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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€181,486.
A 10% decrease in the estimated rental value would give rise to a
decrease in the portfolio’s fair value of K€189,065.
A 0.5% increase in the capitalisation rates would give rise to a
decrease in the portfolio’s fair value of K€231,629.
A 0.5% decrease in the capitalisation rates would give rise to an
increase in the portfolio’s fair value of K€271,166.
A ±0.5% change in the capitalisation rate and a ±10% change in the
estimated rental values are reasonably foreseeable.
There are interrelations between the various rates and rental val-
ues, as they are partly determined by market conditions. As a gen-
eral rule, a change in the estimated rental value assumptions (per
square metre per year) is accompanied by a change in the capitali-
sation rates in the opposite direction.
This interrelation is not incorporated into the sensitivity analysis.
For investment properties under construction, the fair value is influ-
enced 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 market 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 the Executive Committee
and the experts. Other outside references are also examined.
Use of properties
The Executive Committee considers the current use of the invest-
ment properties recognised 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 22.12.2008, 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
Loi/Wet 56, Luxembourg/Luxemburg 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/Luxemburg 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/Nerviërs 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 build-
ing 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/Kolonel Bourg 124 building in Brussels and the Maire 19 build-
ing 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 Colonel/Kolonel Bourg 124, Maire 19, Egmont
I and Egmont II buildings, as well as the usufructs from the Loi/Wet
56, Luxembourg/Luxemburg 40, Everegreen and Nerviens/Nerviërs
105 buildings do not qualify 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 Colonel/Kolonel 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/Wet 56, Luxembourg/Luxemburg 40, Everegreen
and Nerviens/Nerviërs 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 resid-
ual 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 prop-
erties, as required by Article 47 §1 of the Law of 12.05.2014 relating to
Regulated Real Estate Companies.