Klépierre, the second-largest shopping mall specialist after Unibail-Rodamco-Westfield, reported its cost of debt fell further to 1.6% in the six months ended June 30, 2018 from 1.9% at end-2017, as net rental income from its shopping centre activities grew 3.2% on a like-for-like basis.
The Paris-listed company is raising its full-year initial cash-flow guidance to at least €2.62 per share from €2.57–€2.62. No reference was made in the earnings press release to Klépierre's aborted bid to acquire Hammerson earlier this year.
Commenting on the H1 results, CEO Marc Jestin said: ‘In the first half, Klépierre’s teams continued to demonstrate their ability to outperform the market in a polarizing retail environment. This strong performance — as illustrated by our 7.8% increase in net current cash flow per share, exceeding our initial forecast — is the result of our strategy to constantly implement the best of retail in our malls, to create preferred destinations for our retailers and customers, and to enhance the quality of our shopping mall portfolio through refurbishment and extension projects.’
Retailer sales up overall
The company saw retailer sales grow in most of its markets with the exception of Denmark (-3.2%), Belgium (-2.9%) and Italy (-2.7%). Klépierre attributed the decline in Italy mainly to the impact of adverse weather conditions, uncertain political context and to a lesser extent some competitive pressure. Retailer sales rose by 2.4% in France, with the overall performance benefiting from the extension of Val d’Europe (near Paris).
Iberia remained buoyant (+4.1%), while sales growth in Germany accelerated (+2.9%), driven by the successful leasing initiatives at Forum Duisburg (near Dusseldorf; +5.3%) and Centrum Galerie (Dresden; +6.0%). CEE & Turkey (+5.8%) continued to post solid gains, despite the Sunday trading ban in Poland.
The company reported that its €438 mln redevelopment of Hoog Catharijne adjacent to Utrecht Central Station in the Netherlands – a former Corio project - is generating a yield on cost of 6.4%. Overall, the leasing rate for the entire mall, which is being redeveloped in several phases, currently amounts to 82%. The construction works are expected to be fully completed by the end of 2019. Since opening the latest phase in march, footfall at Hoog Catharijne has increased by 12% to reach 26.9 million.
Since January 1, 2018, Klépierre has completed a total of €310 mln (11) worth of disposals. This amount includes the disposals of Grand Vitrolles in Marseille (France) and Gran Via de Hortaleza in Madrid (Spain) to Carmila for €202.8 mln.
Additionally, Klépierre sold a development plot in Cologne, Germany and other properties in Europe for a total amount of €107.2 mln.
The company’s development pipeline stood at €2.9 bn at end-June while its total portfolio was valued at €24.6 bn, up 2.9% year-on-year.