Klépierre expects 2% rental growth in 2013

French listed retail specialist Klépierre said it expects total rents to grow by around 2% on a like-for-like basis in 2013, largely in line with the 2012 result.

Last year, Klépierre reported a 4% increase in rents to €983 mln, partly driven by recently opened shopping centres which added some €33 mln in rents. On a like-for-like basis, the increase came to 2.3%.

The Paris-based REIT delivered three major shopping center projects in 2012 which, together with the positive impact of lease indexation and reversion, were able to offset the rental income lost through asset disposals. Roughly €700 mln of non-strategic assets were sold over the year, as part of Klépierre's strategy to sell €1 bn of properties by end-2013.

In the shopping centre segment, the company's core business, like-for-like rents surged 2.2% driven by good operating performance in France, Belgium, Scandinavia and Italy. Altogether, these regions represented more than 80% of shopping centre rents in 2012.

Revenues for 2012 came to €1.08 bn, up 3.7% versus 2011.

Paris-based Klépierre invested €458 mln in developments in 2012, and currently has a development pipeline worth €2.7 bn largely located in France, Belgium and Scandinavia. Development was also financed through access to the bond market. The French real estate investment trust raised €1 bn in 2012 on both the private and public bond markets, generating long-term financing at a competitive cost of 3.26%, while further diversifying the sources of financing.

Consolidated net debt stands at €7.3 bn, a reduction of €265 mln compared to December 31, 2011. This decrease resulted in an improvement in the company's Loan-to-Value ratio which now stands at 43.6%, down 220 basis points. On the financial front, Klépierre plans to further reduce its cost of debt to around 40%, in order to obtain a higher investment rating.

In the announcement of its 2012 full-year result, Klépierre also said that it has filed a draft simplified tender offer for the purchase of the shares it does not already hold in its Klémurs subsidiary. Klépierre will buy the remaining 15.89% of the company's share capital at a price of €24.60 per share.

'As a pure player in shopping centres, Klépierre’s operations will be conducted from now on under a stronger single brand,' commented Laurent Morel, chairman of Klépierre's Executive Board.