The KlÃ©pierre Supervisory Board has reviewed the companyâs business for the year ended December 31, 2004 and approved the 2004 financial statements as submitted by the Executive Board on February 7, 2005.
KlÃ©pierreâs benchmark indicators recorded double-digit growth during 2004. The group has notched strong growth for the fourth consecutive year since the implementation of its strategic refocus on shopping centers in July 2000, clearly confirming the stability, in the medium term, of its shopping center intensive growth model.
Undeniably, KlÃ©pierre is reaping the benefits of the increasingly strong attractiveness of shopping centers to European consumers, especially in the countries in which it operates. This structural phenomenon is encouraging a growing number of retail anchors to seek out shopping center locations.
The diversity of the formats, quality and geographical spread of its property portfolio helps the group profit from the best consumer trends, while ensuring low sensitivity to general economic downturns.
Its strong European footprint, growing reputation, and partner network guarantee KlÃ©pierre an expanding and diversified source of external growth.
Shopping center lease
Shopping center rents increased by 19.4% in 2004, to â¬333.1 million. Properties outside France now generate 43% of total shopping center lease income (compared with 35.8% in 2003) and 36% of total rents (versus 28.2% in 2003). Spain remains the leading contributor, followed by Italy, with 15.4% and 14.7% of total shopping center rents, respectively. Consolidated over six months of operation, Hungary generated 4.2% of the total, becoming the third largest contributor.
The 19.4% increase in shopping center rents reflects external growth (15% or â¬44.1 million). France accounted for â¬5 million of the total, with 3 acquisitions in 2003 and 3 in 2004. Acquisitions in foreign markets accounted for 88.6% of the total. Shopping centers rents rose by 4.4% on a constant portfolio basis.
Variable rents accounted for â¬11.1 million, equal to 3.3% of total shopping center lease income, versus 4.2% for the year ended December 31, 2003. France accounts for most of this relative and absolute decline (-â¬1.5 million).
The financial occupancy rate remains high (98.4% in 2004, versus 97.9% one year earlier).
In a rental market cycle that has bottomed out, office properties generated â¬64.5 million in rents in 2004. This 13.1% decrease versus December 31, 2003, reflects the impact of disposals made in 2003 and 2004, which reduced the total lease income base by â¬10 million. On a constant portfolio basis, rents were stable (+0.6%). The impact of index-linked rent adjustments (+2.9%) and lease renegotiations (+2.1%) more than offset the impact of vacancies (-4.4%).
Reflecting a difficult economic environment and the sale of recently re-let buildings in line with KlÃ©pierreâs policy, the financial occupancy rate fell from 97.3% on December 31, 2003 to 93.4%.
Net current cash flow
Operating cash flow climbed 12.1% in 2004 to â¬348.7 million, confirming KlÃ©pierreâs ability to control costs during a period of strong growth.
Interest expense for the group ticked up 12.4%, reflecting the near â¬500 million of additional debt contracted in 2004, mainly in the second half. This figure does not yet reflect the positive impact, on a full-year basis, of the major restructuring of debt and interest-rate hedging instruments carried out in 2004. The average cost of debt, 5.3% in 2004, was recalculated on January 1, 2005 at 4.2%. The Loan to Value ratio at the December 31, 2004 reporting date was 46.9%, in line with the Standard and Poorâs rating of BBB+ with a stable outlook.
Group share of pre-tax current cash flow rose 14.5% to â¬188.7 million, and the net current cash flow increased 19.1% to â¬175.8 million. Expressed per share, the value of the latter indicator leaped 16.8%, significantly higher than the annual target of over 10%.
Taking into account non-recurring results totaling â¬15.5 mill