Earnings Release • May 3, 2016
Earnings Release
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Regulated information under embargo until 3.5.2016, 8 a.m
ANTWERP, 03 MAY 2016
1 With unchanged composition of the real estate portfolio compared with 31 December 2015.
Interim statement from the board of directors for the first quarter of 2016
Works in the context of prominent redevelopment and thorough restoration of a premium city high street shop of 3.000 m2 at the Zonnestraat in Ghent are proceeding according to schedule. Vastned Retail Belgium expects completion at the beginning of August. It is the company's express intention to give back to the retail property in this prime location its original character and appeal. The covered space on the first floor will be opened up so that it once again offers a view of the beautiful art deco stained glass domes. The façade will also be given a thorough overhaul and restored to its original state as much as possible. The planned redevelopment and restoration amounting to approximately € 2 million is entirely in keeping with the real estate company's strategy to invest in premium city high street shops. A high-quality tenant has been found in AS Adventure, a Belgian retail chain specialised in everything needed for outdoor, leisure and fashion; this will suit the appearance of the restored building perfectly. The tenant will begin occupying the building in the autumn.
In the first quarter of 2016 Vastned Retail Belgium realised 3 rental transactions representing approximately 2% of the total annual rental income, resulting in average rental growth of 7%:
▲ Zonnestraat 6-10 - Ghent
Interim statement from the board of directors for the first quarter of 2016
| Occupancy rate (excluding buildings undergoing renovation) | 31.03.2016 | 31.12.2015 |
|---|---|---|
| Premium city high street shops | 99% | 100% |
| High street shops | 98% | 98% |
| Non-high street shops (retail parks and retail warehouses) | 96% | 96% |
| Occupancy rate of the real estate portfolio | 98% | 98% |
The occupancy rate2 of the real estate portfolio amounted to 98% as at 31 March 2016, remaining unchanged compared to 31 December 2015. The occupancy rate of premium city high street shops decreased to 99% compared to 100% at the end of 2015 due to bankruptcy of the tenant of one of the shop units in the basement (652 m2) for which replacement will be found as soon as possible. The occupancy rates of the high street shops (98%) and the non-high street shops (96%) remained stable.
As at 31 March 2016 the fair value of the real estate portfolio of Vastned Retail Belgium amounted to € 348 million, a € 1 million increase compared to the end of 2015 (€ 347 million as at 31 December 2015).
The total leasable space is 90.220 m2 as at 31 March 2016.
During the first quarter of 2016, the composition of the real estate portfolio remained unchanged compared to 31 December 2015. As at 31 March 2016, 58% of the real estate portfolio of Vastned Retail Belgium consisted of premium city high street shops, this concerns top-level shop buildings located in the best shopping streets in the major cities Antwerp, Brussels, Ghent and Bruges. Some 17% of the portfolio consisted of high street shops, i.e. city centre shops outside the premium cities, while the other retail properties, i.e. retail parks and retail warehouses, made up 25% of the real estate portfolio.
▲ Zonnestraat 6-10 - Ghent
2 The occupancy rate is calculated as the ratio between the rental income and the sum of this income and the estimated rental income of unoccupied rental premises.
Interim statement from the board of directors for the first quarter of 2016
| in thousands € | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Rental income | 4.486 | 4.944 |
| Rental-related expenses | -33 | -26 |
| Property management costs and income | 3 | 1 |
| Property result | 4.456 | 4.919 |
| Property charges | -525 | -470 |
| General costs and other operating income and costs | -308 | -305 |
| Operating result before result on portfolio | 3.623 | 4.144 |
| Result on disposals of investment properties | 0 | -7 |
| Changes in fair value of investment properties | 898 | 4.072 |
| Other result on portfolio | 4 | -100 |
| Operating result | 4.525 | 8.109 |
| Financial result (excl. changes in fair value - IAS 39) | -747 | -821 |
| Changes in fair value of financial assets and liabilities | -303 | 91 |
| (ineffective hedges - IAS 39) | ||
| Taxes | -14 | -72 |
| Net result | 3.461 | 7.307 |
| Note: | ||
| Operating distributable result | 2.853 | 3.234 |
| Result on portfolio | 902 | 3.965 |
| Changes in fair value of financial assets and liabilities | -294 | 108 |
| (ineffective hedges - IAS 39) and other non-distributable elements | ||
| Information per share | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net result (€) | 0,68 | 1,44 |
| Operating distributable result (€) | 0,56 | 0,64 |
Interim statement from the board of directors for the first quarter of 2016
The rental income of Vastned Retail Belgium in the first quarter of 2016 amounted to € 4,5 million (€ 5,0 million). The € 0,5 million decrease was mainly attributable to the divestment in 2015 of 14 non-strategic retail properties (i.e. retail warehouses and inner-city shops at secondary locations), which account for approximately 9% of the real estate portfolio, on the one hand, compensated by the acquisition of 4 premium city high street shops in the centre of Antwerp over the course of 2015, the indexation of existing lease agreements, and lease renewals carried out, on the other hand.
Property charges as well as the general costs remained stable compared to the first quarter of 2015 and amounted to respectively € 0,5 million and € 0,3 million for the first quarter of 2016.
The changes in the fair value of the investment
properties are positive in the first quarter of 2016 and amounted to € 0,9 million (€ 4,1 million). The increase in fair value of the investment properties is mainly situated in the premium city high street shops.
The financial result (excl. changes in fair value - IAS 39)
amounted to € -0,7 million and thus decreased by € 0,1 million compared to the first quarter of 2015 (€ -0,8 million). This is due to refinancing of a number of loan contracts against lower interest rates and lower credit borrowing due to the achieved sales of investment properties. The average interest rate for financing amounted to 3,2%, including bank margins for the first quarter of 2016 (3,1%).
As at 31 March 2016, 58% of the credit lines were longterm financing, with an average remaining duration of 2,9 years. 42% of the credit lines are short-term financings, 24% of which consists of financings with an unlimited duration and 18% of which derives from a credit line that will expire during the second quarter of 2016. As at 31 March 2016, there were € 44 million in non-withdrawn available credit lines for the purpose of absorbing fluctuations in liquidity requirements, to finance future investments and to pay the dividend for the 2015 financial year.
The changes in the fair value of financial assets and liabilities (ineffective hedges - IAS 39) in the first quarter of 2016 included the increase in the negative market value of the interest rate swaps which, in line with IAS 39, cannot be classified as cash flow hedging instruments, in the amount of € -0,3 million (€ 0,1 million).
The net result of Vastned Retail Belgium for the first quarter of 2016 amounted to € 3,5 million (€ 7,3 million) and may be divided into:
The operating distributable result per share amounted to € 0,56 in the first quarter of 2016 (€ 0,64).
3 Comparative figures from the first quarter of 2015 are placed in brackets.
Interim statement from the board of directors for the first quarter of 2016
| Balance sheet information - per share | 31.03.2016 | 31.12.2015 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net value (fair value) (€) | 48,82 | 48,14 |
| Net value (investment value) (€) | 50,58 | 49,90 |
| Net asset value EPRA (€) | 49,77 | 49,02 |
| Share price on closing date (€) | 55,30 | 55,97 |
| Premium with regard to net value (fair value) (%) | 13% | 16% |
As at 31 March 2016, the net value (fair value) was € 48,82 per share (€ 48,14 as at 31 December 2015). As the share price as at 31 March 2016 is € 55,30, the Vastned Retail Belgium (VASTB) share was listed at a premium of 13% compared to this net value (fair value).
The debt ratio of the company decreased by 1% in the first quarter of 2016 and amounted to 27% as at 31 March 2016 (28% as at 31 December 2015).
The general meeting of shareholders of 27 April 2016 approved the statutory and consolidated annual accounts of Vastned Retail Belgium closed as at 31 December 2015, including the profit appropriation. A gross dividend of € 2,51 per share is being distributed for the 2015 financial year. After deducting an amount of 27% for withholding tax, the net dividend for the 2015 financial year amounts to € 1,8323 per share.
The dividend is payable as from 09 May 2016 based on the shareholding as at 4 May 2016.
As regards dematerialised shares, the financial institutions with which the shares are held in a securities account pay the dividend to the holders. The company automatically pays the dividend for the registered shares to the shareholders by bank transfer.
Interim statement from the board of directors for the first quarter of 2016
Vastned Retail Belgium intends to pursue this strategy further in 2016 by focusing explicitly on premium quality locations and properties. The company will continue to work towards a clear predominance of premium city high street shops, i.e. the very best retail properties in the most popular shopping streets in the major cities of Antwerp, Brussels, Ghent and Bruges, since it wants to invest 75% in this type of real estate in the long term.
Divestments will, for the most part, be made in an opportunistic way, and are only being considered for less strategic high street shops in smaller cities and less strategic retail warehouses or retail parks.
In regards to future rent increases, stemming primarily from lease renewals negotiated in 2016, Vastned Retail Belgium is mildly optimistic. Prime locations should be able to ensure rent increases, but for other locations the company might have to be content with current rent levels. The rate of inflation is expected to remain low.
In 2015, Vastned Retail Belgium divested 14 non-strategic retail properties, thereby improving the quality of the real estate portfolio. The short-term consequence of this is that the 2016 operating distributable result is expected to be lower than in 2015. The actual decrease in the operating distributable result will depend largely on the investments that the company is able to make.
In view of the recently changed shareholder structure of Intervest Offices & Warehouses, it has been decided in proper and due deliberation that each of Vastned Retail Belgium and Intervest Offices & Warehouses will be provided with its own full management during the third quarter of 2016.
The current ceo, Jean-Paul Sols and the cfo, Inge Tas, will terminate their cooperation with Vastned Retail Belgium and be at the full disposal of Intervest Offices & Warehouses.
Rudi Taelemans and Taco de Groot will jointly hold the office of ceo in the new structure of Vastned Retail Belgium. Rudi Taelemans is currently coo of Vastned Retail Belgium and member of the management committee. Taco de Groot is currently ceo of Vastned Retail and a member of the board of directors of Vastned Retail Belgium.
Reinier Walta, cfo of Vastned Retail and a member of the board of directors of Vastned Retail Belgium, will hold the office of cfo of Vastned Retail Belgium.
In addition, Vastned Retail Belgium will appoint a financial manager who will assist the new cfo, Reinier Walta, in his day-to-day work.
The asset managers, who are already full-time employees at Vastned Retail Belgium, will also continue to be employed in the new Vastned Retail Belgium structure. The aim is to change the structure cost-neutral.
These changes are subject to the approval of the FSMA.
About Vastned Retail Belgium. Vastned Retail Belgium is a public regulated real estate company (RREC), the shares of which are listed on Euronext Brussels (VASTB). Vastned Retail Belgium invests exclusively in Belgian commercial real estate, more specifically in premium city high street shops (prime retail properties located on the best shopping streets in the major cities of Antwerp, Brussels, Ghent and Bruges), high street shops (city centre shops outside of the premium cities) and non-high street shops (high-end retail parks and retail warehouses). The RREC intends to achieve a 75% investment ratio in premium city high street shops in due course.
VASTNED RETAIL BELGIUM NV, a public regulated real estate company under Belgian law, Jean-Paul Sols - CEO, Rudi Taelemans - COO or Inge Tas - CFO, tel: + 32 3 287 67 87, www.vastned.be
Interim statement from the board of directors for the first quarter of 2016
| in thousands € | 31.03.2016 | 31.03.2015 |
|---|---|---|
| Rental income | 4.486 | 4.944 |
| Rental-related expenses | -33 | -26 |
| NET RENTAL INCOME | 4.453 | 4.918 |
| Recovery of rental charges and taxes normally payable by tenants on let properties | 1.190 | 1.348 |
| Rental charges and taxes normally payable by tenants on let properties | -1.190 | -1.348 |
| Other rental-related income and expenses | 3 | 1 |
| PROPERTY RESULT | 4.456 | 4.919 |
| Technical costs Commercial costs |
-115 -64 |
-110 -45 |
| Charges and taxes on unlet properties | -66 | -21 |
| Property management costs | -272 | -319 |
| Other property charges | -8 | 25 |
| Property charges OPERATING PROPERTY RESULT |
-525 3.931 |
-470 4.449 |
| General costs | -312 | -322 |
| Other operating income and costs | 4 | 17 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 3.623 | 4.144 |
| Result on disposals of investment properties | 0 | -7 |
| Changes in fair value of investment properties | 898 | 4.072 |
| Other result on portfolio | 4 | -100 |
| OPERATING RESULT | 4.525 | 8.109 |
| Financial income | 1 | 2 |
| Net interest costs | -746 | -820 |
| Other financial charges | -2 | -3 |
| Changes in fair value of financial assets and liabilities | ||
| (ineffective hedges - IAS 39) | -303 | 91 |
| Financial result | -1.047 | -730 |
| RESULT BEFORE TAXES | 3.478 | 7.379 |
| Taxes | -14 | -72 |
| NET RESULT | 3.461 | 7.307 |
Interim statement from the board of directors for the first quarter of 2016
| in thousands € | 31.03.2016 | 31.03.2015 |
|---|---|---|
| NET RESULT | 3.461 | 7.307 |
| Note: | ||
| Operating distributable result | 2.853 | 3.234 |
| Result on portfolio | 902 | 3.965 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
-294 | 108 |
| Attributable to: | ||
| Shareholders of the parent company | 3.461 | 7.306 |
| Minority interests | 0 | 1 |
| in thousands € | 31.03.2016 | 31.03.2015 |
|---|---|---|
| NET RESULT | 3.461 | 7.307 |
| Other components of comprehensive income (recyclable through income statement) |
||
| Changes in the effective part of fair value of authorised hedging instruments that are subject to hedge accounting |
0 | -4 |
| COMPREHENSIVE INCOME Attributable to: |
3.461 | 7.303 |
| Shareholders of the parent company | 3.461 | 7.302 |
| Minority interests | 0 | 1 |
Interim statement from the board of directors for the first quarter of 2016
| ASSETS in thousands € | 31.03.2016 | 31.12.2015 |
|---|---|---|
| Non-current assets | 348.295 | 347.196 |
| Intangible assets | 0 | 1 |
| Investment properties | 347.785 | 346.674 |
| Other tangible assets | 508 | 519 |
| Trade receivables and other non-current assets | 2 | 2 |
| Current assets | 2.995 | 1.082 |
| Trade receivables | 109 | 151 |
| Tax receivables and other current assets | 106 | 106 |
| Cash and cash equivalents | 645 | 272 |
| Deferred charges and accrued income | 2.135 | 553 |
| SHAREHOLDERS' EQUITY AND LIABILITIES in thousands € | 31.03.2016 | 31.12.2015 |
|---|---|---|
| Shareholders' equity | 247.956 | 244.495 |
| Shareholders' equity attributable to shareholders of the parent company | 247.956 | 244.495 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 127.797 | 127.797 |
| Net result of the financial year | 15.302 | 15.302 |
| Net profit for the financial year - first quarter of 2016 | 3.461 | 0 |
| Minority interests | 0 | 0 |
| Liabilities | 103.334 | 103.783 |
| Non-current liabilities | 68.907 | 69.775 |
| Non-current financial debts | 64.000 | 65.200 |
| Credit institutions | 64.000 | 65.200 |
| Other non-current financial liabilities | 4.453 | 4.149 |
| Other non-current liabilities | 117 | 131 |
| Deferred tax - liabilities | 337 | 295 |
| Current liabilities | 34.427 | 34.008 |
| Provisions | 278 | 278 |
| Current financial debts | 29.600 | 30.280 |
| Credit institutions | 29.600 | 30.280 |
| Trade debts and other current debts | 2.104 | 2.038 |
| Other current liabilities | 649 | 630 |
| Deferred charges and accrued income | 1.796 | 782 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 351.290 | 348.278 |
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