Message of the Chairman and the CEO
Open minds, open spaces:
a new identity, a lot more than just words.
This evolving identity is the outward sign of a profound change in our approach to business that began a few years ago.
On the basis of the United Nations Sustainable Development Goals, the entire Befimmo team has been organised to proactively consider the most important societal issues in our line of business, and has defined its strategic priorities: environmentally-friendly mobility, buildings properly integrated into the city, work spaces in symbiosis with the world of work, a continuing dialogue with all our stakeholders, an exemplary contribution to positive change in society and appropriate use of resources in applying the principles of eco-design and the circular economy at each stage of a building’s life cycle. This approach incorporates a thrust for innovation that can anticipates the needs and expectations of our tenants.
Our tenants too are facing quick changes in their business models. We aim to listen to their expectations in terms of flexibility, accessibility, user-friendliness, facilities and services, participation in a community, multi-functionality and respect for the environment, all very topical issues for all of us.
Aware of these issues, tenants are now choosing a real-estate partner who can offer solutions that go beyond simply selecting a building. Befimmo is that partner.
Our new logo, with a window open to the outside world, reflects the interaction between the Befimmo team and the world in which we operate. This is the highly motivating reality of our company.
An example of this is the strategic partnership that we have forged with Silversquare, the leading Belgian operator of co-working centres. There is no doubt that the co-working model will spread quickly, both for companies wanting to take advantage of the dynamic effect of networking and the spirit of innovation, as well as for the growing numbers of self-employed people, start-ups and small businesses, which will find huge added value in breaking out of their isolation and working in a community.
As a co-working operator, associated with a specialist pioneer of the model in Belgium, Befimmo is positioning itself in this new fast-growing market, differentiating itself from the competition through its know-how in community animation, and accelerating its development towards the office of the future. The first coworking space, measuring 4,000 m², will open in -April 2018 in our Triomphe building in Brussels, chosen for its excellent location near the universities of Brussels and the new Chirec hospital. And new spaces are already in preparation so that we can quickly offer a network to our tenants and future customers.
We would also mention our work within the Up4North association (www.labnorth.be) of which Befimmo was a very active founder. The association’s mission is to give renewed impetus to the North area, who is progressively but significantly evolving from "conventional mono-functional offices" into a one of a more vital and assured multi-functional area. A discussion forum and think-tank (Café North) is open to stakeholders. An urban development college, architecture practices, artists and start-ups are moving into spaces (Lab North) that we have made temporarily available in Tower 1 of the WTC.
In this way, the North area, benefiting from the presence of the Brussels North railway station, as the extension of the historic centre of Brussels, will gradually become a pleasant, lively and friendly city district in its own right. We also have a project for redeveloping WTC Towers 1 and 2 into a multifunctional complex. We will be regularly revisiting this subject since the countdown for the departure planned at the end of 2018 of the tenant, the Belgian Government, is well under way.
As planned, the Administration of the Flemish Community vacated the Noord Building early in the year. We have obtained all the permits for the Quatuor project which is to replace it, in which, a third of the space is pre-let. The demolition / reconstruction work has just begun. The brand-new building is scheduled for hand-over around mid-2020.
For the 2017 financial year just ended, Befimmo posted solid results in terms of its EPRA earnings (cash flow) of €3.74 per share, higher than forecast (€3.63), and its net result (€5.32 per share), well up thanks to the capital gain on the opportunistic disposal of the Brederode complex and overall stability in values (fair value as per IAS 40) of the portfolio.
2017 has been a very successful year in terms of take-up in our operational buildings (Central Gate, Axento, Media, etc.) and projects (Quatuor). More generally, Befimmo concluded new leases or renewed current leases for more than 58,000 m² while overall take-up on the market was 381.305 m².
Always on the lookout for growth opportunities with potential added value, Befimmo has expanded its portfolio to include Arts 56, a building of character alongside the Brussels inner ring road at Place du Trône. It has already been contributing to the cash flow since the beginning of 2018.
These robust results enable us to propose a final dividend of €0.86 gross per share to the General Meeting on 24 April. As expected, after the interim dividend of €2.59 gross per share paid out in December 2017, the dividend for the year will be €3.45 gross per share. The return on the share price in 2017 is 6.98%.
As for the international context and the economic environment associated with it, we were concerned last year by the period of uncertainty that was beginning in Europe with the upcoming elections in France, the Netherlands and Germany.
A year on, we are going forward with confidence in a much more positive economic environment with our new projects in the North area, the Quatuor and the redevelopment of WTC Towers 1 and 2. Their high quality, the scarcity of immediately availability "Grade A" buildings on the Brussels market and the fierce but relatively limited competition should accelerate their take-up by corporates and institutions wishing to switch to smart ways of working, and keen to benefit from the opportunity we are offering them. Our particularly well-managed level of debt also enables us to approach the financing of these projects with confidence. As these two large Befimmo buildings have reached the end of their first life cycle almost simultaneously, there is inevitably a negative, but temporary influence, on a like-for-like basis, on future EPRA earnings.
In that respect, we think it is important to reiterate our messages from February and September of last year. While it should not be seen as a commitment, Befimmo's large distributable reserves could be used to supplement the more moderate EPRA earnings while these projects are being redeveloped in order to ensure the sustainability of the current dividend policy.
Accordingly, for the 2018 financial year, we are once again forecasting a dividend of €3.45 gross per share.
On behalf of the Board of Directors, the Management Committee and our entire team, we are very grateful for your confidence in us and assure you that we are motivated and enthusiastic about the challenges that lie ahead.
Brussels, 8 February 2018
Benoît De Blieck
Chairman of the Board of Directors
For more information, please see the press release of 16 February 2017 and 18 September 2017 (http://www.befimmo.be/en/investors/publications/press-releases).