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Risk factors
RISK FACTORS
Market
The markets in which the Cofinimmo Group operates are partly
influenced by trends in the general economic climate. The office
market is influenced in particular by economic trends, whereas the
healthcare real estate sector, the property of distribution networks
portfolio and the Public-Private Partnerships (PPP) are character-
ised by a stable rental environment.
DESCRIPTION OF RISK
POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
1
Deterioration of the economic climate in
relation to the current situation
1. Negative impact on demand and
occupancy rate of space and on rents
at which the properties can be relet.
2. Downwards revision of the value of the
property portfolio.
The healthcare real estate and the Public-
Private Partnerships (together 43.0%
of the portfolio under management)
are insensitive or not very sensitive to
variations of the general economic climate.
(1, 2)
Long weighted average duration of leases
(11.0 years at 31.12.2014). (1, 2)
21.1% of the office tenants belong to the
public sector.
Deterioration of the economic climate
in relation to the property of distribution
networks portofolio
The property of distribution networks
leased to industrial and service
companies is subject to the impact that
the general economic climate may have
on these tenant companies.
The impact occurs at the end of the leases,
which are long-term leases. The network
functions as contact points for the tenant’s
customers and is therefore necessary for
its business.
Conversions of office properties into
residential properties
Uncertainty about the price and timing of
sales.
Pre-sale before the launch of the conversion
works.
This chapter covers the main risks faced by Cofinimmo, their potential effects on its
activities and the various factors and actions cushioning the potential negative impact
of these risks. The mitigating factors and measures are detailed further on in this
Annual Financial Report under the relevant chapters.
Property portfolio
The Group’s investment strategy is reflected in a diversified port-
folio of assets with limited development activity for own account
(construction of new buildings or complete renovation of existing
buildings). Occasionally, the company converts office properties at
the end of their operating period into apartments that are then put
up for sale.
The management of the operating properties is carried out
in-house by a proactive team.
The asset diversification aims at a distribution of market risks.
1
The numbered reference in the mitigating factors and measures establishes the
link with the potential impact of each risk.
DESCRIPTION OF THE RISK
POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Inappropriate choice of
investments or developments
1. Change in the Group’s income
potential.
2. Mismatch with market demand,
resulting in vacancies.
3. Expected yields not achieved.
Strategic and risk analysis and technical, administrative,
legal, accounting and taxation due diligence carried out
before each acquisition. (1, 2, 3)
In-house and external valuations (independent experts)
carried out for each property to be bought or sold. (1, 2, 3)
Marketing of development projects before acquisition.
(1, 2, 3)
Excessive own account
development pipeline
Uncertainty regarding future income.
Activity limited to maximum 10% of the fair value of the
portfolio.
2