Corio posts strong growth in net rental income (NL)

According to Corio CEO, Gerard Groener, "In today's financial environment Corio's strong portfolio has proved to be resistant to the economic downturn. While in September 2008 a large portfolio of offices and industrials was sold, the direct result increased by 0.5%."

Financial results 2008
The direct result in 2008 of €204.1 mln. was slightly higher than the direct result in 2007 (€203.1 mln.). The direct result per share increased by €0.01 to €3.08. Corio transferred almost all of the Dutch offices and industrial portfolio to its new owner at the end of September 2008. Despite this and the economic downturn Corio's strong retail portfolio and solid financing policy resulted in a growing direct result.

Net rental income (continuing operations) increased by €38.8 mln. or 13.9% in 2008 to €317.7 mln. (€278.9 mln.). Of this increase €11.3 mln. came from 'like-for-like' rent increases (same composition of the portfolio 2007 and 2008) and €15.3 mln. from the result of acquisitions and €17.5 mln. from the result of taking properties from the pipeline into operation; the disposals had a negative effect of €5.3 mln. negative. Reletting and renewal resulted in an increase of 16.6% of the rent of 8.1% of the retail portfolio. Turnover based rents represent 1.1% of the total net rental income for the continuing portfolio.

Operating expenses for the continuing operations were €7.3 mln. higher at €47.0 mln. (€39.7 mln.), mainly a result of the expansion of the investment portfolio. Administrative expenses for continuing operations increased by €3.2 mln. in 2008 to €30.2 mln. (€27.0 mln.). This is the result of an increase in staff in Italy and Turkey because of their expanding activities.

The share of profits from associates increased by €1.0 mln. to €15.2 mln. compared with 2007. Of this figure €13.8 mln. (€14.1 mln.) relates to Akmerkez (46.92%), a 30% share in the net results of AdaCenter in Adapazari until May 2008 (as fromMay 2008 Corio is the owner of 100% of the shares and fully consolidated as from that date) and a 40% share of Teras Park in Denizli.

Operating income from discontinued operations was €9.0 mln. lower at €28.6 mln. (€37.6 mln.). This decrease is the result of transferring almost the whole Dutch offices and industrial portfolio to its new owner. Dutch offices which are still owned by Corio generated a net rental income in 2008 of €5.0 mln.

The occupancy rate (EPRA) for the total portfolio in 2008 was the same as in 2007 at 96.8%, retail occupancy rate was 97.7% (98.0%). This decrease is mainly the result of the relatively low occupancy rate of the acquired Grand Littoral shopping center in Marseille in March 2008. It is expected that the occupancy will be around 98% in early 2010, at this moment Corio is executing a restructuring in Grand Littoral which will resolve the current strategic vacancy.

Net financing expenses increased by €28.4 mln. in 2008 to €127.2 mln. (€98.8 mln.). The increase is a result of increased interest expense of €31.2 mln. caused by higher average debt of €0.5 bln. (impact of €24.3 mln.) and increased interest rates (impact of €6.9 mln.) compared with 2007, higher interest income of €10.1 mln., lower capitalized interest of €2.8 mln. and an increase of €4.5 mln. in other cost. The higher debt was mainly used to finance the acquisitions of Grand Littoral in Marseille, Pieter Vreedeplein in Tilburg and acquisitions in Turkey.

Indirect result from continuing operations was €427.6 mln. negative (€563.2 mln.) and the indirect result of discontinued operations was €16.1 mln. negative (€35.2 mln.) taking total indirect result to €443.7 mln. negative (€598.4 mln.).

At 31 December 2008 the entire portfolio, excluding Corio's office and industrial portfolio that was sold to White Estate Investment, was externally valued. According to the IFRS principles the development portfolio was not revalued but an impairment test was performed. In all cases the value in the balance sheet is the lower of cost or external valuation. Compared with the value (plus cap

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