SOURCE: Wereldhave NV

February 22, 2008 02:05 ET

Wereldhave NV - Final Results

The Hague--(Marketwire - February 22, 2008) - The year 2007 was a turbulent one, with property values peaking. Wereldhave realised valuation gains by the disposal of more high-risk properties and added recently constructed first-class property to its portfolio. The occupancy rate and the like-for -like rental income improved slightly. Wereldhave has a very strong financial position and has expanded its committed credit facilities. The dividend will be raised slightly, in line with previous years.

For 2008 Wereldhave expects an improvement of the occupancy rates and higher returns on real estate. Wereldhave's solid capital ratios enable Wereldhave to benefit from attractive investment opportunities.

Profit

The profit for 2007 totalled EUR 229.6 million or EUR 10.42 per share. The portfolio revaluation surplus and the profits on property disposals were less high than during the record year of 2006. The profit includes the direct result and the indirect result.

Direct result

The direct result is the result generated from lettings, net of costs. The extensive sales programme of previous years and exchange rate differences have caused a decrease of direct result by EUR 5.3 million. The direct result for 2007 totals EUR 108.0 million or EUR 4.88 per share. The difference (including exchange rate differences) stems from lower net rental income (EUR - 3.7 million), higher interest costs (EUR - 3.5 million), other income and expense (EUR + 1.2 million) and lower taxes on the direct result (EUR + 0.7 million). Lower exchange rates for the pound sterling and the US Dollar had a negative effect of EUR 1.6 million.

Exchange rate differences had a positive impact of EUR 0.6 million on interest costs, whilst higher interest rates, meant interest costs rose by EUR 1.8 million. The remainder of the increase in interest costs stems from purchases and sales of property. Management costs remained stable. Largely as the result of income arising on the surrender of a lease, other income and expense rose by EUR 1.2 million.

The occupancy rate improved slightly, compared with 2006, to 94.0%. Broken down by sector, occupancy rates during 2007 were as follows: offices 89.6%, retail 98.8%, industrial 94.9% and residential 91.9%.

Indirect result

The indirect result for 2007 totalled EUR 121.6 million (2006: EUR 244.2 million), primarily arising from realised and unrealised increases in the value of the portfolio. A surplus of EUR 17.4 million was recorded on disposals of property in 2007 (2006: EUR 39.9 million).

The yield compression led to an upward revaluation of the property portfolio as at 31 December 2007. These revaluations came to EUR 129.2 million (2006: EUR 270.4 million). The average yield on the portfolio used for valuation purposes dropped by 0.4% in 2007, resulting in a weighted net initial yield of 5.9%. In the United Kingdom, the total revaluation was negative, as a result of decreases during the final quarter.

Higher property valuations and the changes to tax rates and legislation caused an increase in taxes on indirect result of EUR 22.6 million (2006: EUR 64.0 million). Other finance income and costs totalled EUR - 0.5 million, consisting of exchange rate differences and the premium paid on the purchase of Debentures in the United Kingdom. The premium led to a non-recurring drop in the effective tax in the United Kingdom to EUR 1.2 million. In total, Wereldhave purchased Debentures with a nominal value of GBP 9.3 million during 2007. Over the coming years, these purchases will have a positive impact on the direct results, by lowering the interest expense.

Equity

The balance sheet total rose by EUR 152.7 million, primarily as a result of purchases and sales and a higher valuation of the portfolio. At the end of 2007, equity including minority interests, before appropriation of the proposed dividend, was EUR 1,972.6 million. This represents 70.4% of the balance sheet total (2006: 71.3%). No convertible bonds opted for conversion. As at 31 December 2007, a total of 20,781,735 ordinary shares were outstanding.

Property portfolio

In 2007, Wereldhave purchased property in the United States and Spain, and sold property in Belgium, the Netherlands, the United Kingdom and the United States. The largest acquisition during 2007 involved a 35,200 m(2) office block in San Diego, for USD 210 million. In Spain, Wereldhave purchased a retail and leisure centre of 22,666 m(2) for EUR 53.9 million. Sales included offices in the United States and the Netherlands, retail space in the United Kingdom and Belgium, and industrial premises in the United Kingdom, the Netherlands and Belgium. A profit of EUR 17.4 million was realised on these disposals.

Early in October 2007, the Finnish hotel and conference centre developed by Wereldhave in Espoo (near Helsinki) became operational. The investment value was EUR 4.4 million. The building has been fully let since completion.

In November 2007, construction started on the Eilan scheme in San Antonio. The "Nivelles" shopping centre in Belgium underwent an upgrade in 2007. Wereldhave expects that it can commence with the expansion of the shopping centre during autumn of 2008. The new plans for the second phase of the Nivelles development, the expansion of the shopping centre Tournai (Belgium), the shopping centre 'De Winkelhof' in Leiderdorp (Netherlands) and the construction of 600 homes in Frisco (USA) will be detailed further in 2008. As at 31 December 2007, five projects were in the development pipeline: three projects in Europe (totalling approximately EUR 210 million) and two in the United States (totalling approximately USD 400 million). At year-end 2007, the value of the investment portfolio was EUR 2,668.0 million.

Dividend proposal

A cash dividend of EUR 4.65 will be proposed to the General Meeting of Shareholders (2006: EUR 4.60). With a dividend of EUR 4.65, the payout ratio is 95%. Wereldhave has decided to raise the payout ratio to 85%-95% of the direct results. The proposed dividend of EUR 4.65 per share will be distributed entirely in cash.

Prospects

The Board of Directors expects to achieve improvements in occupancy rates during 2008, particularly in Belgium, the United Kingdom and the United States.

Wereldhave expects the returns on property to rise in 2008, and expects property values to fall. Wereldhave has pursued a substantial programme of disposals. If the rise in initial yields continues, it may be possible to once more purchase existing recently built property that offers immediate contributions to the results. Wereldhave's strong capital ratios allow it to benefit from attractive investment opportunities.

For further information: www.wereldhave.com

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