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MESSAGE TO THE SHAREHOLDERS
Dear shareholders,
Mid 2014 was characterised by an unexpected downturn of the
growth in the Euro zone and a significant weakening of inflation.
The overall economic downturn and the severity of public deficits
weighed heavily on the long-term interest rates, keeping them at
historically low levels. In order to adapt as well as possible to this
persistent context, Cofinimmo sought a better distribution of the
risks underlying its property portfolio, namely in terms of sectors
and building sizes, and a reorganisation of the structure of its
financing cost.
For Cofinimmo, the most notable event was without a doubt the
sale of the shares of Galaxy Properties SA/NV, owner of the North
Galaxy office building in Brussels, on 12.05.2014. The building was
valued at €475 million, which makes this the largest real estate
transaction realised on the Belgian market for a single building. This
transaction resulted in a realised book loss of €24 million, due to
the registration rights paid.
The ownership of the North Galaxy building, rented until 2031 to the
Buildings Agency (Belgian federal state), was transferred to ATP, the
largest Danish pension fund, and to Axa Belgium. This transaction
resulted, on the one hand, in a decrease of the forecasted debt
ratio at end 2014 and, on the other hand, in a better allocation of
risks within the Cofinimmo property portfolio and, more specifically,
within its office portfolio. The forecasted net current result per share
(excluding IAS 39 impact) – Group share for the financial year 2014
could be maintained thanks to the partial restructuring of financial
interest rate hedging instruments, resulting in a decrease of future
interest charges. Nevertheless, the financial year ended with a
negative net result of €-52.7 million, resulting from the restructuring
cost of the financial instruments of €57 million and the effect of the
interest rate decrease on their valuation.
Message of the Chief
Executive Officer and
the Chairman of the
Board of Directors
Another important event of the year 2014 is the adoption of the new
Regulated Real Estate Company (RREC) regime. This status change,
which was made possible thanks to the support of the sharehold-
ers of Cofinimmo, enables the company to position itself as Belgian
Real Estate Investment Trust (B-REIT).
Cofinimmo continued its activities in the segment of
healthcare real estate.
In 2014, Cofinimmo reinforced the geographical diversification of its
healthcare portfolio. It realised a first acquisition of a revalidation
clinic in Baden-Baden in southwest Germany, and that of a portfolio
of 13 assets in the Netherlands. Precisely in the Netherlands, where
the sector is still very fragmented, Cofinimmo was able to build a
client base of 12 healthcare operators. The Group also started a
rotation policy in its healthcare portfolio by selling seven healthcare
assets located in France for €46.8 million.
Moreover, Cofinimmo’s operational, commercial and
financial teams are actively working on the various
(re)development projects of the Group.
In the office segment, the renovation works of the Livingstone II
building (Brussels CBD) were finalised. The lease with the European
Commission entered into force in August 2014. The reconversion
works of the Woluwe 34 office building in apartments are progress-
ing according to plans. At the time of writing of this Annual Financial
Report, 95% of the apartments are already reserved or sold.
In the healthcare real estate segment, the construction and reno-
vation works of various assets were finalised, demonstrating once
again Cofinimmo’s expertise in accompanying healthcare operators
in their real estate projects.
In the segment of Public-Private Partnerships, the delivery of the
construction works of the new prison in Leuze-en-Hainaut was
formalised last June and indicates the beginning of the occupation
of the building by the Buildings Agency under a 25-year lease.
Amongst the redevelopment projects, Cofinimmo also
launches the works of the Belliard 40.
The permits required for the redevelopment of this asset were
granted in March 2014. The works, which will start during the first
quarter of 2015, consist in the complete reconstruction of this flag-
ship building of the Rue Belliard/Belliardstraat. The new construc-
tion should be completed and functional by the second quarter of
2017. Cofinimmo is confident in its ability to deliver such an ambi-
tious project, with exemplary architectural features. The marketing,
which is underway, meets the demand for this type of buildings in
the European district of Brussels over the horizon 2017.
London Tower, Antwerp (BE)
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