Dear,
We are pleased to present our estimate of the value of the property portfolio of WDP Comm. VA as at 30 June 2009.
WDP has engaged us as independent property experts to determine the investment value and fair value of its property portfolio. The estimates were made taking account of both the statements and definitions set out in the reports and the guidelines of the International Valuation Standards, issued by IVSC.
The fair value is identified by IAS 40 as the amount for which the assets would be exchanged between two knowledgeable, willing parties in an arm’s length transaction. IVSC considers these requirements to have been met if the definition stated above of market value is complied with. In addition, the market value must reflect the current lease contracts, the current gross margin of self financing (or cash flow), the reasonable assumptions relating to potential rental income and the expected costs.
The administration costs must be adjusted in this context to the actual situation of the market. Following analysis of a large number of transactions, the property experts acting at the request of listed property companies reached the conclusion in a working party that as “fiscal engineering” is applied (completely legally) on a large scale in a variety of forms, the impact of the transaction costs on large investment assets in the Belgian market with a value exceeding EUR 2.5 million is limited to 2.5%. The value with no additional costs for the buyer therefore corresponds to the fair value plus 2.5% administration costs. Fair value is accordingly calculated by dividing that value by 1.025. Properties below the threshold of EUR 2.5 million and properties abroad are subject to the customary registration fees and their fair value therefore corresponds to the “value with costs payable by the buyer”.
As property experts we have a relevant and recognised qualification as well as up-to-date experience with properties of a similar nature and a similar location as the properties in the property portfolio of WDP.
In estimating the properties, account was taken of both the current lease contracts and all rights and obligations arising from these contracts. Each property was estimated separately. The estimates take no account of a potential gain that could be attained by offering the portfolio as a whole in the market. Our estimates take no account of marketing costs forming part of a transaction, such as estate agent’s fees or publicity costs. In addition to an annual inspection of the immovable property concerned, our estimates are also based on the information provided by WDP in respect of the rental situation, the surface areas, the drafts or plans, the rental charges and the taxes relating to the property concerned, the conformity and environmental pollution. The data provided were considered to be correct and complete. Our estimates assume that the nature of elements not notified is not such as to affect the value of the asset.
Op the basis of the statements in the preceding paragraphs we confirm that the investment value of the property (excluding solar panels) of WDP as at 30 June 2009 amounts to EUR 838,166,700 (eight hundred and thirty-eight million one hundred and sixty-six thousand seven hundred euros).
The fair value was determined at EUR 810,864,700 (eight hundred and ten million eight hundred and sixty-four thousand seven hundred euros) as at 30 June 2009. The contractual rental income amounts to EUR 53,256,800, which corresponds to an initial return on rents of 8.00% compared to the fair value of the completed properties. After adding the estimated market value for the vacant portions to the contractual rental income, this amounts to EUR 54,726,000, which corresponds to an initial return on rents of 8.22%.
Yours faithfully,
Philippe Janssens Delegated director
Eric Peeters
Equity Partner
Cushman & Wakefield
Stadim