Befimmo : Half-Yearly Financial Report 2019

Thursday 18 July 2019 I 5.40 PM I Regulated information

Half-yearly accounts for the period from 01.01.2019 to 30.06.2019

PROMISING START OF THE YEAR........................................................................................................................................	3
INTERIM MANAGEMENT REPORT ......................................................................................................................................	5
PROPERTY REPORT ....................................................................................................................................................................................................	5
OFFICE PROPERTY MARKETS ...................................................................................................................................................................................	12
FINANCIAL REPORT .................................................................................................................................................................................................	16
EPRA BEST PRACTICES .........................................................................................................................................................................................	22
BEFIMMO ON THE STOCK MARKET ........................................................................................................................................................................	24
INFORMATION TO THE SHAREHOLDERS ................................................................................................................................................................	26
CONDENSED FINANCIAL STATEMENTS .............................................................................................................................	28
STATUTORY AUDITOR'S REPORT ......................................................................................................................................	42
STATEMENT .....................................................................................................................................................................	43
STATEMENT BY PERSONS RESPONSIBLE ................................................................................................................................................................	43
RISK FACTORS ..................................................................................................................................................................	44
BEFIMMO AT A GLANCE...................................................................................................................................................	58
APPENDIX 1: CONCLUSIONS OF THE REAL-ESTATE EXPERT COORDINATOR ......................................................................	59
APPENDIX 2: GLOSSARY OF THE REAL-ESTATE INDICATORS..............................................................................................	61
APPENDIX 3: ALTERNATIVE PERFORMANCE MEASURES ...................................................................................................	62
APPENDIX 4: TABLES OF THE EPRA BEST PRACTICES RECOMMENDATIONS ......................................................................	66

The Board of Directors met on 17 July 2019 to prepare the consolidated half-yearly financial statements as at 30 June 2019.

Consolidation basis:

Since 1 January 2019, Befimmo has the sole control of Silversquare Holding SA, and as a result, Silversquare Holding and its subsidiaries are included in the overall consolidation as of 30 June 2019.

The Befimmo businesses are presented in this Half-yearly Financial Report by business sector (real-estate operator and coworking). The results presented in € per share are calculated based on the average number of shares not held by the group as at 30 June 2019 (i.e. 25 579 214 shares). The condensed Financial Statements are presented on a consolidated basis.

Real-estate and financial indicators:

The definitions of Befimmo's real-estate indicators are described in Appendix 2 to the Half-yearly Financial Report 2019. They are identified in a footnote the first time they occur.

Befimmo has fully committed to standardising its financial and social-responsibility reporting - with a view to improving the quality and comparability of the information - by adopting the EPRA reporting guidelines.

Alternative Performance Measures:

The Alternative Performance Measures (APM) guidelines of the European Securities Markets Authority (ESMA) have been applicable since 3 July 2016. The APMs used in this press release are identified in a footnote the first time they occur. The full list of APMs, with their definitions, purpose and relevant reconciliation tables are set out in Appendix 3 and Appendix 4 to this press release and are published on Befimmo's website: http://www.befimmo.be/en/investors/publications/alternative-performance-measures.

The Flemish Government has awarded Befimmo the public works contract for the design, construction and provision of a building in the North area of Brussels. The lease covers all the offices (70,000 m²) of the ZINproject (110,000 m²). It will start in 2023 and have a fixed duration of 18 years. The signing of the lease generates an initial unrealised increase in value of €49 million (IAS 40), taking into account the continued compression of the yields.

On the portfolio of redevelopment projects (office part, ±164,000 m²) a large volume is already secured, i.e. let several years before the end of the works. The pre-leaserateon these projects is currently 74%.

In the first half of the year, Befimmo invested €37.7 million in works. These are mainly projects located in the Brussels Central Business District (CBD) (Brederode Corner, Quatuor, ZIN), a project located in the centre of Liège next to the Guillemins Station (Paradis Express) and the Eupen courthouse.

Since the start of the year, Befimmo has moreover let, re-let or renegotiated nearly 20,000 m² of office space, compared with 13,000 m² in the first half of 2018. This reflects the good dynamic in the Brussels office marketin the first half of the year. Tenants are looking for quality office environments, in good locations that are easily accessible. The quality of the buildings in Befimmo's portfolio, and its projects, addresses these needs and the lack of Grade A buildings immediately available on the market.

At the end of the first half, the occupancy rate of properties available for lease is up and amounts to 95.46%.

Befimmo continues the rotation of its portfolio. It sold the Pavilionbuilding in the Brussels CBD (Leopold district). The Pavilion benefits from the compression of yields in the office market. This operation,

1. After the closing of the first semester. This building is in the category "properties held for sale" as at 30 June 2019.
2. Menen, Izegem and Kortrijk Ijzerkaai. In the latter case, the sale was completed after the end of the half-year. The Eagle Building

generating a capital gain of €10.0 million (€0.39 per share) compared to the fair value at the start of the year, was carried out at the right time in the building's life cycle that is still occupied by the European Commission for a residual period of around 6 years.

Befimmo also sold1 the Eagle building, located in the Brussels periphery, earning a capital gain of

€2.7 million (€0.11 per share) compared to the fair value at the start of the year. The sale of this mostly vacant property confirms Befimmo's desire to focus on its core city-centre portfolio and to dispose of properties that do not fit the strategic framework, particularly on account of their location.

As foreseen in the outlook and in accordance with the strategy of selling small Fedimmo properties located in the provinces, Fedimmo sold three buildings during the period2 nearing the end of their leases, earning a capital gain of €0.5 million (€0.02 per share) in relation to the fair value as the fiscal year opened.

At 30 June 2019, the fair value of the portfoliowas €2,685.7 million compared with €2,655.3 million at

31 December 2018. On a like-for-like basis, the value of the portfolio is rising2.97% (€77.4 million), reflecting continued compression of yields and the lease signed in the ZIN.

The EPRA earnings of the real-estateoperatorbusiness amounts to €1.71 per share, compared with €1.91 per share as at 30 June 2018, and in line with the outlook (see page 19 for a detailed analysis of the result).

Silversquareoperates five coworking spaces, including one in Befimmo's Triomphe building, earning a turnover of €3.4 million over the half year. The mature3 spaces are occupied at 100% as at 30 June 2019, confirming the market appetite for coworking.

Silversquare is to open in the first semester of 2020 a new space in "The Platinum" building (7,200 m²), located in the Brussels CBD. In 2020 it will also extend

and Kortrijk Ijzerkaai building are in the category "properties held for sale" as at 30 June 2019.

3 A space is considered as mature after 3 years of existence.

the existing "Europe" (from 2,289 m² to 4,118 m²) and "Stéphanie" (from 2,129 m² to 3,805 m²) spaces, which are 100% occupied.

In Befimmo's portfolio, several new coworking spaces are under development, notably in Ikaros in Zaventem, which will open in September 2019, Central Gate in the Brussels city centre (opening in September 2020), and in the projects Paradis Express in Liège and Quatuor in the Brussels North area (opening in 2021).

These great achievements enable Befimmo and Silversquare to develop their Belux network of interconnected workspaces to better meet the increasingly flexible needs of the users of working environments. By 2020, this network should consist of 8 spaces (36,000 m²) in Brussels, its periphery, other Belgian cities and the Grand Duchy of Luxembourg.

The forecasted consolidated EPRA earnings of the fiscal year, published in February 2019, was estimated at constant perimeter at €3.36 per share.

The consolidated net asset value (group share)is €59.24per share at 30 June 2019, the debt ratio (LTV) is 40.68%.

At the Extraordinary General Meeting on

30 April 2019, Befimmo's proposed merger by absorption of Beway was approved unanimously. This merger led to the creation of 2,659,828 new ordinary Befimmo shares. These shares (still held by the group) were listed on the stock market in May 2019. These shares will be offered for sale to ensure the financing of Befimmo's accretive growth operations.

The consolidated forecasted EPRA earnings, published in February 2019, is estimated at €3.36 per share. Taking into account the sale of the Pavilion building, which realised a capital gain of €0.304 per share during the current fiscal year, the distributable5 amount for the fiscal yearis estimated at €3.66per

1. Net of the absence of income from the building in 2019.
2. Forecasted consolidated EPRA earnings plus the realised capital gain (net of the absence of income from the building in 2019.) of €0.30 per share.

share. On the basis of the above, Befimmo confirms the dividend forecast of €3.45 gross per sharefor fiscal year 2019.

None

6 In the sense that there are no events with an impact on the condensed consolidated financial statements as at 30 June 2019.

Befimmo operates a portfolio of quality work environments, well located with the aim of developing a Belux network of interconnected spaces with Silversquare. Most of its portfolio is located in the Central Business District of Brussels (61%), close to public transport. Befimmo meets the needs of users in a market characterised by a lack of "Grade A" space. The operational achievements, of which the (pre-)lettings, (re)developments and disposals, in the first half of the 2019 fiscal year confirm the dynamic of Befimmo and its market.

	30.06.2019	31.12.2018
Fair value of portfolio (in € million)	2 685.7	2 655.3
Gross initial yield on properties available for lease(a)	5.43%	5.98%
Gross potential yield on properties available for lease(a)	5.67%	6.29%
"Spot" occupancy rate of properties available for lease(a)	95.46%	94.50%
Weighted average duration of current leases up to next break(a)	7.34 years	6.96 years(b)
Weighted average duration of current leases up to final expiry(a)	7.97 years	7.52 years
EPRA Vacancy Rate(c)	3.79%	4.28%
EPRA Net Initial Yield (NIY)	5.03%	5.69%
EPRA Topped-up NIY(d)	5.17%	5.80%

1. This is a real-estate indicator. For more information, please consult Appendix 2 of this Report.
2. Excluding the WTC 2, where the lease expired at the end of 2018, the weighted average duration of leases up to next break would be 7.75 years as at 31 December 2018.
3. Corresponding to the availability rate of properties available for lease, calculated based on the ERV taking account of the future signed contracts.
4. As from 31 March 2019 the "Future rent on signed contracts" is no longer included in the calculation of the EPRA Topped-up NIY. The percentage as of 31 December 2018 has therefore been restated based on this change.

7 The scope of the real-estate operator business has changed since the beginning of the year, with the sale of the Pavilion, Menen and Izegem buildings. The Eagle building and Kortrijk Ijzerkaai are classed as buildings held for sale.