Cofinimmo H1 2013 Results Roadshow presentation 1
Cofinimmo H1 2013 Results Cofinimmo Today • Cofinimmo in a nutshell • Management Team • Track Record • Value Proposition 2
Cofinimmo in a nutshell • Leading Belgian listed Real Estate Investment Trust (REIT) exposed to: ⁻ the Office Property market in Brussels ⁻ Healthcare Real Estate in Belgium, France and the Netherlands ⁻ Property of Distribution Networks in Belgium , France and the Netherlands ⁻ Public-Private Partnerships in Belgium • Total portfolio fair value of > € 3 billion • SICAFI status in Belgium, SIIC status in France and FBI status in the Netherlands • Internal real estate management platform with 110 employees • Total market capitalisation at 30.06.2013: € 1.5 billion • Included in major indices: BEL20, EPRA Europe and GPR 250 3
Management Team Jean Edouard Carbonnelle Françoise Roels Chief Executive Officer Secretary General & Group Counsel Joined Cofinimmo in 1998 Joined Cofinimmo in 2004 Marc Hellemans Xavier Denis Chief Financial Officer Chief Operating Officer Joined Cofinimmo in 2000 Joined Cofinimmo in 2002 4
Track record - 30 years of experience in real estate Sale and Property Sale and Listing on leaseback of Management leaseback of Brussels 283 insurance of Offices 1 068 pubs with Stock branches with internalised AB Inbev Exchange MAAF 1983 1994 1996 1999 2005 2007 2008 2011 2012 First Company First First Sicafi (REIT) healthcare formed with healthcare healthcare status property in the € 6 M of property in property in adopted Netherlands capital Belgium France 5
Value Proposition Cofinimmo’s unique value proposition is to answer specific needs in each of its real estate markets • Corporate and public demand for flexible offices • Elderly and medical care operators demand for nursing homes and clinics • Corporate demand for sale and lease backs of distribution networks • Public authorities’ need for purpose -built facilities 6
Cofinimmo H1 2013 Results Portfolio Today • Investment strategy • Key operational indicators • Lease length & Key tenants 7
Investment strategy Rebalancing the portfolio to maintain high yield/moderate risk profile Monitoring balance sheet Investment Opportunities Asset Rotation and cash flow optimisation Growth focused on Healthcare real Financing investment with debt and Reduction of Office segment down to estate: equity: • 3 core markets in France, Belgium • Regular access to equity capital 40%: • Reconversion to residential and the Netherlands markets • Disposals • Diversification by subsegments and • Capturing investments accretive to operators earnings • Pipeline of € 67 million for 2H 2013-2015 AND Day to day management of Office portfolio Opportunistic investments: Financial Debt: • Internal leasing & property • Property of Distribution Networks management • Diversified sources of funding • Purpose-built facilities for public capabilities • Providing adequate liquidity • Stable occupancy • Debt ratio target ca.50% authorities • Refurbishments for « greener » buildings 8
Key operational indicators (1) Residual lease term of 11.7 years at 30.06.2013 above continental European peers 30.06.2013 31.12.2012 Portfolio of investment properties - fair value (x € 1,000,000) 3,329.4 3,308.6 Residual lease term - Total portfolio (in years) 11.7 11.7 Residual lease term - Office portfolio (in years) 6.9 6.9 Occupancy rate - Total portfolio 95.60% 95.71% Occupancy rate - Office portfolio (*) 91.34% 91.65% Portfolio breakdown Geographical breakdown Walloon Region Others 1.8% 7.9% Property of France 16.0% distribution networks Netherlands Flemish Region 15.9% 21.1% 4.8% Offices 46.0% Healthcare Brussels Region real estate & Periphery 36.3% Belgium 79.3% 50.3% (*) Brussels office market occupancy rate at 30.06.2013 was at 88.9% (Source: DTZ research) 9
Key operational indicators (2) Resilience of property portfolio valuation thanks to diversification of segments Evolution of gross yields since 2010 Balanced portfolio valuation 7.86% 7.69% Unrealised 7.54% 7.44% gain/loss 7,50% 2013 (6m) 7.07% 7.01% 6.98% 6.98% Offices -1.32% 7,00% Healthcare real estate 0.67% 6.70% 6.62% 6.61% 6.61% Belgium 0.43% 6,50% 6.32% 6.33% 6.28% 6.28% France 1.14% Netherlands -0.24% 6,00% Property of distribution 0.08% 2010 2011 2012 Q2 2013 networks Pubstone -0.16% Offices Healthcare PDN Total Cofinimur I 0.98% Others 0.67% Investment in segments with lower property costs Total -0.35% Gross yield (Q2 2013) Direct Costs Net yield (Q2 2013) Offices 7.86% -0.88% 6.98% Healthcare real estate 6.33% -0.02% 6.31% PDN 6.61% -0.16% 6.45% Others 7.03% -0.31% 6.72% Total 7.07% -0.43% 6.64% 10
Lease length and Key tenants Permanent focus on long leases and strong tenant relationships Solid and high quality tenants Average residual lease length until 1 st break option of 11.7 years Share in Master tenant contractual rents 25,0 13.2% AB Inbev HC BE 22.2 PDN 12.4% Belgian Public sector Pubstone 8.9% 20,0 Korian 17.3 8.8% Medica (1) 7.8% Armonea HC NL 14.2 15,0 TOP 5 tenants 49.8% Others 13.5 6.0% Total 11.7 International public sector PDN 5.0% Axa Belgium Cofinimur I 10,0 8.3 3.4% MAAF HC FR 7.3 Offices 6.9 3.2% ORPEA 3.1% Senior Assist 5,0 TOP 10 tenants 69.8% TOP 20 tenants 80.7% Others 19.3% 0,0 Total 100.0% (1) Medica acquired Senior Living Group in July 2013 11
Cofinimmo H1 2013 Results Portfolio segments • Offices • Healthcare Real Estate • Property Distribution Networks • Public Private Partnerships (PPP) 12
Offices TOP 5 TENANTS (As at June 30, 2013) Total aboveground area: 763,573 m² Fair value at 30.06.2013: € 1,531.2 million 1. Belgian Public Sector Offices mainly situated in Brussels with 2. International Public approx. 40% located in Brussels CBD Sector Average lease maturity of office portfolio 3. AXA stands at 6.9 years offering protection from 4. IBM yield shifts in the office market 5. RTL Gross yield at 7.86% on 30.06.2013 Office occupation rate stands at 91.34% at 30.06.2013 outperforming the Brussels office market at 88.9% (source: DTZ) 13
Offices segment strategy Main challenges in the office portfolio, representing 117,000m² or 15% of the office portfolio in fair value: • Woluwe 34: Reconversion of building from offices to residential (74% sold) • Livingstone I: Reconversion of building from offices to residential ( co-developer guarantees fixed price for all units) • Livingstone II: Renovation of office building • Science 15: Renovation of office building (occupied by the European Commission until sept. 2013) • Souverain 23-25: Several options under discussion (building occupied by Axa until 2017 ) For the remaining 85% of the office portfolio, day-to-day management • Stable occupancy rate (95.6% at 30.06.2013) • Long residual lease length (6.9 years at 30.06.2013) • 12% to 15% of total office rent roll at risk every year – in 2012, 70% of the vacancy risk was secured (renewed leases, renegotiations and new leases) Reduction of office segment by active asset rotation, aiming at a dilution to less than 40% of the total portfolio • Reconversions • Disposals • Total portfolio growth For the period 1996-2012, Cofinimmo obtained an average IRR of 8.75% on its office portfolio 14
Offices renovation projects (1) Woluwe 34 (7,000m²) Reconversion of the building from offices to 69 residential units for sale Conversion budget : € 13 million (VAT excl) Permit granted in June 2013 Timing of works: July 2013- January 2015 Target price: € 1,300/m² before conversion costs 74% presold Brussels Region prize: ‘Reconversion en logement d’immeubles de bureaux inoccupés ’ Before works After works (projected situation) 15
Offices renovation projects (2) Livingstone I (17,000m²) Livingstone - after works (projected situation) Reconversion of the building from offices to 122 residential units for sale Co-developer Cordeel guarantees fixed price for remaining units Price obtained: € 24 million ( € 1,400/m²) before conversion costs Timing of works: February 2013 -January 2015 40% presold Livingstone II (17,000m²) Light refurbishment of office building Expected renovation budget : € 13 million (incl.VAT) Science 15-17 - after works (projected situation) Science 15-17 (20,000m²) Creation of a multi-functional building with office /commercial/ residential space Occupied by European Commission until September 2013 Permit application submitted Demolition-Reconstruction budget: € 42 million (incl.VAT) Works will be launched once the permit is granted and a tenant is found 16
Future renovation project- Souverain 23-25 (Axa site) Plot of land « Tenreuken » Livingstone - after works (projected situation) Residential development Building « Souverain 25 » (1970) - 38,500m² Refurbished offices or mixed building Science 15-17 - after works (projected situation) Plot of land « St. Hubert » Residential development Building « Souverain 23 » (1985) - 18,300m² Residential redevelopment 17
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