Klepierre S.A.

The stable outlook incorporates a stabilization of Klepierre's operating performance in 2022-2023, assuming no severe restrictions imposed on shopping centers despite the recent spike in COVID-19 cases throughout Europe. This also includes moderate increases in occupancy, rent collection rates returning to prepandemic levels, and no material changes in the current leases structure. We expect the company to maintain S&P Global Ratings-adjusted debt-to-debt-plus-equity ratio below 50%, with debt to EBITDA returning below 11.0x, over the next 24 months. We could lower our long-term rating on Klepierre if: Severe restrictions on shopping centers across Europe are rolled out in the coming months (including potential store closures); Operating performance deteriorates over an extended period, for example from a material increase in vacancies, due

...Klepierre should post flattish rental growth in 2021, on a like-for-like basis. We think Klepierre's full 2021 performance will be affected by losses on rent deferrals, slightly more days of store closures than in 2020 (2.5 months in the first nine months of 2021 versus 2.1 months for the full 2020) and low collection rate for most of 2021 (76% as of Nov. 8, 2021), mostly in France and Italy. Although the collection rate is improving (91% for third-quarter 2021), we think the ratio for the full 2021 should be very close to that of 2020 (86% of 2020 rents collected as of Nov. 8, 2021). In 2022-2023, Klepierre's rental income should modestly rise 5%-10% annually on a like-for-like basis, since retailers' sales are recovering as vacancies stabilize. We think the company's revenue should benefit from higher rent collection and significantly lower rent abatements over the coming two years. Retailers' sales swiftly bounced back in the second half of 2021 and are already close to prepandemic level...

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