Earnings Release • May 2, 2018
Earnings Release
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REGULATED INFORMATION / EMBARGO UNTIL 2 MAY 2018, 6.00 PM ANTWERP, 2 MAY 2018
1 With unchanged composition of the real estate portfolio compared with 31 December 2017
2 In accordance with the issued guidelines of the European Securities and Markets Authority (ESMA), which are applicable as of 3 July 2016, the Alternative Performance Measures (APM) used by Vastned Retail Belgium are included. The definitions, the use and the related reconciliation tables are included in the chapter "Alternative Performance Measures" of the Annual Report 2017 and also on the website www.vastned.be there is a separate Lexicon available with regard to these APM's. A consequence of these guidelines is that the term used prior to this, "operating distributable result", is no longer usable and has been changed to "EPRA earnings". However, with regard to content there is no difference from "operating distributable result", the term used previously.
PRESS RELEASE ANTWERP, 2 MAY 2018
The second phase, dealing with the prominent redevelopment and thorough restoration of a core city asset in the historic city centre of Ghent, has been launched at the end of March 2017.
The existing retail property at Zonnestraat 10 in Ghent was demolished and construction works have progressed very well. The retail property will be rebuilt as an up-to-date building with both retail and residential functionalities.
This redevelopment involves an investment amount of approximately €1 million. Delivery of the commercial premises to the new tenant, the women's clothing brand YAYA, took place on 25 January 2018. The opening of this shop specialising in women's apparel, described as a mix of authentic items, both feminine and casual and nonchalant with a feminine edge, along with lifestyle products, took place on 9 March 2018.
Delivery of the apartments above the shop is anticipated in the course of the third quarter of 2018.
Ghent - Zonnestraat 10
Ghent - Zonnestraat 10 Ghent - Zonnestraat 10
PRESS RELEASE ANTWERP, 2 MAY 2018
The property, located at Veldstraat 81 in the historic centre of Ghent, was thoroughly renovated after the last tenant left. This in-depth renovation involved among other things removing differences in level in the retail space and replacing the existing shopfront with a state-of-the-art shopfront offering a nice height. These works have significantly improved the property's appearance and visibility.
This redevelopment involves an investment amount of approximately € 0.3 million. Delivery is planned for the second quarter of 2018, and the property has already been put on the rental market in the meantime.
In the building located at Bruul 40-42 in Mechelen, a retail unit has been created along Borzestraat by breaking out the existing interior walls and creating a new shopfront with a nice free height.
Delivery of this new retail unit is planned for the second quarter of 2018, after which the property will be placed on the rental market. This redevelopment involves an investment amount of approximately € 0.1 million.
Antwerp - Leysstraat Antwerp - Leysstraat
The renovation of five apartments located at Leysstraat 28-30 and Leysstraat 17 in the centre of Antwerp began in the first quarter of 2018. It is estimated that this redevelopment will involve an investment amount of approximately € 0.4 million. The apartments will be delivered gradually, with a first delivery expected in the second quarter of 2018 and the last apartment becoming available in the fourth quarter of 2018.
The apartments have in the meantime already been made available for rental pre-registration.
| OCCUPANCY RATE (EXCLUDING BUILDINGS UNDERGOING RENOVATION) | 31.03.2018 | 31.12.2017 |
|---|---|---|
| Occupancy rate Core city assets | 100% | 100% |
| Occupancy rate Mixed retail locations | 98% | 98% |
| Occupancy rate of the real estate portfolio | 99% | 99% |
The occupancy rate for the real estate portfolio amounted to 99% as at 31 March 2018, remaining unchanged compared to 31 December 2017. The occupancy rate of the core city assets and the mixed retail locations remained stable at 100% and 98%, respectively.
| REAL ESTATE PORTFOLIO | 31.03.2018 | 31.12.2017 |
|---|---|---|
| Fair value of investment properties (€ 000) | 378.941 | 378.195 |
| Total leasable space (m²) | 89.877 | 89.877 |
As at 31 March 2018 the fair value of the real estate portfolio of Vastned Retail Belgium amounted to € 379 million, an increase of € 1 million compared to year-end 2017 (€ 378 million as per 31 December 2017). This increase is mainly the result of the capital expenditures carried out in the existing real estate portfolio.
As at 31 March 2018, the total leasable space is 89.877 m².
No changes were made during the first quarter of 2018 to the composition of the real estate portfolio compared to 31 December 2017. As at 31 March 2018, 59% of the Vastned Retail Belgium real estate portfolio consisted of core city assets, i.e. prime retail properties located on the best shop-
ping streets of the major cities of Antwerp, Brussels, Ghent and Bruges. 41% of the portfolio consists of mixed retail locations, i.e. inner-city shops outside the premium cities, retail parks and retail warehouses.
| IN THOUSANDS € | 31.03.2018 | 31.03.2017 |
|---|---|---|
| Rental income | 4.832 | 4.733 |
| Rental-related expenses | -39 | -33 |
| Property management costs and income | 30 | 3 |
| PROPERTY RESULT | 4.823 | 4.703 |
| Property charges | -529 | -610 |
| General costs and other operating income and costs | -506 | -394 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 3.788 | 3.699 |
| Result on disposal of investment properties | 0 | 0 |
| Changes in fair value of investment properties | 25 | -228 |
| Other result on portfolio | 54 | -101 |
| OPERATING RESULT | 3.867 | 3.370 |
| Financial result (excl. changes in fair value - IAS 39) | -428 | -721 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | 171 | 507 |
| Taxes | -15 | -13 |
| NET RESULT | 3.595 | 3.143 |
| Note: | ||
| EPRA result | 3.330 | 2.951 |
| Result on portfolio | 79 | -329 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
186 | 521 |
| INFORMATION PER SHARE | 31.03.2018 | 31.03.2017 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net result (€) | 0,71 | 0,62 |
| EPRA result (€) | 0,66 | 0,58 |
The rental income of Vastned Retail Belgium in the first quarter of 2018 amounted to € 4.8 million (€ 4.7 million). The increase of € 0.1 million is mainly attributable to the acquisition of three core city assets in the city centre of Antwerp in the third quarter of 2017 and new leases that were concluded over the course of the 2017 financial year, as well as indexations of existing lease agreements and lease renewals realised.
The real estate costs amounted to € 0.5 million (€ 0.6 million) and decreased by € 0.1 million, primarily due to a decrease in the commercial costs, among others including those related to commissions, lawyers' fees and other consultancy fees, in combination with an increase of the technical costs for maintenance. The general costs amounted to € 0.5 million (€ 0.4 million) and have therefore increased by € 0.1 million compared with the same period last year.
The changes in the fair value of the investment properties are slightly positive in the first quarter of 2018 and amounted to € 25,000 (€ -0.2 million).
The financial result (excl. changes in fair value - IAS 39) amounted to € -0.4 million as at 31 March 2018 (€ 0.7 million). The increase in financial result is attributable to the refinancing under better conditions of the entire loan portfolio, which took place during the third quarter of 2017. The average interest rate for financing amounted to 1.7%, including bank margins for the first quarter of 2018 (3.2%).
The changes in the fair value of financial assets and liabilities (ineffective hedges - IAS 39) in the first quarter of 2018 included the decrease in the negative market value of the interest rate swaps which, in line with IAS 39 - Financial Instruments: Recognition and Measurement, cannot be classified as cash flow hedging instruments, in the amount of € 0.2 million (€ 0.5 million).
The net result of Vastned Retail Belgium for the first quarter of 2018 amounted to € 3.6 million (€ 3.1 million) and may be divided into:
The EPRA earnings per share are therefore € 0.66 for the first quarter of 2018 or an increase of 8 euro cents compared to the same period of the previous year (€ 0.58 per share).
| KEY FIGURES PER SHARE | 31.03.2018 | 31.03.2017 |
|---|---|---|
| Number of shares entitled to dividend | 5.078.525 | 5.078.525 |
| Net value (fair value) (€) | 54,76 | 54,05 |
| Net value (investment value) (€) | 56,54 | 55,83 |
| Net asset value EPRA (€) | 55,20 | 54,52 |
| Share price on closing date (€) | 56,80 | 45,00 |
| Premium (+) / Discount (-) with regard to fair net value (%) | 4% | -17% |
As at 31 March 2018, the net value (fair value) is € 54.76 per share (€ 54.05 as at 31 December 2017). As the share price of Vastned Retail Belgium amounted to € 56.80 on 31 March 2018, the share was listed as at 31 March 2018 with a premium of 4% compared to this net value (fair value).
The debt ratio of the company has decreased by 1% in the first quarter of 2018 and amounted to 26% as at 31 March 2018 (27% as at 31 December 2017).
The General Meeting of Shareholders of 25 April 2018 approved the statutory and consolidated annual accounts of Vastned Retail Belgium closed on 31 December 2017, including the profit appropriation. A gross dividend of € 2.62 per share is being distributed for the 2017 financial year. After deducting an amount of 30% for withholding tax, the net dividend for the 2017 financial year amounts to € 1.834 per share. The dividend is payable as from 22 May 2018 based on the shareholding on 18 May 2018.
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.
On 12 April 2018, Vastned Retail N.V., which directly and indirectly holds 65.49% of the shares in Vastned Retail Belgium NV, issued a formal voluntary and conditional takeover bid of €57.50 per share for all the shares in Vastned Retail Belgium that it does not yet hold.
On 24 April 2018 the FSMA has approved the prospectus and the memorandum of response from the Board of Directors as part of the takeover bid.
The takeover bid of Vastned Retail N.V. on Vastned Retail Belgium only has one acceptance period, without the possibility of a voluntary reopening of the bid. This acceptance period runs from 2 May 2018 through 1 June 2018.
The Belgian economy is doing well and continues to expand, with growth of 1.8% expected in 2018. Real disposable income for private individuals rose by 0.9% in 2017, and a more pronounced increase of 2.2% is expected in 2018. Private consumption is expected to rise by 1.9% in 2018, thanks in part to a high level of consumer confidence. Employment growth is expected to be 1% in 2018.
The influence of the internet on consumers is exceeding all expectations, and customers have a completely different buying experience than they did before, with mobile technology becoming increasingly important. Physical shops still have added value, and they remain relevant when they connect consumers, products, brands and employees. Despite strong growth in online shopping, consumers still buy 80 to 85% of their non-food products in physical shops.
Vastned Retail Belgium intends to pursue its strategy further in 2018 by focusing more explicitly on premium quality retail locations and retail parks. The company will continue to work towards a clear predominance of core city assets, i.e. the very best retail property in the most popular shopping streets in the major cities. The primary focus is on the acquisition of retail property in the Antwerp city centre, and additionally
in other major cities. By focusing on a limited number of city centres, the market knowledge of the asset team of the company grows, thereby allowing for a good assessment of opportunities. New investments will, to a considerable extent depend on further developments on the retail property market. The long-term goal is to ensure that 75% of all investments are in this type of real estate. At the end of March 2018 the company owned 59% of core city assets.
In past years, Vastned Retail Belgium has greatly increased the quality of its real estate portfolio by investing in high-quality core city assets and divesting from various non-strategic mixed retail locations. For this reason, the vacancy rate for the portfolio had dropped to less than 1% as at the end of the first quarter of 2018.
For the 2018 financial year Vastned Retail Belgium expects that EPRA earnings will continue to grow as a result of a high-quality real estate portfolio with limited vacancies on the one hand and the refinancing implemented in July 2017 on the other. The result of this refinancing is a further decrease of the average interest rate of the credit facilities, which will have a positive effect on EPRA earnings.
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 core city assets (prime retail properties located on the best shopping streets in the major cities of Antwerp, Brussels, Ghent and Bruges), and mixed retail locations (inner-city shops outside of the premium cities, high-end retail parks and retail warehouses). The RREC intends to achieve a 75% investment ratio in core city assets in due course.
VASTNED RETAIL BELGIUM NV, a public regulated real estate company under Belgian law, Taco de Groot, Rudi Taelemans or Reinier Walta, tel. + 32 3 361 05 90, www.vastned.be
This press release contains prospective information, forecasts, convictions and estimates prepared by Vastned Retail Belgium on the expected future performance of Vastned Retail Belgium and the markets in which it operates. Readers are held to observe that such prospects are subject to risks and uncertainties which can cause the actual results to differ considerably from those expressed in such prospective statements. Prospective statements such as these can be impacted by significant factors such as changes in the economic situation, tax, competitive along with environmental factors. Vastned Retail Belgium cannot guarantee that the assumptions underlying the prospective information are free of misstatements.
| IN THOUSANDS € | 31.03.2018 | 31.03.2017 |
|---|---|---|
| Rental income | 4.832 | 4.733 |
| Rental-related expenses | -39 | -33 |
| NET RENTAL INCOME | 4.793 | 4.700 |
| Recovery of rental charges and taxes normally payable by tenants on let properties | 1.094 | 1.065 |
| Rental charges and taxes normally payable by tenants on let properties | -1.094 | -1.065 |
| Other rental-related income and expenses | 30 | 3 |
| PROPERTY RESULT | 4.823 | 4.703 |
| Technical costs | -211 | -117 |
| Commercial costs | -28 | -112 |
| Charges and taxes on unlet properties | -30 | -46 |
| Property management costs | -251 | -311 |
| Other property charges | -9 | -24 |
| Property charges | -529 | -610 |
| OPERATING PROPERTY RESULT | 4.294 | 4.093 |
| General expenses | -509 | -399 |
| Other operating income and expenses | 3 | 5 |
| OPERATING RESULT BEFORE RESULT ON PORTFOLIO | 3.788 | 3.699 |
| Result on disposal of investment properties | 0 | 0 |
| Changes in fair value of investment properties | 25 | -228 |
| Other result on portfolio | 54 | -101 |
| OPERATING RESULT | 3.867 | 3.370 |
| Financial income | 1 | 4 |
| Net interest charges | -427 | -723 |
| Other financial charges | -2 | -2 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) | 171 | 507 |
| Financial result | -257 | -214 |
| RESULT BEFORE TAXES | 3.610 | 3.156 |
| Taxes | -15 | -13 |
| NET RESULT | 3.595 | 3.143 |
| IN THOUSANDS € | 31.03.2018 | 31.03.2017 |
|---|---|---|
| Note: | ||
| EPRA result | 3.330 | 2.951 |
| Result on portfolio | 79 | -329 |
| Changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements |
186 | 521 |
| Attributable to: | ||
| Shareholders of the parent company | 3.595 | 3.143 |
| Non-controlling interests | 0 | 0 |
| IN THOUSANDS € | 31.03.2018 | 31.03.2017 |
|---|---|---|
| NET RESULT | 3.595 | 3.143 |
| 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 | 0 |
| COMPREHENSIVE INCOME | 3.595 | 3.143 |
| Attributable to: | ||
| Shareholders of the parent company | 3.595 | 3.143 |
| Non-controlling interests | 0 | 0 |
| ASSETS IN THOUSANDS € | 31.03.2018 | 31.12.2017 |
|---|---|---|
| Non-current assets | 379.487 | 378.759 |
| Intangible assets | 18 | 15 |
| Investment properties | 378.941 | 378.195 |
| Other tangible assets | 525 | 546 |
| Trade receivables and other non-current assets | 3 | 3 |
| Current assets | 2.986 | 1.907 |
| Trade receivables | 313 | 373 |
| Tax receivables and other current assets | 150 | 151 |
| Cash and cash equivalents | 553 | 367 |
| Deferred charges and accrued income | 1.970 | 1.016 |
| TOTAL ASSETS | 382.473 | 380.666 |
| SHAREHOLDERS' EQUITY AND LIABILITIES IN THOUSANDS € | 31.03.2018 | 31.12.2017 |
|---|---|---|
| Shareholders' equity | 278.103 | 274.508 |
| Shareholders' equity attributable to the shareholders of the parent company | 278.103 | 274.508 |
| Share capital | 97.213 | 97.213 |
| Share premium | 4.183 | 4.183 |
| Reserves | 138.443 | 138.443 |
| Net result of the financial year | 34.669 | 34.669 |
| Net result of the financial year - first quarter of 2018 | 3.595 | 0 |
| Non-controlling interests | 0 | 0 |
| Liabilities | 104.370 | 106.158 |
| Non-current liabilities | 97.989 | 98.146 |
| Non-current financial debts | 95.625 | 95.625 |
| Credit institutions | 95.625 | 95.625 |
| Other non-current financial liabilities | 1.709 | 1.880 |
| Other non-current liabilities | 147 | 145 |
| Deferred tax - liabilities | 508 | 496 |
| Current liabilities | 6.381 | 8.012 |
| Provisions | 269 | 269 |
| Current financial debts | 1.500 | 4.400 |
| Credit institutions | 1.500 | 4.400 |
| Trade debts and other current debts | 2.297 | 2.107 |
| Other current liabilities | 621 | 625 |
| Deferred income and accrued charges | 1.694 | 611 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 382.473 | 380.666 |
Generaal Lemanstraat 74 2600 Berchem - Antwerp T +32 3 361 05 90 [email protected]
WWW.VASTNED.BE
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