2008 half year report

Transcription

1 2008 half year report

2 March 1998 IPO April 1998 First capital increase More than 100 shops Start of promotion for own account More than 150 shops June 2003 Second capital increase Keyfigures PORTFOLIO Total lettable area in m² (incl Distri-Land) Occupancy rate 98.06% 98.36% Fair value investment properties in Eur (incl Distri-Land) Value development projects in Eur Debt ratio (RD 21 June 2006 (max 65%)) in % 56.70% 49.71% RESULTS Net rental income Property result Property charges Operating corporate costs Operating result before result on the portfolio Result on the portfolio Operating result Financial result Taxes Net result Net current result (part of Group) DATA PER SHARE Number of shares Net asset value (fair value) Net asset value (investment value)

3 Reinforcement of the management team Increase in development for own account Over 200 shops November 2007 Third capital increase Target of 300 shops in sight - current operating profit over EUR 10 million Half-yearly financial report of the board of directors of the bevak/sicafi for the period from Table of contents Management report p 2 Introduction p 2 1. Activities report for the first half of the 2008/2009 financial year (6 months to p 2 30 September 2008) 2. Analysis of results p 5 3. Prospects p 7 4. Future-oriented statements p 7 financial report p 8 1. Abbreviated consolidated income statement (non audited) p 8 2. Abbreviated consolidated balance sheet (non audited) p Statement of changes in equity (non audited) p Abbreviated statement of changes in equity (non audited) p Notes on the non audited abbreviated consolidated half year figures p Limited review report on the consolidated half-year financial information for the six p 21 months period ended 30 September 2008 Share performance p 22 A. Overview of share performance p 22 B. Dividend and yield p 23 C. Calendar of the Shareholder p 23 Realestate report p 24 A. Valuation at 30 September 2008 p 24 B. Key figures p 26 half year report 2008 I RETAIL ESTATES Lexicon p 28 Information sheet 1

4 Half year report 2008 Management report Management report Introduction nv is one of Belgium s largest real estate investment companies that specializes in retail properties on the peripheries of residential areas. Its property portfolio consists of 336 retail premises in Belgium and the Grand Duchy of Luxembourg, representing a total retail floor space of 334,597m² and an investment value of EUR million (including an investment of 78.67% in the Distri-Land real estate certificates). nv manages its retail properties itself, and has a proven track record of developing real estate for its own account. nv is a listed company (NYSE, Euronext), with a market capitalization on 30 September 2008 of around EUR 143 million. 1. A c t i v i t i e s r e p o r t f o r t h e f i r s t h a l f o f t h e / financial year (6 months to 30 September 2008) a. investments an d disposals In the first half of its financial year, which began on 1 April 2008, nv extended its real estate portfolio with 50 retail properties, representing rental income of EUR 3.44 million. The investment value of EUR million is in line with the investment value established by the valuation expert at the time of acquisition. 2

5 This extension came about mainly by acquiring control of real estate companies Belgium Retail 1 nv, Keerdok Invest nv, Finsbury Properties nv and purchasing leased-out retail properties at Dendermonde and Namur (Champion). It also acquired control of nv Immo Bartan, with the selling shareholders retaining a 49.99% interest. Following this transaction a joint venture agreement was concluded with these parties. In the framework of proprietary project development, a retail property was delivered at Fort Lapin Brugge (shopping centre extension). 9 retail premises are also under construction at Genk, Habay-la-Neuve and Neupré. The rental income on the investments made in the first half gives an initial gross return of 6.42%. On 20 May 2008 the shareholding in CTM Invest nv, which owns a retail property in Waregem and a fitness centre in Antwerp, was sold to a private investor. A capital gain of EUR 0.22 million was achieved on this transaction. b. r e a l estate po r t f o l i o At 30 September 2008, nv s real estate portfolio consisted of 306 retail properties and 30 other properties of various kinds across Belgium and the Grand Duchy of Luxembourg. These properties represent a total surface area of 334,597 m², a fair value of EUR million and a total investment value of EUR million. The investment value is the value determined by an independent real estate expert prior to deduction of the conveyancing costs. In the past half-year EUR million of capital gains were recorded on the portfolio (valued at fair value), being the balance of EUR 4.62 million of positive revaluations less EUR 4.54 million of writedowns. The occupancy rate is 98.06%. This is down slightly on 31 March 2008, when it amounted to 98.36%. This is, however, a snapshot, given that certain of these properties were leased out subject to obtaining the necessary authorizations. nv also holds a significant 78.67% interest in the real estate certificates issued by Immobilière Distri-Land nv, that is 48,854 out of a total of 62,100 issued certificates. This interest was valued at 30 September 2008 at EUR million. half year report 2008 I RETAIL ESTATES 3

6 Half year report 2008 Management report c. c a p i t a l increases an d merger th r o u g h acquisition of subsidiaries On 30 June 2008 an extraordinary general meeting decided to increase capital by EUR 3.5 million in the context of the contribution of a real estate property following the partial split of nv Zebra Trading. For this transaction 83,632 shares were issued at an issue price of EUR per share. On 5 September a capital increase of EUR 1.00 million was undertaken by the contribution of a property. For this transaction 23,750 shares were issued at an issue price of EUR per share. These two transactions took the number of issued shares to 3,845,381. All the above-mentioned newly issued shares will share in the profit of the current financial year. board of directors convened an extraordinary general meeting in order to discuss the merger through acquisition of three of its subsidiaries: Afrit 5 nv, LC Invest nv and Retail Warehousing bis bvba. After a first non-quorate meeting on 12 August, this merger was approved effective 31 August 2008 for Afrit 5 nv and LC Invest nv and effective 31 December 2008 for Retail Warehousing bis bvba. 4

7 2. Analysis of results Half-year results at 30 September 2008: current profit up 23% - value of real estate portfolio stable For the 6 months to 30 September 2008, current profit (being the profit before portfolio results) amounted to EUR 5.97 million in the same period, up 23% on the same period in the previous year. Rental income has risen from EUR 9.89 million to EUR million. This is due in particular to the acquisition of around 50 additional properties in the current financial year and the contribution of retail properties purchased in the course of the previous financial year and which are contributing 100% from this year onwards. Compared with 30 September 2007, the real estate portfolio has grown by EUR million. After deduction of the property costs, this gives a property result of EUR million compared with EUR 9.82 million last year. Property expenses amount to EUR 0.72 million, up just EUR 0.06 million compared with the previous year owing to scale benefits. After general expenses, the Reit achieved an operating result of EUR million. The operating margin has improved in this way to 86.41% (compared with 84.04% the year before). The result from disposal of investment property amounts to EUR 0.19 million. This relates mainly to the sale in the first quarter of interest in CTM Invest nv. The capital gain on the portfolio amounts to EUR million. This amount is the balance of various revaluations and write-downs. The financial result is EUR million, compared to EUR -1,13 million the same period in This increase is ascribable to the increase in bank debt used to finance the extension of the real estate portfolio. nv finances its real estate portfolio with long-term bank loans at fixed interest rates. The average interest rate at 30 September 2007 was 5.11%. EUR million of loans were for terms in excess of 5 years. half year report 2008 I RETAIL ESTATES The net profit for the first half amounts to EUR 6.24 million, consisting of the net current result of EUR 5.97 million and the portfolio result of EUR 0.27 million. This represents a distributable result per share of EUR 1.58 for the first half-year, compared with EUR 1.42 a year before. 5

8 Half year report 2008 Management report The fair value of the real estate portfolio, excluding assets held for sale, was EUR million at 30 September 2008, (EUR million of directly-owned investment properties and a EUR million shareholding in Distri-Land property certificates), compared with EUR million at 31 March The net asset value (fair value) per share amounted at 30 September 2008 to EUR (excluding 50% of the assumed dividend). At 31 March 2008 this was EUR (excluding dividend). The debt ratio amounted at 30 September 2008 to 56.70% compared with 49.71% a year before. The increased debt ratio is due mainly to the rise in bank borrowing to finance the expansion of the real estate portfolio. Financial debts rose EUR million compared with 31 March These are variable-rate loans with an average term of 5 to 7 years. These variable interest rates are, however, fully hedged by interest rate swap contracts which swap the variable interest rates against fixed interest rates. 6

9 3. Prospects Following the acquisitions made in the previous half-year, and assuming an unchanged composition and occupancy of the real estate portfolio, net rental income is expected to rise to EUR 25 million, as against the EUR million forecast in the 2007/2008 annual brochure. On this basis the net current result (excluding the portfolio result) will evolve from the forecast EUR 10.5 milion to EUR 11.5 million. The expected dividend for the 2008/2009 financial year is maintained unchanged at EUR 9,767,267 million, being EUR 2.54 gross per share (pay-out ratio of 84.93%), which is an increase of 3.25% on the dividend of EUR 2.46 for the 2007/2008 financial year. No forecast can be formulated as to the portfolio result. 4. Future-oriented statements This half-yearly report contains a number of future-oriented statements. Such statements are subject to risks and uncertainties which can result in the actual results differing significantly from the results that could be assumed on the basis of the future-oriented statements in this interim declaration. Significant factors that can influence such results are in particular changes in the economic situation and the commercial environment factors. half year report 2008 I RETAIL ESTATES 7

10 half year report 2008 Financial report Financial report 1. Abbreviated consolidated income statement (non audited) in Rental income Rental related expenses NET RENTAL INCOME Recovery of property expenses Recovery of charges and taxes normally payable by tenants on let properties Charges and taxes normally payable by tenants on let properties Other rental related income and expenses PROPERTY RESULT Technical costs Commercial costs Charges and taxes on unlet properties Property management costs Other property charges PROPERTY CHARGES OPERATING PROPERTY RESULT Operating corporate costs Other current operating income and expenses OPERATING RESULT BEFORE RESULT ON THE PORTFOLIO Result on disposals of investment property Result on sales of other non financial assets Changes in fair-value of investment property

11 OPERATING RESULT Financial income Interest charges Other financial charges FINANCIAL RESULT RESULT BEFORE TAXES Taxes NET RESULT Attributable to: Equity holders of the parent Note: Net Current result (Group) Result on portfolio RESULT PER SHARE Number of ordinary shares Net current result per ordinary share (in ) Diluted net current result per share (in ) Distributable result per share (in ) HALF year report 2008 I RETAIL ESTATES 9

12 half year report 2008 Financial report 2. ABBREVIATED CONSOLIDATED BALANCE SHEET ASSETS in 000 Non-current assets Goodwill Intangible assets Investment properties Development projects Other tangible fixed assets Non-current financial assets Trade receivable and other non-current assets Current assets Assets held for sale Trade receivables Tax receivables and other current assets Cash and cash equivalents Deferred charges and accrued income TOTAL ASSETS SHAREHOLDERS EQUITY AND LIABILITIES in 000 Equity Shareholders Equity attributable to shareholders of the parent company Capital Share premium Reserves Result Impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties Changes in fair value of financial assets and liabilities Minority interests

13 SHAREHOLDERS EQUITY AND LIABILITIES Liabilities Non-current liabilites Provisions Non-current financial debts Credit institutions Financial lease Other non-current liabilities Current liabilities Current financial debts Credit institutions Financial lease Trade debts and other current debts Other current liabilities Accrued charges and deferred income TOTAL SHAREHOLDERS EQUITY AND LIABILITIES DEBT RATIO Debt ratio % 49.71% NET ASSET VALUE PER SHARE (in ) Net asset value per share (fair value) Net asset value per share (investment value) HALF year report 2008 I RETAIL ESTATES Net asset value per share (fair value) excl dividend Net asset value per share (investment value) excl dividend (1) The debt ratio is calculated as the liabilities (excluding provisions, accrued charges and deferred income and the change in the fair value of the coverage instruments) divided by the total assets. 11

14 half year report 2008 Financial report 3. STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY Share capital Share Reserves in 000 Ordinary shares premium legal not available for distribution Amount according to IFRS at 31 March Profit of the first six months of Changes in legal reserves 14 - Transfer on the result on the portfolio to the reserves not available for distribution - Impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties - Dividends of financial year Changes in fair value of financial assets and liabilities * on financial assets held for disposal * on derivative financial instruments - Changes in capital - Others - Minority interests 13 Amount according to IFRS at 30 September Amount according to IFRS at 31 March Profit of the first six months of Transfer on the result on the portfolio to the 81 reserves not available for distribution - Impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties - Dividends of financial year Changes in fair value of financial assets and liabilities * on financial assets held for disposal * on derivative financial instruments - Capital increase by contribution in kind Transfer from reserves not available for distribution -7 9 to reserves available for distribution as a result of disposals - Minority interests - Costs of capital increase Amount according to IFRS at 30 September

15 Result Impact on fair value of Changes in Minority Total estimated transaction fair value of interests shareholders available for tax-free rights and costs financial equity distribution resulting from the assets and hypothetical disposal of liabilities investment properties HALF year report 2008 I RETAIL ESTATES

16 half year report 2008 Financial report 4. CONSOLIDATED CASH-FLOW STATEMENT in CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR Cash-flow from operating activities Net result of the financial year Operational result Interest paid Interest received Dividends received Corporation tax paid Accrued interest Others Non-cash elements to be added to/deducted from result * Depreciation and Writedowns - Depreciation / Writedowns (or writeback) on intangible and tangible assets (+/-) - Depreciation / Writedowns (or writeback) on trade receivables * Other non-cash elements - Changes in fair value of investment properties Profit on sale of investment properties Provisions 65 Change in working capital requirements * Movements of assets: - Trade receivables Tax receivables and other current assets Deferred charges and accrued income * Movements of liabilities: - Trade debts and other currents debts Other current liabilities Accrued charges and deferrred income

17 in Cash-flow from investment activities Purchase of Intangible assets Purchase Investment properties Profit on sale of investment properties and 212 properties held for sale Purchase of shares of investment companies Disposal of shares of investment companies 852 Purchase of Development projects Purchase of Other tangible asset Disposal of non-current financial assets Cash received from trade receivables and other -4 non-current assets Purchase of Assets held for sale Cash-flow from financing activities * Change in financial liabilities and financial debts - Increase (+) in financial debts Decrease (-) in financial debts * Change in other liabilities - Increase (+) / Decrease (-) in other liabilities * Change in shareholders equity - Increase (+) / Reduction (-) in capital and costs resulting from hypothetical disposal of investment properties - Minority interests Others -65 HALF year report 2008 I RETAIL ESTATES * Dividends - Dividend for the previous year (-) CASH AND CASH EQUIVALENTS AT END OF YEAR

18 half year report 2008 Financial report 5. notes on the non audited abbreviated consolidated half year figures 5.1 Basis for preparation The interim financial report for the first half year ending on 30 September 2008 has been prepared using accounting policies consistent with International Financial Reporting Standards as implemented by the Belgian Royal Decree of 21 June 2006 with respect to the accounting, the annual accounts and the consolidated annual accounts of public real estate investment trusts and changing the Royal Decree of 10 April 1995 with respect to real estate investment trusts and is in accordance with the requirements of IAS 34 Interim Financial Reporting. In determining the fair value of the investment properties in accordance with IAS 40 Investment Property, an estimated amount of transfer rights is deducted by independent real estate appraisers. The impact on the fair value of investment property due to these estimated transfer rights is accounted for directly in equity on a specific account labeled «Impact on the fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties» foreseen in this Royal Decree. In the first half year ending 30 September 2008 and 30 September 2007 an amount of respectively EUR 1.09 million and EUR 1.32 million have been directly accounted for in equity. Since 30 June 2008, has been a participant in the Immo Bartan joint venture, over which it exercises joint control. This joint venture is consolidated by the proportional consolidation method. Proportional consolidation is an administrative processing and reporting method whereby the joint venture partner s share in each of the assets, liabilities, and debit and credit income statement items of the entity over which joint control is exercised is added, item by item, to the joint venture partner s annual accounts. In practice this means that 50% of these items are recognized, proportionally to the shareholding. 5.2 Application of ifrs 3 business combinations The company transactions of the last six months are not treated as a business combination as defined under IFRS 3, on the assumption that this does not apply given the nature and size of the companies over which control has been acquired. These are companies owning a limited number of premises, and which it is not intended to hold as an independent business area Segmented information A segment is a distinct component of the enterprise that is active in a particular market and subject to risks and returns that differ from those of the other segments. Given that city periphery retail properties make up 99% of the portfolio, a breakdown of activities by operating segment is not relevant. The Board of Directors does not use any other segment in taking its decisions. 16

19 In the last quarter of 2008 the group sold its Luxembourg subsidiary. This means that the group s significant operating activities are now all located in Belgium, and a breakdown into geographic segments is no longer relevant, given that there are no differences in risk and rewards depending on the zone or region in which the property is located in Belgium. 1. Income statement GEOGRAPHICAL SEGMENT Belgium Luxemburg TOTAL in Rental income Rental related expenses NET RENTAL RESULT Recovery of property expenses Recovery of charges and taxes payable by tenants on let property Charges and taxes payable by tenants on let property Other rental related income and expenses PROPERTY RESULT OPERATING RESULT BEFORE RESULT ON THE PORTFOLIO Result on disposals of investment property Result on sales of other non financial assets Changes in fair-value of investment property OPERATING RESULT OF THE SEGMENT HALF year report 2008 I RETAIL ESTATES Financial result Taxes NET RESULT

20 half year report 2008 Financial report 5.4 Rental income Rental income in Rent Operational lease income Rental discounts -65 Total rental income In the first half of its financial year nv extended its real estate portfolio by 50 retail properties. These represent an annual rental income of EUR 3.44 million. In the consolidated figures for the 6 months to 30 September 2008 these new properties represent a rental flow of EUR 0.66 million. On 20 May 2008, nv s interest in CTM Invest nv was sold to a private investor. This company represented annual rental income of EUR 0.16 million. In the consolidated figures for the 6 months to 30 September 2008, CTM Invest represents rental income of EUR million. The table below indicates how much of the rental income could potentially be eliminated annually, i.e. if each tenant that has a termination option also effectively leaves the building and no relettings are concluded. in Within one year Between one and five years More than five years Rental income type: concludes commercial rental contracts for its buildings, for a period of at minimum 9 years, which can usually be terminated after the expiry of the third and sixth year while taking account of a notice period of six months prior to the expiry date. The rents are usually paid monthly in advance (sometimes quarterly). They are indexed annually on the anniversary of the rental agreement. Taxes and levies, including advance property tax, the insurance premium and the common charges are borne by the tenant in principle. To guarantee compliance with the obligations imposed on the tenant by virtue of the agreement, the tenant must provide a rental guarantee, usually in the form of a bank guarantee worth 3 months of rent. 18

21 At the start of the agreement an inventory of fixtures is drawn between the parties by an independent expert. At the expiry of the agreement the tenant must return the premises it hired in the state described in the inventory of fixtures on taking up occupancy subject to normal wear and tear. The tenant cannot transfer the rental agreement or sublet the premises fully or partially, unless it has prior written permission from nv. The tenant is obliged to register the agreement at its own expense. 5.5 Fixed Assets: investment properties Investment and revaluation table Investment properties Assets held for sale TOTAL in Amount at the end of the preceding financial year Acquisition of real estate investment companies Acquisition investment properties Disposal via the sale of real estate investment companies Sale of investment properties Transfers of development projects Other transfers Change in fair value (+/-) Amount at the end of the financial year OTHER INFORMATIONS Investment property at investment value Development projects Investment and revaluation table Development projects in HALF year report 2008 I RETAIL ESTATES Amount at the end of the preceding financial year Purchases Disposals -150 Capitalized financing costs Transfer to investment property Amount at the end of the financial year During the first half of the financial year real estate companies were purchased in an amount of EUR million. As these companies contained a total of EUR 3.27 million of cash, the net cash outflow for the purchase of real estate companies amounted to EUR million. On the balance sheet this produced a EUR million increase in investment property, EUR million variation in working capital and a EUR million increase in financial debts. 19

22 half year report 2008 Financial report The shareholding in subsidiary CTM Invest was sold for EUR 0.86 million. As the company contained EUR million of liquid assets, the net cash flow from the sale amounted to EUR 0.85 million. On the balance sheet this produced a EUR 1.91 million fall in investment property, a EUR million change in working capital, a EUR 0.64 million reduction in financial debts and a capital gain on sales of EUR 0.22 million Non current and current financial debts Division according to the due date of creditlines in Non current Bilateral loans - floating or fixed rate Financial lease Subtotal Current Bilateral loans - floating or fixed rate Financial lease Subtotal TOTAL Division according to maturity of non-current financial debts in Between 1 and 2 years Between 2 and 5 years More than 5 years Of total financial debt, EUR million carries variable interest rates. EUR of this is in the form of non-current debt. These non-current loans are fully covered with interest rate swap contracts, which swap variable interest rates against fixed ones. The average interest rate on the loans is 5.11% Post balance sheet events Real estate portfolio On 1 November 2008 three retail properties in Genk Hasselweg were delivered in the context of a project development. These properties provide rental income of around EUR 0.21 million on an annual basis. Proposal for a merger by absorption of Leninvest nv, Kairo nv, Nithosa1 nv and Sinac nv The board of directors will be inviting its shareholders to an extraordinary general meeting to take place before the end of the financial year. A proposal will be made to absorb the above-mentioned subsidiaries. This transaction will have the effect of extending the tax benefits of the property Reit structure to the income from these companies. This transaction will have a positive effect on earnings per share by removing the tax (corporate tax) pressure on the subsidiaries results. 20

23 6. limited review report on the consolidated half-year Financial information for the six months period ended 30 September 2008 To the Board of Directors We have performed a limited review of the accompanying consolidated condensed balance sheet, condensed income statement, condensed cash flow statement, condensed statement of changes in equity and selective notes (jointly the interim financial information ) of RETAIL ESTATES SA ( the company ) and its subsidiaries (jointly the group ) for the six months period ended 30 September The Board of Directors of the company is responsible for the preparation and fair presentation of this interim financial information. Our responsibility is to express a conclusion on this interim financial information based on our review. The interim financial information has been prepared using accounting policies consistent with International Financial Reporting Standards as implemented by the Belgian Royal Decree of 21 June 2006 for application by real estate investment trusts and in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Our limited review of the interim financial information was conducted in accordance with the recommended auditing standards on limited reviews applicable in Belgium, as issued by the Institut des Reviseurs d Entreprises/Instituut der Bedrijfsrevisoren. A limited review consists of making inquiries of group management and applying analytical and other review procedures to the interim financial information and underlying financial data. A limited review is substantially less in scope than an audit performed in accordance with the auditing standards on consolidated annual accounts as issued by the Institut des Reviseurs d Entreprises/Instituut der Bedrijfsrevisoren. Accordingly, we do not express an audit opinion. Based on our limited review, nothing has come to our attention that causes us to believe that the interim financial information for the six months period ended 30 September 2008 is not prepared, in all material respects, in accordance with accounting policies consistent with International Financial Reporting Standards as implemented by the Belgian Royal Decree of 21 June 2006 for application by real estate investment trusts and in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. HALF year report 2008 I RETAIL ESTATES 28 November 2008 The Statutory Auditor DELOITTE Reviseurs d Entreprises SC s.f.d. SCRL Represented by Rik Neckebroeck 21

24 half year report 2008 Share performance Share performance A. Overview of share performance Bel20 versus nv BEL /09/98 30/09/99 30/09/00 30/09/01 30/09/02 30/09/03 30/09/04 30/09/05 30/09/06 30/09/07 30/09/08 During the first six months of 2008/2009 the stock market price fluctuated between 60 EUR and EUR 42.5, following the same trend as the Bel20. The average closing NAV (incl. div.) price during this period was EUR

25 B. Dividend and yield Net asset value (fair value) Net asset value (investment value) Net asset value per share (fair value) excl. dividend Net asset value per share (investment value) excl. dividend Gros dividend 2.46 Net dividend 2.09 Share price on closing date Premiums and discounts /09/00 30/09/01 30/09/02 30/09/03 30/09/04 30/09/05 30/09/06 30/09/07 30/09/08 NAV (incl. div.) The net asset value per share (fair value) amounts to EUR The change in net asset value is explained by the limited increase in fair value of the investment property based on the valuation by independent real estate experts and the distribution of dividends over the financial year 2007/2008. HALF year report 2008 I RETAIL ESTATES C. Shareholder s calendar Announcement of annual results for 2008/ May 2009 General meeting for the 2008/2009 financial year 29 June 2009 Release of dividend for 2008/ July

26 half year report 2008 Real estate report Real estate report A. Valuation at 30 September 2008 A. Re a l estate expert s report nv uses Cushman & Wakefield as its real estate expert. In the event of purchases where a conflict of interest occurs, it uses real estate expert CB Richard Ellis (which came in with the take-over of C&T Retail). In practice, each expert values a part of the real estate portfolio. Cushman & Wakefield report We obtain a rounded Investment Value as at 30 September 2008 for nv of EUR and a rounded Fair Value of EUR. On the basis of the investment value, the portfolio grows in absolute terms with 1.52 % compared to 30 June This is mainly due to rent indexations and the acquisitions of Dendermonde, Mechelesesteenweg 35 and Keerdok Invest. This gives a yield of 7.12 % to the portfolio. The portfolio of Immobilière Distri-Land nv has as at 30 September 2008 a rounded Investment value of EUR and a rounded Fair Value of EUR. The investment value in absolute terms remained stable compared to 30 June This gives a yield of 7.55 % for Immobilière Distri-Land. The yields applied in the update as at 30 September 2008 were modified for a number of properties. We need to monitor the yields closely due to the turbulence in the international financial markets. The Belgian retail warehouse market endured this turbulence very well so far, surely when we place this in an international context. After all the Belgian retail warehouse market is the past 10 years characterized by stability. It is remarkable to see that the portfolio does not top during extremely favourable circumstances. On the other hand the retail warehouse market also remains stable in more difficult times. The retail warehouse market is after all pre-eminently a market where value for money remains an important advantage. Moreover many of the 24

27 brands are still somewhat discount oriented. Especially these brands are performing well in times of decreasing purchasing power. We still notice a very good equilibrium between offer and demand in the general retail warehouse market. However from a technical point of view it becomes more and more difficult to receive the necessary permits for new buildings. In addition, some cities in the meanwhile have a commercial strategic plan, which limits further proliferation. This scarcity of new product contrasts with the increasing demand for retail warehouse properties. This demand comes from both existing chains as well as from new international players. Finally we see an increasing interest of typical city centre players, who successfully opened their first shops in the periphery. L&L, Celio, Damart, Club, Cassis, are just some examples. Consequently the void in the portfolio remains at a record low. We expect that the strategic choice to let mainly to retail chains will contribute to the further stability of the portfolio in the near future. Exactly this stability in turbulent markets contribute to the fact that investors still find this market extremely attractive. This remains especially so for the private investor who sees this product as a prudent men investment with an attractive return. This type of investor is after all less dependent on external loans, since they finance mostly with private equity. Also institutional investors still have a good appetite for this kind of investment product. However they are more leverage buyers, which results in less demand for big volumes, in comparison to the past years where buying a big volume resulted often in a premium. The fact that the Belgian market is shredded heavily means there are little larger packed deals available on the market, which can again be seen as a stabilizing factor for this market. Although there is a small correction on some yields, we notice that in this portfolio these corrections are very limited due to the underlying foundations and in particular the rather historical low rents paid by the retailers. This appears to be a decisive element again for investment decisions in the current turbulent investment market. CB Richard Ellis report The report of CB Richard Ellis dd. 30 September 2008 relates to the real estate formally owned by Brimmo nv and LC Invest nv and the real estate owned by Immo Bartan nv. This real estate is included in the consolidation. The investment value of this real estate is hereby estimated at EUR million and the fair value at EUR million. These properties represent rental income of EUR 4.53 million. HALF year report 2008 I RETAIL ESTATES Summary The total investment value of the real estate portfolio amounts to EUR miillion, being EUR million (part of the portfolio valued by Cushman & Wakefield) plus EUR million (part of the portfolio valued by CB Richard Ellis) and EUR million (valuation of the Immobilière Distri-land nv real estate certificates by Cushman & Wakefield). Based on the contractual rent at 30 September 2008, the return on estimated value is 7.17% Including the rental value of the vacant properties the return amounts to 7.19%. 25

28 half year report 2008 Real estate report B. No t e The extension of the real estate portfolio in the previous half-year occurred primarily through the purchase of retail properties in Flanders. As a result the relative weight of investment properties in the Flemish Region, compared with 31 March 2008, has grown to 69.24% as against 30.16% in the Walloon Region. At the same time the proportion of investment properties let out to retailers of shoes and/or clothing rose from 35.85% at 31 March 2008 to 38.67%. The investment market is evolving in various directions under the influence of the global economic uncertainties. On the one hand a number of foreign institutional investors have realized their investments faster than originally intended in order to secure their capital gains and reinvest in their home markets where the credit crisis is offering new purchasing opportunities. On the other hand the private market remains active, with wealthy private investors showing continuing interest in transactions between EUR 1 and 5 million. The rental market remains active, but is more sensitive than in the past to the quality of the location, with a preference for retail properties on sites (retail parks) or along major access roads to cities having strong concentrations of similar properties (retail clusters). Solitary properties are becoming increasingly popular with food supermarkets in well-populated residential areas. 26

29 B. Key figures Distri-land Estimated fair value Contractual rents Yield in % (fair value) 7,17 7,21 7,74 7,74 Contractual rents inc. value of vacant Yield in % (fair value) Total m² premises in portfolio Number of premises Occupancy rate in % Total m² premises under construction Premises under construction - development projects Address Total surface (per m²) Antwerpen (Wilrijk) Boomsesteenweg 943 (1) Genk Hasseltweg Habay la Neuve Rue de la Gare Lier Antwerpsesteenweg Mechelen Guido Gezellelaan Neupré Rue Brassine (2) (1) : Property of Nithosa nv (2) : Land owned by Finsbury Properties nv and buildings by nv HALF year report 2008 I RETAIL ESTATES 27

30 half year estate 2008 Lexicon Lexicon Debt ratio Dividend yield Fair value of a property investment (according to Beama interpretation of IAS 40) The debt ratio is calculated as the relation of all liabilities (excluding provisions and accrued charges and deferred income) less negative variations in the fair value of any hedging instruments, to total assets. The Royal Decree of 21 June 2006 raised the maximum debt ratio for real estate bevaks/sicafis from 50% to 65%. The dividend yield is the gross dividend divided by the average stock market price of the share over the financial year. This value is equal to the amount at which a property might be exchanged between well-informed parties agreeing and acting in conditions of normal competition. From the perspective of the seller this means after deduction of registration fees. In practice this means that the fair value is equal to the investment value divided by (for buildings with a value more than EUR 2.5 million) or the investment value dividend by 1.10/1.125 for buildings with a value less than EUR 2.5 million). Free float Gross dividend Investment value of an investment property Net asset value (fair value) Net asset value (investment value) Net dividend Occupancy rate The free float is the number of shares that are traded freely on the stock exchange and therefore not in permanent ownership. Gross dividend per share is the operating profit dividend by the number of shares. This is the value of a building as estimated by the independent real estate expert, including transfer costs and without deducting registration fee. This value corresponds to the formerly used terms value deed in hand. Total shareholders equity divided by the number of shares. Total shareholders equity adjusted for the impact on the fair value of estimated transaction rights and costs in the hypothetical disposal of investment properties, divided by the number of shares. The net dividend is equal to the gross dividend after retention of 15% withholding tax. The occupancy rate is calculated as the ratio of the effectively leased out space to the space available for leasing, expressed in m². 28

31 information sheet Name: plc STATUS: Real estate investment company with fixed capital established according to Belgian law Address: Industrielaan 6, B-1740 Ternat, Belgium Telephone: +32 (0)2 / FAX: +32 (0)2 / info@retailestates.com WEBSITE: RPR: Brussel VAT number: BE ONDERNEMINGSNUMMER: Incorporated on: 12 July 1988 Status as real estate investment company with fixed capital granted on: 27 March 1998 Statutory period of establishment: Unlimited MANAGEMENT: Internal Auditors: Deloitte auditors Louizalaan Brussels, represented by Mr Rik Neckebroeck Financial year closing: 31 March Capital: EUR 86,523, Number of shares: 3,845,381 General Meeting: Last Monday of June Share listing: Euronext - continuous market Depository bank: KBC Bank Financial services: KBC Bank and ING Belgium Real estate expert: Cushman & Wakefield / CB Richard Ellis Number of properties: 336 Type of properties: City periphery retail outlets Liquidity provider: KBC Securities Realisation : Photos : Bernard Babette

32 VASTGOEDBEVAK - SICAFI Industrielaan 6 B Ternat info@retailestates.com 30