FRANCE - Klépierre, the French real estate investment company, will continue its disposal programme to boost liquidity and expects positive growth in 2009, executives announced yesterday.
Klépierre is currently Europe's largest shopping centre owner and operator, but plans to consolidate its holdings in 2009 by limiting its developments to around €800m, focusing on projects already committed to and disposing of €1bn worth of assets in the next 18 months. This is designed to achieve financial leeway and allow the company to take advantage of opportunities in the market.
Laurent Morel, chairman of the executive board at Klépierre, said: "Thanks to the acquisition of Steen and Strom, Klépierre can offer its retail partners a unique and widening network of locations across Europe. The total size of its portfolio after this acquisition - more than €14.8bn at year-end 2008 - allows the Group to confidently pursue an asset rotation policy, which is sound both as a business model point of view and financially-speaking."
Retail properties make up more than 90% of the firm's holdings, while offices make up only 10%.
The firm will prioritise selling minority interests in its retail assets to maintain the group's strength. Officials said it would consider disposing of €2bn worth of property through partial sales, having already had a number of successful partnerships with insurance companies and pension funds such as ABP, CNP Assurances and AXA.
"We have a number of assets that could be considered for this kind of sharing and we expect a number of financial institutions to enter these types of deals," said Morel.
Three-fourths of the office portfolio will be considered up for sale subject to market conditions.
Moral said there was "no financial urgency" to sell assets and admitted it is unlikely assets will be disposed of in the fist quarter of 2009.
The group's share cash flow was €341.4m in 2008, an increase of 10.1% from the previous year, while Group share earnings were €200.3m, up 1.3%. Total revenues for 2008 were -0.1%. Spain suffered the biggest downturn, while France and Belgium remained relatively stable and Central Europe saw a surge in consumption.
According to Morel, Scandinavia, the Czech Republic and Poland offer interesting opportunities for retail investors, as their economies have remained fairly stable despite the crisis and their populations have strong spending power and less debt. Hungary, Romania and Russia are less favourable.
Moral said the firm was "contemplating" new openings in Central Europe and said Scandinavia would be "an important factor of stability for Klépierre 's revenue next year."
Although Klépierre believes the UK offers potential, it prefers to concentrate on strengthening its position on continental Europe before entering the market.
The average yield correction across all counties was 6,0%. Hungary recorded the highest yields at 7.4% followed by Greece and Portugal with 7%.
Morel insisted, however, the rise in yields was offset by the rise in cash flows and rent, with shopping centre rents increasing by 19.7% to €620.1m.
Offices, which make up €1.1bn of the firm's investments and are located mainly in Paris, also saw rents increase in but these are expected to decrease slightly in 2009.
Klépierre currently has €600m of committed investments which it must finance this year and plans to refinance €119m with the help of payment of dividend in shares, partners' participation in equity capital and the €480m available on lines of credit. Its average debt maturity is 6.3 years.
Klépierre currently has 45 regional centres and 200 hypermarket malls across Europe, however, more than half of its portfolio is located in France and Belgium. In 2007 and 2008, Klépierre opened 170 new locations in its centres for European retailers including Primark, Carrefour and H&M.
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