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Risk Factors /
Clients
Maintenance costs
Decrease in the results.
Almost all the leases for healthcare assets are triple net
contracts; for the cafés/restaurants and agencies, the
maintenance obligations are limited. For the offices, a strict
periodic maintenance policy is applied.
Wear and tear and deterioration
of properties
Architectural or technical obsolescence, resulting
in reduced commercial attractiveness.
Long-term policy of systematic replacement of equipment.
Regular renovation of the properties to keep them attractive.
Sale of properties if the price offered exceeds the estimated
value, net of the anticipated renovation costs.
Destruction of buildings
Interrupted activity, resulting in loss of tenant and
reduced rental income.
Portfolio insured for a total reconstruction value of €1.81 billion
1
(vs. a fair value, including land, of €1.50 billion for the same
assets). Cover against vacancies caused by disasters. Civil
liability insurance as owner or project supervisor.
1
These insurances cover 54.5% of the portfolio (100% if the insurances taken by the occupants are taken into account). This amount does not include insurances contracted during
works, nor those for which the occupants are contractually responsible (i.e. for healthcare real estate in Belgium, in France and in the Netherlands, for the property of distribution
networks, and for some office buildings). The corresponding insurance premium stands at €650,430.
DESCRIPTION OF THE RISK
POTENTIAL IMPACT
MITIGATING MEASURES AND FACTORS
Reduced solvency/
bankruptcy of clients
1. Loss of rental income.
2. Unexpected vacancy.
3. Commercial costs incurred for reletting.
4. Reletting at a lower price/granting of rent-free
periods and incentives (offices).
Main clients: AB InBev 13.5%, Buildings Agency (Belgian Federal
State) 12.6%, Medica/Senior Living Group 8.6%, Armonea 8.4%,
Korian 7.7%. The two main office clients belong to the public
sector. (2)
Before accepting a new client, a credit risk analysis is
requested from an outside rating agency. (2)
Advance/bank guarantee corresponding to six months of rent
generally required from non-public-sector tenants. (1)
Rents are payable in advance (monthly/quarterly/annually) +
quarterly provision to cover property charges and taxes which
are incurred by the Group but are contractually invoiced to
tenants. (1)
The solvency risks on an individual nursing home are
mutualised at the level of the operating Group. (2,3)
Under the terms of the operating licences issued to healthcare
operators in Belgium, France and the Netherlands, a large share
of their income comes directly from the social security bodies.
(1,2,3)
Predominance of the largest tenants
Significant negative impact on rental income in
case of departure.
Diversified client base: Cofinimmo has 365 clients in total, with
the largest client representing 13.5%, and the second largest
belonging to the public sector.
Several tenant operators of healthcare assets.
Non-renewal or early termination of
leases
1. Vacancy.
2. Higher commercial costs caused by vacancy.
3. Negative reversion of rents.
4. Rent-free periods and other incentives granted.
(Pro)active Commercial and Property Management. (1,2,3)
Permanent contacts of in-house letting team with real estate
agencies. (1)
All the leases provide for a compensation in case of early
departure. (2)
Rent-free periods/incentives complying with the market
conditions and not endangering the solvency of the Group may
be granted in certain circumstances in the office segment.
They are calculated taking into account the lease length, the
state of the building and its location.
CLIENTS
The Group actively manages its client base in order to minimise vacancies
and the rotation of office tenants. It is in no way involved in the operational
management of the healthcare assets, cafés/restaurants and insurance
agencies.