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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 171,539 K EUR.
A 10% decrease in the estimated rental value would give rise to a
decrease in the portfolio’s fair value of 179,813 K EUR.
A 0.5% increase in the capitalisation rates would give rise to a
decrease in the portfolio’s fair value of 199,722 K EUR.
A 0.5% decrease in the capitalisation rates would give rise to an
increase in the portfolio’s fair value of 233,248 K EUR.
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 values,
as they are partly determined by market conditions. As a general
rule, a change in the estimated rental value assumptions (per square
metre per year) is accompanied by a change in the capitalisation
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 management and the
experts. Other outside sources are also examined.
Use of properties
The Executive Committee considers the current use of the investment
properties recognised at fair value on 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 56, Luxembourg 40 and Everegreen buildings owned by Cofinimmo
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 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 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 building
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
Bourg/Kolonel Bourg 124 building in Brussels and the Maire 19 building
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 Bourg 124, Maire 19, Egmont I
and Egmont II buildings, as well as the usufructs from the Loi 56,
Luxembourg 40, Everegreen and Nerviens 105 buildings do not qualify
as financial leases.
At the moment of the sale, the amount levied by the Group, resulting
from disposal of future rents, has been recorded as a discount of the
property value, as far as the disposal of rents is effective against third
parties and, as a consequence, the property market value had to be
deducted from the amount of future lease payments sold (see Note 2:
Significant accounting methods, I Properties leased for long periods,
III Sale of future lease payments under a long lease not qualifying as a
finance lease).
Although neither specifically foreseen nor forbidden under IAS 40, the
derecognition from the gross value of the properties of the residual
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 properties, as required
by Article 47§ 1 of the Law of 12.05.2014 relating to Regulated Real
Estate Companies.
In order to benefit from nominal rents, a third party buyer of the
property should repurchase the sold receivables not terminated at
the moment at their present value from the assignee bank. The actual
redemption value of these non-terminated receivables can differ from
their present value established at the moment of disposal, due to
basic interest rates‘ evolution, applied margins on these rates, and
expected inflation, as such possibly having an impact on the future
rents’ indexation.
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