Klepierre S.A.

Overview Key strengths Key risks Large and geographically diversified portfolio of high-quality retail property assets, valued at €19.8 billion on Dec. 31, 2022, with exposure to 12 countries and more than 50 cities. Full dependence on the retail property segment, which has shown more volatility during the pandemic compared to other real estate segments, and is again under pressure in the inflationary environment as purchasing power is hit and retailers? margins squeezed. Strong market position, focusing on large, upscale, well-located shopping centers with a mass-market appeal that should continue to attract top international retailers and high footfall in a post-pandemic environment. Structural challenges from the acceleration of e-commerce over the past few years, including the declining number of physical stores,

...Klepierre's top line should benefit from prevailing high inflation, although this may also weigh on retailers' performance. S&P Global Ratings forecasts about 5.0%-6.0% like-for-like growth in rental income in 2023, reducing to 2.0%-4.0% per year over 2024-2025, which is close to our inflation forecasts for the next few years. Klepierre reported a robust post-pandemic recovery during 2022 and first-quarter 2023. The company's like for like net rental income increased 24.8% during 2022, reflecting a strong recovery from the pandemic, and another 6.2% in first-quarter 2023. Its occupancy rate reached 95.7% on March 31, 2023, a 100 basis point increase from 2021. The company also recorded solid rent collection of about 96.4% in 2022 and collected some of the 2020 and 2021 rent and service charges that were provisioned as a result of the pandemic. Retailers' sales recovered to 100% of 2019 levels through April to December 2022, which should support Klepierre's positive momentum. This was also...

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