Klepierre SA · EURONEXT:LI
Klepierre SA — FY2002 Earnings Presentation
49 slides from Klepierre SA's earnings presentation, Feb 25, 2003
Slide 1: Full year 2002 earnings
Full year 2002 earnings Tuesday, February 25, 2003 V2.0d 1 Klépierre, au coeur de la consommation
Slide 2: Outline
OUTLINE 2002 in review Operating highlights Financial statement highlights Shopping center strategy: leadership in Continental Europe V2.0d 2 Klépierre, au coeur de la consommation
Slide 3: Klépierre: on the growth track
Klépierre: on the growth track • Successful shopping center Lease income (rents) development strategy + 14.9% Operating highlights Î Integration of 36 new shopping centers • Pursuit of active arbitrage of office Net Current cash flow* properties Î Synchronized with the real-estate cycle + 16.6% • Ea
Slide 4: 2002: a year of significant growth in shopping center portfolio
2002: a year of significant growth in shopping center portfolio • Planned acquisitions pursued Î Italian presence strengthened Operating highlights Î Further acquisitions in France and Spain Î Foothold in Portugal • Geographic diversification of lease income accelerated Î 25% of shopping center leas
Slide 5: Opportunistic strategy for the office property portfolio
2002: opportunistic strategy prevails for the office property portfolio • Impact of economic slowdown on Paris office market Operating highlights • Reduced exposure to office market Î Timely sale of mature assets Î Office property assets down from 33% of total holdings to 25% in 1 year • Business in
Slide 6: Enhanced risk profile
Enhanced risk profile Analysis of rents as of December 31, 2002 (total) Operating highlights Offices 26% Shopping centers - Other 2% Shopping centers - France Shopping centers - 55% Spain 10% Shopping centers - Italy 7% 74% 26% (68% in 2001) (32% in 2001) Shopping centers: €230.7 million Office prop
Slide 7: Outline
OUTLINE 2002 in review Operating highlights Financial statement highlights Shopping center strategy: leadership in Continental Europe V2.0d 7 Klépierre, au coeur de la consommation
Slide 8: Business in line with forecasts
Business in line with forecasts • Defined objectives were surpassed Shopping centers Î Impact of change in scale was significant (phase 1 and 2 of Carrefour agreement) Î External growth unrelated to Carrefour in target countries Î Organic growth through rental reversion (ICC impact significant in Fr
Slide 9: Strong growth across the board: France
Strong growth across the board France • Number 1 in the market, top manager Shopping centers • 101 shopping centers owned and 153 managed • Management teams: 296 people • Highlights of 2002: Î 9 centers acquired (52,421 sq.m. - 290 leases) Î Rents up 7.8% (o/w 4.2% due to inflation-indexed adjustmen
Slide 10: Strong growth across the board: Spain
Strong growth across the board Spain • Number 2 in the market, top manager Shopping centers • 58 centers owned and 86 managed • Management teams: 109 people • Highlights of 2002 Î 6 centers acquired (52,583 sq.m. - 300 leases) Î Rents up 4.3% (o/w 2.7% due to inflation-indexed adjustments) Î 192 ren
Slide 11: Strong growth across the board: Italy
Strong growth across the board Italy • Number 1 in the market, top manager Shopping centers • 23 centers owned and 52 managed • Management teams: 71 people • Highlights of 2002 Î 20 centers acquired (impact in H2 2002 only) Î Rents up 4.1% (o/w 2.9% due to inflation-indexed adjustments) Î 31 renewal
Slide 12: Klépierre in Continental Europe
Klépierre in Continental Europe Belgium, Portugal, Czech Republic,Slovakia and Greece Shopping centers • A pivotal role • 3 centers owned and 18 managed • Management teams: 80 people • Outlook for 2003 Î New project acquisitions 12 V2.0d Klépierre, au coeur de la consommation
Slide 13: Ile-de-France market deteriorates
Ile-de-France market deteriorates • Pre-lettings down by 11% 3,0 380 360 • Available supply in one year up 2,5 Office properties Î End 2002: 3 800 000 sq.m. (o.w 33% new) 340 Î Fin 2001: 2 500 000 sq.m. 2,0 320 300 1,5 • Vacancy rates are up 280 Î Ile de France 5.8% 1,0 260 Î Paris 4.0% 240 Î La Déf
Slide 14: An opportunistic strategy
An opportunistic strategy • Holdings less sensitive to vacancy risk Î 90% of portfolio holdings in Paris and 1ste couronne (West) Office properties Î Fully equipped, full service properties (+ 5 000 sq.m.) Î Prime tenants • Disposal of mature assets Î 11 assets covering 45 200 sq.m. for €150.1 milli
Slide 15: 2002: business in line with forecasts
2002: business in line with forecasts • 28 leases signed (12 new) in 2002 Î FY rents of €8.1 million (+24% on leases) Weighted average term for new firm leases Office properties Î 100% signed in 2002: 5 years 99,30% 99,10% 2,5% 99% • Rental prices positively oriented in 2,0% 2002 98% 98% Î Total lea
Slide 16: Resistance potential is real
Resistance potential is real • Global reversionary potential of more than 15% Office properties • Lease renewals (3-year horizon) % leases reversionary potential (%) 2003 17 + 22 2004 20 + 20 2005 3 + 31 ___ 40 • Pursuit of arbitrages in 2003 Î Objective: €150 million in sales 16 V2.0d Klépierre, au
Slide 17: Outline
OUTLINE 2002 in review Operating highlights Financial statement highlights Shopping center strategy: leadership in Continental Europe V2.0d 17 Klépierre, au coeur de la consommation
Slide 18: Shopping center rents: +25.1%
Shopping center rents: + 25.1% Shopping center growth Financial statement highlights Organic: + 7.2% + 25.1% External: + 17.9% In € millions –total part Shopping centers Offices Total 180,7 64.9 245.6 Constant structural basis + 7.2 % + 4.2 % + 6,4 % Acquisitions 50.0 7.9 57.9 Divestitures - 8.4 8.4
Slide 19: Operating earnings: +13.4%
Financial statement highlights Operating earnings: + 13.4% In € millions – total share Shopping centers Offices Total 230.7 81.2 311.9 Lease income + 25.1 % - 6.7 % + 14.9 % 30.4 1.1 31.5 Fee income + 1.3 % n.a. - 1.5 % 261.1 82.3 343.4 Revenues (excl. dev) + 21.8 % - 8.9 % + 13.2 % 5.8 0.2 6.0 Othe
Slide 20: Cash flow from operations: +12.8%
Financial statement highlights Cash flow from operations: + 12.8% In € - total share Shopping centers Offices Total Operating revenues 266.8 82.6 349.4 (excl. dev) + 21.9 % - 7.5 % + 13.4 % Cash-flow from operations 203.2 75.3 278.5 (excl. dev) + 22.2 % - 6.7 % + 12.8 % Operating ratio under control
Slide 21: Significant increase in current cash flow
Financial statement highlights Significant increase in current cash flow In € millions 2002 2001 ∆% Cash-flow from operations (total share) 278.5 247.0 + 12.8 % (excl. dev) Pre-tax cash-flow from operations (total share) 180.4 150.9 + 19.5 % Group (excl. dev) share Pre-tax cash-flow from operations
Slide 22: Net current cash flow: +20.2%
Financial statement highlights Net current cash flow: + 20.2% In € millions – group share 2002 2001 ∆% Pre-tax cash-flow from operations 143.1 118.3 + 21.0 % (excl. dev) Tax expense (21.2) (17.0) + 24.7 % (excl. dev) Net current cash-flow 121.8 101.3 + 20.2 % (excl. dev) Net current cash-flow 121.9
Slide 23: Current net earnings: +50.7%
Financial statement highlights Current net earnings: + 50.7% In € millions – group share 2002 2001 ∆% Net cash earnings 45.2 30.0 + 50.7 % Non-recurring result (net) 35.9 35.3 + 1.8 % Net earnings 81.1 65.3 + 24.2 % Capital gains on office divestments Divestitures 2001 => 150.1 M€ 11 properties 45 2
Slide 24: Net current cash flow per share: +16.6%
Net current cash flow per share: + 16.6% Financial statement highlights surpassing stated objectives Per share data 12.31.2002 12.31.2001 ∆% 12.31.2001 (a) (b)* (a)/(b) Number of shares 14 919 921 14 919 921 13 383 557 Net current cash-flow 8.2 € 7.0 € + 16.6 % 7.6 € (excl. Dev) Net cash earnings 3.
Slide 25: Enhanced financing capability
Financial statement highlights Enhanced financing capability in € millions – total share 12.31.02 12.31.01 ∆% Revalued real-estate 4,709 4,123 + 14.2 assets (I) Net corporate debt (II) 2,012 1,838 + 9.5 Net corporate debt / Revalued real-estate 42.7 % 44,6 % assets(II)/(I) EBITDA / net interest expe
Slide 26: Total new equity issued in 2002: €147 million
Total new equity issued in 2002: €147 million • Successful early retirement of Financial statement highlights debt (CB) Change in stock float Î 99% of issued bonds converted 900 000 000 60,6 % Î 11/5% increase in shares outstanding 800 000 000 Î 30% increase in float 700 000 000 15,6 % (in number of
Slide 27: Net Asset Value: +6.0%
Net Asset Value: + 6.0% In group share 12.31.2002 12.31.2001 ∆% Financial statement highlights (a) (b) (a) / (b) NAV in M€ 2 209 2 083 + 6,0 % Number of shares 14 919 921 14 919 921 NAV per share in € 148,0 139,6 + 6,0 % Including transfer duties, before deferred taxes and before distribution Portfo
Slide 28: A dividend policy that supports Klépierre's growth
A dividend policy that supports Klépierre’s growth €3.50 dividend payout proposed on April 4, 2003 Financial statement highlights €/share 6 + 12,7 % + 12,9 % 5 + 9,6 % + 10,0 % 5,25 4 + 7,2 % 4,12 4,65 3 3,43 3,75 3,20 2 3,50 2,75 3,10 1 2,13 2,29 2,50 0 1997 1998 1999 2000 2001 2002 Net dividends G
Slide 29: Outline
OUTLINE 2002 in review Operating highlights Financial statement highlights Shopping center strategy: leadership in Continental Europe V2.0d 29 Klépierre, au coeur de la consommation
Slide 30: Strategy focused on shopping centers in Continental Europe
Strategy focused on shopping centers in Continental Europe • Continental Europe’s growth markets Î Similar regulatory environments Î Similar patterns of consumption Î Development potential • A global player (development, ownership, management) Î Critical mass in management in every market Î Key part
Slide 31: Sound growth model
Sound growth model Medium-term net current cash flow/share growth target of > 10% per annum • Organic growth Î Rental reversion of 4-5.5% + 5.5% to 7.5% Î Free cash flow annual reinvestment + 3.0% to 3.5% • Other growth is debt financed Î For investment of €100 million net of disposals + 1.5% to 1.8
Slide 32: Planned investments of €600 million in 2003
Planned investments of €600 million in 2003 Market Country Position 5-year potential Investments for extensions, identified for dvpts and 2003 acquisitions Large Mature France No. 1, global player 290 000 sq.m. 20 M€ Shopping centers European countries Growing Italy No. 1, global player 240 000 sq.m
Slide 33: A strategy well adapted to economic situation
A strategy that is well adapted to economic situation • Growth in shopping center holdings: ~ 80% end 2003 Î Sustained development in shopping centers Î Further timely disposals of office properties • Geographic diversification Î More than 1/3 of shopping center rents generated outside France (vs ¼
Slide 34: New tax status (SIIC) in sync with European stature
New tax status (SIIC) in sync with European stature • A competitive tax status versus other European real-estate companies Î Elimination of double taxation in France (cash earnings and capital gains) Î Higher ROE Î Better competitive profile for investments abroad • An increase in NAV (break-up) to
Slide 35: Klépierre, leading shopping center manager in Continental Europe
Klépierre, leading shopping center manager in Continental Europe 35 V2.0d Klépierre, au coeur de la consommation
Slide 36: 2003 - Calendar
2003 - CALENDAR April 4 Annual General Meeting April 15 Distribution of the dividend April 23 Q1 revenues July 23 H1 revenues September 9 H1 earnings October 29 Q3 revenues V2.0d 36 Klépierre, au coeur de la consommation
Slide 37: Appendices
APPENDICES V2.0d 37 Klépierre, au coeur de la consommation
Slide 38: Breakdown of rents as of 12.31.2002
Breakdown of rents as of 12.31.2002 In € millions – group share Shopping Centers Offices Total Appendices 143.7 64.9 245.6 Constant structure + 7.6 % + 4.5 % + 6.6 % Acquisitions 43.6 7.9 51.5 Disposals - 8.4 8.4 186.5 81.2 267.8 Total rents + 26.9 % - 6.3 % + 14.6 % 38 V2.0d Klépierre, au coeur de
Slide 39: Shopping Centers rents: +29.9%
Shopping Centers rents : + 29.9 % In € millions – group share Shopping Centers Offices Total 186.5 81.2 267.8 Total rents Appendices + 29.9 % - 6.3 % + 14.6 % 18.9 1.1 20.0 Fee income + 0.0 % n.a. - 4.3 % 205.5 82.3 287.8 Revenues (excl. dev) + 23.8 % - 7.2 % + 13.0 % 4.7 0.2 4.9 Other revenues + 30
Slide 40: Cash-flow from operations
Cash-flow from operations In € millions – group share Shopping Centers Offices Total Operating revenues 211.2 82.6 292.7 (excl. dev) Appendices + 24.5 % - 7.0 % + 13.3 % Cash-flow from operations 161.4 74.9 236.3 (excl. dev) + 11.1 % - 6.7 % + 12.8 % 40 V2.0d Klépierre, au coeur de la consommation
Slide 41: Cash-flow from operations
Cash-flow from operations 12.31.2002 12.31.2001 ∆% Total Group Total Group Total Gro In € millions share share share share share sha Cash-flow from operations 278.5 236.3 247.0 210.9 + 12.8 +1 (excl dev) Appendices Pre-tax cash-flow from operations 180.4 143.1 150.9 118.3 + 19.5 +2 (excl. dev) Finan
Slide 42: Net current cash-flow
Net current cash-flow 12.31.2002 12.31.2001 ∆% Appendices Total Group Total Group Total Group In € millions share share share share share share Cash-flow from operations 180.4 143.1 150.9 118.3 + 19.5 + 21.0 (excl. dev) Tax expenses (21.2) (21.3) (17.0) (19.0) + 18.9 + 12.1 (excl. dev) Net current c
Slide 43: Net earnings
Net earnings 12.31.2002 12.31.2001 ∆% Total Group Total Group Total Group In € millions share share share share share share Appendices Net cash earnings 63.1 45.2 45.9 30.0 + 37.3 + 50.7 Non-recurring result (net) 35.7 35.9 36.5 35.3 - 2.2 + 1.8 Net earnings 98.7 81.1 82.4 65.3 + 19.8 + 24.2 43 V2.0
Slide 44: Analysis of rents as of December 31, 2002 (group share)
Analysis of rents as of December 31, 2002 (group share) Offices 30% Shopping centers - France Appendices Shopping centers - 52% other 2% Shopping centers - Spain 9% Shopping centers - Italy 7% 70 % 30 % (63 % in 2001) (37 % in 2001) Shopping centers : 186.6 M€ Offices : 81.2 M€ 44 V2.0d Klépierre, a
Slide 45: Gross yields by region for office and warehouse properties
Comparison on a constant structural basis of gross yields (minimum, maximum and average) by region for Klépierre office and warehouse properties 9 133 €/M² 6 278 €/M² 6 070 €/M² 3 438 €/M² 15% 6 045 €/M² 5 412 €/M² 4 073 €/M² 986 €/M² Price per sq.m 3 399 €/M² 2 653 €/M² 3 044 €/M² 172 €/M² Appendic
Slide 46: Shopping centers – capitalization yields used by appraisers in 2002
Shopping centers – capitalization yields used by appraisers in 2002 14,00% 12,6% 12,00% 11,6% 11,5% 11,1% 10,00% 9,3% Appendices 8,3% 8,00% 8,1% 7,8% 7,5% 7,3% 6,9% 6,9% 6,6% 6,5% 6,6% 6,2% 6,2% 6,3% 6,00% 5,8% 5,8% 6,0% 4,00% 2,00% 0,00% - - lle - l a s lie ne un re Vi ta ag ut m tre -I -A m sp en
Slide 47: Ségécé, the leading manager in Continental Europe
Ségécé, the leading manager in Continental Europe A strong European leader • 550 employees over 7 countries N° 1 in Belgium • 307 under management of which 178 owned • 1.9 million sqm GLA 15 shopping centers • 10 100 leases 733 leases Czech Republic Slovakia 2 shopping centers N° 1 in France 217 lea
Slide 48: Stock performance
V2.0d Value 0 20 40 60 80 100 120 140 31/12/01 14/01/02 28/01/02 11/02/02 25/02/02 11/03/02 25/03/02 08/04/02 22/04/02 06/05/02 20/05/02 EPRA EuroZone 03/06/02 17/06/02 01/07/02 15/07/02 EPRA France Date 29/07/02 12/08/02 CAC 40 26/08/02 Comparison Klépierre performance 09/09/02 23/09/02 Klépierre,
Slide 49: Low exposure to changes in variable rents
Low exposure to changes in variable rents Shopping centers Variable rent invoiced since 1995 8,0% 7,0% 7,0% 6,1% 6,3% 5,8% 5,8% 6,0% 5,4% 5,3% 5,0% 4,0% 3,9% 4,0% First acquisitions in 3,0% Spain 2,0% Italian acquisitions 1,0% 0,0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 Estimate 49 V2.0d Klépi