An interview with Jean-Edouard Carbonnelle, CEO and Marc Hellemans, CFO, Cofinimmo

Cofinimmo is the leading listed real estate investor in Belgium and currently holds a strong presence in the European market. With a portfolio of over €3 billion, Cofinimmo has managed to become a major player in Europe, covering properties in Belgium, France and the Netherlands. Cofinimmo's CEO Jean-Edouard Carbonnelle and CFO Marc Hellemans spoke to Real Estate Publishers about the company's strategy and the alternative segments it is investing in.

Jean Carbonnelle

Jean-Edouard Carbonnelle

Who is Cofinimmo? What is your main direction and focus?

Carbonnelle: We are a listed company since 1993. We became a REIT in 1996 and the company is already almost 30 years old. It was formed by institutional investors, but it currently attracts individual retail shareholders too. Today, probably close to 30% of our investor base is retail. We started with offices only because we are based in Belgium and Brussels is the capital of Europe. We have a fairly large office sector in Brussels with a strong growth over the years. But we also saw that there was a tendency of over-investment in the office sector in Brussels and that is why in 2005 we decided to diversify.

Today, a little under 50% of our total assets are located in the Brussels office market. We have two other sectors; one healthcare properties; there we are riding on the back of demographic trends, which bring more people to specialized institutions. We started with Belgium and today we also have presence in France with nursing homes and other types of healthcare facilities. Additionally, we recently acquired an orthopaedic clinic in the Netherlands, nearby Amsterdam.

In that way, we think we are addressing a segment of the real estate market that was under-represented, at least in the listed sector. We find long cash flows with a level of initial yield, which is in line with what we found in offices. So, we keep the profile of risk relatively low with a decent yield.

Our portfolio of healthcare properties in Belgium and France is valued around 6.25% cap rate. We still have the possibility to increase our investment through a €150 million pipeline of pre-let, newly built nursing homes to be delivered in the coming three years. So, within three years we should have 120 different sites; in value terms two-thirds are in Belgium and one-third is in France. What is important in this segment are the operators. They have signed long-lease contracts with us - 27 years for the Belgian assets and 12 years for the French assets. We have eight important operators split between France and Belgium and we will follow them as clients for this side of the business in the coming years.

The other diversification sector is more opportunistic; it is sale-and-leaseback transactions for distribution networks. Distribution networks mean small assets that come as a portfolio to us and that we lease back to an operating company, which uses them to distribute products or services.

We currently have two transactions in our books; one is the major brewer AB Inbev, which originated in Belgium. We have their whole portfolio in Belgium and the Netherlands. This was a €400 million transaction and we have a 23-year lease

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