Klepierre SA · EURONEXT:LI
Klepierre SA — H1 2002 Earnings Presentation
56 slides from Klepierre SA's earnings presentation, Sep 10, 2002
Slide 1: First-half results for the six months ended June 30, 2002
First-half results for the six months ended June 30, 2002 September 10, 2002
Slide 2: 1998 - 2001: reaching new heights
1998 - 2001: reaching new heights 350 Total revenues (total share, excl. dev.) - in €m EBITDA (total share, excl. dev.) - in €m 300 Shopping centers Offices 300 89,1 250 250 X 4.2 X4 200 200 150 42,3 150 85,2 247 81,5 214,3 100 100 72,3 122,3 120,5 132,9 132,8 28,4 109,5 50 83,4 50 73,4 62,1 43,9 49
Slide 3: Activity sustained in first half
Activity sustained in first half èStrong earnings growth, attesting to potential of business model èEmphasis on development in strategic growth markets: France, Spain and Italy èFinancial structure strengthened 3
Slide 4: First-half 2002 Operating highlights and earnings
First-half 2002 Operating highlights and earnings 4
Slide 5: Future looks bright for shopping centers
Future looks bright for shopping centers Acquisitions integrated successfully • Malls integrated (acquisitions or new developments): –2001: 80 malls, representing GLA of 470,.000 sqm and lease income of €59.3 M –2002: 291 malls, representing GLA of 190,000 sqm and lease income of €11.2 M 1: of which
Slide 6: Growth in shopping centers across Europe
Growth in shopping centers across Europe In France • Acquisitions/inaugurations: – 2001: 70 centers acquired and 4 inaugurated – 2002: 9 centers acquired • Activity: 122 leases renewed (+27%), 112 leases renegotiated (+28%) • Financial occupancy rate: 98.9% In Spain • Acquisitions/inaugurations: – 2
Slide 7: Office properties, an opportunistic strategy in a market undergoing correction
Office properties, an opportunistic strategy in a market undergoing correction Office property market in H1 2002 • Drop in demand • New property supply remains under control è Rising vacancy rate, close to equilibrium (5 to 6%) è Slight increase in yields Klépierre’s office property strategy • Exclu
Slide 8: Office properties, proactive arbitrage strategy
Office properties,proactive arbitrage strategy Operating highlights for H1 2002 • Divestitures: – Completed: €59M, of which €19.3M by June 30, 2002 2002 objective: €150 M – “Agreed on”: €90 M • Leases renewed or renegotiated: – GLA leased: 19,382m² (4.6% of real estate assets) – Rental capital gain:
Slide 9: Office properties, real-estate value enhancement in perfect alignment with market
Office properties, real-estate value enhancement in perfect alignment with market Principle • Opportunistic strategy (seller today) => valuation of real-estate holdings closely aligned with market June 30, 2002 values • Appraised value: €1,258.8 M, down 1.9% on a constant structural basis • Paris CB
Slide 10: Office properties, portfolio shows strong rental upside potential
Office properties, portfolio shows strong rental upside potential Renewal schedule (portfolio at June 30, 2002 reporting date) • Period % of leases Reversionary potential • H2 2002 6% + 33% • 2003 13.2% + 24% • 2004 24.5% + 30% è Rental upside potential: €10M by year-end 2004 Impact of construction
Slide 11: Office properties, project on track
Office properties, project on track “Camille Desmoulins” property • Delivery date October 2002 • Location Zac Forum Seine (Issy les Mx) • Retail floor area 12,000 m² • Tenant Stéria • Annual rent €4M • Lease term 6 years binding 11
Slide 12: Financial statements H1 2002
Financial statements H1 2002 12
Slide 13: Growth in lease income exceeds forecasts
Growth in lease income exceeds forecasts In euro millions (total share) Shopping Office Total centers properties Constant structural basis 90.0 36.7 126.7 + 9.9% + 5.4% + 8.6% Acquisitions 18.2 3.6 21.8 Divestitures - 1.1 1.1 Lease income 108.2 41.4 149.6 + 26.8% + 0.9% + 18.4% 72.3% 27.7% 100% 13
Slide 14: Revenues: +16.8%
Revenues: +16.8% Shopping Office In euro millions (total share) Total centers properties Lease income 108.2 41.4 149.6 +26.8% +0.9% +18.4% Fee income 14.1 0.9 15.0 +1.5% na +3.6% Revenues (excl. dev.) 122.3 42.3 164.6 +23.4% +1.1% +16.8% Other revenues 0.2 1.9 2.1 Operating revenues (excl. dev.) 122
Slide 15: Cash flow from operations
Cash flow from operations Shopping Office In euro millions (total share) Total centers properties Operating revenues (excl. dev.) 122.5 44.2 166.7 +21.1% +2.7% + 15.7% Cash flow from operations 96.4 36.4 132.8 (excl. dev.) +19.9% -1.9% +13.0% Building and administrative - 26.8 -6.3 - 33.1 expenses +
Slide 16: Cash flow from operations
Cash flow from operations In euro millions 06/2002 06/2001 D% Cash flow from operations (total share) 132.8 117.5 +13.0% (excl. dev.) Pre-tax cash flow from operations (total 85.0 +23.2% 69.0 share) (excl. dev.) Pre-tax cash flow from operations (group 67.1 54.5 +23.1% share) (excl. dev.) Financial
Slide 17: Net current cash flow
Net current cash flow In euro millions (group share) 06/2002 06/2001 D% Pre-tax cash flow from 67.1 54.5 + 23.1% operations (excl. dev.) Tax expense (excl. dev.) (10.1) (10.8) - 6.4% Net current cash flow (excl. dev.) 56.9 43.8 + 30.0% Amortization basis enlarged through new acquisitions è sustainab
Slide 18: Net earnings
Net earnings In euro millions (group share) 06/2002 06/2001 D% Net cash earnings 18.7 12.0 +55.7% Non-recurring result (net) 6.2 2.9 Net earnings 24.9 14.9 +67.1% Divestitures 2001 => €135.6M 12 properties 105,331 sqm Gross capital gain: €57M Divestitures 2002 - completed June 30 => €19.3M 3 propert
Slide 19: Per share data
Per share data 06/30/2002 06/30/2002 06/30/2001 D% (fully diluted) Number of shares 13 554 070 12 993 369 14 941 919 Pre-tax operating cash flow 4.20 € 3.37 € +24.6% 3.91 € +27.4% (excl. dev.) Net cash earnings 1.38 € 0.92 € +49.4% 1.35 € + 43.5% Net earnings 1.84 € 1.15 € +60.2% 1.76 € +55.6% 19
Slide 20: Real estate holdings
Real estate holdings Value of real estate holdings at 06/30/02 (group share): €3,935 M S Centers Italy S Centers: 8% Greece, Slovakia 1% S Centers Spain 10% Offices properties 67% 33% (62% at end 2001) 33% (38% at end 2001) S Centers France 48% Shopping centers: €2,627 M Office properties: €1,309 M
Slide 21: Revalued net assets
Revalued net assets 06/30/2002 Group share 06/30/2002 06/30/2001 D% (fully diluted) Revalued net assets 2 052 1 799 + 14.0% - (€ M) Revalued net assets per 151.4 138.5 + 9.3% 146.6 share (€) Number of shares 13 554 070 12 993 369 14 941 919 Change in revalued net assets per share over 6 months: + 5%
Slide 22: Pursuing strategic growth opportunities
KLEPIERRE au coeur de la grande consommation é ee ’ Pursuing strategic growth opportunities KLEPIERRE
Slide 23: Sustained activity in early months of 2002
Sustained activity in early months of 2002 €400 million invested over 8 months • February: 7 malls acquired from Carrefour (July 2000 agreement) – In France: 7 existing malls (1st phase of the agreement – existing malls) • July: major developments in Italy – Acquisition of malls • From Carrefour: 11
Slide 24: A growth strategy well balanced over key markets
A growth strategy well balanced over 3 key markets France: N°1 101 centers Surface : 740.000 sqm GLA Estimated GDP 2003-20041 2.4% - 2.7% Italy: N°1 Spain: N°2 23 centers 52 centers Surface : 170.000 sqm GLA Surface : 150.000 sqm GLA Estimated GDP 2003-20041 Estimated GDP 2003-20041 2.1% - 2.2% 2.4%
Slide 25: Well-established players are in the best position to capitalize on key market trends
Well-established players are in the best position to capitalize on key market trends A highly structured market • Growth in market share of shopping malls versus traditional retailers • Increasingly difficult to obtain go-ahead on large new development projects • Strong potential for extending exist
Slide 26: Compared evolution of consumption
Compared evolution of consumption TOTAL : CONSUMPTION EVOLUTION PER CAPITA 7000 6632 6393 6079 5856 6000 5644 5497 5566 6057 5344 5831 5103 5640 4934 5447 5498,2384 4839 5000 4730 5215 5235 5150 5130 4994 4882 4837 Source : Eurostat. 2002. 4683 4612 4536 4530 4433 4000 4280 France ItalY Spain 3000 2
Slide 27: Breakdown of household consumption in 2001
Breakdown of household consumption in 2001 BREAKDOWN OF HOUSEHOLD CNSUMPTION IN 2001 100% 90% 80% 70% 60% Catering Source Eurostat 2002. Entertainment Hygiene 50% House fittings Clothes 40% Food 30% 20% 10% 0% France Italy Spain (2000) 27
Slide 28: Evolution of the French gallery revenues in household consumption
Evolution of the French gallery revenues in household consumption EVOLUTION OF THE FRENCH GALLERY REVENUES IN HOUSEHOLD CONSUMPTION (PANEL SEGECE) : TOTAL EXPENSES FRANCE 150 138,9 140 133,3 130 123,2 Source SEGECE - Eurostat 120 114,8 116,1 Total revenues Gallery Consommation / hab COnsumption 110
Slide 29: Italy: a strategic market
Italy: a strategic market High-growth market • Low shopping center sales area density area per 1,000 inhabitants: 97 m²/1,000 inhabitants 1.5 lower than in Spain and 2.5 times lower than in France • Most centers are medium-sized (-> potential for extending existing centers) • Fragmented market (-> o
Slide 30: Extending the partnership with Carrefour in Italy
Extending the partnership with Carrefour in Italy Torino Montecucco 1 131 m² Burolo 939 m² Paderno 12 832 m² Giussano 2 833 m² Moncalieri 5 791 m² Thiene 5 607 m² Tried and tested approach Vercelli 1 646 m² • 11 centers acquired for €226M, Massa 7 125 m² covering GLA of 67,000 sqm Pescara 9 917 m² •
Slide 31: Finiper, a partnership built on development
Finiper, a partnership built on development GRANDATE 2 162 m² BREMBATE 1 536 m² SERIATE 7 562 m² Klépierre devient le partenaire de Finiper VARESE 4 838 m² SAVIGNANO 13 742 m² • Acquisitions/development : PESARO 8 599 m² – 40% interest in IGC (9 centers MONTEBELLO 8079 m² adjoining IPER hypermarkets
Slide 32: PSG (Ségécé/Finim), Italy's leading shopping center manager
PSG (Ségécé/Finim), Italy’s leading shopping center manager Strong presence Centers managed by PSGEurocenter in key regions • July 2002 : groupings of PSG-Eurocenter • 50% Ségécé - 50% Finim • 70 employees • 52 centers under management – 23 directly owned by Klépierre – 41 property management – 236
Slide 33: Ségécé, a key manager in Continental Europe
Ségécé, a key manager in Continental Europe A strong European leader • 500 employees over 7 countries N° 1 in Belgium 15 shopping centers • 300 under management of which 178 804 leases owned 215 000 sqm GLA • 1,9 million sqm GLA Czech Republic • 10.000 leases Slovakia 2 shopping centers 180 leases 5
Slide 34: Shopping center growth potential exceeds 1,000,000 m²
Shopping center growth potential exceeds 1,000,000 m² Market Country Position Five-year potential Bigger euro countries Mature France n° 1, global player Extension : 90 000 sqm Dev : 200 000 sqm Growth Spain n° 1 in the short term, Extension : 180 000 sqm global player Dev : 170 000 sqm Italy n° 1 i
Slide 35: A solid financial structure
KLEPIERRE au coeur de la grande consommation A solid financial structure KLEPIERRE
Slide 36: Early retirement of convertible bonds will raise additional shareholders' equity of €133M
Early retirement of convertible bonds will raise additional shareholders’ equity of €133M Decision in line with growth prospects • Investment programme 2002-2003 : 1,2 Md€ • Low impact of the dilution An option due to strong performances registered • Difference between stock price (July 2002) > to 3
Slide 37: Impact on float expected to be positive
Impact on float expected to be positive Market capitalization in euros millions 2 000 1 500 Other shareholders 1 000 BNP Paribas 500 0 30/06/02 30/06/01 pro forma (Stock price : 105 €/share) fully diluted (Stock price : 123,5 €/share) BNP Paribas’ stake reduced from 59% to 53% 37
Slide 38: A reinforced debt structure
A reinforced debt structure In euro millions (total share) 06/30/02 06/30/01 Revalued real-estate assets (I) 4 577 3 779 Net corporate debt (II) 2 141 1 675 Net corporate debt/Revalued real- 46.8% 40.4% estate assets (II)/(I) Net corporate debt excl. CB (III) 2 005 1 484 Net corporate debt excl. CB
Slide 39: Diversified financial resources
Diversified financial resources Euro millions ASSETS LIABILITIES Shopping centers Net book value Shareholders’ 938 equity Net book value 2 507 Unrealized capital gain 1 114 341 (NBV) Minority 167 (UGC) interests Unrealized capital gain 136 Convertible bonds 759 225 Subordinated loan 154 Equity-type
Slide 40: Liabilities management, a careful approach
Liabilities management, a careful approach Debt and interest rate hedging • Average cost of debt - 1st semester 2002 : 5,4% • Average due date of debt - July 1st 2002 : 4 years • 80% of forecasted debt as of January 1st 2003 hedge when Euribor < 6% • Hedging average due date - July 1st 2002 : 5,9 ye
Slide 41: A financing capacity of €1.3 M over 2002/2003
A financing capacity of €1.3 M over 2002/2003 Over 01/1/02 – 12/31/03 : 24 months • Free cash flow • Net proceeds on divestments + 600 M€ of own resources • CB conversion Financing capacity1 : €1.300M of which €700 m through new debt 1 taking into account a maximum loan to value of 50% 41
Slide 42: Outlook for 2002-2003
Outlook for 2002-2003 KLEPIERRE
Slide 43: Objectives revised upward on strength of business model
Objectives revised upward on strength of business model Program for external growth in shopping centers • Initial objective for 2002/2003: €1 billion • Revised objective: €1.2 billion – of which, €400M achieved at August 31, 2002 Growth in net current cash flow • Objectives of the business model: –
Slide 44: Klépierre: the leading shopping center manager in continental Europe
Klépierre: the leading shopping center manager in continental Europe 44
Slide 45: Calendar of events in 2002
Calendar of events in 2002 October 30, 2002: Q3 revenues January 29, 2003 : 2002 annual revenues February 25, 2003: 2002 annual results 45
Slide 46: APPENDICES
KLEPIERRE au coeur de la grande consommation RRA; | WS, 2a SOG \) APPENDICES KLEPIERRE
Slide 47: Rents in group share as of June 30, 2002
Rents in group share as of June 30, 2002 In € millions – group share Shopping Offices Total Centers Constant structure 71,0 36,6 107,7 + 9,7% + 5,4% + 8,2% Acquisitions 16,0 3,6 19,6 Disposals - 1,1 1,1 Total rents 87,0 41,3 128,3 + 28,6% 1,2% + 18,3% 47
Slide 48: Cash flow from operations
Cash flow from operations 30/06/2002 30/06/2001 D% In € million Total share Group share Total share Group share Total share Group share Cash-flow from 132,8 112,6 117,5 100,0 +13,0% +12,6% operations (excl. dev) Pre-tax cash flow from operations (excl. 85,0 67,1 69,0 54,5 +23,2% +23,1% dev) Financia
Slide 49: Net current cash flow
Net current cash flow 06/30/2002 06/30/2001 D% In € millions Total share Group share Total share Group share Total share Group share Cash flow from 132,8 112,6 117,5 100,0 +13,0% +12,6% operation (excl.ors dev) Tax expenses (12,7) (10,1) (13,0) (10,8) (excl. dev) Net current cash 72,3 56,9 56,3 43,8
Slide 50: Net earnings
Net earnings 30/06/2002 30/06/2001 D% In € millions Total share Group part Total share Group share Total share Group share Net cash earnings 27,4 18,7 18,8 12,0 +45,7% +55,7% Non recurring result 6,0 6,2 3,0 2,9 Net earnings 33,4 24,9 21,8 14,9 +53,3% +67,1% Disposals 2001 => 135,6 M€€ 12 immeubles
Slide 51: Data per share as of 12/31/2001
Data per share as of 12/31/2001 Dec 31/01 Dec 31/01 Dec 31/00 D% Fully diluted Number of shares 13 383 557* 12 948 655 14 941 919 Net current cash flow (excl. dev) 7,6 € 5,7 € +33,8 % 7,0 € +35,1% Net cash earnings 2,2 € 2,7 € - 17,3 % 2,2 € -15,2% Net earnings 4,9 € 4,3 € +12,5 % 4,6 € +13,9% * Aft
Slide 52: Condensed consolidated balance sheet
Condensed consolidated balance sheet Assets Liabilities In € millions 06/30/2002 06/30/2001 06/30/2002 06/30/2001 Long-terms assets 3 399,3 2 688,9 Shareholders’ equity 938,1 850,0 Intangible 75,8 21,3 Minority interests 340,6 297,5 Fixed 3 254,0 2 660,5 Provisions for contingencies and Financial 68
Slide 53: Characteristics of Convertible Bonds
Characteristics of Convertible Bonds • Amount of the issue 191,6 million euros (970.681 bonds) • Issue price 197,4 euros • Maturity January 1st 2006 • Coupon 3% (gross yield to maturity 3,31%) • Conversion each bond is convertible into 2.06 Klépierre shares (corresponding stock price: 98.7 euros) •
Slide 54: Portfolio (total share)
Portolio (total share) Portfolio at June 30, 2002 (total share) €4 577M S Centers Italy S Centers: 8% Greece, Slovakia 1% S Centers Spain 10% Offices properties 29% 71% 29% S Centers France 52% Shopping centers : 3 266 M € Offices : 1 311 M € 54
Slide 55: Office properties: gross capitalization yields
Office properties: gross capitalization yields Gross capitalization yields minima/maxima and average Per area at 06/30/2002 17,00% 15,00% - Maximum 13,39% 13,39% - Average 13,00% - Minimum 11,00% 9,74% 9,52% 9,00% 8,48% 8,48% 8,50% 7,85% 7,56% 7,54% 7,60% 7,50% 7,36% 7,17% 7,00% 7,06% 7,09% 6,64% 6,
Slide 56: Shopping centers: capitalization yields
Shopping centers: capitalization yields Shopping centers: capitalization yields (appraised value for 2001) 14,00% 12,6% - Maximum 12,00% - Average - Minimum 10,00% 9,7% 9,7% 8,1% 8,3% 8,00% 7,1% 7,0% 7,1% 6,4% 6,4% 6,00% 5,7% 6,0% 6,3% 4,00% 2,00% 0,00% France – Super France Spain Italy Greece Regio