Brussels and in the Main Belgian Cities, and the Grand Duchy of Luxembourg

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Brussels and in the Main Belgian Cities, and the Grand Duchy of Luxembourg BUILDING STORIES STORIES OF BUILDINGS BEFIMMO ANNUAL FINANCIAL REPORT 2015 YEARS 2003 2007 2009 Acquisition of the Capital increase of Capital increase of Poelaert building €261.2 million €166.6 million First communication as per 2006 2008 Global Reporting Initiative Acquisition of the Acquisition of a (GRI) 2001 90% shareholding in registered offices of Fortis Takeover of Sicafi Fedimmo Banque in Antwerp (Meir) CIBIX SCA and in Leuven (Vital) Prize-winner in the “Exemplary Buildings 1998 2007” competition for the Takeover of WTC SA and Empress Court project Noord Building SA 1997 Takeover of Prifast group 1995 Foundation of Befimmo and listing on the stock market Annual Financial Report on the financial statements and the consolidated financial statements as at 31 December 2015 presented at the Ordinary General Mee- ting of shareholders of 26 April 2016 and adopted by the Board of Directors on 26 February 2016. This Annual Financial Report has been prepared in accordance with the Royal Decree of 13 July 2014. Any reference to the portfolio, assets, figures or activities of Befimmo should be understood on a consolidated basis, to include those of its subsidiaries, except where clear from the context or expressly stated otherwise. For the past few years, Befimmo has been standardising its financial reporting and its reporting on Social Responsibility – with a view to improving the quality and comparability of the information – adopting the EPRA reporting guidelines and GRI- G41 guidelines. The following explanatory icons are used in this Report: “Market” “Glossary” www.befimmo.be GRI-G4 This icon refers to further This icon refers to the This icon refers to further This icon refers to the GRI-G4 information in a specific glossary in the appendix information on the guidelines. The index to the chapter or page in this to this Report on page 210. Befimmo website. GRI content is published on Report. the website of the Company (www.befimmo.be/sites/default/ files/imce/publications/2015/ gri_uk_2015.pdf). 1. www.globalreporting.org 2010 2012 2014 2015 Prize-winner in the Transformation of Status change from Befimmo celebrates its “Exemplary Buildings Befimmo SCA in Sicafi to public BE-REIT 20-year anniversary 2009” competition for a Limited-Liability (Société Immobilière Acquisition of the the Science-Montoyer Company 2013 Réglementée/ Gateway building, let for 2011 Integration of property project Purchase of the First BREEAM Post Gereglementeerde 18 years to Deloitte Start of the Construction and management business Vastgoedvennootschap) “EPRA Financial shares of Ringcenter Acquisition and merger telemonitoring SA (Pavilion) In-Use certification Handover of the Paradis Reporting Gold Award” implementation for Prize-winner in of Blue Tower Louise Tower in Liège, let and “EPRA Sustainability “2011 BREEAM SA energy consumption Award Category the “Exemplary for 27.5 years to the Reporting Gold Award” in the buildings of the Buildings 2012” Contribution in kind of Buildings Agency prizes for the Annual Europe offices” for the AMCA building by portfolio the Froissart project competition for the Award for the best Financial Report 2014 First BREEAM Design WTC IV project AXA Belgium SA Belgian sustainability (since 2010) First EPB ISO 14001 certification certification (Energy report, awarded by the Set-up of an recertification of “Institut des Réviseurs Performance of the Environmental Environmental Buildings) d’Entreprises” (Institute Management System Management System of Registered Auditors (EMS) (ISO 14001 (EMS) – IRE) certified) Completion of Befimmo’s materiality matrix First communication according to the new GRI-G4 guidelines BUILDING STORIES. STORIES OF BUILDINGS. For the past 20 years, Befimmo has been conducting its business not only with vision and expertise but also with passion. The passion of a committed team that develops and manages ambitious real-estate projects. The buildings and the personalities come into contact and their stories become entwined. Who, then, could tell Befimmo’s story better than our staff, through their favourite buildings? MANAGEMENT REPORT Befimmo is a BE-REIT (SIR/GVV). It is subject to the law of 12 May 2014 and the Royal Decree of 13 July 2014 on BE-REITs. Befimmo is a real-estate operator pursuing a specialist (“pure-player”) strategy in office buildings located in Belgium, mainly in Brussels and in the main Belgian cities, and the Grand Duchy of Luxembourg. Its portfolio is worth some €2.4 billion and comprises around a hundred office buildings with space totalling over 850,000 m². “Property portfolio, on page 29” Befimmo offers its tenants quality properties that are flexible, efficient, well equipped and located near major transport hubs. As a specialist in office build- ings, Befimmo offers a personalised and full service (property management, space planning and project management, environmental support and facility management), and provides optimum facilities in its properties (common meeting rooms, restaurant, catering, nursery, fitness centre, etc.) to facilitate the everyday lives of its tenants. By building a relationship of trust with its customers, Befimmo seeks to maintain a high occupancy rate of its portfolio, which generates recur- ring and predictable revenue. Befimmo takes a responsible attitude in carrying out the various tasks inherent in its business of real-estate operator: investment, commercialisation, provid- ing services and facilities, renovation and construction for own account, and disinvestment. It places the challenges of Social Responsibility at the heart of its strategic thinking. “Identity and strategy, on page 18” PROFILE >850,000 m2 €2.4 bn total space portfolio value Befimmo is listed on Euronext Brussels. As at 31 December 2015, its market capitalisation was €1.3 billion. Befimmo offers its shareholders a solid dividend and a yield in line with its risk profile. MANAGEMENT REPORT BEFIMMO — ANNUAL FINANCIAL REPORT 2015 1 THE 20 YEARS OF BEFIMMO PROFILE 2 RISK FACTORS 12 MANAGEMENT REPORT 13 Lettre to the shareholders 16 Key figures 18 Identity and strategy 22 Key events of the 2015 fiscal year 23 Construction, redevelopment and renovation projects 28 Property report 29 Property portfolio 35 Geographical situation of the Befimmo portfolio 36 Buildings of Befimmo’s consolidated portfolio 40 Office property markets 46 Conclusions of the real-estate expert coordinator 50 Financial report 51 Financial structure 54 Financial results 56 Appropriation of results (statutory accounts) 58 EPRA Best Practices 67 Subsequent key events after year-end closing 68 Outlook and dividend forecast 76 Befimmo on the stock market 77 Befimmo share 78 Dividend for the 2015 fiscal year 79 Shareholder structure 79 Key dates for shareholders 82 Social Responsibility 122 Corporate governance statement 152 FINANCIAL STATEMENTS 201 GENERAL INFORMATION TABLE OF OF TABLE 209 APPENDICES 210 Appendix I: Glossary 216 Appendix II: Extracts of the articles of association 226 Appendix III: CSR Action Plan 2016 CONTENTS 237 Appendix IV: Tables on energy and environmental performances 2 RISK FACTORS This chapter covers the identified risks that could affect the Company, including a description of the measures it has taken to anticipate and limit the potential impact of those risks. Note that doing business involves taking risks and so it is not possible to eliminate the potential impact of all the risks identified, nor of any residual risk that therefore has to be borne by the Company and, indirectly, by its shareholders. The current economic and financial climate may accentuate certain risks to Befimmo’s business. This list of risks is based on information known at the time RISK RISK of writing of this Report, though other risks, which may be unknown, improbable or unlikely to have an adverse effect on the Company, its business or its financial situation, may exist. The list of risks in this chapter is therefore not exhaustive. FACTORS MAIN MARKET-RELATED RISKS Risk of segmental and geographical Potential impact Owing to the concentration of its portfolio by segment and concentration geogra phy, the Company is sensitive to developments in the Description of risk Brussels office property market. The Befimmo portfolio is not very diversified in terms of segment and geography. It consists of office buildings, mainly located in Mitigation and control measures Brussels and its economic hinterland (67.7%1 of the portfolio as Befimmo’s investment strategy is focused on quality office at 31 December 2015). The vacancy rate of the Brussels office buildings, with an ideal location, good accessibility and a suffi- market was 10.10%2 as at 31 December 2015 compared with cient critical size, among other factors. Buildings must be well 10.63% at the end of 2014. Befimmo’s portfolio is leased to the equipped and flexible, in an appropriate rental situation and with occupancy rate3 of 94.15% at 31 December 2015 compared potential for value creation. The buildings are located in Belgium, with 94.07% at the end of 2014. mainly in Brussels and in the main Belgian cities, and the Grand Duchy of Luxembourg. In principle, this investment strategy “Glossary” makes the buildings more attractive and hence ensures a better “Property portfolio, on page 29” occupancy rate. This makes Befimmo less sensitive to any deterioration of the market. “Identity and strategy, on page 18” 1. Calculated on the basis of fair value. 2. Source : CBRE as at 31 December 2015. 3. Current rents/(current rents + estimated rental value for vacant space). Calculated on the basis of properties available for lease. BEFIMMO — ANNUAL FINANCIAL REPORT 2015 3 The constancy of Befimmo’s cash flow depends mainly on its Risks related to rental vacancy rental income being secured. The Company therefore strives Description of risks to ensure that a large proportion of its property portfolio is let The office property market is currently characterised by higher on long-term leases and/or to multiple tenants, which helps supply than demand. As at 31 December 2015, the occu- to spread the rental risks. At 31 December 2015, the average pancy rate3 of Befimmo’s portfolio was 94.15% (compared with duration of Befimmo’s leases was 8.6 years.
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