BEFIMMO SA 
By TRADING UPDATE REGULATED INFORMATION
EMBARGO - 17 November 2011 - 5.40 PM
Société en Commandite par Actions
C R E A T I N G V A L U E I N R E A L E S T A T EI N T E R I M S T A T E M E N T BY T H E M A N A G I N G A G E N T FOR T H E P E R I O D 1.07.2011 TO 3 0 . 0 9 . 2 0 1 1
- Net asset value at €60.50 per share
- EPRA earnings exceeding forecasts
- Confirmation of interim dividend of €3.94 gross per share for the fiscal year
The Board of Directors of Befimmo SA, Managing Agent of the
Befimmo Sicafi, met on
9 November 2011 to prepare the consolidated quarterly
financial statements of the Befimmo Sicafi as of 30 September
2011.
We recall that, following the approval of the change in the
Befimmo fiscal year by the General Meeting of Shareholders
held on 22 June, the current fiscal year, which opened on 1
October 2010, will close on
31 December 2011. Thus, it will exceptionally last 5
quarters. The first twelve months of this fiscal year are
comparable to the fiscal year ended 30 September 2010 as
published in the Annual Financial Report 2010.
1.1. Change in fair value1 of the property portfolio
The fair value of Befimmo's consolidated portfolio
amounts to €1,959.8 million as of
30 September 2011, as compared to a fair value of €1,922.6
million as of 30 September 2010. This value variation
incorporates the cost of the renovation works carried out in
the portfolio during the four quarters of the fiscal year,
the acquisition of the SA Ringcenter, owner of the Pavilion
complex, the sale of the Empress Court and Kattendijkdok
buildings and of certain floors in the co-ownership building
located at chaussée de La Hulpe 177, as well as changes in
fair value booked to the income statement.
1 These values are established in application of standard IAS 40 that requires investment property to be booked at "fair value". Fair value is obtained by deducting the average costs for transactions established by independent real-estate experts from the "investment value". It corresponds to (i) 2.5% for property worth more than €2.5 million and (ii) 10% (Flanders) or 12.5% (Wallonia and Brussels) for property worth less than
€2.5 million. The Befimmo portfolio comprises both investment properties and properties held for sale.
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The following table shows the fair values of Befimmo's consolidated portfolio, by geographical area.
- Change in floor area between 30 September 2010 and 30 September 2011. Sale of Empress Court and
Kattendijkdok buildings and floors in the Hulpe 177 building, and integration of the Pavilion building.
- The variation matches the change in fair value over (i) the 4 past quarters, i.e. from 1 October 2010 to 30
September 2011 and (ii) the 4th quarter, i.e. from 1 July to 30 September 2011 (excluding investments and
disinvestments).
- The proportion of the portfolio is calculated based on the fair value of the portfolio as of 30 September 2011.
Excluding investments and disinvestments, the unrealized negative change in fair value of the consolidated portfolio was a mere -0.39% or €7.7 million over the fourth quarter of the fiscal year, and amounts to -1.51%, or €30.1 million for the 12 first months of the fiscal year, compared to -1.77% for the same period of the last fiscal year. This small change is in line with published forecasts2.
1.1.1. Overall rental yield
The overall rental yield on current rents of the investment
properties (excluding properties that are being constructed
or developed for our own account in order to be leased) was
6.59% at
30 September 2011, which is stable compared to 6.60% at the
closing of the previous quarter
(30 June 2011) and at the beginning of the fiscal year (30
September 2010). Still on
30 September 2011, the overall rental yield on current rents,
increased with the estimated rental value of vacant space, is
6.98% compared to 6.99% as of 30 June 2011 and 6.90% as of 30
September 2010.
Taking into account buildings under construction or developed
for our own account in order to be leased, current and
potential yields as of 30 September 2011 were 6.42% and 6.87%
respectively.
2 Forecasts published in the Annual Financial Report 2010.
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1.1.2. The occupancy rate and the weighted average duration of leases
The occupancy rate3 of the properties available
for lease amounts to 94.38% as of 30 September 2011, which is
stable since the last quarter (94.44% as of 30 June 2011)
compared to 95.53% as the fiscal year opened.
This slight decrease in the occupancy rate since 30 September
2010 resulted from planned departures as well as the
completion of renovation works in the Froissart building (±
2.800 m²) located in Brussels in the European district, of
which approximately 25% of the lease space is currently
let.
The occupancy rate of all investment properties as of 30
September 2011, i.e. including properties that are being
constructed or developed for our own account in order to be
leased, is 93.49% compared to
94.03% at the beginning of the fiscal year.
As of 30 September 2011, the weighted average duration of
current leases is 9.04 years compared to
9.22 years as of 30 June 2011 and 9.13 years as of 30
September 2010.
During the fourth quarter of the 2010/2011 fiscal year,
Befimmo signed new leases and lease renewals for an
approximate total of 6,500 m², or more than 54,000 m² over
the first 12 months of the fiscal year. Some major tenants
such as Alpha Crédit or Avnet renewed their leases for
several years.
The Company pursues its refinancing program and implemented,
in October 2011, two new financing plans to cover the portion
of the 2006 syndicated loan maturing in March 2012 for a
total amount of
€130 million.
This concerns a fixed rate loan of €44 million corresponding
to the assignment of future (excluding indexation) rents on a
Befimmo building (average weighted duration of 6.8 years) and
a bilateral credit line maturing in March 2017 for an amount
of €100 million.
As a reminder, in April 2011, Befimmo issued bonds with a
maturity of 6 years for an amount of
€162 million, which was the first part of its refinancing
program for a total of €400 million scheduled in
2011/2012.
As of 30 September 2011, the average duration of
Befimmo's debt is
3.79 years. As of the same date, Befimmo has committed
financing for a total amount of
€1,037 million, drawn up to €839 million. Its average
financing cost (including margin and hedging costs) amounts
to 3.36% over a period of 12 months ending on
30 September 2011.
3 Occupancy rate: current rent (including space already let but where the lease has yet to begin) / (current rent
+ estimated rental value of vacant space).
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To reduce its financing costs, Befimmo implemented a
commercial paper program for an amount up to a maximum of
€400 million. As of 30 September 2011, this program had been
used for €291.5 million. This program includes back-up lines
composed of the various financing lines implemented.
During the next few months, the Company will continue its
refinancing and source diversifying program in order to meet
its March and June 2013 loan maturity dates, or a total
amount of approximately €500 million. It also intends to
secure its financing for terms as long as possible.
On 5 October 2011, the Standard & Poor's credit-rating
agency confirmed the BBB/outlook stable rating for
Befimmo's long-term debt, and the A-2 rating for the
short-term debt.
In the course of the last few months, Befimmo has extended
its portfolio of interest rate risk hedging instruments and
prolonged the average weighted duration of the instruments.
The hedging ratio exceeds 80% until the third quarter of
2013, 70% until the second quarter of 2014, 60% until the
fourth quarter of 2014, and 30% until the second quarter of
2016.
As of 30 September 2011, Befimmo's total net asset value
- group share - was
€1,015.7 million.
The net asset value - group share - is therefore €60.50 per
share.
(€/share) | |
Net asset value as of 30 September 2010 | €60.60 |
Dividend 2010 | -€3.90 |
Net result as of 30 September 2011 | €3.80 |
Net asset value as of 30 September 2011 | €60.50 |
EPRA NAV4 | €61.26 |
EPRA NNNAV4 | €59.96 |
4 Details of the EPRA NAV and NNNAV are given on page 58 of Befimmo's Annual Financial Report 2010 (www.befimmo.be).
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4. C O N S O L I D A T E D K E Y F I G U R E S* Please note that, as of 22 June 2011, Meirfree SA and Vitalfree SA, 100% subsidiaries of Befimmo, together hold
637,371 additional shares of Befimmo, which brings the total amount of existing shares to 17,427,474.
** The amount of €3.94 (gross) corresponds to the interim dividend due in December 2011 and decided at the close of the first four quarters of the 2010/2011 fiscal year.
*** EPRA earnings as of 30 September 2010 (€5.05/share) includes €0.39/share resulting from the termination of the leasehold granted on Block II of the WTC described below.
- EPRA earnings, EPRA NAV and EPRA NNNAV were calculated according to the definitions published in the Best Practices Recommendations of the European Public Real Estate Association (« EPRA »). This report is available on the EPRA website at www.epra.com .
- Debt ratio: calculated in accordance with article 6 of the Royal Decree of 21 June 2006 on the accounting, annual accounts and consolidated accounts of public real-estate Sicafs.
- Loan-to-value: [(financial debts - cash) / fair value of portfolio].
- Gross yield: the gross dividend divided by the share price as of 30 September.
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4.1. Share price and yield
As of 30 September 2011, Befimmo shares closed at €56.13, a
-7.22% discount from its net asset value.
As of 30 September 2011, return on equity amounts to
6.61%5. The return on the share price is
-3.33%5 over the one-year period ending on 30
September 2011.
As of 30 September 2011, the debt ratio amounts to 45.06% and
the loan-to-value ratio to 42.51%.
5.1. Events modifying the Company's floor area
The Company's real estate floor area was modified during
the first 12 months of the current fiscal year, primarily
following the sales of the Kattendijkdok (January 2011) and
Empress Court (March 2011) buildings and the sale of floors
in the co-ownership building located chaussée de La Hulpe 177
in Brussels (June 2011), and the acquisition of Ringcenter
SA, owner of the Pavilion complex (February
2011).
The comparison of the first twelve months of the 2010/2011
fiscal year with the 12 months of the
2009/2010 fiscal year is therefore affected by the impact of
this floor area modification.
5 This is the internal rate of return calculated over the last 12 months, taking into account the dividend of €3.90
per share (gross) distributed in December 2010.
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C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T SC O N S O L I D A T E D B A L A N C E S H E E T ( i n t h o u s a n d € )
The statements were subject to a limited review by Deloitte Réviseurs d'Entreprises SC s.f.d SCRL, represented by Kathleen De Brabander and Rik Neckebroeck, jointly acting auditors, who will issue an unqualified opinion.
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C O N S O L I D A T E D I N C O M E S T A T E M E N T ( i n t h o u s a n d € )
- The item "non-controlling interests" refers to the item "minority interests".
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5.2. Analysis of the result
Net rental income is slightly higher (+0.7%) than the net income recorded over the first four quarters of the previous fiscal year. At a constant floor area, this result is slightly lower -0.9%. This decrease, primarily resulting from the end of the income guarantee for the Axento building in Luxembourg and the impact of renegotiating certain leases, is offset by the contribution of the Pavilion complex since its integration into Befimmo's portfolio in February 2011, and by rent indexation.
Net real-estate charges decreased (-27.5%) compared to the previous fiscal year. This decrease essentially results from non-recurring items, notably compensations associated with departing tenants.
The result from the sale of investment properties amounts to €15.0 million. This amount was generated by sales completed in early 2011 (Empress Court building in Brussels, Kattendijkdok building in Antwerp, and sale of floors in the co-ownership building located at chaussée de La Hulpe 177 in Brussels) and is higher than previously announced.
The financial result (excluding the IAS 39 result) amounts to -€26.3 million compared to -€22.8 million one year earlier. This evolution in the financial result is primarily explained by a rise in the interest rates on the short term, but also by a small increase in the average debt of the Company.
The change in fair value of financial instruments is +€5.4 million compared to -€3.8 million one year earlier. Due to the large volatility of the interest rate curve, the recorded variations during the first 6 months amounted to +€17.4 million compared to -€11.9 million during the 6 following months.
The change in fair value of investment properties amounts to -€30.1 million (or -1.51%) compared to
-€34.6 million (or -1.77%) one year earlier.
These factors result in a net result (group share) of €63.9
million (or €3.80/share), compared with
€46.7 million (or €2.78/share) one year earlier.
EPRA earnings for the first twelve months of the fiscal year
were down (-12.6%) compared to last fiscal year. This decline
is explained by the non-recurring result, recorded last year,
of the termination of the leasehold granted on Block II of
the WTC (+€7.2 million, or €6.5 million group share). In
comparison with previously published forecasts6,
EPRA earnings are, however, rising (+6.5%) primarily as a
result of the contribution of the Pavilion building (February
2011), of an indexation of leases higher than forecasted and
of several non-recurring operational economies.
6 Please refer to the press release dated 6 May 2011, published on Befimmo's website (www.befimmo.be).
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6. O U T L O O K
Following the change in the Befimmo fiscal year decided by
the General Meeting of Shareholders on
22 June, and as previously announced7, the Board
of Directors of the Managing Agent of the Sicafi has
decided to distribute an interim dividend for the fiscal
year, which confirms the neutral effect of the change of the
fiscal year for the shareholders.
This interim dividend amounts to €3.9412 gross per share
(amount rounded to 4 decimals), or €3.3500 net per share,
i.e. the dividend amount foreseen for the 2010/2011 fiscal
year (4 quarters8).
In April 2012, the agenda of the Ordinary General Meeting of
Shareholders at which the accounts for the 2010/2011 fiscal
year are to be approved, will include a proposition to
distribute, as the case may be, a final dividend (currently
estimated at €0.99 gross per share) for the 2010/2011 fiscal
year, based on the current net result for the fifth quarter
of said fiscal year.
* * *
B E F I M M O P R A I S E D F O R I TS A N N U A L F I N A N C I A L R E P O R T 2010
On 1 September 2011, Befimmo received the "Most Improved Annual Report 2010-2011" award and a Gold Award in London. This award is given each year by the European Public Real Estate Association (EPRA) - www.epra.com)9. Befimmo's Annual Financial Report was selected among over 80 annual reports from major European listed real estate companies.
This award is the first in the Company's history, and Befimmo intends to enthusiastically pursue its process of continuous enhancement of corporate communication.
* * *
Additional information:
Emilie Delacroix - Investor Relations & External Communication Manager
Befimmo SCA - Chaussée de Wavre 1945 - 1160 Bruxelles Tel: 02/679.38.60 - Fax: 02/679.38.66 www.befimmo.be - Email: e.delacroix@befimmo.be
7 Please refer to the press release dated 6 May 2011, published on Befimmo's website (www.befimmo.be).
8 From 1 October to 30 September 2011.
9 With over 200 active members, EPRA is the voice of the European real estate industry and represents
€250 billion in real estate assets.
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