Although Klepierre's retail tenants are grappling with the growth of e-commerce and shifting consumer preferences, focusing on a smaller number of physical stores with a bigger marketing impact, Klepierre has increased its rental income for several years. We expect this trend will continue over 2018-2019 through rent indexation to the consumer price index--not retailers' sales--and Klepierre's demonstrated ability to accommodate the continuing shift in segment mix. Klepierre's strategy is to focus on dominant shopping centers in large cities with expanding catchment areas and to attract new tenants--for instance covering lifestyle, leisure, and entertainment offerings. Klepierre also aims to leverage big data (collecting statistics on footfall, shopping habits and consumption pattern). With respect to leverage, Klepierre targets an LTV ratio of
