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NRI emerged at EUR 262.2m, up 3.5% YoY and +2.9% on a constant basis.Occupancy improved slightly to 96.5% (stable QoQ and up 50bps YoY).Q1 retailer sales were up 2% YoY supported by a 1% increase in footfall.Main event of the quarter was the double credit ratings upgrades by both Standard & Poor's and Fitch.2025 net current cash flow (NCCF) per share guidance confirmed at EUR 2.60-2.65 (+0% to +3.9%YoY), EBITDA to grow 3% YoY.The update is in line with expectations. We reiterate our ‘Hold' rating on the back of the company trading at more demanding multiples vs peers and despite
Klepierre Klepierre SA
What happened? Klepierre has reported Q1 results and reiterated FY25 earnings guidance of EUR2.60-2.65/sh. This compares to Bloomberg consensus of EUR2.64 and BNPPE EUR2.64. BNPP Exane View: A stable set of figures and confident tone from management against a challenging macro backdrop. Like for like NRI growth has moderated to 2.9% from 6.3% for FY24, driven by a combination of lower indexation and index beating rental growth declining to 110bp from 350bps. This moderation was well flagged and is still marginally ahead of our expectations where we assume 2.5% in our forecast for FY25. Operating KPIs look resilient, particularly for Iberia, and management suggest European retailers could be a net beneficiary of the potential impact of tariffs on global supply chains. In addition to the SandP credit rating upgrade in February to A-, Fitch has also upgraded its credit rating (senior unsecured) to A with a stable outlook, as of yesterday. This underscores the strength of the balance sheet, where the credit spread achieved on the recent 10-year green bond issuance was just 106bps. Overall, we think the statement is sufficient to support the shares, that now trade at an 8.5% forward FFO yield and 9.1% discount to forward NTA. KEY FIGURES RETAIL KPIs: Retailer sales +2% footfall +1% vs Q1 4. NET RENTAL INCOME: EUR262.2m, +2.9% LfL, outpacing indexation by 110bps. This is ahead of our forecast where we assume 2.5% LfL growth for FY25. On a reported basis, net rental income was +3.5%, supported by the acquisition of RomaEst in Q2 24. Rental growth was also supported by 3% uplifts on renewals and re-lettings. OCCUPANCY: +50bps to 96.5% DISPOSALS: EUR74m signed or closed YTD, at an average 19% premium above appraisal values. CREDIT RATING: SandP credit rating upgrade to A- with a stable outlook in February and Fitch credit rating upgrade to A with a stable outlook as of yesterday. BALANCE SHEET: net debt/EBITDA 7.1x, 5.8 year average debt maturity, 1.8% cost of...
• Net rental income stood at EUR 1,066m, up 6.1% YoY and 6.3% on a LfL basis.• Net CCFPS beats the guidance and our estimates at EUR 2.60, +5.3% YoY.• EPRA NTA stood at EUR 32.80p/s, up 8.9% vs December end.• Dividend proposal of EUR 1.85 per share in cash, up 2.8% YoY.• Rating from ‘Reduce' to ‘Hold' rating and TP lifted from EUR 28.00 to 31.00.• We remove Klepierre from the short list in the Preference List.
What happened? Klepierre reported FY24 results and hosted a call for analysts and investors after market close. Key figures are; NCCF/sh +5.3% to EUR2.60, 2.6% ahead of cons, DPS +2.8% to EUR1.85, in line with cons, and EPRA NTA +8.9% to EUR32.8, 1.2% ahead of cons. Guidance for FY25 is 3% EBITDA growth and EUR2.60-2.65 NCCF/sh, which implies growth of 0-2%. This compares to our current forecast of EUR2.61 and cons of EUR2.59. BNPP Exane View: SUMMARY. Overall a solid set of figures with a 2.6% earnings beat and continued capital growth in line with H1, resulting in an attractive 15.1% total accounting return for the year. Messaging from management on the call was bullish, particularly around operating KPIs and the ability to deliver further EBITDA growth. However, earnings guidance for FY25 is muted and may disappoint, despite being marginally ahead of cons. QandA focussed on the ability to deliver index beating LfL NRI growth, where there is now less upside from optimising rent collection and occupancy, and external growth opportunities. Management gave little away in terms of potential acquisitions but alluded to the fact that liquidity and competition is returning to the investment market, which in our view could make it more difficult to acquire accretively. On balance, we see small upside to the shares that trade at a 9.0% FFO yield, 6.5% dividend yield and 11.2% discount to NTA, but think additional acquisitions will be required to drive the share price materially higher. / OPERATIONAL KPIs: Retailer sales +4.0% and footfall +2.5% in 2024. Occupancy +50bps to 96.5% and retailer occupancy cost ratios -20bps YoY to 12.6%. 1,725 leases signed in 2024 (896 H1), +4% YoY, generating 4.0% rental uplifts on renewals and relettings. NET RENTAL INCOME EUR1,066m, +6.3% LfL and 350bps ahead of indexation. EBITDA +6.9% to EUR985.3m with margin up 70bps YoY to 86%. PORTFOLIO VALUATION: +4.1% LfL for the year, split 2.0% H1 and 2.1% H2. Trends from H1 continued in...
BNP Paribas Exane Mid Cap conference feedback Yesterday we hopped over to Paris to attend Day 2 of BNP Paribas Exane''s 3-day Mid Cap conference, as well as undertaking a number of investor meetings. Five of our coverage companies were in attendance on the day and we cover off the feedback from our face to face meetings with all the corporates in this report. One-liners are as follows: Klepierre: Above-inflation retail sales growth continues, with LfL rents to also beat indexation in 2025 CTP: Investor concern regarding their autos exposure is overdone. Tenant demand is broad-based WDP: EUR500m pa need to hit EPS target. Vacancy to rise by c.1% in 2025 Merlin: Socimi taxation now looking unlikely and the company does not need to increase asset sales Shurgard: Same-store revenue growth expected to moderate in 2025, with some cost pressures Unite Group also attended on Day 1 of the conference - we were unable to attend but recently joined Unite''s Capital Markets Day last week instead. Our feedback from which can be found here. For further feedback detail on any of the above companies, please give us a call.
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Net rental income stood at EUR 783.7m, up 5.7% YoY or 6.3% on a LfL basis.9M retailer sales were up 4.0 % YoY.The company fine-tuned its NCCF per share guidance now towards the upper range of the guidance at EUR 2.55 per share Rating downgraded from ‘Hold' to ‘'Reduce' with a price target unchanged at EUR 28.00.
Effective pan-European retail platform
We transfer coverage of the European retail real estate sector to Sam King and revisit the investment case for retail landlords under coverage. The main call in the report is our relative preference for Klepierre (+) over URW (=), where we downgrade URW to Neutral, leaving our EUR80 TP unchanged, following the YTD re-rating. We increase our TP for Klepierre to EUR32 (from EUR30) and reiterate our Outperform rating. We also reiterate our Outperform rating on Carmila, increasing our TP to EUR21 (from EUR20), and retain our Neutral rating on Hammerson, leaving our TP unchanged. Asset level returns are attractive but corporate risk profiles contrast From an asset allocation perspective, we like retail. Income returns are attractive, asset values have mostly stabilised, and property yield spreads to risk free rates are higher in comparison to other major asset classes such Offices and Residential. However, corporate risk and return profiles differ. While URW screens cheap relative to peers, we think lingering tail risks regarding disposals, development cost overruns and leverage, plus inferior forecast total returns, skew the current risk/reward in favour of Klepierre. What returns does each company offer on entry price? We introduce a new stock screen, that compares the ROE each stock offers on a short and medium-term basis versus the current entry price, where Klepierre returns rank highly and Carmila scores favourably on both measures. We also assess key questions for the equity story of each stock and identify upcoming catalysts. Key themes in the report (i) The macro picture; we suggest falling rates are no silver bullet for retail, (ii) The European retail investment market; current conditions favour Klepierre and Hammerson, and (iii) E-commerce threat is not dead; Carmila''s highly defensive portfolio leaves it well-placed.
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Net rental income stood at EUR 520.1m, up 4.9% YoY or 6.0% on a LfL driven by higher collection and occupancy rates. Indexation stood at 2.8%.Portfolio value increased at EUR 19.9bn, up 2.0% LfL since FY23.EPRA NTA stood at EUR 31.4 p/s, up 4.3% vs December end.The company lifts its net current cash flow per share guidance to EUR 2.50-2.55 (EUR 2.45-2.50 previously).We sustain our ‘Hold' rating and lift our TP to 28.00 (from 24.00)The company will host a conference call today at 10:00am CET.More details in our Note published this morning
NRI was up 4.8% to EUR 253.4m, with indexation representing 2.8% and the remainder being driven by reversion and higher additional revenues.Q1 retailer sales were up 4.3% YoY, with Health & Beauty (+12.2%), Food & Beverage (+5.8%) and Fashion (+4.5%) showing the strongest performance. Household equipment was the only segment posting negative growth (-2.0%). 2024 net current cash flow (NCCF) per share guidance confirmed at EUR 2.45-2.50 (-1.2% to +0.8% YoY), EBITDA to grow 4% YoY.The update is in line with expectations. We reiterate our ‘Hold' rating on the back of the company trading at more demanding multiples vs peers.
Net Current Cash Flow (NCCF) stood at EUR 811m, up 10.7% YoY. NCCF per share landed at EUR 2.48 per share, up 10.7% YoY as well (own guidance at EUR 2.40).Portfolio value stood at EUR 19.3bn, down 1.5% YoY on a LfL basis and down 0.2% over 6 months. The largest negative portfolio adjustment was recorded in France (-5.1% YoY LfL) and Scandinavia (-4.6% YoY LfL). Portfolio EPRA NIY stood at 5.9%, up 50bps YoY2024 NCCF per share guidance stands at EUR 2.45-2.50 (-1.2% to +0.8% YoY).2024 guidance is in line with our estimates, driven primarily by the increased interest
Sound balance sheet yet slowing growth
Simon Property Group is monetising around half of its 22.4% stake in Klépierre. What are the implications for Klépierre and at sector level?
Simon Property Group's wholly-owned subsidiary, Simon Global Development B.V., has launched an offering of senior unsecured exchangeable bonds in the aggregate principal amount of EUR 750m, fully and unconditionally guaranteed by the Simon Property Group, exchangeable initially into existing ordinary shares of Klépierre. The bonds will have a 3-year maturity and will be redeemed at their principal amount at maturity. The initial exchange price of the bonds will be set later today and is expected to be set at a premium of 20% to the reference share price, being the VWAP of the shares on Euronext Paris between the opening
NRI up 8.6% to EUR 736.7m. 9m retailer sales were up 7 % vs 9M 2022 levels, mainly driven by Food & Beverage (+14%).In contrast, Household equipment remains subdued, decreasing by 3% YoY.2023 net current cash flow (NCCF) per share guidance confirmed at least EUR 2.40 (+7 % YoY excl. one-off and divested assets).Klépierre released a light trading update, reiterating the earnings guidance for 2023.Hold.
Q3 23 income accelerated significantly compared with H1 23. The other parameters were more in line with our expectations, with the vacancy ratio no longer improving and retailer revenues also normalising yoy. Italy and reversion, which weakened in Q3 23, were the most striking points. The granularity of Klépierre’s communication remains insufficient to better understand, and therefore anticipate, the underlying performance. For the time being, this strategy is favourable to the company’s share price.
Net rental income stood at EUR 484.1m, up 7.3% on a LfL basis excluding the positive non-recurring income from 2020 and 2021 receivables. Indexation stood at 6.1%.Portfolio value stood at EUR 19.2bn, down 1.4% LfL since December end. EPRA NIY stood at 5.7%, up 30bps since December end.The company lifts its net current cash flow per share guidance to EUR 2.40 (EUR 2.35 previously), implying a YoY increase of 7%. The new guidance is fully in line with our estimate (DPe EUR 2.39). ‘Hold' reiterated.
After adjusting for variable rents (+36%), car parks (+32%) among other slight restatements, we see a slight erosion in the underlying rental momentum despite the top line up 7.3% organically in H1 23.
Solid operations
We are lacking a couple of traditional operational metrics with which to evaluate Klépierre’s overall performance in the Q1 23 but inflation is playing its role and vacancy was stable sequentially.
NRI up 6.2% to EUR 228.5m, driven primarily by a 5.75% indexation. Q1 retailer sales were up 13.2% vs Q1 2022 levels, with all segments except Household Equipment showing a double-digit growth. 2023 net current cash flow (NCCF) per share guidance confirmed at EUR 2.35 (+5% YoY excl. one-off and divested assets).Klépierre released a light trading update, which shows indexation a touch above the company guidance for 2023 (at 5%). Hold.
Strength in numbers - balance sheet stronger than peers We consider the balance sheet of Klepierre as strong with an attractive LTV versus peers, low average cost of debt (albeit with 20% maturing by end 2024) and sufficient liquidity to cover near-term refinancing needs. We have undertaken a sensitivity analysis of the impact of disposals and valuation decline on LTV, and conclude that Klepierre has strong headroom to all debt covenants (being able to handle a 37% asset value decline assuming no disposals, without the need to sell assets or raise equity). We forecast like-for-like valuation growth of -1% in 2023 and +4% in 2024. No credit rating downgrade on the table We have stress-tested the portfolio valuation assumptions and we do not expect a credit rating downgrade, given resilient cashflows (c.25% of GLA is hypermarkets, protecting footfall). France, Italy, and Spain exposure as protection Klepierre has no US exposure, and its geographies have lower retail space per capita than the EU average - helpful when e-commerce is still rising. We believe European e-commerce penetration will take longer to converge towards higher levels seen in the UK (especially in regional cities). Index-linked leases providing automatic like-for-like rental growth In addition, (a) Klepierre benefits from positive rental uplift across its four biggest geographies of France, Italy, Spain and Scandinavia, (b) A consumer savings buffer built during Covid in Continental European countries and (c) A low occupancy cost ratio (12.9% at FY22). Set all of this in an environment of cost inflation, we think this will help Klepierre navigate an economic downturn. We initiate at Outperform, EUR24 TP, as part of our sector initiation on Retail Real Estate Klepierre has a positive track record of building net cash from capital allocation (cash in from disposals minus cash out from acquisitions and developments) of EUR0.9bn cumulative over the past six years, which enables...
Retail real estate total returns to outperform the wider sector We forecast retail real estate asset total returns to outperform other key sub-sectors such as offices and logistics over the next 12 months, aided by a relatively resilient European consumer backdrop, with greater capacity for lockdown savings ''burn'' vs. the US protecting discretionary spend. Couple this with deeply discounted stocks, more favourable asset yields and the largest yield gap to risk-free rates in comparison to other sub-asset classes, and we are more positive on the sub-sector. Tenant health check - who''s at risk? In this report, we assess the financial health of our coverage companies'' main tenants (across both Europe and the US) - particularly in light of a recent spate of bankruptcies. The findings? We believe URW is the most at risk, particularly in the US, with Klepierre and Carmila''s relatively more convenience-focused exposure providing better resilience to tenant profitability pressures. Jumping on the AI horse We have worked with an AI data provider to gain insights on footfall, shopper habits and shopper behaviours. This information, incredibly valuable in the current environment, indicates that in the future some assets might not be worth what their owners think they are worth today... US Mall deep-dive analysis We have analysed the US shopping centre market in detail, including URW''s US portfolio across a number of key KPIs, concluding that exiting the US in 2023-24 is a tough sell. Literally. We reinitiate on the subsector Our biggest stock call is our reinitiation on Klepierre with an Outperform recommendation. We rate URW Neutral - there''s value but there''s also risk, and rising leverage could mean the dividend is not reintroduced this year - a risk that isn''t priced in in our view. Finally, we rate Carmila''s convenience-led portfolio business Outperform, while Hammerson receives an Underperform recommendation, despite the deep share price discount to...
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Significant positive one-offs supported consolidated FFO in FY 22. Reported FFO per share should be down c.10% in FY 23 yoy even if +5% positive at the recurring level. €2.35 in FY 23 would mean remaining significantly below the FY 19 level of €2.79, nevertheless.
Net Current Cash Flow (NCCF) per share up 20.1% YoY to EUR 2.62 (EUR 2.24 or +2.7 YoY excluding one-off adjustments). Dividend set at EUR 1.75 (+3% YoY).Portfolio value down 1% YoY on a LfL basis to EUR 19.6bn. EPRA NIY at 5.4%, up 20bps YoY.2023 NCCF per share guidance at EUR 2.35, +5% YoY. Klépierre hosts a conference call at 9:00 CET. Hold.
After persistent volatility for the top-line in Q1-Q2 22, Klépierre’s performance now looks to be progressively stabilising as it benefits from the rising contribution from inflation.
The guidance was raised due to positive one-offs. Vacancy stopped improving, thus confirming the stabilisation since December 2021.
Klépierre addressed the thematic of consumer spending while confirming its guidance. The H2 21 recovery in occupancy stalled in Q1 22.
Due to its own positioning (more global than local), Klépierre’s recovery should be strong in H1 22, for technical reasons first: sure, a favourable base effect will help. There are still a couple of quarters before landing in full.
Business is about to normalise progressively. The rent collection rate should soon be back to its usual pre-crisis level and new rent abatements are now targeting zero.
Despite a slower recovery that one could have expected in 2020, values were resilient in H1 21. The c.4% p.a. was half the FY 20 degradation pace. Even if we question the roughly stable appraisals, the fact is that the released figures were reassuring.
Klepierre confirmed other players’ views: shoppers are back in the shops as from reopening, targeting 90% of 2019 retailers’ revenue. No strong consumption catch-up (i.e. sales above 2019 levels) was observable to date, nevertheless. Klépierre’s shopping malls should reopen in full as from mid-May.
The company’s FY 21 guidance wasn’t that aggressive in assuming a lower FFO per share. Is this because some non-recurring items could be considered as recurring?
