Cofinimmo - Annual Financial Report 2015

Between 2009 and 2010, in accordance with its interest rate hedging

policy and in an environment of uncertainty about the evolution of

short-term rates, Cofinimmo established a partial hedge of its float-

ing-rate debt by purchasing CAP options (with strikes between 3.75%

and 5%) combined with the sale of floor options (with strikes between

2.75% and 3.25%) covering a period until 2017.

During 2015, in addition to the hedging positions cancelled in May 2014,

following the decline in debt and given the persistence of low interest

rates, Cofinimmo deemed it opportune to restructure its hedging posi-

tions, as explained below:

•

FLOOR options with a strike rate of 3%

, for a notional amount of

400 million EUR, were cancelled. These extended until the end of

2017. The total cost of the restructuring was 32.1 million EUR. This

cost is spread over 2015, 2016 and 2017.

•

CAP options, accompanied by a strike rate of 4.25% and whose

notional amount and maturity dates correspond with the

characteristics of the FLOORs, were also cancelled. Because the

prices were out-of-the-money, the options were cancelled without

value.

These transactions helped to reduce the average cost of debt to 2.9%

at 31.12.2015 (versus 3.43% at 31.12.2014) and will result in a decline in

interest expenses in future years.

In total, at 31.12.2015, at constant debt, the interest rate risk is hedged

at over 80% until second quarter 2020.

The situation at 31.12.2015 of interest rate hedging for future years is

set out in Note 24. Cofinimmo’s result nevertheless remains sensitive

to interest rate fluctuations (see the “Risk Factors” chapter of this

Annual Financial Report).

Financial rating

Since 2001, Cofinimmo has a long- and short-term financial rating

awarded by the rating agency Standard & Poor’s.

On 15.05.2015, the Standard & Poor’s agency increased Cofinimmo’s

financial rating from BBB- to BBB/stable outlook for long-term credit

and from A-3 to A-2 for short-term credit. According to S&P, the new

financial rating reflects both the significant improvement in the

debt level following the capital increase successfully completed on

07.05.2015 and Cofinimmo’s goal of keeping its debt ratio below 50%.

The EURIBOR 3M rate at 31.12.2015 was 0.13%.

“AT 31.12.2015, THE

INTEREST RATE RISK

IS MORE THAN 80%

HEDGED UNTIL 2020.”

“IN 2015, STANDARD

& POOR’S RAISED

COFINIMMO’S

FINANCIAL RATING

FROM BBB- TO BBB

FOR THE LONG TERM.”

Management report /

Management of Financial Resources