Beneficial interest AvH: 30.01%
AvH Contact: Jan Suykens
The economic situation in 2016 evolved very well in the Grand Duchy of Luxembourg and relatively well in Belgium. In Switzerland there was a decrease in domestic consumption due to the stronger position of the Swiss franc against the euro at the beginning of 2015. By diversifying into Luxembourg (since 2006), Switzerland (end of 2014) and Austria (end of 2016), LRE is turning outside Belgium towards countries with AAA rating, a healthy economy with low unemployment, high per capital GNP, and a steady growth.
In the Grand Duchy of Luxembourg, where LRE is one of the prime foreign property investors, 2016 was marked by 35% less office rentals than in the record year 2015, whereas retail remained on the same level as 2015. In Belgium, the office market recorded a remarkable 50% increase in rental volumes compared with 2015. Rents remained on the same level, while the vacancy rate decreased to 9%. The rental volume in the retail market showed a positive trend, however, with a 10% increase. The retail rental market in Switzerland remained stable.
The acquisition of the Frun retail park in Asten in Austria marks the presence of Leasinvest Real Estate in a fourth country, although the financial impact will only be felt to its full extent in 2017. This transaction is in line with the strategic reorientation towards more retail and less office space, and a geographical diversification across four countries.
At year-end 2016, the fair value of the consolidated real estate portfolio, including project developments, amounted to 859.9 million euros (compared with 869.4 million euros as at 31/12/2015). The 1% decrease is primarily the result of the important sale of Royal20. The overall real estate portfolio comprises 48% retail (2015: 42%), 37% offices (2015: 42%), and 15% logistics (2015: 16%). There are 15 sites in Luxembourg (49% based on the fair value of the portfolio), 13 sites in Belgium (42%), 3 sites in Switzerland (5%), and 1 site in Austria (4%).
The rental income increased by 12% in 2016 to 56.6 million euros. This record result is due to the acquisition of the Royal Warehouse office building on the Tour & Taxis site in Brussels at the end of 2015. The average duration of the portfolio decreased from 4.8 years to 4.4 years, primarily as a result of the temporary departure of the tenant of the Montoyer 63 office building until after the renovation works. The occupancy rate increased to 96.77% (2015: 95.80%). The rental yield calculated on the fair value remained virtually stable in relation to the previous financial year (2016: 6.78%, 2015: 6.88%).
At year-end 2016, the equity (group share) stood at 356 million euros (2015: 362 million euros). The revalued net assets stood at 72.2 euros per share based on the fair value of the real estate (73.4 euros at 31/12/2015), and 75.6 euros (76.9 euros at 31/12/2015) based on the investment value. The financial debt increased slightly to 541 million euros (532 million euros at 31/12/2015). The debt ratio (calculated according to the Belgian Royal Decree of 12/05/2014) remained stable at 58%. The balance sheet total amounted to 988 million euros at the end of the financial year (2015: 976 million euros).
LRE ended its 2016 financial year as expected with a higher net result (group share) of 31.1 million euros (30.6 million euros at 31/12/2015), or 6.30 euros per share (6.20 euros at 31/12/2015). The EPRA profit increased by 9% to 27.9 million euros.
The price of the LRE share fluctuated in 2016 between 90.20 euros and 114.00 euros. The closing price at the end of the year was 105.50 euros. The gross dividend per share for the 2016 financial year will amount to 4.90 euros, or a gross dividend yield (based on the closing price) of 4.6% (2015 financial year: 5.05%).
At the beginning of January, a demolition and building permit was granted for the Treesquare office building on Square de Meeûs in Brussels. The demolition and construction works have begun, and the provisional acceptance is expected by the end of 2017.
At the end of March, Leasinvest Real Estate was admitted to the BelMid index of Euronext Brussels.
At the end of April, a usufruct agreement for a fixed and irrevocable term of 21 years was concluded with the European Parliament, the sitting tenant of the office building Montoyer 63 in Brussels. The building will be redeveloped and was vacated at the end of November.
In mid-June, the notarial deed of sale was executed for the Zeutestraat building in Mechelen, whereby the property was sold to an end user for 4.5 million euros.
At the end of June, the second notarial deed was executed according to plan for the forward sale of the completed Royal20 office building in Luxembourg city. The property was sold to a private investor for 62.5 million euros (excluding VAT).
In September, the renovation works began for the first phase of Retail Park Strassen (Luxembourg), and will be finished by the end of June 2017. The sitting tenants have extended their leases.
Also in September, a lease extension was signed with the sitting tenant for half of the office space in the Ragheno Park in Mechelen. Part of the remaining office space will be transformed into a business centre, while new tenants will be sought for the other part.
At the beginning of November, the acquisition of Frun Park Asten (Austria) was finalized for a fair value of 38 million euros. This is LRE’s first investment in a fourth country.
During 2016, several leases were concluded in Luxembourg, Belgium and Switzerland.
After the good results of 2016, the company expects for 2017 an EPRA profit in line with previous years. Consequently, the company expects to maintain the dividend over 2017 at the same level.