Corio achieved good financial results in the first half of 2004. The direct investment result increased in the first half 2004 by € 11.1 million to € 100.8 million (+ 12.4%). Net rental income increased by 3.6% to € 127.0 million compared to the same period in 2003. Corio raises the outlook for the direct investment result for the year 2004 to € 192 million (€ 2.90 per share), which is 8% above the 2003 direct investment result.
Change in Dutch Guidelines
As a result of changes in Dutch accounting principles regarding the definition of the result, both realised and unrealised revaluation of investments are accounted for in the profit and loss account as from 1 January 2004.
Results
In the first half of 2004, the direct investment result per share increased by 12.4% to € 1.52 compared to € 1.35 in the first half of 2003. The increase of the direct investment result is mainly due to rent increases (€ 4.6 million) and decreasing interest expenses, mainly due to the redemption of high yielding fixed rate loans in the course of 2003 (€ 4.0 million) and a one-time effect of € 4.0 million related to a release of a provision for Italian withholding tax on inter-company interest. The indirect investment result amounts to € 25.6 million (2003: € 30.1 million); this comprises a € 35.5 million revaluation (2003: € 34.7 million), of which allocated administrative expenses of € 3.4 million (2003: € 3.4 million), addition to deferred tax provision of € 6.3 million (2003: € 1.6 million) and other changes of € 0.2 (2003: € 0.4 million) are deducted. In the first half of 2004, the average financial occupancy rate was 94.5% (2003: 95.5%) for the full portfolio; for retail, office and industrial properties this came to 96.5% (2003: 97.1%), 88.4% (2003: 90.7%) and 96.0% (2003: 97.7%) respectively. The retail share of the portfolio amounted to 72% as per 30 June 2004 (2003: 70%).
Portfolio
In the first half of 2004, property with a value of € 69.0 million has been sold. Investments amounted to € 19.2 million and the revaluation amounted € 35.5 million. The value of the property portfolio therefore decreased by € 14.3 million to € 3,794.4 million. In January, Corio sold its last Spanish office property ‘Mar de Cristal’ for € 52.1 million. A shopping center in the Netherlands (Zoetermeer: € 8.4 million) and a shopping center in France (‘Transatlantic’ in Cherbourg: € 8.6 million) have been sold. In July 2004 Corio has sold the Centrada I and II offices in Toulouse-Blagnac for € 16 million, more than 20% above the book value of 31 December 2003.
Financial Position
Shareholders’ equity decreased by € 27.3 million to € 2,202.0 million, adding the total investment result (€ 126.4 million) and deducting the 2003 dividend in May 2004 (€ 153.7 million). As of 30 June 2004, shareholders’ equity per share amounts to € 33.24 (year end 2003: € 33.65). Leverage (loans as a percentage of balance sheet total) amounted to 38.8% as of 30 June 2004 (year end 2003: 37.9%).
Strategy
Through active hands-on management, including extending the current property portfolio, Corio aims to achieve a growth in direct investment result that is at least in line with inflation in the euro zone. It is also regarded as important that the direct investment result 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.
Pipeline
The total pipeline of potential committed projects (nearly only shopping centres) amounts at 30 June 2004 to € 624 million (year end: € 569 million). Based on the current balance sheet ratios, Corio has a borrowing capacity of approximately € 1 billion.
Outlook
Following the good
