Retail estates 2017 gb by Retail Estates

RISK MANAGEMENT I

SUMMARY

O1 RISK MANAGEMENT

O2 LETTER TO THE SHAREHOLDERS 24

O3 MANAGEMENT REPORT

O4 RETAIL ESTATES ON THE STOCK EXCHANGE

REAL ESTATE REPORT

FINANCIAL REPORT

120

PERMANENT DOCUMENT

184

MISCELLANEOUS

R E T A I L

E S T A T E S

2 0 1 7 I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

206

2 Alternative performance measures and the term

“EPRA

earnings”

Alternative performance measures are standards that Retail Estates nv uses to measure and track its financial performance. The measures are used in this annual report but are not defined in a law or generally accepted accounting principles (GAAP). The European Securities and Markets Authority (ESMA) has issued guidelines applicable from 3 July 2016 for the use and explanation of alternative performance measures. The terms considered by Retail Estates nv as an alternative performance measure are contained in chapter 8 of this report, Miscellaneous, called “Glossery - Alternative performance measures”. The definition, purpose and reconciliation of the alternative performance measures are foreseen as required by the ESMA Directive. As a result of this directive, the previously used term “net current result” is no longer applicable. The designation has therefore been changed to “EPRA earnings”. There is no substantive difference with the previously used term “net current result”. I Re ta i l e s tat e s I a n n ual repo rt 2016 - 2017

RISK MANAGEMENT I

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

GEOGRAPHICAL SPREAD CLUSTERS Geographical distribution 39.37%

Antwerpen-Noord BRUGGE-NOORD

ANTWERPEN

Eeklo

Antwerpen-Zuid Sint-Niklaas

Mechelen-Noord Mechelen-Zuid

GENT-ZUID Dendermonde Wetteren

WEST-VLAANDEREN Roeselare

Lommel

Westerlo

Lier

Beringen

LIMBURG

OOST-VLAANDEREN

HASSELT

Kampenhout

VLAAMS - BRABANT Oudenaarde

BRUSSEL Zaventem BRUXELLES

Kortrijk-Noord

Halle Ath

Tongeren

Rocourt Herstal

Gembloux

HAINAUT Sambreville Aiseau-Presles

Eupen

LIÈGE

Nivelles

MONS

60.63%

Barchon

Wavre Braine-l’Alleud

BRABANT WALLON

Tournai

Genk

LEUVEN-Oost

LIEGE

Verviers

Flanders Region

Walloon Region

NAMUR-Nord Namur-Sud

Type of building

NAMUR Dinant Marche-en-Famenne

7.03%

668

Retail properties .................................

24.42%

LUXEMBOURG

ARLON

The real estate portfolio of Retail Estates nv consists of retail properties

68.55%

located outside the largest cities of Belgium

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Individual peripheral retail properties Retail clusters and retail parks Other

Fair value million EUR ...........................................

KEY FIGURES I

“

1,071

The company’s growth is also supported by its employees.

”

Retail Estates invests in acquisitions, investments in project developments and investments in the optimisation of its real estate portfolio

Commercial activities of tenants

748,136m

10.05%

13.20%

25.45%

Retail area .................................

98.13%

Growth portfolio Retail Estates nv between 1998 and 2017

Stable occupancy rate

1100000 1000000 900000 800000 700000

24.73%

600000 500000 400000

26.57%

300000 200000 100000

Food

Voluminous

Clothes/shoes

Commodities

Various

‘98

‘99

‘00

‘01

‘02

‘03

Area m2

‘04

‘0’

‘05

‘06

‘07

‘08

‘09

‘10

‘11

‘12

‘13

‘14

‘15

‘16

‘17

Fair value (in thousands EUR)

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

KEY FIGURES 2015-2017 THE FINANCIAL YEAR OF RETAIL ESTATES NV STARTS ON 1 APRIL AND ENDS ON 31 MARCH. THE KEY FIGURES BELOW ARE CONSOLIDATED FIGURES.

REAL ESTATE PORTFOLIO Total retail properties Total lettable area in m²

31/03/17

31/03/16

31/03/15

668

634

554

748,136

708,879

611,076

Estimated fair value in EUR

1,071,361,000

1,000,799,000

837,121,000

Estimated investment value in EUR

1,097,917,000

1,025,536,000

857,862,000

95.45

95.86

92.48

98.13%

98.22%

98.78%

514,970,000

474,170,000

381,212,000

50.26%

49.95%

51.54%

Net rental income

66,024,000

61,680,000

52,706,000

Property result

65,465,000

61,386,000

52,334,000

Property charges

-4,940,000

-4,504,000

-3,362,000

-2,941,000

-2,841,000

-2,888,000

Operating result before result on the portfolio

57,584,000

54,041,000

46,084,000

Result on the portfolio

13,889,000

10,557,000

6,610,000

71,473,000

64,598,000

52,694,000

-19,064,000

-21,774,000

-17,128,000

Net result

52,136,000

42,035,000

35,238,000

EPRA Earnings

39,115,000

36,473,000

28,628,000

Average rent prices per m² Occupancy rate BALANCE SHEET INFORMATION Shareholders' equity Debt ratio (RREC legislation*, max. 65%) RESULTS

General costs and other operating costs and income

Operating result Financial result

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

KEY FIGURES I

INFORMATION PER SHARE

31/03/17

31/03/16

31/03/15

Number of shares

9,008,208

8,866,320

7,559,473

Number of shares entitled to dividend

9,008,208

8,866,320

7,559,473

57.17

53.48

50.43

EPRA NAV

59.29

56.66

53.68

Net asset value (investment value) excl. dividend excl. changes in the fair value of authorized hedging instruments

58.96

56.27

53.34

3.30

3.20

3.10

Net asset value IFRS

Gross dividend per share Net dividend per share

2.310

2.336

2.325

Gross dividend yield on closing price (excl. dividend)

4.48%

4.28%

4.22%

Net dividend yield on closing price (excl. dividend)

3.10%

3.09%

3.16%

Closing price on closing date

76.90

78.00

76.64

Average share price

77.54

73.53

64.91

Evolution of share price during the financial year

-1.28%

5.65%

30.01%

Over-/undervaluation compared to net asset value IFRS

34.51%

45.85%

51.97%

* The Royal Decree of 13 July 2014 (the “RREC R.D.”) in execution of the Law of 12 May 2014 (the “RREC Law”) on regulated real estate companies (Belgian REITs).

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

REMARKABLE FACTS

Retail clusters .............................. New-build project after demolition Tournai - tailor-made project for Leen Bakker

Retail parks .............................. Acquisition of retail park at Frameries, expansion retail park at Verviers with Darcis (chocolatier) and renovation retail park at Westerlo.

Solitaire players ............................... Project development at Nivelles â&#x20AC;&#x201C; tailor-made project for Aldi after demolition and reconstruction .

I RE TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

KEY EVENTS 1998-2017

Retail Estates on the stock exchange IPO and first listing on Euronext Brussels

1998

Independant Retail Estates becomes an independently managed investment company with fixed capital

1999

Strengthening of the capital 1e public capital increase

I RE TA I L E S TATE S I A N NUAL REPORT 2016 - 2017

2002

Value real estate portfolio Real estate portfolio reaches the milestone of EUR 250 million

2003

Strengthening of the capital 2e public capital increase

2008

REMARKABLE FACTS I

Retail Estates on the stock exchange Market capitalisation more than EUR 250 million Optional stock dividend offered to the shareholders for the first time

2011

2012

Value real estate portfolio Real estate portfolio reaches the milestone of EUR 500 million

Diversification of financing sources bond issue - private placement

Value real estate portfolio Real estate portfolio reaches the milestone of EUR 1 billion

Amendment of the articles of association Sicaf becomes Belgian Reit

Diversification of financing sources bond issue private placement

(regulated real estate company)

2013

Strengthening of the capital 3e public capital increase

2014

2015

Strengthening of the capital 4e public capital increase Retail Estates on the stock exchange Market capitalisation lists at a milestone of EUR 700 million

2016

2017

Inclusion in EPRA index The inclusion in the EPRA index contributes to the shareâ&#x20AC;&#x2122;s visibility.

I RE TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

RISK MANAGEMENT I

RISK MANAGEMENT O1 O1

MARKET RISKS

OPERATIONAL RISKS

FINANCIAL RISKS

REGULATORY RISKS

I R ETA I L E STATE S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

“ The value of out-of-town retail property is mainly determined by the commercial value of the property’s location. ” I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

RISK MANAGEMENT I

The main risks facing the company are listed below. For each of the listed risks, measures and procedures are in place to assess,

O1 MARKET RISKS

institutional investor markets. The

index, which could allow these

values are generally inflation-proof

costs to increase more quickly than

due to indexation of the rent, but

the increase in rents.

they are interest rate sensitive due to the high debt ratio of many

LIMITING FACTORS AND CONTROL

much as possible. These measures

INVESTMENT MARKET FOR OUT-OF-

investors. The willingness to invest

The company seeks to reduce the

and procedures are also discussed

TOWN SHOPS AND RETAIL PARKS

on the part of institutional investors

risk of cost increases by making

below.

DESCRIPTION OF THE RISK

can temporarily decrease due

contractual agreements with its suppliers.

control and monitor the effects as

The reduced demand from

to macroeconomic factors that

The board of directors regularly

investors for out-of-town retail real

affect the availability and cost of

evaluates the company’s exposure

estate.

credit. Experience shows that the

DEFLATION RISK

private investor market, which

DESCRIPTION OF THE RISK

to risks, the financial impact of these risks and the actions that

POTENTIAL IMPACT

still represents more than 60% of

Deflation leads to a reduction in

must be taken to monitor these

The value of the portfolio is

investments, is less sensitive to this.

economic activity, which in turn

potential risks, to avoid the risks

estimated each quarter by

and/or (where relevant) to limit the

independent real estate experts.

INFLATION RISK

impact of these risks.

A decrease in valuation leads to a

DESCRIPTION OF THE RISK

POTENTIAL IMPACT

decrease in shareholder’s equity

The Group’s lease contracts

In the case of deflation, the health

This list of risks is based on the

(“NAV”) and, consequently, an

contain indexation clauses based

index will be negative, so rental

information that was known at the

increase in the debt ratio of the

on the health index, so that annual

income will fall.

time of preparation of this report.

company.

rental income evolves with the

results in a general fall in prices.

LIMITING FACTORS AND CONTROL

(indexed) inflation rate.

Other unknown and unlikely risks

or risks that are not expected to

LIMITING FACTORS AND CONTROL

have a significant adverse effect on

The value of out-of-town retail

POTENTIAL IMPACT

against the risk of deflation (and a

the company, its activities and its

property is mainly determined

The Group’s exposure to inflation

corresponding decrease in rental

financial situation may exist. The

by the commercial value of the

mainly concerns costs related

income). Virtually all of the Group’s

list of risks included in this chapter

property’s location. Due to the

to the lease, including those

lease agreements specify that the

is therefore not exhaustive.

scarcity of good locations, supply

with respect to renovation and

rental price cannot fall below the

and demand tend to exert upward

investment, which can be indexed

level of the base rent (i.e. the base

pressure in both the private and

on a basis different than the health

rent applicable when the lease

The Group is partly protected

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

agreement is concluded). But even

TERROR THREAT

in the case of these lease agree-

DESCRIPTION OF THE RISK

ments, a decrease in rent to a level

Impact of external elements such

that is lower than the current rent

as terrorism.

MACROECONOMIC FACTORS DESCRIPTION OF THE RISK Extreme volatility and uncertainty

LIMITING FACTORS AND CONTROL

in the international markets.

> Quality of the tenants with mainly

but higher than the base price cannot be ruled out.

in Net Asset Value (NAV). > Possible bankruptcies of tenants.

POTENTIAL IMPACT

retail chains and a limited annual

POTENTIAL IMPACT

Interrupted activity and

provision for doubtful debtors (on

May lead to greater difficulty in

E-COMMERCE

consequentially loss of the tenant

average about 0.50% of rent per

accessing the stock market to

DESCRIPTION OF THE RISK

and reduced rental income.

year)

acquire new capital/shareholder’s

Impact of online shopping on existing sales channels.

equity, or less liquidity available LIMITING FACTORS AND CONTROL

> Sectoral diversification of

in the debt capital markets for

The company is insured against

customers and low average

refinancing outstanding bond

POTENTIAL IMPACT

lost rental income for a period of

contractual rent

loans.

> Reduced demand for physical

18 to 36 months (depending on the

shops due to increased online

type of permit to be obtained) due

shopping.

to acts of vandalism or terror.

> Value is determined by the

LIMITING FACTORS AND CONTROL

commercial value of the

The company aims to build long-

property’s location. Retail

term relationships with financial

CHANGING ECONOMIC CLIMATE

Estates spreads its investments

partners and investors, and has

m²) due to less stock being

DESCRIPTION OF THE RISK

throughout all major shopping

unused credit facilities available to

present in the shops.

Impact of falling consumption and

areas in Belgium. These

absorb liquidity shortages.

a declining economy.

investments are concentrated

> Demand for smaller shops (fewer

LIMITING FACTORS AND CONTROL > Leasing to retailers that integrate the “multichannel” concept

in Flanders and Wallonia, in POTENTIAL IMPACT

particular in the subregions with

> Reduction in demand for shops.

strong purchasing power.

into their business model and thus integrate e-commerce into existing shops. > Splitting existing properties into smaller areas.

> Higher vacancy rates and/or lower rents when re-letting. > Decrease in the fair value of the real estate and consequently also

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

> Usually a bank guarantee of 3 to 6 months is required.

RISK MANAGEMENT I

the real estate portfolio and

to anticipate these risks and, to

consequently a decrease in the

this end, conducts a consistent

NAV and an increase in debt ratio

policy with respect to maintenance

and repairs. In practice, these LIMITING FACTORS AND CONTROL

interventions are limited mainly

Diversified customer base with a

to the renovation of car parks and

good sectoral spread. Good market

roofs.

knowledge via in-house operational teams with strong know-how and

ACQUISITIONS

knowledge of the retail business.

DESCRIPTION OF THE RISK

Weekly follow-up and discussion

A large number of buildings in the

of debt collection at the property

companyâ&#x20AC;&#x2122;s real estate portfolio

meeting.

(and in that of its subsidiaries) were acquired in the context of

O2 OPERATIONAL RISKS

POTENTIAL IMPACT

AGEING OF BUILDINGS

the acquisition of shares in real

DESCRIPTION OF THE RISK

estate companies or corporate

Risk of structural and technical

restructuring such as mergers and

deterioration during the life cycle of

(partial) demergers. Real estate

buildings.

companies over which control is

> Rental income and cash flow

acquired are typically absorbed

affected by an increase in vacancy

POTENTIAL IMPACT

by Retail Estates, which transfers

and the costs of re-letting

> Ageing of buildings, which affects

all of the capital, assets as well as

commercial attractiveness.

VACANCY AND LEASE POTENTIAL

liabilities, of these companies to

> Reduction in the quality and

Retail Estates.

DESCRIPTION OF THE RISK

solvency of tenants, resulting in

Risks in different domains: vacancy,

an increase in doubtful debtors,

in which the invested capital

POTENTIAL IMPACT

but also lease potential, tenant

thereby reducing the level of debt

does not perform.

There is a risk that hidden liabilities

quality, the ageing of buildings

collection

in these transactions will be LIMITING FACTORS AND CONTROL

and the evolution in supply and demand in the rental market.

> Loss of income and a long period

> Decrease in the fair value of

transferred to Retail Estates.

Management makes every effort

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

LIMITING FACTORS AND CONTROL

procedures when transferring

Management takes the necessary

real estate and this can result

precautions to identify possible

in research and study costs.

risks prior to acquiring control (cf.

The regulations relating to soil

due diligence with regard among

transport results in additional

others to technical, financial, fiscal

costs if contaminated soil must be

and accounting as well as legal

manipulated during construction

risks) and strives to obtain the

work at such contaminated sites.

necessary contractual guarantees from the seller/supplier.

“

Management makes every effort to anticipate these risks and, to this end, conducts a consistent policy with respect to maintenance and repairs.

LIMITING FACTORS AND CONTROL Retail Estates attempts to integrate

”

SOIL CONTAMINATION

environmental issues into due

DESCRIPTION OF THE RISK

diligence research that typically

POTENTIAL IMPACT

KEY PERSONNEL

At a number of locations where

precedes the acquisition of real

The result of such refurbishment

DESCRIPTION OF THE RISK

the company has shop premises,

estate and, as far as possible,

usually increases the commercial

The loss of key figures within the

activities were carried out in the

to place responsibility for any

value of retail properties, since

organisation.

past that were potentially polluting.

soil contamination (including a

traffic flow is often slowed and the

possible remediation obligation)

environment around the shopping

POTENTIAL IMPACT

with the transferor of the property.

areas becomes safer. However,

The loss of core competencies

it cannot be ruled out that in

by the company could lead to

POTENTIAL IMPACT Retail Estates is in principle not liable for such - by definition

TRAFFIC INFRASTRUCTURE

exceptional cases access to some

a number of objectives being

historical - contamination. The

DESCRIPTION OF THE RISK

shopping areas could become

achieved later than planned.

activities of the tenants of the

Out-of-town commercial real

more difficult.

company usually only result in a

estate is by definition mainly

very limited risk of contamination

accessible via regional roads.

LIMITING FACTORS AND CONTROL

Retail Estates pays the necessary

and moreover are the responsibility

The road network is regularly

Dialogue with the government to

attention to the well-being of

of the tenant. However, the

refurbished with new roundabouts,

develop constructive solutions in

its employees. The company’s

legislation currently applicable

cycle paths, tunnels etc. in the

the interests of all stakeholders.

remuneration policy is in line with

in the three regions provides

context of road safety.

for complex, time-consuming

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

LIMITING FACTORS AND CONTROL

the market. Great importance is attached to managing the

RISK MANAGEMENT I

competences of the team

site, off site on tape, and in the

members.

cloud).

ICT

& FRAUD

> The necessary measures have

DESCRIPTION OF THE RISK

also been taken regarding access

Risk of operational losses due to

and security.

the failure of internal processes and systems, and human errors

> For ICT-related services, Retail

LIMITING FACTORS AND CONTROL A conservative and cautious financing strategy with a balanced spread of expiration dates,

FINANCIAL RISKS

diversification of funding sources

LIQUIDITY RISK

and an extensive group of bank

DESCRIPTION OF THE RISK

partners.

Retail Estates is exposed to a

or external events (fraud, natural

Estates is supported by an

liquidity risk that could result

INTEREST RATE VOLATILITY

disaster, cybercrime, etc.,…)

external partner with which an

in a lack of cash in the case of

DESCRIPTION OF THE RISK

SLA (Service Level Agreement)

non-renewal or termination of its

The company risks an increase in its

has been concluded.

financing contracts.

financial costs that may arise from

POTENTIAL IMPACT Financial loss due to fraud, theft

the evolution of interest rates.

of sensitive data or interruption of

POTENTIAL IMPACT

activities.

> Impossibility to finance

POTENTIAL IMPACT

acquisitions or developments (via

> Increased cost of debt results

LIMITING FACTORS AND CONTROL

shareholder’s equity as well as

in an impact on earnings and

> The company has in place a

via debt) or increased costs that

cash flows, and a decrease in

reduce the expected profitability.

profitability.

corporate governance charter

and trading rules. The trading > The lack of financing to repay

> Strong fluctuations in the value

company’s website and are also

interest, capital or operating

of financial instruments with

communicated to the team.

expenses.

potential impact on NAV.

rules are published on the

> A disaster recovery plan was

> Increased cost of debt due to

> In the current context of negative

also developed to ensure that

higher bank margins, with an

interest rates, the method used

the company’s activities can

impact on earnings and cash

by some banks of demanding a

be continued in the event of a

flows.

floor for the Euribor rate (which

disaster or crisis. All data is also

is used as a reference in the

backed up in various ways (on

financing contracts) of 0%, has

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

a negative effect on the financial

> The company has limited the risk

costs. Indeed, an asymmetry is

of “floors” with its 4 major banks

present since Retail Estates must

as much as possible by allowing

pay a negative interest rate for

floors only for the portion of the

its hedging instrument while the

credits that are not covered, or by

banks use a 0% floor.

building in floors in the interest rate swaps.

LIMITING FACTORS AND CONTROL > The company applies a

COUNTERPARTY RISK

conservative policy that

DESCRIPTION OF THE RISK

minimises this interest rate risk.

Concluding bank loans and

“

A conservative and cautious financing strategy with a balanced spread of expiration dates, diversification of funding sources and an extensive group of bank partners.

”

hedging instruments with financial > Retail Estates nv uses interest

institutions entails a counterparty

rate swaps to hedge the interest

risk for the company if these

rate risk on long-term loans

financial institutions fail.

concluded at a floating interest

COVENANT RISK

with its bankers and bondholders:

rate. The maturity of these

POTENTIAL IMPACT

DESCRIPTION OF THE RISK

- Retention of BE-REIT status

instruments is matched to the

Termination of existing credit lines,

Risk of the requirements to meet

- Minimum portfolio size

maturity of the underlying credits.

which must then be refinanced

certain financial parameters under

- ICR (calculated on net rental

If the Euribor rate (interest

with another bank/financier, which

the credit agreements not being

rate for short-term loans) falls

involves restructuring costs and the

respected.

sharply, the market value of

risk of higher interest costs for the

these instruments will undergo a

new credits.

> With an interest rate swap, the variable interest rate is

> The Belgian BE-REIT Act imposes POTENTIAL IMPACT

a maximum debt ratio of 65%.

Not respecting these covenants

negative change. However, this is an unrealised and non-cash item.

results) ≥ 2

LIMITING FACTORS AND CONTROL

may result in early termination of

This risk is limited by spreading the

these credits.

bank loans and hedging instruments across different bankers.

exchanged for a fixed interest rate.

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

> The company complies with all the covenants required by the banks. In addition, in

LIMITING FACTORS AND CONTROL

accordance with Art. 24 of the

> The company generally has

BE-REIT Belgian Royal Decree,

agreed the following covenants

Retail Estates nv submits

RISK MANAGEMENT I

a budget forecast with an implementation schedule as long as the consolidated debt ratio, as defined in the same Belgian Royal Decree, is greater than 50%. This describes the measures that will be taken to prevent the consolidated debt ratio from exceeding 65% of consolidated assets. The evolution of the debt ratio is monitored at regular intervals and the influence of any planned investment operation on debt levels is analysed in advance. This obligation has no impact on the companyâ&#x20AC;&#x2122;s banking covenant risk.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

O4 REGULATORY RISKS

PERMITS

attention to reviewing the urban

legislation on BE-REITs that would

DESCRIPTION OF THE RISK

planning permits when acquiring

make it no longer possible for the

and developing retail outlets.

company to enjoy the favourable

The lack of proper urban planning permits and permits for specific properties.

RISK ASSOCIATED

> In addition, management

fiscal transparency system for

continuously tries to evaluate

BE-REITs. The company is also

changes in urban planning

subject to the risk of future adverse changes to this system.

WITH REGULATORY CHANGE

POTENTIAL IMPACT

permits and permissions and

DESCRIPTION OF THE RISK

> Impact on the value of the real

compliance with these, and to POTENTIAL IMPACT

Changes in regulations, including

estate, since this value is largely

fiscal, environmental, urban

determined by the presence of

planning, mobility policy and

all urban planning permits and

RISKS ASSOCIATED WITH THE STATUS

status of public BE-REIT. Loss of

sustainable development as well

permissions under the law on

OF PUBLIC BELGIAN REAL ESTATE

the favourable tax system of a BE-

as new provisions related to the

commercial establishments

INVESTMENT TRUST

REIT and mandatory repayment of

leasing of real estate and the

according to the desired use of

DESCRIPTION OF THE RISK

certain credits in the case of non-

extension of permits with which the

the property.

Risk of future changes to the

compliance with the rules.

company, its real estate, and/or the users to whom the real estate is made available must comply.

> If a new use must be allocated to the property due to external circumstances, changes to

POTENTIAL IMPACT

the permits granted must be

Negative influence on business,

requested.

profits, profitability, the financial situation and prospects.

> Obtaining such changes is often time-consuming and the process

LIMITING FACTORS AND CONTROL

lacks transparency, which causes

Constant monitoring of existing,

property to be temporarily

potentially changing or future

vacated, even though tenants

new laws and regulations and

had been found for it.

compliance with these, assisted by external specialist advisers.

LIMITING FACTORS AND CONTROL > Management devotes due

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

anticipate such changes.

Risk of loss of recognition of the

RISK MANAGEMENT I

LIMITING FACTORS AND CONTROL

of the assets) and may differ from

> Constant monitoring of legal

the fair value of the real estate as

requirements and compliance

recorded in the balance sheet of

with these, assisted by external

the public BE-REIT in accordance

specialist advisers.

with IAS 40.

regulator in the context of

RISKS ASSOCIATED WITH THE STATUS OF INSTITUTIONAL BE-REIT

prudential oversight of the BE-

DESCRIPTION OF THE RISK

REITs.

The company has control over

> Intensive dialogue with the

“

Constant monitoring of legal requirements and compliance with these, assisted by external specialist advisers.

”

one institutional BE-REIT: Retail > Representation of the company

Warehousing Invest nv. Like Retail

in organisations representing the

Estates nv, Retail Warehousing

BE-REIT sector.

Invest nv, in its capacity as institutional BE-REIT, is subject to

TAX LAW

the Belgian BE-REIT Act.

DESCRIPTION OF THE RISK

> Intensive dialogue with the

The exit tax owed by companies

POTENTIAL IMPACT

regulator in the context of

whose assets are taken over by

Risk of loss of recognition of the

prudential oversight of the BE-

a BE-REIT in the case of (among

status of public BE-REIT. Loss of

REITs.

others) a merger is calculated

the favourable tax system of an

taking into account Circular

REIT and mandatory repayment of

Ci.RH. 423/567.729 of the Belgian

certain credits in the case of non-

in organisations representing the

Tax Authorities of 23 December

compliance with the rules.

BE-REIT sector.

> Representation of the company

2004, whose interpretation or practical application could always

LIMITING FACTORS AND CONTROL

change. The “actual value for tax

> Constant monitoring of legal

purposes” referred to in this circular

requirements and compliance

is calculated with a deduction of

with these, assisted by external

registration fees or VAT (which

specialist advisers.

would apply in the event of a sale

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

LETTER TO THE SHAREHOLDERS I

LETTER TO THE SHAREHOLDERS “

The real estate portfolio was selectively expanded with a significant investment in the smalltown province of Hainaut, where we have been weakly represented until now. The investment in the real estate portfolio of Hainaut Retail Invest with its 25 retail outlets valued at EUR 39.33 million has changed this.

”

I R ETA I L E STATE S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

â&#x20AC;&#x153; The value of the real estate portfolio exceeds the milestone of EUR 1 billion and the market value of Retail Estates on the stock market regularly lists at a milestone of EUR 700 million. â&#x20AC;? I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

LETTER TO THE SHAREHOLDERS I

“

Dear shareholders,

The main indicator of health remains the occupancy rate which was above 98% for the 19th year in a row, with tenant turnover limited to 4.94% in the past year in a retail park with 668 properties.

Retail Estates further expanded

shop fixtures and concepts is

its investments in out-of-town

accelerating and the survival of

retail over the past financial year.

some shop concepts is being

EUR 62.86 million was invested

called into question, under

in expanding the real estate

pressure among others from

portfolio and optimising the retail

e-commerce. Consumers are

properties. This pronounced focus

better informed than ever of what

on a dynamic segment of retail in

the market has on offer and the

general and the corresponding real

prices at which they can make

estate segment in particular again

their purchases. The expansion

translated into growth of EPRA

of home delivery under pressure

earnings per share from EUR 4.23

from e-commerce has eliminated

to EUR 4.39 and an increase in the

the “cash-and-carry” concept and

value of the real estate portfolio

the retailer is obliged to expand

demand fast enough are coming

selectively expanded with a

which propelled net asset value of

the products it has at the point

under pressure more quickly

significant investment in the

the share (IFRS) from EUR 53.48 to

of sale with on-line products that

than ever. The disappearance of

small-town province of Hainaut,

EUR 57.17 per share. These results

need to be included in the sales

“outdated” concepts is not new,

where we have been weakly

support the profile of our share as

process. The retailer’s logistics

but the pressure exerted by the

represented until now. The

that of a steadily growing company

process needs to be adapted to

market is unprecedented in high

investment in the real estate

with a defensive investment profile.

accommodate this. We support

visibility sectors such as clothing

portfolio of Hainaut Retail Invest

shopkeepers in the adjustments

and shoes as well as in less eye-

with its 25 retail outlets valued at

However, we may not be blind

that this revolution entails in

catching sectors such as household

EUR 39.33 million has changed

to the daily challenges faced by

adapting their point of sale.

products and DIY.

this. Investments were also made

retailers, our customers. The life

Those who are unable to adapt

cycle of investments in

their shop concept to consumer

”

in expanding the retail parks of The real estate portfolio was

Verviers, Westerlo and Wetteren.

I R E TA IL E STAT E S I A N N U AL R E P O RT 2 0 1 6 - 2 0 1 7

In recent years, financing of the

remains the occupancy rate which

company has been strengthened in

was above 98% for the 19th year

this regard through a limited number

in a row, with tenant turnover

of capital increases amounting to

limited to 4.94% in the past year in

EUR 9.22 million, the issue of new

a retail park with 668 properties.

bond loans for an amount of EUR

The limited loss on debts owed

55 million, and the reservation

(EUR 0.29 million or 0.39% of

of part of EPRA earnings for an

gross rental income including

amount of EUR 8.44 million.

costs for the expense of tenants) also reflects the health of the

Operational results were also

real estate portfolio. When lease

good. The main indicator of health

agreements in retail parks are

“

The company’s growth is also supported by its employees. Our team has also been expanded over the past year with special attention given to management.

”

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

LETTER TO THE SHAREHOLDERS I

renewed, significant rent increases

amounts to EUR 3.30 gross

are noted that are partly reinvested

(EUR 2.310 net) and represents

in renovation or expansion work.

an increase of more than 3%

Rising or stable rents are obtained

compared to the dividend for the

at cluster locations. Some solitary

previous financial year, which is

locations that were affected by

significantly greater than the very

the creation of new retail parks are

low inflation experienced during

under greater pressure.

the same period. Retail Estates will thus distribute EUR 29.73 million

The company’s growth is also

of its current profit, and invest the

supported by its employees. Our

balance of the undistributed profit

team has also been expanded

in the company’s growth.

over the past year with special

“

Our board of directors, together with our 20 employees, is committed to achieving “sustainable growth” that will optimally benefit your investment. While we are not investing in a risk-free environment, we do make use of our knowledge and experience to reduce the risks.

attention given to management.

We trust that a reading of our

Here again there was no deviation

annual report will reinforce your

from the recruiting principles of

confidence in our company. Our

recent years that give priority to

board of directors, together with

accident that we again chose as

employees with strong experience

our 20 employees, is committed

slogan “In retail we trust”.

in retail. On 1 April 2017 a three-

to achieving “sustainable growth”

member management team was

that will optimally benefit

started that, together with the new

your investment. While we

legal counsel, will assist the CEO

are not investing in a risk-free

in the day-to-day management of

environment, we do make use of

the company.

our knowledge and experience

”

Ternat, 19 May 2017

to reduce the risks. In this, our The proposed dividend for

attention in the first place goes to

financial year 2016-2017 that we

our customers and the consumers

Paul Borghgraef

Jan De Nys

will present for your approval at

that make it possible for retailers

Chairman of the board of directors

Managing director

the next shareholders’ meeting

to achieve their sales. It was no

I R E TA IL E STAT E S I A N N U AL R E P O RT 2 0 1 6 - 2 0 1 7

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

MANAGEMENT REPORT O3 REPORTING ON FINANCIAL YEAR 2016-2017

STRATEGY – INVESTMENT IN OUT-OF-TOWN RETAIL REAL ESTATE

INVESTING VIA RETAIL ESTATES NV BELGIAN REAL ESTATE INVESTMENT TRUST

SIGNIFICANT EVENTS IN THE FINANCIAL YEAR

COMMENTS ON THE CONSOLIDATED ACCOUNTS FOR FINANCIAL YEAR 2016-2017

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE STATEMENT

MANAGEMENT OF THE COMPANY

OTHER PARTIES INVOLVED

ACQUISITION AND SALE OF RETAIL ESTATES NV SHARES – INSIDER TRADING

INFORMATION BASED ON ARTICLE 34 OF THE BELGIAN ROYAL DECREE OF 14 NOVEMBER 2007 CONCERNING THE OBLIGATIONS OF ISSUERS OF FINANCIAL INSTRUMENTS AUTHORISED TO TRADE ON A REGULATED MARKET

DATA IN ACCORDANCE WITH THE EPRA REFERENCE SYSTEM

70 72

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

â&#x20AC;&#x153; Over the past years, Retail Estates nv has concentrated on continuously improving the quality of its properties and the expansion of its real estate portfolio.â&#x20AC;? I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

Retailparks 2009-2016 2009

2014

> KRÜGER CENTER - EEKLO

> FRUNPARK - WETTEREN

12.344m² store area

10.423m² store area

> POLIS CENTER - LUIK (BARCHON)

> FRUNPARK - OUDENAARDE

11.871m² store area

7.953m² store area

2010

2015

> ATH SHOPPING CENTER

> ANTWERPEN (MERKSEM)

5.270m² store area

16.078m² store area

> ROCOURT

2012 > T-FORUM - TONGEREN 30.930m² store area

> V-MART - BRUGGE 14.110m² store area

> CHARLEROI (AISEAU-PRESLES) 8.182m² store area

> GEMBLOUX 8.237m² store area

> LOMMEL 6.938m² store area

10.955m² store area

> BRAINE L’ALLEUD 7.331m² store area

> EUPEN 7.533m² store area

> WESTELPARK - WESTERLO 11.102m² store area

> BE-MINE BOULEVARD - BERINGEN 17.637m² store area

2016 > FRAMERIES

2013

7.653m² store area

> CRESCEND’EAU - VERVIERS 21.711m² store area I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

Reporting on financial year 2016-2017 O1

The most important long-term goal for Retail Estates nv is to assemble, manage and extend a portfolio

STRATEGY – INVESTMENT IN OUT-

of out-of-town retail real estate,

OF-TOWN RETAIL REAL ESTATE

which ensures steady, long-term growth, due to its location and

GOAL – INVESTMENT IN A REPRESENTATIVE PORTFOLIO OF OUTOF-TOWN RETAIL REAL ESTATE

the quality and diversification of its tenants. The projected growth results both from the value of the

Retail Estates nv is a Belgian Real

asset and the income generated

Estate Investment Trust (“BE-REIT”),

from leasing.

more specifically a niche company that specialises in investing in out-

In the short term, this goal is

of-town retail real estate located at

being pursued by continuously

the periphery of residential areas or

monitoring the occupancy level of

along main access roads into urban

the portfolio, rental income, and

centres. Retail Estates nv buys these

the maintenance and management

real properties from third parties or

costs.

builds and markets retail buildings for its own account. The buildings

The selective purchase and

have useful areas ranging between

construction of shops at particular

500m and 3,000m . A typical retail

locations (so-called ‘retail clusters

property has an average area of

and retail parks’) are aimed at

1,000m .

simplifying the management and

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

boosting the value of the portfolio.

nv has 668 premises in its portfolio.

Retail Estates nv has currently

The retail lettable surface area

identified 46 clusters in which it

amounts to 748,136m², while the

is systematically increasing its

occupancy rate measured in rented

investments. These represent

square metres is 98.13%.

68.55% of its portfolio. The clusters are spread throughout Belgium.

A total of 9,742m² of retail area has received planning permission and

Over the past years, Retail

is under development. This will be

Estates nv has concentrated on

reflected in the calculation of the

continuously improving the quality

occupancy level upon provisional

of its properties and the expansion

delivery of the buildings.

“

In order to reconcile the profitability expectation of Retail Estates nv and its tenants over the long term, special attention is paid to rental rates.

”

of its real estate portfolio. On 31 March 2017, the fair value of In principle, Retail Estates nv

the real estate portfolio of Retail

real estate certificates owns 10

number of criteria which serve

rents its properties as a building

Estates nv and its subsidiaries is

retail properties with a fair value

as guidelines when acquiring real

shell, with the furnishings, fittings

estimated by the independent

of EUR 17.62 million. During the

estate:

and maintenance left to the

property experts at EUR 1,071.36

past financial year, one property in

discretion of the tenants. Retail

million (excluding transaction costs

the Distri-Land portfolio was sold

CHOICE OF LOCATION

Estates nv’s own maintenance

of 2.50%) and the investment

(CarpetRight in Hasselt) for an

Based on the insight that

costs are essentially limited to

value at EUR 1,097.92 million

amount of EUR 2.40 million. For

management has acquired into

the maintenance of car parks

(including transaction costs).

this, Retail Estates nv received a net

the profitability of its tenants, the

coupon of EUR 1.82 million.

locations that are selected aim to

and roofs, and can be planned in advance.

offer Retail Estates nv’s tenants

Retail Estates nv has invested a total of EUR 14.04 million in “Distri-

ACQUISITION CRITERIA

the best chances of success. In

Most of its tenants are well-known

Land” real estate certificates. It

Retail Estates nv seeks to optimise

this respect, the company seeks to

retail chains.

currently holds 86.05% of the

its real estate portfolio, in terms of

achieve a healthy balance between

issued “Distri-Land” real estate

profitability and potential capital

the supply of retail properties and

certificates. The issuer of these

gains, by paying attention to a

demand from retailers. The aim in

As of 31 March 2017, Retail Estates

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

this is to develop some forty cluster

triangle, and the “green axis” of

DIVERSITY OF TENANTS

In times of economic hardship, not

locations and retail parks.

Brussels – Namur – Luxembourg).

Retail Estates nv seeks to have as

all retail sectors are equally affected

many different retail sectors as

by a possible fall in turnover. A good

RENTAL RATES AND INITIAL PROFITABILITY

DEVELOPMENT AND REDEVELOPMENT OF

possible represented in its list of

distribution over diverse sectors

In order to reconcile the profitability

PROPERTY FOR OUR OWN ACCOUNT

tenants, with a preference for sectors

limits the risks attached to negative

expectation of Retail Estates nv

Retail Estates nv has significant

known to have valuable retail outlets.

economic developments.

and its tenants over the long term,

experience in developing new

special attention is paid to rental

shops for its tenants for its own

rates. Experience shows that the

account. Experience shows

excessive rents charged by certain

that such developments offer

project developers result in a high

architecturally attractive retail

level of customer turnover when

properties which generate a higher

sales do not rapidly meet the

initial income than shops offered

retailers’ expectations.

on the investment market. The importance of redeveloping out-of-

GEOGRAPHICAL DISTRIBUTION

town shopping clusters into large

Retail Estates nv spreads its

groups of modern, connected retail

investments across all major

properties is increasing by the year.

centres in Belgium. In practice,

Such redevelopments generally

however, it invests little in the

make possible an increase

Brussels Capital Region due to

in lettable area and a better

its extremely low supply of out-

alignment of the premises with

of-town locations. As a result,

tenants’ needs. Another distinct

the public BE-REIT prefers to

advantage of redevelopments is

concentrate its investments

that parking and road infrastructure

in Flanders and Wallonia and

is improved, and retail properties

especially in sub-regions with

are modernised.

strong purchasing power (mainly the Brussels – Ghent – Antwerp

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

O2 INVESTING VIA RETAIL ESTATES

such as its strongly diversified real estate portfolio, and the fact that it has been incorporated for an indefinite period of time.

NV BELGIAN REAL ESTATE INVESTMENT TRUST

Investments in out-of-town retail real estate have, over the years,

“

The internationalisation of the retail property market, in conjunction with the shift from city centre to out-of-town shopping,

Since 24 October 2014, Retail

become more attractive, owning

Estates nv is a public Belgian real

to a stricter permit policy adopted

estate investment trust. In its

by the government, a very limited

capacity of public BE-REIT – and

supply of high-quality shop

with a view to maintaining this

locations, and the continuously

status – the company is subject

high level of demand. The

retail concept. This tendency even

statutory threshold of 3% and/or

to the BE-REIT legislation, which

internationalisation of the retail

extends to the points of sale, which

5% (further explanation on page

contains restrictions relative

property market, in conjunction with

benefits these companies’ market

53 of this annual report).

(among others) to the activities,

the shift from city centre to out-of-

position.

debt ratio and appropriation of

town shopping, has had a positive

the results. As long as it respects

influence on the out-of-town retail

Each Retail Estates nv shareholder

are published in the daily press

the above-mentioned rules,

real estate market. This influence,

owns an investment instrument

and on the Euronext website,

the company benefits from an

as well as the tendency to further

that can be traded freely and

shareholders can follow the

exceptional tax regime. This regime

institutionalise the investment

cashed in at any time via Euronext.

evolution of their investments at

allows Retail Estates nv to pay

market for out-of-town retail real

All shares of Retail Estates nv are

all times. The company also has

virtually no corporate tax on its

estate, not only explains the rise in

held by the public and a number of

a website (www.retailestates.

earnings, thereby ensuring that

rents, but also the increase in the fair

institutional investors. On 31 March

com) with relevant shareholder

the result available for distribution

value of this property in the longer

2017, 5 shareholders reported

information.

is higher than for real estate

term. Moreover, several tenants of

that, in accordance with the

companies that do not enjoy this

the company have incorporated

transparency legislation and Retail

The net asset value (NAV) of the

status. Retail Estates nv, as a public

the benefits of distance selling – by

Estates nv’s articles of association,

share is an important indication

BE-REIT, also has additional assets

means of online selling – in their

they have stakes exceeding the

of its value. The net asset value

”

In the Euronext pricing lists, which

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

is calculated by dividing the consolidated shareholders’ equity by the number of shares. The NAV

9,000m² of gross retail space, a

reference for this transaction is EUR

significant expansion of the car

4.74 million.

park, estimated annual rental

(IFRS) amounted to EUR 57.17 on

SIGNIFICANT EVENTS IN THE

income of EUR 0.90 million and an

WESTERLO (OEVEL)

31 March 2017. This represents an

FINANCIAL YEAR

expected total investment of EUR

On 30 June 2015, Retail Estates

14.40 million.

nv acquired 9 properties in a retail

increase of 6.90% (EUR 53.48 over the previous year). On 31 March

INVESTMENTS – RETAIL PARKS

2017, the stock market price of the

INVESTMENTS WITH A VIEW TO

share was EUR 76.90, representing

EXPANDING THE

a premium of 34.51%.

(HEERZELE NV)

WETTEREN RETAIL PARK

park located at the Geel-West exit Ideally, the completion time is 24

of the Antwerp-Liège motorway.

months, which means expected

This site includes 4 other properties

delivery by September 2018.

belonging to third parties. The

In 2014, Retail Estates nv acquired

retail park has undergone a

The NAV EPRA amounts to EUR

the retail park with 14 shops and a

In accordance with the provisions

thorough renovation and will be

59.29 in the year under review

gross retail area of 10,423m². The

of the relevant municipal spatial

commercialised in the course of

compared to EUR 56.66 in the

retail park that opened in 2008

implementation plan, the shops are

2017-2018.

previous year. This increase is due

is known as Frunpark Wetteren.

mainly for large-scale retail.

to the positive change in the value

It is very successful and attracts

of the real estate investments,

consumers from far and wide.

and the result of the financial year.

With two consecutive transactions, WETTEREN (BLOVAN NV)

Retail Estates nv acquired two of

On 31 January 2017, Retail Estates

these four properties during the

Compared to the previous financial

Retail Estates nv acquired

nv acquired a stake (50%) in

past financial year. This acquisition

year, the number of shares of Retail

controlling interest (51%) of real

a second real estate company,

is intended to integrate these 2

Estates nv increased by 141,888.

estate company Heerzele nv on

Blovan nv, which owns a semi-

retail properties into the retail

Hence, there was no dilution of the

30 August 2016, which is owner

logistics facility in Wetteren that

park. On 25 October 2016, a shop

NAV per share.

of property in Wetteren on which,

is used for business-to-business

in Westerlo of approx. 995m²

after obtaining the necessary

trade.

leased to bvba Merkkleding was

permits, it wishes to expand its retail park in Wetteren.

purchased for EUR 1.98 million. The property is fully leased with

Expected annual rental income

an expected annual rental income

amounts to EUR 0.12 million. Then

The total operation consists of

of EUR 0.30 million until 2020.

on 14 December 2016, property

the creation of approximately

The investment value used as a

located at Bell Telephonelaan 2/1,

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

Westerlo, with an investment value

For more information, please see

of EUR 1.70 million, was acquired

the press release of 23 December

in the context of a contribution in

2016, available on the Retail

kind. This comprises a shop leased

Estates nv website.

to Action BVBA and a solar panel installation (see also below).

The purchase price of the shares

Expected annual rental income

of the real estate company in

amounts to EUR 0.11 million.

question was paid for half in cash, and an amount of EUR 11.33

HAINAUT

million was paid by the issue on 5

On 23 December 2016, Retail

April 2017 of 174,404 new shares

Estates nv acquired all shares of a

that will share in profit from the

real estate company that has 25

financial year commencing on 1

retail properties spread across the

April 2017.

province of Hainaut. All of these are leased to retail chains that mainly

VERVIERS (FONCIÈRE DE LA STATION

belong to the discount segment.

VERVIETOISE BVBA)

Shop area has been leased for

On 6 January 2017, the Group

example to Lidl, Action, Chaussea,

acquired the grounds (property

Trafic, Bel&Bo and Shoe Discount

encumbered with a ground lease)

(Bristol).

of its retail park in Verviers by the acquisition of the real estate

The retail properties have a total

company Foncière de la Station

shop surface area of 25,738m² and

Vervietoise bvba by Finsbury

represent expected annual rental

Properties nv (50%) and Retail

income of EUR 2.42 million. Gross

Warehousing nv (50%) for an

initial return on the investment is

amount of EUR 0.37 million.

6.44%.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

The above acquisitions were made

In addition, the building in Verviers,

or by constructing a new addition

The sold properties are located in

at a valuation that corresponds to

a custom project of approximately

to the shop. Sometimes a choice

Aartselaar (1 property, 3,480m²),

the fair value of the relevant shops

2,000m² for chocolatier Darcis,

is even made for a combination of

Spa (1 property, 1,470m²), Waregem

or retail parks, as determined by

was completed on 1 July 2016. This

both.

(1 property, 999m²), Mons (2

real estate experts Cushman &

project is the object of a financial

Wakefield, CBRE or Stadim.

lease. The total investment

Renovations sometimes include

(1 property, 104m²). The fair value

properties, 2,249m²) and Eeklo

amounts to EUR 1.03 million.

more than just an expansion of

of these properties amounted to

PROJECT DEVELOPMENT

This investment represents a

the retail area; Retail Estates nv

EUR 7.04 million at the time of sale.

The project in Froyennes was

strengthening of the retail park

makes regular use of renovation

completed on 30 September 2016.

since an important hospitality

opportunities to also remove an

In a notarial deed of 28 September

The new 1,500m² retail building has

sector function was added.

existing shop façade and replace it

2016, the Distri-Land real estate

with a contemporary version that

certificate for the property located

better fits the tenant’s image.

in Hasselt, leased to CarpetRight,

been leased to Leen Bakker for an annual rent of EUR 0.13 million.

Finally, a building in Tienen (fair

was sold for a net sale price of EUR

value EUR 3.95 million) and a shop An existing shop in Sint-Stevens-

in Westerlo (fair value EUR 1.74

Such investments allow us to

2.41 million. The sales proceeds

Woluwe was renovated into two

million) were completed.

build “win-win” relationships with

were paid to the depositary receipt

separate shops with surface areas

tenants. Available land is put to

holders on 30 September 2016. For

of 1,027m² and 1,042m². This

OPTIMISATION OF REAL ESTATE

work, and revenue growth allows

this, Retail Estates nv received a net

project was also completed on 30

PORTFOLIO

the tenant to pay the rent increase.

coupon of EUR 1.82 million.

September 2016. One unit was

Retail Estates nv pays close

leased to Beter Bed, the other to

attention to the changing needs

DISPOSALS

In addition, 8 lots of the Westende

Cool Blue, the market leader in

of its tenants with respect to

In the past financial year, properties

site were sold for a net sale price

online sales of electronics, and

shop area. Several tenants are

were divested for a net sale price of

of EUR 0.072 million per lot. A total

household and sporting goods,

systematically expanding their

EUR 9.72 million. A net capital gain

capital gain of EUR 0.025 million

which is now also systematically

product range and regularly request

of EUR 0.28 million was realised on

per lot was realised on these 8 lots.

opening physical shops. The total

an expansion of their shop. This can

these disposals.

rent for both units is EUR 0.22

take place through the acquisition

million.

of space from adjacent tenants

6 retail properties were sold for a

sold for a net sale price of EUR 0.02

who sometimes have too much,

net sale price of EUR 7.29 million.

million.

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Finally, 3 car parks in Jette were

MANAGEMENT REPORT I

These disposals find their context

borrowed capital (financing of

in an annual recurring sales

working capital by the banks, issue

programme of individual shops that

of a bond loan…).

“

Retail Estates nv pays close attention to the changing needs of its tenants with respect to shop area.

do not belong to Retail Estates nv’s core portfolio due to their location,

MANAGEMENT OF THE REAL ESTATE

shop size and/or commercial

PORTFOLIO

activity.

OCCUPANCY RATE

”

The occupancy rate of the Retail

INVESTMENTS: CONCLUSION

Estates nv real estate portfolio is

The acquisitions and completion of

98.13%.

own developments in the 20162017 financial year, less disposals,

Of course the occupancy rate

The necessary provisions have been

DAMAGE CLAIMS

resulted in an increase of EUR

must be seen as a snapshot

set aside for these uncollectable

In the past financial year, no

67.11 million for the real estate

behind which are hidden a series

debts.

significant damage by fire or

portfolio. Total rental income

of transactions that took place in

increased by EUR 1.99 million in

the past financial year. They do

At the end of this financial year,

Unfortunately, vandalism is a

the 2016-2017 financial year due to

not imply a guarantee regarding

outstanding trade receivables

recurring problem for shops located

these investments, and decreased

the future since the legislation on

amount to EUR 0.57 million. EUR

at the outskirts of large urban

by EUR 0.05 million in the past

commercial leasing is mandatory

0.15 million concerns the operating

agglomerations.

financial year due to the disposals.

and allows for cancellation every

and reserve fund. Taking into

If the acquisitions and disposals

three years for all tenants.

account the guarantees obtained

other major disaster took place.

2016, rental income would have

RENTAL INCOME

requested bank guarantees - the

ACQUISITION OF FULL PARTICIPATION IN INSTITUTIONAL BE-REIT RETAIL WAREHOUSING INVEST NV

increased by EUR 4.23 million.

In the past financial year, 4

credit risk on trade receivables

On 29 May 2012, controlling

would have taken place on 1 April

- both rental guarantees and the

smaller SME tenants and the retail

is limited to approximately

interest was acquired of Retail

The investments are financed by a

company Charles Vögele (clothing

45% (EUR 0.19 million) of the

Warehousing Invest nv through

mix of shareholder’s equity (issue

stores declared bankrupt, 1 shop

outstanding amount on 31 March

the acquisition of 62.50% of the

of new shares by contribution in

of which still leased from Retail

2017.

shares. On 5 October 2016, an

kind or in the capital market) and

Estates nv) filed for bankruptcy.

agreement was concluded with

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

a view to the acquisition of the

transaction has only a limited

remaining minority interest. This

impact on the consolidated results.

was done through the acquisition of all shares of RWI Invest (then

The transaction consists of two

called Databuild Retail nv), the

parts. The first part concerns the

holder of this minority stake.

transfer and payment by 5 October 2016 of approximately half of the

Retail Warehousing Invest owns

shares for an amount of EUR 7.68

30 retail properties throughout

million. The second part consisted

Belgium. RWI Invest has no assets

of the issue of 115,735 new shares

other than 375 shares of Retail

in the context of a capital increase

Warehousing Invest nv, which then

by contribution in kind with a

represented 37.50% of the share

contribution value of EUR 7.52

capital of that company.

million (see below).

Since the acquisition of this

CAPITAL INCREASES IN

majority interest, Retail Estates nv

THE CONTEXT OF AUTHORISED CAPITAL

has systematically recognised

CAPITAL INCREASES

its obligation to purchase this

BY CONTRIBUTIONS IN KIND

minority interest as a debt in the

On 14 December 2016, the board

consolidated financial statements.

of directors made two capital

The amount of this debt was

increases in the framework of

adjusted to the quarterly price

the authorised capital by two

review clauses contained in the

contributions in kind.

agreement of 29 May 2012. First, 187 shares of RWI Invest nv

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

The result of Retail Warehousing

(then Databuild Retail nv), with

Invest nv has always been fully

a contribution value of EUR 7.52

consolidated. Consequently, this

million, were contributed as part

MANAGEMENT REPORT I

of an initial capital increase. This

increases, 141,888 shares were

MERGER BY ACQUISITION OF

On 31 March 2017, the merger by

contribution was compensated

issued, bringing the total number of

SUBSIDIARIES

acquisition of the company TBK

by the issue of 115,735 shares of

issued shares as of 31 March 2017

On 1 July 2016 and 3 October

bvba by Retail Estates nv was

Retail Estates nv. The new shares

to 9,008,208.

2016, the mergers by acquisition

adopted by the managers and the

of the companies PanEuropean

board of directors of the respective

EUR 65 and will share in the profit

IMPLEMENTATION OF THE FINANCING

Retail Properties nv and Vlaamse

companies, with immediate effect.

for the financial year commencing

STRATEGY

Leasing Maatschappij nv by Retail

on 1 April 2016. As a result of this

The loan portfolio was restructured

Estates nv were adopted by the

Mergers of subsidiaries simplify

contribution, Retail Estates nv

during the first semester of

board of directors of the respective

administrative management and

acquired the balance of the shares

the past financial year. Credit

companies, both with immediate

reduce the taxable income of the

of Databuild Retail nv which it did

extensions were obtained from

effect.

subsidiaries of Retail Estates nv.

not yet own. The most important

all the major Belgian banks in

asset of this company is a minority

which maturities and interest rates

On 23 December 2016, the mergers

INCLUSION IN EPRA INDEX

interest in the institutional BE-REIT

were renegotiated. In addition, in

by acquisition of the companies

On 2 March 2017, the EPRA website

Retail Warehousing Invest nv, for

the second quarter of financial

PanEuropean Property Investments

announced that Retail Estates nv

which Retail Estates nv now directly

year 2016-2017, Retail Estates nv

nv and Localiège nv by Retail

will be included in the “FTSE EPRA/

or indirectly controls all shares.

realised two private placements

Warehousing Invest nv (institutional

NAREIT Developed Europe Index”

of securities to institutional

REIT) were adopted by the board

from 20 March 2017, after market

Then, a shop in Westerlo was

investors for a total of EUR 55

of directors of the respective

close. In the last quarterly review of

contributed (see above). The

million and a maturity of ten years.

companies, with immediate effect.

the index, Retail Estates nv met all

contribution was compensated by

The combination of these credit

the issue of 26,153 new shares of

rearrangements and bond issues

On 20 January 2017, the mergers

Retail Estates nv. The new shares

resulted in an extension of the

by acquisition of the companies

were issued at the issue price of

average maturity of the portfolio

Fimitobel nv and Texas

The inclusion of Retail Estates nv in

EUR 65 and will share in the profit

(to 5.08 years), diversification of

Management nv by Retail Estates

the EPRA index contributes to the

for the financial year commencing

financing sources and a decrease in

nv were adopted by the board

share’s visibility. We believe that this

on 1 April 2016.

the weighted average interest rate

of directors of the respective

inclusion will promote the interests

(from 3.42% on 31 March 2017 to

companies, effective 31 January

of new institutional investors and will

2.86% on 31 March 2018).

2017.

increase the liquidity of the share.

were issued at the issue price of

As a result of these capital

the criteria for inclusion set by the EPRA.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

“

of the board of directors from

The inclusion of Retail Estates nv in the EPRA index contributes to the share’s visibility. We believe that this inclusion will promote the interests of new institutional investors and will increase the liquidity of the share.

”

two to three, and consequently to replace the sixth paragraph of Article 12 of the articles of association with the following text:

“Each director may authorise another member of the board by letter, by fax, by electronic mail or in another written manner to represent him at a specific meeting. A director may represent a maximum of three colleagues.”. INCREASE OF THE CAPITAL AND ISSUE OF NEW SHARES

On 5 April 2017, 174,404 new shares were issued by contribution

The goal of the EPRA is to promote,

appointment of Mr. Vic Ragoen

of the remaining debt claim

develop and represent the

and Ms. Ann Gaeremynck until the

relating to the purchase of the

European listed real estate sector.

2021 annual shareholders’ meeting.

shares of the real estate company

On 22 May 2017, the extraordinary

Hainaut Retail Invest, which has 25

EVENTS AFTER THE DATE OF THE

shareholders’ meeting approved

retail properties spread throughout

BALANCE SHEET

moving the shareholders’ meeting

the Province of Hainaut. Following

APPOINTMENT OF NEW DIRECTORS AND

to the penultimate Monday of July,

this issue, the registered capital

CHANGE OF SHAREHOLDERS’ MEETING DATE

and the extraordinary shareholders’

of Retail Estates was increased to

On 4 April 2017, the extraordinary

meeting decided to increase the

EUR 206,612,347.44, represented

shareholders’ meeting of

number of colleagues that may

by 9,182,612 shares. The new

Retail Estates nv approved the

represent a director at the meeting

shares will share in the company’s

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

profit from 1 April 2017.

MANAGEMENT REPORT I

Current assets amount to EUR 11.95 million and consist of EUR 5.69 million from assets held for

COMMENTS ON THE

sale, EUR 0.94 million from trade

CONSOLIDATED ACCOUNTS FOR

receivables, EUR 3.16 million from

FINANCIAL YEAR 2016-2017

tax assets and other current assets, EUR 0.98 million from cash and

BALANCE SHEET

cash equivalents, and EUR 1.18

Investment properties (including

million from accrued charges and

project developments) increased

deferred income.

from EUR 1,000.80 million to EUR 1,071.36 million. This is mainly

The shareholderâ&#x20AC;&#x2122;s equity of the

due to expansion of the portfolio

public BE-REIT amounts to EUR

by EUR 62.86 million and the

514.97 million. On 31 March 2017,

sale of investment properties

registered capital amounted to

amounting to EUR 5.37 million. The

EUR 202.69 million, an increase

non-current assets held for sale

of EUR 3.19 million compared

decreased from EUR 8.22 million

to last year due to the capital

to EUR 5.69 million. The assets

increases mentioned above. After

held for sale are booked at the

deduction of capital increase costs,

end of each quarter for which the

the capital on the balance sheet

sales agreement was signed but

amounts to EUR 197.60 million.

for which the deed of sale has not

141,888 new shares were created

yet been executed. EUR 1.26 million

during financial year 2016-2017.

in assets was added to the assets

Issue premiums also increased

held for sale in financial year 2016-

from EUR 151.50 million to EUR

2017, and EUR 3.81 million in assets

157.53 million for the same reason.

were sold.

Reserves amount to EUR 107.71 million and consist of the reserve

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

for the balance of the changes in

of derivatives that do not qualify

fair value of authorised hedging

as cash flow hedges are booked

instruments not qualifying for

immediately to the profit and

hedge accounting (EUR 101.29

loss account. Changes in the fair

million), profit from previous

value of the swaps qualifying as

financial years carried forward

cash flow hedge are recognised

(EUR 37.86 million), available

directly in shareholderâ&#x20AC;&#x2122;s equity and

reserves (EUR 13.41 million), legal

are not included in the income

reserves (EUR 0.13 million), less

statement. The negative value of

the impact on the fair value of

these instruments is the result of

estimated transfer rights and costs

the strong decline in interest rates

resulting from the hypothetical

that has continued since the end of

disposal of investment properties

2008 under the influence of the US

(EUR -26.70 million) and less

and European central banks.

the variations in the fair value of financial assets and liabilities

The net result of the financial year

(EUR -18.29 million). The Group

amounted to EUR 52.14 million and

uses financially derived products

consists of EUR 39.12 million from

(interest rate swaps) to cover

EPRA earnings, EUR 13.89 million in

interest rate risks arising from a

result on portfolio, and EUR -0.87

number of operational, financial

million in variations in the fair value

and investment activities. Financial

of financial assets and liabilities.

derivatives are initially booked at

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

cost and revalued to fair value on

Non-current liabilities amount

the subsequent reporting date. The

to EUR 511.23 million and consist

derivatives currently used by Retail

of EUR 485.33 million of non-

Estates nv qualify as accounting

current financial debts with an

cash flow hedges only to a limited

average maturity of 5.08 years. The

degree. Changes in the fair value

remaining non-current liabilities

MANAGEMENT REPORT I

relate to authorised cash flow

PROFIT AND LOSS ACCOUNT

commercial costs due to expansion

financial assets and liabilities)

hedges (interest rate swaps)

The net rental income increased by

of the portfolio and the increase

amounts to EUR 18.20 million

and the debt with respect to the

EUR 4.34 million, mainly due to the

in personnel expenses due to

compared to EUR 16.78 million

minority shareholders of Heerzele

acquisition of additional properties

the expansion of staff. Operating

last year. The fall in the weighted

nv and Blovan nv.

and the completion of projects in

corporate costs amount to EUR

average interest rate from 3.64% to

the 2016-2017 financial year (EUR

2.94 million, a slight increase of

3.42% slightly offsets the increase

Current liabilities amount to EUR

1.08 million), and acquisition of the

EUR 0.10 million over last year,

in the interest charges due to taking

61.14 million and consist of EUR

properties and completion of the

mainly due to higher taxes and

additional loans to finance further

11.98 million from trade debts and

projects in the previous financial

legal costs.

expansion of the portfolio. The

other current debts. These include

year, which yielded a full year’s

in particular trade debts amounting

rent for the first time (EUR 4.00

The result on the sale of

19.06 million, compared to EUR

to EUR 0.36 million, estimated

million). The sale of properties

investment properties is EUR 0.28

21.77 million last year. The decrease

tax liabilities for EUR 0.75 million,

resulted in a decrease in net rental

million. This profit is the result of

in total charges is the result of the

invoices to be received for EUR 6.21

income of EUR 0.05 million. The

the sale of EUR 9.44 million in

change in the fair values of the

million, and exit taxes amounting to

sale of the properties during the

properties (investment value). We

swaps that are not defined as cash

EUR 4.33 million. Current financial

previous financial year resulted in

refer to the “Disposals” section in

flow (variations in the fair value

debts amount to EUR 30.91 million.

a decrease in net rental income

this chapter for more details.

of financial assets and liabilities).

financial result amounts to EUR

in this financial year of EUR 0.54

However, this result is an unrealised

Other current liabilities decreased

million. The impact of contract

The positive change in the fair value

from EUR 15.63 million to EUR 11.50

renewals is EUR 0.11 million.

of investment properties amounts

million and mainly consisted of the

Furthermore, there is the impact

to EUR 13.75 million and is mainly

EPRA earnings (this is the net result

remaining debt for the acquisition

of discounts (EUR -0.05 million),

explained by indexations, increases

without the result on portfolio)

of Hainaut Retail Invest nv shares.

vacancy (EUR -0.96 million) and

in yield at top locations, and the

amounts to EUR 39.12 million,

This debt was brought into the

indexation (EUR 1.01 million).

impact of rental renewals at retail

compared to EUR 36.47 million last

parks. The other result on portfolio

year.

capital of Retail Estates nv on 5 April 2017.

Property costs amounted to EUR

and non-cash item.

amounts to EUR -0.14 million.

4.94 million and increased by EUR As of 31 March 2017, the weighted

0.44 million, mainly due to the

The financial result (excluding

average interest rate is 3.42%.

increase in technical costs and

variations in the fair value of

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

PROSPECTS FOR FINANCIAL YEAR 2017-2018

allocate the profit of the financial

For financial year 2017-2018, on the

annual accounts, as follows:

year, as shown in the statutory

basis of the planned composition EUR

of the real estate portfolio and barring unforeseen events, the

Result of the year

company expects the net rental

Reserve for the positive/negative balance of changes in the fair value of real estate properties

result to amount to EUR 68.40

Changes in fair value of financial assets and liabilities

million. This figure only takes into

Profit to be appropriated for the financial year

37,471

account purchases and sales for

Profit carried forward from the previous financial year (IFRS)

30,147

which a sales contract was signed

Increase in profit carried forward due to merger and other

12,437

and investments that were granted and tendered. As in previous years, Retail Estates

44,096 -7,494 869

Other Payment of dividend 31 March 2017

-29,727

Result to be carried forward

50,328

nv expects that the dividend for the 2017-2018 financial year will grow in

The board of directors of Retail

MISCELLANEOUS ITEMS

line with previous years so that it at

Estates nv will propose to the

RESEARCH AND DEVELOPMENT

BRANCHES

least keeps up with inflation. Retail

shareholdersâ&#x20AC;&#x2122; meeting, to be held on

The company has not undertaken

The company does not have any

Estates nv is aiming at a dividend

24 July 2017, a gross dividend for the

any activities or incurred any

branches.

of EUR 3.40 gross (EUR 2.38 net)

financial year 2016-2017 (which

expenditure in the area of research

for financial year 2017-2018. This

began on 1 April 2016 to end on 31

and development.

would represent an increase of

March 2017) in the amount of EUR

3.03% compared with the dividend

3.30 (or EUR 2.31 net, i.e., the net

for financial year 2016-2017 (EUR

dividend per share after the

3.30 gross).

deduction of 30% in withholding tax) per share, which participates in

ALLOCATION OF RESULTS

the result of the financial year

The board of directors proposes to

2016-2017.

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

Corporate Governance O5

REMUNERATION REPORT INTRODUCTION AND CONTEXT Retail Estates nv has prepared

CORPORATE GOVERNANCE

a report on the remuneration

STATEMENT

policy for its directors. The board of directors has 10 non-executive

This declaration adheres to the

and 2 executive directors, i.e. the

provisions of the Belgian Corporate

executive chief financial officer (Ms.

Governance Code 2009 and

Kara De Smet) and the managing

the Belgian Act of 6 April 2010

director (Mr. Jan De Nys) who

amending the Belgian Companies

together assume the effective

Code.

management of Retail Estates nv and its subsidiaries.

Retail Estates nv applies the Code of 12 March 2009 as its reference

The report was prepared by

code (hereinafter referred to as “the

the remuneration committee in

Code”).

accordance with Article 96 §3 of the Belgian Companies Code and

On 5 May 2015, an adjusted version

was approved by the board of

of the Corporate Governance

directors’ meeting of 19 May 2017.

Charter – taking into account the relevant recent developments

It will be submitted to the annual

– was approved by the board of

shareholders’ meeting of 24

directors. The Charter can be

July 2017 which is to approve or

found at the website:

disapprove the report by a separate

www.retailestates.com.

vote.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

REMUNERATION POLICY

Internal procedure â&#x20AC;&#x201C;

REMUNERATION OF THE DIRECTORS

Principle

financial year 2016-2017

1. In the course of the financial

The remuneration policy of

The remuneration committee met

year 2016-2017, the following

Retail Estates nv has been

twice during the past financial

remuneration (in EUR) was

prepared in such a way that

year to verify and adjust where

awarded to Mr. Jan De Nys â&#x20AC;&#x201C;

it takes into account market-

necessary the remuneration

managing director:

compliant remuneration, which

budgets of the directors individually

enables the company to attract

and the personnel budget in its

Jan De Nys - managing director

and retain talented directors,

entirety, in accordance with the

Fixed remuneration

while also considering the

responsibilities of the persons in

Premiums group insurance

39,000

size of the company and its

question and the medium and long-term objectives that the

Variable remuneration

72,600

financial prospects. Moreover, this remuneration must also be

board of directors has established

proportionate to the responsibilities

for the company. In this respect,

The remuneration for the position

company. He carries out his

associated with the position of a

the executive directors are

of managing director, assumed by

mandate personally as an

director in a listed company. On the

analysed both in terms of the

Mr. Jan De Nys since the initial

independent manager.

other hand, the expectations of the

overall remuneration level and

public offering of Retail Estates nv

shareholders must also be met.

the distribution of the different

in March 1998, takes into account

The fixed remuneration is indexed

components.

2016-2017 280,000

TOTAL

391,600

his experience and track record in

annually on 1 April. The variable

The remuneration and nomination

establishing and developing the

remuneration of the managing

committee analyses the applied

company. It further takes into

director is determined annually

remuneration policy on a yearly

account his experience gained in

by the board of directors, based

basis and assesses whether

the retail environment in Belgium

on a proposal made by the

an adjustment needs to be

and abroad, as well as his

remuneration committee. This

made and makes the necessary

commercial, legal and financial

allowance shall not exceed 25% of

recommendations to the board

knowledge which is necessary for

the fixed remuneration. It is linked

of directors, which in turn must

the development of a portfolio of

to the achievement of a number of

propose their recommendations to

out-of-town retail properties and

qualitative and quantitative criteria,

the shareholdersâ&#x20AC;&#x2122; meeting.

the daily management of a listed

which for financial year 2016-2017

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

concerned the following: > Financial criteria (weighting

> Management skills (weighting

policies. The notice period was

nor any other benefits, except a

15%):

approved, in accordance with legal

computer and a mobile phone.

Expansion of management team

provisions, by the board of directors

25%):

and staff, investor relations and

upon the recommendation of

Besides the above-mentioned

Net current profits per share

“corporate identity”.

the remuneration committee,

remuneration, Mr. Jan De Nys

and taking into account the

does not receive a separate

excluding all changes in fair value of the assets and interest

The variable remuneration is paid

contributions by the managing

remuneration for the exercise of his

rate hedging instruments and

annually in July after approval

director to the growth of the

director’s mandate.

the results achieved on the

of the annual accounts and the

company since its initial public

realisation of assets;

remuneration report by the annual

offering in March 1998.

2.Remuneration of the chairman

shareholders’ meeting. There are no > Portfolio management

of the board of directors, Mr. Paul

special provisions for the recovery

In the event of termination by

(weighting 25%):

of variable remuneration awarded

the managing director, the notice

Collection management and

on the basis of inaccurate financial

period shall be six months.

occupancy level;

data. The provisions of Civil Law

> Real estate portfolio optimisation

Borghgraef. The fixed remuneration of the chairman was set at EUR 60,000,

governing undue payments apply

If the managing director is unable

given the regular presence and

fully.

to perform his duties because of

involvement of Mr. Paul Borghgraef

disability (illness or accident),

and given the fact that he is the

(weighting 25%): Develop “clusters”, improvement

The agreement with the managing

Retail Estates nv shall continue

daily interlocutor and sounding

works and expansion of retail

director provides for a notice period

to pay him the fixed portion of

board of the managing director

premises with a long-term focus,

of eighteen months in the event

his remuneration for a period of

between board meetings. Variable

growth of rental value, updating

of termination by Retail Estates

two months from the first day of

remuneration and other benefits

of buildings and environmental

nv. Any termination compensation

disability. He shall subsequently

or severance payment are not

elements;

which is paid if the public BE-

receive a disability pension,

foreseen.

REIT waives performance during

guaranteed by an insurance

notice period, shall be calculated

company which is equal to 75% of

Mr. Paul Borghgraef is a non-

objectives (weighting 10%):

in accordance with the fixed

the fixed remuneration.

executive director and has been

Buy and sell assets, growth of the

remuneration and the annual

company;

premiums for group insurance

> Implementation of strategic

chairman of the board of directors No stock options are provided,

since 12 January 2016. He does not

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

receive a separate remuneration for the exercise of his directorâ&#x20AC;&#x2122;s mandate. Non-executive directors

Annual fixed

Performance-related

remuneration (EUR)

(EUR)

TOTAL (EUR)

Board of directors / committee RenĂŠ Annaert

6,000

10,500

16,500

Jean-Louis Appelmans

6,000

9,000

15,000

of EUR 6,000. They also receive

Christophe Demain

6,000

4,500

10,500

attendance fees amounting to EUR

Hubert De Peuter

6,000

1,500

7,500

1,500 per meeting for attending

Rudy De Smedt

6,000

12,000

meetings of the board of directors

Vic Ragoen1

6,000

9,000

15,000

and its committee(s).

Jean Sterbelle

6,000

3,000

9,000

The non-executive directors receive fixed annual remuneration

Marc Tinant

6,000

3,000

9,000

Non-executive directors do not

Leen Van den Neste

6,000

9,000

15,000

receive performance-related

Herlinda Wouters

6,000

12,000

60,000

61,500

121,500

remuneration such as bonuses or stock-related long-term incentive schemes or fringe benefits.

TOTAL non-executive directors

1. Vic Ragoen was director until 1 July 2016, since then he attended the board of directors as consultant. He was reappointed as director as of 4 April 2017.

Based on the above, the following fees were paid to the non-executive directors in 2016-2017, pursuant to

Indemnification and insurance of

Future developments

the meetings that took place at the

directors

The board of directors, at

applies to both the executive and

registered office of the company:

The company has an insurance

the recommendation of the

non-executive directors and to

policy to cover the liability of its

remuneration committee, does not

financial years 2016-2017 and 2017-

directors.

intend to make significant changes

2018.

to the remuneration policy. This

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

CORPORATE GOVERNANCE CODE (2009 VERSION)

retail companies with which a non-

Retail Estates nv seeks to comply

– between the company and one

as much as possible with the

of its non-executive directors could

provisions of the Corporate

possibly fall under the conflict of

Governance Code. There are,

interests regulation (‘significant

Stichting Administratiekantoor 'Het Torentje' group and Leasinvest, acting in mutual consultation

however, deviations in several

commercial relationships’).

% at date of registration1

Pro forma % at 31.03.20172

10.03%

10.21%

FPIM nv (Belfius Insurance)

9.76%

9.34%

KBC Group nv

7.59%

7.44%

executive director is associated

areas. According to the Code’s “comply or explain” principle, it is

DEVIATIONS FROM PRINCIPLE 4:

AXA nv

7.01%

7.07%

permissible to take into account

Item 4.6. The recommended 4-year

7.99%

5.17%

the relatively small size and unique

mandate for directors is viewed as

Federale Verzekering/Fédérale Assurance

characteristics of the company.

too short, given the complexity of

General public

57.62%

60.77%

the type of property in which Retail DEVIATIONS FROM PRINCIPLE 2:

Estates nv specialises. As a result,

Item 2.9. The board of directors

all mandates last for 6 years.

has not yet appointed a company secretary.

SHAREHOLDING STRUCTURE

1 On the basis of the denominator at the time of registration. 2 On the basis of the number of voting rights, which appears from the information received from the company’s shareholders, and taking into account the denominator applicable at 31.03.2017 (9,008,208 shares), this table shows, for information only, the (supposed) shareholding structure. It should be noted that this does not necessarily correspond with reality (not for all shareholders in any case), since the company is not necessarily aware of share transactions that did not result in the triggering of a notification threshold, and thus did not result in a transparency notification.

Based on the transparency DEVIATIONS FROM PRINCIPLE 3:

declarations received and the

Item 3.5. In view of the company’s

information which Retail Estates nv

With the exception of the above-

The transparency declarations

activities, and particularly

possesses, the main shareholders

mentioned shareholders, no

received are available for

considering the fact that

are:

other shareholder has declared

consultation on the company’s

negotiating and concluding

ownership of more than 3% of the

website www.retailestates.com

specific contracts is part of the

issued shares of Retail Estates nv.

(under Investor Relations / The

day-to-day management and

According to the criteria applied by

share / Shareholding structure).

falls within the CEO’s powers

Euronext, Retail Estates nv has a

(without the intervention of the

free float of 100%.

board of directors being required in principle), rental agreements – with

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

INTERNAL CONTROL AND

components of this framework

RISK MANAGEMENT SYSTEMS

and their application at Retail

In accordance with the Corporate

Estates nv are discussed below.

Governance rules and the relevant legislation, Retail Estates nv has

Internal control and risk

developed an internal control and

management systems in general

risk management system, taking

Sound internal control and

into account the nature, size and

balanced risk management

complexity of the companyâ&#x20AC;&#x2122;s

are an inherent part of Retail

activities and its environment.

Estates nvâ&#x20AC;&#x2122;s corporate culture and are disseminated throughout the

Internal control is a process

organisation by means of:

which aims to provide reasonable guarantees to ensure that the following objectives are met:

- corporate governance rules and the existence of a remuneration committee and audit committee;

- effectiveness and improving the functioning of the enterprise; - reliability and integrity of information; - compliance with policies, procedures, laws and regulations.

- the existence of a code of conduct (trading regulations), dealing in particular with such matters as conflicts of interest, confidentiality, buying and selling of shares, prevention of abuse of company property, and

For implementing its internal control system, Retail Estates nv

- a detailed human resource policy

has taken the COSO framework

with rules for recruiting staff,

(Committee of Sponsoring

periodic performance evaluation

Organizations of the Treadway

and the setting of annual goals;

Commission) as its reference. The

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

communication;

- monitoring of procedures and

MANAGEMENT REPORT I

formalisation of processes.

Internal control and risk management systems relating to

The board of directors regularly

financial reporting

reviews the company’s exposure

Control environment

to risks, the financial impact of

The control environment, as regards

these risks, and the actions to

financial reporting, consists of the

be undertaken to monitor these

following components:

potential risks, to prevent the risks from taking place and/or, as the case may be, to limit the impact of these risks.

- the accounting team is responsible

“

In particular, the company has developed internal control and risk management systems for the most important processes in the company.

”

for preparing and reporting financial information. - the controller is responsible for

In particular, the company has

reviewing the financial information

developed internal control and

and preparing the consolidated

- the board of directors has detailed

risk management systems for

figures (in consultation with the

quarterly question and discussion

Financial Services and Markets

the most important processes in

CFO), and for the feedback of

sessions with the CEO and

Authority (FSMA), which also

the company, namely managing

information to Retail Estates nv’s

CFO, and oversees the proper

conducts a specific review of the

costs and expenses, repairs and

operational activities.

application of the valuation rules.

financial information. All published

maintenance, developments, and collecting rents.

- the CFO is responsible for the

falls under the supervision of the

The chairman of the board of

financial information is controlled

final review of the consolidated

directors, the CEO and the CFO

(in advance or post facto) by the

financial statements and for the

discuss in detail the principal

correct application of the valuation

strategic, operational and financial

rules, and reports back on these to

issues on a fortnightly basis.

FSMA.

the day-to-day management of

real estate portfolio (which Other factors also play a role in the

constitutes 98.50% of the

company’s control environment:

balance sheet total) is valued by

the company, the CEO regularly discusses the financial reporting with the CFO.

- the real estate expert also plays an important role: the entire

the CEO. - as part of his responsibility for

two internationally recognised - as a listed company (and as a

independent real estate experts

public BE-REIT), Retail Estates nv

(Cushman & Wakefield and

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

CBRE), each evaluating one

objectives and ‘risk appetite’ of the

Every quarter, an operational report

Monitoring

part of the real estate portfolio.

company applied by the board of

is also drawn up in which the key

Every quarter, the financial team

A limited part of the portfolio is

directors.

performance indicators relating

draws up the quarterly figures and

to the real estate department are

balance sheets. These quarterly

included.

figures are always extensively

valued by Stadim. Control activities Risk analysis

Control procedures are in effect

Regular management and

with respect to the company’s key

In the first and third quarter of

risk of errors in financial reporting,

operational meetings serve to

activities, such as collecting rents,

the financial year, an intermediary

the figures are discussed with the

address issues that need to

repairs and maintenance, project

press release is published. Every

management, and their accuracy

be followed up, thus ensuring

development, site supervision, etc.

six months, a more comprehensive

and completeness are verified by

balanced risk awareness and

These procedures are evaluated on

half-yearly financial report is

analysing rental income, vacancies,

management:

a regular basis by the management

published in accordance with

technical costs, rental activity,

team.

IFRS standards. At the end of the

developments regarding the value

financial year, all relevant financial

of the buildings, outstanding

- the main events of the past

analysed and checked. To limit the

period and their impact on the

An ERP system tracks all aspects of

information is published in the

debtors, etc., in compliance

accounting figures;

the real estate business (overview

annual financial report, which is

with the “four-eyes” principle.

- recent and planned transactions;

of lease agreements, rent calls,

also available on the company’s

Comparisons with forecasts and

- the development of major key

settlement of costs, payment

website.

budgets are discussed. Every

performance indicators; and - any operational, legal and fiscal risks.

monitoring, etc.). This software

quarter, management provides

system is linked to the accounting

The limited size of the Retail

the board of directors with a

software.

Estates’ team contributes

comprehensive report on the

significantly to the smooth flow

financial statements, with a

As a result of these meetings,

Information and communication

of information. The considerable

comparison of annual figures,

the appropriate actions can be

Every quarter, a financial report

involvement of the board of

budget and explanations for any

undertaken and measures can be

is drawn up which contains

directors and its chairman

deviations.

adopted in order to implement the

the analyses of the figures, key

promotes open communication

company’s policy. These actions

performance indicators, the impact

and ensures that the management

The statutory auditor also reports

aim to achieve a balanced risk

of purchases and sales on budgets,

body is provided properly with all

to the board of directors on the

policy in line with the strategic

cash flow positions, etc.

necessary information.

main findings of its audit activities.

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

Appropriate risk management policy

prevention of insider trading,

The main risks the company faces

conflicts of interest and

relate to (i) the market value of the

incompatibility of mandates, non-

property, (ii) changes in the rental

corruption, professional secrecy,

market, (iii) the structural condition

etc.

of the buildings, (iv) financial risks, including liquidity risk, the use of

Effective management examines

financial instruments and banking

on a regular basis which other

counterparty and covenant risk, (v)

areas and activities should fall

permit-technical related risks, (vi)

under the scope of the compliance

changes to the traffic infrastructure,

function. The “independent

(vii) soil contamination, (viii) risks

compliance function” is treated as

associated with merger, demerger

an independent function within

or acquisition transactions, and (ix)

an organisation, and focuses

regulatory risks.

on investigating and promoting compliance by the company with

Measures and procedures are in

the laws, regulations and rules

place to identify and monitor each

of conduct applicable to the

of the listed risks, to avoid these

company, and in particular, the

risks, and/or to minimize their

rules relating to the integrity of the

impact, if any, and assess, control

company’s activities. We discuss

and monitor their consequences.

the most important of these below:

This is the role of the risk manager. Prevention of insider trading Integrity policy

In accordance with the principles

The integrity policy (overseen by

and values of the company and

the person entrusted with the

within the framework of the

“compliance function”) covers

implementation of the Belgian

various aspects, including the

Corporate Governance Code, Retail

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

Estates nv has included rules in

− restrictions on the execution

its code of conduct (“Dealing

of transactions in financial

Code”) that must be observed

instruments of the company

by the directors, employees and

during specific periods before

appointed persons who trade in

publication of the financial results

financial instruments issued by

(“closed periods”) or during any

Retail Estates nv. The rules of the

other period considered sensitive

Dealing Code were harmonised

(“prohibited periods”);

with applicable laws and regulations (in particular Regulation

− the appointment of a compliance

(EU) No. 596/2014 of the European

officer to oversee compliance

Parliament and of the Council of

with the Dealing Code by

16 April 2014 on market abuse

directors and other designated

(the Market Abuse Regulation),

persons;

the Belgian Act of 2 August 2002 on oversight of the financial

− prior notification of all

sector and financial services and

transactions in financial

the Corporate Governance Code

instruments of the company to

2009). The company’s Dealing

the compliance officer; and

Code constitutes an integral part of the Corporate Governance Charter and can be consulted (separately)

− the disclosure of each transaction.

on the company website. Conflicts of interest and The Dealing Code includes the

incompatibility of mandates

disclosure of information relevant to such transactions and stipulates

Reference is made to the passage

among others:

listed under ‘Handling conflicts of interest’ on page 64 of this report.

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

Non-corruption

to avoid these risks, and/or to

the company, and analyses the

Mutatis mutandis (and insofar as

Retail Estates nv strongly

minimise their impact, if any, and

quality and efficiency of existing

relevant), these functions may be

emphasises the principles of

assess, control and monitor their

procedures and methods of

implemented at the level of Retail

honesty and integrity, and expects

consequences. This is the role of

internal control.

Warehousing Invest nv according to

a similar attitude on the part

the risk manager.

of third parties with which the company does business.

the same policy as Retail Estates nv. The internal statutory auditor will

The risk manager is appointed for a

present his findings yearly.

3-year term. The internal audit function

Professional secrecy

It is expressly forbidden for

Independent compliance function

is performed by an external

members of the bodies of the

The board of directors has

consultant, in this case VMB,

company and for personnel to use

appointed Mr. Paul Borghgraef

represented by Mr. Luc Martens.

or reveal confidential information

as compliance officer. He is also

This function is performed under

for improper purposes during the

chairman of the board of directors.

the supervision and responsibility

course of their duties.

He is responsible in particular for

of the finance and reporting analyst

compliance with the integrity policy

of the company, who has the

as described above.

necessary professional integrity

Political activities

In pursing legitimate commercial

and appropriate expertise.

objectives, Retail Estates nv acts

The term of Paul Borghgraefâ&#x20AC;&#x2122;s

in a socially responsible manner

mandate as compliance officer is

Internal control functions within

according to the laws of the

the same as for his board mandate

Retail Warehousing Invest nv

country in which the company is

(which expires at the 2021 annual

Taking into account the principle of

active.

shareholdersâ&#x20AC;&#x2122; meeting).

proportionality, the internal audit functions as described above are

Independent supervisory functions

Independent internal audit function

exercised by the same people at the

Risk management function

The person in charge of the

level of Retail Warehousing Invest

Measures and procedures are

internal audit is responsible for

nv (the subsidiary of Retail Estates

in place to identify and monitor

the independent and ongoing

nv with the status of institutional

the risks that the company faces,

assessment of the activities of

Belgian real estate investment trust).

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

O6 MANAGEMENT OF THE COMPANY

COMPOSITION Since 4 April 2017, the board of

of the executive personnel of

may under no circumstances

involvement in other enterprises

Retail Estates nv, or an affiliated

represent such a shareholder;

or bodies;

company, and not having

- not to have, or have had during

- not to have held more than three

occupied a similar position during

the preceding year, or expect to

terms of office as a non-executive

the five years preceding their

have in the future, a significant

director at Retail Estates nv, with

appointment;

commercial relationship with

an overall limit of 12 years;

- not receiving, or have received in

Retail Estates nv or with a related

- not to be a close relative of a

directors of Retail Estates nv

the past, from Retail Estates nv

enterprise, either directly or as

managerial employee, a member

consists of 12 directors: 10 non-

or a related enterprise, any

a partner, shareholder, director,

of the management committee,

executive directors and 2 executive

remuneration or significant

or as member of the senior or

or a person covered by one of the

directors, i.e. the managing director

financial benefits other than

executive management of an

above-mentioned situations.

and the chief financial officer.

those associated with their

organisation related to it in such

Of the 12 directors, 3 directors

- not a dominant shareholder

mandates;

a way;

The composition of the board

- not to be, and not to have been

of directors intends to ensure

(Mr. Annaert, Ms. Van den Neste

or having a shareholding stake

during the past three years, a

that the decisions taken are in

and Ms. Gaeremynck) qualify as

of more than 10% in Retail

partner or salaried employee of

the interests of the company.

independent pursuant to Article

Estates nv â&#x20AC;&#x201C; either alone or jointly

the present or a former statutory

The composition of the board of

526ter of the Belgian Companies

with a company controlled by the

auditor of Retail Estates nv or

directors is determined on the basis

Code. These directors also meet

director â&#x20AC;&#x201C; or a director or member

related company;

of diversity in general, as well as

the criteria of independence set

of the managerial personnel of

out in annex A to the Code. The

such a shareholder, or represent

the management body of another

of skills, experience, and know-

independent directors strictly

it. Directors with a shareholding

company in which an executive

how. It is of particular importance

comply with the following criteria

stake of less than 10% may not

director of the company holds

to have a strong representation of

of independence:

subject the acts of disposal

the function of a non-executive

directors who are well versed in the

relating to their shares, or exercise

member of the management or

management of retail businesses

the rights pertaining to them,

supervisory body;

in the type of property in which

- not a salaried employee, manager,

- not to be an executive member of

on the basis of complementarity

management committee

to contractual stipulations or to

member, managing director,

unilateral commitments to which

with the executive directors of

have experience in the financial

executive director or member

they have subscribed. Directors

Retail Estates nv by virtue of an

aspects of the management of

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

- not to have other significant links

Retail Estates nv invests and/or

MANAGEMENT REPORT I

a listed company, and of a BE-

company’s strategy, investments,

REIT in particular. Therefore, it is

budgets, disposals and acquisitions

pivotal that members of the board

and funding.

of directors are complementary in terms of knowledge and

The board of directors prepares

experience. To enable the board

the annual accounts and interim

of directors to operate efficiently,

financial statements and the

the intent is to limit the number of

annual report of the company for

board members to 12.

the shareholders’ meeting. The board of directors also approves

“

In order to continually improve the effectiveness of the board of directors, the board of directors shall systematically and regularly (at least every three years) evaluate its size.

”

5 out of 12 directors represent a

merger and demerger reports.

reference shareholder: Ms. Wouters

It decides on the use of the

(on behalf of the KBC Group),

authorised capital and convenes

Mr. Appelmans (on behalf of Het

the annual and extraordinary

Torentje (Leasinvest)), Mr. Sterbelle

shareholders’ meeting. It supervises

During the 2016-2017 financial

will validly deliberate and resolve

(on behalf of AXA), Mr. Demain (on

the accuracy and transparency of

year the board of directors met

on the agenda items of the

behalf of the Belfius-group) and Mr.

communications to shareholders,

six times. A number of meetings

previous meeting, providing that

De Smedt (on behalf of Federale

financial analysts, and the

were held by conference call or

at least two directors are present

Verzekering).

general public, as communicated

in the office of notary public Tim

or represented. Every resolution of

through prospectuses, annual

Carnewal. The remuneration

the board of directors is adopted by

Mr. De Nys, Mr. Borghgraef and

and interim reports and press

committee and the audit

an absolute majority of the votes

Mr. Annaert have declared that they

releases. It delegates the day-to-

committee met twice.

cast of directors that are present

hold shares in the company for

day management to the managing

their personal account.

director, who in turn regularly

The board of directors may

of abstention of one or more of

or represented, and, in the event

reports back on the management

validly deliberate and resolve only

them, by the majority of the other

FUNCTIONING OF THE BOARD OF

and the annual budget, and who

if at least half of its members

directors. In the event of a tie, the

DIRECTORS

presents a quarterly financial and

are present or represented. If

director chairing the meeting has

The board of directors of Retail

operational report.

this condition is not met, a new

the casting vote. In exceptional

meeting can be convened, which

cases, pursuant to Article 521 of

Estates nv determines the

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

the Belgian Companies Code,

board of directors is prepared, and

resolutions of the board of directors

that the directors promptly receive

may be adopted by unanimous

the relevant information.

written agreement by the directors,

This assessment focuses on:

following members:

- the functioning of the board of

GZc 6ccVZgi Ã 8]V^g d[ i]Z

directors and its committees;

whenever the urgency of the matter

The managing director is

and the interest of Retail Estates nv

responsible for the operational

director through their attendance

so require. This procedure, however,

tasks relating to the management

of the meetings of the board of

may not be applied for the drawing

of the real estate portfolio and the

directors and committees, and their

up of the annual accounts, or the

functioning of the company. The

contribution to the discussions and

use of the authorised capital.

board of directors will ensure that

the decision-making.

In addition to its legal mandate,

- the effective contribution of each

committee, independent director AZZc KVc YZc CZhiZ Ã independent director 6cc <VZgZbncX` Ã ^cYZeZcYZci director (since 4 April 2017) K^X GV\dZc

sufficient powers are given to meet

Various committees can be

The committee convened twice in

these responsibilities and duties.

established within the board of

2016-2017 in the context of drawing

directors for specific matters.

up the 2017-2018 budget in which

the board of directors, bearing in mind the company’s interests,

REPORT ON THE ACTIVITIES

also determines the strategy

Regarding the board of directors’

Currently, the board of directors

discussed and an inventory was

and outlines the policy lines.

activity report, see section 3 of this

of Retail Estates nv has set up

made of the recurrent fees paid to

More specifically, it takes all the

chapter.

two committees, a remuneration

external service providers.

fundamental decisions concerning

employee remuneration policy was

and nomination committee and

the investments in and disposals

In order to continually improve

an audit committee. In a decision

The role of the remuneration and

of properties, as well as those

the effectiveness of the board of

of the board of directors of 17

nomination committee is to assist

regarding their funding.

directors, the board of directors

February 2017, a management

the board of directors by:

shall systematically and regularly

committee (“directiecomité”) was

A clear distinction is made

(at least every three years)

also established, taking effect on 1

between the responsibilities of

evaluate its size, its composition,

April 2017.

the managing director and those

its performance and those of

of the chairman of the board of

its committees, as well as its

REMUNERATION AND NOMINATION

directors. The chairman leads the

interaction with the management

COMMITTEE

assessment and appointment

board of directors and ensures that

committee.

The remuneration and nomination

of the members of the board of

committee is made up of the

directors;

the agenda for the meetings of the

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

[dgbjaVi^c\ gZXdbbZcYVi^dch dc the composition of the board of directors and its committees; Vhh^hi^c\ ^c i]Z hZaZXi^dc!

MANAGEMENT REPORT I

Vhh^hi^c\ ^c YZiZgb^c^c\ i]Z

and consolidated accounts, and

remuneration of the members of

assessing and monitoring the

the board of directors;

independence of the statutory

egZeVg^c\ i]Z gZbjcZgVi^dc gZedgi#

auditor.

AUDIT COMMITTEE

MANAGEMENT COMMITTEE

The audit committee consists of

(SINCE 1 APRIL 2017)

the following members:

The management committee consists of the following members:

AZZc KVc YZc CZhiZ Ã 8]V^g d[ i]Z committee, independent director GZc 6ccVZgi Ã ^cYZeZcYZci director 6cc <VZgZbncX` Ã ^cYZeZcYZci director (since 4 April 2017, before

?Vc 9Z Cnh Ã 8]V^g d[ i]Z committee, CEO, Executive Officer @VgV 9Z HbZi Ã 8;D! :mZXji^kZ Officer @dZcgVVY KVc C^ZjlZcWjg\ Ã 8>D

this, Vic Ragoen) ?ZVc"Adj^h 6eeZabVch Ã cdc" executive director

The duties of this management committee mainly concern the day-to-day management of Retail

The committee met twice in 2016-

Estates nv and its participations,

2017.

the organisation and management of support functions, the

The tasks of this audit committee

conclusion of lease agreements,

concern mainly the monitoring of

the due diligence for investments

the financial reporting process,

and disposals, preparation of

the effectiveness of internal

financial statements and all

control and risk management

operational reporting.

systems, internal audit monitoring and statutory audit of individual

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

EVALUATION OF THE PERFORMANCE OF

REPRESENTATION POWER

DIRECTORS

In all legal and statutory transactions

Under the supervision of its

concerning the disposal of real

chairman, the board of directors

estate, the company will be

regularly evaluates its size,

represented by at least two directors

composition, performance and

acting jointly, being in principle

relationships with management,

the chairman of the board of

shareholders and other

directors Paul Borghgraef and one

stakeholders.

of the executive directors/effective manager, Mr. De Nys or Ms. De Smet.

The purpose of this evaluation is to: The company may also be validly - appraise the functioning of

represented by the managing

the board of directors and its

director, by means of a special

committees on one hand;

authorisation, for transactions

- monitor the composition of the

related to an item whose value

board of directors on the other

is lower than either 1% of the

hand.

consolidated assets of the company, or EUR 2.50 million, taking the lower

Also included is the timely provision

of the two (including the conclusion

of information prior to meetings of

of a leasing agreement with or

the board of directors.

without option to purchase, or the creation of easements).

The evaluation itself takes the form of a written procedure,

SETTLEMENT OF CONFLICTS OF

using a questionnaire that must

INTEREST

be answered individually and

Pursuant to Article 523 of the Belgian

anonymously.

Companies Code, any member of the board of directors who, whether

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

directly or indirectly, has a financial

Articles 36 through 38 of the Belgian

undertaken with the public BE-REIT

DAY-TO-DAY MANAGEMENT

interest which conflicts with a

BE-REIT Act is also referred to, when

or a company under its control.

The company is managed by a staff

decision or operation involving the

one of the persons mentioned in

board of directors, may not attend

this Article (director, manager or

During the past financial year,

managing director (CEO), Mr. Jan De

the deliberations of the board of

promoter of the BE-REIT,...) acts

no conflict of interest within the

Nys.

directors.

as counterparty in an operation

meaning of these Articles occurred.

of 20, under the leadership of the

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

Executive directors:

nomination committee meetings in

Non-executive directors

Jean-Louis Appelmans (1953):

Jan De Nys (1959): Chief Executive

2016-20172: -

Chair:

director

Officer (CEO – managing director)

Attendance at audit committee

Paul Borghgraef (1954): ):

meetings in 2016-20173: -

chairman of the board of directors

Kara De Smet (1976): Chief Financial Officer (CFO) – executive director from 12 January 2016

Office address: Leasinvest Office address: Retail Estates nv -

Real Estate Comm.V.A. –

Industrielaan 6 - 1740 Ternat

Office address: Van De Wervelaan

Schermersstraat 42 – 2000

End of mandate: 2021

49/2 – 2970 Schilde

Antwerp

Most important other positions:

End of mandate: 2021

Most important other positions:

Alides Construction and Property

Office address: Retail Estates nv -

director at Pertinea Property

managing director of Leasinvest Real

Group), director at First Retail

Industrielaan 6 - 1740 Ternat

Partners nv, director at PG58 nv and

Estate Management nv (statutory

International I and II nv, chairman of

End of mandate: 2021

director at Immpact nv

manager of GVV Leasinvest Real

Private Privak BEM II (set up under

Committees: -

Estate Comm.V.A.), Leasinvest Immo

the aegis of the Flemish Building

Attendance at board of directors’

Lux sa, Leasinvest Services nv,…

Federation), managing director

meetings in 2016-2017: 6

meetings in 2016-2017: 5

Committees: member of the audit

of the management companies

Attendance at remuneration and

committee

Infradis Real Estate Management nv

nomination committee meetings

Attendance at board of directors’

and Snowdonia nv.

in 2016-2017: -

meetings in 2016-2017: 6

Committees: -

Attendance at audit committee

Attendance at remuneration and

Attendance at board of directors’

meetings in 2016-2017: -

nomination committee meetings

director at Alides REM nv (Maes/

meetings in 2016-2017 : 6

in 2016-2017: -

Attendance at remuneration and 1 Total board of directors’ meetings in financial year 2016-2017: 6

2 Total remuneration and nomination committee meetings in financial year 2016-2017: 2 3 Total audit committee meetings in financial year 2016-2017: 2

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Attendance at audit committee meetings in 2016-2017: 2

MANAGEMENT REPORT I

Victor Ragoen (1955): independent

Jean Sterbelle (1962): director

Christophe Demain (1966): director

director

Rudy De Smedt (1962): director from 7 July 2015

Office address: AXA Belgium nv –

Office address: Belfius Insurance nv

Office address: New Vanden

Vorstlaan 25 – 1170 Brussels

– Galiléelaan 5 – 1210 Brussels

Office address: Federale

Borre nv – Slesbroekstraat 101 –

End of mandate: 2021

Verzekering - Stoofstraat 12 - 1000

1600 Sint-Pieters-Leeuw

Most important other positions:

Brussels

End of mandate: 2021

Head of Transactions Belux – AXA

Chief Investment Officer at Belfius

End of mandate: 2021

Most important other positions:

Real Estate Investment Managers

Insurance nv, director of the BE-

Most important other positions:

Advisor

Belgium nv, director at Blauwe

REIT Cofinimmo nv, director at First

Deputy Director at Federale

Most important finished positions:

Toren nv, director at Brustar One nv,

Retail International nv, chairman

Verzekering

managing director at New Vanden

director at Cabesa nv,…

of the board of directors of LFB nv,

Committees: -

Borre nv

Committees: -

Coquelets nv,…

Attendance at board of directors’

Committees: -

Attendance at board of directors’

Committees: -

meetings in 2016-2017: 6

Attendance at board of directors’

meetings in 2016-2017: 4

Attendance at board of directors’

Attendance at remuneration and

meetings in 2016-2017: 2

Attendance at remuneration and

meetings in 2016-2017: 3

nomination committee meetings

Attendance at remuneration and

nomination committee meetings

Attendance at remuneration and

in 2016-2017: -

nomination committee meetings

in 2016-2017: -

nomination committee meetings

Attendance at audit committee

in 2016-2017: -

Attendance at audit committee

in 2016-2017: -

meetings in 2016-2017: -

Attendance at audit committee

meetings in 2016-2017: -

Attendance at audit committee

meetings in 2016-2017: 1

meetings in 2016-2017: -

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

René Annaert (1952): independent

Leen Van den Neste (1966):

Herlinda Wouters (1958): director

Ann Gaeremynck (1966): director

director from 7 July 2015

independent director from 12

from 12 January 2016

from 4 April 2017

January 2016

Office address: KBC Bank Nederland – Watermanweg 92 – 3067 GG Rotterdam – the Netherlands End of mandate: 2021 Most important other positions: General Manager of KBC Bank the Netherlands

Office address: Ultimum bvba – G.

Committees: -

Office address: Faculty of

Attendance at board of directors’

Economics and Business

Mercatorlaan 4 – 1780 Wemmel

Office address: VDK Spaarbank –

meetings in 2016-2017: 4

Administration - Department of

End of mandate: 2021

Sint-Michielsplein 16 – 9000 Ghent

Attendance at remuneration and

Accounting, Finance and Insurance -

Most important other positions:

End of mandate: 2021

nomination committee meetings

Naamsestraat 69 - 3000 Leuven

advisor

Most important other positions:

in 2016-2017: -

End of mandate: 2021

Most important finished positions:

CEO VDK Spaarbank, chairman

Attendance at audit committee

Most important other positions:

CEO Wereldhave Belgium, Devimo

of the board of directors of Xior

meetings in 2016-2017: -

Full professor at KU Leuven,

Consult, Brussels International

student housing nv, member of the

Faculty of Economics and Business

Trade Mart

board of directors of Centrale voor

Administration, member of the board

Committees: member of the

huisvesting cvba, Familiehulp vzw

of directors and audit committee

audit committee, member of the

and Arteveldehogeschool vzw

VIVES University College, and

remuneration and nomination

Committees: member of the

external member of AZ Delta audit

committee

audit committee, member of the

committee.

Attendance at board of directors’

remuneration and nomination

Committees: member of the audit

meetings in 2016-2017: 6

committee

Attendance at remuneration and

Attendance at board of directors’

nomination committee meetings

meetings in 2016-2017: 5

meetings in 2016-2017: -

in 2016-2017: 2

Attendance at remuneration and

Attendance at audit committee

nomination committee meetings in

nomination committee meetings

meetings in 2016-2017: 2

2016-2017: 2

in 2016-2017: -

Attendance at audit committee

meetings in 2016-2017: 2

meetings in 2016-2017: -

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

f.l.t.r.: Jean Sterbelle, Jean-Louis Appelmans, Leen Van den Neste, Ann Gaeremynck, Rudy De Smedt, Victor Ragoen, Kara De Smet, Jan De Nys, Paul Borghgraef, Koenraad Van Nieuwenburg (CIO, member of the management committee), RenÃ© Annaert, Christophe Demain

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

O7 OTHER PARTIES INVOLVED

was appointed for a 3-year term. The statutory auditor’s fixed remuneration for reviewing and certifying Retail Estates nv and

CERTIFICATION OF THE ACCOUNTS

its subsidiaries’ statutory and

A statutory auditor appointed by

consolidated annual accounts is

the shareholders’ meeting must:

EUR 0.10 million (excluding VAT).

- certify the annual accounts

The remuneration of PwC

and review the interim

Bedrijfsrevisoren for the tasks

accounts, as in any limited

assigned to the statutory auditor

liability company (“naamloze

by law (e.g. reports when mergers

vennootschap”/”société

occur), amounts to EUR 0.02

anonyme”);

million (excluding VAT). The fees relating to studies and assistance

- prepare special reports at the

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

and more in particular on taxation

request of the FSMA, given that

matters and due diligence

Retail Estates nv, a public BE-

assignments amount to EUR 0.004

REIT, is a listed company.

million excluding VAT.

The statutory auditor is PwC,

REAL ESTATE EXPERT

represented by Mr. Damien

In accordance with the BE-REIT

Walgrave, a company auditor

legislation, Retail Estates nv

certified by the FSMA, having its

calls upon experts for the regular

registered office at 1932 Brussels,

valuations of its assets each time

Woluwegarden-Woluwedal 18. At

it issues shares, lists securities on

the annual shareholders’ meeting

the stock market or purchases

of 3 July 2015, the statutory auditor

unlisted shares, and when it

MANAGEMENT REPORT I

estimate of part of the properties

ACQUISITION AND SALE OF

INFORMATION BASED ON ARTICLE

The valuation assignments

in the real estate portfolio and the

RETAIL ESTATES NV SHARES –

34 OF THE BELGIAN ROYAL

are entrusted to Cushman &

initial estimate in the case of the

INSIDER TRADING

DECREE OF 14 NOVEMBER 2007

Wakefield (Kunstlaan 56, box 7

purchase of real estate is EUR 0.01

at 1000 Brussels), represented

million incl. VAT on an annual basis.

purchases or sells real properties.

purchases. The compensation

These valuations are necessary

payable to Stadim in respect of

to determine the inventory value

the performance of the periodic

and prepare the annual accounts.

CONCERNING THE OBLIGATIONS In accordance with the principles

OF ISSUERS OF FINANCIAL

and values of the company, Retail

INSTRUMENTS AUTHORISED TO

nv (Avenue Lloyd George 7 at

The property of Immobilière Distri-

Estates nv has included in its

TRADE ON A REGULATED MARKET

1000 Brussels), represented by

Land nv is valued on the basis of a

Dealing Code a number of rules

Mr. Pieter Paepen, and to Stadim

joint instruction from Retail Estates

to be followed by directors and

cvba (Uitbreidingsstraat 10-16,

nv and Immobilière Distri-Land nv,

employees wishing to trade in

CAPITAL STRUCTURE (ON 31 MARCH 2017)

2600 Antwerp), represented by

with the results published by the

financial instruments issued by

The registered capital amounts to

Mrs. Natalie Van Overbeke and Mr.

latter. The costs are shared 50/50

Retail Estates nv.

EUR 202,688,189.49 and is divided

Philippe Janssens.

between Retail Estates nv and

by Mr. Ardalan Azari and to CBRE

into 9,008,208 fully paid-up In the framework of the application

shares, each representing an equal

During the past financial year, a

of the Belgian Corporate

part of the capital. There is only

fee of EUR 0.31 million (including

Governance Code at Retail Estates

one category of shares. There is no

VAT) was payable to Cushman &

nv, the rules of the Dealing Code

legal or statutory limitation on the

Wakefield for the regular valuations

have been reviewed in order to

voting rights or transferability of the

of a part of the properties in the

bring them in line with the Belgian

shares.

real estate portfolio and the initial

Royal Decree of 5 March 2006 on

valuations of real estate purchases.

insider trading, the fair presentation

STOCK OPTION PLAN

Fees of EUR 0.34 million (including

of investment recommendations,

Retail Estates nv has no stock

VAT), were paid to CBRE for the

and the indication of conflicts of

option plan.

regular valuation of the remainder

interest.

Immobilière Distri-Land nv.

of the real estate portfolio and

AUTHORISED CAPITAL

initial valuations of real estate

The extraordinary shareholders’

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

meeting of 9 December 2013

members of the board of directors

level of 60% (lower than the legal

expressly authorised the board of

and the amendment procedure

threshold of 65%).

directors to increase the registered

relating to the articles of association

capital, in one or more instalments,

of Retail Estates nv are set out in the

up to a maximum amount of EUR

applicable legislation (especially the

ARTICLES OF ASSOCIATION OF RETAIL ESTATES NV

164,037,087.74 on the dates and

Belgian Companies Code and the

The articles of association of

according to the procedures to be

BE-REIT legislation) and the articles

Retail Estates nv can be found

defined by the board of directors

of association of Retail Estates nv.

on page 189 of the annual report.

in accordance with Article 603

The articles of association of Retail

Their last revision dates from

of the Belgian Companies Code.

Estates nv do not deviate from the

the extraordinary shareholdersâ&#x20AC;&#x2122;

This authorisation was granted

above-mentioned legal provisions.

meeting of 22 May 2017.

for a period of 5 years from the publication of this decision (17

CONTRACTUAL PROVISIONS

December 2013).

The conditions under which the financial institutions have provided

PURCHASE OF OWN SHARES

Retail Estates nv with financing

The company does not own any of

require retention of the public

its own shares. The extraordinary

Belgian real estate investment

shareholdersâ&#x20AC;&#x2122; meeting of 24

trust status. The general terms

October 2014 amended the articles

and conditions under which this

of association to authorise the

financing was granted give banks

board of directors to acquire shares

the option to demand early

in Retail Estates nv under a number

repayment in the event of change

of special conditions listed in the

of control. In addition, a covenant

articles of association.

has been written into the credit agreements with a number of

DECISION-MAKING BODIES

financial institutions, whereby

The rules which govern the

Retail Estates nv commits itself

appointment or replacement of the

to maintain a maximum debt

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MANAGEMENT REPORT I

Data in accordance with the EPRA reference system EPRA KEY PERFORMANCE INDICATORS

Definitions

EUR/1000

These data are not required by the legislation on Belgian REITs and are not subject to verification by public

share EPRA earnings EPRA NAV

Current result from adjusted core operational activities. Net Asset Value (NAV) adjusted to take the fair value of the

authorities. The statutory auditor

property investments into account and excluding certain

considered whether the ratios

elements not expected to crystallise in a long-term investment

“EPRA Earnings”, “EPRA NAV” and “EPRA NNNAV” were calculated

EPRA NNNAV

Practices Recommendations” and whether the financial data used in the calculation of these ratios

account. Definitions EPRA Net Initial Yield Annualised gross rental income based on current rents ('passing (NIY)

consolidated financial statements.

4.34

534,123

59.29

514,970

57.17

% 6.52%

rents') at balance sheet closing dates, excluding property costs, divided by the market value of the portfolio, plus estimated

correspond with the accounting data included in the activated

property business model. EPRA NAV adjusted to take the fair value of (i) the financial

39,115

instruments, (ii) the debts and (iii) the deferred taxes into

according to the definition included in the “EPRA Best

EUR per

transfer rights and costs resulting from the hypothetical disposal of investment properties. EPRA topped-up Net This measure incorporates an adjustment to the EPRA NIY

6.52%

Initial Yield (topped- in respect of the expiration of the rent-free periods or other up NIY) EPRA Vacancy

unexpired lease incentives as step up rents. Estimated market Rental Value (ERV) of vacant surfaces divided

1.24%

EPRA Cost Ratio

by the ERV of the portfolio as a whole. EPRA costs (including vacancy costs) divided by the gross rental

12.32%

(incl. vacancy costs) EPRA Cost Ratio

income less ground rent costs EPRA Costs (excluding vacancy costs) divided by the gross rental

12.01%

(excl. vacancy costs) income less ground rent costs

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

EPRA earnings IFRS Net Result (attributable to the shareholders of the parent company)

EUR/1000 52,136

Adjustments to calculate EPRA earnings Excluding: Variations in the fair value of investment properties (IAS 40) Result on disposal of investment properties Changes in the fair value of financial assets and liabilities

13,610 279 -869

Adaptations to minority interests EPRA earnings (attributable to the shareholders of the parent company) EPRA earnings (EUR/share) (attributable to the shareholders of the parent company)

EPRA Net Asset Value (NAV) Net Asset Value (attributable to the shareholders of the parent company) according to the annual accounts Net Assets (EUR/share) (attributable to the shareholders of the parent company)

39,115 4.34

EUR/1000 514,970 57.17

Effect of exercise of options, convertibles and other equity interests Diluted net asset value after effect of exercise of options, convertibles and other equity interests

514,970

Excluding: Fair value of the financial instruments EPRA NAV (attributable to the shareholders of the parent company) EPRA NAV (EUR/share) (attributable to the shareholders of the parent company)

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

-19,153 534,123 59.29

MANAGEMENT REPORT I

EPRA Triple Net Asset Value (attributable to the

EUR/1000

shareholders of the parent company)

EPRA Vacancy Rate

EUR/1000

Estimated rental value of vacant surfaces

EPRA NAV (attributable to the shareholders of the

534,123

parent company)

884

Estimated rental value of total portfolio

71,407

EPRA Vacancy Rate

1.24%

Including: Fair value of the financial instruments

-19,153

EPRA Triple Net Asset Value (attributable to the

514,970

EPRA Cost Ratio

EUR/1000

Operating corporate costs

shareholders of the parent company) EPRA NNNAV (EUR/share) (attributable to the

57.17

shareholders of the parent company)

2,941

Impairments on trade receivables

288

Ground rent costs

249

Property costs EPRA Net Initial Yield

EUR/1000

Investment properties (excluding assets held for sale) fair value

1,071,361

Transfer taxes

1,097,917

Project developments

18,825

Property costs

-1,039

EPRA costs (incl. vacancy costs) Vacancy costs

8,169 -204

Rental income less ground rent costs

70,368

Notional rent expiration of rent free period or other lease incentives EPRA Net Initial Yield (NIY)

-249

7,965

1,079,092 71,407

Topped-up net annualised rent

Ground rent costs

EPRA costs (excl. vacancy costs) B

Annualised gross rental income Annualised net rental income

Less:

26,556

Investment value Investment value of the properties, available for rent

4,940

70,368

A/B

6.52%

C/B

6.52%

66,312

% EPRA Cost Ratio (incl. vacancy costs)

12.32%

EPRA Cost Ratio (excl. vacancy costs)

12.01%

EPRA topped-up Net Initial Yield (topped-up NIY)

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

RETAIL ESTATES NV ON THE STOCK EXCHANGE I

RETAIL ESTATES ON THE STOCK EXCHANGE O4 O1

PERFORMANCE

LIQUIDITY PROVIDER

SHAREHOLDER AGENDA

I RETA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

“ The Retail Estates share increased by 143.89% over this period compared with an increase of 28.22% for the BEL 20.” I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

RETAIL ESTATES NV ON THE STOCK EXCHANGE I

01.04.2016

01.04.2015

01.04.2014

31.03.2017

31.03.2016

31.03.2015

Highest share price

81.89

80.71

76.99

Opening price at 1 April

77.99

74.04

57.62

Closing price at 31 March

76.90

78.00

76.64

Average share price

77.54

73.53

64.91

57.17

53.48

50.43

34.51%

45.85%

51.97%

3.30

3.20

3.10

2.310

2.336

2.325

Dividend yield

4.48%

4.28%

4.22%

Return net result on shareholders' equity

10.12%

8.86%

9.24%

75.49%

77.11%

81.15%

9,008,208

8,866,320

7,559,473

692.73

691.57

579.36

Free float percentage

100%

Average daily volume

7,207

4,664

2,939

1,873,888

1,189,395

749,458

Net asset value (NAV) (IFRS) Premiums NAV relative to closing price Gross dividend Net dividend

Pay-out ratio (consolidated) Number of shares Market capitalisation (EUR million)

Annual volume

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

“

O1 PERFORMANCE

MARKET CAPITALISATION

The market capitalisation of Retail Estates nv amounts to EUR 692.73 million as of 31 March 2017.

”

Retail Estates nv is listed on the Euronext continuous market. In the context of Euronext’s plans to reform and harmonise its list of quotations and promote the MARKET CAPITALISATION

visibility and liquidity of small and medium-sized enterprises, relevant benchmarks for the mid-caps and small-caps were launched on 1 March 2005. Retail Estates nv is part of the

(in EUR million)

800 700 600

BelMid index consisting of 34 companies. The market capitalisation of Retail Estates nv amounts to EUR 692.73 million as of 31 March 2017.

500 400 300 200

Based on the Euronext criteria, Retail Estates nv has a free float percentage of 100%.

100 0 31/03/98 31/03/99 31/03/00

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

31/03/01

31/03/02

31/03/03 31/03/04 31/03/05 31/03/06

31/03/07

31/03/08 31/03/09

31/03/10

31/03/11

31/03/12

31/03/13

31/03/14

31/03/15

31/03/16

31/03/17

RETAIL ESTATES NV ON THE STOCK EXCHANGE I

“

The share reached its highest price of the year on 6 June 2016 (EUR 81.89) and ended the financial year at EUR 76.90.

SHARE PRICE The share reached its highest price

”

of the year on 6 June 2016 (EUR 81.89) and ended the financial year at EUR 76.90. The annual average price was EUR 77.54. The above chart shows RETAIL ESTATES NV - BEL 20

the stock market performance of the Retail Estates share relative to the BEL 20 since the share’s introduction on the stock exchange.

300

Retail Estates nv

The Retail Estates share increased by 143.89% over this period

250

compared with an increase of 28.22% for the BEL 20. The price of the Retail Estates share decreased by 1.28% in the

200

150

past financial year compared to the beginning of the financial year. The

100

Bel 20

EPRA Belgian REIT index increased by 1.69%.

0 31/03/98 31/03/99 31/03/00

31/03/01

31/03/02

31/03/03 31/03/04 31/03/05 31/03/06

31/03/07

31/03/08 31/03/09

31/03/10

31/03/11

31/03/12

31/03/13

31/03/14

31/03/15

31/03/16

31/03/17

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

“

INCLUSION IN EPRA INDEX On 2 March 2017, the EPRA website

The goal of the EPRA is to promote, develop and represent the European listed real estate sector.

announced that Retail Estates nv will be included in the “FTSE EPRA/ NAREIT Developed Europe Index” from 20 March 2017, after market close. In the last quarterly review of

”

this index, Retail Estates nv met all the criteria for inclusion set by the EPRA. RETAIL ESTATES NV - EPRA BELGIUM REIT INDEX

The inclusion of Retail Estates nv in the EPRA index contributes to the share’s visibility. We believe that this inclusion will promote

300

the interests of new institutional investors and will increase the

250

Retail Estates nv 200

liquidity of the share. The goal of the EPRA is to promote, develop and represent the

150

EPRA Belgium REIT Index

100

0 31/03/08

31/03/09

31/03/10

31/03/11

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

31/03/12

31/03/13

31/03/14

31/03/15

31/03/16

31/03/17

European listed real estate sector.

RETAIL ESTATES NV ON THE STOCK EXCHANGE I

PREMIUMS AND DISCOUNTS

This represents an increase of

The intrinsic value of the real estate

3.12% compared to the dividend

valuation at ‘fair value’ increased

received for the financial year

during the past year from EUR

ended 31 March 2016.

“

The intrinsic value of the real estate valuation at ‘fair value’ increased during the past year.

53.48 as of 31 March 2016 to EUR 57.17 EUR as of 31 March 2017 (including dividend).

”

The EPRA NAV is EUR 59.29 as compared to EUR 56.66 EUR the year before. This increase is explained by the positive variations RETAIL ESTATES NV - EPRA NAV

in the value of the investment properties and the result of the financial year.

DIVIDEND Regarding the allocation of the results for the financial year ended 31 March 2017, the board of directors proposes to the shareholders’ meeting an amount of EUR 29.73 million to be distributed as gross dividend payment (before tax withholding). This amounts to a gross dividend

Retail Estates nv

80 70 60

EPRA NAV

50 40 30 20 10

of EUR 3.30 for the shares which are entitled to dividend from 1 April 2016 (9,008,208 shares).

0 31/03/10

31/03/11

31/03/12

31/03/13

31/03/14

31/03/15

31/03/16

31/03/17

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

BELGIAN REAL ESTATE INVESTMENT TRUST

occupancy rate and value

Within a specific category of

estate.

appreciation of the underlying real

investments, the risk profiles and returns can vary considerably

BELGIAN GOVERNMENT BONDS

depending on the focus,

Real estate is seen by some

type of activities and specific

investors as a bridge between

characteristics of the company that

an investment in shares and an

issued the shares.

investment in bonds or government bonds.

The greater the risk profile, the higher the return that an investor

The dividend yield of Retail

will demand.

Estates nv (in the case of a gross dividend of EUR 3.30) in the

A number of important factors

past financial year was 4.48%

that determine the performance of

compared to the closing price of

the BE-REITs include the type and

the share (excluding dividend). The

location of the real estate, the type

Belgian government linear bond

of tenants, the extent of possible

(OLO) 10-year rate was 0.79% on

vacancies, the interest rate and the

31 March 2017.

general stock market climate. Since its listing on the stock exchange, the performance of Retail Estates nv has always been in line with the market and in line with the expectations formulated by management at the beginning of the financial year and also with the performance of other Belgian BE-REITs with a comparable

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

RETAIL ESTATES NV ON THE STOCK EXCHANGE I

LIQUIDITY PROVIDER

SHAREHOLDER AGENDA

Since 1 April 2003, KBC

The shareholders’ meeting will take

Publication Annual report 2016-2017

19 June 2017

Securities has been acting as a

place at the offices of Retail Estates

Dividend made available for payment

1 August 2017

market animator promoting the

nv, Industrielaan 6, Ternat on Friday

marketability of the shares. Since 1

24 July 2017 at 10:00 am.

Announcement half-yearly results

October 2016, De Groof Petercam

Announcement annual results of the financial year 2017-2018

20 November 2017 18 May 2018

has also been acting as market animator. Fees for the past financial year were EUR 0.025 million excl. VAT for 12 months for each market animator.

“

A number of important factors that determine the performance of the BE-REITs include the type and location of the real estate, the type of tenants, the extent of possible vacancies, the interest rate and the general stock market climate.

”

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

REAL ESTATE REPORT I

REAL ESTATE REPORT O5 O1

THE MARKET OF OUT-OF-TOWN RETAIL PROPERTIES

THE REAL ESTATE PORTFOLIO

REPORTS OF REAL ESTATE EXPERTS

89 91 118

I RE TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

â&#x20AC;&#x153; Today, the Belgian market of out-of-town retail properties is characterised by considerable stability among long-term investors and tenants.â&#x20AC;? I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

REAL ESTATE REPORT I

conurbations, and EUR 100/m2 in smaller ones, with returns on high-end prime market locations

THE MARKET OF OUT-OF-TOWN

between 5% and 5.50%. About

RETAIL PROPERTIES

fifteen years ago, the highest rents amounted to EUR 75/m2 per year,

Virtually unbridled growth

and returns were between 9% and

appeared to be possible in the

10%.

1980s and the early 1990s.

“

The best barometer to measure the demand is the rate of unoccupied properties, which has now for several years been below 2% in the portfolio of Retail Estates nv.

Tighter legislation put an end to

The trend of rising rents came to

this proliferation midway through

a halt in 2009, with the exception

the 1990s, though. Numerous

of properties at high-end prime

‘opportunity seakers’ have since

locations. At these locations

disappeared on account of the

tenants try to keep the rent payable

properties, which has now for

makes them even less inclined to

growing complexity of the market.

by limiting the rented area.

several years been below 2% in

relocate.

The supply of new properties,

”

the portfolio of Retail Estates nv.

especially in Flanders, has

These two factors – i.e., the

Tenants of out-of-town retail

Most tenants of Retail Estates nv’s

decreased markedly, but demand

increase in the average rent and the

properties are fiercely loyal to their

properties are chain stores that

has remained stable. This has

decrease in the average return –

sales outlets. This is due to the

have, in recent years, acquired the

resulted in rising rents and falling

have reinforced the growth in value

quality of the location on the one

best sites, often at the expense of

returns. The market of out-of-town

of properties at prime locations

hand, and the granting of socio-

local SMEs, which, historically, have

retail real estate has established its

over the past twenty years. Today,

economic permits on the other. The

always dominated these locations.

own position alongside city centre

the Belgian market of out-of-town

permits are issued for buildings,

In this sense, the development

retail premises, offices and semi-

retail properties is characterised by

not to tenants. Moreover, this kind

that has occurred is similar to what

industrial real estate.

considerable stability among long-

of properties are rented out while

has happened in high streets. On

term investors and tenants.

they are still in the carcass stage

the investment side, the attractive

(i.e., the shell of the building) and

ratio of supply and demand has

For prime locations, tenants are currently paying annual rents

The best barometer to measure the

tenants invest significant amounts

resulted in increased presence of

of EUR 125 to 150/m2 in major

demand is the rate of unoccupied

in furnishing the shops, which

institutional investors. Also affluent

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

individuals show an increasing

The contemporary vision of urban

interest in this type of real estate.

and spatial planning embraces greater cohesion and clarity.

Ten institutional investors are

Increasingly, certain zones are

now highly active in this segment.

explicitly being earmarked as

Generally speaking, Belgium has

areas for large retail outlets and

more and more integrated retail

other zones as areas for shops

parks, comparable with those

with restricted activities. These

found close to every conurbation in

areas have space for further

countries like the United Kingdom

establishments. We cannot exclude

and France. Retail parks in Belgium

the possibility that many new

tend rather to be small (15,000

developments will be realised as a

to 20,000mÂ˛), and are mostly

result of the regionalisation of the

situated in the French-speaking

place of business policy, which has

part of the country (Wallonia). In

become effective on 1 July 2014.

Flanders, new parks likely occur in small urban areas, such as

During the past years, Retail

retail parks T Forum and Be-MINE

Estates nv has acquired various

Boulevard respectively in Tongeren

retail parks. Several of them have

and Beringen.

been subjected to a facelift or will be within a medium term. Even the

An important part of the Retail

expansion of such sites offers Retail

Estates nvâ&#x20AC;&#x2122;s properties are located

Estates nv attractive prospects.

adjacent to major peripheral motorways or near residential

It is labour-intensive to select

districts on the outskirts of larger

suitable opportunities and plan and

conurbations and they often form

manage these alterations. They

clusters which seek proximity to

require the necessary expertise, but

each other.

are rewarded with a higher return on rents.

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

REAL ESTATE REPORT I

O2 THE REAL ESTATE PORTFOLIO

has established a significant

The value of the real estate portfolio

TYPE OF BUILDING1

portfolio which, on 31 March 2017,

of the public BE-REIT has increased

Definitions

consists of 668 retail properties,

by 7.05% compared to the value

Individual out-of-town retail

covering a total built-up retail area

on 31 March 2016 (EUR 1,000.80

properties are solitary retail

of 748,136m². Their fair value of

million). This is the result of

properties adjacent to the public

INVESTMENT STRATEGY AND PROFILE

the real estate portfolio totals EUR

acquisitions, as well as the delivery

highway. Every outlet has its own car

Since 1998, Retail Estates nv has

1,071.36 million. The investment

of several properties under its own

park and entrance and exit roads,

been investing in out-of-town retail

value amounts to EUR 1,097.92

development.

connecting it to the public highway,

properties, alongside roads. Over

million.

and making it easily recognisable. In

a period of 19 years, the company

The occupancy rate is 98.13%.

the immediate vicinity, there are, in principle, no retail properties of the same kind.

GROWTH OF THE RETAIL ESTATES PORTFOLIO BETWEEN 1998 AND 2017

Retail clusters are a collection of out-of-town retail properties,

1100000

located along the same traffic axis

1000000

and, from the consumer’s point of

900000

view, they form a self-contained

800000

whole, although they do not

700000

possess a joint infrastructure other

600000

than the traffic axis. This is the most

500000

typical concentration of out-of-

400000

town retail properties in Belgium.

300000

Retail parks are made up of retail

200000

properties that, in conjunction

100000

with other shops, form part of an

0 ‘98

‘99

‘00

‘01

‘02

‘03

‘04

‘0’

‘05

Area in m²

‘06

‘07

‘08

‘09

‘10

‘11

Fair value (in EUR 000)

Until 31 March 2003: investment value From 1 April 2004: fair value (valuation according to IFRS)

‘12

‘13

‘14

‘15

‘16

‘17

integrated commercial complex. All properties use a central car park with a shared entrance and exit 1 The diagrams in this chapter show percentages based on the total surface on 31 March 2017.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

TYPE OF BUILDING

road. This enables consumers to go

GEOGRAPHICAL SPREAD

GEOGRAPHICAL DISTRIBUTION

At the time of the incorporation of

to several shops without having to move their cars. A location of this

7.03%

kind will typically have at least five

24.42%

Retail Estates nv, more than 70% of its retail properties were located in

39.37%

the Walloon Region. This reflected

properties.

the far greater supply of out-ofOther real estate consists mainly

town real estate available in this

of offices, residential dwellings,

part of the country.

hospitality establishments and a Since then, the ratio has changed,

logistics complex at Erembodegem.

with 60.63% of the portfolio located

The Erembodegem site was leased in its totality to Brantano nv under a

68.55%

39.37% in the Walloon Region. These

10-year lease agreement that ends on 31 May 2024. Retail Estates nv only invests in real estate properties used for the aforementioned

60.63%

in the Flemish Region, compared to

Individual peripheral retail properties Retail clusters and retail parks Other

figures are more in line with the way

Flanders Region

Walloon Region

in which the population is distributed across the two regions.

purposes if they are already embedded in a retail property or are

Now, Retail Estates nv has only two

part of a real estate portfolio that

retail outlets in the Brussels Region.

can only be acquired as a whole.

This region hardly knows out-oftown real estate and is therefore

Retail premises under

not actively observed by Retail

development are premises that

Estates nv.

form part of a new-build project or a renovation project.

“

Over a period of 19 years, the company has established a significant portfolio which, on 31 March 2017, consists of 668 retail properties, covering a total built-up retail area of 748,136m².

”

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

REAL ESTATE REPORT I

COMMERCIAL ACTIVITIES OF TENANTS

TENANTS: CHAIN STORES VERSUS SMES

These tenants are less sensitive

RENT PER M²

The proportion of shoe and

Since its incorporation, Retail

than local independent SMEs to

The differences in rent are not

clothing shops (26.57%), together

Estates nv has focused on mainly

changing conditions in the local

only due to the characteristics of

with large-scale retail (interior/

letting out its properties to chain

market. A temporary local fall in

the location, but are often also

decoration and electro, together

stores and/or franchise issuers.

turnover caused by road works, for

attributable to the term of the lease

example, will not cause any liquidity

agreements, which, in the best-

24.73%), accounts for more than 51% of the leased surface

For the purposes of this analysis,

problems capable of jeopardising

case scenario, can be reviewed only

area. Both categories provide a

‘chain store’ shall mean a large retail

the payment of rent for chain

every 9 years, or otherwise not until

stable basis. Retailers selling food

company with at least five sales

stores. As most chain stores are

18 or 27 years later. The demand

represent only 13.20%. Socio-

outlets and central accounting.

organised nationally, and often

for long-term lease agreements

economic permits for all these

Already in 1998, the company was

internationally, they can rely on a

can be explained by the significant

activities are the most difficult

letting out 82% of its properties

strong professional organisation and

amounts that tenants invest in

to obtain. This is conducive to

to chain stores of this kind. On 31

a marketing unit that can promote

furnishing the premises, and also

an increase in the value of the

March 2017 the percentage chain

the attractiveness of every individual

by the advantages that long-term

properties on the one hand and a

stores and/or franchise issuers

outlet.

contracts offer investors, because

stronger loyalty to the location on

represents 88.14%.

the other. COMMERCIAL ACTIVITIES OF TENANTS 10.05%

the tenant is bound by the rent and They also make significant

will not be keen to renegotiate the

marketing efforts which can be

rent for fear of putting the outlet at

advantageous to the real estate

risk.

location. The average contractual rent per

13.20%

25.45%

m² amounts to EUR 95.45 per year. Compared to 1998 (EUR 61.15/ m²) Food Voluminous Clothes/shoes

24.73% 26.57%

this represents an increase of 56.09%. This increase is partly due

Commodities

to inflation and rent increases and

Various

partly due to the increase in the number of recently established retail properties, which, due to the higher market prices, are typically rented out at higher prices than the

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

average of the existing real estate

TENANTS AND CONTRACTS

portfolio.

The top twenty tenants of Retail Estates nv represent 55.67% RENT PER MÂ˛

of the gross rental income, and 52.25% of the total surface area

17.45%

19.77%

of the properties in the real estate portfolio. They represent 294 shops. The weighted average term of the leases is 9.76 years. This does not derogate the exsisting theoretical

20.94%

28.04%

risk that all tenants use their legally granted termination option at

13.81%

the end of the current three-year period. In this case all shop will be

Less than EUR 75 Between EUR 75 and 90 Between EUR 90 and 100 Between EUR 100 and 125 More than EUR 125

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

empty within 3 years and 6 months.

98,

S bezet

REAL ESTATE REPORT I

SUMMARY OF KEY FIGURES RETAIL ESTATES 31.03.17 Estimated fair value2 (in €)

31.03.16

31.03.15

1,071,361,000

1,000,799,000

837,121,000

6.60%

6.64%

6.80%

Contractual rents (in €)

70,522,410

66,600,791

55,880,428

Contractual rents incl. rental value of vacant buildings (in €)

71,406,658

67,956,128

56,511,608

748,136

708,879

611,076

668

634

554

98.13%

98.22%

98.78%

9,742

6,552

32,496

Yield (investment value)

Total m² in portfolio Number of properties Occupancy rate Total m² under development

2 This fair value also contains the project developments, which are not included in the fair value as mentioned in the real estate experts’ conclusions on 31 March 2017 (see further in this chapter).

IMPORTANT NOTE On 31 March 2017, the real estate

All of these retail properties were

portfolio of Retail Estates nv

built before 1989 and are similar to

consists of real estate properties

those owned by Retail Estates nv in

owned by Retail Estates nv and its

terms of location and rent.

subsidiaries. REAL ESTATE PORTFOLIO OF IMMOBILIÈRE DISTRI-LAND NV On 31 March 2017, the real estate portfolio of Immobilière Distri-Land nv consists of 10 retail properties that have been rented out completely.

“

An important part of the Retail Estates nv’s properties are located adjacent to major peripheral motorways or near residential districts on the outskirts of larger conurbations and they often form clusters which seek proximity to each other.

”

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

OVERVIEW REAL ESTATE PORTFOLIO Below is an overview of the real estate portfolio of Retail Estates nv and its subsidiaries on 31 March 2017. Province

Cluster/IBW

Address

Antwerp

Bredabaan, 2170 Merksem Cluster Antwerp-North Bredabaan, 2900 Schoten

Gross Tenants surface (m²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

4.549.479,34

4.549.244,46

69.681.508,23

L&L RETAIL BELGIUM SA FUN BELGIUM NV LEGIO IMMO BELGIUM NV ALDI RIJKEVORSEL NV AVEVE NV BEDDEN EN MATRASSEN BV FABRIMODE NV (BEL & BO) C&A BELGIE CV CARPETLAND NV CHAUSSEA BRT BVBA MENATAM SA (EGGO) EURO SHOE GROUP NV MAXI ZOO BELGIUM BVBA NEW VANDEN BORRE NV PEETERS KIP AAN ‘T SPIT BVBA PRO-DUO NV SCHOT’S VISHANDEL BVBA ZEEMAN TEXTIELSUPERS NV KREFEL NV LEEN BAKKER BELGIE NV MEDINA NV (BENT SCHOENEN) L.TORFS NV HET BROEKENPALEIS NV JBC NV ORCHESTRA - PREMAMAN NV

32.202

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Rental income (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Gross Tenants surface (m²)

Boomsesteenweg , 2610 Wilrijk Cluster Antwerp-South Antwerpsesteenweg, 2630 Aartselaar

Estimated Rental Value (EUR)

Acquisition value (EUR)

3.178.673,66

3.531.335,00

39.404.391,05

818.986,92

897.220,00

7.590.290,42

DECOR HEYTENS BELGIQUE NV KREFEL NV ADEBO NV OBEY NV RESIDENTIAL CARPETLAND NV KEUKENONTWERPERS NV PRO-DUO NV SCHRAUWEN SANITAIR EN VERWARMING NV DARKOM BVBA HILTI BELGIUM NV EDENWOOD NV ODYSSEUS BOUWMARKTEN NV BEDDEN EN MATRASSEN BV KEUKENHUIS NV MAXI ZOO BELGIUM BVBA BMS NV FUN BELGIUM NV KP DECOR BVBA PIOCHEUR NV C&A BELGIE CV BASIC FIT BELGIE LIN’S ZEBULAH NV EURO SHOE GROUP NV

Boomsesteenweg, 2630 Aartselaar Koningin Astridlaan, 2550 Kontich

32.596 Cluster Lier

Rental income (EUR)

Donk, 2500 Lier Antwerpsesteenweg, 2500 Lier

ANISERCO NV HEUREKA BVBA (FRANCHISE HEYTENS) NEW VANDEN BORRE NV MANYLION BVBA (IXINA) BRANTANO NV KREFEL NV SLAAPADVIES BVBA BELGACOM MOBILE NV FUN BELGIUM NV

8.293

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

Province

Cluster/IBW

Address

Cluster MechelenNorth

Oscar Van Kesbeecklaan, 2800 Mechelen Electriciteitsstraat, 2800 Mechelen Guido Gezellelaan, 2800 Mechelen Rode Kruisplein, 2800 Mechelen Liersesteenweg, 2800 Mechelen

Cluster MechelenSouth

Brusselsesteenweg, 2800 Mechelen Geerdegemstraat, 2800 Mechelen

Cluster Westerlo

Bell Telephonelaan, 2260 Oevel Hotelstraat, 2260 Oevel

Individual peripheral retail properties and others

Slachthuisstraat, 2000 Antwerpen Frans Beirenslaan, 2150 Borsbeek Geelsebaan, 2460 Kasterlee Antwerpsesteenweg, 2660 Hoboken Nekkerspoelstraat, 2800 Mechelen

Gross Tenants surface (mÂ²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.286.199,47

1.391.865,00

17.724.336,20

940.922,21

870.785,00

8.954.399,22

765.347,36

1.104.871,00

15.886.864,20

705.350,55

667.570,00

9.644.126,33

EURO SHOE GROUP NV MAXI ZOO BELGIUM BVBA BRANTANO NV OPENBARE VERKOPEN.BE BVBA VACANT LEEN BAKKER BELGIE NV NEW VANDEN BORRE NV DANS- EN EXPRESSIE VZW PRO-DUO NV ORCHESTRA - PREMAMAN NV BABYDUMP BV PIOCHEUR NV FUN BELGIUM NV

13.757 INTRES BELGIUM XP BVBA FABRIMODE NV (BEL & BO) MENATAM SA (EGGO) BRANTANO NV NEW VANDEN BORRE NV REDISCO BVBA L&L RETAIL BELGIUM SA MADMAN BVBA LEGIO IMMO BELGIUM NV

7.536 MERKKLEDING BVBA ACTION BELGIUM BVBA C&A BELGIE CV EURO SHOE GROUP NV FABRIMODE NV (BEL & BO) KWANTUM BELGIE BV RESIDENTIAL KP DECOR BVBA VACANT ZEBULAH NV ZEEMAN TEXTIELSUPERS NV

12.654 ALDI RIJKEVORSEL NV CARPETLAND NV SINT-NIKLAAS DOE HET ZELF NV HUBO BELGIE NV

6.826

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Rental income (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Brussels

Jerusalemstraat, 1030 Schaarbeek Individual peripheral retail Ninoofsesteenweg, 1070 Anderlecht properties and others

Hainaut

Cluster Ath

Gross Tenants surface (m²)

2.205

5.270

8.182

228.375,00

2.764.160,90

556.404,99

664.935,00

7.080.296,22

731.107,34

734.642,50

10.898.022,47

250.319,71

3.720.580,11

187.765,80

2.781.492,34

695.219,86

11.138.464,78

KREFEL NV BIO CORNERS SPRL

2.610

Route Nationale, 7080 Frameries

246.936,47

OMEGA NV (DATABUILD) RSDECO AVEVE NV ELECTRO AV NV ALDI GEMBLOUX SA EURO SHOE GROUP NV

Cluster Enghien Pavé de Soignies, 7850 Enghien

Cluster Frameries

Acquisition value (EUR)

EURO SHOE GROUP NV AGIK SPRL KRUIDVAT BVBA MATCH SA ZEEMAN TEXTIELSUPERS NV TELENET GROUP BVBA PIOCHEUR NV ELECTRO AV NV ACTION BELGIUM BVBA ALKEN MAES NV MONI SPRL

Rue du Campinaire, 6250 Aiseau-Presles Cluster Aiseau-Presles

Route de Mons, 6560 Erquelinnes

Estimated Rental Value (EUR)

ALDI CARGOVIL-ZEMST NV ORCHESTRA-PREMAMAN NV

Chaussée de Bruxelles, 7800 Ath

Cluster Erquelinnes

Rental income (EUR)

SND SA (TRAFIC) TOMONA SPRL (TOM&CO)

2.232 ACTION BELGIUM BVBA FABRIMODE NV (BEL & BO) IMMO AVAL BELGIUM SA (INTERMARCHÉ) NATALE MARIO (SANDER BOUTIQUE) EURO SHOE GROUP NV ANISERCO NV WILLEMS NV (VERANDAS) LEGIO IMMO BELGIUM NV

7.653

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

100

Province

Cluster/IBW

Address

Cluster Leuzeen-Hainaut

Rue de l’Artisanat, 7900 Leuze-en-Hainaut

Cluster Mouscron

Rue de la Liesse, 7700 Mouscron

Cluster Péruwelz

Rue Neuve Chaussée, 7600 Péruwelz

Gross Tenants surface (m²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

269.201,56

3.982.110,76

332.530,05

5.228.877,66

845.470,40

843.133,35

12.952.592,54

843.645,79

916.202,87

8.268.820,60

ACTION BELGIUM BVBA LE REPAIRE DES FILOUS SPRL (SPEELZAAL KINDEREN) PRODUO SPRL (POILS ET PLUMES) EURO SHOE GROUP NV

3.050 EXCEL-CASH SA (CASH CONVERTERS) LIDL GOBREL SA

2.713 PERUWELZ BRICOLAGE SPRL IMMO AVAL BELGIUM SA (INTERMARCHÉ) EURO SHOE GROUP NV POINT CARRE SPRL CHAUSSEA BRT BVBA JBC NV FABRIMODE NV (BEL & BO) ACTION BELGIUM BVBA

9.220 Cluster Tournai Rue des Roselières, 7503 Froyennes

CHAUSSURES MANIET SA LEEN BAKKER BELGIE NV DELCAMBE CHAUSSURES SPRL DECOR HEYTENS BELGIQUE NV ANISERCO NV PIOCHEUR NV CARGLASS NV VACANT DI SA MOBISTAR NV

Rue de Maire, 7503 Froyennes Rue de la Taverne du Maire, 7503 Froyennes

7.979

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Rental income (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Individual peripheral retail properties and others

Route de Philippeville, 6010 Couillet Route Nationale, 6041 Gosselies Route de la Basse Sambre, 6060 Gilly Avenue du Centenaire, 6061 Montignies-sur-Sambre Rue de la Persévérance, 6061 Montignies-sur-Sambre Rue de Leernes, 6140 Fontaine-l’Evêque Chaussée de Mons, 6150 Anderlues Rue Dewiest, 6180 Courcelles Rue des Français, 6200 Châtelet Chaussée de Gilly, 6220 Fleurus Rue de Bertransart, 6280 Gerpinnes Rue d’Anderlues, 6530 Thuin Chaussée de Binche, 7000 Mons Avenue Wilson, 7012 Jemappes Rue de la Station, 7060 Soignies Chaussee de Roeulx, 7060 Soignies Avenue de la Wallonie, 7100 La Louvière Rue Zépherin Fontaine, 7130 Binche Rue des bureaux, 7160 Chapelle-lez-Herlaimont Route de Mons, 7390 Quaregnon Route de Mons, 7390 Wasmuel Rue du Grand Hornu, 7301 Hornu

Gross Tenants surface (m²)

Rental income (EUR)

Estimated Rental Value (EUR)

Acquisition value (EUR)

3.048.704,75

35.988.262,12

101

MAGIC SOFA SCS ELECTRO DEPOT BELGIQUE SA WIBRA BELGIE NV MEGA STORE SPRL SAY SPRL JBC NV E5-MODE NV DO INVEST NV NEW VANDEN BORRE NV MATCH SA POINT CARRE SPRL JBC NV DFA1-CENTRE FUNERAIRE MARCHANT BVBA MOBISTAR NV PROFI SA ALDI GEMBLOUX SA DISTRILED CENTRE BVBA LIDL CODDS SPRL NIKE RETAIL BV MAGS BVBA (CHAUSSEA) BASIC FIT BELGIE PIOCHEUR NV CASHALLO SPRL AVEVE NV CHAUSSEA BRT BVBA WIBRA BELGIE NV RUNFA SPRL (WOK) LEONARDO SPRL OULA OOPS SPRL (BINNENSPEELTUIN) MAXI TOYS BELGIUM SA BASSANI SPRL MC DONALD’S BELGIUM INC. JCDECAUX BILLBOARD SA DEVRESSE SA ANISERCO NV CARPETLAND NV

36.328

3.248.749,67

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

102

Province

Cluster/IBW

Address

Limburg

Cluster Beringen

Koolmijnlaan, 3580 Beringen

Cluster GenkHasseltweg

Hasseltweg, 3600 Genk Wilde Kastanjelaan, 3600 Genk

Cluster Lommel

Binnensingel, 3920 Lommel

Gross Tenants surface (mÂ²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.876.505,42

1.897.048,33

31.120.736,80

727.069,30

723.575,00

9.318.202,39

715.556,22

703.735,00

10.724.969,43

BRICO BELGIUM NV ALBERT HEIJN BELGIE NV MAXI ZOO BELGIUM BVBA MAGS BVBA (CHAUSSEA) MEDINA NV (BENT SCHOENEN) L&L RETAIL BELGIUM SA MONHASHEE BVBA (ZEB) H&M HENNES & MAURITZ SA FABRIMODE NV (BEL & B0) C&A BELGIE CV AVA PAPIERWAREN NV NEW VANDEN BORRE NV

17.637 VAN BEUREN INTERIORS BVBA KVIK A/S GOBREL SA TOYCHAMP BELGIUM NV SEATS AND SOFAS NV BUDGETSLAGER NV ALDI HEUSDEN-ZOLDER

9.971 SPORTSDIRECT.COM BELGIUM LIDL LEEN BAKKER BELGIE NV KREFEL NV

6.938

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Rental income (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Cluster Tongeren

Luikersteenweg, 3700 Tongeren

Individual peripheral retail properties and others

Genkersteenweg, 3500 Hasselt Vredelaan, 3530 Houthalen Grote Baan, 3530 Houthalen Meylandtlaan, 3550 Heusden-Zolder Hoevenstraat, 3920 Lommel Maaseikersteenweg, 3620 Lanaken

Gross Tenants surface (mÂ²)

Rental income (EUR)

Estimated Rental Value (EUR)

Acquisition value (EUR)

2.373.503,68

2.779.780,00

37.888.234,27

551.062,74

745.640,00

11.105.816,84

103

JBC NV L.TORFS NV ADL CONSULT BVBA PRO-DUO NV EURO SHOE GROUP NV KLEDING VOSSEN NV NEW VANDEN BORRE NV MONASHEE BVBA (ZEB) DREAMLAND NV FABRIMODE NV (BEL & BO) KRUIDVAT BVBA E5-MODE NV CHAUSSEA BRT BVBA C.C.I.T. BVBA GOBREL SA PIOCHEUR NV AVA PAPIERWAREN NV DELIEVEC BVBA BELG. BIJKANTOOR DELHAIZE LE LION/DE LEEUW BV LIDL ACTION BELGIUM BVBA MAXI ZOO BELGIUM BVBA DESCART0 BVBA LEEN BAKKER BELGIE NV GROEP L.B.M. BVBA

30.930 VACANT GROUP GL INTERNTIONAL NV JBC NV LIDL RESIDENTIAL E5-MODE NV MAGS BVBA (CHAUSSEA) TOYCHAMP BELGIUM NV

8.364

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

104

Province

Cluster/IBW

Address

Liège

Cluster Blegny- Rue Champs de Tignée, 4671 Barchon Barchon Champs de Tignée, 4671 Barchon

Gross Tenants surface (m²)

Rental income (EUR)

1.078.139,25

1.129.690,00

14.719.308,55

1.246.479,61

1.316.920,00

15.665.782,40

ANISERCO NV DISCUS SPRL (VERKOOP VISGEREI) VACANT STAR MODE SPRL KREFEL NV APRICOT SA (VERKOOP KLEDING) BURGER BRANDS BELGIUM NV LEEN BAKKER BELGIE NV LA GRANDE RECRE BELGIQUE SPRL BURO MARKET NV ALDI VAUX-SUR-SURE SA DISTRILED LIEGE SPRL LEGIO IMMO BELGIUM NV LAMBRECHTS NV (GROOTHANDEL SANITAIR) ENGELS LIEGE BVBA

Bld Cuivre et Zinc, 4000 Liège Boulevard Raymond Poincaré, 4000 Liège Boulevard de Froidmont, 4000 Liège

14.650

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Acquisition value (EUR)

WILMAR DECO SPRL LES PERES NOIRS SA OPTIC BARCHON SPRL CHAUD DIFFUSION SPRL SAKER-GRECO BRICOBA SA INGI COIFFURE SPRL LES BOUCHERS DOUBLES SPRL LA CHINE WOK SPRL CIRCUS BELGIUM SA LA GLISSE 3D MANAGEMENT SPRL SEPTEMBRE 1965 SPRL (POINTCARRE) BELG. BIJKANTOOR DELHAIZE LE LION/DE LEEUW BV LIDL T.C. BONCELLES SPRL PHILIPPE STEVENS SPRL - DIGITHOME

11.871 Cluster Liège Edge of Town

Estimated Rental Value (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Cluster Eupen

Rue Mitoyenne, 4700 Eupen Herbesthalerstraat, 4700 Eupen

Cluster LiègeHerstal

Rue des Naiveux, 4040 Herstal Rue Arnold Delsupexhe, 4040 Herstal

Gross Tenants surface (m²)

Rental income (EUR)

Estimated Rental Value (EUR)

Acquisition value (EUR)

883.531,61

826.760,00

12.949.150,31

663.287,55

539.183,58

4.794.580,69

1.716.999,94

1.683.255,00

27.707.939,92

105

PIOCHEUR NV ANISERCO NV CHAUSSEA BRT BVBA C&A BELGIE CV CASSIS SA EURO SHOE GROUP NV JBC NV PRO-DUO NV VERITAS NV ORCHESTRA-PREMAMAN NV

9.153 GOBREL SA L&L RETAIL BELGIUM SA PROMOTEX INTERNATIONAL SA EN TAO BELGIQUE SA NEW VANDEN BORRE NV REDISCO BVBA AVA PAPIERWAREN NV

5.205 Cluster Rocourt Chaussée de Tongres, 4000 Rocourt

AUTO 5 NV CLUB SA KREFEL NV MEDI-MARKET PARAPHARMACIE LIEGE NV BDO DISTRIBUTION SA MAGS BVBA (CHAUSSEA) C&A BELGIE CV EURO SHOE GROUP NV HEMA BELGIE BVBA DISTRI JEMAPPES-ROCOURT SPRL (GIFI-IDE) JBC NV BURGER BRANDS BELGIUM NV

10.964

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

106

Province

Cluster/IBW

Address

Cluster Verviers

Boulevard des Gérardchamps, 4800 Verviers Rue Fernand Houget, 4800 Verviers Rue d’ Anvers, 4800 Verviers Rue de la Station, 4800 Verviers

Gross Tenants surface (m²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

3.264.340,62

49.999.147,79

BELG. BIJKANTOOR DELHAIZE LE LION/DE LEEUW BV GEMEENSCHAP DELHAIZE/TOM & CO/LEENBAKKER ANISERCO NV LEEN BAKKER BELGIE NV BDO DISTRIBUTION SA BRANTANO NV PIOCHEUR NV REGIE DES BATIMENTS DECATHLON BELGIUM NV MCDONALD’S RESTAURANTS BELGIUM NV SECUREX INTERNATIONAL MIAMI SUN SPRL ING BELGIQUE SA PHARMACIES POPULAIRES DE VERVIERS ET ARR. SCRL DREAMLAND NV PRO-DUO NV GROEP BOSSUYT BELGIE NV ELECTRO AV NV SND SA (TRAFIC) MENATAM SA (EGGO) MAISONS DU MONDE PARFUMERIE ICI PARIS XL SA MAGS BVBA (CHAUSSEA) L&L RETAIL BELGIUM SA 3D MANAGEMENT SPRL JBC NV DELIMMO SA MAXI ZOO BELGIUM BVBA PAPETERIE.BE SPRL KRUIDVAT BVBA EDCOM SCRL

37.084

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Rental income (EUR)

3.467.455,34

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Individual peripheral retail properties and others

Rue Joseph Demoulin, 4000 Liège Rue de Chafnay, 4020 Jupille-sur-Meuse Rue Servais Malaise, 4030 Grivegnée Rue de Sewage, 4100 Seraing Route du Condroz, 4120 Neupré Avenue Laboulle, 4130 Tilff Chaussée Romaine S/N, 4300 Waremme Rue Joseph Wauters, 4500 Huy Avenue du Bosquet, 4500 Huy Rue du Bay-Bonnet, 4620 Fléron Rue Bureau, 4620 Fléron Avenue Reine Astrid, 4900 Spa Boulevard des Anglais, 4900 Spa Rue du Chalet, 4920 Aywaille

Gross Tenants surface (m²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.382.020,89

1.241.849,86

16.566.916,72

1.608.301,64

1.660.705,00

17.980.230,97

ACTION BELGIUM BVBA PROFI SA EURO SHOE GROUP NV KRUIDVAT BVBA ZANIMO SPRL SERAING DISCOUNT POINT CARRE SPRL BOUNCE WEAR BVBA (SPORTARTIKELEN) LIDL BRANTANO NV BLEU CITRON SPRL ORCHESTRA-PREMAMAN NV

16.158

Luxembourg Cluster Marche- Avenue de France, 6900 Marche-en-Famenne en-Famenne

Rental income (EUR)

107

MAXI TOYS BELGIUM SA BE KITCHEN SPRL ZEEMAN TEXTIELSUPERS NV C&A BELGIE CV BBK EXPANSION BVBA (BABYKID) LEEN BAKKER BELGIE NV JMBA SPRL (IXINA) PIOCHEUR NV BASILE FAMILY SPRL H&M JENNES & MAURITZ SA HEMA BELGIE BVBA EUROVENTES SPRL ELECTRO AV NV FOLLOW UP SPRL CIVADIS SA HUBO BELGIE NV

Chaussée de Liège, 6900 Marche-en-Famenne Rue du parc Industriel, 6900 Marche-en-Famenne

15.183

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

108

Province

Cluster/IBW

Address

Individual peripheral retail properties and others

Rue de Marche, 6600 Bastogne Avenue de la Gare, 6720 Habay-la-Neuve Rue de la Ferme, 6780 Messancy Rue de la Vallée, 6780 Messancy Rue de Neufchâteau, 6800 Libramont-Chevigny Rue de Libin, 6800 Libramont Avenue de Bouillon, 6800 Libramont Rue de l’Aliénau, 6800 Libramont Rue de la Girafe, 6830 Bouillon

Cluster Dinant

Tienne de l’Europe / Rue Saint Jacques, 5500 Dinant Tienne de l’Europe, 5500 Dinant

Cluster Gembloux

Campagne d’Enée, 5030 Gembloux

Gross Tenants surface (m²)

Acquisition value (EUR)

1.431.112,53

1.437.664,30

22.952.767,06

510.901,89

512.595,00

6.454.671,73

825.079,05

820.570,00

12.485.203,34

BRANTANO NV ELECTRO AV NV LEEN BAKKER BELGIE NV CASSIS SA CHARTEX SA RESIDENTIAL NMD SPRL C&A BELGIE CV

5.330 MENATAM SA (EGGO) VANDEN BERGH SA AVA PAPIERWAREN NV AUGEM SPRL ELECTRO AV NV KRUIDVAT BVBA IDEAL DECOR ETS SA DISTRILED CENTRE BVBA LIDL

8.237

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Estimated Rental Value (EUR)

JBC NV CARREFOUR BELGIUM RETAIL ASSOCIATES NV ZEEMAN TEXTIELSUPERS NV MAXI MARKET SPRL GOBREL SA MAKE SPRL ZHAN LI FEN BLUE VISION MESSANCY (A CONSTITUER) VACANT QUALITY MEAT RENMANS SA MEUBLES DOURET ET FILS BRICO ARDENNE SPRL KREFEL NV PARTY 2000 SPRL AVA PAPIERWAREN NV OMEGA NV (DATABUILD) BPOST SA

18.778

Namur

Rental income (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Cluster Namur-North

Rue de Sardanson, 5004 Bouge Chaussée de Louvain, 5004 Bouge Rue Louis Albert, 5020 Champion Chaussée de Louvain, 5020 Champion

Cluster Namur-South

Avenue du Prince de Liege, 5100 Jambes Chaussée de Liege, 5100 Jambes Chaussée de Marche, 5101 Erpent

Cluster Sambreville

Rue Baty des Puissances, 5190 Jemeppe-sur-Sambre

Individual peripheral retail properties and others

Ancien Rivage, 5020 Malonne Chaussée de Wavre, 5030 Gembloux Avenue Reine Elisabeth, 5300 Andenne Avenue de la Belle Mine, 5300 Andenne Rue de Neuville, 5600 Philippeville

Gross Tenants surface (m²)

Rental income (EUR)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.572.025,44

1.532.829,00

19.064.443,14

852.736,37

846.032,34

12.979.822,05

395.615,12

449.840,00

4.144.556,55

627.295,37

714.910,00

4.153.657,49

109

FAST FOOD SPRL CCB CORPORATE SPRL (CASH CONVERTERS) 2 HB ANS SPRL (HAIRCARE) C&A BELGIE CV CARREFOUR BELGIUM SA PIOCHEUR NV E5-MODE NV BRANTANO NV SND SA (TRAFIC) NCD SA (IXINA) ALDI GEMBLOUX SA MAISONS DU MONDE TIAN BAO SPRL

14.868 NEW VANDEN BORRE NV CHAUSSEA BRT BVBA ORCHESTRA-PREMAMAN NV BURGER BRANDS BELGIUM NV KREFEL NV ECLIPSE SPRL (AUPING)

8.523 BRICO BELGIUM NV BRANTANO NV MAXI TOYS BELGIUM SA PING AN 168 SPRL (KLEDINGWINKEL) GOBREL SA BAVAROIS CONCEPT SPRL (WOK)

5.045 ANISERCO NV BRANTANO NV MAXI TOYS BELGIUM SA NEW VANDEN BORRE NV EURO SHOE GROUP NV C&A BELGIE CV ALDI GEMBLOUX SA

6.163

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

110

Province

Cluster/IBW

Address

East Flanders

Leopold II-laan, 9200 Dendermonde Cluster Dendermonde- Mechelsesteenweg, 9200 Dendermonde Mechelsestwg Oude Vest, 9200 Dendermonde

Gross Tenants surface (m²)

Rental income (EUR)

1.372.051,97

1.423.525,00

7.627.022,04

1.477.397,37

1.236.438,69

18.187.351,20

DI SA DAMART TSD NV HUNKEMOLLER BELGIUM NV HANS ANDERS BELGIE BVBA L&L RETAIL BELGIUM SA L.TORFS NV C&A BELGIE CV SAVERMO NV (ZEB) LIDL PIOCHEUR NV HEMA BELGIE BVBA NEW VANDEN BORRE NV JBC NV CARREFOUR BELGIUM RETAIL ASSOCIATES NV FITFORM WAMO BVBA BRICO BELGIUM NV ELECTRO AV NV BELSAY NV TIJDLOOS BVBA BRANTANO NV

Stationsstraat, 9900 Eeklo Stationstraat - Krügercenter, 9900 Eeklo Gentsesteenweg, 9900 Eeklo

13.038

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Acquisition value (EUR)

BELG. BIJKANTOOR DELHAIZE LE LION/DE LEEUW BV BELLOLI BVBA PIOCHEUR NV LEEN BAKKER BELGIE NV FUN BELGIUM NV BASIC FIT BELGIE KREFEL NV GAM NV KRUIDVAT BVBA

14.969 Cluster Eeklo

Estimated Rental Value (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Cluster Ghent-South

Kortrijksesteenweg, 9051 Sint-Denijs-Westrem Wallenkensstraat, 9051 Sint-Denijs-Westrem

Cluster Oudenaarde

Gentstraat, 9700 Oudenaarde

Cluster Sint-Niklaas

Parklaan, 9100 Sint-Niklaas Plezantstraat, 9100 Sint-Niklaas

Gross Tenants surface (mÂ²)

Rental income (EUR)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.822.734,98

1.877.625,30

21.337.016,55

445.841,59

645.727,15

6.911.516,83

514.335,98

474.830,00

4.533.707,84

111

FUN BELGIUM NV RETAIL CONCEPTS NV (AS ADVENTURE) DECOR HEYTENS BELGIQUE NV GDW-GENT BV FINSBURY PROPERTIES NV NEW VANDEN BORRE NV KREFEL NV DEUTSCHE BANK AG ORCHESTRA-PREMAMAN NV CARPETLAND NV PIOCHEUR NV L.TORFS NV WAMO BVBA

14.600 EXTRA VERTES BVBA C&A BELGIE CV LEEN BAKKER BELGIE NV VACANT PIOCHEUR NV WIBRA BELGIE NV ALBERT HEIJN BELGIE NV KRUIDVAT BVBA BPOST SA

7.954 GUNGO BVBA ELECTRO AV NV RESIDENTIAL FUN BELGIUM NV ALDI ERPE MERE NV

4.796

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

112

Province

Cluster/IBW

Address

Cluster Wetteren

Oude Heerbaan, 9230 Wetteren Oosterzelesteenweg, 9230 Wetteren

Gross Tenants surface (mÂ²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.656.978,00

25.707.925,20

DE RYCKE BVBA (GROOTHANDEL BLOEMEN EN PLANTEN) ALFLORA BV (VERKOOP BLOEMISTENARTIKELEN) BB CONCEPT BVBA (OPSLAG DROGE VOEDING) GEMEENSCHAP DE RYCKE-ALFLORA-BB CONCEPT AMELIM NV ATITA NV (PAPIERWAREN) JBC NV L.TORFS NV NEW VANDEN BORRE NV SLAAPADVIES BVBA SPORTSDIRECT.COM BELGIUM VERITAS NV RETAIL BELGIE BVBA L&L RETAIL BELGIUM SA REDISCO BVBA ORCHESTRA-PREMAMAN NV C&A BELGIE CV WAMO BVBA

25.247

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Rental income (EUR)

1.702.571,89

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Individual peripheral retail properties and others

Fratersplein, 9000 Gent Brusselsesteenweg, 9050 Gentbrugge Maisstraat, 9060 Zelzate Antwerpsesteenweg, 9080 Lochristi Brusselsesteenweg, 9090 Melle Zelebaan, 9160 Lokeren Zelebaan Lot B, 9160 Lokeren Oosterzelesteenweg, 9230 Wetteren Grote Baan, 9250 Waasmunster Brusselsesteenweg, 9300 Aalst Gentsesteenweg, 9300 Aalst Pieter Corneliskaai, 9300 Aalst Kwadelapstraat, 9320 Erembodegem Nachtegaalstraat, 9320 Erembodegem Brakelsesteenweg, 9400 Ninove Astridlaan, 9500 Geraardsbergen Provincieweg, 9550 Herzele Noordlaan, 9630 Munkzwalm Ronseweg, 9700 Oudenaarde Astenemolenstraat, 9800 Deinze Kortrijksesteenweg, 9830 Sint-Martens-Latem Stationsstraat, 9890 Gavere Puitvoetstraat, 9100 Sint-Niklaas

Cluster Halle

Edingsesteenweg, 1500 Halle Bergensesteenweg, 1500 Halle Demaeghtlaan, 1500 Halle Bergensesteenweg, 1600 Sint-Pieters-Leeuw

Cluster Kampenhout

Mechelsesteenweg, 1910 Kampenhout

Gross Tenants surface (mÂ²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

4.154.734,35

4.227.777,99

58.992.716,13

467.629,82

653.800,00

6.160.459,74

497.521,41

557.850,00

2.157.788,68

LIDL VACANT MUYS NV JBC NV DAMART TSD NV AUGUSTYNS BVBA (VERKOOP KEUKENS) BRANTANO NV KREFEL NV LEGIO IMMO BELGIUM NV RESIDENTIAL TDM PRODUCTS BELGIUM BVBA CARPETLAND NV BRICO BELGIUM NV MUYS NV ALDI ERPE MERE NV MODEMAKERS FASHION NV OMEGA (DEINZE) PLAZA GENT BVBA MATCH SA

56.705

Flemish Brabant

Rental income (EUR)

113

KP DECOR BVBA ORCHESTRA-PREMAMAN NV AVEVE NV BRANTANO NV CHALET CENTER COMM. V.

7.457 EURO SHOE GROUP NV FABRIMODE NV (BEL & BO) NORDEX NV STANDAARD BOEKHANDEL NV ZEEMAN TEXTIELSUPERS NV PIOCHEUR NV SWISS SENSE BVBA

4.536

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

114

Province

Cluster/IBW

Address

Cluster Leuven-East

Tiensesteenweg, 3360 Korbeek-Lo Ridderstraat, 3360 Bierbeek

Cluster Zaventem

Leuvensesteenweg, 1930 Zaventem Leuvensesteenweg, 1932 Sint-Stevens-Woluwe Jozef Van Damstraat, 1932 Sint-Stevens-Woluwe

Gross Tenants surface (mÂ²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.343.171,32

1.315.364,00

19.215.092,84

1.195.852,99

1.289.620,00

17.838.775,66

LOVANIX BVBA (IXINA) SANTANA INTERNATIONAL nv FUN BELGIUM nv ORCHESTRA-PREMAMAN nv BRANTANO nv FABRIMODE nv (BEL & BO) LEEN BAKKER BELGIE nv LEGIO IMMO BELGIUM nv PIOCHEUR nv L.TORFS nv

11.010 CARPETLAND NV VONIKA BVBA E-LOGISTICS NV VACANT PROMO SAPIENS NV HUBO BELGIE NV BEDDEN EN MATRASSEN BV COOLBLUE NV ANISERCO NV RETAIL PARTNERS COLRUYT GROUP ZEEMAN TEXTIELSUPERS NV KRUIDVAT BVBA

15.382

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Rental income (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Individual peripheral retail properties and others

Humaniteitslaan, 1601 Ruisbroek Verlengde Stallestraat, 1620 Drogenbos Nieuwe Stallestraat, 1620 Drogenbos Waterloosesteenweg, 1640 Sint-Genesius-Rode Ninoofsesteenweg, 1700 Dilbeek Assesteenweg, 1740 Ternat Schaarbeeklei, 1800 Vilvoorde Goudbloemstraat, 1800 Vilvoorde Waardbeekdreef, 1850 Grimbergen Hoogstraat, 1930 Zaventem Brusselsesteenweg, 3020 Herent Brusselsesteenweg, 3090 Overijse Leuvensesteenweg, 3290 Diest Leuvenselaan, 3300 Tienen Aarschotsesteenweg, 3390 Sint-Joris-Winge

Cluster Braine l’Alleud

Avenue de la belle Province, 1420 Braine-l’Alleud Rue Pierre Flamand, 1420 Braine-l’Alleud

Gross Tenants surface (m²)

Estimated Rental Value (EUR)

Acquisition value (EUR)

3.596.326,23

3.595.209,85

49.293.471,47

791.188,11

804.685,88

12.266.016,95

566.127,45

693.480,00

9.191.134,87

GOBREL SA ATLANTIS SPRL RETAIL CONCEPTS NV (AS ADVENTURE) NEW VANDEN BORRE NV VACANT CEMEPRO SPRL (CHATEAU D’AX) BRANTANO NV JBC NV DEVOTEC BVBA RESIDENTIAL ALDI CARGOVIL-ZEMST NV AVA PAPIERWAREN NV KREFEL NV LEEN BAKKER BELGIE NV PIOCHEUR NV ALDI HEUSDEN-ZOLDER RETAIL CONCEPTS NV (AS ADVENTURE) FUN BELGIUM NV

32.157

Walloon Brabant

Rental income (EUR)

115

AVA PAPIERWAREN NV PROXIMUS NV (BELGACOM) BRANTANO NV C&A BELGIE CV BELG. BIJKANTOOR DELHAIZE LE LION/ DE LEEUW BV LEGIO IMMO BELGIUM NV MAXI TOYS BELGIUM SA MOBISTAR NV PIOCHEUR NV ORCHESTRA-PREMAMAN NV

8.536 Cluster Nivelles Chaussée de Namur, 1400 Nivelles

BASIC FIT BELGIE SND SA (TRAFIC) VOLTIS SA MENATAM SA (EGGO) NEW VANDEN BORRE NV

5.783

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

116

Province

Cluster/IBW

Address

Individual peripheral retail properties and others

Avenue Reine Astrid, 1300 Wavre Rue Pont du Christ, 1300 Wavre Rue des Carabiniers, 1300 Wavre Avenue de Centenaire, 1400 Nivelles Brusselsesteenweg, 1410 Waterloo Grand Route, 1435 Corbais Rue du Bosquet, 1370 Jodoigne

Cluster Bruges-North

Sint-Pieterskaai, 8000 Brugge Sint-Pieterszuidstraat en Veemarktstraat, 8000 Brugge

Cluster Kortrijk-North

Ringlaan, 8500 Kortrijk Ringlaan, 8520 Kuurne Ter Ferrants, 8520 Kuurne

Gross Tenants surface (m²)

Acquisition value (EUR)

748.711,81

860.895,00

11.826.745,21

1.295.615,13

1.306.415,00

20.101.941,56

919.005,53

1.140.195,00

10.743.615,98

GOBREL SA HEMA BELGIE BVBA DELIX 88 BVBA LIDL EURO SHOE GROUP NV ADL CONSULT BVBA IDEWE VZW DREAMBABY NV LEEN BAKKER BELGIE NV ACTION BELGIUM BVBA OMEGA (BWC) MAXI ZOO BELGIUM BVBA KRUIDVAT BVBA ZEEMAN TEXTIELSUPERS NV

14.110 I & S FASHION NV IMETAM BVBA L.TORFS NV DE MAMBO BVBA KI VIDEO BVBA (MATRASSEN) NEW VANDEN BORRE NV VACANT AVA PAPIERWAREN NV ACTION BELGIUM BVBA LEEN BAKKER BELGIE NV

12.714

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

Estimated Rental Value (EUR)

CHAUSSEA BRT BVBA PIOCHEUR NV REGIE D’ELECTRICITE DE LA VILLE DE WAVRE VACANT BRICO BELGIUM NV CARPETLAND NV CHAUSSURES MANIET SA PARTIJHALLEN BVBA

7.467

West Flanders

Rental income (EUR)

REAL ESTATE REPORT I

Province

Cluster/IBW

Address

Gross Tenants surface (m²)

Cluster Roeselare

Brugsestraat, 8800 Roeselare Brugsesteenweg, 8800 Roeselare Mercury Centrum - Brugsesteenweg, 8800 Roeselare

Individual peripheral retail properties and others

Torhoutsestraat, 8020 Ruddervoorde Maalsesteenweg, 8310 Sint-Kruis Torhoutsesteenweg, 8400 Oostende Biezenstraat, 8430 Middelkerke Koninklijke Baan, 8670 Koksijde Gentstraat, 8760 Meulebeke Gentseweg, 8793 Sint-Eloois-Vijve Frankrijklaan, 8970 Poperinge

Rental income (EUR)

Estimated Rental Value (EUR)

Acquisition value (EUR)

1.353.126,77

1.241.720,00

16.001.880,63

1.151.994,40

1.286.809,00

19.321.771,64

117

BRICO BELGIUM NV ANISERCO NV PIOCHEUR NV IMETAM BVBA BELGIAN POSTERS SEATS AND SOFAS NV OMEGA NV NEW VANDEN BORRE NV

12.903 MATCH SA KI VIDEO BVBA (MATRASSEN) C&A BELGIE CV HOLSTRA BVBA IMETAM BVBA PARTIJHALLEN BVBA BRANTANO NV ALDI Roeselare NV AVA PAPIERWAREN NV MEKOWA BVBA (GAMMA) INOFEC BVBA PPG COATING BVBA OMEGA (BWC)

15.092

On 31 March 2017 there were 10

(warehouse), Oevel (new building

Oudenaarde. There are 3 vacant

shop in Waver that is vacant, and 1

unoccupied retail outlets in Nivelles

delivered), Mechelen, Hasselt

apartments located in Schaarbeek

office in Mechelen. This represents

(demolition and reconstruction),

(expansion), Liège, Messancy,

(sale planned for 22 May 2017)

1.87% of the total portfolio.

Drogenbos (warehouse), Zaventem

Froyennes, Kuurne, Gentbrugge and

and Mechelen. There is also 1 small

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

118

modified decisions). The fair value is defined as the

REPORTS OF

estimated amount for which a

REAL ESTATE EXPERTS

property should exchange on the date of valuation between a

REPORT BY CUSHMAN & WAKEFIELD

willing buyer and a willing seller

This report covers 344 premises

in an arm’s-length transaction

which are part of the real estate

after proper marketing wherein

portfolio of Retail Estates nv and its

the parties had each acted

subsidiaries.

knowledgeably, prudently and without compulsion. This definition

“We have the pleasure of providing

corresponds to our definition of the

you with our valuation as of 31

market value.

March 2017, which covers the portfolio of Retail Estates + Distri-

The sale of a building is in theory

Land + Hainaut Retail Invest nv.

subject to transfer rights collected by the government. This amount

We confirm that we carried out

depends amongst other on the

this task as an independent expert.

transfer manner, the profile of the

We also confirm that our valuation

purchaser and the geographical

was carried out in accordance

situation of the building. On the

with the national and international

basis of a representative sample

standards and their application

of the properties on the Belgian

procedures, amongst other in the

market, the average transfer cost

valuation of Belgian Real Estate

equals 2.50% (for buildings with a

Investment Truts (BE-REITs) –

higher value than EUR 2,500,000

(According to the present decisions.

over the period 2013, 2014, 2015

We preserve ourselves the right

and Q1 2016).

to review our valuation in case of

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

REAL ESTATE REPORT I

For buildings with a value higher

actual paid rent, this adjusted

The investment value, in absolute

REPORT BY STADIM

than EUR 2,500,000 we obtain

market rent is determided by taking

terms, increased with 7.17%

The Stadim report, dated 31 March

a sale value excluding costs

60% of the gap between the

compared to the last quarter.

2017, is a report on a semi-logistics

corresponding with the real

market rent and the actual passing

This gives a yield of 7.07% for

complex. The investment value

value (“fair value”) as set by the

rent. If this is not the case, then the

Immobilière Distri-Land nv.

of these real estate properties

international accounting standard

adjusted market rent is equal to

IAS 40, by subtracting 2.50%

actual paid rent. The difference will

The portfolio of Hainaut Retail

and the fair value at EUR 4.62

transfer cost of the investment

be added to the actual paid rent.

Invest nv has at 31.03.2017 an

million. These properties represent

value. The properties are here

The market rent will be capitalised

investment value (corrections

a collectable rent of EUR 0.33

considered as a portfolio.

in case the actual paid rent is

incl.) of EUR 37.68 million and a

million, which represents a gross yield of 6.75%.

is estimated at EUR 4.74 million

higher than the market rent. In

fair value of EUR 36.76 million.

“Our investment value” is based

addition, adjustments are made for

The investment value, in absolute

on the capitalisation with a Gross

the difference in actual paid rent

terms, increased with 0.05%

Yield of the passing rent, taking

and (adjusted) market rent.

compared to the last quarter. This

into account possible corrections

119

gives a yield of 6.43 % for Hainaut

like vacancy, step-rents, rent-free

The portfolio of Retail Estates nv

periods, etc. The Gross yield is

(incl. Tongeren) has at 31.03.2017

depending on current output on

an investment value (corrections

REPORT BY CBRE

the investment market, taking into

incl.) of EUR 458.28 million and

The CBRE report, dated 31 March

account the location, the suitability

a fair value of EUR 447.11 million.

2017, is a report on 320 real estate

of the site, the quality of the tenant

The investment value, in absolute

properties belonging to Retail

and the building on the moment of

terms, increased with 1.82%. This

Estates nv and its subsidiaries.

the valuation.

gives a yield of 6.67% for Retail

The investment value of these real

Estates.

estate properties is estimated at

Retail Invest nv.”

EUR 565.33 million and the fair

In order to calculate the investment value of the retail park in Tongeren

The portfolio of Immobilière

value at EUR 551.55 million. These

and the Distri-Land portfolio,

Distri-Land nv has at 31.03.2017

properties represent a collectable

we have capitalised its adjusted

an investment value (corrections

rent of EUR 36.98 million, which

market rent. In case when the

incl.) of EUR 18.06 million and

represents a gross yield of 6.54%.

market rent is higher than the

a fair value of EUR 17.62 million.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

120

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

121

FINANCIAL REPORT O6 O1

CONSOLIDATED INCOME STATEMENT

123

CONSOLIDATED BALANCE SHEET

126

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY 128

CONSOLIDATED CASH-FLOW STATEMENT

130

NOTES TO THE CONSOLIDATED ACCOUNTS

132

OTHER NOTES

144

STATUTORY AUDITOR’S REPORT

174

STATUTORY INCOME STATEMENT

176

STATUTORY BALANCE SHEET

178

STATUTORY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

180

STATUTORY APPROPRIATION OF RESULT

182 I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

122

“ Retail estates was again included in the EPRA annual report Survey and received a gold award.“ I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

123

1. A. CONSOLIDATED INCOME STATEMENT INCOME STATEMENT (in â&#x201A;Ź 000)

Rental income Rental related expenses

Notes

31.03.17

31.03.16

66,561

62,074

-537

-394

66,024

61,680

Net rental income Recovery of property expenses Recovery of rental charges and taxes normally payable by tenants on let properties Rental charges and taxes normally payable by tenants on let properties Other rental related income and expenses

6,400

5,882

-6,851

-6,134

-108

-41

65,465

61,386 -2,054

Property result Technical costs Commercial costs Charges and taxes on unlet properties Property management costs Other property costs

-2,237

-508

-427

-339

-338

-1,912

-1,683

-2

Property costs

-4,940

-4,504

Operating property result

60,525

56,882

-2,941

-2,841

Operating corporate costs Other current operating income and expenses

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

124

INCOME STATEMENT (in â&#x201A;Ź 000)

Notes

31.03.17

31.03.16

57,584

54,041

279

341

13,754

10,216

Operating result before result on portfolio Result on disposals of investment properties Result on sales of other non-financial assets Changes in fair value of investment properties Other result on portfolio

-144

Operating result Financial income Net interest charges Authorised hedging instruments' costs Other financial charges

71,473

64,598

144

-18,274

-16,852

-869

-4,995

-70

Financial result

-19,064

-21,774

Result before taxes

52,409

42,824

-273

-789

Net result

52,136

42,035

Attributable to: Shareholders of the Group Minority interests

52,136

42,035

39,115

36,473

Taxes

Note: EPRA earnings (share Group)1 Result on portfolio Changes in fair value of financial assets and liabilities

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

13,889

10,557

-869

-4,995

FINANCIAL REPORT I

RESULT PER SHARE

Number of ordinary shares in circulation Weighted average number of shares Net profit per ordinary share (in €)2 Diluted net profit per share (in €) EPRA earnings per share (in €)3

Notes

31.03.17

31.03.16

9,008,208

8,866,320

8,907,915

8,627,562

5.85

4.87

5.85

4.87

4.39

4.23

125

1 The EPRA earnings is calculated as follows: net result excluding changes in fair value of investment properties, exclusive the result on disposal of investment properties and exclusive changes in fair value of financial assets and liabilities. 2 The net profit per ordinary share is calculated as follows: the net result divided by the weighted average number of shares. 3 The EPRA earnings per share is calculated from the weighted average number of shares, counted from the time of issue (which does not necessarily coincide with first dividend entitlement date). Calculated on the number of dividend-entitled shares, the EPRA earnings per share amounts to EUR 4.34 at 31.03.2017 versus EUR 4.11 at 31.03.2016.

1. B. CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME) Statement of other comprehensive income (in € 000)

Net result Other components of other comprehensive income, recyclable in income statements: Impact on the fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties Changes in the fair value of authorised hedging instruments qualifying for hedge accounting as defined by IFRS OTHER COMPREHENSIVE INCOME

31.03.17

31.03.16

52,136

42,035

-1,761

-4,080

9,870

1,427

60,245

39,382

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

126 2. CONSOLIDATED BALANCE SHEET ASSETS (in € 000)

Notes

Non-current assets Goodwill Intangible non-current assets Investment properties5 Other tangible non-current assets Finance lease receivables Trade receivables and other non-current assets

TOTAL ASSETS

Notes

Shareholders’ equity Shareholders’ equity attributable to the shareholders of the parent company Capital Issue premiums Reserves Net result of the financial year Minority interests 5 Including project developments (IAS 40).

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

31.03.16

1,075,389

1,002,510

346

147

1,071,361

1,000,799

2,134

1,554

1,030

Current assets Non-current assets or groups of assets held for sale Trade receivables Tax receivables and other current assets Cash and cash equivalents Deferred charges and accrued income

SHAREHOLDERS’ EQUITY AND LIABILITIES (in € 000)

31.03.17

518

11,948

13,105

5,691

8,222

938

1,373

3,160

1,466

978

1,315

1,181

729

1,087,338

1,015,615

31.03.17

31.03.16

514,970

474,170

514,970

474,170

197,603

194,545

157,529

151,499

107,702

86,091

52,136

42,035

FINANCIAL REPORT I

SHAREHOLDERS’ EQUITY AND LIABILITIES (in € 000)

Notes

31.03.17

31.03.16

572,369

541,445

511,226

456,178

485,330

428,023

400,910

398,225

84,420

29,788

25,896

28,155

61,143

85,267

Liabilities Non-current liabilities Provisions Non-current financial debts Credit institutions Long term financial lease Other Other non-current financial liabilities

34/35

127

10 30/35

Current liabilities Current financial debts Credit institutions Short term financial lease Trade debts and other current debts

34/35

Exit tax Other Other current liabilities Accrued charges and deferred income

42,597

11,976

21,071

4,327

13,219

7,649

7,852

11,504

15,633

6,754

5,963

1,087,338

1,015,615

31.03.17

31.03.16

50.26%

49.95%

31.03.17

31.03.16

DEBT RATIO

NET ASSET VALUE PER SHARE (in €) - SHARE GROUP

42,601

30,909

4 31

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES

Debt ratio6

30,909

Net asset value per share IFRS7 EPRA NAV8 Net asset value per share (investment value) excl. dividend excl. the fair value of authorised hedging instruments

57.17

53.48

59.29

56.66

58.96

56.27

6 The debt ratio is calculated as follows: liabilities (excluding provisions, accrued charges and deferred income, financial instruments and deferred taxes), divided by the total assets (excluding hedging instruments). 7 The net asset value per share IFRS (fair value) is calculated as follows: shareholders’ equity (attributable to the shareholders of the parent company) divided by the number of shares. 8 EPRA NAV is calculated as follows: shareholders‘ equity (excluding the fair value of authorised hedging instruments) divided by the number of shares.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

128 3. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (in € 000)

Balance according to IFRS on 31 March 2015

Capital ordinary shares

Issue premiums

Reserves*

Net result of the financial year

TOTAL Shareholders’ Equity

166,902

101,838

77,233

35,238

381,212

- Net appropriation of profits 2015-2016 - Transfer of portfolio result to reserves

6,131

-6,131

- Transfer of EPRA earnings to reserves

5,673

-5,673

- Reclassification between reserves - Dividends of the financial year 2014-2015 - Capital increase

-23,434 28,345

47,870

- Capital increase through contribution in kind

1,060

1,791

- Costs of capital increase

-1,762

76,215 2,851 -1,762

- Other

-291

- Other comprehensive income 31/03/2016 Balance according to IFRS on 31 March 2016

194,545

-23,434

151,499

-291

-2,653

42,035

39,382

86,093

42,035

474,170

- Net appropriation of profits 2016-2017 - Transfer of portfolio result to reserves

5,221

-5,221

- Transfer of EPRA earnings to reserves

8,442

-8,442

- Reclassification between reserves - Dividends of the financial year 2015-2016

-28,372

- Capital increase - Capital increase through contribution in kind - Costs of capital increase

3,193

6,030

-134

- Other

-160

- Other comprehensive income 31/03/2017 Balance according to IFRS on 31 March 2017

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

9,223

-134

197,603

157,529

-160

8,109

52,136

60,245

107,705

52,136

514,970

FINANCIAL REPORT I

Changes in the ef-

Reserve for Impact on the fair

the positive/ negative balance of changes in

Balance according to IFRS on 31 March 2015

Legal reserve

411

Changes in the ef-

fective part of the fair

value of estimated fective part of the fair

value of authorised

transfer rights and

value of authorised

hedging instruments

Results car-

costs resulting from

hedging instruments

are not subjected

ried forward

the hypothetical dis-

qualifying for hedge

to qualify for hedge

from previ-

of real estate

Available

posal of investment

accounting as de-

accounting as defined

ous financial

properties

reserves

properties

fined by IFRS

by IFRS

years

the fair value * Detail of the reserves (in â&#x201A;Ź 000)

88,757

129

9,103

-20,860

-24,587

TOTAL

24,409

77,233

5,673

-663

- Net appropriation of profits 2015-2016 - Transfer of portfolio result to reserves

6,131

- Transfer of EPRA earnings to reserves - Reclassification between reserves

663

-3,160

2,869

291

21,323

-21,323

-4,080

-2,292

3,719

-24,942

-5,556

-17,604

- Capital increase through contribution in kind - Costs of capital increase - Other

-291

- Other comprehensive income 31/03/2016 Balance according to IFRS on 31 March 2016

1,074

91,728

11,972

-291 -2,653 29,419

86,091

8,442

- Net appropriation of profits 2016-2017 - Transfer of portfolio result to reserves

10,216

-4,995

- Transfer of EPRA earnings to reserves - Reclassification between reserves

-942

-499

5,221

1,441

- Capital increase through contribution in kind - Costs of capital increase - Other

-160

- Other comprehensive income 31/03/2017 Balance according to IFRS on 31 March 2017

133

101,285

13,413

-1,761

1,524

8,346

-26,703

-4,032

-14,253

8,109 37,861

107,705

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

130 4. CONSOLIDATED CASH-FLOW STATEMENT CASH-FLOW STATEMENT (in â&#x201A;Ź 000)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 1. Cash-flow from operating activities Operating result Interest paid Interest received Corporate taxes paid Corporate taxes received Other Non-cash elements to be added to / deducted from the result: * Depreciations and impairments - Depreciations / Impairments (or write-backs) on tangible and intangible assets - Depreciations / Impairments (or write-backs) on trade receivables * Other non-cash elements - Changes in the fair value of investment properties - Profit on disposal of investment properties - Other result on portfolio - Changes in the fair value of financial assets and liabilities * Other Change in working capital requirements: * Movement of assets - Trade receivables and other receivables - Tax receivables and other current assets - Deferred charges and accrued income - Long-term assets * Movement of liabilities - Trade debts and other current debts - Other current liabilities - Accrued charges and deferred income

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

31.03.17

31.03.16

1,315

1,469

33,445

29,420

71,473

64,958

-16,699

-16,837

-15,444

-7,150

308

632

12,493

425

-12,476

-10,319

257

218

288

102

-13,754

-10,216

-279

-341

144 868 -82 -6,215

-2,296

238

1,199

-1,715

381

-424

254

-1,538

-5

-14,502

-5,764

11,089

997

637

642

FINANCIAL REPORT I

CASH-FLOW STATEMENT (in â&#x201A;Ź 000)

2. Cash-flow from investment activities Purchase of intangible assets Purchase of investment properties Disposal of investment properties and assets held for sale Acquisition of shares of real estate companies Disposal of shares of real estate companies Purchase of other tangible assets Disposal of other tangible assets Disposal of non-current financial assets Income from trade receivables and other non-current assets 3. Cash-flow from financing activities * Change in financial liabilities and financial debts - Increase in financial debts - Decrease in financial debts * Change in other liabilities - Increase in other liabilities * Change in shareholders' equity - Capital increase and issue premiums - Costs of capital increase - Other * Dividend - Dividend for the previous financial year CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR

31.03.17

31.03.16

-37,274

-92,900

-288

-100

-8,218

-26,390

9,459

11,970

-37,481

-77,040

-762

-1,353

3,492

63,329

236,977

222,500

-204,886

-210,190

131

76,215 -133

-1,762

-160

-28,372

-23,434

978

1,315

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

132

5. NOTES TO THE

Determining the fair value of the

financial year were not processed

6bZcYbZci id IFRS 11 ‘Joint

CONSOLIDATED ACCOUNTS

investment properties in accordance

as business combinations such as

arrangements’ on acquisition of an

GENERAL COMPANY INFORMATION

with IAS 40 Investment properties,

required under IFRS 3 definition,

interest in a joint operation, effective

Retail Estates nv is a public Belgian

the independent real estate expert

based on the conclusion that this

for annual periods beginning on or

Real Estate Investment Trust (BE-

deducts an estimated amount

definition is not applicable, given the

after 1 January 2016. This amendment

REIT) governed by and construed

of transfer rights and costs from

nature and the size of the acquired

provides guidance on how to account

in accordance with Belgian law. Its

investment properties. The impact

companies. The companies in

for the acquisition of an interest in

registered office is located in Ternat.

on the fair value of investment

question own a limited number of

a joint operation that constitutes a

properties as a result of these

properties which are not intended

business.

The consolidated accounts of the

estimated transfer rights and costs

to be kept on as independent

company for the financial year which

in case of a hypothetical disposal of

businesses. The companies are

6bZcYbZci id IAS 16 ‘Property,

ended on 31 March 2017 comprise

investment properties is processed

fully consolidated. We refer for this

plant and equipment’ and IAS 38

the company and its subsidiaries

directly in the shareholders’ equity

matter also to note 41.

‘Intangible assets’ on depreciation

(the “Group”). The annual accounts

on the account “Impact on fair

were approved for publication by the

value of estimated transfer rights

New or amended standards and

annual periods beginning on or after

board of directors on 19 May 2017 and

and costs resulting from the

interpretations, applicable in 2016

1 January 2016. In this amendment

will be submitted for approval to the

hypothetical disposal of investment

The following standards, amended

the IASB has clarified that the

annual shareholders’ meeting on 24

properties”, as explicitly provided

by the IASB, and the following

use of revenue-based methods to

July 2017.

by the aforementioned legislation.

interpretations issued by the IFRIC are

calculate the depreciation of an

During the financial years ending on

applicable to the current period but

asset is not appropriate because

SIGNIFICANT ACCOUNTING POLICIES

31 March 2017 and 31 March 2016,

have no effect on the presentation,

revenue generated by an activity

STATEMENT OF CONFORMITY

the respective amounts of EUR

the notes or the financial results of

that includes the use of an asset

The consolidated accounts are drawn

1.76 million and EUR 4.08 million

the Group.

generally reflects factors other than

up in accordance with accounting

were recognised directly in the

standards which are consistent with

shareholders’ equity in this account.

and amortisation, effective for

the consumption of the economic The following interpretation and

benefits embodied in the asset. The

the International Financial Reporting

amendments to standards are

IASB has also clarified that revenue

Standards as implemented by the

Application of IFRS 3 Business

mandatory for the first time for the

is generally presumed to be an

BE-REIT legislation.

Combinations

financial year beginning 1 January

inappropriate basis for measuring

Corporate transactions of the past

2016:

the consumption of the economic

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

benefits embodied in an intangible

for annual periods beginning

of the amendments is to simplify the

2016). These set of amendments

asset.

on or after 1 January 2016. The

accounting for contributions that are

impacts 4 standards: IFRS 5, ‘Non-

amendments to IAS 1 are part of

independent of the number of years

current assets held for sale and

6bZcYbZci id IAS 16 ‘Property,

the initiative of the IASB to improve

of employee service, for example,

discontinued operations’ regarding

plant and equipment’ and IAS

presentation and disclosure in

employee contributions that are

methods of disposal; IFRS 7,

41 ‘Agriculture’ on bearer plants,

financial reports and are designed

calculated according to a fixed

‘Financial instruments: Disclosures’,

effective for annual periods beginning

to further encourage companies

percentage of salary

(with consequential amendments

on or after 1 January 2016. These

to apply professional judgment in

amendments change the financial

determining what information to

6ccjVa ^begdkZbZcih '%&%"'%&'

contracts; IAS 19, ‘Employee benefits’

reporting for bearer plants, such

disclose in their financial statements.

(effective 1 July 2014 and endorsed for

regarding discount rates; IAS 34,

as grape vines, rubber trees and oil

The amendments make clear that

1 February 2015). These amendments

‘Interim financial reporting’ regarding

palms. The IASB decided that bearer

materiality applies to the whole of

include changes from the 2010-12

disclosure of information.

plants should be accounted for in

financial statements and that the

cycle of the annual improvements

the same way as property, plant and

inclusion of immaterial information

project, that affect 7 standards: IFRS

6bZcYbZcih id >;GH &%

equipment because their operation is

can inhibit the usefulness of financial

2, ‘Share-based payment’, IFRS 3,

‘Consolidated financial statements’,

similar to that of manufacturing.

disclosures. Furthermore, the

‘Business Combinations’, IFRS 8,

IFRS 12 ‘Disclosure of interests

amendments clarify that companies

‘Operating segments’, IFRS 13, ‘Fair

in other entities’ and IAS 28,

6bZcYbZcih id IAS 27 ‘Separate

should use professional judgment

value measurement’, IAS 16, ‘Property,

‘Investments in associates and joint

financial statements’ on the equity

in determining where and in what

plant and equipment’, and IAS 38,

ventures’, effective for annual periods

method, effective for annual periods

order information is presented in the

‘Intangible assets’, Consequential

beginning on or after 1 January

beginning on or after 1 January 2016.

financial disclosures.

amendments to IFRS 9, ‘Financial

2016. These amendments clarify

to IFRS 1) regarding servicing

instruments’, IAS 37, ‘Provisions,

the application of the consolidation

to use the equity method to account

6bZcYbZci id IAS 19, ‘Employee

contingent liabilities and contingent

exception for investment entities and

for investments in subsidiaries, joint

benefits’, on defined benefit plans

assets’, and IAS 39, Financial

their subsidiaries.

ventures and associates in their

(effective 1 July 2014 and endorsed for

instruments – Recognition and

separate financial statements.

1 February 2015). These narrow scope

measurement’.

These amendments allow entities

133

The following interpretation and amendments to standards are

amendments apply to contributions 6bZcYbZcih id IAS 1 ‘Presentation

from employees or third parties to

6ccjVa ^begdkZbZcih '%&'"'%&)

mandatory for the first time for the

of financial statements’, effective

defined benefit plans. The objective

(effective and endorsed for 1 January

financial year beginning 1 January

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

134

2016 (however yet subjected to EU

New or amended standards and

amendments and interpretation to

of an identified asset for a period of

endorsement):

interpretations not yet in force

standards have been issued, but are

time in exchange for consideration.

The following new standards and

not mandatory for the first time for

>;GH &) ‘Regulatory deferral

amendments to standards have been

the financial year beginning 1 January

6bZcYbZcih id >;GH &%,

accounts’, effective for annual

issued, but are not mandatory for

2016 and have not been endorsed by

‘Consolidated financial statements’

periods beginning on or after 1

the first time for the financial year

the European Union:

and IAS 28,’Investments in associates

January 2016. It concerns an interim

beginning 1 January 2016 and have

standard on the accounting for

been endorsed by the European

>;GH &+ ’Leases’. This standard

the effective date still has to be

certain balances that arise from

Union:

replaces the current guidance in IAS

determined. These amendments

and joint ventures’, for which

17 and is a far reaching change in

address an inconsistency between

only applicable to entities that apply

>;GH . ‘Financial instruments’,

accounting by lessees in particular.

the requirements in IFRS 10 and those

IFRS 1 as first-time adopters of IFRS.

effective for annual periods

Under IAS 17, lessees were required

in IAS 28 in dealing with the sale or

It permits such entities, on adoption

beginning on or after 1 January

to make a distinction between a

contribution of assets between an

of IFRS, to continue to apply their

2018. The standard addresses

finance lease (on balance sheet)

investor and its associate or joint

previous GAAP accounting policies

the classification, measurement,

and an operating lease (off balance

venture. The main consequence of

for the recognition, measurement,

derecognition of financial assets and

sheet). IFRS 16 requires lessees to

the amendments is that a full gain or

impairment and derecognition of

financial liabilities and general hedge

recognise a lease liability reflecting

loss is recognised when a transaction

regulatory deferral accounts. The

accounting.

future lease payments and a ‘right-

involves a business (whether it is

of-use asset’ for virtually all lease

housed in a subsidiary or not). A

rate–regulated activities. IFRS 14 is

interim standard also provides guidance on selecting and changing

>;GH &* ‘Revenue from contracts

contracts. For lessors, the accounting

partial gain or loss is recognised

accounting policies (on first–time

with customers’. The standard

stays almost the same. However, as

when a transaction involves assets

adoption or subsequently) and on

will improve comparability of the

the IASB has updated the guidance

that do not constitute a business,

presentation and disclosure. The

top line in financial statements

on the definition of a lease (as well

even if these assets are housed in a

European Commission has decided

globally. Companies using IFRS will

as the guidance on the combination

subsidiary.

not to launch the endorsement

be required to apply the revenue

and separation of contracts), lessors

process of this interim standard and

standard for annual periods

will also be affected by the new

6bZcYbZcih id >6H &',’Income

to wait for the final standard.

beginning on or after 1 January 2018.

standard. Under IFRS 16, a contract

taxes’ on Recognition of deferred

is, or contains, a lease if the contract

tax assets for unrealised losses

conveys the right to control the use

(effective 1 January 2017). These

The following new standards,

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

amendments on the recognition of

6bZcYbZcih id >;GH ': Share-

the volatility that could arise when

which changes on IFRS 1 and IAS

deferred tax assets for unrealised

based payments (effective 1 January

IFRS 9 is applied before the new

28 are applicable as of 1 January

losses clarify how to account for

2018): The amendment clarifies the

insurance contracts standard is

2018 and changes on IFRS 12 are

deferred tax assets related to debt

measurement basis for cash-settled

issued; and

applicable as of 1 January 2017.

instruments measured at fair value.

payments and the accounting for modifications that change an award

These set of amendments impacts 3 standards: IFRS 1,’ First-time adoption

· give companies whose activities

6bZcYbZcih id >6H ,, Statement

from cash settled to equity settled. It

are predominantly connected with

of IFRS’, regarding the deletion of

of cash flows (effective 1 January

also introduces an exception to the

insurance an optional temporary

short-term exemptions for first-time

2017). These amendments to IAS 7

principles in IFRS 2 that will require an

exemption from applying IFRS 9

adopters regarding IFRS 7, IAS 19,

introduce an additional disclosure

award to be treated as if it was wholly

until 2021. The entities that defer the

and IFRS 10; IFRS 12,’Disclosure of

that will enable users of financial

equity-settled, where an employer

application of IFRS 9 will continue

interests in other entities’ regarding

statements to evaluate changes

is obliged to withhold an amount

to apply the existing financial

clarification of the scope of the

in liabilities arising from financing

for the employee’s tax obligation

instruments standard—IAS 39.

standard (these amendments

activities. The amendment is part

associated with a share-based

of the IASB’s Disclosure Initiative,

payment and pay the amount to the

6bZcYbZcih id >6H )%,

for annual periods beginning on or

which continues to explore how

tax authorities.

‘Investment property’ relating to

after 1 January 2017) and IAS 28,

transfers of investment property

‘Investments in associates and joint

6bZcYbZcih id >;GH ): Applying

(effective 1 January 2018): The

ventures’ regarding measuring an

IFRS 9 Financial Instruments with

amendment clarifies that to transfer

associate or joint venture at fair value.

6bZcYbZcih id >;GH &*, ‘Revenue

IFRS 4 Insurance Contracts (effective

to, or from, investment properties

from contracts with customers’ -

1 January 2018): These amendments

there must be a change in use. To

>;G>8 ''!’ Foreign currency

Clarifications (effective 1 January 2018).

introduce two approaches: an overlay

conclude if a property has changed

transactions and advance

These amendments compromise

approach and a deferral approach.

use there should be an assessment

consideration (effective 1 January

clarification guidance on identifying

The amended standard will:

of whether the property meets the

2018): ’This IFRIC addresses foreign

definition. This change must be

currency transactions or parts

supported by evidence.

of transactions where there is

financial statement disclosure can be improved.

performance obligations, accounting for licences of intellectual property and

· give all companies that issue

135

should be applied retrospectively

consideration that is denominated

the principle versus agent assessment.

insurance contracts the option to

The amendment also includes more

recognise in other comprehensive

6ccjVa ^begdkZbZcih '%&)"'%&+

or priced in a foreign currency. The

illustrative examples.

income, rather than profit or loss,

applicable to three standards of

interpretation provides guidance for

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

136

when a single payment/receipt is

revenues, whereby the necessary

applying the closing rate on the

Gains or losses resulting from

made as well as for situations where

eliminations are carried out.

balance sheet date. Exchange rate

changes in the fair value of the

differences ensuing from foreign

financial derivatives are immediately

multiple payments/receipts are made. The guidance aims to reduce

â&#x20AC;&#x2DC;Controlâ&#x20AC;&#x2122; is defined as the ability

currency transactions, and conversion

recognised in the income statement

diversity in practice.

of Retail Estates nv to determine,

of monetary assets and liabilities

unless a derivative meets the

directly or indirectly, the financial and

into foreign currencies, are booked

conditions for cash flow hedge

PRESENTATION PRINCIPLES

operational policy of the subsidiary,

in the income statement in the

accounting.

The financial information is drawn

to entitle the variable cash flows and

period in which they occur. Non-

up in euro (EUR), and is rounded

the results of this subsidiary, and to

monetary assets and liabilities in

The fair value of the financial interest

off to the nearest thousand. The

have the possibility to influence her

foreign currencies are converted

rate derivatives is the amount that

companies of the Group also do their

variable cash flows by controlling the

at the exchange rate valid on the

the company expects to receive

accounting in euro (EUR).

subsidiary.

transaction date.

or pay if the financial interest rate derivative is terminated as of the

Below is a summary of the most

In order to apply the full consolidation

FINANCIAL DERIVATIVES

balance sheet date, whereby the

important principles for financial

method to certificates one is, in

Fair value hedge accounting

prevailing interest rate and the credit

reporting. The accounting principles

addition to controlling the issuing

The Group uses financial derivatives

risk of the counterparties involved are

were applied consistently throughout

company, also required to own 75%

(interest rate swaps) to hedge

also taken into account.

the relevant period.

of the number of certificates issued.

against interest rate risks arising from

In this case, a debt is acknowledged,

operational, financial and investment

Cash flow hedge accounting

CONSOLIDATION PRINCIPLES

for the real estate certificates not

activities. Derivative financial

If a financial derivative can be

The companies controlled by the

owned by the company to the

products are initially valued at their

documented as an effective hedge

Group are consolidated through the

holders of certificates.

cost price and revalued to their fair

against any cash flow fluctuations,

value on the subsequent reporting

attributable to a risk linked to an

date.

asset or liability, or a highly probable

application of the full consolidation method.

FOREIGN CURRENCY CONVERSION

future transaction, the part of

Foreign currency transactions are Full consolidation consists in

booked by applying the exchange

After the initial recognition, the

the result ensuing from the value

incorporating all the assets and

rate valid on the transaction date.

financial derivatives are valued in the

change of the financial interest rate

liabilities of the consolidated

Monetary assets and liabilities in

annual accounts at their fair value.

derivative that has been recognised

companies, as well as the costs and

foreign currencies are valued by

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

as an effective hedge, is posted

FINANCIAL REPORT I

directly to equity under “Changes in

board of directors). The commissions

where appropriate, to a subsidiary

on the reserve “impact on the fair

the fair value of financial assets and

related to the acquisition of the

it controls, as well as the underlying

value of estimated transfer rights and

liabilities”. The ineffective part of the

buildings are regarded as additional

real property assets.

costs resulting from the hypothetical

financial interest rate derivative is

costs of the acquisition and are

recognised in the income statement.

added to the acquisition cost.

disposal of investment properties”. The experts perform their assessments in accordance with

Any gains or losses resulting from the fluctuation in the fair value of an

GOODWILL

Valuation after initial recognition

national and international standards

In accordance with IFRS 3, goodwill

At the end of each quarter, an

and their application procedures,

investment property are recognised

is not amortised, but subjected to an

independent real estate expert

including those in the field of the

in the income statement in the

annual impairment loss test.

provides an exact assessment of the

valuation of Belgian real estate

period in which they occur and, at

following items:

investment trusts (according

the appropriation of profit, assigned

to the provisional decrees, the

to the reserves for the balance of

experts reserve the right to adapt

variations in the fair value of real estate properties.

INVESTMENT PROPERTIES Valuation at initial recognition

- the real properties, the real

Investment properties comprise all

properties by function, and the

the valuation in the event of any

real estate properties that are ready

rights in rem over real properties

amendments to the decrees). The

to be let. Investment properties are

held by Retail Estates nv or, where

fair value is defined as the most

Expenditure for works on investment

initially valued at acquisition cost,

appropriate, by a subsidiary it

likely value that can be reasonably

properties

including additional expenses and

controls;

obtained between knowledgeable

The expenditure for works on

and willing parties in normal selling

investment properties is charged to

non-deductible VAT. Also the exit

conditions. Subsequently, a transfer-

the operating property result if the

the public BE-REIT acquires direct

held by Retail Estates nv or, where

tax estimate is deducted from this

expenditure has no positive effect

or indirect control, is in principle

appropriate, by a subsidiary

value. Therefore, the fair value of

on the expected future economic

deducted from the value of the

it controls, as well as the real

the asset is obtained in this way, in

benefits, and is capitalised if it

underlying property, given that it is a

properties to which these rights

accordance with the provisions of IAS

substantially increases the expected

tax on the latent capital gain existing

apply;

40. The estimated amount of transfer

economic benefits that it brings to

taxes is valued at a flat rate set at

the entity. In principle, there are two

2.50% (see note 21 – Investment

major types of expenditure:

tax, owned by companies over which

- the option rights over real properties

in the acquired company prior to the

137

acquisition, unless these companies

- the contract rights by which one

do not qualify for a merger with the

or more real property assets are

properties) and is immediately

public BE-REIT (as decided by the

leased to Retail Estates nv or,

transferred from the acquisition value

a) the costs of maintenance and

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

138

repairs to roofs and parking areas:

Disposal of an investment property

After the initial recognition, the

The following annual depreciation

these are charged to the operating

The gains or losses realised from

projects are valued at fair value if

and amortisation percentages apply:

property result;

the sale of an investment property

they are contracted, licensed and

are classified as “Result from sales

rented. This fair value is based on the

of investment properties” and are

valuation by the real estate expert

and renovation works:

allocated to the retained earnings

after deducting the work that is still

- Furniture

transformations are one-off

upon the appropriation of results.

to be performed.

- Vehicles

projects that add an additional

The commissions paid for sales

- IT equipment

33%

function to the building or

and the liabilities resulting from

A project can relate to a plot of land,

- Standard software

33%

considerably improve the existing

transactions are deducted from the

a building to be demolished, or an

- Tailor-made software

comfort so as to increase the

selling price in order to determine

existing building whose purpose is to

- Properties own use

rental price and/or rental value.

the gain or loss realised. The

be changed, requiring considerable

These costs relate to materials,

transfer taxes of up to 2.50% (see

renovation work to realise the desired

Leased equipment is depreciated

fees, contacting works and

note 21 – Investment properties)

purpose.

over the contractual period of the

the like. Internal management

are immediately transferred

and supervisory costs are not

from the acquisition value on the

OTHER TANGIBLE NON-CURRENT ASSETS

capitalised. As soon as they are

reserve “impact on the fair value of

The tangible non-current assets

If there are indications that an asset

commenced, such works are

estimated transfer rights and costs

other than land and buildings,

may have suffered an impairment

included in the assessed value of

resulting from the hypothetical

whose use is limited in time, are

loss, the carrying amount is

the building in question (initially

disposal of investment properties”.

valued at acquisition cost, and then

compared with the realisable value.

b) the costs of major transformation

on a provisional basis and then

- Facilities, machinery and equipment

20% 10% 20-33%

20-25% 3%

lease.

depreciated over their expected

PROJECT DEVELOPMENTS

useful life using the straight-line

If the carrying amount is higher than

real estate expert). Work which is

Under the revised IAS 40 standard,

method.

the realisable value, an impairment

still to be done is deducted from

project developments are included

the valuation; once it has been

in the investment properties. If

In the financial year of the

done, these costs are capitalised

purchased, they are valued against the

investment, depreciation is recorded

When other tangible non-current

and thus added to the fair value of

acquisition value, including incidental

pro rata to the number of months

assets are sold or retired, their

the investment properties.

costs and non-deductible VAT.

that the asset was in use.

carrying amount ceases to be

definitively following a visit by the

loss is recognised.

recognised in the balance sheet and

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

the gain or loss is recognised in the

price, the aforementioned rule does

price shall be used as the valuation

as investment properties at their

income statement.

not apply. The value is then limited to

until the distribution of the sale’s

acquisition value, including additional

the net asset value.

proceeds;

expenses. Gains or losses that

TRADE RECEIVABLES AND OTHER NONCURRENT ASSETS

result from the fluctuation in the 2. Ownership of material interest (more

b) the contractual rights of the holder

fair value of investment property

than 75%) in certificates issued (as

of the real estate certificate in

are recognised in the income

on the basis of the interest rates that

of 31 March 2017, only applicable

compliance with the prospectus

statement and incorporated in the

apply on the date of acquisition. A

to the “Distri-Land” real estate

that was published at the issuance

period in which they arise and, at the

certificates)

of the real estate certificate.

appropriation of profits, assigned to

Non-current receivables are valued

write-down is entered if uncertainty

139

the reserves available for distribution.

exists concerning the collectability of

The quoted price of these real

the receivable at maturity.

estate certificates, as listed on the

Retail Estates nv only invests in

On 31 March 2017, the value of the

Euronext – Second Market, cannot

certificates issued for the financing

investment properties related to the

REAL ESTATE CERTIFICATES

be considered as a reliable reference,

of out-of-town retail real estate. The

Distri-Land certificates amounts to

Valuation

given the limited liquidity of this real

real estate owned by the issuer is the

EUR 14.04 million (EUR 14.78 million

1. General principle

estate certificate. Retail Estates nv’s

type of out-of-town retail real estate

on 31 March 2016) compared to a

If the holder of the certificates does

policy is to revalue its real estate

in which Retail Estates nv aims to

total portfolio of EUR 1,071.36 million.

not have a material interest (more

certificates on every closing date in

invest. Although Retail Estates nv is

During the course of the financial

than 75%) in a real estate certificate,

function of:

not the legal owner of this real estate,

year, 1 property was sold from the

it considers itself to be the economic

Distri-Land portfolio.

the certificates are entered, on the

beneficiary, pro rata its contractual

closing date, at the weighted average

a) the fair value of the real properties

quoted price during the preceding 30

owned by the issuer, similar to the

rights in ownership. In addition, an

Processing of coupons

days, and classified as “Non-current

valuation of the company’s own

investment in real estate certificates

1. Processing of current operating result

financial assets”.

real properties. This occurs on the

is considered as an investment in real

As a holder of real estate certificates,

basis of a periodic valuation by a

estate pursuant to Article 2, sub. 5°, x,

Retail Estates nv has a contractual

If, on the basis of publicly available

real estate expert hired jointly by

of the Belgian BE-REIT Act of 12 May

right, pro rata to the number of real

information and the issue conditions

Retail Estates nv and Immobilière

2014.

estate certificates in its possession, to

for the real estate certificate, a

Distri-Land nv. Where one or more

net asset value is noted that is

buildings are sold by the real

Taking these considerations into

result is realised by the issuer and is

substantially below the stock market

estate certificate issuer, the sale

account, the certificates are classified

calculated by deducting the operating

a share of the operating result. This

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

140

and maintenance expenses from the

by performing a valuation of the

for doubtful or bad debts. Bank

approved by the shareholders’

total rental income collected. The

certificate holder’s contractual

deposits, sight or term deposits,

meeting.

entire decrease or increase in value

rights as these appear in the issue

are valued at amortised cost. Any

is recognised by re-estimating the

prospectus. Gains or losses that

supplementary costs are charged

LIABILITIES

value of the real estate certificate.

result from the fluctuation in the

directly to the income statement.

A provision is taken if:

As a result, the coupon should not

fair value of investment property

Listed securities are valued at their

be considered as a compensation

are recognised in the income

quoted price.

for any reduction in value of the

statement and incorporated in the

issuer’s buildings. For this reason, the

period in which they arise, and at

SHAREHOLDERS’ EQUITY

commitment resulting from an

entire coupon is treated as net rental

the appropriation of profits are

The capital includes the funds

event in the past;

income and is classified as turnover.

assigned to the reserves available for

obtained when the company

distribution.

was incorporated and those

- Retail Estates nv has an existing – legally enforceable or actual –

- it is probable that an outflow of

received following mergers or

funds will be required to settle the

NON-CURRENT ASSETS OR GROUPS OF

capital increases. The third-

commitment; and

Whenever a particular property in the

ASSETS HELD FOR SALE

party charges that are directly

issuer’s portfolio is sold, it is treated

This concerns real estate for which

attributable to the issuance of

as follows:

the carrying amount will primarily

new shares are deducted from the

be realised by the sale of the

shareholders’ equity. When share

the net proceeds, after retention

assets and not by further letting.

capital recognised as equity is

Trade debts are presented at their

of any tax withholding liability, are

Just like the investment properties

repurchased by Retail Estates nv,

nominal value on balance sheet

recognised as realised capital gain

(see above), these assets are

the paid amount, including directly

date. Interest-bearing borrowings

in Retail Estates nv’s accounts only

recognised at fair value, which

attributable costs, is recognised

are initially recognised at cost

for the difference between the fair

is the investment value less the

as change in shareholders’

price less the transaction costs.

value of the real estate certificate

transfer taxes.

equity. Purchased own shares are

Subsequently the interest-bearing

presented as a decrease in the

borrowings are valued on the

total shareholders’ equity.

basis of the effective interest rate

2. Processing of the liquidation balance on the sale of real estate

on the closing date plus the net

- the amount of the commitment can be reliably estimated.

liquidation coupon, and the fair value

CURRENT ASSETS

on the previous closing date. The fair

The receivables expected within

value of the real estate certificate

one year are recognised at their

Dividends are only recognised

between the initial book value and

is calculated at each closing date

nominal value, less write-downs

as a debt when they have been

the redemption value is recognised

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

method, whereby each difference

FINANCIAL REPORT I

as interest cost in the income

Group’s share in the operational

i.e., the negative variation in the

that has been paid or is due, and are

statement over the term of the

profit and loss is determined

fair value of buildings and the rent

entered into the income statement

loan.

on the basis of the Group’s

payable on leased assets.

using the straight-line method of the period to which they refer.

participation in the subsidiary PUT OPTIONS ON MINORITY PARTICIPATIONS

and is adapted on the basis of

The recovery of property expenses

IN SUBSIDIARIES

the changes of the value of the

includes the revenue obtained from

The technical costs include,

The Group has written put

liability.

charging costs for major repairs

among other things, structural

and maintenance.

and occasional maintenance

options relating to certain minority participations in fully consolidated

PERSONNEL BENEFITS

subsidiaries. The exercise price of

Retail Estates nv provides a defined

The charges and taxes normally

damage covered by the insurance

the option may be fixed or can be

contribution pension scheme

payable by tenants on let

companies. The commercial costs

determined on the basis of a pre-

for its employees and directors.

properties and the recovery of

include brokers’ commission fees.

set formula and the options can be

This scheme was entrusted to

these expenses refer to costs that,

The property management costs

exercised at any time or at a fixed

a fund that is independent of

under law or custom, are at the

mainly consist of the relevant

date.

the company (for the directors).

tenant’s expense. The owner will

personnel costs, the operating

The plan for employees is largely

either charge or not charge these

costs of the company’s registered

In accordance with IAS 32, the

handled via the joint labour

costs to the tenant according to the

office, and fees paid to third parties.

Group has recognised a financial

committee.

contractual arrangements made

liability regarding these put

costs and losses resulting from

Management fees received from

with the tenant.

options. Initially, the liabilities

Contributions paid during the

have been recognised for the cash

financial year are recognised as

Income is valued at fair value of

partially cover the management

value of the purchase amount

expenses.

the compensation received and

costs of the properties, are

entered into the income statement

deducted.

as a reduction of the minority

141

tenants or third parties, which

participation. The subsequent

PROPERTY RESULT

using the straight-line method in

changes of the fair value of the

The net rental result includes

the periods to which it refers.

liability are recognised through

the rent, operating lease income

profit or loss, in accordance with

and other incomes related to the

PROPERTY CHARGES

EXPENSES

IAS 39 (variations in the fair value

aforementioned sources of income,

The property charges are valued at

The corporate operating costs

of investment properties). The

minus the rent-related expenses,

the fair value of the compensation

cover the fixed operating costs

CORPORATE OPERATING COSTS AND OTHER CURRENT OPERATING INCOME AND

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

142

of the company, which operates

current tax charges. Corporate

of the actual merger. These

still to be renewed credits. The

as a legal entity that is listed on

income tax is recognised in the

adjustments to the exit tax liability

weighted average interest rate of

the stock market end benefits

income statement, except when

are recognised in the income

the public BE-REIT is 3.42%.

from the BE-REIT status. These

related to items recognised

statement.

costs are incurred in order to

directly to shareholders’ equity,

obtain transparent financial

in which case it is recognised in

FINANCIAL RISK MANAGEMENT

Long-term financing is concluded in

information, to be economically

shareholders’ equity. Current tax

EVOLUTION OF THE INTEREST RATES

the form of “bullet loans”, i.e., loans

comparable with other types of

charges are the expected tax

Higher interest rates result in

for which the principal must be

investments and to offer investors

payable on the taxable income for

increased financial expenses and

paid back in full after a term of five

the opportunity of participating

the year, and any adjustment to the

a decrease in the EPRA earnings.

to eight years. The diversification of

indirectly, in a liquid manner, in a

tax payable for previous years.

In the current context of negative

financing over various banks limits

interest rates, the method used

the Group’s liquidity risk. The Group

diversified real estate investment.

FINANCING RISK

A part of the costs incurred in

EXIT TAX

by some banks of demanding a

concludes 90.45% of its loans at a

the context of Retail Estates nv’s

Exit tax is the corporate income

floor for the Euribor rate (which is

fixed interest rate, or at a variable

growth strategy are also included in

tax on the capital gain that arises

used as a reference in the financing

interest rate which is immediately

this category.

following the merger of a BE-

contracts) of 0%, has a negative

converted to a fixed interest

REIT with a company that is not a

effect on the financial costs. For

rate. The net result is, therefore,

FINANCIAL RESULT

BE-REIT. When this company first

hedging the interest rate risk on

only sensitive to interest rate

The financial result consists of the

enters the consolidation scope of

non-current loans with variable

fluctuations to a limited extent.

borrowing costs and additional

the Group, a provision for exit tax

interest rate, Retail Estates nv

funding costs, such as the negative

liabilities is recorded.

makes use of financial instruments

CREDIT RISK

of the IRS type. In an interest rate

Before a new tenant is accepted,

variations in hedging instruments where these are not effective within

In principle, intermediate revisions

swap the variable interest rate is

a credit risk analysis is carried

the meaning of IAS 39, less the

of this provision for exit tax only

exchanged for a fixed interest rate.

out on the basis of the available

income from investments.

take place when the rise in value

Due to this interest rate policy,

information. Furthermore, rental

of this company’s property calls

90.45% of the current loans are

arrears are carefully monitored by

CORPORATE INCOME TAX

for this increase. Any overvaluation

hedged with a fixed interest rate.

Retail Estates nv. In case of non-

Corporate income tax on the profit

owing to reductions in value

An interest hedging has also been

payment, the company generally

or loss for the year comprises

is only established at the time

concluded for a large part of the

holds a bank guarantee.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

143

For more details, we refer to notes 34 and 35.

SEGMENTED INFORMATION Since out-of-town retail real estate constitutes more than 90% of the portfolio of Retail Estates nv, a breakdown by business segment is not relevant. The board of directors does not use any other segment to make its decisions.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

144

6. OTHER NOTES

Rental agreement type

Rounding off upwards or downwards to the nearest thousand can

The Group concludes commercial rental contracts for its buildings, for a

bring about discrepancies between the balance sheet and the income

minimum period of 9 years, which, in most cases, can be terminated by the

statement, and the details presented below.

tenant after the expiry of the third and the sixth year, subject to a 6 months’ notice prior to expiry date. The rents are usually due in advance on a monthly

NOTE 1

basis (sometimes quarterly). They are indexed annually, on the anniversary of

The rise in rental income is mainly due to the growth of the real estate portfolio.

the rental agreement. Taxes and levies, including property tax, the insurance premium, and the common charges, are, in principle, borne by the tenant. To

The following table shows by way of theoretical exercise how much rental

guarantee compliance with the obligations imposed on the tenant by virtue of

income Retail Estates nv is certain to receive based on the current lease

the agreement, some tenants must provide a rental guarantee, usually in the

agreements.

form of a bank guarantee, worth three months’ rent.

Rental income (in € 000)

Within one year Between one and five year(s) Within more than five years

31.03.17

31.03.16

69,096

68,062

At the start of the agreement, an inventory of fixtures is drawn up between the parties, by an independent expert. At the expiry of the agreement, the tenant must return the leased premises in the state described in the inventory

244,856

226,994

of fixtures on taking up the occupancy, subject to normal wear and tear. The

374,736

369,098

tenant cannot transfer the rental agreement or sublet the premises fully or partially, unless prior written permission is obtained from the lessor. The tenant

This does not alter the theoretical risk of all lessees making use of their

must register the agreement at his/her/its own expense..

legal right of cancellation at the end of the current three-year period. In this circumstance, all the premises would by definition be empty within 3 years and 6 months. For the past three years, leases were renewed or new leases

NOTE 2 Rental-related expenses (in € 000)

31.03.17

31.03.16

were concluded for 19.36 % of the buildings. For this part of the portfolio, the average rental prices increased from EUR 79.77 to EUR 91.32 per m². The granting of rent-free periods is rather rare in the market of out-of-town retail real estate. In the past three years, and out of a portfolio of 668 properties, a total of 84 months of rent-free periods was granted, which is negligible. Besides rent-free periods, no other material incentives are given when closing lease agreements.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

Rent payable for hired assets and lease costs Impairments on trade receivables

-249

-292

-288

-102

Total rental-related expenses

-537

-394

FINANCIAL REPORT I

NOTE 3 Recovery of charges and taxes normally payable by tenants on let properties (in € 000)

Recharging of rental charges borne by the owner Recharging of real estate taxes and taxes on let properties

145

The buildings (both existing and those under construction) are covered by various insurance policies (covering among others the risks of fire, storm

31.03.17

31.03.16

and water damage) for a total value (new building value without land) of approximately EUR 511.07 million. This amount represents 47.70% of the fair value of the real estate on the same date (EUR 1,071.36 million). The cover is

1,772

1,443

4,628

4,439

limited to an amount determined by Retail Estates, based on the new building value.

NOTE 5 Total recovery of charges and taxes normally payable by tenants on let properties

Technical costs (in € 000) 6,400

5,882

NOTE 4 Charges normally payable by tenants on let properties (in € 000)

Rental charges borne by the owner Real estate taxes and taxes on let properties Total charges normally payable by tenants on let properties

31.03.17

31.03.16

-1,989

-1,690

-4,862

-4,444

Recurrent technical costs Structural maintenance Non-recurrent technical costs Occasional maintenance Claim events covered by insurance companies Compensations received from insurance companies Total technical costs

-6,851

31.03.17

31.03.16

-1,769

-1,634

-1,769

-1,634

-469

-420

-466

-402

-202

-124

199

106

-2,237

-2,054

-6,134

Structural maintenance principally covers the regular renovation of car parks The standard rental agreements usually provide for these expenses and taxes

and roofs. Occasional maintenance, on the other hand, mainly includes

to be borne by the tenants, by means of charges forwarded by the owner. A

unforeseeable costs for the structure of the let premises, as a result of wear

number of the Group’s rental agreements state, however, that taxes remain

and tear, uninsured accidents and vandalism.

payable by the owner. This classification principally includes the costs of property tax, insurance and utilities.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

146

NOTE 6 Commercial costs (in € 000)

These costs mainly include the costs for the personnel responsible for this

31.03.17

31.03.16

activity, the operating costs of Retail Estates nv’s principal place of business and fees paid to third parties. Management fees received from the tenants,

Brokers' commissions Publicity related to the properties Lawyers' fees and legal costs Other Total commercial costs

-57

-72

-37

-76

-261

-178

-153

-101

-508

-427

NOTE 7 Charges and taxes on unlet properties (in € 000)

Vacancy charges of the financial year Property tax on vacant buildings Total charges and taxes on unlet properties

31.03.17

31.03.16

-204

-173

-135

-165

-339

-338

The costs and taxes relating to unlet buildings include buildings that are vacant

which cover partially the management costs of the real estate, are deducted.

Management costs (in € 000) - Internal property management costs

Office charges IT Other Housing costs Fees to third parties Public relations, communication and advertising Personnel expenses Salaries Social security Pensions and collective insurances Other

0.55% on 31 March 2016.

Management fees received from tenants Taxes and legal costs Depreciation charges on office furniture, IT equipment and software

NOTE 8

Total property management costs

for a limited period of time in the context of a changeover between tenants, and properties under development (mainly property tax). On 31 March 2017, the cost for vacant property was 0.51% of the rental income received, compared to

31.03.17

31.03.16

-143

-104

-91

-63

-52

-41

-35

-49

-126

-269

-21

-18

-1,466

-1,140

-1,004

-730

-190

-162

-50

-30

-222

-218

-144

-113

-1,912

-1,683

Management costs are subdivided into the costs for the portfolio management and other costs.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

Personnel costs make up most of the management costs.

FINANCIAL REPORT I

The table below provides an overview of the employee count in FTE. (in FTE)

Property department Total Average

31.03.17

Corporate operating costs (in € 000)

31.03.16

10.26

7.33

19.60

17.10

18.10

15.70

NOTE 9 Other propery charges (in € 000)

Other property charges Total other property charges

31.03.17

31.03.16

56 56

-2 -2

NOTE 10 The corporate operating costs cover the fixed operating costs of the company, which operates as a legal entity that is listed on the stock market and benefits from the BE-REIT status. These costs are incurred in order to obtain transparent financial information, to be economically comparable with other types of investments and to offer investors the opportunity of participating indirectly, in a liquid manner, in a diversified real estate investment. A part of the costs incurred in the context of the company’s growth strategy are also included in this category.

Office charges IT Other Housing costs Fees to third parties Recurrent - Lawyers - Auditors - Other Non-recurrent - Lawyers - Notary costs - Consultants Mergers and acquisitions (other than business combinations) Public relations, communication and advertising Personnel expenses Salaries Social security Pensions and collective insurances Other Renumeration of board of directors Taxes and legal costs Total operating costs

31.03.17

31.03.16

-122

-134

-86

-87

-36

-47

-33

-56

-284

-398

-159

-149

-148

-141

-11

-8

-68

-166

-3

-13

-12

-4

-52

-149

-57

-83

-49

-47

-904

-872

-571

-470

-107

-146

-37

-46

-189

-210

-334

-247

-1,215

-1,087

-2,941

-2,841

147

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

148

NOTE 11 Result on disposals of investment properties (in € 000)

NOTE 13 31.03.17

31.03.16

Book value of sold real estate properties

9,437

11,459

Net sales price of investment properties (sales price - transaction costs)

9,716

11,800

279

341

Total benefit or loss on disposals of investment properties

Financial result (in € 000)

31.03.17

Collected interests and dividends Other

31.03.16

112

144

31.03.17

31.03.16

Nominal interest on loans1 Other interest costs2

-18,322

-17,152

300

Total net interest charges

-18,274

-16,852

Total financial result

NOTE 14

In the past financial year, properties were divested for a net sale price of EUR 9.72 million. A net capital gain of EUR 0.28 million was realised on these disposals. Overall, sale revenue represents a sale value that is in line with the investment value of the real estate expert and thus exceeds the fair value determined by the expert. For more information, we refer you to chapter 3 of this report, Management Report.

Net interest charges (in € 000)

1 Also includes the interests on Interest Rate Swaps (financial instruments). 2 Capitalised interest costs on project developments. The interest rate used is 3.70%.

The weighted average interest rate amounts to 3.42% on 31 March 2017 and

NOTE 12 Changes in fair value of investment properties (in € 000)

3.64% on 31 March 2016 (after application of the IRS). The company has

31.03.17

31.03.16

14,400

22,216

-646

-12,000

13,754

10,216

concluded almost all of its loans as fixed-rate investment loans or as longterm variable-rate loans, for which a fixed interest rate was negotiated via a swap agreement. The evolution of the ratio of interest charges on loans versus

Positive change in investment properties Negative change in investment properties Total changes in fair value of investment properties

The positive change in the fair value of investment properties amounts to EUR 13.75 million and is mainly explained by indexations, increases in yield at top locations, and the impact of rental renewals at retail parks.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

rental income received, amounts to 27.75% on 31 March 2017 compared to 27.81% the year before. We refer to note 35 for the complete swaps overview.

FINANCIAL REPORT I

NOTE 15 Other financial charges (in â&#x201A;Ź 000)

149

These deferred taxes are booked at a rate of 16.99% if the respective board of

31.03.17

31.03.16

directors of Retail Estates nv and the subsidiary intend to merge the subsidiary with the public BE-REIT.

Bank costs and other commissions

-70

Total other financial charges

-70

NOTE 17

NOTE 16 Corporate income tax (in â&#x201A;Ź 000)

31.03.17

31.03.16

Company 1. Corporate income tax Tax rate of 33.99% Previous year tax adjustment

-42

-3 36

Number of shares

Movements of the number of shares Number of shares at the beginning of the financial year Number of shares at the end of the financial year Number of dividend bearing shares Weighted average number of shares for diluted earnings per share

31.03.17

31.03.16

8,866,320

7,559,473

9,008,208

8,866,320

9,008,208

8,866,320

8,907,915

8,627,562

2. Result taxable at exit tax Subsidiaries 1. Corporate income tax Current year taxes Previous year tax adjustment

-231

-822

260

-240

260

-547

2. Exit tax

-491

-582

Total corporate income tax

-273

-789

306

A BE-REIT is subject to corporate income tax solely in respect of non-tax deductible expenditure and abnormal benefits. Deferred taxes are booked for the subsidiaries on the difference between the carrying value after depreciation in the statutory annual accounts of these subsidiaries and the fair value.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

150

CAPITAL INCREASE BY BOARD OF DIRECTORS (IN THE FRAMEWORK OF THE AUTHORISED CAPITAL): CAPITAL INCREASE BY CONTRIBUTION IN KIND

NOTE 18 Calculation of distributable earnings (in â&#x201A;Ź 000) - statutory

31.03.17

31.03.16

44,096

35,904

On 14 December 2016, the board of directors made two capital increases in the framework of the authorised capital by two contributions in kind. First, 187 shares of RWI Invest nv (then Databuild Retail nv), with a contribution value of EUR 7.52 million, were contributed as part of a first capital increase. This contribution was compensated by the issue of 115,735 shares of Retail Estates nv. The new shares were issued at the issue price of EUR 65 and will share in the profit for the financial year commencing on 1 April 2016. As a result of this contribution, Retail Estates nv acquired the balance of the shares of Databuild Retail nv which it did not yet own. The most important asset of this company is a minority interest in the institutional BE-REIT Retail Warehousing Invest nv, for which Retail Estates nv now directly or indirectly controls all

Net result + Depreciations + Impairments - Reversal of impairments +/- Other non-monetary components +/- Result on the disposal of investment properties +/- Changes in fair value of investment properties and project developments +/- Changes in the fair value of financial assets and liabilities ADJUSTED RESULT

shares.

Net reduction debt

Then, a retail outlet in Westerlo was contributed. The contribution was

Distributable result

257

218

426

264

-145

-126

-279

-282

-10,258

-9,189

869

5,006

34,966

31,795

34,966

31,795

compensated by the issue of 26,153 new shares of Retail Estates nv. The new shares were issued at the issue price of EUR 65 and will share in the profit for

The adjusted result is not subject to any further change in respect of potential

the financial year commencing on 1 April 2016.

non-exempt capital gains regarding the sale of investment properties. 80% of the net adjusted result, less the net reduction during the financial year of the

For more information, we refer you to chapter 3 of this report, Management

indebtedness, must be paid out, as calculated in accordance with Article 13 of

Report, on pages 38 through 44.

the BE-REIT R.D.

As a result of these capital increases, 141,888 shares were issued, bringing the total number of issued shares as of 31 March 2017 to 9,008,208.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

NOTE 19 Calculation of pay-out ratio (in € 000) statutory

Ordinary net earnings Diluted net earnings Distributable earnings Minimum profit distribution Proposed gross dividend Pay-out ratio Calculation of pay-out ratio (in € 000) consolidated

NOTE 20 31.03.17

31.03.16

44,096

35,904

44,096

35,904

34,966

31,795

27,973

25,436

29,727

28,372

85.02%

89.23%

31.03.17

31.03.16

Investment and amortisation table (in € 000)

39,381

36,793

31,505

29,434

Proposed gross dividend

29,727

28,372

75.49%

77.11%

52,136

42,035

52,136

42,035

Intangible noncurrent assets

Other tangible noncurrent assets

31.03.17

31.03.16

31.03.17

31.03.16

768

655

2,232

971

289

113

760

1,348

-67

-87

Acquisition value Balance at the end of the previous financial year Acquisitions Transfers and disposals of assets Transfers to/from other accounts At the end of the financial year

Ordinary net earnings Diluted net earnings Distributable earnings Minimum profit distribution

Pay-out ratio

151

1,057

768

2,925

2,232

621

535

678

614

168

143

-54

-79

710

621

792

678

346

147

2,134

1,554

Amortisation and impairment losses Balance at the end of the previous financial year Balance of acquired companies Amortisation3 Transfers and disposals of assets Transfers to/from other accounts At the end of the financial year Net book value

3 Amortisation of non-current intangible assets and other non-current tangible assets are recognised in the income statement under ‘property management costs’. The depreciation costs on cars are included in the personnel costs.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

152

NOTE 21 Investment properties

Investment and revaluation table (in â&#x201A;Ź 000)

Balance at the end of the previous financial year "Acquisition through purchase or contribution real estate companies" Capitalised interest cost Acquisiton and contribution of investment properties Disposal through sale of real estate companies Disposal of investment properties Transfers to assets held for sale Other transfers Change in fair value (+/-)

Assets held for sale

Total

31.03.17

31.03.16

31.03.17

31.03.16

31.03.17

31.03.16

1,000,799

837,121

8,222

4,819

1,009,021

841,940

54,029

142,929

697

54,029

143,626

300

8,785

19,918

2,677

8,787

22,595

-5,374

-3,970

-3,806

-7,489

-9,180

-11,459

-1,261

-7,499

1,261

7,499

14,334

11,999

14,346

12,018

1,071,360

1,000,799

5,691

8,222

1,077,051

1,009,022

1,097,917

1,025,536

5,837

8,427

1,103,754

1,033,963

At the end of the financial year OTHER INFORMATIONS Investment value of the property

31.03.17

31.03.16

Balance at the end of the previous financial year

11,328

34,171

Increase during the financial year Reception during the financial year

17,115

1,264

-9,618

-24,107

At the end of the financial year

18,825

11,328

Project developments (in â&#x201A;Ź 000)

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

bZg\Zg! hea^i VcY di]Zg XdbeVcn

Investment properties are recorded

pay to acquire the asset with the

Walloon Region, 10% for assets

at fair value, using the fair value

aim of enjoying the rental income

located in the Flemish Region;

model in accordance with IAS

and of generating a return on his

40. This fair value is equal to the

investment. In a second phase, the

amount at which a building could

experts deduct an estimated amount

system: 5% to 8% depending on

As a result, the effective percentage

be traded between well-informed

for transfer taxes (registration taxes

the Regions;

of the registration taxes varies

and willing parties acting under

and/or capital gain taxes) which

normal competitive conditions. It was

the purchaser or the seller must pay

determined by independent experts

to execute a transfer of ownership.

estate (up to 50 years for the right

percentage is applicable to the

in two phases. In the first phase, the

The investment value minus the

of building and up to 99 years for

transfer of a given Belgian property

experts determine the investment

estimated transfer taxes is then the

the long-term lease right): 2%;

before the actual transfer takes place.

value of each property, based on the

fair value according to the provisions

discounted value of the future net

of IAS 40. The transfer of ownership

rental income. The discount rate used

of real estate in Belgium is subject

whereby the purchaser is a

involved in determining the value

mainly depends on the discount rates

to transfer taxes. The amount of this

public law institution (e.g., an

of Belgian BE-REITs were asked

applied in the real estate market.

tax depends on the transfer method,

entity of the European Union, of

to determine a weighted average

These take account of the asset’s

the capacity of the purchaser and

the Federal Government, of a

percentage of the effective taxes

location, and the quality of the

the geographical location of the

regional government or of a foreign

for the real estate portfolios of

buildings and the tenant on the date

asset. The first two elements, and

government): exemption from

the BE-REITs. For transactions of

of valuation. The future rents amount

consequently the total amount of the

duties;

properties with a value of over EUR

to the contractual rental income over

taxes to be paid are, therefore, only

the period of the rental agreement

known once the transfer of ownership

in force and the acceptable and

has been completed. The range of

in return for the issuance of

(see above), the experts calculated

reasonable hypothesis concerning

property transfer options and the

new shares to the benefit of the

the weighted average taxes at

rental income from future rental

corresponding taxes is as follows:

contributor: exemption from duties;

2.50%, based on a representative

hVaZ V\gZZbZcih [dg gZVa ZhiViZ/

hVaZ V\gZZbZci [dg h]VgZh d[ V gZVa

price which a third party investor

12.50% for assets located in the

estate company: absence of duties;

(or hypothetical purchaser) would

Brussels Capital Region and in the

reorganisations: absence of duties; etc.

hVaZ d[ gZVa ZhiViZ jcYZg i]Z Wgd`Zg

from 0% to 12.50%, whereby it adc\"iZgb aZVhZ V\gZZbZcih [dg gZVa

is impossible to predict which

In January 2006, all the experts

hVaZ V\gZZbZcih [dg gZVa ZhiViZ

2.50 million and in view of the range Xdcig^Wji^dc ^c `^cY d[ gZVa ZhiViZ

of methods of transferring ownership

sample of 220 market transactions

agreements in the light of the current conditions. This value matches the

153

that took place between 2003 and 2005, worth a total of EUR 6 billion. As regards transactions involving

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

154

buildings whose total value is lower

“fair value” by its real estate valuation

investment properties and non-

directly or indirectly (external)

than EUR 2.50 million, transfer

surveyors Cushman & Wakefield,

current assets held for sale.

observable information

rights of 10% to 12.50% are applied,

CBRE and Stadim, the value of

depending on the Region in which the

this real estate was reduced by

During financial year 2015-2016

premises are located. It was decided

2.50%, which reflects the expected

control was acquired over 7 real

based on non (external) observable

to revise this percentage if necessary,

transaction costs for the disposal

estate companies for a total amount

information

per tranche of 0.5%. During 2016, an

of this real estate according to the

of EUR 77.04 million. The acquisition

update of this calculation was made

valuation surveyors. For a detailed

of the companies was paid in cash.

According to the IFRS 13

according to the methodology used

description of the valuation rules

This resulted in an increase of

classification, investment properties

in 2006 based on a sample of 305

used by the real estate valuation

EUR 142.93 million in investment

are level 3.

large or institutional transactions

surveyors Cushman & Wakefield,

properties, a change in working

(threshold EUR 2.5 million) that

CBRE and Stadim, we refer to the real

capital of EUR -5.17 million and an

Investment properties are accounted

occurred between 2013 and the 1st

estate experts’ reports on pages 118

increase in financial liabilities of EUR

for on the basis of valuation reports,

quarter of 2016 (this is 70% or 8.18

and 119.

60.72 million. Disposals resulted

drawn up by independent and expert

in a decrease of EUR 11.46 million

real estate valuers. These reports are based on:

billion of the estimated total number

AZkZa (/ kVajVi^dc [jaan dg eVgian

of investment transactions during this

During financial year 2016-2017

in investment properties and non-

period). Experts concluded that the

control was acquired over 4 real

current assets held for sale.

0.5% threshold was not exceeded.

estate companies for a total amount

Consequently, the weighted

of EUR 29.80 million. The acquisition

NOTES ON IFRS 13

company, such as current rents,

average of 2.5% was retained. This

of the companies was paid in cash or

Investment properties - valuation

terms and conditions of lease

percentage will be reassessed every 5

reimbursed by issue of shares. This

Investment properties are recorded

agreements, (as the case may

years or in the context of a change in

resulted in an increase of EUR 55.45

at fair value. Fair value is determined

be) rent reductions, investments,

the tax context.

million in investment properties, a

on the basis of one of the following

etc. This information results from

change in working capital of EUR

levels of the IFRS 13 hierarchy:

the public BE-REIT’s financial

Retail Estates nv considers its real

-5.45 million and an increase in

estate portfolio as a whole, which

financial and other liabilities of

can be disposed of as a whole or

EUR 20.20 million. Disposals during

as a limited number of larger parts.

the past financial year resulted in

In compliance with the valuation at

a decrease of EUR 9.18 million in

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

>c[dgbVi^dc egdk^YZY Wn i]Z

and management system and is AZkZa &/ kVajVi^dc dc i]Z WVh^h d[ quoted prices in active markets AZkZa '/ kVajVi^dc dc i]Z WVh^h d[

governed by the company’s general applicable control system. I]Z gZVa ZhiViZ ZmeZgihÈ

FINANCIAL REPORT I

assumptions and valuation models

superficies or long lease rights is

The gross market rental yield of the

used. The assumptions mainly

determined by updating (Discounted

portfolio of Retail Estates nv currently

relate to the market situation, such

Cash Flow) the net rental income, i.e.

ranges between 6% and 10%,

as yields and discount rates. They

after deduction of the superficies or

depending on the location. We also

are based on their professional

ground rent, until the end of the long

refer to the overview per cluster on

assessment and perception of the

lease or superficies agreement.

pages 96 through 117.

The value of the bare ownership is

Sensitivity of valuations

determined by updating (Discounted

The sensitivity of the fair value in

Cash Flow) the periodical superficies

relation to changes in the significant

The investment value is mostly

or ground rent until the expiry date of

non observable information used

calculated on the basis of a GIY

this agreement.

for determining the fair value of the

155

market. The following methods were used:

(Gross Initial Yield) capitalisation of

properties classified in level 3 (in

the current annual base rent due, as

The information provided to

accordance with the IFRS fair value

the case may be taking into account

the real estate experts and the

hierarchy) is the following: the effect

corrections such as the estimated

assumptions and valuation models

of the increase of 1% of the rental

market rental value, vacancy rates,

used are checked by the company’s

income leads to an increase of the

step-rents, rent-free periods, etc. The

controller and the public BE-

fair value of the portfolio of EUR 10.53

GIY depends on the common yields

REIT’s management. All material

million. The effect of an increase

on the investment markets, taking into

differences (positive as well as

of the yield of 100 bps leads to a

account the location, the suitability of

negative) in absolute and relevant

decrease of the portfolio’s fair value

the site, the quality of the tenants and

terms (versus previous quarter and

of EUR 138 million. The effect of a

the building as at valuation.

versus previous year) are compared

decrease of the yield of 100 bps leads

and analysed every quarter. On this

to an increase of the portfolio’s fair

In case of buildings where the

basis, the management meets with

value of EUR 188 million.

property rights are divided in on the

the real estate experts with a view

one hand, bare ownership and, on

to accurately and fully reflecting all

the other hand, rights of superficies

the information regarding the various

or long lease rights, the value of the

sites in the valuations.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

156

NOTE 22 Non-current assets or groups of assets held for sale (in € 000)

The outstanding trade receivables amount to EUR 0.57 million. EUR 0.15

31.03.17

31.03.16

Assets held for sale

5,691

8,222

Total assets held for sale

5,691

8,222

million concerns the revolving and reserve fund. Given the guarantees received – both rental guarantees and the bank guarantees requested – the credit risk concerning trade receivables is limited to about 45% of the outstanding amount on 31 March 2017, equal to a risk of EUR 0.19 million (after deducting doubtful debtors).

Recorded under assets held for sale are those assets for which a sales agreement

For more details about the Distri-Land coupon, we refer to the section ‘Real estate

has been signed but the final deed of sale had not yet been enacted. These assets

certificates’ in the valuation rules (pages 139 and 140 of this annual report).

are usually sold within a year. It is not expected that there will be any decreases in value regarding these assets as a result of the sale.

Impairment on doubtful debtors - roll forward (in € 000)

31.03.17

31.03.16

On 31 March 2017 these assets comprise 3 retail properties (fair value EUR 2.52 million), and a house (EUR 0.70 million), and plots of land in Westende with a fair value of EUR 2.47 million. No agreement was yet signed for these plots of land in Westende, they are actively put for sale since they do not correspond to the Group’s strategy. If these plots of land are not sold to individuals before 31 December 2017, they are taken back by the party of which the Group at the time acquired commercial real estate, including these plots of land.

At the end of the previous financial year From acquired companies Provisions Recoveries Write-offs At the end of the financial year

-1,192

-731 -368

-407

-281

128

136

-1,430

-1,192

NOTE 23

The accrual for doubtful debtors is established as follows: the rental arrears

Trade receivables and doubtful debtors

list is closely monitored internally. Based on a management assessment, or

Trade receivables (in € 000)

31.03.17

31.03.16

Trade receivables Invoices to be issued Doubtful debtors Income to be collected Coupon real estate certificats Distri-Land Other

2,000

2,140

142

195

-1,431

-1,192

if obvious and demonstrable reasons exist to suggest that the claim cannot be recovered, a provision is set up. Trade receivables are payable in cash. The

Total trade receivables

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

table below shows an overview of the age structure of the trade receivables for which no value reduction was registered.

4 223

220 10

938

1,373

Due < 30 days Due 30-90 days Due > 90 days Not due

31.03.17

31.03.16

164

166

-30

129

116

471

FINANCIAL REPORT I

NOTE 24 Tax receivables and other current assets (in € 000)

Taxes VAT receivable Witholding tax receivable Property tax receivable Salary and social security Other Total tax receivables and other current assets

NOTE 26 31.03.17

31.03.16

90 852 1,867

1,367

441

3,160

1,466

NOTE 25

Deferred charges and accrued income (in € 000)

Completed, property returns not due Rental discounts and rental benefits to be appropriated Property costs paid in advance Interest and other financial costs paid in advance Other Total deferred charges and accrued income

31.03.17

31.03.16

631

219

345

336

166

1,181

729

The deferred charges mainly concern assurances and maintenance costs of the

31.03.17

31.03.16

Bank balances

978

1,315

Total cash and cash equivalents

978

1,315

Cash and cash equivalents (in € 000)

157

ERP software.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

158

NOTE 27 Shareholders’ equity Capital Capital evolution

Date

Transaction

12/07/1988 27/03/1998 30/04/1999 30/04/1999 30/04/1999 30/04/1999 30/04/1999 30/04/1999 1/07/2003 31/12/2003 5/11/2004 5/11/2004 10/08/2005 21/11/2006 30/11/2007 30/06/2008 5/09/2008 30/04/2009 24/11/2009 5/02/2010 31/03/2010 05/05/2010 21/06/2010 30/11/2010 30/11/2010 30/11/2010

Incorporation IPO and 1st listing on Euronext Brussels Capital decrease (incorporation of losses) Merger by acquisition Capital decrease (incorporation of losses) Incorporation of losses Incorporation of issue premium and revaluation gain Cash contribution Cash contribution Public bid on real estate certificates Distri-Land Partial incorporation of issue premium Annulment of 20 bearer shares Merger by absorption Merger by absorption Contribution in kind in the context of a partial split Contribution in kind in the context of a partial split Contribution in kind Contribution in kind Contribution in kind in the context of a partial split Contribution in kind Contribution in kind in the context of a partial split Contribution in kind Contribution in kind Contribution in kind Contribution in kind Contribution in kind

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

Capital movement

Total remaining capital after the transaction

(in € 000)

Number of shares created

Total number of shares

3,000

20,563

20,637

1,173,212

1,176,212

-5,131

15,505

1,176,212

1,385

16,891

283,582

1,459,794

-2,267

14,624

1,459,794

-174

14,451

1,459,794

4,793

19,244

1,459,794

10,854

30,098

823,348

2,283,142

12,039

42,137

913,256

3,196,398

4,907

47,043

372,216

3,568,614

33,250

80,294

3,568,614

-1

80,293

-20

3,568,594

80,294

130

3,568,724

80,303

228

3,568,952

3,804

84,107

169,047

3,737,999

1,882

85,989

83,632

3,821,631

534

86,523

23,750

3,845,381

5,625

92,148

250,000

4,095,381

6,944

99,092

308,623

4,404,004

4,380

103,472

194,664

4,598,668

910

104,382

40,459

4,639,127

3,288

107,671

146,135

4,785,262

2,662

110,332

118,293

4,903,555

2,212

112,544

98,301

5,001,856

1,280

113,824

56,872

5,058,728

113,890

2,935

5,061,663

FINANCIAL REPORT I

Capital evolution

Date

Transaction

16/06/2011 27/06/2011 30/03/2012 4/07/2012 27/07/2012 28/06/2013 28/06/2013 28/11/2014 28/05/2015 29/01/2016 14/12/2016 14/12/2016

Contribution in kind Contribution in kind Contribution in kind in the context of a partial split Contribution in kind Contribution in kind - stock optional dividend Contribution in kind Capital increase in cash Contribution in kind Capital increase in cash Contribution in kind Contribution in kind Contribution in kind

As at 31 March 2017, the registered capital amounts to EUR 202,688,189.49

Capital movement

Total remaining capital after the transaction

(in € 000)

Number of shares created

159

Total number of shares

1,989

115,879

88,397

5,150,060

5,520

121,399

245,348

5,395,408

937

122,336

41,666

5,437,074

4,694

127,030

208,607

5,645,681

3,768

130,798

167,441

5,813,122

540

131,338

24,009

5,837,131

32,699

164,037

1,453,280

7,290,411 7,559,473

6,054

170,091

269,062

28,345

198,436

1,259,740

8,819,213

1,060

199,496

47,107

8,866,320

2,604

202,100

115,735

8,982,055

588

202,688

26,153

9,008,208

NOTE 28

and is represented by 9,008,208 shares. There are no preferred shares. Each of

Issue premium evolution (in € 000)

these shares grants 1 voting right at the shareholders’ meeting, and these shares

Date

Transaction

Previous financial year 14/12/16 14/12/16

Contribution in kind Contribution in kind

Issue premiums

represent the denominator for the notification in the context of the transparency declarations. On 5 April 2017 a capital increase took place, bringing total capital to EUR 206,612,347.44, represented by 9,182,612 shares. The capital is fully paid up.

151,499

Total issue premiums 31/03/2017

4,919 1,111 157,529

We refer to Article 6 of the articles of association of Retail Estates nv, on page 192 of this report.

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

160

NOTE 29 Impact on fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties (in € 000)

Balance at the end of the previous financial year Change during the financial year Total impact on fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties

The increase of EUR 6.74 million ‘Other’ refers to minority shareholders related to recognition of the debt for the further acquisition of the shares in Heerzele

31.03.17

31.03.16

nv and Blovan nv not yet owned by Retail Estates nv (see also note 41).

NOTE 31

-24,942

-20,861

-1,761

-4,081

-26,703

-24,942

Trade debts and other current debts (in € 000)

Exit tax Other Trade debts Invoices to be received Taxes payable Other current debts

31.03.17

31.03.16

4,327

13,219

7,649

7,852

360

807

6,212

6,172

752

594

326

279

11,976

21,071

As stated in note 21, Retail Estates nv considers its real estate portfolio as an entity than can be disposed of as a whole, or as a limited number of larger parts. In accordance with valuation at ‘fair value’ from its valuation surveyors

Total trade debts and other current debts

Cushman & Wakefield, CBRE and Stadim, the value of the properties was

The ‘Exit tax’ refers to the taxes payable on the deferred capital gains of

reduced by 2.50% subject to the valuation surveyors’ expected transaction

acquired real estate companies that will have to be paid at the time of merger

charges at the disposal of the properties. On 1 April 2004 (the date of the

of those companies with the public BE-REIT Retail Estates nv. The table below

first application of the IAS/IFRS standards), the transfer charges that were

gives an overview of the evolution of the owed exit tax relative to the previous

deducted from the investment value amounted to EUR 4.90 million. This

financial year.

amount was recognised under this item in the shareholders’ equity. Exit tax (in € 000)

NOTE 30 Other non-current financial liabilities (in € 000)

31.03.17

31.03.16

Authorised hedging instruments (also refer to note 35) Other

19,153

28,155

Total other non-current financial liabilities

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

6,743

25,896

28,155

Balance at the end of the previous financial year

31.03.17

13,219

Increase during the financial year Advance payments Assessments

-15,100

At the end of the financial year

4,327

6,249 -41

FINANCIAL REPORT I

NOTE 32 Other current liabilities (in € 000)

Dividends payable Other Total other current liabilities

NOTE 34 31.03.17

31.03.16

11,471

15,599

11,504

15,633

The decrease of EUR 4.13 million ‘Other current liabilities’ is explained by the acquisition of the remaining shares of Retail Warehousing Invest nv (decrease of debt by EUR 15.56 million) and by the claim for the balance of the price paid (on 05/04/17) for the shares of the company Hainaut Retail Invest nv (increase of debt by EUR 11.40 million) (see also note 41).

NOTE 33 Accrued charges and deferred income (in € 000)

Property returns received in advance Completed, not due interests and other financial costs Other Total accrued charges and deferred income

161

31.03.17

31.03.16

2,707

2,642

3,138

3,015

909

307

6,754

The deferred revenues mainly concern rents paid in advance.

5,963

Breakdown by due date of credit lines (in € 000)

Non-current Bilateral loans - variable or fixed rate Financial lease Bond loan Subtotal

31.03.17

31.03.16

400,510

398,225

84,820

29,788

485,330

428,023

30,909

42,597

Current Bilateral loans - variable or fixed rate Financial lease Subtotal

30,909

42,601

Total

516,239

470,624

31.03.17

31.03.16

Breakdown by maturity of non-current financial debts (in € 000)

Between one and two year(s) Between two and five years More than five years

Breakdown by the variable or fixed-rate nature of the loans (in € 000)

Variable rate loans Fixed rate loans

3,929

100,378

247,755

257,080

233,646

70,555

31.03.17

31.03.16

343,859

368,599

172,380

102,007

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

162

Retail Estates nv has the following unused credit facilities (in € 000)

Expiring within one year Expiring after one year

31.03.17

31.03.16

25,000

114,600

99,512

:JG '* bâa^dc! ^hhjZY dc &% ?jcZ '%&+ lî] V bVijgîn d[ &% nZVgh! Vi Vc interest rate of 2.84% Interest charges analysis – interest sensitivity

The degree to which Retail Estates nv can finance itself significantly impacts its profitability. Property investment generally entails a relatively high level of

Estimate of the future interest burden

Total future interest burden

31.03.17

31.03.16

debt financing. To optimally limit this risk, Retail Estates nv applies a relative cautious and conservative strategy (see mentioned above). In this manner, a rise in the interest rate has no substantial impact on the total result. There is,

Within one year Between one and five year(s) More than five years

15,117

16,969

however, an impact of interest rate increases or decreases on the market value

41,808

48,217

17,882

16,284

of the concluded IRS contracts and thus on shareholders’ equity and changes

Total

74,807

81,470

in the fair value of financial assets and liabilities. If interest rate were to rise by 1%, this would have a positive impact of EUR 14.71 million on shareholders’ equity and changes in the fair value of financial assets and liabilities. If interest

Non-current and current financial debts

rate were to decrease by 1%, this would have a negative impact of EUR 17.72

90.45% of the loans have a fixed interest rate or are hedged using an interest

million on shareholders’ equity and changes in the fair value of financial assets

rate swap contract. The estimate of the future interest burden takes into

and liabilities.

account the debt position as of 31 March 2017 and interest covers according to the contracts currently in progress. For the unhedged part of the liabilities for a

In principle, Retail Estates nv has an agreement with its banks for a debt ratio

total of EUR 49.33 million, account was taken of expectations for the Euribor

covenant of 60%.

on the date of this report + banking margin. The company has issued 3 bond loans: :JG (% bâa^dc! ^hhjZY dc '( 6egâ '%&) lî] V bVijgîn d[ , nZVgh! Vi Vc interest rate of 3.556%. :JG (% bâa^dc! ^hhjZY dc '. 6egâ '%&+ lî] V bVijgîn d[ &% nZVgh! d[ l]^X] EUR 4 million at a fixed interest rate of 2.84% and EUR 26 million at a floating rate (euribor 3 month + 2.25%)

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

163

NOTE 35 Financial instruments on 31 March 2017 Summary of financial instruments as at closing date 31.03.17 (in â&#x201A;Ź 000)

Categories

Book value

Fair value

Level

I. Non-current assets

Finance lease receivables

1,030

Loans and receivables

518

Trade receivables and other receivables

4,098

Cash and cash equivalents

978

6,624

II. Current assets

Total financial instruments on the assets side of the balance sheet I. Non-current liabilities

Interest-bearing liabilities

Credit institutions

485,330

510,039

Other

Other non-current liabilities

Other financial liabilities

25,896

25,830

30,909

A/C

23,480

2/3

565,615

590,258

2 2

II. Current liabilities

Interest-bearing liabilities Current trade debts and other debts

Total financial instruments on the liabilities side of the balance sheet

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

164

The categories correspond with the following financial instruments:

Z^i]Zg WZXVjhZ i]Zn ]VkZ V h]dgi"iZgb bVijg^in a^`Z igVYZ gZXZ^kVWaZh VcY

A. Financial assets or liabilities (including receivables and loans) held until

dg WZXVjhZ i]Zn ]VkZ V kVg^VWaZ ^ciZgZhi gViZ#

debts), maturity, at the amortised cost. The fair value of debts having a fixed interest rate is valued by means of an B. Investments held until maturity, at the amortised cost.

actualisation of their future cash flows, taken into account the Group’s credit risk.

C. Assets or liabilities, held at the fair value through the profit and loss account, except for financial instruments determined as hedging instruments.

Financial instruments at amortised cost price

Since trade receivables and trade debts are short-term, the fair value The aggregate financial instruments of the Group correspond with level 2 in the

approximates the nominal value of these financial assets and liabilities. On

fair values hierarchy. Fair value valuation is carried out regularly.

31 March 2017, Retail Estates nv has 344.03 million EUR of debt at a variable interest rate, and EUR 172.78 million financial debts at a fixed interest rate.

Level 2 in the fair values hierarchy includes the other financial assets and

90.45% of the loans have a fixed interest rate or are hedged using an interest

liabilities, in respect of which the fair value is based on other information, which

rate swap contract. The fixed interest rates at which these long-term debts

can, directly or indirectly, be determined for the relevant assets or liabilities.

were originally concluded in most cases no longer correspond to prevailing money market rates, leading to a difference between their book values and

The valuation techniques regarding the fair value of the level 2 financial

their fair values. The following table compares the total amount of the fixed-

instruments are the following:

rate debts at book value and at fair value at the end of the 2016-2017 financial year. Here, the fair value of the fixed-rate debts is estimated by discounting

- The categories ‘other financial liabilities’ and ‘financial fixed assets’ concern

their future cash flows at an interest rate that reflects the Group’s credit risk.

Interest Rate Swaps (IRS), in respect of which the fair value is determined by

The fair value of the fixed-rate debts is mentioned in the underlying table; the

means of interest rates applicable in active markets, and generally provided

book value is equal to the amortised cost. The financial debts with a variable

by financial institutions.

rate have a book value close to their fair value.

- The fair value of the other level 2 financial assets and liabilities is almost equal to their book value:

Financial debts at fixed interest rate

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

31.03.17

31.03.16

Book value

Fair value

Book value

Fair value

172,380

197,089

102,007

120,021

FINANCIAL REPORT I

Financial instruments at fair value Fair value of financial assets and liabilities (in € 000)

Fair value of financial derivatives Total fair value of financial assets and liabilities

Overview swaps:

31.03.17 -19,153

-19,153

31.03.16

Other non-current liabilities

-28,155

The Group uses financial derivatives (interest rate swaps) to hedge interest rate risks arising from operational, financing and investment activities. Financial derivates are initially booked at cost price and revalued to fair value on the subsequent reporting date. The derivatives currently used by Retail Estates nv qualify as cash flow hedges only to a limited degree. Changes in the fair value of derivatives that do not qualify as cash flow hedges are booked immediately to the profit and loss account. EUR -0.87 million was recorded in the income statement regarding financial instruments. EUR -8.33 million relates to the linear depreciation of the value on 31 December 2015 of the derivatives that do not longer qualify as cash flow hedges. EUR 7.46 million relates to the changes in fair value of the derivatives for the period 1 April 2016 to 31 March 2017. Swaps qualifying as cash flow hedges are directly recognised in the shareholders’ equity and are not included in the income statement. The interest rate swaps are level 2 instruments.

165

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Starting date

Ending date

Interest rate

Notional amount (in € 000)

Hedge accounting

06/2012

06/2017

3.22%

20,000

07/2007

07/2017

4.77%

10,000

06/2012

09/2017

3.03%

10,000

09/2012

09/2017

3.35%

6,000

03/2008

03/2018

4.08%

5,000

04/2014

03/2018

1.91%

20,500

11/2013

11/2018

3.69%

30,000

09/2014

09/2019

2.69%

21,000

02/2015

01/2020

1.48%

20,000

01/2016

01/2021

1.82%

10,000

10/2017

01/2022

1.70%

15,000

06/2016

06/2023

1.04%

25,000

NO NO

06/2016

06/2023

1.03%

10,000

03/2009

12/2023

3.89%

7,310

06/2017

06/2024

1.29%

35,000

NO YES

07/2016

04/2026

1.26%

26,000

06/2017

06/2023

1.36%

14,000

06/2016

06/2021

1.03%

25,000

YES

06/2016

06/2019

1.44%

50,000

YES

06/2019

06/2024

1.49%

30,000

03/2018

03/2026

1.10%

20,000

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

166

NOTE 36

A separate report on the budget forecast is prepared by the statutory auditor,

Additional comments on the debt ratio development

confirming that the latter has verified the method of drawing up the forecast,

31.03.17

31.03.16

572,368

541,445

To be excluded: I. Non-current liabilities Provisions Authorised hedging instruments Deferred taxes

25,907

34,118

19,153

28,155

II. Current liabilities Provisions Authorised hedging instruments Accrued charges and deferred income

6,754

Calculation debt ratio (in â&#x201A;Ź 000)

particularly as regards the economic bases, and that the figures contained in this forecast concur with the accounting records of the public BE-REIT.

Liabilities

The general guidelines of the budget forecast are included in the annual and

0 19,153

28,155 0 5,963

semi-annual financial reports. The annual and semi-annual financial reports will describe and justify how the budget forecast has been implemented during the period under review and how the public BE-REIT will implement the forecast in the future. Notes 2016-2017 Historical evolution of the debt ratio 60%

6,754

5,963

546,461

507,327

50%

Total debt

40%

Net reduction debt Total assets

1,087,338

1,015,615

DEBT RATIO

50.26%

49.95%

Principle

Article 24 of the Belgian Royal Decree relating to Belgian real estate investment trusts (BE-REITs) requires public Belgian REITs to draw up a budget forecast with an implementation schedule when its consolidated debt ratio exceeds

30%

20%

10%

03/07 03/08 03/09 03/10 03/11

03/12 03/13 03/14 03/15 03/16 03/17

50% of consolidated assets. The budget forecast describes the measures to be taken to prevent the consolidated debt ratio from exceeding 65% of

Historically, the debt ratio of Retail Estates fluctuates between 50-55%. In the

consolidated assets.

course of its history, the debt ratio of Retail Estates NV has never exceeded 60%.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

Long-term evolution of the debt ratio

Considering the aforementioned assumptions, the debt ratio as at 30 June 2017

The board of directors considers a debt ratio of +/- 55% ideal for the

would amount to 49.31%.

167

shareholders of the public Belgian real estate investment trust in terms of the return and the current earnings per share. The impact of every investment on

A projection is also made of the debt ratio as at 31 March 2018 (end of the

the debt ratio is reviewed and if necessary the investment is not carried out if it

financial year). This projection takes into account the following assumptions:

has a negative influence on the debt ratio. Y^hedhVah ^c i]Z ÑcVcX^Va nZVg '%&,"'%&Based on the current debt ratio of 50.26%, Retail Estates nv has an investment

No disposals are planned.

potential of EUR 264.85 million without exceeding a debt ratio of 60% (the company has a covenant with a number of banks which provides that the debt

gZhjaih d[ i]Z ÑcVcX^Va nZVg '%&,"'%&-

ratio may not exceed 60%).

The results of the financial year as indicated in the budget for 2017-2018, approved by the board of directors.

Short-term evolution of the debt ratio

Every quarter, the board of directors is presented with a prognosis of how the

eaVccZY ^ckZhibZcih ^c i]Z ÑcVcX^Va nZVg '%&,"'%&-

debt ratio will evolve during the following quarter. The board also discusses any

Investments amounting to EUR 3 million are planned, all of which in the fourth

deviations which may have occurred between the estimated and actual debt

quarter of the financial year 2017-2018.

ratio during the previous quarter. Considering the additional planned investments and the earnings expectations The projection of the debt ratio as at 30 June 2017 takes into account the

for the full year, the debt ratio at 31 March 2018 would amount to 49.29%.

following assumptions: The projection of the debt ratio only takes into account acquisitions and Y^hedhVah ^c i]Z Ñghi fjVgiZg '%&,"'%&-

disposals in respect of which a private agreement has been signed (without

No disposals are planned.

conditions precedent), and investments that are planned and contracted out. Credits to expire are supposed to be refinanced for the same amount.

gZhjaih d[ i]Z Ñghi fjVgiZg '%&,"'%&The results of the third quarter as indicated in the budget for 2017-2018,

Other elements that influence the debt ratio

approved by the board of directors.

The valuation of the real estate portfolio also has an impact on the debt ratio. Considering the current capital basis, the maximum debt ratio of 65%

eaVccZY ^ckZhibZcih ^c i]Z Ñghi fjVgiZg '%&,"'%&-

would be exceeded in the event of a reduction in the fair value of investment

No investments are planned in the first quarter of the financial year 2017-2018.

properties of more than EUR 246.63 million. This reduction in value could be the result of an increase in the yield (if the rental values remain unchanged, the

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

168

yield would have to increase by 2.02% in order to exceed the debt ratio) or a

NOTE 37

reduction in rents (if the yields remain unchanged, the rents would have to drop

Related parties

by EUR 16.28 million). Historically, the fair value of the real estate portfolio has

The company’s related parties are its subsidiaries and its directors and

always risen or was at least stable since the company was set up. There are

members of the board of directors/executive officers. The transactions with the

currently no indications in the market to assume an increase in the yield.

subsidiaries are eliminated in the consolidation.

If substantial value drops do take place that raise the debt ratio above 65%,

Directors and members of the board of directors/executive officers

Retail Estates NV can begin to sell some of its properties. Retail Estates NV has

The board of directors’ and executive officers’ remuneration is entered in the

a solid track record of selling properties at their estimated investment value. In

“corporate operating costs” (see note 10):

financial year 2013-2014, 4 retail properties and 2 apartments in shell condition

31.03.17

31.03.16

Directors

824

501

Total

824

501

(in € 000)

were sold for a net sale price of EUR 5.07 million. In financial year 2014-2015, 9 retail properties were sold for a net sale price of EUR 8.08 million, and the company Belgium Retail 1 Luxembourg SÀRL was sold for EUR 8.22 million. In financial year 2015-2016, 11 retail properties, 2 apartments, office space, parking and 9 plots of the Westende site were sold at a net sale price of EUR 11.80 million. During the past financial year, disposals were recorded for a net sale

Directors and executive officers do not receive any other benefits from

price of EUR 9.72 million. For more information, we refer to chapter 3 of this

the company. These amounts are all short-term benefits. We refer to the

report, Management Report. On average, these properties were sold at their

remuneration report on page 49.

estimated investment value. Conclusion

Retail Estates nv is of the opinion that, based on i]Z ]^hidg^XVa Zkdaji^dc d[ i]Z ejWa^X 7:"G:>I! i]Z igVX` gZXdgY gZ\VgY^c\ hVaZh! no additional measures need to be taken to prevent the debt ratio exceeding 65%. It is the intention of the public BE-REIT to maintain or to re-establish the debt ratio between 50% and 55%. This level is evaluated regularly and will be reviewed by the board of directors if deemed necessary in the light of changing market and influencing factors.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

NOTE 38 Auditor’s fee (VAT excl.)

169

as a result of these investments. If the acquisitions would have taken place

31.03.17

31.03.16

on 1 April 2015, rental income would have increased by EUR 11.65 million. The operating result increased by EUR 10.13 million as a result of these investments.

Remuneration of the auditor for the audit assignment Remuneration for exceptional duties or special assignments - Other audit assignments - Tax consultancy assignments - Other assignments outsite the audit assignment

Sold real estate companies and investment properties As of 31.03.2017

Disposals were made during the 2016-2017 financial year for a net sale price 17

of EUR 9.72 million, which resulted in a decrease in investment properties of EUR 5.37 million. Rental income declined by EUR 0.05 million as a result of these disposals. If the disposals would have taken place on 1 April 2016, rental income would have decreased by EUR 0.14 million

In compliance with Article 133/1, §6, of the Belgian Companies Code, the

As of 31.03.2016

one-to-one rule must be judged at the level of Retail Estates nv. It was not

Disposals were made during the 2015-2016 financial year for a net sale price

exceeded. The other assignments, besides the audit assignments, mainly

of EUR 11.80 million, which resulted in a decrease in investment properties of

concern due diligence assignments.

EUR 11.46 million. Rental income declined by EUR 0.22 million as a result of these disposals. If the disposals would have taken place on 1 April 2015, rental

NOTE 39

income would have decreased by EUR 0.79 million.

Acquired real estate companies and investment properties Per 31.03.2017

NOTE 40

The acquisitions and completion of own developments during financial year

Events after the balance sheet date

2016-2017 resulted in an increase in real estate of EUR 72.48 million. Total

Appointment of new directors and change of shareholders’ meeting date

rental income increased by EUR 1.99 million in the financial year 2016-2017

On 4 April 2017, the extraordinary shareholders’ meeting of Retail Estates nv

as a result of these investments. If the acquisitions would have taken place

approved the appointment of Mr. Vic Ragoen and Ms. Ann Gaeremynck until

on 1 April 2016, rental income would have increased by EUR 4.37 million. The

the 2021 annual shareholders’ meeting. On 22 May 2017, the extraordinary

operating result increased by EUR 1.74 million as a result of these investments.

shareholders’ meeting approved moving the shareholders’ meeting to the penultimate Monday of July, and the extraordinary shareholders’ meeting

As of 31.03.2016

decided to increase the number of colleagues that may represent a director at

The acquisitions and completion of own developments during financial year

the board of directors meeting from two to three, and consequently to replace

2015-2016 resulted in an increase in real estate of EUR 166.52 million. Total

the sixth paragraph of Article 12 of the articles of association with the following

rental income increased by EUR 6.90 million in the financial year 2015-2016

text:

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

170

“Each director may authorise another member of the board by letter, by fax,

remaining debt claim relating to the purchase of the shares of the real

by electronic mail or in another written manner to represent him at a specific

estate company Hainaut Retail Invest, which has 25 retail properties spread

meeting. A director may represent a maximum of three colleagues.”.

throughout the Province of Hainaut. Following this issue, the registered capital of Retail Estates was increased to EUR 206,612,347.44, represented by

Increase in capital and issue of new shares

9,182,612 shares. The new shares will share in the company’s profit from 1 April

On 5 April 2017, 174,404 new shares were issued by contribution of the

2017.

NOTE 41 List of consolidated companies and changes in the circle of consolidation

As at 31 March 2017, the following subsidiaries are part of the consolidation perimeter of Retail Estates nv:

Subsidiary

External financial debts4 (in € 000)

Investment properties4 (in € 000)

Rental income5 (in € 000)

Participation percentage

4.250

90.966

3.533

72,87% by Retail Estates nv,

Retail Warehousing Invest nv

5,98% by Finsbury Properties nv 21,15% by RWI Invest nv

Finsbury Properties nv RWI Invest nv Heerzele nv Hainaut Retail Invest nv Blovan nv Foncière de la Station Vervietoise bvba

6.036

100%

51%

36.764

806

100%

194

4.624

50%

1.345

50% by Finsbury Properties nv, 50% by Retail Warehousing Invest nv

4 Value at closing date of the consolidated figures (31.03.2017). 5 For the period the companies are part of the Group in the current financial year.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

During the past financial year, control was obtained over Blovan nv, Foncière

nv through the acquisition of 62.50% of the shares. On 5 October 2016, an

de la Station Vervietoise bvba, Hainaut Retail Invest nv, Heerzele nv and RWI

agreement was concluded with a view to the acquisition of the remaining

Invest nv. The board of directors of Retail Estates nv acknowledged the mergers

minority interest. This was done through the acquisition of all shares of RWI

by acquisition of subsidiaries PanEuropean Retail Properties nv, Vlaamse

Invest nv (then called Databuild Retail nv), the holder of this minority stake.

171

Leasing Maatschappij nv, Fimitobel nv, Texas Management nv and TBK bvba during the past financial year. The board of directors of Retail Warehousing

Retail Warehousing Invest owns 30 retail properties throughout Belgium. RWI

Invest nv (Institutional BE-REIT) acknowledged the mergers by acquisition of

Invest nv has no assets other than 375 shares of Retail Warehousing Invest nv,

PanEuropean Property Investments nv and Localiège nv.

representing 37.50% of the share capital of that company.

For more information, we refer you to chapter 3 of this report, Management

Since the acquisition of this majority interest, Retail Estates nv has

Report, on pages 38 through 44.

systematically recognised its obligation to purchase this minority interest as a debt in the consolidated accounts. The amount of this debt was adjusted to

None of these acquisitions were considered a business combination under

the quarterly price review clauses contained in the agreement of 29 May 2012.

IFRS 3. The result of Retail Warehousing Invest nv has always been fully consolidated. Minority interests – Heerzele nv

Consequently, this transaction has only a limited impact on the consolidated

On 30 August 2016, Retail Estates nv acquired controlling interest (51%) of

results.

real estate company Heerzele nv, which is owner of property in Wetteren on which, after obtaining the necessary permits, it wishes to expand its retail park

The transaction consists of two parts. The first part concerns the transfer

in Wetteren.

and payment by 5 October 2016 of approximately half of the shares for an amount of EUR 7.68 million. The second part consisted of the issue of

In the case of a possible exit of its partner, the company intends to acquire

115,735 new shares in the context of a capital increase by contribution in kind

all shares no sooner than 12 months after acquisition of controlling interest.

with a contribution value of EUR 7.52 million (see chapter 3 of this report,

Due to the combination of the cooperation agreement and the put options

Management Report).

(which Retail Estates nv intends to exercise) relating to the minority interest, Retail Estates nv has controlling interest of Heerzele nv and is applying the full

Minority interests – Blovan nv

consolidation method.

On 31 January 2017, Retail Estates nv acquired a stake (50%) in a second real estate company, Blovan nv, which owns a semi-logistics facility in Wetteren

Minority interests – Retail Warehousing Invest nv

that is used for business-to-business trade.

On 29 May 2012, controlling interest was acquired of Retail Warehousing Invest

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

172

The company intends to acquire all shares in the case of a possible exit by its

NOTE 42

partner. Due to the combination of the cooperation agreement and the put

Determination of the amount in accordance with Article 617 of the Belgian

options (which Retail Estates nv intends to exercise) relating to the minority

Companies Code

interest, Retail Estates nv has controlling interest of Blovan nv and is applying

The amount referred to in Article 617 of the Belgian Companies Code, of the

the full consolidation method.

paid-up capital or if that amount is higher, of the called-up capital, increased with all the reserves that cannot be distributed (in accordance with the law or

Minority interests – accounting treatment

with the provisions of the articles of association), is determined in Article 13, §1,

As of 31 December 2012, the balance sheet has been drawn up on the

of the BE-REIT R.D.

assumption that all minority interests are acquired (in accordance with IFRS), irrespective of the timing of such acquisition and on the assumption that such

This calculation takes place on the basis of the statutory annual accounts of

acquisition is paid in cash. This reflects the maximum debt ratio on the basis

Retail Estates nv.

of the available information and the development stage of the projects. The impact on the non-current liabilities amounts to EUR 6.74 million.

The result for the subsidiaries held for 100% by Retail Estates nv was incorporated into the company’s annual accounts as follows: I]Z deZgVi^dcVa Y^hig^WjiVWaZ gZhjai d[ i]Z hjWh^Y^Vg^Zh lVh VaadXViZY id i]Z various categories of the company’s result; I]Z X]Vc\Z ^c i]Z [V^g kVajZ d[ i]Z gZVa ZhiViZ d[ i]Z hjWh^Y^Vg^Zh lVh Vhh^\cZY to the result on portfolio. As such, the operating result of the subsidiaries for the full financial year can be used for distribution as dividend.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

(in â&#x201A;Ź 000)

Non-distributable elements of the shareholders' equity before distribution of results Paid-up capital Non-available issue premiums pursuant to the articles of association Reserve for the positive balance of the variations of the fair value of real estate Reserve for the impact on the fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties Reserve for the balance of the changes in fair value of authorised hedging instruments qualifying for hedge accounting Reserve for the balance of the changes in fair value of authorised hedging instruments not qualifying for hedge accounting Other reserves Profit and loss of the financial year that must be allocated to the non-distributable reserves in accordance with Article 13, Â§1, of the RREC R.D. Result on portfolio Revaluation participations Changes in fair value of financial assets and liabilities

31.03.17

31.03.16

410,964

400,426

197,635

194,545

157,529

151,499

96,955

-22,999

-19,887

-4,032

-5,556

-14,253

-17,573

129

443

6,625

1,621

10,446

9,189

-2,952

-2,562

-869

-5006

Total shareholders' equity, statutory, non-distributable

417,589

402,047

Shareholders' equity, statutory Planned dividend distribution Shareholders' equity, statutory, after distribution of dividends

510,623

474,409

Remaining reserve after distribution

29,727

28,372

480,896

446,037

63,307

43,990

173

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

174

7. STATUTORY AUDITOR’S

Standards as adopted by the

An audit involves performing

European Union and implemented

procedures to obtain audit evidence

SHAREHOLDERS’ MEETING ON

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS – UNQUALIFIED OPINION

by the royal decree of 13 July 2014,

about the amounts and disclosures

THE CONSOLIDATED FINANCIAL

We have audited the Consolidated

and with legal and regulatory

in the Consolidated Financial

STATEMENTS FOR THE YEAR

Financial Statements of Retail

requirements applicable in Belgium,

Statements. The procedures

ENDED 31 MARCH 2017

Estates NV (“the Company”) and

and for such internal control as the

selected depend on the statutory

In accordance with legal

its subsidiaries (“the Group”) for the

board of directors determines is

auditor’s judgment, including his

requirements, we report to

year ended 31 March 2017, prepared

necessary to enable the preparation

assessment of the risks of material

you on the performance of our

in accordance with International

of Consolidated Financial Statements

misstatement in the Consolidated

mandate of statutory Auditor. This

Financial Reporting Standards as

which are free from material

Financial Statements, whether due

report includes our report on the

adopted by the European Union

misstatement, whether due to fraud

to fraud or error. In making those risk

Consolidated Financial Statements

and implemented by the royal

or error.

assessments, the statutory auditor

for the year ended 31 March 2017

decree of 13 July 2014, and with the

as defined below, as well as our

legal and regulatory requirements

STATUTORY AUDITOR’S RESPONSIBILITY

to the group’s preparation and fair

report on other legal and regulatory

applicable in Belgium. The total

Our responsibility is to express an

presentation of the Consolidated

requirements. These Consolidated

of the consolidated balance sheet

opinion on these Consolidated

Financial Statements, in order to

Financial Statements comprise

amounts to ‘000’ EUR 1.087.338 and

Financial Statements based on

design audit procedures that are

the consolidated balance sheet as

the consolidated income statement

our audit. We conducted our audit

appropriate in the circumstances,

at 31 March 2017, the consolidated

shows a profit for the year of ‘000’

in accordance with International

but not for the purpose of expressing

income statement, the consolidated

EUR 52.136.

Standards on Auditing (ISA)

an opinion on the effectiveness

as endorsed in Belgium. Those

of the group’s internal control. An

standards require that we comply

audit also includes evaluating the

with ethical requirements and plan

appropriateness of accounting

REPORT TO THE GENERAL

statement of comprehensive income, the consolidated statement

BOARD OF DIRECTORS’ RESPONSIBILITY FOR

of changes in equity and the

THE PREPARATION OF THE

consolidated cash flow statement for

CONSOLIDATED

considers internal control relevant

FINANCIAL STATEMENTS

and perform the audit to obtain

policies used and the reasonableness

the year then ended, as well as notes,

The board of directors is responsible

reasonable assurance about

of accounting estimates made by

comprising a summary of significant

for the preparation and fair

whether the Consolidated Financial

the board of directors, as well as

accounting policies and other

presentation of Consolidated

Statements are free from material

evaluating the overall presentation

explanatory information.

Financial Statements in accordance

misstatement.

of the Consolidated Financial

with International Financial Reporting

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

Statements.

FINANCIAL REPORT I

We have obtained from the board of

I]Z WdVgY d[ Y^gZXidghÈ gZedgi dc i]Z

directors and the Company’s officials

Consolidated Financial Statements,

the explanations and information

prepared in accordance with article

necessary for performing our audit.

119 of the Companies’ Code and to

175

be deposited in accordance with We believe that the audit evidence

article 100 of the Companies’ Code,

we have obtained is sufficient and

includes, both in terms of form and

appropriate to provide a basis for our

content, the information required

unqualified opinion.

by law, is consistent with the Consolidated Financial Statements

UNQUALIFIED OPINION

and does not present any material

The board of directors is responsible

inconsistencies with the information

for the preparation and the content of

that we became aware of during the

the board of directors’ report on the

performance of our mandate.

Consolidated Financial Statements. In the context of our mandate and in accordance with the Belgian standard which is complementary

Sint-Stevens-Woluwe, 19 May 2017

to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, compliance

The Statutory Auditor

with certain legal and regulatory

PwC Reviseurs d’Entreprises sccrl/

requirements. On this basis, we

Bedrijfsrevisoren bcvba

provide the following additional statement which does not impact our

Represented by

opinion on the Consolidated Financial

Damien Walgrave

Statements:

Reviseur d’Entreprises / Bedrijfsrevisor

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

176 8. A. STATUTORY INCOME STATEMENT INCOME STATEMENT (in â&#x201A;Ź 000)

Rental income Rental related expenses Net rental income Recovery of property expenses Recovery of rental charges and taxes normally payable by tenants on let properties Rental charges and taxes normally payable by tenants on let properties Other rental related income and expenses

31.03.17

31.03.16

59,144

50,322

-758

-500

58,385

49,822

5,705

4,758

-6,099

-5,005

-108

-41

Property result

57,883

49,534

Technical costs Commercial costs Charges and taxes on unlet properties Property management costs Other property costs

-2,023

-1,799

Property costs

-491

-339

-310

-294

-1,367

-525

-2

-4,137

-2,959

Operating property result

53,745

46,575

Operating corporate costs Other current operating income and expenses

-2,542

-2,489

Operating result before result on portfolio

51,203

44,086

279

282

10,446

9,189

Result on disposals of investment properties Result on sales of other non-financial assets Changes in fair value of investment properties Other result on portfolio

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

INCOME STATEMENT (in â&#x201A;Ź 000)

Operating result Financial income Net interest charges Authorised hedging instruments' costs Other financial charges

31.03.17

31.03.16

61,927

53,556

1,113

3,595

-18,148

-16,244

-869

-5,006

114

-30

Financial result

-17,790

-17,685

Result before taxes

44,138

35,871

-42

44,096

35,904

33,948

28,841

Taxes Net result Note: EPRA earnings Result on portfolio Revaluation participations Changes in fair value of financial assets and liabilities

10,725

9,471

292

2,598

-869

-5,006

31.03.17

31.03.16

44,096

35,904

-3,112

-1,862

9,850

1,193

OTHER COMPREHENSIVE INCOME

50,834

35,235

177

8. B. STATUTORY STATEMENT OF OTHER COMPREHENSIVE INCOME Statement of other comprehensive income (in â&#x201A;Ź 000)

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

178 9. STATUTORY BALANCE SHEET ASSETS (in â&#x201A;Ź 000)

Non-current assets Goodwill Intangible non-current assets Investment properties Other tangible non-current assets Financial non-current assets Finance lease receivables Trade receivables and other non-current assets Current assets Non-current assets or groups of assets held for sale Trade receivables Tax receivables and other current assets Cash and cash equivalents Deferred charges and accrued income TOTAL ASSETS

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

31.03.17

31.03.16

1,037,040

957,102

149

145

921,774

798,654

2,133

1,554

110,409

156,748

1,030

1,545

36,370

30,206

5,691

7,525

893

1,235

28,082

19,807

470

1,009

1,234

631

1,073,410

987,308

FINANCIAL REPORT I

31.03.17

31.03.16

Shareholders’ equity Capital Issue premiums Reserves Net result of the financial year

510,623

474,409

197,635

194,545

157,529

151,499

Liabilities Non-current liabilities Provisions Non-current financial debts Credit institutions Long term financial lease Other Other non-current liabilities Deferred taxes

562,786

512,898

507,021

451,908

480,917

423,773

396,497

393,975

SHAREHOLDERS’ EQUITY AND LIABILITIES (in € 000)

Current liabilities Current financial debts Credit institutions Short term financial lease Trade debts and other current debts Other current liabilities Accrued charges and deferred income TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES

111,363

92,461

44,096

35,904

84,420

29,788

26,104

28,135

179

0 55,765

60,990

30,878

34,477

30,878

34,473

7,023

5,775

11,496

15,632

6,368

5,106

1,073,410

987,308

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

180 10. STATUTORY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (in € 000)

Capital ordinary shares

Issue premiums

Reserves*

Net result of the financial year

TOTAL Shareholders’ Equity

166,902

101,839

80,441

33,807

382,990

- Transfer of portfolio result to reserves

8,272

-8,272

- Transfer of EPRA earnings to reserves

2,101

-2,101

-23,434

Balance according to IFRS on 31 March 2015 - Net appropriation of profits 2015-2016

- Reclassification between reserves

- Dividends of the financial year 2014-2015 - Capital increase - Capital increase through contribution in kind

28,344

47,870

1,060

1,790

- Increase in shareholders' equity as a result of mergers - Costs of capital increase

2,850 2,608

2,608

-1,762

- Other

-291

- Other comprehensive income 31/03/2016 Balance according to IFRS on 31 March 2016

76,214

194,545

151,499

-291

-669

35,903

35,235

92,461

35,903

474,409

- Net appropriation of profits 2016-2017 - Transfer of portfolio result to reserves

3,531

-3,531

- Transfer of EPRA earnings to reserves

4,000

-4,000

-28,372

- Reclassification between reserves

- Dividends of the financial year 2015-2016 - Capital increase - Capital increase through contribution in kind

0 3,193

6,030

- Increase in shareholders' equity as a result of mergers - Costs of capital increase

9,223 4,630

4,630

-102

- Other

- Other comprehensive income 31/03/2017 Balance according to IFRS on 31 March 2017

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

197,636

157,529

6,738

44,096

50,834

111,359

44,096

510,623

FINANCIAL REPORT I

Changes in the ef-

Reserve for Impact on the fair

the positive/

Balance according to IFRS on 31 March 2015

Legal reserve

356

Changes in the effective part of the fair

value of estimated fective part of the fair

value of authorised

transfer rights and

value of authorised

hedging instruments

changes in

costs resulting from

hedging instruments

the fair value

the hypothetical dis-

qualifying for hedge

negative balance of

* Detail of the reserves (in â&#x201A;Ź 000)

of real estate

Available

posal of investment

accounting as de-

properties

reserves

properties

fined by IFRS

11,726

-18,025

89,185

181

are not subjected to Results carried qualify for hedge ac-

forward from

counting as defined previous finanby IFRS

-24,322

cial years

21,522

TOTAL

80,441

- Net appropriation of profits 2015-2016 - Transfer of portfolio result to reserves

8,272

- Transfer of EPRA earnings to reserves

2,101

- Reclassification between reserves

-499

208

291

21,058

-21,058

- Capital increase through contribution in kind - Increase in shareholders' equity as a result of mergers

0 87

-3

2,524

- Costs of capital increase

2,608 0

- Other

-291

- Other comprehensive income 31/03/2016 Balance according to IFRS on 31 March 2016

2,101

443

96,955

11,934

-291

-1,862

-2,292

3,485

-19,887

-5,556

-17,573

-669 26,147

92,461

4,000

- Net appropriation of profits 2016-2017 - Transfer of portfolio result to reserves

8,537

-5,006

- Transfer of EPRA earnings to reserves - Reclassification between reserves

-941

-103

3,531

1,044

- Capital increase through contribution in kind - Increase in shareholders' equity as a result of mergers

0 627

-8,434

12,437

4,630

- Costs of capital increase

- Other

- Other comprehensive income 31/03/2017 Balance according to IFRS on 31 March 2017

129

96,955

12,978

-3,112

1,524

8,326

-22,999

-4,032

-14,253

6,738 42,584

111,359

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

182 11.STATUTORY APPROPRIATION OF RESULT Statutory appropriation of result (in â&#x201A;Ź 000)

Net result

31.03.17

31.03.16

44,096

35,904

-10,446

-9,189

Allocation to / transfer from reserves - Allocation to / transfer from the reserves for the balance of changes in fair value of investment properties Financial year - Allocation to / transfer from the reserves of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties - Allocation to / transfer from the reserves for the balance of changes in fair value of authorised hedging instruments not subject to hedge accounting - Allocation to / transfer from other reserves7

869

5,006

2,952

-2,598

- Increase in shareholders' equity as a result of mergers

12,437

2,524

Remuneration of capital

29,727

28,372

20,181

3,275

Remuneration of capital - other Result to be carried forward 7 This includes the revaluation of the subsidiariesâ&#x20AC;&#x2122; participation, at fair value.

I RE TA I L E S TAT E S I A N NUAL R EPORT 2016 - 2017

FINANCIAL REPORT I

183

I R E TA I L E STAT E S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

184

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

PERMANENT DOCUMENT I

185

PERMANENT DOCUMENT O7 O1

GENERAL INFORMATION

187

ARTICLES OF ASSOCIATION

189

I R E TA I L E STATE S I A N N U A L R E P O RT 2 0 1 6 - 2 0 1 7

186

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

PERMANENT DOCUMENT I

O1 GENERAL INFORMATION

(“naamloze vennootschap”)

DURATION

shall be lodged with the National

“Retail Estates – Vastgoedbevak

The company was incorporated for

Bank of Belgium. The articles of

naar Belgisch recht” (currently

an indefinite period of time.

association may be obtained from

“Openbare GVV naar Belgisch

the Clerk’s Office of the Brussels

recht” – “Public BE-REIT organised

SOCIAL PURPOSE

Commercial Court or on the

IDENTICIFATION

and existing under the laws of

We refer to Article 3 of the articles

website www.retailestates.com.

NAME

Belgium”) was incorporated

of association, as mentioned on

Retail Estates nv - Public Belgian

pursuant to a deed enacted by

page 190 of this annual report.

Real Estate Investment Trust

notary public Urbain Drieskens

organised and existing under the

at Houthalen on 12 July 1988 and

FINANCIAL YEAR

the Annexes to the Belgian State

laws of Belgium.

subsequently published in the

The financial year of the company

Gazette and in the newspaper

Annexes to the Belgian State

starts on 1 April and ends on

De Standaard. The convening

REGISTERED OFFICE

Gazette on 29 July thereafter under

31 March of each year. The first

notices and all relevant documents

Industrielaan 6, B-1740 Ternat,

number 880729-313.

financial year as a real estate

shall simultaneously be made

Belgium. Pursuant to Article 2 of the

Notices convening shareholders’ meetings shall be published in

investment company (currently

available on the website at www.

articles of association, the registered

The articles of association were

“Belgian Real Estate Investment

retailestates.com : Investor

office of the company may be

most recently amended by means

Trust”) ran from 1 April 1998 to 31

Relations > Shareholders’ agenda

relocated to any place in Belgium

of minutes drawn up on 5 April

March 1999.

> (Extraordinary) shareholders’

following a decision by the board of

2017, by Tim Carnewal, associated

directors, without the need to amend

notary public in Brussels, and

INSPECTION OF DOCUMENTS

the articles of association.

published in the Annexes to the

The non-consolidated and

All press releases and other

Belgian State Gazette of 20

consolidated annual accounts,

financial information published by

ENTERPRISE NUMBER

April thereafter, under number

articles of association, annual

Retail Estates nv can be viewed on

The company is registered with

17058302.

reports and other information

the website.

the register of legal persons under enterprise number 0434.797.847.

meeting.

disclosed publicly to shareholders The company has made a public

can be obtained free of charge

The annual reports of the

appeal on savings in accordance

at the registered office of the

company shall be sent to holders

LEGAL FORM, INCORPORATION,

with Article 439 of the Belgian

company. The non-consolidated

of registered shares, other holders

PUBLICATION

Companies Code.

and consolidated annual accounts

of securities who have fulfilled

and the supplementary reports

the formalities prescribed by the

The limited liability company

187

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188

Belgian Companies Code and to

(“naamloze vennootschap”) or

who acquired the shares as part

any person who requests them.

a partnership limited by shares

of the management of their

They can also be obtained at the

(“commanditaire vennootschap

registered office of the company.

op aandelen”), with a minimum capital of EUR 1,200,000;

LEGAL REGIME REGULATED REAL ESTATE COMPANY The BE-REIT system was

- indebtedness must be limited to 65%; - the portfolio must be stated at

established by the Belgian Royal

fair value (real value) without a

Decree of 13 July 2014 and the

possibility of write-downs;

Belgian Act of 12 May 2014.

private property; - there must be a stock exchange listing; - the activity must be confined to real estate investments; additionally, the BE-REIT may place assets in securities; - possibility to request that

- independent experts must make

branches of the BE-REIT be given

an annual estimate of the real

the status of an institutional BE-

The concept of a Belgian Real

estate assets, which must be

REIT.

Estate Investment Trust is based

updated at the end of the first

on Real Estate Investment Trusts

three quarters of each financial

The objective of all these rules

(USA – “REITs”).

year;

is to limit risks. Companies that

- at least 80 % of the current The intention of lawmakers was for a BE-REIT to guarantee optimum transparency of real

to a 16.995% tax on the unrealised

dividend;

gains and tax-free reserves, i.e. the

- the risk must be spread, i.e. no

estate investments and to assure

more than 20% of the assets may

a maximum disbursement of cash

be invested in one and the same

flow, while allowing investors to enjoy numerous benefits. The REITs are regulated by the FSMA, and are subject to specific regulations, the most important of which are:

real estate complex; - virtually complete exemption from corporation tax; - an advance levy (currently 27%) must be deducted from the payable dividend. This is by

- the legal status must be that of a limited liability company

merge with a BE-REIT are subject

result must be paid out as a

way of discharge of obligations, insofar as it concerns individuals

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‘exit tax’, plus a supertax at the prevailing rate.

PERMANENT DOCUMENT I

189

The company solicits its financial resources in Belgium or abroad by means of a public offering of shares, and therefore makes a

ARTICLES OF ASSOCIATION

public appeal on savings within

CORPORATE FORM - NAME REGISTERED OFFICE - CORPORATE PURPOSE - DURATION

the meaning of Article 438(1) of

ARTICLE 1: LEGAL FORM AND NAME

be traded on a regulated market.

the Belgian Companies Code. The company’s shares are authorised to

The company has the form of a limited liability company

The company is subject to the

(“naamloze vennootschap”)

statutory framework governing

under Belgian law with the name

public real estate investment trusts

“Retail Estates”. This name shall

organised and existing under the

be immediately followed by

laws of Belgium, hereafter called

the words “Belgian Real Estate

“public BE-REIT”.

Investment Trust organised and existing under the laws of Belgium”

The company is subject to the

or “Public BE-REIT organised and

Belgian real estate investment

existing under the laws of Belgium”

trusts’ legislation, applicable at

(“Société immobilière réglementée

all times, and particularly to the

publique de droit belge” or

provisions of the Belgian Act of 12

“SIR publique de droit belge” /

May 2014 on Belgian real estate

“Openbare gereglementeerde

investment trusts (the “BE-REIT

vastgoedvennootschap naar

Act”) and the Belgian Royal Decree

Belgisch recht” or “Openbare

of 13 July 2014 on Belgian real estate

GVV naar Belgisch recht”) and all

investment trusts (the “BE-REIT

documents issued by the company

R.D.”) (this act and its implementing

shall mention this.

decree are hereinafter referred to as the “BE-REIT legislation”).

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190

ARTICLE 2: REGISTERED OFFICE

(b) to own real estate, within the

The registered office is located

limits of the BE-REIT legislation

at 6 Industrielaan, B-1740 Ternat

as specified in Article 2, 5°, i to x

(Belgium).

of the BE-REIT Act.

The registered office may be

By real estate is understood:

which other analogous user rights

(i) with a legal personality; (ii)

were granted;

governed by the laws of another Member State of the European

vi. shares in public fixed-capital real

Economic Area; (iii) whose

estate investment funds (Bevak/

shares are authorised to be

Sicafi);

traded on a regulated market

transferred to any other location in Belgium, pursuant to a decision

and/or are subject to a regime i. real estate as defined in Articles

vii. rights to own participating

of prudential supervision; (iv)

of the board of directors, which

517 et seq. of the Belgian Civil

interest in foreign institutions

whose principal activity is the

complies with the applicable

Code and rights in rem to real

for collective investment in real

acquisition or construction

legislation on the use of languages,

estate, to the exclusion of

estate that are registered in the

of immovable property in

without an amendment to these

real estate related to forestry,

list referred to in Article 260 of

anticipation of making it

articles being required.

agriculture and mining;

the Belgian Act of 19 April 2014;

available to users, or the direct or indirect ownership of shares

The board of directors may also

ii. voting shares issued by real

viii. rights to own participating

in certain types of entities with

establish administrative offices,

estate companies over which

interest in institutions for

similar corporate purposes; and

places of business and subsidiaries,

the company exercises joint or

collective investment in real

(v) that are exempted from the

both in Belgium and abroad.

exclusive control;

estate that are established in

tax on income from the profits

another Member State of the

coming from the activities

European Economic Area and

referred to in the stipulation

that are not registered in the

under (iv), subject to compliance

list referred to in Article 260 of

with specific legal requirements,

Belgian real estate investment

the Belgian Act of 19 April 2014,

and that at least are obliged to

trusts, provided joint or exclusive

insofar as they are subject to

distribute a part of their income

to users, directly or through

control is exercised over

oversight equivalent to that

among their shareholders (called

a company in which it holds

institutional BE-REITs;

exercised over the public fixed-

“Real Estate Investment Trusts”

capital real estate investment

(abbreviated “REITs”));

ARTICLE 3: CORPORATE PURPOSE

iii. option rights to real estate;

The purpose of the company is limited to the following: (a) to make real estate available

iv. shares of public or institutional

shares, in accordance with the provisions of the BE-REIT Act

v. the rights resulting from contracts

and its implementing decrees

in which the company was given

and regulations; and

one or more goods in lease, or in

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funds; x. real estate certificates, within the ix. shares issued by companies

meaning of Article 5, § 4 of the

PERMANENT DOCUMENT I

Belgian Act of 16 June 2006; xi. all other goods, shares or rights

of contribution in cash or in

within the limits of the BE-REIT

basis, unless the properties in

kind, merger, demerger or other

legislation.

question are intended to be used in

corporate restructuring, registration,

the public interest (in which case,

defined as real estate by the

participation, membership,

The company may, on a temporary

this activity may form part of the

regulations applicable to the

financial support or in any other

or subsidiary basis, also invest

companyâ&#x20AC;&#x2122;s main business).

regulated real estate companies.

way, acquire a share (or be a

in securities that are not real

member) of any existing or to be

estate. Such investments shall be

In general, the company is obliged

In the framework of the provision

established companies, businesses

diversified to ensure an adequate

to carry out all of its activities and

of real estate, the company may

or associations in Belgium or

allocation of risk. The company

transactions in accordance with the

in particular carry out all activities

abroad, having a purpose that

may hold non-committed liquid

rules and within the limits provided

related to the establishment,

is similar or complementary to

assets. The liquid assets can be

for by the BE-REIT legislation and

construction (without prejudice

that of the company (including

held in all currencies, in the form

any other applicable legislation.

to the prohibition to act as a

participating interest in a subsidiary

of demand and term deposits, as

property developer, except in the

in respect of which there is a power

well as all easily convertible money

ARTICLE 4: PROHIBITIONS

case of occasional transactions),

of control that provides services to

market instruments.

The company may not act as a

the remodelling, renovation,

the tenants of the buildings of the

development, acquisition, disposal,

company and/or its subsidiaries) or

In addition, the company may

of the BE-REIT legislation, except

furnishing, letting, sub-letting,

that are of such a nature to realise

engage in transactions involving

concerning occasional transactions.

exchange, transfer, contribution,

or facilitate the realisation of its

hedging instruments, provided

development, placing under

purpose and, in general, execute all

the latter are carried out for the

the system of co-ownership or

transactions connected directly or

sole purpose of hedging the

joint ownership of property as

indirectly to its corporate purpose.

interest rate and exchange risk,

above described, the granting

property developer in the sense

The company is prohibited from: 1. participating in a fixed price

expressly excluding any speculative

syndicate or guarantee

transactions.

association;

or acquisition of building rights,

The company may act as a real

usufruct, ground lease or other real

estate developer, provided it only

or personal rights on properties as

does so on an occasional basis.

The company and its subsidiaries

except for loans that are granted

described above, the management

The company may grant mortgages

may let one or more properties

under the conditions and in

and exploitation of real estate.

or other forms of security as well

under finance leases. Such finance

accordance with the provisions

as extend loans to, and serve

leases, with a purchase option, may

of the Belgian Royal Decree of 7

as a guarantor for, a subsidiary,

only be granted on a subsidiary

March 2006; and

The company may, by means

191

2. lending financial instruments,

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192

3. acquiring financial instruments issued by a company or a private

representing an equal share of the

Within the above limits, and

right is granted to the existing

capital

without prejudice to mandatory

shareholders upon the distribution

provisions of the Belgian

of new shares. This irreducible

Companies Code, the board

allocation right shall meet the

association that was declared bankrupt, has concluded an

The capital is paid up in full.

amicable settlement with its

of directors can decide to

requirements determined by the

creditors, is the object of judicial

6.2. Authorised capital

increase the capital, by means of

BE-REIT legislation and Article 6.4

reorganisation proceedings,

The board of directors is authorised

contributions in cash or in kind,

of these articles of association.

has been granted deferment of

to increase the suscribed capital

the incorporation of reserves or

payments or in respect of which

on one or more occasions, up to a

issue premiums, with or without

This right need not be granted in

a similar measure has been taken

maximum amount of one hundred

the issuance of new shares, on

the event of a contribution of cash

abroad.

and sixty-four million, thirty-seven

a case-by-case basis. The board

made in the context of an optional

thousand, eighty-seven euro,

of directors is also authorised,

dividend distribution, under the

ARTICLE 5: DURATION

and seventy-four cents (EUR

by the shareholders’ meeting, to

circumstances provided by Article

The company has an unlimited

164,037,087.74).

issue other securities, including,

6.4 of these articles of association.

duration.

without limitation, (subordinated This authorisation is conferred

or non-subordinated) convertible

Capital increases by means of

CAPITAL - SHARES

on the board of directors for

bonds, warrants, non-voting shares,

a contribution in kind shall be

ARTICLE 6: CAPITAL

a period of five years, as from

and preferred shares with regard

carried out in accordance with the

6.1. Registered capital

the publication in the Annexes

to dividends and/or liquidation

requirements determined by the

The company’s registered capital

to the Belgian State Gazette of

proceeds.

BE-REIT legislation and Article 6.4

amounts to two hundred and six

the amendment to the articles

million six hundred and twelve

of association, adopted by the

Moreover, the board of directors

Such contributions can include a

thousand three hundred forty-

extraordinary shareholders’

is allowed to limit or remove the

right to a dividend in the context

seven euro and forty-four cents

meeting of 9 December 2013. This

preferential right granted by the

of an optional stock dividend

(EUR 206,612,347.44).

authorisation can be renewed. The

Belgian Companies Code to the

distribution.

board of directors shall determine

shareholders, including those in

It is divided into nine million one

the price, the issue premium, and

favour of one or more persons

Without prejudice to the

hundred eighty-two thousand six

the issue conditions for new shares,

other than the employees of

authorisation granted to the board

hundred and twelve (9,182,612)

unless these decisions are taken by

the company or a subsidiary,

of directors in accordance with the

shares, without par value, each

the shareholders’ meeting.

provided an irreducible allocation

preceding paragraphs, the board of

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

of these articles of association.

PERMANENT DOCUMENT I

directors is authorised to proceed

like the capital, as a guarantee

Gazette of the authority granted

authorisations extend to

with one or more capital increases,

to third parties, and which can

by the extraordinary shareholders’

acquisitions and transfers of

in the event of a takeover bid for

only be reduced or abolished

meeting of 24 October 2014,

the company’s shares by its

all of the company’s shares, under

pursuant to a decision of the

and can be extended by the

subsidiaries within the meaning of

the conditions set forth in Article

shareholders’ meeting, deliberating

shareholders’ meeting for the same

the first paragraph of Article 627

607 of the Belgian Companies

in accordance with the conditions

period of time.

of the Belgian Companies Code,

Code, provided the company has

set forth in Article 612 of the

received an acknowledgement of

Belgian Companies Code, without

The board of directors is

acquisitions are made by persons

the takeover bid from the Financial

prejudice to its incorporation in the

authorised, for a period of five (5)

acting in the name and on behalf of

Services and Markets Authority

company’s capital.

years following the extraordinary

a subsidiary.

(FSMA) within a period of three

193

including instances when such

shareholders’ meeting of 24

years from the extraordinary

6.3. Acquisition, transfer and pledge

October 2014, to acquire, pledge

6.4. Capital increase

shareholders’ meeting of 9

of own shares

and transfer the company’s own

Any capital increase shall meet

December 2013. If applicable, the

The company can acquire, pledge

shares on the company’s behalf,

the requirements of Articles 581

board of directors must respect the

or retransfer its own shares subject

at a unit price which may not

through 609 of the Companies

irreducible allocation right provided

to the conditions provided for by

be less than eighty-five percent

Code and the BE-REIT legislation.

for by the BE-REIT legislation.

law.

(85%) of the closing market price

Capital increases carried out by the

on the day preceding the date of

The company’s capital can be

board of directors pursuant to this

The board of directors is authorised,

the transaction (acquisition, sale

increased pursuant to a decision

authorisation will be deducted from

within the limits of Articles 620

or pledge) and may not exceed

of the shareholders’ meeting,

the remaining authorised capital,

et seq. of the Belgian Companies

one hundred and fifteen percent

deliberating in accordance with

mentioned in the first paragraph of

Code, to decide that the company

(115%) of the closing market price

Article 558 and, if applicable,

this Article.

can acquire, pledge and transfer its

on the day preceding the date of

Article 560 of the Belgian

own shares when such acquisition

the transaction (acquisition, sale or

Companies Code, or pursuant to a

When capital increases carried out

or transfer is necessary to avoid

pledge), subject to the requirement

decision of the board of directors

pursuant to these authorisations

serious, imminent harm to the

that the company may not, at any

within the limits of the authorised

entail an issue premium, the

company. This authorisation is

time, hold more than 20% of the

capital. It is, however, forbidden for

amount thereof shall be allocated

valid for a period of three (3)

total outstanding shares.

the company to subscribe, directly

to a non-distributable “issue

years, as from the publication in

premium” reserve which shall serve,

the Annexes to the Belgian State

or indirectly, to its own capital. The above-mentioned

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194

In the event of a capital increase

4. the public subscription period

1. the contributor’s identity must be

its special report, the amount

by means of a cash contribution,

lasts, in this case, for at least

disclosed in the report prepared

of accrued dividends to be

pursuant to a decision of the

three trading days.

by the board of directors

deducted, and sets forth the

pursuant to Article 602 of the

financial conditions for the

shareholders’ meeting, or within the limits of the authorised capital,

This irreducible allocation right

Belgian Companies Code, and

transaction in the annual

the shareholders’ preferential

applies to the issuance of

also, if applicable, in the notice of

financial report;

subscription right can only be

shares, (subordinated or non-

the shareholders’ meeting called

restricted or cancelled if an

subordinated) convertible bonds,

to vote on the capital increase;

irreducible allocation right is

and warrants, but does not have to

granted to the shareholders of

be allocated to a cash contribution

record at the time that the new

with a restriction or cancellation of

than the lower value of the

exchange ratio, as well as

shares are awarded. This irreducible

the preferential subscription right,

following: (a) a net value per

the associated formalities, is

allocation right shall meet the

in addition to a contribution in kind,

share dated no more than four

determined and communicated

following requirements, determined

in the context of the distribution

months before the date of the

to the public, at the latest, on

by the BE-REIT legislation:

of an optional stock dividend,

contribution agreement or, at the

the working day following the

provided the grant thereof is

company’s choosing, before the

conclusion of the contribution

effectively open to all shareholders.

date of the document enacting

agreement, with a mention of

the capital increase and (b) the

the time period within which the

Capital increases by means of

average closing market (share)

capital increase will effectively

contributions in kind are subject to

price over the thirty calendar

be carried out, the document

in proportion to the percentage

the rules set forth in Articles 601

days preceding this same date;

enacting the capital increase

of capital that their shares

and 602 of the Belgian Companies

In this regard, it is permitted

shall be drawn up within

represent at the time of the

Code.

to deduct, from the amount

a maximum period of four

indicated in point (b) above,

months; and

1. it applies to all new shares issued in their entirety; 2. it is granted to the shareholders

transaction;

3. unless the issue price or, under the circumstances provided in

2. the issue price may not be less

Article 6.6 below, the share-

Moreover, the following

an amount corresponding to

requirements must be met in the

the portion of undistributed

announced no later than the day

event of the issuance of securities,

gross dividends of which the

1 above must also make clear

before the opening of the public

following a contribution in kind,

new shares could be deprived,

the effect of the proposed

subscription period; and

in accordance with the BE-REIT

provided that the board of

contribution on the situation

legislation:

directors specifically justifies, in

of the existing shareholders,

3. a maximum share price is

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4. the report mentioned in point

PERMANENT DOCUMENT I

in particular their share of the

6.5. Capital decrease

company’s profit, the net value

A capital decrease may only

per share, and the capital, as well

take place if similarly situated

as the impact on voting rights.

shareholders are treated equally

195

and if the applicable provisions of These additional conditions are

the Belgian Companies Code are

not applicable in the event of the

complied with.

contribution of a right to a dividend in the context of an optional stock

6.6. Mergers, demergers and

dividend distribution, provided the

equivalent transactions

grant thereof is effectively open to

In accordance with the BE-

all shareholders.

REIT legislation, the additional requirements set forth in Article 6.4

If the shareholders’ meeting

in the event of a contribution in kind

decides to require the payment

are applicable mutatis mutandis to

of an issue premium, this amount

mergers, demergers and equivalent

must be booked in a non-

transactions within the meaning of

distributable reserve, which can

Articles 671 to 677, 681 to 758 and

only be reduced or abolished

772/1 of the Belgian Companies

pursuant to a decision of the

Code.

shareholders’ meeting, deliberating in accordance with the conditions

ARTICLE 7: NATURE OF THE SHARES

provided to amend the articles

At the shareholders’ choosing,

of association and respecting the

the shares can be registered or in

procedure provided to reduce the

dematerialised form.

share capital. The issue premium shall serve, like the share capital,

Any shareholder may, at any time,

as a common guarantee for the

request the conversion of his or her

benefit of third parties.

shares.

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196

The shares shall remain in

All shares are fully paid up, and

admitted to trading on a regulated

company than the number of

registered form when the law so

without par value.

market in Belgium, in accordance

votes attached to the securities

with the BE-REIT legislation.

which the person in question had

requires. ARTICLE 8: EXERCISE OF THE RIGHTS

declared to own at least twenty

Effective 01.01.2015, securities

ATTACHED TO THE SHARES

Each shareholder is obliged to

(20) days before the date of the

whose beneficiaries remain

The shares are indivisible, and

notify the company and the

shareholders’ meeting.

unknown shall be offered for sale,

the company only recognises one

Financial Services and Markets

in accordance with the applicable

owner per share. When several

Authority (FSMA) of their

MANAGEMENT AND CONTROL

legislation.

persons may claim rights to the

possession of securities with voting

ARTICLE 11: CONSTITUTION OF THE BOARD

same share, the exercise of the

effects, their voting rights, or similar

OF DIRECTORS

The board of directors may, within

rights attached to this share shall

financial instruments issued by

The company is managed by a

the limits fixed by law, determine

be suspended until a single person

the company, in accordance with

board of directors. The board

the formalities for the conversion

is designated as the owner with

the legislation on the disclosure of

shall be composed of a minimum

of former bearer securities into

regard to the company.

substantial shareholdings.

of three and a maximum of

ARTICLE 9: OTHER SECURITIES

The thresholds above which the

not necessarily be shareholders

twelve members, who need

dematerialised (and/or registered) form.

The company is authorised to issue

notification obligation comes into

in the company, appointed by

Registered securities shall be

the securities mentioned in Article

effect, for the purposes of the

the shareholders’ meeting for a

recorded in the share register

460 of the Belgian Companies

legislation on the disclosure of

maximum term of six years, and

kept at the company’s registered

Code, with the exception of: profit

substantial shareholdings, is fixed

eligible to be removed by the

office. Title to shares may only be

sharing instruments and analogous

at three percent (3%), five percent

shareholders’ meeting at all times.

established through the recording

securities, provided that the

(5%) and multiples of five percent

The directors may be re-elected.

in this register.

specific rules stipulated by the BE-

(5%) of the total number of

REIT legislation and these articles

outstanding voting rights.

Dematerialised securities are

are respected.

represented by a book entry, in the

The board of directors shall have at least three independent directors,

With the exception of: the

within the meaning of Article

name of the owner or holder, with a

ARTICLE 10: STOCK EXCHANGE LISTING

derogations provided for by the

526ter of the Belgian Companies

settlement institution or authorised

AND DISCLOSURE OF SUBSTANTIAL

Belgian Companies Code, no-

Code.

account holder.

SHAREHOLDINGS

one is allowed more votes at a

The company’s shares must be

shareholders’ meeting of the

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

For the exercise of their mandates,

PERMANENT DOCUMENT I

the directors must have the

of the company so require.

three other directors.

capacity as directors only in the

necessary professional integrity and

scope of their official duties.

appropriate expertise as provided

Notices of meetings shall indicate

Each director that attends or

for in the BE-REIT legislation, and

the place, date, time, and agenda

is represented at a meeting is

ARTICLE 13: DELIBERATIONS

may not fall within the scope of the

of the meeting, and shall be sent by

deemed to have been validly

Except in the case of force majeure,

prohibitions laid down in the BE-

regular mail, fax, or email, at least

notified thereof. A director may

the board of directors may validly

REIT legislation.

24 hours in advance.

also, before or after a board

deliberate and take decisions

meeting which he or she did not

only if at least half its members

In the event of a vacancy on the

In exceptional circumstances, when

attend, waive his or her right to

are present or represented. If

board of directors, the remaining

the above-mentioned convening

claim a defect or irregularity with

this condition is not met, a new

directors shall have the right, acting

deadlines cannot be met, the time

respect to the fulfilment of the

meeting may be called, which

as a board, to temporarily appoint

periods may be shortened. When

convocation formalities. In any

may validly deliberate and take

another director to fill the vacancy

this proves necessary, notice may

case, the proper fulfilment of the

decisions on the items on the

until the next shareholdersâ&#x20AC;&#x2122;

be given by telephone, in addition

convocation formalities need not

agenda of the previous meeting if

meeting, at which time the vacancy

to the above-mentioned means.

be proven when all directors are

at least two directors are present or

present or validly represented and

represented.

will be filled definitively. The meeting is presided over by the

express their agreement with the

The director so appointed shall

chair or, if the chair is absent, by a

agenda.

serve out the term of the director

director appointed by the directors

he or she was appointed to replace.

present. The person presiding

Meetings of the board of

deliberate and vote on the items that are on the agenda.

Barring exceptional cases, the meeting may, in principle, only

over the meeting may appoint

directors may validly be held by

ARTICLE 12: CHAIRPERSON AND MEETINGS

a secretary, who need not be a

videoconference or conference

OF THE BOARD OF DIRECTORS

director.

call. In this case, the meeting will

Pursuant to Article 521 of the

be considered to have been held at

Belgian Companies Code, in

Any director may, by letter, fax,

the companyâ&#x20AC;&#x2122;s registered office if

exceptional cases duly justified by

email or any other written means,

at least one director was physically

their urgency and the corporate

The board of directors shall meet

give a proxy to another member of

present at this location.

interest, the board of directors

when convened by the chair, by

the board to represent him or her

two directors, or the managing

at a given meeting. No member of

The directors may use the

in writing. However, it may not use

director(s), whenever the interests

the board may represent more than

information they acquire in their

this procedure to adopt the annual

The board of directors may appoint a chair from amongst its members.

197

may take decisions unanimously

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198

accounts or determine the use of

are attached to the minutes of the

inform the Financial Services and

which are reserved by law, or these

the authorised capital.

meeting for which they were given.

Markets Authority (FSMA).

articles, to be executed by the

Board decisions shall be approved

Copies of, or extracts from, these

The transactions mentioned in

by a simple majority of votes cast

minutes, which are to be used in

the first paragraph, as well as

The board of directors shall draw

by those directors who are present

legal proceedings or otherwise,

the information contained in the

up the semi-annual report and

or represented or, in the event

shall be signed by the chair of the

aforementioned notice, shall be

the annual report. The board shall

of one or more of them having

board of directors, two directors, or

immediately made public and

appoint one or more experts, in

abstained, by a majority of the

a director entrusted with the daily

explained in the annual report

accordance with the BE-REIT

other directors. In the event of a

management. This authority may

and, if applicable, the semi-annual

legislation, and if applicable,

tie, the director presiding over the

be delegated to a representative.

report.

propose any modification to the

shareholders’ meeting.

meeting shall cast the deciding

list of experts, contained in the file ARTICLE 14: PREVENTION OF CONFLICTS OF

The preceding provisions do not

accompanying its application to be

INTEREST

apply to transactions that fall

recognised as a BE-REIT.

When a director has a conflict

The directors, the person(s) in

outside the scope of application of

of interest and consequently

charge of the daily management,

the conflicts of interest procedure

The board may determine the

does not take part in the board’s

and the company’s attorneys-in-

provided for by the BE-REIT

remuneration of any attorney-in-

deliberations or vote on a particular

fact may not act as a counterparty

legislation.

fact on whom it confers special

decision or transaction, the vote

in a transaction with the company

of this director shall not be taken

or one of its subsidiaries, or

Articles 523 and 524 of the Belgian

into account for the purpose

derive any benefit from such a

Companies Code remain applicable

of calculating the quorum and

transaction, except when the

in full.

majority.

transaction is proposed in the

vote.

powers, in accordance with the BE-REIT legislation. ARTICLE 16: REMUNERATION OF THE DIRECTORS

interest of the company, and the

ARTICLE 15: POWERS OF THE BOARD OF

The directors shall be reimbursed

Decisions of the board of directors

transaction is situated within the

DIRECTORS

for normal, legitimate expenses and

are recorded in minutes, signed

normal course of the company’s

The board of directors is vested

costs incurred in the performance

by the chair of the board, the

strategy, and is conducted in

with the powers to perform all

of their duties, provided that these

secretary, and those members

ordinary market conditions.

acts necessary or useful for the

costs were previously discussed

realisation of the company’s

with and accepted by the chair of

corporate purpose, except those

the board of directors.

who so request. These minutes are kept in a special register. Proxies

In this case, the company must first

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

PERMANENT DOCUMENT I

Moreover, in accordance with

organised in such a way that the

Companies Code, the board of

the management committee, it is

the BE-REIT legislation, no

board of directors has at least two

directors may delegate all or

obliged to designate, in accordance

remuneration may be granted

directors who may jointly ensure

some of its management powers

with the applicable provisions

to directors based on a specific

the daily management or supervise

to a management committee

of the Belgian Companies Code,

transaction of the company or its

the performance thereof.

(“directiecomité”), composed of

a permanent representative to

several members, who need not be

perform its duties in its name and on its behalf.

subsidiaries. The board and the persons

directors, although this delegation

ARTICLE 17: EFFECTIVE MANAGEMENT,

entrusted with the daily

of powers may not concern the

DAILY MANAGEMENT, AND DELEGATION OF

management, within the limits

company’s general policy, with

ARTICLE 19: REPRESENTATION OF THE

POWERS

of their powers, may delegate to

regard to any acts reserved by law

COMPANY

The effective management of the

a representative, who need not

or the articles of association to

The company is validly represented

company must be assigned to a

be a director, all or some of their

the board of directors, or decisions

in all actions, including those

minimum of two persons.

powers pertaining to extraordinary

or transactions to which Article

involving a public official or a notary

or specific questions within the

524ter of the Belgian Companies

public, either by two directors

context of a given assignment.

Code applies, in which case the

acting jointly or, in the context of

notification procedure set forth in

the daily management, by a person

Article 524ter § 2 will apply.

entrusted with such management.

The persons entrusted with the effective management of the company must have the necessary

The board of directors may create

professional integrity and

one or more advisory committees

appropriate expertise to exercise

from amongst its members, subject

The board of directors is

need not produce proof of a prior

their functions, in accordance with

to its responsibility. The board shall

responsible for overseeing

board decision.

the BE-REIT legislation, and may

determine the composition and the

the management committee.

not fall within the scope of the

duties of any such committees.

The board determines the

Moreover, the company is validly

prohibitions laid down in the BE-

199

With respect to third parties, they

management committee’s working

bound by special attorneys-in-fact

REIT legislation.

ARTICLE 18: MANAGEMENT COMMITTEE

procedure and the conditions for

acting within the scope of their

(“DIRECTIECOMITÉ”)

the appointment and removal

mandate.

The board of directors may

Without prejudice to Article 17,

of its members, as well as their

delegate the daily management

concerning the daily management

remuneration and the length of

The company may be represented

of the company to one or more

and the delegation of powers,

their term of office.

abroad by any person expressly

persons, on the understanding that

and within the limits provided for

the daily management shall be

by Article 524bis of the Belgian

authorised to do so by the board of When a legal entity is appointed to

directors.

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ARTICLE 20: AUDIT

auditor(s) and must be called

The company shall appoint one or

each time that the shareholders

more statutory auditors to perform

collectively representing one-fifth

the duties incumbent on them

of the registered capital so request.

pursuant to the Belgian Companies Code and the BE-REIT legislation.

Shareholders’ meetings are held at the company’s registered office, or

The statutory auditor(s) must

at any other location mentioned in

be recognised by the Financial

the notice or otherwise indicated.

Services and Markets Authority (FSMA).

One or more shareholders collectively possessing at least

SHAREHOLDERS’ MEETINGS

3% of the registered capital may,

ARTICLE 21: MEETINGS

in accordance with the provisions

The annual shareholders’ meeting

of the Belgian Companies Code

shall be held each year, on the

and its limits, request the inclusion

penultimate Monday of July, at

of items on the agenda of any

10:00 a.m. If this day is a public

shareholders’ meeting, and submit

holiday, the annual shareholders’

proposals for resolutions on the

meeting will be held on the next

items included or to be included

working day, at the same time.

on the agenda. Additional agenda items or proposed resolutions

An extraordinary or special

must be submitted to the

shareholders’ meeting may be

company no later than on the

convened any time the interests of

twenty-second (22nd) day before

the company so require.

the date of the shareholders’ meeting. The directors shall

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

These shareholders’ meetings

answer the questions put to

may be convened by the board

them by shareholders during the

of directors or by the statutory

shareholders’ meeting, or those

PERMANENT DOCUMENT I

which have been submitted in

mentioned in the Belgian

The notice shall contain the

is subject to the recording of the

writing, about their report or other

Companies Code) and in the

agenda for the meeting, with a

shares in the shareholder’s name

agenda items, provided that the

media in accordance with the

mention of the subjects to be

on the fourteenth day preceding

provision of the information or

requirements of the Belgian

discussed and the proposed

the shareholders’ meeting, at

facts in question could not harm

Companies Code, at least 30

resolutions, as well as the date,

twenty-four hours (Belgian time)

the company’s professional

days before the meeting. If a new

time, and place of the meeting, and

(hereinafter the “record date”), in

interests or undermine their duty

meeting must be convened, and if

the other information required by

either the register of the company’s

of confidentiality to the company.

the date of the second meeting is

the Belgian Companies Code.

registered shares or in the books

As soon as the notice of the

mentioned in the first notice, the

shareholders’ meeting is published,

notice for the second meeting must

The documents which must be

holder or settlement institution,

the shareholders may submit

be published at least 17 days before

made available by law and a copy

without regard to the number

questions in writing, which will

the meeting.

thereof shall be sent pursuant to

of shares actually held by the

the applicable provisions of the

shareholder on the date of the

Belgian Companies Code.

shareholders’ meeting.

be answered during the meeting,

held by an authorised account

provided that they were submitted

The notice shall be sent to the

to the company no later than the

holders of shares, bonds, registered

sixth day prior thereto.

warrants and registered depositary

A shareholder that participates in,

The holders of dematerialised

receipts which have been issued in

or is represented at, a meeting is

shares that wish to take part in

The statutory auditor(s) shall

collaboration with the company,

considered to have received valid

a shareholders’ meeting must

answer the questions asked by the

as well as to the directors and

notice thereof. A shareholder may

produce a certificate issued by

shareholders about his/her/their

statutory auditors within the

also, before or after a shareholders’

their authorised account holder or

audit report.

above-mentioned period before

meeting which he or she does not

settlement institution, certifying,

the meeting; the notice may be

attend, waive his or her right to

as the case may be, the number of

ARTICLE 22: NOTICE

sent by regular mail, unless the

rely on any defect or irregularity

dematerialised shares listed in the

Pursuant to Article 533 of the

recipients have individually and

committed in fulfilment of the

shareholder’s name on the record

Belgian Companies Code, a

expressly agreed in writing to

convening formalities.

date, with which the shareholder

shareholders’ meeting must be

receive the notice by another

convened by means of a notice

means of communication. No proof

ARTICLE 23: PARTICIPATION IN THE

to participate in the shareholders’

published in the Belgian State

need be provided of the fulfilment

SHAREHOLDERS’ MEETING

meeting.

Gazette, a national newspaper

of this formality.

The right to participate in and

(except in those cases expressly

201

has declared his or her intention

vote at a shareholders’ meeting

The certificate must be submitted

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202

to the company’s registered office

one proxy holder for a given

pledge and debtors-pledgees must

to the company by registered letter

or to an institution identified in

shareholders’ meeting, without

be represented, respectively, by one

no later than six days before the

the notice of the meeting, no later

prejudice to the derogations

and the same person.

date of the meeting.

than six days before the date of the

provided for in the Belgian

meeting.

Companies Code.

ARTICLE 25: VOTE BY MAIL

ARTICLE 26: BUREAU

If the board of directors so

Every shareholders’ meeting shall

The holders of registered shares

In order to be valid, any request

authorises in the notice of the

be presided over by the chair of the

that wish to participate in a

to appoint a proxy holder shall

meeting, shareholders may vote

board of directors or, in the chair’s

shareholders’ meeting must notify

include at least the following

on the items on the agenda by

absence, by a director appointed

the company of their intention to

information: (1) the agenda for the

correspondence, using a form

by the directors present or by a

do so, by regular mail, fax or email,

meeting, mentioning the subjects

prepared and made available by

member of the meeting appointed

reaching the company’s registered

to be discussed and the proposed

the company.

by the latter. The chair shall

office no later than the sixth day

resolutions; (2) a request for

before the date of the meeting.

instructions regarding the exercising

The form for distance voting shall

appoint a secretary.

of voting rights for the various

include at least the following

When the number of persons

All shareholders or their proxy

items on the agenda; and (3) an

information: (1) the name or

present so allows, the meeting

holders are obliged, before

indication of the manner in which

corporate name of the shareholder,

shall select two tellers (returning

participating in a meeting, to sign

the proxy holder should exercise

as well as the shareholder’s

officers), further to a proposal of

the attendance list, indicating the

the voting rights, in the absence of

address or registered office;

the chair.

last name, the first name(s), and

instructions from the shareholder.

(2) the number of votes the shareholder wishes to cast at

The minutes of shareholders’

The proxy form must be signed by

the shareholders’ meeting; (3)

meetings are signed by the chair

the address of the shareholder and the number of shares represented.

the shareholder and be submitted

the type of shares held; (4) the

of the meeting, the secretary,

ARTICLE 24: PROXY VOTING

at the company’s registered office,

agenda for the meeting, including

the tellers, the directors, and the

Any shareholders may be

or the location indicated in the

proposals for resolutions; (5) the

statutory auditor(s) present, as

represented at a shareholders’

notice, no later than the sixth day

deadline by which the form must

well as those shareholders who so

meeting by a proxy holder, who

before the shareholders’ meeting.

reach the company; and (6) the

request.

need not be a shareholder. A shareholder may only appoint

shareholder’s signature. The form Co-owners, usufructuaries and

shall expressly state that it must be

The minutes shall be kept in a

bare owners, creditors holding a

signed by the shareholder and sent

special register. Proxies shall

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

PERMANENT DOCUMENT I

remain attached to the minutes of

Unless provided otherwise by law

at the meeting. If this condition

ARTICLE 29: MINUTES

the meeting for which they were

or by provisions of the articles of

is not met, a new meeting must

The minutes of shareholders’

granted.

association, any decision may

be convened, which will validly

meetings are signed by the

be adopted by the shareholders’

deliberate, regardless of the

members of the bureau and by

ARTICLE 27: NUMBER OF VOTES AND THE

meeting by a simple majority of

number of shares represented.

those shareholders who so request.

EXERCISE OF VOTING RIGHTS

the votes cast. Blank and invalidly

Each share carries one vote.

marked ballots shall not be counted

Decisions on the above-mentioned

Copies of, or extracts from, the

when calculating the votes cast.

subjects must be approved by a

minutes, which are to be used in

The holders of bonds and warrants

majority of three quarters of the

court or otherwise, shall be signed

may attend the shareholders’

Decisions regarding approval of

votes cast, without prejudice to

by the chair, the secretary, and the

meeting, but are not entitled to

the company’s annual accounts

other rules of attendance and

tellers or, in their absence, by two

vote.

and discharge of the directors and

majority provided for by the Belgian

directors.

statutory auditor(s) are adopted by

Companies Code, including those in

a majority of votes.

relation to the modification of the

FINANCIAL YEAR - ANNUAL REPORT -

corporate purposes, the acquisition,

DIVIDENDS

ARTICLE 28: DELIBERATIONS AND VOTING The shareholders’ meeting may validly deliberate and vote,

When the shareholders’ meeting is

the pledge, and the transfer of

ARTICLE 30: FINANCIAL YEAR AND THE

without regard to the percentage

asked to deliberate, amongst other

own shares by the company,

ANNUAL REPORT

of registered capital present or

things, on:

the dissolution of the company

The financial years starts on the

when, as the result of losses, the

first of April and closes on the

where the Belgian Companies

- an amendment to the articles,

company’s net asset value falls

thirty-first of March of each year.

Code requires a quorum.

- an increase or decrease of the

below a quarter of its registered

represented, except in those cases

registered capital, The shareholders’ meeting may not deliberate on items that do not appear on the agenda, unless all shareholders are physically present or represented at the meeting and

- the issuance of shares below the accounting par value,

At the end of each financial year,

company into a different corporate

the board of directors shall draw up

form.

un inventory, as well as the annual accounts. The board of directors

- the issuance of convertible bonds Voting shall take place by a show

shall also draft a report, in which

of hands or roll call, unless the

it explains its management of the

shareholders’ meeting decides

company. The statutory auditor

at least half the shares representing

otherwise by a simple majority of

shall draft a detailed written report,

the capital must be represented

votes cast.

in preparation for the annual

or warrants, - the dissolution of the company,

unanimously decide to extend the agenda.

capital, and the conversion of the

203

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204

shareholders’ meeting. These

Any dividends or interim dividends

documents shall be prepared in

distributed in violation of the

accordance with the applicable

law must be reimbursed by the

statutory provisions.

shareholders who received them, if the company can prove that

ARTICLE 31: DISTRIBUTION OF DIVIDENDS

the shareholders in question had

On an annual basis, the company

known, or should have known,

must distribute a dividend to

under the circumstances, that the

its shareholders, within the

distribution made in their favour

permissible limits of the Belgian

was contrary to the statutory

Companies Code and the BE-

requirements.

REIT legislation, the amount of which is prescribed by the BE-REIT

ARTICLE 33: ANNUAL REPORT AND SEMI-

legislation.

ANNUAL REPORT

The company’s annual and semiThe board of directors may,

annual reports, containing the

within the limits of the applicable

statutory and consolidated annual

provisions of the Belgian

and semi-annual accounts, and

Companies Code, distribute an

the statutory auditor’s report, shall

interim dividend from the profits for

be placed at the disposal of the

the financial year and determine a

shareholders, in accordance with

payment date.

the applicable statutory provisions applicable to the issuers of

ARTICLE 32: PAYMENT OF DIVIDENDS

financial instruments admitted to

The dividends that the

trading on a regulated market and

shareholders’ meeting decides

within the BE-REIT legislation.

to distribute shall be paid at the

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

time and place determined by the

The company’s annual and semi-

shareholders’ meeting or the board

annual reports shall be made

of directors.

available on its website.

PERMANENT DOCUMENT I

Shareholders have the right to

the shareholders’ meeting.

205

GENERAL PROVISIONS ARTICLE 36: ELECTION OF DOMICILE

obtain a copy of the annual and semi-annual reports free of charge,

The liquidator(s) is/are obliged

Any director, manager, and liquidator

at the company’s registered office.

to call a shareholders’ meeting

of the company whose domicile is

each time that the shareholders

abroad is deemed, for the purpose

DISSOLUTION - LIQUIDATION

collectively representing a fifth of

of his or her official functions, to

ARTICLE 34: APPOINTMENT AND POWERS

the registered capital so request.

have elected a domicile at the company’s registered office, to

OF THE LIQUIDATORS

In the event of the dissolution of

The shareholders’ meeting

which address all communications,

the company, for whatever reason

shall determine the fees of the

notices, and writs of summons may

and at any time whatsoever, the

liquidator(s).

be validly sent.

one or more liquidators appointed

The liquidation of the company

The holders of registered shares

by the shareholders’ meeting.

shall be closed in accordance

must notify the company of any

The liquidator(s) may only take

with the provisions of the Belgian

change of address; in the absence

office after a confirmation of

Companies Code.

thereof, all communications,

liquidation shall be carried out by

his/her/its/their appointment

notices and writs of summons will

by the commercial court. If no

ARTICLE 35: ALLOCATION OF LIQUIDATION

be validly sent to their last known

liquidator(s) is/are appointed, the

PROCEEDS

address.

members of the board of directors

After settling all debts, expenses

shall be considered liquidators with

and liquidation costs, the net asset

ARTICLE 37: APPLICABLE LAW

regard to third parties.

value shall first be used to pay

Any provision of these articles

back, in cash or in securities, the

of association that is contrary to

The liquidators shall form a

paid-up registered capital that has

the mandatory provisions of the

board (“college”). To this end,

not yet been reimbursed.

Belgian Companies Code and to the BE-REIT legislation shall be

they shall have the broadest powers in accordance with the

Any remaining balance shall be

deemed null and void; the invalidity

applicable provisions of the

divided equally amongst the

of any one of these articles or any

Belgian Companies Code, without

shares.

part thereof shall have no effect on

prejudice to any limits imposed by

the remaining articles.

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206

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MISCELLANEOUS I

207

MISCELLANEOUS O8 O1

STATEMENTS

GLOSSARY - GENERAL

209 210

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I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MISCELLANEOUS I

O1 STATEMENTS

RESPONSIBILITIES

imposed by a judicial or regulatory

the sector, to differ considerably

that significantly alter the scope

body, been banned by a court of

from the expected results,

of any statement made in the

law from serving as a member

performance or accomplishments

annual report;

of a management body, or ever

expressed or implied in the

appeared before a court of law

aforementioned forward-

in the capacity of a director, in

looking statements. Given these

connection with bankruptcy.

uncertainties, investors are advised

- this report makes no omissions

- the abbreviated financial

The board of directors of Retail

statements, which were

Estates nv is responsible for the

prepared in accordance with

contents of this annual report,

the applicable accounting

FORWARD-LOOKING STATEMENTS

subject to information provided by

standards and were thoroughly

This annual report contains

third parties, including reports of

audited by the statutory auditor,

forward-looking statements,

AVAILABILITY OF THE ANNUAL REPORT

the statutory auditor and the real

accurately present the property,

including, but not limited to,

This annual report is available in

estate experts.

the financial condition, and the

statements using such words as

Dutch and French versions.

results of Retail Estates nv and

“believe”, “anticipate”, “expect”,

The board of directors, on the

the subsidiaries included in the

“intend”, “plan”, “pursue”, “estimate”,

This annual report was prepared

constitution of which can be found

consolidation. The management

“can”, “will”, “continue”, and similar

in Dutch. Retail Estates nv

on pages 66 through 69, hereby

report further contains the

expressions. These forward-

checked the translation of, and

declares that, to the best of its

expectations concerning next

looking statements are made

the correspondence between,

knowledge:

year’s results, plus explanatory

in the context of known and

the official Dutch version and

notes on the risks and the

unknown risks, uncertainties and

the French version. The Dutch

uncertainties facing the company.

other factors that might cause

version shall prevail in the event

the actual results, the financial

of contradictions between the

- this annual report accurately presents important events

209

not to rely automatically on such forward-looking statements.

and, where applicable, the

STATEMENTS CONCERNING DIRECTORS

condition, the performance, or the

Dutch and French versions. For

most important transactions

The board of directors of Retail

accomplishments of Retail Estates

information purposes only, the

conducted with affiliated parties

Estates nv hereby confirms that,

nv, Finsbury Properties nv, Distri-

company has published an

in the course of the financial

to its knowledge, none of its

Land nv, Retail Warehousing Invest

electronic version of the annual

year, and the impact of those

directors have ever been convicted

nv, RWI Invest nv, Heerzele nv,

report on the website of Retail

transactions on the abbreviated

of a crime of fraud, been the

Hainaut Retail Invest nv, Blovan

Estates nv (www.retailestates.

financial statements;

subject of any official and/or

nv and Foncière de la Station

com). An English version of the

public accusation, had a sanction

Vervietoise bvba or the results of

annual report is also available on

I R E TA I L E STAT E S I A N N U A L R E P ORT 2 0 1 6 - 2 0 1 7

210

the website. None of the other

float percentage and the velocity

between responsibilities, based

ESTIMATED LIQUIDATION VALUE

information published on the

of circulation of the shares in the

on the recommendations of the

This is the value excluding costs,

website of Retail Estates nv forms

basket.

FSMA and Euronext. In a more

registration charges, fees and

general sense, they are part of

recoverable VAT, based on a

BOOK VALUE OF A SHARE

strict business ethics and require

scenario whereby the buildings

NAV (Net Asset Value) means

compliance with the Belgian Act of

are sold on a building-by-building

equity divided by the number of

2 August 2002.

basis.

part of this annual report.

shares.

DEBT RATIO

EXIT TAX

BULLET LOAN

The debt ratio is calculated as

The exit tax is a special corporate

ACQUISITION VALUE

A loan repaid in its entirety at the

follows: liabilities (excluding

income tax rate applied to the

This is the term to be used for

end of the loan term.

provisions, accrued charges

difference between the fair value of

GLOSSARY - GENERAL

the purchase of a building. Any

and deferred income, hedging

the registered capital of companies

conveyance fees payable are

CHAIN STORES

instruments and deferred taxes)

and the book value of its capital

included in the acquisition price.

These are companies that have a

divided by the total assets

at the time that a company is

central purchasing department and

(excluding hedging instruments).

recognised as a Belgian real estate

BE-REIT LEGISLATION

operate at least five different retail

The Belgian Royal Decree of 13 July

outlets.

2014 implementing the Belgian

investment trust, or merges with

DIVIDEND YIELD

a Belgian real estate investment

The ratio of the most recently paid

trust.

Act of 12 May 2014 on Belgian real

CONTRACTUAL RENTS

gross dividend to the final share

estate investment trusts (BE-

The index-linked basic rents as

price of the financial year over

FAIR VALUE

REITs).

provided in the lease agreements

which the dividend is payable.

This value is equal to the amount for which a building could be

as of 31 March 2017, before

BEL MID-INDEX

deduction of gratuities or other

ESTIMATED INVESTMENT VALUE

swapped between properly

Since 1 March 2005, this has

benefits granted to tenants.

This is the value of the real

informed parties, consenting and

estate portfolio, including costs,

acting under normal competitive

been a weighted price index of shares quoted on Euronext that

CORPORATE GOVERNANCE

registration charges, fees and VAT,

conditions. From the point of view

makes allowance for the stock-

Good governance means

as estimated each quarter by an

of the seller, it must be construed

market capitalisation, with the

adherence to principles such as

independent expert.

minus the registration charges.

weightings determined by the free

transparency, integrity and balance

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

MISCELLANEOUS I

FREE FLOAT

standards starting from the first

NET CASH FLOW

The risk premium is the additional

This is the percentage of shares

financial year beginning after 1

Operating cash flow, EPRA

return expected by the investor for

held by the public. Euronext

January 2005.

earnings (share of the group) plus

the company’s risk profile.

calculates the free float as the

the additions to depreciation,

total number of shares in the

INSTITUTIONAL INVESTOR

impairments on trade receivables,

OUT-OF-TOWN RETAIL STORES

capital, minus the shares held by

An enterprise that professionally

and additions to, and withdrawals

Retail premises grouped along

companies that form part of the

invests funds entrusted to it by

from, provisions, plus the achieved

roads leading into and out of cities

same group, state enterprises,

third parties for various reasons.

higher or lower value relative to the

and towns. Each out-of-town retail

founders, shareholders with a

Examples include pension funds,

investment value at the end of the

store has its own car park and an

shareholder agreement, and

investment funds,…

previous financial year, minus the

entrance and exit road connecting

exit tax.

to the public highway.

shareholders with a controlling majority.

“INTEREST RATE SWAP” (IRS) An “Interest Rate Swap” is an

NET DIVIDEND

PAY-OUT RATIO

GROSS DIVIDEND

agreement between parties to

The net dividend is equal to the

The pay-out ratio indicates the

The gross dividend per share is the

exchange interest rate cash flows

gross dividend after retention of

percentage of the net profit that

operating profit distributed.

during a predetermined period

30% withholding tax.

will be paid out as a dividend to shareholders. This ratio is obtained

of time on an amount agreed

IFRS-STANDARDS

beforehand. This concerns only

OCCUPANCY RATE

by dividing the paid-out net profit

The International Financial

the interest rate cash flows. The

The occupancy rate is calculated

by the total net profit.

Reporting Standards are a set of

amount itself is not swapped. IRS

as the ratio of the surface

accounting principles and valuation

is often used to hedge interest rate

area actually leased out to the

PERIPHERAL RETAIL STORES

rules prepared by the International

increases. In this case, a variable

surface area available for leasing,

Retail premises grouped along

Accounting Standards Board. The

interest rate will be swapped for a

expressed in m².

roads leading into and out of cities

aim is to simplify international

fixed one.

and towns. Each peripheral retail

OLO

store has its own car park and an

MARKET CAPITALISATION

Government bond usually deemed

entrance and exit road connecting to the public highway.

comparison between European listed companies.

211

This is the total number of shares

equivalent to a virtually risk-free

Listed companies are required

at the end of the financial year

investment, and used as such

to prepare their consolidated

multiplied by the closing price at

to mitigate the risk premium

PRICE/EARNINGS RATIO (P/E RATIO)

accounts according to these

the end of the financial year.

compared with listed securities.

This ratio is calculated by dividing

I R E TA I L E STAT E S I A N N U A L R E P ORT 2 0 1 6 - 2 0 1 7

212

the price of the share by the profit

with a shared entrance and exit

per share. The ratio indicates the

road.

number of years of earnings that

would be required to pay back the

RETURN

GLOSSARY - ALTERNATIVE

purchase price.

The total return achieved by

PERFORMANCE MEASURES

the share in the past 12 months

Definition:

The ‘Result on the portfolio’ consists of the following items: - ‘Result on disposals of investment properties’;

REAL ESTATE CERTIFICATE

or (most recent price + gross

3.1 TERMINOLOGY

A real estate certificate is a security

dividend)/price in the previous year.

OPERATING MARGIN

that entitles the holder to a

RESULT ON THE PORTFOLIO

Definition:

- ‘Result on sales of other nonfinancial assets’; - ‘Changes in fair value of

proportionate part of the income

RREC LEGISLATION

The ‘Operating result before result

investment properties’;

obtained from a building. The

The Royal Decree of 13 July 2014

of the portfolio’ divided by the ‘Net

- ‘Other result on portfolio’.

holder also shares in the proceeds

in execution of the Law of 12 May

rental income’.

if the building is sold.

2014 on regulated real estate companies (Belgian REITs).

RETAIL CLUSTER

Purpose: Purpose:

Allows to measure realised and

Allows measuring the operational

unrealised gains and losses related

performance of the company.

to the portfolio, compared to the

A collection of out-of-town retail

SECURITISED REAL ESTATE

properties, located along the

This is an alternative way of

same traffic axis and, from the

investing in real estate, whereby the

FINANCIAL RESULT (EXCLUDING CHANGES

consumer’s point of view, they

shareholder or certificate holder,

IN FAIR VALUE OF AUTHORIZED HEDGING

form a self-contained whole,

instead of investing personally

INSTRUMENTS)

WEIGHTED AVERAGE INTEREST RATE

although they do not possess joint

in the ownership of a property,

Definition:

infrastructure other than the traffic

acquires (listed) shares or share

The ‘Financial result’ minus the

The interest charges (including

axis.

certificates of a company that has

‘Changes in fair value of authorized

the credit margin and the cost of

purchased a property.

hedging instruments’.

the hedging instruments) divided

Retail properties that form part

VELOCITY OF CIRCULATION

Purpose:

of an integrated commercial

Sum of the shares traded monthly,

Allows to measure realised and

complex and are grouped together

relative to the total number of

unrealised financial result.

with other retail properties. All

shares over the past 12 months.

last valuation by independent real

RETAIL PARK

estate experts.

by the weighted average financial

properties use a central car park

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

debt of the current period. Purpose:

To measure the average interest rate of the debt.

MISCELLANEOUS I

NET ASSET VALUE PER SHARE (INVESTMENT

3.2 RECONCILIATION TABLES

VALUE) EXCL. DIVIDEND EXCL. THE

OPERATING MARGIN

FAIR VALUE OF AUTHORIZED HEDGING

(in € 000)

31.03.17

213

31.03.16

INSTRUMENTS

Definition:

Shareholders’ equity (excluding the impact on the fair value of estimated transfer rights and costs resulting from the hypothetical disposal of investment properties, excluding the fair value of authorized hedging instruments

Operating result before result on portfolio (A) Net rental income (B) Operating margin (A/B)

57,584

54,041

66,024

61,680

87.22%

87.62%

FINANCIAL RESULT (EXCLUDING CHANGES IN FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES) (in € 000)

31.03.17

31.03.16

-19,064

-21,774

-869

-4,995

-18,195

-16,779

31.03.17

31.03.16

279

341

13,754

10,216

-144

13,889

10,557

and excluding dividend) divided by the number of shares. Purpose:

Reflects the net asset value per share adjusting for some material IFRS-adjustments to enable

Financial result (A) Changes in fair value of financial assets and liabilities (B) Financial result (excluding changes in fair value of financial assets and liabilities) (A-B)

comparison with its stock market value.

RESULT ON PORTFOLIO (in € 000)

Result on disposals of investment properties (A) Result on sales of other non-financial assets (B) Changes in fair value of investment properties (C) Other result on portfolio (D) Result on portfolio (A+B+C+D)

I R E TA I L E STAT E S I A N N U A L R E P ORT 2 0 1 6 - 2 0 1 7

214

WEIGHTED AVERAGE INTEREST RATE (in € 000)

31.03.17

31.03.16

Interest charges (including the credit margin and the cost of the hedging instruments) (A) Weighted average financial debt of the period (B)

17,404

16,268

501,328

439,081

Weighted average interest rate (A/B)

3.42%

3.64%

NET ASSET VALUE PER SHARE (INVESTMENT VALUE) EXCLUDING DIVIDEND EXCLUDING THE FAIR VALUE OF AUTHORISED HEDGING INSTRUMENTS

(in € 000)

Shareholders’ equity attributable to the shareholders of the parent company (A) Impact on the fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties (B) The fair value of authorised hedging instruments qualifying for hedge accounting (C) Proposed gross dividend (D) Number of ordinary shares in circulation (E) Net asset value per share (investment value) excluding dividend excluding the fair value of authorised hedging instruments ((A-B-C-D)/E)

I RE TA I L E S TAT E S I A N NUAL REPO RT 2016 - 2017

31.03.17

31.03.16

514,970

474,170

-26,703

-24,942

-19,153

-28,155

29,727

28,372

9,008,208

8,866,320

58.96

56.27

MISCELLANEOUS I

215

Information sheet Name:

Retail Estates nv

Status:

Public Belgian Real Estate Investment Trust (“Belgian REIT”) organised and existing under the laws of Belgium

Address:

Industrielaan 6, 1740 Ternat, Belgium

Tel:

+32 (0)2 568 10 20

Fax

+32 (0)2 581 09 42

E-mail:

info@retailestates.com

Website:

www.retailestates.com

Brussels

VAT:

BE 0434.797.847

Enterprise number:

0434.797.847

Date of incorporation:

12 July 1988

Status as fixed-capital real estate investment fund granted:

27 March 1998 (until 23 October 2014)

Status as Belgian real estate investment trust (BE-REIT) granted:

24 October 2014

Duration:

Unlimited

Management:

Internal

Statutory auditor:

PwC Bedrijfsrevisoren bcvba - Woluwegarden-Woluwedal 18 at B-1932 Brussels, represented by Mr. Damien Walgrave

Financial year closing:

31 March

Capital at 05.04.2017:

206,612,347.44 EUR

Number of shares at 05.04.2017:

9,182,612

Annual shareholders’ meeting:

Penultimate Monday of July

Share listing:

Euronext – continuous market

Financial services:

KBC Bank

Value of real estate portfolio as of 31.03.2017:

Investment value EUR 1,097.92 million – fair value EUR 1,071.36 million (incl. value of “Immobilière Distri-Land nv” real estate certificates)

Real estate experts:

Cushman & Wakefield, CBRE and Stadim

Number of properties as of 31.03.2017: 668 Type of properties:

Out-of-town retail real estate

Liquidity provider:

KBC Securities and De Groof Petercam

I R E TA I L E STAT E S I A N N U A L R E P ORT 2 0 1 6 - 2 0 1 7

OPENBARE

GVV-SIR PUBLIQUE

INDUSTRIELAAN 6 B- 1740 TERNAT T. +32 (0)2 568 10 20 F. +32 (0)2 581 09 42 INFO@RETAILESTATES.COM WWW.RETAILESTATES.COM