Senior officials of France-based European property development and management company Klepierre Wednesday began a road show here, saying U.K. investors could benefit from its strong growth outlook and portfolio diversification.
Jean-Paul Sabet, a member of the companyÂ's board, told journalists at a luncheon that the Euronext-listed company offers a steady 'eight to 11% organic growth' in free cash flow after tax and dividend a year, plus external cash flow growth opportunities of between 1.5% and 1.8% a year, while maintaining a low level of risk.
At the same time, he said Klepierre shares, while up 17%-20% so far this year, still trade at a modest 13 times cash flow.
He said Klepierre, with a market capitalization of EUR 1.65 bln, or EUR 1.9 bln after taking into account conversion of all outstanding convertible bonds issued, now also has the size, business strategy and corporate structure that appeal to U.K. institutional investors, including pension funds, and retail investors looking to diversify onto the continent.
He said the acquisition of commercial malls adjacent to Carrefour hypermarkets in Europe beginning in mid-2000, and the associated growth in its share trading should also attract investors who like to see a liquid secondary market in share trading.
The companyÂ's growth plans, including EUR 1 bln of investments in 2002-2003 alone, and its high debt capacity should help increase trading activity in both its equity and debt, which is rated BBB+ by Standard & PoorÂ's Corp., Sabet said.
He said the acquisitions have also given the company leading positions in each of its markets, with a portfolio worth EUR 4.4 bln, of which shopping centers represent 70% and Paris office properties 30%.
Asked whether French banking group BNP Paribas S.A.Â's continued control of 52% of the company should concern investors, Sabet said the company now has 'more and more independent members on the board' to look after shareholdersÂ' interests. He also said the merger of BNP and Paribas has produced a changed entity that upholds shareholdersÂ' interests.
With its expansion well advanced since 1998, Klepierre now manages and develops shopping malls in France, Spain, Portugal, Greece and Belgium, and recently became the leading shopping center manager in Italy with the acquisition this month of 11 additional shopping malls.
Sabet said the companyÂ's rising profile in Europe will leave it less sensitive to real estate cycles, and the high barriers to entry in commercial development will secure its position against would-be competitors, adding to its attraction as a safe long-term investment.
(source: Dow Jones)