Klépierre SA (KLPEF) Q4 2022 Earnings Call Transcript

Klépierre SA (OTCPK:KLPEF) Q4 2022 Earnings Conference Call February 16, 2023 3:00 AM ET

Company Participants

Jean-March Jestin - Chairman of nan Executive Board

Stephane Tortajada - Chief Financial Officer, Member of nan Executive Board

Conference Call Participants

Jaap Kuin - Kempen

Céline Soo-Huynh - Barclays

Operator

Good morning. This is nan Chorus Call convention operator. Welcome, and convey you for joining nan Klépierre Full Year Earnings Conference Call presented by Jean-March Jestin, Chairman of nan Executive Board; and Stephane Tortajada, CFO. Please spell ahead, gentlemen.

Jean-March Jestin

Good morning, everyone, and convey you for joining america this morning. I'm pleased to study Klépierre 2022 afloat twelvemonth earnings. Despite outer headwinds characterized by a very uncertain geopolitical business successful Ukraine and a volatile macroeconomic situation pinch precocious inflationary unit and rising liking rates, we had a very successful year, and our business continued to grow.

Before going done nan numbers, I would for illustration to item our singular achievements successful delivering connected nan Act for Good CSR strategy. For nan 3rd twelvemonth successful a row, Klépierre classed astatine apical of nan world unit listed - Europe retail, Europe unit listed and Europe-listed categories pinch a people of 98 retired of 100. And GRESB is nan world's starring ESG benchmark for existent property and infrastructure investments.

And why are we ranking number one? In 2017, we committed to aligning our business objectives pinch our firm societal work approach. 5 years down nan line, we person successfully achieved 99.8% of our 32 targets, including reducing nan power strength of our portfolio by 42% and our greenhouse state emanation by 82%. And make nary mistake, this is simply a unsocial performance.

And fto maine springiness you conscionable 1 figure. Our malls successful Europe devour connected mean 79 kilowatt per quadrate meter. And successful France, nan fig is 70. The French manufacture mean depletion for our promenade [ph] is 1.09. There you person it, we are simply 30% better.

And past week, we unveiled our caller CSR plan, which was co-constructed pinch a 9-member technological committee. And our ambition is elemental for 2030, build nan astir sustainable level for commerce. The first pillar is to execute a nett zero c portfolio pinch an mean portfolio power ratio of 70 kilowatt per quadrate meter. And we will besides lend our support to retailers' power simplification initiatives pinch an nonsubjective of cutting their depletion by 20% and processing debased c solutions passim our portfolio.

The 2nd pillar is to beryllium a section contributor pinch a task astatine each shopping halfway designed to springiness thing backmost to nan community. The 3rd pillar is to enactment arsenic a skilled developer by up-skilling 50,000 people, which is an highly stimulating goal. The 4th and past pillar is to enactment arsenic a crippled changer by promoting sustainable lifestyles arsenic we guideline 50 cardinal shoppers towards sustainable consumption.

Let's now reappraisal our 2022 results. We generated €2.62 successful nett existent rate travel per share, up 20.3% compared to 2021. This is besides 13% complete nan midpoint of our first guidance scope of €2.30 and €2.35 and 7% higher than our revised guidance of $2.45 fixed successful July. These robust figures are nan nonstop consequence of our clear strategy and positioning.

Klépierre owns and operates ascendant malls successful Europe's largest cities, which catchment areas complete 1 cardinal inhabitants, having a gross per capita, 20% supra nationalist averages. The cities we are successful and nan malls we ain are basal venues for nan astir move nationalist and world brands to run their flagship concepts, scope retired to their customers and nurture their optima [ph] transmission strategies.

Our teams person a laser-like attraction connected delivering nan champion and seamless customer acquisition done our 4 differentiating operational initiatives that you are now each acquainted with. Together, these initiatives are serving our imagination to supply our communities pinch venues wherever they tin shop, meet and connect, pinch nan champion and astir modern unit work and leisure offering successful an entertaining appealing and hospitable environment.

Our beardown results are besides a testament to our disciplined superior allocation argumentation based connected a mean usage of leverage, controlled superior expenditures and continuous plus action to streamline our portfolio by divesting mature properties.

In 2022, our business continued to turn remarkably pinch retailer income and footfall up 25% complete nan year. We besides observed beardown momentum successful each regions and crossed each business segments. By geography, nan Netherlands and Germany, together pinch Central Europe led nan measurement pinch income increasing by 45% and 40%, respectively. France and Iberia besides outperformed nan group mean pinch income up by an mean of 28%. All segments posted double-digit income maturation pinch Food and Beverage, up 44%, and Fashion, Health and Beauty and Culture, Gift & Leisure besides increasing by astir 25%. Overall, nan 2022 income rebound has allowed our retailers to execute pre-COVID levels successful each countries and each segments.

As regards leasing activity, tenant request has been beardown crossed each territories. We proceed to renew and widen our unit and leisure offering pinch expanding retailers successful nan sports segment, banners specified arsenic JD Sport, Nike, Snipes, Emel [ph] and successful nan apparel conception pinch Inditex brands, Primark, Calzedonia, Mongo, Levis aliases United Colors of Benetton, arsenic good arsenic among worth for galore retailers for illustration Normal, Action, Pepco and Lidl. We besides proceed to leverage our level to found differentiating brands successful nan caller territories specified arsenic Jimmy Fairly, Miniso [indiscernible]

We signed 1,360 leases during nan twelvemonth and achieved a singular 4.1% affirmative reversion connected apical of nan 3.7% indexation applied successful January 2022. Since 2020, we person relet 26% of our stores to caller tenants, which 1 again exemplify really successfully re-offerings astatine our malls - has been transformed and really charismatic our revenues are to retailers. We besides raised our occupancy complaint by 110 ground points complete nan twelvemonth to 95.8%.

And lastly, nan mean long of leases successful Klépierre malls accrued to 5 years, importantly higher than 1 twelvemonth agone and moreover higher than pre-COVID levels. Our occupancy costs ratio stood astatine 12.9% connected average, helping support early integrated growth.

Looking astatine nett rental income, 2021 was severely impacted by COVID-19 arsenic stores were closed for 2.5 months connected average. 2022 is nan first and disturb twelvemonth pinch virtually nary business disruption owed to COVID, moreover though immoderate ray restrictions stay successful spot during nan first quarter. An important facet of nan twelvemonth is that we person besides almost finalized each our negotiations pinch our retailers for nan costs of costs owed for nan years 2020 and 2021.

To grow further, successful 2022, nett rental income included 2 nonrecurring one-off contributions, reversal of proviso owed to better-than-expected rent postulation for 2020 and 2021 for €88.6 cardinal and €25 cardinal of nett rental income generated by plus disposed complete nan people of 2022. Excluding those 2 elements, nett rental income for 2022 amounted to €921.7 million, reflecting nan ground of nan first undisturbed twelvemonth since COVID-19 outbreak.

Now connected disposables. We prosecute our portfolio streamlining and person disposed of adjacent to €1.5 cardinal successful assets complete nan past 2 years, including €602 cardinal successful 2022. The transactions were executed successful statement pinch appraisals worth conscionable 2.4% below. We are committed to proceed refocusing our portfolio connected best-in-class assets, uncovering nan optimal fresh betwixt Klépierre's early maturation ambitions and nan plans of expanding retailers. As of today, nan portfolio is highly concentrated pinch nan largest 20 malls representing 54% of nan wide portfolio worth and nan largest 70 equating to 92%.

Turning now to our improvement activity. Last July, we opened a ample hold successful Bologna, which is now afloat let. Performance is exceeding anticipation successful position of footfall pinch a 47% boost compared to '19, and our nonsubjective is to pull betwixt 9 cardinal and 10 cardinal visitors per year. The return connected finance is 8%, and we achieved an further €49 cardinal income complete nan first six months of operation. We besides delivered 5 caller Primark mega stores successful France and Italy connected clip and connected budget.

In Grenoble [ph] nan reshaping and hold of Grand Place [ph] is progressing good pinch 89% of nan projected nett rental income signed. This caller improvement will unfastened astatine nan extremity of this twelvemonth and was nan first Primark shop successful nan region, and output connected costs is 8%.

Lastly, I'm pleased to denote nan preamble of nan 2nd clip our marketplace successful Europe astatine Maremagnum, our premium promenade successful Barcelona crossed 5,600 quadrate metre connected nan rooftop level pinch breathe-taking views complete nan city, nan Marina and nan Mediterranean. The marketplace will showcase nan city-based food, drinks and civilization based connected clip location editorial curation. The promenade will characteristic a operation of 14 kitchens, a full-service restaurant, 4 bars and moreover space, nan workplace and an outdoor launch. Yield connected costs is 13.5%.

Turning to nan equilibrium sheet. Our beardown rate travel generation, coupled pinch blimpish superior allocation has enabled america to substantially alteration our nett debt. Net indebtedness has fallen by €1.6 cardinal complete nan past 2 years. Our financial metrics are strong, if not amended than pre-COVID levels and are among nan astir robust successful nan industry.

Our loan-to-value ratio is astatine 37.7%, while nan leverage ratio nett debt-to-EBITDA is 7.9 times and nan liking sum ratio stands astatine 10 times, among nan highest of our peers. We presently person a important headroom connected nan covenant and a robust BBB+ S&P rating.

With very constricted refinancing needs successful nan twelvemonth to come, our liquidity position stands astatine €2.8 billion, covering our refinancing needs until 2025. The mean maturity of our indebtedness is 6.5 years. Cost of indebtedness remained unchangeable astatine 1.2%, and we are afloat hedged successful 2023 and 90% hedged successful 2024.

Based connected these beardown financial and operating results successful 2022, nan Supervisory Board will urge that nan shareholders astatine nan forthcoming May 11, 2023 Annual General Meeting approved a rate distribution of €1.75 per share, up 3% compared to past year. If approved, it will mean that since nan outbreak of COVID-19, we will person served €6.65 per stock aliases €1.9 cardinal successful rate astatine an mean dividend output complete nan play of 8%.

For 2023, nan group expects to make nett existent rate travel per stock of €2.35, up 5% compared to 2022 adjusted for disposals and one-off. With these commitments and figures successful mind and connected nan backmost of improving macroeconomic information successful nan Eurozone [ph] our ambition for 2023 is to present higher rate returns to our shareholders while remaining astatine nan forefront of ESG champion believe successful existent estate.

And I will extremity my remarks connected this and unfastened nan level to questions.

Question-and-Answer Session

[Operator Instructions] The first mobility is from Jaap Kuin of Kempen. Please spell ahead.

Q - Jaap Kuin

Yeah, thanks. Good morning. I deliberation my first mobility will beryllium connected nan retailer sales. So we see, I think, connected mean successful nan 4th quarter, 100% versus 2019, which intends I've taken into relationship value inflation. The measurement constituent seems down, possibly astir 5% to 10%, besides possibly your position connected this. So really do you position this successful position of, let's say, a sustainable improvement of rent maturation and indexation successful narration to nan turnover improvement astatine your retailers?

Jean-March Jestin

Thank you for your question. I deliberation it's - I deliberation we person to return it arsenic a bully news. The income are backmost to pre-COVID levels. It's besides important erstwhile we mentioned not to skip only 2022. 2022 for our clients is 25% much sales. So for them, it's amended profit. And I deliberation it's a bully achievement. And I deliberation what besides is very absorbing to announcement is that it's each complete nan territories and each complete nan segments. So I will see that it's a bully guidelines for early growth.

In position of footfall, we are coming astatine 92% of pre-COVID levels, which I deliberation it's besides rather a singular achievement. And if you remember, erstwhile we reopened nan malls successful 2020 and 2021, we were person to 90 - 85% aliases moreover awkward of 90%. So I deliberation it's a bully achievement.

So we spot nan improvement successful income positively. And location are evidently immoderate brands doing amended than nan others. But overall, we spot a bully restitution from our retailers erstwhile they look astatine their income successful our malls. We are outperforming nan benchmark successful each nan regions wherever we are. So I will suffice nan income arsenic beardown and resilient.

Jaap Kuin

Okay. Great. And past possibly arsenic - immoderate different follow-up. So you've achieved, let's say, 3.7% indexation, 4% reversion. There's still evidently effect from costs ostentation besides connected nan retailers. Can you possibly picture nan past fewer months of existent negotiations and discussions pinch retailers, really they consciousness astir absorbing further rent increases and really that besides leads to your position connected what will beryllium imaginable successful 2023, besides starring to nan question, what's baked into your guidance successful position of reversion successful indexation for this year? Thanks.

Jean-March Jestin

So number one, we did 4.1% reversion connected apical of 3.7% indexation, truthful it's almost 8% connected nan caller leases signed. We person an indexation mean for Europe for 2023 astir 5%. We person seen nary awesome objection from our retailers to salary indexation. Where you are right, and it's a constituent of attraction for each of america is that galore of nan retailers, arsenic you know, are suffering costs increases and their margins are nether pressure. So for nan timing, we person not seen a pushback connected indexation and including for 2023. And you cognize indexation is thing other than accelerating nan seizure of nan reversion we person embedded successful our portfolio. So 5% for 2023 is nan mean indexation successful our portfolio.

Jaap Kuin

Great. Maybe arsenic a speedy follow-up. So what do you deliberation nan existent remaining reversionary imaginable would be? Thanks.

Jean-March Jestin

We don't supply that number.

Jaap Kuin

Thank you very much.

Operator

As a reminder – excuse me...

Jaap Kuin

Morgan [ph] tin you springiness immoderate guidance connected disposal successful 2023? What does nan existent finance scenery look like? Could you besides remark connected output description anticipation going forward?

Stephane Tortajada

So regarding disposals, we - arsenic you tin spot for astatine slightest 6 aliases 7 past year, we ne'er guideline connected disposals. We are committed to streamline nan portfolio. We are doing it. And complete nan past 2 years, we sold for €1.6 billion. In different markets, it was successful Norway, successful France, successful Germany, truthful we are still assured that for nan non-core assets we own, we will find buyers for those properties adjacent to book value. But we don't guideline nan marketplace connected nan measurement of disposal, we want to execute for 2023. And successful nan guidance, location is nary effect of those imaginable disposals if they happen.

Jean-March Jestin

Investment landscape, what we tin opportunity is that Q1 evidently is quiet. There are not galore transactions happening, but it doesn't mean that nan marketplace will enactment quiet for nan remainder of nan year. So I will say, a soft commencement of nan twelvemonth and we will spot further down nan road, we will spot much activity.

Operator

The adjacent mobility is from Céline Soo-Huynh of Barclays. Please spell ahead.

Céline Soo-Huynh

Hi, bully morning. Just 1 question, please. Can you touch connected your NCCF guidance for '23, its including a unchangeable occupancy complaint assumption, macro situation mightiness beryllium much challenging this twelvemonth than past master retailers. We already seen immoderate of them going into management astatine nan commencement of nan twelvemonth successful France. And I do admit that it could beryllium a mini proportionality of your rental income, but if you could show america really apt it is for occupancy to stay unchangeable this year? Thank you.

Jean-March Jestin

Well, I'm - erstwhile it comes to bankruptcies, it's - we person a spot of an uptick successful France compared to past twelvemonth for nan mediate value conception manner retailers. But erstwhile we - but erstwhile much erstwhile we look astatine nan brands that get bankrupt successful France, each of them, they person astir 10 to 15 stores pinch america retired of 11,000 stores. So nan impacts are almost negligible.

So what we person assumed for 2023 is that nan guidance will beryllium based connected level income compared to 2022, which I deliberation it's a reasonable assumption, moreover though I don't person nan crystal ball. The level occupancy, we person - we were - pre-COVID we were astatine 97% pinch 3% of vacancy. We went - we doubled vacancy during COVID to 6%. We are backmost almost astatine 96, truthful I deliberation we person almost unchangeable nan occupancy to pre-COVID levels. So it whitethorn up and down marginally but we don't spot occupancy being nether unit successful 2023.

For nan macroeconomic environment, I deliberation location are rather a statement coming that nan - this would beryllium a soft landing for nan European economies. And erstwhile more, we don't return a stake connected macroeconomic trends. We are besides - we are besides uncertain astir nan geopolitical improvement successful Ukraine. But we are assured that our guidance is based connected realistic assumptions for 2023.

Céline Soo-Huynh

Thank you very much.

Operator

[Operator Instructions] The adjacent mobility is from Neeraj Kumar [ph] of Barclays. Please spell ahead.

Unidentified Analyst

Good morning, everyone. Thank you for taking my question. So successful position of your refinancing needs, you person €520 cardinal unsecured enslaved maturing successful a mates of months. Can you please thief maine understand really you're readying to refinance that?

Jean-March Jestin

On nan financing, we person astir €700 cardinal of financial instrumentality coming to maturity this twelvemonth successful '23. As of today, we person a bunch of options connected nan table. First, obviously, nan banking marketplace is wide open, and we person already received immoderate proposals from nan banking market.

Second, owe indebtedness marketplace is besides rather unfastened for mean leverage. As you know, successful nan past, we were not a large personification of this owe marketplace because excluding Scandinavian assets, it's little than 1% of our indebtedness, but it does show we tin spell further up, truthful we person immoderate options there.

And connected nan enslaved market, nan commencement of nan twelvemonth was highly positive. We person seen dispersed coming backmost from peaked coming for illustration much than 150 ground points since commencement of January, dispersed compressed by much than 70 ground points. We person seen 2 existent property deals successful nan enslaved market. So I deliberation location are besides immoderate options there. So basically, we person a fewer options connected nan table, and we will make nan champion determination based connected pricing and maturity. But I deliberation arsenic of today, location is immoderate liquidity successful nan financing marketplace for us.

Unidentified Analyst

That's helpful. Thank you very much. And my 2nd mobility is successful position of your costs of debt, I spot it's 100% hedged for 2023. I mean really do you spot it processing complete a mates of years, possibly particularly successful nan discourse of your €1.2 cardinal commercialized insubstantial program?

Jean-March Jestin

Okay. The costs of indebtedness has been unchangeable astatine 1.2% for 3 twelvemonth 2020, 2021, 2022. In 2020, I'm sorry, successful 2019, it was 1.5%. So basically, what we spot for 2023 is simply a costs of indebtedness betwixt 1.2 and 1.5 because we are hedged connected nan complaint astatine 100%, but obviously, we are exposed to spread. But arsenic I've conscionable said, spreads person been highly volatile since nan commencement of nan year. So we could spot opportunities to finance astatine rather compress spread. But successful immoderate case, it will not beryllium supra 1.5 for sure.

And for 2024, it's a spot nan aforesaid story. We are a 90% complaint hedge. So nary rumor astatine each connected nan complaint and connected nan spread, depending wherever nan dispersed will be, but I deliberation it would beryllium a adjacent presumption to opportunity that it would beryllium astir nan aforesaid people than 2019, that is to enactment astir 1.5.

Unidentified Analyst

All right. Thank you very overmuch for taking my questions.

Jean-March Jestin

Thank you. We person 2 different questions from Amal. So nan first 1 is, tin you remark connected nan 13.5% output connected clip retired task successful Barcelona and what is nan level of pre-letting. So nan level of pre-letting is 100%. And nan yield, I cannot remark much than it's conscionable 13.5%. So it's a bully return, I think.

Good - and nan 2nd mobility is fixed nan precocious rent indexation expected to prosecute successful 2024, your guidance looks rather conservative. Do you expect higher financial costs to effect nett existent rate travel successful 2024?

So location are 2 questions successful one. About being conservative, astir apt it's my estimation and Klépierre estimation to beryllium blimpish erstwhile it comes to guidance. But astatine slightest it's, I think, a guidance which is 5% supra rebased 2022. So it's rather a important increase.

What do you expect higher financial costs successful 2024? So it's linked to your answer, Stephane?

Stephane Tortajada

Yes. I deliberation that, again, nan complaint are hedged for '23 and 90% for '24. So connected this front, I deliberation we cognize precisely wherever we will land. It will very overmuch dangle upon nan spread. Spread has been compressed very importantly successful nan past 2 months. So I would opportunity that successful 2024, we should not expect thing very different for 2023 successful position of costs of debt. So thing astir 1.5% astir probably.

Jean-March Jestin

From Florent [ph] astatine Bank of America. Can you punctual america nan nett leverage target? As you know, we do not springiness immoderate guidance successful position of leverage. We springiness only nett existent rate travel guidance. What I tin show you is that based connected nan standing today, BBB+ unchangeable outlook, we person evidently immoderate guidance from S&P.

In position of nett debt-to-EBITDA, nan period is 11 time. So needless to opportunity that we consciousness highly comfortable pinch nan S&P guidance. And successful position of indebtedness to indebtedness to equity, it's 50%. And today, nan past S&P estimate is astir 43%, 44%. So I deliberation we are - present also, we are highly comfortable pinch nan S&P guidance. So basically, nan connection present is that we do not springiness a guidance connected leverage, but we consciousness highly comfortable pinch S&P line for existent rating.

Second question, person you quantified nan magnitude of greenish CapEx required to scope your goals? I deliberation nan - we person 4 pillars. So nan first 1 is astir apt nan astir demanding to beryllium nett zero. We person 3 sub targets successful it, which are important to know.

The first 1 is nan 1 I mentioned is to beryllium astatine 70 kilowatt per quadrate metre for power consumption. We are astatine 79. So it's still thing we tin do without really spending CapEx. And if we person to walk CapEx, it would beryllium astir apt thing that will beryllium absorbed by nan attraction CapEx that we person successful our malls today.

The 2nd nonsubjective is to thrust nan tenant power depletion successful their shops by minus 20%. We will put into a amended measuring their ain power depletion and providing benchmark and proving solutions. So we deliberation that this will not require a important magnitude of CapEx.

So nan 3rd pillar of being nett zero is to nutrient power connected tract pinch photovoltaic mainly, but it tin beryllium besides different means, up to 30% of our consumption. This will astir apt require nan CapEx, and we will person location 2 options. The first 1 is to do it by ourselves and waste nan power to nan retailers aliases to nan grid and person a return connected it. Or to squad up pinch partners that will make nan investment. So we person not made wholly our determination coming really we are going to take betwixt nan two, but we deliberation nan CapEx element, either we person to return them and we will person a return. Otherwise, it would beryllium taken by nan partner.

All correct again. Are you happy pinch nan BBB+ aliases you purpose for A minus? The rumor for A minus is that, arsenic you know, S&P takes a position by subsector connected standing range, and they deduce nan methodology for each issuer standing based connected this position by subsector.

As of today, it's rather striking to spot that successful unit existent estate, astir of nan subordinate and nan BBB bucket. And I would opportunity that it's much a mobility of S&P changing his position aliases methodology connected nan subsector than america reaching immoderate circumstantial target to get to nan A minus. Obviously, this is simply a speech we person connected a very regular ground pinch S&P, effort to person them that it should person a much affirmative view, I would say, but it will very overmuch dangle upon it.

So location is simply a method mobility from Pierre Emmanuel. Your income from nan disposal of finance properties and equity finance is antagonistic by €74 cardinal successful 2022. How tin I reconcile it pinch minus 1.8% communicated?

So yea - to beryllium afloat transparent connected nan 1.8% that we person communicated, it's connected nan unit properties that we person sold. We have, astatine nan extremity of December, disposed 40,000 quadrate meters of offices successful [indiscernible] erstwhile we harvester nan two, it's a noncore asset, we don't pass connected it connected a regular basis, but it was disposal. When we harvester nan two, nan mean discount to book worth is minus 5.2%. So clearly, it was little than book worth for nan offices, which was nan past 1 we had successful our portfolio.

So successful nan €74 million, and moreover technically here, we are half of nan amount, which is simply a method recycling of nan ForEx reserves. So - but I will time off this to connection a chat pinch our team. When we waste a spot successful Norway aliases successful nan non-euro rate zone, we person to recycle nan reserves - nan ForEx reserves done nan P&L. It has nary rate impact, nary retained net impact. It's conscionable a method booking.

Operator

The adjacent mobility from nan telephone is simply a follow-up from Jaap Kuin of Kempen. Please spell ahead.

Jaap Kuin

Yes. Sorry to spell again. But conscionable connected valuations, could you possibly picture your assurance level successful your existent valuation done by nan appraisers?

Jean-March Jestin

Basically, if you look astatine nan slope covenant, we person successful nan banking documentation, a 60% period for LTV, it's IFRS LTV, and that's why we pass connected nan aforesaid methodology aliases LTV astatine 37.7. So arsenic you tin see, we are very acold distant from nan period and we are highly comfortable pinch this number compared to nan limit.

The remainder is ICR much than two. We are astatine 10. So a batch of headroom again. And nan unafraid indebtedness compared to portfolio value, excluding Scandinavia, little than 20% and were little than 1%. So basically, connected these 3 criteria, we are highly comfortable pinch nan banking dock. The past 1 is simply a portfolio [ph] worth successful proportionate method, much than €10 cardinal were astatine €17 billion. So nary rumor astatine all.

Jaap Kuin

Yes. Thanks for that. Actually, what I meant was what's your level of assurance successful nan value of nan appraisals?

Jean-March Jestin

The - So I deliberation nan valuation they are done each six months. The - I deliberation what needs fresh to beryllium taken into relationship by those who are looking astatine our earnings, is that nan discount complaint of our properties are perpetually increasing complete time. And today, we person a 7.2% mean discount rate. And erstwhile we comparison this discount complaint pinch different existent property plus classes, we deliberation - and we person nan condemnation that we person done nan occupation and that nan valuers person already factored successful nan valuation. I would say, immoderate benignant of uncertainty they whitethorn person connected nan valuation. So we are comfortable pinch nan value. And erstwhile more, I deliberation nan - we are nan first plus people that has expanded nan discount complaint truthful far, truthful high.

Jaap Kuin

Yes. I would work together pinch that. Just possibly past arsenic pausing successful a different way. I mean, would you really bargain comparatively well-operated malls, if you were offered much - would you really bargain yourself astatine a 5.5% nett financial yield?

Jean-March Jestin

I deliberation nan - I deliberation I don't cognize if I'm going to reply to that question. For nan clip being, we person thing connected nan radar screen. The accuracy we person erstwhile we look astatine acquisition, what we did successful nan past is they person to beryllium - they person to tick 2 boxes - 3 boxes.

First 1 is that we request to bargain high-quality properties pinch reversion embedded into it. So among properties which are comparable to nan champion we have. The 2nd tick people is that nan acquisition has to beryllium accretive and sub tick marketplace that it has to beryllium accordant pinch our equilibrium expanse objective. So for nan clip being, I deliberation we are connected a wait-and-see mode.

Jaap Kuin

Thank you. Thank you very much.

Jean-March Jestin

More mobility astir do you scheme important acquisition? I deliberation I conscionable gave nan reply correct away. Cost of indebtedness anticipation for 2025, I deliberation you already gave immoderate constituent to...

Stephane Tortajada

Yes. On 2025, our level of complaint hedging is much than 2 third, 68%. So we are starting to beryllium good covered. To beryllium honest, it's besides very overmuch dangle upon what is your position connected 2025 short-term rate. As of today, if I look forward, nan marketplace statement is that short-term liking rates should travel down starting extremity of '24 successful Europe. So it very overmuch depends upon nan position you could person connected 2025, right? So I would not stake that nan complaint will enactment astatine nan existent level everlastingly astatine a definite constituent of time, location could beryllium immoderate volatility connected nan right. So arsenic of today, we are 2 3rd covered and we will spot really we negociate this position on nan road.

Jean-March Jestin

Question? Are we taking nary sanction questions? Okay. So location is 1 pinch nary name. So I would person preferred to person nan sanction of - but anyway. How do you spot nan capacity of e-commerce? I deliberation location is simply a batch of lit astir it. So I'm not going to walk excessively overmuch clip connected it.

I deliberation e-commerce, nan axenic players are seeing their income going down compared to nan peak. Second, axenic subordinate are virtually smashed by summation of prices and inflation. So they are going done difficult times. When it comes to nan e-commerce of our retailers, I deliberation it's processing well. The stock successful their income is growing. There are much and much delivering their committedness to their customers aliases having a beardown omnichannel proposal.

This translates into little stores but amended stores. And our position was that nan e-commerce improvement successful our tenant-based business will beryllium favorable to america arsenic we ain among nan champion properties wherever nan retailers want to person their flagship store, wherever they tin present this omnichannel proposal.

And we spot besides much and much retailers pushing for nan returns to travel to nan stores and besides charging a interest connected return erstwhile it doesn't travel to nan store. So I deliberation nan shop will play an expanding domiciled successful nan e-commerce portion of our retailers business.

Jean-March Jestin

So convey you very overmuch for your clip this morning. And obviously, we are afloat disposable to reply follow-up questions coming by email aliases successful nan coming days and besides pinch our Investor Relations squad pinch Paul. Thank you very much.

Operator

Ladies and gentlemen, convey you for joining. The convention is now over. You whitethorn disconnect your telephones.