Leasinvest Real Estate - Interim statement of the manager over the first quarter of the financial year 2016 (01/01/2016-31/03/2016) and report of the extraordinary and ordinary general meetings of ...

Extension of rental contract Strassen in the Grand Duchy of Luxembourg

On 17/03/16 the current rental contract with sitting tenant Roller was extended for a fixed term of 15 years in our retail site of 22,721 m² at the route d'Arlon in Strassen, that will be redeveloped into a shopping center concept,and will comprise, besides shops, a/o a restaurant. The redevelopment will take place in 2 phases in order to take into account the current tenants Adler Mode, Bâtiself and Roller. The reception of the first phase will take place in 2017; the reception of phase 2 is foreseen in 2020. This site will be the largest retail park in the Luxembourg periphery at the entrance of the city of Luxembourg.

Further finishing of the under construction office project Royal 20 in Luxembourg

On 20 April 2015 Leasinvest Real Estate, via its 100% Luxembourg subsidiary, Leasinvest Immo Lux, has concluded a future sales agreement ("vente à terme"), subject to the completion of the building, that was confirmed by a notary deed dated 18 May 2015, for the under construction office project Royal20, located boulevard Royal in the center of the city of Luxembourg in the Grand Duchy of Luxembourg, for an amount of € 62.5 million (excluding VAT)^[2]. The finishing of the office project Royal 20 evolves as planned. The final reception of the office building and the transfer of the property are expected to take place in the second quarter of 2016.

End 2014 a rental contract for the entire building was already concluded with China Merchants Bank for a fixed period of 10 years that will start as of the preliminary reception of the building.

The objective is to obtain a BREEAM 'very good' for this building.

Inclusion of the Leasinvest Real Estate share in the BEL Mid index

Since 21/03/16 the Leasinvest Real Estate share is part of the BEL Mid on Euronext Brussels. In order to be part of this selection, the free float market capitalization of the company that is considered should be higher than the BEL 20 index level at the closing date of the review period, multiplied by 55,000 (cf. www.euronext.com - INDEX RULE BOOK BEL® Family).

2. Important events after the closing of the period 01/01/2016- 31/03/2016

Usufruct agreement concluded with European Parliament for to be redeveloped Montoyer building in 1000 Brussels

On 27/04/2016 a usufruct agreement, for a fixed and irrevocable term of 21 years, was concluded with the European Parliament relating to the office building Montoyer 63 in 1000 Brussels that will be redeveloped. As of the date at which the current lease with the European Parliament ends, the building will be entirely demolished and rebuilt.

The building will comprise 6,052 m² state-of-the-art office space. Montoyer 63 is located in the Leopold district, amidst the European institutions, where there is currently a lack of new high-quality office buildings. The urban permit has been granted at the beginning of 2016 and the objective is to obtain a BREEAM 'excellent' certificate for this building at reception, foreseen in Q3 2018, date at which the usufruct agreement will enter into force.

2. Key figures

(1) The real estate portfolio comprises the buildings in operation, the development projects, the assets held for sale, as well as the buildings presented as financial leasing under IFRS.

(2) Fair value: the investment value as defined by an independent real estate expert and of which the transfer rights have been deducted.

The fair value is the accounting value under IFRS. The fair value of Retail Estates has been defined based on the share price on 31/03/2016.

(3) The investment value is the value as defined by an independent real estate expert and of which the transfer rights have not yet been deducted.

(4) Fair value and investment value estimated by real estate experts Cushman & Wakefield / DTZ Winssinger / Stadim / SPG Intercity.

(5) For the calculation of the rental yield and the occupancy rate only the buildings in operation are taken into account, excluding the assets held for sale.

(6) The occupancy rate has been calculated based on the estimated rental value.

(1) The net current result consists of the net result excluding the portfolio result and the changes in fair value of the ineffective hedges.

3. Consolidated results period 01/01/16- 31/03/16

The first quarter of 2016 is in line with the outlook for Leasinvest Real Estate. 

The rental income has substantially increased in comparison with the same period of last year (+ 12.7%) thanks to the acquisition of the building Tour & Taxis Royal Depot, and amounts to € 14,217 thousand end March 2016 in comparison with € 12,610 thousand end March 2015. At constant portfolio (excluding the impact of purchases and divestments) the rental income remains stable with + 0.6% or + € 73 thousand in comparison with the same period of last year (excl. rental incentives).

The gross rental yields remain unchanged in comparison with end 2015 and amount to 6.88% based on fair value and to 6.75% based on investment value. The occupancy rate amounts to 97.01% (end 2015: 95.80%); an increase explained by the additional lettings of the building Monnet after the reception of the renovation works of end 2015 and a supplementary number of smaller rental contracts (a/o. in the building Riverside).

The fair value^[4] of the direct real estate portfolio has remained nearly identical over the past quarter and amounts to
€ 871.7 million end March 2016 compared to € 869.4 million end December 2015.

The property charges have slightly increased from - € 2.0 million to - € 2.4 million due to increased external management costs on the one hand, and costs and taxes on un-let properties awaiting redevelopment on the other hand.

The portfolio result end March 2016 amounts to - € 2.0 million in comparison with a positive portfolio result of € 4.2 million at the end of March of last year. Last year, the portfolio result at the end of the first quarter was namely positively influenced for € 6.0 million, mainly by the impact of the rise of the Swiss Franc conversion rate on the valuation of the Swiss buildings in the real estate portfolio at that moment. The financial result had equally increased causing that this increase in value was integrally compensated by the negative evolution of the fair value of the financial instruments hedging this exchange risk.

The financial result amounts to - € 2.8 million end March 2016 in comparison with - € 9.7 million for the same period last year. The evolution is explained by a stabilized evolution of the fair value of the assets and liabilities following the slight decrease of the Swiss Franc that has a positive impact on the value of the financial instruments for hedging the exchange rate risk for + € 0.3 million (to compare to - € 6.1 million end March 2015). This effect is integrally compensated by a corresponding negative translation difference on the buildings in Switzerland for - € 0.3 million (included in the decrease of - € 2.0 million mentioned), which results in the fact that the impact on the net and net current result is nil.

The average funding cost decreased at the end of March 2016 and amounts to 2.89% compared to 3.27% end 2015. This is mainly the consequence of the re-financing of a number of bilateral credit lines at lower bank margins on the one hand, and restructuring a number of hedges during the last quarter of 2015 on the other hand.

The net current result^[5] of the first quarter amounts to € 7.1 million (or € 1.43 per share), in comparison with a net current result of € 5.6 million (or € 1.13 per share) end March 2015 (+26%).

The net result, group share stands at € 5.0 million and March 2016 compared to € 3.6 million end March 2015. In terms of net result per share this results in € 1.02 end March 2016 compared to € 0.73 end March 2015 (+39%).

At the end of the first quarter of the financial year 2016 shareholders' equity, group share (based on the fair value of the investment properties) amounts to € 356.4 million (end Q1 2015: € 343.8 million).

End March 2016 the net asset value per share stood at € 72.2 compared to € 69.6 end March 2015. The net asset value per share excl. the influence of fair value adjustments on financial instruments (EPRA) also increases and amounts to
€ 82.2 end March 2016 in comparison with € 78.8 end 2015.

Shareholders' equity decreased end March 2016 to € 356.4 million (31/12/2015: € 362.4 million) following negative changes in the fair value of the effective hedges for - € 11.2 million caused by a decrease of the interest rates over the past quarter.

End March 2016 the debt ratio amounts to 57.68% in comparison with 58.03% end 2015. After the sale of the office project under construction Royal 20, expected before the end of June 2016, the debt ratio will again decrease below 55%.

4. Outlook

Notwithstanding the expected demolition and reconstruction of 2 buildings in the Brussels CBD in 2016 namely the Montoyer 63 building, for which a usufruct agreement was concluded with the European Parliament for a term of 21 years, and the building Square de Meeûs, for which an urban planning permit was recently granted, and except for exceptional circumstances, the company expects, thanks to the acquisition of the Royal Depot at Tour & Taxis end 2015, to realize a higher net result and net current result in 2016 than in 2015 and that the dividend over 2016 can be maintained at minimum at the same level.

II. Report of the extraordinary and ordinary general meetings of 17 May 2016

1. Extraordinary general meeting

After preliminary reading and approval of the report of the Manager drawn up cf. article 604 of the Company Law in conjunction with article 657 of the Company Law, the meeting grants the Manager the largest possible competences in accordance with article 605 and 607 of the Company Law in conjunction with article 657 of the Company Law and articles 26 and 27 of the RREC Law, during a period of 5 years as of the communication of this decision, to increase the capital of the Company in one or more instalments for a maximum amount of 54,314,744.64 EUR, in cash or in kind, as these competences are described in article 7 of the articles of association of the Company, that was amended accordingly.

An authorization is explicitly granted to the Manager to also use these competences for a period of 3 years in the cases intended by article 607 of the Company Law in conjunction with article 657 of the Company Law as of the date of communication by the FSMA of the notification of a public take-over bid.

2. Ordinary general meeting

1. Approvals and discharges

The ordinary general meeting of shareholders of 17 May 2016 has approved the statutory and consolidated annual accounts of Leasinvest Real Estate, closed at 31 December 2015, including the appropriation of the profit, and the remuneration report with regard to the financial year closed at 31 December 2015, which is a specific part of the corporate government statement in the annual report.

The ordinary general meeting of shareholders of 17 May 2016 has also given discharge, by separate vote, to the only and statutory manager, Leasinvest Real Estate Management SA, and its permanent representative Mr Jean-Louis Appelmans, for the execution of the director's mandate, and to the auditor for the execution of his audit in the course of the past financial year.

2. Dividend financial year 2015

The ordinary general meeting of shareholders of 17 May 2016 has decided on proposal of the Manager to pay, on 23 May 2016, a dividend of € 4.70 gross and net, free of withholding tax of 27%, of € 3.431.

Dividends will be paid out as of 23 May 2016 at the financial institutions Bank Delen (main paying agent), ING Bank, Belfius Bank, BNP Paribas Fortis Bank and Bank Degroof Petercam, upon presentation of coupon no 19.

For more information, contact:

Leasinvest Real Estate

Jean-Louis Appelmans

CEO

E: jeanlouis.appelmans@leasinvest.be

Leasinvest Real Estate SCA

Regulated real estate company (B-REIT) Leasinvest Real Estate SCA invests in high quality and well-located retail buildings, offices and logistics buildings in the Grand Duchy of Luxembourg, in Belgium and in Switzerland.

At present the total fair value of the directly held real estate portfolio of Leasinvest amounts to over € 871 million spread across the Grand Duchy of Luxembourg (54%), Belgium (41%) and Switzerland (5%). Moreover, Leasinvest is the largest real estate investor in Luxembourg.

The total portfolio is invested in retail (42.1%), offices (42.3%) and logistics (15.6%).