Unibail-Rodamco-Westfield SE · EURONEXT:URW
Unibail-Rodamco-Westfield — Unibail-Rodamco — H1 2017 Earnings Presentation
80 slides from Unibail-Rodamco-Westfield's earnings presentation, Jul 24, 2017
Slide 1: 2017 Half-Year Results
unibail-rodamco | 2a 2017F~HALF-YEAR RESULTS
Slide 2: Disclaimer
DISCLAIMER Unibail-Rodamco S.E., a Société Européenne à Directoire et Conseil de Surveillance incorporated under French law, is a listed closed end property investment company. Unibail-Rodamco is registered with the French Authority of Financial Markets (AMF). The value of your investment may fluctu
Slide 3: Financial Results
FINANCIAL RESULTS
Slide 4: 2017 Half-Year Results
2017 HALF-YEAR RESULTS € Mn H1-2017 H1-2016 Growth Like-for-like Growth(1) Shopping Centres 670 643 +4.1% +3.4% Offices 70 84 -17.5% +7.8% Convention & Exhibition 55 53 +2.5% +2.5% Net Rental Income 794 781 +1.7% +3.7% Recurring Net Result (Group share) 614 575 +6.7% Recurring EPS(2) 6.16 5.81 +6.0%
Slide 5: Going Concern NAV up 6.0% to €213.60 per share
The Going Concern NAV(3) (GMV based), measuring the fair value on a long term, ongoing basis, came to €213.60 per share as at June 30, 2017, up by +6.0%, or +€12.10, compared to €201.50 as at December 31, 2016. This increase was the sum of: The value creation of +€16.45 per share; The impact of
Slide 6: H1-2017 Operational Highlights
H 1 - 2 0 1 7 O P E R AT I O N A L H I G H L I G H T S
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Slide 8: Solid Retail NRI Growth
SOLID RETAIL NRI GROWTH Net Rental Income (€ Mn) H1-2017 H1-2016 Growth Like-for-like Growth(1) France 303 295 +2.7% +1.8% Central Europe 84 80 +4.3% +3.8% Spain 80 72 +11.2% +5.3% Nordics 75 73 +3.5% +4.2% Austria 52 48 +8.6% +8.0% Germany 47 45 +4.8% +5.5% The Netherlands 29 31 -4.8% -1.8% Total 6
Slide 9: Change in Shopping Centre NRI vs H1-2016
The total net change in Shopping Centre NRI amounted to +€26.6 Mn compared to H1-2016 due to: +€11.0 Mn from the delivery of shopping centres or new units, mainly in Spain (in Glòries and Bonaire), France (Forum des Halles) and Central Europe; +€1.2 Mn from the acquisition of additional units, m
Slide 10: Like-for-like NRI Growth in Line with Objectives
LIKE-FOR-LIKE NRI GROWTH IN LINE WITH OBJECTIVES Like-for-like NRI(1) growth of Shopping Centres +4.7% Average Lfl growth +3.8% +3.9% +3.6% 3.8% +3.4% +3.4% 2.6% 3.0% 2.9% 3.6% 2.7% 3.1% 2.1% 0.8% 0.7% 0.7% 0.3% 0.3% 2013 2014 2015 2016 H1-2017 H1-2017 Excluding assets for sale(2) Lfl growth excludi
Slide 11: Like-for-like NRI growth exceeded indexation by 270 bps
The like-for-like NRI growth of +3.4% exceeded indexation by +270 bps, in line with the Group’s objective of like-for-like NRI growth of between 200 and 300 bps above indexation. The growth was negatively impacted by several one-off items and by an increase of doubtful debtors and vacancy, including
Slide 12: MGR Uplift
MGR UPLIFT Leases signed(2): 755 Rotation rate(3): 6.4% Average 19.6% MGR 18.2% 17.4% uplift(1) 16.8% 15.3% 14.3% 13.5% 2013 2014 2015 2016 H1-2017 H1-2017 Excluding assets for sale(4) Unibail-Rodamco | 2017 Half-year Results 6
Slide 13: 755 leases signed in H1-2017
The Group signed 755 leases in H1-2017 on consolidated standing assets, compared to 795 deals signed in H1-2016. The Minimum Guaranteed Rent uplift and the tenant rotation rate were +13.5%, exceeding the Group’s objectives for the period (+14.3% excluding assets under contract to be sold or in a dis
Slide 14: Active Management Drives Tenant Rotation
ACTIVE MANAGEMENT DRIVES… Percentage of IPRs(1) in Unibail-Rodamco tenant rotation(2) 15.7% 14.7% 13.8% 12.0% 10.1% 1st in mall in Spain 1st in mall in Spain 1st in The Netherlands 8.4% 1st in mall in Germany 1st in mall in Spain 1st coffee shop concept in Cont. Europe mall 2012 2013 2014 2015 2016
Slide 15: Focus on International Premium Retailers
The Group continues to focus on differentiation and has improved the retail offer of its shopping centres through deals signed with International Premium Retailers (IPR). As at June 30, 2017, 111 deals had been signed with IPRs compared to 96 in H1-2016, representing an increase of +15.6%. (1) Inter
Slide 16: Tenant Sales Growth
…TENANT SALES GROWTH GROUP +7.7% +2.7% +3.2% +1.3% +4.4% +2.0% Tenants’ sales growth Excluding National Sales in Unibail-Rodamco’s assets for sale(2) Indices(3) shopping centres(1) Nordics +5.4% +2.8% +3.0% +2.9% +0.7% +2.6% Germany +0.7% Central Europe -0.8% Austria France +2.8% +2.0% Spain Unibail
Slide 17: Tenant sales up 2.7% through May 2017
Through May 31, 2017, Unibail-Rodamco’s tenant sales in all regions increased by +2.7% compared to the same period last year, +148 bps better than the aggregate national sales index. Excluding assets under contract to be sold or in a disposal process, the Group’s tenant sales grew by +3.2%. The long
Slide 18: Active Management Drives Tenant Sales Growth
ACTIVE MANAGEMENT DRIVES TENANT SALES GROWTH Sales in Standing assets Sales split(1) May 2012-2017 12% 8% Breakdown(1) Per m²(2) CAGR(2) New tenants(3) 24% +37.6% +6.6% 80% Existing tenants relocated 19% +5.6% +1.1% Existing tenants not moved 57% -1.5% -0.3% New shopping centres Since Extensions 201
Slide 19: Tenant sales footnotes
(1) Tenant sales for small units (GLA below or equal to 500 m2) for the period ended May 31, 2017. Consolidated assets as at May 31, 2017 exclude: (i) Germany (acquired in August 2012) and (ii) The Netherlands (limited number of sales reported) (2) Reported tenant sales growth per m² for the 12 mont
Slide 20: Paris Office Market – Increasing Take-up
PARIS OFFICE MARKET – INCREASING TAKE-UP Paris region supply and take-up(1) Prime rent per district(2) (in Mn m²) (€/m²/year excl. VAT) 3.9 4.0 3.9 3.6 3.6 3.6 3.5 3.6 800 800 800 810 810 1.3 1.4 1.3 1.1 1.0 1.3 1.0 550 550 530 530 530 1.1 1.2 1.2 1.1 1.2 1.0 0.9 0.9 2010 2011 2012 2013 2014 2015 20
Slide 21: Paris office take-up and supply
With 1.2 million m²(1) of office space let, the take-up in the Paris region was up by +4% over the same period last year, in line with the average figures of the past 10 years. The available supply in the Paris region was around 3.6 million m² as at June 30, 2017 (3.5 million m² as at December 31, 2
Slide 22: Offices: Excellent Like-for-like NRI Growth
OFFICES: EXCELLENT LIKE-FOR-LIKE NRI GROWTH Like-for-like Net Rental Income (€ Mn) H1-2017 H1-2016 Growth Growth(1) France 61 75 -19.3% +9.9% Other 9 9 -2.3% -4.4% Total 70 84 -17.5% +7.8% Unibail-Rodamco | 2017 Half-year Results 11
Slide 23: Offices NRI change vs H1-2016
Unibail-Rodamco’s consolidated NRI from its offices portfolio amounted to €69.6 Mn, a -17.5% decrease compared to the same period last year due primarily to the disposals in 2016. The decrease of -€14.7 Mn breaks down as follows: +€1.0 Mn due to the delivery of Village 3; -€0.2 Mn due to currenc
Slide 24: Capital 8: Enhanced, Repositioned and Leased
CAPITAL 8: ENHANCED, REPOSITIONED AND LEASED Occupancy Main tenants NEW 97% 47% EXISTING Jan. 2016 June 2017 “BREEAM In-Use” Certified Unibail-Rodamco | 2017 Half-year Results 12
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Slide 26: Convention & Exhibition
CONVENTION & EXHIBITION Growth Growth € Mn H1-2017 H1-2016 2017/2016 H1-2015(3) 2017/2015(3) Net Rental Income(1) 55 53 +2.5% 53 +2.4% Property Services and Other Income(2) 26 26 +3.0% 25 +6.9% Recurring Net Operating Income 81 79 +2.7% 78 +3.8% Comexposium - - n.a. +9 n.a. Depreciation -6 -5 +4.1%
Slide 27: Convention & Exhibition shows in H1-2017
The Convention & Exhibition business has a seasonal results pattern, with annual, biennial and triennial shows, and an uneven distribution of shows during the year. H1-2017 has been characterized by the following shows: Annual shows: • The International Agriculture’s show (“SIA”) attracted 619,000
Slide 28: Better Places 2030: H1-17 Achievements
BETTER PLACES 2030: H1-17 ACHIEVEMENTS PILLAR 1 PILLAR 2 PILLAR 3 PILLAR 4 LESS LESS LESS LOCAL LESS CARBON EMISSIONS POLLUTING TRANSPORT UNEMPLOYMENT TOP-DOWN BETTER BETTER BETTER BETTER BUILDINGS CONNECTIVITY COMMUNITIES COLLECTIVE POWER LED Lighting EV charging stations “Connect” app UR i
Slide 29: Better Places 2030 programme
In September 2016, the Group launched a new long-term programme: “Better Places 2030”. The Group aims to reduce its carbon emissions by -50% by 2030. This strategy is being incorporated into the entire value chain with a wide spectrum of initiatives covering the emissions resulting from the activiti
Slide 30: Development
DEVELOPMENT
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Slide 32: A Diversified Pipeline to Create Value
A DIVERSIFIED PIPELINE TO CREATE VALUE By segment By region €0.4 Bn France OFFICES OFFICES 4% €1.5 Bn 19% 23% 44% €3.6 Bn Austria 1% 37% €8.1 Bn The 6% €8.1 Bn Netherlands 8% 33% Central Europe 11% 14% €2.7 Bn RETAIL RETAIL Spain Germany OFFICES RETAIL Greenfield / Brownfield Extension / Renovation
Slide 33: €8.1 Bn consolidated development pipeline
As at June 30, 2017, Unibail-Rodamco’s consolidated development project pipeline amounted to €8.1 Bn (€7.5 Bn in group share), corresponding to a total of 1.6 Mn m² Gross Lettable Area (GLA) to be re-developed or added to the Group’s standing asset portfolio. The Group retains significant flexibilit
Slide 34: 2017 Deliveries on Track
2017 DELIVERIES ON TRACK GLA(1) GLA(1) 41,972 m² 80,843 m² TIC(2) TIC(2) €168 Mn €248 Mn Preletting(3) Preletting(3) 98% Opening October 2017 97% Opening October 2017 GLA(1) GLA(1) 29,906 m² 10,517 m² TIC(2) TIC(2) €242 Mn €125 Mn Preletting(3) Preletting(3) 83% Opening October 2017 98% Opening Nove
Slide 35: Five projects scheduled for delivery in H2-2017
Five projects, representing an expected TIC of ca. €911 Mn, are scheduled to be delivered in H2-2017: The 41,972 m² extension of Centrum Chodov; The 80,843 m² development of the Wroclavia shopping centre in Wroclaw (Poland); The 29,906 m² extension of Carré Sénart; The 10,517 m² extension an
Slide 36: Building Permits Delivered
BUILDING PERMITS DELIVERED Gaité Montparnasse Sisters Triangle 2020 POST 2021 POST 2021 GLA(1) TIC(2) GLA(1) TIC(2) GLA(1) TIC(2) 88,547 m² €350 Mn 89,259 m² €629 Mn 85,140 m² €522 Mn Unibail-Rodamco | 2017 Half-year Results 18
Slide 37: GLA and TIC definitions
(1) GLA: Gross Lettable Area (2) TIC: Total Investment Cost equals the sum of: (i) all capital expenditures from the start of the project to the completion date and includes: land costs, construction costs, study costs, technical fees, tenant fit-out costs paid for by the Group, letting fees and rel
Slide 38: Europe Is Not the USA
EUROPE IS NOT THE USA
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Slide 40: In Europe, Shopping Centre Density Is Much Lower
IN EUROPE, SHOPPING CENTRE DENSITY IS MUCH LOWER… United States Continental Europe 424 Finland AVERAGE(2)(3) 460 1,602 291 Sweden 311 GLA m²/ GLA m²/ Denmark 1,000 inhabitants(1) 1,000 inhabitants(2) 270 Poland 180 Germany 242 277 373 340 154 170 Spain France Netherlands Austria Cz. Rep. Slovakia Un
Slide 41: Density sources
(1) Source: ICSC data for total shopping center GLA above 30,000 sq ft (i.e. 2,787 m²) (2) Source: Cushman & Wakefield data as at January 2017 (centres above 5,000 m²) (3) Continental Europe average: Average of continental European countries in which Unibail-Rodamco operates (France, Germany, Spain,
Slide 42: Average Quality Is Higher
…AVERAGE QUALITY IS HIGHER… % of ‘A’ rated malls by GLA(1) United States (2) Continental Europe (3) 96% 71% 74% 60% 63% Average 49% 51% 52% 56% 48% 48% Average 36% 18% Company A Company B Company C Company D Company E Company A Company B Company C Company D Company E Unibail-Rodamco Unibail-Rodamco
Slide 43: Quality sources
(1) A malls comprise A++, A+, A and A- malls (2) Source: Green Street Advisors, Mall Database April, 2017 (3) Source: Green Street Advisors, European Shopping Centre Database, April, 2017; includes Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Italy, The Neth
Slide 44: Very Different Anchors and No Co-tenancy Rights
…WITH VERY DIFFERENT ANCHORS AND NO CO-TENANCY RIGHTS GLA breakdown by segment United States (1) Unibail-Rodamco (2) 46% 6% 8% 8% 17% 17% Department store Food Dining & Entertainment Unibail-Rodamco | 2017 Half-year Results 22
Slide 45: GLA sources
(1) Source: Cistri, for total Shopping Centre GLA over 100,000 m² (2) Based on total complex GLA
Slide 46: An Illustration
AN ILLUSTRATION US mall example 113,000 m² GLA 104,000 m² GLA 56% 0% 10% 14% 23% 8% Department store Food Dining & Entertainment Unibail-Rodamco | 2017 Half-year Results 23
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Slide 48: Extending to Improve the Experience
EXTENDING TO IMPROVE THE EXPERIENCE 104,000 m² GLA 141,000 m² GLA 14% 23% 8% 10% 16% 21% Department store Food Dining & Entertainment Unibail-Rodamco | 2017 Half-year Results 24
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Slide 50: Internet Will Not Kill Physical Retail!
INTERNET WILL NOT KILL PHYSICAL RETAIL!
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Slide 52: Internet and Large Shopping Centres Outperform the Market
INTERNET AND LARGE SHOPPING CENTRES OUTPERFORM THE MARKET French retail sales by distribution channels UR FOCUS UR FOCUS 85% 2010 54% 2016 €42 Bn Of UR French GMV(4) Of UR French GMV(4) €39 Bn GLA GLA 34%(1) 3.8% > 40,000 m² 3.5% > 40,000 m² 36%(1) > 80 stores > 80 stores 9% (2) GLA €467 Bn (1) 9%(2
Slide 53: Retail sales sources
(1) Source: INSEE – Retail sales excluding fuels (2) Source: CNCC (3) Source: Fevad (4) Unibail-Rodamco French retail GMV as at December 31, 2010 and December 31, 2016 Figures may not add up due to rounding
Slide 54: Online Rate of Growth High, but Decreasing
ONLINE RATE OF GROWTH HIGH, BUT DECREASING Annual B2C e-commerce sales growth(1) United States Continental Europe (2) 18.9% 16.4% 14.9% 15.9% 15.3% 15.0% 14.5% 13.9% 14.2% 13.6% 12.4% 12.1% 12.3% 9.3% 2012 2013 2014 2015 2016F 2017F 2020F 2012 2013 2014 2015 2016F 2017F 2020F Unibail-Rodamco | 2017
Slide 55: E-commerce sources
(1) Source: Forrester (2) Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden and Switzerland
Slide 56: Winners in Retail
WINNERS IN RETAIL E-COMMERCE PROXIMITY & TRAVEL RETAIL LARGE SHOPPING MALLS Personalized Fulfils a practical need Brand interaction Value for money Rapid and efficient Flagship stores Quick Daily consumption Customer services Unlimited offer Entertainment and dining Social ex
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Slide 58: Valuation
VALUATION
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Slide 60: Value Creation: €16.45 per Share
VALUE CREATION: €16.45 PER SHARE Non Lfl revaluation & intangible assets(2) +€0.53 Recurring Going Concern Net Asset Value(1) (in € per share) EPS +€6.16 Rent effect(3) +€3.47 €213.60 €201.50 +€16.45 Asset -€5.10 +€0.75 €197.15 revaluation -€5.92 -€5.10 +€9.36 Yield effect(3) +€5.36 Other(4) +€0.93
Slide 61: EPRA NNNAV and Going Concern NAV
Unibail-Rodamco’s EPRA triple Net Asset Value (NNNAV)(6) amounted to €195.30 per share as at June 30, 2017, an increase of +6.3%, or +€11.60, from €183.70 as at December 31, 2016. The Going Concern NAV(1) (GMV based), measuring the fair value on a long term, ongoing basis, came to €213.60 per share
Slide 62: Risk Premiums Remain High
RISK PREMIUMS REMAIN HIGH French shopping centres French offices(1) 6.8% 5.7% 5.6% 5.2% 4.3% 5.3% 4.0% 4.5% 4.3% 4.3% 460 bps 340 bps Risk premium Risk premium 0.6% 0.6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1-2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1-2017 Appraisers’ Di
Slide 63: Risk premiums of French shopping centres and offices
Risk premiums of French shopping centres and occupied offices vs. French 10-year OAT remain high at 340 bps and 460 bps, compared to an historical average of circa 228 and 383 bps, respectively. (1) Occupied offices (2) Net Initial Yield (NIY): annualized contracted rent (including indexation) and o
Slide 64: Asset Rotation
ASSET ROTATION
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Slide 66: Asset Disposals at Premiums to Market
ASSET DISPOSALS AT PREMIUMS TO MARKET (1) (2) (3) NDP Premium NIY €526 Mn 17.2% 4.1% Unibail-Rodamco | 2017 Half-year Results 33
Slide 67: Agreements to dispose of five assets
Unibail-Rodamco has entered into agreements to dispose of five assets for an aggregate NDP of €526 Mn at an average net initial yield (NIY) of 4.1% and at an average premium of +17.2% over the last unaffected appraisal values. These transactions are expected to close in Q3. In addition, the Group is
Slide 68: Financing
FINANCING
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Slide 70: €2.5 Bn of Medium to Long-term Capital Raised
€2.5 BN OF MEDIUM TO LONG-TERM CAPITAL RAISED €1.7 Bn of bonds ‘Green’ credit line February May April €600 Mn €1.0 Bn €650 Mn 11-year 1.5% €500 Mn €500 Mn 1st in Europe 20-year 12-year 2.0% 1.5% Interest margins tied to the Group’s sustainability vision and “Better Places 2030” agenda Unibail-Rodamc
Slide 71: H1-2017 financing transactions
In H1-2017, the Group took advantage of favorable market windows to extend its maturity profile and secure attractive funding conditions through the following transactions: The first of its kind “green” revolving credit facility signed in Europe. The margin of the “green” facility depends on the a
Slide 72: Lower Cost and Higher Average Maturity: New Records!
LOWER COST AND HIGHER AVERAGE MATURITY: NEW RECORDS! Average cost of debt (%) Average maturity (years) 7.4 3.9% 3.6% 7.0 3.4% 6.5 2.9% 5.9 2.6% 5.4 2.2% 4.9 4.5 4.3 1.6% 1.4% 2010 2011 2012 2013 2014 2015 2016 H1-2017 2010 2011 2012 2013 2014 2015 2016 H1-2017 Unibail-Rodamco | 2017 Half-year Result
Slide 73: Average cost of debt and maturity
Unibail-Rodamco’s average cost of debt decreased to 1.4% for H1-2017 compared to 1.6% for 2016. This new record low average cost of debt results from: Low coupon levels the Group achieved during the last years on its fixed rate debt; The level of margins on existing borrowings; The Group’s act
Slide 74: Strong Credit Ratios
STRONG CREDIT RATIOS Low LTV(1) Strong ICR(2) 60%(3) 6.9 5.9 41% 41% 4.6 37% 35% 4.0 33% 3.8 30% 3.5 2.5 2.0(3) Unibail-Rodamco | 2017 Half-year Results 37
Slide 75: LTV, ICR and credit ratings
As at June 30, 2017, the Loan-to-Value ratio (LTV) amounted to 33%, stable compared to December 31, 2016. The Interest Coverage Ratio (ICR) improved to 6.9x for H1- 2017 as a result of strong rental growth and the lower cost of debt. These ratios show ample headroom vis-à-vis bank covenants, usually
Slide 76: Outlook
OUTLOOK
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Slide 78: Recurring EPS Outlook for 2017 Confirmed
REPS OUTLOOK FOR 2017 CONFIRMED €11.80 - €12.00 Unibail-Rodamco | 2017 Half-year Results 39
Slide 79: Guidance confirmed at €11.80–€12.00
Unibail-Rodamco has entered into agreements to dispose of five assets for an aggregate NDP of €526 Mn at an average net initial yield (NIY) of 4.1% and at an average premium of +17.2% over the last unaffected appraisal values. These transactions are expected to close in Q3. In addition, the Group is
Slide 80: www.unibail-rodamco.com
unibail-rodamco www.unibail-rodamco.com