabilities amount to € 13 million (€ 33 million) and consist mainly of € 8 million (€ 27 million) current financial debts (short-term financings progressing each time). The decrease of € 19 million is due mainly to the realised refi nancing into long-term credit facilities and the divestment of some non-strategic buildings. Further, the current liabilities consist of € 1 million in negative market value of current hedging instruments, of € 3 million in trade debts and other current debts and of € 1 million in deferred charges and accrued income.
A relatively low debt ratio of 34 % on 31 December 2013 (33 % on 31 December 2012) and financings with well-spread expiry dates offer Vastned Retail Belgium a stable balance-sheet position.
41 41
On 31 December 2013, Vastned Retail Belgium has a conservative fi nancial structure allowing it to continue to carry out its activities in 2014.
The most important characteristics of the fi nancial structure on 31 December 2013 are:
42
On 31 December 2013, 87 % of the available credit lines of Vastned Retail Belgium are longterm fi nancings. 13 % of the credit lines are short-term fi nancings with an unlimited duration (€ 17,4 million).
87 % of the credit lines are long-term financings with well spread expiry dates.
On 31 December 2013, the property investment fund still has € 15 million (2012: € 21 million) of non-withdrawn credit facilities at its fi nancial institutions to meet the fl uctuations of liquidity needs, for fi nancing future investments and for payment of the dividend of fi nancial year 2013.
On 31 December 2013, the weigthed average duration of the long-term fi nancings is 2,8 years. The strategy of Vastned Retail Belgium is to maintain this average duration between 3,5 and 5 years, but it is possible to deviate from that principle when specifi c market circumstances require it.
In fi nancial year 2014 Vastned Retail Belgium does not need to carry out any refi nancing of its credit facilities. The next credit facility expires at the end of March 2015.
Moreover, the credit facilities portfolio of Vastned Retail Belgium is spread over 5 European fi nancial institutions.
When composing the loan portfolio, the strategy of Vastned Retail Belgium consists of achieving a ratio of one-third borrowed capital with a variable interest rate and two-thirds borrowed capital with a fi xed interest rate. On 31 December 2013, 66 % of the credit lines of the property investment fund consist of fi nancing with a fi xed interest or fi xed by interest rate swaps. 34 % are credit facilities with a variable interest rate.
Of the withdrawn credit facilities on 31 December 2013, 74 % have a fi xed interest rate or are fi xed by interest rate swaps. 26 % have a variable interest rate which is benefi cial due to the current low interest rate levels.
The weighted average duration of long-term credit facilities amounts to 2,8 years on 31 December 2013. 74 % of the withdrawn credit facilities have a fixed interest rate or are hedged by financial derivatives.
43
43
For the protection of its operating results against future interest rate fl uctuations, Vastned Retail Belgium covers partially the interest rate fl uctuations with interest rate swaps.
In the fourth quarter of 2013 the property investment fund has purchased an interest rate swap for a notional amount of € 10 million with a duration of 4 years. This interest rate cover has been realised at 0,79 % which is substantially lower than the interest rate swap which expired.
On 31 December 2013 the property investment fund has a notional amount of € 80 million active interest rate swaps at a weighted average interest rate of 2,44 %. Furthermore, the property investment fund has one credit facility of € 10 million with a fi xed interest rate of 3,40 %. Through these interest rate covers the interest rate for 66 % of credit lines is fi xed on 31 December 2013 for a remaining period of 3,3 years.
The interest rate policy of Vastned Retail Belgium always consists in concluding one-third of its credit facilities with a variable interest rate. In 2013, the total average interest rate of the fi nancial debts of the property investment fund amounts to 4,0 %, including bank margins (2012: 4,0 %).
For 2013, the average interest rate for the noncurrent fi nancial debts amounts to 4,6 % (2012: 4,6 %).
For 2013, the average interest rate for the current fi nancial debts amounts to 1,5 % (2012: 2,4 %).
During the fi rst quarter of 2013 Vastned Retail Belgium has prolonged a fi nancing for an amount of € 10 million for a duration of 4,5 years of a credit facility which expired on 15 April 2013.
During the third quarter of 2013 the property investment fund has prolonged a fi nancing of € 15 million for a duration of 4 years of a credit facility which expired on 1 January 2014.
The existing credit facilities have been refi nanced at the same fi nancial institutions at market rates. Herewith the property investment fund has carried out all its fi nancings for fi nancial year 2014.
44
For fi nancial year 2013 the eff ect on the operating distributable result of a (hypothetical) increase in interest rates by 1 % gives a negative result of approximately € 0,4 million (2012: € 0,4 million). The concluded fi nancial derivatives are taken into account for this calculation. Given the currently low market rate a hypothetical decrease of interest rates by 1 % is not realistic.
The interest cover ratio is the ratio between the operating result before result on portfolio and the fi nancial result (excluding the revaluation of fi nancial derivatives in accordance with IAS 39). For Vastned Retail Belgium, this ratio amounts to 3,8 for fi nancial year 2013 (3,6 for fi nancial year 2012), which is signifi cantly better than the requirements agreed in the fi nancing agreements of the property investment fund as a covenant.
On 31 December 2013, the debt ratio of the property investment fund amounts to 34 % and has increased by 1 % compared to 31 December 2012 (33 %) as a result of investments and divestments in investment properties in 2013.
The board of directors proposes to distribute the result for fi nancial year 2013 of Vastned Retail Belgium sa, as follows:
| in thousands € | 31.12.2013 |
|---|---|
| Net result for fi nancial year 20135 | 12.194 |
| Transfer from the reserves for the balance of changes in fair value6 of investment properties ○ |
|
| ● Financial year |
2.895 |
| ● Realisation real estate properties |
-115 |
| ○ Transfer from the reserves for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
63 |
| ○ Transfer to the reserve for the balance of changes in fair value of allowed hedging instruments not subject to hedge accounting |
-1.586 |
| ○ Transfer to other reserves |
-3 |
| ○ Transfer from results carried forward from previous fi nancial years |
10 |
| Remuneration of capital | 13.458 |
At the general meeting of shareholders on 30 April 2014, it shall be proposed that a gross dividend of € 2,65 per share will be distributed.
This represents a net dividend7 of € 1,9875 after deduction of 25 % withholding tax.
Taking into account 5.078.525 shares that will participate in the full result for the fi nancial year, this means that a dividend of € 13.458.091 is available for distribution.
The dividend is higher than the required minimum of 80 % of the operating distributable result as Vastned Retail Belgium, in accordance with its policy, will also distribute 100 % of the operating distributable result for 2013.
The dividend will be payable as from 9 May 2014. As far as the bearer shares are concerned, this can be done by presentation of dividend certifi cate number 14.
5 As legally speaking only the operating distributable profi t of the statutory annual accounts can be distributed and not of the consolidated annual accounts, the present profi t distribution is based on the statutory fi gures (see note 13 of the fi nancial report).
6 Based on the changes in the investment value of investment properties.
7 The withholding tax on dividends of public property investment funds increased from 15 % to 21 % for taxation year 2012 pursuant to the Act of 28 December 2011 containing miscellaneous provisions. Subsequently pursuant to the Finance Act of 27 December 2012 the withholding tax on dividends of public property investments funds increased as from taxation year 2013 from 21 % to 25 % (subject to certain exemptions).
In August 2011 the EPRA's Reporting and Accounting Committee published an update of the report entitled "Best Practices Recommendations (BPR)8. This BPR contains the recommendations for defi ning the main fi nancial performance indicators applicable to the real estate portfolio. Vastned Retail Belgium supports the reporting standardisation approach designed to improve the comparability and the quality of information and supplies her investors and other users of the annual report with most of the EPRA recommendations. For this reason Vastned Retail Belgium has chosen to record the key performance indicators in a separate chapter of the annual report. The statutory auditor has checked whether the "EPRA earnings", "EPRA NAV" and "EPRA NNNAV" ratios have been calculated in accordance with the defi nitions given in the "EPRA Best Practices Recommendations" of August 2011 and whether the fi nancial data used to calculate those ratios tally with the accounting data included in the consolidated fi nancial statements.
| Table | EPRA indicators | EPRA Defi nitions9 | 31.12.2013 | 31.12.2012 | |
|---|---|---|---|---|---|
| 1 | EPRA Earnings | Recurring earnings from core operational activities |
In thousands € | 13.365 | 13.430 |
| €/share | 2,63 | 2,64 | |||
| 2 | EPRA NAV | Net Asset Value adjusted to include properties and other investment interests at fair value and to exclude certain items not expected to crystallize in a long term investment property business model |
In thousands € | 239.115 | 241.790 |
| €/share | 47,08 | 47,61 | |||
| 3 | EPRA NNNAV | EPRA NAV adjusted to include the fair values of (i) fi nancial instruments, (ii) debt and (iii) deferred taxes |
In thousands € | 235.186 | 234.754 |
| €/share | 46,31 | 46,22 | |||
| 4 | (i) EPRA Net Initial Yield (NIY) |
Annualised rental income10 based on the cash rents passing at the balance sheet date, less non recoverable property operating expenses, divided by the market value of the property, increased with estimated purchasers' costs |
5,2 % | 5,3 % | |
| (ii) EPRA Topped-up NIY | This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods (or other unexpired lease incentives such as discounted rent periods and step rents) |
5,3 % | 5,4 % | ||
| 5 | EPRA Vacancy Rate | Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio |
4,7 % | 2,7 % | |
| 6 | EPRA Cost Ratio (includ ing direct vacancy costs) |
EPRA costs (including direct vacancy costs) divided by Gross Rental Income less ground rent costs |
15,8 % | 16,7 % | |
| EPRA Cost Ratio (exclud ing direct vacancy costs) |
EPRA costs (excluding direct vacancy costs) divided by Gross Rental Income less ground rent costs |
15,1 % | 16,4 % | ||
8 The report is available on the EPRA website: www.epra.com.
9 Source: EPRA Best Practices (www.epra.com). The defi nitions are in English, as defi ned originally by EPRA;
| in thousands € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Net result | 12.194 | 18.664 |
| Ajustments to calculate EPRA earnings | ||
| To exclude: | ||
| I. Changes in fair value of investment properties | 3.030 | -6.406 |
| II. Result on disposal of investment properties | -273 | -918 |
| VI. Changes in fair value of fi nancial assets and liabilities | -1.586 | 2.090 |
| EPRA Earnings | 13.365 | 13.430 |
| Weighted average number of shares | 5.078.525 | 5.078.525 |
| EPRA Earnings (€/share) | 2,63 | 2,64 |
Tony Mertens Wilrijk 1.167 m2
47
47
| in thousands € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Net asset value | 235.467 | 235.080 |
| Net asset value (€/share) | 46,37 | 46,29 |
| Eff ect of exercise of options, convertible debts and other equity interests | 0 | 0 |
| Diluted net asset value, after the exercise of options, convertible debts and other equity interests |
235.467 | 235.080 |
| To exclude: | ||
| IV. Fair value of fi nancial instruments | 3.610 | 6.695 |
| Va. Deferred taxes | 38 | 15 |
| EPRA NAV | 239.115 | 241.790 |
| Number of shares at the end of the year | 5.078.525 | 5.078.525 |
| EPRA NAV (€/share) | 47,08 | 47,61 |
| To include: | ||
| I. Fair value of fi nancial instruments | -3.610 | -6.695 |
| II. Revaluations at fair value of fi nancings with fi xed interest rate | -281 | -326 |
| III. Deferred taxes | -38 | -15 |
| EPRA NNNAV | 235.186 | 234.754 |
| Number of shares at the end of the year | 5.078.525 | 5.078.525 |
| EPRA NNNAV (€/share) | 46,31 | 46,22 |
Rituals Antwerp 140 m2
| in thousands € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Investment properties and properties held for sale | 361.678 | 361.182 |
| To include: | ||
| Properties held for sale | 0 | -1.999 |
| Properties available for lease | 361.678 | 359.183 |
| To include: | ||
| Estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
9.042 | 8.979 |
| Investment value of properties available for lease (B) | 370.720 | 368.162 |
| Annualised gross rental income | 21.515 | 21.578 |
| To exclude: | ||
| Property charges11 | -2.362 | -2.086 |
| Annualised net rental income (A) Adjustments: |
19.153 | 19.492 |
| Rent expiration of rent free periods or other lease incentives | 610 | 254 |
| Annualised 'topped-up' net rental income (C) | 19.763 | 19.746 |
| (in %) | ||
| EPRA NET INITIAL YIELD (A/B) | 5,2 % | 5,3 % |
| EPRA 'topped-up' NET INITIAL YIELD (C/B) | 5,3 % | 5,4 % |
| Segment | Leasable space |
Estimated rental value (ERV) on vacant spaces |
Estimated rental value (ERV) |
EPRA vacancy rate |
EPRA vacancy rate |
|---|---|---|---|---|---|
| (in m²) | (in thousands €) | (in thousands €) | (in %) | (in %) | |
| 31.12.2013 | 31.12.2012 | ||||
| Inner-city shops | 33.624 | 581 | 11.696 | 5,0 % | 2,1 % |
| Retail warehouses and shopping centres |
113.338 | 477 | 10.774 | 4,4 % | 3,3 % |
| Total properties available for lease |
146.962 | 1.058 | 22.470 | 4,7 % | 2,7 % |
11 The perimeter of the property charges to be excluded for the calculation are recorded in the EPRA Best Practices and does not correspond with the "Property charges" as presented in the consolidates IFRS accounts.
49
49
| in thousands € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| General costs | 1.066 | 1.049 |
| Write-downs on trade receivables | 84 | 51 |
| Compensations for building rights and long-lease rights | 109 | 106 |
| Property charges | 2.276 | 2.605 |
| To exclude: | ||
| Compensations for building rights and long-lease rights | -109 | -106 |
| EPRA costs (including vacancy costs) (A) | 3.426 | 3.705 |
| Vacancy costs | -168 | -83 |
| EPRA costs (excluding vacancy costs) (B) | 3.258 | 3.622 |
| Rental income less compensations for building rights and long-lease rights (C) | 21.634 | 22.139 |
| (in %) | ||
| EPRA Cost Ratio (including vacancy costs) (A/C) | 15,8 % | 16,7 % |
| EPRA Cost Ratio (excluding vacancy costs) (B/C) | 15,1 % | 16,4 % |
Rooseveltcentre Vilvorde 8.069 m2
Vastned Retail Belgium intends to pursue its strategy further in 2014 by focusing explicitly on premium quality retail locations and properties.
For new acquisitions, the focus will be on premium high streets located in larger cities, such as Antwerp, Brussels, Ghent and Bruges.
It would not be realistic to state growth targets due to the fact that the market for high-quality products is still scarce. Making the shift to prime locations also means accepting a lower yield. Yields on prime locations are currently about 4 %, and sometimes even lower depending on a property's rent potential. Investing at these kinds of yields only makes economic sense if the rent levels off er opportunity for an increase in rent.
Divestments will be made primarily on an opportunistic basis. Real estate brokers and investors know that Vastned Retail Belgium is open to the idea of selling properties insofar as the terms of these sales are favourable for the property investment fund. Divestments are only being considered for less strategic inner-city shops in smaller cities and less strategic retail warehouses or retail parks.
Vastned Retail Belgium tries to balance the volume and the timing of divestments in an eff ort to maintain the operating result. However, this will not inhibit the property investment fund from pursuing exceptional or high-priority divestment opportunities, with the result being that rental income might be subjected to temporary pressure.
Absolute premium retail warehouse projects, such as the Gouden Kruispunt in Tielt-Winge, will remain in portfolio. By means of active asset management, Vastned Retail Belgium is seeking to better exploit the commercial potential of its best retail warehouse projects through an optimisation of the tenant mix as well as investments in the buildings.
The property investment fund is mildly optimistic when it comes to future rental growth, which will come mainly from lease renewals that will be negotiated in 2014 and which will take eff ect in 2015. A number of prime locations defi nitely have the potential for sizable rent increases, but there are some cases in which we might have to be content with current rent levels. The rate of infl ation will likely remain low.
Over the course of fi nancial year 2013, interest rate swaps that Vastned Retail Belgium had already purchased in 2011 have gradually taken eff ect for a notional amount of € 45 million. The property investment fund also purchased another interest rate swap in the fourth quarter of 2013 for a notional amount of € 10 million with a duration of 4 years at 0,79 %.
The average rate of interest on these interest rate hedges that started in 2013 is 2,2 %, which is substantially lower than the average interest rate on the previous interest rate hedges, which was 3,8 %. Assuming a constant market rate, these new interest rate swaps will lower the property investment fund's fi nancing costs in the future.
Avance Ghent 265 m2
The share of Vastned Retail Belgium (VASTB) is listed on NYSE Euronext Brussels and is included in the stock market indexes BEL Real Estate and GPR 250 Europe.
Share price 2013
The share price of Vastned Retail Belgium has increased from € 47,60 on 31 December 2012 to € 52,40 on 31 December 2013 or an increase by approximately 10 %. The lowest closing share price reaches € 47,37 (10 January 2013) and the highest closing share price € 57,69 (12 April 2013).
The average share price of fi nancial year 2013 amounts to € 52,06 compared to € 47,72 for fi nancial year 2012.
Share price evolution 2009-2013
During the last 5 years (2009-2013) the share price of the Vastned Retail Belgium share has increased gradually from € 28,50 on 1 January 2009 to € 52,40 on 31 December 2013 or an increase of approximately 84 %.
54
During 2013, the share of Vastned Retail Belgium is quoted with a premium of 13 % in average compared to the net asset value (fair value).
The net asset value of Vastned Retail Belgium includes the 2012 dividend up to the payment date on 3 May 2013.
Comparison 2013
The share of Vastned Retail Belgium has fl uctuated during the fi rst three quarters of 2013 along with the BEL 20 and the BEL Real Estate or performed better. In the fourth quarter of 2013 the Vastned Retail Belgium share has performed lesser than the BEL 20 but has fl uctuated along with the BEL Real Estate.
During the last 5 years (2009-2013) the Vastned Retail Belgium share has performed much better than the BEL 20 and the BEL Real Estate.
This graph shows that in 2013 Vastned Retail Belgium has performed better than the GPR 250 Belgium index and the GPR 250 Europe index and in the fi rst three quarters of 2013 better than the BEL 20 and the Euronext 100 index.
Additional information on the indexes can be obtained from Euronext Brussels for the Euronext 100 and BEL 20 and from Global Property Research (www.propertyshares.com) regarding the GPR 250 Europe and GPR 250 Belgium.
The traded volumes, with an average of 837 shares per day, are slightly higher than previous year (708 units a day).
A liquidity contract has been concluded with Bank Degroof to promote the negotiability of the shares. In practice this takes place through the regular submission of buy and sell orders within certain margins.
At the end of 2013 the free fl oat amounts to 34,5 %.
| 31.12.2013 | 31.12.2012 | 31.12.2011 | |
|---|---|---|---|
| Number of shares at the end of the period | 5.078.525 | 5.078.525 | 5.078.525 |
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 | 5.078.525 |
| Share price (€) | 31.12.2013 | 31.12.2012 | 31.12.2011 |
|---|---|---|---|
| Highest closing share price | 57,69 | 51,00 | 50,10 |
| Lowest closing share price | 47,37 | 44,25 | 42,52 |
| Share price on closing date | 52,40 | 47,60 | 44,98 |
| Premium to net asset value (fair value) (%) | 13 % | 3 % | 0 % |
| Average share price | 52,06 | 47,72 | 46,26 |
| Data per share (€) | 31.12.2013 | 31.12.2012 | 31.12.2011 |
|---|---|---|---|
| Net asset value (fair value) | 46,37 | 46,29 | 45,04 |
| Net asset value (investment value) | 48,13 | 48,07 | 46,66 |
| Net asset value EPRA | 47,08 | 47,61 | 46,06 |
| Gross dividend | 2,65 | 2,62 | 2,53 |
| Net dividend12 | 1,9875 | 1,9650 | 1,9987 |
| Closing price gross dividend yield (%) | 5,0 % | 5,5 % | 5,6 % |
| Closing price net dividend yield (%) | 3,8 % | 4,1 % | 4,4 % |
On 31 December 2013 the share price of Vastned Retail Belgium is € 52,40, off ering its shareholders a gross dividend yield of 5 %.
56
12 The withholding tax on dividends of public property investment funds increased from 15 % to 21 % for taxation year 2012 pursuant to the Act of 28 December 2011 containing miscellaneous provisions. Subsequently pursuant to the Finance Act of 27 December 2012 the withholding tax on dividends of public property investments funds increased as from taxation year 2013 from 21 % to 25 % (subject to certain exemptions).
On 31 December 2013, the following shareholders are known to the company:
| Vastned Retail sa | ||
|---|---|---|
| Lichtenauerlaan 130 | ||
| 3062 ME Rotterdam | ||
| The Netherlands | 3.320.529 shares | 65,4 % |
| CFB Belgique sa | ||
| Uitbreidingstraat 18 | ||
| 2600 Berchem - Antwerp | 5.431 shares | 0,1 % |
| Public | 1.752.565 shares | 34,5 % |
| Total | 5.078.525 shares | 100 % |
Pursuant to article 74 of the Public Takeover Act of 1 April 2007, Vastned Retail sa and CFB Belgique sa have informed the FSMA that they act jointly.
Vastned Retail Belgium received a transparency notifi cation on 7 January 2014 from Capfi Delen Asset Management SA, with registered offi ces at 2020 Antwerp, Jan Van Rijswijcklaan 178. This notifi cation stated that the voting rights relating to the Vastned Retail Belgium shares that are held directly or indirectly by Capfi Delen Asset Management SA as from 7 January 2014 exceed the limit of 3 % of the total of the existing voting rights and amount to 4,13 %.
The complete notifi cation as well as the shareholder structure on 7 January 2014 can be consulted on the website of Vastned Retail Belgium under the heading "Corporate - Corporate Governance - Shareholders' structure and transparency declarations".
| Announcement of annual results as at 31 December 2013: | Tuesday 11 February 2014 |
|---|---|
| General meeting of shareholders: | Wednesday 30 April 2014 at 14.30 pm |
| Dividend payable: | |
| Ex dividend date 2013 | Tuesday 6 May 2014 |
| Record date dividend 2013 | Thursday 8 May 2014 |
| Dividend payment 2013 | As from Friday 9 May 2014 |
| Interim statement on the results as at 31 March 2014: | Tuesday 6 May 2014 |
| Half-yearly fi nancial statement as at 30 June 2014: | Tuesday 29 July 2014 |
| Interim statement on the results as at 30 September 2014: | Tuesday 28 October 2014 |
Vastned Retail Belgium invests exclusively in Belgian commercial real estate, focusing primarily on innercity locations and retail warehouses. Shopping centres also represent possible investment opportunities.
The retail properties consist of 58 % of inner-city shops, and of 42 % retail warehouses and shopping centres.
b ● 42 % Retail warehouses and shopping centres
The category inner-city shops contains premises that are situated in a well-developed trading centre with a concentration of large retail organisations. Twenty towns and cities fall into this category. The inner-city shops are particularly desired assets for as well retailers as investors. The shortage of these objects supports in an important measure the development value of these buildings.
For retail warehouses it is primarily the location of the premises alongside major traffi c routes as well as the large sales area (from 400 m²). This category includes both standalone buildings and retail parks. These are clusters of retail warehouses, often conceived as trading complexes with shared parking areas. Since a few years the retail warehouses undergo a quality development. Especially the retail warehouses form an attraction pool on their own and are not only attractive for discount formula. Since a few years there is an evolution whereby retailers are not only located in the inner-city but also in the periphery.
The costs which are at the expense of the lessor are rather limited to important maintenance costs to the structure of the building or important repairs or replacements of roofs. Rental expenses (such as property tax and costs for shared areas) are mostly paid by the tenant.
60
The stores are spread throughout Belgium, with a good repartition across the various regions.
13 Above charts in this report have been compiled based on the annual rental income of 2013 and the value of the real estate properties on 31 December 2013.
The tenants are of a high quality and they are spread equally over the principal sectors of the retail trade.
The major share of tenants are international chains, which is benefi cial to the stability and continuity of portfolio.
Most of the retail properties have been let on traditional lease contracts to users who are widely distributed across all sectors of the retail trade. Since most of these premises are in prime locations, the tenants are not inclined to relocate quickly. In many cases they have made a joint investment in the interior of the property, which is benefi cial to the stability and continuity of the rental income.
All of these factors result in a high occupancy rate of the portfolio (95,4 %).
Through the spread of tenants over a large number of buildings on diff erent locations, the risk of retail centres evolving less favourably and its effect on changes in rental prices is extremely limited. On 31 December 2013 the portfolio is made up of 245 leasable units, spread over 86 diff erent locations.
62
Rental income of Vastned Retail Belgium is spread over 149 diff erent tenants, limiting debtor's risk and improving stability of rental income. The ten most important tenants represent 48 % of rental income and are always prominent companies in their sector and part of international groups.
Gouden Kruispunt Tielt-Winge 19.096 m2
| Space (m²) |
Annual rent (€ 000) |
Investment value (€ 000) |
Fair value (€ 000) |
Weighting (%) |
|
|---|---|---|---|---|---|
| Investment properties | |||||
| Brussels | 11.074 | 3.066 | 54.524 | 53.194 | 15 % |
| Flanders | 106.802 | 15.866 | 256.740 | 250.478 | 69 % |
| Walloon region | 29.086 | 4.251 | 59.456 | 58.006 | 16 % |
| Total investment properties | 146.962 | 23.183 | 370.720 | 361.678 | 100 % |
On 31 December 2013 the real estate portfolio has an occupancy rate of 95,4 %.
Massimo Dutti Antwerp 583 m2
63
63
| 31.12.2013 | 31.12.2012 | 31.12.2011 | 31.12.2010 | 31.12.2009 | |
|---|---|---|---|---|---|
| Investment value investment properties (€ 000) | 370.720 | 368.162 | 371.268 | 337.371 | 332.446 |
| Current rents (€ 000) | 22.125 | 21.832 | 21.942 | 21.392 | 21.036 |
| Yield (%) | 6,0 % | 5,9 % | 5,9 % | 6,3 % | 6,3 % |
| Current rents, including estimated rental value on vacancy (€ 000) |
23.183 | 22.442 | 22.724 | 21.656 | 21.221 |
| Yield if fully let (%) | 6,3 % | 6,1 % | 6,1 % | 6,4 % | 6,4 % |
| Total leasable space of investment properties (m²) | 146.962 | 151.041 | 161.573 | 159.581 | 159.633 |
| Occupancy rate (%) | 95,4 % | 97,3 % | 96,6 % | 98,8 % | 99,1 % |
Yields of retail warehouses as well as those of inner-city properties have been adjusted upwards slightly by these trends. For retail warehouses and shopping centres, the average yield in the portfolio
of the property investment fund was 7,3 % on 31 December 2013 (6,9 % on 31 December 2012), and for inner-city shops, this was 5,6 % (5,4 % on 31 December 2012).
In case of a hypothetical negative adjustment of the yield the property experts use for the valuation of the real estate portfolio of the property investment fund (yield or capitalisation rate) with 1 % (from 6,0 % to 7,0 % in average), the investment value of the real estate portfolio would decrease by € 53 million or 14 %. Herewith the debt ratio of the property investment fund would increase by 6 % to 40 %.
In the opposite case of a hypothetical positive adjustment of this yield with 1 % (from 6,0 % to 5,0 % in average), the investment value of the real estate would increase by € 75 million or 20 %. Herewith the debt ratio of the property investment fund would decrease by 6 % to 28 %.
Slaets Antwerp 54 m2
All the commercial properties of Vastned Retail Belgium are valued by Cushman & Wakefi eld or CB Richard Ellis. Julianus Shopping in Tongres is valued by de Crombrugghe & Partners.
The Cushman & Wakefi eld methodology is based on the ERV (Estimated Rental Value) or Estimated Rental Value with adjustments that take into account the current rent paid and/or any other element that infl uences the value, e.g. costs of vacancy.
They base their determination of the market rental value on their knowledge of the real estate market and on recent transactions concluded by the Retail department. The rental value is infl uenced, inter alia, by:
The allocated unit price is multiplied by the surface area of the commercial building in order to reach a total estimated rental value.
For the inner-city shops, the "zone A" principle is used. The fi rst step involves calculating the fi rst 10 metres depth over the full façade width of the premises at 100 % of the estimated rent/m², the next 10 metres at 50 % and the rest at 25 %. Storeys are charged at 25 % or at a fi xed estimated amount depending on location and usability.
Next, the Adjusted ERV is calculated: this is 60 % of the diff erence between the current rent and the ERV. If the current rent is higher than the ERV, the Adjusted ERV is equal to the ERV and the 60 % rule doesn't apply.
A following step consists of determining a yield or capitalisation rate at which an investor would be prepared to buy the premises. The gross value before corrections is then obtained. Any adjustments (e.g. costs of vacancies) can be made at this point, after which the investment value (value deed in hand) is obtained.
In its report of 31 December 2013, Cushman & Wakefi eld states that the investment value of the retail portfolio amounts to € 173.152.503.
H&M Bruges 1.998 m2
Gand Zonnestraat 2.701 m2
The methodology of CB Richard Ellis can be summarised as follows:
For each let property, the estimated market rental value (ERV) is determined along with a marketlevel capitalisation rate (cap rate) based on recent points of comparison and taking into account the results of our inspections on the spot.
If the estimated market value exceeds the current rental value, it is assumed that a rental increase can be obtained at the next rental renewal, which is called 'adjusted ERV'. This adjusted ERV consists of the amount of the current rental income increased by 60 % of the diff erence between the ERV and the current rental income. After capitalization of the adjusted ERV, the gross market value before adjustments of the property is obtained.
If the estimated market value is lower than the current rental income, the gross market value before corrections is obtained through capitalisation of the estimated rental value (ERV).
The applied corrections on the gross market value consist of:
In its report of 31 December 2013, CB Richard Ellis declares that the fair value of the commercial properties amounts to € 181.657.029.
When determining the value, diff erent paths of reasoning are followed which actors in the relevant market use for comparing certain sales results. The following analyses proved to be decisive for determining the value:
The market value, taking into account the lease contracts under consideration, is determined in this case by the economic market rental value of the leasable space, capitalised on the basis of a yield that is considered realistic in the present market circumstances. This yield is based on the judgment of the market, the location of the property, and is composed of the following factors:
In this method, the potential cash value of the diff erence of the current rental income and the valued market rental value are normally calculated on the basis of the remaining duration of the lease contracts.
The possible costs for vacancy, such as loss of rent, service charges borne by the landlord, rental costs, publicity and marketing costs related to the letting, as well as the costs for supervision, maintenance and modifi cations and/or incentives during the leasing process are taken into account.
This approach makes explicit and subjective assumptions or projections of future cash fl ow, referral fees, wear, renovations, redevelopments, management and transfer costs, taxes and fi nancial charges. It can be used for calculation of the net current value of this future cash fl ow or for determining the internal interest rate of an investment at a given value.
Inasmuch as fi nancing conditions are specifi c to the profi le of each investor and its investment policy, in order to be coherent, they have not been not taken into account. As usual in this scenario, cautious assumptions are made with respect to costs and vacancy. This makes it possible to make a real comparison that takes the unique aspects of each individual investment into account. It is therefore far from certain that these costs would have to actually be taken into account for the period indicated.
In its report of 31 December 2013, de Crombrugghe & Partners states that the fair value of the commercial properties amounts to € 6.868.408.
67
67
Armani Jeans 528 m2 Pearle Opticiens 193 m2 Antwerp
| INDEX | |
|---|---|
| Consolidated income statement | 72 |
| Consolidated statement of comprehensive income |
73 |
| Consolidated balance sheet | 74 |
| Statement of changes in consolidated equity |
76 |
| Consolidated cash fl ow statement | 78 |
| accounts | Notes to the consolidated annual | 79 |
|---|---|---|
| Note 1. | Scheme for annual accounts of | |
| property investment funds | 79 | |
| Note 2. | Principles of fi nancial reporting 79 | |
| Note 3. | Segmented information | 88 |
| Note 4. | Property result | 90 |
| Note 5. | Property charges | 92 |
| Note 6. | General costs | 94 |
| Note 7. | Employee benefi ts | 95 |
| Note 8. | Result on disposals | |
| of investment properties | 96 | |
| Note 9. | Changes in fair value of | |
| investment properties | 96 | |
| Note 10. | Other result on portfolio | 96 |
| Note 11. | Financial result | 97 |
| Note 12. | Taxes | 98 |
| Note 13. | Number of shares and | |
| result per share | 98 | |
| Note 14. | Non-current assets | 101 |
| Note 15. | Current assets | 104 |
| Note 16. | Shareholders' equity | 106 |
| Note 17. | Current liabilities | 110 |
| Note 18. | Non-current and current | |
| fi nancial debts | 111 | |
| Note 19. | Financial instruments | 113 |
| Note 20. | Calculation of consolidated | |
| debt ratio | 117 | |
| Note 21. | Related parties | 117 |
| Note 22. | List of consolidated companies 118 | |
| Note 23. | Fee of the statutory auditor | |
| and entities affi liated with | ||
| the statutory auditor | 118 | |
| Note 24. | Off -balance sheet obligations | 118 |
| Note 25. | Events after the balance | |
| sheet date | 119 | |
| Statutory auditor's report | 120 | |
| Statutory annual accounts | ||
| Vastned Retail Belgium sa | 122 |
| in thousands € | Note | 2013 | 2012 |
|---|---|---|---|
| Rental income | 4 | 21.743 | 22.245 |
| Rental-related expenses | 4 | -72 | -133 |
| NET RENTAL INCOME | 21.671 | 22.112 | |
| Recovery of rental charges and taxes normally payable by tenants on let properties |
4 | 1.548 | 1.459 |
| Rental charges and taxes normally payable by tenants on let properties |
4 | -1.548 | -1.459 |
| Other rental-related income and expenses | 37 | 19 | |
| PROPERTY RESULT | 21.708 | 22.131 | |
| Technical costs | 5 | -460 | -837 |
| Commercial costs | 5 | -215 | -229 |
| Charges and taxes on unlet properties | 5 | -168 | -83 |
| Property management costs | 5 | -1.229 | -1.227 |
| Other property charges | 5 | -204 | -229 |
| PROPERTY CHARGES | -2.276 | -2.605 | |
| OPERATING PROPERTY RESULT | 19.432 | 19.526 | |
| General costs | 6 | -1.066 | -1.049 |
| Other operating income and costs | 77 | 60 | |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 18.443 | 18.537 | |
| Result on disposals of investment properties | 8 | 273 | 918 |
| Changes in fair value of investment properties | 9 | -3.030 | 6.406 |
| Other result on portfolio | 10 | -154 | 91 |
| OPERATING RESULT | 15.532 | 25.952 | |
| Financial income | 11 | 3 | 50 |
| Net interest charges | 11 | -4.883 | -5.209 |
| Other fi nancial charges | 11 | -11 | -7 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) |
19 | 1.586 | -2.090 |
| FINANCIAL RESULT | -3.305 | -7.256 | |
| RESULT BEFORE TAXES | 12.227 | 18.696 | |
| Corporate tax | -33 | -32 | |
| Taxes | 12 | -33 | -32 |
| NET RESULT | 12.194 | 18.664 | |
| Note: | |||
| Operating distributable result | 13 | 13.448 | 13.290 |
| Result on portfolio | 8-9-10 | -2.911 | 7.415 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) and other non-distributable elements |
1.657 | -2.041 | |
| Attributable to: | |||
| Equity holders of the parent company | 12.194 | 18.664 | |
| Minority interests | 0 | 0 |
73
73
| RESULT PER SHARE (in €) | Note | 2013 | 2012 |
|---|---|---|---|
| Number of shares entitled to dividend | 13 | 5.078.525 | 5.078.525 |
| Weighted average number of shares | 13 | 5.078.525 | 5.078.525 |
| Net result | 13 | 2,40 | 3,68 |
| Diluted net result | 13 | 2,40 | 3,68 |
| Operating distributable result | 13 | 2,65 | 2,62 |
| in thousands € | 2013 | 2012 |
|---|---|---|
| NET RESULT | 12.194 | 18.664 |
| Other components of comprehensive income (recyclable in the income statement) |
||
| Changes in the eff ective part of fair value of allowed hedging instruments that are subject to hedge accounting |
1.499 | 525 |
| COMPREHENSIVE INCOME | 13.693 | 19.189 |
| Attributable to: | ||
| Equity holders of the parent company | 13.693 | 19.189 |
| Minority interests | 0 | 0 |
| ASSETS (in thousands €) | Note | 31.12.2013 | 31.12.2012 |
|---|---|---|---|
| Non-current assets | 362.265 | 359.792 | |
| Intangible assets | 7 | 4 | |
| Investment properties | 14 | 361.678 | 359.183 |
| Other tangible assets | 14 | 560 | 602 |
| Financial fi xed assets | 19 | 17 | 0 |
| Trade receivables and other non-current assets | 3 | 3 | |
| Current assets | 2.768 | 3.142 | |
| Assets held for sale | 15 | 0 | 1.999 |
| Trade receivables | 15 | 173 | 245 |
| Tax receivables and other current assets | 15 | 91 | 161 |
| Cash and cash equivalents | 1.860 | 216 | |
| Deferred charges and accrued income | 644 | 521 | |
| TOTAL ASSETS | 365.033 | 362.934 |
75
75
| SHAREHOLDERS' EQUITY AND LIABILITIES (in thousands €) | Note | 31.12.2013 | 31.12.2012 |
|---|---|---|---|
| Shareholders' equity | 235.467 | 235.080 | |
| Shareholders' equity attributable to the shareholders of the parent company |
235.467 | 235.080 | |
| Share capital | 16 | 97.213 | 97.213 |
| Share premium | 16 | 4.183 | 4.183 |
| Reserves | 121.877 | 115.020 | |
| Net result of the fi nancial year | 12.194 | 18.664 | |
| Minority interests | 22 | 0 | 0 |
| Liabilities | 129.566 | 127.854 | |
| Non-current liabilities | 116.965 | 94.648 | |
| Non-current fi nancial debts | 18 | 113.712 | 89.517 |
| Credit institutions | 113.700 | 89.500 | |
| Financial lease | 12 | 17 | |
| Other non-current fi nancial liabilities | 19 | 3.106 | 4.998 |
| Other non-current liabilities | 109 | 118 | |
| Deferred taxes - liabilities | 38 | 15 | |
| Current liabilities | 12.601 | 33.206 | |
| Current fi nancial debts | 18 | 8.405 | 27.399 |
| Credit institutions | 8.400 | 27.394 | |
| Financial lease | 5 | 5 | |
| Other current fi nancial liabilities | 19 | 521 | 1.697 |
| Trade debts and other current debts | 17 | 2.576 | 2.971 |
| Other current liabilities | 17 | 175 | 210 |
| Accrued charges and deferred income | 17 | 924 | 929 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 365.033 | 362.934 |
| DEBT RATIO | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Debt ratio (max. 65 %) | 34 % | 33 % |
| NET ASSET VALUE PER SHARE in € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Net asset value (fair value) | 46,37 | 46,29 |
| Net asset value (investment value) | 48,13 | 48,07 |
| Net asset value EPRA | 47,08 | 47,61 |
| in thousands € | Share capital | Share premium | of real estate properties Reserve for thebalance of change in investment value of real estate properties |
Reserve for the balance of the changes in fair value Reserve for the impact on fair value* |
|---|---|---|---|---|
| Balance at 31 December 2011 | 97.213 | 4.183 | 103.308 | -8.228 |
| Comprehensive income of 2012 | ||||
| Transfer through result allocation 2011: | ||||
| Transfer from result on portfolio to reserves | 24.340 | -827 | ||
| Transfer from changes in fair value of fi nancial assets and liabilities |
||||
| Other mutations | ||||
| Dividends fi nancial year 2011 | ||||
| Balance at 31 December 2012 | 97.213 | 4.183 | 127.648 | -9.055 |
| Comprehensive income of 2013 | ||||
| Transfer through result allocation 2012: | ||||
| Transfer from result on portfolio to reserves | 7.340 | 75 | ||
| Transfer from changes in fair value of fi nancial assets and liabilities |
||||
| Other mutations | ||||
| Dividends fi nancial year 2012 | ||||
| Balance at 31 December 2013 | 97.213 | 4.183 | 134.988 | -8.980 |
* of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties
| RESERVES | |||||||
|---|---|---|---|---|---|---|---|
| Reserve for the balance of changes in fair value of allowed hedging instruments subject to hedge accounting |
Reserve for the balance of changes in fair value of allowed hedging instruments not subject to hedge accounting |
Results carried forward from previous fi nancial years |
Total reserves |
Net result of fi nancial year |
Total shareholders' equity |
||
| -2.527 | -2.510 | 993 | 91.036 | 36.308 | 228.739 | ||
| 525 | 525 | 18.664 | 19.189 | ||||
| 23.513 | -23.513 | 0 | |||||
| -92 | -92 | 92 | 0 | ||||
| 38 | 38 | -38 | 0 | ||||
| -12.849 | -12.849 | ||||||
| -2.003 | -2.602 | 1.031 | 115.020 | 18.664 | 235.080 | ||
| 1.499 | 1.499 | 12.194 | 13.693 | ||||
| 7.415 | -7.415 | 0 | |||||
| -2.090 | -2.090 | 2.090 | 0 | ||||
| 33 | 33 | -33 | 0 | ||||
| -13.306 | -13.306 | ||||||
| -504 | -4.692 | 1.064 | 121.877 | 12.194 | 235.467 |
| in thousands € | Note | 2013 | 2012 |
|---|---|---|---|
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR |
216 | 379 | |
| 1. Cash fl ow from operating activities | 13.334 | 14.223 | |
| Operating result | 15.532 | 25.952 | |
| Interests paid | -4.937 | -5.004 | |
| Other non-operating elements | 1.445 | -2.175 | |
| Adjustment of result for non-cash fl ow transactions | 1.300 | -5.130 | |
| Depreciations on intangible and other tangible assets | 106 | 131 | |
| Result on disposals of investment properties | 8 | -273 | -918 |
| Spread of rental discounts and benefi ts granted to tenants | 10 | -131 | 64 |
| Changes in fair value of investment properties | 9 | 3.030 | -6.406 |
| Other result on portfolio | 10 | 154 | -91 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) |
19 | -1.586 | 2.090 |
| Change in working capital | -6 | 580 | |
| Movement of assets | |||
| Trade receivables and other non-current assets | 0 | 16 | |
| Trade receivables | 15 | 72 | 30 |
| Tax receivables and other current assets | 15 | 70 | 57 |
| Deferred charges and accrued income | -42 | 366 | |
| Movement of liabilities | |||
| Trade debts and other current debts | -219 | 176 | |
| Other current liabilities | 17 | -35 | -1 |
| Accrued charges and deferred income | 148 | -64 | |
| 2. Cash fl ow from investment activities | -3.577 | 8.121 | |
| Acquisitions of intangible and other tangible assets | -66 | -562 | |
| Acquisition of investment properties | 14 | -11.670 | 0 |
| Investments in existing investment properties | 14 | -204 | -1.437 |
| Prepaid investment invoices | -258 | -4 | |
| Proceeds of disposals of investment properties | 8.621 | 10.124 | |
| 3. Cash fl ow from fi nancing activities | -8.113 | -22.507 | |
| Repayment of loans | 18 | -10.000 | -29.720 |
| Drawdown of loans | 18 | 15.206 | 20.000 |
| Repayment of fi nancial lease liabilities | 18 | -5 | -5 |
| Receipts from non-current liabilities as guarantee | -8 | 67 | |
| Dividend paid | 13 | -13.306 | -12.849 |
| CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR | 1.860 | 216 |
As a listed property investment fund, Vastned Retail Belgium has prepared its consolidated annual accounts in accordance with the "International Financial Reporting Standards" (IFRS) as accepted by the European Union. A scheme for the annual accounts of property investment funds is contained in the Royal Decree of 7 December 2010.
The scheme principally means that the result on the portfolio is presented separately in the income statement.
This result on the portfolio includes all movements in the real estate portfolio and consists of:
The result on the portfolio is not distributed to the shareholders, but transferred to or from the reserves.
Vastned Retail Belgium is a property investment company having its registered offi ces in Belgium. The consolidated annual accounts of the company as per 31 December 2013 include the company and its subsidiaries (the "Group"). The annual accounts of Vastned Retail Belgium sa have been prepared and are released for publication by the board of directors on 12 March 2014 and will be submitted for approval to the general meeting of shareholders on 30 April 2014.
The consolidated fi nancial statements have been prepared in compliance with the "International Financial Reporting Standards" (IFRS) as approved by the European Union and according to the Royal Decree of 7 December 2010. These standards comprise all new and revised standards and interpretations published by the International Accounting Standards Board ('IASB') and the International Financial Reporting Interpretations Committee ('IFRIC'), as far as applicable to the activities of the Group and eff ective for fi nancial years as from 1 January 2013.
The IFRS 13 standard - Fair Value Measurement became eff ective for fi nancial years taking eff ect on 1 January 2013 or later. This standard has modifi ed the disclosure obligations of the Group as mentioned in note 14 and 19.
The following amended standards by the IASB and published standards and interpretations by the IFRIC became eff ective for the current fi nancial year, but do not aff ect the disclosure, notes or fi nancial results of the Group: IAS 27 - Separate Financial Statements (1/1/2013); IAS 28 - Investments in Associates and Joint Ventures (1/1/2013); Amendment IAS 1 - Presentation of Items of Other Comprehensive Income (1/7/2012); Amendments IFRS 7 - Disclosures - Off setting fi nancial assets and fi nancial liabilities (1/1/2013); Amendment IFRS 1 - Government loans (1/1/2013); Amendment IAS 19 - Employee Benefi ts (1/1/2013); Improvement of IFRS 1, IAS 1, IAS 16, IAS 32, IAS 34 as a result of the annual improvement project 2009-2011 (1/1/2013); IFRIC 20 - Stripping costs in the production phase of a surface mine (1/1/2013).
Following amendments are applicable as of next year or later are not expected to have an impact on the presentation, notes or fi nancial results of the Group:Amendment IAS 36 Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets (1/1/2014); Amendment IAS 39 Financial instruments - Novation of Derivatives and Continuation of Hedge Accounting (1/1/2014); IFRS 10 - Consolidated Financial Statements (1/1/2014); IFRS 11 - Joint Arrangements (1/1/2014); IFRS 12 - Disclosures of Involvement with Other Entities (1/1/2014); Amendment IAS 19 Employee Benefi ts - Defi ned Benefi t Plans: Employee Contributions (1/7/2014); Amendment IAS 32 Off setting fi nancial assets and fi nancial liabilities (1/1/2014); IFRS 9 Financial instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (not earlier than 1/1/2017); Amendment IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities en IAS 27 Separate Financial Statements (1/1/2014); Improvement IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and 38, IAS 24 as a result of the annual improvement project project 2010 -2012 (1/7/2014); Improvement IFRS 1, IFRS 3, IFRS 13, IAS 40 as a result of the annual improvement project 2011 -2013 (1/7/2014); IFRIC 21 - Levies (1/1/2014).
The consolidated annual accounts are expressed in thousands of €, rounded to the nearest thousand.
The accounting principles are applied consistently and the consolidated accounts are presented before profi t distribution.
A subsidiary company is an entity over which another entity has control (exclusively or jointly). Control is the power to govern the fi nancial and operating policies of an entity in order to obtain benefi ts from its activities. A subsidiary company's annual fi nancial statement is recognised in the consolidated annual fi nancial statement by means of the integrated consolidation methodology from the time that control arises until such time as it ceases. If necessary, the fi nancial reporting principles of the subsidiaries have been changed in order to arrive at consistent principles within the Group. The reporting period of the subsidiary coincides with that of the parent company.
Any transactions between the Group companies, balances and unrealised profits and losses from transactions between Group companies will be eliminated when the consolidated annual accounts are prepared. The list of subsidiaries is given under note 22.
When the Group takes control of an integrated combination of activities and assets corresponding to the defi nition of business according to IFRS 3 - Business combinations, assets, liabilities and any contingent liabilities of the business acquired are recognised separately at fair value on the acquisition date. The goodwill represents the positive change between the sum of the acquisition value, the formerly interest in the entity which was not controlled (if applicable) and the recognised minority interest (if applicable) and on the other part the fair value of the acquired net assets. If the diff erence is negative ("negative goodwill"), it is immediately recognised in the results after confi rmation of the values. All transaction costs are immediately charged and do not represent a part of the determination of the acquisition value.
In accordance with IFRS 3, the goodwill can be determined on a provisional basis at acquisition date and adjusted within the 12 following months.
After initial recognition, the goodwill is not amortised but submitted to an impairment test carried out at least every year for cash-generating units to which the goodwill was allocated. If the carrying amount of a cash-generating unit exceeds its value in use, the resulting impairment is recognised in the results and fi rst allocated in reduction of the possible goodwill and then to the other assets of the unit, proportional to their carrying amount. An impairment loss recognised on goodwill is not reversed during a subsequent year.
In the event of the disposal of a cash-generating unit, the amount of goodwill that is allocated to this unit is included in the determination of the result of the disposal.
When the Group acquires an additional interest in a subsidiary company, formerly already controlled by the Group or when the Group sells a part of the interest in a subsidiary company without losing control, the goodwill, recognised at the moment of the acquisition of control, is not infl uenced. The transaction with minority interests has an infl uence on the transferred results of the Group.
Foreign currency transactions are recognised at the exchange rate valid on the transaction date. Monetary assets and liabilities denominated in foreign currency are valued at the fi nal rate in force on the balance-sheet date. Exchange rate diff erences deriving from currency transactions and from the conversion of monetary assets and liabilities denominated in foreign are recognised in the income statement in the period when they occur. Non-monetary assets and liabilities denominated in foreign currencies are converted at the exchange rate valid at the transaction date.
Income is valued at the fair value of the compensation received or to which title has been obtained. Income will only be recognised if it is probable that the economic benefi ts will fall to the entity and can be determined with suffi cient certainty.
The rental income, the received operational lease payments and the other income and costs are recognised linearly in the income statement in the periods to which they refer.
The compensation paid by tenants for early termination of lease contracts is immediately taken into result in the period in which it is irrevocably obtained.
The costs are valued at the fair value of the compensation that has been paid or is due and are recognised in the income statement for the periods to which they refer.
The changes in fair value of investment properties are equal to the diff erence between the actual carrying amount and the previous fair value as estimated by the independent property expert. A comparison is made at least four times a year for the entire portfolio of investment properties. Movements in fair value of the real estate properties are recognised in the income statement in the period in which they arise.
The result from the disposal of investment properties is equal to the diff erence between the selling price and the carrying amount (i.e. the fair value determined by the property expert at the end of previous fi nancial year) less the selling expenses.
The fi nancial result consists of interest charges on loans and additional fi nancing costs, less the income from investments.
Taxes on the result of the fi nancial year consist of the taxes due and recoverable for the reporting period and previous reporting periods, deferred taxes and the exit tax due. The tax expense is recognised in the income statement unless it relates to elements that are immediately recognised in equity. In the latter case, taxes are recognised as a charge against equity.
When calculating the taxation on the taxable profi t for the year, the tax rates in force at the end of the period are used.
Withholding taxes on dividends are recognised in equity as part of the dividend until such time as payment is made.
The exit tax owed by companies that have been taken over by the property investment fund, are deducted from the revaluation surplus at the moment of the merger and are recognised as a liability.
Tax claims and liabilities are valued at the tax rate used during the period to which they refer.
Deferred tax claims and liabilities are recognised on the basis of the debt method ('liability method') for all provisional diff erences between the taxable basis and the carrying amount for fi nancial reporting purposes with respect to both assets and liabilities. Deferred tax claims are only recognised if it is probable that there will be taxable profi t against which the deferred tax claim can be off set.
The ordinary net result per share is calculated by dividing the net result as shown in the income statement by the weighted average of the number of outstanding ordinary shares (i.e. the total number of issued shares less own shares) during the fi nancial year.
To calculate the diluted net result per share, the net result that is due to the ordinary shareholders and the weighted average of the number of outstanding shares is adapted for the eff ect of potential ordinary shares that may be diluted.
Intangible assets are recognised at cost, less any accumulated depreciation and exceptional impairment losses, if it is likely that the expected economic benefi ts attributable to the asset will fl ow to the entity, and if the cost of the asset can be measured reliably. Intangible assets are amortised linearly over their expected useful life. The depreciation periods are reviewed at least at the end of every fi nancial year.
Investment properties comprise all lands or buildings that are lettable and (wholly or in part) generate rental income, including the buildings where a limited part is kept for own use and buildings under an operating lease.
Development projects comprise lands and buildings under development as a result of which, for a particular time, they only require investments without generating income.
Initial recognition in the balance sheet takes place at the acquisition value including transaction costs such as professional fees, legal services, registration charges and other property transfer taxes. The exit tax due from companies absorbed by the property investment fund is also included in the acquisition value.
Commission fees paid for acquisitions of buildings must be considered as additional costs for these acquisitions and added to the acquisition value.
If the acquisition takes place through the acquisition of shares of a real estate company, through the nonmonetary contribution of a building against the issue of new shares or by merger through takeover of a real estate company, the deed costs, audit and consultancy costs, reinvestment fees and costs of lifting distraint on the fi nancing of the absorbed company and other costs of the merger are also capitalised.
Expenses for works on investment properties and development projects are charged against the profit or loss of the reporting period if they have no positive eff ect on the expected future economic benefi ts and are capitalised if the expected economic benefi ts for the entity are thereby increased.
Four types of subsequent costs are distinguished in respect of investment properties and development projects:
After initial recognition, investment properties and development projects are valued by the independent property experts at investment value. For this purpose investment properties and development projects are valued quarterly on the basis of the cash value of market rents and/or eff ective rental income, after reduction of associated costs in line with the International Valuation Standards 2001, drawn up by the International Valuation Standards Committee.
Valuations are made by discounting the annual net rent received from the tenants, reduced by the related costs. Discounting uses a yield factor depending on the inherent risk of the relevant building.
In accordance with IAS 40, investment properties are recognised on the balance sheet at fair value. This value is equal to the amount for which a building might be exchanged between knowledgeable, willing parties in normal competitive conditions. From the perspective of the seller, it should be understood as being subject to the deduction of registration taxes.
The Belgian Association of Asset Managers (BEAMA) published a press release on 8 February 2006 with respect to the amounts of these registration fees (see also www.beama.be publications - press release: "First application of IFRS accounting rules").
A group of independent property experts, carrying out the periodical valuation of buildings of property investment funds, ruled that for transactions involving buildings in Belgium with an overall value of less than € 2,5 million, registration taxes of between 10,0 % and 12,5 % should apply, depending on the region where the buildings are located.
For transactions concerning buildings with an overall value of more than € 2,5 million and considering the wide range of property transfer methods used in Belgium, the same experts - on the basis of a representative sample of 220 transactions that took place in the market from 2002 to 2005 and representing a grand total of € 6,0 billion - valued the weighted average of the taxes comes to 2,5 %.
This means that the fair value is equal to the investment value divided by 1,025 (for buildings with a value of more than € 2,5 million) or the investment value divided by 1,10/1,125 (for buildings with a value of less than € 2,5 million). As Vastned Retail Belgium in principle only off ers collective portfolios of individual buildings for sale in the market, and these usually have a higher investment value than € 2,5 million, the fair value was calculated by dividing the investment value by 1,025.
The diff erence between the fair value of the property and the investment value of the property as determined by the independent property experts is recognised at the end of the period in the item "impact on the fair value of the estimated transaction rights and costs resulting from the hypothetical disposal of investment properties" in the shareholders' equity.
Profi ts or losses deriving from the change of fair value of an investment property or development projects are recognised in the income statement in the period where they emerge and allocated to the reserves in the profi t allocation.
Interest charges directly attributable to development projects are capitalised as part of the cost. With loans that are generally taken out to acquire assets, the fi nancing cost eligible for recognition as part of the cost of the development projects, is determined by applying a capitalisation percentage to the cost of the assets. The capitalisation percentage is equal to the weighted average of the fi nancing costs, excluding loans specially entered into. The amount of the fi nancing costs capitalised during a period may not be greater than the amount of the fi nancing costs incurred during the period. Capitalisation begins when the expenses for the asset are incurred, the fi nancing costs are incurred and the activities needed to produce the asset are under way. Capitalisation is deferred during long periods of interruption. Every year information is provided in the explanatory notes on the methods employed for fi nancing costs, the amount of the fi nancing costs capitalised during the period and the capitalisation percentage used.
Government grants associated with these assets are a deduction from the cost. If the cost is greater than the realisable value, an impairment loss is recognised.
The buildings for own use are valued at fair value if only a limited part is occupied by the entity for its own use. In any other case the building will be classifi ed in "other tangible assets".
The commission fees paid to real estate agents under a mandate to sell are charged against profi t or loss made on the sale.
The profits or losses realised on the disposal of investment properties and development projects are recorded in the income statement of the reporting period in 'result on disposals of investment properties' and are allocated to the reserves.
Assets held for sale refer to real estate properties whose carrying amount will be realised during a sales transaction and not through continuing use. The buildings held for sale are valued in accordance with IAS 40 at fair value.
The fixed assets under the entity's control that do not meet the defi nition of investment property are classifi ed as "other tangible assets".
Other tangible assets are initially recognised at cost and thereafter valued according to the cost model.
Government grants are deducted from the cost price. Additional costs are only capitalised if the future economic benefits related to the tangible asset increase.
Other tangible assets are depreciated using the linear depreciation method. Depreciation begins at the moment the asset is ready for use as foreseen by the management. The following percentages apply on an annual basis:
| ○ | plant, machinery and equipment | 20 % |
|---|---|---|
| ○ | furniture and vehicles | 25 % |
| ○ | computer equipment | 33 % |
| ○ | real estate for own use: | |
| ● land | 0 % | |
| ● buildings | 5 % | |
| ○ | other tangible assets 16 % | 16 % |
If there are indications that an asset may have suffered impairment loss, its carrying amount is compared to the realisable value. If the carrying amount is greater than the realisable value, an exceptional impairment loss is recognised.
Solar panels are valued based on the revaluation model in accordance with IAS 16 - Tangible Assets. After initial recognition, an asset whose fair value can be reliably determined must be booked at the revalued value, i.e. the fair value at the moment of revaluation less any subsequently accumulated depreciation and subsequently accumulated impairment losses. The fair value is determined based on the discounting method for future income. The useful life of solar panels is estimated at 20 years.
Capital gains generated upon the start-up of a new site are entered in a separate component of the shareholders' equity. Capital losses are also included in this component, unless they have been converted into cash or unless the fair value drops below the original cost. In the latter cases they are included in the results.
When tangible assets are sold or retired, their carrying amount ceases to be recognised on the balance sheet and the profi t or loss is recognised on the income statement.
The carrying amount of the assets of the company is reviewed periodically to determine whether there is an indication of impairment. Special impairment losses are recognised in the income statement if the carrying amount of the asset exceeds the realisable value.
Trade receivables are recorded at initial recognition at fair value, and are subsequently measured at amortised cost using the eff ective interest rate method. Appropriate allowances for impairment losses are recognised in profi t or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash fl ows discounted at the eff ective interest rate computed at initial recognition.
Investments are recognised and derecognised on a trade date basis when the purchase or sale of an investment is under a contract whose terms require delivery of the asset within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs.
Debt securities of which the Group has the expressed intention and ability to hold to maturity (held-to-maturity debt securities) are valued at amortised cost using the eff ective interest rate method, less any impairment recognised to refl ect irrecoverable amounts. Such impairment losses are recognised in profi t or loss when there is the objective evidence that an asset is impaired. Special impairment losses are reversed in subsequent periods when an increase in the investment's recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignifi cant risk of changes in value.
Financial liabilities and equity instruments issued by the Group are classifi ed according to the economic certainty of the contractual arrangements and the definitions of a fi nancial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The principles of fi nancial reporting related to specifi c fi nancial liabilities and equity instruments are set out below.
Interest-bearing bank loans and credit overdrafts are initially valued at fair value and are subsequently valued at amortised cost, using the effective interest rate method. Any diff erence between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with principles of fi nancial reporting related to fi nancing costs, applied by the Group.
Trade debts are initially valued at fair value and are subsequently valued at amortised cost using the eff ective interest rate method.
Equity instruments issued by the company are recognised in the proceeds received (net of direct issue costs).
The Group uses derivatives to hedge its exposure to interest rate risks arising from operational, fi nancing and investment activities. The Group does not engage in speculative transactions nor does it issue or hold derivatives for trading purposes.
Derivatives are initially valued at cost price and are valued after initial recognition at fair value.
○ Derivatives that do not qualify for hedge accounting
Certain derivatives do not qualify for hedge accounting. Changes in the fair value of each derivative that does not qualify for hedge accounting are recognised immediately in the income statement.
○ Hedge accounting
The Group designates certain hedging instruments as fair value hedges and cash fl ow hedges.
The eff ective portion of changes in the fair value of derivatives that are designated and qualify as cash fl ow hedges is recognised in the other comprehensive income. The ineffective portion is recognised in the income statement on the line "Changes in fair of fi nancial asset and liabilities (ineff ective hedges - IAS 39)".
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassifi ed to the income statement when the hedged item is recognised in the income statement, in the same line as the recognised hedged item. When the forecast transaction that is hedged results in the recognition of a non-fi nancial asset or a nonfi nancial liability, the profi ts or losses on the fi nancial derivative previously accumulated in equity are recognised in the initial valuation of the asset or liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument is sold or terminated, or exercised, or no longer qualifi es for hedge accounting. Any profi t or loss accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement.
When own shares are purchased, the amount paid, including attributable direct costs, is accounted for as a deduction of shareholders' equity.
A provision is an obligation of uncertain size or with an uncertain time element. The amount that is recognised is the best estimate at balance sheet date of the expenditure required to settle the existing liability.
Provisions are only recognised when there is a present obligation (legal or constructive) as a result of a past event that probably will bring an outfl ow of resources whereby a reliable estimate of the amount of the obligation can be made.
Contributions to defi ned-contribution retirement benefi t plans are recognised as an expense against the reporting period when employees have rendered services entitling them to the contributions..
85
85
Dividends are recognised as equity until the annual shareholders' meeting approves the dividends. The dividends are therefore recognised as a liability in the annual accounts of the period in which the dividend distribution is approved by the annual general shareholders' meeting.
Events after the balance sheet date are events, both favourable and unfavourable, that take place between the balance sheet date and the date the fi nancial statements are authorised for issue. Events providing information of the actual situation on balance sheet date are recognised as result in the income statement.
The fair value of the investment properties of Vastned Retail Belgium is valued on a quarterly basis by independent property experts. This valuation of the property experts is meant to determine the market value of a building on a certain date according to the evolution of the market and the characteristics of the relevant buildings. The property experts use the principles described in the chapter "Valuation of the portfolio by property experts" in the Property report and in "Note 14: Non-current assets: investment properties" of the Financial report. The real estate portfolio is recorded in the consolidated annual accounts at fair value determined by the property experts.
The fair value of the fi nancial derivatives of Vastned Retail Belgium is valued on a quarterly basis by the by the issuing fi nancial institute. A comprehensive description can be found in "Note 19. Financial instruments" in the Financial report.
The company is, and may in the future, be involved in legal procedures. Vastned Retail Belgium is involved on 31 December 2013 as claimer as well as defendant in a number of legal procedures which (according to the information held by the company on the date of this annual report) will most probably not have a signifi cant impact on the assets, liabilities and results of the property investment fund.
Pain de Sucre Antwerp 66 m2
The reporting by segment is done within Vastned Retail Belgium according to two segmentation bases:
The two business segments comprise the following activities:
The category of "corporate" includes all non-segment allocated fi xed costs borne at a group level.
| BUSINESS SEGENT | Inner-city shops | Retail warehouses Corporate & shopping centres |
TOTAL | |||||
|---|---|---|---|---|---|---|---|---|
| in thousands € | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| Rental income | 10.954 | 10.775 | 10.789 | 11.470 | 21.743 | 22.245 | ||
| Rental-related expenses | -52 | -45 | -20 | -88 | -72 | -133 | ||
| NET RENTAL RESULT | 10.902 | 10.730 | 10.769 | 11.382 | 21.671 | 22.112 | ||
| Rental-related costs and income | -1 | 0 | 38 | 19 | 37 | 19 | ||
| PROPERTY RESULT | 10.901 | 10.730 | 10.807 | 11.401 | 21.708 | 22.131 | ||
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO |
9.700 | 9.303 | 9.564 | 10.024 | -821 | -790 | 18.443 | 18.537 |
| Result on disposals of investment properties |
-52 | 71 | 325 | 847 | 273 | 918 | ||
| Changes in fair value of investment properties |
-59 | 5.602 | -2.971 | 804 | -3.030 | 6.406 | ||
| Other result on portfolio | -149 | 50 | -5 | 41 | -154 | 91 | ||
| OPERATING RESULT OF THE SEGMENT |
9.440 | 15.026 | 6.913 | 11.716 | -821 | -790 | 15.532 | 25.952 |
| Financial result | -3.305 | -7.256 | -3.305 | -7.256 | ||||
| Taxes | -33 | -32 | -33 | -32 | ||||
| NET RESULT | 9.440 | 15.026 | 6.913 | 11.716 | -4.159 | -8.078 | 12.194 | 18.664 |
| BUSINESS SEGMENT | Inner-city shops | Retail warehouses & shopping centres |
TOTAL | ||||
|---|---|---|---|---|---|---|---|
| in thousands € | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |
| Fair value of real estate properties | 211.386 | 201.202 | 150.292 | 157.981 | 361.678 | 359.183 | |
| ○ of which investments during the fi nancial year (fair value) |
204 | 112 | 0 | 1.325 | 204 | 1.437 | |
| ○ of which acquisitions during the fi nancial year |
11.670 | 0 | 0 | 0 | 11.670 | 0 | |
| Divestments during the fi nancial year (fair value) |
-1.631 | -230 | -4.718 | -10.643 | -6.349 | -10.873 | |
| Investment value of real estate properties |
216.671 | 206.232 | 154.049 | 161.930 | 370.720 | 368.162 | |
| Accounting yield of the segment (%) |
5,2 % | 5,4 % | 7,2 % | 7,3 % | 6,0 % | 6,2 % | |
| Total leasable space (m²) | 33.624 | 33.541 | 113.338 | 117.500 | 146.962 | 151.041 | |
| Occupancy rate (%) | 95 % | 98 % | 96 % | 97 % | 95 % | 97 % |
The activity of Vastned Retail Belgium is geographically subdivided into 3 regions namely Flanders, Brussels and the Walloon region.
| GEOGRAPHICAL SEGMENT | Flanders | Walloon region Brussels |
TOTAL | |||||
|---|---|---|---|---|---|---|---|---|
| in thousands € | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| Rental income | 14.704 | 14.808 | 4.021 | 4.471 | 3.018 | 2.966 | 21.743 | 22.245 |
| Fair value of real estate properties | 250.478 | 249.597 | 58.006 | 56.804 | 53.194 | 52.782 | 361.678 | 359.183 |
| Investment value of real estate properties |
256.740 | 255.837 | 59.456 | 58.224 | 54.524 | 54.101 | 370.720 | 368.162 |
| Accounting yield of the segment (%) | 5,9 % | 5,9 % | 6,9 % | 7,9 % | 5,7 % | 5,6 % | 6,0 % | 6,2 % |
| Investments during the fi nancial year (fair value) |
181 | 1.316 | 23 | 121 | 0 | 0 | 204 | 1.437 |
| Divestments during the fi nancial year (fair value) |
-6.349 | -1.486 | 0 | -9.157 | 0 | -230 | -6.349 | -10.873 |
note Property result
| in thousands € | 2013 | 2012 |
|---|---|---|
| Rents | 22.118 | 22.592 |
| Rental discounts | -375 | -347 |
| Total rental income | 21.743 | 22.245 |
Rental income comprises rents, income from operational lease agreements and directly associated revenues, such as rent securities granted by promoters and compensation for early terminated lease contracts minus any rental discounts and rental benefi ts (incentives) granted. The rental discounts and incentives are spread over the period running from the start of the lease contract to the next possibility of terminating a lease contract.
Rental income of Vastned Retail Belgium is spread over 149 diff erent tenants, limiting the debtor's risk and improving stability of rental income. The ten most important tenants represent 48 % (45 % in 2012) of rental income and are always prominent companies in their sector and part of international groups. The most important tenant represents 12 % of rental income (12 % in 2012). In 2013, there are 5 tenants whose lease payments on an individual basis represent more than 5 % of total rental income of Vastned Retail Belgium (5 tenants in 2012).
The cash value of the future minimum rental income until the fi rst expiry date of lease contracts is subject to the following collection terms:
| in thousands € | 2013 | 2012 |
|---|---|---|
| Receivables with a remaining duration of: | ||
| Less than one year | 21.547 | 20.556 |
| Between one and fi ve years | 28.181 | 23.921 |
| More than fi ve years | 221 | 308 |
| Total of future minimum rental income | 49.949 | 44.785 |
The increase of the future minimum rental income on 31 December 2013 of € 5,2 million results mainly on the one hand from the acquisition of a building located Steenstraat in Bruges, let to Massimo Dutti, rental renewals and new lettings to a.o. Club and Mayerline in Jardin d'Harscamp in Namur, partly compensated on the other hand by sales of non-strategic properties.
91
91
| in thouands € | 2013 | 2012 |
|---|---|---|
| Rent for leased assets and ground lease | -109 | -106 |
| Write-downs on trade receivables | -84 | -51 |
| Reversal of write-downs on trade receivables | 121 | 24 |
| Total rental-related expenses | -72 | -133 |
The rental-related expenses comprise write-downs on trade receivables and are recognised in the income statement when the carrying amount is higher than the estimated realisation value, as well as costs and income of the letting of buildings not belonging to former classes.
Recovery of rental charges and taxes normally payable by tenants on the let properties
| in thousands € | 2013 | 2012 |
|---|---|---|
| Rebilling of rental charges borne by the landlord | 64 | 65 |
| Rebilling of advance levies and taxes on let properties | 1.484 | 1.394 |
| Recovery of rental charges and taxes normally payable by tenants on let properties |
1.548 | 1.459 |
| Rental charges borne by the landlord | -64 | -65 |
| Advance levies and taxes on let properties | -1.484 | -1.394 |
| Rental charges and taxes normally payable by tenants on the let properties | -1.548 | -1.459 |
| Total net amount of recovered rental charges and taxes | 0 | 0 |
Rental charges and taxes on let buildings and recovery of these charges refer to costs that are, by law or custom, of the responsibility of the tenant. These costs comprise primarily property tax and rental charges. The owner is responsible for the management of the buildings or has it contracted out to external property managers. Depending on contractual agreements with the tenants, the landlord may or may not charge the tenants for these services.
note Property charges
| in thousands € | 2013 | 2012 |
|---|---|---|
| Recurrent technical costs | -112 | -113 |
| Insurance premiums | -112 | -113 |
| Non-recurrent technical costs | -348 | -724 |
| Maintenance | -341 | -720 |
| Claims | -7 | -4 |
| Total technical costs | -460 | -837 |
Technical costs comprise, inter allia, maintenance costs and insurance premiums.
Maintenance costs that can be seen as renovation of an existing building because they bring about an improvement of the return or the rent, are not recognised as costs but are capitalised.
The technical costs have decreased in 2013 as a result on the one hand of a less elaborated maintenance program and on the other hand because in 2012 exceptional costs for the stability problems in Mechelen Bruul were recorded.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Brokers' fees | -58 | -86 |
| Publicity | -35 | -47 |
| Lawyers' fees and legal costs | -122 | -96 |
| Total commercial costs | -215 | -229 |
Commercial costs also include brokers' fees. Brokers' fees paid to brokers after a period of vacancy are capitalised as the property experts, after a period of vacancy, reduce the estimated fees from the estimated value of the real estate property. Brokers' fees paid after an immediate re-letting, without vacancy period, are not capitalised and are recognised in the result as the property experts do not take this fee into account at the moment of valuation.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Vacancy charges of the fi nancial year | -125 | -97 |
| Vacancy charges of preceding fi nancial years | 13 | -11 |
| Property tax on vacant properties | -76 | -58 |
| Recuperation of property tax on vacant properties | 20 | 83 |
| Total charges and taxes on unlet properties | -168 | -83 |
The increase of charges and taxes on unlet properties results mainly from the growing vacancy in Tongeren and the increasing arrears of some tenants in Jardin d'Harscamp in Namur.
Vastned Retail Belgium largely recovers the property tax that is charged on vacant parts of buildings through objections submitted to Flanders Tax Administration.
| in thousands € | 2013 | 2012 |
|---|---|---|
| External property management fees | -35 | -35 |
| Internal property management fees | -1.194 | -1.192 |
| Property experts | -189 | -193 |
| Remuneration of employees | -708 | -700 |
| Other costs | -297 | -299 |
| Total property management costs | -1.229 | -1.227 |
Property management costs are cost related to the management of the buildings. These include personnel costs and indirect costs with respect to the management committee and the staff (such as offi ce costs, operating costs etc.) who manage the portfolio and lettings, and also depreciations and impairments on tangible assets used for such management and other business expenses related to the management of the property.
The external property management fees are related to the commercial complex Jardin d'Harscamp in Namur.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Property tax contractually borne by the landlord | -37 | -37 |
| Costs contractually borne by the landlord | -70 | -67 |
| Security costs | -45 | -80 |
| Other costs | -52 | -45 |
| Total other property charges | -204 | -229 |
The other property charges comprises mainly costs contractually borne by the landlord for Julianus Shopping in Tongeren and security costs for Jardin d'Harscamp in Namur.
06
| in thousands € | 2013 | 2012 |
|---|---|---|
| CII tax | -227 | -182 |
| Auditor's fee | -77 | -91 |
| Directors' remunerations | -31 | -31 |
| Liquidity provider | -14 | -14 |
| Financial services | -5 | -6 |
| Employee benefi ts | -403 | -452 |
| Other costs | -309 | -273 |
| Total general costs | -1.066 | -1.049 |
General costs are all costs related to the management of the property investment fund and costs that cannot be allocated to property management. These operating costs include general administration costs, cost of personnel engaged in the management of the company as such, depreciations and impairments on tangible assets used for his management and other operating costs.
| in thousands € | 2013 | 2012 | ||||
|---|---|---|---|---|---|---|
| Charges for the patrimony manage ment |
Charges linked to the man agement of the fund |
TOTAL | Charges for the patrimony manage ment |
Charges linked to the man agement of the fund |
TOTAL | |
| Remunerations of employees | 444 | 242 | 686 | 442 | 291 | 733 |
| Salary and other benefi ts paid within 12 months |
282 | 144 | 426 | 256 | 179 | 435 |
| Pensions and post-employment benefi ts |
13 | 8 | 21 | 11 | 6 | 17 |
| Social security | 77 | 46 | 123 | 72 | 43 | 115 |
| Variable remunerations | 26 | 16 | 42 | 25 | 15 | 40 |
| Dismissal indemnities | 0 | 0 | 0 | 0 | 17 | 17 |
| Other charges | 46 | 28 | 74 | 78 | 31 | 109 |
| Remuneration of the management committee |
264 | 161 | 425 | 258 | 161 | 419 |
| Chairman of the management committee |
65 | 65 | 130 | 63 | 63 | 126 |
| Fixed remuneration | 60 | 61 | 121 | 59 | 59 | 118 |
| Variable remuneration | 5 | 4 | 9 | 4 | 4 | 8 |
| Other members of the management committee |
199 | 96 | 295 | 195 | 98 | 293 |
| Fixed remuneration | 184 | 73 | 257 | 180 | 78 | 258 |
| Variable remuneration | 15 | 12 | 27 | 15 | 8 | 23 |
| Retirement obligations | 0 | 11 | 11 | 0 | 12 | 12 |
| Total employees benefi ts | 708 | 403 | 1.111 | 700 | 452 | 1.152 |
The number of employees at year-end 2013, expressed in FTE is 4 staff members and 2 members of the management committee for the internal management of the patrimony (2012: respectively 4 and 2) and 4 staff members and 1 member of the management for the management of the fund (2012: respectively 4,5 and 1). The management team comprises 3 persons.
Remuneration, supplementary benefi ts, compensation upon termination, redundancy and resignation compensation for personnel in permanent employment are regulated by the Act on the Labour Agreements of 4 July 1978, the Annual Holiday Act of 28 June 1971, the joint committee for the sector that the company falls under and the collective bargaining agreements that have been recognised in the income statement in the period to which they refer.
Pensions and compensations following the termination of the work comprise pensions, contributions for group insurance, life assurance and disability and hospitalisation insurance. For permanent employees, Vastned Retail Belgium has taken out a group insurance policy - a "defi ned contribution plan" - with an external insurance company.
The company pays contributions to this fund, which is independent of the company. A pension plan with a defi ned-contribution scheme is a plan involving fi xed premiums paid by the company and without the company having legally enforceable or actual obligations to pay further contributions if the fund were to have insuffi cient assets. The contributions to the insurance plan are fi nanced by the company. This group insurance contract complies with the Vandenbroucke act on pensions. The compulsory contributions are recognised in the income statement for the period that they relate to. For fi nancial year 2013 these contributions amount to € 32.000 (2012: € 29.000). The insurance company confi rmed on 31 December 2013 that the defi cit to guarantee the minimum return is not material.
Financial report
€
note
| in thousands € | 2013 | 2012 |
|---|---|---|
| Acquisition value | 4.208 | 8.558 |
| Accumulated capital gains and extra-ordinary impairment losses | 2.288 | 2.315 |
| Carrying amount (fair value) | 6.496 | 10.873 |
| Sales price | 7.105 | 11.307 |
| Selling costs | -336 | -9 |
| Additional compensation for Shopping Park Olen | 0 | 493 |
| Net proceeds of sale | 6.769 | 11.791 |
| Total result on disposals of investment properties | 273 | 918 |
The property investment fund was sold in 2013 fi ve non-strategic premises in Schelle, Scherpenheuvel, Sint-Job-in-'t-Goor, Merksem and Diest for a total sales price of € 6,8 million and a gain of € 0,4 million. Furthermore an apartment was also sold in Vilvorde, recorded on 31 December 2012 on assets held for sale (see note 15).
09 Changes in fair value of investment note properties
| in thousands € | 2013 | 2012 |
|---|---|---|
| Positive changes of investment properties | 7.003 | 9.495 |
| Negative changes of investment properties | -10.033 | -3.089 |
| Total changes in fair value of investment properties | -3.030 | 6.406 |
The changes in fair value of investment properties for fi nancial year 2013 are negative and amount to - € 3,0 million (€ 6,4 million). This eff ect comes mainly from the decrease in fair value of Julianus Shopping in Tongeren and the write-off of 2,5 % transaction costs for the acquisition of the building located on Steenstraat 38 in Bruges.
96
| in thousands € | 2013 | 2012 |
|---|---|---|
| Changes in spread of rental discounts and benefi ts granted to tenants | -131 | 64 |
| Other changes | -23 | 27 |
| Total other result on portfolio | -154 | 91 |
| in thousands € | 2013 | 2012 |
|---|---|---|
| Financial income | 3 | 50 |
| Net interest charges with fi xed interest rate | -4.529 | -4.719 |
| Net interest charges with variable interest rate | -354 | -490 |
| Other fi nancial costs | -11 | -7 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) | 1.586 | -2.090 |
| Total fi nancial result | -3.305 | -7.256 |
The fi nancial result (excl. changes in fair value of fi nancial assets and liabilities (ineff ective hedges – IAS 39)) amounts for fi nancial year 2013 to - € 4,9 million (- € 5,2 million). On an annual basis the average credit facility withdrawal of the property investment fund has decreased by approximately € 9 million in 2013 compared to 2012 through the realised divestments of investment properties in December 2012 and in 2013. Through this lower credit facility withdrawal and because of new interest rate swaps at lower interest rates, the fi nancing costs of the property investment fund have decreased by € 0,3 million in 2013.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Net interest charges on non-current fi nancial debts | -4.541 | -4.392 |
| Net interest charges on current fi nancial debts | -342 | -817 |
| Total net interest charges | -4.883 | -5.209 |
The average interest rate of the fi nancial debts amounts for 2013 to 4,0 % including bank margins (4,0 % for 2012).
The average interest rate for 2013 of the non-current fi nancial debts amounts to 4,6 % including bank margins (2012: 4,6 %), and of the current fi nancial debts to 1,5 % including bank margins (2012: 2,4 %).
For 2013 the (hypothetical) future cash outfl ow of the interest charges from the loans drawn on at 31 December 2013 at the fi xed or variable interest rate on 31 December 2013 amounts to approximately € 3,6 million (2012: € 4,7 million).
For fi nancial year 2013, the eff ect on the operating distributable result of a (hypothetical) increase in interest rates by 1 % gives a negative result of approximately € 0,3 million (2012: € 0,4 million). The fi nancial derivatives are included in the calculations. Given the currently low market rate a hypothetical decrease of the interest rates by 1 % is not realistic.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Corporate income tax | -33 | -32 |
| Total taxes | -33 | -32 |
With the Royal Decree of 7 December 2010 (previously the Royal Decree of 10 April 1995), the legislator gave a favourable tax status to property investment funds. If a company converts its status into that of a property investment fund, or if an (ordinary) company merges with a property investment fund, it must pay a one-off tax (exit tax). Thereafter, the property investment fund is only subject to taxes on very specifi c items, e.g. "disallowed expenditure". No corporate tax is therefore paid on the majority of the profi t that comes from lettings and added value on disposals of investment properties.
Pursuant to the Finance Act of 27 December 2012 (Belgian Offi cial Gazette 31 December 2012) withholding tax on dividends of public property investments funds increases as from taxation year 2013 from 21 % to 25 % (subject to certain exemptions).
Movement of the number of shares
| 2013 | 2012 | |
|---|---|---|
| Number of shares at the beginning of the fi nancial year | 5.078.525 | 5.078.525 |
| Number of shares at the end of the fi nancial year | 5.078.525 | 5.078.525 |
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Adjustments for calculation of the diluted result per share | 0 | 0 |
| Weighted average number of shares for calculation of diluted result per share | 5.078.525 | 5.078.525 |
The amount subject to distribution is determined pursuant to article 27 § 1 and Chapter 3 of Annex C of the Royal Decree of 7 December 2010.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Net result according to statutory annual accounts | 12.194 | 18.664 |
| Adjustment for non-cash fl ow transactions included in the net result: | ||
| ○ Depreciations and reversal of depreciations and impairments | 70 | 158 |
| ○ Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) | -1.590 | 2.236 |
| ○ Result on portfolio | 2.844 | -7.610 |
| Corrected result for mandatory distribution | 13.518 | 13.448 |
| Mandatory distribution: 80 % | 10.814 | 10.758 |
| Operating distributable result (statutory annual accounts) | 13.448 | 13.290 |
| Operating distributable result (consolidated annual accounts) | 13.448 | 13.290 |
The distributable earnings per share, based on the statutory annual accounts of Vastned Retail Belgium sa, amount to € 13,4 million in 2013 compared to € 13,3 million in 2012.
No further adjustments must be made on the corrected result for any non-exempted capital gain on sales of investment properties or debt reductions. Consequently, the corrected result is equal to the amount eligible for mandatory distribution of 80 %.
Vastned Retail Belgium chooses to distribute 100 % of the statutory operating distributable result to its shareholders.
| in € | 2013 | 2012 |
|---|---|---|
| Ordinary net result per share | 2,40 | 3,68 |
| Diluted net result per share | 2,40 | 3,68 |
| Operating distributable result per share | 2,65 | 2,62 |
The operating distributable result per share is, given a 100% distribution, rounded to € 2,65 per share.
After the closing of the fi nancial year, the dividend distribution shown below is proposed by the board of directors. This will be presented to the general meeting of shareholders on 30 April 2014. In accordance with IAS 10, the dividend distribution is not recognised as a liability and has no eff ect on the tax on profi t.
| 2013 | 2012 | |
|---|---|---|
| Dividend per share (in €) | 2,65 | 2,62 |
| Remuneration of share capital (in thousands €) | 13.458 | 13.306 |
| Dividend as a percentage of consolidated operating distributable result (%) | 100 % | 100 % |
99
99
The amount, as referred to in article 617 of the Belgian Companies Code, of paid-up capital or, if this amount is higher, the called-up capital, plus all reserves which, pursuant to the law or the articles of association, may not be distributed, is determined in Chapter 4 of Annex C of the Royal Decree of 7 December 2010.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Non-distributable elements of shareholders' equity for distribution | ||
| Paid-up capital | 97.213 | 97.213 |
| Unavailable share premiums, according to the articles of association | 4.183 | 4.183 |
| Reserve for the positive balance of changes in investment value of real estate properties |
134.524 | 126.984 |
| Reserve for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
-8.907 | -8.977 |
| Reserve for the balance of changes in fair value of allowed hedging instruments subject to a hedge accounting |
-504 | -2.003 |
| Reserve for the balance of changes in fair value of allowed hedging instruments not subject to a hedge accounting |
-4.692 | -2.602 |
| Other reserves Result of the fi nancial year which, pursuant to Chapter I of Annex C of the Royal Decree of 7 December 2010, is to be allocated to non-distributable reserves |
622 | 768 |
| Result on portfolio | -2.844 | 7.610 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) and fi nancial fi xed assets |
1.590 | -2.236 |
| Total non-distributable shareholders' equity | 221.184 | 220.940 |
| Statutory shareholders' equity | 235.467 | 235.080 |
| Planned dividend distribution | 13.458 | 13.306 |
| Number of shares | 5.078.525 | 5.078.525 |
| Operating distributable result per share (in €) | 2,65 | 2,62 |
| Statutory shareholders' equity after dividend distribution | 222.009 | 221.774 |
| Remaining reserves after distribution | 824 | 834 |
This calculation is based on the statutory annual accounts of Vastned Retail Belgium sa.
| in thousands € | 2013 | 2012 | ||||
|---|---|---|---|---|---|---|
| Inner-city shops |
Retail warehouses and shopping centres |
TOTAL | Inner-city shops |
Retail warehouses and shopping centres |
TOTAL | |
| Balance at 1 January | 201.202 | 157.981 | 359.183 | 195.695 | 166.518 | 362.213 |
| Acquisitions of investment properties |
11.670 | 0 | 11.670 | 0 | 0 | 0 |
| Investments in existing investment properties |
204 | 0 | 204 | 112 | 1.325 | 1.437 |
| Disposals of investment properties |
-1.631 | -4.718 | -6.349 | -230 | -10.643 | -10.873 |
| Changes in fair value of investment properties |
-59 | -2.971 | -3.030 | 5.602 | 804 | 6.406 |
| Balance at 31 December | 211.386 | 150.292 | 361.678 | 201.202 | 157.981 | 359.183 |
| OTHER INFORMATION | ||||||
| Investment value of real estate properties |
216.671 | 154.049 | 370.720 | 206.232 | 161.930 | 368.162 |
On 31 December 2013, the fair value of the investment properties of Vastned Retail Belgium amounts to € 362 million (€ 359 million). This increase of € 3 million compared to 31 December 2012 comes mainly from:
On 31 December 2013, the real estate properties are valued at € 371 million (investment value) by the independent property experts. The fair value is the investment value minus the hypothetical transaction rights and costs that must be paid in the event of any future potential disposal. For the explanation of the changes in fair value of investment properties, please see note 9.
On 31 December 2013, there were no investment properties mortgaged as security for loans taken out or for credit facilities at fi nancial institutions.
IFRS 13 applies to fi nancial years beginning on or after 1 January 2013. It introduces a standardised framework for measuring fair value and a disclosure requirement regarding fair value measurement when this valuation principle is required or permitted by virtue of other IFRS standards. IFRS 13 specifi cally defi nes fair value as the price that would be received for the sale of an asset or that would have to be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The disclosure requirement in IFRS 13 regarding fair value measurements also serves to replace or expand upon the requirements imposed by other IFRS standards, including IFRS 7 Financial Instruments: Disclosures.
Investment properties are recognised at fair value. The fair value is determined on the basis of one of the following levels of the hierarchy:
IFRS 13 classifies investment properties as level 3.
102
The fair value of all of the property investment fund's investment properties are valued each quarter by independent property experts. The fair value is based on the market value (i.e. adjusted for the 2,5% purchasing fees as described in the 'Principles of fi nancial reporting - Investment properties' - see above), which is the estimated amount for which an investment property can be sold at the measurement date by a seller to a willing buyer in a business-like, objective transaction preceded by sound negotiations among knowledgeable and willing parties.
If no current market prices are available in an active market, the measurements are made on the basis of a calculation of gross returns in which the gross market rents are capitalised. The measurements obtained are adjusted for the present value (NPV) of the diff erence between the current actual rent and the estimated rental value at the date of valuation for the period up to the fi rst opportunity to give notice under the current lease contracts. Rent discounts and rent-free periods are also taken into consideration. For buildings that are partially or completely vacant, the measurement is made on the basis of the estimated rental value minus the vacancy and the costs (rental costs, publicity costs, etc.) for the vacant portions.
The yields used are specifi c to the type of property, location, state of maintenance and the leasability of each property. The basis used to determine the yields is formed by comparable transactions and supplemented with knowledge of the market and of specifi c buildings. Comparable transactions in the market are also taken into account for the valuation of properties.
The yields described in the property report are calculated by dividing the (theoretical) gross rent of the real estate by the investment value of the investment properties expressed as a percentage. The average gross yield of the total investment portfolio as per 31 December 2013 comes to 6,3 % (31 December 2012: 6,1 %).
Assumptions are made per property, per tenant and per vacant unit concerning the likelihood of lease/ re-lease, number of months vacant, incentives and rental costs.
The most important hypotheses regarding the valuation of the investment properties are:
| 31.12.2013 | 31.12.2012 | |
|---|---|---|
| Average gross market rent per m² (in €) | ||
| ○ Inner-city shops |
356 | 333 |
| ○ Retail warehouses & shopping centres |
99 | 96 |
| Average gross yield (in %) | ||
| ○ Inner-city shops |
5,6 % | 5,4 % |
| ○ Retail warehouses & shopping centres |
7,3 % | 6,9 % |
| Average net yield (in %) | ||
| ○ Inner-city shops |
4,9 % | 4,8 % |
| ○ Retail warehouses & shopping centres |
6,5 % | 6,1 % |
| Vacancy rate (in %) | 4,6 % | 2,7 % |
In the case of a hypothetical negative adjustment of 1 % (from 6,0 % to 7,0 % on average) to the yield used by property experts for valuing the real estate portfolio of the property investment fund (yield or capitalisation rate), the fair value of the real estate would decrease by € 53 million or 14 %. This would raise the debt ratio of the property investment fund by 6 % to around 40 %. If this is reversed, and a hypothetical positive adjustment of 1 % (from 6,0 % to 5,0 % on average) is made to this yield, the fair value of the real estate would increase by € 75 million or 20 %. This would lower the debt ratio of the property investment fund by 6 % to around 28 %.
In the case of a hypothetical decrease in the current rents of the property investment fund (assuming a constant yield) of € 1 million (from € 22,1 million to € 21,1 million), the fair value of the real estate would decrease by € 16 million or 5 %. This would raise the debt ratio of the property investment fund by 2 % to around 36 %. In the reverse case of a hypothetical increase of the current rents of the property investment fund (assuming a constant yield) of € 1 million (from € 22,1 million to € 23,1 million), the fair value of the real estate would increase by € 16 million or 5 %. This would lower the debt ratio of the property investment fund by 2 % to around 32 %.
A correlation exists between changes in the current rents and the yields that are used to value the real estate, but this was not factored into the above sensitivity analysis.
Investment properties are recorded in the accounts on the basis of valuation reports drawn up by independent and expert property assessors. These reports are based on:
For a detailed description of the valuation method used by the property experts, please refer to the section of the Property Report entitled 'Valuation of the portfolio by property experts'.
The information provided to the property experts, as well as the assumption and the valuation models, are checked by the company's business analyst and also by the management committee of the property investment fund. This involves an examination of the changes in fair value during the relevant period.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Amount at the end of the preceding fi nancial year | 602 | 162 |
| Acquisitions | 60 | 561 |
| Deprication | -102 | -121 |
| Amount at the end of the fi nancial year | 560 | 602 |
Vastned Retail Belgium installed in 2012 solar panels in own management on the retail warehouse located on Boomsesteenweg 660 in Wilrijk. The generated energy is provided at favourable rates to tenants AS Adventure, Tony Mertens, Brantano and Prémaman. Vastned Retail Belgium receives a subsidy of € 250 per 1.000 kWh of energy generated for this project. This investment in solar panels amounted in 2012 to € 0,5 million and generates a yield of 7,6 %. The revenue of the solar panels are recorded under the item 'other rental-related income and expenses'.
Solar panels are valued on an annual basis by the independent property experts. The fair value is determined based on the discount of the future guaranteed revenues from green power certifi cates, under normal sunshine hours, taking into account normal maintenance costs. The useful life of solar panels is estimated at 20 years.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Hasselt, Genkersteenweg | 0 | 1.552 |
| Brussels, Waversesteenweg | 0 | 300 |
| Vilvoorde Leuvensestraat - apartements | 0 | 147 |
| Total assets held for sale | 0 | 1.999 |
On 31 December 2013, the property investment fund has no assets held for sale. For the properties in Hasselt and Brussels the notarial deeds were signed in the fi rst semester of 2013 and the last apartment of the project in Vilvorde was sold in October 2013.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Trade accounts receivable outstanding | 147 | 209 |
| Invoices to be issued and credit notes to be received | 26 | 36 |
| Doubtful debtors | 170 | 110 |
| Provision doubtful debtors | -170 | -110 |
| Total trade receivables | 173 | 245 |
Thanks to a strict credit control the number of days of outstanding customers' credit is only 2 days.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Receivables < 30 days | 50 | 88 |
| Receivables 30-90 days | 42 | 79 |
| Receivables > 90 days | 55 | 42 |
| Total trade accounts receivable outstanding | 147 | 209 |
For the follow-up of the debtor's risk used by Vastned Retail Belgium, please see the description of the most important risk factors and internal control and risk management systems.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Recoverable VAT | 0 | 28 |
| Taxes receivables | 81 | 80 |
| Receivables on insurances | 7 | 53 |
| Other receivables | 3 | 0 |
| Total tax receivables and other current assets | 91 | 161 |
| Date | Transaction | Share capital movement |
Total out standing share capital aff ter transaction |
Number of share issued |
Total number of shares |
|---|---|---|---|---|---|
| in thousands € | in thousands € | in units | in units | ||
| 15.06.1987 | Constitution | 74 | 74 | 3 | 3 |
| 30.06.1996 | Capital increase | 3.607 | 3.682 | 146 | 149 |
| 30.06.1997 | Absorption | 62 | 3.744 | 8 | 156 |
| 31.07.1997 | Capital increase | 1.305 | 5.049 | 71 | 227 |
| 22.12.1997 | Absorption | 1.529 | 6.578 | 69 | 296 |
| 06.11.1998 | Absorption | 3.050 | 9.628 | 137 | 434 |
| 23.12.1998 | Absorption | 874 | 10.502 | 101 | 535 |
| 23.12.1998 | Capital increase | 23.675 | 34.178 | 1.073 | 1.608 |
| 23.12.1998 | Capital increase | 33.837 | 68.015 | 1.723 | 3.332 |
| 31.03.1999 | Capital decrease | -3.345 | 64.670 | 0 | 3.332 |
| 01.11.1999 | Merger GL Trust | 13.758 | 78.428 | 645.778 | 3.977.626 |
| 01.11.1999 | Capital increase (VastNed) | 21.319 | 99.747 | 882.051 | 4.859.677 |
| 25.11.1999 | Capital decrease (compensation of losses) |
-7.018 | 92.729 | 0 | 4.859.677 |
| 29.02.2000 | Capital increase (contribution in kind Mechelen Bruul) |
2.263 | 94.992 | 90.829 | 4.950.506 |
| 30.06.2000 | Kapitaalverhoging (inbreng La Louvière) |
544 | 95.536 | 21.834 | 4.972.340 |
| 30.06.2000 | Capital increase (contribution in kind avenue Louise 7) |
1.306 | 96.842 | 52.402 | 5.024.742 |
| 20.09.2000 | Merger by absorption Immorent, Nieuwe Antwerpse Luxe Build ings, Zeven Zeven and News Of The World |
79 | 96.921 | 14.004 | 5.038.746 |
| 20.09.2000 | Conversion of share capital to euro |
79 | 97.000 | 0 | 5.038.746 |
| 08.05.2002 | Merger by absorption of the limited liability company Immo bilière de l'Observatoire |
3 | 97.003 | 7.273 | 5.046.019 |
| 30.12.2002 | Merger by absorption of the limited liability companies GL Properties, Retail Development, Winvest, Immo 2000M, Avamij, Goorinvest, Tafar, Lemi, Framonia, Micol and Immo Shopping Tienen |
209 | 97.212 | 26.701 | 5.072.720 |
| 30.12.2002 | Merger by absorption of the lim ited liability company Immo GL |
1 | 97.213 | 5.805 | 5.078.525 |
On 31 December 2013, the share capital amounts to € 97.213.233,32 and is divided among 5.078.525 fully paid-up shares with no statement of nominal value.
The board of directors is expressly authorised to increase the nominal capital on one or more occasions by an amount of € 97.213.233,32 by contribution in cash or contribution in kind, if applicable, by incorporation of reserves or share premiums, under regulations provided for by the Belgian Companies Code, article 7 of the articles of association and article 13 of the Royal Decree of 7 December 2010 relating to property investment funds.
This authorisation is valid for a period of fi ve years from the publication in the annexes to the Belgian Offi cial Gazette of the offi cial report of the extraordinary general meeting dated 24 April 2013, i.e. from 26 June 2013 onwards. This authorisation is valid until 26 June 2018. The authorisation to use authorised capital as possible means of defence in the event of a takeover bid is, pursuant to article 607, second paragraph, of the Belgian Companies Code, only valid for three years and expires on 26 June 2016. This authorisation is renewable.
Whenever there is a capital increase, the board of directors shall set the price, any share issue premium and the conditions of issuance of the new shares, unless the general meeting is to decide on that itself. The capital increases may give rise to the issuance of shares with or without voting right.
If the capital increases decided upon by the board of directors pursuant to this authorisation include a share issue premium, the amount of this issue premium must be recorded in a special unavailable account, named "issue premiums", which, like the capital, forms the guarantee for third parties and which cannot be reduced or abolished subject to a decision of the general meeting, meeting under the conditions of presence and majority, providing for a reduction in capital, subject to the conversion into capital as provided for above.
In 2013, the board of directors did not make use of the authorisation granted to use amounts from the authorised capital.
Pursuant to article 9 of the articles of association, the board of directors can proceed to the purchase of own paid-up equity shares by buying or exchanging within the legally permitted limits, if the purchase is necessary to protect the company from a serious and threatening loss.
This permission is valid for three years from the publication of the minutes of the general meeting of 24 April 2013, i.e. from 26 June 2013. This permission is valid till 26 June 2016 and is renewable.
All capital increases will be implemented pursuant to articles 581 to 607 of the Belgian Companies Code, subject to that stated hereafter with respect to the pre-emptive right.
Moreover, the company must comply with the provisions for the public issue of shares as defi ned in article 87 of the Act of 3 August 2012 relating to certain forms of collective management of investment portfolios and in articles 20 and following of the Royal Decree of 7 December 2010 relating to property investment funds.
In case of a capital increase through a contribution in cash and without prejudice to articles 592 to 598 of the Belgian Companies Code, the pre-emptive right may only be limited or withdrawn if a priority allocation right is granted to the existing shareholders at the time of allocating new securities. This priority allocation right must satisfy the following conditions:
107
107
Capital increases realised through a contribution in kind are subject to the provisions of articles 601 and 602 of the Belgian Companies Code. Moreover, pursuant to article 13 §2 of the Royal Decree of 7 December 2010 relating to property investment funds, the following conditions must be met:
The above does not apply to the transfer of the right to dividends in the context of the distribution of an optional dividend, insofar as this is actually made available for payment to all shareholders.
108
| in thousands € | 2013 | 2012 | |
|---|---|---|---|
| Date | Transaction | ||
| 01.11.1999 | Merger GL Trust | 4.183 | 4.183 |
| Total share premium | 4.183 | 4.183 |
Reserve for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties
| in thousands € | 2013 | 2012 |
|---|---|---|
| Amount at the end of the preceding fi nancial year | -9.055 | -8.228 |
| Changes in investment value of investment properties of the preceding fi nancial year | -196 | -600 |
| Impact on acquisitions of investment properties of the preceding fi nancial year | 0 | -258 |
| Impact on disposals of investment properties of the preceding fi nancial year | 271 | 31 |
| Total reserves for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
-8.980 | -9.055 |
The diff erence between the fair value of the property (in accordance with IAS 40) and the investment value of the property as determined by the independent property experts is recognised in this item.
The transfer of the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties are no longer, as from the fi nancial year 2010, recorded during the fi nancial year but only after approval of the result distribution by the general meeting of shareholders (in April of next fi nancial year). As this concerns a transfer within two items of shareholders' equity, it has no impact on the total shareholders' equity of the property investment fund.
For the movement of the reserves during the fi nancial year 2013, please see the statement of changes in equity.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Trade debts | 833 | 924 |
| Advances received from tenants | 1.134 | 1.151 |
| Invoices to be received | 434 | 647 |
| Other current debts | 175 | 249 |
| Total trade debts and other current debts | 2.576 | 2.971 |
| in thousands € | 2013 | 2012 |
|---|---|---|
| Dividends payable | 25 | 32 |
| Guarantees received after bankruptcies | 92 | 103 |
| Other current liabilities | 58 | 75 |
| Total other current liabilities | 175 | 210 |
| in thousands € | 2013 | 2012 |
|---|---|---|
| Accrued interest charges | 488 | 651 |
| Accrued vacancy costs | 180 | 92 |
| Other accrued charges and deferred income | 256 | 186 |
| Total accrued charges and deferred income | 924 | 929 |
For the description of the fi nancial structure of the property investment fund, please see the report of the management committee.
| in thousands € | 2013 | 2012 | ||||
|---|---|---|---|---|---|---|
| Debts with a remaining duration of | Debts with a remaining duration of | |||||
| < 1 year | > 1 year and < 5 years |
TOTAL | < 1 year | > 1 year and < 5 years |
TOTAL | |
| Credit institutions (credits withdrawn) |
8.400 | 113.700 | 122.100 | 27.394 | 89.500 | 116.894 |
| Financial lease | 5 | 12 | 17 | 5 | 17 | 22 |
| TOTAL | 8.405 | 113.712 | 122.117 | 27.399 | 89.517 | 116.916 |
| Percentage | 7 % | 93 % | 100 % | 23 % | 77 % | 100 % |
In addition to the requirement to maintain the property investment fund's charter and to comply with fi nancial ratios as enforced by the Royal Decree of 7 December 2010 relating to property investment funds, the bank credit agreements of Vastned Retail Belgium are subject to compliance with fi nancial ratios, which are primarily related to the property investment fund's consolidated fi nancial debt or its fi nancial interest charges, the prohibition on the mortgaging or pledging of real estate investments and the pari passu treatment of creditors. The fi nancial ratios limit the amount that could still be borrowed by Vastned Retail Belgium.
For the purpose of the fi nancing of the property investment fund, no mortgage registrations were made and no mortgage authorisations were permitted as per 31 December 2013.
For most fi nancings, credit institutions generally require an interest coverage ratio of more than 2 (see description of the fi nancial structure in the Report of the management committee).
These ratios are respected on 31 December 2013. If Vastned Retail Belgium were no longer to respect these ratios, the fi nancial institutions could demand that the fi nancing agreements of the fund be cancelled, renegotiated, terminated or prematurely repaid.
| in thousands € | 2013 | 2012 | ||||
|---|---|---|---|---|---|---|
| Debts with a remaining duration of | Debts with a remaining duration of | |||||
| < 1 year | > 1 year and < 5 years |
TOTAL | < 1 year | > 1 year and < 5 years |
TOTAL | |
| Credit institutions (credits withdrawn) |
8.400 | 113.700 | 122.100 | 27.394 | 89.500 | 116.894 |
| Not-withdrawn credit lines | 8.994 | 6.300 | 15.294 | 0 | 20.500 | 20.500 |
| TOTAL | 17.394 | 120.000 | 137.394 | 27.394 | 110.000 | 137.394 |
| Percentage | 13 % | 87 % | 100 % | 20 % | 80 % | 100 % |
"Classifi cation by expiry date of credit lines" comprises an amount of € 15 million of not-withdrawn credit lines (€ 21 million on 31 December 2012). These do not form at closing date an eff ective debt but are only a potential debt under the form of an available credit line.
Classifi cation by variable or fi xed character of withdrawn credit facilities at fi nancial institutions
| in thousands € | 2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|---|
| Debts with a remaining duration of |
Per | Debts with a remaining duration of |
Per | |||||
| < 1 year | > 1 year and < 5 years |
TOTAL | centage | < 1 year | > 1 year and < 5 years |
TOTAL | centage | |
| Variable | 8.400 | 23.700 | 32.100 | 26 % | 17.394 | 27.000 | 44.394 | 38 % |
| Fixed | 0 | 90.000 | 90.000 | 74 % | 10.005 | 62.517 | 72.522 | 62 % |
| TOTAL | 8.400 | 113.700 | 122.100 | 100 % | 27.399 | 89.517 | 116.916 | 100 % |
In the above table "Classifi cation by variable or fi xed character of withdrawn credit facilities at fi nancial institutions" the percentage is calculated as the relation of each component to the sum of the credit lines.
The major fi nancial instruments of Vastned Retail Belgium consist of fi nancial and commercial receivables and debts, cash and cash equivalents as well as fi nancial instruments of the interest rate swap type (IRS).
| Summary of the fi nancial instruments (in thousands €) | 2013 | 2012 | ||||
|---|---|---|---|---|---|---|
| Categories | Level | Carrying amount |
Fair value |
Carrying amount |
Fair value |
|
| FINANCIAL INSTRUMENTS ON ASSETS | ||||||
| Non current assets | ||||||
| Financial fi xed assets | C | 2 | 17 | 17 | 0 | 0 |
| Trade receivables and other non-current assets | A | 2 | 3 | 3 | 3 | 3 |
| Current assets | ||||||
| Trade receivables | A | 2 | 173 | 173 | 245 | 245 |
| Tax receivables and other current assets | A | 2 | 91 | 91 | 161 | 161 |
| Cash and cash equivalents | B | 2 | 1.860 | 1.860 | 216 | 216 |
| FINANCIAL INSTRUMENTS: LIABILITIES Non-current liabilities |
||||||
| Non-current fi nancial debts (interest-bearing) | A | 2 | 113.712 | 113.933 | 89.517 | 89.843 |
| Other non-current fi nancial liabilities | C | 2 | 3.106 | 3.106 | 4.998 | 4.998 |
| Other non-current liabilities | A | 2 | 109 | 109 | 118 | 118 |
| Current liabilities | ||||||
| Current fi nancial debts (interest-bearing) | A | 2 | 8.405 | 8.405 | 27.399 | 27.399 |
| Other current fi nancial liabilities | C | 2 | 521 | 521 | 1.697 | 1.697 |
| Trade debts and other current debts | A | 2 | 2.576 | 2.576 | 2.971 | 2.971 |
| Other current liabilities | A | 2 | 175 | 175 | 210 | 210 |
The categories correspond to the following fi nancial instruments::
Financial instruments are recognised at fair value. The fair value is determined based on one of the following levels of the fair value hierarchy:
113
113
The fi nancial instruments of Vastned Retail Belgium correspond to level 2 of the fair value hierarchy. The following techniques are used to measure the fair value of level 2 fi nancial instruments:
Vastned Retail Belgium employs interest rate swaps to hedge potential changes in the interest charges on a portion of the fi nancial liabilities that have a variable interest rate (the short-term Euribor rate). These interest rate swaps are classifi ed as a cash fl ow hedge, with the eff ectiveness or ineff ectiveness of the hedges determined in the process.
114
| in thousands € | Start date | Expiry date | Interest rate |
Contractual notional amount |
Hedge accounting |
Fair value | ||
|---|---|---|---|---|---|---|---|---|
| Yes/no | 2013 | 2012 | ||||||
| 1 | IRS | 15.12.2013 | 15.12.2017 | 0,79 % | 10.000 | Yes | 17 | 0 |
| Financial fi xed assets | 17 | 0 | ||||||
| 2a | IRS | 01.10.2009 | 01.10.2014 | 3,02 % | 25.000 | Yes | 0 | -1 240 |
| 3 | IRS | 15.04.2013 | 15.04.2018 | 2,29 % | 10.000 | No | -589 | -801 |
| 4 | IRS | 06.10.2013 | 06.10.2018 | 2,60 % | 15.000 | No | -1.118 | -1 326 |
| 5 | IRS | 06.10.2013 | 06.10.2018 | 2,50 % | 10.000 | No | -698 | -834 |
| 6 | IRS | 15.12.2013 | 15.12.2018 | 2,50 % | 10.000 | No | -701 | -797 |
| Other non-current fi nancial liabilities | -3.106 | -4.998 | ||||||
| 2b | IRS | 01.10.2009 | 01.10.2014 | 3,02 % | 25.000 | Yes | -521 | 0 |
| IRS callable |
12.05.2008 | 15.04.2013 | 3,93 % | 10.000 | No | 0 | -109 | |
| IRS | 06.10.2008 | 06.10.2013 | 4,43 % | 25.000 | No | 0 | -825 | |
| IRS | 15.12.2008 | 16.12.2013 | 4,105 % | 20.000 | Yes | 0 | -763 | |
| Other current fi nancial liabilities | -521 | -1.697 | ||||||
| Total fair value fi nancial derivatives | 80.000 | -3.610 | -6.695 | |||||
| Accounting process on 31 December: | ||||||||
| ○ | In shareholders' equity: Reserve for the balance of changes in fair value of allowed hedging instruments subject to a hedge accounting |
-504 | -2.003 | |||||
| ○ In shareholders' equity: Reserve for the balance of changes in fair value of allowed hedging instruments not subject to a hedge accounting |
-4.692 | -2.602 | ||||||
| ○ | (ineff ective hedges - IAS 39) | In the income statement: Changes in fair value of fi nancial assets and liabilities | 1.586 | -2.090 | ||||
| Total fair value fi nancial derivatives | -3.610 | -6.695 |
On 31 December 2013, the company has following fi nancial derivatives:
On 31 December 2013, these interest rate swaps have a negative market value of - € 3,6 million (contractual nominal value € 80 million), which is determined on a quarterly basis by the issuing fi nancial institute. Interest rate swap 1 was purchased in the fourth quarter of 2013. The expiry date of interest rate swap 2 is on 1 October 2014 so that this interest rate swap is considered as current as from the fourth quarter of 2013. The conversion is divided in above summary in 2a and 2b.
The fair value of the derivatives is exclusively determined by the information having an observable character for the derivative (directly or indirectly) but which is not a price listed on the active market and consequently the IRS contracts are belonging to level 2 of the hierarchy of the fair value as determined by IFRS 7.
On 31 December 2013, Vastned Retail Belgium classifi es the interest rate swaps 1 and 2(a+b) as cash fl ow hedges, determining that these interest rate swaps are eff ective. The fl uctuations in value of the interest rate swaps 3 till 6 included are recognised directly in the income statement..
The major fi nancial risks of Vastned Retail Belgium are the fi nancial risk, liquidity risk and the interest rate risk.
For the description of this risk and its management is referred to chapter "Financial risk" in the description of the Major risk factors and internal control and risk management systems of the Report of the board of directors.
For fi nancing real estate, Vastned Retail Belgium always strives for a balance between shareholders' equity and borrowed capital. In addition, Vastned Retail Belgium aims to safeguard its access to the capital market through the transparent disclosure of information, by maintaining regular contacts with fi nanciers and (potential) shareholders and by increasing the liquidity of the share. Finally, with respect to long-term fi nancing, it aims for a balanced spread of refi nancing dates and a weighted average duration between 3.5 and 5 years. This may be temporarily derogated from if specifi c market conditions require this. The average remaining duration of the long-term credit agreements as on 31 December 2013 is 2,8 years. Vastned Retail Belgium has also diversifi ed its funding sources through the use of fi ve European fi nancial institutions.
More information on the composition of the credit portfolio of Vastned Retail Belgium can be found in the section entitled "Financial structure" in the Report of the Management Committee and also in "Note 18. Non-current and current fi nancial debts" in the fi nancial report.
○ Liquidity risk
For the description of this risk and the way it is managed, please refer to the section entitled "Liquidity risk" in the description of the major risk factors and internal control and risk management systems in the Report of the board of directors.
The bank credit agreements of Vastned Retail Belgium are subject to compliance with fi nancial ratios, which are primarily related to the consolidated fi nancial debt level of Vastned Retail Belgium or its fi nancial interest charges. In order to avail itself of this credit margin, the conditions of credit facilities must be complied with on a continuous basis. On 31 December 2013, the property investment fund still had € 15 million in non-withdrawn credit lines with its lenders for the purpose of absorbing fl uctuations in liquidity requirements.
More information on the composition of the credit portfolio of Vastned Retail Belgium can be found in the section entitled "Financial structure" in the Report of the Management Committee as well in "Note 18. Non-current and current fi nancial debts" of the Financial report.
○ Interest rate risk
116
For the description of this risk and the way it is managed, please refer to the section entitled 'Interest rate risk' in the description of the major risk factors and internal control and risk management systems in the Report of the board of directors.
As a result of fi nancing with borrowed capital, the yield is also dependent on interest rate developments. In order to reduce this risk, when composing the loan portfolio, the fund aims for a ratio of one third borrowed capital with a variable interest rate and two thirds borrowed capital with a fi xed interest rate. Depending on the developments in interest rates, a derogation from this may occur. Furthermore, for long-term borrowed capital, a balanced spread of interest rate review dates and a minimum duration of 3 years are targeted. On 31 December 2013 the interest rates on the credit facilities of the property investment fund remain fi xed for a remaining average duration of 3,3 years.
More information on the composition of the credit portfolio of Vastned Retail Belgium can be found in the section entitled "Financial structure" in the Report of the Management Committee and also in "Note 18. Non-current and current fi nancial debts" and "Note 11. Financial result" in the Financial report.
On 31 December 2013, the consolidated debt ratio amounts to 34 %.
| in thousands € Note |
2013 | 2012 |
|---|---|---|
| Non-current fi nancial debts 18 |
113.712 | 89.517 |
| Other non-current liabilities | 109 | 118 |
| Current fi nancial debts 18 |
8.405 | 27.399 |
| Trade debts and other current debts 17 |
2.576 | 2.971 |
| Other current liabilities 17 |
175 | 210 |
| Total liabilities for calculation of debt ratio | 124.977 | 120.215 |
| Assets | 365.033 | 362.934 |
| Financial fi xed assets | -17 | 0 |
| Total assets for calculation of debt ratio | 365.016 | 362.934 |
| Debt ratio | 34 % | 33 % |
note Related parties
The company's related parties are its majority shareholder, its subsidiaries (see note 22) and its directors and members of the management committee.
The remuneration for the directors and the members of the management committee are classifi ed in the items "property management costs" and "general costs" (see notes 5 and 6). More details of the composition of the remuneration of the members of the management committee can be found in "Note 7. Employer benefi ts".
| in thousands € | 2013 | 2012 |
|---|---|---|
| Directors | 62 | 62 |
| Members of the management committee | 425 | 419 |
| Total | 487 | 481 |
The directors and members of the management committee do not receive additional benefi ts on the account of the company.
117
117
| Company name | Address | Enterprise identi fi cation number |
Capital share (in %) |
Minority interests in thousands € |
|
|---|---|---|---|---|---|
| 2013 | 2012 | ||||
| EuroInvest Retail Properties sa |
Uitbreidingstraat 18, 2600 Berchem |
BE 0479 506 731 | 100 % | 0 | 0 |
| Total minority interests | 0 | 0 |
118
| in thousands € | 2013 | 2012 |
|---|---|---|
| Including non-deductible VAT | ||
| Fee statutory auditor for audit mandate | 77 | 91 |
| Fee for exceptional activities or special assignments within the company by the statutory auditor regarding other control assignments |
11 | 0 |
| Total fee of the statutory auditor and the entities affi liated with the statutory auditor |
88 | 91 |
24 note Off -balance sheet obligations
On 31 December 2013 Vastned Retail Belgium has a potential off -balance sheet obligation regarding stability problems In its inner-city shop in Malines. Based on its contractual responsibility against its tenants, which does not fall under the public liability insurance, a possible indemnity may be due by Vastned Retail Belgium to Coolcat and H&M. Presently the responsibility of Vastned Retail Belgium has not been determined and the amount of the suff ered damages is not yet known. At the end of October 2013 the legal expert has presented is preliminary report to the concerned parties. From this preliminary report can currently be concluded that Vastned Retail Belgium is not responsible for the stability problems.
Furthermore, on 31 December 2013 Vastned Retail Belgium has off -balance sheet obligations regarding fi nancing. No registrations of mortgage were taken, and no mortgage authorisations permitted. Most fi nancial Institutions do however demand that the investment fund continues to comply with the fi nancial ratios as laid down by the Royal Decree on property invest ment funds. For the fi nancing, the credit institutions generally require a coverage ratio of more than 2.
There are no signifi cant events to be mentioned that occurred after the closing of the accounts as at 31 December 2013.
H&M Turnhout 1.269 m2
119 119
As required by law, we report to you in the context of our appointment as the company's statutory auditor. This report includes our report on the consolidated fi nancial statements together with our report on other legal and regulatory requirements. These consolidated fi nancial statements comprise the consolidated statement of fi nancial position as at 31 December 2013, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash fl ows for the year then ended, as well as the summary of signifi cant accounting policies and other explanatory notes.
We have audited the consolidated fi nancial statements of Vastned Retail Belgium NV/SA, Public real estate investment fund under Belgian law ("the company") and its subsidiaries (jointly "the group"), prepared in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. The consolidated statement of fi nancial position shows total assets of 365,033 (000) EUR and the consolidated income statement shows a consolidated profi t (group share) for the year then ended of 12,194 (000) EUR.
The board of directors is responsible for the preparation and fair presentation of consolidated fi nancial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated fi nancial statements that are free from material misstatement, whether due to fraud or error.
120
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the group's preparation and fair presentation of the consolidated fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the group's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the consolidated fi nancial statements. We have obtained from the group's offi cials and the board of directors the explanations and information necessary for performing our audit.
121
121
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinion.
In our opinion, the consolidated fi nancial statements of Vastned Retail Belgium NV/SA, Public real estate investment fund under Belgian law, give a true and fair view of the group's net equity and fi nancial position as of 31 December 2013, and of its results and its cash fl ows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.
The board of directors is responsible for the preparation and the content of the directors' report on the consolidated fi nancial statements.
As part of our mandate and in accordance with the Belgian standard complementary to the International Standards on Auditing applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we make the following additional statement, which does not modify the scope of our opinion on the consolidated fi nancial statements:
○ The directors' report on the consolidated fi nancial statements includes the information required by law, is consistent with the consolidated fi nancial statements and is free from material inconsistencies with the information that we became aware of during the performance of our mandate.
Antwerp, 12 March 2014
The statutory auditor,
DELOITTE Bedrijfsrevisoren / Reviseurs d'Entreprises BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by
Kathleen De Brabander
The statutory annual accounts of Vastned Retail Belgium are prepared according to the IFRS-standards and in accordance with the Royal Decree of 7 December 2010.
The entire version of the statutory annual accounts of Vastned Retail Belgium, along with the annual report and the report of the statutory auditor, will be deposited within the legal time frame at the National Bank of Belgium and can be obtained for free through the website of the company (www.vastned.be) or on demand at the registered offi ce.
The statutory auditor has issued an unqualifi ed auditor's report on the statutory annual accounts of Vastned Retail Belgium sa.
| in thousands € | 2013 | 2012 |
|---|---|---|
| Rental income | 21.399 | 21.913 |
| Rental-related expenses | -32 | -94 |
| NET RENTAL INCOME | 21.367 | 21.819 |
| Recovery of rental charges and taxes normally payable by tenants on let properties | 1.534 | 1.446 |
| Charges and taxes normally payable by tenants on let properties | -1.534 | -1.446 |
| Other rental-related income and expenses | 37 | 18 |
| PROPERTY RESULT | 21.404 | 21.837 |
| Technical costs | -460 | -837 |
| Commercial costs | -215 | -229 |
| Charges and taxes on unlet properties | -168 | -83 |
| Property management costs | -1.202 | -1.200 |
| Other property charges | -204 | -228 |
| PROPERTY CHARGES | -2.249 | -2.577 |
| OPERATING PROPERTY RESULT | 19.155 | 19.260 |
| General costs | -1.047 | -1.030 |
| Other operating income and costs | 77 | 60 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 18.185 | 18.290 |
| Result on disposals of investment properties | 273 | 918 |
| Changes in fair value of investment properties | -2.986 | 6.628 |
| Other result on portfolio | -131 | 64 |
| OPERATING RESULT | 15.341 | 25.900 |
| Financial income | 190 | 248 |
| Net interest charges | -4.883 | -5.209 |
| Other fi nancial charges | -11 | -7 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) | 1.586 | -2.090 |
| Changes in fair value of fi nancial fi xed assets | 4 | -146 |
| FINANCIAL RESULT | -3.114 | -7.204 |
| RESULT BEFORE TAXES | 12.227 | 18.696 |
| Taxes | -33 | -32 |
| NET RESULT | 12.194 | 18.664 |
| in thousands € | 2013 | 2012 |
|---|---|---|
| NET RESULT | 12.194 | 18.664 |
| Note: | ||
| Operating distributable result | 13.448 | 13.290 |
| Result on portfolio | -2.844 | 7.610 |
| Changes in fair value of fi nancial assets and liabilities (ineff ective hedges - IAS 39) and fi nancial fi xed assets |
1.590 | -2.236 |
| RESULT PER SHARE | Note | 2013 | 2012 |
|---|---|---|---|
| Number of shares entitled to dividend | 13 | 5.078.525 | 5.078.525 |
| Net result (€) | 13 | 2,40 | 3,68 |
| Diluted net result (€) | 13 | 2,40 | 3,68 |
| Operating distributable result (€) | 13 | 2,65 | 2,62 |
| in thousands € | 2013 | 2012 |
|---|---|---|
| NET RESULT Other components of comprehensive income (recyclable through income statement) |
12.194 | 18.664 |
| Changes in the eff ective part of fair value of allowed hedging instruments subject to hedge accounting |
1.499 | 525 |
| COMPREHENSIVE INCOME | 13.693 | 19.189 |
| in thousands € | 2013 | 2012 |
|---|---|---|
| NET RESULT | 12.194 | 18.664 |
| Allocation to / transfer from reserves for the balance of changes in fair value15 of ○ investment properties |
||
| ● Financial year |
2.895 | -6.893 |
| ● Realisation real estare properties |
-115 | -646 |
| ○ Allocation to / transfer from the reserves of the impact on the estimated transaction rights and costs resulting from the hypothetical disposal of investment properties |
63 | -70 |
| ○ Allocation to / transfer from the reserves for the balance of changes in fair value of allowed hedging instruments that are not subject to a hedge accounting |
-1.586 | 2.090 |
| ○ Allocation to / transfer from other reserves |
-3 | 146 |
| ○ Transfer from results carried forward from previous fi nancial years |
10 | 15 |
| Remuneration of capital | 13.458 | 13.306 |
Financial report
€
124
| ASSETS in thousands € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Non-current assets | 360.417 | 357.896 |
| Intangible assets | 7 | 4 |
| Investment properties | 358.818 | 356.278 |
| Other tangible assets | 560 | 602 |
| Financial fi xed assets | 1.029 | 1.009 |
| Trade receivables and other non-current assets | 3 | 3 |
| Current assets | 4.568 | 4.983 |
| Assets held for sale | 0 | 1.999 |
| Trade receivables | 173 | 244 |
| Tax receivables and other current assets | 1.898 | 2.007 |
| Cash and cash equivalents | 1.853 | 212 |
| Deferred charges and accrued income | 644 | 521 |
| TOTAL ASSETS | 364.985 | 362.879 |
| € |
|---|
| Financial report |
| SHAREHOLDERS' EQUITY AND LIABILITIES in thousands € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Shareholders' equity | 235.467 | 235.080 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 121.877 | 115.020 |
| Net result of the fi nancial year | 12.194 | 18.664 |
| Liabilities | 129.518 | 127.800 |
| Non-current liabilities | 116.927 | 94.633 |
| Non-current fi nancial debts | 113.712 | 89.517 |
| Credit institutions | 113.700 | 89.500 |
| Financial lease | 12 | 17 |
| Other non-current fi nancial liabilities | 3.106 | 4.998 |
| Other non-current liabilities | 109 | 118 |
| Current liabilities | 12.591 | 33.167 |
| Current fi nancial debts | 8.405 | 27.399 |
| Credit institutions | 8.400 | 27.394 |
| Financial lease | 5 | 5 |
| Other current fi nancial liabilities | 521 | 1.697 |
| Trade debts and other current debts | 2.574 | 2.939 |
| Other current liabilities | 175 | 210 |
| Accrued charges and deferred income | 916 | 922 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 364.985 | 362.879 |
| DEBT RATIO | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Debt ratio (max. 65 %) | 34 % | 33 % |
| NET ASSET VALUE PER SHARE in € | 31.12.2013 | 31.12.2012 |
|---|---|---|
| Net asset value (fair value) | 46,37 | 46,29 |
| Net asset value (investment value) | 48,12 | 48,06 |
| Net asset value EPRA | 47,08 | 47,61 |
Vastned Retail Belgium sa, public property investment fund with fi xed capital under Belgian law, or "property investment fund" / "sicafi " under Belgian law.
Uitbreidingstraat 18, 2600 Berchem - Antwerp.
The company is registered at the Central Enterprise Database under the enterprise identifi cation number 0431.391.860.
The limited liability company was founded by deed, executed before the civil-law notary André van der Vorst, in Elsene, on 15 June 1987, as published in the appendices to the Belgian Offi cial Gazette of Orders and Decrees of 9 July 1987 under no. 870709-272.
Since 22 December 1998, the company has been recognised as a "property investment fund with fi xed capital under Belgian law", or a "sicafi " under Belgian law for short, which is registered with the Financial Services and Markets Authority (FSMA).
It is subject to the statutory system for investment companies with fi xed capital, as referred to in article 6,2° of the Act of 3 August 2012 relating to certain forms of collective management of investment portfolios.
The company opted for the investment category specifi ed in article 7, fi rst subsection, 5° of the aforementioned Act of 3 August 2012.
The company draws publicly on the savings system in the sense of article 438 of the Belgian Companies Code.
The articles of association were last amended on 24 April 2013, whereby the name of the company has been changed from "Intervest Retail" in "Vastned Retail Belgium". This amendment of the articles of association has been published in the Annexes to the Belgian Offi cial Gazette of 13 May 2013 under number 2013-05-13 / 0072429.
De vennootschap is opgericht voor onbepaalde duur.
Article 4 of the articles of association
The sole purpose of the company is the collective investment in immovable properties.
The company's primary activity is therefore the investment in immovable properties, i.e.,
128
The company may on an incidental basis engage in transactions and conduct studies related to all the forms of real estate described above, and it may perform all real estate-related activities, such as the purchasing, renovation, furnishing, rental, subletting, managing, exchanging, selling, subdividing the property or placing it under the system of joint ownership, and associating - within allowable limits - with all businesses having an object similar or complementary to its own, by way of merger or otherwise, insofar as these actions are permitted by the regulation applicable to property investment funds and, generally speaking, all actions engaged in are directly or indirectly associated with its object.
Pursuant to article 51 of the Royal Decree of 7 December 2010 on property investment funds, the company may only act as a property developer for occasional transactions. The company may also lease real estate without an option to purchase, and, on an incidental basis with an option to purchase, pursuant to article 37 of the Royal Decree of 7 December 2010 on property investment funds.
The company may also, on an incidental basis, invest in securities that are not considered to be property and hold non-allocated liquid assets pursuant to article 34, § 2 and article 35 of the Royal Decree of 7 December 2010 on property investment funds.
The company may also buy or sell hedging instruments, with the exception of speculative transactions, pursuant to article 34, § 3, of the Royal Decree of 7 December 2010 on property investment funds.
These investments must be diversifi ed in order to ensure a suitable risk spread. These investments must also be carried out pursuant to the criteria defi ned by the Royal Decree of 4 March 1991 on certain collective investment institutions. In the event that the company were to own these types of securities, it must coincide with the short or medium-term continuation of the company's investment policy, and the securities must additionally be listed on the stock exchange of a Member State of the European Union, the NYSE, the NASDAQ, or on a Swiss exchange.
It may own liquid assets in any currency in the form of a demand deposit account or term deposit account, or in the form of any other easily negotiable monetary instrument. The company may borrow securities in accordance with the provisions allowed by law.
The fi nancial year starts on 1 January and ends on 31 December of each year.
The other publicly accessible documents that are mentioned in the prospectus are available for inspection at the company's registered offi ce.
Article 7 - Authorised capital
The board of directors is expressly authorised to increase the nominal capital on one or more occasions by an amount of € 97.213.233,32 for a period of fi ve years starting from the publication in the Appendices to the Belgian Offi cial Gazette of the relevant power of authorisation of the general meeting. This authorization is renewable.
The board of directors is authorised to increase the nominal capital by monetary contribution or contribution in kind, if applicable through incorporation of the reserves or issue premiums, or by issuing convertible bonds or warrants, under regulations provided for by the Belgian Companies Code, these articles of association and article 13 of the Royal Decree of 7 December 2010 on property investment funds. This authorization is only related to the amount of the nominal capital and not to the issue premiums.
For every capital increase, the board of directors shall set the price, any share issue premium and
16 These articles are not the complete or the literal reproduction of the articles of association. The complete articles of association can be consulted on the company's registered offi ce and on the website www.vastned.be. 129
the conditions of issuance of the new shares, unless the general meeting should decide otherwise.
The shares are bearer or registered shares or in dematerialized form. The shares already issued in the sense of articles 460, fi rst paragraph of the company code, which are bearer shares and put on securities account, exist in dematerialised form.
The bearer shares can be issued as single shares or collective shares. The collective shares represent several single shares in accordance with a form to be specifi ed by the board of directors. They can be split into sub-shares at the sole discretion of the board of directors. If combined in suffi cient number, even if their numbers correspond, these sub-shares off er the same rights as the single share.
Each holder of single shares can have his/her shares exchanged by the company for one or more bearer collective shares representing these single securities, as he/she sees fi t; each holder of a collective share can have these securities exchanged by the company for the number of single shares that they represent. The holder will bear the costs of this exchange.
Each bearer security can be exchanged into registered securities or securities in dematerialised form and vice versa at the shareholder's expense.
A record of the registered shares, which each shareholder is entitled to inspect, is maintained at the company's registered offi ce. Registered subscription certifi cates will be issued to the shareholders.
All natural persons or legal entities who acquire or surrender shares or other fi nancial instruments with voting rights granted by the company, regardless of whether these represent the capital, are obliged to inform both the company and the Financial Services and Markets Authority of the number of fi nancial instruments in their possession, whenever the voting rights connected with these fi nancial instruments reach fi ve per cent (5%) or a multiple of fi ve per cent of the total number of voting rights in existence at that time, or when circumstances that require such notifi cation arise.
Besides the legal threshold mentioned in the previous paragraph, the company also provides for a statutory threshold of (3 %).
This declaration is also compulsory in the event of the transfer of shares, if as a result of this transfer the number of voting rights rises above or falls below the thresholds specifi ed in the fi rst or second paragraph.
The company is managed by a board of directors consisting of at least three directors, who may or may not be shareholders. They will be appointed for a maximum of six years by the general meeting of shareholders, and their appointment may be revoked at any time by the latter.
In the event that one or more directors' positions become vacant, the remaining directors have the right to fi ll the vacancy on a provisional basis until the next general meeting, when a defi nitive appointment will be made.
In application of what is determined by article 9, § 1, of the Royal Decree of 7 December 2010 relating to property investment funds, the board of directors is composed in such way that the company can be managed autonomously and in the sole interest of the shareholders. Three independent directors within the meaning of article 526ter of the Belgian Companies Code have to sit on the board of directors.
Where a legal entity is elected as director or member of the management board, that legal entity shall designate from among its partners, business managers, directors or employees a permanent representative to be charged with the performance of that mandate on behalf of and for the account of the legal entity in question. That representative must satisfy the same conditions and is liable under civil law and responsible under criminal law as if he himself were performing the mandate in question on his own behalf and on his own account, without prejudice to the joint and several liability of the legal person whom he represents. That legal entity may not dismiss his representative without at the same time naming a successor.
All directors and their representatives must satisfy the requirements in terms of professional reliability, experience and autonomy, as specifi ed by article 4 §1, 6° and article 11 of the Royal Decree of 7 December 2010 relating to property investment funds. They may not fall under the application of the prohibitions referred to in article 19 of the law of 22 March 1993 related to the statute for and supervision of credit institutions.
In application of article 524bis of the Belgian Companies Code, the board of directors can put together an management committee, whose members are selected from inside or outside the board. The powers to be transferred to the management committee are all managerial powers with the exception of those managerial powers that might relate to the company's general policy, actions reserved to the board of directors on the basis of statutory provisions or actions and transactions that could give rise to the application of article 524 of the Belgian Companies Code. If an management committee is appointed, the board of directors is charged with the supervision of this committee.
The board of directors determines the conditions for the appointment of the members of the management committee, their dismissal, their remuneration, any severance pay, the term of their assignment and way of working. If a management committee is appointed, it can only delegate day-to-day management of the company to a minimum of two persons, who must be directors. If no executive committee is appointed, the board of directors can only delegate day-to-day management of the company to a minimum of two persons, who must be directors.
The board of directors, the executive committee and the managing directors charged with the dayto-day management may also, within the context of this day-to-day management, assign specifi c powers to one or more persons of their choice, within their respective areas of competence.
The board can determine the remuneration of each mandate-holder to whom special powers are assigned, all in accordance with the Act of 3 August 2012 in the form of collective management of investment portfolios, and its implementating decrees.
The directors, the persons charged with day-today management and the authorised agents of the company will respect the rules relating to confl icts of interests, as provided for by the Royal Decree of 7 December 2010 relating to property investment funds, by the Belgian Companies Code as where appropriate they may be amended.
The task of auditing the company's transactions will be assigned to one or more statutory auditors, appointed by the general meeting from the members of the Belgian Institute of Company Auditors for a renewable period of three years. The statutory auditor's remuneration will be determined at the time of his/her appointment by the general meeting.
The statutory auditor(s) also audits (audit) and certifi es (certify) the accounting information contained in the company's annual accounts. At the request of the Financial Services and Markets Authorities, he (she) also confi rms the accuracy of the information that the company has presented to the Financial Services and Markets Authorities in application of article 96 of the Act of 3 August 2012.
The ordinary general meeting of shareholders, known as the annual meeting, must be convened every year on the last Wednesday of April at 2.30 p.m.
If this day is a public holiday, the meeting will be held on the next working day.
At any time an extraordinary general meeting can be convened to deliberate and decide on any matter belonging to its competence and which does not contain any modifi cation of the articles of association.
At any time an extraordinary general meeting can be convened to deliberate and decide, before a notary.
The general meetings are held at the company's registered offi ce or at another location in Belgium, as designated in the notice convening the meeting.
To be admitted to general meeting and to express a vote, depends on the accounting registration of bearer shares of the shareholder on the fourteenth day prior to the general meeting at midnight (Belgium time) (name hereinafter "registration date"), either by subscription to the register of bearer shares of the company, either by subscription by an authorised account holder or a settlement body, or by fi ling the bearer shares with a fi nancial intermediary, regardless of the
amount of shares held by the shareholder on the day of the general meeting.
Owners of dematerialised shares or bearer shares informing the company of their wish to attend, must provide a certifi cate that have been that has been fi led with a fi nancial intermediary or authorised account holder, attesting the number of dematerialised shares that have been registered in their accounts on the registration date in the name of the shareholder or the number of bearer shares that have been registered, attesting that the shareholder wish to attend the general meeting. This fi ling have to be done at latest the sixth day prior to the general meeting date at the registered offi ce or at the institutions mentioned in the invitation.
Owners of nominative shares communicate their wish to participate to the company, by ordinary mail, fax or e-mail at least the sixth day before the date of the general meeting.
Article 26 - Voting rights
Each share gives the holder the right to one vote.
If one or more shares are jointly owned by different persons or by a legal entity with a representative body consisting of several members, the associated rights may only be exercised vis-à-vis the company by a single person who has been designated in writing byall the authorised persons. Until such a person is designated, all of the rights connected with these shares remain suspended.
If a share is encumbered with a usufruct, the voting rights connected with the share are exercised by the usufructuary, unless there is an objection from the bare owner.
The company distributes annually as capital at least 80 % of the in Chapter III of Annex C of the Royal Decree of 7 December 2010 relating to property investment funds fi xed amount as remuneration of the share capital. This obligation is not detrimental to article 617 of the Belgian Companies Code. Besides, the clauses recorded in article 27 of the Royal Decree of 7 December 2010 relating to property investment funds have to be respected.
132
On 24 April 2013, Deloitte Réviseurs d'Entreprises sc under the form of a SCRL, which is represented by Kathleen De Brabander, Berkenlaan 8b - 1831 Diegem, has been reappointed as statutory auditor of Vastned Retail Belgium. The mandate of the statutory auditor will end immediately after the annual meeting to be held in 2016.
The remuneration of the statutory auditor amounts to € 58.000 (excl. VAT, incl. costs) a year from the fi nancial year that started on 1st January 2013 for the auditing of the statutory and consolidated annual accounts of the property investment fund.
Since December 2001, a liquidity contract has been concluded with Bank Degroof, rue de l'Industrie 44, B-1000 Brussels, to promote the negotiability of the shares. In practice this takes place through the regular submission of buy and sell orders within certain margins.
The remuneration has been set at a fi xed amount of € 1.000 a month.
The property experts designated by Vastned Retail Belgium are:
In accordance with the Royal Decree of 7 December 2010, they value the portfolio four times a year.
The fee of the property experts is calculated on the basis of an annual fi xed amount per building.
The investment fund system is formalised in the Royal Decree of 7 December 2010 relating to property investment funds to stimulate joint investments in property. The concept is very similar to that of the Real Estate Investment Trusts (REIT-USA) and the Fiscal Investment Institutions (FBI-Netherlands).
It is the legislator's intention that property investment funds guarantee optimum transparency with regard to the property investment and ensure the pay-out of maximum cash fl ow, while the investor enjoys a wide range of benefi ts.
The property investment fund is monitored by the Financial Services and Markets Authority and is subject to specifi c regulations, the most notable provisions of which are as follows:
if the consolidated debt ratio exceeds 50 %, a fi nancial plan has to be drawn up
The aim of these rules is to minimise the risk for shareholders.
Companies that merge with a property investment fund are subject to a tax (exit tax) of 16,995 % on deferred added values and tax-free reserves.
Pursuant to 13 § 2 of the Royal Decree of 14 November 2007, the board of directors, composed of Jean-Pierre Blumberg (chairman), EMSO Sprl permanently represented by Chris Peeters, Nick van Ommen, Hubert Roovers, Taco de Groot and Tom de Witte, declares that according to its knowledge:
a. the annual accounts, prepared in accordance with the "International Financial Reporting Standards" (IFRS) as accepted by the European Union and in accordance with the Royal Decree of 7 December 2010, give a true and fair view of the equity, the fi nancial position and the results of Vastned Retail Belgium and the companies included in the consolidation.
134
b. the annual report gives a true statement of the development and results of Vastned Retail Belgium during the current year and of the position of the property investment fund and the companies included in the consolidation, as well as of the main risks and uncertainties that Vastned Retail Belgium is confronted with.
This term is used at the acquisition of a property. If transfer costs are paid, they are included in the acquisition value.
Corporate governance is an important instrument for constantly improving the management of the property investment fund and to protect the interest of the shareholders.
Annual rent on the basis of the rental situation on a certainmoment in time.
The debt ratio is calculated as the relation of all liabilities (excluding provisions and accrued charges and deferred income) less the negative change in fair value of fi nancial instruments, compared to total assets. The calculation method of the debt ratio is pursuant to article 27 § 1-2° of the Royal Decree of 7 December 2010. By means of this Royal Decree the maximum debt ratio of property investment funds is 65 %.
The diluted net result per share is the net result as published in the income statement, divided by the weighted average number of ordinary shares, adapted to the eff ect of potential ordinary shares leading to dilution.
This value is equal to the amount at which a building might be exchanged between knowledgeable, willing parties in normal competitive conditions. From the perspective of the seller, they should be understood as involving the deduction of registration fees.
In practice, this means that the fair value is equal to the investment value divided by 1,025 (for buildings with a value of more than € 2,5 million) or the investment value divided by 1,10/1,125 (for buildings with a value of less than € 2,5 million).
Free fl oat is the number of shares circulating freely on the stock exchange and therefore not in permanent ownership.
The gross dividend per share is the distributable operating result divided by the number of shares.
The gross dividend yield is the gross dividend divided by the share price on closing date.
The gross initial yield is calculated as the relation between rental income on an annual basis on the acquisition date of the investment property and the investment value of the investment property.
The gross market rent comprises the current rents increased by the estimated rental value of vacant properties.
The gross yield is calculated as the relation between gross market rent and the investment value of investment properties.
This is the value of a building estimated by an independent property expert, and including the transfer costs without deduction of the registration fee. This value corresponds to the formerly used term "value deed in hand".
The ratio between the number of shares traded daily and the number of capital shares.
Total shareholders' equity increased with the reserve for the impact on the fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties, divided by the number of shares.
Total shareholders' equity divided by the number of shares.
Total shareholders' equity, adjusted for the fair value of fi nancial instruments and deferred taxes, divided by the number of shares.
The net divided is equal to the gross dividend after deduction of withholding tax of 25 %.
The net dividend yield is equal to the net dividend divided by the share price on closing date.
The net result per share is the net result as published in the income statement, divided by the weighted average number of ordinary shares (i.e. the total amount of issued shares less the own shares) during the fi nancial year.
The net yield is calculated as the relation between the gross market rent, less the allocated property charges, and the investment value of investment properties.
The occupancy rate is calculated as the ratio of the rental income to the same rental income plus the estimated rental value of the vacant locations for rent.
The distributable operating result is the operating result before the result on portfolio less the fi nancial result and taxes, and exclusive the change in fair value of fi nancial derivatives (which are not considered as eff ective hedge in accordance with IAS 39) and other non-distributable elements on the basis of the statutory annual accounts of Vastned Retail Belgium.
136
The vacancy rate is calculated as the relation between the estimated rental value of the vacant properties increased by commercial rental income.
The yield is calculated as the ratio between the rental income (increased or not by the estimated rental value of vacant locations for rent) and the investment value of investment properties.
VASTNED RETAIL BELGIUM Uitbreidingstraat 18 2600 Berchem T + 32 3 287 67 67 F + 32 3 287 67 69 [email protected] www.vastned.be
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.