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Edited Transcript of ECMPA.AS earnings conference call or presentation 30-Aug-19 8:00am GMT

Full Year 2019 Eurocommercial Properties NV Earnings Call

Amsterdam Sep 5, 2019 (Thomson StreetEvents) -- Edited Transcript of Eurocommercial Properties NV earnings conference call or presentation Friday, August 30, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Evert Jan van Garderen

Eurocommercial Properties N.V. - Finance Director & Member of Management Board

* J. Peter C. Mills

Eurocommercial Properties N.V. - Member of the Board of Management

* Jeremy P. Lewis

Eurocommercial Properties N.V. - Chairman of the Management Board & CEO

* Pascal H. Le Goueff

Eurocommercial Properties N.V. - Property Director of France

* Roberto Fraticelli

Eurocommercial Properties N.V. - Member of Board of Management, Director of Italian Operations & Company Secretary

* Tom R. Newton

Eurocommercial Properties N.V. - Consultant

* Valeria Di Nisio

Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director

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Conference Call Participants

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* Charles Boissier

UBS Investment Bank, Research Division - Director and Property Analyst

* Niko Levikari

ABN AMRO Bank N.V., Research Division - Research Analyst

* Peter Papadakos

Green Street Advisors, LLC, Research Division - MD & Lead Research Analyst

* Robert Woerdeman

Kempen & Co. N.V., Research Division - Research Analyst

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Presentation

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Operator [1]

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Welcome to the Eurocommercial Full Year Results 2018-2019 Conference Call. I will now turn the conference over to [Natalie Magee], Investor Relations Executive. Please go ahead.

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Unidentified Company Representative, [2]

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Thank you and welcome to our financial results call and webcast. And joining us on the call today are our Chief Executive, Jeremy Lewis; our Country Directors, Tom Newton for Belgium, Pascal Le Goueff for France, Roberto Fraticelli for Italy and Peter Mills for Sweden. Also with us, Valeria Di Nisio, our Group Leasing Director; Ilaria Vitaloni, our Head of Research; and Caterina Liori, our Group Economist; and Evert Jan van Garderen, our Finance Director.

I will now hand over the line to Jeremy Lewis.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [3]

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Thank you very much. Good morning to everyone. I mean I think we've had a pretty good year in all both in terms of our income and our asset values. And I'll come back to valuations in a moment because I think it's very important. But I just like to put things in perspective and ask some questions but I don't want answers now but later. Number one, the average yield of the major European, I supposed that includes Hammerson for the U.K. but that changes the numbers. But the average dividend yield of the better property companies in retail is now around 9%. The average coupon yield, if you like, on bonds is not even 1%. It's minus something. There is something very odd going on there. I mean there is one certainty with bonds, and that is that you're going to lose money on them.

What I'd like to know from people later on is given though that yield differential is what people are afraid of now. And I can see they might be afraid of in the U.K., whether, as you know, I've always had a view that it was too high, of course, they are now coming down, so that would affect things. But that is not the case not just with us but with Klepierre, and by any of the better European property companies, it's a totally different market. So I'd like to know what people are really afraid of because I think there's a degree of hysteria out there.

Okay, so our results are pretty solid. You can see our earnings are up. And don't forget we are also selling properties now. Obviously, that will have an effect to some degree next year with the sale of the half of Passage du Havre. But of course, that's our lowest yielding investment. The dividend we are proposing to shareholders of EUR 2.18 is slightly up on last year's at EUR 2.15. We could have paid, of course, if we wanted to, EUR 2.42, but we are being ever cautious so -- perhaps overcautious, you might say. But no, in terms of earnings, we're very confident because our vacancies are still 1% only, in fact slightly less. And we don't expect that to change. I mean in terms of companies in administration, nothing like the CVAs or what I call compulsory voluntary arrangements in the U.K. But we really only have 6 companies, and they represent a tiny proportion of our 1,700 tenants. So our rents, we believe, are absolutely sustainable. The valuations I was talking about I think are of vital importance. Because clearly, that has an effect potentially is what people might be afraid of in the U.K. is that property values go down enough, and debt levels are too high. Then you have the possibility of bankruptcies in the end, I suppose, but it's not going to be the case for now.

So our valuations are within 0.4%, in other words pretty well much the same as last year, so it has not going down, they are going down in the U.K., the markets are completely different. And don't forget that we have now validated, if you like, our valuations with the sale of Passage du Havre. Of course, that's one of our best investments. But remember, that the value was revalued of that property also value of other properties. So you could argue that they are incompetent, but there we are, we have just proved we're one of the largest and most experienced investors in the world and French to boot, the largest valuations are completely valid. So I think that's terribly important.

Our rents are still growing. They are not falling. And in fact, oddly -- well, not oddly. Pascal will slaughter me for saying that, but actually our best (inaudible) is on renewals and relettings has been in France, notwithstanding the famous Gilets Jaunes.

So I think the French market is pretty damn solid. Now obviously, there are some assets there with other companies that are not so solid, but I would argue that our smallest centers are just as solid in their different ways. There's a fear that people have of online. I think it's worth commenting on. The more we talk to retailers and the more research there is suggests that actually, for retailers who have both channels, that their online sales are enhanced in the areas where they have a physical shop and not (inaudible) and so they're being of a battle between online and physical, they work very well together and complement each other. And that's a fairly major change in -- over the last couple of years. So don't forget that over 80% of sales -- retail sales are still done in shops and I don't expect that to change very much in the future.

Clearly though, the job of the owners and managers of shopping centers is to make them attractive, so people would want to come to them. So clearly, we are doing our best. And I think given our vacancy level, we can prove that, that has been successful.

Looking forward, yes, we have some other properties we will be selling, not the biggest, I have to say. And the other question I'd like to address really I think, and that is if we are coming down after the sale of the 50% of Passage du Havre to 43% . I'd ask you all to think about the percentage of mortgage you have on your houses, which is probably an average of 60% to 80%. I don't think 43% is particularly worrying especially in our markets where we have stability, sustainable income, and therefore, I believe sustainability of values supported by yields that are 5x the best you can get from bonds.

So now I'm, as you won't be surprised to hear, pretty confident. Life is always a bit lot more difficult behind the scenes than we show on the front because we work very hard. We've got a fantastic team of people, we really have. We work extraordinarily hard, and we have mutual respect for each other, and that's why we have such stability in our teams.

So I'd like to end my little peroration by thanking the team members and then hand over to somebody who is still with us despite rumors, to the contrary but perhaps on a slightly different basis, Tom Newton, who is now looking after our largest investment, in glorious -- no, it's not like that, I have a glorious Brussels. So Tom, I'd like to hand over to you.

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Tom R. Newton, Eurocommercial Properties N.V. - Consultant [4]

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Well, thanks, Jeremy. Yes, I mean I had -- I feel like a bit of an imposter this morning because I am with a bird of passage (inaudible)for the most at the moment. But that being the case, I think for Belgium, the important thing is that I talk about, (inaudible), who is doing the heavy lifting in Brussels. (inaudible), who we stole from the Paris office, you won't be surprised to hear, and literally grabbed the shopping center by the scruff of the neck and he's giving it a thoroughly good shaking. The first thing (inaudible) did when he got there, he realized that nobody have spoken to the retailers in the center ever. So he now knows every single one of the retailers. And due to his dialogue, he managed to persuade them, which is a bit of a revolution in Belgium, that we should actually extend our shop -- our opening hours to 8:00 on a Saturday. That actually was quite a tough call from (inaudible) because we did have some sort of more distance at the sort of trade union level, but he is an extremely good communicator, (inaudible). And its thanks to him, we extended the opening hours on a Saturday. And knowing (inaudible) he will be very keen to now sort of carry on and do that for the rest of the week. But an important and logical move. This being Italy -- Eurocommercial, it's an Italian card. We were going down there, Mr. [Salvini,] who is looking for an Italian expatriate. I urged him to come to Woluwe because we've got Italian designers crawling all over it and actually doing the (inaudible). We are sticking on new louvers. We are sticking a new seating area to replace the absolutely atrocious gray benches, which have been there for 30 years. We're upping the lighting. We're improving the food court and all that stuff is -- it's cosmetic, but it will make a huge difference, and those works should be finished now by -- in time for Christmas trading.

On the merchandising front, it's a bit of a similar story. There's quite a lot of deadwood in there, if I can call it that. It's sort of unfashionable fashion. Our turnover have picked up, but Valeria Di Nisio, our Group Leasing Director, is getting sucked into the merchandising, and she is clearing out a lot of that unfashionable fashion. An example, our rental growth is very slightly negative, but that's because we had a bit of temporary vacancy. And we've got Courir coming along and replacing that vacant unit. And if you count that recent deal with Courir on the vacant unit, our rental growth is actually positive. So yes, so on the ground, retailers, whole new team down there, good dialogue on the ground, good (foreign language) happening will be finished by the end of the year. And in terms of merchandising, I mean one example, this must be the only shopping center in the whole of the Northern Hemisphere that does not have a pizzeria. I can assure you it will be having one very soon. So that's sort of an example of the stuff we are doing.

I think all divestments from (inaudible) and Valeria are sort of coming through because if you look at the 12 months, turnover trend were 0.3 up, just -- if you look at the 6 months, we're 0.6 up, just 3 months is getting better, we're at 2.2% up. And then we have an absolute humdinger of a month in July because our turnover growth is no less than 6.3%, and part of that is due to the fact that the way it works is going on last year. But nevertheless, with that positive trend, we must be doing something good down there, one would like to think.

What about the extension, I hear you say. Well, the extension, we have got (foreign language) is-- there's nothing French about (inaudible) there's nothing Italian about [Alba], (foreign language) born and bred in (inaudible) or wipers to the English who perished I'm afraid in their thousands in the first World War (foreign language) to the Dutch. And incidentally (inaudible) the Dutch analysts will be pleased to hear, well he is a Frenchman, he is so enthusiastic in himself down there that he's actually taking Dutch lesson. So then we are integrating into Belgium. As far as extension is concerned, we have been delayed a little bit because the Brussels region has changed the rules for our major developments in Brussels. And there is a whole new framework of rules, which has come into play literally next week on the 1st of September, so we have to adjust our clock a little bit to fit that framework. But I am very confident that Alba who is really doing a good job, it's a complex extension. We're not just a parking or shopping center in Greenfield. It is an urban site there's a Metro to worry about. There's an underground car parking there a walk stable, there's all sorts of things to worry about down there and we are building 100 slots above. But I'm pretty confident that Alba will have that planning application in certainly October. It might just edge over to November, but I think Alba is pretty confident that we will have it in October.

So yes, all sorts of evolution down in Belgium, but really thanks to (inaudible) and Alba. And with that, I will hand over to what is a presently a proper Frenchman, Mr. Pascal Le Goueff.

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Pascal H. Le Goueff, Eurocommercial Properties N.V. - Property Director of France [5]

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Thank you, Tom. Good morning all.

Let's start with sales. So our turnover in France over 12 months are down minus 1.8%. The Gilets Jaunes protest has a strong impact on these results. In December -- In last December, when the protest reached its peak, turnover were down minus 2.8% over 12 months. But over the last months, we are seeing a clear link between the decline of the movement and our results improving step-by-step to end up in positive territory for the last quarter with plus 0.9%.

In terms of sectors on group's food, beverage, boutiques have shown the best results with, respectively, plus 16% and plus 7.8%. Sports and health and beauty sector have also been very good this year.

So now France is now feeling better economic condition. So with the continuous improvement of the labor market, a robust housing market and a solid growth, we could expect positive effect on the turnover in the coming months.

About rental growth, like-for-like rental growth was positive, plus 2.9%. If we look at the split, the relettings and renewals are plus 1%. The rental growth from the 53 deals we made at an average at least of 11%. Indexation has produced plus 2.2%. If we look at renewals only, we have renewed 37 leases at an average uplift of 17%. So it's a good performance which shows the soundness of our portfolio. Regarding arrears over 12 months, it represents 0.6% of the total rents, which results similar to the previous year.

Vacancy. Compared to last year, the vacancy rate is down. In Passage du Havre, the leasing team has been quite busy to fill in the space, which were lessen the peak by (inaudible) and the ones which will be let by Zara and GAP. All these units have been successfully related to normal than in Switzerland which was a Dutch retailer (inaudible) a successful French-house-owned retailer. The Passage du Havre is fully let.

In Taverny, (inaudible) unit has been partially let to a local restaurant operator. And in Trois, the X shared unit has received a strong interest from national retailers. In Bordeaux, we are in advanced negotiation with an international firm of co-working to let the first floor vacated by La Grande Récré .

Valuation now. So the value of the French portfolio has decreased by 2.1% over 12 months and by 0.2% over 6 months. These results are due to a slight increase of net initial yield, going up from 4.4% in June 2018 to 4.5% in June 2019. Over 6 months, net initial yield remained stable. Our latest transaction, Cormeilles-en-Parisis, the retail park Cormeilles-en-Parisis and Passage du Havre, were both in line with the latest valuation, which confirm the accuracy of our valuations.

So with regards to the investment market, we have now co-dividends for prime shopping center. Thanks to AXA, we booked 75 jobs in [Italida] 75 at a yield of 4.1% and 50% of Passage du Havre at a yield of 3.7%.

Regarding Passage du Havre sale, we have signed with AXA a permit subjected to specific conditions an agreement of the mayor of Paris. This is the usual Frenchman rights and an agreement of the European Commission with regards to the concentration rules under the European initiation will shed -- that we are not creating a situation of monopoly. So we have also signed a joint venture agreement with AXA which accept the rules of all joint venture and we'll get to the management and also to the liquidity mechanism. So we expect to sign the final contract around in November.

So I would like to also mentioned that the professionalism of my colleague in Paris that responds accurately to hundreds of questions from AXA's team and provide hundreds or nearly 1,000 of documents to justify this response has been a determinant factor of this deal. So great thanks to the French team, Emily, Christine, (inaudible) Cecile, Nicola and Juliet.

Let's talk about projects. In Paris, we have received our planning permits. But as expected, this authorization has been [appealed]. Nevertheless, permitting is well advanced in its prime national and international retailers, who clearly expressed their preference to us compared to the competing scheme.

In Etrembières, we have secured a planning permit to build 1,600 square meter of retail and an underground carpark. Terms have been agreed with the national restaurant operator, which will let the whole building. We expect to start the works of building of 2020. In Tours Les Atlantes, we have applied for building permit to build retail park of 8,000 square meters on the land adjacent to the center. The subdivision will be examined by the CDIC commission within the coming months.

And lastly, in Bordeaux, a refurbishment is on schedule, and we expect to complete this work before the end of the year.

And now I hand over to Roberto.

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Roberto Fraticelli, Eurocommercial Properties N.V. - Member of Board of Management, Director of Italian Operations & Company Secretary [6]

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Thanks, Pascal. (foreign language). Well, apparently, there is a new government in the making in Italy, so that has been received well by the market. If you look at the bond yields, the spread with the bond, that's decreased quite a lot, so that's a good sign. We'll see in the future. Of course, this government, that's a very important task which is the one of approving the budget law of 2020. And If you look at the news, it's a common problem at least in Europe, so there's going to be I think, a big discussion at the European level on fiscal policies in rules and budget law for 2020, so you will see.

Italian GDP was flat this year, also reflecting uncertainties in Italy and a bit everywhere else. But the unemployment rate is going down. It's now 9.7%, down from 10.3% last year. Please remember also there is always statistical difference between Northern Italy where centers are located and Southern Italy.

As we go a bit to commercial retail sales. Retail sales were up a good 0.8% over the year compared to an average in Italy of around minus 2%, which is the latest available data from CNCC, which is the Italian National Council of Shopping Centers. There was a good contribution both from boutiques which were up and medium units also, while the hypermarkets was still in negative territory, as we won't be surprised to hear. The best performing centers in Italy were home goods and sports. Shoes was slightly negative. And fashion, basically flat, a little bit negative but not that much. June was an exceptional month for us as we register increasing sales of 6.6%, thanks to the weather as well which was finally what it was supposed to be. But a big thanks to our asset managers, Carlo, who manages the mall and the property team for their work, it has been very good year.

The best-performing centers that we have were Castello, Cremona Po and I Gigli. But there was a small turnover decrease in Fiordaliso but it's normal because we are still busy with the construction work for the new Primark.

The overall number of visitors in Italy decreased slightly, was minus 1% year-on-year. It was mainly due to the opening of new food discount in the proximity of our centers and, of course, the works which we are carrying out. There was a good increase in visitors number in I Gigli, but please remember this is still the #1 most visited shopping center in Italy with almost 20 million visitors; and Cremona Po, still above the 5 million visitors.

Occupancy cost, they remain stable, healthy at 8.2%. And rental growth, and thanks to Valeria and her team, it was up too, with a solid 1.9%. The top line inflation was still pretty low. So the main contribution came from the 87 renewals and relettings with an average rental uplift of almost 12%. So I think that's a good result.

90 days arrears in Italy are still very low, still around 0.5%. And if we look at valuations, according to Savills, the investment volume on retail -- on the retail state market in Italy almost reached EUR 1 billion for the first half of 2019 with a 50-50 split between high street and out of town shopping centers. Yield from primary shopping centers remains unchanged while small increases were registered for core assets and larger yield increases for secondary assets. But there is no real market comparison which has taken place so far. So we'll wait and see. There are some transactions being rumored, we will see.

Our June valuation showed an increasing value of 1.6% compared to June 2019 and 2.1% compared to December 2018. But please note that it was also due to an extraordinary transaction. So while the gross property values remain stable, the increase in net property value was mainly related to a reorganization of the Italian portfolio, whereby single assets have been compared to newly created operating companies. So an asset sale, it will be done through a shared deal and no longer through an asset deal. So no longer triggering the transfer taxes of 9%, 4% or 3% , depending on the transaction that they were going to do. And we do need to congratulate administration [Simon's]team for it was a humongous work and Luca Lucaroni, (inaudible) and their team, they really did a fantastic job.

If we go look at extensions, we have to say that we do like Christmas because all the work they are performing we are trying to finalize until Christmas, and we are pretty sure that they will all happen. So we are talking about Curno, where we have the new food court, which welcome almost 20 new restaurants. And there's also going to be the first restaurant of famous Italian chef. So if you want to know, you need to come to the opening. And also Cremona Po, we finalized basically the construction of the new retail park which will host a new Decathlon, which is a big attraction for Cremona; Brico, which is a DIY store; and (inaudible) and many more other retailers. And last but not least, of course, Fiordaliso, where we finalized the works related to Primark, the constriction of the Primark and the new H&M unit which will be a big one also hosting H&M Home. And the units have been handed over to the tenants, and trading will happen before Christmas. Maybe something else in July, we acquired through our joint venture vehicle with Finiper the existing hypermarkets of Fiordaliso, part of which has been, as you know, used to create space for Primark and the new H&M unit. So big thanks to our technical and property team because they really did a fantastic job with these extensions.

Thank you, and over to Pete.

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J. Peter C. Mills, Eurocommercial Properties N.V. - Member of the Board of Management [7]

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Thank you. Well in Sweden, retail sales remain positive over the year at 1.4%. That was the same level of growth as last year. And while fashion and shoes were marginally negative, the other sectors more than made up to the shortfall with strong performances from health and beauty, gifts, jewelry, sports and electricals. Our 7 owned and let hypermarkets also had another year of strong sales growth at 1.7%. And together with our 4 Systembolaget, that's the state alcohol monopoly, they continue to provide regular footfall for the benefit of the whole shopping center. Interestingly, customer surveys confirm that 40% of our visitors come for the hypermarkets, and then 60% of those go on to make a purchase in the gallery. That's a very high rate of conversion.

Like-for-like rental growth increased by 2.9% over the year, during which 92 lease renewals and relettings were completed, producing an average uplift of 4.6% on those transactions. While the uplift was lower than last year, there remains strong demand for retail space in our portfolio which is also reflected in low vacancy and arrears, both still below 1%. In December, we saw signed 3 further H&M full concept stores, and they will be almost doubling their floorspace in Valbo, Hallarna and Elins. By the end of next year, we will therefore have 5 of their largest and latest format stores which will bring important long-term commercial benefits for the shopping centers at the time when they're closing some of their smaller and older stores elsewhere.

We only had one casualty, and just after Christmas, the Danish toy retailer, Top-Toy, went into administration. We had 5 of their BR toy stores averaging 350 square meters each and have already let 3 of similar rents with serious interests for the remaining 2. There was a slight decline in the valuations of 0.9% over the year. The average net initial yield on the portfolio has increased slightly to 5% but the yield range remains tight, reflecting the homogenous character of the portfolio being established, regional shopping centers with a dominance in their catchment. The highest increase in value was at C4, our new 40,000 square meter shopping center development, which the value have brought into line with the other shopping centers following its full letting and strong early trading. There were no comparable shopping center sales in the first 6 months of 2019, and the value is therefore referred to growth as acquisition of Lidingö, and CBR EGI's purchase of Port 73 at Haninge, at yields of 4.25% and 4.75%, respectively. Both these deals were completed in 2018. And more recent transactions in the prime retail segment have been restricted to retail parks and city center property. [Deka] acquired 2 retail parks at Hallarna, South of Stockholm and Norrkoping. Both parks included food anchor, for which there is very strong investor demand. And the recent evidence suggests that yield for stand-alone hypermarkets are 5% and even lower. Institutions have been more acquisitive of city center retail with 2 recent examples upside trading at yields below 5%.

On the project front, the 20th of September 2018 saw the opening of C4 located outside Kristianstad. It opened 96% pre-let. And most Scandinavia's major retailers, including H&M, KappAhl, Lindex, New Yorker, Stadium, the Varner Group and Bestseller brands, Clas Ohlson and Afound, which is the latest H&M concept. The adjoining owned hypermarkets let to City Gross have already successfully opened a year earlier and complements the latest Lidl concept situated in the gallery. Footfall and retail sales over the first 9 months have been very encouraging, and C4 has clearly established a strong market position in its 300,000 catchment.

Following the acquisition of Valbo early last year, asset management initiatives are focused on re-merchandising and the preparation of the project to improve the master plan and deliver an extension of around 1,000 meters. Phase 1 of the project is well underway and involves rerouting the mall from a new entrance off the main carpark to form a single loop around the whole center which will significantly improve customer flow. This has involved 17 lease negotiations and will result in new stores for H&M and Intersport. We have also taken back 600 square meters from the Coop hypermarket, which we are in the course of reletting to facilitate the establishment of a new international fashion anchor who have signed. The total project will take almost 2 years to complete by when Valbo will be technically updated and fully refurbished to include new shopfronts, malls, common areas and external façade.

Last year, we opened the new northern extension of Hallarna, Halmstad and 6 units including Pizza Hut, Kjell & Company and Flying Tiger. And by the end of this year, the entire project will be finalized following the completion of the hotel and the relocation of H&M into the former Willy's Supermarket.

So looking at the whole Swedish portfolio, we have now built or refurbished 240,000 square meters, meaning that over 90% of the current floor area is effectively new. This puts us in a very strong position to handle any structural headwinds affecting the retail sector as our modern prime portfolio of regional shopping centers remains highly relevant for both customers and retailers in terms of size, quality, design and merchandising. In these circumstances, we would expect to keep the portfolio fully let. And while rental growth is harder to achieve, the letting team continues to secure uplifts on their negotiations supported by steady tenant demand and indexation, which is currently around 1.5%.

And on that note, I will hand you over to Evert Jan for the financial review.

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Evert Jan van Garderen, Eurocommercial Properties N.V. - Finance Director & Member of Management Board [8]

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Good morning, everybody. In this conference call, I would like to say a few words about the new bank loans we closed during the financial year, the financial implications of the joint venture agreed with AXA Investment Managers, the contribution of the last part of the Woluwe Shopping Center, the completed buyback program and, of course, the proposal to introduce an interim dividend and a final dividend.

Our funding target for the financial year was to enter into new long-term bank loans partly on properties which were not yet financed and to take advantage of the extremely low interest rates. During the financial year, we closed new bank loans for a total amount of almost EUR 485 million. The first step into this direction was taken in July 2018 by the closing of a loan of EUR 248 million granted by Intesa San Paolo, BNP Paribas and UBI to our Italian subsidiary for the financing of Carosello for a term of 8 years. The Belgian subsidiary owning the Woluwe Shopping Center also entered into a EUR 50 million loan granted by ABN AMRO and ING under the same terms and conditions as the 7-year bullet loan entered into in June 2018 with the same banks. This loan was used for the purchase of part of Woluwe Shopping Center from the Belgian insurance company AG and is secured by a mortgage over the property. In March, we entered into 3 new short-term loans with Banca Popolare di Milano and UBI for a total amount of EUR 35 million. And in June 2019, we closed another 2 new bank loans, one 7-year loan with the German Postbank for an amount of SEK 650 million on the C4 Shopping Center in Kristianstad in Sweden at a fixed interest rate of 1.54%. And we also closed a 10-year loan with Berlin Hyp for an amount of EUR 72.5 million on the Val Thoiry Shopping Center near Geneva at a fixed interest rate of 1% -- 1.36%, so 1.36%, which is, of course, a very low coupon. And then we followed that up with a smaller transaction in July with BNP Paribas and ING for an amount of EUR 17 million on the Fiordaliso Shopping Center.

And these deals show that there is still a lot of appetite from the banks to finance retail properties especially first-class assets on good locations. These transactions resulted in an average term of the loan portfolio of 5.5 years at the end of June. And for the 2019 calendar year, there are no noncurrent borrowings maturing at all.

And as you can see in the presentation, the noncurrent loan maturity schedule provides for a sound spread of maturities for the coming years. The interest costs are hedged for 78% at 30 June, which was also the case June last year. And it was done for an average term of 6.5 years, mostly by interest rate swaps, although the number of fixed interest coupons in the loan book increased. Benefiting from the attractive market interest rates, we could maintain the overall interest rate for the loan portfolio at 2.1%. Since our year-end date, the interest rates have fallen further. And today, we are observing 10-year interest rate swap of minus 30 basis points, which is unbelievably low. It also makes forward starting swaps extremely attractive.

The adjusted net equity position of the company stood at EUR 2,222 million and was approximately the same compared to the position we have at 30 June 2018. The net debt portfolio increased by EUR 100 million and amounted to just over EUR 1.9 billion from EUR 1.8 billion at June last year. The net debt-to-adjusted net equity ratio at 30 June 2019 on the basis of proportional consolidation increased to 86% compared to 81% at the end of June. And the net loan to property value increased to 46% compared to 44% reported in June '18. But as announced last month, the net proceeds of the sale of 50% of the shopping center, Passage du Havre, will be used to repay debt, which is mostly the EUR 170 million loan on the building granted by ING. And the rest will be used to prepay short-term loans. And this prepayment will also improve the loan maturity profile as the refinancing need in 2022 for this EUR 170 million is then removed.

After closing of the transaction in October or maybe November, but hopefully October, under the current circumstances, in other words, all else remaining equal, the net loan to value will decrease to 43% and the net debt-to-adjusted net equity ratio will decrease to 77%. The latter is already for decades the important covenant for our bank loans. There is no group loan-to-value ratio as a covenant.

And we thought it to be useful to include a graph in the presentation setting out the loan-to-value ratio over the last 12 years, so just before the start of the financial crisis. And the graph shows that our loan-to-value ratio moved in the range of 35% to 46% and will now go down again. Interesting to see that our average interest rate for the loan book has more than halved over that period, which improves the interest cover ratio immensely. Other property sales are planned to improve the company's loan to value further.

The announced transaction, whereby our Belgian subsidiary will become the owner of the Inno department store in Woluwe Shopping Centre is expected to take place mid-September and will not require any cash or debt from the company as our joint venture partner AG will obtain a minority shareholding in our Belgian subsidiary in exchange for contributing the property.

During the summer, we successfully completed a EUR 20 million buyback program. In total, we bought back 1.7% of the issued share capital at an average price of EUR 23.94. We have not yet decided whether to announce another buyback program or not.

We propose to the Annual General Meeting of shareholders to approve a dividend of EUR 2.18 per depositary receipts payable in cash. And there will also be the option to elect for a stock dividend. Although the issue price of the stock dividend will only be announced on Friday, 1 November, just before the AGM, it is likely that the takeup will be smaller, unless our stock price improves substantially, smaller compared to other years, as we will continue with our policy to have an issue price close to the net asset value per depositary receipt to avoid any dilution.

As announced in our press release on 12 June, we proposed an amendment to our dividend policy and introduced 2 dividends -- 2 dividend payments per year, starting from the current financial year 2019/2020. And this implies an interim dividend payment in April 2020 with a final dividend payment in November 2020. And this policy to offer investors is also -- and including in this policy to offer to investors is also the option to elect for a stock dividend.

And that concludes my brief observations. And now I would like to hand over to the operator to invite participants in the conference call to ask questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [2]

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Can I just say that -- as we said earlier, we have some very learned colleagues with us. So if you want to talk about the leasing market generally, or the recent leasing market, then of course, Valeria is the expert on that. If you want to talk about our research, which we do a huge amount of, not just of tenant reactions but of customer reactions, then talk to Ilaria. And of course, last but by no means least, our Group Economist, Caterina, who will tell you anything you want to know about any economy anywhere, I suspect. But all right, so I'll shut up and leave you to ask the questions.

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Operator [3]

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Your first question comes from the line of Charles Boissier from UBS.

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Charles Boissier, UBS Investment Bank, Research Division - Director and Property Analyst [4]

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Just had 2 questions. The first one is, I think, both in the Swedish and Italian market, you mentioned that rental arrears of around 90 days were below 1%. And I think in the case of Italy, even below 0.5%. And then when we look at the full year group level, I think it's widened quite a bit. So I guess by deduction, it has to be in France or Belgium. I just was wondering if you could comment on that point.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [5]

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Yes. I mean we -- because Tom has hinted one doesn't wish to be moved. But the problem with there on Woluwe was that it was not owned by one person but by many and in funds that they could not spend money. And I'm afraid the arrears position was very bad there, not because the terms were bad, but because I think the organization was not effective. So that's part of the reasons. So actually, Belgium has not come down massively. It's still above 1%. But I think it was -- correct me if I'm wrong, Tom. But I think it was around 6% when we took over, which is just not good enough. So our teams are in there. Our fearsome ladies, led by Christine, will not let people get away with it. So that was a major one. The arrears in France, so I think it's mostly actually Brussels. Pascal, would you confirm?

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Pascal H. Le Goueff, Eurocommercial Properties N.V. - Property Director of France [6]

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Yes. No, the arrears in France are over 12 months. I mentioned 0.6%. We see the same rate as last year. It is quite stable. In fact, overall in the portfolio, we have one tenant who was not paying any rent, it's Søstrene Grene in Amiens. For the rest of the portfolio, they are paying their rent, even if they are late sometimes, but the rents are paid. So I would say there is a real stability in terms of arrears in France, except for one tenant in Amiens.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [7]

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Thank you, Pascal. But Tom, I think...

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Tom R. Newton, Eurocommercial Properties N.V. - Consultant [8]

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I have to jump in, Jeremy. Yes, I mean in terms of the Belgian arrears, they were pretty horrendous. But basically, as Jeremy said, they are being overseen now by our French team, who have got completely stuck. And there are 4 guys who aren't paying rent. There's a Netherlands fashion retailer, there's a local optician, there's actually a Flemish fashion retailer. But other than that, I think there seems that -- so I think it's much better than it was.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [9]

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I mean we're having to do a lot of hard and constructive work in Woluwe, which is succeeding, especially if you look at those turnover numbers for July. 6% was fantastic, so -- no, we're making progress. But like everything else in this world, it requires some hard work. Does that answer your question?

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Charles Boissier, UBS Investment Bank, Research Division - Director and Property Analyst [10]

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Yes. And if I may with the second question, so I think from the press release, you mentioned after the sale of Passage du Havre, that other sales are under negotiation. And I imagine you can't give too much details. But is there anything you can mention about at least the type of assets or the type of locations? I don't know if you've commented anything in the past about it. But if there's anything you didn't mention because I think Passage du Havre was probably quite a logical partial disposal and very well done on this transaction. I'm just wondering what you're thinking in terms of the next...

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [11]

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No, I mean clearly we have other assets of that quality, I mean, the [ETVs] of this world. But we're not at the moment thinking of selling those. But no, I won't comment. All I can say is they will be retail properties. But until -- I hate saying anything until we've got a contract signed. And there are no contracts signed at the moment. So I'm afraid no comment until the deals are done.

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Charles Boissier, UBS Investment Bank, Research Division - Director and Property Analyst [12]

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Okay. And lastly, less a question but just an observation, I'm sure you're getting it quite frequently, so it's nothing very innovative. But just the discussion about LTV, which has been stable for many years, so there's nothing to be concerned about. Obviously, you're pointing that you're selling Passage du Havre at reported value, so that's supporting the reason of the deal. But yes, so apologies, I interrupted you.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [13]

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Sold the property at less than valuation, so you can expect the future sales will also be at valuation.

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Charles Boissier, UBS Investment Bank, Research Division - Director and Property Analyst [14]

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Right. But then just in terms of the LTV, which has been stable, the yields have come down quite a bit. So LTV is about the same level as in 2009. But the yields were 5.6% at that time across the group.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [15]

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I mean the whole yield structure of everything has come down across, I mean, look at the portfolio. But Evert Jan, do you want to make any comment there?

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Evert Jan van Garderen, Eurocommercial Properties N.V. - Finance Director & Member of Management Board [16]

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Well, of course, LTV is always something you can only measure against fair value at the time you measure. And in the chart which is included in the presentation, of course, goes back to 2007, when we have other type of valuations, so -- but of course, let's say from a covenant point of view, that doesn't matter. I mean it is about that covenant. And it's just to say that all we wanted to express is that has been pretty stable. And obviously, we are always in the hands every time of valuations because IFRS is requiring us to report at fair value. I mean that is a fact of life. But of course, what I wanted to express is that we are very much aware of concerns and we have addressed it. On the other hand, we should not forget that, of course, from a cash flow point of view, there has never been so, yes, such a big gap between interest expense and, on the other hand, your rental income. And of course, interest expense is the biggest expense in the P&L of a property company.

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Roberto Fraticelli, Eurocommercial Properties N.V. - Member of Board of Management, Director of Italian Operations & Company Secretary [17]

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Maybe it's also worth mentioning that we sold high-yield properties in Italy at least. So you see the average, that should be lower, but...

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [18]

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But if you look at our portfolio, I mean -- and that was the importance, I think, of Woluwe, that there has been a major change, if you like, in the quality of the portfolio. Yes, we've got a lot of work to do in Woluwe. But it's an extraordinary strong center and a wonderful position. So we have been quietly upgrading the portfolio and our intention is to continue to do it.

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Operator [19]

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Next question comes from the line of Robert Woerdeman from Kempen.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [20]

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This is Robert, Kempen. First question on an interesting comment you made. Future sales will all be done at valuation. Does that mean that we're going to basically see high quality or the higher part or the better part of the portfolio being sold? How should we read this?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [21]

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Well, it depends how you describe it. I mean it's got a very loose description. I mean our smaller, if you like, properties of their kind is very high quality. So no, I mean I've already said that you shouldn't expect that we're suddenly going to sell a chunk of the [ETV] or other things, although in due course, we can. The properties we have on the market at the moment are in the smaller category, if you like. But we still expect them to sell at valuation because the valuations are accurate. And remember, it is the same firms that value those properties that have valued the Passage du Havre. So they don't distinguish. They are accurate valuers. Remember one thing as well, and that is -- which I think is mad, but they have a double-check method of valuing the properties because they look at a 10-year value at the end and they apply an income yield or property yield to that at the end. But they also use a discount rate over that period. They're still using 6% or 7%, notwithstanding bond yields of less than 1%. So they're pretty damn conservative valuation. So there we are. So no, you can't assume we'll be selling big properties at the moment.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [22]

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Okay, that's clear. Second question on the buybacks. It felt that you left the door very wide open for more buybacks. And we've discussed this in the call as well on loan to value, you're pretty high with 43%, also given the fact where we are in the cycle.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [23]

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We don't think that. I know the market does, but we'll see. But go on.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [24]

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Yes. Well, at 43%, the market thinks, which I think is pretty important, thinks that, that's too high.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [25]

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Hang on, Robert, why? Now if you accept, and I know you probably don't, but if you accept that income in companies like ours, like Klépierre, like Unibail and others is pretty solid and you expect therefore as a result that valuations in Europe are going to stay roughly the same, why is 43% too high at a time of the lowest interest rates in living memory, when interest rates are generally fixed? I don't understand why it would suddenly, like parrots around the market, all you say is, "It's too high," whereas 2, 3 years ago, when interest rates were higher, they were perfectly happy. I don't understand. I can understand if we're looking at the U.K. situation, where rents (inaudible) been the same for years, should halve at least and are going to halve and therefore there may be some problems. That is not the case in our market.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [26]

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That's very clear. But let's assume that the 43% is the good figure. Does that mean that future buybacks will be fully funded by disposals? Or how would you basically look at buybacks going forward?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [27]

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I mean certainly it will be preferable, of course, if they're funded by property sales. That is our preference. And obviously, part of our hesitation, if you like, and we're in no hurry, is not to rush into the next phase. I mean it's a dilemma that we'd rather not, despite the comments, increase debt levels. So no, ideally, of course, it should be funded out of property sales. I agree with you.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [28]

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Okay, that's perfectly clear. And then just out of curiosity, how should we read Tom's contribution to the conference call after he resigned a year ago? And I know that he's still with the firm as a consultant. But is this perhaps a forebode that he might be returning? Or how should we read it?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [29]

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You should ask Tom that. But we have a continuation of a wonderful relationship over the years. But Tom decided he'd rather do it in a slightly different, technical way. But Tom, any comment from your end?

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Tom R. Newton, Eurocommercial Properties N.V. - Consultant [30]

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Well, all I'd say is Evert Jan and I have produced a very sort of Netherlands-style contract, which is very straightforward. I do 3 days a week, and that's about it, I'll tell you what.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [31]

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I will stay at 3 days a week.

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Tom R. Newton, Eurocommercial Properties N.V. - Consultant [32]

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Yes. It's a 12-month duration renewable if approved bit.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [33]

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Okay. Last question, I think there's a lot of questions on what will happen in November 2020, when perhaps Mr. Lewis will leave the company as a CEO. I'm pretty sure that you don't have a clue at this point of time what the plan will be. But what kind of line of thinking should we think of with respect to will it be internally solved, externally? Or do you leave everything open? And when do you expect to give the market a bit more information on this?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [34]

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Okay. The new Chief Executive will be an internal appointment. That is absolutely clear. My position, I mean, as you know -- well, with (inaudible) Bas Steins Bisschop and others started the company. And I will continue to have an association with the company, which we're discussing at the moment. So no, not in any day-to-day executive role, of course. But I'm creeping slowly towards the age of 75, so no doubt, I'd like to have a bit of leisure time. But no, I will stay (inaudible) in the company for as long as I possibly can. Because frankly, I love it and I love the people. So you don't get rid of me that quickly. But of course, in an executive role, there will be, which has already internally decided, but there are other ramifications, an internal appointment. You can make your guesses.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [35]

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Okay. And just out of curiosity, why so from an internal appointment? I'm not saying that the team is not right for the job. But I can imagine that there is more, well, external candidates that might be suitable for the job as well.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [36]

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I can't think of anybody more suitable than our internal candidate. And I should say one -- no, I mean that.

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Robert Woerdeman, Kempen & Co. N.V., Research Division - Research Analyst [37]

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Yes.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [38]

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There are very few out there. I know one of your colleagues has now joined a property company, but -- and I won't make any comment on that at all. But no, I mean there are truths to say. The first one is that we have had both at a Board level, even for people who tried to leave this company, couldn't interpret it, such long-term relationships with our employees. And that is no accident, and that is because senior management has an intense sense of loyalty to them and respect for people. It's not they were particularly clever, it's just they trust us and we trust them. And that will continue.

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Operator [39]

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Next question comes from the line of Niko Levikari from ABN AMRO.

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Niko Levikari, ABN AMRO Bank N.V., Research Division - Research Analyst [40]

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I've got a couple of questions regarding the Woluwe and one regarding the funding terms.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [41]

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The line is breaking.

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Niko Levikari, ABN AMRO Bank N.V., Research Division - Research Analyst [42]

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Apologies. Can you hear me now better?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [43]

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Yes. Just don't move.

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Niko Levikari, ABN AMRO Bank N.V., Research Division - Research Analyst [44]

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Okay. Perfect. So first question regarding the funding terms, 1.44% at an average overall for the entire loans signed. So I just wanted to ask how do you see, I'd say, the financing market overall from the project placement upside. Is that something that you've considered? And yes, sorry?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [45]

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Evert Jan, go on.

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Evert Jan van Garderen, Eurocommercial Properties N.V. - Finance Director & Member of Management Board [46]

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Yes, Niko, thank you for your question. Now let's say, of course, private placements are alternatives, which in theory we have. We have never used it. And I think, as I said, we experience still appetite from banks also actually continuing after the summer to finance property, also retail property. So we don't have any particular incentive to look into other alternatives to bank loan financing. And then we have, of course, a few coming up in 2020 in the summer. We're already talking to the banks actually who are currently financing us to see whether we should renew or whether we should maybe do some switch. No, but we're very pleased to, of course, have added 3 new names to our, let's say, bank portfolio, if you want to consider it like that, with recently, of course, from Germany, Postbank; also from Germany, Berlin Hyp; and then Banca Popolare di Milano, which is now a big -- much bigger bank than it was in the past. So no, there's plenty still to choose, which we like because we like diversification. And then no, I don't think you will see us tapping the private placement market.

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Niko Levikari, ABN AMRO Bank N.V., Research Division - Research Analyst [47]

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Okay. That's clear. A follow-up question regarding Woluwe. So you obviously communicated now that Inno sale would close presumably in September. If I recall correctly, you're disregarding that this will be done by the full year results. I was just wondering if there's been any changes in the terms of the agreement. And also regarding the Inno department store and its size, so that's currently 12,000 square meters. Are you expecting now following the release that this will go down, so they will release some of the space for you to redevelop? Any update there?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [48]

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There's no evidence that they will yet, but we'll see.

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Niko Levikari, ABN AMRO Bank N.V., Research Division - Research Analyst [49]

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Okay. But regarding the terms, has there been any change with AG regarding the...

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Evert Jan van Garderen, Eurocommercial Properties N.V. - Finance Director & Member of Management Board [50]

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No, there have been no changes really. Let's say, when we announced that we would buy, let's say, the remaining part of Woluwe. And this was all, let's say, clearly agreed with AG. The fact that we actually do the contribution now in September is purely the result of the fact that the contribution, of course, has to be done at net asset value. And we had a first long financial year for our Belgian subsidiary, which we incorporated when we bought Woluwe. And now we have the audited figures of the Belgian subsidiary and makes, of course, the NAV calculation much more easier and reliable, hence our timing and agreed timetable with AG. And of course, they will participate from mid-September as a minority shareholder in the results of the subsidiary. And of course, the subsidiary has full access to all benefits from the Inno department store.

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Niko Levikari, ABN AMRO Bank N.V., Research Division - Research Analyst [51]

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Last question just regarding the like-for-like figures that were reported for the Belgian. Obviously, indexation renewals, that's been reported a positive. So I'd assume that the small decrease or a dip has been caused by a fall in occupancy level. Is that correct? Or...

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Tom R. Newton, Eurocommercial Properties N.V. - Consultant [52]

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(inaudible) Yes. I mean if you look at the split, you're absolutely right. We have some good indexation. We have some reasonable uplift, 8% uplift on renewals and relettings. But as I did say earlier, we've got quite a lot of deadwood in there, which Valeria is in the process of sorting out. And the fact that our rental growth was 0.5% negative was because of a vacant unit which was subsequently let to Courir.

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [53]

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And that happened exactly just before the 30th of June, an electrical store [builder] left the center in agreement with us. And by then, we've already reletted the store to a French retailer, Courir, who is sitting out and on time for opening by September with another 2 part Courir stores in Belgium.

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Operator [54]

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Next question comes from the line of Peter Papadakos from Green Street.

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Peter Papadakos, Green Street Advisors, LLC, Research Division - MD & Lead Research Analyst [55]

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I have one question. It relates to occupancy cost ratios and also sales. So just on Page 3, where you split out the retail sales growth, fashion is down for the 12 months. Can you remind us, one, if you can give some color in terms of what is the type of OCR for the fashion segment? And the overall OCR is at a historical high for Eurocommercial. How are you thinking about sort of -- in conjunction with the releasing spread, which is back into single digits, how are you thinking about sort of a ceiling for an OCR? Or where would you start to be worried about the OCR potentially limiting further releasing spreads?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [56]

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Valeria, comment?

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [57]

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As you know, yes, I did say that the OCR overall is slightly higher. And that's mainly due to the new contribution of the shopping center Woluwe, which is clearly a slightly different type of shopping center from all of others in our portfolio, not a hypermarket -- a anchor shopping center, a department store, anchor shopping center. I will say almost a downtown shopping center as such, where OCR generally speaking is slightly higher for the boutiques compared to the other critical boutiques, in particular fashion, as you said. But being the -- Woluwe being the main, I would say, sought-after shopping center in Belgium, retailers are prepared to pay higher rent.

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Peter Papadakos, Green Street Advisors, LLC, Research Division - MD & Lead Research Analyst [58]

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Okay. So it's a change in scope, Valeria, as opposed to anything underlying the OCR change?

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [59]

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Sorry, Peter, can you repeat that question?

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Peter Papadakos, Green Street Advisors, LLC, Research Division - MD & Lead Research Analyst [60]

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It's a change in scope. There's no story essentially to what I'm suggesting that the trend in OCR is ticking higher structurally.

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [61]

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No. Absolutely, no. If you look at the all other (inaudible), I am very confident on that.

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Peter Papadakos, Green Street Advisors, LLC, Research Division - MD & Lead Research Analyst [62]

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Okay. Maybe to put it another way -- and I guess that's why the discounts we see in [retail] could be one reason. The fashion, which is a very high contributor to your income, is under pressure. And so as we think about average rent per square meter for the whole center, I guess the highest contributor is under pressure. What makes you -- could you just outline for us what makes you confident that you can -- as you're replacing fashion with lower rent per square meter sectors, you will still be able to achieve medium-term positive rent growth?

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [63]

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The main change from that point of view, we have seen it in France, to be fair. And maybe Pascal wants to comment on that point.

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Pascal H. Le Goueff, Eurocommercial Properties N.V. - Property Director of France [64]

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Maybe I can take the example of (inaudible) and Zara and (inaudible), who are moving (inaudible). If we take the (inaudible) the rent that they used to pay under current rent as a new tenant, we will reduce the rent by around 8%. Definitely, not overrun -- overlook that this is the difference we get from fashion retailer and other sector retailer, such as sports with Courir, such as health and beauty with Rituals or such as Normal, the Danish retailer. So we get a slight reduction of rent when we change a sector -- a change of sector from fashion to another sector.

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [65]

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And that, Peter, as you know, we have discussed in many occasions, is we believe is the long-term aim is to improve in any case the mix. In the strategic places of Passage du Havre, H&M has left because they were going -- well, reinforcing their main flagship store around the (inaudible) frankly for the good of the center. If you went to Passage du Havre a couple days ago, and I was there, the new tenants we have (inaudible) they've increased enormously the footfall of the center. And that's not only Søstrene Grene, it's Normal. It will be Courir. It will be Rituals. And the...

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Pascal H. Le Goueff, Eurocommercial Properties N.V. - Property Director of France [66]

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And Maisons du Monde.

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [67]

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Maisons du Monde, (inaudible).

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Pascal H. Le Goueff, Eurocommercial Properties N.V. - Property Director of France [68]

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Yes.

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Valeria Di Nisio, Eurocommercial Properties N.V. - Property Director of Italy & Group Leasing Director [69]

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And those are all retailers who right at the moment are not present to downtown Paris, a couple of them. So this, we believe, are a very good mix change.

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Operator [70]

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(Operator Instructions) You have another question from Niko Levikari from ABN AMRO.

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Niko Levikari, ABN AMRO Bank N.V., Research Division - Research Analyst [71]

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Okay. Just one more follow-up regarding the Woluwe Centre. I believe previously, you communicated that the extension size will be roughly in the ballpark of 11,600 square meters GLA. And now it was mentioned at 8,500 regarding the retail space. So I was just wondering if there's been -- is this an indication of a reduction in the size of the project? And is there any change in the potential yield on cost that you can expect?

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [72]

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Niko, the project hasn't change at all. The 11,000 was including (inaudible) a large fashion retailer which will be reintegrated. But we've always been talking about an additional retail of 8,000 on a net basis. So nothing has changed. Yes, I mean in terms of yield and cost, I'm not going to put my head on the block and I'm not going to put my head on the block on timing. But in terms of costs, if you assume sort of mid-18s in terms of millions at the moment. And in terms of yield, obviously mid-7s. But we'll see where we go. But I think the project itself has not changed. What we have done and what's cost us a little bit of time is a little bit late in the day that the buckles of authority that are to set the new building back a bit further from the pavement. So that's cost us a bit of time. But nothing has changed in terms of floor area.

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Operator [73]

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Thank you. There are no further questions.

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Jeremy P. Lewis, Eurocommercial Properties N.V. - Chairman of the Management Board & CEO [74]

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Okay. Well, I'll just finish off by saying (inaudible), just saying thank you all very much for listening to us and your questions. But no, we're looking forward to a pretty good next year, I think, so thank you all very much.

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Operator [75]

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Thank you. That does conclude our conference for today. Thank you for participating. You may now all disconnect.