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Report of the independent surveyor
Dear,
We are pleased to present to you our estimate of the value of the property portfolio of WDP Comm. VA at 31 December 2009.
WDP has appointed us as independent surveyors to determine the investment value and fair value of its property portfolio. The estimates made take into account both the observations and definitions stated in the reports and the International Valuation Standards issued by IVSC.
Fair value is defined in IAS 40 as the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. IVSC considers these conditions to have been met if the definition of market value set out above is complied with. In addition, market value must reflect current rental agreements, the current gross margin of self-financing (or cash flow), the reasonable assumptions in respect of potential rental income and expected costs.
The administration costs must be adjusted in this context to the actual situation in the market. Following analysis of a large number of transactions the independent surveyors acting on the request of listed property companies concluded in a working party that, since fiscal engineering takes place on a large scale in various forms (completely within the law), the impact of the transaction costs on large investment property in the Belgian market with a value of more than EUR 2,5 million is limited to 2,5%. The value with additional costs borne by the seller therefore corresponds to the fair value plus 2,5% administration costs. Fair value is consequently calculated by dividing the value with additional costs borne by the seller by 1,025. Properties below the threshold of EUR 2,5 million and foreign properties are subject to the usual registration regime and their fair value therefore equals the ‘value with costs borne by the buyer’.
As independent surveyors we have a relevant and recognised professional qualification as well as recent experience with properties of a similar category and location to the properties being valued in the property portfolio of WDP.
The estimates of the properties take account of both current rental agreements and all rights and obligations arising from those agreements. Each property was estimated separately. The estimates do not take account of potential additional value that could be realised by offering the portfolio as a whole in the market. Our estimates also do not take account of marketing costs specific to a transaction, such as estate agents’ fees or advertising costs. Our estimates are based on an annual inspection of the properties concerned and also take account of the information provided by WDP on the rental situation, surface areas, drafts or plans, rental costs and taxes relating to the property concerned, conformity and environmental pollution. The information supplied was considered to be accurate and complete. Our estimates assume that information not provided to us would not affect the value of the asset.
On the basis of the statements in the preceding paragraphs, we can confirm that the investment value of WDP’s real estate property (excluding solar panels) at 31 December 2009 is EUR 844.374.800 (eight hundred forty-four million three hundred seventy-four thousand eight hundred euros).
The fair value was determined at EUR 817.250.900 (eight hundred seventeen million two hundred fifty thousand nine hundred euros) at 31 December 2009.
The contractual rental income amounts to EUR 56.192.200, which corresponds to an initial rental yield of 7,68% compared to the fair value of the completed properties. After addition of the estimated market rental value for non-let sections to the contractual rental income, this amounts to EUR 60.908.226, which corresponds to an initial rental yield of 8,34%.
Yours faithfully,
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