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Notes to the Consolidated Accounts
\ Annual Accounts
Sensitivity of the building’s fair value to changes of the
unobservable data
A 10% increase in the estimated rental value would give rise to an increase
in the portfolio’s fair value of k€158,953.
A 10% decrease in the estimated rental value would give rise to a decrease
in the portfolio's fair value of k€166,870.
A 0.5% increase in the capitalisation rates would give rise to a decrease in
the portfolio's fair value of k€175,945.
A 0.5% decrease in the capitalisation rates would give rise to an increase
in the portfolio's fair value of k€205,926.
A ±0.5% change in the capitalisation rate and a ±10% change in the esti-
mated rental values are reasonably foreseeable.
There are interrelations between the various rates and rental values, as
they are partly determined by market conditions. As a general rule, a
change in the estimated rental value assumptions (per square metre per
year) is accompanied by a change in the capitalisation rates in the oppo-
site direction.
This interrelation is not incorporated into the sensitivity analysis.
For investment properties under construction, the fair value is influenced
by the realisation of the works on budget and on time.
Valuation process
In accordance with the legal provisions, the valuations of properties are
performed on a quarterly basis based on the valuation reports prepared
by independent and qualified experts.
The independent external experts are appointed for a period of three years
after their approval by the Board of Directors, the Audit Committee and
subject to the approval of the FSMA. The selection criteria include mar-
ket knowledge, reputation, independence and application of professional
standards.
The external experts determine:
•
whether the fair value of a property can be determined reliably;
•
which valuation method must be applied to each investment
property;
•
the assumptions made for the unobservable data used in the
valuation methods.
The assumptions used for the valuation and any significant changes in
value are discussed quarterly between management and the experts.
Other outside sources are also examined.
Use of properties
Management considers the current use of the investment properties rec-
ognised at fair value in the balance sheet to be optimal taking into account
the possibilities on the rental market and their technical characteristics.
Sale of lease receivables
On 21.04.2005, the Cofinimmo Group sold to Fortis Bank SA/NV all the future
lease payments relating to the 18-year lease contract with the Buildings
Agency for the North Galaxy building located in Brussels which it owns. On
19.07.2012, Cofinimmo and the Buildings Agency (Belgian Federal State)
signed an addendum to the lease related to the North Galaxy building,
extending it for nine years, in exchange for a rent reduction.
On 22.12.2008, the Cofinimmo Group sold to a subsidiary of the Société
Générale Group the usufruct receivables for an initial period of 15years pay-
able by the European Commission and relating to the Loi 56, Luxembourg
40 and Everegreen buildings which Cofinimmo owns in Brussels. The
usufructs from these three buildings end between December 2020 and
April 2022. Cofinimmo retains bare ownership and the indexation part of
the receivables from the Luxembourg 40 building was not sold.
On 20.03.2009, the Cofinimmo Group sold to a subsidiary of the Société
Générale Group the usufruct receivables for an initial period of 15 years
payable by the European Commission and relating to the Nerviens 105
building located in Brussels. The usufruct ends in May 2023. Cofinimmo
retains bare ownership of the building.
On 23.03.2009, the Cofinimmo Group sold to Fortis Bank 90% of the finance
lease receivables payable by the City of Antwerp relating to the new fire
station. At the end of the financial lease, the building will automatically
be transferred to the City of Antwerp for free. The Cofinimmo Group also
sold on the same date and to the same bank lease receivables payable
by the Belgian State relating to the Colonel Bourg 124 building in Brussels
and the Maire 19 building in Tournai. Cofinimmo retains ownership of these
two buildings.
On 28.08.2009, the Cofinimmo Group sold to BNP Paribas Fortis 96% of the
lease receivables pertaining to 2011 and the following years relating to the
Egmont I and Egmont II buildings located in Brussels.
The leases related to the North Galaxy, Colonel Bourg 124, Maire 19,
Egmont I and Egmont II buildings, as well as the usufructs from the Loi
56, Luxembourg 40, Everegreen and Nerviens 105 buildings do not qual-
ify as financial leases. The fair value of these properties after the sale of
their rental income or usufruct receivables corresponds to the difference
between their market value, including the future rental income or lease
receivables, and the discounted value of the future rental income or lease
payments sold. Indeed, by virtue of Article 1690 of the Belgian Civil Code,
a third party wishing to buy the North Galaxy, Colonel Bourg 124, Maire 19,
Egmont I and Egmont II buildings would be deprived of the right to receive
rental income on that property until the end of the lease. Likewise, in the
case of the Loi 56, Luxembourg 40, Everegreen and Nerviens 105 buildings,
the buyer would be deprived of the receivables until the expiry of the right
of usufruct.
Although neither specifically foreseen nor forbidden under IAS 40, the
derecognition from the gross value of the properties of the residual value
of the future receivables sold allows, in the opinion of the Board of Directors
of Cofinimmo, a true and fair presentation of the value of the properties in
the consolidated balance sheet, which corresponds to the independent
expert’s assessment of the properties, as required by Article 29 § 1 of the
Royal Decree of 07.12.2010.