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RISK FACTORS
DESCRIPTION OF THE RISK POTENTIAL IMPACT
MITIGATING FACTORS AND MEASURES
Rental vacancy (non
occupation) of properties
1. Loss of rental income.
2. Downwards revision of rents and granting
of rent-free periods/incentives.
3. Increase in marketing costs to attract new
tenants, with an impact on the results.
4. Fall in value of the properties.
At 31.12.2015, a 1% value change would have
had an impact of around 31.34 million EUR
on the net result and around 1.57 EUR on the
intrinsic value per share (compared with
31.99 million EUR and 1.78 EUR at 31.12.2014).
It would also have had an impact on the debt
ratio of around 0.35% (compared with 0.44%
at 31.12.2014).
(Pro)active marketing and property management by in-house letting and
Property Management teams. (1, 3)
Long average duration of leases (10.5 years) with maximum 15% expiring
during a single year. (1, 2, 4)
Preference given to long leases: the office properties are, when possible,
let for a medium and even a long term; the healthcare properties for a very
long term (initial terms of 27 years in Belgium, 12 years in France, 15 years
in the Netherlands and 25 years in Germany); the pubs for an initial term of
minimum 23 years, and the financial services agencies for an initial term
of 9.7 years; the occupancy rate of the office portfolio stands at 89.7%;
that of the healthcare properties at 99.2%, and that of the property of
distribution networks at 98.0%. (1, 2, 4)
At 31.12.2015, the overall occupancy rate
1
stood at 94.9%, compared with
95.2% in 2014, i.e. a decrease of 0.3%
At 31.12.2015,the cost of holding inoccupied properties amounted at
3.45 million EUR.
Maintenance costs
Fall in the results.
Almost all the healthcare property leases are triple net contracts. For the
pubs/restaurants and agencies, the maintenance obligations are limited.
The offices are subject to a periodic maintenance policy.
Wear and tear and
deterioration of properties
Architectural, technical or environmental
obsolescence, resulting in reduced
commercial appeal of properties.
Long-term policy of systematic replacement of equipment.
Regular renovation of properties to preserve their appeal.
Sale of properties if the price offered exceeds the estimated net value of
the anticipated renovation costs.
Destruction of buildings
Interrupted activity, resulting in loss of tenant
and reduced rental income.
Portfolio insured for a total reconstruction value of 1.64 billion EUR
2
(i.e. vs.
a fair value, including land, of 1.41 billion EUR for the same properties).
Cover against vacancies caused by disasters.
Civil liability insurance as owner or project supervisor.
1
The occupancy rate is calculated based on the contractual rents and the potential rents on unlet spaces.
2
These insurances cover 44.9% of the portfolio (100% if the insurances taken by the occupants are taken into account). This amount does not include insurances contracted during
works, nor those for which the occupants are contractually responsible (i.e. for healthcare real estate in Belgium, in France and in the Netherlands, for the property of distribution
networks, and for some office buildings). The corresponding insurance premium stands at 669,007 EUR.
4