Logistics REITS Belgium

Equity Cluster Report

30/05/2017

Warehousing shifts gear

WDP, Montea and Intervest Offices & Warehouses

Summary
There is an undersupply of Class-A logistics space in Europe. The reconfiguration of the European supply
chain and the rise of e-commerce means there is significant development potential for modern, efficient
distribution facilities across the Benelux region.

Company Price Target Upside NAV 31/12/16 NAV premium Yield% Wacc
WDP 89.5 95.7 7% 51.2 75% 5.2% 5.6%
Montea 48.6 54.3 12% 27.8 75% 5.0% 5.7%
Intervest O&W 22.8 24.6 8% 19.6 16% 5.8% 5.9%
Source : Company data, Valuescan

Analyst
Wim Lewi, CFA
Valuescan.be
Wim.Lewi@Valuescan.be

FOR QUALIFIED INVESTORS ONLY, see last page for important disclosures

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 Contents
I. Sector overview : Logistics Real Estate in Benelux ................................................................................... 2
A. E-commerce impact ................................................................................................................................... 2
B. Multimodal Opportunity ............................................................................................................................ 4
C. Legislation holds back e-commerce in Belgium ......................................................................................... 5
D. Outlook for Benelux logistic market .......................................................................................................... 5
II. WDP......................................................................................................................................................... 7
A. History ........................................................................................................................................................ 7
B. Activities ..................................................................................................................................................... 8
C. Management ............................................................................................................................................ 10
D. Shareholders and board of directors ....................................................................................................... 10
E. Business Model and Valuation ................................................................................................................. 11
III. Montea .................................................................................................................................................. 16
A. History ...................................................................................................................................................... 16
B. Activities ................................................................................................................................................... 17
C. Management ............................................................................................................................................ 18
D. Shareholders and board of directors ....................................................................................................... 18
E. Business Model and Valuation ................................................................................................................. 19
IV. Intervest ............................................................................................................................................ 24
A. History of contributions in kind and mergers by absorption ................................................................... 24
B. Activities ................................................................................................................................................... 25
C. Management ............................................................................................................................................ 26
D. Shareholders and Board of directors ....................................................................................................... 26
E. Business Model and Valuation ................................................................................................................. 27

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I. Sector overview : Logistics Real Estate in Benelux
Over the last three decades the “Just-in-time” principle has determined the development of the Western
logistic/warehouse system. Getting the goods to the right place on the right time was the credo so that only
minimal stocks should be held. The Just-in-time principle has been built in the Benelux mainly on road
transport and warehouses on the main logistic lines. This system is bumping into bottlenecks like road
congestion and is also suffering from higher service demands from end-customers. The development of e-
commerce has created higher expectations on delivery times. The “out-of-stock” cost has risen significantly
for retailers as their competitors are now only 1 click away.

Critical success factor survey scores (source : Prologis 2015) :

1. Proximity to customers : 3.9
2. Labour & government laws : 3.6
3. Real Estate availability : 3.5
4. Infrastructure (Roads, Rail, …) : 3.4
5. Proximity to suppliers : 3.3

The number of warehouses increases as the out-of-stock cost increases and delivery times decrease

In this chapter we examine the structural trends that underlie the demand for logistic real estate in the
Benelux. We discuss 3 topics separately: e-commerce, Intermodal and labour laws.

A. E-commerce impact
E-commerce provides customers and businesses with a multitude of ways to buy, receive and return goods.
The growth of these services have been fueled by expectations of execution on ever-shortening timescales.
The fulfilment backbone has become a complex distribution process that gains importance in the fight for
market share. The impact on the real estate within the distribution networks is also becoming more
significant. Retailers and their logistic partners are forced to think differently about the location, size and
specifications of their warehouses. The process that handles e-commerce differ substantially from the
traditional retail processes. The table below shows the different new types of warehouses that are linked to
e-commerce distribution.

Source : PwC

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The table below illustrates the major challenges for retailers that shift to an e-commerce or omnichannel
model in the field of location, time management and cost control. These three factor are interrelated as
proximity and number of locations reduce delivery time, but also increase total costs. The succesfull retailer
can balance the three factors over the long term. Retailers and logistic companies want to stay flexible in
order to keep up with the expansion needs and changing logistic processes.

Source : PwC

Organisation of warehouses changes significantly:

Different types of warehouses depending on position in the delivery chain. The Urban logistic centers are
closest to the consumers and become more important as the delivery time expectations decline. Amazon is
experimenting with a 2 hour delivery time for a selection of products for its prime members.

Size and Shape Location Cross-Dock

E-fulfillment center Large, Multiple Levels Off-center, labour supply Often
Parcel Hub High length to width Hub and spoke with E-fulf. High amount of Lorry docking
Urban logistics High length to width Edge of centers High amount of Van docking
Return Center Depends on product Close to E-fulfillm. Not

The last 40 years have seen a paradigm shift in the way delivery systems operate. From the 70s when retail
stores were directly sourcing their goods from wholesalers, to centralized store deliveries in the 80s, global
sourcing in the 90s to current e-commerce and e-fulfilment distribution networks. The largest and fastest
growing platforms benefit from economies of scale and compete on ever higher standards of service
quality. These companies need a denser infrastructure network closer to the end-customers.

Source : JLL

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B. Multimodal Opportunity
Congestion Problem

Road transport is estimated to loose significant market share by 2030 (see graph above right)
Congestion in road transport is a serious problem in the Benelux, especially around large cities.
There is still a lot of progress possible in the area of intelligent transport systems that optimizes the
different modes of transport in order to reduce congestion in road transport. As transport and logistic
demand is still expected to grow significantly by 2030, the congested road traffic is estimated to lose
market share in the transport mix.

Rail is predicted to rise from 11% to 20% (NL) and 9% to 15% (BE) in the transport mix by 2030
The freight transport by rail from and to the Benelux has mainly an international focus. Rail transport is
hardly used for transport within the Benelux. The extensive rail network in the Benelux can be better
integrated into the multimodal chain. The higher taxation of road transport will speed up the intermodal
development. Below is an example of a road-rail connection in Luxembourg :

Source: Multimodal Hub Bettembourg (Rail-Road)

Inland navigation is expected to rise from 35% to 45% (NL) and 35% to 42% (BE) by 2030
Inland navigation: inland navigation in, from and to the Benelux already represents a high volume
compared to the rest of the EU-28. The Benelux is already a trendsetter in Europe in developing innovative
tri-modal transport services.
Intermodal transport also supports the reduction of CO2 emissions from freight transport in the Benelux.
Opportunities for rail (left) and water (right) interconnections with road infrastructure in Belgium :
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Source : VUB

C. Legislation holds back e-commerce in Belgium,

The Belgian government agreed at the end of 2015 that night work should be allowed to stimulate the
Belgian ecommerce development. Many Belgian consumers prefer to order in Dutch or French e-commerce
businesses, because they allow night work and offer faster delivery times despite the longer distances.
However, only few companies have yet submitted an application to allow night work as it has to be
approved within the corporate’s collective labour agreement of each company.
As each company has to negotiate with its unions, there is little progress on allowing night work or
weekend work that is critical for an efficient e-commerce backbone.
It is estimated that the Belgium ecommerce industry has lost an estimated 30,000 to 40,000 jobs to its
neighbouring countries.
A federal law that regulates the labour conditions for the whole sector instead of each company
individually could put the Belgian e-commerce development in a higher gear. There is also a need for a
mentality shift of workers. The culture of combining jobs, working part time and student work is well
established in The Netherland and could also take hold in Belgium. WDP and Montea have not waited for
the legislation to progress and have invested along the Belgian borders.

D. Outlook for Benelux logistic market

Logistic real estate market forecasters are positive on the trends for 2017 in the Benelux. There have been
relatively little speculative investments in new warehouses as most projects are Build-to-suit. Positive
structural trends like e-commerce create a shortage of modern logistics buildings on the Antwerp- Brussels
Axis. There are only a few large multinationals active on the Benelux market (Prologis and Goodman).
Some new logistics axes are developing like Antwerp-Ghent and the Wallonia-axis regions Liege-Limburg.
These trends will keep prime rents stable. The best warehousing locations may see upward rental pressure
in areas of tight supply.

Belgian Logistic market expectations

Source Cushman & Wakefield Dec 2016

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General European warehouse market trends
Over 2017 market forecasters expect strong demand for warehouses exceeding 50k m2 as well as for
smaller units close to large cities, fueled by the continuing alignment to e-fulfilment and final-mile delivery.
The majority of new supply remains focused on build-to-suit. This trend pushes the European aggregate
vacancy rate to below 6% in 2017. The majority of European markets anticipate rental increases over 2017.
The Benelux logistic hubs are expected to remain at the top of the rankings. Transport and storage as a % of
GDP has been increasing in The Netherlands and is now approaching the Belgian level.

Source: Prologis

Conclusion Valuescan
There is an undersupply of Class-A logistics space in Europe. The reconfiguration of the European supply
chain and the rise of e-commerce means there is significant development potential for modern, efficient
distribution facilities across the region. Logistics companies are constantly optimizing their distribution
strategies to ensure high service levels for minimal costs.

Summary Table Companies

Company Price Target Upside NAV 31/12/16 NAV premium Yield% Wacc
WDP 89.5 95.7 7% 51.2 75% 5.2% 5.6%
Montea 48.6 54.3 12% 27.8 75% 5.0% 5.7%
Intervest O&W 22.8 24.6 8% 19.6 16% 5.8% 5.9%
Source : Company data, Valuescan

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II. WDP
Share Price 89.5 EUR Recommendation BUY
Fair Value 95.3 EUR Upside 7%
Symbol WDP Number of shares 21.8 m
Ising Code BE0003763779 Market Cap 1951 mEUR
Website www.wdp.eu Net Debt 1046 mEUR
Sector REIT, Logistic Enterprise Value 2997 mEUR

2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Rental Income 57.8 62.7 69.1 81.3 89.0 101.8 129.1 139.7 154.3 169.8 186.0
EPS (cash) 0.21 2.60 2.29 2.49 5.15 3.94 7.85 6.86 6.06 6.35 6.63
P/E 148.8 13.7 16.0 16.9 9.6 14.7 9.2 11.8 14.8 14.1 13.5
Dividend yield 8.0% 7.0% 8.0% 7.4% 6.5% 5.9% 5.6% 5.2% 5.0% 5.2% 5.4%
NAV/Share 32.0 32.5 33.4 34.6 35.9 39.2 44.9 51.2 50.9 53.4 55.9
Premium -2% 9% 10% 22% 39% 48% 60% 59% 76% 68% 60%
Source : Company data, Valuescan

100.0

90.0

80.0

70.0

60.0

50.0

40.0

Source : Euronext

A. History
1999 Formation of Warehousing &Distribution De Pauw Comm.VA and IPO on Brussels Stock Exchange.
2000 Formation of WDP France SARL.
2001 Name changed to Warehouses De Pauw, formation of WDP Nederland BV.
2003 Successful capital increase.
2004 Free float to 70% after the sale of 20% stake of main shareholder the Jos De Pauw family
2008 Launch of the solar energy project, expected power of 30 MWp and a carbon-neutral portfolio.
2009 Acquisition through payment in shares of DHL premises, capital increase
2012 Strategic expansion in the Netherlands with the acquisition of the Lake Side Portfolio.
2013 Strategic plan for 2013-16: ambition to grow the portfolio by 50% to 1.8bn EUR
03/15 Acquisition of MLB NV by a capital increase of 48mn EUR, DHL Supply Chain network in Bornem.
04/15 WDP acquires The Greenery Dutch sites for 46mn EUR and invests 26 mEUR in additional capacity.
06/15 WDP realizes a private placement of 92mn EUR in bonds
11/15 WDP starts to list on Euronext Amsterdam to expand in the Netherlands
11/15 WDP finishes the biggest e-commerce order-picking warehouse in Europe for Wehkamp (30mn EUR)
11/16 WDP raises 178m at 75 EUR per share to finance expansion

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B. Activities
WDP is a Real Estate Investment Trust (BE-REIT) headquartered in Wolvertem. The company was founded
by the family De Pauw in 1971 and is listed on Euronext Brussels since 1999 and Amsterdam (AMX) since
2015. WDP develops and invests in semi-industrial and logistic real estate with an estimated 10% and 6%
market share in Belgium and The Netherlands. The portfolio is 95% located on the broad Amsterdam-
Rotterdam-Breda-Antwerp-Brussels-Lille axis. The company also operates in Romania. WDP develops both
its own logistic sites and sites tailored to specific client needs. The company also grows through direct
acquisitions and redevelopment of existing projects. WDP works with its own project management team
and uses partnerships with building and automation companies. WDP and its partners also develop cross-
docking, cold storage, datacentre, and pharma warehouses. Besides letting, WDP is also in charge of the
management of its real estate, its facility managers support clients in their daily warehousing activities.

Real estate portfolio: 2,9m m2, distributed over 132 sites and with an occupancy rate of 96%:

Source : Company data

By keeping real estate in portfolio after the development phase, internal gains stay in the BE-REIT.

Geographical Profile: Benelux to North of France connecting Ports, Airports and Container Terminals

Source : Company data

Intermodal Investments
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WDP is active on the Rhine–Meuse–Scheldt. This comprises the major navigable waterways in Benelux.
Intermodal is driven by the transport demand from the international ports of Antwerp and Rotterdam
towards the hinterland.

Romania
The Romanian portfolio was acquired in 2007 as a play on the enlargement of the European Union. After
2009 credit crisis, this investment program was put temporarily on ice. Over the next couple of years, WDP
intends to expand the real estate portfolio gradually from 71m EUR currently to 250m EUR in order to
benefit from scale effects in that region. Including solar panels, the current portfolio amounts to 80m EUR.
The real estate market in Romania has stabilised and the economy benefits from an increase in exports.
WDP is currently expanding its existing projects and starting new locations.

Tenants’ distribution: a diversified tenant base between end-users and logistic service providers (3PL)

Source : Company data

Third Party Logistics (3PL) exposure is 46%

3PL players like DHL, Distrilog and K&N can choose to operate asset light business models and rely on
warehouse rental for fixed 3-6-9 year periods or develop asset intensive operations that rely on owned
warehouses for longer investment horizons (> 20 years). WDP provides large “campus” solutions for its
major 3PL tenants. Some large Belgian logistic companies like Katoennatie or Essers operate through
owned warehouses. Some retailers like Delhaize and Colruyt also depend on their internal logistics. These
companies control market share that is not available for competition to WDP. The logistic markets in the
Benelux and Europe in general are still highly fragmented as the largest companies only control a couple of
percentages of the market. Most companies want to maintain a high degree of flexibility as the market is
competitive and under a lot of flux from the changes in the competitive landscape (traditional distribution
vs. e-commerce).

E-commerce exposure is estimated at 15% of Real estate m2

The company estimates its exposure to pure e-commerce around 15%, while experiencing stronger than
average growth for these types of warehouses. For example its Wehkamp site Zwolle is presented as the
biggest automated e-commerce platform in Europe. WDP develops this site with a 30 mEUR investment. It
is partnering with the Knapp Company, a specialist in order picking systems. Wehkamp invested also 70
mEUR itself for the automation equipment.

Specialisation into Food logistics

WDP has become a specialist for fresh food warehouses rental. It rents out to the largest competing fresh
food companies that cater to retailers in the Benelux: Greenyard Foods, The Greenery and Staay Food
Group. The Greenery came into troubled water over the last couple of years and went through a
restructuring program that forced it to sell some real estate assets. WDP grabbed this opportunity to
expand its fresh food exposure. Greenyard Foods also operates a relatively asset light business model.

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Recently, the increasing demand for food e-commerce services like Hello Fresh and Smartmat also require
time critical fresh food warehousing and automatization. Food storage has to answer to ever more
stringent health rules and building requirements (high energy use for food warehouses). This explains why
many companies choose to rent cooled warehouses instead of owning and operating the warehouses
themselves.

Warehouse types: diversified portfolio that follows current trends (E-commerce/Food)

Source : Company data

C. Management
Tony De Pauw CEO: general management; investment policy and project management
Joost Uwents CEO: financial policy; marketing; commercial policy; investor relations
Mickaël Van den Hauwe CFO: financial policy; internal reporting; investor relations

D. Shareholders and board of directors

The share capital is made up of only ordinary shares (no preference shares).
Shareholder Composition Number of shares (declared) (in %)
BlackRock-related companies 659,847 3.1%
BNP Paribas Investment Partners SA 640,390 3.0%
Family Jos De Pauw en De Pauw NV 5,508,104 25.8%
Free float 15,817,939 68.1%
Total number of shares 21,326,043 100.0%
Source: annual report FY2015

Board of Directors
Mark Duyck, executive director and Chairman of the Board of Directors,
Tony De Pauw, CEO, executive director, represents the Jos De Pauw family.
Joost Uwents, CEO, executive director
Anne Leclercq, Independent director, Director at the Belgian Debt Agency
Frank Meysman, Independent director, International marketing
Cynthia Van Hulle, Independent director, Professor at the Faculty of Economics and Business Studies.
The board consists of 6 members, of which 3 are independent. The CEO and CFO are part of the board as
the only executives. The real estate valuation specialists are Stadim and Cushman & Wakefield for Belgium,
Cushman & Wakefield for The Netherlands, BNPP Real Estate for France and Activ Property Services
Romania.

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E. Business Model and Valuation
Growth and Investments
WDP Portfolio Fair Value rose significantly over the last 10 years and is expected to continue its growth.
WDP is expected to use a mix of new equity issues and debt to grow its market share over the next couple
of years. The estimated fair value of the portfolio increased by 243m EUR over FY16. WDP focussed its
expansion on The Netherlands (191k m2) and Belgium (178k m2). Also Romania experienced increased
investments (66k m2). WDP also expanded its solar exposure, but only in The Netherlands with 22 MWp.

Acquisitions FY16: approx. 130m EUR for 240 k m2 with initial yield of 7.25%
Netherlands : approx. 160k m2, highlight Barendrecht 45k m2 for The Greenery
Belgium : approx. 70k m2, Highlights Londerzeel, Puurs 35k m2 for Distrilog, Neovia
Romania : approx. 7k m2

Completed projects FY16: approx. 110m EUR for 198 m2 with initial yield of 7.50%
Netherlands : approx. 31k m2, highlight Barendrecht/Breda 31k m2 for The Greenery
Belgium : approx. 108k m2, Highlights Willebroek 30k m2 for Damco
Romania : approx. 59k m2
France : approx. 24k m2 in Lille

3500 30%
3000
Fair Value in mEUR FV Growth
25%
2500
2000 20%

1500
15%
1000
10%
500
0 5%

Portfolio 31/3 year end 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Total surface area (k m2) 689 953 1124 1303 1356 1660 2018 2138 2432 3082 3375 3648 3959 4298
Estimated FV in EURm 430 617 778 884 889 989 1163 1273 1567 1930 2204 2426 2680 2957
Value/m2 in EUR 624 647 692 678 656 596 576 596 644 626 653 665 677 688
Value/m2 growth 3.8% 7.0% -2.0% -3.4% -9.1% -3.3% 3.3% 8.2% -2.8% 4.3% 1.9% 1.8% 1.6%
Property Income/m2 EUR 44.9 46.1 45.8 52.0 49.3 47.4 45.4 44.0 45.6 48.0 44.6 45.2 45.8 46.2
Occupancy rate 96.6% 98.5% 98.7% 91.7% 95.7% 96.7% 97.3% 97.4% 97.6% 97.5% 97.0% 97.2% 97.5% 97.5%
Average Lease in yrs 6.1 7.2 7.2 7.3 7.1 6.5 6.3 6.2 6.1 6.1

Investments 31/3 yr end 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Net Property Investments 161 177 129 10 97 172 111 275 315 243 200 230 250
Equity Financing 0 81 88
New shares in mln 0.5 0.9 1.0
Net Profit - Dividend 17 18 20
New Debt 183 132 143
Source : Company data, Valuescan

Investments WDP aims for a portfolio of 3bn EUR by 2020 and has delivered on its previous growth plans.
By 1Q18, WDP will execute another 308k m2 of projects of which a majority in The Netherlands (216k m2)
and 62k m2 in Romania. These projects are expected to cost 175m EUR and realise an initial yield of 6.8%.
This is below the 7.5% yield on the completed projects over FY16. We expect that WDP will create on
average 1m new shares per year to finance the growth plan.

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Property income/m2 varied between 44 and 50 Euro per m2 between 2006 and 2016, depending on the
timing of projects. The shift to larger average sizes weighs on the average income per m2. This trend has no
significant impact on the yield as larger buildings also realise construction cost synergies per m2. The larger
building sizes are partly a consequence of the e-commerce trends described in Part I. We expect a
continued slow decline in income per m2.
60.0

50.0

40.0

30.0

20.0

10.0

0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e2018e2019e
Source : Company data, Valuescan

Occupancy rate has been consistently above 97% during the past 10 years. WDP achieved a lease renewal
rate of circa 90% over the last 5 years. The e-commerce impact will support the demand for grade-A
warehouses and specialised warehouse projects. This trend will support the occupancy rate over the next
couple of years. The limited supply of speculative projects in the Benelux is also a positive factor that
explains the low vacancy rate.

Source : Company data

Financial Model
Income/Fair Value% declined from a stable 7% between 2010 and 2013 to 6.3% over 2016. The decline is
explained by the low financing costs that push up the fair value of the portfolio which decreases the
average yields. We expect this slightly declining trend to continue into 2019. This effect ripples through the
P&L to the bottom-line, but is still earnings enhancing on a current level as the financing costs are still
significantly below the net yields of the new projects.
7.5%

7.0%

6.5%

6.0%

5.5%

5.0%

Source : Company data, Valuescan

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P&L 31/3 year end 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Net Rental Income 117 132 146 161 178
Solar Income 8.2 8.4 8.4 8.4 8.4
Early termination & Other 3.7 -0.4 0.0 0.0 0.0
Property Income 29.9 37.3 46.9 57.8 62.7 69.1 81.3 89.0 101.8 129.1 139.7 154.3 169.8 186.0
Income/Fair Value% 7.0% 6.0% 6.0% 6.5% 7.1% 7.0% 7.0% 7.0% 6.5% 6.7% 6.3% 6.4% 6.3% 6.3%
Costs -3.3 -3.1 -4.7 -4.4 -5.2 -5.8 -7.0 -7.2 -8.3 -10.1 -9.5 -10.3 -11.0 -11.7
Costs/Income% 11.0% 8.3% 10.0% 7.6% 8.3% 8.4% 8.6% 8.1% 8.2% 7.8% 6.8% 6.7% 6.5% 6.3%
Operating result 26.6 34.2 42.2 53.4 57.5 63.3 74.3 81.8 93.5 119.0 130.2 143.9 158.8 174.2
Financial costs -4.3 -7.7 -12.8 -18.1 -18.5 -18.9 -21.3 -22.1 -25.4 -27.1 -30.3 -29.3 -34.4 -39.5
Tax&Other 0.0 -0.3 -0.7 -1.3 0.0 -0.1 -0.9 -0.1 -0.8 -1.0 0.9 -0.9 -0.9 -0.9
Net current result (EPRA) 22.3 26.2 28.7 34.0 39.0 44.3 52.1 59.6 67.3 90.9 100.8 113.8 123.5 133.9
Portolio Results 16.3 26.1 -15.7 -22.7 -4.2 2.7 1.7 -0.7 19.7 47.4 31.2 22.0 24.3 26.8
Portfolio Result/FV 3.8% 6.1% -2.5% -2.9% -0.5% 0.3% 0.2% -0.1% 1.5% 3.0% 1.6% 1.0% 1.0% 1.0%
Changes in Financial Instr. 3.5 0.8 -28.8 -10.9 -2.3 -17.3 -18.5 20.8 -19.4 7.8 1.8 0.0 0.0 0.0
Depreciation Solar Cells 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -2.9 -3.4 -3.5 -3.5 -3.6 -3.7
Net current result (IFRS) 42.0 53.2 -15.8 0.4 32.6 29.7 35.3 79.7 64.7 142.7 130.2 132.2 144.0 156.9
Net current EPS (IFRS) 5.18 6.19 -1.84 0.21 2.60 2.29 2.49 5.15 3.94 7.85 6.86 6.06 6.35 6.63
Net current EPS (EPRA) 2.75 3.05 3.34 3.14 3.11 3.42 3.67 3.85 4.10 5.00 5.30 5.21 5.43 5.64
Gross Dividend 2.47 2.31 2.50 2.50 2.50 2.94 3.11 3.25 3.40 4.00 4.25 4.45 4.65 4.80
Pay out ratio (Min. 80%) 90% 76% 75% 80% 80% 86% 85% 84% 83% 80% 80% 85% 86% 85%
Nr Shares (in mln) 8.1 8.6 8.6 10.8 12.5 13.0 14.2 15.5 16.4 18.2 21.3 21.8 22.7 23.7
Dividend in mEUR 20 20 21 27 31 38 44 50 56 73 82 97 106 114
Source : Company data, Valuescan

Cost/Income%, WDP operates a team of around 60 people and is actively involved in the development and
operation management of its warehouses. As the portfolio grows, the overall cost as a percentage of
income declines.

Portfolio Results WDP realised some significant gains on the valuation of its real estate portfolio. Over
FY16, the increase amounted to 1.6% of the portfolio value of the previous year. These estimates by real-
estate specialists also benefit from the lower interest rates that impact the discount rate of future rental
cash flows. We expect the revaluation to slow down to 1% on average over the next 3 years. These gains do
not impact our valuation model as we value the company on net current cash flows.

Dividends
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e2018e2019e

Source : Company data, Valuescan

The gross dividend has grown consistently in line with the scale of WDP. Over the last 5 years, WDP
increased its dividend on average by 7.8% annually. WDP meets the 80% requirement, but reserves the
remaining 20% to finance its growth. We believe that the lower pay-out ratio is in the interest of investors
as it maximizes the equity base for further leverage. WDP also offers a choice stock dividend with a small
discount. Over Fy16, 61% of shareholders chose for a dividend in stock. This amount equalled almost 50m
EUR. The high stock dividend take-up increases the equity base without expensive market transactions. The
company can leverage the increased equity base again with more than an equal amount of debt.

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13
Financial structure
WDP’s debt is financed by a mix of instruments with relatively low refinancing demands over the next 4
years. In 2021 and 2022, WDP sees expiries of 250m and 275m EUR.

Source : Company data FY16

Balance Sheet
Assets EUR m 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Investment Properties 615 774 871 887 976 1130 1235 1526 1872 2123 2323 2553 2803
Intangibles 0 0 0 0 0 0 0 0 0 0 0 0 0
Other Fixed 11 12 13 19 16 17 30 18 18 8 8 8 8
Financial Assets 0 0 0 0 0 0 3 3 3 35 35 35 35
Non-Curr.A. 626 787 884 906 992 1147 1268 1547 1893 2166 2366 2596 2846
Inventory 0 0 0 0 0 0 0 0 0 0 0 0 0
Receivables 24 9 15 11 8 10 7 17 9 14 14 14 14
Cash 9 1 2 1 2 2 2 0 1 0 0 0 0
Other Current 4 6 15 4 17 38 6 6 5 3 3 3 3
Curr.Ass. 37 16 32 16 26 50 15 23 14 17 17 18 19
Total Assets 663 803 916 922 1019 1196 1283 1570 1907 2183 2383 2614 2865
Liabilities EUR m
Equity 310 261 367 371 401 450 527 613 768 1032 1049 1148 1257
LT Debt 202 297 374 373 423 481 515 665 916 866 1050 1182 1324
Other NC Liabil. 17 32 40 38 55 73 50 69 65 65 65 65 65
Non-Curr.Liabil. 529 590 780 783 879 1005 1092 1348 1749 1963 2163 2394 2645
ST Debt 121 183 127 131 130 182 177 202 129 179 179 179 179
Payables 10 18 5 7 8 8 9 9 15 0 0 0 0
Other Curr.Liabil. 3 12 4 1 2 2 5 12 15 40 40 40 40
Current Liabilit. 134 213 136 139 140 192 191 223 158 219 219 219 219
Total Liabil. 663 803 916 922 1019 1196 1283 1570 1907 2183 2383 2614 2865
Source : Company data, Valuescan

Debt/Assets decreased to 48% after the FY16 capital increase. We expect more debt financing over FY17 as
the financing costs are low. WDP has 300m credit financing buffer. The current hedge ratio is above 90%.
Financial costs/Debt% has been declining from 3.7% in 2010 to 2.9% in 2016. We expect a gradual increase
to 3.0% by 2019.

Financial Leverage ratios 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Financial Debt 177 324 480 500 504 552 663 692 867 1045 1046 1229 1361 1504
Net Financial Debt 177 315 479 498 503 551 661 690 866 1044 1046 1229 1361 1503
Debt/Assets (Max 65%) 24% 49% 60% 55% 55% 54% 55% 54% 55% 55% 48% 52% 52% 52%
Net Debt/Equity 65% 102% 183% 136% 135% 137% 147% 131% 141% 136% 101% 117% 119% 120%
Debt Coverage (Fixed As.) 41% 50% 61% 56% 56% 55% 58% 54% 56% 55% 48% 52% 52% 53%
Financial expenses/Debt % 2.4% 2.4% 2.7% 3.6% 3.7% 3.4% 3.2% 3.2% 2.9% 2.6% 2.9% 2.8% 2.8% 2.9%
Interest Coverage (Rent) 5.9 4.5 3.0 2.5 2.9 3.1 3.4 3.6 3.3 4.2 4.1 4.1 4.1 4.1
Average cost of debt (%) 4.3% 4.0% 3.6% 3.6% 3.5% 2.8% 2.8% 2.8% 2.9%
Source : Company data, Valuescan

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14
DCF Calculation
DCF 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e
Salesgrowth 10.4% 10.1% 9.5% 4.0% 3.0% 2.5% 2.0% 2.0% 2.0%
Sales 139.7 154.3 169.8 186.0 193.4 199.2 204.2 208.3 212.4 216.7
Oper.Margin 93.2% 93.3% 93.5% 93.7% 93.7% 93.7% 93.7% 93.7% 93.7% 93.7%
Oper.Income 130.2 143.9 158.8 174.2 181.2 186.6 191.3 195.1 199.0 203.0
Taxes 0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9
Capex -243 -200 -230 -250 -44 -44 -44 -44 -44 -44

Free Cash Flow 2.8 -57.0 -72.1 -76.7 136.2 141.7 146.3 150.2 154.1 158.1
Discount Factor 1.0 0.9 0.9 0.8 0.8 0.8 0.7 0.7 0.6 0.6
Discounted Flows 2.8 -53.9 -64.7 -65.1 109.6 107.9 105.5 102.5 99.6 96.8

Horizon Value 341 Sensitivity Wacc

Terminal Value 2,742 Growth 5.1% 5.6% 6.1%
- net debt 1,006 1.5% 100.8 79.4 62.8 WACC 5.6%
Equity Value 2,078 2.0% 122.6 95.3 74.8 LT Growth 2.00%
Nr Shares 21.8 2.5% 152.8 116.3 90.1 Fair Value : 95.3
Source : Company data, Valuescan
We use a 5.6% Wacc and 2% terminal growth rate as base case scenario. The DCF is calculated with only
organic growth (inflation) from 2019 onwards.

NAV table
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
NAV IFRS 32 36.1 30.4 29.3 29.6 29.4 29.9 32.8 35.2 41.5 48.4 48.1 50.6 53.1
NAV EPRA 31.5 35.5 33.2 32.0 32.5 33.4 34.6 35.9 39.2 44.9 51.2 50.9 53.4 55.9
Share Price Avg 49.5 36.9 31.3 35.5 36.7 42.1 49.7 57.9 72.0 81.2 89.5 89.5 89.5
Avg Premium 39% 11% -2% 9% 10% 22% 39% 48% 60% 59% 76% 68% 60%
Gross Dividend Return 4.7% 6.8% 8.0% 7.0% 8.0% 7.4% 6.5% 5.9% 5.6% 5.2% 5.0% 5.2% 5.4%

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15
III. Montea
Share Price 48.6 EUR Recommendation BUY
Fair Value 54.3 EUR Upside 12%
Symbol MON Number of shares 10.0 m
Ising Code BE0003853703 Market Cap 484 mEUR
Website www.montea.com Net Debt 307 mEUR
Sector REIT, Logistic Enterprise Value 791 mEUR

2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Rental Income 16.3 17.1 19.3 19.7 23.7 26.8 34.3 40.5 43.6 49.4 54.5
EPS (cash) -2.99 1.78 -0.05 -0.49 2.42 0.79 2.66 3.74 3.20 3.48 3.65
P/E -8.8 13.1 -454.1 -54.1 12.7 40.8 13.5 11.2 15.2 14.0 13.3
Dividend yield 7.9% 7.9% 7.6% 7.3% 6.4% 6.1% 5.6% 5.0% 4.7% 5.1% 5.3%
NAV/Share 24.6 23.1 23.0 22.8 22.4 23.8 25.2 27.8 30.4 32.5 34.6
Premium 7% 1% 6% 15% 37% 36% 43% 51% 60% 50% 41%
Source : Company data, Valuescan

50.0

45.0

40.0

35.0

30.0

25.0

Source : Euronext

A. History
Montea is a public regulated real estate company under Belgian law specialized in developing and
managing logistics real estate in Belgium, France and the Netherlands.
2006 The activities of Montea began on 1 October 2006, by joining different property portfolios.
2006 Montea was listed on the Euronext Brussels since October 2006 and Euronext Paris since December
2010 June, capital increase by share issue of 40m EUR at 19.5 per share
2012 December, capital increase by contribution in kind of 21m EUR (DHL Brussels Airport)
2013 June, merger with Warehouse Nine valued at 17.7m EUR
2013 December, contribution in kind of Ghent Logistics for 6.5m EUR
2014 June, capital increase by share issue of 52.5m EUR at 27.0 per share
2015 June, contribution in kind of WGA Verstijnen Investment Transport for 7.5m EUR
2016 December, contribution in kind of EOS logistics and Office Park Eleven for 17.3m EUR
2014, Montea was accredited by the FSMA as a public regulated real estate company under Belgian law.

The company headcount amounts to 15 FTE and 5 managers. Montea also employs external consultants, IT
specialists and legal experts. The operational technical management and maintenance of the buildings, as
well as the coordination of current building and renovation works, are monitored by Montea’s own staff.
The quarterly real estate valuations are performed by JLL.

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16
B. Activities
Geographical portfolio distribution (number of properties)

Source: company website

Montea Belgium is active on the axis Antwerp-Brussels-Charleroi and Ghent-Brussels-Liege.

In the Netherlands, Montea has more a network approach and an axis Amsterdam-Rotterdam-Tilburg-
Eindhoven. In France, Montea operates through a North-South axis Lilles-Paris-Lyon-Montpellier.
Sites# Value in mEUR Rental income mEUR Size k m2 Value/m2 Income/m2
Belgium 23 268 19.9 431 622 46.2
Netherlands 10 169 11.6 205 824 56.6
France 14 94 7.5 146 644 51.4
47 531 39 782 679 49.9
Source : Company data
Montea decreased its position in France over 2016 as older infrastructure was sold. Montea owns land in
Camphin (near Lilles) for new project development in France. The French logistics market is an internal
market, not as international as the Benelux market.

Source : Company data

Montea combines own developments with acquisitions from third part developers like the frame
agreement with MG Real Estate (De Paepe Group) in Willebroek. Montea wants to increase its own
developments in the portfolio mix. The company does not own a significant land bank.

Source : Company data

Montea’s average age of its portfolio amounts to 8,2 years. That is relatively young for a warehouse
portfolio. Third Party Logistics (3PL) exposure is 46% with clients like Jan De Rijk, DSV, Vos Logistics and
Federal Mogul. As end-clients, Montea mentions Barry Callebout, Caterpillar, Bakkersland, Metro and Coca-
Cola.
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17
E-commerce exposure is estimated at 20% of Real estate m2
Montea’s traditional logistics clients are adapting their warehouses to the e-commerce evolution. They are
delivering more goods direct to stores or end-customers. Montea also rents to DocMorris, an online
pharmacy company. Montea does not bid for the investment projects of the large online moguls like
Amazon, Zalando, Bol, or Coolblue. These companies need surfaces of 50k to 100k m2 and have become
trophy deals for large investors that are often new to the warehousing market. These deals do not meet the
return requirements of Montea. The large consumer chains or brands are developing their own logistic
networks. For instance Nike in Ham or Decathlon in Willebroek. They build new infrastructure or convert
their existing warehouses to accommodate e-commerce flows. This conversion can include mezzanine
floors or separate corners for order picking. In France, Montea experiences a slower e-commerce
development compared to the Benelux. Projects take more time to get approval.

Intermodal Investments
Every greenfield development by Montea has to offer bi-modal transport at least. For instance, the recent
developments in Willebroek offer access by road and waterways. Montea believes the problem of road
congestion in Belgium will take at least 10 years to get fixed. The investments in waterway transport are
also driven by cost considerations. Although on average road transport is still faster. The estimated arrival
time by road has become highly uncertain, while transport by water is easier to organize the logistical
treatment. Rail remains difficult for short distance. This is mainly a solution for international transport.

C. Management
Name Function Since Experience
Jo De Wolf Chief Executive Officer 2010 Brussels Airport RE, Extensa
Els Vervaecke Chief Financial Officer 2016 Pylos CFO, E&Y
Peter Demuynck Chief Commercial Officer 2010 Brucargo RE, Cushman&Wakefield
Source : Company data

Montea has a relatively young management that has gained experience in the real estate market in
previous jobs.

D. Shareholders and board of directors

The board of directors of Montea Management NV : Shareholders
Name Function End of mandate
Dirk De Pauw Chairman and executive director May 2021
Ciska Servais Independent director May 2019
Jo De Wolf Managing director and CEO May 2022
Peter Snoeck Executive director May 2018
André Bosmans Independent director May 2018
Jean-Marc Mayeur Non-executive director May 2018
Dirk Vanderschrick Non-executive director May 2018
Sophie Maes Independent director May 2019
Michel Delbaere Independent director May 2019
Source: annual report

The board defines the strategy of Montea, its risk profile and in particular the sectors and the geographical
areas for investment.

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18
E. Business Model and Valuation

Growth and Investments

900 FV Growth
800 Fair Value in mEUR 35%
700 30%
600 25%
500 20%
400
15%
300
10%
200
100 5%
0 0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e -5%

Source : Company data, Valuescan

Montea has experienced strong growth over FY14-16. The growth over FY16 was impacted by the
divestment of older warehouses in France.

Portfolio 31/3 year end 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Sites 32 33 42 31 32 35 41 45 47
Logistics/Semi-Ind. (in k m2) 320 330 392 416 466 535 632 682 715
Offices (in k m2) 46 51 46 44 49 49 59 67 68
Total surface area (in k m2) 366 381 438 460 515 584 691 749 783 905 1000 1092
Fair Value real estate EURm 210 206 233 247 284 320 425 516 552 648 724 802
Value/m2 574 541 532 537 551 547 614 689 705 716 724 734
Property Income/m2 Eur 39.7 47.5 43.6 44.6 42.0 45.4 43.5 49.3 53.5 52.5 52.7 52.9
Occupancy rate 96.3% 91.8% 95.8% 96.5% 96.3% 94.8% 96.6% 96.7% 98.9% 98.5% 98.5% 98.5%
Average Lease in yrs 6.3 6.8 7.7

Investments 31/3 year end 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Net Property Investments -4 27 14 37 36 105 92 36 90 70 70
Equity Financing 36 28 28
New shares in mln 0.74 0.58 0.58
Net Profit - Dividend 10 12 14
Net Debt Financing 44 30 28
Source : Company data, Valuescan

Investments
We expect net property investments to grow by 90m EUR over FY17 and 70m EUR over FY18-19. The build-
to-suit projects (>10m EUR) that are currently in the pipeline are :
Location Tenant Value in m EUR Deployment
Brucargo Zaventem DHL – 15y 35 1Q17
Bilzen Carglass – 15y 25 2Q18
Tilburg NSK – 10y 15 3Q17
Bornem Edialux – 15y 11 2Q18
Source : Company data

Montea has been selected as exclusive partner for the development of the 6,5 hectare logistics zone at Blue
Gate. This is part of the redevelopment of Petroleum Zuid in Antwerp (total 63 hectares).
We expect Montea to finance its growth by a balanced mix of equity and debt issuance.

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19
Property income/m2. Has increased over FY15 and FY16 as a result of the portfolio restructuring in France
and new developments. We expect a stabilisation in income per m2.
60.0

50.0

40.0

30.0

20.0

10.0

0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Source : Company data, Valuescan

Occupancy rate has bottomed out over 2013 at 94% and has risen to 98.9%. That is significantly above the
European average of 94%. The limited supply of speculative projects in the Benelux and France is also a
positive factor that explains the low vacancy rate.
100%

98%

96%

94%

92%

90%

88%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Source : Company data, Valuescan

Financial Model
1Q17 results confirmed our expectations for 2017
EPRA net profit equals 7.2m EUR including 2.1m EUR exceptionals.
Fair value increased 2.8% to 556m EUR. Occupancy rate of 95.3% and Average lease term at 7.8 yrs.

Income/Fair Value% bottomed out in 2014 below 6.5%. The income ratio recovered strongly over 2016 to
7.3%. Due to the large increase in new projects over FY17, we expect the ratio to decline to 6.8% over FY17.
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e

Source : Company data, Valuescan

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20
P&L 31/3 year end 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Net Rental Income 14.0 16.3 17.1 19.3 19.7 23.7 26.8 34.3 40.5 43.6 49.4 54.5
Income/Fair Value% 6.7% 7.9% 7.3% 7.8% 6.9% 7.4% 6.3% 6.6% 7.3% 6.7% 6.8% 6.8%
Costs -2.5 -2.9 -3.9 -3.6 -3.0 -3.8 -4.0 -4.9 -4.2 -4.5 -4.9 -5.4
Costs/Income% 17.9% 17.7% 22.7% 18.7% 15.2% 15.9% 14.9% 14.2% 10.4% 10.2% 9.9% 9.9%
Operating result 11.5 13.4 13.2 15.7 16.7 19.9 22.8 29.4 36.3 39.2 44.6 49.1
Financial costs -9.8 -8.1 -3.6 -5.5 -5.3 -6.2 -7.2 -8.0 -11.8 -10.0 -11.3 -12.7
Tax&Other 6.7 2.1 -1.6 -1.2 -0.2 -0.2 -0.3 -0.3 -0.5 -0.5 -0.5 -0.5
Net current result (EPRA) 8.4 7.4 7.9 9.0 11.2 13.5 15.3 21.1 24.0 28.7 32.7 36.0
Portolio Results -10.0 -16.0 -1.1 -4.4 -6.3 -3.0 1.6 2.5 12.9 5.5 6.5 7.2
-7.6% -0.5% -1.9% -2.6% -1.1% 0.5% 0.6% 2.5% 1.0% 1.0% 1.0%
Changes in Financial Instr. -6.2 -2.1 1.4 -4.9 -8.0 5.5 -10.8 0.4 -0.6 0.0 0.0 0.0
Net current result (IFRS) -7.8 -10.7 8.2 -0.3 -3.1 16.0 6.1 24.0 36.3 34.2 39.2 43.2
Net current EPS (IFRS) -2.18 -2.99 1.78 -0.05 -0.49 2.42 0.79 2.66 3.74 3.20 3.48 3.65
Net current EPS (EPRA) 2.36 2.09 1.72 1.61 1.76 2.05 1.97 2.34 2.47 2.69 2.90 3.04
Gross Dividend 2.09 2.09 1.84 1.84 1.93 1.97 1.97 2.03 2.11 2.28 2.47 2.58
Pay out ratio (Min. 80%) 89% 100% 107% 114% 110% 96% 100% 87% 85% 85% 85% 85%
Nr Shares (in mln) 3.6 3.6 4.6 5.6 6.4 6.6 7.8 9.0 10.0 10.7 11.3 11.8
Dividend in mEUR 7.5 7.5 8.5 10.3 12.4 13.0 15.3 18.3 21.0 24.4 27.8 30.6
Source : Company data, Valuescan
We expect the cost ratio to continue its decline as Montea benefits from scale effetcs.

Dividend The dividend pay-out is expected stable at 85% of net current profit.
3.00

2.50

2.00

1.50

1.00

0.50

0.00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Source : Company data, Valuescan

Financial structure
Montea still has enough headroom on its balance sheet to continue its growth strategy. Total debt on
assets decreased from 58% at the end of FY15 to 54% in 2016, below the regulatory threshold of 65%.
The debt of 310m EUR is financed by 37% in bonds and 63% through bank credit lines. The overall debt
maturity is 5.4 years. The maturity hedging amounts to 7.8 years.

Source : Company data

Maturities of credit lines: Maturities of outstanding bonds:
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21
 Maturity Amount mEUR Coupon in %
28/06/2020 30.0 4.11
28/05/2021 30.0 3.36
30/06/2025 25.0 3.42
30/06/2027 25.0 Float
110.0

Source : Company data

The credit line maturity profile is also well spread over the next 7 years and about 50m EUR over 2017-
2019. There are no bond maturities before 2020-21 and after that till 2025-27.

Balance Sheet 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Tangibles 211 206 234 253 290 320 422 517 545 636 706 776
Intangibles 0 0 0 0 0 0 0 0 0 0 0 0
Other Fixed 0 0 1 0 0 0 0 0 0 0 0 0
Financial Assets 0 1 1 0 0 0 0 0 0 0 0 0
Non-Curr.A. 211 207 236 254 290 320 422 518 545 636 706 776
Inventory 0 0 0 0 0 0 0 0 0 0 0 0
Receivables 7 3 7 7 6 9 17 13 17 17 17 17
Cash 5 4 14 5 7 4 4 5 3 3 3 3
Other Current 1 1 1 4 4 7 10 14 29 29 29 29
Curr.Ass. 13 9 22 16 17 19 32 32 49 49 49 49
Total Assets 224 216 259 269 307 340 454 550 595 686 756 826

Equity 103 84 124 117 124 139 183 208 252 298 338 380
LT Debt 54 126 69 116 141 158 202 291 310 355 384 413
Other NC Liabil. 1 0 0 0 1 0 0 0 0 0 1 2
Non-Curr.Liabil. 157 211 194 233 266 298 385 500 562 652 722 792
ST Debt 56 1 59 29 32 29 51 28 11 11 11 11
Payables 8 3 4 4 4 5 10 11 22 22 22 22
Other Curr.Liabil. 3 1 3 4 6 8 8 11 0 0 0 0
Current Liabilit. 67 5 65 36 42 42 68 50 33 33 33 33
Total Liabil. 224 216 259 269 307 340 454 550 596 686 756 826
Source : Company data, Valuescan

The financing cost rose over FY16 due to one-off internal hedging operations that amounted to a 2.1m EUR
cost. The current financial cost is closer to 3% on outstanding debt.

Financial Leverage ratios 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Financial Debt 110 128 128 144 173 187 253 320 322 366 396 424
Net Financial Debt 105 124 114 139 166 183 249 306 307 362 392 420
Debt/Assets (Max 65%) 49% 59% 49% 54% 56% 55% 56% 58% 54% 53% 52% 51%
Net Debt/Equity 102% 146% 92% 119% 134% 132% 135% 147% 122% 122% 116% 111%
Debt Coverage (Fixed Assets) 50% 60% 48% 55% 57% 57% 59% 59% 56% 57% 56% 54%
Financial expenses/Debt % 8.9% 6.3% 2.8% 3.8% 3.1% 3.3% 2.9% 2.5% 3.7% 3.1% 3.1% 3.2%
Source : Company data, Valuescan

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22
DCF Calculation
DCF 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e
Salesgrowth 7.7% 13.3% 10.2% 5.0% 4.0% 2.5% 2.0% 2.0% 2.0%
Sales 40.5 43.6 49.4 54.5 57.2 59.5 61.0 62.2 63.5 64.8
Oper.Margin 89.6% 89.8% 90.1% 90.1% 90.1% 90.1% 90.1% 90.0% 90.0% 90.0%
Oper.Income 36.3 39.2 44.6 49.1 51.6 53.6 55.0 56.0 57.1 58.3
Taxes -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Capex -36.0 -90.0 -70.0 -70.0 -11.0 -11.0 -11.0 -11.0 -11.0 -11.0

Free Cash Flow 2.8 -51.3 -25.9 -21.4 40.0 42.1 43.4 44.5 45.6 46.7
Discount Factor 1.0 0.9 0.9 0.8 0.8 0.8 0.7 0.7 0.6 0.6
Discounted Flows 2.8 -48.5 -23.2 -18.1 32.1 31.9 31.1 30.2 29.3 28.4

Horizon Value 65 Sensitivity Wacc

Terminal Value 782 Growth 5.2% 5.7% 6.2%
- net debt 307 1.5% 57.7 44.6 34.3 WACC 5.7%
Equity Value 540 2.0% 70.9 54.3 41.7 LT Growth 2.00%
Nr Shares 10.0 2.5% 89.0 67.0 51.0 Fair Value : 54.3
Source : Company data, Valuescan
We use a 5.7% Wacc and 2% terminal growth rate as base case scenario. The DCF is calculated with only
organic growth (inflation) from 2019 onwards.

NAV table
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
NAV IFRS 28.6 23.5 22.0 21.0 20.3 20.4 20.9 23.1 25.3 27.9 30.0 32.1
NAV EPRA 29.7 24.6 23.1 23.0 22.8 22.4 23.8 25.2 27.8 30.4 32.5 34.6
Share Price Avg 29.1 26.4 23.3 24.3 26.3 30.8 32.2 36.0 42.0 48.6 48.6 48.6
Avg. Premium -2% 7% 1% 6% 15% 37% 36% 43% 51% 60% 50% 41%
Gross Dividend Return 7.2% 7.9% 7.9% 7.6% 7.3% 6.4% 6.1% 5.6% 5.0% 4.7% 5.1% 5.3%

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23
IV. Intervest
Share Price 22.8 EUR Recommendation Hold
Fair Value 24.6 EUR Upside 8%
Symbol INTO Number of shares 21.3 m
Ising Code BE0003746600 Market Cap 486 mEUR
Website www.intervest.be Net Debt 282 mEUR
Sector REIT, Logistic Enterprise Value 768 mEUR

2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Rental Income 38.9 38.6 35.8 37.6 39.9 40.0 46.2 45.1 47.6 50.3 52.6
EPS (cash) -0.19 1.89 1.48 0.51 2.42 1.13 1.60 1.23 2.14 2.23 2.33
P/E -135.9 11.5 14.7 37.9 7.7 19.5 14.3 19.5 10.6 10.2 9.8
Dividend yield 8.3% 8.3% 7.8% 9.2% 8.2% 6.3% 7.4% 5.8% 7.0% 7.4% 7.7%
NAV/Share 21.7 20.8 20.8 19.7 20.2 19.8 20.1 19.6 19.6 20.0 20.5
Premium 22% 5% 5% -3% -7% 12% 14% 22% 17% 14% 11%
Source : Company data, Valuescan

29.0

27.0

25.0

23.0

21.0

19.0

17.0

15.0

Source : Euronext

A. History of contributions in kind and mergers by absorption

1996 constitution of "Immo Airway" SA
1999 name change into “PeriFund” and capital increase by contribution in kind (Atlas Park)
2001 name change into Intervest Offices, merger with Innotech, Greenhill Campus and Mechelen pand
2001 merger with companies of the VastNed Group, De Arend, Sky Building and Gateway House
2002 merger with Siref, Apibi, Mechelen Campus, Merchtem Cargo, Pakobi and Puurs Logistic Center
2005 merger with Mechelen Campus 2, Mechelen Campus 4, Mechelen Campus 5 and Perion II
2007 merger with Zuidinvest and Mechelen Campus 3
2008 merger with Herentals Logistic Center
2009 merger with Edicorp
2011 name change to Intervest Offices & Warehouses, merger with West - Logistics and MGMF Limburg;
2014 change into a public regulated real estate company
2016 merger with Stockage Industriel
2017 capital increase of 481k shares @ 21.60 EUR, acquisition of 2 logistic sites for 12.75 m EUR
2017 expansion into The Netherlands (Tilburg) with 13.3k m2 rented out to Dutch Bakery group
The valuation of the current real estate portfolio of Intervest Offices & Warehouses is carried out by the
following two independent property experts: Stadim and Cushman & Wakefield.

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B. Activities
Geographical overview of key portfolio figures
Offices Space in k m2 Rental mEUR Occupancy %
E19 (incl. Malines) 126 13 83%
Brussels 55 7 96%
Antwerp 28 3 82%
Total offices 209 23 86%
Logistics properties
Antwerp - Limburg -Liège 311 13 99%
Antwerp - Brussels - Nivelles 186 7 90%
Total Logistics 496 21 96%
Total 705 44 91%
Source: company website

Intervest focuses on a radius of 150 km around Antwerp, including The Netherlands and Germany
In the logistics segment, Intervest operates on the axis Antwerp-Brussels-Nivelles and Antwerp-Limburg-
Liège. In terms of rental income, Offices (54%) are currently still slightly above the Logistics (46%), although
logistics have been closing the historic gap as the latest investments have favoured logistics.

Office locations :

Logistics locations :

Source : Company data

Tenant profiles :

Portfolio mix evolution

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25
The absolute value of the portfolio did not change much since 2007, but the composition shifted from an
Offices bias to a logistic bias. The acquisitions in May 2017 lifted the logistics proportion above 52% :

Sector Exposure of tenants Lease expiry % per year

Source : Company data

The exposure to the pure logistic companies in the tenants mix is relativtely high, taken into account that
logistic warehouses make up about half of the portfolio. Intervest suffers over 2017 from a relatively high
amount of lease expiries. Over 2018-19, this effect is balanced by a very low amount of expiries of only 1%
and 6% respectively.

C. Management
Jean-Paul Sols, CEO
Inge Tas, CFO
Marco Hengst, CIO
Source : Company data

D. Shareholders and Board of directors

Shareholder Share Name Function End of mandate Other Function
FPIM (incl. Belfius) 10,3% Jean-Pierre Blumberg Chairman, Independent Apr-19 Partner Linklaters LLP
BlackRock 2,8% Chris Peeters Independent director Apr-19 Transport economist
Patronale Life 3,6% Jacqueline de Rijk - Heeren Independent director Apr-19 MD Jan de Rijk
Foyer Finance S.A. 3,9% Marleen Willekens Independent director Apr-19 Professor Accounting KUL
Allianz 7,3% Johan Buijs Director Apr-18
Freefloat 72,0% Gunther Gielen Director Apr-19 MD Belfius Insurance Invest
Source : Company data

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26
E. Business Model and Valuation
Over FY16, IO&W experienced a decline in the fair value of the portfolio as it sold some non-core office
buildings below the book value. Since 2012, the portfolio results have been negative as the value of the
office real estate declined. We expect IO&W to realise growth in its portfolio from FY17 onwards as the
refocus into the logistic segment progresses gradually. The vacancy rate of the office segment should
improve after FY17 as the refurbishment of the Diegem campus is completed. Deloitte vacated the building
on 31/01/17.

800 FV Growth
700
Fair Value in mEUR 10%

600 5%
500
400 0%
300
-5%
200
100 -10%
0
2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e -15%

Portfolio 31/3 year end 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Logistics 30% 31% 36% 38% 42% 45% 49% 49%
Offices 70% 69% 64% 62% 58% 55% 51% 51%
Total surface area (in k m2) 541 535 627 604 614 674 717 705 747 779 811
Fair Value real estate EURm 541 527 581 581 581 609 634 611 646 676 706
Value/m2 1000 984 927 962 946 904 884 867 865 868 870
Property Income/m2 Eur 81.8 84.7 72.7 71.0 76.2 71.4 73.8 69.7 70.0 70.2 70.5
Occupancy Logistics% 83% 84% 86% 89% 91% 91% 95% 96%
Occupancy Offices % 90% 85% 84% 84% 82% 84% 85% 86%
Occupancy rate % 88% 85% 85% 86% 86% 87% 90% 91% 91% 92% 92%
Average Lease in yrs 3.6 3.6 3.6 4.5 3.9 4.0 3.9 3.9

Investments 31/3 year end 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Net Property Investments -14 55 0 0 28 25 -23 30 25 25
Equity Financing 0 0 0
New shares in mln 0 0 0
Net Profit - Dividend 7 7 8
Net Debt Financing 23 18 17
Source : Company data, Valuescan

Investment s: IO&W believes it can increase the portfolio fair value from 611 mEUR to 800 mEUR by the
end of 2018. The company want to expand its logistics segment to 60% of the portfolio by 2018.

Property income/m2 declined from 82 Euro in 2009 to 70 by 2016 as the mix is shifting towards logistics
that generally averages an income/m2 below 50 EUR. The continued shift to logistics will decrease the
income per m2 as well as the fair value per m2. Hence, the impact of the switch on the overall yield or
income/m2 can be positive. We expect a slight increase in the income/m2 to 70.5 EUR over the next 3
years. IO&W has to compete with the 2 established local players WDP and Montea.

Occupancy rate has been recovering since 2011. The office segment bottomed out over 2013 at 82% and
also the logistic segment has recovered from its 2009 low of 83% to a near sector average of 96%. The
Occupancy rate could still suffer over FY17 from the Diegem refurbishment.

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Financial Model
Income/Fair Value% .declined from around 7.3% between 2009 and 2010 to a low of 6.2% over 2011. The
margin has been recovering since 2011 to 7.4% over 2016 as the refocus exercise gained traction. We
expect the income to FV ratio to increase slightly to 7.5% by 2019. This is a relatively conservative scenario
as we await more evidence that IO&W can expand successfully into the logistics segment.

8.0%

7.5%

7.0%

6.5%

6.0%

5.5%

5.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e

Source : Company data, Valuescan

P&L 31/3 year end 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Net Rental Income 38.9 38.6 35.8 37.6 39.9 40.0 46.2 45.1 47.6 50.3 52.6
Income/Fair Value% 7.2% 7.3% 6.2% 6.5% 6.9% 6.6% 7.3% 7.4% 7.4% 7.4% 7.5%
Costs -1.2 -1.1 -1.2 -1.6 -4.3 -5.1 -4.1 -6.9 -6.4 -6.4 -6.6
Costs/Income% 3.1% 2.8% 3.4% 4.3% 10.8% 12.8% 8.9% 15.3% 13.5% 12.8% 12.5%
Operating result 37.7 37.5 34.6 36 35.6 34.9 42.1 38.2 41.2 43.9 46.1
Financial costs -7.8 -9.5 -12.0 -11.2 -8.8 -12.2 -10.9 -9.2 -9.0 -10.2 -10.8
Tax&Other -0.1 0.0 -0.2 -0.7 0.0 0.0 -0.3 0.0 -0.5 -0.5 -0.5
Net current result (EPRA) 29.8 28.0 22.4 24.1 26.8 22.7 30.9 29.0 31.6 33.2 34.8
Portolio Results -32.3 -8.7 2.4 -13.8 5.5 -5.2 -5.3 -10 5 5 5
Changes in Financial Instr. -0.2 7.0 -4.2 -3.1 2.3 -1.2 0.5 1.5 0.0 0.0 0.0
Net current result (IFRS) -2.7 26.3 20.6 7.2 34.6 16.3 26.1 20.5 36.6 38.2 39.8
Net current EPS (IFRS) -0.19 1.89 1.48 0.51 2.42 1.13 1.60 1.23 2.14 2.23 2.33
Net current EPS (EPRA) 2.15 2.01 1.61 1.70 1.87 1.58 1.90 1.73 1.84 1.93 2.03
Gross Dividend 2.20 1.80 1.70 1.76 1.53 1.40 1.70 1.40 1.60 1.68 1.75
Pay out ratio (Min. 80%) 102% 89% 105% 104% 82% 89% 89% 81% 87% 87% 86%
Nr Shares (in mln) 13.9 13.9 13.9 14.2 14.3 14.4 16.2 16.8 17.2 17.2 17.2
Dividend in mEUR 30.6 25.0 23.6 25.0 21.9 20.2 27.6 23.5 27.5 28.9 30.1
Source : Company data, Valuescan

Cost Ratio: IO&W net cost line increases by 2.8m EUR between FY15 and FY16. This can be explained by a
much higher contribution from the “Property Cost and Income” line that contributed only 0.5m EUR over
FY16 vs. 2.8m EUR over FY15. This decrease of 2.3m EUR is related to a one-time profit from the
refurbishment fee of the departing tenant Deloitte in the office portfolio. We expect the cost ratio to
decline to 12% by FY19.

Gross dividends for the last fiscal year were fixed at EUR 1.40 as the profitability suffered over FY16 and the
company stuck to an 81% pay-out ratio. We expect the dividend to return to 1.75 EUR by 2019 as the
profitability recovers.

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Dividends per share
2.50

2.00

1.50

1.00

0.50

0.00
2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Source : Company data, Valuescan

Financial structure
IO&W has significant headroom on its balance sheet to continue its refocus into logistic real estate. Total
debt on assets decreased from 48% at the end of FY15 to 46% in 2016, far below the regulatory threshold
of 65%. The debt maturity profile is also well spread over the next 7 years, with an 84m EUR repayment
peak in 2019.

Balance Sheet 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Tangibles 541 527 582 582 581 610 635 612 642 667 692
Intangibles 0 0 0 0 0 0 0 0 0 0 0
Other Fixed 0 0 0 0 0 0 0 0 0 0 0
Financial Assets 0 0 0 0 0 0 0 0 0 0 0
Non-Curr.A. 541 527 582 582 581 610 635 612 642 667 692
Inventory 0 0 0 0 0 0 0 0 0 0 0
Receivables 2 3 5 7 6 6 9 11 11 11 11
Cash 1 1 0 1 1 1 1 0 0 0 0
Other Current 2 2 7 5 1 1 3 2 2 2 2
Curr.Ass. 5 6 12 12 8 9 13 13 13 13 13
Total Assets 546 533 594 594 589 619 648 625 654 679 704

Equity 298 289 284 272 287 314 322 326 333 340 348
LT Debt 204 176 264 260 226 177 231 223 246 264 281
Other NC Liabil. 2 2 1 1 1 1 1 1 0 1 2
Non-Curr.Liabil. 503 466 548 533 513 491 553 550 579 604 629
ST Debt 37 53 34 48 62 112 79 62 62 62 62
Payables 1 0 1 1 4 6 7 3 3 3 3
Other Curr.Liabil. 5 13 11 12 10 8 9 10 10 10 10
Current Liabilit. 42 66 46 61 76 127 95 75 75 75 75
Total Liabil. 546 533 594 594 589 619 648 625 654 679 704
Source : Company data, Valuescan
The relatively low debt level and low interest rate will result in more debt vs. equity over the next couple of
years.

Financial Leverage ratios 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
Financial Debt 241 229 298 308 288 289 310 285 306 321 335
Net Financial Debt 240 228 297 307 287 288 309 282 306 321 335
Debt/Assets (Max 65%) 44% 43% 50% 52% 49% 47% 48% 46% 47% 47% 48%
Net Debt/Equity 81% 79% 105% 113% 100% 92% 96% 86% 91% 93% 94%
Debt Coverage (Fixed Assets) 44% 43% 51% 53% 49% 47% 49% 46% 48% 48% 48%
Financial expenses/Debt % 3.2% 4.1% 4.0% 3.6% 3.1% 4.2% 3.5% 3.2% 3.2% 3.3% 3.3%

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Debt Maturities

Source : Company data

DCF Calculation
DCF 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e
Salesgrowth 5.4% 5.7% 4.6% 2.5% 2.0% 2.0% 2.0% 1.8% 1.8%
Sales 45.1 47.6 50.3 52.6 53.9 55.0 56.1 57.3 58.3 59.3
Oper.Margin 84.7% 86.5% 87.2% 87.5% 87.5% 87.5% 87.5% 87.5% 87.0% 87.0%
Oper.Income 38.2 41.2 43.9 46.1 47.2 48.1 49.1 50.1 50.7 51.6
Taxes 0.0 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5
Capex 23.0 -30.0 -25.0 -25.0 -9.2 -9.2 -9.2 -9.2 -9.2 -9.2

Free Cash Flow 2.8 10.7 18.4 20.6 37.5 38.5 39.4 40.4 41.0 42.0
Discount Factor 1.0 0.9 0.9 0.8 0.8 0.8 0.7 0.7 0.6 0.6
Discounted Flows 2.8 10.1 16.4 17.3 29.8 28.9 28.0 27.1 25.9 25.0

Horizon Value 183 Sensitivity Wacc

Terminal Value 622 Growth 5.4% 5.9% 6.4%
- net debt 282 1.3% 25.9 21.3 17.6 WACC 5.9%
Equity Value 523 1.8% 30.3 24.6 20.1 LT Growth 1.80%
Nr Shares 21.3 2.3% 36.1 28.8 23.3 Fair Value : 24.6
Source : Company data, Valuescan

We use a 5.9% Wacc to account for the current repositioning of the group and 1.8% terminal growth rate as
base case scenario. The DCF is calculated with only organic growth (inflation) from 2019 onwards.

NAV table
2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e
NAV IFRS 21.4 20.6 20.4 19.2 20.0 19.6 19.8 19.4 19.4 19.8 20.3
NAV EPRA 21.7 20.8 20.8 19.7 20.2 19.8 20.1 19.6 19.6 20.0 20.5
Share Price Avg 26.4 21.8 21.8 19.2 18.7 22.1 22.9 24.0 22.8 22.8 22.8
Avg. Premium 22% 5% 5% -3% -7% 12% 14% 22% 17% 14% 11%
Gross Dividend Return 8.3% 8.3% 7.8% 9.2% 8.2% 6.3% 7.4% 5.8% 7.0% 7.4% 7.7%
Source : Company data, Valuescan

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Disclaimer : THIS DOCUMENT IS CONFIDENTIAL AND IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE
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