Unibail-Rodamco-Westfield SE · EURONEXT:URW
Unibail-Rodamco-Westfield — Unibail-Rodamco — H1 2007 Earnings Presentation
67 slides from Unibail-Rodamco-Westfield's earnings presentation, Aug 24, 2007
Slide 1: 2007 Half-Year Results
2007 Half-Year Results This presentation has been prepared by Unibail-Rodamco for general circulation and is circulated for general information only. All reasonable care has been taken to ensure that the information contained herein is not untrue or misleading, but no representation is made as to it
Slide 2: Agenda
1. H1 2007 HIGHLIGHTS 2. STRONG OPERATING PERFORMANCE UNDERPINNED BY STRONG FUNDAMENTALS 3. INTEGRATION ON TRACK 4. STRATEGY AND OUTLOOK APPENDIX 1
Slide 3: H1 2007 Highlights
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Slide 4: Financial highlights: a strong H1 2007 operating performance
> FINANCIAL HIGHLIGHTS: A STRONG H1 2007 OPERATING PERFORMANCE % like-for-like € Mn H1 2007 H1 2006 % Growth growth - Shopping centres 127 111 +13.9% +9.8% - Offices 74 64 +15.4% +18.6% - Convention and exhibition 32 36 -10.9% -2.1% Net rental income 233 211 +10.2% +10.4% Convention & exhibition Ser
Slide 5: H1 2007 profit and loss commentary
¾ H1 2007 profit and loss figures only include Unibail on a stand-alone basis as Rodamco has only been consolidated as of 30 June 2007, following the success of the exchange offer which became unconditional on 21 June 2007. ¾ In H1 2007, recurring EPS increased by 22% vs. H1 2006. This growth was ma
Slide 6: Unibail-Rodamco NAVPS evolution in H1 2007
> UNIBAIL-RODAMCO NAVPS EVOLUTION IN H1 2007 €/share 2.3 160 2.0 -1.5 Mark-to-market -2.2 4.3 Recurring of debt (2) Variation in net profit (1) transfer tax (3) Impact of the Disposal Exchange Offer (4) 150 of Coeur Défense 14.2 140 159.7 Revaluation of property assets 130 140.6 120 NAVPS as at NAVP
Slide 7: NAVPS growth drivers
¾ Fully diluted triple net liquidation Net Asset Value per share (NAVPS) includes the impact of the 79.63% Rodamco integration as at 30 June 2007. It came to €159.7 per share as at 30 June 2007 vs. €140.6 as at 31 December 2006, up 13.6%. ¾ NAVPS increase amounted to €19.1 per share during H1 2007 a
Slide 8: Shopping centre portfolio valuation
> UNIBAIL-RODAMCO'S SHOPPING CENTRE PORTFOLIO VALUATION Unibail-Rodamco's shopping centres' initial yields (1) 7% 6.1% 5.9% 5.9% 6% 5.7% 5.5% 5.1% 5.1% 4.7% 4.9% 5% 4.4% 4% 270 bps premium 3% 2% 1% 0% France Nordic Countries Spain Netherlands Central Europe H1 2007 2006 10-year real interest rate (2
Slide 9: Shopping centre valuation commentary
¾ Unibail-Rodamco's total retail portfolio is valued at €16,738 million as at 30 June 2007 (1). ¾ Shopping centre portfolio is valued on the basis of an initial yield (2) of 4.9% as at 30 June 2007. This represents a 270 bps premium to the 10-year real interest rate (interpolated OATei). ¾ Yield com
Slide 10: Office valuations for French assets
> OFFICE VALUATIONS FOR FRENCH ASSETS Portfolio valuation of occupied offices vs. comparable transactions realised in H1 2007 €/m² Paris CBD 20,000 18,000 Average of transactions 16,000 +26% 14,000 12,000 10,000 8,000 6,000 (1) (2) Paris CBD 61 Monceau Rue Presbourg Avenue Kleber 44 Lisbonne Unibail
Slide 11: Office valuation commentary
¾ Office (and industrials) portfolio valuation of Unibail-Rodamco stands at €5,707 million (1) out of which 83% derives from the French portfolio. ¾ Office portfolio valuation of Unibail-Rodamco's assets in France amounts to €4,737 million (1)(2) as at 30 June 2007. Occupied offices in France of the
Slide 12: Strong financial structure
> STRONG FINANCIAL STRUCTURE Ä AMONG THE STRONGEST CREDIT PROFILE IN CONTINENTAL EUROPE REAL ESTATE € Mn Unibail-Rodamco Hedging Portfolio Interest Rate 4,000 4.5% Cap ¾ Recently upgraded to A from A- by Swap Standard & Poor's 3,000 Average cost of Unibail-Rodamco swaps 4.0% 2,000 ¾ Strong balance s
Slide 13: Financial structure commentary
¾ With a 26% consolidated loan-to-value, Unibail-Rodamco has one of the strongest balance sheet in continental Europe real estate as at 30 June 2007. ¾ Unibail-Rodamco has a sound financial structure: • interest coverage ratio stands at 3.9x in H1 2007 for Unibail-Rodamco on a pro-forma basis (4.7x
Slide 14: Operating performance
Carré Sénart – Paris Region OPERATING PERFORMANCE 13
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Slide 16: Strong H1 2007 rental performance
> STRONG H1 2007 RENTAL PERFORMANCE % like-for-like € Mn H1 2007 H1 2006 % Growth growth UNIBAIL (STAND-ALONE) - Shopping centres 127 111 +13.9% +9.8% - Offices 74 64 +15.4% +18.6% - Convention and exhibition 32 36 -10.9% -2.1% Net rental income 233 211 +10.2% +10.4% RODAMCO - Shopping centres (1) 2
Slide 17: Rental performance commentary
¾ Looking at the whole portfolio, rental performance has been strong in H1 2007 with: • a 7.3% growth in pro-forma net rental income for the combined entity in H1 2007 vs. H1 2006; • a 7.4% like-for-like net rental growth on a pro-forma basis in H1 2007 vs. H1 2006. ¾ The shopping centre division ne
Slide 18: Strong increase in tenants' sales across Europe
> STRONG INCREASE IN UNIBAIL-RODAMCO'S TENANTS' SALES ACROSS EUROPE Evolution of Unibail-Rodamco's tenants' sales vs. local consumption index 7% 6.5% 6% 5.6% ¾ Strong growth in tenants' sales across 5.2% Europe 5.0% 5% 3.9% ¾ Over performance compared to local market 4% in France and Spain 3% 2.5% ¾
Slide 19: Tenants' sales commentary
¾ This strong rental performance is supported by strong increase in tenants' sales in almost all countries where Unibail-Rodamco operates, evidencing the attractiveness of large shopping centres for customers. ¾ The performance has been particularly strong in : • France with a 5.6% growth in tenants
Slide 20: Increase in shopping centre sales through active management
> INCREASE IN SHOPPING CENTRES SALES THROUGH ACTIVE MANAGEMENT Labège 2 – Toulouse Impact of tenant rotation Î + 31.4% in tenants' sales (1) Î + 7.4% on a same store basis Parquesur – Madrid Impact of tenant rotation and extension Î +17.0% in tenants' sales (2) (1) Total sales H1 2007 vs. total sale
Slide 21: Active management examples
¾ It is worth noting that shopping centres, having benefited from specific asset management actions, show strong tenants' sales performance: • +31.4% (1) in Labège 2 (Toulouse) and +7.4% on a same store basis, where a retenanting took place in 2006 with the arrival of H&M in H2 2006; • +17.0% (2) in
Slide 22: Like-for-like net rental growth for shopping centres
> STRONG LIKE-FOR-LIKE NET RENTAL GROWTH EVOLUTION FOR SHOPPING CENTRES IN ALMOST ALL MARKETS Like-for-like shopping centres net rental growth in H1 2007 12% ¾ Like-for-like net rental growth is 10% supported by: • Leasing activity • Rental uplift 8% • Indexation 6.9% on average 6% ¾ Overall perform
Slide 23: Like-for-like growth by country
¾ Like-for-like net rental growth of the combined shopping centre division amounted to 6.9% on a pro- forma basis (including a 9.8% contribution from Unibail's French shopping centre assets with a 5.5% contribution from indexation). ¾ Like-for-like net rental growth has been strong in particular in:
Slide 24: Strengthening of the Paris office leasing market
> STRENGTHENING OF THE PARIS OFFICE LEASING MARKET Paris CBD vacancy and prime rents Vacancy €/m² Rate ¾ Sustained demand: 6% 800 • 1.42 million m² taken-up during H1 2007 5.6% 5.6% (equalling H1 2006), i.e. +39% on 2002-2006 average 5.0% • 72% of take-up in Paris / Western outskirts 5% 700 includin
Slide 25: Paris office market commentary
¾ Demand remained steady in H1 2007 in the Paris office market with: • 1.42 million m² taken-up in H1 2007, stable compared to H1 2006, which was already a record year; • on the back of this performance and according to brokers, full-year take-up is expected to reach ca. 2.7 million m² (vs. 2.9 mill
Slide 26: 50% of vacant office space let in H1 2007
> 50% OF VACANT OFFICE SPACE AS AT YEAR-END 2006 LET IN H1 2007 (1) ¾ Full letting of: • 44 Lisbonne: 4,023 m² (2) let in H1 2007 • Les Villages 5: 11,500 m² (2) let in H1 2007 ¾ Capital 8: over ¾ let • 6,007 m² let in 2007 (3) • First leases signed at 800€/m² • 12,933 m² (4) still for rent out of 6
Slide 27: Office leasing activity
¾ Leasing activity has been good with 50% of vacant surfaces as at 31 December 2006 let during H1 2007, i.e. ca 21,000 m². ¾ Full letting of: • Les Villages 5 in La Défense to prime tenants (Les Villages is now fully let) including: › Société Générale, signed in H1 2007; › Star GT Acquisition, signe
Slide 28: Outstanding like-for-like net rental growth: offices
> OUTSTANDING LIKE-FOR-LIKE NET RENTAL GROWTH Offices (1) Office Division Performance (1) New leases +15.3% € Mn H1 2007 H1 2006 % Growth Gross rents 77.5 67.7 +14.5% Renewals +2.5% Net rents 73.5 63.7 +15.4% Like-for-like: Indexation +4.6% > Net rents 65.8 55.5 +18.6% Miscellaneous +2.8% Departures
Slide 29: Office net rents and disposals impact
¾ Disposals in 2006 have impacted H1 2007 Unibail-Rodamco's net rents while like-for-like net rental income growth remained strong. ¾ Office assets sold in 2006 include: • 41 Ybry in Neuilly; • 189, boulevard Malesherbes in Paris17; • 31, rue du Colisée in Paris 8; • 70, boulevard de Courcelles in P
Slide 30: Further growth to come from the office division
> FURTHER GROWTH TO COME FROM THE OFFICE DIVISION Ä 67,500 M² OF PRIME OFFICES FOR LET/RENEWAL IN NEXT 12 MONTHS 7 Adenauer – Paris 16 ¾ 11,069 m² (1) in Paris CBD – Paris 16 ¾ To be vacated in August 2007 ¾ Market rent: over 50% above passing rent (2) Clichy Project – Clichy ¾ 13,501 m² (1) project
Slide 31: Office growth positioning
¾ Unibail is ideally positioned to benefit from the strengthening Paris market through: • vacant space representing 21,648 m² of prime quality offices in Paris CBD and La Défense; • reversion – such as 7 Adenauer in Paris 16 with a reversionary potential over 50% of passing rents. This building will
Slide 32: Convention & exhibition H1 2007 performance
> CONVENTION & EXHIBITION H1 2007 PERFORMANCE % Growth % Growth € Mn H1 2007 H1 2006 H1 2005 H1 2007/H1 2006 H1 2007/H1 2005 Paris Expo recurring NOI 31.5 36.9 31.2 -14.6% +1.0% Hotels recurring NOI 6.8 6.1 5.3 +11.5% +28.3% Venues recurring NOI 38.3 43.0 36.5 -10.9% +4.9% Exhibitions organising rec
Slide 33: Convention & exhibition commentary
¾ Convention & Exhibition venues NOI came to €38 million in H1 2007 representing: • a 10.9% decline compare to H1 2006 (due to the seasonality of this activity); • a 4.9% increased compared to H1 2005, a more comparable year. ¾ H1 2007 performance was affected by the closure of CNIT's site from Marc
Slide 34: Merger of Unibail and CCIP's C&E activity
> THE MERGER OF UNIBAIL AND CCIP'S C&E ACTIVITY TO CREATE THE LEADING OWNER/OPERATOR IN EUROPE Porte de Versailles – Paris Paris Nord – Villepinte Unique growth perspectives linked to the merger project ¾ Complementary businesses ¾ Operating performance enhancement ¾ Extension opportunities Palais d
Slide 35: C&E merger terms and rationale
¾ In June 2007, Unibail-Rodamco and CCIP (1) signed an agreement for the merger of their operations in the Convention and Exhibition sector, subject to relevant authorisations (2). ¾ This merger would create the leading convention-exhibition operator in Europe, including: • 11 leading venues in the
Slide 36: Integration on track
Donauzentrum – Vienna INTEGRATION ON TRACK 35
Slide 37: TT Ti
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Slide 38: Success of the transaction and next steps
> SUCCESS OF THE TRANSACTION & NEXT STEPS ¾ 95.74% of Rodamco's capital owned by Unibail-Rodamco following the two offer periods ¾ Squeeze out procedure: application to be filed by year-end 2007 ¾ Squeeze out procedure is a long process which can take several months (12-18 months) according to Dutch
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Slide 40: A favourable tax structure
> A FAVOURABLE TAX STRUCTURE ¾ Changes to the FBI status legislation approved in Parliament on 10 July 2007: • development for own portfolio is possible • FBI status opened to foreign companies ¾ Unibail-Rodamco benefits from SIIC status for its French assets ¾ Unibail-Rodamco benefits from FBI stat
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Slide 42: Integration well on track
> INTEGRATION WELL ON TRACK June-July 07 July-Sept. 07 November 07 Q4 2007 ¾ New Management ¾ Top 50 managers International Board and appointed Completion of Supervisory Board operations HQ move ¾ Team work in place business plan and appointed ¾ Visit of all home to Schipol – ¾ Roadshows held synerg
Slide 43: Integration progress commentary
¾ Integration is progressing well with: • appointment of Top 50 managers; • implementation of a common selective investment policy; • team work in place combining Unibail and Rodamco people. ¾ Move to new international operations headquarters in Schiphol-Amsterdam will take place in Q4 2007. ¾ Exten
Slide 44: Strategy and outlook
Vélizy 2 – Paris Region STRATEGY AND OUTLOOK 43
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Slide 46: Strategy: deliver superior cash flow growth
> STRATEGY: DELIVER SUPERIOR CASH FLOW GROWTH TO CREATE SUSTAINABLE LONG-TERM VALUE Les Quatre Temps – Paris 1. Accelerate portfolio rotation: • sell mature assets with limited growth potential 2. Ensure each asset can deliver superior IRR (1) • increase in tenant rotation ¾ 12.2% Ebitda CAGR 1997-2
Slide 47: Strategy commentary
¾ Unibail-Rodamco's strategy is to create intrinsic long-term value through increase of cash flows of each individual asset. ¾ This cash flow growth derives from: • ability to position assets in line with the catchment area / consumers' needs; • on-going rent-roll optimisation; • renovation/extensio
Slide 48: Capital recycling policy to be pursued further
> CAPITAL RECYCLING POLICY TO BE PURSUED FURTHER Unibail-Rodamco's 2007 main disposals Net Proceeds (1) Premium over last appraisals before Disposal Date Asset (€ Mn) price agreement (2) 11/01/2007 Robeco-huis - Rotterdam 74 +6% 19/01/2007 Chelles 2 shopping centre 88 +18% 30/01/2007 Zeilgalerie - F
Slide 49: Disposals commentary
¾ In 2007, Unibail-Rodamco continued its policy of selling mature bond-like assets. In doing so, Unibail- Rodamco generated premium to last appraisals for all assets disposed of. ¾ Unibail-Rodamco benefited again from a very strong investment market. Investments in real estate amounted in H1 2007 to
Slide 50: Development projects: key growth driver for shopping centres
> DEVELOPMENT PROJECTS: A KEY GROWTH DRIVER FOR SHOPPING CENTRES... Ä Focus on prime projects with limited risks Metropolis – Moscow Ä Attractive yields on cost: 8.1% Thousand Evolution of Unibail-Rodamco shopping m² centre portfolio 5,000 4,000 + 39 % 324 785 ¾ 80,000 m² in centre of Moscow – Russi
Slide 51: Shopping centre development commentary
¾ Development is a key driver for the Group's further growth. ¾ Unibail-Rodamco has a strong know-how in development to be applied to the 14 countries where the Group is present. ¾ This pipeline of development: • relates to prime centres of the same quality as the existing portfolio; • generates att
Slide 52: ...and offices
> ...AND OFFICES Ä Prime projects in Paris CBD and Western CBD Majunga – La Défense Ä Attractive yields on cost: 8.4% Thousand m² Evolution of Unibail-Rodamco office portfolio (1) 1 400 1 200 + 42 % 391 1 000 800 600 923 400 200 0 ¾ Prime project in La Défense, the Existing portfolio (1) Development
Slide 53: Office development pipeline commentary
¾ Unibail-Rodamco also has a strong development pipeline in its office division, representing 42% of office (and industrials) surface currently in operation. ¾ This pipeline is mainly made of prime office building projects in the Paris CBD and Western outskirts, including: • the Phare and Majunga pr
Slide 54: Velizy 2: further value creation in progress
> VELIZY 2: FURTHER VALUE CREATION IN PROGRESS Vélizy 2 after renovation in 2007 Extension plans Successful delivery of renovation in March 07 Extension project ¾ A prime 102,000 m² shopping centre with 17 million visits ¾ 3,800 m² extension on the third floor per year ¾ Expected IRR: 11% ¾ +9.1% in
Slide 55: Velizy 2 commentary
¾ Vélizy 2 is a prime shopping centre in the Paris region: • 102,000 m²; • one of the wealthiest catchment areas; • 17 million visits/year. ¾ Vélizy 2 went through a full renovation completed in March 2007. ¾ The impact of this renovation has been very positive on tenants' sales with a 9.1% increase
Slide 56: Selective development – Badajoz
> SELECTIVE DEVELOPMENT – BADAJOZ Badajoz – Spain ¾ A GLA 56,000 m² regional shopping centre near border with Portugal ¾ 33,000 m² owned by Unibail- Rodamco ¾ El Corte Ingles to be anchor tenant ¾ Completion expected in H1 2010 (1) ¾ Estimated yield on cost: 8.1% (1) Subject to authorisations 55
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Slide 58: Selective development – Pankrac
> SELECTIVE DEVELOPMENT – PANKRAC Arkády Pánkrac – Prague, Czech Republic ¾ A GLA 49,000 m² regional shopping centre ¾ Strong catchment area in the Prague city ¾ Estimated yield on cost: 8.2% ¾ Unibail-Rodamco will own 75% ¾ Expected completion of the first phase in Q4 2008 57
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Slide 60: Financial outlook: a growth and yield company
> FINANCIAL OUTLOOK Î A GROWTH AND YIELD COMPANY 2007 Medium term ¾ Confirmation of 15% target ¾ Double-digit growth target Recurring EPS growth on average over the next 4 years in recurring EPS ¾ Increase of pay-out ratio: 85% ¾ Increase of pay-out ratio: to 95% of recurring EPS 85% to 95% of recur
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Slide 62: Conclusion
> CONCLUSION Ä STRONG OPERATING FUNDAMENTALS Ä STRONG BALANCE SHEET Ä INTEGRATION WELL ON TRACK TO DELIVER PROMISES Ä INCREASING DIVIDEND POLICY Ä OPPORTUNISTIC INVESTMENT/DIVESTMENT APPROACH Ä NEW OPPORTUNITIES MAY ARISE IN A MORE VOLATILE ENVIRONMENT: • SELECTIVE ACQUISITIONS • ACQUISITION OF OWN
Slide 63: The End
THE END
Slide 64: Appendix
> APPENDIX 64
Slide 65: Strong growth potential
> STRONG GROWTH POTENTIAL Shopping centres Office, C&E and Industrials 1,110,000 m² (1) 390,700 m² (1)(4) DEVELOPMENT ¾ Current valuation: €479 million ¾ Current valuation: €134 million EXTENSIONS ¾ Additional capex: €3.8 billion ¾ Additional capex: €2.0 billion ¾ Additional rents: €343 million ¾ Ad
Slide 66: Retail development pipeline as of 30 June 2007
> RETAIL DEVELOPMENT PIPELINE AS OF 30 JUNE 2007: OVER 1.1 MILLION M² IN EUROPE Region Major projects Type GLA m² Estimated delivery date (2) Rivetoile – Strasbourg (1) Greenfield project 27,900 Q1 2008 Docks 76 – Rouen (1) Greenfield project 35,800 Q4 2008 Lyon Confluence (1) Greenfield project 51,
Slide 67: Office and C&E development pipeline
> OFFICE AND C&E DEVELOPMENT PIPELINE: 391,000 M² AS OF 30 JUNE 2007 Estimated Region Major projects Surfaces m² delivery date (2) Clichy (1) 13,500 Q1 2008 Versailles – Chantiers (2) 14,600 2012 Office Centre Eiffel – Levallois (2) 29,700 2011 Majunga (2) 64,900 2011 Phare (2) 130,000 2012 Tour Oxy