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MARKET ANALYSIS 2010

Presentation BOBCA, 5/10/2011

DRAFT VERSION – FOR DISCUSSION PURPOSES ONLY

BUSINESS CENTER MARKET IN BELGIUM

I. Business centers in Belgium I. Number of business centersII. 3 types of shareholdersIII. Location of business centers

II. Financials of business center in BelgiumI. TurnoverII. Added valueIII. Financing structureIV. Personal V. Operational profitabilityVI. Net profitability

Annex : • List of inventarized business centers

INTRODUCTION

Business centers in Belgium : See list in annex Research by a maximum of means

Growing market if you know new centers, please let me now.

What is a business center ? Uses this as name of his business Including ‘bedrijvencentra’, excluding ‘innovation centers’/incubation centers !! Serviced offices = full time reception services

Used figures : Published financial data Added by questionnaire august 2011

INTRODUCTION“Definitions and limitations”

Total appr. 120 business centers in Belgium :

29 ‘BC’s’, bedrijvencentra

9 Regus

5 NCI/Multiburo

7 groups with 2-4 centers

56 ‘individual business center owners

First estimate of the market (appr. 90 % reliability)

3500 individual offices, 10.000 workstations ?

200-250 meeting rooms

Appr. 3 - 5000 virtual offices

Listing is not ‘clear-cut’

No innovation/incubation-centers

No ‘co-working-spaces

Not included : incubation/innovation centres, > 30 in

Belgium – mainly in the Walloon region.

We have in Belgium appr. 120 business centers, of which appr. 50 % are individual centers.

I. BUSINESS CENTERS IN BELGIUM1.1. Inventory

75 % of the business centers are situatied in

Brussels, Antwerp en Gent

95 % of the internationally owned

85 % of the privatly owned

30 % of the semi-public-initiatives

The penetration in other cities is very low, mainly

private and semi-public initiatives

3/4th of all business centers are located in the three main cities of our country.

I. BUSINESS CENTERS IN BELGIUM1.1 Business centers pro city

CityInternational

ownershipPrivate

ownership(Semi)-public

ownership Total

Brussel 12 33 3 48

Antwerpen 5 8 5 18

Gent 1 6 3 10

Charleroi 3 3

Mechelen 1 1 1 3

Hasselt 1 2 3

Sint-Niklaas 1 1 2

Namen 2 2

Aalst 1 1 2

Kortrijk 1 1 2

Luik 2 2 Other cities 2 3 22 27Eind-totaal 21 62 39 122

Most business centers in Belgium are

situated at the suburban area of the cities

Only 1 on 3 business centers is located in the

centre of the cities

Appr. 20 business centers are located in

industrial site

Airway and motorways only attract a minority

of business centers

Nearly 50 % of the business centers are located at the suburban office-area’s of the cities.

I. BUSINESS CENTERS IN BELGIUM1.3. Business center pro location

The market growth is very low for a ‘new en dynamic’ market

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.1. Turnover estimation

• Market appr. 50 Mio €– International BC 45 % of market– Private national BC 35 %– Public BC ca. 20 %

• Growth rhythm – YAGR ca. 3.5 % =/= inflation !– Private BC > 6 % and stable

growth rhythm, higher then inflation

– Semi-public BC, 2 %, lower then inflation

– International BC, 3.5 % but concentrated in 2006-2008.

The market growth was only substanial in 2006-2008, 2009 and 2010 were years without market growth !

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.1. Added value

• More correct then turnover (estimated)

• Figures of 2010 representative, except for ‘international’ (Regus 2010 still not

available)• Growth rhythm remains

low– 2001-2010 : 3-4 %– 2006 – 2008 : > 15 %– 2009/2010 : no growth !

• International players have relatively lower added value (less ‘own’ building, see further)

The three different market types have different ‘business models’

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.3. Fixed assets (Material fixed assets)

• Semi public BC nearly always own their property

• Private BC are the main investors in property from 2006-07 on.

• International BC do not own the buildings they operate in.

The financing structure of the different players in the market is very different.

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.4. Equity

• The market ‘owns’ more equity then it has turnover …

– The ‘semi-public’ market has four times more equity then it makes turnover

– The private market realizes 1.5 € turnover for every € equity

– The international players realize the highest turnover with a maximum of leverage

The financing structure of the different players in the market is very different.

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.5. Financial debt

• The three ‘business segments’ have a different financing structure :

– The ‘semi-public’ market mainly (80 %) finances itself with equity

– The private market has a gearing of appr. 200 % (2 € loan financing for 1 € equity)

• This indicates that appr. 70-80 % of the investments are financed

– The international players limit their financing and equity by renting their buildings.

The semi-public initiatives have relatively less personal then the private and international business centers

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.6. Personel

• The number of personal active in this market is appr. 225 people– Excluding the appr. 50 – 100

‘fee-earning managers/owners’

• The number of personnel is growing at the same rhythm as the turnover does (3.5 %/year)

• International owners have relatively more personnel then the semi-public owners

1 out of 2 business centers do not make an operational profit !

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.6. Operational profit

• The different segments of the market present totally different operational profitability :– International BC are (very)

profitable the last years– Private players have a declining

profitability the last years– The semi-public market do not

generate operational profits as a whole.

• 58 out of 122 business center lose money, this 50 % is relatively stable during the last 10 years.

40 – 45 % of the business centers have a negative net result.

II. FINANCIAL DATA OF BUSINESS CENTER MARKET2.6. Net profit after taxes

• The international BC do make profit after taxes

• The private BC are also making losses, due to the limited operational profitability and the substantial financial costs

• The semi-public business centers make net profit due to positive financial revenues and extra-ordinary income (sale of property).

Conclusions

• The business center market has not grown in 2009 and 2010– After double digit growth in 2007 and 2008

• The ‘business models’ of the different kind of shareholders differ substantially :– International players are profitable, without investing in fixed assets– Private investors are operationally profitable, and focus mainly on the long-

time value of the owned building– Semi-public owners are making losses but are very solvent and liquid, and

they can survive through financial and extra-ordinary income