Leasinvest Real Estate: Interim statement of the manager on the third quarter of the financial year 2014 (01/07/14-30/09/14) and the first nine months of 2014
- Regulated press release
- Recurring rental income rises by 17%
- Net current result increases to € 20.8 million, or by nearly 12%
- Recurring net result higher than last year
- Outlook is confirmed
1. Activity report period 01/07/14- 30/09/14
In Luxembourg there are concrete commercialization prospects for the building Royal 20 located Boulevard Royal. For the Montimmo building at avenue Monterey, also located in Luxembourg, the lease with the current tenant has been successfully extended for a fixed 9-year period.
In Belgium the prospects for the partial commercialization of the logistics building Canal Logistics are positive.
2. Important events after the closing of the period 01/07/14- 30/09/14
Approval of the change of status into a public regulated real estate company (RREC)
The FSMA (Financial Services and Markets Authority) has formally confirmed to the Company on 1 October 2014 that it meets all conditions of the Law of 12 May 2014 with regard to regulated real estate companies (the "RREC Law") to obtain a licence as a public regulated real estate company ("public RREC"), under certain conditions precedent, and if the "indirect real estate" is brought below the legal threshold of 20% of the consolidated assets of the Company[1].
The Company has brought its "indirect real estate" in the meanwhile to below the legal threshold of 20% of the consolidated assets of the Company. On 4 November 2014 the FSMA has granted Leasinvest Real Estate ("LRE") a licence as a public RREC under certain conditions precedent.
The Extraordinary General Meeting of shareholders of LRE ("EGM") held on 6 November 2014, has unanimously approved the change of status from a public sicafi into a public RREC, in accordance with the RREC Law.
LRE is pleased with the approval of this new status by its shareholders. This will allow LRE to continue its current activities in the interest of the Company, its shareholders and other stakeholders, and to consequently position itself as a REIT (Real Estate Investment Trust) in order to optimise its visibility and its understanding by international investors.
Leasinvest Real Estate acquires a high-quality retail portfolio in Switzerland and reinforces so its geographic diversification toward a third country, besides the Grand Duchy of Luxembourg and Belgium
On 7 November 2014 Leasinvest Real Estate has acquired, via its 100% Luxembourg subsidiary Leasinvest Immo Lux SA SICAV-SIF, a high-quality real estate portfolio in Switzerland.
The acquired retail portfolio consists of 3 very well located retail buildings in the Canton of Vaud in the West French-speaking part of Switzerland. Two commercial centres are located respectively in the well developed retail park areas of Etoy (Littoral Park) and Villeneuve (Pré Neuf). The third asset is located on the main retail street of Yverdon-les-Bains along the Lake of Neuchâtel, the second most important city in the Canton of Vaud.
These 3 buildings were acquired for a price of 45.6 million CHF (including registration duties and costs), or approximately € 37.8 million, which is lower than the estimated fair value. The total portfolio has a surface area of 11,649 m² and is entirely let to international retailers such as Fust (part of the second largest Swiss retailer Coop group), C&A, Casa, JYSK, Maxi Zoo and Heytens.
Through this acquisition, the retail part in the consolidated real estate portfolio of Leasinvest Real Estate further increases to 46% (offices 34%, logistics and semi-industrial 20%). The geographical breakdown of the portfolio is as follows as from now on: Grand Duchy of Luxembourg: 58%, Belgium: 37%, Switzerland: 5%.
3. Key figures
Key figures as at 30/09/14 and for the third quarter of 2014
| Key figures real estate portfolio (1) | 30/09/2014 | 30/09/2013 | 31/12/2013 |
| Fair value real estate portfolio (€ 1,000) (2) | 709,413 | 694,006 | 718,234 |
| Fair value real estate portfolio, incl. participation Retail Estates (€ 1,000) (2) | 754,253 | 733,378 | 759,290 |
| Investment value real estate portfolio (€ 1,000) (3) | 722,630 | 707,053 | 731,850 |
| Rental yield based on fair value (4) (5) | 7.24% | 7.28% | 7.31% |
| Rental yield based on investment value (4) (5) | 7.11% | 7.15% | 7.18% |
| Occupancy rate (5) (6) | 95.82% | 96.35% | 96.90% |
| Average duration of leases (years) | 4.88 | 4.74 | 5.23 |
(1) he real estate portfolio comprises the buildings in operation, the development projects, the assets held for sale, as well as the buildings presented as financial leasing under IFRS.
(2) Fair value: the investment value as defined by an independent real estate expert and of which the transfer rights have been deducted. The fair value is the accounting value under IFRS. The fair value of Retail Estates has been defined based on the share price on 30/09/14.
(3) The investment value is the value as defined by an independent real estate expert and of which the transfer rights have not yet been deducted.
(4) Fair value and investment value estimated by real estate experts Cushman & Wakefield / Winssinger and Associates / Stadim.
(5) For the calculation of the rental yield and the occupancy rate only the buildings in operation are taken into account, excluding the assets held for sale.
(6) The occupancy rate has been calculated based on the estimated rental value.
The data per share are calculated based on the number of shares at the reporting date, or 4,938,870, following the public capital increase of end-June 2013.
| Key figures of the balance sheet | 30/09/2014 | 30/09/2013 | 31/12/2013 |
| Net asset value group share (€ 1,000) | 326,269 | 328,251 | 335,334 |
| Net asset value group share per share | 66.1 | 66.5 | 67.9 |
| Net asset value group share per share based on investment value | 68.7 | 69.1 | 70.7 |
| Net asset value group share per share < EPRA | 72.2 | 70.4 | 71.5 |
| Total assets (€ 1.000) | 781,483 | 754,317 | 777,867 |
| Financial debt | 407,017 | 388,015 | 407,602 |
| Financial debt ratio (pursuant RD 7/12/2010) | 53.18% | 52.73% | 53.53% |
| Average duration credit lines (years) | 3.16 | 3.17 | 3.7 |
| Average funding cost (excl. fair value changes hedges) | 3.66% | 3.24% | 3.29% |
| Average duration hedges (years) | 5.63 | 5.63 | 5.63 |
| Key figures of the income statement | 30/09/2014 | 30/09/2013 | 31/12/2013 |
| Rental income (€ 1,000) | 37,607 | 32,915 | 45,186 |
| Net rental result per share | 7.61 | 6.66 | 9.15 |
| Net current result (€ 1,000) (1) | 20,783 | 18,598 | 24,128 |
| Net current result per share | 4.21 | 3.76 | 4.89 |
| Net result group share (€ 1,000) | 21,303 | 21,918 | 26,928 |
| Net result group share per share | 4.31 | 4.44 | 5.45 |
| Global result group share (€ 1,000) | 11,183 | 30,224 | 37,305 |
| Global result group share per share | 2.26 | 6.12 | 7.55 |
(1) The net current result consists of the net result excluding the portfolio result and the changes in fair value of the ineffective hedges.
The rental income has risen by 14% (+ € 4 692 thousand) and amounts to € 37 607 thousand in comparison with € 32 915 thousand for the same period in 2013.
The rental income in the third quarter of 2013 was positively influenced by € 967 thousand settlement with a tenant for the early termination of its lease. If we make abstraction of this settlement, the rental income increases by 17% in comparison with the same period of last year.
This evolution results mainly from the investments realized in September and December 2013 in respectively the Knauf Shopping Center Pommerloch and in the building located at Bertrange, let by Hornbach, or a total of € 5.7 million, compensated by lower income due to the realized sales (€ -1.2 million).
But a like-for-like growth was also recorded in the rental income, that increases, at constant portfolio, by 4% or € 1.2 million (mainly Knauf Shopping center in Schmiede & The Crescent in Anderlecht) in comparison with the same period of last year (excl. rental rebates).
The rental income over the third quarter of 2014 has increased by 2.5% compared to the rental income over the third quarter of the previous financial year, and amounts to € 12 384 thousand in comparison with € 12 087 thousand.
If we make abstraction of the early settlement mentioned above, the rental increase increases by 11% in comparison with the same period of last year.
The average duration of the rental contracts has slightly decreased to 4.88 years in comparison with 5.23 at the end of 2013.
The gross rental yield has slightly diminished in comparison with the end of 2013 and amounts to 7.24% (end 2013: 7.31%) based on the fair value, and to 7.11% (end 2013: 7.18%) based on the investment value, which is also the consequence of a slight decrease of the occupancy rate (95.82% end September 2014, end 2013: 96.90%).
The fair value of the direct real estate portfolio amounts to € 709.4 million end September 2014 compared to € 718 million end December 2013. The decrease is explained by the sale of the building located avenue Louise 66 (Brussels) in the first quarter of 2014 (€ -8.2 million) and the sale of the logistics building located in Meer (€ -1.7 million).
The operating result increases by 13% and amounts to € 31 million end September 2014 in comparison with € 27.5 million end September 2013.
The financial result decreases by € 4 million and amounts to € - 9 506 thousand end September 2014 in comparison with € -5 497 thousand end September 2013. This evolution is explained by a higher average funding cost end September 2014 (3.66%) in comparison with end September 2013 (3.24%), which has an impact of € - 1.3 million, a higher debt based on fixed interest rates concluded for the funding of the investments realized in 2013 or an impact of € - 1.6 million, the negative evolution of the fair value of the financial assets and liabilities or an impact of € - 1.7 million, compensated by a higher dividend received from Retail Estates or € + 0.6 million.
End September 2014 the debt ratio amounts to 53.18% in comparison with 53.53% end December 2013. The debt ratio fits within the 50%-55% pre-defined limit at the end of September 2014.
The net current result over the first 9 months amounts to € 20.8 million (or € 4.21 per share), in comparison with a net current result of € 18.6 million (or € 3.76 per share) for the same period of last year. This increase is mainly the consequence of a higher rental income in comparison with the same period of last year, compensated by higher financial charges.
The net result, group share, amounts to € 21.3 million end September 2014 compared to € 21.9 million in comparison with the same period of last year. In terms of net result per share, this results in € 4.31 end September 2014 compared to € 4.44 end September 2013. This slight decrease is mainly the consequence of a non-recurring settlement payment (see above) received in September 2013 of approximately € 1 million. The corrected net result, group share, would amount to € 20.9 million end September 2013, which implies a slight increase end September 2014 of € 0.4 million compared to the same period of last year.
The net result was also influenced by the negative impact of the evolution of the fair value of the financial assets and liabilities that amounts to € -880 thousand end September 2014, in comparison with € 842 thousand end September 2013.
End September 2014 shareholders' equity, group share (based on the fair value of the investment properties) amounts to € 326.3 million (31/12/13: € 335.3 million) or € 66.1 per share (2013: € 67.9).
The decrease of shareholders' equity in comparison with end 2013 is due to the dividend (€ - 20.2 million), compensated by the evolution of the global result, standing at € 11.2 million end September 2014.
End September 2014 the net asset value per share amounts to € 66.1 (30/09/13: € 66.5). The closing price of the share amounted to € 80.90, or 22.5 % higher than the net asset value. The net asset value per share excl. the influence of the fair value adjustments on financial instruments (EPRA) increases and amounts to € 72.2 end September 2014 in comparison with € 71.9 end September 2013.
On 29 October Leasinvest Real Estate, through its 100% subsidiary Leasinvest Immo Lux, has acquired all the shares of S. Invest, holding in its turn all the shares of Porte des Ardennes Schmiede SA, issuer of the real estate certificate of the shopping center Knauf Schmiede.
4. Outlook
It is expected that unless exceptional circumstances and unforeseen capital losses on the existing real estate portfolio and interest rate hedges a better net result and better net current result will be achieved than in 2013.
17 November 2014,
The manager
For more information, contact:
Leasinvest Real Estate
Jean-Louis Appelmans
CEO
T: +32 3 238 98 77
E: jeanlouis.appelmans@leasinvest.be
Leasinvest Real Estate SCA
Regulated real estate company (B-REIT) Leasinvest Real Estate SCA invests in high quality and well-located retail buildings, offices and logistics buildings in the Grand Duchy of Luxembourg, in Belgium and in Switzerland. At present the real estate portfolio of Leasinvest comprises 35 sites of which 18 are located in the Grand Duchy of Luxembourg, 14 in Belgium and 3 in Switzerland, with a total real estate value of € 746 million.
The RREC is listed on Euronext Brussels and has a market capitalization of approximately € 431 million (value 14 November 2014).
[1] For more information we refer to the Information memorandum and the Press release of 3 October 2014 of the Company with regard to the "proposal for amendment of the status into a Public Regulated Real Estate Company" as published on the website of the Company (www.leasinvest.be).
