Befimmo SA – Interim statement as at 31 March 2015

Press release
Regulated information
Embargo | 13 May 2015 | 5.40 PM
CREATING VALUE IN
REAL ESTATE
Interim statement of the
Board of Directors for the period
from 1 January 2015 to 31 March 2015




Acquisition of the Gateway project (34.000 m² off-plan)
EPRA earnings of €1.01 per share, in line with the outlook
Net asset value of €55.04 per share
Stable fair value of portfolio (+0.08%)
Table of contents
1. Key event of the quarter ..................................................................................................... 2
2. Major renovation and construction projects...................................................................... 2
3. Property portfolio as at 31 March 2015 ............................................................................. 3
4. Financial report as at 31 March 2015 ................................................................................. 6
5. Befimmo share .................................................................................................................... 9
6. Dividend forecast ................................................................................................................ 9
7. Forthcoming publications ................................................................................................. 10
 The Board of Directors met on 11 May 2015 to establish the consolidated
quarterly financial statements as at 31 March 2015.
Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
1. Key event of the quarter
Acquisition of the Gateway project (Brussels Airport District)
On 10 March 2015, Befimmo concluded an agreement with the developers Codic and Immobel for
the acquisition of the Gateway project (34,000 m² off-plan).
This project represents an investment of about €140 million, in line with the fair value determined by
an independent real-estate expert and with market yields (initial yield of 4.65%). The transaction will
be completed upon the handover of the building, expected before the end of 2016, when the fixedterm lease of 18 years concluded with Deloitte will start.
As of the start of the lease the EPRA earnings per share should increase by approximately €0.18 on
an annualised basis, according to the outlook published in the Annual Financial Report 2014.
The acquisition was completed on 27 April 2015 after the close of the first quarter of the fiscal year.
For more information, please see the press releases of 10 March 2015 and 27 April 2015 on the
Befimmo website (www.befimmo.be).
2. Major renovation and construction projects
Befimmo continually invests in its portfolio to meet the needs of its tenants and to keep its
properties at a high level of quality and attractiveness, for the purpose of ensuring the highest
possible occupancy rate in its portfolio.
Over the first quarter of the 2015 fiscal year, Befimmo invested €2.54 million in its portfolio. The
main renovation and construction projects in progress are:
 Brederode 9 and Namur 481 | Brussels CBD | Centre: The Brederode 9 and Namur 48
buildings are undergoing a major renovation for a total amount of around €14 million. These
buildings will once again be available for rent from mid-2016. Befimmo aims to achieve a
"Very Good" rating for the BREEAM certification in the Post Construction phase of the
Brederode 9 building.
 Guimard | Brussels CBD | Leopold district: After the end of the current lease, in late 2015,
Befimmo will begin major renovation work in the Guimard building for a total amount of
around €12 million. The permit is being applied for. Befimmo is aiming for a BREEAM
"Excellent" certification in the Design and Post Construction phases.
 Paradis Express2 | Liège - Guillemins: After the close of the first quarter of the fiscal year,
Fedimmo selected the "Paradis Express" team (architects: A2M, Greisch, Jaspers & Eyers
Architects) as the winner of the call for projects procedure launched in late 2013.
1
2
For more information on this renovation project, please see the Annual Financial Report 2014, published on the
Befimmo website (www.befimmo.be).
For more information on this construction project, please see the press release of 16 April 2015, published on the
Befimmo website (www.befimmo.be).
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Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
3. Property portfolio as at 31 March 2015
Property key figures
31.03.2015
31.12.2014
2 289.5
2 285.2
Gross initial yield on properties available for lease
6.21%
6.28%
Gross potential yield on properties available for lease
6.63%
6.68%
93.66%
94.07%
8.52 years
8.64 years
6.63%
6.50%
Fair value of portfolio (€ million)
Occupancy rate of properties available for lease
Weighted average duration of leases
EPRA vacancy rate of properties available for lease
Change in fair values3 of the property portfolio
Change over
the quarter(a)
(in %)
Proportion of
portfolio(b)
(31.03.2015)
(in %)
Fair value
(31.03.2015)
(€ million)
Fair value
(31.12.2014)
(€ million)
Brussels centre (CBD)
Brussels decentralised
Brussels periphery
Flanders
Wallonia
Luxembourg city
Properties available for lease
-0.80
-4.46
-3.58
1.71
4.47
2.40
-0.05
53.5
4.1
6.1
21.5
8.2
3.8
97.1
1 224.7
92.8
140.0
491.6
188.2
86.6
2 223.8
1 233.5
97.1
144.3
483.3
179.8
84.6
2 222.6
Properties that are being
constructed or developed for
own account in order to be
leased
4.86
2.8
63.9
60.7
Investment properties
0.08
99.9
2 287.7
2 283.3
Properties held for sale
-8.46
0.1
1.8
2.0
0.08
100.0
2 289.5
2 285.2
Offices
Total
(a)
The change over the quarter is the change in fair value between 1 January 2015 and 31 March 2015 (excluding the
amount of the investments).
(b)
The proportion of portfolio is calculated on the basis of the fair value of the portfolio as at 31 March 2015.
3
These values are established in application of the IAS 40 standard which requires investment properties to be booked at
“fair value”. Fair value is obtained by deducting the average costs for transactions established by independent realestate experts, from the “investment value”. These costs amount to (i) 2.5% for property worth more than €2.5 million
and (ii) 10% (Flanders) or 12.5% (Wallonia and Brussels) for property worth less than €2.5 million.
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Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
As at 31 March 2015, the fair value of Befimmo’s consolidated portfolio was €2,289.5 million, as
against €2,285.2 million as at 31 December 2014. This change in value incorporates the renovation
works carried out in the portfolio over the past quarter, and the changes in fair value booked to the
income statement.
Excluding the amount of the investments, the fair value of the portfolio rose by €1.7 million (+0.08%)
over this first quarter of the fiscal year.
Rotation of real-estate experts
Pursuant to the Royal Decree of 13 July 2014 on B-REITs, since the mandates of the experts, JLL, DTZWinssinger & Associés and PricewaterhouseCoopers, expired on 31 December 2014, new three-year
valuation mandates were given from 1 January 2015 to JLL and CBRE, distributed as follows:
 JLL values the part of the Befimmo and Fedimmo property portfolio on long or potentially
long leases (i.e. let for > 9 years in Brussels and its hinterland and > 6 years in the regions);
 CBRE values the part of the Befimmo and Fedimmo property portfolio mostly let under
conventional 3/6/9-year leases.
JLL has the task of coordinating these valuations.
Comment on changes in values over the quarter
This rotation of experts within the Befimmo consolidated portfolio broadly confirmed the valuation
of the portfolio.
There are two main trends:
 The buildings in the portfolio with good locations and with income secured through long
ongoing leases have benefited from the recent acceleration in yield compression for such
properties;
 Meanwhile, the buildings in the portfolio with leases approaching expiry have seen further
declines in value.
Occupancy rate4 and weighted average duration of leases
The occupancy rate of the properties available for lease is 93.66% as at 31 March 2015 compared
with 94.07% as at 31 December 2014. For all the investment properties5, the occupancy rate as at
31 March 2015 was 92.25% (compared with 92.31% at 31 December 2014).
As at 31 March 2015, the weighted average duration of current leases amounts to 8.52 years
compared with 8.64 years as at 31 December 2014.
Since the acquisition was completed after close of the first quarter of the year, these portfolio
parameters do not yet include the Gateway project.
4
5
Occupancy rate = current rents (including the rate for space let but for which the lease has yet to begin)/(current rents
+ estimated rental value for vacant space).
This includes properties that are being constructed or developed for own account in order to be leased.
4
Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
The inclusion of the project in the Befimmo portfolio would have had the following impact at
31 March 2015:
 Occupancy rate of properties available for lease: 93.93%
 Occupancy rate of investment properties: 92.57%
 Weighted average duration of leases: 8.95 years
During the first quarter of the fiscal year, Befimmo signed new leases and lease renewals for space
measuring some 5,400 m², compared with 3,000 m² signed during the first quarter of the 2014
fiscal year.
Overall rental yield
Properties available for lease
Investment properties(c)
31.03.2015
31.12.2014
31.03.2015
31.12.2014
Initial yield(a)
6.21%
6.28%
6.04%
6.13%
Potential yield(b)
6.63%
6.68%
6.51%
6.61%
(a)
The initial yield is the overall rental yield on current rents.
(b)
The potential yield is the overall rental yield on current rent plus the estimated rental value of vacant space.
(c)
Taking into account the properties that are being constructed or developed for own account in order to be leased.
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Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
4. Financial report as at 31 March 2015
Financial key figures
31.03.2015
31.12.2014
Shareholders' equity (€ million)
Net asset value (€ per share)
EPRA NAV (€ per share)
EPRA NNNAV (€ per share)
1 218.43
55.04
54.32
53.88
1 195.45
54.00
54.38
52.80
Average financing cost (in %)(a)
3.10%(b)
3.16%
Weighted average duration of debts (in years)
Debt ratio as per the Royal Decree (in %)
3.61
48.05%
3.82
47.48%
Loan-to-value (in %)(c)
44.28%
45.21%
31.03.2015
31.03.2014
22 673 609
22 138 280
22 062 701
21 534 086
22 138 280
21 534 086
1.04
1.01
1.01
0.96
1.01
1.01
3.20
5.96%
3.41
6.34%
Number of shares issued
Number of shares not held by the group
Average number of shares not held by the group during the
period
Net result (€ per share)
Net current result (€ per share)
EPRA earnings (€ per share)
Return on shareholders' equity (€ per share)(d)
Return on shareholders' equity (in %)(d)
(a)
Including margin and hedging costs.
(b)
Calculated over a 12-month period ending at the closing of the quarter.
(c)
Loan-to-value (“LTV”): [(nominal financial debts – cash)/fair value of portfolio].
(d)
Calculated over a 12-month period ending at the closing of the quarter, taking into account the gross dividend
reinvestment and the participation in the optional dividend.
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Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
Net asset value6 as at 31 March 2015
As at 31 March 2015, Befimmo’s total net asset value amounts to €1,218.43 million.
The net asset value is therefore €55.04 per share, as against €54.00 per share as at 31 December 2014.
Change in net asset value
Net asset value as at 31 December 2014
Result for the period
Net asset value as at 31 March 2015
(€ million)
(€ per share)
Number of
shares not held
by the group
1 195.45
22.99
1 218.43
54.00
22 138 280
55.04
22 138 280
31.03.2015
31.12.2014
54.32
53.88
54.38
52.80
EPRA NAV and NNNAV
EPRA NAV (€ per share)
EPRA NNNAV (€ per share)
The calculation methods of the EPRA NAV and NNNAV are detailed on page 66 of Befimmo's Annual Financial Report 2014
(www.befimmo.be).
6
Audit of the accounts: the quarterly accounts are not audited. The half-yearly accounts are subject to a limited review,
while the annual accounts are audited.
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Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
Trend of results7
Net rental result (€ million)
Property operating result (€ million)
EPRA earnings (€ million)
Number of shares issued
Number of shares not held by the group
Average number of shares not held by the group during the period
Net result (€/share)
Current net result (€/share)
EPRA earnings (€/share)
31.03.2015
31.03.2014
3 months
3 months
36.68
34.45
33.76
22.32
22 673 609
22 138 280
22 138 280
1.04
1.01
1.01
31.28
21.68
22 062 701
21 534 086
21 534 086
0.96
1.01
1.01
Analysis
The net rental result and property operating result are up year-on-year. This improvement is
explained mainly by:
 a one-time effect related to the commencement of the 27.5 year lease in the new Paradis
Tower while the lease on the old building, due to be demolished, was still running until
31 March 2015;
 the payment of a severance grant in early 2015.
All other components of the net rental result (the arrival of new tenants, the departure of tenants,
indexing, change of floor area, etc.) cancel one another out overall.
Net property charges are stable in relation to last year.
The other components of EPRA earnings, i.e. overheads and financial charges, are generally stable in
relation to last year, despite the increase in the average financial debt of 4.7%.
EPRA earnings amounted to €22.32 million, up 3.0% in relation to the first three months of the 2014
fiscal year.
The EPRA earnings per share of €1.01 is unchanged in relation to the same period last year. Note
that the average number of shares increased slightly following the creation of shares related to the
contribution in kind of the Rue aux Choux 35 building and the distribution of the optional dividend at
the end of 2014.
The net result per share of €1.04 is impacted by the net effect of the positive changes in the fair
value of the investment properties (+€1.7 million) and the negative changes in the financial assets
and liabilities (-€1.0 million).
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Audit of the accounts: the quarterly accounts are not audited. The half-yearly accounts are subject to a limited review,
while the annual accounts are audited.
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Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
Financial structure and hedging policy
As part of its overall financing programme, after the end of the quarter Befimmo issued two bonds
with a maturity of 7 years and a total amount of €55 million, €45 million of which was at a floating
rate and €10 million at a fixed rate.
Within the framework of its hedging policy, during the quarter and to date, Befimmo arranged a
series of IRS, with a deferred start on 1 January 2016, for a total notional amount of €150 million,
with maturities between 8 and 9.25 years. The Company also acquired a cap of €30 million with a
maturity of 5.25 years. Befimmo also carried out several restructurings of its IRS and CCS.
As at 31 March 2015, Befimmo’s financial structure had the following main characteristics:
 confirmed credit facilities for a total sum of €1,239.8 million, €1,014.0 million of which was in
use. The volume of unused lines is determined on the basis of the Company's liquidity criteria,
taking account of the maturities of the financing agreements and the renovation/acquisition
commitments planned for the coming years;
 a debt ratio of 48.05%8 (compared with 47.48% as at 31 December 2014);
 an LTV ratio of 44.28%9 (compared with 45.21% as at 31 December 2014);
 a weighted average duration of debts of 3.61 years;
 56.0% of total debt at fixed rates (including IRS);
 an average financing cost (including hedging margin and costs) of 3.10% over the past
12 months.
5. Befimmo share
Share key figures
Closing share price (in €)
Premium in relation to the net asset value
Return on share price(a)
(a)
31.03.2015
31.12.2014
63.20
14.83%
30.23%
60.21
11.50%
26.47%
Calculated over a 12-month period ending at the closing of the quarter, taking into account the gross dividend
reinvestment and the participation in the optional dividend.
6. Dividend forecast
All other things being equal, the Board of Directors confirms the dividend forecast of €3.45 10 gross
per share for the current fiscal year.
8
9
10
The debt ratio is calculated in accordance with the Royal Decree of 13 July 2014.
Loan-to-value (“LTV”): [(nominal financial debts – cash)/fair value of portfolio].
The gross dividend of €3.45 per share could be paid as an interim dividend of €2.59 in December 2015 and a final
dividend of €0.86 in May 2016.
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Interim statement as at 31 March 2015 | Embargo | 13 May 2015 | 5.40 PM
7. Forthcoming publications
Publication of the Half-Yearly Financial Report 2015
Interim statement – publication of the net asset value as at
30 September 2015
(a)
(b)
Friday 31 July 2015(a)
Thursday 29 October 2015(b)
Publication before opening of the stock market.
Publication after closing of the stock market.
***
Befimmo is a “pure player” investor whose business is to offer high-quality office buildings located in
Brussels, other Belgian cities and the Grand Duchy of Luxembourg.
Its portfolio currently consists of around one hundred office buildings, with a total space of more than
900,000 m², a large part of which (±70%) is let long-term to public institutions. At 31 March 2015 the fair
value of the portfolio was assessed at €2,289.5 million.
The Company strives to enhance its current portfolio while seizing any investment opportunity that can
create value for its shareholders.
Listed on Euronext Brussels since it was created and member of the BEL 20 index since March 2009, Befimmo
pursues an informed strategy of optimising its results over the long term.
Befimmo endeavours to incorporate the challenges of sustainable development into its strategic thinking,
and models its day-to-day activities on the principles of social responsibility.
Befimmo SA
Caroline Kerremans | IR & External Communication Manager
Chaussée de Wavre 1945 - 1160 Brussels
Tel.: 02/679.38.13 +| Fax: 02/679.38.66
Email: [email protected] | www.befimmo.be
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