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(05/02/2004) COFINIMMO : 2003: a year of consolidation
2003: a year of consolidation
Operational margin over 83%
Important presence on the investment market
More than 20% progression for the net current result
Confirmed gross dividend forecast for 2003 at EUR 7.25
The debt ratio stands at 47.70%
Brussels, 5 February 2004
Cofinimmo has realised an excellent performance in 2003, in a more and more difficult real estate environment.
This was illustrated by its introduction in the BEL20 index, showing if necessary that the real estate sector is to
be fully considered in the management of every investment portfolio. Cofinimmo has again positioned itself as
an investment of choice, offering shareholders a total return (stock price +reinvested gross dividend) of 17.34%.
This stock performance is the result of the continuation of Cofinimmo's strategy.
By optimising the operational management of its buildings and intensifying its active commercial approach,
Cofinimmo succeeded in maintaining an operational margin over 80% and an occupancy rate clearly higher
than the market (94.68% against 90.1% - source: Cushman Wakefield).
Cofinimmo has also been particularly active on the investment market. By means of different transactions, it has
acquired, or has engaged itself to acquire, under certain conditions and according to diverse financing modes,
more than EUR 450 million of assets.
Whereas both the rent levels as the occupancy rate continue to decrease and the evolution of the economic
situation remains uncertain, the company has concentrated on investments in quality assets, which are perfectly
located, rented on the long term to first class tenants and offering attractive returns. Most of these assets are
under construction or renovation and will have effect on Cofinimmo's result at their reception in 2005. The
main transaction was the acquisition of 33% of the shares of North Galaxy SA. The construction risks are not
borne by Cofinimmo.
In order to increase its presence in the prime districts of Brussels, mainly the Leopold District, and to be more
competitive, Cofinimmo has acquired buildings that mostly will be subject to renovation in the coming years.
These projects will integrate the activity of development for own account, aimed to improve the quality of and
the durability of the buildings.
1. Consolidated accounts as at 31.12.2003
For the daily management of its portfolio, Cofinimmo has continued to apply a proactive and flexible
commercial approach, aimed at improving its clients' fidelity. The maintenance of an occupancy rate close to
95% (94.68%), still clearly superior to the average occupancy rate of the Brussels office market (90.1% -
source: Cushman Wakefield), the control of direct operating costs linked to rental vacancy and the economies of
scale on indirect property costs, have thus allowed the company to exceed its operating margin objectives
(80%). For 2003, the operating margin amounts to 83.25%, compared to 80.15% in 2002.
The net current result (group share) is in progression (+21.3%) and reaches EUR 73.71 million in 2003 against
EUR 60.76 million for the year 2002.
The net current result per share as at 31.12.2003 came to EUR 8.31, or a decrease of 2.5% compared to the
result as at 31.12.2002, that reached EUR 8.52 per share. The number of shares of the company has increased
by 24.4% since 30 December, following the capital increases consecutive to the acquisition of buildings of
Dexia Group and the contribution of the shares of Longview Holdings BV.
This proves that the dilution of the net current result caused by these successive capital increases is very weak
and can be explained by the nature of the acquisitions, which will have effect on the net current results as of
2005.
The shareholders continue to benefit from the company's performances in 2003. Indeed, the return of the share
amounts to 17.34% in 2003, against 9.88% in 2002. The 2003 dividend that the Board of Directors will propose
to the General Assembly, is again superior to the 2002 dividend. It will amount to EUR 7.25 (gross) per share,
after approval by the General Assembly, representing an increase of 3.6%.
The net result amounts to EUR 60.31 million against EUR 56.63 million, or an increase of 6.5%.
The net result per share (after inclusion of the portfolio result) as at 31.12.2003 equals EUR 6.80 against EUR
7.94 in 2002. The market value of the buildings in portfolio (with constant portfolio) depreciated by 0.77%
during the year 2003, resulting from a less good behaviour of the rental market for properties located in the
airport zone and in lesser way for buildings in the decentralised zone of Brussels. This has led to a decline in the
portfolio value of EUR 1.53 per share (unrealised loss) in 2003, while a decrease by EUR 0.69 (unrealised loss)
had been recorded for the year 2002.
The net asset value per share (after appropriation of dividend) amounts to EUR 103.85 as at 31.12.2003 against
EUR 104.43 as at 31.12.2002.
CONSOLIDATED BALANCE SHEET (1)
| x 1,000 EUR | 31.12.2003 | 31.12.2002 | | ASSETS | | | | Intangible fixed assets | 306 | 118 | | Tangible fixed assets* | 1,856,171 | 1,787,036 | | Financial assets | 336 | 1,047 | | Amounts receivable after one year | 159,675 | 144,295 | | Amounts receivable within one year | 23,358 | 24,216 | | Investments | 78 | 4,200 | | Cash at bank and in hand | 34 | 860 | | Deferred charges and accrued income | 11,745 | 15,869 | | Total Assets | 2,051,703 | 1,977,641 | | LIABILITIES | | | | Capital and reserves - group share | 920,623 | 851,127 | | Minority interests | 77,670 | 74,095 | | Provisions for liabilities and charges | 37,282 | 60,862 | | Amounts payable after one year | 457,735 | 508,117 | | Financial debts** | 422,598 | 479,876 | | Other amounts payable | 35,137 | 28,241 | | Amounts payable within one year | 520,834 | 453,593 | | Financial debts** | 431,673 | 373,612 | | Other amounts payable | 89,161 | 79,981 | | Accrued charges and deferred income | 37,559 | 29,847 | | Total Liabilities | 2,051,703 | 1,977,641 | | Ratio of debt to total Assets | 47.70% | 48.63% |
* The properties are entered in the accounts at their estimated investment value.
** Total committed credit lines amounted to EUR 842,4 million at the end of 2003, with maturities almost evenly spread
over 2004-2008.
CONSOLIDATED INCOME STATEMENT (1)
| x 1,000 EUR | 31.12.2003 | 31.12.2002 | | A. NET CURRENT RESULT | | | | Rents | 127,790 | 116,740 | | Taxes and charges not recovered | -1,240 | -1,448 | | Other operating income | 1,208 | 633 | | Net rents | 127,758 | 115,925 | | Direct property operating costs | -10,566 | -10,459 | | Indirect property operating costs | -7,183 | -8,684 | | Property result | 110,009 | 96,782 | | Corporate operating costs | -3,646 | -3,867 | | Operating result | 106,363 | 92,915 | | Financial income | 9,677 | 10,942 | | Financial charges | -37,630 | -38,867 | | Taxes | -768 | -401 | | Net current result | 77,642 | 64,589 | | Minority interests | 3,934 | 3,831 | | Group share | 73,708 | 60,758 | | B. RESULT ON THE PORTFOLIO | | | | Realised gain or loss on disposal of properties | 659 | 5,817 | | Reversal of changes in market | -471 | -5,060 | | value previously recorded on elements | | | | of the portfolio disposed | | | | of during the financial year | | | | Variation in market value of | -13,584 | -4,884 | | elements of the portfolio, net of exit tax | | | | Result on the portfolio | -13,396 | -4,127 | | NET RESULT FOR THE PERIOD - group share | 60,312 | 56,631 | | Average number of shares with rights | 8,864,822 | 7,128,283 | | to share in the result for the period | | | | Number of shares at the end of the period | 8,864,822 | 8,150,017 | | Net current result per share - group share (in EUR) | 8.31 | 8.52 | | Net result per share - group share (in EUR) | 6.8 | 7.94 |
(1) The statutory auditors have confirmed that their audit procedures, which have been substantially completed, have not
revealed material adjustments, which would have to be made to the accounting information disclosed in this press release.
| NET ASSET PER SHARE (in EUR) | 31.12.2003 | 31.12.2002 | | Before distribution of the year dividend | 111.1 | 111.43 | | After distribution of the year dividend | 103.85 | 104.43 |
A. Comments on the consolidated income statement as at 31.12.2003
The net rents increased by 10.2% compared to 31.12.2002. This is mainly due to the acquisition of certain
buildings of Dexia Group during the last quarter of 2002 but also thanks to the maintenance of a good
occupancy level at nearly 95% (94.68%), still clearly higher than the average occupancy rate on the Brussels
office market.
The direct operating costs are adequately controlled. An increase of 1.0% is noticed, while the occupancy rate
globally decreased by almost 2% in 2003. In theory, such a decrease in occupancy rate should generate an
increase of almost 20% in direct property costs in 2003 compared to 2002. This shows that Cofinimmo
perceives the results of its strong commercial approach. In percent of net rents, the direct operating costs went
from 9.0% in 2002 to 8.3% in 2003.
The indirect property operating costs and the corporate operating costs have sensitively decreased
(-13.7%) compared to 2002. Cofinimmo has thus proved its aptitude to generate economies, which partly relate
to a scale effect.
The operating margin amounts to 83.25%, which represent an increase of 3.25% compared to Cofinimmo's
objective, against 80.15% in 2002.
The decrease in financial costs (-3.2%) shows that Cofinimmo continues to take advantage of low interest rates
in 2003. The average interest rate of loans, including credit margins and amortisation costs for cover
instruments, went from 4.13% in 2002 to 4.04% in 2003.
The financial income chiefly comprises interests received on the long-term lease receivables for the property
Belliard I-II.
The net current result per share as at 31.12.2003 amounts to EUR 8.31, a decrease of EUR 0.21 per share
(-2.5%) compared to 31.12.2002.
B. Comments on the consolidated balance sheet as at 31.12.2003
The market value of the property portfolio (estimated investment value) reaches EUR 1,855.66 million* as at
31.12.2003, as compared to EUR 1,786.53 million as at 31.12.2002, or an increase of more than 3%, taking into
account the investments and disposals of the year (see below) but not the market value variation.
The net asset value per share amounts to EUR 103.85 as at 31.12.2003 against EUR 104.43 as at 31.12.2002,
which is a depreciation of 0.56%.
The decrease of provisions is mainly due to their consecutive use following the renovation of Belliard I-II.
The debt ratio (financial and others) to total assets equals 47.70%, against 48.63% as at 31.12.2002. The
investment capacity amounts to nearly EUR 95 million.
* In the theoretical hypothesis of liquidation by simple sale, which is contrary to the principle of going concern, the value
of the portfolio after deducting the registration rights is EUR 1,659.90 million.
2. Real estate portfolio
As at 31.12.2003, the real estate portfolio comprised 135 properties, totalising 821,000m² rental area above the
ground. According to Cofinimmo strategy, the bulk of this portfolio (98%) is made up of offices, which are
chiefly located in Brussels (90%).
| Evolution of the portfolio (x 1,000,000 EUR) | 31.12.2003 | 31.12.2002 | | Estimated investment value of the total portfolio | 1,855.66 | 1,786.53 | | Projects and development sites | -103.15 | -18.45 | | Total marketable property portfolio | 1,752.51 | 1,768.08 | | Contractual rents | 128.67 | 130.9 | | Yield on marketable property portfolio | 7.34% | 7.40% | | Contractual rents + estimated | 135.9 | 135.43 | | rental value on unlet space | | | | Yield on the portfolio as if 100% rented | 7.75% | 7.66% | | Occupancy rate | 94.68% | 96.65% |
The occupancy rate is slightly lower than 95%, which represents a decrease of 2% since 31.12.2002. The
average of the Brussels market amounts to 90.1% (source: Cushman Wakefield).
3. Acquisition of 33% of North Galaxy SA
On 08.12.2003, Cofinimmo SA has signed an agreement with Atenor Group SA, Compagnie De Promotion SA
and Dexia Bank Belgium SA regarding the acquisition of 25% of the shares, with successive options for the
balance, in North Galaxy SA, the company that develops the project of the same name located in the 'North
Space' in Brussels. The acquisition price amounted to EUR 20.0 million. On 05.01.2004, Cofinimmo has
acquired an additional 8% of the shares of North Galaxy SA, for an amount of EUR 6.4 million, which brings
its total participating interest to 33%. The remaining shares are held by Compagnie De Promotion SA (47 %),
Atenor Group (14%) and Dexia Bank Belgium (6%).
This building is currently in construction and will offer 105,500m² of office space, 13,500m² of archives and
684 inside parking spaces.
On 17.02.2003, an 18-year lease contract was signed with the Régie des Bâtiments (Belgian Federal
Government). This lease starts on 01.12.2004 and relates to nearly 72% of the surfaces. The Federal Public
Service of the Ministry of Finance will take residence there. In December 2003, the Council of Ministers has
approved to let the remaining surfaces for an identical term.
The shareholders have agreed to exercise a joint control on the company, which is subject to a proportional
consolidation in Cofinimmo's consolidated financial statements as at 31.12.2003.
Cofinimmo has a call option on the remainder of the shares and has granted a put option to the other
shareholders, which can be exercised when the building is completed, but not later than 30.12.2005.
The study of financing modalities to be realised in 2005 is in the process of being finalised and will be
explained in Cofinimmo's Annual Report for the year 2003.
4. Other investments and disposals
On 11.04.2003, Cofinimmo acquired 75.1% of the shares of SA Immo Loi, owner of an office block (5,800m²)
situated at Rue de la Loi 227 close to Rond-Point Schuman, for an amount of EUR 10.78 million. On
02.01.2004, the seller exercised his option to sell the balance of the shares for an amount of EUR 3.57 million.
Immo Loi SA is included in the consolidation scope of Cofinimmo since 01.04.2003, applying the method of
full consolidation. Currently, the building owned by Immo Loi SA is nearly 100% occupied, its main tenant
being Bank Santander Central Hispano.
During the month of April 2003, Cofinimmo proceeded with the acquisition of 92.08% of the building situated
at Rue Archimède 25 in Brussels (or 100% of the office surface) close to Rond-Point Schuman, partly by
contribution in kind against the issue of 45,938 new shares at the net asset value of 31.03.2003 and entitled to
share in the results as of 01.01.2003, and partly through a purchase. It concerns an office building currently in
redevelopment. At the end of the renovation works, foreseen for the 2 nd quarter of 2005, the property will offer
5,000m² office space.
On 30.07.2003, Cofinimmo has acquired 100% of the shares of Longview Holdings bv, who owns 2 buildings
located on Avenue des Arts 47-49 (6,800m² of offices) and Rue du Commerce 44 (3,200m²) in 1000 Brussels.
The estimated value of the buildings amounts to EUR 17.25 million. Both buildings, situated in the Leopold
District benefit from an excellent location. The building Arts 47-49 is already rented until 2017 to Federal
Planning Bureau, an agency of the Belgian Federal Government.
These 3 acquisitions enabled the company to increase its presence in the Leopold District even more.
On 03.09.2003, Cofinimmo acquired Espace Sainte Catherine SA, owner of the building ‘Centre Albert',
located Place Albert Ier, 4 in 6000 Charleroi. This building comprises office space totalling 20,500m² and is let
to the Régie des Bâtiments under a 25-year lease contract ending on 31.12.2027. In accordance with the lease
contract, the building is to be completely renovated. It is foreseen that the works will end on 01.01.2005.
The purchase price of the shares will depend on the value of the building after renovation, which is estimated at
about EUR 30 to EUR 40 million (investment value), depending amongst others of the obtained rent. The initial
rental yield from this investment will be between 7.5% and 8.0%.
Transfer of ownership and payment, by Cofinimmo, of the shares in the company Espace Sainte Catherine SA
will only take place upon acceptance of the works by the Régie des Bâtiments.
During the 3d quarter of 2003, Cofinimmo proceeded with the sale of a building located on rue de Trèves
92-98, for an amount of EUR 11.78 million. This sale to the State of Hungary has created a gain of EUR 0.55
million compared to the last investment value.
This transaction brings the total amount of sales undertaken in 2003 to EUR 17.48 million. These sales are
consistent with Cofinimmo's strategy to refocus its investment portfolio with a view to maximising its value.
The prices obtained confirm the correct valuation of the properties in the balance sheet.
5. Distribution of dividend for the year 2003
It will be proposed at the Ordinary General Shareholders' Meeting of 30.04.2004 to distribute a gross dividend
for the year 2003 of EUR 7.25 per share, up 3.6% compared to the year 2002 (EUR 7.00). After deducting 15%
withholding taxes, the dividend for 2003 comes to EUR 6.16 per share, compared to EUR 5.95 for 2002. The
dividend is payable from 10.05.2004 on submission of coupon No 11.
6. Perspectives 2004-2005
Considering the nature of the investments realised in 2003 (see above) and the ongoing difficult context in
which the rental market will evolve in 2004, Cofinimmo expects to register a decline in its operational activity
in 2004. The first net current result forecast for 2004 is slightly below EUR 8.00 per share, representing a
decrease of about 5% compared to 2003. However, the objective for the operational margin (80%) should be
achieved.
The year 2004 will be a more challenging year, but as of 2005 she should retrieve the net current result level of
2002 and 2003, taking into account the completion of its investments committed in 2003 and a slight
improvement of the office rental market.
Cofinimmo will continue to apply its current strategy: improve the quality of its portfolio, increase its market
share and maximise the shareholders' return.
Independent and self managed property company
Focused on offices in Brussels and Antwerp.
The largest in Belgium, with a portfolio of 821,000m²
and a market capitalisation of EUR 1,010 million.
Cofinimmo is a SICAFI, similar to US REITs
For more information:
Laure le Hardy de Beaulieu - Investor Relations Officer
Tel: +32(2) 373.00.09 - llehardy@cofinimmo.be
Séverine Van der Schueren
Corporate Communication Officer
Tel: +32(2) 373.00.04 - svanderschueren@cofinimmo.be
(C) Companynews
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