Interview: Pursuing the daily shopper

Retailers which succeed in drawing in the daily shopper are the key to growth and should be pampered, says French mall operator Klépierre

A sharper focus on retail, further deleveraging and continued diversification of its financial sources are what lie in store for French REIT Klépierre in 2013. Backed by a new major shareholder, the shopping centre operator is targeting organic growth in places enjoying both demographic growth and significant purchasing power, CEO Laurent Morel told PropertyEU in an interview.

‘We will continue to concentrate on the most promising retail consumption areas in Europe, which are southwestern France and Paris, northern Italy and Scandinavia,’ Morel said, speaking from the company’s headquarters at Avenue Kléber in Paris. ‘This strategy is supported by our main shareholders.’ Last March, Simon Property Group, the biggest shopping centre owner in the US, became Klépierre’s largest investor by buying 54.4 million shares, almost a 29% stake, from BNP Paribas, Klépierre’s historic shareholder which founded the business in 1990 and had a controlling stake for the past two decades. The sale by France’s biggest listed bank was widely expected in the market, as BNP Paribas was pressured by new Basel III regulations to strengthen its capital ratio. The tie-up with Simon Property has strengthened Klépierre’s shareholder base and provided certainty about its direction, Morel said. ‘The major BNP Paribas interest was weighing on our stock,’ he noted. ‘Simon Property was willing to accelerate our plan so we felt vindicated by the number one player in the world.’ The deal saw Simon Property invest €1.5 bn for a 28.7% stake in the Paris-based company while BNP Paribas, which previously owned 50.9%, was left with a 22.2% interest. The bank pledged to keep this stake for at least one year and has made no further comment since then. As the apron strings with BNP Paribas are loosened, Klépierre is seeking to diversify its sources of financing, which have in the past relied heavily on the parent group. Over the past 12 months, the company more than doubled its liquidity to €2 bn thanks to a string of disposals and successful bond issues. ‘We are well on schedule.... we do not need to do any significant refinancing until 2015,’ Morel said. The strong growth of Klépierre’s cash pile in the past year follows an accelerated campaign to divest non-core assets and offices as part of its plans to refocus more strongly on retail properties.