For the nine months ended September 30, 2004, Klépierre reports revenues of 318.4 million euros, an increase of 10.1% versus the corresponding period one year earlier.
The ongoing and steady rise in rents posted by Klépierre´s shopping center properties over the first three quarters of this year, which was achieved in spite of the economic slowdown that has hampered consumption in Europe, confirms both the soundness of the business model and the quality of the shopping-center assets in the Klépierre portfolio.
Consumption patterns in Europe showed signs of uncertainty throughout the third quarter, particularly in France, as reflected in the 1.3% slide in the September reading of the small retail business activity index published by the Banque de France.
Like the rest of the market, Klépierre´s retail shopping center tenants saw their revenues adversely affected by the gloomy economic environment. Globally, their sales were down by 0.3% in September. However, the trend for the year remains positively oriented, and the year-to-date progression over nine months stands at 2%.
This resilience is mainly attributable to the diversity of Klépierre´s shopping center assets, with the downtown shopping malls turning in a more solid performance (+4.6%) than the regional or inter-communal retail centers (+0.9% and +0.3%, respectively).
Shopping centers: Rents up by 17%
The structure of Klépierre´s leases offer substantial protection against business cycle factors. Rents continued to show sustained growth, reflecting the combined effect of the pursuit of the acquisition program and efforts accomplished by Ségécé and its subsidiaries to enhance the rental value of the portfolio. At 243.4 million euros for the nine months ended September 30, 2004, rents are up 17%.
External growth accounted for 13.2% of the period progression in rents. Acquisitions contributed a total of 32.2 million to total rents for the period, principally:
- Spain: 10 million euros from 10 acquisitions made in 2003, to which the Santander property was added in late July 2004.
- Hungary: 7.1 million euros from 12 acquisitions made in July 2004.
- Portugal: 6.9 million euros from 3 centers acquired in 2003 (of which 3.5 million euros from Porto- Gondomar).
- France: 4.8 million euros from 3 acquisitions in 2003 and 1 in 2004.
- Italy: 3.6 million euros from 4 centers acquired in 2003.
On a constant portfolio basis, rents collected from shopping center properties rose by 3.8%.
Office rents up 1.5% on a constant portfolio basis
Through September 30, 2004, office properties generated 49.7 million euros in rents. This 12.8% decline on a current portfolio basis reflects the impact of disposals made in the preceding 12 months. The sold properties led to the loss of 8.7 million euros lease income. On a constant portfolio basis, rents increased by 1.5%.
The occupancy rate at the September 30, 2004 reporting date was 93%, compared with 95.1% at the halfyear reporting date. The two principal factors behind this change were the base effect due to the sale last August of the fully leased-up Ledru-Rollin property (Paris, 12th arrondissement) and the vacancy of several units: 3,467 square meters at 83/85 quai André Citroën (Paris, 15th arrondissement) and 2,014 square meters at 36 rue Marbeuf (Paris, 8th arrondissement).
'In a difficult environment, Klépierre has once again demonstrated that its business model is extremely robust. On the basis of these latest figures, which are in line with our own forecasts, we are once again confident - for the fifth year in a row - that our targeted growth in net current cash flow per share of more than 10% will once again be achieved this year' stated Executive Board Chairman Michel Clair.
Source: Klépierre
