For the entire pdf-version with figures of this press release, please click on the link below:
Antwerp, 19 February 2008 - Public property investment fund Intervest Retail[1] releases today its consolidated results on 31 December 2007. (comparable figures 31 December 2006 between brackets)
Property investment fund Intervest Retail has known an active fourth quarter 2007 with the sale of its outlet centre "Factory Shopping Messancy" and the acquisition of a portfolio of 21 retail warehouses which are mainly let to the interior decoration specialist Decor Heytens.
The reason Factory Shopping Messancy has been sold, is that the outlet centre had a negative operating result and that no improvement was to be expected, in spite of the commercial efforts of the property investment fund. With this disinvestment a very important step has been taken for the improvement of the yield of the property investment fund. In spite of the realised capital loss, the sale has indeed a considerable positive effect on the dividend that Intervest Retail can distribute to its shareholders. The property investment fund expects with this sale that the distributable result in 2008 will increase with about € 2 million compared to the distributable result of 2007. Herewith, according to the expectations, the gross dividend per share, apart from other developments, such as investments, rental improvements or changes in interest rates, can increase for the financial year 2008 with 40 eurocent per share or 27 % compared to the dividend 2007.
Moreover, in November 2007 Intervest Retail has acquired a portfolio of retail warehouses which are mainly let to the interior decoration specialist Decor Heytens. The portfolio comprises 21 retail warehouses with an occupancy rate of 100 % and has a fair value of € 19 million. The retail warehouses generate a gross initial rental income of about € 1,3 million on annual basis and provide the property investment fund a net initial yield of 5,8 %.
With both transactions the occupancy rate[2] of the portfolio increases considerably to 99,3 % on 31 December 2007 (95,5 % at the end of 2006).
Besides, Intervest Retail has currently 3 ongoing projects which all evolve favourably:
- in December 2007 the demolition works have started for the redevelopment of Wooncentrum Van de Ven in Olen.
- the opening of the commercial centre Julianus in Tongeren, which is entirely let, is planned on 13 March 2008. From then on this investment will contribute positively to the operating result.
- In Vilvoorde, after demolition of the existing building, the building of a commercial space designated for H&M and ten luxury apartments on the floors has started. The delivery of the commercial part to H&M is planned for September 2008. The selling on plan of the apartments has started at the end of 2007 and currently 5 apartments are already sold.
In 2007, the net rental result of the property investment fund decreased with € 1,2 million to € 17,2 million (€ 18,4 million) as a result of the sale of properties mid 2006, the financial incentives for the tenants and the doubtful debtors of the sold outlet centre Factory Shopping Messancy and the one-time indemnity received in 2006 from the property developer of Factory Shopping Messancy (€ 0,8 million related to rental income).
The operating result before the result on the portfolio amounts to € 12,0 million (€ 13,8 million). The decrease of € 1,8 million is the direct result of the lower net rental income and the increasing property charges (specially marketing and service charges, which from a commercial point of view, can not be charged to the tenants).
The positive change of the fair value of the real estate portfolio results from the valuation of the property experts and amounts to € 36 million or 14 % in 2007 (€ 3,5 million). The increasing demand of commercial properties on the rental and investment market persists. Rental renewals in the commercial portfolio of Intervest Retail are concluded at higher rents. This positive development is reflected in the substantial increase in value of the real estate portfolio of the property investment fund.
In 2007, the result of the sale of investment properties comprises a capital loss of € 19,5 million and is related to the sale of Factory Shopping Messancy and three non-strategic buildings. The sales price of the outlet centre lies € 18 million lower than the book value on 31 December 2006. Taking into account the additional charges (including the VAT revision) the realised capital loss of the financial year 2007 amounts about to € 20 million.
The financial result amounts to - € 4,6 million ( - € 3,9 million) due to the increase of the interest charges as a result of the rise of the short-term interest rates. Besides, the property investment fund received in 2006 a one-time amount of € 0,1 million moratory interests as a result of the arbitrational judgment against the property developer of Factory Shopping Messancy.
The net result of 2007 increases with € 11,6 million to € 23,9 million (€ 12,3 million). This net result can be divided in:
- an operating distributable result of € 7,4 million (€ 10,0 million) that is negatively influenced by the financial situation of the sold Factory Shopping Messancy. Besides, the result of 2006 had a one-time positive effect due to the indemnity (€ 1 million) received from the arbitrational procedure against the property developer of Factory Shopping Messancy; and
- the result on the portfolio of € 16,5 million (€ 2,4 million) as a consequence of the revaluation of the real estate portfolio with € 36 million (€ 3,5 million) and the capital loss on the sale of investment properties of € 19,5 million.
For the financial year 2007, this represents a gross dividend of € 1,47 (€ 1,97) which corresponds to our previous formulated expectations.
On 31 December 2007, the fair value of the portfolio amounts to € 313 million (€ 281 million). This rise with € 32 million is mainly the combined effect of the increase in value of the commercial portfolio (€ 36 million), the acquisition of the Heytens portfolio (€ 19 million), the investment in the Julianus project in Tongeren (€ 7 million), the sale of Factory Shopping Messancy (- € 29 million) and the sale of three non-strategic buildings in 2007 (- € 4 million).
On 31 December 2007 the net asset value (fair value) of the share amounts to € 36,97 (€ 34,21). Given that the share price on 31 December 2007 is € 32,80, the Intervest Retail share is quoted with a discount of 11 % compared to this net asset value (fair value).
In accordance with the calculation method of article 6 of the RD of 21 June 2006, the debt ratio amounts to 43 % on 31 December 2007 (39%).
On the short term our efforts will be concentrated on the optimisation of the rental income of the existing portfolio and the realisation of ongoing projects. It is also the aim that the portfolio should grow, depending on the investment opportunities which will occur on the investment market.
Note to the editors: for more information, please contact:
Intervest RETAIL SA, Jean-Paul Sols - CEO or Inge Tas - CFO, tel. 03/287.67.87, www.intervest.be
[1] Intervest Retail is a public property investment fund listed on Euronext Brussels.
[2] The occupancy rate is calculated as the ratio of the actual rental income to the same rental income plus the estimated rental value of the vacant locations for rent.
