Unibail-Rodamco-Westfield SE · EURONEXT:URW
Unibail-Rodamco-Westfield — Unibail-Rodamco — FY2017 Earnings Presentation
72 slides from Unibail-Rodamco-Westfield's earnings presentation, Jan 31, 2018
Slide 1: 2017 Full-Year Results
ok unibail-rodamco 2017fFULL-YEAR RESULTS
Slide 2: 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 fluctuate. Past p
Slide 3: A Year of Exceptional Achievements
A YEAR OF EXCEPTIONAL ACHIEVEMENTS
Slide 4: Retail deliveries, disposals, acquisitions and Westfield announcement
Retail Announcement Disposals (3) Acquisitions (4) Deliveries(1)(2) of Westfield acquisition to create €930 Mn €710 Mn €364 Mn the world’s premier 172,400 m² developer and operator of flagship shopping destinations Unibail-Rodamco | 2017 Full-Year Results 1
Slide 5: 2017 deliveries, disposals and acquisitions
The following five retail projects, representing a TIC of €929.9 Mn and a total GLA of 172,395 m², were delivered in 2017: ▪ The 81,032 m² new Wroclavia Shopping Centre; ▪ The 41,948 m² extension of Centrum Chodov; ▪ The 31,310 m² extension of Carré Sénart; ▪ The 10,501 m² extension of Glòries; ▪ Th
Slide 6: Financial Results
FINANCIAL RESULTS
Slide 7: Net rental income and recurring results
Shopping Centres 1,346 1,273 +5.8% +4.3% Offices 141 153 -8.1% +13.5% Convention & Exhibition 95 103 -6.9% -6.9% Net Rental Income 1,583 1,529 +3.5% +4.2% Recurring Net Result (Group share) 1,202 1,114 +7.9% Recurring EPS(2) 12.05 11.24 +7.2% 219.20 201.50 +8.8% 200.50 183.70 +9.1% 211.00 195.60 +7.
Slide 8: Going Concern NAV and results commentary
The Going Concern NAV(3) (GMV based), measuring the fair value on a long term, ongoing basis, came to €219.20 per share as at December 31, 2017, up by +8.8%, or +€17.70, compared to €201.50 as at December 31, 2016. This increase was due principally to: ▪ The value creation of +€27.14 per share; ▪ Th
Slide 9: FY Operational Highlights
F Y- 2 0 1 7 O P E R A T I O N A L H I G H L I G H T S
Slide 10: Shopping Centres NRI by region
France 610 581 +5.0% +3.7% Central Europe 172 156 +10.4% +4.2% Spain 161 146 +10.3% +4.6% Nordics 146 140 +4.2% +7.6% Austria 103 99 +4.6% +3.9% Germany 93 90 +2.9% +3.2% The Netherlands 62 62 +0.2% +3.8% 1,346 1,273 +5.8% +4.3% Unibail-Rodamco | 2017 Full-Year Results 5
Slide 11: Shopping Centre NRI change commentary
The total net change in Shopping Centre NRI amounted to +€73.8 Mn compared to 2016 due to: ▪ +€34.1 Mn from the delivery of shopping centres or new units, mainly in Spain (Glòries and Bonaire), France (mainly Le Forum des Halles, Carré Sénart and Parly 2) and Central Europe (mainly Centrum Chodov an
Slide 12: Like-for-like NRI growth of Shopping Centres
Like-for-like NRI(1) growth of Shopping Centres +4.7% Average +4.3% Lfl growth +3.8% +3.9% 4.0% +3.4% 2.6% 3.6% 3.0% 3.6% 3.1% 2.1% 0.8% 0.7% 0.3% 0.3% 2013 2014 2015 2016 2017 Lfl growth excluding indexation Indexation Unibail-Rodamco | 2017 Full-Year Results 6
Slide 13: Like-for-like NRI growth drivers
The +4.3% like-for-like NRI growth reflects indexation of +0.7% (+0.3% in 2016), the solid performance in renewals and relettings (+1.9% vs +2.2% in 2016) and the positive impact of “Other” (+1.9% vs. +2.2% in 2016). The growth in “Other” was due primarily to a Sales Based Rent (SBR) increase (prima
Slide 14: Leases signed and rotation rate
Leases signed(1): 1,350 Rotation rate(2): 11.0% 19.6% 18.2% 17.4% 16.8% 15.3% 14.7% 2013 2014 2015 2016 2017 2017 Flagship(3) assets Unibail-Rodamco | 2017 Full-Year Results 7
Slide 15: Leasing activity and MGR uplift
The Group signed 1,350 leases on consolidated standing assets (1,479 in 2016) for €159.7 Mn of MGR. The average MGR uplift(4) on renewals and relettings was +14.7% (+17.4% in 2016), exceeding the Group’s targets for the period. The uplift in 2017 was the result of the reversion in Spain, Austria and
Slide 16: Tenant sales growth
+5.3% +2.3% +3.9% +3.6% +2.3% +2.1% +5.9% +4.3% +4.6% +2.5% +1.7% +0.5% +2.7% +1.8% Tenant sales growth in Unibail-Rodamco’s shopping centres(1) National Sales Indices(2) Unibail-Rodamco | 2017 Full-Year Results 8
Slide 17: Tenant sales by region
Through November 30, 2017, Unibail-Rodamco’s tenant sales in all regions increased by +3.9% compared to the same period last year, +181 bps better than the aggregate national sales index. The continuous trend of tenant sales increasing at a higher pace than footfall reflects the steady increase of c
Slide 18: International Premium Retailers in tenant rotation
Percentage of IPRs(1) in tenant rotation(2) Active signings 16.7% 58 International 14.2% Premium Retailers 62 Active discussions brands on activation list(3) Long term potential 133 brands on sourcing list(4) 2016 2017 Unibail-Rodamco | 2017 Full-Year Results 9
Slide 19: Differentiation strategy and IPR leases
With a strategy based on differentiation and exclusive retail destinations, leasing teams signed 223 leases with International Premium Retailers (IPR), an increase of +13.3% compared to the 196 deals signed in 2016. The share of the IPRs in the Group’s rotation reached 16.7% in 2017. (1) Internation
Slide 20: Events and loyalty cards
Events held in 2017 Loyalty cards (in Mn) 4.2 +75% CentrO: Pokemon Go Safari Zone Vélizy 2: Unexpected Sensation 2.4 2016 2017 Forum des Halles: live basketball show Shopping City Süd: CityWave Unibail-Rodamco | 2017 Full-Year Results 10
Slide 21: Niantic and Pokémon partnership
The Group continued to leverage its exclusive partnership with Niantic Inc. and The Pokémon Company with “spawning moments” in August, including never-seen-before “Pokémon creatures” in Europe. The footfall increased by +9% over three weekends in August, compared to 2016(1). The first worldwide “Pok
Slide 22: Digital audience and social media
Large digital audience Social media leaders(2) 1 Westfield London 488,789 2 Forum des Halles 364,006 3 Carré Sénart 358,081 4 La Maquinista 288,424 7.6 Mn 235,000 5 Arkadia 287,864 Followers Active app users Direct engagement 6 La Vallée Village 278,033 7 Vélizy 2 266,681 boosts footfall 8 CentrO 26
Slide 23: Loyalty programme and digital growth
On the digital side, Unibail-Rodamco signed up almost +1.8 million new customers to its loyalty program in 2017 to reach a total of 4.2 million members. 85% of these new members came through digital channels (web and apps) compared to 37% in 2016. In 2017, the audience on the Group’s digital channel
Slide 24: Rotation with no extra GLA
Floor 3 139,600 m² GLA(1) 2012 2017 Floor 2 74.4% Cumulative rotation rate(2) Floor 1 39.1% Average annual MGR uplift(3) 4.7% Floor 0 CAGR Lfl NRI(4) With no extra GLA Relettings / Renewals with new concepts since 2012 Unibail-Rodamco | 2017 Full-Year Results 12
Slide 25: Definitions and footnotes
(1) GLA: Gross Lettable Area (2) Rotation rate: (number of re-lettings + number of assignments and renewals with new concepts) / number of stores (3) Minimum Guaranteed Rent uplift (MGR uplift): difference between new MGR and indexed old MGR. Indicator calculated on renewals and relettings only (4)
Slide 26: Paris region supply and take-up
Paris region supply and take-up(1) (in Mn m²) 4.0 3.9 3.9 3.6 3.6 3.6 3.5 3.4 Average Take-up 2.3 2.5 2.5 2.6 2.4 2.1 2.1 2.2 1.9 2010 2011 2012 2013 2014 2015 2016 2017 Take-up Immediate supply Unibail-Rodamco | 2017 Full-Year Results 13
Slide 27: Paris office take-up commentary
With 2.6 million m² of office space let in 2017, take-up in the Paris region was at the highest since 2007. This is mostly due to transactions in the Western crescent and to those over 5,000 m². 88 transactions above 5,000 m² were recorded in 2017 (65 in 2016) and accounted for 1.1 million m² (+23%
Slide 28: Offices
France 124 Nordics 12 Other 5 141 153 -8.1% +13.5% Unibail-Rodamco | 2017 Full-Year Results 14
Slide 29: Offices NRI commentary
Unibail-Rodamco’s consolidated NRI from its offices portfolio amounted to €140.8 Mn, a -8.1% decrease compared to 2016 due primarily to the disposals in 2016 and 2017. The decrease of -€12.5 Mn breaks down as follows: ▪ +€1.7 Mn mainly due to the delivery in March 2016 of Village 3; ▪ -€0.4 Mn due t
Slide 30: Office lettings and vacancy
Renewals (1) Pre-letting to 22,800 m² 13,200 m² CNIT Tour Ariane First lettings 11,600 m² 6,500 m² Les Villages 3,100 m² Capital 8 4,400 m² rooftop terraces and balconies 72,300 m² 44,600 m² Vacancy(2) down to 3.3% Unibail-Rodamco | 2017 Full-Year Results 15
Slide 31: Office leasing commentary
A record 97,144 weighted square meters (wm²) were leased in standing assets, including 72,266 wm² in France. Lease agreements were signed with AEW, Paul Hastings, Arsene and Dior in Capital 8, with In’Li in Tour Ariane, with Orange in Les Villages 4 and 6, as well as the renewals of SNCF in CNIT and
Slide 32: Convention & Exhibition results
Net Rental Income(2) Property Services and Other Income(3) 146 165 -11.5% 149 -2.1% Depreciation Unibail-Rodamco | 2017 Full-Year Results 16
Slide 33: Convention & Exhibition shows in 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. 2017 has been characterized by the following shows: ▪ Annual shows: • The International Agriculture’s show (“SIA”) attracted 619,000 vi
Slide 34: New Paris Convention Centre
Opened November 22, 2017 Capacity 35,000 participants 15 congresses Signed 2018 2019 European European Society Respiratory Society of Cardiology 22,000 35,000 participants participants Unibail-Rodamco | 2017 Full-Year Results 17
Slide 35: Paris Convention Centre opening
The new Paris Convention Centre was opened on November 22 and welcomed its first congress in December: the 30th Rheumatology congress with 5,000 participants. 15 congresses have already been signed for the period 2017-2022.
Slide 36: Better Places 2030 pillars
PILLAR 1 PILLAR 2 PILLAR 3 PILLAR 4 LESS LESS LESS LESS CARBON EMISSIONS POLLUTING TRANSPORT LOCAL UNEMPLOYMENT TOP-DOWN BETTER BETTER BETTER BETTER BUILDINGS CONNECTIVITY COMMUNITIES COLLECTIVE POWER 146 partnerships 398 charging spaces 32 shopping centres 1,161 units 20 shopping centres 98% store
Slide 37: Better Places 2030 objectives
The Group has taken up a new long-term challenge, with a set of objectives to be achieved by 2030: “Better Places 2030”, a program launched in September 2016. The Group aims to reduce by -50% its carbon footprint by 2030. This strategy is now incorporated into the entire value chain, with a wide spe
Slide 38: Unibail-Rodamco | 2017 Full-Year Results
Unibail-Rodamco | 2017 Full-Year Results 19
Slide 39: LED partnerships
As at December 31, 2017, 146 LED partnerships were signed, accounting for 15.6% of the total retail GLA(1). (1) Total owned and managed retail GLA
Slide 40: Development
DEVELOPMENT
Slide 41: 2017 project deliveries
Additional GLA(1) 172,400 m² TIC(2) €930 Mn 99% let at opening(3) Yield on cost(4) 7.7% Unibail-Rodamco | 2017 Full-Year Results 21
Slide 42: Five deliveries in 2017
2017 was a very active year for development projects, with five deliveries in Q4: ▪ The new 81,032 m² shopping centre Wroclavia; ▪ The renovation and 41,948 m² extension of Centrum Chodov; ▪ The renovation and 31,310 m² extension of Carré Sénart; ▪ The full redevelopment and extension of Glòries, cr
Slide 43: Vitam project, Greater Geneva
Location Greater Geneva GLA(1) 69,600 m² TIC(2) €322 Mn Delivery Post 2022 Ownership Joint Venture Unibail-Rodamco | 2017 Full-Year Results 22
Slide 44: Vitam project description
The Vitam project, with a total investment cost (TIC) of €322 Mn and a GLA of 69,621 m², encompassing the renovation and extension of an existing leisure and retail centre organized around an aquatic park in France, close to Geneva. (1) GLA: Gross Lettable Area (2) TIC: Total Investment Cost equals
Slide 45: Development pipeline by segment
By segment €8.0 Bn +€0.7 Bn €7.9 Bn €0.4 Bn 5% -€0.9 Bn €1.5 Bn 19% €3.3 Bn 42% €7.9 Bn 34% €2.7 Bn 2016 Delivered New Projects 2017 OFFICES RETAIL Projects and others(1) Greenfield / Brownfield Extension / Renovation Unibail-Rodamco | 2017 Full-Year Results 23
Slide 46: Development project pipeline commentary
As at December 31, 2017, Unibail-Rodamco’s consolidated development project pipeline amounted to €7.9 Bn(2) (€7.3 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 assets. The Group retains significant flexibility
Slide 47: Pipeline delivery timeline
Vélizy 2 Mall of the Netherlands Val Tolosa Überseequartier 3 Pays Maquinext 2019 2020 2021 2022 Post 2022 Trinity La Part-Dieu Gaité Montparnasse Sisters Mall of Europe Triangle Unibail-Rodamco | 2017 Full-Year Results 24
Slide 48: Slide 48
Slide 49: Asset Rotation
ASSET ROTATION
Slide 50: 2017 disposals
(1) (2) (3) NDP Premium NIY €710 Mn 15% 4.6% Retail 251 Offices 459 710 Unibail-Rodamco | 2017 Full-Year Results 26
Slide 51: Disposals of non-core assets
The Group disposed of a number of non-core assets, including: ▪ In September, two Swedish assets, Eurostop Arlanda and Arninge Centrum. The total GLA disposed of was almost 64,000 m², including approximately 17,500 m² of hotel and office space; ▪ In October, the 15,300 m² of retail in Eurostop Orebr
Slide 52: 2017 acquisitions
2017 acquisitions(1) €364 Mn Cagnes-sur-Mer Stake 50% 100% 67,000 m² GLA Prague Stake 50% 56,000 m² GLA Unibail-Rodamco | 2017 Full-Year Results 27
Slide 53: Metropole Zlicin and Polygone Riviera acquisitions
On October 23, 2017, the Group formed a joint venture with Commerz Real and acquired 50% of the shopping centre Metropole Zlicin for a Total Acquisition Cost(1) of €110 Mn. Metropole Zlicin, located in Prague, has a GLA of approximately 56,000 m². This asset is accounted for using the equity method.
Slide 54: Westfield acquisition and strategic focus
97% GMV > 6 Mn visits 75% GMV > 10 Mn visits Focus on large assets 85 - 95% Attractive Disposal ~€3 Bn pay out ratio distribution policy of non-core assets in the next several years Selective acquisitions Westfield acquisition to create the world’s premier developer and operator of flagship shopping
Slide 55: Identified disposals of ca. €3 Bn
Further to its annual business review, the Group has identified ca. €3 Bn of assets to be disposed of in the next several years.
Slide 56: Valuation
VALUATION
Slide 57: Going Concern NAV bridge
Going Concern NAV(1) (in € per share) Recurring EPS Non LfL +€12.05 revaluation €219.20 & intangible assets(2) +€4.29 €201.50 -€10.20 +€27.14 +€0.76 €192.06 Asset revaluation +€14.16 Rent effect(3) +€9.22 Other(4) +€0.93 Yield effect(3) +€0.65 December 2016 Dividend MtM of debt December 2017 Decembe
Slide 58: NAV and portfolio valuation commentary
The Going Concern NAV (GMV based), measuring the fair value on a long term, ongoing basis, came to €219.20 per share as at December 31, 2017, up by +8.8%, or +€17.70, compared to €201.50 as at December 31, 2016. Unibail-Rodamco’s EPRA triple Net Asset Value (NNNAV) amounted to €200.50 per share as a
Slide 59: Financing
FINANCING
Slide 60: Average cost of debt and maturity
Average cost of debt (%) Average maturity (years) 3.9% 7.2 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 2017 2010 2011 2012 2013 2014 2015 2016 2017 Unibail-Rodamco | 2017 Full-Year Results 32
Slide 61: Cost of debt commentary
Unibail-Rodamco’s average cost of debt decreased to 1.4% for 2017 from 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 active balanc
Slide 62: Low LTV and strong ICR
Low LTV(1) Strong ICR(2) 60%(3) 6.7 5.9 41% 41% 4.6 37% 35% 4.0 3.8 33% 30% 3.5 2.5 2.0(3) Unibail-Rodamco | 2017 Full-Year Results 33
Slide 63: LTV, ICR and credit ratings
As at December 31, 2017, the Loan-to-Value (LTV) ratio amounted to 33%, stable compared to year-end 2016. The Interest Coverage Ratio (ICR) improved to 6.7x for 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 set
Slide 64: Next Steps: Westfield Acquisition
NEXT STEPS WESTFIELD ACQUISITION
Slide 65: Westfield transaction timetable
Consultation of Unibail-Rodamco’s works councils Publication Transaction documentation March/April 2018 Regulatory approvals and other customary closing conditions Q2 - 2018 Unibail-Rodamco shareholder meetings Q2 - 2018 Westfield shareholder meetings Q2 - 2018 Closing Q2 - 2018 Unibail-Rodamco | 20
Slide 66: Westfield acquisition status
On December 12, 2017, Unibail-Rodamco announced it had entered into an agreement to acquire Westfield Corporation. Unibail-Rodamco has since obtained the unanimous positive opinions of its works councils, in accordance with Clause 2 of the Implementation Agreement dated December 12, 2017. The transa
Slide 67: Dividend & Outlook
DIVIDEND & OUTLOOK
Slide 68: Cash dividend of €10.80
For fiscal year 2017 (1) Cash dividend : €10.80 90% pay-out ratio INTERIM €5.40 on March 29, 2018 FINAL €5.40 in Q2-2018 prior to closing of Westfield transaction(2) Unibail-Rodamco | 2017 Full-Year Results 37
Slide 69: Dividend payment schedule
In 2018, Unibail-Rodamco will again pay its dividend in two instalments. Unibail-Rodamco believes that this policy offers shareholders a regular flow of dividends which more closely matches the Group's cash flows. For the fiscal year 2017, the Group will propose a cash dividend of €10.80 per share f
Slide 70: 2018 and medium-term outlook
2018 MEDIUM TERM CAGR Indexation Rental uplifts Timely delivery of projects €12.75 - €12.90 +6% to +8% Amount and timing of disposals Taxation Cost of debt No acquisitions assumed Unibail-Rodamco | 2017 Full-Year Results 38
Slide 71: Outlook and macroeconomic environment
The macroeconomic environment in 2017 improved on the back of the recovery in investment, manufacturing and trade which in turn strengthened consumer confidence. Looking ahead, the outcome of elections in certain European countries, including Italy, the formation of a government in Germany, the Brex
Slide 72: www.unibail-rodamco.com
unibail-rodamco www.unibail-rodamco.com