Retail Estates : 20/11/2017 - Interim press release - Half-yearly result of 30 September 2017

Interim press release - regulated information

Ternat, 20 November 2017

HA LF-YE A R L Y RE SULT OF 30 SEPTEMBER 2017

Epra res u lt in cre a ses by 18.62% to EUR 21.98 milli o n

Th e fa ir value o f th e real esta t e portfolio i n crea ses to 1,152.55 mi o EUR Th e avera g e interest ra te decrea sed to 2.86% (compa red to 3.42% o n

31 March 2017)

Occupancy Rate: 98.21%

The pr op osed di viden d o f EUR 3. 4 0 1 EUR confirmed

Half-yearly repor t 2017-2 018 avai lable

1 The dividend prognosis for the financial year 2017-2018 as mentioned in the annual report 2016-2017 (p. 48)

1. HALF-YEARLY RESULTS

2. REPORT ON ACTIVITIES FOR THE FIRST HALF OF 2017-2018 FINANCIAL YEAR, CLOSED ON 30 SEPTEMBER 2017

3. Rental income and occupancy rate

   Rental income in the first half of the financial year amounted to EUR 36.24 million, an increase of 11% with respect to the comparable semester in the 2016-2017 financial year. Rental income then was EUR 32.51 million. This increase is almost entirely attributable to the growth of the real estate portfolio.

   The occupancy rate on 30 September 2017 was 98.21%, compared to 98.13% on 31 March 2017.

4. Fair value of the real estate portfolio

   The fair value of the real estate portfolio is EUR 1,152.55 million. Based on the contractually owed rent, rent return (versus investment value) on the portfolio as determined by the real estate experts amounts to 6.68%.

   The stability of the value of out-of-town retail property (mainly retail parks) is largely explained by the continuing interest in investing in this type of real estate by wealthy individuals and institutional investors of domestic and foreign origin. Retail Estates nv itself experienced this in the realisation of its annual recurring disposal programme.

   As at 30 September 2017, the real estate portfolio consists of 724 properties with a lettable surface area of 837,763 m².

5. Investments - retail parks

   Retail Estates is expanding its investments into the Netherlands through the purchase of 5 retail parks. These retail parks are intended for high-volume retail trade (mainly home decoration) and are mainly leased to retail chains active in home furnishing. There are 51 retail spaces in total. Since Retail Estates foresees the same "hands-on" approach that is behind its success in Belgium, work is currently being done on the launch of a Dutch headquarters. In order to stay in touch with the market and close to the tenants, commercial activities will be directed by a Dutch property management.

   Consumer spending has continued to increase over the last three years in the Netherlands. The low unemployment rate and the strong economic growth of the Dutch economy follow years of "draconian" austerity measures that brought government finances and social security in balance, but also sent retailers to unprecedented lows in the period 2008-2013. Today, according to the most recent quarterly report of public service CBS, consumer confidence is at its highest point in the last 10 years. In particular, the residential real estate market is reaping the benefits, causing purchases in home furnishing goods to peak. Investments in the out-of-town shopping market are recovering strongly as a result of the better prospects announced by retailers. For its 17 million inhabitants, the Netherlands counts around 200 out-of-town locations where high-volume retail is allowed. A strict urban planning framework limits the number of retail parks, but also the type of trade that may be exploited. For example, in contrast to Belgium, trade in foodstuffs, clothing and shoes was prohibited, but the fragmentation of shops along major roads was also prevented in time and guided into well-accessible retail parks. The entry of international institutional

   investors into the acquisition of this type of real estate is at an early stage. For more information we refer to our press release of 3 July 2017.

   In the meantime, several investment opportunities were identified on the Dutch retail market. Additional investments in the course of the fiscal year will most probably occur in The Netherlands rather than in Belgium. The available investment capacity allows to realize these investments with additional resources from bank financing and/or bonds to be issued.

6. Disposals

   In the past six months, properties were divested for a net sale price of EUR 1.89 million. A limited decrease in value of EUR -0.01 million was realised on these disposals.

   These disposals find their context in an annual recurring disposal programme of individual retail buildings that do not belong to Retail Estates nv's core portfolio due to their location, shop size and/or commercial activity .

7. Implementation of the financing strategy

   Retail Estates combines bilateral credits at different banking partners with private placements of bonds for institutional investors. The average maturity of the loan portfolio is 4.33 years. In the context of the financing of its activities, Retail Estates has been offering a commercial paper programme of (up to) 50 million euro since September 2017. The commercial paper is fully covered by back-up lines and unutilised credit lines that serve as a guarantee for refinancing should the placement or renewal of the commercial paper prove infeasible or only partially possible.

   The average interest rate on 30 September 2017 was 2.86%, compared to 3.42% on 31 March

   2017.

   Moreover, the board of directors, held on 20 November 2017 instructed the management committee to organize a private placement for a bond loan of 100 mio EUR maximum. This issuance serves to further diversify the funding sources and the extension of the average duration of the credit portfolio.

8. Capital increases in the context of authorised capital

   On 5 April 2017, 174,404 new shares were issued by contribution of the remaining debt claim relating to the purchase of the shares of the real estate company Hainaut Retail Invest, which owns 25 retail buildings spread throughout the Province of Hainaut. Following this issue, the registered capital of Retail Estates was increased to EUR 206,612,347.44, represented by 9,182,612 shares. The new shares will share in the company's profit from 1 April 2017.

   As mentioned under 1.3, the acquisition of the Dutch real estate portfolio was partly realised through the issue of new shares. These shares were issued by the board of directors on 29 June 2017 in the context of the authorised capital at an issue price of EUR 65. They share in profit from the start of the 2017-2018 financial year that has been in progress since 1 April. As a result of this capital increase, 200,000 shares were issued, bringing the total number of shares on 30 September 2017 to 9,382,612.

9. SUBSEQUENT EVENTS

10. Libramont & Jemeppe-sur-Sambre

    On 31 October 2017, Retail Estates nv acquired exclusive control of the company Prometra BVBA. This company owns 2 retail spaces in Libramont and 1 in Jemeppe-sur-Sambre. The shops yield annual rental income of EUR 0.18 million. The investment in this transaction amounts to EUR 2.85 million.

    The above acquisition was made at a valuation that corresponds to the fair value of the relevant shops or retail buildings, as determined by real estate experts CBRE or Cushman & Wakefield.

11. ANALYSIS OF THE RESULTS

Half-year results 30 September 2017: EPRA earnings for the Group2 increased by 18.62% compared to 30 September 2016 - fair value of the real estate portfolio increased to EUR 1,152.55 million.

On 30 September 2017, EPRA earnings (this being the profit before the portfolio results and without the changes in fair value of financial assets and liabilities) amounted to EUR 21.98 million, an increase of 18.62% compared to the same period last year.

Net rental income rose from EUR 32.21 million to EUR 36.14 million. This is mainly due to the contribution of the retail buildings purchased during the previous financial year, which are contributing 100% for the first time this financial year. Compared to 30 September 2016, the real estate portfolio grew by EUR 136.24 million. Compared to 31 March 2017, the portfolio grew by EUR

81.19 million

After deduction of property costs, this results in an operating property result of EUR 33.19 million compared to EUR 29.53 million last year

Property costs amounted to EUR 2.61 million compared to EUR 2.39 million in the previous year, mainly due to the increase in technical and commercial costs. Operating corporate costs amounted to EUR 2.01 million, an increase of EUR 0.56 million compared to last year. After deduction of the operating corporate costs, Retail Estates nv achieved an operating result before result on portfolio of EUR 31.18 million. The operating margin was 86.29%.

The result from the disposals of investment properties was EUR -0.01 million on total sales of EUR 1.89 million. Changes in the fair value of investment properties amount to EUR 0.77 million and can be explained by the positive impact of indexations and contract renewals on the one hand, offset by the reduction in transfer taxes for determining the fair value of investment properties on the other hand. The 'other' result on portfolio amounts to EUR 0.27 million and includes mainly deferred taxes relating to the Dutch portfolio.

The financial result amounted to EUR -7.91 million. Net interest costs were EUR -8.54 million, representing a decrease of EUR 0.58 million compared to last year. Interest charges increased due to the inclusion of additional financing. However, this impact was offset by the decrease in the

2 Retail Estates nv and its subsidiaries.