Corio to sell EUR 1 bn office-industrial portfolio

Dutch property company Corio expects to raise as much as EUR 1 bn by selling its office and industrial portfolio. The company, which presented its first half results on Friday, said it is planning to sell the major part of its office and industrial assets, which account for about 19% of its EUR 6 bn total portfolio. The proceeds will be used to finance the EUR 2.2 bn pipeline of new projects. 'Only some office projects closely related to retail won't be sold,' CEO Jan de Krij said. 'We have decided to focus on retail, which provides a more stable cash flow, and stop with office developments, even opportunistic ones'.

Corio hopes to reach an agreement on a possible sale in the first half of next year and is considering expanding its retail property activities in another country. Corio is currently active in the Netherlands, Italy, France Spain, and Turkey. About 52% of the new projects will be outside the Netherlands and will be financed through the disposals, as well as the $1.2 bn the group borrowed under the US Private Placement at the beginning of 2007.

The Dutch company said it has consolidated its position in Turkey which it entered two years ago and 'can now go a step further.' Answering a question on the outcome of Turkey's governmental elections, De Krij said that the Islamic party has accepted the democratic process in the country, and that Corio sees no risk-adjusted premium in Turkey. 'We consider the possibility that guns would be blazing, but this has a very low likelihood', he said. 'Although the political risk is difficult to judge', he added.

Corio's net rental income increased by 11.9% to EUR 157.5 mln in the first six months of 2007, while the like-for-like rental growth came at 5.5% for the total portfolio. Corio's Earnings Before Interest and Tax (EBIT) increased by 13% to EUR 145.4 mln. The direct result was EUR 98.3 mln, or EUR 1.48 per share, as the benefits in net rental income and lower corporate income tax were offset by the increase in financing expenses. In the first half of 2007 the average occupancy rate of the entire property portfolio improved from 96% to 96.3% Net profit increased from EUR 268 mln in the first half of 2006 to EUR 339.8 mln in the same period this year.