Better than the peers in Q1 23

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.

Closing the chapter of strong recovery

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.

Operational performance stabilising progressively

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.

Welcome contribution from one-offs in H1 22

The guidance was raised due to positive one-offs. Vacancy stopped improving, thus confirming the stabilisation since December 2021.

First concerns about consumer spending

Klépierre addressed the thematic of consumer spending while confirming its guidance. The H2 21 recovery in occupancy stalled in Q1 22.

Further recovery in H1 22; don't think of it in 2023

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.

Positive one-offs in Q3 21.

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.

Resilient values in H1 21

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.

Convalescence begins

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.

FY 21 won't improve that much after all?

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?

Stabilising figures in Q3 20. Will this be enough?

Prior to the impact of further lockdown measures adopted in early Q4 20 across Europe, Q3 20 was stabilising vs. Q2 20. Both tenant revenues and footfall were stabilising at c.10% below their 2019 levels. The good news, however, was that rents did not collapse in Q3 20. The question remains whether this recovery will be sufficient to avoid a recap. March 2021 (annual figures, including values) will at least provide the answer.

A trend of above 6% negative revaluation per annum

The negative revaluation of 2.8% vs. December 2019 demonstrates a c. 6% annual pace. Valuers warned that valuation “could” adjust strongly in H2 20. Consumption was far from having fully recovered in Klépierre’s shopping malls in June 2020. Please wait.

Hybrids will come-back; they will not fully rescue NAVs

The Q1 20 figures from the old world were unsurprisingly good with a stable revenue, lfl. As Hammerson confirmed today that Orion decided not to buy its £400m retail parks in the UK, we can assume that all other players will experience some difficulties in selling assets in the coming quarters. How will Klépierre’s balance sheet react to the crisis?

Contained erosion of Gross Asset Value in H2 19

Erosion of Gross Asset Value was 1.1% in H2 19 (at constant perimeter) and 2% over FY 19. Don’t wait for a strong share price rebound but annual dividend yield looks safe (c.7%) as the retailer’s sales stand in positive territory (+1.8% for FY 19).

Acceleration of retailers' sales rebound in Q3 19

Except for France (36% of revenue) at +0.7% lfl, stable below inflation, the bulk of Klépierre’s tenants revenue showed an acceleration all over Europe. The key accelerations were located in Germany, Italy and Scandinavia.

CMD - Broadening & deepening client relationships

FLASH: In-line trading update

A dose of morosity

No change in the narrative. Aviva’s ship sails on as usual. The PRT business is still going well, inflation remains an impediment to a strong P&C improvement, retail customers seem more interested in the rising cost of living than savings’ products and Aviva investors see no real signs of an improvement. This is the same story as in recent quarters and, in that context, our thesis remains the same.

'Airlines will be shocked when Covid leases run out and rates go up’

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Morning Note – 5 June 2023

Cenkos: Duke Royalty Ltd -- Record revenues and more to come

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Reassuring AGM statement

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LIBERUM: NewRiver* - Higher occupancy driving earnings growth despite macro challenges

Morning Note – 30 May 2023

NewRiver REIT+ (NRR, House Stock at 83p) - Final results preview

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Early Mover in UK Lab-grown Meat

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Very strong CY22 - CY23 upgraded 10%