Report of the management board
As in previous years, Corio’s primary focus in 2008 was on generating a healthy cash flow from its portfolio and continuing to evolve into a retail specialist. The figures presented below therefore relate to the continuing operations and do not take account of the discontinued offices and industrial portfolio in the Netherlands.
With an active letting policy and centre management in direct contact with its tenants, Corio again achieved healthy growth in net rental income, with a view to the long-term appreciation of the portfolio. Total net growth in rental income in 2008 amounted to € 38.8 million (+13.9%), while like-for-like rental growth amounted to € 11.3 million (+4.4%). Corio therefore again achieved its year-on-year target of like-for-like net rental growth at least equal to the growth in retail spending in the EU-15 countries (2008: 1.2%). While the direct result held steady, Corio faced uncertainty in the financial markets in 2008, where availability of capital could no longer be taken for granted. While long-term interest rates fell, the mutual lack of confidence moved the banks to increase their spreads, bringing upward pressure to bear on initial yields on property. The number of transactions decreased, values were adjusted downwards and Corio recognised an impairment of € 339.3 million (5.5%) on its total property portfolio, excluding associates.
The financial crisis combined with the economic recession made both financing and future cash flows more risky. After reassessing its pipeline in this light during 2008, Corio took several actions. A small number of projects that, due to above combination of factors, no longer met Corio’s requirements were removed from the pipeline. Most projects in the pipeline will still generate added value. The fixed pipeline will be acquired for an average net initial yield of 7.3%, while the Corio portfolio has been appraised by external valuers at a net theoretical initial yield (assuming full occupancy) of 6.1%. Some projects have been postponed because we expect to achieve a better result by opening and commencing operations at a later date. Although we have started to insource redevelopment activities, turnkey acquisitions still account for the vast majority of the pipeline.
The main results for 2008 can be summarised as follows:
Source: Annual Report 2008, Chapter Overview & Strategy, page 18 (PDF, 476 kB)
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