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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