Financial Debt

Cofinimmo's financial policy is characterised by:

• A well-diversified banking pool, as well as sources of financing and derivative instruments
• Maintaining a lasting and sound relationship with banking partners with a good financial rating for the sector
• A broad spread of maturities of loans
• The arrangement of adequate long-term cover instruments against the risk of interest rate increase
• Full cover for short-term treasury bills by lines available on the long term.

This policy provides an attractive financing cost while limiting the liquidity and counterpart risk.

The Group contracts nearly all its financial debt at floating rate or, if at fixed rate, conversion immediately follows to floating rate. This allows the Group to take advantage of low short-term rates. However, as financial charges are exposed to the risk of hikes in the rate, the policy of the Group consists of securing interest rates over a rolling period, of a minimum of 3 years, for a minimum of 50% of the expected consolidated financial debt.

In this way, the Group partially cushions itself against the effect of a sharp upturn in these rates. The reasoning behind this policy is that as rents are contractually indexed, an increase in inflation affecting nominal rates would have a favourable net impact on the Group's net result, but only after a time lag of several years.

The cover period of a minimum of 3 years was chosen, on the one hand, to offset part of the depressive effect this time lag would have on the net income and, on the other hand, to forestall the adverse impact of any rise in European short-term interest rates that is not accompanied by a simultaneous increase in inflation.

Finally, a rise in real interest rates would probably be accompanied or quickly followed by a revival of overall economic activity, which would give rise to more robust rental conditions and subsequently benefit the Group's net result.