Good morning, everyone. Jean-Michel and myself we are happy to present you today the full year’s earnings for 2018.

As some of you have been able to read yesterday when we posted our press release, we have done what we think is a very good year, with good results. We are going to go quickly through the presentation and take some of your questions – all of your questions.

I think the outcome of 2018 is the evidence that the strategy of Klépierre is paying off to concentrate our portfolio on the big cities in Continental Europe. But more importantly, I think it’s also the evidence that we have a fantastic team, and I would like to say thank you to all the Klépierre team members who are the people in charge of making that company better for our shareholders.

And to make sure that our properties are not only better, but are places where the customers can come to shop, meet and connect. It’s a lot of work but it’s also a lot of enthusiasm and initiatives, and I would like really to thank you – them for their fantastic job.

And I will go very quickly to the art not the disclaimer, but to the art of our business, the core of our business. So 2018 has been a very dynamic leasing activity.

We have signed almost 1,800 leases, which is very comparable to what we have done last year. And as you can see, the uplift on each and every lease renegotiation is double digit, 11.1%.

And as you can read, it distributes positively in all the countries, almost double-digit everywhere with only one exception, which is Germany, which is still as we know, lagging behind. But we will see that on the NRI side, Germany is doing quite well.

The uplift is very strong in Iberia and you will see that Central Europe and Iberia are pushing very fast and very strongly in our results. And behind the numbers, what I think is interesting is to see that what make Klépierre unique compared to some of our peers is that we have a very large leasing platform.

And the leasing platform is our capacity to sign leases with retailers that are really expanding in Europe. So you can see on the chart that the number of stores we are opening with some of our brands is quite significant.

So on top of the lease, you will have Sephora, we have signed 15 leases this year, 3 new ones. And we have also newcomers like Action, like Normal, and they are all opening massively in Europe, and in many countries, so the platform really help us to serve our clients.

So when we look at the mall level, we are also rotating quite significantly the commercial offer. This is few examples, so our malls are between 80 shops and 200 shops for the big ones.

And in Alexandrium, we have 16 new stores, in Field’s 12 stores new. So the number of stores that we are rotating in each and every asset is also year-by-year very significant.

We are also opening flagship stores. As we said in the past, the capacity of our retailers to invest into the stores is crucial.

It’s a question some times of high sizing the stores, but it is also a question of making the store more experiential for the customers. We have put few names that illustrate what has been done by the team.

Victoria’s Secret has been a fantastic achievement because this was the first one in Continental Europe to open full size, and the performance cannot reveal the numbers, but the performance are just skyrocketing, it’s probably 5x or 6x the initial expectation. And we are continuously with our most important client to do exceptional stores.

And I would like also to mention with H&M that we are also expanding their brands, all of those are places, not only H&M, Arket, Munki and other stores. And in Copenhagen, we were the first Scandinavian mall hosting all the brands of H&M.

When we look at the tenant mix and the retail mix, as we indicated in the past, and quite recently, during our Investor Day, very different evolution in the retail mix. The first one is that when we look at fashion, we see more big stores than small stores, so we continue to do flagship stores with larger fashion retailers.

But we also reduce some of their segments like Victoria segment. And we have this year replaced 101 fashion shops, which is a significant number.

And they have been replaced by health and beauty, food and beverage and also the equipment. So the tenant mix is also evolving year-after-year positively.

And this is probably why our energy and the quality of our team makes that our KPIs are still very good. So if we look at the EPRA vacancy rate, it’s still at 3.2%, so no big change in that number.

The occupancy cost ratio of our clients stay at very low level compared to some of our peers, so 12.3%. So still a very well [indiscernible] situation for us looking forward.

And the bad debt, it’s how much we collect, so you can see that this is still below 2%, so very solid KPIs for the portfolio. And then it translate into what we think are still very impressive numbers in terms of NRI growth, outperforming indexation significantly by more than 220 basis points.

And as you can see, it distributes positively everywhere. And some of the countries are doing extremely well.

We look at Iberia but also Central Europe and the Netherlands is picking up significantly. So these are positive signs that our strategy is paying off.

And we also have a significant boost of the specialty leasing and the purpose stores, which are bringing new revenues to the platform. And this has been done in a very contrasted retail sales environment with some countries doing very well, some being more flattish and some being slightly negative.

I think we have stressed all over the years that the strategy of Klépierre is to be pan-European, so we can benefit from the fact that the macroeconomic in Europe are never synchronized, and that we can take the best of the best countries and be a little bit on the wait and see mode when it’s less favorable. And Scandinavia, it’s probably going through a period where the knowledge and economy is is slowing down and that’s the reason why the sales in Scandinavia are a little bit negative.

But Iberia and Central Europe are still very, very positive. And this is as I just mentioned in the beginning of my presentation, this is not by chance that it happened.

So it’s a clear evidence that the strategy pay off. So it’s a capital allocation that we have been very careful to improve year-after-year over the last 6 years, in big cities, large catchment areas and growing population.

And it is also as I just said, it’s a very focused, very customer-centric, very retailer-centric operational strategy, and that’s probably what will make that – make the difference in the future between the shopping center owners, the one who have the team to invest in their malls and the one who don’t. So this is a business.

So the business has been very strong in 2018, and we have also continued to improve our risk profile and to streamline our portfolios. So as you can see, we have sold the assets and properties a little bit everywhere.

So we continue in order to finance our pipeline and our potential acquisitions, we are constantly selling assets. And this has been done everywhere, so the markets are our open in many countries, and every time we went on the market, we have sold above book value at a net initially the 5.7%.

And in addition to disposing, we also invest in our properties and in our business. I think that’s the most important.

So we are extending our shopping centers. This is our main focus when it comes to the pipeline.

And we are also investing in our malls quite significantly to make them better and more attractive, so we refurbish them, we maintain them well and we do significantly leasing actions as we have indicated. And we have also bought some shares to close €500 million program that we launched in 2017.

So, a few highlights on the last deliveries. So Hoog Catharijne, it’s almost the end of it, and as you can see on the picture, it’s really great.

So today, 52,000 square meters have been opened. We still have 28,000 square meters to complete in terms of refurbishment.

As of today, 95% of the mall is leased, and the footfall increased by almost 10%, so reaching almost €28 million. So it’s a great achievement, we are very proud of it.

When we move to the next one, sorry, twice, so Créteil Soleil, it’s another example of what we focus on to make our properties stronger in the catchment area. So the works are under way.

So, we are 81% leased, we open at the end of the year, and the leasing targets have been increased. So the yield increased from 5.7% to 6%, and the numbers of tenants lining up to come is just simply impressive.

So we are also very enthusiastic about the achievement of Créteil. The next one on the leased probably will be Gran Reno.

We are almost ready to start preleasing is doing great, we are 43% pre-let. We have always been very conservative when we start a project, so we want to have a high level of pre-letting before starting.

And I think this is more and more important in the current environment. And we should open now in 2 years’ time after we have started it.

We do also – we presented during our Investor Day, we do a specific investment in each and every mall when we can. So we buy corners out, so most of the times they are hypermarket.

We buy the stores, some of the space from them and we release, so we have done that in a cycle, which is in Milan, a fantastic achievement, we have opened 5000 square meters Zara, and we are very proud because when they did their Q3 release, they always put the picture of the best stores, okay, there are few numbers but a lot of pictures and they Shanghai, they put New York and we – and they put Milan. So we were very proud that they mentioned it, and this is a great achievement that we can replace, I will say, shrinking hypermarket by fantastic retailers.

We do that in Campania, we do that Le GRU we already bought space back from the hypermarket. And Rives d’Arcins, this is an additional anchoring with Decathlon and with a big Zara store.

So step-by-step, we continue in pulling our properties. And this has been the story for quite a while.

So continuing increasing the cash flow, and this year as you read, it’s 6.5% and keeping the leverage low and the net debt EBITDA still decreasing. So this is what we put on the graph, what we have done over the last few years.

And we are happy to say that we are probably the only company in our peer group that has done this, growing the cash flow and reducing the net debt to EBITDA. And this has been made possible by the financial orthodoxy that we follow every year.

And that’s the reason why we are increasing – we also – we are happy to increase our dividends to our shareholders by 7.1% to €2.10. And now I will ask Jean-Michel to go through the numbers, and detail the specific financial performance of Klépierre.

Thank you, Jean-Marc. Good morning.

Good morning, everyone. Just let’s see now in deeper details how all this good operational achievement transfer into financial figures.

So the main growth driver into the cash flow is an NRI like-for-like, for which the growth come mainly from indexation, 1.2%, reduction plus 1.4% and specialty leasing and parking revenues plus 0.6%. Acquisition and development, Neuva Condomina, [indiscernible] second phase, but also the opening of [indiscernible] and the Val d’Europe, were offset by the disposals of [indiscernible] at the beginning of the year and of the Italian and Hungarian asset more in September of the year, which just to make it clear, will continue to impact negatively the cash flow of next year in this year in 2019.

In 2018, we continued to streamline our cost base. First on operating cost, restated from nonrecurring elements, we lower our G&A by €4 million.

This mostly reflects reduction in payroll, which we have done by €3.5 million. Combined with growing net controlling income, this translates into a further decrease into the EPRA cost ratio by 70 basis points, which reached 15.6% at the end of 2016 as you can see here.

We continue to bring down our cost of net debt to 1.6%. This is a 20 basis points reduction thanks to our refinancing initiatives mainly on the banking facilities in 2017 and 2018.

Our interest cover ratio continues to improve at the very high 7x. So Jean-Marc mentioned financial orthodoxy.

Financial orthodoxy implies allocating recurrent sources, such as our net cash flow to finance the recurrent uses, such as the dividend payments and maintenance CapEx. To finance less committed or non-recurring items, such as our development pipeline, acquisition, if any, or share buyback program, we generate positives from disposals.

In 2018, once again, our net current cash flow more than covered the 2017 dividend and distribution to minority partners and maintenance CapEx also, which, as Jean-Marc mentioned earlier, amounted to €127 million. Some cash flow was even available to finance part of €205 million development pipeline.

So second source of disposable come from cash – they come from disposal positives, which are mainly allocated to acquisitions, share buyback and de-leveraging. We spent €110 million on acquisition in 2018.

This includes the acquisition of hypermarket, spaces in Italy and the process of minority stake in partnership owning, shopping mall in Spain, and more especially, Meridiano in Tel Aviv. Our share buyback program was completed in 2018 with €150 million investment.

The remaining €103 million were used to repay our debt. As a result, we continue to bring down our net debt-to-EBITDA ratio as we have seen before to 8.3x.

Since end 2015, this is almost 1x decrease, while our net current cash flow has grown by 22%. I believe this is a quite remarkable achievement.

Our loan-to-value ratio is following the same trajectory with further 70 bps contraction to 36.3%. This is in the low end of our midterm target of 35%, 40%, which anchors quite well, if not to say very well, our A minus rating.

Let’s now look at Klépierre hedging policy. Klépierre hedging policy is to maintain very high portion of fixed rate debt or hedge at fix rate for at least the next 3 years and at the minimum of 70% long term.

The hedging ratio at the end of 2018 stood at 96%, with 79% of pure fixed rate, fixed debt or hedged at fixed rate, and 17% of caps with an average strikes for the cap below 0.6%. The retail average interest rate on the fixed rate position is quite low at 0.8%, excluding spreads of course.

With €2.2 billion, the group liquidity position is sizable, and more than covered our 2019 and ‘20 refinancing needs. Let’s look now at the valuation of our portfolio at the end of 2018.

In 2018, the retail investment market remained quite active with the level of transaction with an 8% decrease for the first 9 months of the year, but which is still 20% above the 10-year average. It is fair to say that like in previous years, a limited number of transaction took place in the main segment where Klépierre operate, that is to say, mainly leading shopping mall in leading cities of Europe, the market appears to be more active outside of France, the UK and Germany, favoring countries like Italy, Portugal or Central Europe, which offer smaller transaction sizes and higher returns.

As a reminder of the evaluation methodology, I’m sure you’re aware of it, but it’s predominantly based on discounted cash flow calculation. The outcome is then benchmarked by the appraisal with comparable property and recent market production if any.

It was emphasizing that Klépierre disposal in 2018 were in line with the latest appraisal evaluation. Over the 12 months of 2018, the value of our portfolio increased by 1.5% and was broadly flat over the last 6 months.

The market effect was slightly negative, minus 0.8%, as a result of a 10 basis points increase in the average discount rate. It now stands at 6.6%, to be compared with the risk-free rate of 1.5%.

In the meantime, the NRI CAGR taken in consideration by the appraisal has slightly increased from 2.5% coming from 2.3%. So, all these changes reflect in an increase of the EPRA net initial the yield of 10 basis points at 4.9%, then from the valuation to the NAV.

The EPRA NAV per share stood at €40.5 per share at the end of December, 2018. This represents a 2.3% increase compared to December 2017.

The main driver were strong cash flow generation €2.65 and the at asset revaluation €0.09 offset by the dividend payment of €1.96. The minus €0.66 are mostly related to ForEx, minus €0.52 indeed, and to a lesser extent, to other operating and financial costs, while the share buyback had a positive impact of €0.10.

The EPRA NAV is at €39 per share or a 3.6% increase. This is a slightly faster growth than the NAV and reflects the favorable evolution of the fair value of the fixed rate debt.

And last but not least, the dividend. Jean-Marc told you already, it’s going to be what we are going to propose to the next general meeting will be €2.10 per share with an increase by 7.1%.

This is consistent with Klépierre payout policy of distributing 80% of its net current cash flow. This significant increase demonstrates our confidence in our ability to keep delivering sustainable dividend growth going forward.

€1.13 per share of the dividend will be SIIC related and for the first time as you know, the dividend will be paid in 2 installments, €1.05 in 10 of March, and another €1.05 in 11 of July. Thank you.

Thank you very much. So, the outlook for next year, just as I said before doing the outlook and to put that into perspective, 2018 has been an outstanding year for us.

So, it’s 3.4% net rental increase like-for-like. Net current cash flow is 6.5% up.

We continue to significantly divest property more than €600 million over 12 months. We keep the net debt EBITDA around 8.3x, and as John-Michel just indicated, we raised the dividend significantly by 7.1%.

So, the for the for next year, taking into consideration the macro economic environment in Europe, which is slowing down, but still positive in many countries, we have guidance for next year between €2.72 and €2.75 per share per share of our net current cash flow. And as we indicated in our press release, we have also put in place share a buyback program for €400 million that we will use depending on the disposable of space we are going to do in 2019.

So, thank you very much for listening to us. And now we are happy to take your questions.

Michel Varaldo, Société Générale. Two question for me.

So first one it is retailer sales. We have a trend, which is still positive but declining year-by-year.

And we have the negative figures in Italy, in Scandinavian countries. Is it because we have a [indiscernible] kind of cannibalization from the sales in your shopping centers through internet sales?

Is it possible to have a little more color about this? And the second question is about the investment market.

We have a lower activity last year, how is it in the beginning of this year in term of acquisition, disposal? Will you continue to sell at the same level for this year, for example?

Thank you.

Thank you, Michel. So, the retailer sales, I don’t have any crystal ball to look in the future, but the way we look at it is, first of all, I we are active in 12 countries, and then the as you know, the macro economies are never synchronized.

So, and the most important element in that influence retailer sales is the GDP loss and the translation into the consumption. So, we see the slowdown of the economy at the end of ‘18 as one element for the lukewarm retailer service in some of the countries.

But now if we want to be specific, I think Italy, this is probably a combination of many elements. Our Italian colleagues keep claiming that the climate was very unfavorable, but that’s never an excuse.

But this has been a very difficult year for the fashion retailers. And as in Italy, we are just starting reducing the fashion segment in our malls.

We still have a significant exposure of fashion compared to the rest of our portfolio. So just as a number, the we have more than 42% fashion retailers in our Italian malls, while in France it’s more 35%.

So, we still have a significant exposure. I don’t know if significant is the right term but we have a much larger exposure.

And if you look at the segment of fashion in Italy, it decreased by something like 5%, while for the group it decreased by 1%. So, I think the dynamic is to continue re-leasing to less to more to less fashion and more a dynamic segment.

So, I think this is undergoing in Italy. When you look at the performance of Italy NRI-wise, it’s excellent and the reversion is also excellent.

So, and the occupancy cost ratio for Italy is also pretty low. When it comes to Scandinavia, Norway has been the growth of the GDP growth of Norway significantly reduced compared to the previous years.

The same in Denmark where it was almost divided by 2 compared to 2017, still positive, but kind of slowed down. So, if you have some kind of memory, you will see that the retailer sales in ‘14, ‘15, and ‘16, in Scandinavia were excellent.

And then after a few years of GDP growth, it’s not abnormal to see a plateau in terms of sales. And Norway, more specifically, we have some malls, which are on the East Coast of Norway, which has been impacted by the oil price decrease and more unemployment.

Even though, the unemployment rate in Norway is below 3%. So, at the end of the day, it will be too long to comment country-by-country, region-by-region, city-by-city, catchment the way we see our business going forward for the retailer sales, I think the we have the competition coming from the from online for our retailers, it’s of use.

It’s growing in each and every country, and it’s going to continue like this. So, we think that the segment of the shopping centers which is only 25% of the retailers, volume in Continental Europe, while in the U.S.

it’s a little bit the opposite. I think the shopping center segment will be the winning format in the next 10 years.

I think the as you can see in the small cities, secondary retail, high street retail is shrinking massively. And then when I look at the malls we own and some of our peers, I have to say, that the occupancy and the demand is still very high.

And I think we are going to benefit in the future in that everything equal to repatriation of the sales of the shops, which are going to use close. In each and every catchment area where we are, we are seeing shops closing.

And our strategy to work with the retailers so that they invest their money in our stores to make them more appealing and when they close other stores, I think this is a winning strategy for the next 5 to 10 years. And that’s the way we see the sales to evolve, even though, the global environment in retailer sales is almost slightly positive.

My name is [indiscernible]. You have mentioned on page 45, in the highlights you spoke about the French retailers, the plus 0.6% positive number, which is not bad, which is quite close to your European average.

Would you be able to precisely quantify the impact of the 2 months of the yellow vest movement, which had a big hit, negative hit on the Christmas season to restate its impact on the 2018 full year figures? Well, yes, we know 2.2% is the negative impact of the yellow west movement of the social and rest.

I will speak English?

So, the impact was 2.2% on the French we the impact of the yellow vest was November and December, not full November, not full December. So, and approximately 15% to 20% of our malls have been impacted because the movement were not national and the impact was mainly on Saturdays.

So, some of the Saturdays were very bad, but most of the consumption has been transferred to other days of the week. So, the impact is pretty limited, even though, at some Saturdays it was significant.

So, 2.2%. And at the end of October for the French portfolio, the retailers, sales were up by 1.5%.

Okay. I think just because no, we have some questions on the phone also, I think we will take one and then after we will come back in the room.

Hi good morning guys. Thanks very much for presentation and two questions for me, please.

I think both pretty much in capital allocation. And the first one is on your, the buyback first, the de-leveraging strategy and how are you looking there at that going forward?

Do you expect to continue to do this buyback and renew this basically every year or would it be a good idea to reduce leverage further as well, i.e. from the current 35% to 40%, bring the target for example lower to say the 30% to 40% range?

That’s the first question.

Okay. Maybe I take that one on the buyback.

Just to say first, I hope not forever because you know there is at least one crucial parameter before the buyback, which is the share price compared to the NAV. So, I don’t hope that the share price will remain forever below the NAV.

So, I still have some hope there. The second thing is that for the time being this is the case, and we have always stressed that the buyback will come in connection with disposals in order to manage the expected deletion from the disposal.

I think, [indiscernible] with an objective, which is still available for Klépierre to keep that stable if not lower. So, this is it.

We will see going forward how it will be. For this year, what we have announced, as you know, is the €400 million new share buyback program in consideration of the disposal of the year that we are quite confident we will achieve during the year and we will adapt the pace of the buyback in connection with that.

Okay, thank you. And then the second one is on the quantum of the buyback.

I think you said it’s around €400 million this year, and that you will match that with ongoing disposals. I read that as you’re looking dispose around €400 million worth of assets this year.

And is that a right assumption or should we expect more disposals like we’ve seen over the last couple of years?

Well, your assumption will be correct if the yield on the buyback would be the same as the disposal yield actually which is probably not the case, due to the level of the share price of today.

No, I mean, just more on in terms of the quantum of the disposals because I think you said in the statement you said you will match the disposals with the buyback?

No, that’s what I’m saying. But let’s put it otherwise.

No, the idea as you know, we are not used to disclose on the disposal target, we don’t have any financial constraint, but the fact is that the way we have derived the guidance is considering that the impact the remaining impact of the disposal of 2018, and the one we are going to do in 2019, will be offset by the buyback. And we have a perfect match in the way, we have sized the buyback.

I think it’s yes. And so, I think it’s important to understand that we were a net seller year.

So, we are probably between not probably, we are between €0.02, €0.03 dilutive impact in ‘19 of the disposal will be adapted to the disposals and not the disposals to the buyback. So, the buyback is one of our tool, to manage our balance sheet and to size opportunity to create value for our shareholders.

But the budget has been done with a neutral effect.

Thank you. So, we will come back for a while in the room, Pierre-Emmanuel, and then we will go back to the phone because there is a list of waiters of them.

So, Pierre-Emmanuel Clouard from Kepler Cheuvreux. The first one just to come back on disposals.

So, let’s assume that the total amount is approximately the same in 2019 from that of 2018. Can you give us a broad geographical breakdown?

And maybe, are you planning given the lack of current action in the French market to sell some assets in France? The second one on your capital allocation.

So, you are communicating more and more on the net debt-to-EBITDA ratio, do you have a midterm target in mind for this ratio? And the third one on the value adjustments, especially in France, do you expect any value adjustment to come for your second-highest assets in France?

Thank you.

For so for disposal, if we don’t have a target, we don’t have a geographical target. So, but so, Klépierre, it’s more than 100 shopping mall, but the top 100 in values represent 93% or 94% of our portfolio.

So, what we consider as a source of non-core or assets disposals, that’s the 7% or 6% of our portfolio. And this is what we are doing, and we are committed to streamline the portfolios that way.

So, we will size any opportunity when it comes to acquisitions, disposals, share buyback in the only view to improve the quality of the portfolio and to create value for our shareholders. And we are not granular in the guidance when it comes to disposals.

And as you can see, we do that in many, many regions. The net debt to EBITDA, we keep a close watch on it.

Okay, as you can see on the graph. We are very proud of what we have done.

So, there is no chance that we change our mind.

We are fine already we consider we are fine already, it can always be better but I think it’s a quite good figure already.

No, we like the financial orthodoxy. So, if we are on a decreasing way, it’s not to go up.

Okay, so I think we will take one more on the phone.

Yes, hi good morning. I have two questions.

The first one is on CapEx. So, thank you for the additional disclosure.

You mentioned €127 million of like-for-like maintenance CapEx, and about a quarter is recharged to tenants. So, I was just under the impression that in the past you seeing larger portion was recharged to tenant but I may be completely wrong.

So obviously, it evolving the total amount, so that’s about 0.5% of asset value as the like-for-like CapEx and the Klépierre bond by the tenant. So here it’s above 1/3.

And the second question is on the yield. So basically, it’s in the market where you’re doing the best operationally, where you actually are experiencing most yield expansion, so España Sl.

And you actually said on the call that the SI and España, in particular are at more active transaction market because of smaller size products. So, my question was, is that the markets will the transaction evidence that the yields are increasing?

And where you don’t have the transaction, if you don’t but increase has been little longer change? Thank you.

Thank you, Charles. I like your French accent like mine.

So, I was in room there this morning it was tough for my accent. So, on the CapEx, I appreciate you acknowledge that we are more transparent, we have always been very transparent.

So, we have 3 elements in the CapEx. We have the maintenance CapEx and it’s most of it is recharged to the tenants.

Then we have CapEx, which are associated to leasing actions that are all of them are for Klépierre and under different charts to the tenants by definition. And then we have refurbishment CapEx, and refurbishment CapEx are also partly recharged to the tenants.

So, the average of one-third, it’s when you exclude the CapEx, the leasing CapEx and you only take the maintenance and the refurbishment, then you will probably come to the number you have in mind when we previously discussed of how much we recharge in maintenance and refurbishment CapEx, which is closer to 50%. So, for the yields, I’m not sure I have there is the narrative on retail it’s is not very favorable.

So, there is a lot of question about the investment market, direct investment market in the retail properties. I’m just going to tell what we are doing.

So, we have always had a strategy to have a clear gap in terms of yields between our prime properties and more secondary properties, and this is not new, it’s not something that we just have started to do. And so we are – we have always been confident and when we come to the market for the non-core assets, we meet the market, and that’s what we are doing.

So, and it’s good for us. So, when it comes to the non – to the core assets, we are not selling them, so I can’t say.

We see the appraisers being more cautious about retail and that’s the reason why we see the media kind of expansion of the yields and that’s it. That’s we cannot comment more on the future.

Okay. Thank you.

Yes.

I would just add that every time we – the shopping center segment is a very limited segment. Every time we were in competition to buy some assets like the big ones that have been sold in ‘18, we always lost.

And we always lost the competition at prices which are below our yields in our EPRA in our books. So, I think the market is also – we have to take into account that there is not so many transaction this year, but the year before of large shopping centers of a nature that is similar to what we own.

So – and that’s probably where the market has to differentiate more between the high-quality assets and secondary assets.

Okay, I think we have another question in the room. Yes.

Yes, Florent Laroche-Joubert from ODDO BHF. I would like to come back on your like-for-like growth.

So, it was 3.4% last year and it was 200 bps above the indexation. And so are you comfortable with such difference with the indexation for next year?

This is my –

Well, I think we expect slightly more indexation next year and it’s fair to say that what we have is full indexation. We don’t necessarily have it on the rest of the NRI like-for-like growth.

So, one part will benefit from the indexation, because we will not give you how much we expect as NRI or like-for-like rental growth from next – for this year, probably some swing in average in the same extent that – what we have posted in the last years, but there is a chance that the contribution of indexation will be a little bit more significant.

Thank you.

Thank you. I think one more in the room and then we go on the phone.

Yes.

Yes, good morning. Vladimir Minot, Invest Securities.

Some questions, just one to better understand on the disposals, you indicated that they were realized slightly above book value and in the profit and loss accounts we see a slightly negative loss of disposals. So, what’s the explanation?

Well, it’s because I think there is a – two parameter. One is, how the prices, the selling prices we got compared to valuation, it was in line and slightly positive.

Then after we have some extra cost, it can be broker fees and so on, which come on top and which come to the – it’s minus EUR10 million, I know the figure quite precisely, which come for all that part, but when it comes to valuation, disposal value of the asset, we are in line.

Okay, thank you. And two quick ones.

Can we have an idea of the vacancy rate, including the strategic vacancy?

3.8%.

3.8%, okay. Thank you.

And is it possible to have – to know the overall change in traffic in your shopping centers in 2018?

We don’t give footfall, but the footfall is slightly positive in Europe in our malls.

Thank you.

Thank you. Let’s go back on the phone.

Is that me?

Yes.

Sorry, yes, Jaap Kuin, ING here. My question would be on the guidance and the share buyback.

So, you made a statement that the impact of the 2018 buyback is included and neutral, but could you specify how much of the EUR4 million indicated is included in the 2019 guidance, or is it not included at all? And what would you think would be the annualized positive accretion potential from this full execution of the share buyback?

That would be my first question. Thanks.

Well, it’s a multi – a known parameter equation. If I give you all of them except one, you will find the last one, which is the amount of disposal we plan in 2019.

So, the answer is that the growth of the cash flow we forecast for 2019 is purely related to NRI like-for-like rental growth and optimization in cost including cost of debt. There is nothing related either to a negative effect of disposal or to a positive effect of the buyback because the way we build our project was to tailor-made the buyback in order to offset this effect.

So, I think this is all what we can say.

Okay, great. That’s very helpful.

And then on your comment on the appraiser’s assumption on the NRI CAGR, it’s slightly up. Could you maybe – in your discussions with them you’ve probably learned why this has happened.

Is that a mix effect? Is that higher inflation expectations or higher market rents?

Could you maybe give us slight detail on those assumptions?

Yes, yes. For the NRI CAGR from the appraisal, just put the figure was at 2.3% and goes at 2.5%, it’s a 20 bps increase, and this is mainly related to an increase in expected inflation going forward.

Okay, clear. And then my final one is on the amount of assets you state are non-core, 6% to 7%, and given the disposal yields realized at around 5.7%, 5.8%.

Should we expect those yields to be slightly higher currently in the books given the fact that probably you’ve – you’re – depending on the mix of what you sold obviously, but could you give some guidance whether we should expect coming disposals to be kind of higher or lower than what you’ve done in 2018? Thanks.

Yes. Our objective is to sell – no, it’s – we are very confident and when we go to the market to sell non-core properties, our values are in line with what the market can buy from us.

So, the yield 5.7%, it’s a mix of different type of yields. So, we just comment on the average.

So, we’ll see next year. But once more, we have proven over the years that every time we sell assets, it’s over book value, slightly over book value.

Okay. Thank you.

I think one more on the phone, I think.

So, we have a online question that’s super-specific, so we want to not discourage people which are purely online to come to us. So, I take it.

So, how much is energy cost in percentage of revenue, and how do you prepare for future energy price increase? Wow, so on top of my head, sir, this is a – we – the service charge represent half that we pass to the tenants, it’s approximately 20%, 25% of our revenues.

In that number, the energy is probably average around 25%, 30% energy cost in which you have electricity costs. So, the increase of energy has been significant over the last years and it’ something that is going to go.

So, we develop more and more green energy to get better prices, but also we have mutualized all our platforms to buy cheaper electricity depending on the legal constraints. So, we have been able to keep the service charges for – in the same level of services within energy cost which is going.

So this is a constant fight, we are confident that it’s not going to be a problem in the future for us.

I have one more online. I believe it’s for you, Jean-Marc.

If we can make an update on the pipeline in term of size and expected return?

For the pipeline it’s – the official number, it’s EUR2.6 billion, and this is mainly a focus on extensions. So, there is a leased offer of projects that are identified and disclosed.

And all of them are investments in our properties, large properties, a little bit everywhere in Europe. So, we are very confident that they are reasonable extensions that they make sense, that we can lease them out and that we can control the construction cost to meet the target, which is always around 7% as a whole.

We disclose it project-by-project, but as a whole the target for us is around 7%.

Okay. So, if we have exhausted all the questions on the phone, one more here in the room.

So, valuation was 1.5% up during 2018. Is it possible to have a split between the core asset and the non-core asset to 6% or 7% in term of change of value, please?

I don’t have the figures and we have nothing to hide. So, it’s – if you look at the – as an indication, if you look at the – at the notes to the financial statements, you will see the average yields per country.

And if you look at ‘14, ‘15, ‘16, ‘17, ‘18, if you are patient enough, you will see that some of the countries where we could suspect to be – to have more secondary assets and we see that the yields are pretty high as an average, okay. So – and they have not been expanding more than the others.

So, the change is affecting a little bit every type of properties as an average. So, if you look at Hungary, for example, you will see that the average yields in our books is around 8.5%, that’s a high yield, and this has been like that for many years.

So, we have sold properties in Hungary and we admit that the market was hot enough to buy it from us at that level. I’m not sure I have the Internet, so I need a colleague of mine to help me.

Can you provide the total GLA-based vacancy figure 2018 versus 2017? I think we’ll post an answer to that.

I think there is no discrepancy between the fluctuation of the financial vacancy and the fluctuation of the physical vacancy. And if my recollection is correct, we disclose it in our financial statements notes.

And the strategic vacancy is not a way for us to change our numbers. So, as we said, strategic vacancy on identified re-leasing and refurbishment actions is pretty marginal to the total numbers.

So, there is no deterioration of the physical vacancy, I guess –

Okay.

When we will give you the numbers, the exact numbers.

There is one more on the phone.

Good morning.

Good morning, Jonathan.

I guess, if you expand on the development pipeline, if I may. So, there is obviously a number of projects in the controlled pipeline that have been pushed back over the years.

So, should we just read that despite the comment that you’ve made previously at this stage you don’t necessarily have appetite to spend additional money in these controlled projects, or you’re expecting some to come very shortly into committed, I think you mentioned Gran Reno, but are there any others? Thank you.

I think the – probably the shift, if any, in the development pipeline looking backward is that we are more and more focused on extensions. It doesn’t mean that they are easier to do from a permitting point of view.

So, one of the main order we have to go over in doing development is the permitting issue, in all the countries it’s complicated. So, when we push the date, it’s just because it’s as a consequence of this administrative process.

So, we are very confident in the projects that are identified and listed in our pipelines. They are all in catchment area, where our shopping centers have strong position.

The fight is not against Internet only, the fight is very local. So, the strategy we have that in each and every catchment area, we want to be the winning shopping center.

And instead of building new ones in new catchment area is to reinforce because the polarization of retail is underway and this is going to benefit to the strong shopping centers. And for that you need to continue constantly also the new retailers that want to join you.

So, this is what we do. We are super confident they will be accretive in terms of return, but they also would be value creation – value accretive for the future of the business shortly.

So just to clarify, exactly what you are saying is that, you’re confident in demand from retailer, you would be ready to invest there in these shopping centers, but it’s just the permitting that is holding you up from all of this?

Most of the time, most of the time. And look at Gran Reno, Gran Reno, we could have started earlier, but we wanted to check that we can pre-let it.

So, it has always been a concern for us to start a project when we have the right level of pre-leasing. And it’s clear that we have a little bit put the bar above the previous years, but we are confident that there is retail demand from all the extension that are listed there.

So, what divide the 60% for the pre-let or –

No, pre-let, it’s – it varies. For extensions of the size we contemplate, it’s between 30% and 40% pre-let, closer to 40%.

Okay. Thank you.

Thank you.

Okay.

So, thank you very much for –you have one last more.

[indiscernible].

You mentioned that the retailers showed high performance levels according to sectors except for fashion, which is minus 1%, they are all operating well. Can you break down performance between small boutiques and medium size and large size supermarkets?

No, I can’t, because if I were to give you a full European review, it would take too much of our time, Norway, Denmark and the rest of Europe. You are an expert for retail right, your magazine has been a retail expert for years.

If you look at the last few years, the fashion business has – and fashion retail business has been skyrocketing with retailers with revenues, I need to speak English, yes, sorry, I’ll switch back to English and do that again. So, there is two – we had for 15 years of large development of fashion, smaller retailers and it’s clear that they are less capable to meet the customer expectation in the digital world and they are just going to diminish.

So that’s what we are just saying. So the smaller format less than 1 billion sales on the European basis is more challenging for them.

And they also get a pressure on their EBITDA, on the low – on the pricings, so to do the volumes. So, this is what just we are seeing.

So, the – and this is what is happening.

So Jean-Michel invited me to finish. So, thank you very much for attending, and thank you very much for your questions and the patience.

So, the next date for us is our general meeting on the 16th of April, and on the 18th of April, we will do the Q1 report about turnover figures. So, we will meet you in between.

So, thank you very much again and see you soon.

Thank you.