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Property Portofolio \ Risk Factors
PROPERTY PORTOFOLIO
The Group’s investment strategy is reflected in a diversified portfolio of
assets with limited development activity for own account (construction of
new buildings or complete renovation of existing buildings). Occasionally,
the company reconverts office properties at the end of their operating
period into apartments that it then puts up for sale.
The management of operating properties is carried out in-house by a
proactive team.
The asset diversification aims at a distribution of market risks.
DESCRIPTION OF THE RISK
POTENTIAL IMPACT
MITIGATING MEASURES AND FACTS
Inappropriate choice of investments
or developments
1. Change in the Group’s revenues 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 (independent expertise) valuations
carried out for each property to be bought or sold. (1,2,3)
Marketing of development projects before acquisition. (1,2,3)
Excessive development
pipeline for own account
Uncertainty regarding future income.
Activity limited to maximum 10% of the fair value of the portfolio.
Poor management
of major works
1. Budget and timing not respected.
2. Cost increase and/or income reduction;
negative impact on the profitability of the
projects.
In-house specialised Project Management team. (1,2)
Specialised external Project Managers selected for larger
projects. (1,2)
Negative change in the fair value
of the properties
Negative impact on the net result, the net asset
value and the debt ratio.
At 31.12.2013, a 1% change in value would have
had an impact of approximately €33.47 million
on the net result and of approximately €1.90 on
the intrinsic value per share (vs. respectively
€33.09 million and €2.07 at 31.12.2012).It would
also have had an impact of approximately 0.44%
on the debt ratio (vs. 0.51% in 2012).
Property portfolio valued by independent experts on a quarterly
basis conducive to corrective measures being taken.
Clearly defined and prudent debt policy.
Investment strategy focusing on quality assets and offering
stable income.
Multi-asset portfolio subject to different valuation trends
making up for one another.
Main asset representing only 6.4% of the portfolio (see
page 26).
Negative change in the fair value of
property assets on the company’s
ability to distribute a dividend
Total or partial incapacity to pay a dividend
if the cumulative changes in the fair value exceed
the distributable reserves.
The company has substantial distributable reserves.
In the past, the Group conducted certain transactions to ensure
the distribution of its dividend: distribution of dividends by
subsidiaries to the parent company and restatement of non-
distributable reserves, corresponding to gains realised during
mergers with the parent company, into distributable reserves
1
.
Vacancy of the properties
1. Loss of rental income.
2. Downwards review of rents and granting of
rent-free periods/incentives.
3. Increase in commercial costs to attract new
tenants with an impact on the results.
4. Decrease in value of the properties.
At 31.12.2013, a 1% change in value would have
had an impact of approximately €33.47 million on
the net result and of approximately €1.90 on the
intrinsic value per share (vs. respectively €33.09
and €2.07 at 31.12.2012).It would also have had an
impact of approximately 0.44% on the debt ratio
(vs. 0.51% in 2012).
(Pro)active commercial and property management by in-house
letting and Property Management teams. (1,3)
Long average term of leases (11.6 years) with maximum 9%
expiring during a single year. (1,2,4)
Preference given to long leases: the office properties are, when
possible, let for a medium or even long term; the healthcare real
estate properties for a very long term (initial length of 27 years
in Belgium, 12 years in France and 15 years in the Netherlands);
the cafés/restaurants for an initial term of minimum 23 years
and the financial services agencies (let to MAAF) for an initial
term of 9.7 years; the occupancy rate of the offices stands at
91.24%; that of the healthcare assets and the cafés/restaurants
stands at 99.27%; that of the agencies at 98.94%. (1,2,4)
At 31.12.2013, the occupancy rate of the total portfolio
2
stood at
95.43%, vs. 95.71% at 31.12.2012, i.e. a decrease of 0.28%.
1
As a reminder, the transfer of €214,087,000 approved by the Extraordinary General Shareholders’ Meeting of 29.03.2011has, on the one hand, increased the
distributable amount by an equivalent amount and made the total amount of the company reserves and the result carried forward of Cofinimmo SA/NV positive,
and, on the other hand, reduced the combined share capital and share premium account.
2
The occupancy rate is calculated based on the contractual rents and the potential rents on unlet spaces.