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“Cofinimmo announces having sold today to BNP Paribas Fortis, for a total amount of € 199.6 million, 96% of the future indexed lease receivables on the office buildings Egmont I and Egmont II, as well as a receivable for the works realised in these buildings for the account of the occupant. Cofinimmo retains however 100% of the lease payments pertaining to the years 2009 and 2010, in order not to affect their recurrent cash flow income. The 96% receivables which are disposed of therefore only relate to the year 2011 and beyond.
Subsequent to this disposal, Cofinimmo’s consolidated debt ratio, as laid down by the regulation governing Sicafis1, is reduced by 3.08 percentage points. As a reminder, at 30.06.2009 this ratio stood at 52.94%. Hence, if this disposal would have been carried out before the end of the first halfyear, it would have reached 49.86%.
This transaction tallies with Cofinimmo’s financing policy and allows the company to efficiently reinforce its capital structure and to balance out its sources and applications of funds. Indeed, the proceeds resulting from this disposal, and those expected to be recorded from ongoing office disposals approaching € 40 million, fully cover Cofinimmo’s investment commitments for the second
half year of 2009 (€ 46 million) and the entire year 2010 (€ 193 million)2. Cofinimmo currently does not have any other significant investment commitments beyond this timeframe.
This disposal also allows the company, all other things being equal, to continue its strategy focused on a low risk and profitable portfolio growth, as well as the protection of the net asset value per share. Other financial means will only be explored to the extent and insofar as new projects would justify doing so.
1. Total debt/Total assets.
2. Of this program, € 138 million is dedicated to office properties. It concerns in particular the buildings West]End (€ 26 million) in the Brussels periphery, City Link nearby the Antwerp Singel (€ 64 million), AMCA – Avenue Building in the Antwerp harbour neighbourhood (€ 38 million), as well as the renovation of the Square de Meeûs 23 building in the Brussels Leopold district (€ 10 million).
The second part of the investment program relates to the construction of new nursing homes and the extension of existing already managed nursing homes. It totalises € 101 million. The entire portfolio of newly built and extended nursing homes is already let for 27 years. The new office properties are let progressively; the West]End complex being already let to a 60% extent.
The outcome of this disposal is a gain of € 12.2 million whichwill be recognized in the 2009 3rd quarter results as a non]recurring financial item. It chiefly stems from the difference between the interest rates applied, on the one hand by the buyer of the receivables (5.52%), and on the other hand by the real estate expert (6.00%), when valorising the rents; the first being favourably impacted by the current low real long term interest rates on the market.
The 2009 dividend forecast, as anticipated by the Board of Directors, remains unchanged.
The Egmont I and Egmont II complex, located rue des Petits Carmes in the Brussels centre, accommodates the Federal Public Service of Foreign Affairs, Foreign Trade and Development Aid.
Cofinimmo acquired the Egmont I building and the land intended for the imposed construction of the Egmont II building (realised in 2004/2005) on 14.05.2004 in an auction. Both buildings are let to the Buildings Agency (Régie des Bâtiments, Federal State), for the account of the occupant, until 31.05.2031. The annual passing rent at 30.06.2009 stands at € 14.6 million.
At 30.06.2009, this office complex appeared on Cofinimmo’s balance sheet for a fair value of € 265.8 million. After the disposal of the lease receivables, this value is brought to € 85.9 million, of which € 58.1 million being apportioned to the residual fair value of the building and € 27.8 million to the unsold lease receivables.
Analogous to the other buildings of which Cofinimmo sold the lease receivables but maintained ownership, the company will account in its income statement: in the current result, as of 2011, under the caption “Writeback of lease payments sold and discounted (non]cash)”: the progressive reconstitution, on the balance sheet, of the sold rents, so as to reflect the full value of the building at the end of the lease contract; and in the result on portfolio, under the caption “Changes in fair value of investment properties”: the positive or negative change in the full value of the building, according to the expert, as is the case for any other building of which Cofinimmo has ownership.
Cofinimmo is the foremost listed Belgian real estate company specialising in rental property. The company owns a property portfolio worth over € 3 billion, representing a total area of 1,600,000m². Its main investment segments are office property and care homes. Cofinimmo is an independent company, which manages its properties in]house. It is listed on Euronext Brussels (BEL20) and Paris and benefits from the Belgian fiscal Sicafi regime and the French SIIC regime. At 30.06.2009, its total market capitalisation was € 1.2 billion” (CS della Società).
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