Unibail Rodamco: Consistent Perfomance - Half-year results

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Algemeen advies 24/07/2008 07:40
"In a world of uncertainty, decreasing consumer confidence, increasing inflation and rising cost of capital, Unibail-Rodamco has one of the strongest balance sheets in industry, inflation linked income, secured borrowing costs and above all a unique portfolio of large, high quality shopping centres, the most resilient real estate investment category. I am glad to announce good first half results, of €4.33 in Recurring Earnings Per Share (EPS), a 6.9% growth on H1 2007. We re-iterate our earnings outlook for the year of 7% growth or more in Recurring EPS. Moreover, the uncertainty of the current markets should continue to give us opportunities".

Guillaume Poitrinal - Chief Executive Officer and Chairman of the Management Board

Business performance: The Group is posting H1 2008 results in line with plans, with a 6.9% growth in recurring earnings per share. This performance comes on the back of continuing good like-for-like net rental income growth numbers (7.9% for the shopping centre division, 11.1% for the offices and 4.6% for the C&E business, all pro-forma), and a limited impact of rising interest costs (4.2% on average) due to the Group's interest rate protection policy. Leasing activity continues to be driven by a lack of prime retail space throughout Europe and limited large office space in Paris. Vacancy rates are at historical lows, and this situation is unlikely to change significantly due to limited deliveries in the coming period. Some retail tenants are faced with slowing sales, and are becoming more selective in their expansion policy. Centres with high footfall, offering a large variety of shops and entertainment are clearly the top picks for retailers in the current environment. The Paris office market remains tight, and rental levels for new leases are not showing signs of weakness. The Group's vacant office space dropped significantly over H1, to 5.4%. The Convention and Exhibition division saw the number of exhibitors increase with 4.3% and the number of visitors with 3%, compared to H1 last year.

Portfolio: The size of the portfolio grew with 3.4% to €26.1 Bn and NNNAV per share increased with 1.6% to €172.0. The investment market for shopping centres has seen very few transactions. Notable transactions within the Group's portfolio include the divestment of €741 Mn Dutch high street retail assets and the €607 Mn acquisition of Shopping City Süd (Vienna). Subsequent to the half-year close, the Group announced the €434 Mn acquisition of La Maquinista and Habaneras in Spain. Across the Group's retail division yields increased marginally with 10 bps to 4.9%. The impact of rental increases however has resulted in an overall positive retail revaluation result of €319 Mn (like-for-like, net of investments) for the Group. In the office market yields on the Group's portfolio have moved out on average with 40 basis points (France 60 bps) to 5.9%. Rental growth could not completely offset this and the office portfolio lost €315 Mn in value (like-for-like, net of investments).

Financing: During the first half year, the rating agencies confirmed the Group's A (Standard & Poors') and A-3 (Moody's) ratings, in recognition of the fact that the Group is one of the least indebted property companies in the world.
In H1, the Group successfully secured some €1.23 Bn medium/long term loans (4.4 years at 63 bps) with another €0.4 Bn being finalised.

Changes in Management Board effective on September 1, 2008:
After having served on Unibail-Rodamco's Management Board more than a year with a focus on integration and corporate development, Mr. Joost Bomhoff (59) proposed to the CEO and the Supervisory Board of Unibail-Rodamco, which have accepted, that his role evolve outside the Management Board focusing essentially on sustainability. In addition, Mr. J. Bomhoff will chair the Unibail-Rodamco Academy and in that position will bring his strong knowledge in retail and commercial real estate to the many talented young professionals throughout the Group. In parallel, the Supervisory Board of Unibail-Rodamco has decided to appoint Mr. Bertrand Julien-Laferrière (50), who has accepted, as member of the Management Board, subject to regular approval by the Dutch Authority Financial Markets. Mr. B. Julien-Laferrière will assume the role of Chief Development Officer, responsible for the origination and execution of property development projects, for the construction of new assets and for major restructurings, extensions or refurbishments of existing assets. Mr. B. Julien-Laferrière joined the Group in November 2007 as Chief Executive Officer of Unibail-Rodamco Development, the international development arm of Unibail-Rodamco S.A.

Key consolidated indicators (in € Mn) H1 2008
Unibail-Rodamco H1 2007
Unibail Growth % Growth % like for like

Shopping centres 435 127 7.9%
Offices 115 74 11.1%
Convention & Exhibition and hôtels 49 32 4.6%
Net rental income 599 233 8.1%

Valuation movements and gain on disposals 106 925

Net profit group share 489 1,144
of which net recurring profit 394 187

Recurring earning per share 4.33 € 4.05 € 6.9%

Total distribution (since January 1st) 3.40 € 2.00 € 70.0%

June 30, 2008
Unibail-Rodamco Dec 31, 2007
Unibail-Rodamco %
Fully diluted liquidation Net Asset Value per share 172.0 € 169.3 € 1.6%

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