Small shareholders denounce ‘good news show’ at Cofinimmo

At the general meeting of Cofinimmo, CEO Jean-Pierre Hanin received a lot of criticism from small shareholders about the weak share price of the listed real estate company.

Cofinimmo held its last general meeting on Wednesday at the outdated head office in Woluwe-Saint-Lambert. The regulated real estate company (GVV) will soon move to brand new offices on Tervurenlaan.

CEO Jean-Pierre Hanin started with a dry presentation of the annual results. He underlined that the transformation of the portfolio, worth 6.2 billion euros, continues. Last year, the company fulfilled its promise to sell and buy real estate worth 300 million euros in difficult market conditions. As a result, healthcare real estate now makes up 75 percent of the portfolio, while the importance of offices has fallen to 18 percent. Cofinimmo is in a strong financial position. For example, the average interest rate of 1.4 percent is the lowest of all GVVs, Hanin boasted.

Several of the 30 shareholders present were critical of the company’s management. “I hear a good news show here,” the first questioner complained. “One statistic is missing from your presentation: the stock price.” Cofinimmo is trading at 66 euros, half as much as at the end of 2021 and lower than at the IPO in the 1990s. “Whoever was stupid enough to sign up then is well shaved,” the questioner sneered.

Hanin pointed out that many European real estate companies saw their share prices fall. ‘The most important element that has an impact on the share price is the uncertainty about the interest rate. This weighs heavily on our share price, even without divestments or acquisitions. Of course, we have no control over that.’ Hanin hopes that the European Central Bank will soon cut interest rates. “We’re crossing our fingers that it will happen,” the CEO said. ‘If interest rates stabilize, the price will become more in line with the past.’ Moreover, Cofinimmo has paid out generous dividends in recent years, which must be taken into account in the price evolution.

Nevertheless, the shareholder criticized the fact that Cofinimmo sold (office) buildings for 300 million euros last year. ‘Divestments are a good thing. But spending money to buy real estate is just insane. There just has to be a sale, and the price will drop. And yet you can’t resist. If you used that money to repay debts, the price would immediately go up.’ Hanin pointed out that Cofinimmo already signed the purchases in question two or three years ago. ‘We only buy projects that we have committed to in the past. We don’t buy new things.’

Another shareholder questioned the painful capital increase that Cofinimmo carried out in October. The company then raised 167 million euros from major investors at 60 euros per new share, which implied a hefty 40 percent discount on the intrinsic value. “That was a defensive action that could not be avoided,” Hanin said. ‘Last year sales were very difficult. Other RRECs have made much larger capital increases. We have limited ourselves to the minimum to keep our debt ratio defensible. That was important to get through the storm.”

However, Hanin had recently highlighted Cofinimmo’s low debt ratio of 44 percent. “For multiple institutional investors, you cannot exceed 40 percent,” the CEO explained. ‘If you compare Cofinimmo with European real estate companies, we are at the top in terms of debt ratio. There was enormous market pressure to keep the debt ratio between 40 and 45 percent.’

It was notable that several agenda items were approved with a weak score. The remuneration report only received 78 percent yes votes. The reappointment of Cobepa CFO Xavier de Walque, director of Cofinimmo since 2009, also convinced only 78 percent of the shareholders. Since Cofinimmo has only one major shareholder, the American asset manager BlackRock (6.7 percent), this indicates a certain dissatisfaction among investors.