10/11. Half year financial results R ETAIL E STATE S

Transcription

1 10/11 Half year financial results R ETAIL E STATE S

2 Key figures PORTFOLIO Total lettable area in m² (incl Distri-Land) 406, ,754 Fair value of the portfolio (incl Distri-Land) 483,987, ,600,000 Occupancy rate 98.29% 98.25% Debt ratio (RD 21 June 2006 (max 65%)) in % 55.13% 53.77% RESULTS Net rental income 16,797,000 15,224,000 Property result 16,583,000 15,024,000 Property charges -989, ,000 Corporate operating costs -1,119, ,000 Operating result before result on the portfolio 14,476,000 13,338,000 Result on the portfolio 4,786, ,000 Operating result 19,262,000 14,121,000 Financial result -6,373,000-6,109,000 Taxes 25,000 57,000 Net result 12,914,000 8,069,000 Net current result before result on the portfolio 8,128,000 7,286,000 DATA PER SHARE Number of shares Net asset value (fair value) Net asset value (fair value) excl dividend Net asset value (investment value) Net asset value (investment value) excl dividend Eeklo Stationstraat m 2

3 Table of contents Key figures Management report 2 Introduction 4 1. Activities report for the first half of financial year (6 months to 30 September 2010) 4 2. Capital increase 7 3. Analysis of results 8 4. Prospects 9 5. Future-oriented statements 9 Financial report Abbreviated consolidated income statement Abbreviated consolidated balance sheet Abbreviated statement of changes in equity Abbreviated cashflow statement Notes on the abbreviated consolidated half year figures Base for preparation Application of IFRS 3 business combinations Statement of the management Segmented information Valuation development projects Rental income Investment properties Financial debts Post balance sheet events Limited review report of the consolidated half-year financial information for the six months period ended 30 September Share performance Overview of share performance Dividend and yield Shareholder s calendar 29 Real estate report Real estate expert s report Note Sectorial spread Breakdown by type of building 35 Information sheet 37

4 2 Management report Froyennes

5 Half ye a r financial results R ETAIL E STATE S The company is investing in developing 20 clusters of out of town shops.this is being achieved by active arbitrage (purchase/sale). 3

6 Management report Introduction General Retail Estates nv is one of Belgium s largest real estate investment companies, specializing in retail premises on out of town sites. Its portfolio consists of 430 retail premises in Belgium and the Grand Duchy of Luxembourg, representing a total retail floor space of 406,629 m² and an investment value of EUR million (including an investment of % in the Distri-Land property certificates). The fair value of the portfolio amounts to EUR million. Retail Estates nv manages its retail properties itself and has a proven track record of developing real estate for its own account. Retail Estates nv is a listed company (Euronext Brussels), with a market capitalization on 30 September 2010 of around EUR million. Risk management 4 Even if management tries to limit the risk factors to a minimum, careful account still has to be taken of a certain number of risks. For an overview of these risks the reader is referred to pages 4 to 7 of the annual report and to pages 10 to 13 (summary of major risk factors) and pages 18 to 27 of the prospectus of 6 July There have been no changes in the major risk factors since these publications. 1. activities report for the first half of the financial year (6 months to 30 September 2010) 1.1. Rental income and occupancy rate Rental income during the first half of the financial year amounted to EUR million. This is 10.77% higher than in the comparable half of the financial year (EUR million). This increase is attributable almost entirely to the growth in the real estate portfolio by 7.95 % since 31 March 2010 to a fair value of EUR million, mainly through acquiring control of six property companies. At 30 September 2010, these owned 27 retail properties with a fair value of EUR million. There has been no significant rise in payment problems among lessees. This is largely explained by the fact that out of town retailing, which represents 90.91% of Real Estate nv s leased surface area, is mainly in the discount area, which appears to be withstanding the economic downturn reasonably well. froyennes Rue des Rosselières m 2

7 Half year financial results RETAIL ESTATES Occupancy rate 1 at 30 September 2010 remained at a high %, compared with % at 31 March Fair value of the portfolio For those premises which permit comparison, that is that have remained uninterruptedly in the real estate portfolio since 31 March 2010, the fair value of the real estate portfolio at 30 September 2010 has increased with EUR 4.72 million (0,97%). The fair value of the real estate portfolio rose to EUR 483,99 million. The gross rental yield established by the property experts on this portfolio amounts to 7.04 %. The stability of the fair value of out of town retail properties is explained mainly by continuing interest from wealthy investors for this type of investment, partly offsetting the low interest from institutional investors. Retail Estates nv has observed this itself during its ongoing divestment programme. Retail Estates nv also holds a significant % interest in the real estate certificates issued by Immobilière Distri-Land nv. The fair value of this latter company s real estate portfolio as of 30 September 2010 is assessed at EUR million. The share of Retail Estates in this fair value amounts to 15,01 mio EUR. At 30 September 2010 the real estate portfolio consisted of 430 units with a lettable surface of 406,629 m² Project development None of the four projects which Retail Estates is currently working on is at the execution phase. As part of the continued focus on optimizing the retail properties portfolio, the Bredabaan site at Schoten has been fully developed for retail activities. For this a former Jaguar showroom has been transformed and let out to Torfs (shoes) and Zeb (clothing), and an empty office floor renovated and integrated into the Baby 2000 outlet. In addition, the Messancy site, plagued by vacancies, underwent major restructuring and renovation. The site currently has six retail properties with an area of 4,427 m² and is fully leased to Aldi, Blokker, Zeeman, Maxi Toys and Le Roi du Matelas. The site in Ghent (Kortrijksesteenweg) which houses a subsidiary of FUN (toys and seasonal items) has been thoroughly renovated and expanded to 2,500 m². After this extensive renovation and expansion, the property, originally a converted garage, is now one of the architecturally and commercially most attractive buildings in the real estate portfolio. 1 De bezettingsgraad wordt berekend als de effectief verhuurde oppervlakte in verhouding tot de verhuurbare oppervlakte, uitgedrukt in m².

8 Management report 1.4. Investments 2 On 1 April 2010 control of four real estate companies was acquired from a Dutch private investor. These together own 9 retail and 1 SME premises. These real estate companies had been purchased shortly before by the seller from the Limburg real estate promoter Group GL in Houthalen. Several of the properties acquired in this way join existing clusters of retail premises in which Retail Estates nv has previously invested. For example, two further retail premises were acquired at the Hasseltweg site in Genk, and at Tienne de l Europe in Dinant one store was added to an existing retail park. At 30 September 2010, these represent an investment value of EUR million and a fair value of EUR million. On 5 May 2010, control was acquired of a real estate company NV Pillar Roeselare, which owns a retail park along the main shopping axis formed by the Brugsesteenweg in Roeselare, where Retail Estates already owned four properties. These large-scale retail properties (6,800 m²) are let to Decathlon, New Vanden Borre and Seats & Sofa s. At 30 September 2010, these new investments represent an investment value of EUR million and a fair value of EUR 9.95 million. 6 On 21 June 2010 Retail Estates acquired control of SA Caisse de Leasing which owns a property portfolio comprising 14 retail properties with an investment value of EUR 6.18 million and a fair value of EUR 6.03 million Disposals 2 During the past quarter, 7 retail units were sold to private investors for total sales proceeds of EUR 0.06 million. The fair value of these properties amounted at 31 March 2010 to EUR 4.46 million. The shops sold in this way are located in Ghent (Lidl 816m² and Max Markt 450 m²), Malmédy (JSM Decor 1000 m²), Sint-Truiden (Devreese 950 m²), Hannut (Sport 85, 582 m²), Diest (O Cool 900 m² and Le Roi du Matelas 850 m²). These sales are part of an ongoing programme of selling individual retail properties which for reasons of location, shop size and/or the trading activity undertaken in them do not belong to the core portfolio of Retail Estates nv. 2 The purchase and sale values of the investments and disposals are in line with the investment values as appraised by the real estate expert. HERSTAL Rue des Naiveux m 2

9 Half year financial results RETAIL ESTATES 1.6. Capital increase with application of the authorized capital On 5 May 2010, the Board of Directors undertook, in the context of the authorized capital, a capital increase of EUR 6.25 million (EUR 3.29 million share capital and EUR 2.96 share premium), following the contribution of all shares of NV Pillar Roeselare. In this transaction, 146,135 new shares were issued at EUR per share. This issue price was based on the closing share price on NYSE-Euronext during the 30 days leading up to the issue. On 21 June 2010, the Board of Directors undertook, by way of application of the authorized capital, a capital increase of EUR 5.06 million (EUR 2.66 million share capital and EUR 2.40 share premium), following the contribution of all shares of NV Caisse de Leasing. In this transaction, 118,293 3 new shares were issued at EUR per share. This issue price was determined based on the closing share price on NYSE-Euronext during the 30 days leading up to the issue. The new shares did not share in the profit for FY ending on 31 March They do share fully in the profits of the new financial year beginning on 1 April As a result of these capital increases there are, on 30 September 2010, 4,903,555 shares outstanding. 2. Capital increase and merger through acquisition of subsidiaries 7 The extraordinary general meeting of 30 June 2010 took the following decision: Merger by absorption of Eeklo Invest nv, without the issuance of new shares The extraordinary general meeting of 30 September 2010 took the following decision: Merger by absorption of Solido nv, without the issuance of new shares The mergers of these subsidiaries simplify administration and reduce the taxable income of the subsidiaries of Retail Estates nv. 3 With respect to this issue, a prospectus was published on 6 July 2010 on froyennes Rue des Rosselières m 2

10 Management report 3. Analysis of results Half-year results at 30 September 2010: net current result up by % - fair value of the real estate portfolio up by 7.95 % For the six months to 30 September 2010, net current result (i.e. profit before the result on the portfolio) amounted to EUR 8.13 million, an increase of 11.56% on the same period in the previous year. Net rental income rose from EUR million to EUR million. This is due in particular to the acquisition of 27 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 2009, the fair value of the real estate portfolio has grown by EUR million. After deduction of property charges, this gives a property result of EUR million compared with EUR million last year. 8 Property charges amount to EUR 0.99 million compared with EUR 0.89 million the year before. The increase is in line with the increase in rental income. After deducting general costs, Retail Estates reached an operating result before result on the portfolio of EUR million. Operating margin (operating result before result on the portfolio/net rental income) improved to 86.18%. Net earnings from sales of investment properties amount to EUR million on sales totaling EUR 4.46 million. The variations in the fair value of investment properties amount to EUR million, representing the net surplus of various positive and negative variations. The financial result is EUR million, which is EUR 0.26 million more negative than for the same period in Retail Estates nv finances its real estate portfolio with long-term bank loans at fixed interest rates. The average interest rate at 30 September 2010 was 4.97% (including margin). The net result for the first half is EUR million, consisting of the net current result of EUR 7.29 million and the result on the portfolio of EUR 4.79 million. Per share this represents for the first half a profit available for distribution of EUR The fair value of the property portfolio, including assets held for sale, amounted as of 30 September 2010 to EUR million (that is EUR million of owned buildings and a EUR million holding in the Distri-Land property certificates), compared with EUR million as of 31 March The net asset value (fair value) per share amounted as of 30 September 2010 to EUR (excluding 50% of the expected dividend). As of 31 March 2010 this was EUR (excluding dividend). The debt ratio amounted at 30 September 2010 to 55.13% compared with 53.77% on 31 March 2010.

11 Half year financial results RETAIL ESTATES 4. Prospects The macro-economic uncertainties do not permit predictions as to the evolution of the fair value of the property or the negative variations in the fair value of interest rate hedging instruments. The evolution of the net asset value of the share, which is sensitive to such variations and uncertainties, is therefore uncertain. At the end of last fiscal year , a net current result was projected on the assumption of a stable result. Based on the results of the first half this objective is maintained. The expected dividend 4 (EUR 2.70 gross per share) is confirmed. This represents a 3% increase on These expectations reflect stable consumer spending and a limited but positive evolution of rents. 5. Future-oriented statements This half-yearly report contains a number of future-oriented statements. Such statements are subject to risks and uncertainties which mean that the actual results can differ significantly from those expected on the basis of such future-oriented statements in this interim statement. Significant factors that can influence such results include changes in the economic situation and commercial and environmental factors Translation Please note that this report is a free translation of the Dutch half year report. Only the Dutch version forms legal evidence. 4 Pursuant to Article 7 of the Royal Decree of 21 June 2006, the dividend is determined based on the statutory (unconsolidated) financial statements of Retail Estates nv. BARCHON Rue Champs de Tignée 151 m 2

12 10 Financial report

13 Half ye a r financial result R ETAIL E STATE S The out of town retail property market offers stable property values and returns. 11

14 Financial report 1A. Condensed consolidated income statement (in 000 ) Rental income 17,022 15,367 Rental related expenses Net rental income 16,797 15,224 Recovery of property expenses Recovery of charges and taxes normally payable by tenants on let properties 1,493 2,430 Charges and taxes normally payable by tenants on let properties -1,681-2,611 Other rental related income and expenses Property result 16,583 15, Technical costs Commercial costs Charges and taxes on unlet properties Property management costs Other property charges Property charges Operating property result 15,595 14,135 Operating corporate costs -1, Other current operating income and expenses Operating result before result on the portfolio 14,476 13,338 Result on disposals of investment property Result on sales of other non financial assets Changes in fair-value of investment property 4, Operating result 19,262 14,121 Financial income Interest charges -6,506-6,186 Other financial charges Financial result -6,373-6,109 Result before taxes 12,889 8,012 Taxes Net result 12,914 8,069

15 Half year financial results RETAIL ESTATES Attributable to: Equity holders of the parent 12,914 7,996 Minority interests 73 Note: Net Current result (Groupe) 8,128 7,286 Result on portfolio 4, RESULT PER SHARE Number of ordinary shares 4,903,555 4,095,381 Weighted average number of shares 4,822,600 4,095,381 Net current result per ordinary share (in ) Diluted net current result per share (in ) Distributable result per share (in ) Net current result per share (in ) B. STATEMENT OF OTHER COMPREHENSIVE INCOME 13 in Net profit 12,914 8, 069 Other components of other comprehensive income 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 -3, Comprehensive income of the first half year 8,441 8, 468

16 Financial report 2. Condensed consolidated balance sheet ASSETS (in 000 ) Non-current assets 484, ,091 Goodwill Immobilisations corporelles Development projects 1 483, ,326 Other tangible fixed assets Non-current financial assets 293 Trade receivables and other non-curent assets Current assets 7,980 4,150 Assets held for sale 1,274 Trade receivables 2, Tax receivables and other current assets 2,503 1,321 Cash and cash equivalents 2, Deferred charges and accrued income TOTAL ASSETS 492, ,241 SHAREHOLDERS EQUITY AND LIABILITIES (in 000 ) Equity 198, ,040 Shareholders Equity attributable to shareholders of the parent company 198, ,040 Capital 109, ,851 Share premium 29,718 24,358 Reserves 71,389 66,673 Result 19,578 23,021 Impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties -11,936-11,179 Changes in fair value of financial assets and liabilities -19,933-16,218 Minority interests 534 (1) including development projects (IAS40).

17 Half year financial results RETAIL ESTATES SHAREHOLDERS LIABILITIES (in 000 ) 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 2 55,13% 53,77% NET ASSET VALUE PER SHARE (in ) Net asset value per share (fair value) (3) 40,46 41,07 Net asset value per share (investment value) (4) 42,89 43,47 Net asset value per share (fair value) excl dividend (3) 39,11 38,45 Net asset value per share (investment value) excl dividend (4) 41,54 40,85 (2) 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. (3) The net assets per share (fair value) is calculated as follows: shareholders equity divided by the number of shares. (4) The net asset per share (investment value) is calculated as follows: shareholders s equity excluding the impact on the fair value of estimated transaction rights and costs resulting form the hypothetical disposal of investment properties divided by the number of shares

18 Financial report 3. Condensed statement of changes in equity STATEMENT OF CHANGES IN EQUITY Share capital Ordinary shares Share premium in 000 Amount according to IFRS at 31 March ,523 10, legal 16 Profit of the first six months of 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 derivative financial instruments Capital increase by contribution in kind 5,625 4,375 Reclassification between reserves* -7 Minority interests Costs of capital increase Impact on reserves as a result of the additional aquisition of 50% of Immo Bartan nv Others Amount according to IFRS at 30 September ,148 14, Amount according to IFRS at 31 March ,851 24, Profit of the first six months of 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 derivative financial instruments Capital increase by contribution in kind 5,950 5,360 Reclassification between reserves Minority interests Costs of capital increase -223 Others Amount according to IFRS at 30 September ,578 29, * In accordance with the proposal of the Board of Directors to the General Meeting of Shareholders of 29 June 2009 to align the presentation of the reserves with their legal nature in accordance with article 617 of the Companies Code.

19 Half year financial results RETAIL ESTATES Reserves available (result on portfolio)* available (others) 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 Total shareholders equity 65,129 1,023 19,874-10,810-13, ,259 8,069 8, ,767-9, ,000-1, , ,926 1, ,261-1, ,484 1,356 17,128-10,128-14,103 1, ,526 63,881 2,497 23,021-11,179-16, ,040 12,914 12,914 4,724-4, ,614-11,614-3,715-3,715 11, ,219 2,875 19,578-11,936-19, ,394

20 Financial report 4. Condensed consolidated cash flow statement in CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR Cash-flow from operating activities 7,303 5 Net result of the financial year 12,914 8,069 Operational result 19,262 14,121 Interest paid -6,243-6,198 Interest received 3 58 Dividends received Corporation tax paid -2,352-6,056 Accrued interest Others 2,244 6, Non-cash elements to be added to/deducted from result -4, * 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 -4, Profit on sale of investment properties Provisions Change in working capital requirements ,381 * Movements of assets: - Trade receivables 1, Tax receivables and other current assets -1, Deferred charges and accrued income * Movements of liabilities: - Trade debts and other currents debts -1,203-7,730 - Other current liabilities Accrued charges and deferrred income

21 Half year financial results RETAIL ESTATES in Cash-flow from investment activities -7,786 13,449 Purchase of Intangible assets -14 Purchase investment properties -6, Disposal of investment properties and properties held for sale 4,447 34,751 Purchase of shares of investment companies -5,541-20,567 Disposal of shares of investment companies Purchase of other tangible asset Trade receivables and other non current assets 0-2 Disposal of non-current financial assets 3. Cash-flow from financing activities 2,522-8,724 * Change in financial liabilities and financial debts - Increase in financial debts 22,398 7,506 - Decrease in financial debts -7,337-6, * Change in other liabilities - Increase (+) / Decrease (-) in other liabilities Decrease minority interests -534 * Dividends -11,614-9,767 - Dividend for the previous year (-) Costs of capital increase CASH AND CASH EQUIVALENTS AT END OF period 2,681 5,312 Rounding to the nearest thousand can lead to rounding differences with the balance sheet and income statement in the tables above. Barchon Rue Champs de Tignée m 2

22 Financial report 5. notes to the condensed consolidated half-year figures 5.1 Basis for preparation The interim financial report for the first half-year ending on 30 September 2010 has been prepared using accounting standards consistent with International Financial Reporting Standards as implemented by the Belgian Royal Decree of 21 June 2006 with respect to the accounting, annual accounts and consolidated annual accounts of public real estate investment companies, and amending the Royal Decree of 10 April 1995 with respect to real estate investment companies, and in accordance with the requirements of IAS 34 Interim Financial Reporting. 20 In determining the fair value of investment properties in accordance with IAS 40 Investment Property, an estimated amount of transfer taxes and costs is deducted by the independent property appraiser. The impact on the fair value of investment property of these estimated transfer taxes and costs on the hypothetical disposal of investment properties is recognized directly in equity under the heading lmpact on fair value of estimated transfer taxes and costs on the hypothetical disposal of investment properties expressly provided for in the above Royal Decree. In the first half-years ending on 30 September 2010 and 30 September 2009 amounts of, respectively EUR and EUR million were directly recognized in equity via this heading. In these condensed interim financial statements the same accounting principles and calculation methods are applied as in the consolidated financial statements for the year ending on 31 March Application of IFRS 3 Business Combinations The company transactions of the past six months are not treated as a business combination as defined by IFRS 3, on the assumption that this standard is not applicable, given the nature and size of the company over which control has been acquired. These are companies owning a limited number of premises, and which it is not intended to maintain as independent businesses Declaration by management In accordance with Article 13 2 of the Royal Decree of 14 November 2007, Jan De Nys, managing director, declares that, to his knowledge, a) the condensed interim financial statements prepared on the basis of financial reporting principles consistent with IFRS and with IAS 34 Interim Financial Reporting as adopted by the European Union, give a true and fair view of the net worth, financial position and results of Retail Estates nv and of the companies included in the consolidation. b) the interim report presents an accurate description of the main events occurring during the first six months of the current financial year, their influence on the condensed interim financial statements, the main risk factors and uncertainties for the remaining months of the financial year, and the main transactions between related parties and their possible impact on the condensed interim financial statements where these transactions are of significant importance and were not concluded at normal market conditions.

23 Half year financial results RETAIL ESTATES 5.4. 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 out of town retail properties make up 90% of the Retail Estates 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. 5.5 Valuation of projects In line with the revised IAS 40 standard, project developments are included under investment property. On purchase they are stated at cost, including incidental expenses and non-deductible VAT. After initial recognition, projects are valued at fair value once contractors have been found, the necessary licences acquired, and the properties let. This fair value amount is based on the valuation by the real estate appraiser, after deducting still outstanding work. 5.6 Rental income During the first half of the year, Retail Estates nv expanded its property portfolio with 27 retail units. These represent an annual rental income of EUR 1.93 million. In the consolidated figures as of 30 September 2010 these new units represent a rent flow of EUR 1.02 million. 21 A number of properties were also divested in the first half. These represent an annual rental income of EUR 0.39 million. In the consolidated figures as of 30 September 2010, rental income from these properties amounts to EUR 0.12 million. froyennes Rue des Rosselières m 2

24 Financial report Rental income in Rent 16,549 14,595 Guaranteed income Operational lease income Rental benefits ( incentives ) -15 Total rental income 17,022 15,367 The rise in rental income is mainly due to the growth of the real estate portfolio. The following table shows by way of theoretical exercise the amount by which annual rental income could potentially drop on the assumption that tenants do not renew their leases at the expiry of their contracts and no subsequent rehiring takes place. This does not affect the theoretical risk of all tenants exercising their legal right of termination at the of the current three year period: in this case, all retail shops will by definition be empty within 3 years and 6 months. Rents in the table below are the expected annual rentals and therefore deviate from the total rental income in the above table. 22 in Within one year Between one and five years 5,754 4,804 More than five years 28,464 25,624 Rental income type: Retail Estates 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, subject to six months notice prior to 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.

25 Half year financial results RETAIL ESTATES 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 Retail Estates nv. The tenant is obliged to register the agreement at its own expense Investment properties Investment and revaluation table Investment properties Assets held for sale TOTAL in Amount at the end of the preceding financial year 448, ,993 1,274 6, , ,382 Acquisition of real estate investment companies 27,502 78,509 27,502 78,509 Activated financial costs Acquisition of investment properties 6,916 27, ,916 27,601 Disposal via the sale of real estate investment companies -7,502-7,502 Sale of property investments -3,173-38,736-1,274-7,047-4,446-45,783 Other transfers -1,857 1,857 Change in fair value (+/-) 4,292 1, ,292 1, Amount at the end of the financial year 483, , , , ,600 OTHER INFORMATIONS Investment property at investment value 495, , , , ,779 During the first half of the financial year control was acquired of one property company at a cost of EUR million (paid EUR million in shares and EUR 5.54 million in cash), producing a EUR million increase in property investments, a EUR million variation in working capital and a EUR million increase in financial debt. HERSTAL Rue des Naiveux m 2

26 Financial report 5.8. Non-current and current financial debts Division according to the due date of creditlines in 000 Non current Bilateral loans - floating or fixed rate 260, ,643 Financial lease Subtotal 260, ,643 Current Bilateral loans - floating or fixed rate 3,145 5,798 Financial lease Subtotal 3,186 5,879 Total 263, ,522 Division according to maturity of non-current financial debts in Between 1 and 2 years 18,412 11,031 Between 2 and 5 years 142, ,182 More than 5 years 98, ,430 Of the total amount of loans, EUR 230,06 million carry a variable interest rate. These are all long term loans. 89% of the loans are hedged by interest rate swap contracts, that swap variable against fixed interest rates. The average interest rate on the loans is 4,97%. In principle Retail Estates nv covenants a debt ratio ceiling of 60% with its banks Events occurring after the end of the first half - real estate portfolio Under the terms of an agreement signed on 2 November, Retail Estates will on 30 November acquire control of two companies (Depatri nv and Asverco NV) through a contribution in kind. Those companies own real estate at Sint-Stevens-Woluwe, Gavere, Meulebeke, Zaventem and elsewhere, with an investment value of EUR 7.27 million and a fair value of EUR 7.09 million. The issue price of the new shares is the average share price over the 30 days preceding the contribution. Barchon Rue Champs de Tignée m 2

27 Half year financial results RETAIL ESTATES 6. Limited review report on the consolidated half-year financial information for the six-month period ended 30 September 2010 To the board of directors We have performed a limited review of the accompanying condensed consolidated balance sheet, condensed income statement, condensed statement of comprehensive income, condensed cash flow statement, condensed statement of changes in equity and selective notes 5.1 to 5.9 (jointly the interim financial information ) of Retail Estates NV ( the company ) and its subsidiaries (jointly the group ) for the six-month 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 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 Réviseurs d Entreprises/Instituut van de 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 Réviseurs d Entreprises/Instituut van de Bedrijfsrevisoren. Accordingly, we do not express an audit opinion. 25 Based on our limited review, nothing has come to our attention that causes us to believe that the interim financial information for the six-month period ended 30 September 2010 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Diegem, 26 November 2010 The statutory auditor DELOITTE Bedrijfsrevisoren / Reviseurs d Entreprises BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by Rik Neckebroeck

28 26 Share performance Halle

29 Half year financial results R ETAIL E STATE S Retail Esates nv enjoys the loyalty of both institutional and private investors. 27

30 Share performance 1. Stock market performance Retail estates - Bel Bel20 Retail Estates /98 09/99 09/00 09/01 09/02 09/03 09/04 09/05 09/06 09/07 09/08 09/09 09/10 During the first six months of the stock market price fluctuated between EUR and 44.99, following the same trend as the Bel 20. The average closing price during this period was EUR 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) Gros dividend 2.54 Net dividend 2.16 Share price on closing date

31 Half year financial results RETAIL ESTATES Premiums and discounts 60 Retail Estates NAV (incl. div.) /00 09/01 09/02 09/03 09/04 09/05 09/06 09/07 09/08 09/09 09/10 29 The net asset value per share on a fair value basis is EUR The change in net asset value is explained by the further decline in fair value of interest rate hedging instruments and the payment of a dividend for the financial year. 3. Shareholders calendar Interim statement on results for the 3 rd quarter of financial year 18 February 2011 Announcement of results for financial year 27 May 2011 General meeting for financial year 27 June 2011 Dividend payable from 5 July 2011

32 Kuurne 30 Real estate report

33 Half ye a r financial results R ETAIL E STATE S The government s strict licensing policy has the effect of limiting the supply of new retail premises at top locations, thereby increasing the value of existing retail premises. 31

34 Real estate report A. valuation at 30 September Real estate expert s report Retail Estates nv uses Cushman & Wakefield as its real estate expert. For purchases where a conflict of interest occurs, it uses reserve appraiser CB Richard Ellis (following the takeover of C&T Retail). In practice, each expert values a part of the real estate portfolio. Report by Cushman & Wakefield The report of Cushman & Wakefield dd. 30 September 2010 covers a portion of the property of Retail Estates nv and its subsidiaries. The Investment Value as at 30 September 2010 of Retail Estates nv amounts (rounded) to EUR 328,573, 000 and its fair value to (rounded) EUR Based on the investment value, the portfolio has grown in absolute terms by 0.73% since 30 June This reflects the sale of a nonstrategic property and also sharper yields on a number of top properties. This gives a portfolio yield of 7.07%. 32 The portfolio of Immobilière Distri-Land nv has as at a rounded Investment Value of EUR 20,510,000 and a rounded fair value of EUR 20,010,000. The investment value in absolute terms has increased by 3.81% since 30 June 2010, also due to indexation increases and a tighter yields on a number of properties. This gives a yield for Distri-Land of 7.39%. In the notes to the valuation the real estate expert mentions: Stability has been a typical feature of the out of town retail premises market for many years. During the past six months, the market was again characterized by a healthy demand for limited amounts of available space. Tenants in good locations appear reluctant to leave their premises, resulting in a very limited supply. There is therefore little or no vacancy, and the few new developments continue to be easily filled at stable rent levels. Tenants appear to be generating sufficient turnover to support current rent levels, which are not excessively high in the international context. In the larger portfolios we observe only a marginal increase of rent arrears. KUURNE Ringlaan m 2

35 Half year financial results RETAIL ESTATES The investment market has also held up well. Indeed, still increasing demand from private investors for individual properties, with volumes up to EUR 2,000,000, led to slightly declining yields for this type of sales. Out of town retail properties are more popular than ever with this type of investor, and are quickly sold at what are at times very good prices. In comparison with a year ago we also notice a growing appetite for somewhat larger volumes. Yields in this segment have stabilized, and we see prices rising rather than a weakening. Large volumes appear to be again in demand, inter alia from German funds, provided the projects are fully leased to strong tenants. In this segment, no sales were undertaken, given the lack of supply. In this way we are quite positive as regards the evolution of this market in the next 6 months. Report by CB Richard Ellis The report by CB Richard Ellis dd. 30 September 2010 covers a portion of the property of Retail Estates nv and its subsidiaries. The investment value of this real estate is herewith estimated at EUR million and the fair value at EUR million. These properties represent a rental income of EUR million, representing a gross return of 6.90%. 2. Note 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 of between EUR 1 and 5 million. The rental market remains active, but is more sensitive than in the past to location quality, with a preference for retail properties on multi-shop sites (retail parks) or along major city access roads with strong concentrations of similar properties (retail clusters). Isolated buildings in well-populated residential areas are popular with food supermarkets. 33

36 Real estate report 3. Distribution by sector Clothing and footwear shops (32.99 % compared with 33.25% at 31 March 2010) together with food, electrical goods and toy retailers account for more than 60% of the leased space. Both groups provide a stable basis, given the less cyclically sensitive nature of their businesses. Moreover, the great difficult in obtaining socio-economic permits for these activities makes these buildings more likely to appreciate in value, and tends to promote strong tenant loyalty to existing locations. The larger margins in the interior decoration and home furnishings sector make it possible to obtain sizeable rent increases in favourable economic climates, but it is this sector that is hardest hit by any downtrend in consumer confidence. This segment represents 25.98% of Retail Estates nv s property portfolio (compared with 26.57% at 31 March 2010). The Miscellaneous heading contains primarily apartments, SME premises and catering outlets. Retail Estates nv invests in real estate with such end uses only when these are ancillary to retailing premises. 34 Sectorial distribution (m 2 ) Type of building (m 2 ) Miscellaneous 12,26% Food 10,50% Electrical goods 7,63% Fitness 0,66% Horeca 0,54% Interior decoration 25,98% Retail Cluster 64,72% Apartements 0,35% Others 4,80% Centercity 1,00% on out of town areas 28,66% Vacancy 0,89% Toy retailers 8,56% Clothing and footwear 32,99% Office buildings 0,47%

37 Half year financial results RETAIL ESTATES 4. Breakdown by type of building Retail Estates nv invests in principle only in out of town retail property. Under pressure from changing planning requirements more and more retail properties are being integrated into mixed-use buildings, that is buildings intended primarily as shop premises, but with office or residential functions on the upper floors. The company does not invest in office buildings or residential property. Since the selling of floors with different functions leads to complex ownership situations, Retail Estates nv prefers to retain ownership of the entire building. Moreover, as part of package deals, Retail Estates nv acquires real estate portfolios containing properties with semi-logistic functions, like the Brantano office and distribution centre at Erembodegem. Key figures Retail Estates Distri-land Estimated fair value 468,971, ,600,000 20,009,835 Contractual rents 33,140,589 31,036,331 1,516,436 Contractual rents inc. value of vacant property 33,223,140 31,232,358 1,516,436 Yield in % (fair value) 7,17% 7,13% 7,58% Total m² premises in portfolio 397, ,565 19,089 Number of premises Occupancy rate in % 98,29% 98,16% 100,00% Total m² premises under construction 4,725 2,500-35

38 General information LEXICON Debt ratio Dividend yield 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. Fair value of a property investment (according to Beama interpretation of IAS 40) 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). 36 Free float Gross dividend Investment value of an investment property Net asset value (fair value) Net asset value (investment value) 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. Net dividend The net dividend is equal to the gross dividend after retention of 15% withholding tax. Occupancy rate The occupancy rate is calculated as the ratio of the effectively leased out space to the space available for leasing, expressed in m².

39 Half year financial results RETAIL ESTATES Information sheet Name: Retail Estates 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: Brussels VAT number: BE 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 Berkenlaan 8B 1831 Diegem, represented by Mr Rik Neckebroeck Financial year closing: 31 March Capital: EUR 110,332, Number of shares: 4,903,555 General Meeting: Last Monday of June Share listing: Euronext - continuous market Depository bank: KBC Bank Financial services: KBC Bank Value real estate portfolio: investment value million EUR - fair-value million EUR (incl value of the real estate certificates Distri - land ) Real estate expert: Cushman & Wakefield and CB Richard Ellis Number of properties: 430 Type of properties: Out of town retail outlets Liquidity provider: KBC Securities 37 Contact list Jan De Nys Kara De Smet Johan Jansens Bernadette Rossel Wilfried Van Laethem Maaike Dubois Sara Hautier Laurence De Bisschop Lindsey De Waegeneer Mélissa Jacob Katja Appelmans (jan.denys@retailestates.com) Managing Director-CEO (kara.desmet@retailestates.com) CFO (johan.janssens@retailestates.com) Property Manager (bernadette.rossel@retailestates.com) Property Manager (wilfried.vanlaethem@retailestates.com) Controller (maaike.dubois@retailestates.com) Legal Counsel (sara.hautier@retailestates.com) Accounting Manager (laurence.debisschop@retailestates.com) Property Manager (lindsey.dewaegeneer@retailestates.com) Assistant accountancy (melissa.jacob@retailestates.com) Assistant Property Manager (katja.appelmans@retailestates.com) Incasso Manager

40 38 Notes

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42 vastgoedbevak - sicafi Industrielaan 6 B Ternat info@retailestates.com