Leasinvest Real Estate SCA: Interim statement of the manager over the third quarter of the financial year 2013 (01/07/13-30/09/13) and the first nine months of 2013

Issue of bonds

On 27 September Leasinvest Real Estate raised, already after one day, the foreseen maximum amount of € 75 million through the issue of a public bond. The Joint Lead Managers received subscriptions for a higher amount, subject to which the subscriptions were proportionally reduced.
These bonds have been issued and have been admitted for trading on the regulated market of NYSE Euronext Brussels on 9 October 2013 and offer an annual gross coupon of 3.75%. This represents a gross actuarial yield of 3.399% on an annual basis and the net annual actuarial yield is 2.472% (after deduction of 25% withholding tax).
The net proceeds of this issue have been used for concretising the company's strategy and more specifically to fund its growth and the further diversification of the real estate portfolio, as well as to diversify its funding sources, and moreover to ensure an extension of the average duration of debt.

Building permit for the building 'Royal 20' located Boulevard Royal in the Grand Duchy of Luxembourg

On 09 October 2013 the building permit for the development of a new office project located Boulevard Royal in the City of Luxembourg was obtained. The demolition works of the former "Hotel Rix" have started and the completion of the building is foreseen in the spring of 2015. On this top location a new office building of approximately 5.000 m², named "Royal20", that will meet high energy performance standards, will be realised, and it will be designed by the renowned French architect firm Agences Elisabeth & Christian de Portzamparc.

Dividend Retail Estates

At the beginning of July 2013 the annual dividend from the participation in Retail Estates over the financial year 2012/2013 for € 1.7 million (€ 0.34 per share) was received. This dividend has been included in the results per 30 September 2013.

Divestment office building Delta Business Park in Kontich

On 13 September 2013 the office building of the Delta Business Park located at Kontichsesteenweg in the technology park Satenrozen in Kontich was sold for an amount of € 2.2 million, which nearly reflected the fair value.

2. Important events after the closing of the period 01/07/13- 30/09/13

Divestment of logistics building rue Lusambo in Forest

On 9 October 2013 the semi-industrial building, consisting of offices and storage, located at rue Lusambo in Forest was sold, together with the underlying long lease of the BRDA (Brussels Regional Development Agency) for an amount of € 1 million, reflecting its fair value.

3. Key figures

Key figures on 30/09/13 and over the third quarter of 2013

Key figures real estate portfolio (1)	30/09/13	30/09/12	31/12/12
Fair value real estate portfolio (€ 1,000)  (2)	694,006	600,346	617,763
Fair value investment properties incl. stake in Retail Estates (€ 1,000)  (2)	733,378	634,941	649,254
Investment value investment properties (€ 1,000)  (3)	707,053	614,008	633,301
Rental yield FV (4) (5)	7.28%	7.34%	7.30%
Rental yield IV (4) (5)	7,15%	7.16%	7.14%
Occupancy rate (5) (6)	96.35%	94.45%	94.9%
Average duration leases (years)	4.74	4.70	4.9

(1) The real estate portfolio comprises the buildings in operation, the development projects, the assets held for sale and the buildings presented under financial leasing according to 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 30/06/13.
(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 on the basis of the number of shares at the reporting date, namely for 2013: 4,938,870, following the public capital increase at the end of June 2013, and 4,012,832 for 2012.

	30/09/13	30/09/12	31/12/12
NAV group share (€ 1,000)	328,251	250,684	256,005
NAV group share per share	66.5	62.5	63.8
NAV group share per share IV	69.1	65.9	67.7
NAV group share per share EPRA	70.4	68.5	70.6
Total assets (€ 1,000)	754,317	648,889	667,026
Financial debt	388,015	356,642	364,409
Financial debt ratio (in conformity with RD 7/12/2010)	52.73%	56.12%	56.19%
Average duration credit lines (years)	3.17	2.89	2.64
Average financing cost (excl. fair value changes financial instruments)	3.24%	3.12%	3.04%
Average duration hedges (years)	5.63	5.11	5.43
	30/09/13	30/09/12	31/12/12
Rental income (€ 1,000)	32,915	27,446	37,959
Net rental result per share	6.66	6.84	9.46
Net current result (€ 1,000) (1)	18,598	15,302	21,113
Net current result per share	3.76	3.81	5.26
Net result group share (€ 1,000)	21,918	14,005	20,508
Net result group share per share	4.44	3.49	5.11
Global result group share (€ 1,000)	30,224	4,425	9,744
Global result group share per share	6.12	1.10	2.43

(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 of Leasinvest Real Estate over the first nine months of 2013 has risen by 20% (+ € 5,469 thousand) and amounts to € 32,915 thousand in comparison with € 27,446 thousand over the first nine months of 2012.

This evolution is mainly the consequence of the investments realized in September 2012 in the Knauf Shopping Center Schmiede, the State Archives in Bruges, and of the contribution of 1 month of rental income from Knauf Shopping Center Pommerloch, or € 4,388 thousand in total, compensated by a lower income following the realized sales (-€ 971 thousand).

Moreover, the rental result was positively influenced for € 967 thousand within the framework of an early break of a rental contract through an amicable settlement of a rental contract. If we make abstraction of this settlement, the rental income rises by 16%.

At constant portfolio the rental income increases by 5.4% or € 956 thousand in comparison with the same period of the previous year.

The rental income over the third quarter of 2013 has increased by 25% compared to the rental income over the third quarter of the previous financial year, and amounts to € 12,087 thousand in comparison with € 9,651 thousand.

The average duration of the rental contracts has increased to 4.74 years compared to end-June 2013 (4.36 years) and amounts currently to nearly 4.8 years in Luxembourg.

The gross rental yields are comparable with those at the end of 2012 and amount to 7.28% (end 2012: 7.30%) based on fair value and to 7.15% (end 2012: 7.14%) based on the investment value.

The additional rental contracts in the business center The Crescent and the Brixton Business Park, our proactive asset management and the investment in the Knauf Shopping Center in Pommerloch have contributed to a higher occupancy rate amounting to 96.35% at the end of September 2013, in comparison with 95.92% at the end of June 2013 and with 94.9% end-2012.

The fair value of the real estate portfolio stands at € 694 million at the end of September 2013 compared to € 598 million end-June 2013 and to € 617.8 million end-December 2012. The increase is the consequence of the acquisition of the economic property of the shopping center Knauf Pommerloch in the third quarter of 2013 (€ 96.5 million). This investment has been partially funded with the resources from the public capital increase realized end-June.
The global direct and indirect real estate portfolio (including the participation in Retail Estates SA) amounts to € 733 million at the end of September 2013.

Due to the realized transactions the offices part further decreases to 38% of the direct portfolio, of which 20% is located in the Grand Duchy of Luxembourg and 18% in Belgium, and the retail part rises to 40%. Also, the part of the direct real estate portfolio in the Grand Duchy of Luxembourg rose further (58%) compared to Belgium (42%).

The financial results over the first nine months were further positively influenced by the dividend received from Retail Estates for € 1.7 million (€ 1.1 million the previous year) and the positive changes in fair value of the hedges (€ 842 thousand) compared to negative changes over the first nine months of the previous year (€ -1.1 million).

The net current result over the first nine months amounts to € 18.6 million (or € 3.76 per share), in comparison with € 15.3 million (or € 3.81 per share based on the number of shares on the reporting date under review) for the same period of the previous year (+22%). The increase of the net current result is explained by the rise of the rental income partially compensated by higher financial charges following the investments.

The net result over the first nine months strongly rises and amounts to € 21.9 million (or € 4.44 per share), in comparison with € 14 million (or € 3.49 per share based on the number of shares on the reporting date under review) for the same period of the previous year (+56%).

At the end of the third quarter of the financial year 2013 shareholders' equity, group share (based on the fair value of the investment properties) amounts to € 328 million (end 2012: € 256 million) and to € 318 million end-June 2013. The further growth is to be attributed to the evolution of the global result which amounts to € 30 million at the end of September 2013 in comparison with € 20 million end-June 2013. (September 2012: € 4,4 million).

End-September 2013 the net asset value per share amounts to € 66.5 (end 2012: € 63.8). End-September 2013 the share price of the Leasinvest Real Estate share closed at € 70.5 or 6% higher than the net asset value; if we take into account the pro rata dividend of € 2.14, the premium amounts to 9.5%.

The net asset value per share excl. the impact of fair value adjustments on financial derivatives (EPRA) amounts to € 70.4 per share and is comparable to end 2012, or € 70.6 per share.

Following the net investments realised in the third quarter, the debt ratio increases in comparison with end-June 2013, and amounts to 52.73%. Following the capital increase and the divestments realized in the first half-year of 2013, the debt ratio is still lower than at the end of 2012, which was 56.19%, and is consequently within  our objective range of 50%-55% , standing at 52.73% at the end of September 2013.

In the third quarter of 2013, besides the successful placement of a retail bond for € 75 million, a supplementary credit with an additional bank was also concluded for € 15 million till 2018, and consequently the available funding resources have increased to € 508 million. At the end of September 2013 the financial debt amounts to € 388 million, of which € 278 million of credit lines are withdrawn and € 110 million of commercial paper has been issued.

4. Outlook

In 2013 Leasinvest Real Estate has largely concretized its strategic reorientation. Except for unforeseen circumstances and unexpected capital losses on its current real estate portfolio and hedges, the company expects to realize a better net result and a better net current result than in 2012.

Subject to the approval by the general meeting of shareholders the gross dividend of € 4.45 for 2013, for the shares existing before the capital increase, will be maintained based on this outlook.^[1]

14 November 2013,
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
Real estate investment trust (sicafi/vastgoedbevak) Leasinvest Real Estate SCA mainly invests in high quality and well-located shops, offices and logistics buildings in the Grand Duchy of Luxembourg and in Belgium. The consolidated real estate portfolio comprises 53 buildings and represents a total surface of 424,858 m².
The sicafi is listed on Euronext Brussels and has a market capitalization of approximately € 360 million (value 12 November 2013).