Befimmo SA: Interim statement as at 30 September 2019

Press release

Regulated information

24 October 2019 | 5.40 PM

• Real-estateoperator:

1. Paradis Express (Liège): 6,700 m² of offices pre-let to the Walloon Public Service

1. Performing letting activity: 104,000 m² let since the beginning of the year of which 70,000 m² in the ZIN project

• 1. Stability (+0.30%) of the fair value of the portfolio (excluding investments and divestments)
  1. EPRA earnings of €2.51 per share
• Coworking:
• 1. Opening of Silversquare Zaventem in the Ikaros Park
• Financial results:
• 1. Net asset value of €59.79 per share (group share)

• 1. Net result of €4.51 per share (group share)
• Confirmation of the dividend forecast for the fiscal year

The Befimmo Board of Directors met on 21 October 2019

to prepare the consolidated quarterly financial statements, as at 30 September 2019.

1.	Property report ...................................................................................................................	3
	....................................................................................................................	3
	..............................................................................................................................	4
	Occupancy rate, weighted average duration of leases and signed lease agreements ...................................	4
	Change in fair values of the property portfolio .................................................................................................	5
	Overall rental yield ...........................................................................................................................................	5
	Redevelopment projects ..................................................................................................................................	6
	................................................................................................................................................	7
	Occupancy rate ................................................................................................................................................	7
2.	Financial report ..................................................................................................................	8
	............................................................	8
	.......................................................................................................................................	9
	..............................................................................................................................	11
3.	Befimmo share .................................................................................................................	12
4.	Dividend forecast .............................................................................................................	12
5.	Financial calendar............................................................................................................	13
6.	Appendix 1........................................................................................................................	15
7.	Appendix 2: Alternative Performance Measures...........................................................	17
8.	Annexe 3: EPRA indicators .............................................................................................	21

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 September 2019.

The Befimmo businesses are presented in this press release 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 September 2019 (i.e. 25,579,214 shares).

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 in this press release.

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 2 and Appendix 3 to this press release and are published on Befimmo's website: http://www.befimmo.be/en/investors/publications/alternative-performance-measures.

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Paradis Express: 6,700 m² of offices pre-let to the Walloon Public Service

In Liège, Befimmo signed an 18-yearlease with the Walloon Public Service that relates to the take-upin occupancy of 6,700 m² in the "Paradis Esplanade" building, which is to comprise more than 16,000 m² of office space, including 4,700 m² of coworking areas.

This building will be located in the new eco- neighbourhood Paradis Express which provides a mix of offices (22,000 m²), housing

(15,600 m²) and also local shops and services (nursery, fitness centre, etc.). Paradis Express aims to be a dynamic, modern working and living environment, open to the city and fully integrated into the underlying urban fabric.

This pre-let of 6,700 m² of office space, two years before the handover of the building, once again confirms the capability of the Befimmo teams to design quality projects that meet the needs of a new generation of users.

The construction works are ongoing and will be completed in 2021.

Opening of Ikaros Zaventem, the 6th Silversquare coworking centre

Silversquare and Befimmo are developing a Belux network of interconnected workspaces to better meet the increasing needs of flexibility of the users of working environments.

In October 2019, the Zaventem coworking space (2,800 m²) opened in Ikaros Park. Conceived by Belgian designer Jane Haesen, the collaborative workspaces transport users into a New York-style loft atmosphere. It is an ideal location for commuters. The Park is located near Nossegem train station and the airport. It is a true business campus, with a meeting centre, a wide range of workspace solutions, and services such as a fitness centre, a nursery and a restaurant.

For more information, see page 11 of the Half-yearly Financial Report

(https://www.befimmo.be/sites/default/files/imce/publications/befimmo_-

_half-yearly_financial_report_2019_-_embargo_18.07.2019_5.40pm_0.pdf)

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Key figures

	30.09.2019	31.12.2018
Fair value of portfolio (in € million)	2 710.9	2 655.3
Gross initial yield on properties available for lease(a)	5.39%	5.98%
Gross potential yield on properties available for lease(a)	5.65%	6.29%
"Spot" occupancy rate of properties available for lease(a)	95.03%	94.50%
Weighted average duration of current leases up to next break(a)	7.17 years	6.96 years(b)
Weighted average duration of current leases up to final expiry(a)	7.83 years	7.52 years
EPRA Vacancy Rate(c)	3.93%	4.28%
EPRA Net Initial Yield (NIY)	4.97%	5.69%
EPRA Topped-up NIY	5.15%	5.80%(d)

1. This is a real-estate indicator. For more information, please consult Appendix 2 of the Half-yearly Financial Report 2019.
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

Occupancy rate, weighted average duration of leases and signed lease agreements1

The spot occupancy rate of the properties available for lease amounts to 95.03% as at 30 September 2019 (compared with 94.50% as at 31 December 2018).

The weighted average duration of the leases until their next break is 7.17 years as at 30 September 2019, compared with 6.96 years2 as at 31 December 2018. The weighted average duration of current leases until their final expiry is 7.83 years as at 30 September 2019.

Over the first 9 months of the fiscal year, Befimmo signed new leases and renewals for a total floor area of 103,861 m², compared with a total floor area of 43,297 m² during the first 9 months of fiscal year 2018.

This increase is explained by two important transactions:

• the pre-letting of the offices (70,000 m²) of the ZIN3 project (110.000 m²) to the Flemish Administration;
• the pre-letting of 6,700 m² to the Wallonia Public Service in the Paradis Express in Liège.

The other main transactions are:

• Blue Tower: signature of several extensions in duration and surface (4,300 m²);
• Central Gate: signature of a lease agreement (2,300 m²) with Mediahuis and renewals;
• Triomphe: signature of new lease agreements (2,200 m²).

The strong rental activity during the first 9 months of the fiscal year confirms the dynamism of Befimmo's team and the quality of its portfolio.

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1. In accordance with the definitions, leases are only reflected in the real-estate indicators as from the start of the lease.
2. Excluding 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. For more information, refer to page 4 of the Half-Yearly Financial Report 2019.

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Change in fair values4 of the property portfolio

Offices	Change over the	Proportion of	Fair value	Fair value	Fair value
	quarter(a)	portfolio(b)	(30.09.2019)	(30.06.2019)	(31.12.2018)
	(in %)	(30.09.2019)	(in € million)	(in € million)	(in € million)
		(in %)
Brussels CBD and similar(c)	-0.10%	49.3%	1 337.2	1 337.4	1 440.6
Brussels decentralised	-0.02%	3.0%	80.8	80.5	81.7
Brussels periphery	-1.58%	4.4%	120.3	119.9	116.5
Flanders	0.36%	17.6%	476.8	475.0	474.3
Wallonia	1.64%	8.4%	227.7	222.8	220.2
Luxembourg city	-0.02%	5.0%	135.0	135.0	122.6
Properties available for lease	0.09%	87.7%	2 377.8	2 370.6	2 455.8
Properties that are being constructed or
developed for own account in order to be	1.88%	12.3%	333.1	311.6	199.5
leased
Investment properties	0.30%	100.0%	2 710.9	2 682.2	2 655.3
Properties held for sale	-	-	-	3.5	-
Total	0.30%	100.0%	2 710.9	2 685.7	2 655.3

1. The change over the quarter is the change in fair value between 1 July 2019 and 30 September 2019 (excluding the amount of investments and divestments).
2. The proportion of portfolio is calculated on the basis of the fair value of the portfolio as at 30 September 2019.
3. Including the Brussels airport zone, in which the Gateway building is located.

As at 30 September 2019, the fair value of Befimmo's consolidated portfolio was €2,710.9 million, as against €2,655.3 million as at 31 December 2018.

This change in value incorporates:

• the renovation or redevelopment works (investments) carried out in the portfolio;
• the divestments made;
• the changes in fair value booked to the income statement (IAS 40).

At constant perimeter, the value of the portfolio (excluding the amount of investments and divestments) was stable during the third quarter of the fiscal year (a change of +0.30% or €8.2 million).

Overall rental yield

	Properties available for lease		Investment properties(a)
	30.09.2019		31.12.2018	30.09.2019	31.12.2018
Gross initial yield	5.39%		5.98%	4.73%	5.53%
Gross potential yield	5.65%		6.29%

1. Taking into account the properties that are being constructed or developed for own account in order to be leased.

The decline in yields between 31 December 2018 and 30 September 2019 is due mainly to the WTC 2 building leaving the portfolio of properties available for lease, in early 2019, which had a very high yield at

31 December 2018, coupled with the increase in value of certain properties in the portfolio (see also page 8 of the Half-Yearly Financial Report 2019 for more details).

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4 These values are established in application of the IAS 40 standard which requires investment properties to be booked at "fair value". The fair value of a building is its investment value, including registration fees and other transaction costs (also known as "deed-in-hands value") as calculated by an independent expert, minus a standard allowance of 10% (Flanders) or 12.5% (Wallonia and Brussels) for buildings with an investment value of less than €2.5 million, and 2.5% for buildings with an investment value of more than €2.5 million. This 2.5% allowance represents the average transaction costs actually paid in these transactions and is derived from an analysis by independent experts of a large number of transactions observed on the market. This accounting treatment is detailed in the press release issued by BeAMA on 8 February 2006 and confirmed in the press release of the BE-REIT Association of 10 November 2016. This rule is also applied for determining the fair value of property located in the Grand Duchy of Luxembourg.

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