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RISK FACTORS
Clients
The Group actively manages its client base in order to minimise vacancies and the rotation of office tenants.
It is in no way involved in the operational management of the healthcare assets, cafés/restaurants and insurance agencies.
Legislation
Cofinimmo benefits from a favourable tax regime (RREC in Belgium,
SIIC in France, FBI in the Netherlands) which exempts it from
corporate tax in return for an obligation to distribute 80%
1
(Belgium),
95%
2
(France) or 100% (Netherlands) of its profits (see pages 206
and 207). Apart from the obligations relating to company law, the
company is also required to comply with the legislation on listed
companies. It is also subject to the specific town-planning and
environmental protection legislation.
DESCRIPTION OF THE RISK
POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Reduced solvency/bankruptcy of
clients
1. Loss of rental income.
2. Unexpected rental vacancy.
3. Marketing costs incurred
for re-letting.
4. Re-letting at a lower
price/granting of rent-
free periods and other
incentives (offices).
Main tenants: Korian/Medica 15.8%, AB InBev 14.1%, Armonea 9.8%,
Buildings Agency (Belgian Federal State) 5.6%. The two main office
clients belong to the public sector. (2)
Before accepting a new client, a credit risk analysis is requested
from an outside rating agency. (2)
Advance/bank guarantee corresponding to six months’ rent
generally required from non-public-sector tenants. (1)
Rents are payable in advance (monthly/quarterly/annually) +
quarterly provision to cover property charges and taxes which
are incurred by the Group but can contractually be invoiced to the
tenants. (1)
The solvency risks for an individual nursing home are pooled at the
level of the operating group. (2, 3)
Under the terms of the operating licences issued to healthcare
operators in Belgium, France and the Netherlands, a large portion
of their income is received directly from the social security bodies.
(1, 2, 3)
Predominance of the largest
tenants
Negative impact on rental
income in the event of
departure.
Diversified client base. Cofinimmo has 379 clients in total, with
the largest client representing 15.8% and the second largest
(10.2%) belonging to the public sector. Several tenant operators in
healthcare real estate.
Non-renewal or early termination
of leases
1. Rental vacancy.
2. Higher marketing costs
resulting from vacancy.
3. Negative rent reversion.
4. Granting of rent-free
periods and other
incentives.
(Pro)active marketing and property management. (1, 2, 3)
Ongoing contact between in-house letting team and real estate
agencies. (1)
All the leases provide for a compensation in the event of an early
departure. (2)
Rent-free periods/incentives, in line with market conditions and not
endangering the Group’s solvency, may be granted in certain cases
in the office segment.
They are calculated based on the lease length, the state of the
building and its location.
1
RREC communicate a dividend policy corresponding to an amount per share. This
amount per share may be higher than or equal to the minimum of 80% of the net
proceeds as required by the Royal Decree of 13.07.2014.
2
Obligation to distribute 95% of the gains resulting from the letting of property
assets as from 2014.
DESCRIPTION OF THE RISK
POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Non-compliance with RREC regime
1. Loss of approval as RREC and the
associated fiscal transparency regime
(exemption from income tax at RREC
level/taxation at shareholder level).
2. Compulsory early repayment of certain
loans.
Professionalism of the teams ensuring rigorous
compliance with the obligations.
Non-compliance with SIIC or FBI regime
Loss of the fiscal transparency regime.
Professionalism of the teams ensuring rigorous
compliance with obligations.
Unfavourable changes to the RREC, SIIC
or FBI regimes
Fall in the results or the net asset value.
Regular contact with public authorities.
Participation in organisations and federations
representing the sector.
4