Klépierre to sell retail gallery portfolio for €2b

Klépierre plans to sell a portfolio of 127 Carrefour-anchored retail galleries to a consortium led by Carrefour in a €2 bn deal.

The buyer consortium is 'capitalised' by institutional investors, the Paris-listed European shopping centre specialist said.

Klépierre and Carrefour have signed a memorandum of understanding for the proposed disposal.

The portfolio consists of small to medium-sized retail galleries initially acquired from Carrefour. It includes 57 assets in France (70% of the total transaction value), 63 assets in Spain (19% of total value) and seven assets in Italy (11% of total value) representing a total area of 476,000 m2.

The total consideration for the transaction is expected to be €2.01 bn, with Klépierre's share accounting for €1.67 bn. This price is in line with appraised values as of June 30, 2013 in France and Italy and reflects a discount in Spain.

Klépierre will not retain the asset and property management contracts for this portfolio if the sale goes ahead as planned.

The sale will enable Klépierre to allocate more capital to its €2.3 bn development pipeline of projects concentrated in dynamic and growing regions across Europe, mostly in France and Scandinavia.

Klépierre said that the sale will also support its ability to 'seize potential selective acquisition opportunities', such as the acquisition of Icade's 50% stake in the Odysseum shopping center in Montpellier announced earlier in December.

The company expects that the loss of an estimated annual net rental income of €1 bn on a group share basis would be mostly offset by interest savings from deleveraging and restructuring the hedging portfolio. As a result, Klépierre expects its net current cash flow not to be below €2 per share for 2014, assuming this transaction is completed as planned.

The transaction would have a limited impact on NAV of minus €0.70 per share and Klépierre does not expect to change its dividend policy as a result of the proposed transaction.

Klépierre was advised by Morgan Stanley & Co International, which is acting as exclusive financial adviser as well as White & Case and Bredin Prat & Associés, which acted as legal advisers.