Corio achieved very good financial results in 2003. In 2003 the net profit increased by € 12.2 million to € 177.9 million (7.4%). Net rental income increased over the same period by 5.4% to € 253.4 million. The revaluations (including profit on divestments) amounted to € 127.0 million (+3.5% over the value at year end 2002). A dividend of € 2.32 for the year 2003 will be proposed to the General Meeting of Shareholders.
Net profit (direct investment result) per share rose by 7.4% in 2003 to € 2.69 compared to € 2.50 in 2002. This increase was largely attributable to rent increases and a concurrent slight decrease of the average financial occupancy rate to 94.9% (2002: 95.6%). The decrease of the financial occupancy rate is particularly caused by two offices in Paris. The decrease in short term interest rate levels as well as the early repayment of several high interest loans compensated the negative impact of the mandatory redemption of an interest free convertible loan of € 90 million at year end 2002. The indirect investment result amounted to € 123.2 million (2002: € 111.5 million). This is composed of revaluations to the value of € 127.0 million (2002: € 128.7 million); allocated administration expenses of € 7.3 million (2002: € 6.8 million) were deducted and a reduction in the tax provision of € 2.6 million (2002: increase -€ 10.5 million). The other changes amounted to € 0.9 million (2002: € 0.1 million). The upward revaluations mainly occurred in the retail portfolio, the positive and negative revaluations in the office portfolio are more or less balanced. Corio’s share price has increased considerable during 2003, taking the distributed dividend into account, the total rate of return (with reinvested dividend) amounted 34,9% in 2003.
The value of the property portfolio increased by € 181.3 million to € 3,808.7 million. The investments amount in total to € 113.0 million. This included among others the acquisition of the shopping centre ‘Il Maestrale’ in Senegallia, Italy (€ 23.4 million) and a shopping centre in Groningen (€ 14.0 million) as well as investments in the current portfolio (€ 75.6 million). In 2003, several small shopping centres, one office building and one residential property were sold to the amount of € 58.7 million, generating a book profit of € 0.5 million. In January 2004, Corio sold its remaining Spanish office building ‘Mar de Cristal’ for € 52.1 million, which resulted in a revaluation of € 8.9 million. This has been taken into account in the 2003 indirect result. The overall financial occupancy rate for the portfolio at year end 2003 amounted to 95% (2002: 96%). For the retail, office and industrial portfolios this amounts to 97% (2002: 97%), 89% (year end 2002: 93%) and 95% (year end 2002: 96%) respectively. The retail share in the portfolio at year end 2003 amounted to 71% (2002: 70%).
Through active hands-on management, including extending the current property portfolio, Corio aims to achieve a growth in net profit that is at least in line with inflation in the euro zone. It is also regarded as important that net profit does not fluctuate excessively year-on-year. The time horizon of the strategy emphasizes generation of the desired results over a rolling period of 3 to 5 years. Corio expects to achieve this goal by concentrating on retail investments, maintaining the existing and making selective new investments in industrial properties in the economic regions where Corio already has a retail presence. Therefore, in principle, Corio will not acquire any new office property. Under the current market conditions, the divestment of offices is particularly unattractive where added value can still be realised. Corio therefore decided to make the profile of the office portfolio more attractive for a strong market (through renovation and renewal of lease contracts) as opposed to selling in a weak market. The market in the Netherlands is not expected to strengthen appreciably u