Semi Annual Report

EUROPEAN PROPERTY STRATEGY NV
SEMI-ANNUAL REPORT 2014
FUND STRUCTURE EUROPEAN PROPERTY STRATEGY NV
Clients > EUR 2 million
Clients < EUR 2 million
RFM Regulated Fund Management BV
Manager
(Dutch Financial Markets Supervision
Act Section 2:65)
Stichting EPS
Board of management RFM Regulated
Fund Management BV
European Property Strategy NV
Board of management RFM Regulated Fund
Management BV
Advisory Board
EPS investment I BV
EPS investment II BV
CBRE Retail Property Fund France Belgium
CBRE Nordic Property Fund
CBRE Dutch Retail Fund
DRET Development Fund
DRES Development Fund
CBRE UK Property Fund
CBRE European Industrial Fund
CBRE Dutch Residential Fund
CBRE European Shopping Centre Fund
CBRE Retail Property Fund Ibérica
CBRE Property Fund Central Europe
CBRE Property Fund Central and Eastern Europe
CBRE European Office Fund
RFM Regulated Fund Management BV
WTC Schiphol
G-Tower, 7th Floor
Schiphol Boulevard 281
1118 BH Schiphol
The Netherlands
Ownership
Management agreement
P.O. Box 75620
1118 ZR Schiphol
The Netherlands
T +31 (0) 20 202 2200
F +31 (0) 20 202 2201
E [email protected]
I www.regulatedfundmanagement.nl/eps
An initiative of CBRE Global Investors
Cover Prague, Czech Republic
TABLE OF CONTENTS
SEMI-ANNUAL REPORT 2014 EUROPEAN PROPERTY STRATEGY NV
REPORT OF THE MANAGER .............................................................................................................................. 5
FUND FACT SHEET ................................................................................................................................................. 5
MANAGEMENT REPORT ......................................................................................................................................... 6
INREV ................................................................................................................................................................... 13
HISTORICAL PERFORMANCE ................................................................................................................................ 14
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU .................................................... 15
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES EPS .......... 24
APPENDIX 1: GUIDELINES AND REGULATIONS................................................................................................ 29
APPENDIX 2: ADMINISTRATION ...................................................................................................................... 31
This report consists of the consolidated financial statements in accordance with IFRS-EU and the consolidated financial statements in
accordance with the Accounting Principles EPS. The figures in these reports have not been audited by an external auditor.
IMPORTANT INFORMATION
This report has been produced by RFM Regulated Fund Management BV
and has been prepared solely for information purposes and is intended for
the use and the assistance of existing investors in European Property
Strategy NV only.
This report does not purport to be a complete description of the markets,
developments or securities referred to in this report. The value of an
investment can go down as well as up. Past performance is not a guide or
guarantee to future performance.
Acceptance and/or use of any of the information contained in this report
indicate the recipient’s agreement not to disclose any of the information
contained herein.
CBRE Global Investors and its affiliates accept no liability whatsoever for
any direct, consequential or indirect loss of any kind arising out of the use
of this report or any part of its contents.
This report does not constitute any form of representation or warranty on
the part of CBRE Global Investors, an investment advice, or a
recommendation, or an offer or solicitation, and is not the basis for any
contract to purchase or sell any security, property or other instrument, or
for CBRE Global Investors to enter or arrange any type of transaction.
RFM Regulated Fund Management BV (“The Manager”) is licensed as an
alternative investment fund manager in the Netherlands, pursuant to
section 2:65 et seq. of the Dutch Financial Markets Supervision Act (Wet op
het financieel toezicht). The Manager is therefore subject to conduct
supervision (gedragstoezicht) by the Dutch Authority for the Financial
Markets (Autoriteit Financiële Markten) and to prudential supervision
(prudentieel toezicht) by the Dutch Central Bank (De Nederlandsche Bank).
This report should not be regarded as a substitute for the exercise by the
recipient of its, his or her own judgment.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 3
FIGURE 1 LOCATION OF INVESTMENTS
4 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
REPORT OF THE MANAGER
FUND FACT SHEET
30 JUNE 2014
The following figures are based on the Financial Statements in accordance with the Accounting Principles EPS 1.
(Amounts in € ‘000, unless otherwise indicated and based on the Accounting Principles EPS)2
General fund information
Structure
Investment strategy
Fund domicile
Fund inception date
Fund maturity date
Size
Number of shareholders
Countries of investment
Property types
Key portfolio metric s
Limited Liability Company (NV)
Open-end
The Netherlands
21 June 2010
Indefinite
Uncapped
11
Pan-European
All sectors
Portfolio ac tivity
Number of
Amount of
Number of
Amount of
Income distributions received
Changes in fair value investments
Occupancy rate portfolio target funds
acquisitions
acquisitions
dispositions / capital repayments
dispositions / capital repayments
4
12,196
2
2,055
1
2,251
Shareholders c apital
%
Loan-to-value ratio (EPS level)
Loan-to-value ratio (including debt at target fund level)
Maximum leverage (including debt at target fund level)
Ongoing charges ratio
Ongoing charges ratio (including management costs)
Payout ratio of distributable result
NAV per share
11
206,476
3,004
4,058
93.3%
Financ ial ratios
Number of commitments to target funds
Commitments to target funds
0.0
38.2
50.0
0.03
0.57
76.34
2
Capital committed
271,675
EPS Share Price
567.11
Capital contributed
Capital undrawn
Dividend distributions
Capital distributions
Total distributions
Net asset value
238,325
33,350
13,831
13,831
236,176
IFRS-EU NAV
Repurchase Price
EPS NAV based upon INREV NAV target funds
570.26
549.89
568.35
Five largest investments
CBRE
CBRE
CBRE
CBRE
CBRE
1
Number of target funds invested in
Fair value investments in target funds on balance
European Shopping Centre Fund
European Industrial Fund
Dutch Residential Fund
Dutch Retail Fund
Retail Property Fund France Belgium
Alloc ated
c apital
29,147
26,923
26,489
24,126
22,446
129,131
Ca sh a nd c a sh e quiva le nts
Alloc ated
c apital
Cash to adhere minimum liquidity of 10%
Cash earmarked for dividend distrbution
Cash earmarked for investments
25,896
1,949
2,000
29,845
%
14.0
13.0
12.7
11.6
10.8
62.1
%
11.0
0.8
0.8
12.6
Number of shares as at the end of the period
Average number of shares during the period
Fund alloc ation
Convenant
416,452
416,452
Ac tual
%
A sset t yp e a l l oca t i on
Retail
Logistics
Residential
Office
Other
G eog ra p h i ca l a l l oca t i on
max 75%
max 30%
max 30%
max 40%
max 5%
61
17
14
7
1
Western Europe
Central & Eastern Europe
Southern Europe
Nordics
United Kingdom
Germany & Austria
max 75%
max 30%
max 25%
max 30%
max 25%
max 25%
49
13
12
11
10
5
The Accounting Principles EPS are based on IFRS-EU and adjusted with discounts received / premiums paid on investments in target funds and/or acquisition costs in order
to better reflect the fair value of the investments of the Fund. For more information please refer to the Financial Statements in accordance with the Accounting Principles EPS.
2
Amounts expressed in whole €.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 5
REPORT OF THE MANAGER
MANAGEMENT REPORT
INTRODUCTION
We are pleased to provide you with the semi-annual report 2014 of European Property Strategy NV (‘the Fund’). Following the
improving confidence in the European property market, the Fund yielded a return of 3.1% based on the Accounting Principles EPS1 in
the first half of 2014. The regained confidence in European property that picked in the second half of 2013 continued into 2014. In
addition to the north western parts of Europe, a sentiment improvement towards southern Europe could be seen. Due to the fact that
macro-economic fundamentals seem to have stabilised in large parts of Europe, capital flows find their way to Europe again. The
recovery however is fragile. Current geo-political tensions in eastern Europe and the Middle East may lead to renewed uncertainty in
the market.
INVESTMENTS
The portfolio as at 30 June 2014 consisted of investments in eleven target funds amounting to EUR 206.5 million. The regional
allocation is focused on northern and western Europe (including the United Kingdom). Retail is the dominant property sector. These
markets have proven to be the most resilient. However, in southern Europe the current market developments created momentum for
reinvesting in this region. During the first half of 2014 the Fund made investments in CBRE Retail Property Fund Ibérica and CBRE
Property Fund Central Europe totalling EUR 12.2 million. Furthermore the Fund paid the remaining commitment amounting to EUR 7.7
million to CBRE European Shopping Centre Fund and received a EUR 2.1 million capital repayment from CBRE European Office Fund.
In addition the Fund committed itself to an EUR 2.3 million investment in CBRE European Industrial Fund reinvesting the repayment of
CBRE European Office Fund.
RETURNS AND CAPITAL
In the first half of 2014, the Fund realised a total return of 3.1% based on the Accounting Principles EPS. The Fund distributed 1.0% as
dividend to the investors and capital increased by 2.1% mainly as a result of positive revaluations within the target funds. Seven out of
eleven target funds distributed income. Four target funds saw a decrease in value in the first two quarters of 2014, which was fully
offset by capital growth in the seven other funds.
The total distributed dividend of the Fund amounted to EUR 2.3 million during the first half of 2014. This equals EUR 5.55 per share.
The Fund‘s NAV grew to EUR 236.2 million. In the reporting period the Fund raised EUR 33.4 million of additional capital
commitments from existing and new investors, which will lead to an issue of shares in the third quarter.
1
The Accounting Principles EPS are based on IFRS-EU, adjusted with discounts received / premiums paid on investments in target funds and/or acquisition costs in order to
better reflect the fair value of the investments of the Fund. For more information please be referred to the Financial Statements in accordance with the Accounting Principles
EPS.
6 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
REPORT OF THE MANAGER
PERFORMANCE
The following figures are based on the Financial Statements in accordance with the Accounting Principles EPS.
RETURN AND CAPITAL
The net result of the Fund amounted to EUR 7.1 million in the first half of 2014 (first half of 2013: EUR 0.8 million) representing a total
return on equity of 3.1% (first half of 2013: 0.4%) and corresponding to a net result per share of EUR 16.99 (first half of 2013:
EUR 2.26). The breakdown of the individual return components is set out in the figure below.
FIGURE 2 BREAK DOWN OF TOTAL RETURN
The distributed dividends to the shareholders of the Fund amounted to EUR 2.3 million (first half of 2013: EUR 2.0 million). This is
equal to EUR 5.55 per share (first half of 2013: EUR 5.59). In line with the dividend policy of the Fund the distributable result of the
second quarter amounting to EUR 1.9 million (EUR 4.68 per share) was distributed in August 2014.
The NAV of the Fund increased to EUR 236.2 million as at 30 June 2014 (31 December 2013: EUR 231.4 million), mainly as a
consequence of received income distributions, dividend distributions and capital growth of the investment portfolio. The net asset value
per share (EPS Share Price) increased to EUR 567.11 as at 30 June 2014 (31 December 2013: EUR 555.68).
The IRR since inception of the Fund was 2.7% as at 30 June 2014 (as at 31 December 2013: 2.3%). For a total performance overview
please refer to the historical performance overview.
INCOME DISTRIBUTIONS RECEIVED
The Fund received income distribution from investments in target funds amounting to EUR 3.0 million (first half of 2013:
EUR 1.7 million) or 1.3% (first half of 2013: 0.8%). Seven out of eleven funds made income distributions to the Fund during the first two
quarters of 2014. It is expected that more target funds will make income distributions during the second half of 2014.
FAIR VALUE CHANGES INVESTMENTS
During the first half of 2014 the fair value changes net of income distributions (1.8%) of the investments amounted to EUR 4.0 million
(first half of 2013: EUR -1.1 million). The fair value changes are composed of the following elements:
 capital increase investments (net of income distributions) of EUR 2.7 million (first half of 2013: EUR -1.2 million); and
 discounts received on acquisitions of EUR 1.3 million (first half of 2013: EUR 0.1 million).
The remaining discounts received at the end of June 2014 amounted to EUR 1.4 million. These discounts received will be amortised
during 2014-2015.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 7
REPORT OF THE MANAGER
FINANCE RESULT
The total finance result in the financial reporting period amounted to EUR 0.1 million (first half of 2013: EUR 0.3 million). The finance
result relates to the interest income on savings and cash deposits and the FX-result on cash in foreign currency. The Fund has spread its
deposits and savings over several banks (ABN AMRO, Barclays, Handelsbanken and ING).
OPERATING EXPENSES
The operational expenses (0.04%) amounted to EUR 91,000 (first half of 2013: EUR 82,000) and consist of direct fund expenses of
EUR 60,000 (first half of 2013: EUR 51,000) and acquisition expenses of EUR 31,000 (first half of 2013: EUR 31,000). The direct fund
expenses are composed of professional services provided by auditors, legal and tax advisors, costs for supervision and reporting costs.
The acquisition expenses consist of establishment fees and expenses for professional services provided by legal, tax and other advisors
and are amortised over a five year period.
TAXES
The Fund itself is tax exempt and has a zero tax burden. Two entities in the Fund structure (EPS Investment I BV and EPS Investment II
BV) are subject to corporate income tax charges. The (minimum) tax rate for these entities is 20%.
PORTFOLIO HIGHLIGHTS
The first half of 2014 continued the positive trend that set in after the summer of 2013. Regained confidence in capital markets drove a
recovery of prime property values and created liquidity in the market. The Fund benefitted from the improved market sentiment. On the
investment side the Manager selected and successfully added four investments in two target funds to the portfolio with the aim to
improve the Fund’s regional diversification, distribution potential and future value growth. Additionally, the Fund committed itself to one
investment and is assessing two further investments.
TABLE 1 FUND INVESTMENT OVERVIEW
Fund
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
Retail Property Fund France Belgium
Nordic Property Fund
Dutch Retail Fund
UK Property Fund
European Industrial Fund
Dutch Residential Fund
European Shopping Centre Fund
Retail Property Fund Ibérica
Property Fund Central Europe
Property Fund Central and Eastern Europe
European Office Fund
Value as at
30 June 2014
€ million
22.5
16.0
24.1
21.8
26.9
26.5
29.2
14.6
10.5
12.4
3.4
Share in
Fund
portfolio
%
10.8
7.7
11.6
10.5
13.0
12.7
14.0
7.0
5.1
6.0
1.6
Stake in
target
fund
%
3.7
5.4
2.3
3.5
10.4
2.5
9.0
2.7
2.5
5.0
5.4
Sector
Region
Retail
Balanced
Retail
Balanced
Logistics
Residential
Retail
Retail
Retail
Retail
Office
Western Europe
Nordics
Western Europe
United Kingdom
Balanced
Western Europe
Balanced
Southern Europe
Central & Eastern Europe
Central & Eastern Europe
Balanced
The investment portfolio of target funds gives the Fund access to a total property portfolio of EUR 9.3 billion. All eleven target funds
have invested in property, where the Fund has minority shares (ranging from 2.3% to 10.4%) in these funds. The CBRE Dutch Retail
Fund has the largest portfolio with a size of EUR 1.61 billion. CBRE European Shopping Centre Fund represents the largest investment
in the portfolio. Through its equity investments the Fund has gained EUR 365.1 million of property exposure.
PORTFOLIO PERFORMANCE
OCCUPANCY
Despite last year’s positive developments on capital markets, occupier markets do not show strong improvements yet. This translates
into a fairly stable occupancy rate of 93.3% at the end of June 2014 (as at 31 December 2013: 93.4%). In the underlying target funds
incremental changes, upside or downside, can be seen. The most notable change in occupancy is the CBRE European Office Fund,
where a disposal of some well let office buildings led to a decrease of occupancy to 80% at fund level.
8 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
REPORT OF THE MANAGER
DIVERSIFICATION
The Fund aims to offer its clients a diversified pan-European exposure. To realise an optimised exposure, the Fund pursues an
allocation strategy over sectors and regions.
The Fund has a balanced exposure to the four main property sectors: retail, offices, residential and logistics. In terms of weight, the
Fund remains primarily exposed to the retail sector. In addition to retail the Fund also strives for a strong exposure to logistics because
of its high income component. For 2014, the Manager will maintain the Fund’s current sector profile provided that the Manager will
explore the possibilities to add some office investments based on an improved sentiment.
The sector allocation of the investments at the end of June 2014 is set out below.
FIGURE 3 SECTOR ALLOCATION
The Fund’s portfolio is located in fifteen countries in Europe, covering all major European property markets. Within Europe the portfolio
is concentrated in “the core area” of Europe: western Europe, the Nordics and the United Kingdom. As in the sector approach, the
Fund aims at exposure to countries with a stable risk profile and solid outlook. In the second quarter of 2014 the Fund increased its
exposure to southern and central Europe through investments in the CBRE Retail Property Fund Ibérica and CBRE Property Fund Central
Europe.
The country allocation of the investments at the end of June 2014 is set out below.
FIGURE 4 COUNTRY ALLOCATION
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 9
REPORT OF THE MANAGER
LEVERAGE
The loan-to-value (’LTV’) ratio including debt at target fund level was 38.2% (as at 31 December 2013: 37.4%). The LTV ratio increased
following the investments of cash assets into target funds. When adding new investments the impact on the Fund’s LTV ratio will be
closely monitored and the Fund will in principal select target funds with healthy capital structures, including LTV ratios below 50%. The
Fund had no external debt at Fund level. Most target funds have attracted external debt for return enhancing purposes.
PORTFOLIO ADDITIONS / CHANGES
ACQUISITIONS
In the first half of 2014 the Fund made five investments in target funds of which the investment in CBRE European Shopping Centre
Fund was the last capital call of an outstanding commitment. The investment in the CBRE Retail Property Fund Ibérica was done through
a series of pre-emptions on proposed transfers between other Limited Partners. The investment in CBRE Property Fund Central Europe
was a secondary trade with a liquidity discount. All acquisitions fit within the key parameters of the Fund’s investment strategy in terms
of distribution potential, solid capital structure and stabilised values. The investments, except for CBRE Retail Property Fund Ibérica, were
in line with the Fund’s investment strategy and the Investment Plan. CBRE Retail Property Fund Ibérica was added to the portfolio
anticipating the improving fundamentals for the Iberian peninsula.
TABLE 2 ACQUISITIONS
Fund
Admission
CBRE Property Fund Central Europe
CBRE European Shopping Centre Fund
CBRE Retail Property Fund Iberica
CBRE Retail Property Fund Iberica
CBRE Retail Property Fund Iberica
June 2014
May 2014
April 2014
May 2014
May 2014
Type
Original invested
amount
€ million
Transfer
5.0
Capital call
7.7
Transfer
0.4
Transfer
6.2
Transfer
0.6
COMMITMENTS
At the beginning of the third quarter, the Fund committed itself to an additional investment in CBRE European Industrial Fund for
EUR 2.3 million. With this commitment the Fund was fully invested during the second quarter. This commitment is expected to
materialise during the third quarter of this year. In addition the Fund is negotiating further investments to invest new inflow and to stay
optimally exposed to the European property market.
The Fund earmarked CBRE Pan European Core Fund as a pipeline target fund, which materialisation is still subject to the approval of
the Funds’ investors.
The commitments are presented in the table below.
TABLE 3 COMMITMENTS
Fund
Commitment
€ million
2.3
CBRE European Industrial Fund
(TARGETED) DISPOSITIONS / CAPITAL REPAYMENTS
No disposals were made in the first half of 2014. The investors in CBRE European Office Fund and CBRE Nordic Property Fund have
approved their respective exit strategies by means of an orderly disposal of the target fund’s assets. Backed by the increased liquidity in
the European property market, CBRE European Office Fund is successfully selling its properties at or above foreseen sales values which
resulted in two consecutive capital repayments. The proceeds of divestment proceeds of CBRE European Office Fund have been
recommitted to CBRE European Industrial Fund. CBRE Nordic Property has just started preparation of certain disposals. Discussions on
the future of CBRE Retail Property Fund Ibérica and CBRE Retail Property Fund France Belgium are ongoing.
The capital repayments are shown in the table below.
TABLE 4 CAPITAL REPAYMENTS
Fund
Date
Type
CBRE European Office Fund
CBRE European Office Fund
April 2014
June 2014
Capital repayment
Capital repayment
10 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
Original invested
amount
€ million
1.0
1.1
REPORT OF THE MANAGER
TARGET FUND PERFORMANCE
TOTAL RETURN
The target funds’ return figures are generally positive and are significantly better than the 2013 return figures (a total return of 3.7% in
the first half of 2014, compared to 0.5% in the first half of 2013). Target funds that generated the best performance were CBRE
European Industrial Fund, CBRE Retail Property Fund Ibérica and CBRE UK Property Fund, with total returns to the Fund ranging from
8.8% to 15.1%. These return figures where attributable to improvement of market and financing conditions, but also to realised
discounts on recent secondary trades and the FX-result on the investment in CBRE UK Property Fund.
The two negative exceptions to the general positive trend were CBRE Dutch Retail Fund and CBRE Nordic Property Fund. CBRE Dutch
Retail Fund is subject to the effects of a delayed correction of the Dutch retail market. The poorest return was from CBRE Nordic
Property Fund, which also had a significant negative impact on the Fund’s return. Despite attractive conditions in the local markets, the
Fund continues to be affected by underperforming properties and high LTV ratios.
INCOME DISTRIBUTIONS
Seven out of the eleven target funds invested in made income distributions during the first half of 2014. CBRE European Office Fund,
CBRE Property Fund Central and Eastern Europe, CBRE Retail Property Fund Ibérica and CBRE Nordic Property Fund did not distribute
income in the first two quarters of 2014. The total income distributions received from the target funds amounted to EUR 3.0 million
(EUR 1.7 million over the same period in 2013) resulting in an income distribution received by target funds of 1.3% (compared to the
first half of 2013: 0.8%). All income distributions received were passed on to the shareholders.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE)
On 22 July 2013, the Alternative Investment Fund Managers Directive (“AIFMD”) had to be implemented into the national laws across
the EU. As a result, both CBRE Global Investors as a manager (“the company”) and its AIFMD regulated funds in EMEA will be
supervised by financial regulators. The company has applied for an AIFMD license in three jurisdictions: the Netherlands, the UK and
Luxembourg. The Fund is domiciled in the Netherlands and in scope of AIFMD and will be managed by the Dutch AIFM.
In the Shareholders’meeting on 26 May 2014 the Shareholders approved the related amendments to the Shareholders Agreement and
the appointment of CBRE Global Investors EMEA AIFM BV as AIFMD manager and Nothern Trust as depositary
Until the Dutch license is granted the Fund is still being management by RFM Regulated Fund Management BV (“RFM”). RFM has an
AIFMD license granted per 22 July 2014 through the transfer of the existing AFM-license granted in 2004. Following the
implementation of the AIFMD the Manager intends to terminate its current license when the AIFMD license is obtained by CBRE Global
Investors.
As of 1 July 2014 the Fund appointed Nothern Trust as depositary for the Fund. Nothern Trust will act as a depositary in accordance
with the AIFMD.
ADVISORY BOARD
ACTIVITIES
During the first half year the Advisory Board approved on the proposal of the Manager in writing:

The additional investment in CBRE Retail Property Fund Ibérica.
During the reporting period the Advisory Board had the following meetings:

On 28 April 2014 at which occasion the Advisory Board unanimously approved the annual report for the year ending
31 December 2013;

On 26 May 2014 an Advisory Board meeting was held to discuss the annual update of the Investment Plan. In this meeting
the Advisory Board approved:
The appointment of the AIFM;
The amendments to the Management Agreement between RFM BV and the AIFM;
The entering into the agreement between RFM BV and the AIFM;
The appointment of Northern Trust as the depositary for the Fund;
The amendments to the Prospectus.
After 30 June 2014, the Advisory Board further approved in writing:

The Investment Plan 2014-2015 as was presented by the Management Board in the Advisory Board meeting in May.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 11
REPORT OF THE MANAGER
MANAGEMENT OF THE FUND
The Fund is managed by RFM Regulated Fund Management BV. Mr Knoester is the financial manager and Mr Jansen is the portfolio
manager of the Fund.
OUTLOOK
The outlook for Europe is one of a slow recovery with a smaller chance of a macro-political shock than at any time in the past four
years, although the current geo-political tensions in eastern Europe and the Middle East bring increased uncertainties to European
economies. The Economist Intelligence Unit is forecasting annual average GDP growth of 1.3% per annum between 2014 and 2018,
compared to a long-term average of 1.8%. Accordingly, this is an environment where labour markets and consumer demand will be
weak and growth driven by the external sector. Against the backdrop of ongoing fiscal austerity, the region’s central banks forecast to
keep monetary policy loose. The European Central Bank may well introduce a negative policy rate or quantitative easing. Other things
being equal, looser monetary policy would be helpful to real estate capital markets, feeding through into easier financing conditions.
That said, if the motivation for looser monetary policy is to counter the risk of deflation, there would be a potential downside risk to
economic growth.
For the remainder of 2014 the Manager expects the outlook to remain positive. New peaks (downside or upside) do not seem very
likely at the moment, but the real impact of the increased uncertainty is not yet clear. The Manager will therefore continue to uphold its
investment policy, with limited room to add investments with a higher risk profile. When adding new investments to the portfolio the
Manager will select target funds with a sound cash flow profile combined with a low to moderate LTV level. From a sector perspective
the Fund will remain focused on retail and simultaneously will aim at rebalancing the currently underweight residential and logistics
sectors. In southern Europe current market developments and pricing created momentum for reinvesting in the region.
Schiphol, the Netherlands, 28 August 2014
On behalf of European Property Strategy NV
Signed by RFM Regulated Fund Management BV
M. Knoester, Financial Manager
T.M.R.A. Jansen, Portfolio Manager
12 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
REPORT OF THE MANAGER
INREV
Although the Fund does not have direct real estate assets, the Fund implemented the INREV financial reporting guidelines as far as
possible and reports an NAV based upon INREV NAV’s of the target funds and a TER based upon the INREV TER’s of the target funds as
described below.
EPS NAV BASED UPON INREV NAV TARGET FUNDS
The Manager presents a net asset value of the Fund, the EPS share price, which is based upon the Accounting Principles EPS. To comply
with the INREV guidelines the Fund makes adjustments to the EPS share price. In the table below the adjustments to the EPS share price
are shown, based upon the INREV NAV's reported by the target funds.
(Amounts in € ‘000, unless otherwise indicated)
30 June 2014
31 Dec ember 2013
NAV according to Accounting Principles EPS
- Adjustment NAV specified price target funds to INREV NAV target funds
- Adjustment discounts received on investments
- Adjustment premiums paid on investments
EPS NAV BASED ON INREV NAV INVESTMENTS
236,176
(886)
1,401
236,691
231,412
(692)
2,185
232,905
Number of shares issued
416,452
416,452
567.11
568.35
555.68
559.26
EPS share price according to Accounting Principles EPS
EPS NAV based upon INREV NAV target funds per share
INREV TER BASED UPON INREV TER TARGET FUNDS
(Amounts in € ‘000, unless otherwise indicated)
Six months ended 30 June
2014
Total management fee1
Total fund expenses2
Subtotal fund expenses and management fee
2013
C=A+B
1,278
406
1,684
976
450
1,426
Total property specific costs3
D
2,969
2,145
TOTAL EXPENSES
E=C+D
4,653
3,571
Total exempt
Performance fee
F
Average NAV4
Average GAV
TER NAV
TER GAV
1
Total management fee excluding the acquisition and disposal fee.
2
These are the professional services including the bank charges.
3
These are the operating costs, including the acquisition and disposal fees.
4
This is calculated over the average NAV based on Accounting Principles EPS.
A
B
G
H
I
C/H
C/I
29
(32)
233,393
233,517
0.72%
0.72%
92
(120)
195,263
204,341
0.73%
0.70%
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 13
1234
REPORT OF THE MANAGER
HISTORICAL PERFORMANCE
30 JUNE 2014
The following figures1 are based on the Financial Statements in accordance with the Accounting Principles EPS 2.
(Amounts in €, unless otherwise indicated)
Shareholders capital
Period
2010
2011
2012
2013
2014
LTV
Net
Asset
Value
%
€ '000
36.1
44.5
37.8
37.4
38.2
64,346
134,923
191,258
231,412
236,176
Number
of shares
110,646
228,116
339,495
416,452
416,452
Cumulative
committed
capital
Cumulative paid
in
capital
Cumulative
dividend
distributions
€
€ '000
€ '000
€ '000
581.55
591.47
563.36
555.68
567.11
62,000
131,009
195,331
238,285
271,635
62,000
131,009
195,331
238,285
238,285
3,106
7,583
11,520
13,831
Income
return
%
2.8
2.9
1.9
1.0
Shareholders capital
Period
2014
Q1
Q2
YTD
Net returns
EPS
Share Price
LTV
Net
Asset
Value
%
€ '000
36.4
38.2
Movement in
number
of shares
232,991
236,176
-
Capital
growth
Total
return
%
%
4.6
1.7
(4.8)
(1.4)
2.1
4.6
4.5
(1.9)
0.5
3.1
Net returns
IRR
Since
inception
%
8.7
6.0
2.9
2.3
2.7
EPS
Share Price
Movement in
capital
Dividend
distributions
Dividend
distributions
per share
Income
return
Capital
growth
Total
return
IRR
Since
inception
€
€ '000
€ '000
€
%
%
%
%
559.47
567.11
-
1,232
1,079
2,311
2.96
2.59
5.55
0.5
0.5
1.0
0.7
1.4
2.1
1.2
1.9
3.1
1.9
2.4
2.2
1.3
(1.7)
0.6
3.2
0.7
2.8
2.4
2.7
Annualised performance 3
Rolling one year
Rolling three years
Since inception
3
1
In June 2010 the first investors entered the Fund.
2
The Accounting Principles EPS are based on IFRS-EU, adjusted with discounts received / premiums paid on investments in target funds and/or acquisition costs in order to better reflect the fair value of the investments of the Fund. For more
information please refer to the Financial Statements in accordance with the Accounting Principles EPS.
3
Annualised performance figures are time weighted returns.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 14
CONSOLIDATED FINANCIAL STATEMENTS
IN ACCORDANCE WITH IFRS-EU
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Amounts in € ‘000, unless otherwise indicated)
Notes
ASSETS
Non-current assets
Investments at fair value through profit and loss
Total non-current assets
Current assets
Prepayments and accrued income
Cash and cash equivalents
Total current assets
31 Dec ember
2014
2013
1
207,877
207,877
186,775
186,775
2
3
35
29,845
29,880
50
46,729
46,779
237,757
233,554
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Issued capital
Retained earnings
Total equity
4
Current liabilities
Other current liabilities
Total current liabilities
5
TOTAL EQUITY AND LIABILITIES
30 June
238,325
(838)
237,487
238,325
(4,848)
233,477
270
270
77
77
237,757
233,554
Notes 1-5 see page 20-21
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 15
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
(Amounts in € ‘000, unless otherwise indicated)
Notes
Six months ended 30 June
2014
Income
Interest income
Income distribution received from investments
Net foreign currency gains or losses on cash and cash equivalents
Net changes in fair value of investments at fair value through profit or loss
Total net income/(loss)
Expenses
Interest expenses
Professional services
Other expenses
Total operating expenses
OPERATING PROFIT/(LOSS) BEFORE TAX
Corporate income tax
PROFIT/(LOSS) AFTER TAX
Basic and diluted net result per share (in €)
Number of shares (entitled to profit)
Notes 1-9 see page 20-22
16 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
6
1
1
7
8
9
80
3,004
23
3,274
6,381
2013
245
1,669
32
(685)
1,261
46
14
60
16
42
9
67
6,321
1,194
-
-
6,321
1,194
15.18
416,452
3.40
371,517
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Amounts in € ‘000, unless otherwise indicated)
30 June 2014
Capital
Balance as at the beginning of the period
416
- Net result for the period
- Other comprehensive income
Total consolidated comprehensive income
-
Movements
- Capital contribution
- Dividend distribution
Balance as at the end of the period
416
Additional
paid- in c apital
237,909
-
237,909
Retained
earnings
Retained
earnings
Cumulative
realised
gains / losses
Cumulative
unrealised
gains / losses
1,226
(6,074)
3,047
3,047
3,274
3,274
(2,311)
1,962
(2,800)
Basic and diluted equity per share
Dividend distribution per share
30 June 2013
233,477
6,321
6,321
(2,311)
237,487
570.26
5.55
Capital
Balance as at the beginning of the period
340
- Net result for the period
- Other comprehensive income
Total consolidated comprehensive income
-
Movements
- Capital contribution
- Dividend distribution
Balance as at the end of the period
32
372
Basic and diluted equity per share
Dividend distribution per share
Total
Additional
paid- in c apital
194,991
-
17,971
212,962
Retained
earnings
Retained
earnings
Total
Cumulative
realised
gains / losses
Cumulative
unrealised
gains / losses
971
(5,230)
191,072
1,879
1,879
(685)
(685)
1,194
1,194
(1,985)
865
(5,915)
18,003
(1,985)
208,284
560.63
5.59
The total declared dividend distribution for the first half of 2014 amounts to EUR 2.3 million (first half of 2013: EUR 2.0 million). This is
equal to EUR 5.55 per participation (first half of 2013: EUR 5.59). The whole amount was already distributed as dividend distribution.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 17
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
CONSOLIDATED CASH FLOW STATEMENT
(Amounts in € ‘000, unless otherwise indicated)
Six months ended 30 June
Cash flow from operating activities
Acquisition of investments at fair value through profit and loss
Income distribution received from investments
Interest income received
Operating expenses paid
Net cash used in operating activities
Cash flow from financing activities
Capital contribution
Dividend distribution
Net cash used in financing activities
NET MOVEMENT IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents as at the beginning of the period
Exchange gains/(losses) on cash and cash equivalents
CASH AND CASH EQUIVALENTS AS AT THE END OF THE PERIOD
18 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
2014
2013
(17,828)
3,004
95
133
(14,596)
(20,252)
1,669
301
(87)
(18,369)
(2,311)
(2,311)
18,003
(1,985)
16,018
(16,907)
(2,351)
46,729
23
29,845
64,262
32
61,943
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
BASIS OF PREPARATION
The interim financial statements have been prepared in accordance with IAS 34 on interim financial reporting.
ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED INTERIM FINANCIAL REPORTING
The accounting principles adopted in the preparation of the interim consolidated financial statements are consistent with those followed
in the preparation of the annual consolidated financial statements of the Fund for the year ended 31 December 2013, except for the
adoption of new standards and interpretations as of 1 January 2014.
ADOPTION OF NEW AND REVISED STANDARDS
STANDARDS AND INTERPRETATIONS EFFECTIVE IN THE CURRENT PERIOD
Various standards issued and amended by the International Financial Reporting Interpretations Committee, and endorsed by the EU,
are effective for the current period. The adoption of these standards had no impact on the equity and results of the Fund for the period.
The adoption of the following Standards issued and amended has not led to changes in the Fund’s accounting policies and has no
impact on equity or results for the period:
IFRS 2 Share-base Payment (amended), IFRS 10 Consolidated Financial Statements (original issue), IFRS 11 Joint Arrangements
(original issue), IFRS 12 Disclosure of interests in Other Entities (original issue), IAS 27 Separate Financial Statements (amended), IAS
32 Financial Instruments: Presentation (amended), IAS 36 Impairment of Assets (amended), IAS 39 Financial Instruments: Recognition
and Measurement (amended).
All standards issued and amended effective for the current period have not led to changes in the Fund’s accounting policies and have
no impact on equity or results for the period.
EARLY ADOPTION OF STANDARDS AND INTERPRETATIONS
No other new Standards became effective in 2014 and recently issued Standards that become effective after 1 July 2014 are not
expected to have a material effect on equity or profit for the period. The Fund has not early adopted any new International Financial
Reporting Standard or Interpretation.
STANDARDS AND INTERPRETATIONS IN ISSUE NOT YET ADOPTED
The Standards in issue and not yet adopted and recently issued Standards that become effective after 1 July 2014 are not expected to
have a material effect on equity or profit for the period.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 19
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Amounts in € ‘000, unless otherwise indicated)
NON-CURRENT ASSETS
1
INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
30 June
31 Dec ember
2014
2013
Balance as at the beginning of the period
Movements
- Acquisitions
- Changes in fair value of investments (net of income distributions)
Balance as at the end of the period
186,775
126,621
17,828
3,274
207,877
60,998
(844)
186,775
- Historical cost
- Cumulated changes in fair value
Balance as at the end of the period
210,677
(2,800)
207,877
192,849
(6,074)
186,775
Balanc e
as at the end
of the period
Inc ome
distribution
investments
INVESTMENTS IN TARGET FUNDS
CBRE Retail Property Fund France Belgium
CBRE Nordic Property Fund
CBRE Dutch Retail Fund II
CBRE Dutch Retail Fund III
- DRET Development Fund
CBRE UK Property Fund
CBRE European Industrial Fund
CBRE Dutch Residential Fund I
CBRE Dutch Residential Fund II
CBRE Dutch Residential Fund IV
- DRES Development Fund
CBRE European Shopping Centre Fund
CBRE Retail Property Fund Ibérica
CBRE Property Fund Central Europe
CBRE Property Fund Central and Eastern Europe
CBRE European Office Fund
Total
Balanc e as at
the beginning
of the period
Ac quisitions
Changes in
fair value of
investments
21,850
16,847
21,319
3,664
80
19,923
26,146
6,772
9,938
10,129
23
21,642
5,679
5,132
12,267
5,364
186,775
7,687
7,212
4,984
(2,055)
17,828
596
(823)
(801)
(136)
1,918
777
(97)
(140)
(136)
(182)
1,695
377
177
49
3,274
22,446
16,024
20,518
3,528
80
21,841
26,923
6,675
9,798
9,993
23
29,147
14,586
10,493
12,444
3,358
207,877
185
442
74
360
871
88
129
131
580
144
3,004
The changes in fair value of CBRE UK Property Fund consist of a change in fair value of EUR 1.1 million and a FX-result of
EUR 0.8 million.
CURRENT ASSETS
2
PREPAYMENTS AND ACCRUED INCOME
Accrued interest
Other
Total
20 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
30 June
31 Dec ember
2014
2013
27
8
35
34
16
50
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
3
CASH AND CASH EQUIVALENTS
Current account ING Bank
Current GBP-account ING Bank
Current account Barclays
Current account Handelsbanken
Savings account ING Bank
Savings account SNS Bank
GBP-deposit ING
Deposit ING
Deposit ABN AMRO
Deposit Barclays
Deposit Handelsbanken
Total
30 June
31 Dec ember
2014
2013
439
22
29
6,076
2,500
20
759
5,000
7,500
7,500
29,845
792
401
15
4,001
2,500
20
14,700
7,500
8,000
8,800
46,729
The liquid assets are freely available to the Fund. The Manager will target a minimum liquidity basis of 10% of the total assets of the
Fund in cash or cash equivalents.
EQUITY
4 ISSUED CAPITAL
The authorised capital of EUR 1 million is divided into 1 million shares with a nominal amount of EUR 1. Of the shares, 416,452 have
been issued and fully paid. A breakdown of the issued capital is shown in the statement of changes in equity.
MOVEMENT IN NUMBER OF SHARES
30 June
31 Dec ember
2014
2013
Number of shares as at the beginning of the period
Issuance of new shares 1 April 2013
Repurchase of shares 1 July 2013
Issuance of new shares 1 July 2013
Issuance of new shares 1 October 2013
Number of shares as at the end of the period
416,452
416,452
339,495
32,022
(9,000)
14,280
39,655
416,452
Average number of shares
416,452
376,065
CURRENT LIABILITIES
5
OTHER CURRENT LIABILITIES
Corporate income tax
Other liabilities
Total
30 June
31 Dec ember
2014
2013
5
265
270
4
73
77
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 21
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
NOTES TO THE CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
(Amounts in € ‘000, unless otherwise indicated)
6
INTEREST INCOME
30 June
30 June
2014
2013
80
80
245
245
Interest credit institutions
Total
7
INTEREST EXPENSES
Interest compensation
Total
8
30 June
30 June
2014
2013
-
PROFESSIONAL SERVICES
30 June
30 June
2014
2013
12
(6)
33
7
46
18
14
3
7
42
30 June
30 June
2014
2013
Audit fees
Tax fees
Legal fees
Non-reclaimable VAT
Total
9
16
16
OTHER EXPENSES
Non-reclaimable VAT
Supervisory costs
Other (including supervisory costs)
Total
22 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
10
4
14
1
11
8
20
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS-EU
OTHER NOTES
10
TRANSACTIONS WITH RELATED PARTIES
All the investments of the Fund are investments in target funds managed by CBRE Global Investors. Therefore, these investments can
be considered as transactions with related parties.
MANAGEMENT AGREEMENT
The Fund entered into a management agreement with RFM Regulated Fund Management BV, the Manager of the Fund, for managing
the Fund. The Manager does not charge a management fee to the Fund to avoid accumulation of fees.
SUBSEQUENT EVENTS
COMMITED INVESTMENTS
In July 2014 the Fund committed itself to a target fund. This commitment consists of:
 CBRE European Industrial Fund (EUR 2.3 million)
CAPITAL COMMITMENTS AND CAPITAL CALLS
In June 2014 the Fund attracted EUR 33.4 million of new capital commitments. At the beginning of July 2014 the Fund received
EUR 14.9 million. Following the receipt of the remaining EUR 18.5 million, the issue of new shares relating to these commitments will
take place at the beginning of September 2014.
Schiphol, the Netherlands, 28 August 2014
On behalf of European Property Strategy NV
Signed by RFM Regulated Fund Management BV
M. Knoester, Financial Manager
T.M.R.A. Jansen, Portfolio Manager
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 23
CONSOLIDATED FINANCIAL STATEMENTS IN
ACCORDANCE WITH THE ACCOUNTING
PRINCIPLES EPS
In line with the Prospectus the consolidated Financial Statements in accordance with the Accounting Principles EPS are also included in
this report. The Accounting Principles EPS and the subsequent calculated share price of the Fund are based on IFRS-EU and are
adjusted for discounts received/premiums paid and/or acquisition costs to better reflect the fair value of the shares of the Fund. The
Accounting Principles EPS form the basis for the calculation of the performance figures.
The following paragraph gives an overview of the treatment of discounts, premiums, acquisition costs and valuation of target funds in
which the Fund invests for more than 20%.
DISCOUNTS AND PREMIUMS
For the calculation of the share price, the investments in the target funds are valued at their reported net asset value (based on the
specified price) adjusted for discounts received or premiums paid. Any discounts or premiums recognised are capitalised/amortised on
a monthly basis over a period of one year. This means that ultimately one year after acquisition of shares in target funds, the valuation
of an investment in a target fund is equal to the target fund’s reported net asset value (based on the specified price).
ACQUISITION EXPENSES
For the calculation of the share price the acquisition expenses that meet the minimum threshold are amortised on a monthly basis over
a period of five years. The minimum threshold for capitalisation and amortisation are acquisition expenses that have a cumulative value
of at least EUR 50,000 over a full year. This threshold is calculated on the basis of all the expenses together relating to realised
acquisitions incurred during the year. If, in any year the minimum threshold is not met, no adjustments will be made for that year.
TABLE 1 TREATMENT OF DISCOUNTS AND PREMIUMS AND ACQUISITION COSTS
IFRS-EU
Accounting Principles EPS
Repurchase Price
Discounts received
Not recognised
(price target fund)
Recognised and amortised
over one year
Recognised and amortised
over one year
Premiums paid
Not recognised
(price target fund)
Recognised and amortised
over one year
Not recognised
(price target fund)
Acquisition costs
Not recognised
(amortised at once)
Recognised and amortised
over five years
Not recognised
(amortised at once)
VALUATION OF TARGET FUNDS IN WHICH THE FUND INVESTS FOR MORE THAN 20%
Within the current investment restrictions the Fund will not acquire interests in one single target fund that exceed the 20% of the capital
of that target fund. In the event that the position of the Fund will lead to a stake higher than 20% of the capital of that target fund, the
valuation method of that target fund will not be changed. The valuation method of that target fund will be identical as if a position was
held by the Fund of less than 20% of the capital in that target fund.
24 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES EPS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Amounts in € ‘000, unless otherwise indicated)
IFRS- EU
30 June 2014
Adjustments
Notes
31 Dec ember 2013
Adjustments
Ac c ounting
Princ iples
EPS
IFRS- EU
Ac c ounting
Princ iples EPS
206,476
206,476
186,775
186,775
(2,185)
(2,185)
184,590
184,590
125
29,845
29,970
50
46,729
46,779
120
120
170
46,729
46,899
233,554
(2,065)
231,489
ASSETS
Non-current assets
Investments at fair value
through profit and loss
Total non-current assets
1-2
Current assets
Prepayments and accrued income
Cash and cash equivalents
Total current assets
3
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Issued capital
Retained earnings
Total equity
1-3
Current liabilities
Debt from credit institutions
Other current liabilities
Total current liabilities
TOTAL EQUITY AND LIABILITIES
207,877
207,877
35
29,845
29,880
(1,401)
(1,401)
90
90
237,757
(1,311)
236,446
238,325
(838)
237,487
(1,311)
(1,311)
238,325
(2,149)
236,176
270
270
237,757
(1,311)
270
270
236,446
238,325
(4,848)
233,477
77
77
233,554
(2,065)
(2,065)
238,325
(6,913)
231,412
(2,065)
77
77
231,489
Notes 1-3 see page 28
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 25
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES EPS
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
(Amounts in € ‘000, unless otherwise indicated)
Six months ended 30 June 2014
IFRS- EU
Adjustments
Notes
Income
Interest income
Income distribution received from
investments
Net foreign currency gains or losses
on cash and cash equivalents
Net changes in fair value of
investments at fair value
Total net income/(loss)
Expenses
Interest expenses
Professional services
Other expenses
Total operating expenses
1-2
PROFIT/(LOSS) AFTER TAX
Basic and diluted net result per share (in €)
Number of shares (entitled to profit)
Adjustments
Ac c ounting
Princ iples
EPS
-
80
245
-
245
3,004
-
3,004
1,669
-
1,669
23
-
23
32
-
32
4,058
7,165
(685)
1,261
3,274
6,381
-
Corporate income tax
IFRS- EU
80
784
784
46
14
60
19
12
31
65
26
91
16
42
9
67
6,321
753
7,074
1,194
3
3
OPERATING PROFIT/(LOSS) BEFORE TAX
Six months ended 30 June 2013
Ac c ounting
Princ iples
EPS
-
-
-
-
-
-
(380)
(380)
(1,065)
881
19
12
31
16
61
21
98
(411)
783
-
-
6,321
753
7,074
1,194
(411)
783
15.18
416,452
1.81
16.99
416,452
3.40
371,517
(1.14)
2.26
371,517
Notes 1-3 see page 28
DISTRIBUTABLE RESULT
(Amounts in € ‘000, unless otherwise indicated)
Six mo nths ended
30 June 2014
Interest income
Income distribution received from investments
Operational expenses
Other
Total result available for distribution
80
3,004
(60)
3
3,027
Distributed result previous quarters
RESULT AVAILABLE FOR DISTRIBUTION
1,079
1,948
26 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES EPS
RECONCILIATION OF EQUITY FROM IFRS-EU TO THE ACCOUNTING PRINCIPLES EPS
(Amounts in € ‘000, unless otherwise indicated)
Equity according to IFRS-EU
Adjustments:
- Discounts received on investments
- Premiums paid on investments
- Acquistion expenses
EQUITY ACCORDING TO ACCOUNTING PRINCIPLES EPS
Basic and diluted equity per share according to the
Accounting Principles EPS (= EPS Share Price)
1
2
3
30 June
31 Dec ember
2014
2013
237,487
233,477
(1,401)
90
236,176
(2,185)
120
231,412
30 June
31 Dec ember
2014
2013
567.11
555.68
Notes 1-3 see page 28
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 27
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES EPS
NOTES TO THE ACCOUNTING PRINCIPLES EPS
(Amounts in € ‘000, unless otherwise indicated)
1
DISCOUNTS RECEIVED ON INVESTMENTS
Amortised received discounts
Balance as at the beginning of the period
Movements
- Discounts received on new investments
- Amortisation
Balance as at the end of the period
2
30 June
31 December
2014
2013
2,185
88
542
(1,326)
(784)
2,860
(763)
2,097
1,401
2,185
30 June
31 Dec ember
2014
2013
PREMIUMS PAID ON INVESTMENTS
In 2013 and 2014 the Fund did not pay premiums on investments.
3
ACQUISITION EXPENSES
Amortised acquisition expenses
Balance as at the beginning of the period
Movements
- Acquisition expenses current year
- Amortisation
Balance as at the end of the period
120
181
(30)
(30)
(61)
(61)
90
120
Of the remaining acquisition expenses an amount of EUR 61,000 (2012: EUR 61,000) will be amortised within a period of one year.
4
ONGOING CHARGES RATIO
The ongoing charges ratio relates to the total costs of the Fund, excluding acquisition expenses, finance income and finance expenses
to the average net asset value of the Fund. The income distributions and other fair value changes of the investments are not taken into
account.
A second ongoing charges ratio is calculated including the management costs of the target funds in which the Fund invests. For the
calculation of the ongoing charges ratio including the management costs of the investments in target funds, these costs are added to
the costs of the Fund.
Six months ended 30 June
Total costs of the Fund
Total costs of the Fund including management cost target funds
Average net asset value
Ongoing charges ratio of the Fund
Ongoing charges ratio of the Fund including management costs target funds
28 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
2014
2013
60
1,338
233,393
0.03%
0.57%
51
1,027
195,263
0.03%
0.53%
APPENDIX 1: GUIDELINES AND REGULATIONS
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD)
On 22 July 2013, the Alternative Investment Fund Managers Directive (“the AIFMD”) had to be implemented into the national laws
across the EU member states. As a result, both CBRE Global Investors as a manager (“the Company”) and its AIFMD regulated funds in
EMEA will be supervised by financial regulators. The Company applied for an AIFMD license in three jurisdictions: the Netherlands, the
UK and Luxembourg to manage the funds in scope of the AIFMD domiciled in the respective jurisdictions. The Fund is domiciled in the
Netherlands and in scope of AIFMD and will be managed by the Dutch AIFM.
Until the Dutch license is granted the Fund is still being management by RFM Regulated Fund Management BV (“RFM”). RFM has an
AIFMD license granted per 22 July 2014 through the transfer of the existing AFM-license granted in 2004. Following the
implementation of the AIFMD the Manager intends to terminate its current license when the AIFMD license is obtained by CBRE Global
Investors.
RISK MANAGEMENT
The principle risks and investment- and economic uncertainties that the Fund might face are included in the latest annual report, in the
financial risk management paragraph of the accounting principles for the consolidated financial statements on pages 31-33, as well as
in the fund documentation.
During the reporting period no material changes to the fund documentation and governance have become effective.
Risk management refers to the mitigating or corrective actions that follow from risk reports. Mitigating and corrective actions may differ
in nature, and the AIFM defines two types of actions: managerial actions and risk management related actions. Managerial actions are
the responsibility of the EMEA Executive Committee (EMEA EC) and refer to the management of the business lines. The risk-related
actions are the responsibility of the Risk Management Committee (RMC) (or one of its members) and refer to amendments in processes
or systems, or monitoring reports. Both actions follow from the regular risk reporting flows and actions are monitored frequently (but at
least quarterly).
Effective risk monitoring requires a reporting and review structure to ensure that risks are effectively identified and assessed. Risks are
reported through three key information reporting flows.
1.
2.
3.
Exposes: For all capital transactions, including new product approval, an expose is submitted to the EPS Investment Committee
(EPS IC) which should cover mitigating controls for identified relevant risks;
Portfolio Performance Review (PPR): On a quarterly basis, the portfolio performance, risk management issues and Challenged
Asset Lists (CAL) are reviewed and assessed by the RMC and reported, including RMC advice, to the EMEA EC;
Corporate risks: On a quarterly basis corporate risks are reported to the EMEA EC, through the RMC.
To embed risk management within the organisation, it is structured along a three lines of defence model. Within this governance
structure, it is essential that the three lines of defence work closely together in providing advice and support to the management in
order to mitigate the risks which (may) have an impact on the organisational and business objectives of the company, while
maintaining their independent roles and responsibilities.
1st line of defence responsibilities
The business lines, the first line of defence, are responsible for the day-to-day management of the business. The business lines develop
and carry out activities that reduce risk, such as ensuring the effectiveness of business processes and reporting business status, and are
ultimately responsible.
2nd line of defence responsibilities
Operational and Regulatory Compliance, Legal, Tax, Treasury, Control & Finance Departments collectively, the second line of defence,
formulate and implement policies, and limit and monitor risk exposure. These departments are able to challenge the first line of
defence in order to optimise the risk/reward trade-off. The departments assist the business lines to identify and manage its risks. They
also help find ways to reduce risks, give advice, and provide objective challenges and support on the design and implementation of
business procedures.
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 29
APPENDIX 1: GUIDELINES AND REGULATIONS
3rd line of defence responsibilities
The third line of defence, Internal Audit, is responsible for the overall effectiveness of the internal controls of the organisation.
Furthermore, Internal Audit provides assurance to the EMEA EC and senior management, on how effective the organisation assesses
and manages its risks, including the manner in which the first and second lines of defence operate. This assurance task covers all
elements of an organisation’s risk management cycle: i.e. including risk identification, measurement, monitoring and management,
and communication of risk-related information.
LIQUIDITY ARRANGEMENTS
The investments made by the Fund in real estate funds are generally illiquid by nature. This illiquidity tends to limit the ability of the
Manager to offer liquidity for the Investors. However, the Fund offers a liquidity possibility by the right of Investors to offer their shares
for repurchase at specific times during the lifetime of the Fund.
During the reporting period no changes have been made to the repurchase mechanism as laid down in the Prospectus. For more
information we refer to the latest version of the (amended and restated) Prospectus, clause 5.
LEVERAGE
During the reporting period the maximum loan-to-value, calculated at Fund level including debt at target fund level, has not been
adjusted and remains at the level of 50% as mentioned in the Prospectus dated 20 February 2014.
30 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
APPENDIX 2: ADMINISTRATION
MANAGER
AUDITOR
RFM Regulated Fund Management BV
PO Box 75620
1118 ZR Schiphol
Schiphol Boulevard 281
1118 BG Schiphol
The Netherlands
Ernst & Young Accountants LLP
PO Box 7883
1008 AB Amsterdam
Antonio Vivaldistraat 150
1083 HP Amsterdam
The Netherlands
BOARD OF DIRECTORS
Marcel Knoester
Tjeerd Jansen
CONTACT
Marcel Knoester
[email protected]
T: +31 20 202 2218
Tjeerd Jansen
[email protected]
T: +31 20 202 2217
Frederike Regenboog
[email protected]
T: +31 20 202 2247
DEPOSITARY
Northern Trust
World Trade Centre
Zuidplein 36, H-Tower
1077 XV Amsterdam
The Netherlands
LEGAL ADVISOR
De Brauw Blackstone Westbroek NV
PO Box 75084
1070 AB Amsterdam
Claude Debussylaan 80
1082 MD Amsterdam
The Netherlands
TAX ADVISOR
Loyens & Loeff NV
PO Box 71170
1008 BD Amsterdam
Fred. Roeskestraat 100
1076 ED Amsterdam
The Netherlands
EUROPEAN PROPERTY STRATEGY NV | SEMI-ANNUAL REPORT 2014 | 31
32 | SEMI-ANNUAL REPORT 2014 | EUROPEAN PROPERTY STRATEGY NV
PHOTOGRAPHY
I-Stock Photo (Cover)
COVER CONCEPT AND DESIGN
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www.cbreglobalinvestors.com

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