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RISK FACTORS
DESCRIPTION OF THE RISK POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Financial and banking
markets unfavourable
to real estate and/or to
Cofinimmo
1. Access to credit impeded and more costly.
2. Reduced liquidity.
Rigorous financial policy (1, 2):
• diversification of financing sources between the banking market (19%)
and various segments of the capital market (81%);
• stable, well-spread banking pool;
• well-balanced maturity spreads over time. Full cover of the treasury bills
programme. (1)
Sufficient volume of undrawn portions of confirmed credit lines to cover
medium-term operational/acquisition/construction expenditure and
short-term refinancing. (1, 2)
Insolvency of financial or
banking counterparties
Negative impact on the results.
Diversified and limited number of banking counterparties with good
financial ratings.
Changes in (future) market
interest rates
1. Revaluation of financial instruments
2
.
2. Negative impact on financial charges.
3. Negative impact on the net asset value and
on the result of the period.
4. Downward adjustment of the Group’s rating
with negative impact on cost of financing
and on liquidity (see “Change of the Group’s
public rating”).
5. Negative impact under IAS 39 and on the
result of the period. In 2015, Cofinimmo
cancelled FLOOR options until the end of
2017, with a 3% strike for a notional amount
of 400 million EUR. The total cost of the
restructuring stood at 32.1 million EUR and
will be borne extending over 2015, 2016 and
2017, under IAS 39.
Part of the debt is contracted at floating rate or immediate conversion
from fixed to floating rate.
Interest rates locked in over a minimum of three years and for at least 50%
of the debt.
Use of derivative instruments until end 2015 (Interest Rate Swaps and
CAP and FLOOR options) to lock the interest rate into a corridor between a
minimum and a maximum rate. (1, 2, 3)
In 2016, assuming the structure and the level of debt remain identical to
those at 31.12.2015, and taking into account the hedging instruments put
in place for 2016, a 0.5% increase or decrease in interest rates would not
have a significant impact on the cost of financing.
At 31.12.2015, 53.8% of the debt is financed at fixed rate while 46.2% is
financed at floating rate.
In the absence of any hedging, an interest rate increase of ten base points
would increase charges by 0.56 million EUR.
Over 80% of the floating debt is hedged using derivatives until mid 2020.
Immediate outlay which will be compensated by lesser financial charges
during the coming years.
In the future, Cofinimmo will continue its cautious hedging policy. In 2015,
Cofinimmo fixed new hedges in the form of IRS for the period 2020-2022:
- IRS, covering the year 2020, for a notional amount of 350 million EUR with
a strike rate of 0.85%;
- IRS, covering the year 2021, for a notional amount of 150 million EUR with
a strike rate of 1%;
- IRS, covering the year 2022, for a notional amount of 150 million EUR with
a strike rate of 1.31%.
Increase in credit margins
Increase in financial charges
Diversification of sources of borrowing designed to optimise average
credit margins and capital raised over the medium and the long term at
fixed margins.
FINANCIAL MANAGEMENT
1
Cofinimmo’s financial policy aims to optimise the financing cost and to limit the Group’s liquidity risk and counterparty risk.
1
See also the “Management of Financial Resources” chapter of this Annual Financial Report.
2
Interest rate derivatives being measured at market value.
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