Cofinimmo has announced the final closing of the transaction whereby it acquired 90% of the Immobrew SA shares from the InBev Group. Immobrew SA and its subsidiaries own 1,068 pubs (823 in Belgium and 245 in the Netherlands). The investment value of the real estate portfolio (100%) amounts to 429 million and the initial gross rental yield to 6.30%. The name of the new subsidiary, which will not be merged with Cofinimmo SA and in which InBev Belgium retains a 10% interest, will very soon be changed to Pubstone SA.
The portfolio of 1,068 pubs represents a total surface of 320,000 m². Some 823 pubs or 77% of the portfolio are located in Belgium and represent 272,000 m². The remaining pubs (245 or 23% of the total) are located in the Netherlands and count 48,000 m².
Cofinimmo has signed a global contract with InBev for a firm duration of minimum 23 years and for an initial rent of 26.6 million per year (indexed to CPI) covering all pubs. It is a commercial lease agreement with InBev Belgium and InBev Nederland, assorted with a guarantee by InBev SA, which ensures the firm duration of minimum 23 years. Cofinimmo will receive the first rent payment as of 01.11.2007.
In order to cancel a lease on a particular pub, the premises have to be entirely vacated, thus allowing Cofinimmo to redevelop, sell or relet it. As long as the pub is not empty InBev continues to pay the contractual rent.
In the framework of this partnership with InBev, the leading global brewer, each party has specific responsibilities. Cofinimmo is in charge of the structural maintenance of the roofs, the walls and the facades and has committed to further investments in the properties in order to guarantee the continued success of the property portfolio. Cofinimmo bears no operational risks linked to the management of the pubs. InBev, on the other hand, maintains its commercial relationship with the pub operators, who are its own tenants, and continues to deliver beers. The interior fitting out and the operation are managed by the pub operator.
Cofinimmo and InBev have concluded a shareholders agreement related to Pubstone's strategy and management whereby certain decisions regarding structure and operations will be taken in common. The portfolio also includes surfaces, mostly residential, let to different occupants other than InBev, for a global rent of 0.42 million.
With this deal, InBev becomes one of the most important private long term tenants of Cofinimmo. The lease agreement ensures a secure and long term income stream. The many outstanding pub locations should allow to progressively capture a gain on the land value. The partnership with InBev and the diversification in this new real estate segment will increase the Cofinimmo shareholders' return and will create a better risk allocation of the portfolio. The positive impact of the Pubstone transaction on Cofinimmo's net current result is expected to reach 0.40 per ordinary share on average over 10 years.
Cofinimmo has financed this transaction through debt. Bank loans covering the entire investment are already in place. An interest rate cover has also been contracted for the total amount and for a period of eight years. After the Pubstone transaction, the Cofinimmo's debt ratio should reach almost 51%.
After this transaction, Cofinimmo's portfolio is spread as follows: 76.3% offices, 14.7% pubs and 7.3% nursing homes. Diversification per sector has improved the risk profile of the portfolio. The average lease length for the leases in portfolio goes from 9.1 to 11.0 year.
Source: Cofinimmo
