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\ 7
Management for Third Parties and Co-Investments
\ Risk Factors
Risk of deflation
Negative impact on rental income.
The leases usually foresee that the new rent may not be lower
than either the previous rent or the rent of the first year of the
lease.
The indexation of a minor number of technical charges can be
higher than that of the rents.
Risk of debt
1
Cancellation/termination of credit contracts or
early repayment.
Non-compliance with the legislation on Sicafis/
Bevaks and resulting penalties.
Prudent financial and debt policy and ongoing monitoring.
At 31.12.2013, Cofinimmo’s legal debt ratio stood at 48.87%, in
compliance with the legal maximum debt ratio of 65% according
to the Sicafi/Bevak legislation. This ratio is used in contracts
relating to borrowings and credit facilities (maximum 60%).
The financial charges (excl. IAS 39) stood at €-66.67 million at
31.12.2013 (vs. €-65.09 million at 31.12.2012).
Exchange risk
Decrease in value of the investments and cash
flows.
All investments are denominated in Euros, as are income
and expenditure.
Volatility in the share
price
More difficult access to new capital.
Control of any in-house factor which may have a negative
impact on the market price.
Frequent communication with the shareholders and publication
of forecasted financial information.
Change in the group’s
public rating
Cost of financing and liquidity.
Close relationship with the rating agency which
recommendations are taken into account regarding financial
ratios to be achieved for different rating levels and regarding
sources of financing, liquidity and interest rate hedging. The
company also dialogs with another rating agency,
which rating is private.
1
In accordance with Article54 of the Royal Decree of 07.12.2010, if the debt ratio exceeds 50%, Cofinimmo must draw up a financial plan accompanied by an execution schedule detailing
the measures taken to prevent this debt ratio from exceeding 65% of the consolidated assets. See Note23, section D.
2
Formerly Cofinimmo France.
DESCRIPTION OF THE RISK
POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Conflict of interest with
Cofinimmo’s investment
activities
Cofinimmo loses out on the chance to invest in
certain assets itself.
The investments concerned are different from those of
Cofinimmo. Cofinimmo does not want to or cannot purchase
these assets, either because it feels that it already holds
sufficient similar assets or because it does not have the
necessary financial means to acquire them. In the case of co-
investments, (MAAF insurance agencies, for example) sharing
the risk may also be a desirable option.
Reclassification of the Asset
Management business as a non-
ancillary activity in the event where
the share of profits earned exceeds
10% of the profits of Cofinimmo
Investissements et Services (CIS)
1. If this limit is exceeded, the regulatory
authorities may impose a penalty/fine and
demand the reduction/sale of the business.
2. Loss of the Sicafi/Bevak status.
The Asset Management activities will be deliberately restricted
so as not to reach this limit.
Liability proceedings in relation to
losses incurred on the portfolio
managed for third parties
Deterioration of the business relationship with the
investor who may accuse Cofinimmo of not having
sufficiently analysed the investment products
offered. Potential payment of damages.
Cofinimmo Investissements et Services (CIS) only does
business with institutional investors who are aware of the risks
related to the investment products offered. The investment
policy is clearly defined with and approved by the investor. This
policy is part of a contract between Cofinimmo Investissements
et Services (CIS) and the client. The client’s decision to invest is
based on the products offered by Cofinimmo Investissements et
Services (CIS), which criteria are defined in the contract.
The above-mentioned mitigating factors and measures do not necessarily dissolve the entire potential impact of the identified risk. Hence, the impact
remains partially or entirely the company’s and, indirectly, its shareholders’ liability.
MANAGEMENT FOR THIRD PARTIES AND CO-INVESTMENTS
In 2013, Cofinimmo Investissements et Services (CIS)
2
launched its asset management activity for third parties. It constitutes an ancillary activity
within the Group.
In addition, Cofinimmo also joins forces with third parties on some of its investments. It materialises in the form of a share, on their behalf, in the capital of
subsidiary companies or other types of economic interests, such as the issue by these subsidiaries of mandatory convertible bonds.