Leasinvest Real Estate : refocuses on two asset classes and three countries

Leasinvest Real Estate refocuses on two asset classes and three countries:

• strengthening of the position in Austria and in retail by two acquisitions in Vienna
• total divestment of Swiss retail portfolio and
• finalization of divestment of 65% of logistics portfolio in Belgium.

Summary

Mid-October 2017, Leasinvest Real Estate has acquired two important retail parks in Austria, in district no 22 Stadlau of the City of Vienna for an amount of € 56.2 million, strengthening that way its global position in retail and furthering its growth in Austria.

At the beginning of October, the three retail buildings located in Switzerland, in the Vaud Canton, were sold for a global amount of CHF 48 million (€ 41.8 million).

As announced previously, the three Belgian logistics buildings were divested for a total amount of € 60 million, in September and October 2017.

Acquisition retail buildings in Austria

Mid-October 2017, Leasinvest Real Estate, through its Austrian subsidiaries, has acquired 100% of the shares of two Austrian companies, Kadmos Immobilien Leasing GmbH and Adrestos Beteiligungsverwaltungs GmbH. These companies hold respectively a DIY shop Hornbach Baumarkt of 13,300 m² and 10 shops with a global surface of 11,000 m² in a retail park 'Gewerbepark Stadlau' situated in district no 22 Stadlau of the City of Vienna, both very well located retail sites with an important footfall and holding leading positions in the City of Vienna.

The value of these two buildings amounts to € 56.2 million, which is lower than the fair value defined by our real estate expert. The average duration of the rental contracts is 9.3 years. The different indexed rental contracts are signed with renowned international and local retailers, among which the most important are Hornbach Baumarkt, Lidl, Intersport, DM (drugstore), CCC (shoes) and TK Maxx (clothing). The global occupancy rate stands at 100% and represents a total annual rent of € 3.2 million for the two sites.

This acquisition is financed, on the one hand, by the partial divestment of our logistics portfolio and, on the other hand, by the integral divestment of our Swiss retail portfolio (see below). A good example of the capital recycling principle followed by Leasinvest throughout its strategy for over 10 years, constantly improving the quality of its real estate portfolio, by divesting less strategic buildings and replacing them with better performing and/or located core buildings.

Thanks to the acquisition end 2016 of the retail park Frun Park Asten located in Linz (Austria), since its creation end 2013 registering a 20% annual footfall growth, the portfolio of Leasinvest Real Estate in Austria currently amounts to nearly
€ 100 million, or 10% of the global portfolio.

Jean-Louis Appelmans, CEO: "The Austrian real estate market becomes for Leasinvest the third core market, representing a stable market where we can develop our strategy and seize real estate opportunities, that way creating a stable income with capital gain possibilities".

Strategic divestment of Swiss portfolio

At the beginning of November 2014 Leasinvest Real Estate had acquired three shops situated in the periphery, located in Etoy, Villeneuve and Yverdon-les-Bains, all in the Vaud Canton, for an amount of CHF 45 million, based on a gross initial yield of over 6%. At the beginning of October 2017 these same 100% let buildings were sold to an important Swiss private investor for a global amount of CHF 48 million on the basis of a gross yield slightly over 5%.

After nearly three years, the Swiss portfolio could not have been increased following the rise of the Swiss franc at the beginning of 2015, which had an immediate impact of strongly negative interest rates spurring local real estate players to invest their funds in Swiss real estate resulting in continuously decreasing real estate yields. These reasons made Leasinvest prefer investing in Austria to Switzerland.

Before Swiss capital gain taxation and sales costs, the divestment of these three buildings results in a slight capital gain compared to the initial acquisition value.

The original acquisition end 2014 was financed through bank loans in EUR converted by 'Cross Currency Swaps' (CCS) in CHF and at a fixed CHF rate for 10 years, which had to be prematurely cancelled at the moment of the divestment as these CCS had become redundant following the sale of the underlying Swiss assets.

Divestment of an important part of the logistics portfolio in Belgium

As announced previously, an agreement for the divestment of three logistics buildings had been concluded, and three leaseholds were concluded in September and October 2017 on behalf of a German real estate fund for an amount of € 60 million. This related to buildings located in Wommelgem, Canal Logistics phase 1 and the SKF site in Tongres. The global value of the transaction is in line with the fair value defined by the real estate expert.

The building located Prins Boudewijnlaan in Kontich had been sold under a forward sales contract last June to a private Belgian developer for an amount of € 12 million. The sales proceeds will be received end December 2017, meanwhile Leasinvest Real Estate continues to collect the rent of this 100% leased building.

Following these divestments, the Belgian logistics part will only comprise some warehouses located at the Riverside Business Park in Anderlecht (Brussels) and at Brixton Business Park in Nossegem/Zaventem, together with the State archives in Bruges.

Leasinvest Real Estate will have divested € 74 million in 2017, or 65% of its global Belgian logistics portfolio valued at
€ 111 million (on 30/06/2017). The logistics percentage will drop from 14% (on 30/06/2017) to approximately 7%.

Jean-Louis Appelmans, CEO: "The focus on two assets classes, retail buildings in Luxembourg and Austria, and offices in Luxembourg and Belgium, is a source of value creation and strengthens our efficiency." 

Acquisition and lease in the Grand Duchy of Luxembourg

The four remaining shops of the shopping centre located in the city centre of Diekirch were acquired by our Luxembourg subsidiary Leasinvest Immo Lux SA for an amount of € 0.8 million, resulting in all commercial spaces currently being held by the latter.

The occupancy rate of our building Mercator situated Route d'Arlon in the City of Luxembourg, acquired last May, reaches 60% thanks to an additional floor let. Advanced negotiations with potential tenants are ongoing and are expected to be finalized by year-end in order to let the rest of the building.

Evolution of debt ratio

Taking into account the important investments and divestments announced of respectively € 83 million and € 115 million, Leasinvest Real Estate's debt ratio should fluctuate between 57% and 59% by end 2017.

For more information, contact
Leasinvest Real Estate                                                                      Leasinvest Real Estate
Jean-Louis Appelmans                                                                         Michel Van Geyte                                                
Chief Executive Officer                                                                       Chief Investment Officer
T: +32 3 238 98 77                                                                              T: +32 3 238 98 77
E: jeanlouis.appelmans@leasinvest.be                                         E: michel.van.geyte@leasinvest.be                                 

On LEASINVEST REAL ESTATE SCA
Public BE-REIT (SIR/GVV) Leasinvest Real Estate SCA invests in high quality and well-located retail buildings and offices in the Grand Duchy of Luxembourg, Belgium and Austria.
At present the total fair value of the directly held real estate portfolio of Leasinvest amounts to € 901 million on 30 October 2017, spread across the Grand Duchy of Luxembourg (52%), Belgium (38%) and Austria (10%).
Moreover, Leasinvest is one of the most important real estate investors in Luxembourg.
The public BE-REIT is listed on Euronext Brussels and has a market capitalization of over € 471 million (value 30 October 2017).