Financing

NSI is a closed-end investment company with variable capital that qualifies as a fiscal investment institution (FII) under Dutch law. The company owes no corporation tax in the Netherlands provided that it complies with all Dutch tax laws. Real estate investments outside the Netherlands may be subject to taxation according to profit.

NSI's goal is to achieve an optimum capital structure from the twin perspectives of risk and return. NSI has a long investment horizon, so the company actively looks for long-term financing. Non-euro investments are financed or hedged in the same non-euro currency.

Financing with borrowed capital
In principle the company does not finance more than 50% of its real estate portfolio by means of borrowed capital. This guideline may temporarily be set aside if there are attractive buy or sell opportunities and interest rates are acceptable relative to the return obtainable on the real estate.

The company will need to raise substantial financing from banks and other equity providers to achieve the planned growth of its portfolio. To double the investment portfolio the financing requirement will be approximately €700 million. NSI has set itself the task in the coming period of exploring the financing instruments that may be available to the company.

Interest terms
NSI is striving to take out long-term loans with variable interest rates and to cover the long-term interest risk by means of derivatives.

Issue of shares
New shares will be issued only if there are investment opportunities in the foreseeable future.

NSI's preference regarding new share capital is to place new shares privately with institutional investors. Under present legislation it is expensive to make public offerings on account of the requirement to publish a prospectus, the obligations that ensue from the prospectus and the involvement of the required consultants.

However, the number of outstanding shares may be increased to a limited extent each year and placed privately. A consequence of this provision is that NSI will have to make one or more public offerings for substantial amounts to obtain the capital it needs to pursue its growth target.