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DESCRIPTION OF THE RISK
POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Poor management of major
works
1. Budget and timing not respected.
2. Increase in costs and/or reduction
in income; negative impact on the
profitability of the projects.
Specialised in-house Project Management team. (1, 2)
Specialised external project managers selected for the
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 31.12.2014, a 1% value change
would have had an impact of around
€31.99 million on the net result and
around €1.78 on the intrinsic value per
share (compared with €33.47 million
and €1.90 at 31.12.2013). It would also
have had an impact on the debt ratio
of around 0.44% (compared with 0.44%
at 31.12.2013).
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
able to offset one another.
Main asset representing only 3.1% of the portfolio (see
page 30).
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 fair value exceed the distributable
reserves.
The company has substantial distributable reserves,
amounting to €174.5 million.
In the past, the Group carried out certain transactions to
allow it to distribute its dividend: distribution of dividends
by the subsidiary to the parent company and restatement
of non-distributable reserves, corresponding to capital
gains realised through mergers with the parent company,
as distributable reserves
1
.
Rental vacancy of the properties
1. Loss of rental income.
2. Downwards revision of rents and
granting of rent-free periods and
other incentives.
3. Increase in marketing costs to
attract new tenants, with an impact
on the results.
4. Fall in value of the properties.
At 31.12.2014, a 1% value change
would have had an impact of around
€31.99 million on the net result and
around €1.78 on the intrinsic value per
share (compared with €33.47 million
and €1.90 at 31.12.2013). It would also
have had an impact on the debt ratio
of around 0.44% (compared with 0.44%
at 31.12.2013).
(Pro)active marketing and property management by in-
house letting and Property Management teams. (1, 3)
Long average duration of leases (11.0 years) with maximum
13% expiring during a single year. (1, 2, 4)
Preference given to long leases: the office properties are,
when possible, let for a medium and even a long term; the
healthcare properties for a very long term (initial terms
of 27 years in Belgium, 12 years in France, 15 years in the
Netherlands and 25 years in Germany); the pubs 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 office portfolio stands at 90.4%;
that of the healthcare properties at 99.1%, and that of the
property of distribution networks at 98.4%. (1, 2, 4)
At 31.12.2014, the overall occupancy rate
2
stood at 95.2%,
compared with 95.4% in 2013, i.e. a decrease of 0.21%.
Maintenance costs
Fall in the results.
Almost all the healthcare property leases are triple net
contracts; for the cafés/restaurants and agencies, the
maintenance obligations are limited. The offices are
subject to a periodic maintenance policy.
Wear and tear and deterioration
of properties
Architectural, technical or
environmental obsolescence, resulting
in reduced commercial appeal of
properties.
Long-term policy of systematic replacement of equipment.
Regular renovation of properties to preserve their appeal.
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 €1.57
billion
3
(i.e. vs. a fair value, including land, of €1.35 billion
for the same properties). Cover against vacancies caused
by disasters. Civil liability insurance as owner or project
supervisor.
1
As a reminder, the transfer of €214,087,000 approved by the Extraordinary
General Shareholders’ Meeting of 29.03.2011 has, on the one hand, increased the
distributable amount by an equivalent amount and made the total amount of the
company reserves and the company result of Cofinimmo SA/NV positive again,
and, on the other hand, reduced the combined share capital and share premium
account.
2
The occupancy rate is calculated based on contractual rents and, for vacant
premises, on potential rents.
3
These insurances cover 44.8% of the portfolio (100% when taking into account the
insurances taken by the occupants). This amount does not include insurances
taken during works nor those for which the occupants are contractually
responsible (i.e. for healthcare real estate in Belgium, in France, in the Netherlands
and in Germany, for the property of distribution networks and certain office
buildings). The corresponding insurance premium stands at €823,098.
3