IERE.L Regulatory News (IERE)

28 May 2009 07:00



28 May 2009

INVISTA EUROPEAN REAL ESTATE TRUST SICAF 

(the "Company"/"Group")

ANNOUNCEMENT OF HALF YEARLY RESULTS AND UNAUDITED NAV 

Report for the six month period ENDING 31 March 2009

The Invista European Real Estate Trust SICAF today announces its results for the period ended six months to 31 March 2009, including its unaudited Net Asset Value for the last quarter.

Financial highlights

Unaudited Net Asset Value per share of 133p at 31 March 2009 a decrease of 53p since 30 September 2008 and 46p since 31 December 2008. In Euros the unaudited Net Asset Value was €1.43 per share reflecting a decrease of €0.91 over the six month period and €0.40 over the last quarter

Property assets of €564.2 million comprising 47 properties across seven countries (30 September 2008: 52 assets, valued at €697.9 million)

Property portfolio decreased in value on a like-for-like basis by 5.9% in the quarter and by 10.3% over the last six months

Successful disposals totalling €69.1 million achieved to date at close to or above valuation and proceeds used to reduce borrowings 

Reduction in the Investment Manager's fee approved from 0.95% pa of Gross Asset Value to 2.0% pa of Net Asset Value, resulting in an immediate reduction in fees of approximately 40% on an annualised basis payable by the Company

Three year refinancing completed with the Bank of Scotland in November 2008.

Operational highlights

Proactive negotiations with tenants continue in advance of lease events to preserve income by extending lease maturities. Excluding new vacancies, like-for-like income growth increased by 1.4%

Portfolio generating gross income of €45.4 million p.a. representing a Gross Income Yield of 8.04% (7.26% Net Initial Yield) 

Low vacancy rate of 5.8% by income

Tenant strength underlined by low levels of arrears, no material defaults or bankruptcies

In parallel with the variation to the investment managers fee, cost reductions and operational efficiencies have been introduced across the Company

Commenting, Tom Chandos, Chairman of the Invista European Real Estate Trust, said:

"The impact of the global recession will continue to be felt across Continental European markets during calendar 2009. Notwithstanding the Company's high quality pan-European portfolio, conditions remain challenging and the Board is continuing to focus on its strategy to strengthen the balance sheet, maximise cash flow and re-set the capital structure with a view to realising long term performance for shareholders."

For further information:

Tony Smedley / Chris Ludlam 

Invista Real Estate Investment Management  020 7153 9345

Stephanie Highett / Dido Laurimore / Rachel Drysdale

Financial Dynamics 020 7831 3113

  

ANNOUNCEMENT OF UNAUDITED NAV 

Net Asset Value

As at 31 March 2009, the Company's unaudited Net Asset Value (adjusted to add back deferred taxation) was €1.43 (133p) per share, reflecting a decrease of €0.40 (46p) equating to 22.2% over the quarter. The unaudited Net Asset Value, calculated under International Financial Reporting Standards, was €1.33 per share. Over the 12 months to 31 March 2009, the Company's NAV has decreased by €1.48 per share or 51.0%. 

A breakdown of the unaudited Net Asset Value is set out below:

In €m	31/03/2009	31/12/2008	3 month change	% 3 month change
Direct property:
Independent valuation	554.9	589.6	(34.7)	(5.9%)
Valuation of sales	-	11.5	(11.5)	(100%)
Like for like direct property	554.9	601.1	(46.2)	(7.7%)
Net current assets	29.6	34.9	(5.3)	(15.2%)
Market value of swaps	(27.3)	(16.6)	(10.7)	(64.5%)
Interest bearing loans and borrowings	(394.2)	(410.0)	15.8	3.9%
Net deferred tax liabilities	(11.1)	(14.2)	3.1	21.8%
Net Asset Value	151.9	195.2	(43.3)	(22.2%)
Adjusted Net Asset Value*	163.0	209.4	(46.4)	(22.2%)
Adjusted Net Asset Value* per share (EUR)	1.43	1.83	(0.40)	(21.9%)

* Net Asset Value adjusted to add back deferred tax (both current and non-current liabilities)

The unaudited Net Asset Value incorporates a number of events and key factors during the quarter ended 31 March 2009 including:

Three property assets have been sold equating to €11.5 million or €0.10 per share;

Excluding sales, the existing portfolio decreased in value on a like-for-like basis by 5.9% in the quarter, equating to €34.7 million or €0.30 per share; 

A decrease in the mark-to-market valuation of the Company's interest rate swaps of €10.7 million, equating to €0.09 per share. 

The Company's unaudited Net Asset Value figure incorporates the external property portfolio valuation as at 31 March 2009. The property portfolio will next be valued by an external valuer as at 30 June 2009 and the next quarterly Net Asset Value per share is expected to be published in August 2009. 

Figures converted into sterling assume a EUR per STG exchange rate of 1.0764 as at 31 March 2009.

 

CHAIRMAN'S HALF YEARLY RESULTS STATEMENT

Market conditions remain extremely challenging and are likely to remain difficult in the short term as contraction occurs in most world economies. During this time the Board and the Investment Manager have been taking steps to mitigate the impact of capital value declines and the prospect of rental falls to help the Company weather the worst financial climate in a generation.

Results 

Asset value deflation has continued to affect all property investment classes during the period although we believe the pace of decline may now be slowing. The independent property valuations of the Company's portfolio undertaken during the quarter to 31 March 2009 fell by 5.9% on a like for like basis. This is in line with expectations and reflects a total fall of 10.3% for the first six months of this financial year.

Liquidity in the investment markets remains tight across all property markets but the Company has been successful in disposing of some €69.1 million of property assets during the last six months at close to or above valuation. Realising equity from these sales prior to experiencing further valuation falls has been of great benefit to the Company and proceeds of €45.0 million have been applied to reduce borrowings and strengthen the Company's cash position.

Despite the positive sales activity the unaudited NAV, adjusted to add back deferred tax, decreased by €0.91 per share to €1.43 or by 38.9% over the six month period to 31 March 2009. In Sterling the NAV has fallen by 53 pence per share (28.5%) to a figure of 133p per share. These falls in NAV are not surprising in the light of the leveraged effect of declines in the value of the property portfolio and a decrease in the value of the interest rate swaps which are marked to market each quarter.

Cash Flow

In an environment where capital valuations are under pressure it is all the more important to manage carefully both rental income streams and free cash flow. Good progress has been made by our Investment Manager in preserving the durability and quality of the income generated from the portfolio as set out in his report.

As we work to maximise income returns we have in parallel been reviewing costs. During the period, the Investment Manager and the Board have been exploring the best approach to achieving a reduction in the Investment Management fee. The Board has now approved a change in the Investment Management fee basis from 0.95% per annum of Gross Asset Value to 2.0% per annum of Net Asset Value; a move that the Board believes enhances the alignment of the interests of the Investment Manager with those of the shareholders. The result of this change, which takes immediate effect, is an immediate reduction in fees of approximately  40%. The new fee basis is structured to ensure that the new Investment Management fees cannot under any circumstances be higher than those under the previous basis. 

The strategy remains to maximise free cash flow and strengthen the Company's balance sheet through reducing borrowings and preserving income. In line with our stated strategy we are not declaring an interim dividend.

 

Property Portfolio

The background of the collapse and subsequent bail-out of banks in the US and Europe in October 2008 made for a challenging start to the Company's 2009 financial year. During the first three months of 2009 the downwards pressures shifted from being capital markets focussed to those resulting from the underlying economic conditions in the markets in which the Company is invested. The Investment Manager expects this to feed through to weaker property leasing markets although the impact will vary between country and sector. Like for like income growth will be minimal or may even be negative during this calendar year, emphasising the need to manage carefully both cash flow and costs.

Despite the more challenging market conditions, the Company's property portfolio delivered consistent cash flows during the past six months. The Investment Manager remains in constant dialogue with our tenants to monitor behaviour and take appropriate action to protect the Company from the risks of default and vacancy. 

The Investment Manager expects to see further declines in property values across the market in calendar 2009, although the rate of decline is expected to vary widely as both local economic and property level factors such as active asset management and tenant management initiatives begin to have a greater overall impact on performance.

Whilst current macro-economic conditions make it impossible to predict accurately the near term impact of credit contraction on the one hand and government stimulus packages on the other, they do highlight the benefit of the Company's geographical and market diversity. 

Borrowings

Since completion of the three year refinancing with the Bank of Scotland in November 2008 the Company has retired €9.5 million of debt by using sale proceeds to de-leverage. The Company now has drawn down facilities of €400.5 million which represents an LTV under the debt facility agreement of 65.2% and a current LTV of 72.2%. Servicing the debt is relatively expensive and constrains the amount of free cash flow. The Board, together with the Investment Manager, are negotiating changes to the facility which would increase flexibility and resilience in such an uncertain climate.

Outlook

The impact of the global recession will continue to be felt across Continental European markets during calendar 2009. Any recovery in capital values will be held back by market rental declines although the impact of government stimulus packages should begin to ease financial markets during the second half of 2009. Notwithstanding its high quality pan-European portfolio, conditions remain challenging and therefore the Board is continuing to focus on its strategy to strengthen the balance sheet, maximise cash flow and re-set the capital structure with a view to realising long term performance for shareholders.

Tom Chandos

Chairman

Invista European Real Estate Trust SICAF

27 May 2009

  

INVESTMENT MANAGER'S REPORT

Strategy

Volatile financial markets and a weak economic outlook have combined to make the first half of this financial year extremely demanding.  Across our sector, the rapid decline in market conditions during the second half of 2008 made it difficult to operate effectively in an environment which lacked liquidity and credit. Despite this, the Company made good progress during the period by disposing of €69.1 million of assets in advance of material valuation declines and in extending the debt for three years.

The property markets of Continental Europe have been slower to react to the global downturn than the UK or the US. Rising property yields will therefore continue to affect our markets throughout calendar 2009 and we expect values to fall approximately 15%-20% across the markets on average during the 2009 calendar year. International efforts to stabilise financial markets will help slow asset value declines but recovery will ultimately be dependant on an economic turnaround which we consider to be at least two years away.

Despite these very tough trading conditions, we have made positive headway in implementing the agreed strategy of maximising income from the property portfolio, improving income security by extending lease maturities and reducing borrowings through sales and free cash flow. There is more work to be done and market conditions remain challenging however the management emphasis is clearly on initiatives that add value at both a property and a corporate level. 

No additional debt has been drawn down during the period and we have reduced borrowings by €45.0 million in the last six months through asset sales.

Property Portfolio 

As at 31 March 2009, the property portfolio was valued at €564.2 million and comprised 47 assets (including one asset the Company conditionally committed to acquire in Girona, Spain). This compares with a property portfolio as at 30 September 2008 of 52 assets, valued at €697.9 million. The like-for-like decrease in property valuations over the six month period to 31 March 2009 was 10.3%, a fall of €66.9 million. As mentioned previously, however sales of €69.1 million were achieved, at prices reflecting an average 2.6% above the then current valuation.

The Group's portfolio generates a gross income of €45.4 million per annum representing a Gross Income Yield of 8.04% (7.26% Net Initial Yield). This income is generated from a total of 165 tenants operating in a wide range of industries and 176 lease contracts, 99% of them subject to indexation.

The weighted average lease term until expiry is 6.06 years (4.19 years to first break) which remains relatively long for Continental Europe and supports the income focused strategy of the Company. The portfolio credit rating as measured by Experian in December 2008 was 69/100 or "below average risk". This is a helpful lead indicator of credit worthiness. However we take greater assurance from the behaviour of our tenants, the timeliness with which rent is collected and the minimal extent of arrears (if any). At this time we have not experienced any material bankruptcies, tenant defaults or rising arrears. 

As at 31 March 2009 the portfolio had a relatively low vacancy level of 5.8% by income. This rose from 3.8% in September 2008 as a result of three tenants vacating logistics units in France. This increase in vacancy was fully anticipated and marketing strategies are already in place to re-let the vacant accommodation as soon as possible. 

The weak economic outlook makes it prudent to implement a more defensive strategy against voids increasing even if this means agreeing relatively short term leases to maximise cash flow. Some occupiers are seeking occupational flexibility in this environment and we are reacting to this accordingly where it best serves the Company. 

Top 10 Properties by Value

Property Location	Sector	%*
Heusenstamm, Frankfurt, Germany	Office	12.4%
Riesa, Germany	Retail	8.8%
Lutterberg, Germany	Logistics	4.9%
Cergy, Paris, France	Office	4.6%
Madrid, Spain	Logistics	3.9%
Monteux, France	Logistics	3.3%
Marseille, France	Logistics	3.2%
Grenoble, France	Office	3.1%
Roth, Germany	Retail	3.1%
Miramas, Aix-en-Provence, France	Logistics	2.9%
Total		50.2%

*Percentage of aggregate asset value plus cash (including committed asset) as at 31 March 2009

Top 10 Tenants by Income

Tenant Name	%**
Norbert Dentressangle	19.3%
Deutsche Telekom	12.4%
DHL	8.1%
Tech Data	4.3%
Valeo	4.0%
Bax Global	3.7%
Carrefour	3.4%
AVA Marktkauf	2.7%
Real SB-Warenhaus	2.3%
Strauss Innovation	2.3%
Total	62.5%

**Percentage of aggregate gross rent (including committed asset) as at 31 March 2009

Sector Spread

Sector	%*
Office	29.8%
Logistics	54.8%
Retail	15.4%
Total	100.0%

*Percentage of aggregate asset value (including committed asset) as at 31 March 200

Geographic Spread

Country	% *
France	44.5%
Germany	36.2%
Belgium	6.8%
Spain	5.8%
Netherlands	3.6%
Czech Republic	1.8%
Poland	1.3%
Total	100.0%

*Percentage of aggregate asset value (including committed asset) as at 31 March 2009

Rent Expiry Profile

Term	Expiry
< 1 year	0.4%
1 - 3 years	17.7%
3 - 6 years	23.5%
6 - 9 years	34.8%
9 - 15 years	23.6%
15 + years	0.0%
Total	100.0%

*Percentage of aggregate asset value (including committed asset) as at 31 March 2009

Expiry Dates of Lease Contracts

Financial Year	Percentage of Income Subject to Lease Expiry
2009	0.2%
2010	4.9%
2011	12.9%
2012	7.6%
2013	8.4%
2014	7.4%
2015	22.3%
2016	5.5%
2017	7.2%
2018	8.0%
2019+	15.6%

   Portfolio Statistics

Portfolio Statistics 1	France	Germany	Spain	Netherlands	Belgium	Czech Republic	Poland	Total
Number of Tenants 2	31	101	2	2	27	1	1	165
Number of Leases 2	39	103	3	2	27	1	1	176
Ten Largest Tenants (%) 2	84.0%	84.1%	100.0%	100.0%	78.0%	100.0%	100.0%	62.5%
ERV (€,000) 3	€ 21,722	€ 15,345	€ 2,545	€ 1,681	€ 3,024	€ 942	€ 685	€ 45,943
Gross Rent (€,000) 2	€ 20,002	€ 16,021	€ 2,706	€ 1,902	€ 3,153	€ 952	€ 634	€ 45,370
Net Rent (€,000) 3	€ 20,135	€ 15,238	€ 2,658	€ 1,734	€ 3,153	€ 952	€ 621	€ 44,492
Potential Rent 2,3,4	€ 22,623	€ 16,152	€ 2,706	€ 1,902	€ 3,184	€ 952	€ 634	€ 48,153
Over/(Under) Rent 5	4.15%	5.26%	6.34%	13.13%	5.29%	1.08%	-7.46%	4.81%
Average Occupancy Rate (%) 6	88.4%	99.2%	100.0%	100.0%	99.1%	100.0%	100.0%	94.2%
Number of Properties 2	30	6	2	2	5	1	1	47
Average Lot Size (€,000) 3	6,815	41,805	16,310	10,225	7,680	10,400	7,080	12,005
Net Equivalent Yield (%) 7	8.22%	7.12%	7.39%	6.64%	7.89%	8.32%	8.50%	7.72%
Net Initial Yield (%) 7	7.11%	7.04%	7.77%	7.86%	7.95%	9.00%	8.78%	7.26%
Lettable Floor Space (sqm) 2	394,338	196,928	48,398	30,082	22,410	17,147	16,030	725,333
Lettable Floor Space (%) 2	54.37%	27.15%	6.67%	4.15%	3.09%	2.36%	2.21%	100.00%
Sector 3,8
Office	21.8%	36.5%	0.0%	0.0%	100.0%	0.0%	0.0%	29.8%
Logistics	78.2%	21.0%	100.0%	100.0%	0.0%	100.0%	100.0%	54.9%
Retail	0.0%	42.5%	0.0%	0.0%	0.0%	0.0%	0.0%	15.4%

 

1 As at 31 March 2009, includes committed property in Girona, Spain

2 Source: Invista Real Estate Investment Management Limited

3 Source: DTZ Debenham Tie Leung valuation as at 31 March 2009

4 Potential Rent is calculated as gross rent plus ERV on vacancy

5 Positive figures represent over-rented, negative figures represent under-rented. Calculated as the percentage difference between Potential Rent and ERV

6 Calculated as a percentage of ERV on vacancy of total Potential Rent

7 Weighted average by property

8 Calculated as a percentage of market valuation as at 31 March 2009

The European Market 

Economic conditions remained subdued across Europe throughout Q1 2009, particularly amongst major exporting nations such as Germany and Italy. The European Central Bank continued to ease monetary policy in a conservative fashion, reducing base rates from 2.5% to 1.25%. 

Over the past six months it has become clear that the credit crunch and resulting global economic recession is now impacting the underlying strength of the European commercial property market. In the face of heightened economic uncertainty, tenant demand for property space has weakened. However, the impact on rental levels remains mixed, with the most substantial reductions in asking rents seen in the major financial centres such as Frankfurt, London and Paris, driven by reductions in office leasing activity of 25-50% and increases in vacancy to 14%, 16% and 5% respectively. Regional office markets are tending to perform more defensively, although it is noted that vacancy rates are now rising there too.

The less volatile retail and industrial sectors have also come under increasing pressure as retail spending and industrial production growth have slowed. To date rental declines in core retail and logistics centres have been less marked than in the office market. 

Recent economic indicators suggest that market conditions may be starting to stabilise, but we remain cautious about the timing of a sustainable return to growth in Continental Europe, and note that to date short-term GDP growth forecasts are yet to stabilise. As a result property leasing markets are not expected to improve until 2010 at the earliest due to rising unemployment levels and weak corporate earnings. For this reason we remain focused on protecting the existing income profile and minimising the level of vacancy across the Company's property portfolio.

Property investment volumes are reported by CBRE to have fallen by almost 60% in the last six months to a record low level of €11.5 billion across Europe, in part reflecting the restriction of available funding in the debt finance markets. With property pricing having moved significantly in favour of purchasers in recent months and improving clarity on the likely depth and duration of the rental downturn across Europe, we expect property investment volumes to increase in the remainder of 2009, though remaining below long run levels. 

Transactions and Asset Management 

In the six months to 31 March 2009 the Company has completed the disposal of five assets, four of which were located in France and one in Brussels. These sales totalled €69.1 million and were completed at prices reflecting 2.6% above valuation. These sales were consistent with the Company's strategy to realise value once business plan objectives had been achieved or where there were concerns about individual assets' future performance.

The sale of two office assets in Lyon, France in October 2008 for €56.0 million was reported as a post balance sheet event in the Company's Annual Report & Accounts for the year ended 30 September 2008. This was an excellent result for the Company and represented the largest single transaction in the Lyon market in 2008.  

In February 2009 the Company sold a 2,638 sqm office building in Brussels to the Belgian Government at a price 44% above the December 2008 valuation, following a concerted strategy to let the property or sell it to an owner-occupier. The proceeds from the sale were used to reduce borrowings at Group level. Generating such profits from sales in this current market environment is a considerable achievement.

The Company also divested of two logistics assets in Aix-en-Provence, France totalling 11,600 sqm. The transactions were completed at the end of March 2009 at 2.8% below the December 2008 valuation. 

Identifying local companies seeking to purchase rather than rent their property has been key to achieving such positive results for the Company. We continue to consider other opportunities to realise assets in the portfolio where this will be of benefit to the Company's strategy to reduce borrowings and/or maximise earnings through reducing exposure to vacant properties. 

We are pro-actively engaging in negotiations with tenants in advance of lease breaks/expiries and continuing in our efforts to preserve income by extending lease maturities. Over 15% of total gross annual income of the portfolio has been successfully re-negotiated in the six month period since 30 September 2008, representing an annual income of €5.8 million. As a result of increased vacancy during the last six months the like-for-like income growth was down 1.5%. Excluding the vacancy however like-for-like income growth increased by 1.4%. 

Some examples of the type of asset management activity undertaken since September 2008 include the following:-

In France we have stabilised and re-geared a number of occupational leases in Amiens and Marseille. In Amiens, a 3,547sqm warehouse was leased to Saint-Gobain on the basis of a six year commitment and we have also successfully re-geared a larger unit nearby in Amiens (occupied by Norbert Dentressangle) well in advance of expiry (in December 2012) on the basis of a new six year lease at a market rent of €601,537 pa. 

In a continuing effort to minimise property level expenditure and gross to net income leakage we also negotiated the lease so that operating costs such as property management fees and insurance are also recoverable from the respective tenants. This was not previously the case.

In Monteux, South East France, we re-negotiated an existing lease to Norbert Dentressangle ahead of expiry (in December 2009) and agreed a secure term of three years at a rent of €1,010,242 pa - which is above current market level. The new lease agreement also allows for the recovery of all operating costs.

In engaging with tenants in advance of lease breaks/expiries in Aix-en-Provence and Marseille, we have contracted a total of €1.0 million of income over three years. This enables the Company to lock in rental income and preserve cash flow for the duration of the new leases. 

Good progress is also being made in Trappes, South West Paris, where construction of a new logistics unit for Nature et Decouvertes will be completed in July 2009. In parallel we have re-geared and consolidated four leases to an existing tenant on the site, Veolog and now benefit from new six year leases on the entire development. 

Finance 

As reported in the Company's Annual Report & Accounts for the financial year ended 30 September 2008, the Company extended its debt facility with the Bank of Scotland for a further three years to 31 December 2011. During the six months to 31 March 2009, the Company repaid a total of €45.0 million of debt out of proceeds from disposals in the period and as at 31 March 2009 had drawn down €400.5 million of senior debt. In addition the Company had cash balances of €37.3 million (excluding tenant deposits of €5.7 million) at that date giving a net debt of €363.2 million.

The Company's gross LTV (gross debt divided by market value of properties) as at 31 March 2009 under the Finance Documents with Bank of Scotland - which is based on the 30 September 2008 valuation - was 65.2%; the LTV covenant under these documents is 75%. Using the 31 March 2009 valuation - which for the avoidance of doubt is not used under the Finance Documents - the LTV would have been 72.2%.

As a result of the disposals and reduction of debt, the Company has terminated a number of interest rate swaps. The associated break costs have been settled in part through cash payments and in part through increasing the rates of remaining swaps so as to conserve existing cash resources. All debt is fully hedged against changes in European interest rates until January 2013 at a weighted average swap rate of 4.13%. 

Costs

As well as working to improve the stability of the income of the Group we have also been looking at various ways to reduce costs and improve operational efficiency. One good example of this is rationalising the French accounting service which will not only result in savings to the Group of over €280,000 per year but will also improve our overall effectiveness by reducing the number of service providers to the Group. 

Investment Management Fees

Of more significant impact, Invista Real Estate Investment Management has volunteered a reduction in its investment management fees. Further to discussions with the Board, the Board has now approved a change in the basis of the investment management fee from 0.95% per annum of Gross Asset Value to 2.00% per annum of Net Asset Value with immediate effect. This results in an immediate reduction in investment management fees of approximately 40% on an annualised basis as at 31 March 2009.

The change in fee basis to Net Asset Value removes the perception of an external manager seeking to maximise fee income through applying leverage and at the same time encourages the reduction of debt and improvement of Net Asset Value. Rather than simply undertake a switch to a Net Asset Value basis we have also ensured that the new fee basis could not, under any circumstances, result in a higher fee being paid than the equivalent of 0.95% being payable under the existing arrangement. As the NAV of the Company evolves, the rate of 2.00% of NAV per annum will therefore be adjusted so as to ensure that the fee can never be higher than that applicable under the current fee arrangement. There will be a minimum fee which will be the lower of either €3 million per annum or the fee as would have been payable calculated under the previous fee arrangement.

There is no change to the performance fee basis.

Outlook 

Rents will undoubtedly continue to experience downward pressure during the 2009 and 2010 calendar years and, as such, the continuing implementation of our active management strategy will be critical to protect the Company as far as possible against such market driven influences. We fully expect businesses to seek cost savings in response to the economic slowdown and that property level expenditure will be one area of focus. By maintaining close working relationships with our tenants we will continue to identify ways to maximise the earnings and also strengthen the income security of the Company.

We expect that property valuation declines in Continental Europe will slow during the 2009 calendar year and that property pricing will begin to look increasingly attractive in 2010 and beyond. The Company should be positioned to benefit from that recovery and we will continue to pursue efforts to improve the terms of the debt facility and strengthen the balance sheet so as to prepare the ground for the future.

Summary

In the context of the worst year for commercial property ever on record we have been extremely active during the last six months and despite the difficult trading conditions we have made good progress in preserving income and reducing the costs of running the business. 

The Group owns a high quality property portfolio on a pan-European basis with a diverse range of properties. The property market is returning to fundamentals of cashflow generation and has become less focused on capital returns in the short term. Long run property investment performance is largely driven by income and rewards efforts to preserve the duration and quality of the rental income receivable by the Company. Active asset management will be as influential in stabilising property valuations as will the return of confidence (and liquidity) to the financial markets. 

  We also remain focused on the corporate strategy of strengthening the balance sheet. Property sales will continue to be effected where they return equity to the Group, reduce borrowings and do not negatively impact earnings. We will also maintain an open dialogue with the Bank of Scotland with a view to improving the operational flexibility of the existing debt facility. 

Tony Smedley

Head of Continental European Funds

Invista Real Estate Investment Management

27 May 2009

  

CONSOLIDATED INCOME STATEMENT

Unaudited for the period from 1 October 2008 to 31 March 2009

		Six months to	Six months to	Twelve months to
		31-Mar-09	31-Mar-08	30-Sep-08
	Notes	€'000	€'000	€'000
Rent income		23,055	23,641	47,283
Property operating expenses		(1,974)	(1,125)	(2,188)
Net rental and related income		21,081	22,516	45,095
Other income
Other income		1,841	165	271
Profit on disposal of investment properties		1,411	-	-
Total other income		3,252	165	271
Expenses
Investment manager fee		(2,929)	(3,629)	(7,362)
Performance fee adjustment		-	(54)	-
Professional fees		(1,482)	(2,546)	(2,079)
Abortive fees		(16)	-	(1,656)
General & administration expenses		(1,188)	(1,440)	(2,747)
Directors' fees		(89)	(123)	(222)
Other expenses		(337)	(149)	(458)
Total expenses		(6,041)	(7,941)	(14,524)
Net change in value of investment property		(66,976)	(749)	(65,927)
Net change in fair value of derivative financial instruments		(35,670)	-	-
Change in value of investments		(102,646)	(749)	(65,927)
Net operating profit		(84,354)	13,991	(35,085)
Finance income		1,203	1,438	3,442
Finance expenses		(17,216)	(14,339)	(29,862)
Net finance costs		(16,013)	(12,901)	(26,420)
(Loss) / Profit before tax		(100,367)	1,090	(61,505)
Deferred taxes		5,688	(1,912)	4,651
French restructuring taxes		-	(4,319)	(4,319)
Other taxes		10	(782)	(2,026)
Total taxation		5,698	(7,013)	(1,694)
Loss for the year/period attributable to the equity holders of the company		(94,669)	(5,923)	(63,199)
Basic and diluted loss per share (euro)	7	(0.83)	(0.05)	(0.55)

All items in the above statement are derived from continuing operations.

The accompanying notes 1 to 10 form an integral part of this consolidated interim report.

  CONSOLIDATED BALANCE SHEET

Unaudited as at 31 March 2009

	Notes	As at	As at	As at
		31-Mar-09	31-Mar-08	30-Sep-08
		€'000	€'000	€'000
Assets
Investment property	4	554,906	754,280	631,569
Deferred tax assets		57	334	1,447
Total non-current assets		554,963	754,614	633,016
Trade and other receivables		14,787	15,722	17,163
Derivative financial instruments		-	-	8,990
Cash and cash equivalents		43,016	41,314	29,915
Non-current assets classified as held for sale		-	-	57,559
Total current assets		57,803	57,036	113,627
Total assets		612,766	811,650	746,643
Share capital		142,829	142,829	142,829
Reserves		155,985	160,017	157,608
Retained earnings		(146,934)	4,269	(52,264)
Total equity attributable to equity holders of the Company	5	151,880	307,115	248,173
Liabilities
Interest-bearing loans and borrowings		394,158	-	-
Deferred tax liabilities		11,212	26,238	18,506
Total non-current liabilities		405,370	26,238	18,506
Interest-bearing loans and borrowings		-	442,025	411,715
Derivative financial instruments		27,319	477	-
Trade and other payables		21,263	26,451	22,522
Current taxation payable		6,934	9,344	8,740
Liabilities directly associated with non-current assets classified as held for sale		-	-	36,987
Total current liabilities		55,516	478,297	479,964
Total liabilities		460,886	504,535	498,470
Total equity and liabilities		612,766	811,650	746,643
Net Asset Value per share (Euro)	6	1.33	2.69	2.17

The interim statements were approved by the Board of Directors on 27 May 2009 and signed on its behalf by:

Tom Chandos Robert DeNormandie

Chairman Chair of Audit Committee

The accompanying notes 1 to 19 form an integral part of this consolidated interim report.

  

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Unaudited as at 31 March 2009

	Share capital	Share premium	Hedging  reserve	Restricted reserves	Retained  earnings	Total equity
	€'000	€'000	€'000	€'000	€'000	€'000

Balance as at 30 September 2007	142,829	170,215	5,380	101	10,192	328,717
Effective portion of changes in fair value of cash flow hedges, net of tax	-	-	(5,716)	-	-	(5,716)
Restricted reserve	-	-	-	64	-	64
Total income and expense recognised directly in equity	-	-	(5,716)	64	-	(5,652)
Profit for the period	-	-	-	-	(5,923)	(5,923)
Total recognised income and expense	-	-	(5,716)	64	(5,923)	(11,575)
Dividends to equity holders	-	(10,027)	-	-	-	(10,027)
Balance as at 31 March 2008	142,829	160,188	(336)	165	4,469	307,115

Balance as at 30 September 2008	142,829	149,304	8,990	(686)	(52,265)	248,173
Amortization of hedging reserves regarding cashflow hedges	-	-	(1,383)	-	-	(1,383)
Restricted reserves	-	-	-	(240)	-	(240)
Total income and expense recognised directly in equity	-	-	(1,383)	(240)	-	(1,623)
Profit for the period	-	-	-	-	(94,669)	(94,669)
Total recognised income and expense	-	-	(1,383)	(240)	(94,669)	(96,293)
Balance as at 31 March 2009	142,829	149,304	7,607	(926)	(146,934)	151,880

The accompanying notes 1 to 10 form an integral part of this consolidated interim report.  CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited for the period from 1 October 2008 to 31 March 2009 

	Six months to 31 March 2009	Six months to 31 March 2008	Twelve months to 30 September 2008
	€'000	€'000	€'000
Operating Activities
Profit/(loss) for the period before taxation	(101,307)	1,090	(61,505)
Adjustments for:	-	-	-
Net valuation gains on investment	102,646	749	65,927
Net finance costs	16,204	12,901	26,420

Unrealised foreign currency exchange

(16)

(28)

192

Operating profit before changes in working capital and provisions	17,527	14,712	31,034
Increase in trade and other receivables	(690)	(523)	(2,950)
Decrease/(increase) in trade and other payables	11,583	(1,108)	(7,658)
Cash generated from operations	28,420	13,081	20,426
Interest paid	(15,560)	(11,464)	(25,989)
Interest received	1,979	1,223	3,413
Tax paid	(1,749)	131	(1,433)
Cash flows from operating activities	13,090	2,971	(3,583)
Investing Activities
Acquisition of investment properties	90	(34,786)	(29,472)
Disposal of investment properties	50,908	-	-
Cash flows from investing activities	50,998	(34,786)	(29,472)
Financing Activities
Dividends	-	(10,027)	(20,162)
Issuing fees	-	-	(749)
Draw down of loan facility	-	17,945	17,945
Repayments of existing loans	(44,900)	-	-
Finance costs paid on arrangement of long term loan	(6,998)	(3,476)	(1,840)
Cash flows from financing activities	(51,898)	4,442	(4,806)
Net increase/(decrease) in cash and cash equivalents for the period	12,190	(27,373)	(37,861)
Opening cash and cash equivalents	30,826	68,687	68,687
Opening acquisitions	-	-	-
Closing cash and cash equivalents	43,016	41,314	30,826
Cash directly associated with non-current assets held for sale	-	-	(911)
Closing cash and cash equivalents	-	-	29,915

The accompanying notes 1 to 10 form an integral part of this consolidated interim report.  NOTES TO THE CONSOLIDATED INTERIM STATEMENTS AS AT 31 MARCH 2009

1. Significant accounting policies

Statement of compliance

Invista European Real Estate Trust SICAF ("the Company") was incorporated as a "société anonyme" under the laws of Luxembourg on 6 June 2005. On 17 November 2006 the Company was converted into an investment company with fixed capital "société d'investissement à capital fixe" ("SICAF"). Through its subsidiaries (together "the Group") its main activity is to evaluate, make and actively manage direct and indirect investments in real estate in Continental European countries. During the period ended 31 March 2009 the Group has disposed of five properties in France and Belgium.

The Company is a public limited liability company incorporated for an unlimited term. The registered office of the Company is established at 25B, Boulevard Royal, L-2449 Luxembourg.

These consolidated interim statements have been approved for issue by the Board of Directors on 27 May 2009 and have been prepared in accordance with International Financial Reporting Standard (IFRS) issued by, or adopted by, the International Accounting Standards Board (the 'IASB'), interpretations issued by the International Financial Reporting Interpretations Committee. 

Basis of measurement

The consolidated interim statements have been prepared on the historical cost basis except for the following:

Derivative financial instruments measured at fair value

Investment properties measured at fair value

The methods used to measure fair values are discussed further in note 3.

Basis of preparation

These consolidated interim statements are presented in Euro, which is the Company's functional currency. All financial information presented in Euro has been rounded to the nearest thousand.

The accounting policies have been consistently applied to the results, assets, liabilities and cash flows of the entities included in the interim statements and are consistent with those of the previous year/period.

Use of estimates and judgements

The preparation of interim statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the interim statements is included in the note 3 'Determination of fair values'.

Basis of consolidation

The consolidated interim statements comprise the accounts of the Company and all of its subsidiaries drawn up to 31 March each year. Subsidiaries are those entities over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interests. 

The assets and liabilities of the subsidiaries and their results are fully reflected in the consolidated interim statements. Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.

Investment property

Investment property is property that is held to earn rental income together with potential for capital growth. Investment property comprises freehold land, freehold buildings and land held under operating leases.

Investment property is initially recognised on completion of contracts at cost, including related transaction costs associated with the investment property. After initial recognition, investment properties are measured at fair value, with unrealised gains and losses recognised in the Consolidated Income Statement.

Property acquisitions are recognised in the Balance Sheet at their contractual value where unconditional commitments have been entered into prior to the Balance Sheet date.

Financial Instruments

Non derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through the Consolidated Income Statement, any directly attributable transaction costs. 

Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Loans and borrowings

Profit participating loans that had been obtained from the Company's shareholders are classified as long term debt because of their repayment and remuneration features.

Borrowings are recognised initially at fair value of the consideration received, less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

Financing costs incurred in obtaining a debt facility are capitalised and amortised over the period of the facility using the effective interest rate method.

Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to interest rate risks arising from operational, financing and investment activities. 

Derivatives are initially recognised at fair value; attributable transaction costs are recognised in the Consolidated Income Statement when incurred. Subsequent to initial recognition, derivative financial instruments are measured and stated at fair value, and changes therein are accounted for as described below: 

Cash flow hedges

Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the Consolidated Income Statement.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to the Consolidated Income Statement in the same period that the hedged item affects profit or loss.

Share capital

Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares, other than on a business combination, are shown as a deduction, net of tax, in equity from the proceeds. Share issue costs incurred directly in connection with a business combination are included in the cost of acquisition. Dividends are recognised in the period in which they are paid.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. 

Impairment

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the Consolidated Income Statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the Consolidated Income Statement.

Non-financial assets

The carrying amounts of the Group's non-financial assets, other than investment property, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the Consolidated Income Statement. 

Revenue

Rental income

Rental income from investment properties is accounted for on a straight-line basis over the term of the ongoing leases and is shown gross of any income tax. Any material premiums or rent-free periods are spread evenly over the lease term.

Finance income and expenses

Finance income comprises interest income on funds invested and gains on hedging instruments that are recognised in the Consolidated Income Statement. Interest income is recognised on an accruals basis.

Finance expenses comprise interest expense on borrowings, and losses on hedging instruments that are recognised in the Consolidated Income Statement. 

Expenses

Operating Expenses

All expenses are accounted for on an accruals basis. The Group's investment management and administration fees and all other expenses are charged through the Consolidated Income Statement. 

Attributable transaction costs incurred in establishing the Group's credit facilities are deducted from the fair value of borrowings on initial recognition and are amortised over the lifetime of the facilities through the Consolidated Income Statement.

Taxation

According to the Luxembourg regulations regarding SICAF companies the Group is not subject to capital gains taxes in Luxembourg. It is, however, liable to an annual subscription of 0.05% (taxe d'abonnement) of its total net assets, payable quarterly, and assessed on the last day of each quarter.

Real estate revenues, or capital gains derived thereon, may be subject to taxes by assessment, withholding or otherwise in the countries where the real estate is situated.

The subsidiaries of the Group are subject to taxation in the countries in which they operate. Current taxation is provided for at the current applicable rates on the respective taxable profits.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated interim statements. 

Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. 

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. 

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Earnings per share

The Group presents basic and undiluted earnings per share (EPS) data for its ordinary shares. EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. As there is not dilution of the shares of the Company, it is not needed to report the diluted earnings per share (EPS).

2. New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations have been issued by the International Auditing Standards Board but are not yet effective for the period ended 31 March 2009 and have not been applied in preparing these financial statements:

Revised IAS 1 Presentation of Financial Statements introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total income (effectively combining both the income statements and all non-owner changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income. 

Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. 

Amended IAS 27 Consolidated and Separate Financial Statements requires accounting for changes in ownership interests by the Group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the Group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. 

The other standards and interpretations that have been adopted and which have not yet adopted, according to IASB, are not expected to have a significant impact on the Company's financial statements.

3. Determination of fair values

A number of the Group's accounting policies and disclosures require the determination of fair values, for both financial and non financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Investment property

Fair value is based on the open market valuations of the properties as provided by an independent expert, DTZ Debenham Tie Leung, in accordance with the guidance issued by the Royal Institution of Chartered Surveyors (the "RICS"). Market valuations are carried out on a quarterly basis.

The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows is then applied to the net annual cash flows to arrive at the property valuation.

Valuations reflect, when appropriate the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation, and the market's general perception of their creditworthiness, the allocation of maintenance and insurance responsibilities between the Group and the lessee and the remaining economic life of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices, and when appropriate counter-notices, have been served validly and within the appropriate time.

Derivatives

The fair value of the Group's derivatives is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

4. Investment properties

	31-Mar-09	31-Mar-08	30-Sep-08
	€'000	€'000	€'000
At beginning of year/period	631,568	724,270	724,270
Acquisitions	-	33,277	29,026
Net change in value of investment properties	(63,725)	(3,267)	(65,927)
Investment property classified as held for sale	-	-	(55,800)
Disposals	(12,937)	-	-
Balance at end of period	554,906	754,280	631,569

At 31 March 2009 all properties of the portfolio were subject to registered mortgages in order to secure bank loans. 

On 21 October 2008, 2 assets in Lyon, France, were sold for €55.8 million. 

On 2 February 2009 an asset in Brussels, Belgium was sold for €5.8 million.

On 19 March 2009 and on 31 March 2009, two assets in Aix-en-Provence, France were sold for €7.4 million.

Investment property comprises a number of commercial properties that are leased to third parties. 

5. Issued capital and reserves

Share capital 

The Company has an issued share capital of €142,829,093.75 consisting of 114,263,275 shares with a par value of €1.25 per share, all of which have been fully paid up.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

All shares rank equally with regard to the Company's residual assets.

No shares have been issued in the six month period ended 31 March 2009.

Authorised capital

The Company has an authorised capital of 938,463,133.75 consisting of 750,770,507 shares of a par value of €1.25 per share.

Hedging reserve

The hedging reserve relates to the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.

Due to the difference in the maturity of the extended loan facility (2011) and the related hedging contracts/derivative financial instruments (2013), the hedge accounting relationship was discontinued with effect from 1 October 2008, since the derivative financial instruments no longer met the hedging criteria.

Movements in the valuations of the derivative financial instruments from 1 October 2008 onwards are included in the income statement. The related reserve of €9.0m, which has been credited to the reserves as at 30 September 2008 is amortised to the income statements over the life of the new credit facility.

Restricted reserve

A legal reserve subject to profit of the Subsidiaries and the Company has been allocated in the different jurisdictions where applicable. This reserve is not available for dividend distributions.

6. Net asset value per ordinary share

The net asset value per ordinary share is based on the net assets of €151.8 million (30 September 2008: €248.1 million and 31 March 2008 €307.1 million) and 114.2 million (30 September 2008: 114.2 million and 31 March 2008 114.2 million) ordinary shares in issue at the Balance Sheet date.

7. Loss per ordinary share

The calculation of basic and diluted loss per share for the period to 31 March 2009 was based on the loss attributable to ordinary shareholders of €95.6 million (31 March 2008: €5.9 million and 30 September 2008: €63.1 million), and a weighted average number of ordinary shares outstanding of 114.2 million. 

8. Segment reporting

Geographical segments

Segment information is presented in respect of the Group's geographical segments. This primary format is based on the Group's management and internal reporting structure.

Business segments

Business segment reporting has not been prepared because the Group invests predominantly in one business segment which is property investment of commercial properties.

  Geographical segments

The Group's business is investing in commercial properties. All the existing properties are located in the continental European region.

	France	Germany	Other Europe	Total
Six months to 31 March 2009	€'000	€'000	€'000	€'000
Gross rental income	10,509	8,021	4,525	23,055
Property operating expenses	(1,106)	(303)	(565)	(1,974)
Segment gross profit	9,403	7,718	3,960	21,081
Change in value of investment properties	(31,634)	(20,627)	(14,715)	(66,976)
Net change in fair value of derivative financial instruments	-	-	(35,670)	(35,670)
Change in value of investments	(31,634)	(20,627)	(50,385)	(102,646)
Finance income	671	428	104	1,203
Finance expenses	(10,005)	(5,605)	(1,606)	(17,216)
Unallocated net expense	(1,613)	(1,130)	(46)	(2,798)
Loss before tax	(33,178)	(19,216)	(47,973)	(100,367)
Taxation	1,229	1,236	3,233	5,698
Loss after tax	(31,949)	(17,980)	(22,637)	(94,669)
As at 31 March 2009
Assets and Liabilities
Segment assets	279,260	213,265	120,241	612,766
Segment liabilities (excluding equity components)	(200,130)	(141,531)	(119,787)	(461,448)
	France	Germany	Other Europe	Total
Six months to 31 March 2008	€'000	€'000	€'000	€'000
Gross rental income	12,200	7,868	3,573	23,641
Property operating expenses	(387)	(496)	(242)	(1,125)
Segment gross profit	11,813	7,372	3,331	22,516
Change in value of investment properties	(1,450)	(1,760)	2,461	(749)
Finance income	546	376	516	1,438
Finance expenses	(7,874)	(4,510)	(1,955)	(14,339)
Unallocated net expense	(2,309)	(1,287)	(4,180)	(7,776)
Profit before tax	726	191	173	1,090
Taxation	(6,039)	(176)	(798)	(7,013)
Profit/(loss) after tax	(5,313)	15	(625)	(5,923)
As at 31 March 2008	€'000	€'000	€'000	€'000
Assets and Liabilities
Segment assets	409,146	254,369	148,135	811,650
Segment liabilities (excluding equity components)	(267,889)	(147,854)	(88,592)	(504,335)

  9. Contingencies

Certain subsidiaries of the Group are involved in litigation resulting from operating activities. These legal disputes and claims for damages are routine resulting form the normal course of business. None of these legal disputes and claims are expected to have a material effect on the balance sheet, profits or liquidity of the Group.

10. Post Balance Sheet Events

No significant post balance events occurred after 31 March 2009 which could have a material effect on the balance sheet, profits or liquidity of the Group.  

Glossary 

Net Equivalent Yield is the time weighted average yield between the Net Initial Yield and the Reversionary yield.

Estimated rental value (ERV) is the Group's external valuers' reasonable opinion as to the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.

Gross rental income or gross rent is the annualised rental income receivable in the period, prior to payment of non-recoverable expenditure such as ground rents and property outgoings. 

Gross income yield (GIY) is the Gross rent expressed as a percentage of the net valuation of property portfolio.

Group is Invista European Real Estate Trust SICAF and its subsidiaries.

Net asset value (NAV) are shareholders' funds, plus the surplus of the open market value over the book value of both development and trading properties, adjusted to add back deferred tax.

Net initial yield (NIY) is the Net rental income expressed as a percentage of the gross valuation of property portfolio.

Net rental income or net rent is the annualised rental income receivable in the period after payment of non-recoverable expenditure items such as ground rents and property outgoings.

Potential rent is the rent achievable if all the remaining vacant space is let at the Estimated rental value and added to the current Gross rental income.

Reversionary yield is the anticipated yield, which the Net initial yield will rise to once the rent reaches the Estimated rental value

ENDIR DDLFLKEBXBBL