Thanks to a balanced combination of a steady flow of acquisitions and dynamic shopping center management, rents collected from mall tenants rose by 15.9% over the quarter and by 12.8% for the nine months ended September 30, 2007. This steady and sustained pace of growth is attributable to the satisfactory geographic and retail mix of the shopping center properties.
Shopping Center rents: +12.8%
Revenues for retailers operating in malls owned by Klépierre continued to rise over the course of the third quarter. With the exception of Greece, all the countries in which Klépierre operates posted growth that surpassed domestic consumption levels. Mall revenues for French shopping centers increased by 3.8% over the first 8 months of the year (+3.7% through 9 months), driven by the inter-communal centers (+4.6%), which demonstrates the appeal of malls adjoining hypermarkets that act as a magnet for consumers. Revenues through August from Spanish malls rose by 5.2%, compared with a more modest increase for Italy (+1.3%). For the portfolio as a whole, the increase was 3.8%.
All retail segments reported a rise in revenues, with particularly strong increases in Beauty/Health (+6.7%), Personal Products (+4.3%) and Culture/Gifts/Leisure (+4.1%).
Shopping center rents show balanced and sustained growth
Through September 2007, rents from shopping center leases totaled 380 mln., an increase for the period of 12.8%. The principal contributions came from France (196 mln. or 51.6%), Italy (59.4 mln. or 15.6%), Spain (48.7 mln. or 12.8%) and Hungary (22.1 mln. or 5.8%). Poland now represents 4.7% of the total, with a contribution of 18 mln. for the period. Central Europe, where consumer spending levels are among the most dynamic in all of Europe, now accounts for 13.5% of the group's shopping mall rents. In Hungary and Poland, Klépierre management teams are now firmly installed and have rolled out a retail repositioning plan for some shopping centers aimed at boosting their performances. The process is well under way, and the first tangible results have been encouraging. It is expected that, as of 2008, the plan will result in growth in rents.
External growth contributed 6.9% to the global rise in rents (+23.3 mln.). Acquisitions completed in 2006 contributed 10.5 mln., in particular Novo Plaza in the Czech Republic (Prague) for 1.7 mln., Minho center in Portugal (Braga) for 1.8 mln., and Toulouse Purpan in France for 1.4 mln., while the new downtown mall in Valenciennes (France) contributed an additional 1.5 mln. The 3 Polish shopping centers (in Rybnik, Sosnowiec and Lublin), which were acquired in May and July 2007, contributed 3.7 mln., and the Progest portfolio acquired in January 2007 provided 5.3 mln. Overall, acquisitions completed since the beginning of this year have contributed 11.7 mln.
On a constant portfolio basis, rents increased by 5.9%, reflecting the impact of:
- Index-linked rent adjustments (+4.5% for the portfolio as a whole and 6.9% for French minimum guaranteed rents)
- Rental reversion, which is still sustained: 502 leases were renewed (+14%) and 493 relettings were signed (+11.1%).
Additional variable rents totaled 8.6 mln., up by 3.1% compared with the nine months ended September 30, 2006, and accounting for 2.3% of total rents collected (compared with 2.5% one year earlier). In France, variable rents were stable at 5.5 mln., reflecting the strong index-linked adjustments applicable in 2007. The biggest increases came in Poland (+346,000) and in Hungary (+252,000). The financial occupancy rate stood at 98.2% on September 30, 2007, versus 98.6% on September 30, 2006, reflecting the impact of vacancies related to retail restructuring in Hungary, Poland and Portugal.
Retail rents: growth in line with targets
Retail property rents amounted to 17.4 mln., with the contribution of rents from Buffalo Grill restaurants reaching 14.4 mln. Rents from the three historical assets, which comprise the constant portfolio, increased in line with the index