Corio - Why people buy

Retail

* Annualised contractual rent applying at 31 December 2009 with current market rent being added in case of unlet space.

The annual rent of the retail portfolio (excluding associates) rose to € 374.3 million at year-end 2009. The annual rent rose partly through net acquisitions and disposals and partly through indexation and new and adjusted rental contracts.

* Excluding results of associates.

Net rental income rose 7.3% in 2009 (2008: 14.6%) to € 304.5 million. The increase of € 20.6 million was mainly attributable to acquisitions. The acquisitions like Príncipe Pío in Madrid in June 2009, Grand Littoral shopping centre in Marseille in March 2008, the IKEA unit at Shopville Le Gru in Turin in December 2008 and Tekira in Tekirdağ early 2009, contributed € 15.9 million to net rental income. The handover of new shopping centres or expansions and renovations such as Pieter Vreedeplein in Tilburg and Quais d’Ivry in Ivry-sur-Seine (both 2008) had a net positive effect of € 6.9 million on rental income in 2009. At the same time, € 6.5 million in net rental income was lost through disposals.

The net rental growth of the standing retail properties in both 2008 and 2009 (like-for-like) was 1.7% (2008: 4.0%). This was higher than the 0.3% average consumer price index for the Euro Area and the nominal growth in retail spending, which was 2.0% negative in the EU-15.

The highest net rental growth was achieved in France, through the relatively high indexation and high relettings/renewals. The increase in the Netherlands is always relatively low, due to rent control legislation that does not permit direct adjustment to market rates. Total turnover-based rental income amounted to 0.9% of the theoretical rent. In Spain, despite good new and revised leases, the net like-for-like rental income was negatively affected by a combination of higher vacancies and higher operating expenses.

Turkey is not included because it is a relatively new activity.

Depending on the rent levels (or market rents) and revenue growth in the centre, rent increases or replacement of tenants can be achieved when leases expire. The increases are in excess of the indexation that has already taken place. In 2009 8.1% (2008: 8.1%) of the annual rent was relet or renewed resulting in an 7.2% (2008: 16.6%) higher contractual rent. The lower rate of increase compared with 2008 reflects the economic recession of 2009.

The expiration of retail leases is well spread over the years, and only a relatively small proportion of 8% will qualify for renewal or reletting in 2010.

The occupancy rates in the Netherlands and Italy were strong at year end 2009. The lower occupancy in France resulted mainly from restructuring at Grand Littoral in Marseille, La Galerie in Mulhouse and Quais d’ Ivry in Ivry-sur-Seine. The decrease in occupancy in Spain is mainly the result of optimising the tenant mix in the shopping centres. Strategic vacancy accounted for almost 1% point of the vacancy number presented.

Source: Annual Report 2009, Chapter Review of Operations, page 39 (PDF, 6.362 kB)

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