Press release Regulated information 09 May 2018 5:40 PM Opening of the first Silversquare @Befimmo coworking centre in the Triomphe building EPRA earnings of 0.98 per share, in line with the outlook Net result of 0.86 per share Net asset value of 57.49 per share Change in fair value of the property portfolio of -0.19% over the first 3 months of the fiscal year (excluding the amount of investments and acquisitions) Unchanged EPRA earnings and dividend outlook for the fiscal year The Board of Directors of Befimmo SA met on 7 May 2018 to close the quarterly consolidated financial statements as at 31 March 2018.
1. Key events... 3 Opening of the first Silversquare @Befimmo coworking centre in the Triomphe building... 3 Completion of the acquisition of the Arts 56... 3 2. Property portfolio as at 31 March 2018... 3 Key figures of the property portfolio... 3 Ongoing projects... 4 Change in fair value of the property portfolio... 5 Occupancy rate, weighted average duration of leases and signed lease agreements... 6 Overall rental yield... 6 3. Financial report... 7 Financial key figures... 7 Net asset value as at 31 Mars 2018... 8 Trend of results... 8 Financial structure and hedging policy... 9 4. Befimmo share... 11 Share key figures... 11 5. Dividend forecast... 11 6. Forthcoming publications... 11 7. Appendix 1... 13 Consolidated income statement (in thousand)... 13 Consolidated balance sheet (in thousand)... 14 8. Appendix 2... 15 Glossary of the Alternative Performance Measures... 15 Reconciliation tables of the Alternative Performance Measures... 16 9. Appendix 3... 18 Tables of the EPRA indicators... 18 The real-estate indicators of Befimmo are identified with a footnote at their first mention in this press release. The definitions of those indicators are published in Befimmo s Annual Financial Report 2017 on page 208: http://www.befimmo.be/sites/default/files/imce/publications/rfa_2017_-_uk.pdf The Alternative Performance Measures (APM) guidelines of the European Securities Markets Authority (ESMA) have been applicable since 3 July 2016. The APMs within this press release are identified with a footnote at the first mention of the APM in this press release. The full list of APMs, their definition, their utility and the related reconciliation tables are included in Appendix 2 and 3 to this press release and are published on the Befimmo website: http://www.befimmo.be/en/investors/publications/alternative-performance-measures 2
Opening of the first Silversquare @Befimmo coworking centre in the Triomphe building In April 2018, Silversquare @Befimmo opened its first centre Triomphe (Brussels, decentralised), a one of a kind coworking space. Arranged in the lobby and the first floor of the building, the Triomphe centre offers 4,000 m² of coworking space, available as open and private spaces, rooms for meetings, conferences and gatherings, and offering a range of services to meet the needs of all occupants. As a reminder, Befimmo concluded in September 2017 a strategic partnership with the company Silversquare, Belgian coworking pioneer. The Silversquare @Befimmo partnership is a response to the desire to gain a foothold in the world of tomorrow and to take account of the present and future needs of office occupants. Silversquare @Befimmo plans to develop a Belux coworking network in several buildings of the portfolio of Befimmo. Completion of the acquisition of the Arts 56 1 In January 2018, Befimmo completed the acquisition from AXA Belgium of a 99-year leasehold on the Arts 56 building, for an amount of some 116 million 2. The Arts 56 building, totalling 21,000 m² of office space, is currently let to a dozen leading tenants on the basis of 3/6/9-year leases. The occupancy rate is 98%. The gross annual rent amounts to 5.2 million (a gross current yield of 4.5%). Key figures of the property portfolio 31.03.2018 31.12.2017 Fair value of portfolio (in million) 2 619.1 2 494.4 Gross initial yield on properties available for lease 5.91% 6.19% Gross potential yield on properties available for lease 6.25% 6.52% Spot occupancy rate of properties available for lease 93.99% 94.44% Weighted average duration of current leases up to next break 8.02 years (b) 7.31 years Weighted average duration of current leases up to final expiry 8.65 years 7.88 years Reversion rate of properties available for lease -11.04% (c) -10.78% EPRA Vacancy Rate (d) 5.74% 5.43% EPRA Net Initial Yield (NIY) 5.61% 5.82% EPRA Topped-up NIY 5.75% 5.97% This is a real-estate indicator. For more information, please consult page 208 of the Annual Financial Report 2017. (b) Excluding the WTC 2, the weighted average duration of leases up to next break would be 8.86 years as at 31 March 2018. Excluding the Noordbuilding (meanwhile being demolished) and WTC 2, the weighted average duration of leases up to next break was 8.47 years as at 31 December 2017. (c) Excluding the WTC 2 the reversion would be -5.72% as at 31 March 2018. Excluding the Noordbuilding (meanwhile being demolished) and WTC 2, the reversion was -5.90% as at 31 December 2017. (d) Corresponding to the availability rate of properties available for lease. 1 Please see the press release of 29 January 2018 for more information (http://www.befimmo.be/en/investors/publications?type=21). 2 In line with the fair value determined by an independent real-estate expert. 3
Ongoing projects Over the first quarter of the fiscal year, Befimmo invested 15.3 million in its portfolio. The main renovation and construction projects are listed in the table below. For more information on these projects, please consult pages 22 to 25 of the Annual Financial Report 2017, which is available on the Befimmo website (www.befimmo.be). Ongoing projects Rental space Location Start of the works Completion Type BREEAM certification Rental situation Total investment (in million) Committed Brederode Corner 6 500 m² Brussels CBD, Q1 2018 Q1 2020 Renovation Excellent Ongoing commercialisation 20 Centre Eupen - Rathausplatz 7 200 m² Eupen, Wallonia Phase 1: Q1 2017 Phase 2: Q4 2018 Phase 1: Q3 2018 Phase 2: Q4 2019 Renovation and construction - 100% let for a duration of 25 years as from hand-over 14 Quatuor 60 000 m² Brussels CBD, North 2018 2020 Demolition Noord Building and construction Quatuor Excellent/Outstanding Ongoing commercialisation 22,000 m² pre-let for a duration of 15 years as from hand-over 150 To be committed Paradis Express 35 000 m² Liège, Wallonia 2018 2020 Construction Excellent - 82 "Future ex-wtc 1 & 2" 110 000 m² Brussels CBD, North 2020 2023 Demolition and construction Outstanding - 300 WTC 4 53 500 m² Brussels CBD, North Implementation of the permit According to commercialisation Construction Outstanding - 140 All-in construction cost of the project (including other functions than offices). 4
Paradis Express This project, right next to the high-speed train station in Liège, involves the construction of an eco-neighbourhood offering a mix of offices, housing and local shops. The permit was obtained in April 2018. Based on a multi-tenant occupancy with conventional 9-year leases, the expected yield on the total investment value would be above 6.0%. Brederode Corner The Brederode Corner building, which enjoys good visibility at the corner of Rue Brederode and Rue de Namur in the centre of Brussels, is undergoing an in-depth renovation. The permit was obtained in February 2018. The structure of the building will be streamlined to create panoramic views over Brussels city centre and the Royal Palace. The new building will offer facilities and services, and will be equipped with the most recent technology. It is arousing a lot of interest among prospective tenants. Based on a multi-tenant occupancy with conventional 9-year leases, the expected yield on the total investment value would be above 5.5%. Change in fair value 3 of the property portfolio Offices Change over the quarter (in %) Proportion of portfolio (b) (31.03.2018) (in %) Fair value (31.03.2018) (in million) Fair value (31.12.2017) (in million) Brussels CBD and similar (c) 2.21% 55.4% 1 451.9 1 327.7 Brussels decentralised -13.50% 3.0% 77.7 87.0 Brussels periphery -20.83% 4.2% 109.8 137.8 Flanders -2.18% 18.2% 477.2 487.7 Wallonia 3.45% 7.7% 202.5 195.8 Luxembourg city 3.72% 4.4% 114.1 109.9 Properties available for lease -0.36% 92.9% 2 433.2 2 345.9 Properties that are being constructed or developed for own account in order to be leased 2.46% 7.1% 185.9 148.5 Investment properties -0.19% 100.0% 2 619.1 2 494.4 Total -0.19% 100.0% 2 619.1 2 494.4 The change over the 2017 fiscal year is the change in fair value between 1 January 2018 and 31 March 2018 (excluding the amount of acquisitions and investments). (b) The proportion of portfolio is calculated on the basis of the fair value of the portfolio as at 31 March 2018. (c) Including the Brussels airport zone, in which the Gateway building is situated. 3 These values are established in application of the IAS 40 standard which requires investment properties to be booked at fair value. The fair value of a building is its investment value, including registration fees and other transaction costs (also known as "deed-in-hands value") as calculated by an independent expert, minus a standard allowance of 10% (Flanders) or 12.5% (Wallonia and Brussels) for buildings with an investment value of less than 2.5 million, and 2.5% for buildings with an investment value of more than 2.5 million. This 2.5% allowance represents the average transaction costs actually paid in these transactions and is derived from an analysis by independent experts of a large number of transactions observed on the market. This accounting treatment is detailed in the press release issued by BeAMA on 8 February 2006 and confirmed in the press release of the BE-REIT Association of 10 November 2016. This rule is also applied for determining the fair value of property located in the Grand Duchy of Luxembourg. 5
As at 31 March 2018, the fair value of Befimmo s consolidated portfolio was 2,619.1 million, as against 2,494.4 million as at 31 December 2017. This change in value of 124.7 million incorporates: the renovation or redevelopment works carried out in the portfolio; the investments made (among other things the integration in the portfolio of the Arts 56 building); the changes in fair value booked to the income statement (IAS 40). Accordingly, the value of the portfolio (excluding acquisitions and investments) was overall stable over the first quarter of the fiscal year (change of -0.19% or, - 5 million). Rotation of real-estate experts In accordance with the obligation to rotate the mandates of the real-estate experts, pursuant to the Royal Decree on BE-REITs of 13 July 2014, new three-year expert mandates have been given as from 1 January 2018 to Mr Rod P. Scrivener (National Director - JLL), Mr Rob Vaes (National Director - JLL) and Mr Christophe Ackermans (Head of Valuation - Cushman & Wakefield, company under Dutch Law, acting through its Belgian branch Wissinger & Associés SA). Mr Rod P. Scrivener has the task of coordinating the valuations. These experts carried out their first valuation as at 31 March 2018. Comment on changes in value This rotation of experts within the consolidated portfolio of Befimmo globally confirmed the valuation of the portfolio. The strategic properties available for lease benefited from continued pressure on yields, while the buildings available for lease with leases approaching expiry and those located in the periphery and decentralised area of Brussels, accounting for 7% of Befimmo s portfolio, underwent value adjustments. Occupancy rate, weighted average duration of leases and signed lease agreements The spot occupancy rate of the properties available for lease is equal to 93.99% as at 31 March 2018 (compared with 94.44% as at 31 December 2017). The weighted average duration of the leases until their next maturity is 8.02 4 years as at 31 March 2018, compared with 7.31 years as at 31 December 2017. The weighted average duration of current leases until their final expiry date was 8.65 years as at 31 March 2018. Over the first quarter of the fiscal year, Befimmo signed new leases and renewals for a total floor area of 8,162 m². Overall rental yield Properties available for lease Investment properties 31.03.2018 31.12.2017 31.03.2018 31.12.2017 Gross initial yield 5.91% 6.19% 5.51% 5.85% Gross potential yield 6.25% 6.52% Taking into account the properties that are being constructed or developed for own account in order to be leased. 4 Exluding the WTC 2, the weighted average duration of leases up to next break would be 8.86 years as at 31 March 2018. 6
Financial key figures 31.03.2018 31.12.2017 Shareholders' equity (in million) 1 470.45 1 448.50 Net asset value (in per share) 57.49 56.63 EPRA NAV (in per share) 57.77 57.03 EPRA NNNAV (in per share) 57.17 56.35 EPRA Like-for-Like Net Rental Growth (b) (in %) 3.86% 2.82% Average (annualised) financing cost (c) (in %) 1.93% 2.08% Weighted average duration of debts (in years) 4.91 4.73 Debt ratio according to the Royal Decree (in %) 43.37% 41.62% Loan-to-value (d) (in %) 41.26% 39.61% 31.03.2018 31.03.2017 Number of shares issued 25 579 214 25 579 214 Average number of shares during the period 25 579 214 25 579 214 Net result (in per share) 0.86 2.05 EPRA earnings (in per share) 0.98 0.94 Return on shareholders' equity (e) (in per share) 4.14 6.04 Return on shareholders' equity (e) (in %) 7.49% 11.40% (b) (c) (d) (e) This is an Alternative Performance Measure. For more information, please consult Appendix 3 to this press release. Trend of the rental income minus property charges at constant perimeter, calculated on the basis of the EPRA Best Practices Recommendations. Including margin and hedging costs. This is an Alternative Performance Measure. For more information, please consult Appendix 2 to this press release. Loan-to-value ( LTV ): [(nominal financial debts cash)/fair value of portfolio]. This is an Alternative Performance Measure. For more information, please consult Appendix 2 to this press release. Calculated over a 12-month period ending at the closing of the period, taking into account the gross dividend reinvestment. This is an Alternative Performance Measure. For more information, please consult Appendix 2 to this press release. 7
Net asset value as at 31 Mars 2018 As at 31 March 2018, Befimmo s total net asset value was 1,470.4 million. The net asset value is therefore 57.49 per share, compared with 56.63 per share as at 31 December 2017. Changes in the net asset value (in per share) (in million) Number of shares Net asset value as at 31 December 2017 56.63 1 448.5 25 579 214 Result of the period 21.9 Net asset value as at 31 March 2018 57.49 1 470.4 25 579 214 31.03.2018 31.12.2017 EPRA NAV (in per share) 57.77 57.03 EPRA NNNAV (in per share) 57.17 56.35 The calculation methods of the EPRA NAV and NNNAV are detailed in Appendix 3 to this press release. Trend of results (in thousand) 31.03.2018 31.03.2017 Net rental result 36 086 36 465 Net rental result excluding spreading 35 860 36 020 Spreading of gratuities/concessions 226 445 Net property charges -2 346-3 116 Property operating result 33 741 33 349 Corporate overheads -3 459-3 013 Other operating income & charges - 226-445 Operating result before result on portfolio 30 055 29 891 Operating margin 83.3% 82.0% Gains or losses on disposals of investment properties - 21 704 Net property result 30 055 51 596 Financial result (excl. changes in fair value of financial assets and liabilities) -4 831-5 642 Corporate taxes - 64-321 Net result before changes in fair value of investment properties and financial assets and liabilities 25 160 45 632 Changes in fair value of investment properties -5 016 3 053 Changes in fair value of financial assets and liabilities 1 800 3 743 Changes in fair value of investment properties & financial assets and liabilities -3 216 6 796 Net result 21 944 52 428 EPRA earnings 25 160 23 928 Net result (in per share) 0.86 2.05 EPRA earnings (in per share) 0.98 0.94 This is an Alternative Performance Measure. For more information, please consult Appendix 2 to this press release. 8
Analysis The condensed consolidated income statement includes the data published on 31 March 2018. The result analysis is based on a comparison with the data as at 31 March 2017. The year-on-year fall in the Net rental result of 1.0% is explained mainly by the impact of the expiry of the lease of the Flemish Community in the Noordbuilding and of the one of Sheraton in the Brederode Corner building. The impact linked to a granting of a leasehold on the Brederode complex is offset by the Arts 56 building being added to the portfolio. The like-for-like net rental result 5 is up 2.56% on the same period last year. Net property charges went from 3.1 million to 2.3 million. This decrease is due to one-off items. Overheads amounted to 3.5 million compared with 3.0 million in 2017. This change is explained mainly by the expansion of the team and of IT. The Operating result before the portfolio result is stable at 30.0 million for the first quarter of the fiscal year (+0.5%). In the first quarter of 2018 no assets were sold, while the Gains and losses on disposals of investment properties of 21.7 million recorded in the first quarter of 2017 was due mainly to the capital gain realised on the granting of a 99-year leasehold on the Brederode complex. The Financial result (excluding changes in the fair value of financial assets and liabilities) improved from - 5.6 million in 2017 to - 4.8 million in 2018. This improvement is explained mainly by a fall in interest rates for the Company s financing. As at 31 March 2018, the Net result was 21.9 million as against 52.4 million as at 31 March 2017. The change in fair value of the investment properties (excluding the amount of investments and acquisitions) amounted to - 5.0 million, down 0.19% in value. The change in the fair value of the financial assets and liabilities was 1.8 million, as against 3.7 million one year earlier. EPRA earnings amounted to 25.2 million as at 31 March 2018, up 5.1% in relation to the first quarter of fiscal year 2017. As the number of shares was constant over both periods, EPRA earnings per share were also up 5.1% at 0.98 as against 0.94 for the same period last year. The Net result per share is 0.86. Financial structure and hedging policy The financing arranged is designed to maintain the best possible balance between cost, maturity and diversification of funding sources. Financing arranged during the fiscal year Under its overall financing programme, in March 2018 Befimmo made a fixed-rate private placement of debt totalling 125 million over eight years, following roadshows held in Brussels, Paris and Luxembourg. On this basis, and all other things being equal, the Company has covered its financing needs until the end of the second quarter of 2019. 5 This is an Alternative Performance Measure. For more information, please see Appendix 2 to this press release. 9
As at 31 March 2018, Befimmo s financial structure had the following main characteristics: confirmed credit facilities for a total sum of 1,379.3 million (66.9% of which were bank loans), 1,096.6 million of which were in use. The volume of unused lines is determined on the basis of the Company's liquidity criteria, taking account of the maturities of the financing agreements and commitments planned for the coming years; a debt ratio of 43.37% 6 (compared with 41.62% as at 31 December 2017); a LTV ratio of 41.26% 7 (compared with 39.61% as at 31 December 2017); a weighted average duration of debt of 4.91 years (compared with 4.73 years as at 31 December 2017); 85.6% of total borrowings at fixed rates (including IRS); an average financing cost (including hedging margin and costs) of 1.93% over the first 3 months of the fiscal year, compared with 2.08% for the 2017 fiscal year. 6 The debt ratio is calculated in accordance with the Royal Decree of 13 July 2014. 7 Loan-to-value (LTV) = [(nominal financial debts cash)/fair value of portfolio]. 10
Share key figures 31.03.2018 31.12.2017 Closing price (in ) 52.50 53.55 Asset value (en par action) 57.49 56.63 Premium or discount compared to the asset value -8.67% -5.44% Return on share price 5.28% 6.98% Calculated over a 12-month period ending at the closing of the fiscal year, taking into account the gross dividend reinvestment, and if applicable the participation in the capital increase. All other things being equal, the Board of Directors confirms the dividend forecast of 3.45 8 gross per share for the current fiscal year. On 23 March 2018, Befimmo published its Annual Financial Report 2017, which is available on its website: www.befimmo.be. The two upcoming publications are included in the table below. For more information, please consult the shareholders calendar (http://www.befimmo.be/en/investors/shareholders-calendar). Publication of the Half-Yearly Financial Report 2018 Interim statement as at 30 September 2018 Thursday 19 July 2018 Thursday 25 October 2018 Publication after closing of the stock exchange. 8 The gross dividend of 3.45 per share could be paid as an interim dividend of 2.59 in December 2018 and a final dividend of 0.86 in May 2019. 11
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Consolidated income statement (in thousand) 31.03.18 31.03.17 I. (+) Rental income 36 026 36 575 III. (+/-) Charges linked to letting 60-109 NET RENTAL RESULT 36 086 36 465 IV. (+) Recovery of property charges 4 500 1 392 V. (+) Recovery of rental charges and taxes normally paid by tenants on let properties 22 809 23 664 VII. (-) Rental charges and taxes normally paid by tenants on let properties -22 661-23 812 VIII. (+/-) Other revenue and charges for letting 52 1 465 PROPERTY RESULT 40 786 39 175 IX. (-) Technical costs -3 121-1 999 X. (-) Commercial costs - 183-39 XI. (-) Charges and taxes on unlet properties -1 751-1 890 XII. (-) Property management costs - 656-734 XIII. (-) Other property charges -1 335-1 163 (+/-) Property charges -7 046-5 826 PROPERTY OPERATING RESULT 33 741 33 349 XIV. (-) Corporate overheads -3 459-3 013 XV. (+/-) Other operating income and charges - 226-445 OPERATING RESULT BEFORE RESULT ON PORTFOLIO 30 055 29 891 XVI. (+/-) Gains and losses on disposals of investment properties - 21 704 XVIII. (+/-) Changes in fair value of investment properties -5 016 3 053 OPERATING RESULT 25 039 54 649 XX. (+) Financial income 228 105 XXI. (-) Net interest charges -4 488-5 094 XXII. (-) Other financial charges - 572-654 XXIII. (+/-) Changes in fair value of financial assets and liabilities 1 800 3 743 (+/-) Financial result -3 032-1 899 PRE-TAX RESULT 22 008 52 749 XXV. (-) Corporation tax - 64-321 (+/-) Taxes - 64-321 NET RESULT 21 944 52 428 BASIC NET RESULT AND DILUTED ( /share) 0.86 2.05 Other comprehensive income - actuarial gains and losses - non-recyclable - - TOTAL COMPREHENSIVE INCOME 21 944 52 428 13
Consolidated balance sheet (in thousand) ASSETS 31.03.18 31.12.17 I. Non-current assets 2 655 515 2 532 477 A. Goodwill 14 281 14 281 C. Investment properties 2 619 095 2 494 360 D. Other property, plant and equipment 2 404 2 436 E. Non-current financial assets 17 815 19 498 F. Finance lease receivables 1 920 1 902 II. Current assets 62 682 26 651 A. Properties held for sale - - B. Current financial assets 1 676 1 874 C. Finance lease receivables 69 136 D. Trade receivables 39 384 21 067 E. Tax receivables and other current assets 1 715 1 688 F. Cash and cash equivalents 16 017 254 G. Deferred charges and accrued income 3 822 1 632 TOTAL ASSETS 2 718 198 2 559 128 SHAREHOLDERS EQUITY AND LIABILITIES 31.03.18 31.12.17 TOTAL SHAREHOLDERS EQUITY 1 470 448 1 448 504 I. Equity attributable to shareholders of the parent company 1 470 448 1 448 504 A. Capital 357 871 357 871 B. Share premium account 792 641 792 641 C. Reserves 297 992 228 172 D. Net result for the fiscal year 21 944 69 820 LIABILITIES 1 247 750 1 110 624 I. Non-current liabilities 621 886 505 008 A. Provisions 3 883 3 673 B. Non-current financial debts 601 440 484 255 a. Credit institution 150 121 153 553 c. Other 451 319 330 702 EUPP 290 526 165 966 USPP 157 674 161 916 Guarantees received 3 120 2 820 C. Other non-current financial liabilities 16 563 17 080 II. Current liabilities 625 864 605 616 A. Provisions 5 279 5 592 B. Current financial debts 504 468 517 832 a. Credit institution 12 968 47 332 c. Other 491 500 470 500 EUPP 15 000 15 000 Commercial papers 476 500 455 500 C. Other current financial liabilities 33 5 D. Trade debts and other current debts 63 094 52 359 E. Other current liabilities 2 043 2 491 F. Accrued charges and deferred income 50 948 27 337 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 2 718 198 2 559 128 14
Glossary of the Alternative Performance Measures Alternative Performance Measure Net property charges Other operating income and charges (excluding goodwill impairment) Operating margin Net property result Financial result (excluding changes in fair value of financial assets and liabilities and closeout costs) Net result before changes in fair value of investment properties and financial assets and liabilities Like-for-Like net rental result Loan-to-value ( LTV ) Average (annualised) financing cost Return on shareholders equity (in per share) Return on shareholders' equity (in %) Definition The sum of various property charges, net of amounts recoverable from tenants (corresponds to the sum of headings IV to XIII of the consolidated statement of total comprehensive income). Heading XV Other operating income and charges minus any goodwill impairment. Operating result before result on portfolio divided by Net rental result. Operating result before result on portfolio plus heading XVI Gains and losses on disposals of investment properties. Financial result minus heading XXIII Changes in fair value of financial assets and liabilities and any gains or losses realised on financial assets and liabilities (i.e. close-out costs). Net result minus heading XVIII Changes in fair value of investment property and heading XXIII Changes in fair value of financial assets and liabilities. Net rental result of properties available for lease at constant perimeter for two consecutive periods. The Like-for-Like scope is calculated on the basis of the EPRA definition. Nominal financial debt minus balance sheet heading II.F. Cash and cash equivalents, divided by the sum of balance sheet headings I.C. Investment property and II.A. Properties held for sale. Nominal financial debts are the accounting financial debts excluding IFRS adjustments, in other words excluding the reassessment at fair value of financial assets and liabilities and the smoothing of debt issuance costs. Annualised interest paid over the reporting period, including the credit margin, the cost of the hedging instruments and liquidity cost, divided by the average nominal financial debt over the period concerned. The return obtained by an investor over a 12-month period ending at the close of the period, assuming the reinvestment of dividends and the participation in operations to strengthen the Company s capital. The calculation is based on the average number of shares not held by the group over a 12-month period. The internal rate of return earned by an investor over a 12-month period ending at the close of the period, assuming the reinvestment of dividends and the participation in operations to strengthen the Company s capital. The calculation is based on the average number of shares not held by the group over a 12-month period. Use Gives an overview of all net property charges. Used to compare forecasts and actual figures in heading XV Other operating income and charges. Any goodwill impairment is not budgeted. Used to assess the Company s operating performance. Used to identify the operating profit before changes in the fair value of investment property. Used to compare forecasts and actual figures in the financial results. Used to identify the net result before changes in the fair value of investment property and of the financial assets and liabilities. Used to measure the change in rental income of properties available for lease at constant floor area for two consecutive periods. This is the debt ratio calculated on the basis of the fair value of the property portfolio. Used to measure the average cost of the Company s financial debt. Used to measure the profitability over 12 months (in /share) of a shareholder s investment on the basis of the value of shareholders equity. Used to measure the profitability over 12 months (in %) of a shareholder s investment on the basis of the value of shareholders equity. 15
Reconciliation tables of the Alternative Performance Measures Average (annualised) financing cost (in thousand ) 31-03-18 31-03-17 Interest paid 5 228 5 822 Annualised interest paid (A) 20 912 23 287 Annualised nominal financial debts (B) 1 083 000 1 074 568 Average (annualised) financing cost (A/B) 1.93% 2.17% Loan-to-value (in thousand ) 31-03-18 31-12-17 Nominal financial debts (A) 1 096 562 988 393 II. F. Cash and cash equivalents (B) 16 017 254 I. C. Investment properties (D) 2 619 095 2 494 360 II. A. Assets held for sale (E ) - - Fair value of portfolio at the closing date (C = D+E) 2 619 095 2 494 360 Loan-to-value (A-B)/C 41.26% 39.61% Net rental result in Like-for-Like (in thousand ) 31-03-18 31-03-17 Net rental result (A) 36 086 36 465 Net rental result linked to change in perimeter (B) 1 004 905 Net rental result on properties not available for lease (C) 893 2 226 Net rental result in «Like-for-Like» (A-B-C) 34 188 33 334 Net result before changes in fair value of investment properties and financial assets and liabilities (in thousand ) 31-03-18 31-03-17 Net result (A) 21 944 52 428 XVIII. Changes in fair value of investment properties (B) -5 016 3 053 XXIII. Changes in fair value of financial assets and liabilities (C ) 1 800 3 743 Net result before changes in fair value of investment properties and financial assets and liabilities (A-B-C) 25 160 45 632 Financial result (excl. the changes in fair value of the financial assets and liabilities and close-out costs) (in thousand ) 31-03-18 31-03-17 Financial result (A) -3 032-1 899 XXIII. Changes in fair value of financial assets and liabilities (B) 1 800 3 743 Net losses realised on financial assets and liabilities: close-out costs (C ) - - Financial result (excl. the changes in fair value of the financial assets and liabilities and close-out costs) (A-B-C) -4 831-5 642 16
Net property result (in thousand ) 31-03-18 31-03-17 Operating result before result on portfolio 30 055 29 891 XVI. Gains or losses on disposals of investment properties - 21 704 Net property result 30 055 51 596 Operating margin (in thousand ) 31-03-18 31-03-17 Operating result before result on portfolio (A) 30 055 29 891 Net rental result (B) 36 086 36 465 Operating margin (A/B) 83.3% 82.0% Other operating income and charges (excluding goodwill impairment) (in thousand ) 31-03-18 31-03-17 XV. Other operating income and charges (A) - 226-445 Goodwill impairment (B) - - Other operating income and charges (excluding goodwill impairment) (A-B) - 226-445 Net property charges (in thousand ) 31-03-18 31-03-17 IV. Recovery of property charges 4 500 1 392 V. Recovery of rental charges and taxes normally paid by tenants on let properties 22 809 23 664 VI. Costs payable by the tenant and borne by the landlord on rental damage and redecoration at end of lease - - VII. Rental charges and taxes normally paid by tenants on let properties -22 661-23 812 VIII. Other revenue and charges for letting 52 1 465 IX. Technical costs -3 121-1 999 X. Commercial costs - 183-39 XI. Charges and taxes on unlet properties -1 751-1 890 XII. Property management costs - 656-734 XIII. Other property charges -1 335-1 163 Net property charges -2 346-3 116 17
Tables of the EPRA indicators 9 EPRA earnings (in thousand) 31.03.2018 31.03.2017 Net result IFRS 21 944 52 428 Net result IFRS (in per share) 5,32 3,82 Adjustments to calculate EPRA earnings 3 216-28 501 To exclude: I. Changes in fair value of investment properties and properties held for sale 5 016-3 053 II. Result on disposals of investment properties - - 21 704 V. Negative goodwill/goodwill impairment - - VI. Changes in fair value of financial assets and liabilities and close-out costs - 1 800-3 743 EPRA earnings 25 160 23 928 EPRA earnings (in per share) 0.98 0.94 EPRA NAV & NNNAV (in thousand) 31.03.2018 31.12.2017 Net Asset Value 1 470 448 1 448 504 Net Asset Value (in per share) 57.49 56.63 To include: II. Revaluation at fair value of finance lease credit 118 127 To exclude: IV. Fair value of financial instruments 7 101 10 143 EPRA NAV 1 477 666 1 458 774 EPRA NAV (in per share) 57,77 57,03 To include: I. Fair value of financial instruments - 7 101-10 143 II. Revaluations at fair value of fixed-rate loans - 8 270-7 216 EPRA NNNAV 1 462 296 1 441 415 EPRA NNNAV (in per share) 57.17 56.35 EPRA Vacancy rate (in thousand) 31.03.2018 31.12.2017 Estimated rental value (ERV) on vacant space (A) 8 050 7 680 Estimated rental value (ERV) (VLE) (B) 140 350 141 561 EPRA Vacancy rate of properties available for lease (A)/(B) 5.74% 5.43% 9 The definitions of the EPRA indicators are published in the Annual Financial Report 2017 on page 67. Source: EPRA Best Practices (www.epra.com). 18
EPRA Net Initial Yield (NIY) & Topped-up (NIY) ( thousand) 31.03.2018 31.12.2017 Investment properties and properties held for sale 2 619 095 2 494 360 To exclude: Properties that are being constructed or developed for own account in order to be leased - 185 885-148 482 Properties held for sale - - Properties available for lease 2 433 209 2 345 878 To include: Allowance for estimated purchasers cost 61 282 59 382 Investment value of properties available for lease (B) 2 494 491 2 405 260 Annualised cash passing rental income 144 228 145 644 To exclude: Property charges - 4 363-5 567 Annualised net rents (A) 139 865 140 077 To include: - Notional rent expiration of rent free periods or other lease incentives 3 136 2 362 - Future rent on signed contracts 368 1 266 Topped-up annualised net rents (C) 143 369 143 706 (in %) EPRA Net Initial Yield (A/B) 5.61% 5.82% EPRA Topped-up Net Initial Yield (C/B) 5.75% 5.97% The scope of the property charges to be excluded for calculating the EPRA Net Initial Yield is defined in the EPRA Best Practices and does not correspond to property charges as presented in the consolidated IFRS accounts. EPRA Cost ratio (in thousand) 31.03.2018 31.03.2017 Net administrative and operating expenses in the income statement -5 745-6 238 III. (+/-) Rental charges 60-109 Net property charges -2 346-3 116 XIV. (-) Corporate overheads -3 459-3 013 XV. (+/-) Other operating income and charges - 226-445 Exclude: i. Impact of the spreading of gratuities 226 445 ii. Negative goodwill/goodwill impairment - - EPRA costs (including direct vacancy costs) (A) -5 745-6 238 XI. (-) Charges and taxes on unlet properties 1 751 1 890 EPRA costs (excluding direct vacancy costs) (B) -3 994-4 349 I. (+) Rental income 36 026 36 575 Gross rental income (C) EPRA Cost ratio (including direct vacancy costs) (A/C) 15.95% 17.06% EPRA Cost ratio (excluding direct vacancy costs) (B/C) 11.09% 11.89% This is an Alternative Performance Measure. 19
EPRA Like-for-Like net rental growth Segment 31.03.2018 31.03.2017 Évolution (in thousand) Properties owned throughout 2 consecutive years Acquisitions Disposals Properties held for sale Properties that are being constructed or developed (1) Total net rental income (2) Properties owned throughout 2 consecutive years Acquisitions Disposals Properties held for sale Properties that are being constructed or developed (1) Total net rental income (2) Properties owned throughout 2 consecutive years Brussels CBD and similar 19 168 1 032 - - 1 858 22 058 18 535-799 - 1 465 20 799 3.41% Brussels decentralised 495 - - - - 495 509 - - - - 509-2.75% Brussels periphery 1 813 - - - - 1 813 1 611 - - - - 1 611 12.57% Wallonia 2 376-0 - - 8 2 368 2 374 - - 13 - - 1 2 359 0.11% Flanders 7 293 - - - - 6 7 287 7 126 - - 14-6 7 133 2.35% Luxembourg city 1 406 - - - - 1 406 1 189 - - - - 1 189 18.30% Total 32 552 1 032 0-1 845 35 428 31 343-786 - 1 457 33 601 3.86% Reconciliation to the consolidated IFRS income statement Net rental income related to: - Properties booked as financial leases (IAS 17) - Non recurring element: restitution of reserve funds - 1-3 - 1 462 Other property charges - 1 687-1 711 Property operating result in the consolidated IFRS income statement 33 741 33 349 (b) These are properties that are being constructed or developed for own account in order to be leased. The total Net rental income defined in EPRA Best Practices, reconciled with the consolidated IFRS income statement, corresponds to the Property operating result of the consolidated IFRS accounts. 20
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