Annual financial report 2024

ANNUAL FINANCIAL REPORT 2024 XIOR

XIOR

IN A NUTSHELL

Occupancy rate

20,695

Lettable units

ALTERNATIVE PERFORMANCE MEASURES AND THE TERM "EPRA EARNINGS"

Alternative

performance measures (APMs) are measures used by Xior Student Housing NV to measure and monitor its operational performance. The European Securities and Markets Authority (ESMA) has issued guidelines that apply from

3 July 2016 for the use and explanation of alternative performance measures. The concepts Xior considers

Housing to

c.150

Nationalities

Total area of the property portfolio

878,894

Nature of

the property portfolio

(based on Fair Value)

Students

Others

267Employees

50% 50%

Organisation & Employees

Happy students in efficient buildings

Fair value of the

property portfolio

€3.3billion

BELGIUM

18Fair value

5,054

PORTUGAL

6Fair value

2,236

SPAIN

Fair value

2,773

GERMANY

Fair value

POLAND

5Fair value

3,767

APMs are included in

Chapter 10.8 of this Annual Report. The APMs are marked with and are accompanied by a definition, an objective and reconciliation as required

under the ESMA guidelines.

The EPRA (European

Public Real Estate Association) is an organisation which promotes, helps to develop and represents the European publicly listed real estate sector in order to boost confidence in the sector and increase investment in publicly listed real estate in Europe. For more information about EPRA, please consult www.epra.com.

1.1 MARKET RISKS

1.1.1 RISKS ASSOCIATED WITH SUPPLY AND DEMAND IN THE STUDENT HOUSING MARKET

The Company's income and portfolio value are to a very large extent related to property focusing specifically on student housing. This type of property makes up the vast majority of the Company's property portfolio (94% based on the Fair Value of the portfolio as at 31 December 2024, from which the Company generates 90.25% of its gross rental income as at 31 December 2024). The rent level and property valuation are strongly influenced by the supply and demand for purchasing or renting in the property market.

The demand for student housing, and therefore the Company's financial situation, can be significantly negatively affected by a decline in student populations, which could be due to the offer of study programs and/ or the (continued) presence and quality of educational institutions, or by the increase in online courses, such as Massive Open Online Courses (MOOCs), for which study materials are distributed via the Internet, so

participants do not need to relocate and are not bound by any particular location.

The demand for student rooms may also be adversely affected if any government financial aid to students (such as loans, subsidies, (housing) allowances or student grants) is scaled back or if educational institutions decide to raise their registration fees. Such a decline in demand for student housing may or may not be local, may affect a particular area of a student town, entire student town or even the entire student population in a particular country and will result in lower demand when the lease agreements are renewed with existing tenants or when new lease agreements are signed.

A decrease in the demand for student rooms may reduce the occupancy rate and/or affect the Company's ability to maintain or increase the rent of the Property, which would have a direct negative effect on the Company's income, and indirectly on the value of the Property.

An oversupply of property specifically dedicated to student housing could lead to both impairment of the Company's property (see also Risk Factor 1.2.1 of this Annual Report)

and to a decline in rents that the Company can charge to its tenants, and therefore to lower income for the Company.

As at 31 December 2024, a 1% reduction in rental income (which, as stated, is largely generated from this student real estate) would lead to a 1.84% fall in the Company's EPRA result1, a 0.04 EUR fall in the NAV per share2 and a 0.03% increase of the debt ratio (excluding any tax impact).

As the property held by the Company is largely let based on fixed-term contracts (of one year or less), such a decrease in rent prices may happen fairly quickly after the supply of student housing or the demand for student housing changes in a certain region.

1.2 PROPERTY-RELATED RISKS

1.2.1 RISKS ASSOCIATED WITH THE EVOLUTION OF THE FAIR VALUE OF THE PROPERTY PORTFOLIO

The Fair Value of the Company's property portfolio, as estimated quarterly by independent valuation experts, fluctuates and is included in accordance with IAS 40.

The Company is therefore exposed to fluctuations in the Fair Value of its property portfolio (since the start of 2024, the Fair Value of the property portfolio increased by 1.8%, which resulted in a positive portfolio result for the year 2024 (and therefore an impact on the net result) of 58 MEUR).

In general, valuations evolved positively, this increase resulting from the positive effect of rental growth. This increase was partly offset by valuation changes in two specific residences (Malmo and Aarhus), where (lim- ited) increases in property yields were not offset by higher rental income (as rents here, in order to support the ramp-up, were temporarily reduced) and which, due to their significant size, carry a higher weigh. On the other hand, we also have the variations in the valuation of investment properties due to the

As at 31 December 2024, a 1% decrease in the Fair Value of the Company's property portfolio would have an impact of 33.1 MEUR on the Company's net result and would have an impact of approximately 0.78 EUR on the net asset value per share. This would also increase the Company's debt ratio by 0.48%.

The Company is exposed to an impairment risk with regard to the property in its portfolio as a result of:

The Dutch government has announced that this transfer tax will be reduced again from 1 January 2026 to 8%);

• difficulties in carrying out maintenance operations or renovations as a result of the co-ownership of the properties con- cerned (as at 31 December 2024, a total of approximately 8.10% of the portfolio's Fair Value was represented by Company properties held in co-ownership);
• incorrect plans and/or measurements on which the property valuation is based for acquisition; and/or
• sustainability requirements due to cli- mate change and increasingly stricter regulations resulting in potentially higher investment and operating costs (see also Chapter 9 of this Annual Report).

If the Company proceeds with a transaction and therefore invests in or divests property, it also runs the risk of not identifying certain risks based on its due diligence or, despite prior due diligence and an independent property appraisal, purchasing property at too high a price in relation to the underlying value. Since Xior's IPO in December 2015, the Fair Value of its property portfolio has increased from 196 MEUR to 3,314 MEUR as at 31 December 2024. From 1 January 2024 to 31 December 2024, the Fair Value of the property portfolio increased from

1. Alternative Performance Measures. In accordance with the guidelines issued by the European Securities and Market Authority (ESMA) on 3 July 2016, the definitions of the APMs, the way they are used and the reconciliation tables are included in Chapter 10.8 of the consolidated financial statements for 2024.
2. As defined in Article 2 (23) of the Law on Regulated Real Estate Companies: the value obtained from dividing Xior's consolidated net assets, after deduction of minority interests, by the number of shares issued by Xior, after deduction of treasury shares held, in this instance at the consolidated level.

difference between the conventional value and the Fair Value of the newly acquired property on acquisition.

3,213 MEUR to 3,314 MEUR. This makes the Company one of the fastest-growing real estate companies. For example, if it were es-

tablished that the properties acquired since 1 January 2024 had been overvalued by 5% when they were acquired, this would lead to an impairment of the property portfolio, have an impact on the net result of 5,060 KEUR, and result in a 0.31% fall in the NAV per share. Based on the debt ratio as at 31 December 2024, this would result in an increase in the debt ratio by 0.07%.

For a description of the relevant property market, please refer to Chapter 8.1 of this Annual Report.

1.2.2 CONSTRUCTION, DEVELOPMENT AND CONVERSION RISKS

In addition to acquiring existing properties, the Company invests in development and conversion projects in order to expand its property portfolio. This concerns 4,867 student units out of a total of 25,562 student units after the completion of such projects, or a 24% increase after the completion of such projects compared to the Company's current property portfolio. As of 31 December 2024, the current active pipeline has an initial esti-

mated investment value of about 236 MEUR, with a total cost to come of about 62 MEUR to finalise the active pipeline. For 2025, the cost to come is 44 MEUR. The 2026 cost to come amounts to 18 MEUR and takes into account the sale of part of Brinktoren to Ymere (committed sale), for which the capex has already been partly borne and is still partly investable:

Development and conversion projects are associated with various risks. These include specific situations when the necessary permits to construct or convert a building are not granted (see Risk 1.2.3 of this Annual Report) or are contested, the project is delayed or cannot be executed (resulting in re- duced, delayed or lost rental income), or the budget is exceeded due to unforeseen costs. The Company estimates the probability of the risk of delays or cost overruns as "aver- age" and also estimates the potential impact as "average". A building conversion takes two years on average (incl. the planning permis-

1.2.3 RISKS ASSOCIATED WITH (THE REJECTION OR DELAY OF) PERMITS AND OTHER AUTHORISATIONS AND THE REQUIREMENTS TO BE MET BY THE PROPERTY

The value of property is partly determined by whether all legally required urban planning and other permits and authorisations have been issued. Obtaining permits is often time-consuming and lacks transparency, which may impact on rental income, the value of the properties concerned, and the opportunities for the Company to perform its

environmental risks (such as historical soil contamination and the (former) presence of high-risk organisations and/or high-risk operations) and environment-related proce- dures, which may take a lot of time and result in investigation costs and/or other costs. An urban construction offence may also result in penalties for as long as the offence is not barred by limitation, even if a regularisation permit has been obtained and after the rules have been fulfilled by demolishing the unlawful structures. Not obtaining any permits may also mean that redevelopment is not possible and the properties concerned have

1. Minus the sale of part of Brinktoren to Ymere (committed sale 28 MEUR), for which the capex has already been largely borne.
2. In addition, Xior is working on the redevelopment/expansion potential of existing properties in the portfolio.
3. Final investment values may differ from estimates once final permits and construction agreements are in place.

sion period). After the necessary permits are obtained, office building conversion work can only start once the rental agreements with the office tenants have come to an end. The terms of these rental agreements may not correspond to the final permit process: the rental agreements may expire too early - resulting in vacancy - or they may expire too late - meaning that the work cannot start immediately after the permit is obtained. If there is a delay in obtaining the permit or carrying out the work, this will result in a proportionate delay of the budgeted rental income and, if the start of an academic year is missed, in a more difficult first rental season.

The Company carries the construction risk for projects representing 2.7% of the total portfolio including the investment pipeline as at 31 December 2024, and the permit risk for projects representing 1% of the total portfolio including the investment pipeline as at 31 December 2024.

operational activities in such buildings. In ad- dition, specific regulatory requirements may be imposed on all properties and in particular in the student housing segment (from which the Company generated 90.25% of its gross rental income as at 31 December 2024) and/ or residential property (for example in terms of living comfort or (fire) safety); local differences and their interpretation and/or application may also depend on the authorities involved (which, in student cities, often have their own policy with regard to controlling the supply and monitoring the quality of student housing), which may be an uncertain factor in meeting such regulatory requirements, which are often very local, detailed and tech- nical.

The absence of the required permits or the failure to comply with permits or other regulatory conditions could result in the Company being temporarily or permanently unable to let the property concerned for the purpose of performing certain activities, as a result of which the property cannot be let or can only be let at lower rents. The Company thinks that it is unlikely that the Company would not be able to obtain the required permits or meet the conditions of the permits or other regulations, but if this does occur, the potential impact could be material. In this case, the Company's property may be the subject of regularisation procedures or even a reorientation to another purpose or use, which may be accompanied by adjustment works, may involve additional conversion costs and may also restrict the building's letting potential (and the resulting revenues) due to

to be sold, possibly at a significantly lower value, depending on the existing building and/or the development potential that has already been permitted or can be permitted. The Company sees the risk of not obtaining any permits as low, but the potential impact would be high in that case.

1.2.4 RISKS ASSOCIATED WITH THE EXECUTION OF MAINTENANCE WORK AND REPAIRS

The Company regularly carries out maintenance work to all properties in its portfolio in order to keep the properties and their contents (the rooms are almost always fur- nished) in good condition and finished to a proper standard. The weighted average age of the properties in the Company's portfolio is 4.3 years, and the cost of such maintenance in 2024 was approximately 5,591,401 EUR which is 0.17% of the portfolio's Fair Value and 3.33% of the gross rental income.

As the real estate in the portfolio gets older, the Company will be obliged to carry out important and/or structural renovations and investment programmes due to the build- ings' ageing or wear and tear (due to normal, structural and technical ageing) and the buildings' contents, or as a result of damage to the buildings or the contents. There is also the risk that the buildings will not, or will no longer, comply with increasing (statutory or commercial) requirements in areas such as living comfort, fire safety and sustainable development (energy performance, etc.) and need to be adapted accordingly (see Risk

factor 1.2.3 of this Annual Report). These works may lead to substantial costs and may temporarily prevent the rental of (part of) the property in question, which may have a negative effect on the Company's income. Taking into account the relatively low average age of the buildings in the Company's portfolio, the Company sees the risk described in the previous paragraph as "low", and the impact if it does happen as "moderate to high".

BASECAMP BY XIOR

Potsdam - Germany

1.3 OPERATIONAL RISKS

1.3.1 RISKS ASSOCIATED WITH THE INABILITY TO CONCLUDE LEASES AND HAVE LEASES EXECUTED (IN PARTICULAR RISKS ASSOCIATED WITH THE IMPACT OF CHANGES TO THE DUTCH HOUSING VALUATION SYSTEM), VACANCY AND LOSS OF RENT

Due to its activities, the Company is exposed to the risk of loss of rent associated with the departure of tenants before or on the expiry date of current rental agreements, including the additional risk of non-rental or re-rental. The short-term nature of the rental agreements the Company concludes with stu- dents, which tends to be less than one year, is generally inherent to the student housing sector (from which the Company generated 90.25% of its gross rental income as of 31 December 2024). When tenants leave, new rental agreements may result in a lower rental income than the current rental income (for example because of an oversupply from student accommodation) (see Risk Factor

1.1.1 of this Annual Report), and it may not be possible to reduce the rental-relatedex- penses in line with the lower rental income.

In certain countries where the Company op- erates, a number of additional factors may have a significant impact on this risk:

• In the Netherlands (where the Company generated 34% of its rental income and the real estate represented 42% of the Fair Value of the total real estate portfolio as at 31 December 2024), campus con-

tracts (which are contracts based on the tenant's qualification as a student) must be terminated when the studies end (and the student has to leave the room within a six-month period), and contracts may also be terminated with a one-month notice period (for the tenant).

The Dutch government also applies the Housing Valuation System ("woning- waarderingsstelsel" or WWS) to regulate the price level of the "social" rental market (in contrast to the deregulated rental market, where no rent level restrictions apply). In order to determine whether a property qualifies for liberalised rent (and the landlord is therefore free to determine the rent), the theoretical rent calculated in accordance with the WWS must be above a certain level, the "rent liberalisation limit", which is set at 879.66 EUR until June 30 2024 and from 1 July at 1,157.95, the increase stems from the fact that a new segment has been added, namely the middle rental, which means that a larger part of the market is regulated, which makes this system relevant to liberalised renting as well, since a tenant of a 'liberalised' dwelling is also entitled, if they are of the opinion that the theoretical rent value is below this limit, to have the tenancy commission rule on this (as of 31 December 2024, the rent of 87% (by number of units) of the Dutch portfolio are capped under the WWS).

This WWS includes the so-called "points system". A property is valued based on a series of characteristics (such as surface area, quality, location and energy perfor- mance), which are given a score. In the

end, the total score determines the rental value, which is the maximum rent for the rooms. Certain elements in the calculation can be measured completely objectively, but some elements require subjective assessment or are open to interpretation. If it is observed that the landlord did not comply with the points system (with rent exceeding the rental amount specified by the points calculation or because of a mistake in the points calculation that determines the rent), there is a risk that tenants seek redress from the tenancy commission for a price reduction and the retroactive recovery of any overpaid amounts. If a tenant succeeds in such a claim, there is also the risk that other tenants in similar circumstances can also make a claim. This risk materialises relatively often, but has a low impact as this tends to happen on a case-by-case basis. A legislative or general policy change in this points system or in its interpretation (due to legislative action, a policy change during enforcement or precedents set by the tenancy commission or the courts) may have, although the company does not expect this, a potentially significant negative impact on the Company's current and future rental income and on the valuation of the relevant property, as this would directly affect the property's expected rental flows and market value.

• For Spain and Portugal, it should be pointed out that the occupancy rate (for units let directly to students) comprises two distinct periods: first, the ten-month academic year during which leases

almost exclusively cover the academic year and often cover an even shorter period (for foreign students participating in exchange programmes for one semester or on a monthly basis) and second, the two-month summer period, which is characterised by shorter leases (at higher rental prices). Summer rentals are often related to the demand for tourist or short- term rentals in the cities concerned. It has also become apparent that if there is a general decline in demand for tourist rentals and short-term rentals (such as hotels and apartments), such as caused by the COVID-19 crisis; these players also compete in the market for short-term rentals to students, which leads to a fall in occupancy levels and market rents. On this basis, the Spanish and Portuguese student housing markets are therefore characterised by a higher "frictional vacancy rate" and a higher management overhead (frequent check-in and check-out, administrative processing, marketing efforts) than the Belgian and Dutch markets, and are more sensitive to the general economic situation and international mobility.

• In Poland, too, the rent also experiences a seasonal effect, with the occupancy rate lower in the summer months than during the academic year. Rental during the summer months often consist of rental to groups (such as companies or associations with a need for short-term accommodation) or rental in the context of events. This rental is therefore charac- terised by a higher "frictional vacancy rate" and a higher management effort, such as

in Spain and Portugal, and is also more sensitive to the general economic situation and international mobility.

• In Denmark, student housing is regulated as residential, and students are protected by The Danish Rent Act (Lejeloven). Contracts are as standard open ended and the notice period for termination is typically 3 months. A time limitation can also be agreed on in the contract. In this case the rent will end when contract ex- pires and if it will be renewed to the same tenant it will be undetermined time. Xior is currently only renting out undetermined with 3-month notice. This short notice period gives a risk of unforeseen vacancy that can be difficult to fill if it's between the academic terms. If the property is built after 1992, or located in a not regulated area the landlord can determine the rent free. But the rent can't exceed 10% of the value of the lease. Tenants can file a claim to Housing Committee (Huslejenævnet) who will determine if the lease is too high.
• In Sweden student housing is also not a separate asset class. Like in Denmark it's regulated as residential, and students are protected by The Swedish Rent Act (Hyresrättslagen). Contracts are in gen- eral open ended (undetermined time) and according to the law notice period is 3 months. But in the agreement a time limita- tion can also been agreed. In this case the rent will end when contract expires. Like in Denmark Xior rents out undetermined with 3-month notice. It creates the same risk of unforeseen vacancy like in Denmark but the usage in Sweden is slightly more

flexible so we can fill the gaps with other activity than students for a short period of time. The rent determination in Sweden is determined by either "utility value rent" "bruksvärdeshyran" or "presumption rent" (presumtionshyra) which is a rent the landlord negotiate with the tenant organization bound for 15 years. For Xior property we have determined the rent based on Utility value method and agreed the rent individually which each students. The are no general ruling prohibiting us to agree a rent with the tenants that is higher than the "utility value rent" as long as fixed rent is agreed with the tenant in an individual contract, also the indexation needs to be agreed upfront in the contract and it's not allowed to increase the rent due to unforeseen costs such as increased taxes. The utility value is not based on the landlord's actual costs for the apartment but the value of the apartment for a tenant in general. There is a risk that the tenant can create a claim to housing committee (Hyreslagstiftningen) to get their case proven. Housing committee can require a potential adjustment, already from an earlier point in time. Normally the Housing committee will accept an additional rent of 15-25 % on the basic marketrent if the concept includes furniture, internet, common areas etc. But if there will be a case the exact topup will be assessed by the court.

1.3.2 RISKS ASSOCIATED WITH MERGERS, DEMERGERS OR TAKEOVERS AND PROCESSING/INTEGRATION OF ACQUIRED ACTIVITIES

In order to structure and grow its real estate portfolio, the Company has engaged in merg- ers, demergers and other takeover transactions in the past, and is expected to continue to do so in the future. By their very nature, such transactions transfer all the liabilities of the real estate companies concerned, including those that the Company may not have been able to reveal in the context of its due diligence investigations and those that the Company may not have been able to hedge with guarantees in the relevant take- over agreements. This may be partly due to the transferors' non-compliance with certain obligations or their inability to present certain documents (such as provisional or final acceptance documents, insurance documents, electricity records, post-intervention files and fire safety inspection reports, etc.). The stipulated warranties are moreover limited in time and sellers normally place a cap on their liability under them. Lastly, the Company continues to be faced with the risk of insolvency of its counterparty.

Since Xior's IPO in December 2015, the Fair Value of its property portfolio has increased from 196 MEUR to 3,314 MEUR as of 31 December 2024. This growth since the IPO is almost exclusively due to capex and take- over transactions (including acquisitions of real estate), as detailed in the overview included in sections 10.9.17 and 10.9.29 of the consolidated financial statements as at 31 December 2024.

Xior also carried out a very substantial take- over transaction in 2022 with the acquisition of Basecamp (with regard to a real estate portfolio of 671 MEUR as at 31 December 2022). This transaction also related (in the second phase of this transaction, implemented in April 2024) to a number of operational companies, together with the operational teams working in these companies and running this portfolio. In addition to the above

risks, a takeover and integration of such a size also involves an important process of organisational change in order to integrate the acquired organisation into the existing Xior organisation and to make the employees involved part of the entire organisation as soon as possible. This entails risks in terms of retaining and attracting motivated employees, transferring and retaining operational knowledge, integrating processes and ensuring the continuity of the Company's operations and reporting. If this process is not or insufficiently controlled, it may, even after implementing this operation, lead to loss of operational efficiency, inadequate follow-up of operational and financial risks, delay in carrying out the necessary steps related to maintenance, repairs and customer service.

1.3.3 RISKS ASSOCIATED WITH THE LARGE-SCALE DIGITALISATION PROJECT

In 2022, Xior began a broad-based selection process to create an integrated IT platform that will eventually be rolled out to all the countries in which it operates. This IT platform will eventually provide support for all aspects of Xior's business, both operational (rental, website, maintenance and repairs) and financial (accounting and reporting). This project was launched in 2023 and a plan was made for the phased set-up and roll-out of this platform in cooperation with the partner selected for this purpose, Yardi, across countries. The Netherlands was selected as the 'guiding country' for initial set-up and roll- out. In 2024, it was decided to use a phased onboarding of the different regions and buildings for the roll-out within the Netherlands, with two 'soft go lives' during 2024, which will continue in 2025 with a completion, expected in Q4 2025 for the entire Dutch portfolio. This project involves an estimated investment amount of 5 MEUR, but its impact will eventually touch the Company's entire value chain.

Such ambitious and far-reaching IT projects include numerous aspects and decisions that require precise and thorough follow-up, both from the external partner and internally,

which is essential for ensuring the necessary internal support for the project in the long term.

If the Company fails to achieve a good result for this project together with its external partner, there is not only the risk that the investment made will not have any results, but a malfunctioning platform could also lead to reduced rentals, frustrations among tenants, higher maintenance costs of delayed recognition of such costs, legal and financial risks, vacant rooms, incorrect, or insufficient reporting and/or reputational damage. Taking into account the quality of the selected part- ner, the deployment of a large part of the Company's employees, the use of a phased (country by country) approach, the complexity of such a process and the comprehensive impact of the project on the operations, the Company estimates the chance of the risk materialising as described in the previous section as medium to high, and the impact if it materialises as medium to high. This risk is further mitigated by, among other things, the creation of a detailed, phased roadmap for design and implementation with interim evaluation and adjustment, the implementation of an extensive gap analysis between the operational needs and the delivered platform, direct management attention, and the fact that each of the Company's departments allocates people and other resources to the success of this project.

1.3.4 RISKS ASSOCIATED WITH DISTURBANCES CAUSED BY STUDENTS AS TENANTS AND RESULTING REPUTATIONAL DAMAGE

Because the Company mostly lets properties directly or indirectly to students (93.83% of the Fair Value of its portfolio and 90.25% of its gross rental income as at 31 December 2024), it is more at risk (specifically compared with other real estate (sub-)sectors) of receiving complaints about disturbances or nuisance to neighbours and of being subjected to certain administrative or other measures for the buildings in its property portfolio. Such complaints and measures

may result in additional costs and reduced income both directly and indirectly (due to reputational damage, disruption of the relationship with the relevant authorities or the reduced lettability of the premises concerned). There is also an increased risk (compared to other real estate (sub-)sectors) that tenants may engage in certain activities in the property in question that are not permitted by the applicable legislation and/or rental contract without informing Xior. Such activities could result in government enforcement and even the (temporary) closure of the building in extreme circumstances.

For the Company's initiatives in this regard, please refer to the item "Community Engagement" in Chapter 9.4.2 of this Annual Report.

1.3.5 RISKS OF DEFAULTING TENANTS

The Company cannot rule out the possibility that its tenants may fail to fulfil their financial obligations towards the Company. This risk increases as inflation (and the related increase in rents and energy costs) rises, as happened in 2022-2023. In the Company's student housing segment, this risk is higher with leasing directly to students (which was the case for approximately 94.06% of the Company's student housing gross rental income as at 31 December 2024, which represented in turn 90.25% of its gross rental income as at 31 December 2024) and is lower with leasing indirectly to students via housing organisations linked to a college or university (which was the case for approximately 5.94% of the Company's student housing gross rental income as at 31 December 2024). However, this also means that in the second case of indirect rental to students the counterparty risk is situated with one party only, whereas in the first case of direct rental to students the counterparty risk is spread. If tenants remain in default of their obligations towards the Company, there is a risk that the guarantee (covering one or two months' rent as the case may be) will not suffice, that the Company will be unable to have recourse against the tenant and

consequently be unable to recover anything or only a small amount from the defaulting tenant. In addition, the default of tenants and the follow-up of these debtors gives rise to additional internal and external costs (send- ing formal notices, summonses, legal costs).

Loss of rental income could also have a negative impact on the valuation of the property concerned (see also Risk Factor 1.2.1 of this Annual Report), and may increase following specific events (such as the COVID-19 pan- demic).

As at 31 December 2024, 442,825 EUR in provisions for doubtful debtors had been set up (see Chapter 10.9.13 of this Annual Report). This makes up 0.30% of the gross rental income (excluding rental guarantees). In 2024, the external collection costs with regard to defaulting tenants was approximately 440,073 EUR , compared to 327,766 EUR the previous year (an increase of 34%). The teams in the various countries are tasked with monitoring the progress of the collections and the measures to be taken. .

1.3.6 RISKS ASSOCIATED WITH (THE INABILITY TO PAY) DIVIDENDS

Pursuant to the Legislation on Regulated Real Estate Companies and Article 34 of the Company's Articles of Association, the Company is subject to a distribution obligation of at least 80%.

No guarantee can be given that the Company will be able to make dividend payments in future. Even if the Company's properties are yielding the expected rental income and operational profit, it may become technically impossible for the Company to pay a dividend to its Shareholders in accordance with Article 7:212 of the Belgian Companies and Associations Code and the Legislation on Regulated Real Estate Companies. In view of the fact that the Company had limited or no reserves at the time of its inception (rec- ognition as a regulated real estate company and IPO) and could only slowly build these reserves because of the above-mentioned