Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Klépierre Full Year Earnings Conference Call presented by Jean-Marc Jestin, Chairman of the Executive Board, and Stéphane Tortajada, CFO. Please go ahead, gentlemen. Good morning, everyone, thank you for joining us this morning. I'm pleased to report Klépierre 2022 full year earnings. Despite external headwinds characterized by the very uncertain geopolitical situation in Ukraine and the volatile macroeconomic environment with high inflationary pressure and rising interest rates, we had a very successful year, and our business continued to grow. Before going through the numbers, I would like to highlight our remarkable achievements in delivering on the Act for Good CSR strategy. For the third year in a row, Klépierre ranked top of the global retail listed, Europe re-retail, Europe retail listed and Europe listed categories with a score of 98 out of 100. GRESB is the world's leading ESG benchmark for real estate and infrastructure investments. Why are we ranking number one? In 2017, we committed to aligning our business objectives with our corporate social responsibility approach. Five years down the line, we have successfully achieved 99.8% of our 32 targets, including reducing the energy intensity of our portfolio by 42% and our greenhouse gas emission by 82%. Make no mistake, this is a unique performance. Let me give you just one figure. Our malls in Europe consume on average 79 kW/m2, and in France, the figure is 70. The French industry average consumption for a mall is 109. There you have it. We are simply 30% better. Last week, we unveiled our new CSR plan, which was co-constructed with a nine-member scientific committee. Our ambition is simple for 2030, build the most sustainable platform for commerce. The first pillar is to achieve a net zero carbon portfolio with an average portfolio energy efficiency of 70 kW/m2. We will also lend our support to retailers' energy reduction initiatives with an objective of cutting their consumption by 20% and developing low carbon solutions throughout our portfolio. The second pillar is to be a local contributor with a project at each shopping center designed to give something back to the community. The third pillar is to act as a skilled developer by upskilling 50,000 people, which is an extremely stimulating goal. The fourth and last pillar is to act as a game changer by promoting sustainable lifestyles as we guide 50 million shoppers towards sustainable consumption. Let's now review our 2022 results. We generated EUR 2.62 in Net Current Cash Flow per share, up 20.3% compared to 2021. This is also 13% over the midpoint of our initial guidance range of EUR 230-EUR 235 and 7% higher than our revised guidance of EUR 245 given in July. These robust figures are the direct result of our clear strategy and positioning. Klépierre owns and operates dominant malls in Europe's largest cities, with catchment areas over 1 million inhabitants, having a revenue per capita 20% above national averages. The cities we are in and the malls we own are essential venues for the most dynamic national and international brands to operate their flagship concepts, reach out to their customers and nurture their omni-channel strategies. Our teams have a laser-like focus on delivering the best and seamless customer experience through our four differentiating operational initiatives that you are now all familiar with. Together, these initiatives are serving our vision to provide our communities with venues where they can shop, meet, and connect with the best and most modern retail, service, and leisure offering in an entertaining, appealing, and hospitable environment. Our strong results are also a testament to our disciplined capital allocation policy based on a moderate use of leverage, controlled capital expenditures, and continuous asset selection to streamline our portfolio by divesting mature properties. In 2022, our business continued to grow remarkably with retailer sales and footfall up 25% over the year. We also observed strong momentum in all regions and across all business segments. By geography, the Netherlands and Germany, together with Central Europe, led the way with sales growing by 45% and 40% respectively. France and Iberia also outperformed the group average, with sales up by an average of 28%. All segments posted double-digit sales growth, with food and beverage up 44% and fashion, health and beauty and culture, gift and leisure also growing by around 25%. Overall, the 2022 sales rebound has allowed our retailers to achieve pre-COVID levels in all countries and all segments. As regards leasing activity, tenant demand has been strong across all territories. We continue to renew and widen our retail and leisure offering with expanding retailers in the sports segment, banners such as JD Sports, Nike, Snipes, Umbro, and in the apparel segment with Inditex brands, Primark, Calzedonia, Mango, Levi's or United Colors of Benetton, as well as among value for money retailers like Normal, Action, Pepco and Lidl. We also continue to leverage our platform to establish differentiating brands in the new territories such as Jimmy Fairly, Miniso or Xiaomi. We signed 1,360 leases during the year and achieve a remarkable 4.1% positive reversion on top of the 3.7% indexation applied in January 2022. Since 2020, we have relet 26% of our stores to new tenants, which once again illustrate how successfully the offerings at our malls has been transformed and how attractive our venues are to retailers. We also raised our occupancy rate by 110 basis points over the year to 95.8%. Lastly, the average duration of leases in Klépierre malls increased to five years, significantly higher than one year ago and even higher than pre-COVID levels. Our Occupancy Cost Ratios stood at 12.9% on average, helping support future organic growth. Looking at Net Rental Income, 2021 was severely impacted by COVID-19 as stores were closed for 2.5 months on average. 2022 is the first undisturbed year with virtually no business disruption due to COVID, even though some light restrictions remain in place during the first quarter. An important aspect of the year is that we have also almost finalized all our negotiation with our retailers for the payment of rents due for the years 2020 and 2021. To expand further, in 2022, Net Rental Income included two non-recurring one-off contributions. Reversal of provision due to better than expected rent collection for 2020 and 2021 for EUR 88.6 million and EUR 25 million of Net Rental Income generated by asset disposed over the course of 2022. Excluding those two elements, Net Rental Income for 2022 amounted to EUR 921.7 million, reflecting the basis of the first undisturbed year since COVID-19 outbreak. On disposals. We pursue our portfolio streamlining and have disposed of close to 1.5 billion in assets over the last two years, including EUR 602 million in 2022. The transaction were executed in line with our preserved value, just 2.4% below. We are committed to continue refocusing our portfolio on best-in-class assets, finding the optimal fit between Klépierre's future growth ambitions and the plans of expanding retailers. As of today, the portfolio is highly concentrated, with the largest 20 malls representing 54% of the overall portfolio value and the largest 70 equating to 92%. Turning now to our development activity. Last July, we opened a large extension in Bologna, which is now fully let. Performance is exceeding expectation in terms of footfall, with a 47% boost compared to 2019. Our objective is to attract between 9 and 10 million visitors per year. The ROI is 8%. We achieve an additional EUR 49 million sales over the first six months of operation. We also delivered five new Primark mega stores in France and Italy on time and on budget. In Grenoble, the reshaping and extension of Grand'Place is progressing well, with 89% of the project in Net Rental Income signed. This new development will open at the end of this year and house the first Primark store in the region. Yield on cost is 8%. Lastly, I'm pleased to announce the introduction of the second Time Out Market in Europe at Maremagnum, our premium mall in Barcelona, across 5,600 sq m on the rooftop floor, with breathtaking views over the city, the marina and the Mediterranean. The market will showcase the city's best food, drinks and culture based on Time Out editorial curation. The mall will feature a mix of 14 kitchens, a full-service restaurant, four bars, an event space, a studio, and an outdoor lounge. Yield on cost is 13.5%. Turning to the balance sheet, our strong cash flow generation, coupled with conservative capital allocation, has enabled us to substantially decrease our net debt. Net debt has fallen by EUR 1.6 billion over the last two years. Our financial metrics are strong, if not better than pre-COVID levels, and are among the most robust in the industry. Our loan-to-value ratio is at 37.7%, while the leverage ratio, net debt to EBITDA, is 7.9x, and the interest coverage ratio stands at 10 x, among the highest of our peers. We currently have a significant headroom on the covenant and a robust BBB+ S&P rating. With very limited refinancing needs in the year to come, our liquidity position stand at EUR 2.8 billion, covering our refinancing needs until 2025. The average maturity of our debt is 6.5 years. Cost of debt remains stable at 1.2%, and we are fully hedged in 2023 and 90% hedged in 2024. Based on these strong financial and operating results in 2022, the supervisory board will recommend that the shareholders at the forthcoming May 11, 2023 annual general meeting approve a cash distribution of EUR 1.75 per share, up 3% compared to last year. If approved, it will mean that since the outbreak of COVID-19, we will have served EUR 6.65 per share or EUR 1.9 billion in cash at an average dividend yield over the period of 8%. For 2023, the group expect to generate Net Current Cash Flow per share of EUR 2.35, up 5% compared to 2022, adjusted for disposals and one-off. With these commitments and figures in mind, and on the back of improving macroeconomic condition in the Eurozone, our ambition for 2023 is to deliver higher cash returns to our shareholders while remaining at the forefront of ESG best practice in real estate. I will end my remarks on this and open the floor to questions. Excuse me, this is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Jaap Kuin of Kempen. Please go ahead. Yeah, thanks. Good morning. I think my first question will be on the retailer sales. We see, I think on average in the fourth quarter, 100% versus 2019, which means that taking into account price inflation, the volume component seems down, maybe about 5%-10%. Also maybe your view on this. So how do you view this in terms of, let's say, a sustainable development of rent growth and indexation in relation to the turnover development at your retailers? Thank you for your question. I think we have to take it as a good news. The sales are back to pre-COVID levels. It's also important when we mention, not to skip only 2022. 2022 for our clients is 25% more sales. For them, it's a better profit. I think it's a good achievement. I think what also is very interesting to notice is that it's all over the territories and all over the segments. I will consider that it's a good base for our future growth. In terms of footfall, we are today at 92% of pre-COVID levels, which I think it's also quite a remarkable achievement. And if you remember, when we reopened the malls in 2020 and 2021, we were closer to 90%, 85% or even shy of 90%. I think it's a good achievement. We see the development in sales positively. And there are obviously some brands are doing better than the others, but overall, we see a good satisfaction from our retailers when they look at their sales in our malls. We are outperforming the benchmark in all the regions where we are. I will qualify the sales as strong and resilient. Okay, great. Maybe as a somewhat of a follow-up. You've achieved, let's say 3.7% indexation, 4% reversion. There's still obviously impact from cost inflation also on the retailers. Can you maybe describe the last few months of kind of negotiations and discussions with retailers, how they feel about absorbing further rent increases and how that also leads to your view on what will be possible in 2023? Also leading to the question, what's baked into your guidance in terms of reversion indexation for this year? Thanks. Number one, we did 4.1% reversion on top of 3.7% indexation. It's almost 8% on the new leases signed. We have an indexation average for Europe for 2023 around 5%. We have seen no major objection from our retailers to pay indexation. Where you are right, and it's a point of attention for all of us, is that many of the retailers, as you know, are suffering cost increases and their margin are under pressure. For the timing, we have not seen a pushback on indexation and including for 2023. You know, indexation is nothing else than accelerating the capture of the reversion we have embedded in our portfolio. So 5% for 2023 is the average indexation in our portfolio. Great. Maybe as a quick follow-up. What do you think the current remaining reversionary potential would be? Thanks. Don't provide that number. All right, fair enough. Thank you very much. As a reminder- We have. Oh, excuse me. Can you give some guidance on disposal in 2023? What does the current investment landscape look like? Could you also comment on yield expansion expectation going forward? Regarding disposals, we as you can see for at least the six or seven last years, we never guide on disposals. We are committed to streamline the portfolio. We are doing it. Over the last two years, we sold for EUR 1.6 billion in different markets. It was in Norway, in France, in Germany. We are still confident that for the non-core assets we own, we will find buyers for those properties close to book value. We don't guide the market on the volume of disposal we want to achieve for 2023. In the guidance, there is no impact of those potential disposals if they happen. Investment landscape, what we can say is that Q1 obviously is quiet. There are not many transaction happening, but doesn't mean that the market will stay quiet for the rest of the year. I will say a soft start of the year, we will see if further down the road we will see more activity. The next question is from Céline Soo-Huynh of Barclays. Please go ahead. Hi, good morning. Just one question please. Can you touch on your NCCF guidance for 2023? It's including a stable occupancy rate assumption. Macro environment might be more challenging this year, than last for fashion retailers. We already see some of them going into administration at the start of the year in France. I do appreciate that it could be a small proportion of your rental income, but, you know, if you could tell us, how likely it is for occupancy to remain stable this year. Thank you. When it comes to bankruptcies, we have a bit of an upstick in France compared to last year for the middle price segment fashion retailers. But once more when we look at the brands that get bankrupt in France, each of them, they have around 10 to 15 stores with us out of 11,000 stores. So the impact are almost negligible. So what we have assumed for 2023 is that the guidance will be based on flat sales compared to 2022, which I think it's a reasonable assumption, even though I don't have the crystal ball The flat occupancy, we have, we were pre-COVID we were at 97 with 3% vacancy. We doubled vacancy during COVID to 6%. We are back almost at 96, I think we have almost stabilized the occupancy to pre-COVID levels. It may fluctuates marginally, but we don't see occupancy being under each pressure in 2023. For the macroeconomic environment, I think there are quite a consensus today that the, this will be a soft landing for the European economies. Once more, we don't take a bet on macroeconomic trends. We are also uncertain about the geopolitical development in Ukraine. We are confident that our guidance is based on a realistic assumptions for 2023. Thank you very much. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Miraj Kumar of Barclays. Please go ahead. Morning, everyone. Thank you for taking my question. In terms of your refinancing needs, you have EUR 520 million unsecured bond maturing in a couple of months. Can you please help me understand how you're planning to refinance that? On the financing, we have around EUR 700 million of financial instrument coming to maturity this year in 2023. As of today, we have a bunch of options on the table. First, obviously, the banking market is wide open, and we have already received some proposal from the banking market. Second, mortgage loan market is also quite open for moderate leverage. As you know, in the past, we were not a big user of this mortgage market because excluding Scandinavian assets, it's less than 1% of our indebtedness, but that demonstrates we can go further up, so we have some options there. On the bond market, the start of the year was extremely positive. We have seen spread coming back from peaked today, like more than 150 basis points. Since start of January, spread have comprised by more than 70 basis point. We have seen two real estate deals in the bond market. I think there are also some options there. Basically, we have a few options on the table, and we will make the best decision based on pricing and maturity. I think as of today, there is some liquidity in the financing market for us. That's helpful. Thank you very much. My second question is, in terms of your cost of debt, I see it's 100% hedged for 2023. How do you see it developing over a couple of years, maybe especially in context of your EUR 1.2 billion commercial paper program? The cost of debt has been stable at 1.2% for three years, 2020, 2021, 2022. In 2019, it was 1.5%. Basically, what we see for 2023 is a cost of debt between 1.2% and 1.5% because we are edged on the rate at 100%, but obviously we are exposed to spread. As I've just said, spread have been extremely volatile since the start of the year. We could see opportunities to finance at quite compressed spread. In any case, it will not be above 1.5% for sure. For 2024, it will be the same story, where 90% rate edge, so no issue at all on the, on the rate, and on the spread, depending where the spread will be, I think it would be a fair assumption to say that it will be around the same marks in 2019, that is to say around 1.5. All right. Thank you. Thank you very much for taking my questions. Thank you. We have two other question from Amal. The first one is, can you comment on the 13.5% yield on Time Out Market project in Barcelona? What is the level of preletting? The level of preletting is 100%, and the yield, I cannot comment more than it's just 13.5%, so it's a good return, I think. Good, the second question is, given the high rent indexation expected to pursue in 2024, your guidance looks quite conservative. Do you expect higher financial costs to impact Net Current Cash Flow in 2024? There are two questions in one. About being conservative, probably it's my reputation and Klépierre reputation to be conservative when it comes to guidance. At least it's, I think, a guidance which is 5% above re-based 2022. It's quite a significant increase. What do you expect higher financial costs in 2024? It's linked to your answer, Stéphane. Yeah. I think that again, the rate are aged for 2023 and 90% for 2024. On this front, I think we know exactly where we will land. It will very much depend upon the spread. Spread have been compressed very significantly in the last two months. I would say that in 2024 we should not expect something very different for 2023 in terms of cost of debt, something around 1.5%, most probably. From Florent at Bank of America, can you remind us the net leverage target? As you know, we do not give some guidance in terms of leverage. We give only Net Current Cash Flow guidance. What I can tell you is that based on the rating today, BBB+ stable outlook, we have obviously some guidance from S&P. In terms of net debt to EBITDA, the threshold is 11 x, needless to say that we feel extremely comfortable with the S&P guidance. In terms of debt to equity, it's 50%. Today, the last S&P estimate is around 43%, 44%. I think here also we are extremely comfortable with the S&P guidance. Basically, the message here is that we do not give a guidance on leverage, but we feel extremely comfortable with S&P guideline for current rating. The second, sorry. Second question, have you quantified the amount of green CapEx required to reach your goals? I think the, we have four pillars. The first one is probably the most demanding to be net zero. We have three sub-targets in it, which are important to know. The first one is, the one I mentioned, is to be at 70 kW/m2 for energy consumption. We are at 79. It's still something we can do without really spending CapEx. If we have to spend CapEx, it will be probably something that will be absorbed by the maintenance CapEx that we have in our malls today. The second objective is to drive the tenant energy consumption in their shops by -20%. We will invest into a better measuring the their own energy consumption and providing benchmark and proving solutions. We think that this will not require the significant amount of CapEx. The third pillar of being net zero is to produce energy on site with photovoltaic mainly, but it can be also other means up to 30% of our consumption. This will probably require the CapEx, and we will have there two options. The first one is to do it by ourselves and sell the energy to the retailers or to the grid and have a return on it or to team up with partners that will make the investment. We have not make completely our decision today how we are going to choose between the two, but we think the CapEx element, either we have to take them and we will have a return, otherwise it will be taken by the partner. Again, are you happy with the BBB+ or you aim for A-? The issue for A - is that, as you know, S&P takes a view by sub-sector on rating range, and they derive the methodology for each issuer rating based on the view by sub-sector. As of today, it's quite striking to see that in retail real estate, most of the player are in the triple B bucket. I would say that it's more a question of S&P changing its view or methodology on the sub-sector than us reaching some specific target to get to the A -. Obviously, this is a conversation we have on a very regular basis with S&P, try to convince them that it should have a more positive view, I would say. It will very much depend upon it. There is a technical question from Pierre-Emmanuel. Your income from the disposal of investment properties and equity investment is negative by EUR 74 million in 2022. How can I reconcile it with the minus 1.8% communicated? Here to be fully transparent on the 1.8% that we have communicated, it's on the retail properties that we have sold. We have, at the end of December, disposed 40,000 sq m of offices in Yeah. Yeah, sorry to go again, but just on valuations, could you maybe describe your confidence level in the current valuation done by the appraisers? Basically, if you look at the bank covenant, we have in the banking documentation a 60% threshold for LTV. It's IFRS LTV. That's why we communicate on the same methodology or LTV at 37.7. As you can see, we are very far away from the threshold, and we are extremely comfortable with, you know, this number compared to the limit. The rest is ICR more than 2. We are at 10, a lot of headroom again. The secure debt compared to portfolio value, excluding Scandinavia, less than 20% and, well, less than 1%. Basically, on these three criteria, we are extremely comfortable with the banking doc. The last one is a portfolio value in a proportionate method, more than EUR 10 billion, we're at EUR 17 billion. No issue at all. Yeah. Thanks for that. Actually, what I meant was, what's your level of confidence in the quality of the appraisals? I think the valuation, they are done every six months. I think what needs really to be taken into account by those who are looking at our earnings is that the discount rate of our properties are constantly growing over time. Today we have a 7.2% average discount rate, When we compare this discount rate with other real estate asset classes, we think, and we have the conviction that we have done the job and that the valuers have already factored in the valuation, I would say, some kind of uncertainty they may have on the valuation. We are comfortable with the value. Once more, I think the we are the first asset class that has expanded the discount rate so far. Yeah. No, I would agree with that. Just maybe, as I said, posing in a different way. I mean, would you actually buy relatively well-operated malls? If you were offered a mall, would you actually buy yourself at a 5.5% Net Initial Yield? I think the I think I don't know if I'm going to answer to that question for the time being. We have nothing on the radar screen. The philosophy we have when we look at acquisition, what we did in the past is they have to be, they have to tick two boxes, three boxes. First one is that we need to buy high quality pro-properties with a reversion embedded into it, so among pro-properties which are comparable to the best we have. The second tick mark is that the acquisition has to be accretive. Third tick mark is that it has to be consistent with our balance sheet objective. For the time being, I think we are we are on a wait and see mode. Very clear. Thank you very much. More question about do you plan significant acquisition? I think I just gave the answer right away. Cost of that expectation for 2025, I think you already gave some element to. Yeah. On 2025, our level of rate hedging is more than two-thirds, 68%, so we are starting to be well covered. To be honest, it's also very much depend upon what is your view on 2025 short-term rate. As of today, if I look the forward, the market consensus is that short-term interest rate should come down starting end of 2024 in Europe. It very much depend upon the view you could have on 2025 rate. I would not bet that the rate would stay at the current level forever. At a certain point of time, there could be some volatility on the rate. As of today, we are two-third covered, and we will see how we manage this position along the road. A question. Are we taking no name questions? Okay, there is one with no name. I would have preferred to have the name of, but anyway. How do you see the performance of e-commerce? I think there is a lot of literature about it. I'm not going to spend too much time on it. I think e-commerce, the pure players are seeing their sales going down compared to the peak. Second, the pure player are literally smashed by increase of prices and inflation. They are going through difficult times. When it comes to the e-commerce of our retailers, I think it's developing well. The share in their sales is growing. They are more and more delivering their promise to their customers of having a strong omni-channel proposal. This translate into less stores but better stores. Our view was that the e-commerce development in our tenant base business will be favorable to us as we own among the best properties where the retailers want to have their flagship store, where they can deliver this omni-channel proposal. We see also more and more retailers pushing for the returns to come to the stores and also charging a fee on return when it doesn't come to the store. I think the store will play an increasing role in the e-commerce part of our retailers' business. Thank you very much for your time this morning. Obviously, we are fully available to answer follow-up question today by email or in the coming days and also with our investor relation team with Paul. Thank you very much. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.