vastned retail belgium - annual report 2014

Retail Belgium

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14

ANNUAL REPORT

2014

Retail Belgium

3

VASTNED RETAIL

BELGIUM

• isapublicregulatedrealestatecompanyunderBelgianlaw

• thesharesarelistedonEuronextBrussels

• specialisesininvestmentsincommercialrealestate:inner-cityshopsandretailwarehousesontoplocations

• focusesonaninvestmentpolicybasedoncommercialrealestate,withrespectforcriterionsofriskspreadintherealestateportfolio,relatingtothetypeofbuildingaswellastothegeographicspreadandthesectorofthetenants

• isprovidedwithahealthyfinancialstructure

Turnhout, Gasthuisstraat - 1.269 m2

4

68%INNER-CITY SHOPS

58%INNER-CITY SHOPS

31.12.2014

31.12.2013

31.12.2014

31.12.2013

32%RETAIL WAREHOUSES

42%RETAIL WAREHOUSES

+ 10%

RISKSPREADOFTHEREALESTATEPORTFOLIO

Typeofretailproperty

Achievement of the stated strategy to invest 65% of the real

estate portfolio in inner-city shops.

As at 31 December 2014, 68% of the real estate portfolio

consists of inner-city shops (58% as at 31 December 2013).

As at the end of 2014, 49% of the entire portfolio has already

been invested in “premium city high street shops”, i.e. prime

retail properties located on the best shopping streets in the

major cities of Antwerp, Brussels, Ghent and Bruges.

Further intensification of the strategy by focussing on

premium city high street shops.

5

Key figures

Occupancyrate

Increase in the occupancy rate in 2014 by 2,5% to 97,9%

as at 31 December 2014 via leases and divestments in

properties with a lower occupancy rate.

Totalleasablespace(m2)

31.12.2014

97,9% 95,4%

31.12.2013 31.12.2014

98,5% 96,0%

31.12.2013

OCCUPANCY RATE (%) OCCUPANCY RATE (%)EXCLUSIVE PROPERTIES IN RENOVATION

31.12.2014

111.594 m² 146.962 m²

31.12.2013

6

Fairvalueofinvestmentproperties

In 2014, with an unchanged compo-

sition of the real estate portfolio with

respect to 31 December 2013, the fair

value of the existing real estate port-

folio increased by 3%, mainly due to

the stronger yields of Vastned Retail

Belgium’s properties in prime loca-

tions in the larger cities.31.12.2013

€ 362million

€ 357million

31.12.2014

RISKSPREADOFTHEREALESTATEPORTFOLIO

Ghent, Veldstraat - 2.690 m2

Acquisition of an inner-city shop in a

prime location on Veldstraat in Ghent

in July 2014 for an investment amount

of € 27,7 million.

Divestment of 19 non-strategic retail warehouse properties

and inner-city shops in secondary locations with a total fair

value of € 42,9 million (12% of the real estate portfolio).

ACQUISITIONOFANINNER-CITYSHOPGHENT

DIVESTMENTOF19NON-STRATEGICRETAILWAREHOUSEPROPERTIESANDINNER-CITYSHOPS

EVOLUTIONOFFAIRVALUEOFINVESTMENTPROPERTIES

7

Key figures

Geographicspread

Sectoroftenants

15%BRUSSELS

13%WALLOON REGION

72%FLANDERS

63% 13% 10% 6% 5% 3%

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The debt ratio amounts to only 31% as at 31 December 2014.

KEYFIGURESPERSHARE 31.12.2014 31.12.2013

Numberofshares 5.078.525 5.078.525

Netvalue(fairvalue)(€) 47,81 46,37

Netvalue(investmentvalue)(€) 49,59 48,13

Sharepriceonclosingdate(€) 57,97 52,40

Premiumtonetassetvalue(fairvalue)(%) 21% 13%

STRONGBALANCESHEET:DEBTRATIO31%

31.12.2014

242.967

119.447

235.467

129.566

31.12.2013

Shareholders’ equity (€ 000)

Liabilities (€ 000)

Debt ratio

31% 34%

Antwerp, Leysstraat - 528 m2

9

Key figures

POSITIVERESULTSIN2014

Rentalincome:€22,0milion

Realisation of 27 rental transactions

representing approx. 16% of the total

annual rental income, resulting in an

average increase in rent of 5%.

Grossdividenddistribution:€2,72pershare

The gross dividend increases

to € 2,72 per share in 2014

(€ 2,65 for financial year 2013).

2013

€ 22,0million

2014

€ 21,7million

20132014

€ 2,65€ 2,72

10

inthousands€ 2014 2013

Operatingdistributableresult 13.801 13.448

Resultonportfolio 7.927 -2.911

Changesinfairvalueoffinancialassetsandliabilities(non-effectivehedges-IAS39)andothernon-distributableelements

-1.240 1.657

Net result 20.488 12.194

RESULTPERSHARE 2014 2013

Numberofsharesentitledtodividend 5.078.525 5.078.525

Netresult(€) 4,03 2,40

Grossdividend(€) 2,72 2,65

Netdividend(€) 2,0400 1,9875

DIVIDENDYIELD

As at 31 December 2014 the share price of Vastned Retail

Belgium is € 57,97, offering a gross dividend yield of 4,7%.

EVOLUTIONSHAREPRICE

RESULTS2014

€60

58

56

54

52

50

48

Jan 14

Feb 1

4

Mar

14

Apr 14

May

14Jul 1

4

Aug 14

Sep 14

Jun 14

Nov 14

Oct 14

Dec 14

11

Key figures

EPRA-KEYFIGURES 2014 2013

EPRAEarnings(€pershare) 2,72 2,66

EPRANAV(€pershare) 48,71 47,08

EPRANNNAV(€pershare) 47,74 46,32

EPRANetInitialYield(NIY)(%) 4,9% 5,2%

EPRATopped-upNIY(%) 5,1% 5,4%

EPRAVacancyrate(%) 1,5% 4,1%

EPRACostRatio(includingdirectvacancycosts)(%) 17,3% 15,8%

EPRACostRatio(excludingdirectvacancycosts)(%) 16,3% 15,1%

FINANCIALCALENDAR

The change to the status of regulated real estate company

(RREC) is approved by the general meeting of shareholders on

27 October 2014.

EPRA1

1 Financial performance indicator calculated according to Best Practices Recommandations of EPRA (European Public Real Estate

Assocation). See also www.epra.com.

DEC JAN FEB

Announcement of annual results as at31 December 2014

Tue 10

MAR APR

General meeting of shareholders

MAY

Interim statementon the results as at 31 March 2015

Tue 5

JUN JUL

Half-yearly financial statement as at 30 June 2015

Thur 30

AUG SEP OCT

Interim statement on the results as at30 September 2015

Tue 27

NOV DEC

Wed 29 at 14.30

Record date dividend 2014 Wed 6

2014 2015

Ex dividend date 2014Tue 5

Dividend payment 2014 as of Thur 7

12

Antwerp, Meir - 583 m2

13

Letter to the shareholders 14

Report of the board of directors 17

Profile 18Investmentpolicy 19Corporategovernancestatement 21

Report of the management committee 41

Theretailpropertymarketin2014 42Importantdevelopmentsin2014 44Financialresults 52Financialstructure 58Allocationofprofits2014 61EPRABestPractices 62Outlookfor2015 68

Report on the share 71

Stockmarketinformation 72Dividendandnumberofshares 76Shareholders 77Financialcalendar2015 77

Property report 79

Compositionoftheportfolio 80Overviewoftheportfolio 83Evolutionoftheportfolio 84Valuationoftheportfoliobypropertyexperts 85

Financial report 87

Index 89Consolidatedincomestatement 90Consolidatedstatementofcomprehensiveincome 91Consolidatedbalancesheet 92Statementofchangesinconsolidatedequity 94Consolidatedcash-flowstatement 96Notetotheconsolidatedannualaccounts 97Statutoryauditor’sreport 140StatutoryannualaccountsVastnedRetailBelgiumsa142

General information 147

Identification 148Extractfromthearticlesofassociation 152Statutoryauditor 154Liquidityprovider 154Propertyexperts 156Regulatedrealestatecompany-legalframework 156Statementtotheannualreport 157

Terminology 158

CONTENTS

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2 The market information in this text is based on Cushman & Wakefield, Vastned Retail Belgium Portfolio 31 December 2014,

market overview p. 12 - 18; CBRE Belgium Retailer Survey 2014, p. 2 - 5; CBRE interview Kim Verdonck, dated 14/1/2015 and

CBRE’s annual review of retail activity in 2014 and trends for 2015, p. 46-47.

LETTERTOTHESHAREHOLDERS2

DearShareholder,

In2014,VastnedRetailBelgiumhassucceededinfurtherimplementingitsstrategyforrentincreasesvialeaseextensions,aswellasinexpandingtheshareofinner-cityshopswithintheportfolio.

Despitesignsofslowedgrowthinrecentyears,theBelgian retail real estate market continuestoperformfairlywell.However,thereisamixedsentimentwithintheretailrealestatemarket,thatisevolvingatdifferent speedswithinitssub-segments.Meanwhile,thedegreetowhichprimelocations(bothretailwarehousesandinner-cityshops)areabletowithstandthesechangingmarketconditionsclearlydiffersfromthatforthesecondarylocations.

Theturnoverofmanyretailershasdeclinedinrecentyears,dueinparttothefactthattheydidnot,ordidnotenough,anticipatetheincreaseinonlinesalesandtheprotractedeconomiccrisis.Thishasresultedinasubstantialdeclineintheirneedtoleaseneworadditionalunits,andthisisreflectedindownwardpressureonrents.Theprimehighstreetsinthemajorcitiesareforthemostpartdoingwellduetothe(planned)presenceofretailerssuchasPrimark,Marks&Spencer,ZaraandUniqlo,whichleaselargeproperties.ButeveninthesixBelgianprimehighstreets,someprimelocationshaveexperiencedadownwardadjustmentinrents.Inthesecondaryhighstreetsandinthesmallercities,vacanciesareontheriseandrentsarefalling.Intheselocationsespecially,retailersareclosingtheirbusinessesiftheyarenotprofitableenough.

RetailwarehouselocationsaredoingrelativelywellinBelgium.Thereisatrendtowardshigherqualityarchitecture,which,combinedwithattractivepricesontheperiphery,isalsoattractingbetterinner-citybrands.This,however,onlyappliestothebestlocationsinthissegment.Theperipheryisforthatmatterthemostactivesegmentin2014,especiallyintheretailparks.Demandishigherinthissegmentcomparedtotherestofthemarket.ExpandingretailerssuchasAlbertHeijnandtypicalcitycentreretailershavebecomeextremelyactiveintheselocations.WeareawaitingtheimpactofthemovetoshiftresponsibilitiesforretaillicencestotheregionallevelinBelgium.It’sexpectedthattheforthcomingregulationswillimpedefuturedevelopmentsintheperipheryandinturnboostthedemandforprimelocationsintheperipherywhicharealreadylicenced.

Inthismarket,VastnedRetailBelgiumhasachievedniceresultsin2014.Atotalof27rental transactionsareconcludedin2014valuedat€3,6millioninannualrentalincome.Thisrepresentsroughly16%ofthecompany’stotalannualrentalincome.Theaveragerentincreaseinthesetransactionsisabout5%.Intermsofitsinvestment strategy,VastnedRetailBelgiumdecidedbackin2012thatatleast65%ofitsrealestateportfoliomustbeinvestedininner-cityshops,preferablyinprimelocationsinthecitycentresoflargercitiessuchasBrussels,Antwerp,GhentandBruges.Asat31December2014,inner-cityshopsalreadyconstitute68%oftherealestateportfolio,whichishigherthanthestatedgoalof65%.In2014,thecompanyhasinvestedinaninner-cityshopinaprimelocationinGhentanddivestednon-strategicpropertiesinordertoachievethisgoal.

5% Average rent increase in 27 transactions

68% Inner-city shops in the real estate portfolio

Divestment 19 non-strategic properties

15

InlateJuly2014,VastnedRetailBelgiumsucceededinacquiringaninner-cityshopinaprime location:Veldstraat23-27inGhent,whichisleasedtoH&M.

Thisretailpropertyisacquiredforaninvestmentvalueofroughly€27,7millionandatayieldinlinewiththemarket.Thisacquisitionwillgeneratearentalincomestreamforthecompanyofroughly€1,1millionannually.Thetransactionisfundedfromthecom-pany’sexistingcreditlinesandviathetakeoveroftheloansoftheacquiredcompany.

Withtopyieldsat4%,retailpropertiesareinhighdemandontheinvestmentmarket,andVastnedRetailBelgiumhastakenadvantageofthesefavourablemarketconditionsin2014bydivestingatotalof19non-strategicretailwarehousepropertiesandinner-cityshopsinsecondarylocationshavingatotalfairvalueof€42,9million,orroughly12%oftheoverallrealestateportfolio.ThesedivestmentsincludeJulianusShoppinginTongerenandretailpropertiesinFlandersandtheWalloonregionwithatotalgrossretailsurfaceareaofroughly39.000m².ThecombinedannualrentalincomeofthedivestedretailpropertiesamountstoEUR3.6million,orroughly16%ofthecompany’stotalannualrentalincome.Thecompany’sstrategyistousethefundsthatwerefreedupviathesedivestmentstoinvestininner-cityshopsinprimelocations.

Despitethesedivestmentsrepresentingroughly12%oftherealestateportfolio,therental incomeofVastnedRetailBelgiumhasrisenin2014by€0,3million,or1%,duetoinvestmentsininner-cityshopsinprimelocations,indexingandleaseextensions.In2014the financing costsofthecompanyhasdecreasedby€0,7millionor14%,mainlyduetolowerinterestrates.Forthe2014financialyear,theaverageinterestrateofthecompanyhasfallento3,2%includingbankmargins,comparedto4,0%forthe2013financialyear.

Asaresult,theoperating distributable result persharein2014ishigherthanin2013.Forthe2014financialyear,VastnedRetailBelgiumcanofferitsshareholdersagross dividendof€2,72pershare,comparedto€2,65pershareforthe2013financialyear.Thismeansthatthegrossdividendyieldoftheshareis4,7%basedontheclosingpriceasat31December2014.

Wewishtothankyoufortheconfidenceyouplaceinus.Moreover,weherebyalsowishtothankthemanagementandallemployeesfortheircommitment,whichliesatthebasisoftheseexcellentresults.

Theboardofdirectors

Taco de Groot Jean-Pierre BlumbergDirector Chairmanoftheboardofdirectors

Divestment 19 non-strategic properties

+1% Increase rental incdome

-14% Financing costs

Gross dividend € 2,72

17

Report of the board of directors

Antwerp, Korte Gasthuisstraat - 145 m2

18

VastnedRetailBelgiumisapublicregulatedrealestatecompany(RREC).ThesharesofthecompanyarelistedontheregulatedmarketofEuronextBrussels(VASTB).

VastnedRetailBelgiuminvestsexclusivelyinBelgiancommercialrealestate,focusingprimarilyoninner-citylocationsinprimelocationsandhigh-qualityretailwarehouses.

Atpresenttheportfolioismadeupof169leasableunits,spreadover69differentlocations.

Evolutionoffairvalueofinvestmentproperties(million€)

Typeofrealestateproperty

PROFILE

As at 31 December 2014, 68% of the real estate portfolio consists of inner-

city shops and 32% of retail warehouses, with 49% of the portfolio already

invested in premium city high street shops, located in the prime high streets

of the major cities of Antwerp, Brussels, Ghent and Bruges. The total fair

value of the portfolio amounts to € 357 million as at 31 December 2014.

.

b

285 281 313

20052006

20072008

20092010

20112012

20132014

324 329 362327 362359 357

mill

ion

€

a

b

68%

32%

Inner-city shops

Retail warehouses

a

b

19


The investment strategy is aimed at achieving a combination of direct

return based on rental income and indirect return based on the increase

in the value of the real estate portfolio.

INVESTMENTSTRATEGY

Thecompanypursuesaninvestmentpolicygearedtowardhigh-qualitycommercialproperties,whichareinturnleasedtofirst-classtenants.CommercialpropertyconsistsofretailpropertieslocatedinBelgium,whichmaybebothinner-cityshopsandretailwarehouses(locatedoutsidethecities).Thispropertypreferablyrequiresnomajorrepairworkintheshorttermandiscommercially-strategicallysituatedatgoodlocations.Residentialproperties,officesandlogisticspropertiesare,inprinciple,notthesubjectofinvestment.

VastnedRetailBelgiumbelievesthatpopularhighstreetsinthecitycentresofmajorcitiesguaranteethemostauthenticanduniqueshoppingexperiencewhileatthesametimeofferingthegreatestsecurityasalong-terminvestment.Forthisreasonthecompanyestablishedapolicyin2012requiringthatatleast65%ofitsrealestateinvestmentsbeininner-cityshops,preferably

intheseprimelocations.Asat31December2014,inner-cityshopsalreadyconstituted68%oftherealestateportfolio.Currently,49%oftheportfolioisalreadyinvestedinprimeretailpropertieslocatedintheprimehighstreetsofthemajorcitiesofAntwerp,Brussels,GhentandBruges.

VastnedRetailBelgiumhasintensifieditsinvestmentstrategy.Itnowintendstoachievea75%investmentratioininner-cityshopsinBelgiumovertime.Indoingso,overtimetheshareofprimeretailpropertiesinthemostpopularhighstreetsinthemajorcitiesmustamountto50%oftheoverallrealestateportfolio.

VastnedRetailBelgiumwishestoimprovetheattrac-tivenessofitssharefurtherthroughhigherliquidity,expandingtherealestateportfolioandfurtherimprovingriskspreading.

Increaseoftheliquidityoftheshare

Liquidityisdeterminedbytheextenttowhichthesharescanbetradedonthestockmarket.Companieswithhighliquidityaremorelikelytoattractlargeinvestors,whichimprovesgrowthopportunities.

Increasedliquiditymakesiteasiertoissuenewshares(forincreasingthecapital,contributionsinkindormergers),whichisalsoveryimportantforgrowth.

Toimproveitsliquidity,VastnedRetailBelgiumhasconcludedaliquidityagreementwithBankDegroof.TheliquidityofmostBelgianregulatedrealestatecompaniesisrelativelylow.Onemajorreasonforthisisthatthesecompaniesareoftentoosmall-bothintermsofmarketcapitalisationandfreefloat-togaintheattentionofprofessionalinvestors.Inaddition,sharesinregulatedrealestatecompaniesaregenerallypurchasedaslonger-terminvestmentsratherthanonaspeculativebasis,whichreducesthenumberoftransactions.

In 2014 the free float

of the share has remained

unchanged at 34,5%.

20

Expansionofthepropertyportfolio

Alargeportfolioclearlyoffersanumberofbenefits.

• Ithelpstospread the riskfortheshareholders.Byin-vestinginrealestatepropertiesthroughoutBelgium,itispossibletocushionpotentialcyclicalmovementsinthemarket.Thisalsomeansthatthecompanyisnotdependentononeorasmallnumberofmajortenantsorprojects.

• Theachievedeconomies of scalemakeitpossibletomanagetheportfoliomoreefficiently,withtheresultthatagreateramountofoperatingprofitcanbepaidout.Thisrelates,forinstance,tocostsofmaintenanceandrepair,the(long-term)renovationcosts,consul-tancyfees,publicitycosts,etc.

• Withalargertotalportfolio,management’snegotia-ting positionisimprovedwhendiscussingnewleasetermsandofferingnewservices,alternativelocations,etc.

• Itmakesitpossibleforaspecialisedmanagementteamtouseitsknowledgeofthemarkettopursueaninnovativeandcreativepolicy,resultinginincrease in shareholder value.Thismakesitpossibletoachieve

growth,notonlyintermsoftherentalincome,butalsointhevalueoftheportfolio.Thiskindofactivemanagementcanleadtotherenovationandoptimi-zationoftheportfolio,negotiationsonnewtermsoflease,animprovementinthequalityofthetenants,offerofnewservices,etc.

Expansionoftherealestateportfoliocanbeachievedthroughadynamicapproachofthemarketontheonehand,onaninternallevelthroughthegrowthpotentialofthecurrentpropertyportfolio,andthroughacquisitionsontheotherhand.

VastnedRetailBelgiumisaveryusefulpartnerforinves-torswhowishtocontributetheirretailpropertiesagainsttheissueofnewshareswithaviewtospreadingriskandcuttingadministrativeactivities.Retailchainsthatstillowntheirownpropertiescanalsobenefitfromconclu-dingsale-and-rent-backtransactionswithVastnedRetailBelgium.

Improvementofriskspread

VastnedRetailBelgiumtriestospreaditsriskinavarietyofways.Forexample,thetenantsoftenoperateinwidelydivergentsectorsoftheeconomy,suchasclothes,food,do-it-yourself,homeinterior,etc.Besides,thecompanystrivestomaximisethegeographicspreadofitsproper-ties.

Theadministrationoftheexpirydatesandfirstinterimexpirydatesoftheleaseagreementsaresubmittedtotherestrictionsbythelegislationoncommercialleases(Actof30April1951),allowingthetenantstoterminatelegallytheirtenancyagreementeverythreeyears.

21


General

ThecorporategovernancestatementisinlinewiththeprovisionsoftheBelgianCorporateGovernanceCode2009(‘2009Code’)andtheActof6April2010amendingtheBelgianCompaniesCode.TheRoyalDecreeof6June2010providedthatthe2009Codeistheonlycodeapplicable.ThisCodecanbefoundontheBelgianOfficialGazettewebsiteandonwww.corporategovernancecommittee.be.

VastnedRetailBelgiumtreatstheBelgianCorporateGovernanceCode2009asareferencecode.TheVastnedRetailBelgium’sboardofdirectorshavelaiddowncorpo-rategovernanceprinciplesinanumberofguidelines:

• theCorporateGovernanceCharter• thecodeofconduct• whistle-blowingrules• themarketabuse-preventiondirective.

ThecompleteCorporateGovernanceCharterthatsetsouttheimportantinternalproceduresforthemanage-mententitiesofVastnedRetailBelgium,aswellastheotherdirectives,areavailableonthecompanywebsite(www.vastned.be).

ThetermsoftheBelgianCorporateGovernanceCode2009mayonlybedeviatedfromwhenspecificcircum-stancesrequireit.Ifsuchaneventoccurs,thedeviationisexplained,inaccordancewiththe“complyorexplain”principle,intheannualreport.TheboardofdirectorsofthecompanyhasjudgedthatitissometimesjustifiedforthecompanynottofollowcertaintermsoftheCorporateGovernanceCode2009.Accordingtothe“complyorex-plain”principleitisindeedpermittedtotakeintoaccounttherelativelysmallsizeandowncharacteristicsofthecompany,particularlyregardingthealreadyrigidlegisla-tionrelatingtoregulatedrealestatecompanies.

CORPORATEGOVERNANCESTATEMENT

Brussels, avenue Louise - 245 m2

22

Board of directors

EMSO sprl permanently represented by Chris PeetersIndependent director

Berchemstadionstraat76bus62600Berchem-Belgium

Transporteconomist

Term: April2017Attendance: 5/7

Jean-PIerre BlumbergChairman, independent director

Plataandreef72900Schoten-Belgium

ManagingpartnerLinklatersLLP


Nick van OmmenIndependent director

Beethovenweg502202AHNoordwijkaanZee-TheNetherlands

Directorofrealestatecompanies


Managemententities

23


Hubert RooversDirector

FranklinRooseveltlaan384835ABBreda-TheNetherlands

Directorofcompanies


Taco de GrootDirector and effective leader (pursuant to article 14,§ 3 of the RREC Act)

Schubertlaan163723LNBilthoven-TheNetherlands

ChiefexecutiveofficerVastnedRetail


Reinier WaltaDirector

Bastion71945EBBeverwijk-TheNetherlands

ChieffinancialofficerVastnedRetail

Term: Asfrom15December2015bycooptationAttendance: 1/1

Ra

24

TomdeWitteresignedasdirectorofthecompanyon1November2014(attendance4/6).

Theboardofdirectorscomprisesasat31Decembers2014sixmembers,threeofwhomareindependentdirec-torswhoallthreefulfiltheconditionsofarticle526teroftheBelgianCompaniesCode.Alldirectorsarenon-execu-tivedirectorsexceptTacodeGroot.

Thedirectorsareappointedforaperiodofthreeyears,buttheirappointmentcanberevokedatanytimebythegeneralmeeting.

Theboardofdirectorsmetseventimesin2014.Themostimportantagendaitemsduringthemeetingsoftheboardofdirectorsandwithrespecttowhichtheboardhastakendecisionsin2014are:

• approvalofthequarterly,half-yearlyandannualfigures

• approvaloftheannualaccountsandthestatutoryreports

• approvalofthebudgets2014andthebusinessplan2015

• discussionontherealestateportfolio(investmentsanddivestments,tenancyissues,valuations,insur-ances,renovations,etc.)

• changeofstatustoregulatedrealestatecompany• applicationoftheconflictofinterestsettlementregardingtheprovisionoftemporaryfinancingbyVastnedRetailnvtoVastnedRetailBelgiumsaforthefinancingoftheacquisitionofthesharesofVeldstraat23-27sa(seeNote23oftheFinancialreport).

Duringfinancialyear2014,TacodeGroot,TomdeWitte(till1November2014)andReinierWalta(asfrom15December2014)haverepresentedthemajorityshare-holderVastnedRetailnv.FurthermoreTacodeGrootistheeffectiveleaderofthecompanypursuanttoarticle14,§3oftheRRECAct.

TheCorporateGovernanceCharterofthecompanystipulatesthatdirectorsresignonthedateofthegeneralmeetingofshareholdersheldintheyearinwhichtheyturn70yearsold.Deviatingfromthisintheinterestofthecompanyisonlyallowedforspecificreasons.ThisisthecasewithHubertRooverswhoreachedthemaximumage.Theboardofdirectorsbelievedthat,basedonhisvision,competence,knowledgeandyearsofexperienceinrealestate,itwasintheinterestofthecompanythatHubertRooverswhosemandateexpiresinApril2014wouldbeprolongedforoneyearandwouldendatthegeneralmeetingofshareholdersof29April2015.

SincethepassageoftheActof28July2011,quotasareimposedinBelgiuminordertoensurethatwomenhaveaseatontheboardofdirectorsoflistedcompanies.Asaresult,VastnedRetailBelgiummustseetoitthat,inthefuture,atleastonethirdofthemembersoftheboardofdirectorsarefemale.Forcompanieswithafreefloatoflessthan50%,thislawappliesasfromthefirstdayoftheeighthfinancialyearthatstartsfollowingthepublicationofthislawintheBelgianOfficialGazette,whichis1January2019.Inthefuture,whenthemandateofadirectorends,VastnedRetailBelgiumwillselectalistofcandidatedirectorsonthebasisofclearandobjectivecriteria,andinsodoingitwilltakegenderdiversityintoaccount.

25


Audit committee

In2014,theauditcommitteecomprisesthreeindepend-entdirectors:

• NickvanOmmen(chairman)(attendance5/5)• Jean-PierreBlumberg(attendance5/5)• EMSOsprl,permanentlyrepresentedbyChrisPeeters(attendance4/5)

In2014,theseindependentdirectorsfulfilallninecriteriaofindependencepursuanttoarticle526teroftheBelgianCompaniesCode.Thetermoftheirmandateintheauditcommitteeisnotspecified.

Themembersoftheauditcommitteeareexperts.Eachmemberofthecommitteeisindependentlyqualifiedintheareaofaccountancyand/orauditing.Besides,theau-ditcommitteeasawholeisqualified.Thisontwolevels:intheareaoftheactivitiesofVastnedRetailBelgiumandintheareaofaccountancyandauditing.

In2014,theauditcommitteemetfivetimes.Themostimportantitemsontheagendaoftheauditcommitteein2014havebeen:

• discussionofthequarterly,half-yearlyandannualfigures

• analysisoftheannualaccountsandstatutoryreports• discussionofthebudgets• oversightofstatutoryauditofthe(consolidated)annualaccountsandanalysisoftherecommendationsofthestatutoryauditor

• analysisoftheefficiencyoftheinternalauditmechanismandrisk-managementofthecompany.

Thecommitteereportsitsconclusionsandrecommenda-tionsdirectlytotheboardofdirectors.

Management committee

Asat31December2014,themanagementcommitteecomprises:

• SprlJean-PaulSols,representedbyJean-PaulSols,chiefexecutiveofficer,chairmanofthemanagementcommittee

• SprlRudiTaelemans,representedbyRudiTaelemans,chiefoperatingofficer

• IngeTas,chieffinancialofficer.

Jean-PaulSolssprl,permanentlyrepresentedbyJean-PaulSols,andIngeTas,alsoholdamanagementcommittee’smandateatIntervestOffices&Warehousessa,publicregulatedrealestatecompanygovernedbyBelgianlaw.

Pursuanttoarticle524bisoftheBelgianCompaniesCodeandarticle15ofthecompany’sarticlesofassociation,theboardofdirectorshasdelegatedspecificmanagementauthority.Therulespertainingtothecompositionandoperationofthemanagementcommitteearedescribedinmoredetailinthecompany’sCorporateGovernanceCharterthatisavailableonthewebsite(www.vastned.be).TacodeGroot,TomdeWitte(till1November2014)andReinierWalta(asfrom15December2014)haverepresentedthemajorityshareholderVastnedRetailnv.FurthermoreTacodeGrootistheeffectiveleaderofthecompanypursuanttoarticle14,§3oftheRRECAct.

Jean-Paul Sols, ceo Inge Tas, cfo Rudi Taelemans, coo

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Evaluation of management entities

Underthedirectionofthechairman,theboardofdirectorsperiodicallyreviewsitssize,composition,workingandef-ficiency.Itcarriesoutthesamereviewwithrespecttotheauditcommitteeandtheinteractionwiththemanage-mentcommittee.Forthepurposesofsuchreviews,theboardofdirectorscanbeassistedbyexternalexperts.

Duringthisevaluationprocess:

• anassessmentismadeofthefunctioningandleader-shipoftheboardofdirectors

• whethermajorsubjectsarepreparedanddiscussedthoroughlyischecked

• anassessmentismadeoftheactualcontributionandinvolvementofeachdirectorinthediscussionsanddecisions

• thecompositionoftheboardofdirectorsisassessedwithrespecttothedesiredcompositionoftheboard

• thefunctioningandcompositionoftheauditcommit-teeisdiscussed

• thecollaborationandcommunicationwiththeman-agementcommitteeisevaluated.

Iftheabovementionedevaluationproceduresshowsomeweaknesses,theboardofdirectorswillhavetoof-ferappropriatesolutions.Thiscanleadtochangesinthecompositionorthefunctioningoftheboardofdirectorsortheauditcommittee.

Conflicts of interest

Asfarasthepreventionofconflictsofinterestiscon-cerned,thecompanyissubjecttolegalrules(articles523and524oftheBelgianCompaniesCodeandarticles36to38oftheActof12May2014onregulatedrealestatecompanies)andtotherulessetoutinitsarticlesofas-sociationanditsCorporateGovernanceCharter.

Inthisregard,article17ofthearticlesofassociationofthecompanystatesthefollowing:“Directors, persons charged with the day-to-day management and authorised agents of the company shall respect the rules relating to conflicts of interest provided for in articles 36, 37 and 38 of the RREC Act and in the Belgian Companies Code, as these may be amended, where appropriate.”

Conflicting interests of a proprietary nature of directors and members of the management committee

Theboardofdirectors,managementcommitteeandeverymemberstrictlyundertaketoexcludeanypos-sibleconflictofinterest,whetherofaproperty-related,professionalorofanyothernature,andintendtocarefullycomplywiththelegalruledefinedinarticle523oftheBelgianCompaniesCoderegardingconflictsofinterestbetweenthecompanyandadirector.

If,forexample,adirectorofthecompany,duetootherdirectormandatesheldbyhimorforanyotherreason,hasaproprietaryinterestthatisinconflictwithadecisionortransactionfallingundertheauthorityoftheboardofdirectors,article523oftheBelgianCompaniesCodeshallbeapplicableandthedirectorinquestionshallberequestednottoparticipateinthedeliberationsondeci-sionsortransactionsorinthevoting(article523,§1infine).

Ifadirectorormemberofthemanagementcommit-tee,directlyorindirectly,hasaproprietaryinterestthatisinconflictwithatransactionordecisionfallingundertheauthorityoftheboardofdirectorsorthemanage-mentcommittee,thememberinquestionmustinformthechairmanandthemembersofthisinadvance.Inthiscase,theconcernedmembermaynotparticipateinthedeliberationsandvotingonthetransactioninquestion.

Thestatementaswellasthejustificationfortheconflictofinterestshallberecordedintheminutes.Withaviewtoitspublicationintheannualreport,thenatureofthedecisionortransactionisaccountedforintheminutes.Theminutesalsooutlinetheproprietaryconsequencesforthecompanyresultingfromthisdecision.Thereportoftheauditor,tobedrawnupinaccordancewitharticle143oftheBelgianCompaniesCode,containsaseparatedescriptionofthefinancialimplicationsforthecompany.

.

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Conflict of interest for a major shareholder

Incaseofapotentialconflictofinterestwithamajorshareholderofthecompany,theproceduredefinedinarticle524oftheBelgianCompaniesCodeshallbeapplicable.Article524oftheBelgianCompaniesCoderequiresthatoperationswithrelatedcompanies-withcertainexceptions-mustbesubmittedforadvicetoacommitteeofindependentdirectors,assistedbyanindependentexpert.

Conflict of interest on the part of certain individuals mentioned in article 37 of the Act of 12 May 2014 concerning regulated real estate companies

Likewise,article37oftheActof12May2014onregu-latedrealestatecompaniesprovidesthattheFinancialServicesandMarketsAuthority(FSMA)mustbenotifiedinadvancebytheRRECofactivitiesplannedbytheRRECoroneofitssubsidiariesifoneormoreofthefollowingpersonsdirectlyorindirectlyactsoractasopposingparty(parties)insuchactivitiesordraws(draw)anymaterialgainfromit:thepersonscontrollingthepublicRRECorholdingastakeinit;thepromoterofthepublicRREC;theothershareholdersofallsubsidiariesofthepublicRREC;andthedirectors,managingdirectors,themembersofthemanagementcommittee,thepersonsentrustedwiththedailymanagement,theactualmanagersormandata-ries;andthepersonslinkedtoalltheseparties.

TheseplannedtransactionsmustholdaninterestforthepublicRREC,beinlinewithitsstrategyandmustbeexecutedundernormalmarketconditions.Thesetransac-tionsmustbepromptlydisclosed.

Pursuanttoarticle49,§2oftheActof12May2014onregulatedrealestatecompanies,whenarealestatetransactiontakesplacewiththeabove-mentionedper-sons,thecompanyisboundbythevaluationmadebythepropertyexpert.

.

Theprovisionsofarticles36and37oftheRRECActdonotapplyto:

• transactionsinvolvingasumthatislessthanthelow-estamountofeither1%oftheconsolidatedassetsofthepublicRRECor€2.500.000

• theacquisitionofsecuritiesbythepublicRRECoroneofitssubsidiariesinthecontextofapublicissuebyathird-partyissuer,forwhichapromoteroroneofthepersonsreferredtoinarticle37,§1actsasintermedi-arywithinthemeaningofarticle2,10°oftheActof2August2002

• theacquisitionoforsubscriptiontothesharesinthepublicRRECissuedasaresultofadecisionbythegeneralmeetingbythepersonsreferredtoinarticle37,§1;and

• transactionsinvolvingtheliquidassetsofthepublicRRECoroneofitssubsidiaries,providedthepersonactingascounterpartyhasthecapacityofinterme-diarywithinthemeaningofarticle2,10°oftheActof2August2002andthesetransactionsareexecutedundernormalmarketconditions.

Theprocedureforpreventingconflictsofinteresthasbeenappliedduringthe2014financialyearinrelationtotheprovisionoftemporaryfinancingbyVastnedRetailnvtoVastnedRetailBelgiumsatofinancetheacquisi-tionofthesharesofVeldstraat23-27(seeNote23oftheFinancialreport).

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Remunerationreport

Appointment and remuneration committee

VastnedRetailBelgiumdoesnothaveanappointmentandremunerationcommittee.Theboardofdirectorsofthecompanyisoftheopinionthattherelevanttasksoftheappointmentcommitteeandremunerationcom-mitteeshouldberegardedastasksoftheentireboardofdirectors.Herewith,VastnedRetailBelgiumderogatesfromtherecommendationsoftheBelgianCorporateGovernanceCode2009(alsoseeparagraphon“complyorexplain”principle),sincethelimitedsizeoftheboardmakesitpossibletodeliberateefficientlyonthesetopics.Ontheotherhand,theissueofappointmentsorremu-nerationinthecompanyrequirestoolittleadditionalattentiontojustifyaseparatecommitteeanditsrelatedadditionalexpenses.

Remuneration policy of the board of directors

Theboardofdirectorsisresponsiblefortheremunerationpolicyforitsmembersandforthemembersoftheman-agementcommittee.Theremunerationofthedirectorshastobeproposedforapprovaltothegeneralmeeting.

Thispolicyisbasedonthefollowingprinciples:

• theremunerationpolicyfordirectorsandmembersofmanagementcommitteeisinaccordancewithalltheapplicableregulationsandinparticularwiththosecontainedintheRRECAct

• thetotalremunerationlevelandstructureshouldbesuchthatqualifiedandcompetentpersonscanberecruitedandretained

• theremunerationstructure,intermsoffixedincomeandvariableincome,ifany,issuchthattheinterestsofthecompanyarepromotedinthemediumandlongterm

• theremunerationpolicytakesintoaccounttheresponsibilitiesandtimespentbydirectorsandmem-bersofmanagementcommittee.

Otherthingsbeingequal,theremunerationpolicyshallremainapplicableforthenexttwofinancialyears.

Basic remuneration 2014

Directors

In2014,theannualfixedfeeofthedirectors,whodonotrepresentthemajorityshareholder,amountsto€14.000peryearforamemberoftheboardofdirectors(€15.000peryearforthechairmanoftheboardofdirectors).Noadditionalfeesarepaidforservingasamemberorasachairmanofacommittee.Thedirectorsrepresent-ingthemajorityshareholderperformtheirdutieswithoutremuneration.

Noemploymentcontracthasbeenconcludedwithanyofthedirectorsandnoterminationcompensationisap-plicable.Pursuanttoarticle35§1oftheActof12May2014onregulatedrealestatecompanies,thedirectors’feesarenotrelated,eitherdirectlyorindirectly,tothetransactionscarriedoutbythecompany.Thedirectorsdonotownsharesofthecompanyandnorhaveanyoptionsbeengrantedtothedirectorsonsharesofthecompany.

Members of the management committee

Theamountofthefixedfeegrantedasremunerationin2014tothemembersofthemanagementcommit-tee,amountsto€388.560,ofwhich€122.316isforthechairmanofthemanagementcommittee.Nooptionshavebeengrantedtothemanagementcommitteeonsharesofthecompany.

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Bonus for 2013, paid in 2014

Thethreemembersofthemanagementcommitteemaybeeligibleforanannualcombinedbonusofmaximum€47.000.Theamountofbonustobegrantedisdeter-minedonthebasisofmeasurablecriterialinkedtoagreedperformancelevels.

In2013,thesecriteriawereintheareaoftheimprove-mentoftheoccupancyrate,investmentsanddivestmentsaspartofthestrategy,attractingimportantretailers,theoptimisationoftheaccountmanagement,theprolonga-tionanddiversificationoffinancing.Basedontargetsachievedin2013,atotalbonusof€43.500wasawardedin2014.Noreclamationrightsareforeseenforthevari-ableremuneration.

Besidesthisregularbonus,amemberofthemanagementcommitteemaybeeligibleforanadditionalannualbonus,whichmaybegrantedforexceptionalperformance.Noadditionalbonuswaspaidfor2013.

Basic remuneration for 2015 and bonus for 2014

Atthegeneralmeetingofshareholdersof29April2015willbeproposedtoadapttheannualfixedremunerationoftheindependentdirectorsasfollows:

• increasefrom€14.000to€20.000(exceptthechair-manoftheboardofdirectors)

• increasefrom€15.000to€25.000forthechairmanoftheboardofdirectors.

On1Januaryeachyear,theannualfixedfeeofthemembersofthemanagementcommittee,exceptthedirector,is(i)indexedaccordingtothenormalindexofconsumerprices,wherethebasicindexisthatofthemonthprecedingthemonthinwhichtheagreementcameintoeffect,andthenewindexofthemonthpre-cedingthemonthinwhichtheindexationtakesplace(ii)increasedby1percent.Thisrepresentsanincreaseof1%asat1January2015.

Bonuscriteriafor2014areintheareaoftheimprove-mentoftheoccupancyrate,investmentsanddivest-mentsasapartofthestrategyandattractingimportantretailers.

Thethreemembersofthemanagementcommitteemaybeeligibleforfinancialyear2014foranannualcom-binedbonusofmaximum€60.000.Basedonthetargetachievedin2014,atotalbonusof€60.000isawarded.Noadditionalbonuswillbepaidfor2014.

Duration and termination conditions

Membersoftheboardofdirectorsareappointedforaperiodof3years,buttheirappointmentmayberevokedatanytimebythegeneralshareholdersmeeting.Noterminationcompensationisapplicable.

Themembersofthemanagementcommitteeareappointedforanindefiniteperiodandtheterminationcompensationisequivalenttotwelve(forthecfo)andtoeighteen(fortheceoandthecoo)months’fixedfee(exceptforgrossnegligenceordeliberateerror,inwhichcasenocompensationwillbepayable).

Anadditionalexplanationisgivenpursuanttoarticle7.18oftheBelgianCorporateGovernanceCode2009,namelythattheseverancepaymentfortheceoandthecooamountstomorethanthecounter-valueoftwelvemonthsoffixedremuneration,which,however,concernsacontractualarrangementconcludedbefore1July2009thathasnotyetconstitutedthesubjectmatterofanextensionsince23May2010,asaresultofwhicharticle554oftheBelgianCompaniesCodedoesnotapply.

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Majorriskfactorsandinternalcontrolandriskmanagementsystems

In2014,theboardofdirectorsofVastnedRetailBelgiumonceagainfocusesattentionontheriskfactorswithwhichVastnedRetailBelgiummustcontend.

Strategic risks and management

TheserisksarelargelydeterminedbythestrategicchoicesmadebyVastnedRetailBelgiumtolimititsvulnerabilitytoexternalfactors.Thesizeoftheserisksisdeterminedbythestrategicchoicessuchasthechoiceoftypeofrealestateandthetimeofinvestmentanddivestment.

Type of real estate

VastnedRetailBelgiumhasmainlychosentoinvestincommercialproperties,withafocusoninner-cityshopsontoplocations.Retailwarehousesandretailparksalsobelongtotheportfolio.Furthermore,thecompanytriestospreadaswellaspossiblethegeographiclocationsofitsproperties.

TherealestatepatrimonyofVastnedRetailBelgiumisvaluedonaquarterlybasisbyindependentpropertyexperts.Thesepropertyexpertshavethenecessaryqualificationsandsignificantmarketexperience.Thefairvalueofthebuildings,asestimatedbythem,isenteredunderthesection“Investmentproperties”intheassetssideofthestatutoryandconsolidatedbalancesheet.Fluctuationsinfairvaluesareenteredunderthesection“Changesinfairvalueofinvestmentproperties”intheconsolidatedandstatutoryincomestatementsandthesecanhaveeitherapositiveornegativeeffectonthenetincome.Thevaluesestablishedbytheexpertsrepresentthemarketvalueofthebuildings.Consequently,fluctua-tionsinthemarketvalueofthepropertyarereflectedinthenetassetsofVastnedRetailBelgium,aspublished

onaquarterlybasis.VastnedRetailBelgiumisexposedtothefluctuationofthefairvalueofitsportfolio,asesti-matedbytheindependentassessments.

Asat31December2014,a1%hypotheticalnegativeadjustmentoftheyieldusedbypropertyexpertsforthevaluationoftherealestateportfolioofthecompany(yieldorcapitalisationrate)wouldreducetheinvestmentvalueoftherealestateby€54millionor15%.Asare-sult,thedebtratioofthecompanywouldincreaseby6%to37%(inthisregard,alsoseethe“Sensitivityanalysis”inthePropertyreport).

Time of investment and divestment

Basedontheknowledgeofeconomicandrealestatecycles,onetriestoanticipateasaccuratelyaspossiblethedownwardandupwardmovementsofthemarkets.Thenormallyexpectedcourseoftheeconomiccyclescanbeassessedtothebestofone’sabilitybasedoneconomicindicators.Theinvestmentmarketandparticularly,therentalmarketforcommercialrealestaterespondwithacertainamountofdelaytothevolatilityoftheeconomicclimate.Clearperiodsofeconomicboomleadtohighermarketpriceswhichmay,atalaterdate,besubjecttosharpnegativeadjustments.Duringthisperiodofeco-nomicboom,VastnedRetailBelgiumwillpursueafairlymoderatepolicyoninvestmentssoastoreducetheriskofmakingill-timedinvestments.Inperiodsofeconomicrecession,thevalueandoccupancyrateofbuildingsusu-allydecline.However,oncetheeconomypicksupagain,amoreactiveinvestmentpolicyisfollowedinanticipa-tionoftheincreasingvalueofbuildingsandamoreactiverentalmarket.Inthisregard,duecareistakentopreventthedebtratioofthecompanyfromrisingabovethepermittedlevels.

The constant evolutions in the real estate and financial markets require a

continuous monitoring of the strategic, operational and financial risks, as well

as of the financial reporting and compliance risks in order to safeguard the

results and the financial situation of Vastned Retail Belgium.

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Operating risks and management

Theserisksariseoutofdailytransactionsand(external)eventsexecutedwithinthestrategicframework:invest-mentrisks,rentalrisks,costcontrolrisks,risksrelatingtoadeterioratingconditionofbuildingsandtheriskofmajorworks,debtor’srisksandlegalandtaxrisks.

Investment risks

Themainrisksinherentininvestinginrealestatearerelatedtofuturenegativechangesinfairvalueofinvest-mentpropertiescausedprimarilybyincreasingvacancy,unpaidrents,declineinrentswhenconcludingnewleaseagreementsorextendingexistingleaseagreements,andsoilcontamination.

AtVastnedRetailBelgium,internalcontrolmeasuresaretakentoreducetheriskofmakingincorrectinvestmentdecisions.Forexample,theriskprofileisalwayscarefullyassessedbasedonmarketresearch,anestimateoffutureyields,ascreeningofexistingtenants,astudyofenviron-mentalandpermitrequirements,ananalysisoftaxrisks,etc.

Pursuanttoarticle49,§1oftheActof12May2014onregulatedrealestatecompaniesanindependentpropertyexpertvalueseachacquisitionordisposalofproperty.Foreachdisposal,theassessmentvaluedeterminedbytheindependentpropertyexpertisanimportantguidingprincipleforthetransactionvalue.VastnedRetailBelgiumalsocarefullyensuresthattheguaranteesofferedduringthetransactionremainlimited,intermsofbothdurationandvalue.

Foreachacquisition,VastnedRetailBelgiumalsocarriesoutatechnical,administrative,legal,accountingandtax“duediligence”basedoncontinuousanalysisproceduresandusuallywiththeassistanceofexternal,specialisedconsultants.

Rental risks

Theserisksarerelatedtothenatureandlocationoftherealestateproperty,theextenttowhichitmustcompetewithnearbybuildings,theintendedtargetaudienceandusers,thequalityoftherealestateproperty,thequalityofthetenantandtheleaseagreement.VastnedRetailBelgiumcontinuouslyrecordsthedevelopmentofthesefactors.Basedontheabovecriteria,ariskprofileisallocatedtoeachproperty,whichisregularlyevaluated(basedonthecompany’sownlocalknowledgeanddatafromexternalpartiesand/orvaluers).Dependingontheriskprofile,acertainyieldmustberealisedoveracertainperiod,whichiscomparedtotheexpectedyieldaccordingtotheinternalyieldmodel.Onthebasisofthis,ananalysisisdrawnupoftheobjectsinwhichadditionalinvestmentsshouldbemade,wherethetenantmixmustbeadaptedandwhichpropertiesareeligibleforsale.Vacancyandthevacancyriskarealsoanalysedeachmonth,forwhichtheexpirydatesoftheleaseagreementsaretakenintoaccount.Thefundstrivestomaintainabalanceddistributionofthedurationoftheleaseagreementsincompliancewithrulesdefinedintheapplicableleasinglegislation.Thisallowsfutureleaseterminationsandagreementrevisionstobeanticipatedingoodtime.

Cost control risks

Thereisariskofthenetyieldonrealestatepropertiesbeingnegativelyinfluencedbyhighoperatingcostsorinvestments.WithinVastnedRetailBelgium,severalinternalcontrolmeasuresareimplementedthatreducethisrisk,includingregularcomparisonofmaintenancebudgetswiththeactualrealityandapprovalproceduresatthetimeofenteringintomaintenanceandinvestmentcommitments.Theseapprovalproceduresentail,dependingontheamount,oneormoreoffersbeingrequestedfromvariouscontractors.Duringthisprocess,theassetmanagementdepartmentofVastnedRetailBelgiummakesacomparisonofprice,qualityandtimingoftheworks.Dependingonthesizeoftheamountquotedfortheworkstobecarriedout,therearevariouslevelsofapprovalwithinthecompany.

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Debtor’s risks

VastnedRetailBelgiumfollowsclearproceduresforscreeningtenantswhennewleaseagreementsareconcluded.Depositsorbankguaranteesarealsoalwaysrecquiredwhenenteringintoleaseagreements.Arentaldepositorbankguaranteeofsixmonths’rentisprovidedforinthestandardleaseagreementusedbyVastnedRetailBelgiumfortherentalofitsproperties.Asat31December2014,theactualweightedaveragedurationoftherentaldepositsandbankguaranteesisapproximately5months(orabout€8million).

Inaddition,thereareinternalcontrolproceduresinplacetoensuretimelyrecoveryofleasereceivablesandadequatefollow-upofrentarrears.Rentsarepayableinadvanceonamonthlyorquarterlybasis.Thefinancialandassetmanagementpayscloseattentiontolimitingrentarrears.Asat31December2014,thenumberofdaysofoutstandingcustomers’creditisonly2days.

Legal and tax risks

• Contractsandcorporatereorganisations

Beforeconcludingcontractswiththirdpartiesanddependingontheircomplexity,thesearereviewedbyexternalconsultants,toreducetheriskoffinanciallossanddamagebeingcausedtothecompany’sreputationduetoinadequatecontracts.VastnedRetailBelgiumisinsuredagainstliabilityarisingfromitsactivitiesoritsinvestmentsunderathirdpartyliabilityinsurancepolicycoveringbodilyinjuryuptoanamountof€12,4millionandmaterialdamage(otherthanthatcausedbyfireandexplosion)ofupto€0,6million.Further-more,thedirectorsandmembersofthemanagementcommitteeareinsuredfordirectors’liability,coveringlossesuptoanamountof€35million.

Corporatereorganisations,inwhichVastnedRetailBelgiumisinvolved(merger,demerger,partialdemerg-er,contributioninkind,etc.),arealwayssubjectto“duediligence”activities,guidedbyexternalconsultantstominimisetheriskoflegalandfinancialerrors.

• Insurance

TheriskofbuildingsbeingdestroyedbyfireorotherdisastersisinsuredbyVastnedRetailBelgiumforatotalreconstructionvalueof€124million(€81millionforinner-cityshopsand€43millionforretailwarehouses),ascomparedtoafairvalueofinvest-mentpropertiesof€357millionasat31December2014(€242millionforinner-cityshopsand€115millionforretailwarehouses).Coverisalsoprovidedforvacancyinthebuildingsduetotheseeventsfor36monthsrent.

• Taxation

Taxationplaysanimportantroleintheareaofrealestateinvestments(VAT,registrationfees,exittax,splitacquisitions,propertytax,etc.).Thesetaxrisksarecontinuouslyassessedandwherenecessary,theassistanceofexternalconsultantsisused.

• Regulatoryandadministrativeprocedures

Thechangesinregulationsonurbanplanninganden-vironmentalprotectioncanhaveanadverseeffectonthelong-termoperationofabuildingbyVastnedRetailBelgium.Thestrictenforcementandobservanceofurbanplanningregulationsbymunicipalgovern-mentscannegativelyinfluencetheattractivenessofthebuilding.Forexample,areductioninthedimen-sionsofabuildingimposedaspartofthoroughreno-vationcanalsoaffectitsfairvalue.

Theexittax,whichisduebycompaniesacquiredbytheRRECviamerger,iscalculatedwhiletakingCircularLet-terCi.RH.423/567.729of23December2004intoac-count.Thewayinwhichthiscircularletterisinterpretedorappliedinpracticecanalwaysvary.This“actualtaxvalue”,asthecircularletterreferstoit,iscalculatedbydeductingregistrationfeesorVAT,anddiffersfromthefairvalueofthepropertyasrecordedonthefund’sbal-ancesheet(inaccordancewithIAS40).

Finally,theintroductionofnewormorestringentstandardsforsoilcontaminationorenergyconsump-tioncanhaveamajorimpactonthecostsrequiredtocontinueoperatingtheproperty.

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34

Financial risks and management

Themajorfinancialrisksarethefinancingrisk,theliquid-ityriskandtheinterest-rateriskandtherisksassociatedwithbankingcounterparties.

Financing risk

Therealestateportfoliocanbefinancedpartlywithshareholders’equityandpartlywithborrowedcapital.Arelativeincreaseinborrowedcapitalwithrespecttoshareholders’equitycanresultinahigheryield(knownas“leverage”),butcanalsoimplyanincreasedrisk.Incaseofdisappointingyieldsfromrealestateandadecreaseinfairvalueofinvestmentproperties,ahighdegreeofleveragecangiverisetotheriskofnolongerbeingabletomeetinterestrateandrepaymentobligationsofborrowedcapitalandotherpaymentobligations.Insuchacase,itisnotpossibletoobtainfinancingwithnewborrowedcapitalorthiscanonlybeobtainedunderveryunfavour-ableterms.Tocontinuemeetingpaymentobligations,realestatemustthenbesold,whichentailstheriskthatthissalecannotbecarriedoutunderthemostfavourableconditions.Thevaluedevelopmentoftheretailportfolioislargelydeterminedbydevelopmentsintherealestatemarket.Forfinancingrealestate,VastnedRetailBelgiumalwaysstrivesforabalancebetweenshareholders’equityandborrowedcapital.

VastnedRetailBelgiumalsostrivestosecureaccesstothecapitalmarketbyprovidingtransparentinformationandmaintainingregularcontactswithbankersandcurrentorpotentialshareholdersandbyincreasingtheliquidityoftheshare.

Finally,withrespecttolong-termfinancing,itaimsforabalancedspreadofrefinancingdatesandaweightedaveragedurationbetween3,5and5years.Thismaybetemporarilyderogatedfromifspecificmarketconditionsrequirethis.Theaverageremainingdurationofthelong-termcreditagreementsasat31December2014is2,1years.

ThebankcreditagreementsofVastnedRetailBelgiumaresubjecttocompliancewithfinancialratios,whichareprimarilyrelatedtotheconsolidatedfinancialdebtlevelofVastnedRetailBelgiumoritsfinancialinterestcharges.TheseratioslimittheamountthatcouldstillbeborrowedbyVastnedRetailBelgium.Theseratioswererespectedasat31December2014.IfVastnedRetailBelgiumwerenolongertorespecttheseratios,thefinancingagreementsofVastnedRetailBelgiumcanbecancelled,renegotiated,terminatedorprematurelyrepaid.

VastnedRetailBelgiumislimitedinitsborrowingcapacitybythemaximumdebtratiopermittedbytheregulationsonregulatedrealestatecompanies.Withinthelegallydefinedlimitsofthe65%ratio,thetheoreticaladditionaldebtcapacityofVastnedRetailBelgiumamountstoapproximately€350millionincaseofanunchangedvaluationoftheexistingrealestateportfolio.Asat31December2014thedebtratioamountsto31%.

Liquidity risk

VastnedRetailBelgiummustgeneratesufficientcashflowtomeetitsday-to-daypaymentobligations.Ontheonehand,thisriskislimitedbythemeasuresmentionedunderoperationalrisks,whichreducestheriskoflossofcashflowduetoe.g.vacancyorbankruptciesoftenants.OntheotherhandVastnedRetailBelgiumhastodisposeofsufficientcreditmargintoabsorbfluctuationsinliquidityneeds.Forthispurposecashflowprognosesaremade.Inaddition,VastnedRetailBelgiumhasprovidedforasufficientcreditmarginwithitsbankerstoabsorbfluctuationsinliquidityrequirements.Inordertoavailitselfofthiscreditmargin,theconvenantsofcreditfacilitiesmustbecompliedwithonacontinuousbasis.

Asat31December2014,VastnedRetailBelgiumhasnon-withdrawncreditlinesof€31millionavailableforitsoperationsanddividendpayment.

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Interest rate risk

Asaresultoffinancingwithborrowedcapital,theyieldisalsodependentoninterestratedevelopments.Inordertoreducethisrisk,whencomposingtheloanportfolio,thefundaimsforaratioofone-thirdshort-termborrowedcapital(withavariableinterestrate)andtwo-thirdslong-termborrowedcapital(withafixedinterestrate).De-pendingonthedevelopmentsininterestrates,derogationfromthismayoccur.Additionally,thecompanytries,withrespecttothelong-termborrowedcapital,toachieveabalancedspreadofthedatesofreviewoftheinterestratesanddurationofminimum3years.

Asat31December2014,75%ofthecreditlinesofthecompanyarefinancingwithafixedinterestrateorarefixedbyinterestrateswaps.25%ofthecreditfacilitieshaveavariableinterestrate.Thefixedinterestratesarefixedforaremainingaveragedurationof3,6years.

Risk associated with banking counterparties

Theconclusionofafinancingcontractorinvestmentinahedginginstrumentwithafinancialinstitutiongivesrisetoacounterpartyriskifthisinstitutionremainsindefault.Inordertolimitthiscounterpartyrisk,VastnedRetailBelgiumtakestheassistanceofvariousreferencebanksinthemarkettoensureacertaindiversificationofitssourcesoffinancinganditsinterestratehedges,withparticularattentionfortheprice-qualityratiooftheservicesprovided.

VastnedRetailBelgiummaintainsbusinessrelationswith5banks:

• banksprovidingfinancingare:INGBelgiumsa,BNPParibasFortissa,BayerischeLandesbanksa,BelfiusBanksaandKBCBanknv

• bankswhicharecounterpartiesfortheinterestratehedgesare:BNPParibasFortissa,INGBelgiumsaandKBCBanknv

VastnedRetailBelgiumregularlyreviewsthelistofitsbankingrelationshipsandtheextentofitsexposuretoeachofthese.Inthecurrentcontextofthecrisisinthebankingsector,itispossiblethatoneormoreofthebankingcounterpartiesofVastnedRetailBelgiumcanremainindefault.ThefinancialmodelofVastnedRetailBelgiumisbasedonastructuraldebtburden,whichimpliesthatitscashpositionatafinancialinstitutionisusuallyquitelimited.Asat31December2014,thiscashpositionamountsto€0,3million.

Financial reporting risks and management

Thefinancialreportingriskistheriskthatthecompany’sfinancialreportscontainmaterialinaccuracies,inwhichcasestakeholderswouldreceiveincorrectinformationregardingtheoperationalandfinancialresultsofthecompany,aswellastheriskthatthedeadlineimposedbytheregulationsforfinancialreportingisnothonoured.Thiscanresultindamagetothecompany’sreputation,andstakeholderscouldmakeinvestmentdecisionswhicharenotbasedontherightinformation,whichinturncouldresultinclaimsbeingfiledagainstthecompany.

Eachquarter,acompleteclosingandconsolidationoftheaccountsispreparedandpublished.Tooptimisethefinancialreportingprocess,thefinancedepartmentalwaysdrawsupaschedulewithdeadlinesforallthetaskstobecompleted.Subsequently,thefinancialteampreparesthequarterlyfiguresandbalancesheetsquarterlyfiguresarealwaysanalysedindetailandcheckedinternally.

Toreducetheriskoferrorsinthefinancialreporting,thesefiguresarediscussedwithinthemanagementcommitteeandtheiraccuracyandcompletenesscheckedviaanalysesofrentalincome,operationalcosts,vacancy,rentalactivi-ties,theevolutionofthevalueofthebuildings,outstand-ingdebtors,etc.Comparisonswithforecastsandbudgetsarediscussed.Afterthis,themanagementcommitteepresentsthefinancialstatementstotheauditcommitteeeachquarter,alongwithacomparisonofannualfigures,budget,andexplanationsforderogations.Inaddition,thehalf-yearlyandannualfiguresarealwayscheckedbythestatutoryauditor.

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Compliance risks and management

Thisincludestheriskofaninadequatelevelofcompliancewithrelevantlawsandregulationsandtheriskofemployeesnotactingwithintegrity.VastnedRetailBelgiumlimitsthisriskbyscreeningitsemployeesatthetimeofrecruitment,bycreatingawarenessamongthemregardingthisriskandbyensuringthattheyhavesufficientknowledgeofthechangesintherelevantlawsandregulations,assistedinthisregardbyexternallegaladvisers.Toensureacorporatecultureofintegrity,VastnedRetailBelgiumhasinthepastdefinedaninternalcodeofconductandwhistleblowingrules.Moreover,thecompanyhasinstitutedadequateinternalcontrolmechanismsbasedonthefour-eyesprinciple.Thesemechanismsaredesignedtolimittheriskofdishonestbehaviour.

Article17,§4oftheRRECActstipulatesthatthepublicRREC“must take the necessary measures to be able at all times to access an appropriate independent compliance function so as to ensure compliance by the public RREC, its directors, effective leader, employees and agents with the laws relating to the integrity of the business of a public RREC”. Article6oftheRoyalDecreeonRRECstipulatesthatthepublicRREC “must take the necessary measures to be able to permanently access an appropriate independent compliance function. The compliance function is appropriate when it ensures with reasonable certainty compliance by the public

RREC, its directors, effective leader, employees and agents with the laws relating to the integrity of the business of a public RREC”.

The“independentcompliancefunction”canbeunderstoodasanindependentfunctionwithinthecompanyfocusedonexaminingandpromotingcompliancebythecompanywiththerulesrelatingtotheintegrityofitsbusinessactivities.Therulesconcernthoseresultingfromthecompany’spolicy,thestatusofthecompanyandotherlegalandregulatoryprovisions.Inotherwords,thisconcernsanelementofcorporateculture,withanemphasisonhonestyandintegrityandadherencetohighethicalstandardsinbusiness.Inaddition,boththecompanyanditsemployeesmustbehavewithintegrity,i.e.honestly,reliablyandinatrustworthymanner.

IngeTas,memberofthemanagementcommitteeandcfo,isappointedheadoftheindependentcompliancefunction.Shehasafour-yearmandateinrelationtotheindependentcompliancefunction.


37


Risks associated with the status of public regulated real estate company

Since27October2014,thecompanyhasthestatusofpublicregulatedrealestatecompany.Asapublicregulatedrealestatecompany,VastnedRetailBelgiumisgovernedbytheprovisionsoftheActof12May2014onregulatedrealestatecompaniesandtheRoyalDecreeof13July2014onregulatedrealestatecompanies.

AsapublicRRECVastnedRetailBelgiumisexposedtotheriskoffuturechangesinthelawgoverningRREC.Inaddition,thereisalsotheriskoflosingthestatusofpublicRREC.Inthatcase,VastnedRetailBelgiumwouldlose

theadvantageofthefavourabletaxsystemapplicabletoRRECs.Furthermore,thelossofthisstatuswouldgener-allybeseenasaneventwherebytheloansthatVastnedRetailBelgiumhastakenoutbecomedueimmediately.

RetainingthestatusofpublicRREChastheconstantattentionoftheboardofdirectorsandthemanagementcommittee.Assuch,thedistributionrequirementandfundinglimitsarecalculatedordeterminedperiodicallyandonanad-hocbasiswhenrefinancing,investingandpreparingthedividendproposal.

Otherpartiesinvolved

Statutory auditor

Thestatutoryauditor,appointedbythegeneralmeetingofshareholders,isthecooperativepartnershipDeloitteRéviseursd’EntreprisesSC,whichisrepresentedbyKath-leenDeBrabander,auditor.

Property experts

In2014,therealestateportfolioisvaluedeveryquarterbytwoindependentexperts,Cushman&WakefieldandCBRichardEllis,eachforapartoftheportfolio,basedonarotationprinciple.

Independent control functions

Aspartofitsinternalcontrols,eachpublicRRECmustimplementinternalauditprocedures,ariskmanage-mentpolicyandanintegritypolicy.Thisissupervisedbythepersonresponsiblefortheinternalauditfunction,theriskmanagementfunctionandthecompliancefunction,respectively,inaccordancewitharticle17,§3,4and5oftheRRECAct(togetherthesearethe“independentcontrolfunctions”).

InthecontextoftheconversionofthestatusofVastnedRetailBelgiumtoaRREC,on27October2014personsareappointedwhoareresponsiblefortheinternalauditfunction,theriskmanagementfunctionandthecompli-ancefunction.

3 Results (rental income and capital gains from sales less operating expenses and financial charges) are exempt from corporation

tax as far as the public RREC is concerned; only disallowed expenses and abnormal benefits are taxed. It can also be subjected

to the special secret commissions tax of 309% on commissions and remunerations paid that are not properly documented in

individual pay sheets and a summary statement.

38

Independent internal audit function

Theinternalauditcanbeunderstoodasanindependentevaluationfunction,embeddedintheorganisation,aimedatexaminingandevaluatingtheproperoperation,theeffectivenessandtheefficiencyoftheprocessesandproceduresappliedbythecompanyinthecarryingoutofitsactivities.Thepersonresponsiblefortheinternalauditcanprovidethevariousmembersoftheorganizationwithanalyses,recommendations,advice,evaluationsandinformationconcerningtheactivitiesexaminedinconnectionwiththeexecutionoftheirresponsibilities.

Thisinternalauditconcerns,amongotherthings,theoperation,effectivenessandefficiencyofprocesses,proceduresandactivitiesrelatingto:

• operationalmatters:qualityandsuitabilityofsystemsandprocedures,organisationalstructures,policiesandmethodsandresourcesusedinrelationtoobjectives

• financialmatters:reliabilityofaccounting,thefinancialstatementsandthefinancialreportingprocess,andcompliancewithapplicable(accounting)regulations

• managementmatters:qualityofthemanagementfunctionandstaffservicesinthecontextofthecom-pany’sobjectives

• riskmanagementandcompliance.

VastnedRetailBelgiumhasappointedtheexternalconsultantBDO(representedbyitspermanentrepresentative,LievenVanBrussel-Partner(BDORisk&AssuranceServices))asthepartyresponsiblefortheinternalaudit,withTacodeGroot,directorandmemberofthemanagementcommitteeofVastnedRetailBelgium,beingappointedasthenon-operationaleffectiveleaderwhocontrolstheinternalauditfunctionasexercisedbyBDOfromwithinthecompanyandisthusregardedashavingultimateresponsibilityforinternalaudit.ThemandateofBDOasexternalconsultantaswellasthemandateofTacodeGrootasthepersonultimatelyresponsibleforinternalauditisfor4years.

Independent risk management function

Inthecontextoftheriskmanagementpolicy,thecompanywillensurethattheaboveriskstowhichitisexposed(strategic,operational,financial,financialreportingandcompliancerisks)areassessed,controlledandmonitoredinaneffectivemanner.

Withthisaiminmind,VastnedRetailBelgiumhaschargedapersonwiththeriskmanagementfunctionwhoisresponsiblefor,amongotherthings,preparing,developing,monitoring,updatingandimplementingriskmanagementpolicyandriskmanagementprocedures.

FromtheconversionofthestatusofthecompanytopublicRREC,theindependentriskmanagementfunctioniscarriedoutbyIngeTas,memberofthemanagementcommitteeandcfo.IngeTashasafour-yearmandateinrelationtotheindependentriskmanagementfunction.

Independent compliance function

Rulesregardingcomplianceandintegrityareincludedinthefunctionofthecomplianceofficer.Inaccordancewithprinciples3.7and6.8togetherwithAnnexBtotheBelgianCorporateGovernanceCode2009oftheCorporateGovernanceCommission,thecompanyhasappointedIngeTas,memberofthemanagementcommitteeandcfo,ascomplianceofficer,responsibleforsupervisingcompliancewiththerulesonmarketabuseasimposedby,amongotherthings,theActof2August2002onsupervisionofthefinancialsectorandfinancialservicesandDirective2003/6/EConinsiderdealingandmarketmanipulation.Thecomplianceofficeralsoseestoitthatthecompanycomplieswiththelaws,regulationsandrulesofconductthatapplytoit.Toensureacorporatecultureofintegrity,VastnedRetailBelgiumsahasdefinedaninternalcodeofconductandwhistleblowingrules.

39


Asstatedabove,the“independentcompliancefunction”canbeunderstoodasanindependentfunctionwithinthecompanyfocusedonexamining,andpromoting,compliancebythecompanywiththerulesrelatingtotheintegrityofitsbusinessactivities.Therulesconcernthoseresultingfromthecompany’spolicy,thestatusofthecompanyandotherlegalandregulatoryprovisions.Inotherwords,thisconcernsanelementofcorporateculture,withanemphasisonhonestyandintegrityandadherencetohighethicalstandardsinbusiness.Inaddi-tion,boththecompanyanditsemployeesmustbehavewithintegrity,i.e.honestly,reliablyandinatrustworthymanner.

IngeTas,memberofthemanagementcommitteeandcfo,isappointedheadoftheindependentcompliancefunction.Shehasafour-yearmandateinrelationtotheindependentcompliancefunction.

“Complyorexplain”-principe

In2014,thecompanydeviatedfromthefollowingstipulationsoftheBelgianCorporateGovernanceCode2009(explain):

Clauses 5.3 and 5.4 on the operation of committees (incl. appendix D and E)

Theboardofdirectorsdecidednottosetupanappoint-mentcommitteeoraremunerationcommittee.Itistheopinionoftheboardthattasksofthesecommitteesaretasksofthefullboardofdirectors.Thelimitedsizeoftheboardmakesanefficientdebateonthesesubjectspossible.

Clause 2.9 Company secretary

Theboardofdirectorshasnotdesignatedacompanysecretary,whoadvisestheboardofdirectorsregardingalladministrativemattersandtakescareofthecommunica-tionwithinandbetweenthemanagemententitiesofthecompany,asprovidedforbyclause2.9.Thelimitedsizeofthecompanyandtheboardofdirectorsmakesuchaposi-tionsuperfluous.

Determination of the age limit

TheCorporateGovernanceCharterofthecompanystipulatesthatdirectorsresignonthedateofthegeneralmeetingofshareholdersheldintheyearinwhichtheyturn70yearsold.Deviatingfromthisintheinterestofthecompanyisonlyallowedforspecificreasons.ThisisthecasewithHubertRooverswhoreachedthemaxi-mumage.Theboardofdirectorsbelievedthat,basedonhisvision,competence,knowledgeandyearsofexpe-rienceinrealestate,itisintheinterestofthecompanythatHubertRooverswhosemandateexpiresinApril2014wouldbeprolongedforoneyearandwouldendatthegeneralmeetingofshareholdersof29April2015.

Bruges, Steenstraat - 2.058 m2

41

Report of the management

committee

Bruges, Steenstraat - 941 m2

42

Inearly2014turnoverintheretailmarketstabilises,withslightgrowthinFebruary.Thepreviouslycautiousoutlookofretailershasbeenadjustedinthesecondquarterof2014duetosalesgrowthinMayandJunecomparedwiththesameperiodin2013.Despitethegenerallycautiouseconomicclimateandhesitantconsumerconfidence,retailactivitygrowsinAugust.Thedownwardpressureonrentscontinuesmostlyinhighstreets,whichmakethemarketfavourableforlessees.Inthelastquarterof2014,short-termeconomicgrowthremainsbelowexpecta-tionsandwagesremainlower.Governmentexpenditureincreases,whichhasapositiveimpactonGDP.

Owingtothepressureonrentsintherentalmarket,apowershifttakesplaceinthenegotiatingpositionfromownertotenant.

Intheinvestmentmarket,thelastquarteristhestrongest,withatotalvolumeof€337million.Withthis,thetotalvolumefor2014amountsto€631million,15%downon2013.

Sustainabilitycontinuestoplayalimitedroleintheretailmarketwhenchoosingaretaillocation.

Rentalmarket

Inthefirsthalfof2014,culminatinginthethirdquarter,rentsremainunderpressure.Theturnoverofretailersex-hibitedasimilarpatternwherebydemandfornewspaceremainsweak,eveninprimelocations.Theprimehighstreetsinthemajorcitiesforthemostpartdowellduetothe(planned)presenceofretailerssuchasPrimark,Marks&Spencer,ZaraandUniqlo,whichleaselargeproperties.Inthe6Belgianprimehighstreets,someprimelocationsalsoexperienceadownwardadjustmentinrents.Thereislessinterestthanbeforeinprimelocationsthatbecamevacant,andthereforefewerdealsclose.Concludingtrans-actionstakemoretime.Rentsinthehighstreetsstabilisesinthesecondhalfoftheyear.Thesecondaryhighstreetsandsmallercitiescontinuetograpplewithvacanciesandpressureonrents.Sufficientreturnforretailersiscrucial,especiallyintheselocations.Generally,thereisgreateravailability.

Afterthreequarterswithratherlowactivity,thelastquarterof2014showsaslightimprovementintherentalmarketwithatake-upof134.000m²,accountingfor40%oftotaltake-upin2014,inparticularthankstosomemajorleases.Forexample,Primarkisgoodforatotalof

12.150m²spreadover3locations,justlikeMediamarktwith11.550m²,alsoat3locations.

Thereisgrowingdemandforspaceoutsidecitiesonthepartofseveraltraditionalcityretailers.Thereisatrendtowardshigherqualityarchitecturewhich,combinedwithmoreattractivepricesontheperiphery,alsoattractsbetterinner-citybrands,forexampleH&M.This,how-ever,onlyappliestothebestlocationsinthissegment.Theperipheryismoreoverthemostactiveandbest-performingsegmentin2014,especiallyinretailparks.Demandishigherinthissegmentcomparedtotherestofthemarket.ExpandingretailerssuchasAlbertHeijnandtypicalcitycentreretailersbecomeextremelyactiveintheselocations.

Intermsofsupply,onlyDocksBruxselstartsconstructioninthesecondquarteranditisexpectedtobecompletedby2016.TheothertwoprojectsinthepipelineinthenorthofBrussels,UplaceandNeo-Europea,arefacinglegalhurdlesandareheadingtowardslongerperiodsofdelay.

THERETAILPROPERTYMARKETIN20144

4 The market information in this text is based on Cushman & Wakefield, Marketbeat Retail Snapshot Q1-Q4, Cushman & Wake-

field, Vastned Retail Belgium Portfolio 31 December 2014, market overview p. 12 - 18; CBRE Belgium Retailer Survey 2014,

p. 2 - 5; CBRE interview Kim Verdonck, dated 14/1/2015 and CBRE’s annual review of retail activity in 2014.

43

Report of the management committee

Investmentmarket

Inthefirstquarterof2014,onlyalimitednumberoftransactionshavebeenconcludedwithatotalvalueof€73million.Activityremainshighwithanumberofmedium-sizedandlargetransactionsinthepipelineforthesecondquarter.Thelargesttransactionistheacquisi-tionof3HuboshopsbyRetailEstatesfor€10,6millionandayieldof6,4%.

Inthesecondquarterof2014atotalof€113millionintransactionshavetakenplace:mainlyaseriesoftransactionsinvolvingsmallershoppingtownsandretailwarehouses.ThelargesttransactionistheacquisitionoftheCarrefourCentreinEvere(Brussels)fromRedevcobyTeychenéforapproximately€25million.Primeyieldsremainstableat4,5%forthepremiumcityhighstreetshops.

Thelargertransactionsinthepipelinetakemoretimethanexpectedandprovideaslightincreaseininvestoractivityto€148millioninthethirdquarter.Thisisprimarilydrivenbysmallscalehighstreetdealspressuringprimeyieldsfurtherto4,25%inthepremiumhighstreetlocationsinBrussels,andto4,5%inGhent.

ThelargesttransactionistheacquisitionoftheRingShoppingCentreKortrijkfromRedevcobyWereldhaveBelgiumforapproximately€40million.

Otheracquisitions:theH&MshopinVeldstraatinGhentissoldtoVastnedRetailBelgiumforabout€27,7millionandTommyHilfigerinthesamestreetisboughtbyaprivateinvestorforapproximately€12,6million.FrenchREITSofidysaboughtvarioushighstreetlocationsinseveralBelgiantownsfromBermasofor€16million.

Notsurprisingly,thelastquarterof2014isthestrongestwithatotaltransactionvolumeof€337million.Withthis,thetotalvolumefortheyearamountsto€631million,15%downon2013.Inthefirstthreequartersitmainlyinvolvesmallscalehighstreettransactions;inthelastquartertheeye-catcherismainlythe“out-of-town”segmentwith9transactionstotalling€159million.

VastnedRetailBelgiumhasrecordedthelargesttransactionwiththesaleofaportfolio,whichincludesJulianusShoppinginTongeren,toaFrenchprivateinvestorfor€35,6million.

SinceJuly2014,competenceforretailpermitsisregionalised.InFlanders,apolicyisexpectedthattendstosupportthecitycentres.InitsdraftmemorandumstheWalloondecreeprovidesforlimitingpermitsto20years.Theeffectofthisisyettobeseen.

Sustainability

Sustainabilityisnotasimportantforretailpropertiesasitisintheofficemarket.Intheretailmarket,sustainabil-ityplaysamuchsmallerrolewhenchoosingalocation.Whennewretailwarehousesandshoppingcentresarebuilt,however,attentionisdefinitelypaidtothesustain-abilityaspectsoftheproperty.

Thisdoesnotmeanthatsustainabilityisnotimportanttoretailers:theythinkaboutenvironmentallyefficientlightingandairconditioning,andsustainabilityisalsoanimportantissuewithregardtotheproductionprocess.However,intermsofthepropertyitself,sustainabilityisoftennotacriterion.

Brussels, chaussée d’Ixelles - 6.604 m2

44

Investments

Regardingnewinvestments,thefocusofVastnedRetailBelgiumisonhigh-qualityretailpropertyinprimelocationsinthecentreofmajorcitiesinBelgiumsuchasBrussels,Antwerp,GhentandBruges.

Acquisition of an inner-city shop in a prime location on Veldstraat, Ghent

Afterthepurchasein2013ofthemagnificenthistoricpropertyinBrugesatSteenstraat38,inlateJuly2014,VastnedRetailBelgiumagainsucceedsinacquiringaninner-cityshopinaprimelocation,thistimeatVeldstraat23-27inGhent,whichisleasedtoH&M.TheshopislocatedinthebestpartofVeldstraat,onthecornerwithBennesteeg,andhasafrontageof25metersonVeld-straatand28metersonBennesteeg.

GhentisoneofthetopthreeretailcitiesinBelgium,andthefootfallinVeldstraataverages150.000peopleperweek.VastnedRetailBelgiumstrengthensitspositionwiththisacquisitioninGhent,whereitalsoownsotherretailpropertiesonVeldstraat,ZonnestraatandVolderstraat.

Thecommercialsurfaceareaofthisinner-cityshopconsistsofagroundfloorof1.025m2andafirstfloorof850m2.Thefirstandsecondfloorsalsohavestorageandsocialareas,aswellastechnicalareas.

H&MisaSwedishfashionchainwithmorethan3.200branchesinover54countriesandapproximately116.000employees.BesidesH&M,thegroupconsistsof5otherin-dependentbrands:COS,Monki,Weekday,CheapMondayplus‘&OtherStories’,whichwaslaunchedinMarch2013.

Thisretailpropertyisacquiredforaninvestmentvalueofroughly€27,7millionandatayieldinlinewiththemarket.Thisacquisitionwillgeneratearentalincomestreamforthecompanyofroughly€1,1millionannuallyandcontributetotheconsolidatedoperatingdistributableresult.Thetransactionisfundedfromthecompany’sexistingcreditlinesandviathetakeoveroftheloansoftheacquiredcompany.

IMPORTANTDEVELOPMENTSIN2014

The acquisition of the shop in Ghent fits Vastned Retail Belgium’s investment

strategy of focusing on inner-city shops in prime locations in the most

popular shopping streets of larger cities with firmly based shopping precincts.


45


Divestments

ItisthestrategyofVastnedRetailBelgiumtoreduceinthelongtermtheshareofretailwarehousesinthecompany’srealestateportfolioandtomovetowardsa75%shareofinner-cityshopsintheportfolio,preferablyinprimelocations.

ThepropertiesofVastnedRetailBelgiumarecontinuouslyevaluatedbasedontheirfuturepositioninthisstrategyandtheircontributiontoreturn.Thisway,propertiesareregularlydestinedforsaleforvariousreasons:

• thepropertiesarelocatedwherenogrowthisex-pectedorwhereattractivenesshasdecreased

• thesearedetachedpropertiesthatareincreasinglylesssoughtafterbyretailers.

In2014,VastnedRetailBelgiumhasdivestedatotalof19non-strategicretailwarehousesandinner-cityshopsinsecondarylocationswithatotalfairvalueof€43million.

ThesedivestmentsinvolvetheJulianusShoppinginTongerenandretailpropertiesinVilvoorde,Hoboken,Bree,Chênée,Flémalle,Genk,LaLouvière,Malmédy,Mons,Sint-Pieters-Leeuw,Waterloo,AntwerpandWesterlo.HasseltandWilrijkwithatotalgrossretailareaofroughly39.000m².

Thetotalsellingpriceisonaverageabout1%lowerthanthefairvalueasat31December2013(fairvalueasdeterminedbytheindependentpropertyexpertofthecompany).Thenetsellingprice(includingafterdeductionofsalescostsandVATadjustment)isapproximately4%lowerthanthefairvalueasat31December2013.The19retailpropertiestogethermakeup12%ofthetotalfairvalueofthecompany’srealestateportfolio.

Thecombinedannualrentalincomeofthedivestedretailpropertiesamountsto€3,6million,orroughly16%ofthecompany’stotalannualrentalincome.

“The divestments we have carried out in 2014 are fully in line with our

strategy to focus on shops in prime locations in town centres. As a result of

these divestments, combined with the acquisition of the prime retail property

in Ghent’s city centre, the occupancy rate of the portfolio has increased to

almost 98% and the share of inner-city shops in the real estate portfolio has

increased to 68% as at 31 December 2014.”

JEAN-PAULSOLS-CHIEFEXECUTIVEOFFICER

In 2014, Vastned Retail Belgium has divested 19 non-strategic retail

warehouses and inner-city shops in secondary locations with a total fair

value of € 42,9 million, approximately 12% of its total real estate portfolio.

46

Intensificationofinvestmentstrategy

Overthepastyear,VastnedRetailBelgiumhasachieveditsstatedgoalofincreasingtheshareofinner-cityshopsintheportfolioto65%.Basedoncurrentlyidentifiabletrends,VastnedRetailBelgiumintendstointensifythisstrategybypursuingatargetof75%forpremiumcityhighstreetshops.Premiumcitiesareattractiveshoppingcitiesthathavepositivedemographicgrowth,strongpurchasingpower,ahistoriccitycentre,arehighlyattractivetotouristsandarehometonationalandinternationalinstitutionsanduniversities.TheseincludecitiessuchasAntwerp,Brussels,BrugesandGhent.VastnedRetailBelgiumwillfocusexclusivelyontheprimehighstreetsinthehistoriccentresofthesecities.Atpresent,49%oftheportfoliohasalreadybeeninvestedinthesetypesoflocations.Theaimistoachievethestrategicgoalofinvesting75%oftheportfoliointhesemarketsthroughacquisitionsanddivestments.Fortheremaining25%,VastnedRetailBelgiumwillcontinuetoinvestinhigh-qualityretailwarehouselocationsandinner-citylocationsinothercities.

Evolutioninfairvalueofrealestateportfolio

In2014,thefairvalueoftheinvestmentpropertiesofVastnedRetailBelgiumdecreasesby€5millioncom-paredtothefairvalueasat31December2013andamountsasat31December2014to€357million(€362millionasat31December2013).

Thisdecreasecanbedetailedasfollows(inmillion€):

Fair value of the portfolio at 1 January 2014 362

• acquisitionsofinvestmentproperties 27• disposalsofinvestmentproperties -43• investmentsintheexistingportfolio 0• unrealisedcapitalgains 16• unrealisedcapitallosses -5

Fair value of the portfolio at 31 December 2014 357

Thisdecreaseisthecombinedeffectoftheinvestmentinaninner-cityshopinGhentwithafairvalueof€27million,thedivestmentof19non-strategicpropertieswithatotalfairvalue(asat31December2013)of€43millionandtheincreaseinfairvalueoftheexistingrealestateportfolioby€11million.

Fair value of investment properties (%)


31.12.2013

€ 362million

€ 357million

31.12.2014

47


Leases

Intheareaofleases,2014hasbeenanactiveyearforVastnedRetailBelgium.Atotalof27rentaltransactionsareconcludedthatarevaluedat€3,6millioninannualrentalincome.Thisrepresentsroughly16%ofthecompa-ny’stotalannualrentalincome.Theaveragerentincreaseinthesetransactionsisabout5%.In2014,21agreementshavegoneintoforce,withtheresttocommencein2015orlater.

Givencurrentmarketconditions,itisoftennotpossibletorealiseasubstantialincreaseinrentwhenleasingtonewtenants,especiallyinsecondarylocationswhereitisoftennecessarytolowertherent.Whenleaseagreementsareextendedwithexistingtenants,arentincreasecanbeachievediftheseinvolveprimelocations,bothinthecitycentresofthetopshoppingcities(Antwerp,Brussels,GhentandBruges)andinthebestretailwarehouseparks(GoudenKruispuntinTielt-Winge).

Thisisalsoreflectedinthefairvalueoftheinvest-mentpropertiesofVastnedRetailBelgium,whichhaveexperiencedstrongeryieldsforprimelocationsoverthecourseof2014.Moreover,theimprovementmadetothequalityoftherealestateportfolioviatheacquisitionofaninner-cityshopinaprimelocationinGhentandthedivestmentof19non-strategicpropertieshascausedtheaverageyieldintherealestateportfolioofVastnedRetailBelgiumtodecreaseforbothretailwarehousesandinner-cityshops.Asat31December2014,theaverage yield ofretailwarehousesis6,9%(7,3%asat31Decem-ber2013)andforinner-cityshopsthisis5,2%(5,6%asat31December2013).

Theoccupancy rateoftheportfolioamountsto97,9%on31December2014.Theincreaseof2,5%relativeto31December2013istheresultofdivestmentsinpropertieswithalowoccupancyrateaswellasleases,mainlyinBrussels,PhilippevilleandTurnhout.Theoccupancyrateoftherealestateportfolioexcludingbuildingsundergoingrenovationis98,5%asat31December2014(5,6%asat31December2013).

Occupancy rate (%)

31.12.2013

95,4%97,9%

31.12.2014

48

Lease renewals and renegotiations with existing tenants

In2014,VastnedRetailBelgiumhasrenewed14leaseagreementsforanannualrentalvolumeofroughly€2,5million,orapproximately11%ofthecompany’stotalrentalincome.Thenewrentfortheseleaseagreementsisonaverage7%higherthantherentcurrentlybeingchargedfortheseleaseagreements.

Therehavebeen10transactionsconcludedfor retail warehouse locationsforanannualrentalvolumeof€0,8millionandwithanaveragerentincreaseof18%.Sixofthese10leaseagreementsareextendedbasedonthesameleaseterms.IntheretailwarehouseparkinPhilippeville,a7%increaseinrentisattained.VastnedRetailBelgiumalsocouldmanagetoconcludetwomajortransactionsforleaseextensionsintheGoudenKruispuntretailparkinTielt-Winge.Therentscharged,whichovertheyearshadfallenbelowthemarketrent,areraisedbyalmost50%overthepreviousrentlevel.Thisisevidenceofthequalityofthistopretailwarehouseproject.Therecontinuestobeamarkeddiscrepancybetweentherentlevelsofprimaryandsecondarylocationsin2014.

PropertiesinthecentresofthemajorBelgianshoppingcitiesremainpopularamongcompetitiveretailers,andexistingtenantsarewillingtopayhigherrentinordertopreservetheirnamerecognitionatcertaingoodloca-tions.Asaresult,VastnedRetailBelgiumhasattaineda2%rentincreaseonleaseextensionsforits inner-city shopsonanannualrentalvolumeof€1,7millioninfourtransactions.Thisrentalvolumerepresentsroughly8%ofthecompany’sannualrentalincome.TwoofthesefourleaseextensionsareconcludedwithH&MfortheirshopsonSteenstraatinBrugesandonBondgenoten-laaninLeuven.Theseleaseextensionsareconcludedforthesameleasetermsasthosecurrentlyinforce,andthetenantisalsoundertakingmajorrenovationsatitsownexpense.H&McompletelyrenovateditsshoponLeuven’sBondgenotenlaan.ForitsbuildinginBruges,H&Malsocompletelyrenovatedandexpandedtheshop,whichoccupiesthreelevels(ground,1stand2ndfloors).Theadjoininggroundfloorshop-whichuntilendofSeptemberisstillbeingoperatedbyForMen-aswellasvariousstorageroomsonthe1stand2ndfloorsarenowincorporatedintothecurrentH&Mshop.

Philippeville, Zoning des Quatre Bras - 3.689 m2 Louvain, Bondgenotenlaan - 1.495 m2

49


New leases

In2014,13transactionsareconcludedwithnewtenantsthatgenerateanannualrentalvolumeof€0,9million.Therentforthesetransactionsisonaverage1%lowerthanthepreviousrent.

Thisdeclineinrentisconcentratedintheretail ware-houses,whichgenerateanannualrentalvolumeof€0,2millionin9transactionswithanaveragerentdecreaseof6%.Alloftheseleasesareforpropertiesinsecondarylocations.4ofthe9rentaltransactionsareconcludedforvacantunitsintheRooseveltcenterinVilvoorde,whichisdivestedinlateDecember2014.IntheretailparkinPhilippeville,anewleaseagreementisconcludedwitharentincreaseof11%fortheopeningofaCassis-Paprikashopof400m².Cassis-PaprikaisanattractiveBelgianfashionretailerthatalsohasapresenceinFrance,LuxembourgandtheNetherlands.

Forthe inner-city shops,fourtransactionsareconcludedfor€0,7millioninannualrentalincome.Thesetransactionshaveproducedanaveragerentincreaseof1%comparedtothepreviouslevel.Inlate2014,G-StarRawhasopenedaflagshipstoreinaprimelocationatHuidevettersstraat12inAntwerp.Untilrecently,thisshopwasleasedto

alocalmulti-brandshop.G-StarRawhascompletelyrenovatedthestore.Withasurfaceareaof530m²,theAntwerpbranchisthesecond-largestG-StarRawoutletintheworld.

Onenewinner-citytenantistheFrenchchainTheKaseinJardind’HarscampinNamur.ThisnewcomerontheBelgianmarketisanestablishedretailchaininFrancethathasinternationalgrowthaspirations.TheKasespecialisesin(personalised)casesforsmartphonesandtablets.

OneoftherentaltransactionsinvolvestheleaseofthepropertylocatedatGasthuisstraat32inTurnhout.Turnhout’scitycentrehasstruggledwithvacanciesforseveralyears,andthisstrategicallylocatedproperty-onthebestsectionofthehighstreet–hasbeendifficulttolease.Thepropertyhasalargeretailsurfaceareaofover1.500m²splitovertwofloors.SincelateOctober2014,theSpanishfashiongiantDesigualhasoccupiedthegroundfloorofthebuilding.DesigualisalreadyatenantofVastnedRetailBelgiuminJardind’HarscampinNamur,andowingtotheexistingagreementsatransac-tionisreadilyconcluded.

Antwerp, Huidevettersstraat - 684 m2 Namur, Place de l’Ange - 2.270 m2

50

Changefrompropertyinvestmentfundtoregulatedrealestatecompany(RREC)

AsaresultofthepublicationoftheActof12May2014concerningregulatedrealestatecompanies(RRECAct)andtheRoyalDecreeof13July2014onregulatedrealestatecompanies(RREC-RD),VastnedRetailBelgiumdecidedtochangeitsstatusandadoptthatofapublicregulatedrealestatecompany(“publicRREC”).

Firstly,itistheintentionofthecompanytopositionitselfasanREIT(RealEstateInvestmentTrust)toimprovevisibilityandunderstandingonthepartofinternationalinvestorsandtoavoidbeingseenasan“alternativeinvestmentfund”,aqualificationwhichhenceforthwillapplytopropertyinvestmentfunds,whichwouldmeanthattheeconomicmodelforanalternativeinvestmentfund,subjecttotheActof19April2014onalternativeundertakingsforcollectiveinvestmentandtheirmanagers,whereintheAIFMDdirectiveistransposed,wouldhavetoberespected.

Inthiscontext,VastnedRetailBelgiumsubmitteditspermitapplicationasapublicregulatedrealestatecom-panytotheFSMAon14August2014.ThecompanywassubsequentlygrantedthestatusofpublicregulatedrealestatecompanybytheFSMApursuanttoarticles9,§3and77oftheRRECActon22September2014,underthesuspensiveconditionofachangeinthearticlesofassocia-tionofthecompanyandcompliancewiththestipulationsofarticle77,§2andfollowingoftheRRECAct.

Tothisend,thecompanythenconvenedanextraordinarygeneralmeetingon27October2014toamendthearti-clesofassociationofthecompanyinviewofthechangeofstatusfromarealestateinvestmentfundtoapubliclyregulatedrealestatecompany.Thisextraordinarygeneralmeetingapprovedthetransformationwitha100%majority.Sincenorightofwithdrawalwasexercisedandallsuspensiveconditionstowhichtheamendmenttothearticlesofassociationwassubjectedwereimmediatelymet,asfrom27October2014,VastnedRetailBelgiumhasacquiredthestatusofpublicRREC.

Asapublicregulatedrealestatecompany,thecompanyisnolongersubjectedtothestipulationsoftheRoyalDecreeof7December2010regardingpropertyinvestmentfundsandtheActof3August2012regardingcertainformsofcollectivemanagementofinvestmentportfolios,andsince27October2014theapplicablelegislationconsistsoftheRRECActandtheRRECRoyalDecree.

VastnedRetailBelgiumispleasedwiththisnewstatusthatisbetteradaptedtotheeconomicrealityandprovidesamodifiedlegalframeworkthatisinlinewiththecapacityofVastnedRetailBelgiumasanoperationalandcommercialrealestatecompany.ThisstatusallowsVastnedRetailBelgiumtocontinueitscurrentoperationsintheinterestofthecompany,itsshareholdersandotherstakeholders.

51


Namur, Place de l’Ange - 2.270 m2

52

Consolidatedincomestatement


Rentalincome 22.011 21.743

Rental-relatedexpenses -81 -72

Propertymanagementcostsandincome 43 37

Property result 21.973 21.708

Propertycharges -2.468 -2.276

Generalcostsandotheroperatingcostsandincome -1.223 -989

Operating result before result on portfolio 18.282 18.443

Resultondisposalsofinvestmentproperties -1.870 273

Changesinfairvalueofinvestmentproperties 11.102 -3.030

Otherresultonportfolio -1.305 -154

Operating result 26.209 15.532

Financialresult(excl.changesinfairvalue-IAS39) -4.191 -4.891

Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) -1.240 1.586

Taxes -290 -33

NET RESULT 20.488 12.194

Note:

Operatingdistributableresult6 13.801 13.448


Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andothernon-distributableelements

-1.240 1.657

RESULTPERSHARE 2014 2013


Weightedaveragenumberofshares 5.078.525 5.078.525

Netresult(€) 4,03 2,40

Grossdividend(€) 2,72 2,65

Netdividend(€) 2,0400 1,9875

FINANCIALRESULTS5

5 Comparative figures for the financial year 2013 between brackets.

6 For the calculation of the operating distributable result: see Note 13 of the Financial report.

53


In2014,rental incomeofVastnedRetailBelgiumamountsto€22,0million(€21,7million).Theincreaseof€0,3millionor1%comparedto2013ismainlyduetotheacquisitionoftwopremiumhighstreetsshopsinthecentreofBrugesinMay2013andinGhentinJuly2014,aswellastoindexationsofexistingleaseagreementsandrealisedrentalrenewals,partlycompensatedbythedivestmentofapproximately12%oftherealestateportfolioin2014.

Property chargesofthecompanyincreasein2014by€0,2millionto-€2,5million(-€2,3million)asaresultofhighertechnicalcostsforplannedroofrenovationsandincreasedcommercialcosts,mainlybrokers’feesforlettings.

General costs and other operating costs and income increasein2014to-€1,2million(-€1,0million)mainlythroughadviceandpublishingcostsforthestatuschangeofthecompanyfromrealestateinvestmentcompanyintopublicregulatedrealestatecompany.

Throughtheincreaseinrentalincome,compensatedbytheincreaseofpropertychargesandgeneralcosts,theoperating result before result on portfoliodecreasesin2014by€0,1millionto€18,3million(€18,4million).

The operating margin of Vastned

Retail Belgium is 83% for financial

year 2014 (85% in 2013).

Theresult on disposals of investment propertiesamountsto-€1,9million(€0,3million)andcomprisesthelosswhichisrealisedonthedivestmentof19non-strategicretailwarehousepropertiesandinner-cityshopsinsecondarylocations.Thetotalsalespricesofthedivestedpropertiesisapproximately1%lowerthanthefairvalueasat31December2013(fairvalueasestimatedbytheindependentpropertyexpertofthecompany).Thenetsalesprice(afterdeductionofthesalescostsandtheVATrevision)isapproximately4%lowerthanthefairvalueasat31December2013.

In2014thefairvalueoftheexistingrealestateportfolioofVastnedRetailBelgiumincreasesby3%comparedtotheendof2013.Thechanges in fair value of invest-ment propertiesin2014arethuspositiveandamountto€11,1millioncomparedtothenegativechangesinfairvalueof-€3,0millionin2013.Thisincreaseinfairvaluein2014comesmainlyfromretailpropertiesinprimelocations,intheinner-cityofimportantcitiesaswellasinretailparksintheperipherythroughthesharpeningoftheyieldsduring2014.

In 2014 the fair value of the existing

real estate portfolio of Vastned

Retail Belgium increases by 3%

compared to the end of 2013 which

confirms the quality of the portfolio.

Notwithstanding the divestment of approximately 12% of the real estate

portfolio, rental income of Vastned Retail Belgium increases in 2014 by € 0,3

million or 1% through the acquisition of two inner-city shops in prime loca-

tions, indexations and rental renewals.

54

Theother result on portfolioamountsto-€1,3millionandcomprisestheimmediatewriteoffofthedifferenceinpriceof-€1,1millionontheacquisitionofthesharesofthecompanyVeldstraat23-27sa(ownerofthepre-miumhighstreetshopinGhent)attheendofJuly2014.IFRS3isnotapplicableonthisacquisition.

Thefinancial result (excl. changes in fair value of financial assets and liabilities (ineffective hedges - IAS 39)) amountsforfinancialyear2014to-€4,2million(-€4,9million).Thedecreaseof€0,7millionor14%resultsmainlyfromthestartofinterestrateswaps(forhedgingcreditfacilitieswithavariableinterestrate)atlowerinterestratesthantheinterestrateoftheinterestrateswapswhichhaveexpired.Theaverageinterestrateofthecompanyfor2014decreasesto3,2%includ-ingbankmarginscomparedto4,0%forfinancialyear2013.

For financial year 2014, the average

interest rate of the outstanding

credit facilities of the company

amounts to 3,2% including bank

margins (4,0% in 2013).

Changes in fair value of financial assets and liabili-ties (ineffective hedges - IAS 39)in2014includetheincreaseofthenegativemarketvalueofinterestrateswapsthat,inlinewithIAS39,cannotbeclassifiedascashflowhedginginstruments,foranamountof-€1,2million(€1,6million).Thisresultsfromthedecreaseoftheinterestratecurve.

Thenet resultofVastnedRetailBelgiumamountsto€20,5million(€12,2million)forfinancialyear2014andcanbedividedin:

• theoperating distributable resultof€13,8million(€13,4million)oranincreaseof€0,4millionorapproximately3%mainlythroughlowerfinancingcostsasaresultofinterestrateswapsthatstartatlowerinterestrates

• theresult on portfolioof€7,9million(-€2,9million)mainlyasaresultoftheincreaseinfairvalueoftheinvestmentproperties

• changes in the fair value of financial assets and liabilities (ineffective hedges - IAS 39) and other non-distributable elements foranamountof-€1,2million(€1,7million).

Forfinancialyear2014,theoperating distributable result ofVastnedRetailBelgiumincreasesthusto€13,8million(€13,4million).With5.078.525sharesbeingissued,thisrepresentsagross dividendof€2,72pershareforfinancialyear2014comparedto€2,65in2013.Herewiththegrossdividendyieldamountsto4,7%basedonthesharepriceasat31December2014.

55


Consolidatedbalancesheet

inthousands€ 31.12.2014 31.12.2013

ASSETS

Non-currentassets 357.023 362.265

Currentassets 5.391 2.768

Total assets 362.414 365.033

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity 242.967 235.467

Sharecapital 97.213 97.213

Sharepremium 4.183 4.183

Reserves 120.910 121.877

Netresultofthefinancialyear 20.494 12.194

Minorityinterests 167 0

Liabilities 119.447 129.566

Non-currentliabilities 91.632 116.965

Currentliabilities 27.815 12.601

Total shareholders’ equity and liabilities 362.414 365.033

DATAPERSHARE 31.12.2014 31.12.2013


Netvalue(fairvalue)(€) 47,81 46,37

Netvalue(investmentvalue)(€) 49,59 48,13

NetassetvalueEPRA7(€) 48,71 47,08

NNNNetassetvalueEPRA(€) 47,74 46,32

Sharepriceonclosingdate(€) 57,97 52,40

Premiumtonetvalue(fairvalue)(%) 21% 13%

Debtratio(max.65%) 31% 34%

7 Financial performance indicator calculated according to Best Practices Recommandations of EPRA (European Public Real

Estate Assocation). See also www.epra.com. These data are not required by regulation regarding regulated real estate compa-

nies and are not subject to a control by government authorities.

56

Assets

Asat31December2014,thefairvalueoftheinvest-ment propertiesofVastnedRetailBelgiumamountsto€357million(€362million).Thisdecreaseof€5millionin2014comparedto31December2013comesmainlyfrom:

• thedivestmentof19non-strategicretailwarehousepropertiesandinner-cityshopsinsecondaryloca-tionswithatotalfairvalueof€42,9millionasat31December2013

• theacquisitionofapremiumhighstreetshopinaprimelocationonVeldstraatinGhentwithafairvalueofapproximately€26,7million

• anincreaseinfairvalueoftheexistingrealestateport-folioof€11,1millionmainlyforretailpropertieslo-catedinprimelocations,intheinner-cityofimportantcitiesaswellasinretailparksintheperipherythroughthesharpeningoftheyields.

Asat31December2014,therealestatepropertiesarevaluedat€365million(investmentvalue)bytheinde-pendentpropertyexperts.Thefairvalueistheinvestmentvalueminusthehypotheticaltransactionrightsandcoststhatmustbepaidintheeventofanyfuturepotentialdisposal.

Current assetsamountto€5million(€3million)andconsistmainlyof€4millionassetsheldforsaleforwhichthenotarialdeedsstillhavetobeexecuted.

Thanks to a strict credit control

the number of days of outstanding

customers’ credit is only 2 days.

As at 31 December 2014, the fair

value of the real estate portfolio

amounts to € 357 million.

Antwerp, Schuttershofstraat - 66 m2

57


Liabilities

Shareholders’ equityofthecompanyamountsto€243million(€235million).Thesharecapital(€97million)andtheshare premium(€4million)haveremainedunchanged.Thenumberofsharesentitledtodividendamountsto5.078.525asat31December2014.

In 2014 the free float of the share

remains unchanged at 34,5%.

Thereservesofthecompanyamountasat31December2014to€121million(€122million)andconsistmainlyof:

• areserveforthebalanceofthechangesinfairvalueofrealestatepropertiesfor€123million(€126million)composedofthereserveforthebalanceofthechangesintheinvestmentvalueofrealestatepropertiesfor€132million(€135million),andareservefortheimpactonthefairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties.Indeed,inaccordancewiththeBeamainterpretationofIAS40(publicationoftheBelgianAssociationofAssetManagersof8February2006),therealestateportfolioisvaluedatfairvalue.Thedifferencewiththeinvestmentvalueisshownseparatelyinshareholders’equity.Asat31December2014,thisdifferenceamountsto-€9million(-€9million)

• areserveforthebalanceofthechangesinfairvalueofallowedhedginginstrumentsof-€3million(-€5million)

• resultscarriedforwardfrompreviousfinancialyearsfor€1million(€1million),availablefordistribution.

Asat31December2014,thenet value(fairvalue)oftheshareis€47,81(€46,37).Giventhatthesharepriceasat31December2014is€57,97,theshareofVastnedRetailBelgiumisquotedwithapremiumofapproximately21%comparedtothisnetvalue(fairvalue).

Comparedto2013, non-current liabilitiesdecreaseto€92million(€117million)andconsistmainlyof€87millionlong-termfinancingsaswellasthenegativemarketvalueof€5millionofnon-currenthedginginstruments.Thedecreaseresultsmainlyfromtherealisedsalesofinvestmentproperties.

Current liabilitiesamountto€28million(€13million)andconsistmainlyof€19million(€8million)currentfinancialdebts(short-termfinancingsprogressingeachtime),of€7millionintradedebtsandothercurrentdebtsandof€1millionindeferredchargesandaccruedincomeandotherliabilities.

A low debt ratio of 31%

as at 31 December 2014

(34% as at 31 December 2013)

offers the company a stable

balance-sheet position.

58

Themostimportantcharacteristicsofthefinancialstructureasat31December2014are:

• amountoffinancialdebts:€106million

• 69%oftheavailablecreditlinesatfinancialinstitutionsarelong-termfinancingswithanaverageremainingdurationof2,1years

• well-spreadexpirydatesofcreditfacilitiesbetween2015and2018

• spreadofcreditfacilitiesover5Europeanfinancialinstitutions

• €31millionofavailablenon-withdrawncreditlinesatfinancialinstitutions

• 75%ofthewithdrawncreditfacilitieshaveafixedinterestrateorarefixedthroughinterestrateswaps,25%haveavariableinterestrate

• fixedinterestratesarefixedforaremainingperiodof3,6yearsinaverage

• averageinterestratefor2014:3,2%includingbankmargins(2013:4,0%)

• marketvalueoffinancialderivatives:€4,6millioninnegative

• limiteddebtratioof31%(legalmaximum:65%)(34%asat31December2013).

Balancebetweenlong-termandshort-termfinancings

Asat31December2014,69%oftheavailablecreditlinesatfinancialinstitutionsarelong-termfinancings.31%ofthecreditlinesareshort-termfinancingswith13%con-sistingofcreditfacilitieswithanunlimitedduration(€17,4million)and18%ofacreditfacilitywhichhastoberefinancedinthefirstquarterof2015(€25million).Fortherefinancingofthelattercreditfacility,discussionsareongoingwiththefinancialinstitutionconcerned.

69% of the credit lines are long-

term financings with well spread

expiry dates.

Balance between long-term and short-term financings

FINANCIALSTRUCTURE

a b

b 1b 2

Long-term credit facilitiesShort-term credit facilitiesCredit facilities with indefinite durationCredit facility expiring in the first quarter of 2015

69%31%13%

18%

abb1

b2

Asat31December2014,VastnedretailBelgiumhasaconservativefinancialstructureallowingittocontinuetocarryoutitsactivitiesin2015.

59


Availablecreditlines

Asat31December2014,thecompanystillhas€31mil-lion(€15millionin2013)ofnon-withdrawncreditfacili-tiesatitsfinancialinstitutionstomeetthefluctuationsofliquidityneeds,forfinancingfutureinvestmentsandforpaymentofthedividendoffinancialyear2014.

Durationandspreadofexpirydatesoflong-termfinancings

Asat31December2014,theweightedaveragedurationofthelong-termfinancingsis2,1years.ThestrategyofVastnedRetailBelgiumistomaintainthisaveragedura-tionbetween3,5and5years,butitispossibletodeviatefromthatprinciplewhenspecificmarketcircumstancesrequireit.

ThecreditfacilitiesportfolioofVastnedRetailBelgiumisspreadover5Europeanfinancialinstitutions.

Expiry calendar credit lines

Percentagecreditfacilitieswithfixedandvariableinterestrate

Whencomposingtheloanportfolio,thestrategyofVastnedRetailBelgiumconsistsofachievingaratioofone-thirdborrowedcapitalwithavariableinterestrateandtwo-thirdsborrowedcapitalwithafixedinterestrate.Asat31December2014,58%ofthecreditlinesofthecompanyconsistsoffinancingwithafixedinterestorisfixedbyinterestrateswaps.42%arecreditfacilitieswithavariableinterestrate.

Ofthewithdrawncreditfacilitiesasat31December2014,75%hasafixedinterestrateorisfixedbyinterestrateswaps.25%haveavariableinterestratewhichisbeneficialduetothecurrentlowinterestratelevels.

Balance credit facilities with fixed and variable interest rate

The weighted average duration of

long-term credit facilities amounts

to 2,1 years as at 31 December 2014.

75% of the withdrawn credit lines

has a fixed interest rate or is fixed

by interest rate swaps.

17

Indefinite

dura

tion

25

2015

50

20162018

2025

2017

mill

ion

€

a

b

25%

75%

Variable interest rate

Fixed interest rate

k

a

b

60

Durationoffixedinterestrates

Fortheprotectionofitsoperatingresultsagainstfutureinterestratefluctuations,VastnedRetailBelgiumcoverspartiallytheinterestratefluctuationswithinterestrateswaps.

Inthefirstsemesterof2014thecompanyhaspurchasedaninterestrateswapforanotionalamountof€15millionwithadurationof5yearsasfrom1October2014.Thisinterestratecoverhasbeenrealisedat0,72%whichissubstantiallylowerthantheinterestrateoftheexistinginterestrateswapwhichamountedto3,02%andexpiredon1October2014(withanotionalamountof€25million).

Asat31December2014VastnedRetailBelgiumhasanotionalamountof€70millionactiveinterestrateswapsataweightedaverageinterestrateof1,87%(toincreasebythebankmargins).Furthermore,thecompanyhasonecreditfacilityof€10millionwithafixedinterestrateof3,40%.Throughtheseinterestratecoverstheinterestratefor75%ofthewithdrawncreditlinesisfixedasat31December2014foraremainingperiodof3,6yearsinaverage.

Averageinterestrates

TheinterestratepolicyofVastnedRetailBelgiumalwaysconsistsinconcludingone-thirdofitscreditfacilitieswithavariableinterestrate.In2014,thetotalaverageinterestrateofthefinancialdebtsofthecompanyamountsto3,2%,includingbankmargins(4,0%in2013).

For2014,theaverageinterestrateforthenon-currentfinancialdebtsamountsto3,1%(4,6%in2013).

For2014,theaverageinterestrateforthecurrentfinan-cialdebtsamountsto3,3%(1,5%in2013).

Refinancingrealisedin2014

Duringthefirstquarterof2014VastnedRetailBelgiumdidnothavetocarryoutsomerefinancingofitscreditfacilities.ThenextcreditfacilitywhichwillexpireisattheendofMarch2015.

Interestratesensitivity

Forfinancialyear2014theeffectontheoperatingdistributableresultofa(hypothetical)increaseininterestratesby1%givesanegativeresultofapproximately€0,4million(€0,4millionin2013).Theconcludedfinancialderivativesaretakenintoaccountforthiscalculation.Giventhecurrentlylowmarketrateahypotheticalde-creaseofinterestratesby1%isnotrealistic.

Interestcoverratio

Theinterestcoverratioistheratiobetweentheoperat-ingresultbeforeresultonportfolioandthefinancialresult(excludingtherevaluationoffinancialderivativesinaccordancewithIAS39).ForVastnedRetailBelgium,thisratioamountsto4,3forfinancialyear2014(3,7forfinancialyear2013),whichissignificantlybetterthantherequirementsagreedinthefinancingagreementsofcompanyasacovenant.

Debtratio

Asat31December2014,thedebtratioofthecompanyamountsto31%andhasdecreasedby3%comparedto31December2013(34%)asaresultofdivestmentsininvestmentpropertiesin2014andtheincreaseinfairvalueoftheexistingrealestateportfolio.

The company has a limited

debt ratio of 31%.

Debt ratio

31.12.2014 31.12.2013

31% 34%

61


Theboardofdirectorsproposestodistributetheresultforfinancialyear2014ofVastnedRetailBelgiumsa,asfollows:

inthousands€ 31.12.2014

Net result for financial year 20148 20.494

Transfertothereservesforthebalanceofchangesinfairvalue9ofinvestmentproperties

• Financialyear -11.327

• Valuerealisedfromrealestateproperties 2.967

Transfertothereservesfortheimpactonfairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties

-752

Transferfromthereserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentsnotsubjecttohedgeaccounting

1.240

Transferfromotherreserves 968

Transferfromresultscarriedforwardfrompreviousfinancialyears 224

Remuneration of capital 13.814

Thisrepresentsanetdividendof€2,0400afterdeductionof25%withholdingtax.

Takingintoaccount5.078.525sharesthatwillparticipateinthefullresultforthefinancialyear,thismeansthatadividendof€13.813.588isavailablefordistribution.

Thedividendishigherthantherequiredminimumof80%oftheoperatingdistributableresultasVastnedRetailBelgium,inaccordancewithitspolicy,willalsodistribute100%oftheoperatingdistributableresultfor2014.

Thedividendwillbepayableasfrom7May2015.Asfarasthebearersharesareconcerned,thiscanbedonebypresentationofdividendcertificatenumber15.

PROFITDISTRIBUTION2014

At the general meeting of shareholders on 29 April 2015, it shall be proposed

that a gross dividend of € 2,72 per share will be distributed.

8 As legally speaking only the operating distributable profit

of the statutory annual accounts can be distributed and

not of the consolidated annual accounts, the present profit

distribution is based on the statutory figures (see Note 13

of the Financial report).

9 Based on the changes in the investment value of invest-

ment properties.

62

InDecember2014theEPRA’sReportingandAccountingCommitteepublishedanupdateofthereportentitled“BestPracticesRecommendations(BPR)11.ThisBPRcontainstherecommendationsfordefiningthemainfinancialperformanceindicatorsapplicabletotherealestateportfolio.VastnedRetailBelgiumsupportsthereportingstandardisationapproachdesignedtoimprovethecomparabilityandthequalityofinformationandsuppliesherinvestorsandotherusersoftheannualreportwithmostoftheEPRArecommendations.ForthisreasonVastnedRetailBelgiumhaschosentorecordthekeyperformanceindicatorsinaseparatechapteroftheannualreport.

Thestatutoryauditorhascheckedwhetherthe“EPRAearnings”,“EPRANAV”and“EPRANNNAV”ratioshavebeencalculatedinaccordancewiththedefinitionsgiveninthe“EPRABestPracticesRecommendations”ofAugust2011andwhetherthefinancialdatausedtocalculatethoseratiostallywiththeaccountingdataincludedintheconsolidatedfinancialstatements.

EPRABESTPRACTICES10

10 These data are not compulsory under the legislation on

regulated real estate companies and are not verified by

public authorities.

11 The report is available on the EPRA website: www.epra.com

Ghent, Volderstraat - 279 m2

63


EPRAKeyperformanceindicators

TableEPRA

IndicatorsEPRADefinitions12 31.12.2014 31.12.2013

1 EPRAEarningsRecurringearningsfromcoreopera-tionalactivities

inthousands€ 13.807 13.519

€/share 2,72 2,66

2 EPRANAV

NetAssetValueadjustedtoincludepropertiesandotherinvestmentinterestsatfairvalueandtoexcludecertainitemsnotexpectedtocrystalizeinalongterminvestmentpropertybusinessmodel

inthousands€ 247.352 239.115

€/share 48,71 47,08

3 EPRANNNAVEPRANAVadjustedtoincludethefairvaluesoffinancialinstruments,debtanddeferredtaxes.

inthousands€ 242.434 235.186

€/share 47,74 46,32

4

(i)EPRA

NetInitialYield

(NIY)

Annualisedrentalincomebasedon

thecashrentspassingatthebalance

sheetdate,lessnonrecoverable

propertyoperatingexpenses,divided

bythemarketvalueoftheportfolio,

increasedwithestimatedpurchasers’

costs.

4,9% 5,2%

(ii)EPRA

Topped-up(NIY)

Thismeasureincorporatesanadjust-menttotheEPRANIYinrespect

oftheexpirationofrent-freeperiods

(orotherunexpiredleaseincentives

suchasdiscountedrentperiodsand

steprents).

5,1% 5,4%

5EPRA

VacancyRate

Estimatedmarketrentalvalue(ERV)ofvacantspacedividedbyERVofthewholeportfolio

1,5% 4,1%

6EPRACostRatio(includingdirectvacancycosts)

EPRAcosts(includingdirectvacancycosts)dividedbygrossrentalincomelessgroundrentcosts.

17,3% 15,8%

EPRACostRatio(excludingdirectvacancycosts)

EPRAcosts(excludingdirectvacancycosts)dividedbygrossrentalincomelessgroundrentcosts.

16,3% 15,1%

12 Source: EPRA Best Practices (www.epra.com).

64

Table 1: EPRA Earnings

inthousands€ 31.12.2014 31.12.2013

Net result 20.494 12.194

Ajustments to calculate EPRA earnings

Toexclude:

Changesinfairvalueofinvestmentproperties -11.102 3.030

Resultondisposalofinvestmentproperties 1.870 -273

Changesinfairvalueoffinancialassetsandliabilities 1.240 -1.586

Otherresultonportfolio 1.305 154

EPRA Earnings 13.807 13.519

Weightedaveragenumberofshares 5.078.525 5.078.525

EPRA Earnings (€/share) 2,72 2,66

TheEPRAEarningsamountsto€13,8millionforfinancialyear2014comparedto€13,5millionforfinancialyear2013oranincreaseof€0,3millionor2%,mainlythroughlowerfinancingcostsasaresultofinterestrateswapsthatstartatlowerinterestrates.TheEPRAEarningspershareamountsherewithto€2,72forfinancialyear2014comparedto€2,66forfinancialyear2013.

Namur, Place de l’Ange - 2.270 m2

65


Tables 2 and 3: EPRA NAV and EPRA NNNAV

inthousands€ 31.12.2014 31.12.2013

Net value 242.800 235.467

Net value (€/share) 47,81 46,37

Effectofexerciseofoptions,convertibledebtsandotherequityinterests 0 0

Diluted net asset value, after the exercise of options, convertible debts and other equity interests

242.800 235.467

Toexclude:

IV.Fairvalueoffinancialinstruments 4.552 3.610

Va.Deferredtaxes 0 38

EPRA NAV 247.352 239.115

Numberofsharesattheendoftheyear 5.078.525 5.078.525

EPRA NAV (€/share) 48,71 47,08

Toinclude:

I.Fairvalueoffinancialinstruments -4.552 -3.610

II.Revaluationsatfairvalueoffinancingswithfixedinterestrate -366 -221

III.Deferredtaxes 0 -38

EPRA NNNAV 242.434 235.246

Numberofsharesattheendoftheyear 5.078.525 5.078.525

EPRA NNNAV (€/share) 47,74 46,32

TheEPRANAVpershareamountsasat31December2014to€48,71comparedto€47,08asat31December2013.Theincreaseof€1,63pershareresultmainlyfromtheincreaseinfairvalueoftherealestateportfolioinfinancialyear2014.

TheEPRANNNAVpershareamountsasat31December2014to€47,74comparedto€46,32asat31December2013.Theincreaseof€1,42pershareresultsmainlyfromtheincreaseinfairvalueoftherealestateportfolioduringfinancialyear2014,partlycompensatedbythechangeinfairvalueofthefinancialinstruments.

66

Table 4: EPRA Net Initial Yield (NIY) and EPRA Topped-up NIY

inthousands€ 31.12.2014 31.12.2013

Investment properties and properties held for sale 360.692 361.678

Toinclude:

Propertiesthatarebeingconstructedordevelopedforownaccountinordertobeleased -2.129 -2.129

Propertiesheldforsale -4.156 0

Properties available for lease 354.407 359.549

Toinclude:

Estimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties

8.860 8.989

Investment value of properties available for lease (B) 363.267 368.538

Annualisedgrossrentalincome 19.862 21.515

Toexclude:

Propertycharges13 -1.931 -2.362

Annualised net rental income (A) 17.931 19.153

Adjustments:

Rentexpirationofrentfreeperiodsorotherleaseincentives 569 610

Annualised ‘topped-up’ net rental income (C)

18.500

19.763

(in %)

EPRA NET INITIAL YIELD (A/B) 4,9% 5,2%

EPRA ‘topped-up’ NET INITIAL YIELD (C/B) 5,1% 5,4%

TheEPRANetInitialYieldandtheEPRA‘Topped-up’NetInitialYieldhasslightlydecreasedasat31December2014comparedto31December2013,mainlyduetotheincreaseinfairvalueoftherealestateportfolioduringfinancialyear2014.

13 The perimeter of the property charges to be excluded for the calculation is recorded in the EPRA Best Practices and does not

correspond with the “Property charges” as presented in the consolidated IFRS accounts.

67


Table 5: EPRA Vacancy rate

SegmentLeasablespace

Estimatedrentalvalue(ERV)onvacantspaces

Estimatedrentalvalue(ERV)

EPRA vacancy rate

EPRAvacancyrate

inm2 inthousands€ inthousands€ in % in%

31.12.2014 31.12.2013

Inner-cityshops 33.805 129 12.384 1,6% 3,9%

Retailwarehouses 77.353 184 7.894 1,5% 4,4%

Total properties available for lease

111.158 313 20.278 1,5% 4,1%

TheEPRAVacancyrateat31December2014hasdecreasedby2,6%comparedto31December2013,resultingmainlyofdivestmentsinpropertieswithalowoccupancyrateaswellasleases,mainlyinBrussels,PhilippevilleandTurnhout.

Table 6: EPRA Cost Ratios

inthousands€ 31.12.2014 31.12.2013

Generalcosts 1.248 1.066

Write-downsontradereceivables 70 84

Compensationsforbuildingrightsandlong-leaserights 110 109

Propertycharges 2.468 2.276

Toexclude:

Compensationsforbuildingrightsandlong-leaserights -110 -109

EPRA costs (including vacancy costs) (A) 3.786 3.426

Vacancycosts -219 -168

EPRA costs (excluding vacancy costs) (B) 3.567 3.258

Rentalincomelesscompensationsforbuildingrightsandlong-leaserights(C) 21.901 21.634

(in %)

EPRA Cost Ratio (including vacancy costs) (A/C) 17,3% 15,8%

EPRA Cost Ratio (excluding vacancy costs) (B/C) 16,3% 15,1%

TheEPRACostRatio(includingvacancycosts)andtheEPRACostRatio(excludingvacancycosts)asat31December2014hasincreasedcomparedto31December2013,mainlyduetotheincreaseofpropertycharges(€0,2million)andthegeneralcosts(€0,2million)duringfinancialyear2014.Thevacancycostshaveremainedatthesamelevelin2014asin2013(€0,2million).

68

VastnedRetailBelgiumintendstopursueitsstrategyfurtherin2015byfocusingexplicitlyonpremiumqual-itylocationsandproperties.Asattheendof2014,theobjectivetoincreasetheshareoftheinner-cityshopstoatleast65%oftheportfolioisrealisedwithaninner-cityshoppropertypercentageof68%wherein49%oftheportfolioisalreadyinvestedinprimeretailpropertieslocatedintheprimehighstreetsofthemajorcitiesofAntwerp,Brussels,GhentandBruges.

VastnedRetailBelgiumhasintensifieditsinvestment strategy.Itnowintendstoachievea75%investmentratioininner-cityshopsinBelgiumovertime.Indoingso,overtimetheshareofprimeretailpropertiesinthemostpopularhighstreetsinthemajorcitiesmustamountto50%oftheoverallrealestateportfolio.

Acquisitionswillonlybemadeinmajorcitieshavingstrongshoppingdistrictsinwhichanauthenticshoppingexperienceispossible,suchasAntwerp,Brussels,GhentandBruges.Itwouldnotberealistictostateshort-termgrowthtargetsduetothefactthatthemarketforhigh-qualityproductsisstillscarce.Butit’sexpectedthatinvestmentswillpickupontheinvestmentmarketin2015,particularlyintheprimehighstreets,wheremainlyprivateinvestorsaccountforalargepartofthetotalin-vestmentvolume.Thelargerinvestorsarefocusingmoreontheshoppingcentresandretailparks,whichhavemorereasonableinvestmentyields(between5,25%-6%and5,75%-6,25%,respectively)thanpropertiesintheprimehighstreets(4%).Makingtheshifttoprimelocationsalsomeansaccept-ingaloweryield.YieldsonprimelocationsinAntwerp,Brussels,GhentandBrugesarecurrentlyabout4%,andsometimesevenlowerdependingonaproperty’srentalpotential.Investinginthesekindsofyieldsonlymakeseconomicsenseiftherentlevelsmakeitpossibletoincreasetherent.

Divestmentswillforthemostpartbemadeinanopportunisticway,andareonlybeingconsideredforlessstrategicinner-cityshopsinsmallercitiesandlessstrategicretailwarehousesorretailparks.

AbsolutepremiumretailwarehouseprojectsofVastnedRetailBelgium,suchastheGoudenKruispuntinTielt-Winge,willremainintheportfolio.Bymeansofactiveassetmanagement,VastnedRetailBelgiumisseekingtobetterexploitthecommercialpotentialofitsbestretailwarehouseprojectsthroughanoptimisationoftheten-antmixaswellasinvestmentsinthebuildings.

Weareawaitingtheimpactofthemovetoshiftrespon-sibilityforretailbusinesstotheregionallevel.ThisbringsaboutuncertaintyregardingfuturedevelopmentsaswellaspotentialdisparitiesbetweentheregionsofBelgium.Flandersisclearlyoptingforcity-centredevelopmentsinlinewiththe‘RetailMemorandum’strategy.It’sexpectedthattheforthcomingregulationswillimpedefuturedevelopmentsintheperipheryandinturnboostthedemandforprimelocationsintheperipherywhicharealreadylicenced.

TheannualCBRESurveymoreovergivesVastnedRetailBelgiumreasonforhope.Apredominantlypositivesentimentisbeingnotedamongretailers.Nearlythree-quartersoftheretailchainssurveyedbyCBREsaytheyarethinkingaboutexpandinginthenexttwelvemonths,withoneofeveryfourlookingatunitswithmoresurfacearea.Halfofthesechainsareconvincedofanincreaseinturnover,andslightlymorethanhalfexpectrentstostaythesame.

Veritascontinuestobeasuccessstorytofollow,asaretwootherlocalplayers,ZEB(ColruytGroup)andLola&Liza.Internationally,weareawaitingtheimpactofthe(planned)arrivalofUniqloontheMeirinAntwerpandtheexpansionplansofPrimarkforGhent,BrusselsandHasselt.

Theoutlookforpuree-commerceplayerslikeZalandoisdifficulttojudge.Belgiumhaslaggedbehindine-commerceforalongtime,thoughitnowfindsitselfattheEuropeanaverageintermsofvolume.Aportionofthisvolumegoestoforeignretailers.Itisestimatedthatthelossinturnoverforlocalretailersamountstoabout3%to4%.

Inregardstofuture rent increasesstemmingprimar-ilyfromleaseextensionsthatwillbenegotiatedin2015,VastnedRetailBelgiumismildlyoptimistic.Anumberofprimelocationsdefinitelyhavethepotentialforrentincreases,buttherearesomecasesinwhichwemighthavetobecontentwithcurrentrentlevels.Therateofinflationwilllikelyremainlow.

In2014,VastnedRetailBelgiumhasdivested19non-strategic,high-yieldretailwarehousepropertiesandinner-cityshopsinsecondarylocations,therebyincreas-ingthequalityoftherealestateportfolio.Intheshortterm,thismeansthatthedistributable operating resultisexpectedtobelowerin2015thanin2014.Theactualdecreaseinthedistributableoperatingresultwilldependlargelyontheinvestmentsthatthecompanyisabletomakeintheprimehighstreetsofmajorcitieswithhealthyshoppingdistrictsinwhichanauthenticshoppingexperienceispossible,suchasAntwerp,Brussels,GhentandBruges.

OUTLOOKFOR201514

14 The market information in this text is based on Cushman & Wakefield, Vastned Retail Belgium Portfolio 31 December 2014,

what to expect p. 19 - 20; CBRE Belgium Retailer Survey 2014, p. 2 - 5; CBRE interview Kim Verdonck, dated 14/1/2015 and

CBRE’s annual review of retail activity in 2014 and trends for 2015, p. 46-47.

69


Ghent, Volderstraat - 279 m2 Bruges, Steenstraat - 941 m2

Brussels, Avenue Louise - 245 m2Antwerp, Leysstraat - 528 m2

71

Report on the share


72

STOCKMARKETINFORMATION

TheshareofVastnedRetailBelgium(VASTB)islistedonEuronextBrusselsandisincludedinthestockmarketindexesBELRealEstateandGPR250Europe.

VASTB

Sharepriceevolution2014

ThesharepriceofVastnedRetailBelgiumhasincreasedfrom€52,40asat31December2013to€57,97asat31December2014oranincreasebyapproximately11%.Thelowestclosingsharepricereaches€51,00(20January2014)andthehighestclosingshareprice€58,80(11November2014).

Theaveragesharepriceoffinancialyear2014amountsto€55,24comparedto€€52,06forfinancialyear2013.

Sharepriceevolution2010-2014

Duringthelast5years(2010-2014)thesharepriceoftheVastnedRetailBelgiumsharehasincreasedgradu-allyfrom€37,20on1January2010to€57,97asat31December2014oranincreaseofapproximately56%.

€60

58

56

54

52

50

48

Jan 14

Feb 1

4

Mar

14

Apr 14

May

14Jul 1

4

Aug 14

Sep 14

Jun 14

Nov 14

Oct 14

Dec 14

€60

55

50

45

40

35

30

20102011

20122013

20142015

73

Report on the share

PremiumVastnedRetailBelgium

During2014,theVastnedRetailBelgiumshareisquotedwithapremiumof19%inaveragecomparedtothenetvalue(fairvalue).

ThenetvalueofVastnedRetailBelgiumincludesthe2013dividenduptothepaymentdateon9May2014.

€

Net asset value (fair value)

54

Average share price

58

56

52

50

48

46

44

Jan 14

Feb 1

4

Mar

14

Apr 14

May

14Jul 1

4

Aug 14

Sep 14

Jun 14

Nov 14

Oct 14

Dec 14

74

ComparisonofVastnedRetailBelgiumwithBelRealEstateindexandBEL20Closeindex

TheVastnedRetailBelgiumsharehasperformedlesserthantheBEL20andtheBELRealEstate.

Duringthelast5years(2010-2014)theVastnedRetailBelgiumsharehasperformedmuchbetterthantheBEL20andhasfluctuatedalongwiththeBELRealEstate.

%

Vastned Retail Belgium BEL Real Estate BEL 20

120

115

110

105

100

95

Jan 14

Feb 1

4

Mar

14

Apr 14

May

14Jul 1

4

Aug 14

Sep 14

Jun 14

Nov 14

Oct 14

Dec 14

180

160

140

100

120

80

60

40

20102011

20122013

20142015

%

Vastned Retail Belgium BEL Real Estate BEL 20

75

Report on the share

ComparisonofVastnedRetailBelgiumwithGPRindexes

Thisgraphshowsthatin2014VastnedRetailBelgiumhasfluctuatedalongwiththeGPR250Belgiumindex,theGPR250EuropeindexandtheEuronext100index.

AdditionalinformationontheindexescanbeobtainedfromEuronextBrusselsfortheEuronext100andBEL20andfromGlobalPropertyResearch(www.property-shares.com)regardingtheGPR250EuropeandGPR250Belgium.

TradedvolumesVastnedRetailBelgium

Thetradedvolumes,withanaverageof813sharesperday,areslightlylowerthanpreviousyear(837unitsaday).

AliquiditycontracthasbeenconcludedwithBankDegrooftopromotethenegotiabilityoftheshares.Inpracticethistakesplacethroughtheregularsubmissionofbuyandsellorderswithincertainmargins.

Attheendof2014thefreefloatamountsto34,5%.

%

Vastned Retail Belgium GPR 250 Europe

GPR 250 Belgium

BEL 20

Euronext 100

150

125

100

75

Jan 14

Feb 1

4

Mar

14

Apr 14

May

14Jul 1

4

Aug 14

Sep 14

Jun 14

Nov 14

Oct 14

Dec 14

25.000

20.000

15.000

10.000

5.000

0

Jan 14

Feb 1

4

Mar

14

Apr 14

May

14Jul 1

4

Aug 14

Sep 14

Jun 14

Nov 14

Oct 14

Dec 14

76

31.12.2014 31.12.2013 31.12.2012

Numberofsharesattheendoftheperiod 5.078.525 5.078.525 5.078.525

Numberofsharesentitledtodividend 5.078.525 5.078.525 5.078.525

SHAREPRICE(€) 31.12.2014 31.12.2013 31.12.2012

Highestclosingshareprice 58,80 57,69 51,00

Lowestclosingshareprice 51,00 47,37 44,25

Sharepriceonclosingdate 57,97 52,40 47,60

Premiumtonetvalue(fairvalue)(%) 21% 13% 3%

Averageshareprice 55,24 52,06 47,72

DATAPERSHARE(€) 31.12.2014 31.12.2013 31.12.2012

Netvalue(fairvalue) 47,81 46,37 46,29

Netvalue(investmentvalue) 49,59 48,13 48,07

NetassetvalueEPRA 48,71 47,08 47,61

Grossdividend 2,72 2,65 2,62

Netdividend 2,0400 1,9875 1,9650

Closingpricegrossdividendyield(%) 4,7% 5,0% 5,5%

Closingpricenetdividendyield(%) 3,5% 3,8% 4,1%

DIVIDENDANDNUMBEROFSHARES

As at 31 December 2014 the share price of Vastned Retail Belgium is € 57,97,

offering its shareholders a gross dividend yield of 4,7%.

77

Report on the share

SHAREHOLDERS

Asat31December2014,thefollowingshareholdersareknowntothecompany:

Vastned Retail nv

Lichtenauerlaan1303062MERotterdam

TheNetherlands3.320.529shares 65,4%

CFB Belgique sa

Uitbreidingstraat18

2600Berchem-Antwerp

Belgium 5.431shares 0,1%

Public 1.752.565shares 34,5%

TOTAL 5.078.525 shares 100%

Pursuanttoarticle74ofthePublicTakeoverActof1April2007,VastnedRetailnvandCFBBelgiquesahaveinformedtheFSMAthattheyactjointly.

VastnedRetailBelgiumreceivedatransparencynotifica-tionon7January2014fromCapfiDelenAssetManage-mentSA,withregisteredofficesat2020Antwerp,JanVanRijswijcklaan178.ThisnotificationstatedthatthevotingrightsrelatingtotheVastnedRetailBelgiumsharesthatarehelddirectlyorindirectlybyCapfiDelenAssetManage-

mentsaasfrom7January2014exceededthelimitof3%ofthetotaloftheexistingvotingrightsandamountto4,13%.

Thecompletenotificationaswellastheshareholderstructureon7January2014canbeconsultedonthewebsiteofVastnedRetailBelgiumundertheheading“Corporate-CorporateGovernance-Shareholders’struc-tureandtransparencydeclarations”.

FINANCIALCALENDAR2015

DEC JAN FEB

Announcement of annual results as at31 December 2014

Tue 10

MAR APR

General meeting of shareholders

MAY

Interim statementon the results as at 31 March 2015

Tue 5

JUN JUL

Half-yearly financial statement as at 30 June 2015

Thur 30

AUG SEP OCT

Interim statement on the results as at30 September 2015

Tue 27

NOV DEC

Wed 29 at 14.30

Record date dividend 2014 Wed 6

2014 2015

Ex dividend date 2014Tue 5

Dividend payment 2014 as of Thur 7

79

Property report

Antwerp, Huidevettersstraat - 684 m2

80

Geographicspread

ThestoresarespreadthroughoutBelgium,withagoodrepartitionacrossthevariousregions.

Typeofretailproperty

Theretailpropertiesconsistof68%ofinner-cityshops,andof32%retailwarehouses.

Thecategory inner-city shops containspropertiesthataresituatedinawell-developedtradingcentrewithaconcentrationoflargeretailorganisations.Twentytownsandcitiesfallintothiscategory.Theinner-cityshopsareparticularlydesiredassetsforaswellretailersasinvestors.Theshortageoftheseobjectssupportsinanimportantmeasurethedevelopmentvalueofthesebuildings.

Forretail warehousesitisprimarilythelocationofthepropertiesalongsidemajortrafficroutesaswellasthelargesalesarea(from400m²).Thiscategoryincludesbothstandalonebuildingsandretailparks.Theseareclustersofretailwarehouses,oftenconceivedastradingcomplexeswithsharedparkingareas.Sinceafewyearstheretailwarehousesundergoaqualitydevelopment.Especiallytheretailwarehousesformanattractionpoolontheirownandarenotonlyattractivefordiscountformula.Sinceafewyearsthereisanevolutionwherebyretailersarenotonlylocatedintheinner-citybutalsointheperiphery.

Thecostswhichareattheexpenseofthelessorareratherlimitedtoimportantmaintenancecoststothestructureofthebuildingorimportantrepairsorreplace-mentsofroofs.Rentalexpenses(suchaspropertytaxandcostsforsharedareas)aremostlypaidbythetenant.

VastnedRetailBelgiuminvestsexclusivelyinBelgiancommercialrealestate,focusingprimarilyoninner-citylocationsandretailware-houses,bothontoplocations.

15 Above charts in this report have been compiled based on

the annual rental income of 2014 and the value of the real

estate properties as at 31 December 2014.

COMPOSITIONOFTHEPORTFOLIO15

a

b

c

72%

15%

13%

Flanders

Brussels

Walloon region

a

b

c

k

a

b

68%

32%

Inner-city shops

Retail warehouses

a

b

81

Property report

Sectoroftenants

Thetenantsareofahighqualityandtheyarespreadequallyovertheprincipalsectorsoftheretailtrade.

Regionofactivityoftenants16

Themajorshareoftenantsareinternationalchains,whichisbeneficialtothestabilityandcontinuityofportfolio.

Mostoftheretailpropertieshavebeenletontraditionalleaseagreementstouserswhoarewidelydistributedacrossallsectorsoftheretailtrade.Sincemostofthesepropertiesareinprimelocations,thetenantsarenotin-clinedtorelocatequickly.Inmanycasestheyhavemadeajointinvestmentintheinterioroftheproperty,whichisbeneficialtothestabilityandcontinuityoftherentalincome.

Allofthesefactorsresultinahighoccupancyrateoftheportfolio(97,9%asat31December2014).

16 A national chain has to have at least five points of sale, an

international chain must have at least five points of sale in

at least two countries.

a

b

c

d

e

f

63%

13%

10%

6%

5%

3%

Clothing, shoes and accessoires

Domestic articles, interior and do-it-yourself

Leisure, luxury articles and personal care

Specialised food shops and department stores

TV, hifi, electrical articels, multimedia and telephone

Others

a b

c

d

e

a

b

c

81%

15%

4%

International

National

Local

a

b

c

Antwerp, Schuttershofstraat -54 m2

82

The Top 10 of tenants

generates 53% of

rental income.

Riskspreadamongstbuildings

Throughthespreadoftenantsoveralargenumberofbuildingsondifferentlocations,theriskofretailcentresevolvinglessfavourablyanditseffectonchangesinrentalpricesisextremelylimited.Asat31December2014theportfolioismadeupof169leasableunits,spreadover69differentlocations.

Riskspreadamongsttenants

RentalincomeofVastnedRetailBelgiumisspreadover113differenttenants,limitingdebtor’sriskandimprovingstabilityofrentalincome.Thetenmostimportanttenantsrepresent53%ofrentalincomeandarealwaysprominentcompaniesintheirsectorandpartofinternationalgroups.

a

b

c

d

e

f

g

h

i

j

k

10%

9%

7%

6%

5%

4%

4%

3%

3%

3%

46%

Tielt-Winge - Aarschotsesteenweg 1/6

Brussels - Chée d’Ixelles 41/43

Ghent - Veldstraat 23/27

Bruges - Steenstraat 80

Antwerp - Leysstraat 28/30

Namur - Jardin d’Harscamp

Malines - Bruul 42/44

Louvain - Bondgenotenlaan 69/73

Antwerp - Meir 99

Bruges - Steenstraat 38/40

Other buildings

46%54%

a

b

cd e

fg

h

i

j

k

a

b

c

d

e

f

g

h

i

j

k

19%

8%

5%

4%

4%

3%

3%

3%

2%

2%

47%

Hennes & Mauritz

Inditex

Ariane

Euro Shoe Group

Aldi

AS Watson

De Secon Group

Giorgio Armani Retail srl

Blokker Group

Maxeda

Other

47%53%

a

bc d e

fg

h

i

j

k

Turnhout, Gasthuisstraat - 1.269 m2

83

Property report

31december2014

Space

(m²)

Annualrent

(€000)

Investment

value(€000)

Fairvalue

(€000)Weighting

(%)

Investment properties

Brussels 11.175 3.106 56.307 54.934 15%

Flanders 79.809 14.452 262.813 256.403 72%

Walloonregion 20.610 3.317 46.330 45.199 13%

Total investment properties 111.594 20.875 365.450 356.536 100%

As at 31 December 2014 the real

estate portfolio has an occupancy

rate of 97,9%.

OVERVIEWOFTHEREALESTATEPORTFOLIO

Tielt-Winge, Aarschotsesteenweg - 19.096 m2

84

31.12.2014 31.12.2013 31.12.2012 31.12.2011 31.12.2010

Investmentvalueinvestmentproperties(€000) 365.450 370.720 368.162 371.268 337.371

Currentrents(€000) 20.431 22.125 21.832 21.942 21.392

Yield(%) 5,6% 6,0% 5,9% 5,9% 6,3%

Currentrents,includingestimatedrentalvalueonvacancy(€000)

20.875 23.183 22.442 22.724 21.656

Yieldiffullylet(%) 5,7% 6,3% 6,1% 6,1% 6,4%

Totalleasablespaceofinvestmentproperties(m²) 111.594 146.962 151.041 161.573 159.581

Occupancyrate(%) 97,9% 95,4% 97,3% 96,6% 98,8%

TherealestateportfolioofVastnedRetailBelgiumresists,givenitseconomiesofscale,diversityandaboveallitsquality,ingeneralrelativelygoodtoevolutionsinthemarket.

ThisisalsoreflectedinthefairvalueoftheinvestmentpropertiesofVastnedRetailBelgiumwhereasharpeningoftheyieldforprimelocationsoccurredduring2014.

FurthermoretheimprovementofthequalityoftherealestateportfoliothroughtheacquisitionofapremiumhighstreetshopinaprimelocationinGhentandthedivestmentof19non-strategicpropertieshasledtoadecreaseoftheaverageyieldoftherealestateportfolioofVastnedRetailBelgiumforretailwarehousepropertiesaswellasforinner-cityshops.Asat31December2014theretailwarehousepropertieshaveanaverageyieldof6,9%(7,3%asat31December2013)andinner-cityshopsof5,2%(5,5%asat31December2013).

.

Total leasable space (m2)

Sensitivityanalysis

Incaseofahypotheticalnegativeadjustmentoftheyieldthepropertyexpertsuseforthevaluationoftherealestateportfolioofthecompanyfund(yieldorcapi-talisationrate)with1%(from5,6%to6,6%inaverage),theinvestmentvalueoftherealestateportfoliowoulddecreaseby€54millionor15%.Herewiththedebtratioofthecompanywouldincreaseby6%to37%.

Intheoppositecaseofahypotheticalpositiveadjustmentofthisyieldwith1%(from5,6%to4,6%inaverage),theinvestmentvalueoftherealestatewouldincreaseby€78millionor22%.Herewiththedebtratioofthecompanywoulddecreaseby6%to25%.

EVOLUTIONOFTHEREALESTATEPORTFOLIO

31.12.2014

111.594 m² 146.962 m²

31.12.2013

85

Property report

Cushman&Wakefield

TheCushman&WakefieldmethodologyisbasedontheERV(EstimatedRentalValue)withadjustmentsthattakeintoaccountthecurrentrentpaidand/oranyotherelementthatinfluencesthevalue,e.g.costsofvacancy.

TheybasetheirdeterminationofthemarketrentalvalueontheirknowledgeoftherealestatemarketandonrecenttransactionsconcludedbytheRetaildepartment.Therentalvalueisinfluenced,interalia,by:

• location• suitabilityofthesite• qualitiesofthebuilding• marketcircumstances.

Theallocatedunitpriceismultipliedbythesurfaceareaofthecommercialbuildinginordertoreachatotalesti-matedrentalvalue.

Fortheinner-cityshops,the“zoneA”principleisused.Thefirststepinvolvescalculatingthefirst10metresdepthoverthefullfaçadewidthofthepropertiesat100%oftheestimatedrent/m²,thenext10metresat50%andtherestat25%.Storeysarechargedat25%oratafixedestimatedamountdependingonlocationandusability.

Next,theAdjustedERViscalculated:thisis60%ofthedifferencebetweenthecurrentrentandtheERV.IfthecurrentrentishigherthantheERV,theAdjustedERVisequaltotheERVandthe60%ruledoesn’tapply.

Afollowingstepconsistsofdeterminingayieldorcapi-talizationrateatwhichaninvestorwouldbepreparedtobuytheproperties.Thegrossvaluebeforecorrectionsisthenobtained.Anyadjustments(e.g.costsofvacancies)canbemadeatthispoint,afterwhichtheinvestmentvalue(valuedeedinhand)isobtained.

Initsreportof31December2014,Cushman&Wakefieldstatesthattheinvestmentvalueoftheretailportfolioamountsto€154.256.081.

CBRichardEllis

ThemethodologyofCBRichardElliscanbesummarisedasfollows:

Valuation on the basis of the capitalisation of rental income

Foreachletproperty,theestimatedmarketrentalvalue(ERV)isdeterminedalongwithamarket-levelcapitalisa-tionrate(caprate)basedonrecentpointsofcomparisonandtakingintoaccounttheresultsofourinspectionsonthespot.

Iftheestimatedmarketvalueexceedsthecurrentrentalvalue,itisassumedthatarentincreasecanbeobtainedatthenextrentalrenewal,whichiscalled‘adjustedERV’.ThisadjustedERVconsistsoftheamountofthecurrentrentalincomeincreasedby60%ofthedifferencebetweentheERVandthecurrentrentalincome.Aftercapitalisa-tionoftheadjustedERV,thegrossmarketvaluebeforeadjustmentsofthepropertyisobtained.

Iftheestimatedmarketvalueislowerthanthecurrentrentalincome,thegrossmarketvaluebeforecorrectionsisobtainedthroughcapitalisationoftheestimatedrentalvalue(ERV).

Theappliedcorrectionsonthegrossmarketvalueconsistof:

• deductionfromthenetcurrentvalueofthedifferencebetweentheadjustedERVandthecurrentrentalincomefortherestofthecurrentrentalperiodiftheestimatedmarketrentalvalueishigherthanthecurrentrentalincome

• increasebythecurrentnetvalueofthedifferencebetweenthecurrentrentalincomeandtheestimatedmarketvaluefortheremainingperiodofcurrentrentsiftheestimatedmarketvalueislowerthanthecurrentrentalincome

• deductionoftherentaldiscountgiven• deductionforthenecessaryexpensestotheproperty• deductionfortheexpectedvacancyperiods.

Initsreportof31December2014,CBRichardEllisdeclaresthatthefairvalueofthecommercialpropertiesamountsto€202.280.362.

VALUATIONOFTHEPORTFOLIO

BYPROPERTYEXPERTS

AllthecommercialpropertiesofVastnedRetailBelgiumarevaluedbyCushman&WakefieldorCBRichardEllis.

87

Financial report


88

Liège, Rue pont D’Ile - 375 m2

89

Financial report

Consolidated income statement 90

Consolidated statement of comprehensive income 91

Consolidated balance sheet 92

Statement of changes in consolidated equity 94

Consolidated cash flow statement 96

Notes to the consolidated annual accounts 97

Note1. Schemeforannualaccountsofregulated realestatecompanies 97Note2. Principlesoffinancialreporting 97Note3. Segmentedinformation 106Note4. Propertyresult 108Note5. Propertycharges 110Note6. Generalcosts 112Note7. Employeebenefits 113Note8. Resultondisposalsofinvestment properties 114Note9. Changesinfairvalueofinvestment properties 114Note10. Otherresultonportfolio 115Note11. Financialresult 115Note12. Taxesontheresult 116Note13. Numberofsharesand resultpershare 116Note14. Non-currentassets 119Note15. Currentassets 122Note16. Shareholders’equity 124Note17. Currentliabilities 128Note18. Non-currentandcurrentfinancial debts 129Note19. Financialinstruments 131Note20. Calculationofdebtratio 135Note21. Relatedparties 135Note22. Listofconsolidatedcompanies 136Note23. Dealingwithconflictsofinterest 137Note24. Feeoftheauditorandentities affiliatedwiththeauditor 138Note25. Conditionalobligations 138Note26. Eventsafterthebalancesheetdate 138

Statutory auditor’s report 140

Statutory annual accounts Vastned Retail Belgium sa 142

INDEX

90

inthousands€ Note 2014 2013

Rentalincome 4 22.011 21.743

Rental-relatedexpenses 4 -81 -72

NET RENTAL INCOME 21.930 21.671

Recoveryofrentalchargesandtaxesnormallypayablebytenantsonletproperties

4 1.506 1.548

Rentalchargesandtaxesnormallypayablebytenantsonletproperties 4 -1.506 -1.548

Otherrental-relatedincomeandexpenses 43 37

PROPERTY RESULT 21.973 21.708

Technicalcosts 5 -582 -460

Commercialcosts 5 -319 -215

Chargesandtaxesonunletproperties 5 -219 -168

Propertymanagementcosts 5 -1.223 -1.229

Otherpropertycharges 5 -125 -204

Property charges -2.468 -2.276

OPERATING PROPERTY RESULT 19.505 19.432

Generalcosts 6 -1.248 -1.066

Otheroperatingincomeandcosts 25 77

OPERATING RESULT BEFORE RESULT ON PORTFOLIO 18.282 18.443

Resultondisposalsofinvestmentproperties 8 -1.870 273

Changesinfairvalueofinvestmentproperties 9 11.102 -3.030

Otherresultonportfolio 10 -1.305 -154

OPERATING RESULT 26.209 15.532

Financialincome 11 6 3

Netinterestcharges 11 -4.187 -4.883

Otherfinancialcharges 11 -10 -11

Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) 11

-1.240 1.586

Financial result -5.431 -3.305

RESULT BEFORE TAXES 20.778 12.227

Corporatetax -290 -33

Taxes 12 -290 -33

NET RESULT 20.488 12.194

Note:

Operatingdistributableresult 13 13.801 13.448

Resultonportfolio 8-9-10 7.927 -2.911

Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andothernon-distributableelements

-1.240 1.657

Attributable to:

Equityholdersoftheparentcompany 20.494 12.194

Minorityinterests -6 0

CONSOLIDATEDINCOMESTATEMENT

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RESULTPERSHAREin€ Note 2014 2013

Numberofsharesentitledtodividend 13 5.078.525 5.078.525

Weightedaveragenumberofshares 13 5.078.525 5.078.525

Netresult 13 4,03 2,40

Dilutednetresult 13 4,03 2,40

Operatingdistributableresult 13 2,72 2,65

CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME


NET RESULT 20.488 12.194

Other components of comprehensive income (recyclable in the income statement)

Changesintheeffectivepartoffairvalueofallowedhedginginstrumentsthataresubjecttohedgeaccounting

297 1.499

COMPREHENSIVE INCOME 20.785 13.693

Attributable to:

Equityholdersoftheparentcompany 20.791 13.693

Minorityinterests -6 0

92

ASSETSinthousands€ Note 31.12.2014 31.12.2013

Non-current assets 357.023 362.265

Intangibleassets 3 7

Investmentproperties 14 356.536 361.678

Othertangibleassets 14 477 560

Non-currentfinancialassets 19 0 17

Tradereceivablesandothernon-currentassets 7 3

Current assets 5.391 2.768

Assetsheldforsale 15 4.156 0

Tradereceivables 15 163 173

Taxreceivablesandothercurrentassets 15 213 91

Cashandcashequivalents 339 1.860

Deferredchargesandaccruedincome 520 644

TOTAL ASSETS 362.414 365.033

CONSOLIDATEDBALANCESHEET

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SHAREHOLDERS’EQUITYANDLIABILITIESinthousands€ Note 31.12.2014 31.12.2013

Shareholders’ equity 242.967 235.467

Shareholders’ equity attributable to the shareholders of the parent company

242.800 235.467

Sharecapital 16 97.213 97.213

Sharepremium 16 4.183 4.183

Reserves 120.910 121.877


Minority interests 22 167 0

Liabilities 119.447 129.566

Non-current liabilities 91.632 116.965

Non-currentfinancialdebts 18 86.906 113.712

Credit institutions 86.900 113.700

Financial lease 6 12

Othernon-currentfinancialliabilities 19 4.552 3.106

Othernon-currentliabilities 174 109

Deferredtaxes-liabilities 0 38

Current liabilities 27.815 12.601

Provisions 205 0

Currentfinancialdebts 18 19.256 8.405


Financial lease 6 5

Other current financial debts 17.000 0

Othercurrentfinancialliabilities 19 0 521

Tradedebtsandothercurrentdebts 17 7.209 2.576

Othercurrentliabilities 17 136 175

Accruedchargesanddeferredincome 17 1.009 924

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 362.414 365.033

DEBTRATIO 31.12.2014 31.12.2013


NETVALUEPERSHAREIN€ 31.12.2014 31.12.2013

Netvalue(fairvalue) 47,81 46,37

Netvalue(investmentvalue) 49,59 48,13

NetassetvalueEPRA 48,71 47,08

94

inthousands€ Sharecapital Sharepremium

RESERVES

NETRESULTOFFINANCIAL

YEAR

Minorityinterests

Total

shareholders’ equity

Reserve for the balance of the changes infair value of real estate properties Reserve for the

balance of changes infair value of allowedhedging instruments

subject to hedgeaccounting

Reserve for thebalance of changes infair value of allowedhedging instrumentsnot subject to hedge

accounting

Results carriedforward

from previousfinancial years

TOTAL RESERVESReserve for the

balance of changesin investment

value of real estateproperties

Reserve for theimpact on fair

value*

Balance at 31 December 2012 97.213 4.183 127.648 -9.055 -2.003 -2.602 1.031 115.020 18.664 0 235.080

Comprehensiveincomeof2013 1.499 1.499 12.194 13.693

Transferthroughresultallocation2012

Transferfromresultonportfoliotoreserves 7.340 75 7.415 -7.415 0

Transferfromchangesinfairvalueoffinancialassetsandliabilities

-2.090 -2.090 2.090 0

Othermutations 33 33 -33 0

Dividendsfinancialyear2012 -13.306 -13.306

Balance at 31 December 2013 97.213 4.183 134.988 -8.980 -504 -4.692 1.064 121.877 12.194 0 235.467

Comprehensiveincomeof2014 297 297 20.494 -6 20.785


Transferfromresultonportfoliotoreserves -2.849 -62 -2.911 2.911 0


1.586 1.586 -1.586 0


MinorityinterestGhentVeldstraat23-27nv 173 173



*ofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties.

STATEMENTOFCONSOLIDATEDCHANGESINEQUITY

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inthousands€ Sharecapital Sharepremium

RESERVES

NETRESULTOFFINANCIAL

YEAR

Minorityinterests

Total

shareholders’ equity

Reserve for the balance of the changes infair value of real estate properties Reserve for the

balance of changes infair value of allowedhedging instruments

subject to hedgeaccounting

Reserve for thebalance of changes infair value of allowedhedging instrumentsnot subject to hedge

accounting

Results carriedforward

from previousfinancial years

TOTAL RESERVESReserve for the

balance of changesin investment

value of real estateproperties

Reserve for theimpact on fair

value*

Balance at 31 December 2012 97.213 4.183 127.648 -9.055 -2.003 -2.602 1.031 115.020 18.664 0 235.080

Comprehensiveincomeof2013 1.499 1.499 12.194 13.693


Transferfromresultonportfoliotoreserves 7.340 75 7.415 -7.415 0


-2.090 -2.090 2.090 0




Comprehensiveincomeof2014 297 297 20.494 -6 20.785


Transferfromresultonportfoliotoreserves -2.849 -62 -2.911 2.911 0


1.586 1.586 -1.586 0


MinorityinterestGhentVeldstraat23-27nv 173 173



*ofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties.

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CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR 1.860 216

1. Cash flow from operating activities 13.038 13.334

Operating result 26.209 15.532

Interests paid -4.191 -4.937

Other non-operating elements -1.619 1.445

Adjustment of result for non-cash flow transactions -6.913 1.300

• Depreciationsonintangibleandothertangibleassets 86 106

• Resultondisposalsofinvestmentproperties 8 1.870 -273

• Spreadofrentaldiscountsandbenefitsgrantedtotenants -312 -131

• Changesinfairvalueofinvestmentproperties 9 -11.102 3.030

• Otherresultonportfolio 10 1.305 154

• Changesinfairvalueoffinancialassetsandliabilitiesineffectivehedges-IAS39) 19 1.240 -1.586

Change in working capital -448 -6

Movement of assets

• Tradereceivables 15 11 72

• Taxreceivablesandothercurrentassets 15 -122 70

• Deferredchargesandaccruedincome 192 -42

Movement of liabilities

• Tradedebtsandothercurrentdebts -486 -219

• Othercurrentliabilities 17 -39 -35

• Accruedchargesanddeferredincome -4 148

2. Cash flow from investment activities 17.390 -3.577

Acquisitionsofintangibleandothertangibleassets 0 -66

Acquisitionsofsharesofrealestatecompanies -20.885 0

Acquisitionofinvestmentproperties 14 0 -11.670

Investmentsinexistinginvestmentproperties 14 -36 -204

Prepaidinvestmentinvoices -68 -258

Proceedsofdisposalsofinvestmentproperties 38.379 8.621

3. Cash flow from financing activities -31.949 -8.113

Repaymentofloans -35.550 -10.000

Drawdownofloans 17.000 15.206

Repaymentoffinancialleaseliabilities 18 -5 -5

Receiptsfromnon-currentliabilitiesasguarantee 64 -8

Dividendpaid 13 -13.458 -13.306

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 339 1.860

CONSOLIDATEDCASHFLOWSTATEMENT

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Note1. Schemeforannualaccountsofregulatedrealestatecompanies

Asalistedpublicregulatedrealestatecompany,VastnedRetailBelgiumsahasprepareditsconsolidatedannualaccountsinaccordancewiththe“InternationalFinancialReportingStandards”(IFRS)asacceptedbytheEuropeanUnion.IntheRoyalDecreeof13July2014onregulatedrealestatecompaniesaschemefortheannualaccountsiscontained.

Theschemeprincipallymeansthattheresultontheport-folioispresentedseparatelyintheincomestatement.

Thisresultontheportfolioincludesallmovementsintherealestateportfolioandconsistsof:

• realisedgainsorlossesonthedisposalofinvestmentproperties

• changesinfairvalueofinvestmentpropertiesasaresultofthevaluationbypropertyexperts,beingnon-realisedincreasesand/ordecreasesinvalue.

Theresultontheportfolioisnotdistributedtotheshare-holders,buttransferredtoorfromthereserves.

Note2. Principlesoffinancialreporting

Statement of conformity

VastnedRetailBelgiumisapublicregulatedrealestatecompanyhavingitsregisteredofficesinBelgium.Theconsolidatedannualaccountsofthecompanyasper31December2014includethecompanyanditssubsidiaries(the“Group”).TheannualaccountsofVastnedRetailBelgiumsahavebeenpreparedandarereleasedforpublicationbytheboardofdirectorson16March2015andwillbesubmittedforapprovaltothegeneralmeetingofshareholderson29April2015.

Theconsolidatedfinancialstatementsarepreparedincompliancewiththe“InternationalFinancialReportingStandards”(IFRS)asapprovedbytheEuropeanUnionandaccordingtotheRoyalDecreeof13July2014.ThesestandardscompriseallnewandrevisedstandardsandinterpretationspublishedbytheInternationalAccountingStandardsBoard(‘IASB’)andtheInternationalFinancialReportingInterpretationsCommittee(‘IFRIC’),asfarasapplicabletotheactivitiesoftheGroupandeffectiveforfinancialyearsasfrom1January2014.

New and amended standards and interpretations effective for financial year starting as at 1 January 2014

ThefollowingamendedstandardsbytheIASBandpublishedstandardsandinterpretationsbytheIFRICbecameeffectiveforthecurrentperiod,butdonotaffectthedisclosure,notesorfinancialresultsofRREC:IFRS10Consolidated Financial Statements;IFRS11Joint Arrange-ments;IFRS12Disclosures of Interests in Other Entities; IAS27Separate Financial Statements; IAS28Investments in Associates and Joint Ventures; AmendmentstoIFRS10,IFRS12andIAS27-Consolidated Financial Statements and Disclosure of Interests in Other Entities: Investment Entities;AmendmentstoIAS32FinancialInstruments:Presenta-

tion-OffsettingFinancialAssetsandFinancialLiabilities;AmendmentstoIAS36-Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Asset; AmendmentstoIAS39-Financial Instruments - Novation of Derivatives and Continuation of Hedge Accounting.

New and amended standards and interpretations not yet effective in 2014

Thefollowingamendedstandardswillbecomeeffectiveasfromfollowingyearorlater,butarenotsupposedtoaffectthedisclosure,notesorfinancialresultsoftheRREC:IFRS9Financial Instruments and subsequent amendments (1/1/2018);IFRS14Regulatory Deferral Accounts(1/1/2016);IFRS15Revenue from Contracts with Customers(1/1/2017);ImprovementstoIFRS(2010-2012)(1/2/2015);ImprovementstoIFRS(2011-2013)(1/1/2015);AmendmentstoIFRS11Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations(1/1/2016);AmendmentstoIAS16andIAS38Property, Plant and Equipment and Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortisation(1/1/2016);AmendmentstoIAS16andIAS41Agriculture: Bearer Plants(1/1/2016);AmendmentstoIAS19Employee Benefits – Employee Contributions(1/2/2015);IFRIC21–Levies(1/7/2014);Improvements to IFRS(2012-2014)(notyetendorsedintheEU);AmendmentstoIFRS10,IFRS12andIAS28Investment Entities: Applying the Consolidation Exception(notyetendorsedinEU);AmendmentstoIFRS10andIAS28Sale or Contribution of Assets between an Investor and its Associate or Joint Venture(notyetendorsedintheEU);AmendmentstoIAS1Presentation of Financial Statements – Disclosure Initiative (notyetendorsedinEU);AmendmentstoIAS27Separate Financial Statements - Equity Method (notyetendorsedintheEU).

NOTESTOTHECONSOLIDATEDANNUALACCOUNTS

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Presentation basis

Theconsolidatedannualaccountsareexpressedinthousandsof€,roundedtothenearestthousand.

Theaccountingprinciplesareappliedconsistentlyandtheconsolidatedaccountsarepresentedbeforeprofitdistribution.

Consolidation principles

a.SubsidiarycompaniesAsubsidiarycompanyisanentityoverwhichanotherentityhascontrol(exclusivelyorjointly).Controlisthepowertogovernthefinancialandoperatingpoliciesofanentityinordertoinfluencebenefitsfromitsactivities.Asubsidiarycompany’sannualfinancialstatementisrecognisedintheconsolidatedannualfinancialstatementbymeansoftheintegratedconsolidationmethodologyfromthetimethatcontrolarisesuntilsuchtimeasitceases.Ifnecessary,thefinancialreportingprinciplesofthesubsidiarieshavebeenchangedinordertoarriveatconsistentprincipleswithintheGroup.Thereportingperiodofthesubsidiarycoincideswiththatoftheparentcompany.

b.EliminatedtransactionsAnytransactionsbetweentheGroupcompanies,balancesandunrealisedprofitsandlossesfromtransac-tionsbetweenGroupcompanieswillbeeliminatedwhentheconsolidatedannualaccountsareprepared.ThelistofsubsidiariesisgivenunderNote22.

Business combinations and goodwill

WhentheGrouptakescontrolofanintegratedcombinationofactivitiesandassetscorrespondingtothedefinitionofbusinessaccordingtoIFRS3-Businesscombinations,assets,liabilitiesandanycontingentliabilitiesofthebusinessacquiredarerecognisedseparatelyatfairvalueontheacquisitiondate.Thegoodwillrepresentsthepositivechangebetweenthesumoftheacquisitionvalue,theformerlyinterestintheentitywhichwasnotcontrolled(ifapplicable)andtherecognisedminorityinterest(ifapplicable)andontheotherpartthefairvalueoftheacquirednetassets.Ifthedifferenceisnegative(“negativegoodwill”),itisimmediatelyrecognisedintheresultsafterconfirmationofthevalues.Alltransactioncostsareimmediatelychargedanddonotrepresentapartofthedeterminationoftheacquisitionvalue.

InaccordancewithIFRS3,thegoodwillcanbedeter-minedonaprovisionalbasisatacquisitiondateandadjustedwithinthe12followingmonths.

Afterinitialrecognition,thegoodwillisnotamortisedbutsubmittedtoanimpairmenttestcarriedoutatleasteveryyearforcash-generatingunitstowhichthegoodwillwasallocated.Ifthecarryingamountofacash-generatingunitexceedsitsvalueinuse,theresultingimpairmentisrecognisedintheresultsandfirstallocatedinreductionofthepossiblegoodwillandthentotheotherassetsoftheunit,proportionaltotheircarryingamount.Animpair-mentlossrecognisedongoodwillisnotreversedduringasubsequentyear.

Intheeventofthedisposalofacash-generatingunit,theamountofgoodwillthatisallocatedtothisunitisincludedinthedeterminationoftheresultofthedisposal.

WhentheGroupacquiresanadditionalinterestinasubsidiarycompany,formerlyalreadycontrolledbytheGrouporwhentheGroupsellsapartoftheinterestinasubsidiarycompanywithoutlosingcontrol,thegoodwill,recognisedatthemomentoftheacquisitionofcontrol,isnotinfluenced.ThetransactionwithminorityinterestshasaninfluenceonthetransferredresultsoftheGroup.

.

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Foreign currencies

Foreigncurrencytransactionsarerecognisedattheexchangeratevalidonthetransactiondate.Monetaryassetsandliabilitiesdenominatedinforeigncurrencyarevaluedatthefinalrateinforceonthebalancesheetdate.Exchangeratedifferencesderivingfromcurrencytransac-tionsandfromtheconversionofmonetaryassetsandliabilitiesdenominatedinforeignarerecognisedintheincomestatementintheperiodwhentheyoccur.Non-monetaryassetsandliabilitiesdenominatedinforeigncurrenciesareconvertedattheexchangeratevalidatthetransactiondate.

Property result

Incomeisvaluedatthefairvalueofthecompensationreceivedortowhichtitlehasbeenobtained.Incomewillonlyberecognisedifitisprobablethattheeconomicbenefitswillfalltotheentityandcanbedeterminedwithsufficientcertainty.

Therentalincome,thereceivedoperationalleasepay-mentsandtheotherincomeandcostsarerecognisedlinearlyintheincomestatementintheperiodstowhichtheyrefer.

Thecompensationpaidbytenantsforearlyterminationofleaseagreementsisimmediatelytakenintoresultintheperiodinwhichitisirrevocablyobtained.

Property charges and general charges

Thecostsarevaluedatthefairvalueofthecompensa-tionthathasbeenpaidorisdueandarerecognisedintheincomestatementfortheperiodstowhichtheyrefer.

Result on disposal and changes in fair value of in-vestment properties

Theresultfromthedisposalofinvestmentpropertiesisequaltothedifferencebetweenthesellingpriceandthecarryingamount(i.e.thefairvaluedeterminedbythepropertyexpertattheendofpreviousfinancialyear)lessthesellingexpenses.

Thechangesinfairvalueofinvestmentpropertiesareequaltothedifferencebetweentheactualcarryingamountandthepreviousfairvalueasestimatedbytheindependentpropertyexpert.Acomparisonismadeatleastfourtimesayearfortheentireportfolioofinvest-mentproperties.Movementsinfairvalueoftherealestatepropertiesarerecognisedintheincomestatementintheperiodinwhichtheyarise.

Brussels, chaussée d’Ixelles - 622 m2 Brussels, chaussée de Louvain- 2.964 m2

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Financial result

Thefinancialresultconsistsofinterestchargesonloansandadditionalfinancingcosts,lesstheincomefrominvestments.

Taxes on result

Taxesontheresultofthefinancialyearconsistofthetaxesdueandrecoverableforthereportingperiodandpreviousreportingperiods,deferredtaxesandtheexittaxdue.Thetaxexpenseisrecognisedintheincomestate-mentunlessitrelatestoelementsthatareimmediatelyrecognisedinequity.Inthelattercase,taxesarerecog-nisedasachargeagainstequity.

Whencalculatingthetaxationonthetaxableprofitfortheyear,thetaxratesinforceattheendoftheperiodareused.

Withholdingtaxesondividendsarerecognisedinequityaspartofthedividenduntilsuchtimeaspaymentismade.

Theexittaxowedbycompaniesthathavebeentakenoverbytherealpropertyinvestmenttrust,aredeductedfromtherevaluationsurplusatthemomentofthemergerandarerecognisedasaliability.

Taxclaimsandliabilitiesarevaluedatthetaxrateusedduringtheperiodtowhichtheyrefer.

Deferredtaxclaimsandliabilitiesarerecognisedonthebasisofthedebtmethod(‘liabilitymethod’)forallprovisionaldifferencesbetweenthetaxablebasisandthecarryingamountforfinancialreportingpurposeswithrespecttobothassetsandliabilities.Deferredtaxclaimsareonlyrecognisedifitisprobablethattherewillbetax-ableprofitagainstwhichthedeferredtaxclaimcanbeoffset.

.

Ordinary and diluted net result per share

Theordinarynetresultpershareiscalculatedbydividingthenetresultasshownintheincomestatementbytheweightedaverageofthenumberofoutstandingordinaryshares(i.e.thetotalnumberofissuedshareslessownshares)duringthefinancialyear.

Tocalculatethedilutednetresultpershare,thenetresultthatisduetotheordinaryshareholdersandtheweightedaverageofthenumberofoutstandingsharesisadaptedfortheeffectofpotentialordinarysharesthatmaybediluted.

Intangible assets

Intangibleassetsarerecognisedatcost,lessanyaccumu-lateddepreciationandexceptionalimpairmentlosses,ifitislikelythattheexpectedeconomicbenefitsattribut-abletotheassetwillflowtotheentity,andifthecostoftheassetcanbemeasuredreliably.Intangibleassetsareamortisedlinearlyovertheirexpectedusefullife.Thedepreciationperiodsarereviewedatleastattheendofeveryfinancialyear.


a.DefinitionInvestmentpropertiescomprisealllandsorbuildingsthatarelettableand(whollyorinpart)generaterentalincome,includingthebuildingswherealimitedpartiskeptforownuseandbuildingsunderanoperatinglease.

b.InitialrecognitionandvaluationInitialrecognitioninthebalancesheettakesplaceattheacquisitionvalueincludingtransactioncostssuchasprofessionalfees,legalservices,registrationchargesandotherpropertytransfertaxes.Theexittaxduefromcompaniesabsorbedbythecompanyisalsoincludedintheacquisitionvalue.

Commissionfeespaidforacquisitionsofbuildingsmustbeconsideredasadditionalcostsfortheseacquisitionsandaddedtotheacquisitionvalue.

Iftheacquisitiontakesplacethroughtheacquisitionofsharesofarealestatecompany,throughthenon-monetarycontributionofabuildingagainsttheissueofnewsharesorbymergerthroughtakeoverofarealestatecompany,thedeedcosts,auditandconsultancycosts,reinvestmentfeesandcostsofliftingdistraintonthefinancingoftheabsorbedcompanyandothercostsofthemergerarealsocapitalised.

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Financial report

c.SubsequentcostsExpensesforworksoninvestmentpropertiesarechargedagainsttheincomestatementofthereportingperiodiftheyhavenopositiveeffectontheexpectedfutureeconomicbenefitsandarecapitalisediftheexpectedeco-nomicbenefitsfortheentityaretherebyincreased.

Fourtypesofsubsequentcostsaredistinguishedinrespectofinvestment:repairsandmaintenance,refurbishment,renovations,rentincentives.

1. Repairs and maintenance:theseareexpensesthatdonotincreasetheexpectedfutureeconomicbenefitsofthebuildingorprojectandareconsequentlychargedinfullagainsttheincomestatementundertheitem“Technicalcosts”.

2. Refurbishment:theseareexpensesarisingfromaten-antleaving.Theseexpensesarechargedintheincomestatementunder“Costspayablebytenantandbornebylandlordforrentaldamageandrefurbishment”.

3. Renovations:theseareexpensesresultingfromadhocworksthatsubstantiallyincreasetheexpectedeconomicbenefitsfromthebuilding(forexample:installationofairconditioningorcreationofadditionalparkingplaces).Thedirectlyattributablecostsoftheseworks,suchasmaterials,buildingworks,technicalstudiesandarchitects’feesareconsequentlycapitalised.

4. Rent incentives:theseareconcessionsbytheownertothetenantonmoving-incostsinordertopersuadethetenanttorentexistingoradditionalspace.Forexample,furnishingofretailproperties,creationofadditionalsocialareas,etc.Thesecostsarecapitalisedandthenallocatedovertheperiodfromthecom-mencementoftheleaseagreementsuptothenexttimeatwhichitispossibletoterminatethecontractandaredeductedfromtherentalincome.

d.ValuationafterinitialrecognitionAfterinitialrecognition,investmentpropertiesanddevel-opmentprojectsarevaluedbytheindependentpropertyexpertsatinvestmentvalue.Forthispurposeinvestmentpropertiesanddevelopmentprojectsarevaluedquar-terlyonthebasisofthecashvalueofmarketrentsand/oreffectiverentalincome,afterreductionofassociatedcostsinlinewiththeInternationalValuationStandards2001,drawnupbytheInternationalValuationStandardsCommittee.

Valuationsaremadebydiscountingtheannualnetrentreceivedfromthetenants,reducedbytherelatedcosts.Discountingusesayieldfactordependingontheinherentriskoftherelevantbuilding.

InaccordancewithIAS40,investmentpropertiesarerecognisedonthebalancesheetatfairvalue.Thisvalueisequaltotheamountforwhichabuildingmightbeexchangedbetweenknowledgeable,willingpartiesinnormalcompetitiveconditions.Fromtheperspectiveoftheseller,itshouldbeunderstoodasbeingsubjecttothedeductionofregistrationtaxes.

TheBelgianAssociationofAssetManagers(BEAMA)pub-lishedapressreleaseon8February2006withrespecttotheamountsoftheseregistrationfees(seealsowww.beama.be-publications-pressrelease:“FirstapplicationofIFRSaccountingrules”).

Agroupofindependentpropertyexperts,carryingouttheperiodicalvaluationofbuildingsofregulatedrealestatecompanies,ruledthatfortransactionsinvolvingbuildingsinBelgiumwithanoverallvalueoflessthan€2,5million,registrationtaxesofbetween10,0%and12,5%shouldapply,dependingontheregionwherethebuildingsarelocated.

Fortransactionsconcerningbuildingswithanoverallvalueofmorethan€2,5millionandconsideringthewiderangeofpropertytransfermethodsusedinBelgium,thesameexperts-onthebasisofarepresentativesampleof220transactionsthattookplaceinthemarketfrom2002to2005andrepresentingagrandtotalof€6,0billion-valuedtheweightedaverageofthetaxescomesto2,5%.

Thismeansthatthefairvalueisequaltotheinvestmentvaluedividedby1,025(forbuildingswithavalueofmorethan€2,5million)ortheinvestmentvaluedividedby1,10/1,125(forbuildingswithavalueoflessthan€2,5million).AsVastnedRetailBelgiuminprincipleonlyofferscollectiveportfoliosofindividualbuildingsforsaleinthemarket,andtheseusuallyhaveahigherinvestmentvaluethan€2,5million,thefairvaluewascalculatedbydividingtheinvestmentvalueby1,025.

Thedifferencebetweenthefairvalueofthepropertyandtheinvestmentvalueofthepropertyasdeterminedbytheindependentpropertyexpertsisrecognisedattheendoftheperiodintheitem“Impactonthefairvalueof

102

theestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties”intheshareholders’equity.

Profitsorlossesderivingfromthechangeoffairvalueofaninvestmentpropertyordevelopmentprojectsarerecognisedintheincomestatementintheperiodwheretheyemergeandallocatedtothereservesintheprofitallocation.

Thebuildingsforownusearevaluedatfairvalueifonlyalimitedpartisoccupiedbytheentityforitsownuse.Inanyothercasethebuildingwillbeclassifiedin“Othertangibleassets”.

e.DisposalsofinvestmentpropertiesThecommissionfeespaidtorealestateagentsunderamandatetosellarechargedagainstprofitorlossmadeonthesale.

Theprofitsorlossesrealisedonthesaleofinvestmentpropertiesanddevelopmentprojectsarerecordedintheincomestatementofthereportingperiodin“Resultondisposalsofinvestmentproperties”andareallocatedtothereservesnotavailablefordistribution.

f.AssetsheldforsaleAssetsheldforsalerefertorealestatepropertieswhosecarryingamountwillberealisedduringasalestransactionandnotthroughcontinuinguse.ThebuildingsheldforsalearevaluedinaccordancewithIAS40atfairvalue.

Other tangible assets

a.DefinitionThefixedassetsundertheentity’scontrolthatdonotmeetthedefinitionofinvestmentpropertyareclassifiedas“Othertangibleassets”.

b.ValuationOthertangibleassetsareinitiallyrecognisedatcostandthereaftervaluedaccordingtothecostmodel.

Additionalcostsareonlycapitalisedifthefutureeconomicbenefitsrelatedtothetangibleassetincrease.

c.DepreciationandexceptionalimpairmentlossesOthertangibleassetsaredepreciatedusingthelineardepreciationmethod.Depreciationbeginsatthemomenttheassetisreadyforuseasforeseenbythemanagement.Thefollowingpercentagesapplyonanannualbasis:

• plant,machineryandequipment 20%• furnitureandvehicles 25%• computerequipment 33%• realestateforownuse:• land 0%• buildings 5%

• othertangibleassets 16%

Ifthereareindicationsthatanassetmayhavesufferedimpairmentloss,itscarryingamountiscomparedtotherealisablevalue.Ifthecarryingamountisgreaterthantherealisablevalue,anexceptionalimpairmentlossisrecognised.

d.DisposalandretirementWhentangibleassetsaresoldorretired,theircarryingamountceasestoberecognisedonthebalancesheetandtheprofitorlossisrecognisedontheincomestatement.

Solar panelsSolarpanelsarevaluedbasedontherevaluationmodelinaccordancewithIAS16-TangibleAssets.Afterinitialrecognition,anassetwhosefairvaluecanbereliablydeterminedmustbebookedattherevaluedvalue,i.e.thefairvalueatthemomentofrevaluationlessanysubsequentlyaccumulateddepreciationandsubse-quentlyaccumulatedimpairmentlosses.Thefairvalueisdeterminedbasedonthediscountingmethodforfutureincome.Theusefullifeofsolarpanelsisestimatedat20years.

Capitalgainsgenerateduponthestart-upofanewsiteareenteredinaseparatecomponentoftheshareholders’equity.Capitallossesarealsoincludedinthiscomponent,unlesstheyhavebeenconvertedintocashorunlessthefairvaluedropsbelowtheoriginalcost.Inthelattercasestheyareincludedintheresults.

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Impairment losses

Thecarryingamountoftheassetsofthecompanyisreviewedperiodicallytodeterminewhetherthereisanindicationofimpairment.Specialimpairmentlossesarerecognisedintheincomestatementifthecarryingamountoftheassetexceedstherealisablevalue.

Financial instruments

a.TradereceivablesTradereceivablesarerecordedatinitialrecognitionatfairvalue,andaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.Appropriateallowancesforimpairmentlossesarerecognisedinprofitorlosswhenthereisobjectiveevidencethattheassetisimpaired.Theallowancerecognisedismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedattheeffectiveinterestratecomputedatinitialrecognition.

b.InvestmentsInvestmentsarerecognisedandderecognisedonatradedatebasiswhenthepurchaseorsaleofaninvestmentisunderacontractwhosetermsrequiredeliveryoftheassetwithinthetimeframeestablishedbythemarketconcerned,andareinitiallymeasuredatfairvalue,plusdirectlyattributabletransactioncosts.

DebtsecuritiesofwhichtheGrouphastheexpressedintentionandabilitytoholdtomaturity(held-to-maturitydebtsecurities)arevaluedatamortisedcostusingtheeffectiveinterestratemethod,lessanyimpairmentrecognisedtoreflectirrecoverableamounts.Animpairmentlossisrecognisedinprofitorlosswhenthereistheobjectiveevidencethatanassetisimpaired,andismeasuredasthedifferencebetweentheinvestment’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedattheeffectiveinterestratecomputedatinitialrecognition.Specialimpairmentlossesarereversedinsubsequentperiodswhenanincreaseintheinvestment’srecoverableamountcanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,subjecttotherestrictionthatthecarryingamountoftheinvestmentatthedatetheimpairmentisreversedshallnotexceedwhattheamortisedcostwouldhavebeenhadtheimpairmentnotbeenrecognised.

c.CashandcashequivalentsCashandcashequivalentscomprisecashonhandanddemanddepositsandothershort-termhighlyliquidinvestmentsthatarereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvalue.

d.FinancialliabilitiesandequityFinancialliabilitiesandequityinstrumentsissuedbytheGroupareclassifiedaccordingtotheeconomiccertaintyofthecontractualarrangementsandthedefinitionsofafinancialliabilityandanequityinstrument.Anequityinstrumentisanycontractthatevidencesaresidualinter-estintheassetsoftheGroupafterdeductingallofitsliabilities.Theprinciplesoffinancialreportingrelatedtospecificfinancialliabilitiesandequityinstrumentsaresetoutbelow.

e.Interest-bearingbankloansInterest-bearingbankloansandcreditoverdraftsareinitiallyvaluedatfairvalueandaresubsequentlyvaluedatamortisedcost,usingtheeffectiveinterestratemethod.Anydifferencebetweentheproceeds(netoftransactioncosts)andthesettlementorredemptionofborrowingsisrecognisedoverthetermoftheborrowingsinaccordancewithprinciplesoffinancialreportingrelatedtofinancingcosts,appliedbytheGroup.

f.TradedebtsTradedebtsareinitiallyvaluedatfairvalueandaresubsequentlyvaluedatamortisedcostusingtheeffectiveinterestratemethod.

g.EquityinstrumentsEquityinstrumentsissuedbythecompanyarerecognisedintheproceedsreceived(netofdirectissuecosts).

h. DerivativesTheGroupusesderivativestohedgeitsexposuretointerestraterisksarisingfromoperational,financingandinvestmentactivities.TheGroupdoesnotengageinspeculativetransactionsnordoesitissueorholdderiva-tivesfortradingpurposes.

104

Derivativesareinitiallyvaluedatcostpriceandarevaluedafterinitialrecognitionatfairvalue.

• DerivativesthatdonotqualifyforhedgeaccountingCertainderivativesdonotqualifyforhedgeaccount-ing.Changesinthefairvalueofeachderivativethatdoesnotqualifyforhedgeaccountingarerecognisedimmediatelyintheincomestatement.

• HedgeaccountingTheGroupdesignatescertainhedginginstrumentsasfairvaluehedgesandcashflowhedges.

Theeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesisrecognisedintheothercomprehensiveincome.Theineffectiveportionisrecognisedintheincomestatementontheline“Changesinfairoffinan-cialassetandliabilities(ineffectivehedges-IAS39)”.

Amountspreviouslyrecognisedinothercomprehen-siveincomeandaccumulatedinequityarereclassifiedtotheincomestatementwhenthehedgeditemisrecognisedintheincomestatement,inthesamelineastherecognisedhedgeditem.Whentheforecasttransactionthatishedgedresultsintherecognitionofanon-financialassetoranon-financialliability,theprofitsorlossesonthefinancialderivativepreviouslyaccumulatedinequityarerecognisedintheinitialvaluationoftheassetorliability.

HedgeaccountingisdiscontinuedwhentheGrouprevokesthehedgingrelationship,thehedginginstru-mentissoldorterminated,orexercised,ornolongerqualifiesforhedgeaccounting.Anyprofitorlossaccu-mulatedinequityatthattimeremainsinequityandisrecognisedwhentheforecasttransactionisultimatelyrecognisedintheincomestatement.Whenaforecasttransactionisnolongerexpectedtooccur,thegainorlossaccumulatedinequityisrecognisedimmediatelyintheincomestatement.

i.OwnsharesWhenownsharesarepurchased,theamountpaid,includingattributabledirectcosts,isaccountedforasadeductionofshareholders’equity.

Provisions

Aprovisionisanobligationofuncertainsizeorwithanuncertaintimeelement.Theamountthatisrecognisedisthebestestimateatbalancesheetdateoftheexpenditurerequiredtosettletheexistingliability.

Provisionsareonlyrecognisedwhenthereisapresentobligation(legalorconstructive)asaresultofapasteventthatprobablywillbringanoutflowofresourceswherebyareliableestimateoftheamountoftheobliga-tioncanbemade.

Post-employment benefits

Contributionstodefined-contributionretirementbenefitplansarerecognisedasanexpenseagainstthereportingperiodwhenemployeeshaverenderedservicesentitlingthemtothecontributions.

Dividend distribution

Dividendsarerecognisedasequityuntiltheannualshareholders’meetingapprovesthedividends.Thedividendsarethereforerecognisedasaliabilityintheannualaccountsoftheperiodinwhichthedividenddistributionisapprovedbytheannualgeneralshareholders’meeting.

Events after the balance sheet date

Eventsafterthebalancesheetdateareevents,bothfavourableandunfavourable,thattakeplacebetweenthebalancesheetdateandthedatethefinancialstatementsareauthorisedforissue.Eventsprovidinginformationoftheactualsituationonbalancesheetdatearerecognisedasresultintheincomestatement.

.

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Financial report

Significant valuations and main sources of uncer-tainty regarding valuations

a.FairvalueofinvestmentpropertiesThefairvalueoftheinvestmentpropertiesofVastnedRetailBelgiumisvaluedonaquarterlybasisbyindepen-dentpropertyexperts.Thisvaluationofthepropertyex-pertsismeanttodeterminethemarketvalueofabuild-ingonacertaindateaccordingtotheevolutionofthemarketandthecharacteristicsoftherelevantbuildings.Thepropertyexpertsusetheprinciplesdescribedinthechapter“Valuationoftheportfoliobypropertyexperts”inthePropertyreportandin“Note14:Non-currentassets:investmentproperties”oftheFinancialreport.Therealestateportfolioisrecordedintheconsolidatedannualaccountsatfairvaluedeterminedbythepropertyexperts.

b.FinancialderivativesThefairvalueofthefinancialderivativesofVasnedRetailBelgiumisvaluedonaquarterlybasisbytheissuingfinancialinstitute.Acomprehensivedescriptioncanbefoundin“Note19.Financialinstruments”intheFinancialreport.

c.DisputesThecompanyis,andmayinthefuture,beinvolvedinlegalprocedures.VastnedRetailBelgiumisinvolvedasat31December2014asclaimeraswellasdefendantinanumberoflegalprocedureswhich(accordingtothein-formationheldbythecompanyonthedateofthisannualreport)willmostprobablynothaveasignificantimpactontheassets,liabilitiesandresultsofthecompany.

Antwerp, Korte Gasthuisstraat - 145 m2

106

Note3. Segmentedinformation

ThereportingbysegmentisdonewithinVastnedRetailBelgiumaccordingtotwosegmentationbases:

1. by business segment:thissegmentationbasisissub-dividedinto“retailwarehouses”17and“inner-cityshops”

2. by geographic segment:thissegmentationbasisrepresentsthe3geographicalmarketsinBelgiuminwhichtheGroupoperates,namelyFlanders,BrusselsandtheWalloonregion.

By business segment

Thetwobusinesssegmentscompriseinner-cityshopsandretailwarehouses.

Thecategoryof“inner-cityshops”includesthoseshopsthatarelocatedinsubstantiallydevelopedcommercialcentreswithaconcentrationoflarge-scaleretailorgani-sations.Twentytownsqualifyforthis.

Thecategoryof“retailwarehouses”relates,ontheone

hand,tosinglebuildingsorretailparksalongthemajortrafficaxesandmostlyanimportantsalesarea(from400m²).Retailparksareclustersofretailwarehouses,oftenconceivedastradingcomplexeswithsharedparkingareas.

Thecategoryof“corporate”includesallnon-segmentallocatedfixedcostsborneatagrouplevel.

Income statement by segment

BUSINESSSEGMENTinthousands€

Inner-cityshops Retailwarehouses Corporate TOTAL

2014 2013 2014 2013 2014 2013 2014 2013

Rentalincome 11.466 10.954 10.545 10.789 22.011 21.743

Rental-relatedexpenses 2 -52 -83 -20 -81 -72

NET RENTAL RESULT 11.468 10.902 10.462 10.769 21.930 21.671

Rental-relatedcostsandincome

-2 -1 45 38 43 37

PROPERTY RESULT 11.466 10.901 10.507 10.807 21.973 21.708

OPERATING RESULT

BEFORE RESULT ON PORTFOLIO

10.092 9.700 9.250 9.564 -1.060 -821 18.282 18.443

Resultondisposalsofinvestmentproperties

-73 -52 -1.797 325 -1.870 273

Changesinfairvalueofinvestmentproperties

8.739 -59 2.363 -2.971 11.102 -3.030

Otherresultonportfolio -1.329 -149 24 -5 -1.305 -154

OPERATING RESULT OF THE SEGMENT

17.429 9.440 9.840 6.913 -1.060 -821 26.209 15.532

Financialresult -5.431 -3.305 -5.431 -3.305

Taxes -290 -33 -290 -33

NET RESULT 17.429 9.440 9.840 6.913 -6.781 -4.159 20.488 12.194

17 Till the date of the divestment, being 22 December 2014, this segment also comprised shopping centre Julianus Shopping in

Tongeren. Shopping centres are complexes of different shops. Shopping centres are complexes comprising different shops that

are dependent commercially on each other and which have joint commercial and promotional aspects.

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Financial report

Key figures by segment

BUSINESSSEGMENT

inthousands€

Inner-cityshops Retailwarehouses TOTAL

2014 2013 2014 2013 2014 2013

Fairvalueofrealestateproperties 242.031 211.386 114.505 150.292 356.536 361.678

• ofwhichinvestmentsduringthefinancialyear(fairvalue) 0 204 36 0 36 204

• ofwhichacquisitionofsharesofrealestatecompanies 26.605 0 0 0 26.605 0

• ofwhichpurchases/acquisitionofinvestmentpro-perties 0 11.670 0 0 0 11.670

Divestmentsduringthefinancialyear(fairvalue) -4.699 -1.631 -38.186 -4.718 -42.885 -6.349

Investmentvalueofrealestateproperties 248.082 216.671 117.368 154.049 365.450 370.720

Accountingyieldofthesegment(%) 4,7% 5,2% 9,2% 7,2% 6,2% 6,0%

Totalleasablespace(m²) 34.241 33.624 77.353 113.338 111.594 146.962

Occupancyrate(%) 98% 95% 98% 96% 98% 95%

By geograph segment

TheactivityofVastnedRetailBelgiumisgeographicallysubdividedinto3regionsnamelyFlanders,BrusselssandtheWalloonregion.

GEOGRAPHICALSEGMENTATIONinthousands€

Flanders Walloonregion Brussels TOTAL

2014 2013 2014 2013 2014 2013 2014 2013

Rentalincome 15.004 14.704 3.984 4.021 3.023 3.018 22.011 21.743

Fairvalueofrealestateproperties

256.403 250.478 45.199 58.006 54.934 53.194 356.536 361.678

Investmentvalueofrealestateproperties

262.813 256.740 46.330 59.456 56.307 54.524 365.450 370.720

Accountingyieldofthesegment(%)

5,9% 5,9% 8,8% 6,9% 5,5% 5,7% 6,2% 6,0%

Investmentsduringthe

financialyear(fairvalue)-49 181 85 23 0 0 36 204

Divestmentsduring

thefinancialyear(fairvalue)-31.362 -6.349 -11.523 0 0 0 -42.885 -6.349

108

Note4. Propertyresult

Rental income


Rents 22.642 22.118

Rentaldiscounts -660 -375

Compensationforearlyterminationofleaseagreements 29 0

Total rental income 22.011 21.743

Rentalincomecomprisesrents,incomefromoperationalleaseagreementsanddirectlyassociatedrevenues,suchasrentsecuritiesgrantedbypromotersandcompensationforearlyterminatedleaseagreementsminusanyrentaldiscountsandrentalbenefits(incentives)granted.Therentaldiscountsandincentivesarespreadovertheperiodrunningfromthestartoftheleaseagreementtothenextpossibilityofterminatingaleaseagreement.

RentalincomeofVastnedRetailBelgiumisspreadover113differenttenants,limitingthedebtor’sriskandimprovingstabilityofrentalincome.Thetenmostimportanttenantsrepresent53%(48%in2013)ofrentalincomeandarealwaysprominentcompaniesintheirsectorandpartofinternationalgroups.Themostimportanttenantrepresents19%ofrentalincome(12%in2013).In2014,thereare3tenantswhoseleasepay-mentsonanindividualbasisrepresentmorethan5%oftotalrentalincomeofVastnedRetailBelgium(5tenantsin2013).

Overview of future minimum rental income

Thecashvalueofthefutureminimumrentalincomeuntilthefirstexpirydateofthenon-cancellableleaseagree-mentsissubjecttothefollowingcollectionterms:


Receivables with a remaining duration of:

Lessthanoneyear 19.922 21.547

Betweenoneandfiveyears 20.110 28.181

Morethanfiveyears 128 221

Total of future minimum rental income 40.160 49.949

Thedecreaseofthefutureminimumrentalincomeasat31December2014of€9,8millionresultsmainlyofthedivestmentof19non-strategicbuildingsin2014,partlycompensatedbytheacquisitionofapremiumhighstreetshopinGhent.

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Financial report

Rental-related expenses


Rentforleasedassetsandgroundlease -110 -109

Write-downsontradereceivables -70 -84

Reversalofwrite-downsontradereceivables 99 121

Total rental-related expenses -81 -72

Therental-relatedexpensescomprisewrite-downsontradereceivablesandarerecognisedintheincomestatementwhenthecarryingamountishigherthanthe

estimatedrealisationvalue,aswellascostsandincomeofthelettingofbuildingsnotbelongingtoformerclasses.

Recovery of rental charges and taxes normally payable by tenants on let properties


Rebillingofrentalchargesbornebythelandlord 33 64

Rebillingofadvanceleviesandtaxesonletproperties 1.473 1.484

Recovery of rental charges and taxes normally payable by tenants on let properties 1.506 1.548

Rentalchargesbornebythelandlord -33 -64

Advanceleviesandtaxesonletproperties -1.473 -1.484

Rental charges and taxes normally payable by tenants on let properties -1.506 -1.548

Total net amount of recovered rental charges and taxes 0 0

Rentalchargesandtaxesonletbuildingsandrecoveryofthesechargesrefertocoststhatare,bylaworcustom,oftheresponsibilityofthetenant.Thesecostscompriseprimarilypropertytaxandrentalcharges.VastnedRetailBelgiumisresponsibleforthemanagementanddoesnotcontractitouttoathirdparty,exceptfortheexecutivemanagementofthecommercialcomplex“Jardin

d’Harscamp”thatismanagedbytheexternalpropertymanagerDevimoConsultsa.ThisfacilitymanagementissupervisedbythecooofVastnedRetailBelgiumwhohasbuilt-inthenecessarycontrols.Dependingoncontractualagreementswiththetenants,thelandlordmayormaynotchargethetenantsfortheseservices.

110

Note5. Propertycharges

Technical costs


Recurrent technical costs -112 -112

Insurancepremiums -112 -112

Non-recurrent technical costs -470 -348

Maintenance -464 -341

Claims -6 -7

Total technical costs -582 -460

Technicalcostscomprise,interallia,maintenancecostsandinsurancepremiums.

Maintenancecoststhatcanbeseenasrenovationofanexistingbuildingbecausetheybringaboutanimprove-

mentofthereturnortherent,arenotrecognisedascostsbutarecapitalised.

Thetechnicalcostshaveincreasedin2014asaresultoftheplannedroofrenovations.

Commercial costs


Brokers’fees -147 -58

Publicity -51 -35

Lawyers’feesandlegalcosts -121 -122

Total commercial costs -319 -215

Commercialcostsalsoincludebrokers’fees.Brokers’feespaidtobrokersafteraperiodofvacancyarecapitalisedasthepropertyexperts,afteraperiodofvacancy,reducetheestimatedfeesfromtheestimatedvalueoftherealestate

property.Brokers’feespaidafteranimmediatereletting,withoutvacancyperiod,arenotcapitalisedandarerecognisedintheresultasthepropertyexpertsdonottakethisfeeintoaccountatthemomentofvaluation.

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Financial report

Charges and taxes on unlet properties


Vacancychargesofthefinancialyear -169 -125

Vacancychargesofprecedingfinancialyears 12 13

Propertytaxonvacantproperties -97 -76

Recuperationofpropertytaxonvacantproperties 35 20

Total charges and taxes on unlet properties -219 -168

Theincreaseofchargesandtaxesonunletpropertiesresultsin2014mainlyfromthegrowingvacancyintheon22December2014divestedJulianusShoppinginTongeren.

VastnedRetailBelgiumlargelyrecoversthepropertytaxthatischargedonvacantpartsofbuildingsthroughob-jectionssubmittedtoFlandersTaxAdministration.

Property management costs


Externalpropertymanagementfees -4 -35

Internalpropertymanagementfees -1.219 -1.194

Property experts -152 -189

Remuneration of employees -726 -708

Other costs -341 -297

Total property management costs -1.223 -1.229

Propertymanagementcostsarecostsrelatedtothemanagementofthebuildings.Theseincludepersonnelcostsandindirectcostswithrespecttothemanagementcommitteeandthestaff(suchasofficecosts,operating

costsetc.)whomanagetheportfolioandlettings,andalsodepreciationsandimpairmentsontangibleassetsusedforsuchmanagementandotherbusinessexpensesrelatedtothemanagementoftheproperty.

Other property charges


Propertytaxcontractuallybornebythelandlord -34 -37

Costscontractuallybornebythelandlord -104 -70

Securitycosts 0 -45

Othercosts 13 -52

Total other property charges -125 -204

Theotherpropertychargescomprisemainlycostscon-tractuallybornebythelandlordfortheon22December2014divestedJulianusShoppinginTongeren.

112

Note6. Generalcosts


CIItax -218 -227

Auditor’sfee -80 -77

Directors’remunerations -31 -31

Liquidityprovider -14 -14

Financialservices -10 -5

Employeebenefits -441 -403

Advicecosts -108 -20

Othercosts -346 -289

Total general costs -1.248 -1.066

Generalcostsareallcostsrelatedtothemanagementofthecompanyandcoststhatcannotbeallocatedtopro-pertymanagement.Theseoperatingcostsincludegeneraladministrationcosts,costofpersonnelengagedinthe

managementofthecompanyassuch,depreciationsandimpairmentsontangibleassetsusedforhismanagementandotheroperatingcosts.

Wilrijk, Boomsesteenweg - 4.884 m2

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Financial report

Note7. Employeebenefits


Chargesforthe

patrimonymanage-

ment

Chargeslinkedtothemanage-

mentofthe

company

TOTAL

Chargesforthe

patrimonymanage-

ment

Chargeslinkedtothemanage-

mentofthe

company

TOTAL

Remunerations of employees 457 266 723 444 242 686

Salaryandotherbenefits

paidwithin12months281 155 436 282 144 426

Pensionsandpost-employment

benefits13 8 21 13 8 21

Socialsecurity 79 49 128 77 46 123

Variableremunerations 39 25 64 26 16 42

Dismissalindemnities 0 0 0 0 0 0

Othercharges 45 29 74 46 28 74

Remuneration of the

management committee269 175 444 264 161 425

Chairmanofthemanagementcommittee 69 68 137 65 65 130

Fixed remuneration 61 61 122 60 61 121

Variable remuneration 8 7 15 5 4 9

Othermembersofthe

managementcommittee200 107 307 199 96 295

Fixed remuneration 186 80 266 184 73 257

Variable remuneration 14 15 29 15 12 27

Retirement obligations 0 12 12 0 11 11

Total employee benefits 726 441 1.167 708 403 1.111

Thenumberofemployeesatyear-end2014,expressedinFTEis4staffmembersand2membersofthemanage-mentcommitteefortheinternalmanagementofthepatrimony(respectively4and2in2013)and4staffmembersand1memberofthemanagementforthemanagementofthecompany(respectively4and1in2013).Themanagementteamcomprises3persons.

Remuneration,supplementarybenefits,compensationupontermination,redundancyandresignationcom-pensationforpersonnelinpermanentemploymentareregulatedbytheActontheLabourAgreementsof4July1978,theAnnualHolidayActof28June1971,thejointcommitteeforthesectorthatthecompanyfallsunderandthecollectivebargainingagreementsthathavebeenrecognisedintheincomestatementintheperiodtowhichtheyrefer.

Pensionsandcompensationsfollowingtheterminationoftheworkcomprisepensions,contributionsforgroupinsurance,lifeassuranceanddisabilityandhospitalisationinsurance.Forpermanentemployees,VastnedRetailBelgiumhastakenoutagroupinsurancepolicy-a“definedcontributionplan”-withanexternalinsurancecompany.Thecompanypayscontributionstothisfund,whichisindependentofthecompany.Apensionplanwithadefined-contributionschemeisaplaninvolvingfixedpremiumspaidbythecompanyandwithoutthecompanyhavinglegallyenforceableoractualobligationstopayfurthercontributionsifthefundweretohaveinsufficientassets.Thecontributionstotheinsuranceplanarefinancedbythecompany.ThisgroupinsurancecontractcomplieswiththeVandenbrouckeActonpen-sions.Thecompulsorycontributionsarerecognisedintheincomestatementfortheperiodthattheyrelateto.Forfinancialyear2014thesecontributionsamountto€32.000(€32.000in2013).Theinsurancecompanyconfirmedasat31December2014thatthedeficittoguaranteetheminimumreturnisnotmaterial.

.

114

Note8. Resultondisposalsofinvestmentproperties


Acquisitionvalue 43.176 4.208

Accumulatedcapitalgainsandextra-ordinaryimpairmentlosses -291 2.288

Carrying amount (fair value) 42.885 6.496

Salesprice 42.581 7.105

Sellingcosts -1.566 -336

Net result of sale 41.015 6.769

Total result on disposals of investment properties -1.870 273

In2014VastnedRetailBelgiumhassold19non-stra-tegicretailwarehousepropertiesandinner-cityshopsinsecondarylocationswithatotalfairvalueof€42,9million.

ThedivestmentsconcernJulianusShoppinginTongerenandretailpropertiesinVilvoorde,Hoboken,Bree,Chênée,Flémalle,Genk,LaLouvière,Malmédy,Mons,Sint-Pieters-Leeuw,Waterloo,Antwerp,Westerlo,HasseltandWilrijkwithatotalgrosscommercialspaceofapproximately39.000m².

Thetotalsalespriceisabout1%lowerthanthefairvalueasat31December2013(fairvalueasestimatedbytheindependentpropertyexpertofthecompany).Thenetsalesprice(afterdeductionofthesalescostsandtheVATrevision)liesapproximately4%lowerthanthefairvalueasat31December2013.The19retailpropertiesrepre-senttogether12%ofthetotalfairvalueoftherealestateportfolioofthecompany.

Thecommonrentalincomeofthedivestedretailproper-tiesamountsto€3,6millionorapproximately16%ofthetotalrentalincomeofthecompany.

Note9. Changesinfairvalueofinvestmentproperties


Positivechangesofinvestmentproperties 15.855 7.003

Negativechangesofinvestmentproperties -4.753 -10.033

Total changes in fair value of investment properties 11.102 -3.030

In2014thefairvalueoftheexistingrealestateportfoliohasincreasedby3%comparedto2013.Thechangesinfairvalueofinvestmentpropertiesin2014aresub-sequentlypositiveandamountto€11,1millioncom-paredtonegativechangesof-€3,0millionin2013.The

increaseinfairvaluecomesfromretailpropertiesontoplocations,aswellintheinner-cityofimportantcitiesasfromimportantperipheralretailwarehouseswhereasharpeningoftheyieldoccurredduring2014.

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Financial report

Note10. Otherresultonportfolio


Changesinspreadofrentaldiscountsandbenefitsgrantedtotenants -207 -131

Otherchanges -1.098 -23

Total other result on portfolio -1.305 -154

Theotherresultonportfolioamountsto-€1,3millionandcomprisestheimmediatewriteoffofthedifferenceinpriceof-€1,1millionontheacquisitionofthesharesof

thecompanyVeldstraat23-27sa(ownerofthepremiumhighstreetshopinGhent)attheendofJuly2014.IFRS3isnotapplicableonthisacquisition.

Note11. Financialresult


Financialincome 6 3

Netinterestchargeswithfixedinterestrate -3.652 -4.529

Netinterestchargeswithvariableinterestrate -535 -354

Otherfinancialcosts -10 -11


Total financial result -5.431 -3.305

Thefinancialresult(excl.changesinfairvalueoffinan-cialassetsandliabilities(ineffectivehedges-IAS39))amountsforfinancialyear2014to-€4,2million(-€4,9millionin2013).Thedecreaseof€0,7millionor14%resultsmainlyfromthestartofinterestrateswaps(forhedgingcreditfacilitieswithavariableinter-

estrate)atlowerinterestratesthantheinterestrateoftheinterestrateswapswhichhaveexpired.Theaverageinterestrateofthecompanyfor2014decreasesto3,2%includingbankmarginscomparedto4,0%forfinancialyear2013.

116

Net interest charges classified by credit line expiry date


Netinterestchargesonnon-currentfinancialdebts -3.009 -4.541

Netinterestchargesoncurrentfinancialdebts -1.178 -342

Total net interest charges -4.187 -4.883

Theaverageinterestrateofthefinancialdebtsamountsfor2014to4,0%includingbankmargins(4,0%for2013).

Theaverageinterestratefor2014ofthenon-currentfinancialdebtsamountsto3,1%includingbankmargins(4,6%in2013),andofthecurrentfinancialdebtsto3,3%includingbankmargins(1,5%in2013).

For2015the(hypothetical)futurecashoutflowoftheinterestchargesfromtheloansdrawnonat31

December2014atthefixedorvariableinterestrateasat31December2014amountstoapproximately€3,3mil-lion(€3,6millionin2013).

Forfinancialyear2014,theeffectontheoperatingdistributableresultofa(hypothetical)increaseininterestratesby1%givesanegativeresultofapproximately€0,4million(€0,3millionin2013).Thefinancialderivativesareincludedinthecalculations.Giventhecurrentlylowmarketrateahypotheticaldecreaseoftheinterestratesby1%isnotrealistic.

Note12. Taxesontheresult


Corporateincometax -290 -33

Total taxes -290 -33

WiththeRRECAct(formerlytheRoyalDecreeof7December2010andtheRoyalDecreeof10April1995),thelegislatorgaveafavourabletaxstatustoaRREC.IfacompanyconvertsitsstatusintothatofaRREC,orifan(ordinary)companymergeswithaRREC,itmustpaya

one-offtax(exittax).Thereafter,theRRECisonlysubjecttotaxesonveryspecificitems,e.g.“Disallowedexpendi-ture”.Nocorporatetaxisthereforepaidonthemajorityoftheprofitthatcomesfromlettingsandaddedvalueondisposalsofinvestmentproperties.

Note13. Numberofsharesandresultpershare

Movement of the number of shares

2014 2013

Numberofsharesatthebeginningofthefinancialyear 5.078.525 5.078.525

Numberofsharesattheendofthefinancialyear 5.078.525 5.078.525


Adjustmentsforcalculationofdilutedresultpershare 0 0

Weightedaveragenumberofsharesforcalculationofdilutedresultpershare 5.078.525 5.078.525

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Financial report

Determination of amount of mandatory dividend distribution

Theamountsubjecttodistributionisdeterminedpursuanttoarticle13§1sixthparagraphoftheRRECRoyalDecreeandChapter4oftheannexCoftheRRECRoyalDecree.


Net result according to statutory annual accounts 20.494 12.194

Adjustmentfornon-cashflowtransactionsincludedinthenetresult:

• Depreciationsandreversalofdepreciationsandimpairments 58 70

• Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) 2.207 -1.590

• Resultonportfolio -9.111 2.844

Corrected result for mandatory distribution 13.648 13.518

Mandatory distribution: 80% 10.918 10.814

Operatingdistributableresult(statutoryannualaccounts) 13.590 13.448

Operatingdistributableresult(consolidatedannualaccounts) 13.801 13.448

Thedistributableearningspershare,basedonthestatutoryannualaccountsofVastnedRetailBelgiumsa,amountto€13,6millionin2014comparedto€13,4millionin2013.Thedifferencewiththeoperatingdis-tributableresultaccordingtotheconsolidatedannualaccountsconcernstheoperatingdistributableresultofthesubsidiariesVeldstraat23-27andEuroInvestRetailProperties.

Nofurtheradjustmentsmustbemadeonthecorrectedresultforanynon-exemptedcapitalgainondisposalsofinvestmentpropertiesordebtreductions.Consequently,

thecorrectedresultisequaltotheamounteligibleformandatorydistributionof80%pursuanttoarticle45,2°oftheRRECAct.

VastnedRetailBelgiumchoosestodistribute100%oftheconsolidatedoperatingdistributableresulttoitsshareholdersandoffersconsequentlyanadditionaldistributionfromthereservesofthecompanyregardingthedifferencebetweenthestatutoryandconsolidatedoperatingdistributableresult.Thisamountsto101%ofthestatutoryoperatingdistributableresult.

Calculation of result per share

in€ 2014 2013

Ordinarynetresultpershare 4,03 2,40

Dilutednetresultpershare 4,03 2,40

Operatingdistributableresultpershare(statutoryannualaccounts) 2,68 2,65

OperatingdistributableresultofthesubsidiariesVeldstraat23-27saandEuroInvestRetailPropertiessa

0,04 0

Operatingdistributableresultpershare(consolidatedannualaccounts) 2,72 2,65

118

Proposed dividend per share

Aftertheclosingofthefinancialyear,thedividenddistributionshownbelowisproposedbytheboardofdirectors.Thiswillbepresentedtothegeneralmeetingof

shareholderson29April2015.InaccordancewithIAS10,thedividenddistributionisnotrecognisedasaliabilityandhasnoeffectonthetaxonprofit.

2014 2013

Dividendpershare(in€) 2,72 2,65

Remunerationofsharecapital(inthousands€) 13.814 13.458

Dividendasapercentageofconsolidatedoperatingdistributableresult(%) 100% 100%

Determination of the amount pursuant to article 617 of the Belgian Companies Code

Theamount,asreferredtoinarticle617oftheBelgianCompaniesCode,ofpaid-upcapitalor,ifthisamountishigher,thecalled-upcapital,plusallreserveswhich,pur-suanttothelaworthearticlesofassociation,maynotbedistributed,isdeterminedinChapter4ofannexCoftheRRECRoyalDecreeof13Julyof2014.

ThiscalculationisbasedonthestatutoryannualaccountsofVastnedRetailBelgiumsa.


Non-distributable elements of shareholders’ equity for distribution

Paid-upcapital 97.213 97.213

Unavailablesharepremium,accordingtothearticlesofassociation 4.183 4.183

Reserveforthepositivebalanceofchangesininvestmentvalueofrealestateproperties 131.743 134.524

Reservefortheimpactonfairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties

-8.970 -8.907

Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentssubjecttoahedgeaccounting

-206 -504

Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentsnotsubjecttoahedgeaccounting

-3.106 -4.692

Otherreserves 625 622

Result of the financial year which, pursuant to Chapter I of Annex C of the Royal Decree of 13 July 2014, is to be allocated to non-distributable reserves


Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andnon-currentfinancialassets

-2.207 1.590

Total non-distributable shareholders’ equity 228.386 221.184

Statutory shareholders’ equity 242.800 235.467

Planneddividenddistribution 13.814 13.458

Numberofshares 5.078.525 5.078.525

Operatingdistributableresultpershare 2,72 2,65

Shareholders’ equity after dividend distribution 228.986 222.009

Remaining reserves after distribution 600 824

119

Financial report

Note14. Non-currentassets


Investment and revaluation table


Inner-cityshops

Retailware-houses18 TOTAL

Inner-cityshops

Retailwarehouses

TOTAL

Balance sheet on 1 January 211.386 150.292 361.678 201.202 157.981 359.183

Acquisitionsofinvestmentproperties 0 0 0 11.670 0 11.670

Investmentsinexistinginvestmentproperties

0 36 36 204 0 204

Acquisitionofsharesofrealestatecompanies

26.605 0 26.605 0 0 0

Disposalsofinvestmentproperties -4.699 -38.186 -42.885 -1.631 -4.718 -6.349

Changesinfairvalueofinvestmentproperties

8.739 2.363 11.102 -59 -2.971 -3.030

Balance sheet as at 31 December 242.031 114.505 356.536 211.386 150.292 361.678

OTHERINFORMATION

Investmentvalueofrealestateproperties 248.082 117.368 365.450 216.671 154.049 370.720

Asat31December2014,thefairvalueoftheinvestment propertiesofVastnedRetailBelgiumamountsto€357million(€362millionin2013).Thisdecreaseof€5millionin2014comparedto31December2013ismainlythecombinedeffectof:

• thedivestmentof19non-strategicretailwarehousesandinner-cityshopsinsecondarylocationswithafairvalueof€42,9millionasat31December2013

• theacquisitionofapremiumhighstreetshopinaprimelocationonVeldstraatinGhentwithafairvalueofapproximately€26,7million

• anincreaseinfairvalueoftheexistingrealestateport-folioof€11,1millionmainlyforretailpropertiesloca-tedinprimelocations,intheinner-cityofimportantcitiesaswellasinretailparksintheperiphery,throughthesharpeningoftheyields.

In2014VastnedRetailBelgiumhasacquired99%ofthesharesofthecompanyVeldstraat23-27forapurchase

priceof€21,7million.Veldstraat23-27comprises€0,7millionincash.Thenetcashflowfollowingtheacquisitionamountsthusto€21,0million.Theretailpropertyrepre-sentsafairvalueof€26,7millionandgeneratesanannualrentalincomeofapproximately€1,1million.Furthermorefollowingthisacquisitionthedeferredtaxof€3,7millionisrecorded.IFRS3isnotapplicableonthisacquisition.

Asat31December2014,theinvestmentpropertiesarevaluedat€365million(investmentvalue)bytheinde-pendentpropertyexperts.Thefairvalueistheinvestmentvalueminusthehypotheticaltransactionrightsandcoststhatmustbepaidintheeventofanyfuturepotentialdisposal.

Fortheexplanationofthechangesinfairvalueofinvest-mentproperties,pleaseseeNote9.

Asat31December2014,therewerenoinvestmentpro-pertiesmortgagedassecurityforloanstakenoutorforcreditfacilitiesatfinancialinstitutions.

18 Till the date of divestment, being 22 December 2014, this segment also comprised shopping centre Julianus Shopping in

Tongeren.

120

IFRS 13

IFRS13appliestofinancialyearsbeginningonorafter1January2013.ItintroducesastandardisedframeworkformeasuringfairvalueandadisclosurerequirementregardingfairvaluemeasurementwhenthisvaluationprincipleisrequiredorpermittedbyvirtueofotherIFRSstandards.IFRS13specificallydefinesfairvalueasthepricethatwouldbereceivedforthesaleofanassetorthatwouldhavetobepaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.ThedisclosurerequirementinIFRS13regardingfairvaluemeasurementsalsoservestore-placeorexpandupontherequirementsimposedbyotherIFRSstandards,includingIFRS7FinancialInstruments:Disclosures.

Investmentpropertiesarerecognisedatfairvalue.Thefairvalueisdeterminedonthebasisofoneofthefollowinglevelsofthehierarchy:

• level1:measurementisbasedonquotedmarketpricesinactivemarkets

• level2:measurementisbasedon(externally)obser-vableinformation,eitherdirectlyorindirectly

• level3:measurementisbasedeitherfullyorpartiallyoninformationthatisnot(externally)observable

IFRS13classifiesinvestmentpropertiesaslevel3.

Valuation of investment properties

Thefairvalueofallofthecompany’sinvestmentpro-pertiesisvaluedeachquarterbyindependentpropertyexperts.Thefairvalueisbasedonthemarketvalue(i.e.adjustedforthe2,5%purchasingfeesasdescribedinthe“Principlesoffinancialreporting-Investmentproperties”-seeabove),whichistheestimatedamountforwhichaninvestmentpropertycanbesoldatthemeasurementdatebyasellertoawillingbuyerinabusiness-like,objectivetransactionprecededbysoundnegotiationsamongknowledgeableandwillingparties.

Ifnocurrentmarketpricesareavailableinanactivemarket,themeasurementsaremadeonthebasisofacalculationofgrossreturnsinwhichthegrossmarketrentsarecapitalised.Themeasurementsobtainedareadjustedforthepresentvalue(NPV)ofthedifferencebetweenthenetcurrentactualrentandtheestimatedrentalvalueatthedateofvaluationfortheperioduptothefirstopportunitytogivenoticeunderthecurrentleaseagreements.Rentdiscountsandrent-freeperiodsarealsotakenintoconsideration.Forbuildingsthatarepartiallyorcompletelyvacant,themeasurementismadeonthe

basisoftheestimatedrentalvalueminusthevacancyandthecosts(rentalcosts,publicitycosts,etc.)forthevacantportions.

Theyieldsusedarespecifictothetypeofproperty,loca-tion,stateofmaintenanceandtheleasabilityofeachproperty.Thebasisusedtodeterminetheyieldsisformedbycomparabletransactionsandsupplementedwithknowledgeofthemarketandofspecificbuildings.Comparabletransactionsinthemarketarealsotakenintoaccountforthevaluationofproperties.

Theyieldsdescribedinthepropertyreportarecalculatedbydividingthe(theoretical)grossrentoftherealestatebytheinvestmentvalueoftheinvestmentpropertiesexpressedasapercentage.Theaveragegrossyieldofthetotalinvestmentportfolioasper31December2014comesto5,7%(6,3%asat31December2013).

Assumptionsaremadeperproperty,pertenantandpervacantunitconcerningthelikelihoodoflease/re-lease,numberofmonthsvacant,incentivesandrentalcosts.

121

Financial report

Themostimportanthypothesesregardingthevaluationoftheinvestmentpropertiesare:

2014 2013

Average gross market rent per m² (in €)

• Inner-cityshops 373 356

• Retailwarehouses 105 99

Average gross yield (in %) 5,7% 6,3%

• Inner-cityshops 5,2% 5,6%

• Retailwarehouses 6,9% 7,3%

Average net yield (in %) 5,1% 5,6%

• Inner-cityshops 4,6% 4,9%

• Retailwarehouses 6,1% 6,5%

Vacancy rate (in %) 2,1% 4,6%

Inthecaseofahypotheticalnegativeadjustmentof1%(from5,6%to6,6%onaverage)totheyieldusedbypropertyexpertsforvaluingtherealestateportfolioofthecompany(yieldorcapitalisationrate),thefairvalueoftherealestatewoulddecreaseby€54millionor15%.Thiswouldraisethedebtratioofthecompanyby6%toaround37%.Ifthisisreversed,andahypotheticalpositiveadjustmentof1%(from5,6%to4,6%onaverage)ismadetothisyield,thefairvalueoftherealestatewouldin-creaseby€78millionor22%.Thiswouldlowerthedebtratioofthecompanyby6%toaround25%.

Inthecaseofahypotheticaldecreaseinthecurrentrentsofthecompany(assumingaconstantyield)of€1million

(from€20,4millionto€19,4million),thefairvalueoftherealestatewoulddecreaseby€17millionor5%.Thiswouldraisethedebtratioofthecompanyby2%toaround33%.Inthereversecaseofahypotheticalincreaseofthecurrentrentsofthecompany(assumingaconstantyield)of€1million(from€20,4millionto€21,4million),thefairvalueoftherealestatewouldincreaseby€17millionor5%.Thiswouldlowerthedebtratioofthecompanyby1%toaround30%.

Acorrelationexistsbetweenchangesinthecurrentrentsandtheyieldsthatareusedtovaluetherealestate,butthiswasnotfactoredintotheabovesensitivityanalysis.

Valuation process for investment properties

Investmentpropertiesarerecordedintheaccountsonthebasisofvaluationreportsdrawnupbyindependentandexpertpropertyassessors.Thesereportsarebasedoninformationsuppliedbythecompanyandtheassumptionsandvaluationmodelsusedbythepropertyexperts.

• Informationsuppliedbythecompany,suchascurrentrents,periodsandconditionsofleaseagreements,servicecharges,investments,etc.Thisinformationcomesfromthecompany’sfinancialandmanage-mentsystemandissubjecttothegenerallyapplicableverificationsystemofthecompany.

• Theassumptionsandvaluationmodelsusedbythepropertyexperts.Theseassumptionsrelatemainlytothemarketsituation,suchasyieldsanddiscountrates.Theyarebasedontheirprofessionalassessmentandobservationofthemarket.

Foradetaileddescriptionofthevaluationmethodusedbythepropertyexperts,pleaserefertothesectionofthePropertyreportentitled“valuationoftheportfoliobypropertyexperts”.

Theinformationprovidedtothepropertyexperts,aswellastheassumptionandthevaluationmodels,arecheckedbythecompany’sbusinessanalystandalsobythemanagementcommitteeofthecompany.Thisinvolvesanexaminationofthechangesinfairvalueduringtherelevantperiod.

122

Other tangible assets


Amount at the end of the preceding financial year 560 602

Acquisitions 0 60

Depreciations -83 -102

Amount at the end of the financial year 477 560

VastnedRetailBelgiuminstalledin2012solarpanelsinownmanagementontheretailwarehouselocatedonBoomsesteenweg660inWilrijk.ThegeneratedenergyisprovidedatfavourableratestotenantsASAdventure,TonyMertens,BrantanoandPremaman.VastnedRetailBelgiumreceivesasubsidyof€250per1.000kWhofen-ergygenerated.Thisinvestmentinsolarpanelsamountedin2012to€0,5millionandgeneratesayieldof7,6%.Therevenueofthesolarpanelsarerecordedundertheitem

“Otherrental-relatedincomeandexpenses”.

Solarpanelsarevaluedonanannualbasisbytheinde-pendentpropertyexperts.Thefairvalueisdeterminedbasedonthediscountofthefutureguaranteedrevenuesfromgreenpowercertificates,undernormalsunshinehours,takingintoaccountnormalmaintenancecosts.Theusefullifeofsolarpanelsisestimatedat20years.

Note15. Currentassets

Assets held for sale


HobokenZeelandstraat 1.912 0

AntwerpAbdijstraat 470 0

Other 1.774 0

Total assets held for sale 4.156 0

123

Financial report

Trade receivables


Outstandingtradereceivables 157 147

Invoicestobeissuedandcreditnotestobereceived 6 26

Doubtfuldebtors 162 170

Provisiondoubtfuldebtors -162 -170

Total trade receivables 163 173

Thankstoastrictcreditcontrolthenumberofdaysofoutstandingcustomers’creditisonly2days.

Aging analysis of trade receivables


Receivables<30days 71 50

Receivables30-90days 48 42

Receivables>90days 38 55

Total outstanding trade receivables 157 147

Forthefollow-upofthedebtor’sriskusedbyVastnedRetailBelgium,pleaseseethedescriptionofthemostimportantriskfactorsandinternalcontrolandriskmanagementsystems.

Tax receivables and other current assets


Taxesreceivables 106 81

Receivablesoninsurances 0 7

Otherreceivables 107 3

Total tax receivables and other current assets 213 91

124

Note16. Shareholders’equity

Evolution of share capital

Date TransactionSharecapital

movement

Totaloutstan-dingshare

capitalafter

transaction

Numberof

shareissued

Total

number

ofshares

inthousands€ inthousands€ inunits inunits

15.06.1987 Constitution 74 74 3 3

30.06.1996 Capitalincrease 3.607 3.682 146 149

30.06.1997 Absorption 62 3.744 8 156

31.07.1997 Capitalincrease 1.305 5.049 71 227

22.12.1997 Absorption 1.529 6.578 69 296

06.11.1998 Absorption 3.050 9.628 137 434

23.12.1998 Absorption 874 10.502 101 535

23.12.1998 Capitalincrease 23.675 34.178 1.073 1.608

23.12.1998 Capitalincrease 33.837 68.015 1.723 3.332

31.03.1999 Capitaldecrease -3.345 64.670 0 3.332

01.11.1999 MergerGLTrust 13.758 78.428 645.778 3.977.626

01.11.1999 Capitalincrease(VastNed) 21.319 99.747 882.051 4.859.677

25.11.1999 Capitaldecrease(compensationoflosses) -7.018 92.729 0 4.859.677

29.02.2000Capitalincrease(contributioninkindMechelenBruul)

2.263 94.992 90.829 4.950.506

30.06.2000Capitalincrease(contributioninkindLaLouvière)

544 95.536 21.834 4.972.340

30.06.2000Capitalincrease(contributioninkindavenueLouise7)

1.306 96.842 52.402 5.024.742

20.09.2000MergerbyabsorptionImmorent,NieuweAntwerpseLuxeBuildings,ZevenZevenandNewsOfTheWorld

79 96.921 14.004 5.038.746

20.09.2000 Conversionofsharecapitaltoeuro 79 97.000 0 5.038.746

08.05.2002MergerbyabsorptionofthelimitedliabilitycompanyImmobilièredel’Observatoire

3 97.003 7.273 5.046.019

30.12.2002

MergerbyabsorptionofthelimitedliabilitycompaniesGLProperties,RetailDeve-lopment,Winvest,Immo2000M,Avamij,Goorinvest,Tafar,Lemi,Framonia,MicolandImmoShoppingTienen

209 97.212 26.701 5.072.720

30.12.2002 MergerbyabsorptionofcompanyImmoGL 1 97.213 5.805 5.078.525

Asat31December2014,thesharecapitalamountsto€97.213.233,32andisdividedamong5.078.525fullypaid-upshareswithnostatementofnominalvalue.

125

Financial report

Authorised capital

Theboardofdirectorsisexpresslyauthorisedtoincreasethenominalcapitalononeormoreoccasionsbyanamountof€97.213.233,32bycontributionincashorcontributioninkind,ifapplicable,byincorporationofreservesorsharepremiums,byincorporationofreservesorsharepremiums,underregulationsprovidedforbytheBelgianCompaniesCode,article7ofthearticlesofassociationandarticle26oftheRRECAct.

ThisauthorisationisvalidforaperiodoffiveyearsfromthepublicationintheannexestotheBelgianOfficialGazetteoftheofficialreportoftheextraordinarygeneralmeetingdated24April2013,i.e.from26June2013onwards.Thisauthorisationisvaliduntil26June2018.Theauthorisationtouseauthorizedcapitalaspossiblemeansofdefenceintheeventofatakeoverbidis,pursuanttoarticle607,secondparagraph,oftheBelgianCompaniesCode,onlyvalidforthreeyearsandexpireson26June2016.Thisauthorisationisrenewable.

Wheneverthereisacapitalincrease,theboardofdirec-torsshallsettheprice,anysharepremiumandthecondi-tionsofissuanceofthenewshares,unlessthegeneralmeetingistodecideonthatitself.Thecapitalincreasesmaygiverisetotheissuanceofshareswithorwithoutvotingright.

Capitalincreasescangiverisetotheissueofshareswithorwithoutvotingright.Whencapitalincreases,decidedbytheboardofdirectorsfollowingthisauthorisation,compriseasharepremium,theamountofthissharepremiummustberecordedonaspecialunavailableac-count,named“sharepremium”,whichconstitutesasthecapitaltheguaranteeforthirdpartiesandwhichwillnotbereducedordecreasedunlessbydecisionofthegeneralassembly,meetingpursuanttotheconditionsofattend-anceandmajorityprovidedforacapitaldecrease,exceptfortheconversionintocapitalasmentionedabove.

In2014,theboardofdirectorsdidnotmakeuseoftheauthorisationgrantedtouseamountsfromtheauthor-isedcapital.

Purchase of own shares

Pursuanttoarticle9ofthearticlesofassociation,theboardofdirectorscanproceedtothepurchaseofownpaid-upequitysharesbybuyingorexchangingwithinthelegallypermittedlimits,ifthepurchaseisnecessarytoprotectthecompanyfromaseriousandthreateningloss.

Thisauthorisationisvalidforthreeyearsfromthepubli-cationoftheminutesofthegeneralmeetingof24April2013,i.e.from26June2013.Thispermissionisvalidtill26June2016andisrenewable.

Capital increase

Allcapitalincreaseswillbeimplementedpursuanttoarticles581to607oftheBelgianCompaniesCode,subjecttothatstatedhereafterwithrespecttothepre-emptiveright.

Moreover,thecompanymustcomplywiththeprovisionsforthepublicissueofsharesasdefinedinarticles26and27oftheRRECAct.

Incaseofacapitalincreasethroughacontributionincashandwithoutprejudicetoarticles592to598oftheBelgianCompaniesCode,thepre-emptiverightmayonlybelimitedorwithdrawnifapriorityallocationrightisgrantedtotheexistingshareholdersatthetimeofallocatingnewsecurities.Thispriorityallocationrightmustsatisfythefollowingconditions:

1. itisrelatedtoallnewlyissuedsecurities;2. itisgrantedtotheshareholdersinproportiontothepartofthecapitalrepresentedbytheirsharesatthetimeofthetransaction;

3. amaximumpricepershareisannouncedatthelatestontheeveoftheopeningofthepublicsubscriptionperiod;and

4. insuchacase,thepublicsubscriptionperiodmustbeatleastthreetradingdays.

126

Capitalincreasesrealisedthroughcontributionsinkindaresubjecttotheprovisionsofarticles601and602oftheBelgianCompaniesCode.Moreover,pursuanttoarticle26§2oftheRRECAct,thefollowingconditionsmustbemet:

1. theidentityofthecontributormustbementionedinthereportreferredtoinarticle602oftheBelgianCompaniesCodeaswellasinthenoticeofthegeneralmeetingconvenedwithregardtothecapitalincrease;

2. theissuepricemaynotbelessthanthelowestvalueof(a)anetassetvaluedatingfromnotmorethanfourmonthsbeforethedateofthecontributionagreementor,atthediscretionofthecompany,beforethedateofthecapitalincreasedeed,and(b)theaverageclos-ingpriceduringthethirtycalendardayspriortothissamedate;fortheapplicationofprevioussentenceitisallowedtodeductanamountoftheamountmeantinpreviousparagraphatpoint(b)whichcorrespondtothepartofthenon-distributedgrossdividendonwhichthenewsharespossiblywouldgivenorights,ontheconditionthattheboardofdirectorsspecifi-

callyjustifiesthedeductedamountofthecumulateddividendinitsspecialreportandexplainsthefinancialconditionsoftheoperationinitsfinancialreport.

3. exceptiftheissuepriceorexchangeratioandtherelatedconditionsaredeterminednolaterthanontheworkingdayfollowingtheconclusionofthecontri-butionagreementandcommunicatedtothepublicmentioningthetimewithinwhichthecapitalincreasewilleffectivelybeimplemented,thecapitalincreasedeedshallbeexecutedwithinamaximumperiodoffourmonths;and

4. thereportreferredtounder1.mustalsoexplaintheimpactoftheproposedcontributiononthesituationofformershareholders,particularlyasfarastheirshareoftheprofits,netassetvalueandcapitalisconcerned,aswellastheimpactonthevotingrights.

Theabovedoesnotapplytothetransferoftherighttodividendsinthecontextofthedistributionofanoptionaldividend,insofarasthisisactuallymadeavailableforpaymenttoallshareholders.

Share premium


Date Transaction

01.11.1999 MergerGLTrust 4.183 4.183

Total share premium 4.183 4.183

Reserves

127

Financial report

Reserve for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties


Amount at the end of the preceding financial year -8.980 -9.055

Changesininvestmentvalueofinvestmentpropertiesoftheprecedingfinancialyear 71 -196

Impactonacquisitions/purchasesofinvestmentspropertiesoftheprecedingfinancialyear -292 0

Impactondisposalsofinvestmentspropertiesoftheprecedingfinancialyear 159 271

Total reserves for the impact on fair value of estimated transaction rights and costs resulting from the hypothetical disposal of investment properties

-9.042 -8.980

Thedifferencebetweenthefairvalueoftherealestateproperty(inaccordancewithIAS40)andtheinvestmentvalueofthepropertyasdeterminedbytheindependentpropertyexpertsisrecognisedinthisitem.

Thetransferoftheimpactonfairvalueofestimatedtransactionrightsandcostsresultingfromthehypo-theticaldisposalofinvestmentpropertiesarenolonger,

recordedduringthefinancialyearbutonlyafterapprovaloftheresultdistributionbythegeneralmeetingofshare-holders(inAprilofnextfinancialyear).Asthisconcernsatransferwithintwoitemsofshareholders’equity,ithasnoimpactonthetotalshareholders’equityofthecompany.

Forthemovementofthereservesduringthefinancialyear2014,pleaseseethestatementofchangesinequity.

128

Note17. Currentliabilities

Trade debts and other current debts


Tradedebts 946 833

Advancesreceivedfromtenants 391 1.134

Invoicestobereceived 992 434

Othercurrentdebts 4.880 175

Total trade debts and other current debts 7.209 2.576

Theothercurrentdebtscomprise,amongothers,thedeferredtaxesonthecompanyVeldstraat23-27for€3,7

millionandtheVATrevisionresultingfromthedivestmentofJulianusShoppinginTongerenfor€0,6million.

Other current liabilities


Dividendspayable 25 25

Guaranteesreceivedafterbankruptcies 57 92

Othercurrentliabilities 54 58

Total other current liabilities 136 175

Accrued charges and deferred income


Accruedinterestcharges 391 488

Accruedvacancycosts 207 180

Otheraccruedchargesanddeferredincome 411 256

Total accrued charges and deferred income 1.009 924

129

Financial report

Note18. Non-currentandcurrentfinancialdebts

ForthedescriptionoftheFinancialstructureofthecompany,pleaseseetheReportofthemanagementcommittee.

Classification by expiry date of withdrawn credit facilities


Debts with a remaining duration of Debtswitharemainingdurationof

< 1 year > 1 year and < 5 years TOTAL <1year

>1yearand<5years

TOTAL

Creditinstitutions:

(creditswithdrawn)

19.250 86.900 106.150 8.400 113.700 122.100

Financiallease 6 6 12 5 12 17

TOTAL 19.256 86.906 106.162 8.405 113.712 122.117

Percentage 18% 82% 100% 7% 93% 100%

Guarantees regarding financing

Inadditiontotherequirementtomaintaintheregu-latedrealestatecompany’scharterandtocomplywithfinancialratiosasenforcedbytheRRECAct,thebankcreditagreementsofVastnedRetailBelgiumaresubjecttocompliancewithfinancialratios,whichareprimarilyrelatedtocompany’sconsolidatedfinancialdebtoritsfinancialinterestcharges,theprohibitiononthemort-gagingorpledgingofrealestateinvestmentsandtheparipassutreatmentofcreditors.ThefinancialratioslimittheamountthatcouldstillbeborrowedbyVastnedRetailBelgium.

Forthepurposeofthefinancingofthecompany,nomortgageregistrationshavebeenmadeandnomortgageauthorisationshavebeenpermittedasper31December2014.

Formostfinancings,creditinstitutionsgenerallyrequireaninterestcoverageratioofmorethan2(seedescriptionoftheFinancialstructureintheReportofthemanage-mentcommittee).

Theseratiosarerespectedasat31December2014.IfVastnedRetailBelgiumwerenolongertorespecttheseratios,thefinancialinstitutionscoulddemandthatthefinancingagreementsofthecompanybecancelled,renegotiated,terminatedorprematurelyrepaid.

130

Classification by expiry date of credit lines


Debts with a remaining duration of Debtswitharemainingdurationof

< 1 year > 1 year and < 5 years TOTAL <1year

>1yearand<5years

TOTAL

Creditinstitutions:

(creditswithdrawn)

19.250 86.900 106.150 8.400 113.700 122.100

Not-withdrawncreditlines 23.145 8.100 31.245 8.994 6.300 15.294

TOTAL 42.395 95.000 137.395 17.394 120.000 137.394

Percentage 31% 69% 100% 13% 87% 100%

“Classificationbyexpirydateofcreditlines”comprisesanamountof€31millionofnot-withdrawncreditlines(€15millionasat31December2013).Thesedonot

formatclosingdateaneffectivedebtbutareonlyapotentialdebtundertheformofanavailablecreditline.

Classification by variable or fixed character of withdrawn credit facilities at financial institutions


Debts with a remaining duration of

Percen-tage

Debtswitharemainingdurationof

Percen-tage

< 1 year

> 1 year and

< 5 yearsTOTAL

<1year

>1yearand

<5yearsTOTAL

Variable 4.250 21.900 26.150 25% 8.400 23.700 32.100 26%

Fixed 15.000 65.000 80.000 75% 0 90.000 90.000 74%

TOTAL 19.250 86.900 106.150 100% 8.400 113.700 122.100 100%

Intheabovetable“Classificationbyvariableorfixedcharacterofwithdrawncreditfacilitiesatfinancialinstitu-

tions”thepercentageiscalculatedastherelationofeachcomponenttothesumofthecreditlines.

131

Financial report

Note19. Financialinstruments

ThemajorfinancialinstrumentsofVastnedRetailBelgiumconsistoffinancialandcommercialreceivablesanddebts,

cashandcashequivalentsaswellasfinancialinstrumentsoftheinterestrateswaptype(IRS).

SUMMARYOFTHEFINANCIALINSTRUMENTSinthousands€ 2014 2013

Categories Level Carryingamount Fairvalue

Carryingamount

Fairvalue

FINANCIAL INSTRUMENTS ON ASSETS

Non-current assets

Non-currentfinancialassets C 2 0 0 17 17

Tradereceivablesandothernon-currentassets A 2 7 7 3 3

Current assets

Tradereceivables A 2 163 163 173 173

Taxreceivablesandothercurrentassets A 2 213 213 91 91

Cashandcashequivalents B 2 339 339 1.860 1.860

FINANCIAL INSTRUMENTS ON LIABILITIES

Non-current liabilities

Non-currentfinancialdebts(interest-bearing) A 2 86.906 87.272 113.712 113.933

Othernon-currentfinancialliabilities C 2 4.552 4.552 3.106 3.106

Othernon-currentliabilities A 2 174 174 109 109

Current liabilities

Currentfinancialdebts(interest-bearing) A 2 19.256 19.256 8.405 8.405

Othercurrentfinancialliabilities C 2 0 0 521 521

Tradedebtsandothercurrentdebts A 2 7.209 7.209 2.576 2.576

Othercurrentliabilities A 2 136 136 175 175

Thecategoriescorrespondtothefollowingfinancialinstruments:

A. financialassetsorliabilities(includingreceivablesandloans)heldtomaturityandmeasuredatamortisedcost

B. investmentsheldtomaturityandmeasuredatamor-tisedcost

C. assetsandliabilitiesheldatfairvaluethroughprofitandloss,withtheexceptionoffinancialinstrumentsdefinedashedginginstruments.

Financialinstrumentsarerecognisedatfairvalue.Thefairvalueisdeterminedbasedononeofthefollowinglevelsofthefairvaluehierarchy:

• level1:measurementisbasedonquotedmarketpricesinactivemarkets

• level2:measurementisbasedon(externally)obser-vableinformation,eitherdirectlyorindirectly

• level3:measurementisbasedeitherfullyorpartiallyoninformationthatisnot(externally)observable.

132

ThefinancialinstrumentsofVastnedRetailBelgiumcor-respondtolevel2ofthefairvaluehierarchy.Thefollow-ingtechniquesareusedtomeasurethefairvalueoflevel2financialinstruments:

• fortheitems“Othernon-currentfinancialliabilities”and“Othercurrentfinancialliabilities”(whichapplytotheinterestrateswaps),thefairvalueisdeterminedbymeansofobservabledata,namelytheforwardinterestratesthatapplytoactivemarkets,whicharegenerallysuppliedbyfinancialinstitutions

• thefairvalueoftheremaininglevel2financialassetsandliabilitiesispracticallythesameastheircarryingamount,eitherbecausetheyhaveashort-termmaturity(suchastradereceivablesanddebts)orbecausetheycarryavariableinterestrate.Whenthefairvalueoftheinterest-bearingfinancialliabilitiesiscalculated,thefinancialliabilitieswithafixedinterestratearetakenintoaccount,andthefuturecashflows(interestandcapitalredemption)arediscountedwithamarket-basedyield.Financialliabilitiesthatcarryavariableinterestrateorwhicharehedgedbyafinan-cialderivativewerenottakenintoaccount.

VastnedRetailBelgiumemploysinterestrateswapstohedgepotentialchangesintheinterestchargesonaportionofthefinancialliabilitiesthathaveavariableinterestrate(theshort-termEuriborrate).Theseinterestrateswapsareclassifiedasacashflowhedge,withtheeffectivenessorineffectivenessofthehedgesdeterminedintheprocess.

• Theeffectivepartofthechangesinthefairvalueofderivativesdesignatedascashflowhedgesisrecognisedinthecomprehensiveincomeontheline“Changesintheeffectivepartoffairvalueofauthorisedhedginginstrumentsthataresubjecttohedgeaccounting”.Asaresult,hedgeaccountingisappliedtotheseswaps,anditisonthisbasisthatchangesinthevalueoftheseswapsarerecogniseddirectlyintheshareholders’equityandnotintheincomestatement.

• Theineffectivepartisrecognisedintheincomestatementontheline“Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)”inthefinancialresult.

133

Financial report

Fair value of financial derivatives

Asat31December2014,thecompanyhasfollowingfinancialderivatives:

inthousands€ Startdate ExpirydateInterest

rate

Contractual

notionalamount

Hedgeaccounting

Fairvalue

Yes/No 2014 2013

1a IRS 15.12.2013 15.12.2017 0,79% 10.000 Yes 0 17

Non-current financial assets 0 17

1b IRS 15.12.2013 15.12.2017 0,79% 10.000 Yes -206 0

3 IRS 15.04.2013 15.04.2018 2,29% 10.000 No -726 -589

4 IRS 06.10.2013 06.10.2018 2,60% 15.000 No -1.412 -1.118

5 IRS 06.10.2013 06.10.2018 2,50% 10.000 No -902 -698

6 IRS 15.12.2013 15.12.2018 2,50% 10.000 No -937 -701

7 IRS 01.10.2014 01.10.2019 0,72% 15.000 No -369 0

Other non-current financial liabilities -4.552 -3.106

IRS 01.10.2009 01.10.2014 3,02% 25.000 Yes 0 -521

Other current financial assets 0 -521

Total fair value financiële derivaten 70.000 -4.552 -3.610

Accountingprocessasat31December:

• Inshareholders’equity:Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentssubjecttoahedgeaccounting -206 -504

• Inshareholders’equity:Reserveforthebalanceofchangesinfairvalueofallowedhedginginstrumentsnotsubjecttoahedgeaccounting -3.106 -4.692

• Intheincomestatement:Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39) -1.240 1.586

Total fair value financial derivatives -4.552 -3.610

Asat31December2014,theseinterestrateswapshaveanegativemarketvalueof-€4,6million(contractualnominalvalue:€70million),whichisdeterminedonaquarterlybasisbytheissuingfinancialinstitute.Inter-estrateswap1hadapositivemarketvalueasat31December2013andwasclassifiedunderthefinancialassets.Asat31December2014thisswaphasanegativemarketvalueandisclassifiedothernon-currentfinancialliabilities.Theconversionisdividedinabovesummaryin1aand1b.

Thefairvalueofthederivativesisexclusivelydeterminedbytheinformationhavinganobservablecharacterforthederivative(directlyorindirectly)butwhichisnotapricelistedontheactivemarketandconsequentlytheIRScontractsarebelongingtolevel2ofthehierarchyofthefairvalueasdeterminedbyIFRS7.

Asat31December2014,VastnedRetailBelgiumclas-sifiestheinterestrateswap1ascashflowhedges,determiningthatthisinterestrateswapiseffective.Thefluctuationsinvalueoftheinterestrateswaps2till7includedarerecogniseddirectlyintheincomestatement.

134

Management of financial risks

ThemajorfinancialrisksofVastnedRetailBelgiumarethefinancialrisk,liquidityriskandtheinterestraterisk.

• FinancialriskForthedescriptionofthisriskanditsmanagementisreferredtochapter“Financialrisk”inthedescriptionoftheMajorriskfactorsandinternalcontrolandriskmanagementsystemsoftheReportoftheboardofdirectors.

Forfinancingrealestate,VastnedRetailBelgiumalwaysstrivesforabalancebetweenshareholders’equityandborrowedcapital.Inaddition,VastnedRetailBelgiumaimstosafeguarditsaccesstothecapitalmarketthroughthetransparentdisclosureofinforma-tion,bymaintainingregularcontactswithfinanciersand(potential)shareholdersandbyincreasingtheliquidityoftheshare.Finally,withrespecttolong-termfinancing,itaimsforabalancedspreadofrefinancingdatesandaweightedaveragedurationbetween3,5and5years.Thismaybetemporarilyderogatedfromifspecificmarketconditionsrequirethis.Theaverageremainingdurationofthelong-termcreditagreementsasat31December2014is2,1years.VastnedRetailBelgiumhasalsodiversifieditsfundingsourcesthroughtheuseof5Europeanfinancialinstitutions.

MoreinformationonthecompositionofthecreditportfolioofVastnedRetailBelgiumcanbefoundinthesectionentitled“Financialstructure”intheReportofthemanagementcommitteeandalsoin“Note18.Non-currentandcurrentfinancialdebts”intheFinan-cialreport.

• LiquidityriskForthedescriptionofthisriskandthewayitisman-aged,pleaserefertothesectionentitled“Liquidityrisk”inthedescriptionoftheMajorriskfactorsandinternalcontrolandriskmanagementsystemsintheReportoftheboardofdirectors.

ThebankcreditagreementsofVastnedRetailBelgiumaresubjecttocompliancewithfinancialratios,whichareprimarilyrelatedtotheconsolidatedfinancialdebtlevelofVastnedRetailBelgiumoritsfinancialinterestcharges.Inordertoavailitselfofthiscreditmargin,theconditionsofcreditfacilitiesmustbecompliedwithonacontinuousbasis.Asat31December2014,thecompanystillhad€31millioninnon-withdrawncreditlineswithitslendersforthepurposeofabsor-bingfluctuationsinliquidityrequirements.

MoreinformationonthecompositionofthecreditportfolioofVastnedRetailBelgiumcanbefoundinthesectionentitled“Financialstructure”intheReportofthemanagementcommitteeaswellin“Note18.Non-currentandcurrentfinancialdebts”oftheFinancialreport.

• InterestrateriskForthedescriptionofthisriskandthewayitisman-aged,pleaserefertothesectionentitled“Interestraterisk”inthedescriptionoftheMajorriskfactorsandinternalcontrolandriskmanagementsystemsintheReportoftheboardofdirectors.

Asaresultoffinancingwithborrowedcapital,theyieldisalsodependentoninterestratedevelopments.Inor-dertoreducethisrisk,whencomposingtheloanport-folio,thefundaimsforaratioofonethirdborrowedcapitalwithavariableinterestrateandtwothirdsbor-rowedcapitalwithafixedinterestrate.Dependingonthedevelopmentsininterestrates,aderogationfromthismayoccur.Furthermore,forlong-termborrowedcapital,abalancedspreadofinterestratereviewdatesandaminimumdurationof3yearsaretargeted.Asat31December2014theinterestratesonthecreditfacilitiesofthecompanyremainfixedforaremainingaveragedurationof3,3years.

MoreinformationonthecompositionofthecreditportfolioofVastnedRetailBelgiumcanbefoundinthesectionentitled“Financialstructure”intheReportofthemanagementcommitteeandalsoin“Note18.Non-currentandcurrentfinancialdebts”and“Note11.Financialresult”intheFinancialreport.

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Financial report

Note20. Calculationofdebtratio

Asat31December2014,theconsolidateddebtratioamountsto31%.


Non-currentfinancialdebts 18 86.906 113.712


Currentfinancialdebts 18 19.256 8.405

Tradedebtsandothercurrentdebts 17 7.209 2.576

Othercurrentliabilities 17 136 175

Total liabilities for calculation of debt ratio 113.680 120.215

Assets 362.414 365.033

Non-currentfinancialassets 0 -17

Total assets for calculation of debt ratio 362.414 365.016

Debt ratio 31% 34%

Note21. Relatedparties

Thecompany’srelatedpartiesareitsmajorityshare-holder,itssubsidiaries(seeNote22)anditsdirectorsandmembersofthemanagementcommittee.

Debts to related parties


VastnedRetailnvcreditfacility 17.000 0

VastnedRetailnvinterestchargestopay 26 0

Total 17.026 0

Aspartoftheacquisitionof99%ofthesharesofthecompanyVeldstraat23-27sa,ownerofthepremiumhighstreetshopinGhent,VastnedRetailBelgiumcon-cludedattheendofJuly2014atemporaryfinancingwithitsmajorityshareholderVastnedRetailnvforanamountof€17million.

On12January2015VastnedRetailBelgiumrepaidthetotalamountofthefinancingtoVastnedRetailnvandthe“TermLoanAgreement”washerewithterminated.

Intheframeworkofapossibleconflictofinterestswiththemajorityshareholdersofthecompanytheprocedureofarticle524oftheBelgianCompaniesCodewasappliedattheendofJuly2014(seeNote23).

136

Directors and members of the management committee

Theremunerationforthedirectorsandthemembersofthemanagementcommitteeareclassifiedintheitems“Propertymanagementcosts”and“Generalcosts”(see

Notes5and6).Forfurtherexplanationofthecomposi-tionoftheremunerationofthemembersofthemanage-mentcommittee,pleasesee“Note7.Employeebenefits”.


Directors 62 62

Membersofthemanagementcommittee 444 425

Total 506 487

Thedirectorsandmembersofthemanagementcommit-teedonotreceiveadditionalbenefitsontheaccountofthecompany.

Note22. Listofconsolidatedcompanies

Company

nameAddress

Enterprise

identificationnumber

Capitalshare

(in%)Minority interests

in thousands €

2014 2013

Veldstraat23-27saUitbreidingstraat18

2600BerchemBE0448976277 99% 167 0

EuroInvestRetailPropertiessa

Uitbreidingstraat18

2600BerchemBE0479506731 100% 0 0

Total minority interests 167 0

137

Financial report

Note23. Dealingwithconflictsofinterest

Incaseofapotentialconflictofinterestwithamajorshareholderofthecompany,theproceduredefinedinarticle524oftheBelgianCompaniesCodeshallbeap-plicable.ReferenceisalsomadetoArticles36to38oftheRRECActconcerningthepreventionofconflictsofinterest.

AsimilarconflictofinterestoccurredinJuly2014re-gardingtheprovisionoftemporaryfinancingbyVastnedRetailnvtoVastnedRetailBelgiumsaforthefinancingoftheacquisitionofthesharesofVeldstraat23-27sa.

Initscapacityaslender,VastnedRetailnvwishedtoprovidealoanofEUR17milliontoVastnedRetailBelgiumsaunderthe“TermLoanAgreement,”whichhadtoberepaidinfullatthelateston29March2015byVastnedRetailBelgiumsatoVastnedRetailnv.

Theamountoftheloanof€17millionunderthe“TermLoanAgreement”couldonlybeusedbyVastnedRetailBelgiumsawithaviewtoacquiring99%ofthesharesofthecompanyVeldstraat23-27sa,whichisowneroftheinner-cityshoplocatedatVeldstraat23-27inGhent.

Theloanunderthe“TermLoanAgreement”wasnotsecuredbutalsonotsubordinated.Theinterestratewas6-monthEuriborplus1.40%perannum.

Bydecisionof28July2014,theboardofdirectorscon-sequentlyappointedacommitteeofthreeindependentdirectors,inthepersonofJean-PierreBlumberg,NickvanOmmen,andEMSObvbapermanentlyrepresentedbyChrisPeeters,whointurnappointedtwoexpertsinthepersonofPatrickMoermansandAlexisMeeùsofDegroofCorporateFinance,awholly-ownedsubsidiaryofBankDegroofsa.

InconsultationwithandassistedbyPatrickMoermansandAlexisMeeùs,thiscommitteedraftedarecommen-dation,ofwhichthedecisionwasasfollows:

“The Committee believes that entering into the “Term Loan Agreement” for the purpose of acquiring 99% of the shares of the company Veldstraat 23-27 NV is to the advantage of the Company and certainly not of such a nature for it be disadvantageous to it, which, in the light of the policy of the Company is manifestly unlawful. The commercial advantage was described above.

The Company can thus obtain very short-term liquid funds amounting to € 17.000.000 at a market interest rate of Euribor 6 months plus 1,40% per year and this in the context of Company’s strategy to add a top retail property in the city centre of Ghent to its real estate portfolio.”

Theboardofdirectorssubsequentlydecidedon28July2014tosignthe“TermLoanAgreement”betweenVastnedRetailnvandVastnedRetailBelgiumsa.

Theboardofdirectorsalsorequestedthecompany’saudi-tors,DeloitteCompanyAuditors,Burgl.Venn.specifyingCVBA,representedbyKathleenDeBrabander,companyauditor,inaccordancewitharticle524§3oftheBelgianCompaniesCode,togiveanopinionontheaccuracyofthedataspecifiedintherecommendationofthecom-mitteeofthreeindependentdirectors,assistedbytheindependentexpert.Thedecisionoftheauditorinthisrespectisasfollows:

“On the basis of the above work, we can conclude that the data contained in the recommendation of the Committee and in the minutes of the board of directors are faithfully presented. However, this does not mean that we have given a discretionary opinion on the recommendation of the Com-mittee and the decision of the board of directors.”

TheboardalsostatedthattheprocedureimposedbyArticle37oftheRRECActhasbeenrespected.

On12January2015,VastnedRetailBelgiumsarepaidinfulltheamountofthefinancingtoVastnedRetailnvandthe“TermLoanAgreement”wastherebyterminated.

138

Note24. Feeoftheauditorandentitiesaffiliatedwiththeauditor


Excl.VAT

Feestatutoryauditor 67 63

Feeforexceptionalactivitiesorspecialassignmentswithinthecompanybythestatutoryauditorregarding

• Othercontrolassignments 2 0

• Taxadviceassignments 0 0

• Otherassignmentsapartfromauditassignments 16 9

Feeforexceptionalactivitiesorspecialassignmentswithinthecompanybypersonsaffiliatedwithstatutoryauditor

0 0

Total fee of the statutory auditor and the entities affiliated with the statutory auditor 85 77

Note25. Conditionalobligations

Asat31December2014VastnedRetailBelgiumhasapotentialconditionalsheetobligationregardingstabilityproblemsinitsinner-cityshopinMalines.Basedonitscontractualresponsibilityagainstitstenants,whichdoesnotfallunderthepublicliabilityinsurance,apossiblein-demnitymaybeduebyVastnedRetailBelgiumtoCoolcatandH&M.PresentlytheresponsibilityofVastnedRetailBelgiumhasnotbeendeterminedandtheamountofthesuffereddamagesisnotyetknown.AttheendofOctober2013thelegalexperthaspresentedhispreliminaryreporttotheconcernedparties.Fromthispreliminaryreportcan

currentlybeconcludedthatVastnedRetailBelgiumisnotresponsibleforthestabilityproblems.

Furthermore,asat31December2014VastnedRetailBelgiumhasconditionalsheetobligationsregardingfinancing.Noregistrationsofmortgageweretaken,andnomortgageauthorisationspermitted.MostfinancialInstitutionsdohoweverdemandthattheinvestmentfundcontinuestocomplywiththefinancialratiosaslaiddownbytheRRECAct.Forthefinancing,thecreditinstitutionsgenerallyrequireacoverageratioofmorethan2.

Note26. Eventsafterthebalancesheetdate

Therearenosignificanteventstobementionedthatoccurredaftertheclosingoftheaccountsasat31December2014.

On12January2015,VastnedRetailBelgiumsarepaidinfulltheamountofthefinancingtoVastnedRetailnvandthe“TermLoanAgreement”wastherebyterminated(seeNote23).

139

Financial report

Bruges, Steenstraat - 2.058 m2

140

VASTNEDRETAILBELGIUMNV/SA,PUBLICREGULATEDREALESTATECOMPANYUNDERBELGIANLAW

STATUTORYAUDITOR’SREPORTTOTHESHAREHOLDERS’MEETINGONTHECONSOLIDATEDFINANCIALSTATEMENTSFORTHEYEARENDED31DECEMBER2014

Totheshareholders,

Asrequiredbylaw,wereporttoyouinthecontextofourappointmentasthecompany’sstatutoryauditor.Thisreportincludesourreportontheconsolidatedfinancialstatementstogetherwithourreportonotherlegalandregulatoryrequirements.Theseconsolidatedfinancialstatementscomprisetheconsolidatedbalancesheetasat31December2014,theconsolidatedincomestatement,theconsolidatedstatementofcomprehensiveincome,theconsolidatedstatementofchangesinequityandtheconsolidatedstatementofcashflowsfortheyearthenended,aswellasthesummaryofsignificantaccountingpoliciesandotherexplanatorynotes.

Report on the consolidated financial statements - Unqualified opinion

WehaveauditedtheconsolidatedfinancialstatementsofVastnedRetailBelgiumNV/SA,PublicregulatedrealestatecompanyunderBelgianlaw(“thecompany”)anditssubsidiaries(jointly“thegroup”),preparedinaccordancewithIn-ternationalFinancialReportingStandardsasadoptedbytheEuropeanUnionandwiththelegalandregulatoryrequire-mentsapplicableinBelgium.Theconsolidatedstatementoffinancialpositionshowstotalassetsof362.414(000)EURandtheconsolidatedincomestatementshowsaconsolidatedprofit(groupshare)fortheyearthenendedof20.494(000)EUR.

Board of directors’ responsibility for the preparation of the consolidated financial statements

TheboardofdirectorsisresponsibleforthepreparationandfairpresentationofconsolidatedfinancialstatementsinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnionandwiththelegalandregulatoryrequirementsapplicableinBelgium,andforsuchinternalcontrolastheboardofdirectorsdeterminesisnecessarytoenablethepreparationofconsolidatedfinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Statutory auditor’s responsibility

Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit.Wecon-ductedourauditinaccordancewithInternationalStandardsonAuditing(ISA).Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsoli-datedfinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheconsoli-datedfinancialstatements.Theproceduresselecteddependonthestatutoryauditor’sjudgment,includingtheassess-mentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,thestatutoryauditorconsidersinternalcontrolrelevanttothegroup’spreparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofthegroup’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebytheboardofdirectors,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.Wehaveobtainedfromthegroup’sofficialsandtheboardofdirectorstheexplanationsandinformationnecessaryforperformingouraudit.

STATUTORYAUDITOR’SREPORT

141

Financial report

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

Unqualified opinion

Inouropinion,theconsolidatedfinancialstatementsofVastnedRetailBelgiumNV/SA,PublicregulatedrealestatecompanyunderBelgianlawgiveatrueandfairviewofthegroup’snetequityandfinancialpositionasof31December2014,andofitsresultsanditscashflowsfortheyearthenended,inaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnionandwiththelegalandregulatoryrequirementsapplicableinBelgium.

Report on other legal and regulatory requirements

Theboardofdirectorsisresponsibleforthepreparationandthecontentofthedirectors’reportontheconsolidatedfinancialstatements.

AspartofourmandateandinaccordancewiththeBelgianstandardcomplementarytotheInternationalStandardsonAuditingapplicableinBelgium,ourresponsibilityistoverify,inallmaterialrespects,compliancewithcertainlegalandregulatoryrequirements.Onthisbasis,wemakethefollowingadditionalstatement,whichdoesnotmodifythescopeofouropinionontheconsolidatedfinancialstatements:

• Thedirectors’reportontheconsolidatedfinancialstatementsincludestheinformationrequiredbylaw,isconsistentwiththeconsolidatedfinancialstatementsandisfreefrommaterialinconsistencieswiththeinformationthatwebecameawareofduringtheperformanceofourmandate.

Antwerp,16March2015

Thestatutoryauditor,

DELOITTEBedrijfsrevisoren/Réviseursd’EntreprisesBVo.v.v.e.CVBA/SCs.f.d.SCRL

Representedby

KathleenDeBrabander

142

ThestatutoryannualaccountsofVastnedRetailBelgiumsaarepreparedaccordingtotheIRFSstandardsandinaccordancewiththeRRECRoyalDecreeof13July2014.

TheentireversionofthestatutoryannualaccountsofVastnedRetailBelgiumsa,alongwiththeannualreportandthereportofthestatutoryauditor,willbedepositedwithinthelegaltimeframeattheNationalBankof

Belgiumandcanbeobtainedforfreethroughthewebsiteofthecompany(www.vastned.be)orondemandattheregisteredoffice.

Thestatutoryauditorhasissuedanunqualifiedauditor’sreportonthestatutoryannualaccountsofVastnedRetailBelgiumsa.

Incomestatement


Rentalincome 21.214 21.399

Rental-relatedexpenses -41 -32

NET RENTAL INCOME 21.173 21.367

Recoveryofrentalchargesandtaxesnormallypayablebytenantsonletproperties 1.454 1.534

Chargesandtaxesnormallypayablebytenantsonletproperties -1.454 -1.534

Otherrental-relatedincomeandexpenses 43 37

PROPERTY RESULT 21.216 21.404

Technicalcosts -582 -460

Commercialcosts -319 -215

Chargesandtaxesonunletproperties -219 -168

Propertymanagementcosts -1.165 -1.202

Otherpropertycharges -125 -204

Property charges -2.410 -2.249

OPERATING PROPERTY RESULT 18.806 19.155

Generalcosts -1.224 -1.047

Otheroperatingincomeandcosts 25 77

OPERATING RESULT BEFORE RESULT ON PORTFOLIO 17.607 18.185

Resultondisposalsofinvestmentproperties -1.932 273

Changesinfairvalueofinvestmentproperties 11.250 -2.986

Otherresultonportfolio -207 -131

OPERATING RESULT 26.718 15.341

Financialincome 210 190

Netinterestcharges -4.187 -4.883

Otherfinancialcharges -10 -11


Changesinfairvalueofnon-currentfinancialassets -967 4

Financial result -6.194 -3.114

RESULT BEFORE TAXES 20.524 12.227

Taxes -30 -33

NET RESULT 20.494 12.194

STATUTORYANNUALACCOUNTSVASTNEDRETAILBELGIUMSA

143

Financial report

RESULTPERSHARE Note 2014 2013

Numberofsharesentitledtodividend 13 5.078.525 5.078.525

Netresult(€) 13 4,03 2,40

Dilutednetresult(€) 13 4,03 2,40

Operatingdistributableresult(€) 13 2,68 2,65

Statementofcomprehensiveincome


NET RESULT 20.494 12.194

Other components of comprehensive income

(recyclable in income statement)

Changesintheeffectivepartoffairvalueofallowedhedginginstrumentssubjecttohedgeaccounting

297 1.499

COMPREHENSIVE INCOME 20.791 13.693

Appropriationofresult


NET RESULT 20.494 12.194

• Allocationto/transferfromreservesforthebalanceofchangesinfairvalue19ofinvest-mentproperties:

-Financialyear -11.327 2.895

-Valuerealisedfromrealestateproperties 2.967 -115

• Allocationto/transferfromthereservesoftheimpactontheestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties

-752 63

• Allocationto/transferfromthereservesforthebalanceofchangesinfairvalueofallowedhedginginstrumentsthatarenotsubjecttoahedgeaccounting

1.240 -1.586

• Transferfromotherreserves 968 -3

• Transferfromresultscarriedforwardfrompreviousfinancialyears 224 10

Remuneration of capital 13.814 13.458


NET RESULT 20.494 12.194

Note:

Operatingdistributableresult 13.590 13.448


Changesinfairvalueoffinancialassetsandliabilities(ineffectivehedges-IAS39)andNon-currentfinancialassets

-2.207 1.590

Incomestatement(continued)

19 Based on the changes in investment value of investment properties.

144

Balancesheet

ASSETSinthousands€ 31.12.2014 31.12.2013

NON-CURRENT ASSETS 350.846 360.417

Intangibleassets 3 7

Investmentproperties 328.738 358.818

Othertangibleassets 477 560

Financialfixedassets 21.625 1.029

Tradereceivablesandothernon-currentassets 3 3

CURRENT ASSETS 7.424 4.568

Assetsheldforsale 4.098 0

Tradereceivables 163 173

Taxreceivablesandothercurrentassets 2.342 1.898

Cashandcashequivalents 301 1.853

Deferredchargesandaccruedincome 520 644

TOTAL ASSETS 358.270 364.985

145

Financial report

SHAREHOLDERS’EQUITYANDLIABILITIESinthousands€ 31.12.2014 31.12.2013

SHAREHOLDERS’ EQUITY 242.800 235.467

Sharecapital 97.213 97.213

Sharepremium 4.183 4.183

Reserves 120.910 121.877


LIABILITIES 115.470 129.518

Non-current liabilities 91.632 116.927

Non-currentfinancialdebts 86.906 113.712


Financial lease 6 12

Othernon-currentfinancialliabilities 4.552 3.106


Current liabilities 23.838 12.591

Provisions 205 0

Currentfinancialdebts 19.256 8.405


Financial lease 6 5

Other current financial debt 17.000 0

Othercurrentfinancialliabilities 0 521

Tradedebtsandothercurrentdebts 3.240 2.574

Othercurrentliabilities 136 175

Accruedchargesanddeferredincome 1.001 916

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 358.270 364.985

NETVALUEPERSHAREIN€ 31.12.2014 31.12.2013

Netvalue(fairvalue) 47,81 46,37

Netvalue(investmentvalue) 49,59 48,12

NetassetvalueEPRA 48,71 47,08

DEBTRATIO 31.12.2014 31.12.2013


147

General information

Louvain, Bondgenotenlaan - 1.495 m2

148

Name

VastnedRetailBelgiumsaisapublicregulatedrealestatecompanyunderBelgianlaw.

On24April2013thenameofthecompanychangedfrom“IntervestRetail”into“VastnedRetailBelgium”.

Registeredoffice

Uitbreidingstraat18,2600Berchem-Antwerp.

Enterpriseidentificationnumber

ThecompanyisregisteredattheCentralEnterpriseDatabaseundertheenterpriseidentificationnumber0431.391.860.

Legalform,formation,publication

Thecompanywasfoundedbydeed,executedbeforenotaryAndrévanderVorst,inElsene,on15June1987,aspublishedintheappendicestotheBelgianOfficialGazetteofOrdersandDecreesof9July1987underno.870709-272.

ThearticlesofassociationhavelastbeenamendedbydeedexecutedbynotaryEricDeBieon27October2014,announcedintheAnnexesoftheBelgianOfficialGazetteundernumber2014-11-14/0207159,wherebythecorporateobjectivewaschangedbecausethecompanyhasbecomeapublicregulatedrealestatecompanyinthesenseofarticle2,2°oftheActof12May2014concern-ingtheregulatedrealestatecompanies(andisthereforenolongerapropertyinvestmentfund)andwherebyalsootherchangestothearticlesofassociationhavebeenimplementedinordertorefertotheActof12May2014concerningtheregulatedrealestatecompaniesinsteadofthepropertyinvestmentfundslegislation.

On22December1998,VastnedRetailBelgiumwasrecognisedasa“PublicpropertyinvestmentfundwithfixedcapitalunderBelgianlaw”,abbreviatedto“PropertyinvestmentfundsunderBelgianlaw”.TakingintoaccountthecomingintoforceoftheActof19April2014regard-ingthealternativeinstitutionsforcollectiveinvestmentsandtheirmanagers(the“AIFMDAct”)20,thecompanyhas

optedtoapplyforthestatusofpublicregulatedreales-tatecompany,asimplementedbytheRRECAct,insteadofthestatusofpublicpropertyinvestmentfund.Inthiscontext,thecompanysubmitteditspermitapplicationaspublicregulatedrealestatecompanytotheFSMAon14August2014.ThecompanywassubsequentlygrantedthestatusofpublicregulatedrealestatecompanybytheFSMApursuanttoarticles9,§3and77oftheRRECActon22September2014,underthesuspensiveconditionofachangeinthearticlesofassociationofthecompanyandcompliancewiththestipulationsofarticle77,§2andfollowingoftheRRECAct.Finally,on27October2014,theextraordinarygeneralmeetingofshareholdersinthecompanyapproved,with100%majorityofthevotes,thechangeinthecorporateobjectiveregardingthechangeofstatusfrompropertyinvestmentfundtopublicregulatedrealestatecompany,pursuanttotheRRECAct.Consid-eringthatattheabovementionedextraordinarygeneralmeetingofshareholdersnorightofabstentionwhat-soeverwasexecuted,andallsuspensiveconditionswerefulfilledtowhichthechangeinthearticlesofassociationbytheextraordinarygeneralmeetingofshareholdersandthepermitgrantedbytheFSMAweresubject,VastnedRetailBelgiumenjoysthestatusofpublicregulatedrealestatecompanyasfrom27October2014.Asapublicregulatedrealestatecompany,thecompanyisnolongersubjectedtothestipulationsoftheRoyalDecreeof7December2010regardingpropertyinvestmentfundsandtheActof3August2012regardingcertainformsofcollectivemanagementofinvestmentportfolios,butsince27October2014theapplicablelegislationconsistsoftheRRECActandtheRRECRoyalDecree.

ThecompanyisregisteredattheFinancialServicesandMarketsAuthority(FSMA).

Thecompanydrawspubliclyonthesavingssysteminthesenseofarticle438oftheBelgianCompaniesCode.

Duration

Thecompanyisfoundedforanindefiniteperiod.

IDENTIFICATION

20 This act forms the conversion of the European Directive to Belgian law with regard to alternative investment funds managers,

with the result that this Directive is known as the “AIFMD Directive” and this law as the “AIFMD Act”.

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Purposeofthecompany

Article 4 of the articles of association

4.1.Thecompanyhastheexclusiveobjectiveof:

a. eitherdirectly,orbymeansofacompanyinwhichitpossessesaholdingpursuanttothestipulationsoftheRRECActandthedecisionsandregulationsmadefortheexecutionofthesame,tomakerealestateavail-abletousers;and,

b. withintheboundsoftheapplicablelegislationonregulatedrealestatecompanies,topossessrealestateasmentionedinarticle2,5°,vitoxoftheRRECAct.

Realestateinthesenseofarticle2,5°oftheRRECActincludes:

i. realestateasdefinedinarticles517andfollowingoftheCivilCode,andrightsinremonrealestate,withtheexclusionofrealestateofanarchitectural,agri-culturalorminingnature;

ii. votingsharesissuedbyrealestatecompaniesman-agedexclusivelyorjointlybythecompany;

iii. optionrightstoproperty;iv. sharesofpublicorinstitutionalregulatedrealestate

companies,providedthatthelatterarejointlyorexclusivelymanagedbythecompany;

v. rightsarisingfromcontractsunderwhichoneormorepropertieshavebeenplacedunderarentalarrangementwiththecompany,oranyothersimilarrightsofusufructhavebeengranted;

vi. sharesofpublicpropertyinvestmentfunds;vii. unitsinforeigninstitutionsforcollectiveproperty

investmentregisteredonthelistreferredtoinarticle260oftheActof19April2014onalternativeinstitu-tionsforcollectiveinvestmentandtheirmanagers;

viii.unitsininstitutionsforcollectivepropertyinvestmentlocatedinanotherMemberStateoftheEuropeanEconomicAreaandwhicharenotregisteredonthelistreferredtoinArticle260oftheActof19April2014onalternativeinstitutionsforcollectiveinvest-mentandtheirmanagers,insofarastheyaresubjecttoasimilarcontrolaspublicpropertyinvestmentfunds;

ix. sharesissuedbycompanies(i)withthestatusofalegalentity;(ii)resortingunderthejurisdictionofanotherMemberStateoftheEuropeanEconomicArea;(iii)ofwhichtheshareshavebeenadmittedfortradingonaregulatedmarketand/orthataresubjecttoaprudentialcontrolregime;(iv)ofwhichthemainactivityconsistsoftheacquisitionorestablishmentof

realestatewithaviewtomakingthesameavail-abletousers,orthedirectorindirectpossessionofholdingsincompanieswithsimilaractivities;and(v)whichareexemptfromtaxonprofitincomearisingfromtheactivityintendedbythestipulationunder(iv)above,providedcertainlegalobligationsarecom-pliedwith,andwhichareatleastmandatoryforthedistributionofaportionoftheirincomeamongtheirshareholders(hereinafter“RealEstateInvestmentTrusts”(or“REITs”);

x. propertycertificatesasdefinedinarticle5,§4oftheActof16June2006onpublicofferingsofinvestmentinstrumentsandtheadmissionofinvestmentinstru-mentstotradingonaregulatedmarket;

Inthecontextofmakingavailablerealestate,thecom-panymayexecuteallactivitiesrelatedtotheestablish-ment,rebuilding,renovation,development,acquisition,disposal,managementandexploitationofrealestateproperties.

Thecompanydevelopsastrategyenablingittopositionitselfinallstagesofthevaluechainoftherealestatesector.Tothisend,thecompanyacquiresanddisposesofrealestateandrightsinremwithregardtorealestatewiththeobjectiveofmakingthesameavailabletoitsusers,howeverthecompanymayalsomanageitsdevelopment,(therenovation,development,expansion,establishment,etc.),andthedailymanagementofrealestateinitspossession.Itmaybeabuildingmanagerforrealestateofwhichitisco-owneror“propertymanager”ofabuildingcomplexofwhichitisoneoftheowners.Inthiscontextitmayexecuteallotheractivitiesthatprovideaddedvaluetoitsrealestateortoitsuserse.g.facilitymanagement,theorganisationofevents,caretakerservices,rebuildingactivitiesadaptedtothespecificneedsofthetenant,etc.Thecompanymayalsooffercustomisedrealestatesolutionswherebytherealestateisadaptedtothespecificneedsofitsusers.

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Forthatpurpose:

a. thecompanyexercisesitsactivitiesindependently,withoutdelegatingsuchactivitiestoathirdpartyotherthananaffiliatedcompanyinanywaywhatso-ever,pursuanttoarticles19and34oftheRRECAct,bywhichmeanstheassetmanagementcannotbedelegated;

b. itconductsdirectrelationshipswithitsclientsandsuppliers;

c. ithas,withaviewtotheexecutionofitsactivitiesinthemannerstipulatedbythisarticle,operationalteamsatitsdisposalwhichformasignificantpropor-tionofitsworkforce.

4.2.Thecompanymayincidentallyortemporarilyinvestinsecuritiesthatarenotrealestateinthesenseoftheapplicablelegislationonregulatedrealestatecompanies.Theseinvestmentswillbeexecutedinaccordancewiththeriskmanagementpolicyadoptedbythecompanyandwillbediversified,thusguaranteeinganappropriateriskdiversification.Thecompanymayalsoownunallocatedliquidassetsinanycurrencyintheformofdemandde-positaccountsortermdepositaccounts,orintheformofanyothereasilynegotiablemonetaryinstrument.

Thecompanymayalsoconcludetransactionsincon-nectionwithhedginginstruments,insofarastheseareexclusivelyintendedtocoverinterestandexchangeraterisksinthecontextofthefinancingandmanagementofthecompany’srealestateandtotheexclusionofanytransactionsofaspeculativenature.

4.3. Thecompanymayleaseorrentoneormorerealestateproperties(asreferredtointheIFRSstandards).Theactivityofleasingrealestatewithapurchaseoption(referredtointheIFRSstandards)mayonlybecarriedoutasanincidentalactivity,unlesssuchrealestateisintendedforgeneralpurposes,includingsocialhousingandeducation(inthiscasetheactivitymaybeexecutedasthemainactivity).

4.4. Pursuanttointermediatelegislationontheregulatedrealestatecompanies,thecompanymaybeinvolvedin:• purchasing,renovation,furnishing,rental,subletting,

managing,exchanging,selling,subdividingtheprop-ertyorplacingitunderthesystemofjointownershipasdescribedabove;

• grantingmortgagesorothersecuritiesorguaranteesonlyinthecontextofthefinancingofitsrealestateactivities,pursuanttoarticle43oftheRRECAct;

• grantingcreditsandprovidingsecuritiesorguaranteesinfavourofasubsidiaryofthecompanypursuanttoarticle42oftheRRECAct.

4.5. Thecompanymayacquire,rentorrentout,carryoverorexchangeallmovableorimmovableproperty,materialsandaccessoriesandgenerally,pursuanttotheapplicablelegislationonregulatedrealestatecompanies,performallcommercialorfinancialactionsthataredirectlyorindirectlyrelatedtoitsobjectiveandtheexploitationofallintellectualrightsandcommercialpropertiesrelatedtoit.Insofarasitiscompatiblewiththearticlesofassociationofregulatedrealestatecompanies,thecompanymay,throughcontributionsincashorinkind,mergers,sub-scriptions,participations,financialinterventionsorothermeans,participateinallexistingcompaniesorenterprises,orthoseyettobeformed,inBelgiumorabroad,thecorporateobjectiveofwhichisidenticaltoitsownorthenatureofwhichissuchthatitpromotesitsobjective.

Financialyear

Thefinancialyearstartson1Januaryandendson31Decemberofeachyear.

Inspectionofdocuments

• thearticlesofassociationofVastnedRetailBelgiumsaareavailableforinspectionattheOfficeoftheClerkoftheCommercialCourtinAntwerp,andatthecompany’sregisteredoffice

• theannualaccountsarefiledwiththebalancesheetcentreoftheNationalBankofBelgium

• theannualaccountsandassociatedreportsaresentannuallytoholdersofregisteredsharesandtoanyotherpersonwhorequeststhem

• theresolutionsrelatingtotheappointmentanddismissalofthemembersofthecompany’sbodiesarepublishedintheappendicestotheBelgianOfficialGazette

• financialannouncementsandnoticesconveningthegeneralmeetingsarepublishedinthefinancialpress

• importantpubliccompanydocumentsareavailableonthewebsite:www.vastned.be.

Theotherpubliclyaccessibledocumentsareavailableforinspectionatthecompany’sregisteredoffice.

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EXTRACTFROMTHEARTICLESOFASSOCIATION21

21 These articles are not the complete or the literal reproduction of the articles of association. The complete articles of association

can be consulted on the company’s registered office and on the website www.vastned.be.

Capitalshares

Article 7 - Authorised capital

Theboardofdirectorsisauthorisedtoincreasethenominalcapitalcapitalononeormoreoccasionsbyanamountofninetysevenmilliontwohundredthirteenthousandtwohundredandthirtythreeeuroandthirtytwoeurocent(97.213.233,32EUR),bycontributionincashorcontributioninkind,ifapplicablethroughincor-porationofthereservesorsharepremiums,orbyissuingconvertiblebondsorwarrants,underregulationsprovidedforbytheBelgianCompaniesCode,thesearticlesofas-sociationandtheapplicablelegislationonregulatedrealestatecompanies.

Thisauthorisationisvalidforaperiodof5yearsstartingfromthepublicationintheAppendicestotheBelgianOfficialGazetteoftherelevantpowerofauthorisationofthegeneralmeeting.Thisauthorisationisrenewable.

Foreverycapitalincrease,theboardofdirectorsshallsettheprice,anysharepremiumandtheconditionsofissuanceofthenewshares,unlessthegeneralmeetingshoulddecideotherwise.

Capitalincreasescangiverisetotheissueofshareswithorwithoutvotingright.Whencapitalincreases,decidedbytheboardofdirectorsfollowingthisauthorisation,compriseasharepremiumtheamountofthissharepremiummustberecordedonaspecialunavailableaccount,named“sharepremium”,whichconstitutesasthecapitaltheguaranteeforthirdpartiesandwhichwillnotbereducedordecreasedunlessbydecisionofthegeneralassembly,meetingpursuanttotheconditionsofattendanceandmajorityprovidedforacapitaldecrease,exceptfortheconversionintocapitalasmentionedabove.

Article 8 - Nature of the shares

Thesharesareregisteredsharesorindematerialisedform.Arecordoftheregisteredshares,whicheachshareholderisentitledtoinspect,ismaintainedatthecompany’sregisteredoffice.

Registeredsubscriptioncertificateswillbeissuedtotheshareholders.

Anytransferbetweenlivingpersonsorfollowingdeath,aswellasanyexchangeofsecurities,willberecordedintheaforementionedregister.

.

Possession

Article 11 - Transparency regulations

Inaccordancewithlegalrequirements,allnaturalpersonsorlegalentitieswhoacquireorsurrendersharesorotherfinancialderivativeswithvotingrightsgrantedbythecompany,regardlessofwhethertheserepresentthecapital,areobligedtoinformboththecompanyandtheFinancialServicesandMarketsAuthorityofthenumberoffinancialderivativesintheirpossession,wheneverthevotingrightsconnectedwiththesefinancialderivativesreachfivepercent(5%)oramultipleoffivepercentofthetotalnumberofvotingrightsinexistenceatthattime,orwhencircumstancesthatrequiresuchnotificationarise.

Besidesthelegalthresholdmentionedinthepreviousparagraph,thecompanyalsoprovidesforastatutorythresholdof3%.

Thisdeclarationisalsocompulsoryintheeventofthetransferofshares,ifasaresultofthistransferthenumberofvotingrightsrisesaboveorfallsbelowthethresholdsspecifiedinthefirstorsecondparagraph.

Administrationandsupervision

Article 12 - Composition of board of directors

Thecompanyismanagedbyaboardofdirectorsconsist-ingofatleastthreedirectors,whomayormaynotbeshareholders.Theywillbeappointedforamaximumofsixyearsbythegeneralmeetingofshareholders,andtheirappointmentmayberevokedatanytimebythelatter.

Intheeventthatoneormoredirectors’positionsbecomevacant,theremainingdirectorshavetherighttofillthevacancyonaprovisionalbasisuntilthenextgeneralmeeting,whenadefinitiveappointmentwillbemade.

Inapplicationofwhatisdeterminedbyarticle13oftheRRECAct,theboardofdirectorsiscomposedinsuchwaythatthecompanycanbemanagedautonomouslyandinthesoleinterestoftheshareholders.Threeindepend-entdirectorswithinthemeaningofarticle526teroftheBelgianCompaniesCodehavetositontheboardofdirectors.

Theeffectiveleadershipofthepublicregulatedrealestatecompanymustbeconsignedtoatleasttwopersons.

Alldirectorsandtheirrepresentativesmustsatisfytherequirementsintermsofprofessionalreliability,

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experienceandautonomy,asspecifiedbyarticle14§1,oftheRRECAct.Theymaynotfallundertheapplicationoftheprohibitionsreferredtoinarticle20oftheActof25April2014relatedtothestatuteforandsupervisionofcreditinstitutions.

Themembersoftheboardofdirectorsandthepersonsinchargeoftheeffectiveleadershipmustsatisfytherequirementsofarticles14and15oftheRRECAct.

Unabatedthetransitionalstipulationasprovidedforbyarticle37,themembersoftheboardofdirectorsandthepersonsinchargeofeffectiveleadershipareexclusivelypersons.

Article 15 - Delegation of authority

Inapplicationofarticle524bisoftheBelgianCompaniesCode,theboardofdirectorscanputtogetheraman-agementcommittee,whosemembersareselectedfrominsideoroutsidetheboard.Thepowerstobetrans-ferredtothemanagementcommitteeareallmanagerialpowerswiththeexceptionofthosemanagerialpowersthatmightrelatetothecompany’sgeneralpolicy,ac-tionsreservedtotheboardofdirectorsonthebasisofstatutoryprovisionsoractionsandtransactionsthatcouldgiverisetotheapplicationofarticle524oftheBelgianCompaniesCode.Ifamanagementcommitteeisappointed,theboardofdirectorsischargedwiththesupervisionofthiscommittee.

Theboardofdirectorsdeterminestheconditionsfortheappointmentofthemembersofthemanagementcommittee,theirdismissal,theirremuneration,anyseverancepay,thetermoftheirassignmentandwayofworking.

Ifamanagementcommitteeisappointed,itcanonlydelegateday-to-daymanagementofthecompany.

Ifnomanagementcommitteeisappointed,theboardofdirectorscanonlydelegateday-to-daymanagementasprovidedforbyarticle13,fourthparagraphofthecur-rentarticlesofassociation.

Theboardofdirectors,themanagementcommitteeandthemanagingdirectorschargedwiththeday-todaymanagementmayalso,withinthecontextofthisday-to-daymanagement,assignspecificpowerstooneormorepersonsoftheirchoice,withintheirrespectiveareasofcompetence.

Theboardcandeterminetheremunerationofeachmandate-holdertowhomspecialpowersareassigned,allinaccordancewiththeapplicablelegislationonregu-latedrealestatecompanies.

Unabatedthetransitionalstipulationsasprovidedbyarticle38,thememberofthemanagementcommitteeareexclusivelynaturalpersonsandtheyhavetocomplywitharticles14and15oftheRRECAct.

Article 17 - Conflicts of interest

Thedirectors,thepersonschargedwithday-to-dayman-agementandtheauthorisedagentsofthecompanywillrespecttherulesrelatingtoconflictsofinterest,aspro-videdforbyarticles36,37and38oftheRRECActandbytheBelgianCompaniesCodeastheymaybeamended.

Article 18 - Auditing

Thetaskofauditingthecompany’stransactionswillbeassignedtooneormorestatutoryauditors,appointedbythegeneralmeetingfromthemembersoftheBelgianInstituteofCompanyAuditorsforarenewableperiodofthreeyears.Thestatutoryauditor’sremunerationwillbedeterminedatthetimeofhis/herappointmentbythegeneralmeeting.

Thestatutoryauditor(s)alsoaudits(audit)andcertifies(certify)theaccountinginformationcontainedinthecompany’sannualaccounts.

Themissionofthestatutoryauditormayonlybecon-signedtooneormorerecognisedstatutoryauditors’companies,recognisedbytheFSMA.PriorapprovalisrequiredfromtheFSMAfortheappointmentofauditorstothecompany.Thisapprovalisalsorequiredfortherenewalofanorder.

Generalmeeting

Article 19 - Meeting

Theordinarygeneralmeetingofshareholders,knownastheannualmeeting,mustbeconvenedeveryyearonthelastWednesdayofAprilat2.30p.m.Ifthisdayisapublicholiday,themeetingwillbeheldonthenextworkingday.

Anextraordinarygeneralmeetingcanbeconvenedatanytimetodeliberateanddecideonanymatterthatfallswithinitscompetenceandthatdoesnotrelatetochangestothearticlesofassociation.Anextraordinarygeneralmeetingcanbeconvenedbeforeanotaryatanytimetodeliberateanddecide,onchangestothearticlesofassociation.

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Thegeneralmeetingsareheldatthecompany’sreg-isteredofficeoratanotherlocationinBelgium,asan-nouncedinthenoticeconveningthemeeting.

Article 22 - Participation to the general meeting

Tobeadmittedtogeneralmeetingandtoexpressavote,dependsontheaccountingregistrationofbearersharesoftheshareholderonthefourteenthdaypriortothegeneralmeetingatmidnight(Belgiumtime)(namedhereinafter“registrationdate”),eitherbysubscriptiontotheregisterofbearersharesofthecompany,eitherbysubscriptionbyanauthorisedaccountholderorasettle-mentbody,orbyfilingthebearershareswithafinancialintermediary,regardlessoftheamountofsharesheldbytheshareholderonthedayofthegeneralmeeting.

Ownersofdematerialisedsharesinformingthecompanyoftheirwishtoattend,mustprovideacertificatethathasbeenfiledwithafinancialintermediaryorauthorizedaccountholder,attestingthenumberofdematerialisedsharesthathavebeenregisteredintheiraccountsontheregistrationdateinthenameoftheshareholderorthenumberofbearersharesthathavebeenregistered,at-testingthattheshareholderwishestoattendthegeneralmeeting.Thisfilinghastobedoneatthelatestthesixthdaypriortothegeneralmeetingdateattheregisteredofficeorattheinstitutionsmentionedintheinvitation.

Ownersofnominativesharescommunicatetheirwishtoparticipatetothecompany,byordinarymail,faxore-mailatleastthesixthdaybeforethedateofthegeneralmeeting.

Article 26 - Voting rights

Eachsharegivestheholdertherighttoonevote.

Ifoneormoresharesarejointlyownedbydifferentpersonsorbyalegalentitywitharepresentativebodyconsistingofseveralmembers,theassociatedrightsmayonlybeexercisedvis-à-visthecompanybyasinglepersonwhohasbeenappointedinwritingtodosobyallthepersonsholdingrights.Untilsuchapersonhasbeenappointed,alloftherightsassociatedwiththosesharesremainsuspended.

Ifashareisencumberedwithausufruct,thevotingrightsassociatedwiththeshareareexercisedbytheusufructu-ary,subjecttoanobjectionfromthebareowner.

Resultallocation

Article 29 - Appropriation of profit

Pursuanttoarticle45,2°oftheRRECActthecompanydistributesannuallyascapitalatleast80%asdeterminedbytheRRECAct,asimplementationofthetakendeci-sionsandregulations.Thisobligationisnotdetrimentaltoarticle617oftheBelgianCompaniesCode.

STATUTORYAUDITOR

On24April2013,DeloitteBedrijfsrevisoren/Réviseursd’EntreprisesSCundertheformofaSCRL,whichisrepresentedbyKathleenDeBrabander,Berkenlaan8b–1831Diegem,hasbeenreappointedasstatutoryauditorofVastnedRetailBelgium.Themandateofthestatutoryauditorwillendimmediatelyaftertheannualmeetingtobeheldin2016.

Theremunerationofthestatutoryauditoramountsto€58.580(excl.VAT,incl.costs)asfromthefinancialyearstartedon1January2014forthesurveyofthestatutoryandconsolidatedannualaccounts.

LIQUIDITYPROVIDER

SinceDecember2001,aliquiditycontracthasbeencon-cludedwithBankDegroof,ruedel’Industrie44,B-1000Brussels,topromotethenegotiabilityoftheshares.Inpracticethistakesplacethroughtheregularsubmissionofbuyandsellorderswithincertainmargins.

Theremunerationhasbeensetatafixedamountof€1.000amonth.

.

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PROPERTYEXPERTS

ThepropertyexpertsdesignatedbyVastnedRetailBelgiumare:

• Cushman&Wakefield,1000Brussels,avenuedesArts56.ThecompanyisrepresentedbyKrisPeetermans.

• CBRichardEllis,1000Brussels,avenueLloydGeorge7.ThecompanyisrepresentedbyPeterdeGroot.

InaccordancewiththeActof12May2014onregulatedrealestatecompanies,theyvaluetheportfoliofourtimesayear.Thefeeofthepropertyexpertsiscalculatedonthebasisofanannualfixedamountperbuilding.

REGULATEDREALESTATE

COMPANIES-

LEGALFRAMEWORK

Theregulatedrealestatecompany’ssystemisformal-isedintheActof12May2014onregulatedrealestatecompanies(theRRECAct)andintheRoyalDecreeof13July2014onregulatedrealestatecompanies(theRRECRoyalDecree)tostimulatepublicinvestmentsinrealestateproperties.TheconceptisverysimilartothatoftheRealEstateInvestmentTrusts(REIT-USA),theFiscalInvestmentInstitutions(FBI-Netherlands),theSociétésd’InvestissementImmobilierCôtées(SIIC-France)andtheREITintheUnitedKingdomandGermany.

AsapublicRRECwithaseparateREITstatus,theRRECissubjecttostrictlegislationwithaviewtotheprotec-tionofitsshareholdersandfinanciers.Thestatusprovidesbothfinanciersandprivateinvestorswiththeopportunityofgainingaccessinabalanced,cost-effectiveandfiscallytransparentmannertoadiversifiedrealestateportfolio.

Itisthelegislator’sintentionthatRRECguaranteeopti-mumtransparencywithregardtoinvestmentpropertiesandensurethepay-outofmaximumcashflow,whiletheinvestorenjoysawiderangeofbenefits.

TheRRECisunderthesupervisionoftheFinancialServicesandMarketsAuthority(FSMA)andissubjecttospecificregulationsofwhichthemostnotableprovisionsarethefollowing:

• adopttheformofalimitedliabilitycompanyoralim-itedpartnershipwithasharecapitalwithaminimumcapitalof€1.200.000

• companywithfixedcapitalandafixednumberofshares

• compulsorylistingonthestockexchangewithatleast30ofthesharesinpublichands

• thepublicregulatedrealestatecompanyhasforonlypurpose(a)eitherdirectly,orbymeansofacompanyinwhichitpossessesaholdingpursuanttothestipula-tionsoftheRRECActandthedecisionsandregula-tionsmadefortheexecutionofthesame,tomakerealestateavailabletousersandb)withintheboundsoftheapplicablelegislationonregulatedrealestatecom-panies,topossessrealestateasmentionedinarticle2,5°,vitoxoftheRRECAct.TheRRECdoesnothaveastatutoryembeddedinvestmentpolicybutdevelopsastrategyenablingittopositionitselfinallstagesofthevaluechainoftherealestatesector

• limitedpossibilityforconcludingmortgages• adebtratiolimitedto65%ofthetotalassets;ifthe

consolidateddebtratioexceeds50%,afinancialplanhastobedrawnuppursuanttotheprovisionsofarticle24oftheRRECAct.Incaseofadispensationauthor-isedbytheFSMAbasedonarticle30,§3and§4oftheRRECAct,theconsolidateddebtratioofthepublicRRECpursuanttheprovisionsofarticle30,§3and§4oftheRRECActmaynotexceed33%

• annualfinancialinterestchargesresultingfrombor-rowingsmayundernocircumstancesexceedthethresholdof80%oftheoperatingdistributableresultbeforeresultonportfolioincreasedwiththefinancialincomeofthecompany

• strictrulesrelatingtoconflictsofinterests• theportfoliomustberecordedatmarketvaluewithout

thepossibilityofdepreciationathree-monthlyesti-mateofthepropertyassetsbyindependentpropertyexperts,basedonarotationprinciple

• riskspread:amaximumof20%ofcapitalinonebuild-ing,exceptcertainexceptions

• aRRECmaynotengageitselfin“developmentactivi-ties”;thismeansthatthecompanycannotactasabuildingpromoteraimingtoerectbuildingsinordertosalethemandtocashadeveloper’sprofit

• exemptionfromcorporationtaxprovidedthatatleast80%oftheoperatingdistributableresultaredistributed

• awithholdingtaxof25%tobededucteduponpay-mentofdividends(subjecttocertainexemptions)

• theopportunitytoestablishsubsidiarycompanieswhichtaketheformofan“institutionalRREC”whichmustoperateundertheexclusiveorjointcontrolofthepublicRRECinordertobeabletoimplementspecificprojectswithathird,being1)professionalclientssuchascreditinstitutions,investmentcompaniesandcol-lectiveinvestmentinstitutions,or2)legalpersonswhocanbeconsideredaseligibleinvestorbyintroducingasimplyrequesttotheFSMAwithoutadditionalcondi-tionshavingtobefulfilled

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• atleastthreeindependentdirectorsinthesenseofarticle526boftheBelgianCompaniesCodesitontheboardofdirectors

• thefixedfeesofdirectorsandtheactualmanagersmaynotdependontheoperationsandtransactionscarriedoutbythepublicRRECoritssubsidiaries:thisthere-foreprohibitsthembeinggrantedafeebasedontheturnover.Thisrulealsoappliestothevariablefee.Ifthevariablefeeisdeterminedaccordingtotheresult,onlytheconsolidatedoperatingdistributableresultmaybeusedasbasisforthis.

Theaimoftheserulesistominimisetheriskforshare-holders.

CompaniesthatmergewithaRRECaresubjecttoatax(exittax)of16,995%ondeferredaddedvaluesandtax-freereserves.

STATEMENTTOTHEANNUAL

REPORT

Pursuantto13§2oftheRoyalDecreeof14November2007,theboardofdirectors,composedofJean-PierreBlumberg(chairman),EMSOsprlpermanentlyrepresent-edbyChrisPeeters,NickvanOmmen,HubertRoovers,TacodeGrootandReinierWalta,declaresthataccordingtoitsknowledge:

a. theannualaccounts,preparedinaccordancewiththe“InternationalFinancialReportingStandards”(IFRS)asacceptedbytheEuropeanUnionandinaccordancewiththeActof12May2014,giveatrueandfairviewoftheequity,thefinancialpositionandtheresultsofVastnedRetailBelgiumandthecompaniesincludedintheconsolidation

b. theannualreportgivesatruestatementofthedevel-opmentandresultsofVastnedRetailBelgiumduringthecurrentyearandofthepositionofthecompanyandthecompaniesincludedintheconsolidation,aswellasofthemainrisksanduncertaintiesthatVastnedRetailBelgiumisconfrontedwith.

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Acquisition value of an investment property

Thistermisusedattheacquisitionofaproperty.Iftransfercostsarepaid,theyareincludedintheacquisitionvalue.

Corporate governance

Corporategovernanceisanimportantinstrumentforconstantlyimprovingthemanagementofthecompanyandtoprotecttheinterestoftheshareholders.

Current rents

Annualrentonthebasisoftherentalsituationonacer-tainmomentintime.

Debt ratio

Thedebtratioiscalculatedastherelationofallliabilities(excludingprovisionsandaccruedchargesanddeferredincome)lessthenegativechangeinfairvalueoffinancialinstruments,comparedtototalassets.Thecalculationmethodofthedebtratioispursuanttoarticle13,§1secondparagraphoftheRoyalDecreeof13July2014.BymeansofthisRoyalDecreethemaximumdebtratioofthecompanyis65%.

Diluted net result

Thedilutednetresultpershareisthenetresultaspub-lishedintheincomestatement,dividedbytheweightedaveragenumberofordinaryshares,adaptedtotheeffectofpotentialordinarysharesleadingtodilution.

EPRA vacancy rate

TheEPRAvacancyrateiscalculatedastheratiobetweentheestimatedrentalvalueofthevacantpropertiesavail-ableforlettingandthesameestimatedrentalvalueoftheentireportfolioavailableforletting.

Fair value of investment properties (in accordance with Beama interpretation of IAS 40)

Thisvalueisequaltotheamountatwhichabuildingmightbeexchangedbetweenknowledgeable,will-ingpartiesinnormalcompetitiveconditions.Fromtheperspectiveoftheseller,theyshouldbeunderstoodasinvolvingthedeductionofregistrationfees.

Inpractice,thismeansthatthefairvalueisequaltotheinvestmentvaluedividedby1,025(forbuildingswitha

valueofmorethan€2,5million)ortheinvestmentvaluedividedby1,10/1,125(forbuildingswithavalueoflessthan€2,5million).

Free float

Freefloatisthenumberofsharescirculatingfreelyonthestockexchangeandthereforenotinpermanentowner-ship.

Gross dividend

Thegrossdividendpershareistheoperatingdistribut-ableresultdividedbythenumberofsharesentitledtodividend.

Gross dividend yield

Thegrossdividendyieldisthegrossdividenddividedbythesharepriceonclosingdate.

Gross initial yield

Thegrossinitialyieldiscalculatedastherelationbetweenrentalincomeonanannualbasisontheacquisitiondateoftheinvestmentpropertyandtheinvestmentvalueoftheinvestmentproperty.

Gross market rent

Thegrossmarketrentcomprisesthecurrentrentsin-creasedbytheestimatedrentalvalueofvacantproperties.

Gross yield

Thegrossyieldiscalculatedastherelationbetweengrossmarketrentandtheinvestmentvalueofinvestmentproperties.

Investment value of an investment property

Thisisthevalueofabuildingestimatedbyanindepend-entpropertyexpert,andincludingthetransfercostswithoutdeductionoftheregistrationfee.Thisvaluecor-respondstotheformerlyusedterm“valuedeedinhand”.

Liquidity of the share

Theratiobetweenthenumberofsharestradeddailyandthenumberofcapitalshares.

TERMINOLOGY

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Terminology

Net asset value EPRA

Totalshareholders’equityattributabletothesharehold-ersoftheparentcompany,adjustedforthefairvalueoffinancialinstrumentsanddeferredtaxes,dividedbythenumberofsharesattheendoftheyear.

Net value (investment value)

Totalshareholders’equityincreasedwiththereservefortheimpactonthefairvalueofestimatedtransactionrightsandcostsresultingfromthehypotheticaldisposalofinvestmentproperties,dividedbythenumberofsharesattheendoftheyear.

Net value (fair value)

Totalshareholders’equitydividedbythenumberofsharesattheendoftheyear.

Net dividend

Thenetdividedisequaltothegrossdividendafterdeduc-tionofwithholdingtaxof25%.

Net dividend yield

Thenetdividendyieldisequaltothenetdividenddividedbythesharepriceonclosingdate.

Net result per share

Thenetresultpershareisthenetresultaspublishedintheincomestatement,dividedbytheweightedaveragenumberofordinaryshares(i.e.thetotalamountofissuedshareslesstheownshares)duringthefinancialyear.

Net yield

Thenetyieldiscalculatedastherelationbetweenthegrossmarketrent,lesstheallocatedpropertycharges,andtheinvestmentvalueofinvestmentproperties.

Occupancy rate

Theoccupancyrateiscalculatedastheratiooftherentalincometothesamerentalincomeplustheestimatedrentalvalueofthevacantlocationsforrent.

Operating distributable result

Theoperatingdistributableresultistheoperatingresultbeforetheresultonportfoliolessthefinancialresultandtaxes,andexclusivethechangeinfairvalueoffinancialderivatives(whicharenotconsideredaseffectivehedgeinaccordancewithIAS39)andothernon-distributableelementsonthebasisofthestatutoryannualaccountsofVastnedRetailBelgium.

Regulated real estate company (RREC)

ThestatusofregulatedrealestatecompanyisregulatedbytheActof12May2014onregulatedrealestatecompanies(RRECAct)andbytheRoyalDecreeof13July2014onregulatedrealestatecompanies(RRECRoyalDecree)inordertostimulatejointinvestmentsinproperty.

RREC Act

TheActof12May2014onregulatedrealestatecompa-nies.

RREC Royal Decree

TheRoyalDecreeof13July2014onregulatedrealestatecompanies.

Vacancy rate

Thevacancyrateiscalculatedastheratiobetweentheestimatedrentalvalueofthevacantpropertiesandthesameestimatedrentalvalueincreasedbycommercialrentalincome.

Yield

Theyieldiscalculatedastheratiobetweentherentalincome(increasedornotbytheestimatedrentalvalueofvacantlocationsforrent)andtheinvestmentvalueofinvestmentproperties.

Retail Belgium

Retail Belgium

VASTNED RETAIL BELGIUM Uitbreidingstraat 18

2600 Berchem

T + 32 3 287 67 67

F + 32 3 287 67 69

[email protected] www.vastned.be

vastned retail belgium - annual report 2014

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