Antwerp, 7 August 2007 - Public property investment fund Intervest Offices[1] releases today its results on the first half year of 2007. (comparable figures for 30 June 2006 between brackets)
The distributable result of Intervest Offices increases during the first half year of 2007 and amounts to Eur 13,3 million (Eur 13,0 million). This increase leads for the first half year of 2007 to distributable earnings per share of Eur 0,97 compared to Eur 0,95 for the same period of prior year.
The net result of the property investment fund amounts to Eur 24,6 million (Eur 26,7 million) and can be divided in a distributable operating result of Eur 13,3 million (Eur 13,0 million) and a result on real estate the portfolio of Eur 11,3 million (Eur 13,7 million).
The revaluation of the property portfolio which has started in 2006 continues in 2007. The increase in value of the real estate portfolio amounts to Eur 11,3 million during the first half of 2007, by analogy with the revaluation in the same period of 2006 (+ 13,7 million). This is principally due to the important demand on the investment market which incites mainly foreign investors to pay continuously higher prices in spite of the difficult rental market and the climate of increasing interest rates.
With the limited offer and the still increasing demand for qualitative logistic real estate, the yields for semi-industrial real estate reach a historical depth. This yield shift is reflected in the higher valuations of the property experts on 30 June 2007. During the first half year of 2007 the semi-industrial portfolio of Intervest Offices has been revalued with Eur 8,8 million or 6%. During the first half year the office portfolio increases with Eur 2,5 million. Given the shortage on the investment market, the interest for well let properties in the periphery increases.
In May 2007 Intervest Offices has obtained control over Zuidinvest sa, owner of the "Exiten"-building, with an occupancy rate of 96 %, for an amount of Eur 8.490.000, at a gross initial yield of 7,35%. With this investment Intervest Offices makes first steps towards its aim to improve the quality of its portfolio by reinvesting the recently liberated financial means from the sale of five office buildings end 2006, in high quality buildings with good yields. The gross rental income amounts to about Eur 624.000 a year. This investment contributes directly to the distributable operating result of 2007.
Intervest Offices purchased the majority of the shares of the real estate company Mechelen Campus 3, owner of two office buildings in the 'Mechelen Campus' business park. These office buildings have a letting surface area of 15.400 m². These buildings form the final phase of the acquisition of the entire site of Mechelen Campus, of which the other office buildings are already owned by Intervest Offices. The acquired buildings are let for 80% to Borealis and Tibotec-Virco, at a rental income which is conforming the market. These two office buildings offer an initial rental income of about Eur 2,1 million on an annual base. For the vacant spaces a rental guarantee is granted by the seller, Uplace Group sa, with a duration of two years, from 1st July 2007 on. The investment value of the properties amounts to Eur 26,8 million (fair value Eur 26,1 million), the gross initial yield 7,70%. As from the 1st of July 2007, these office buildings contribute to the operating result of Intervest Offices.
During the first half year of 2007 the rental income of the property investment fund decreases with 3,6% to Eur 20,5 million (Eur 21,3 million) due to the sale of five office buildings and a semi-industrial property at the end of 2006. During the first half of the year, new leases has been concluded (7 new transactions) for a surface area of 2.638 m² and 19 leases have been renewed with existing tenants, for a surface area of 14.151 m². On 30 June 2007, the occupancy rate[2] slightly decreases to 91,0% (91,8% end 2006).
On 30 June 2007, the property charges amount to Eur 2,1 million (Eur 1,8 million). This rise is principally due to the increase of property management costs as a result of the reinforcement of the commercial team of the property investment fund. The general costs amount to Eur 0,8 million which is Eur 0,1 million lower than during the same period of prior year.
The financial result improves significantly to - Eur 4,6 million (- Eur 5,8 million). In spite of the strong increase of the short-term interest rates, Interest Offices could maintain the stability of its interest charges by the refinancing of its credits at considerable more attractive conditions than the previous credit and by the use of interest swaps. Besides, the property investment fund received during the first half of 2007 moratory interests from the sale transaction of its five office buildings for an amount of Eur 0,8 million. Hence, the settlement of this sale transaction has a total one-time positive effect on the net result of the property investment fund of Eur 0,2 million.
On 30 June 2007, the fair value of the portfolio amounts to Eur 527 million (Eur 507 million on 31 December 2006). This rise is principally due to the increase in value of the existing buildings for Eur 11 million. Additionally, the acquisition of the Exiten building occurred for Eur 8 million as well as the realised investments in the portfolio.
On 30 June 2007, after distribution of the dividend over 2006, the net asset value (fair value) of the share is Eur 24,11 (Eur 23,99 on 31 December 2006). Given that the share price on 30 June 2007 is Eur 29,00, the Intervest Offices share is quoted with a premium of 20% compared to this net asset value (fair value).
According to the calculation method of article 6 of the RD of 21 June 2006, the debt ratio amounts to 37,6% on 30 June 2007 (44,7% on 31 December 2006).
As mentioned in the annual report 2006, Intervest Offices expects that the dividend per share for the financial year 2007 will be higher than prior year. Indeed, through the sale of properties with a low occupancy rate end 2006 and through the investment of the liberated financial means in office buildings as Exiten and Mechelen Campus Tower, the distributable result will increase. Intervest Offices expects to be able to offer its shareholders in 2007 a gross dividend per share between Eur 1,90 and Eur 1,95.
Note to the editors: for more information, please contact:
Intervest Offices SA, Jean-Paul Sols - CEO or Inge Tas - CFO, T + 32 3 287 67 87 www.intervest.be
[1] Intervest Retail is a public property investment fund listed on Euronext Brussels in the Next Prime Segment.
[2] The occupancy rate is calculated as the ratio of the commercial rental income to the same rental income plus the estimated rental value of the vacant locations for rent.
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