Leasinvest Real Estate : Notes of the manager on the financial year 2020

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NOTES OF THE MANAGER ON THE PAST FINANCIAL YEAR 2020

KEY DATA

For the financial year 2020 we record the following key data:

•  Corona-impact of -6.5% on rental turnover

  •  Dividend proposal maintained at €5.25 gross per share

•  The EPRA earnings1 decrease by 12% from € 40.5 million end 2019 to € 35.6 million (€ 6.01 per share vs € 6.83 per share)

  •  Occupancy rate rises from 90.46% end 2019 to 91.62%

•  Financial headroom of € 83 million

•  Average funding cost is expected to substantially drop following the early repayment of derivatives

MICHEL VAN GEYTE CEO:

"The 2020 financial year was a year of unprecedented challenges. Despite the difficult situation, thanks to the efforts of our team, we have been able to limit the damage and will propose to the general meeting to distribute the same dividend for the financial year 2020 as for the financial year 2019. Our diversified portfolio of sustainable buildings in prime locations in Belgium, Luxembourg and Austria has proven its defensive strength. 2021 will be a transition year for Leasinvest to further address the Covid-19 crisis and make us even more resilient for the future."

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1 Alternative Performance Measures (APM) in the sense of the ESMA directive of 5 October 2015 in this press release are indicated with an asterisk (*) and are further explained in the annexes to this press release.

Activity report

2020 was also a special year for Leasinvest. The Corona pandemic has had an impact on our results, both in terms of rental income and in terms of revaluation results on the participation in Retail Estates.

The various lockdowns, with associated mandatory store closures in the three countries in which Leasinvest operates, have led to several tenants from the retail segment approaching us with a demand for deferrals and/or temporary rent reductions. This resulted in a loss of turnover of € 4.2 million, of which € 2.5 million has already been definitively granted and the balance was recognized as a provision on turnover, as negotiations with various tenants are still ongoing.

As in the first lockdown, Leasinvest chooses to look at every situation tenant per tenant, since the impact of the pandemic differs based on the country, the sector, the financial capacity, etc. This way of working leads to the process taking longer, because of the very thorough analysis of each situation, with the aim of pursuing a long-term business relationship with our tenants.

Restructuring of Luxembourg activities

A recent change in the law has led to placing the Luxembourg activities in a number of Special Purpose Vehicles (SPVs) which are subject to ordinary Luxembourg corporate taxes. This resulted in a positive non-realized portfolio result.

Early repayment of derivatives

Within the framework of its hedging strategy, it was decided to lower the hedge ratio from 90% to the previously defined percentage of 75% for the 5 following years.

In particular, interest rate swaps were repaid for a nominal amount of € 115 million, which corresponds to a payment of € 20 million. As a result, this negative value, which has always been recorded under Other Comprehensive Income in the past, was as a one-off recycled through the income statement (revaluation results on financial instruments). More importantly, however is that this will significantly reduce the future funding cost, as early as of the first quarter of 2021. An estimate depending on short-term interest rates will nevertheless lead to a reduction in the average funding cost to a level slightly below 2%, which corresponds to a saving of approximately € 3 million per year.

Divestments

BELGIUM

Sales of a semi - industrial building in the Brixton Business Park

On 28 September 2020, the notarial deed was passed for the sale of a semi-industrial building in the Brixton Business Park, an SME park in Zaventem, for € 3 million, in line with the last valuation on 30 June 2020. The building represented an annual rent of € 0.2 million.

Sale of State Archives in Bruges

On 1 December 2020, the State Archives in Bruges were sold to the listed regulated real estate company (GVV/SIR) QRF, through the transfer of 100% of the shares of RAB Invest NV.

The building was sold at € 20.6 million, in line with the latest fair value estimated by the independent real estate experts on 30/09/2020. The annual rent of this building amounted to approximately € 1.3 million.

GRAND DUCHY OF LUXEMBOURG

Sale of Esch 25 in Luxembourg

On 15 December 2020, Leasinvest Real Estate sold an office building of 1,750 m², located on the Route d'Esch 25 in Luxembourg City. The transaction was realized for an amount of € 13 million, cost paid by the buyer, which corresponds to a return of 4.8%, based on an annual rent of approximately € 0.6 million.

These divestments all fit within the strategy of dynamizing Leasinvest's real estate portfolio by selling older buildings and continuing to focus on new, sustainable projects.