Hello, and welcome to the Klépierre 2020 Full Year Earnings Call. My name is Josh, and I will be your coordinator for today's event. Please note that this conference is being recorded. For the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the call. [Operator Instructions] I will now hand you over to your host, Jean-Marc Jestin, CEO of Klépierre, to begin today's conference. Thank you.

Good morning, everyone, and thank you for joining us this morning. I am happy to be here with Jean-Michel Gault, our CFO; and Beñat Ortega, our Chief Operating Officer, to present Klépierre’s 2020 full year earnings. 2020 has been a challenging year for the company, our colleagues and communities where we serve. Our company has not been immune to the exceptional health situation we have known. Due to lockdown orders placed on them, our malls have been closed several times in almost all geographies for an aggregate amount of more than two months. This is the equivalent of 660,000 trading days for our retailers, and this has obviously disrupted their operations and caused embarrassment to our shoppers. We dealt with this situation in the best interest of all our stakeholders. We have been solid, pragmatic and resistant throughout the year. We have been able to swiftly adapt to closures and reopenings to ensure the highest level of safety to our shoppers and to support our retailers. We owe this to all our teams at Klépierre, which have demonstrated incredible adaptation capabilities over the years. And I am truly thankful for their hard work and their unwavering commitment. This past year, we have been able to generate €690 million in cash flow, to return €628 million of cash to our shareholders, to raise €1.5 billion of new financing at exceptionally good conditions, to cut OpEx and CapEx by roughly €200 million and to keep our debt broadly stable, and finally, last but not least, to gain worldwide recognition for our extra financial performance. And I think these are remarkable achievements given the circumstances. Let me now walk through our earnings. In 2020, our net current cash flow reached €1.97 per share. This excludes the impact of the IFRS 16 straight-line amortization of the rent abatement, which represents €0.08. In other words, this €1.97 net current cash flow per share reflects the full impact of the COVID crisis and stands €0.85 then compared to 2019. And to make it simple, the reduction in our cash flow per share reflects the combination of three elements, rent abatements for €0.44, provision for credit losses for €0.38 and lower variable income for €0.09. The various lockdowns have impacted our collection capability. Nevertheless, for the full year, our collection rate is expected to stand at 92% after the abatements that we have granted, i.e., 84% of the rents contractually due. This reflects administrative closures we have faced in Q2 and Q4 with key abatement collection rates reaching 63% and 74%, respectively. For this quarter only, when stores were closed, we waived part of the rents to our tenants with a view to maximizing rent collection, extended – extending targeted leases and settling dispute on long-term rents. By contrast, collections were remarkably higher when stores were reopened as in Q3, where it reached 92%. During open periods of Q4, the collection rate was quite similar, which shows a rapid recovery of our business when malls reopened. Variable revenues, including sales-based rent, CapEx income, specialty leasing income mainly declined by 26% as a consequence of our malls being closed. Overall, we have been able to contain the drop in our net rental income to 22.5% after excluding the impact of last year's disposals and ForEx. To mitigate the drop in revenues, we curbed cash outflows. Altogether, OpEx, G&A and CapEx have been cut by roughly €200 million. On OpEx first, service charges have been reduced by €42 million, as we have been very careful in limiting them in consideration of the financial situation of our retailers. G&A have been reduced by approximately 20% over the full year. This represents savings of €32 million coming from lower payroll and other administrative expenses. Lower staff expenditures reflects reduced variable compensation as well as a conservative approach towards the replacement of departing staff. Besides, we have also taken strong actions to reduce CapEx. We only spent €178 million on like-for-like and development CapEx in 2020. This is €129 million less than last year, and I think it is a quite contained amount for a company of our size. We will remain extremely vigilant. In 2021, we expect to spend €94 million. This includes mostly the redevelopment of Gran Reno in Italy, the end of the Hoog Catharijne redevelopment and new Primark stores that we plan to open in France and Italy. Our conservative take on CapEx explain why, despite the decline in cash flow, our net debt has been virtually stable, which I think is a strong achievement in this environment. Our debt ratios have increased, but they remain well under control with an LTV of 41.4%, a net debt-to-EBITDA of 10.8x and interest coverage ratio of 7.3x. On the refinancing side, we have been also very active to reinforce our liquidity position and secure future refinancing. And we did it at outstanding conditions. In 2020, we have raised €1.5 billion in bonds at an average yield of 1.5% for close to 10 years maturity. Combined with new lines of revolving credit facilities of €1.4 billion, we now have €3.2 billion of liquidity with an average maturity of five years. This means that our refinancing needs are fully covered until early May 2024. The financial discipline we have exercised for years put us in a comfortable position to face current challenges. We have adapted the company to the crisis and demonstrated our own business, and I think that these are reasons to be optimistic. First, our business is extremely resilient and shows a very rapid pace of recovery. Each time our malls reopen, retailer sales pick up very quickly. They reached 90% of last year level in June and July after the first lockdown and the same performance was once more achieved in December. In France, for instance, retailer sales of open stores grew by 1% in December after the November lockdown. Despite the persistence of some health measures, the closure of restaurants, cinemas and fitness, which are important for footfall and retail. It is what resilience is. Once allowed, people are eager to go out and to come to our malls to shop, meet and connect. There are, of course some discrepancies between shopping centers and some malls rely more on transportation hubs, office workers, students or tourists. This malls have registered a softer recovery. Note we'll differentiate all countries that have bounced back at a satisfactory pace. On the leasing side, the group engaged in negotiation with retailers to offer rent concessions when needed in order to optimize rent collections and/or to extend leases on targeting the stores. Circa 5,000 bids have been agreed with retailers, and the group obtained an average 1.6 year extension for 1,900 leases. And although, leasing activity was focused mainly on agreeing deals with retailers, we continue to sign structurally important leases. The pace of signature has slowed down compared to last year for obvious reasons, but we have, anyway, signed 900 leases with a 4.5% reversion. To name but a few, we have signed this year of six new stores with Primark. As we have done in the past through the rightsizing of hypermarkets that are refocusing their activity on grocery, we are able to find the needed space for the highly differentiating fashion retailer. Together with 11 stores we already have with Primark, we almost have 20 of their stores, demonstrating the relevance of our platform, the quality of our asset base, which will become even more relevant in the current retail landscape. Besides, we still benefit from some retailers that continue to expand their store network. Hence, we have opened roughly 40 stores with retailers such as Hubside, Huawei, Snipes, Courir or Normal among others. In 2020, Klépierre malls continue to serve their communities actively and bring value to the territories in which they are anchored. With COVID-related charities to welcome these women to collect food, blood or clothing towards testing campaigns, et cetera, the group were contributing to local employment with dedicated fairs, welcoming local initiatives and organizing drives for the benefit of local charities. And among its operation, the group accelerated the delivery of its ambitious nonfinancial road map. Over the year, we reduced the energy intensity of our shopping centers by 16% and greenhouse gas by 30%. Thanks to this outstanding achievement, Klépierre has been recognized as a worldwide leader in CSR by several nonfinancial operating agencies. First, GRESB, the ESG benchmark for real estate and infrastructure investments named Klépierre for the 2020 Category Global REIT Listing Leader on its performance and strategy worldwide, number one. The Science-Based Target initiative also approved Klépierre environmental approach and low-carbon commitments with the highest possible level. And lastly, the group made it again to the CDP's A-list, which gathered the most advanced company in the fight against climate change. We are not only proud to be awarded. We are deeply engaged and convinced our business is sustainable and we now prove it every year. That was for 2020, and I cannot wait to turn the page and move towards 2021. We are still impacted by health measures as roughly 60% of our stores are currently closed. Besides the pace and efficiency of the vaccination rollout makes the end date of those restrictive measures uncertain. We take the assumption they will not extend beyond March 2021, which would represent an aggregate closure period of 1.5 months for our portfolio and cost us €0.25 in cash flow. Based on this assumption, we expect net current cash flow to reach €1.9 per share in 2021, excluding the impact of IFRS 16. And as I said earlier, our financial position is very strong. A tight management of our balance sheet and our development pipeline has always provided us with the flexibility to pay a dividend to our shareholders. And this year, again, we have the flexibility. But to benefit from a higher visibility on the resumption of our activities, we have decided to call the Annual General Meeting on June 17 and defer our decision on the distribution proposal to early May. To conclude, once this crisis is over, we know physical retail will regain traction and trigger a recovery of our earnings. Each time our malls reopened, we have experienced a swift pickup in terms of sales, footfall and rent collection. I am confident this will be the case in the future. Retailers will continue to refocus their operation on the best stores and the most attractive retail destination. We are those places. We know that we own the proper assets and have the perfect team to support the retail transformation. And now I will end my remarks on this note and open the floor to questions.

Thank you very much. [Operator Instructions] Our first question comes from the line of Bart Gysens from Morgan Stanley. Bart, please go ahead. Your line is now unmuted.

Hi, good morning. Thank you. Jean-Marc, I think we understand the difficulty when you provide guidance that it's very hard to have strong visibility for 2021, but I have two questions. Firstly, regarding the dividend. I think understandable how you delay the decision. But for us to understand a little bit where the range could be, we've seen some of your peers cutting the dividend entirely. Do you think under current REIT regulations or restrictions, without giving clarity on what you're currently thinking, but do you think this could potentially also be a zero dividend? Would that be possible under the REIT regime or to protect your REIT regime, you think? Or is there a minimum level that you think you will have to pay?

Thank you, Bart, for your question. You turned around the corner on the dividend. I think what we wanted to say to the market is, even though the current environment is uncertain, we think it's wise to try to give a guidance based on certain clear assumptions. So we gave a guidance of €1.9, which is slightly below – very – quite equivalent to what we have in 2020 with €1.97. This is subject to changes if the situation evolve differently, but I think the – it is interesting to have the perspective. When it comes to the dividend, the decision will be taken in May. So by definition, there is no decision today we can share with you. On the technical question for the REIT regime obligation, as it has been explained many times, the obligation to pay a dividend is capped at the net income of the holding company. And the net income of the holding company, Klépierre SA, will be negative this year which means technically that we have – we are not obliged to pay any dividend under the REIT regime. And the amount that we have accumulated will be pushed to the next year. So technically, we have no obligation to pay a dividend under the REIT regime. And when we look at our peers at different situations, some have purely eliminated their dividend forever. Some are forced to pay a dividend because of the REIT regime. Here we have the full flexibility. We provide guidance under certain assumptions. And I think we give you a view of what is the flexibility we have.

Yes, that’s clear. Thank you. And then my other question is around your guidance that you talked about the €1.90. Look, you say that this is based on assumption that there will be no more restrictions after the first quarter. But could you provide us more building blocks on what else you have assumed on recovery rates? How quickly you think sales will come back and kind of variable income? Because I think guiding to a lower earnings number for 2021 than for 2020, I appreciate in 2020, you had two good quarters and two challenged quarters effectively. But it looks like, if you're assuming that you're going to have one challenged quarter in 2021 and then three better quarters, just trying to understand why your guidance for 2021 is lower than on an EPS basis then for 2020. Thank you.

Okay. Thank you, Bart, again. I think the most important element to take into consideration to assess the point is the following. We have known in 2020 different closure period all over Europe. So what we are telling you is that, when we accumulate all the closing period in 2020, in all the countries, this is the equivalent of 2.1 months of closing of the whole portfolio. And in the Q – in 2021, in the Q1, we have assumed that we have 1.5 months of closing for the whole portfolio. So as you can imagine, the gap between the closing period in 2020 and 2021is not that big. So it looks a little bit counterintuitive, but in reality, the let – the closing period in Q1 2021, because it concerns more countries at the same period of time, it's pretty equivalent to what we have on an aggregate basis suffered in 202. And when it comes to the rest, not to be too detailed, we have taken assumptions regarding the recovery of footfall and sales and rent collection. And we have basically taken the identical or similar pattern to what we have experienced in 2021 when the malls were reopened. So we have made that exercise. This is not rocket science, but this is probably the best estimate we can provide for the market based on our, I would say, benchmark in 2020.

Great. That’s very clear. Thank you.

Thank you.

Thank you very much. Our next question comes from the line of Florent Laroche-Joubert from ODDO. Florent, please go ahead. Your line is now unmuted.

Yes. Thank you, everyone, and thank you very much for this presentation. So I would have two questions. So my first question will be on the dividend. So are you attached this year to pay a cash dividend? Or would you be open to contemplate a script dividend?

Thank you, Florent, for your question. I want to restate my statement. The Board has not made the decision, so all options are on the table. You will know in due course, what has been decided, so this will be provided early May, 45 days before the AGM. And we are looking forward to provide that information in due course.

Okay. But – okay. So that means that you can contemplate all options. And we can imagine everything on what you can pay and how you can pay this dividend. Okay. So maybe another question on your guidance for 2021. Have you taken into account the fact that the French state can help retailers to pay their rents? And if no, does that mean that you could be able to increase your guidance for 2021 in the coming months if we have positive discussions with the French states?

Once more, I think what we wanted to do is provide a guidance and reserve our decision on the dividend. I think this is a proper way to do for the market to understand the perspective when the decision will be taken. When it comes to the guidance, we have seen the Prime Minister in France making a statement that retailers will be supported during that period of time when the malls of more than 20,000 square meters are closed. They promise to cover 70% of their fixed cost, which will be a great help to pay their rent. But as always, it remains to be seen, okay? So we have taken our own assumptions on rent collection for the closing period based on our experience of 2020 and the relation we have with our retailers. So we have already closed thousands of deals for 2020 for the same type of event. So we have taken our own assumptions. And once more, if we have support from the government in France to the retailers, this probably will help in the rent collection, but we have not taken a specific view on that because we don’t know yet.

Okay. Thank you very much.

Thank you. Our next question comes from the line of Pierre Clouard from Kepler. Please go ahead. Your line is now unmuted.

Thank you. Not Klepierre, but Kepler Cheuvreux, but I think he understood. Yes, just to come back on the guidance and on the point made by Florent, just to make sure that you did not take any assumptions on potential tax credit for 2021, but also for 2020, I imagine. So that’s the first one. And maybe another point on the guidance is probably – it would be nice to have the split between the rent abatements and the provisions for credit losses that you took in your guidance, just to see if we can expect the same amount of provisions for 2021. And the second question is on disposals. So did you set the target for your disposals in 2021 onwards? Or are you under negotiations with potential buyers or whatever? So it would be nice to have more color on disposals.

Well, I think, on the guidance, we appreciate everybody want to understand how we did it, probably because nobody did in the industry. We – basically, what we have done – and I repeat myself, sorry for that – we have taken the benchmark of 2020, what type of deal we have been able to reach with our retailers on closing period. And this you can read in our financial statement of 2020. We have, basically, in 2020, provided €126 million rent abatements, and we have invoiced rent and service charge for the whole year of €1.3 billion. So you can do the math based on two months of closing. And in 2021, I said we had 1.5 months. So I’m not going to itemize all the ingredients of our guidance. But basically, what we have done is taken the benchmark of 2020 and projected. When it comes to the disposal, we have been – sorry, we have been successful in 2020 to dispose for €156 million of small assets. It was quite a challenge because they have been sold, and the money has been transferred to our account when the malls were physically closed. So it shows the appetite of the investors for those types of assets. We – as you know, we never give any guidance on disposal for next year. We have not factored anything specific in the guidance regarding disposals. We are committed to continue strengthening our portfolio and to sell our noncore assets. 2020 has been a little bit lower than 2019 in terms of disposal volume, but we are confident that this will resume when the market reopens.

And just a quick follow-up on this one. What countries are probably more open than the others today?

It’s – I think it’s a little bit everywhere. In fact, we have been – in 2020, it was many, the French market, we have sold roughly only in France, I think, the €156 million. The year before, it was Hungary and Spain. Next year is difficult to say. I think for the noncore assets, we are selling – they are good assets, very stabilized assets. They have very sticky cash flows. They are small size. So there are different investors, a little bit everywhere in Europe, to buy those assets. If you remember, I think, 12 months ago, we sold an asset in Almere, in the Netherlands to a private owner or investor. So I think the type of assets we are selling a little bit everywhere in Europe, there is a market for that. So it may change from the year to another, but there is no specific geography, which is more dynamic today than Europe.

Okay. Thank you.

Thank you. Welcome.

Our next question comes from the line of Rub Virdee from Green Street. Rub, please go ahead. Your line is now unmuted.

Good morning, gentlemen. A couple of questions, please. So a little bit more broadly on your capital allocation priorities. So what are they now? How high up or otherwise is deleveraging in your balance sheet? Do you have a target for net debt EBITDA? Obviously, I can see what you’ve done with the development pipeline, but what else are you thinking? The first question.

Okay. Thank you for your question. I think the – when we look at the leverage, okay, we are taking into account different elements. First of all, Klepierre has been committed and is committed to keep the – for given portfolio to keep the net debt flat. This year, it has slightly increased due to the loss of cash flow. You will notice that it doesn’t – it increased less than the loss of cash flow, so we have been very good at limiting the outflow. So this is where we are strong compared to other peers. We have a full control of our outflows. And I think this gives some comfort. The net debt-to-EBITDA jumped from 8 to 10 based on the 2020 EBITDA. If we do the exercise, which is surely theoretical, of taking out from the EBITDA loss the abatements and the rent provision in excess of a normal year, the net debt-to-EBITDA will be 8.4x, so would be quite equivalent, but this is probably a little bit theoretical as we speak. The most important element that differentiates us from others is that the interest coverage ratio is 7.5x. And I think this is one of the strongest parameter today in the industry, in Continental Europe. So of course, we are looking at each and every year – parameter. But the most important for us is to keep our net debt stable or declining and to continue allocating our CapEx very carefully and to commit only when we are sure that the projects are profitable and then we have a clear visibility on the cash flows.

Yes. It was very clear, actually. And secondly, if you can just talk a little bit about the investment markets across Europe. So a follow-on from the last question. So I know there’s some rays of sunshine in the Nordics, but what are you seeing elsewhere? Obviously, some of your peers, quite a few of them, are trying to find an exit in some of the markets. But where are you seeing buyers returning?

When it comes to the investment market, there are people who are more relevant probably to discuss it. We are not forced to sell. I think the big difference between – in the investment market is timing, okay? Timing is of the essence, okay? If you are not at the right timing, probably this is more difficult to dispose. So we have a disposal program of noncore assets, and we have always been able to manage the timing. Today, there are – we have seen transactions of, I would say, noncore assets in some of our peers, which are good assets. And the transaction levels have been, I would say, quite in line with the present value, so the book value. So – and when we look at Klepierre, we sold €156 million, 3% above book value. So I think all is about timing. And timing today is not probably the best. The investment market, direct investment market, is quiet. So you are better and not being in the rush to sell. If you have to sell, this will be probably more complicated. This is not where we are, and we are, once more, very proud not to have this pressure on our shoulder and to be able to continue generating cash flow and keeping our net debt stable. That’s the big message I want to pass.

Thank you.

Thank you. Welcome.

Thank you very much. Our next question comes from the line of Jaap Kuin from Kempen. Please go ahead. Your line is now unmuted.

Hi. Thanks. I think two small questions. We’ve talked a lot about guidance and rent collection, but maybe one more on that. So on rent collection for 2021, I think that might be part of the kind of miss versus analyst estimates, is that probably people are – have priced in a better recovery for 2021. So could you kind of share your ideas on rent collections for this year, for 2021, and how you feel that is shaping up and also how that ties into your NRI margin? And if you feel that then should come out perhaps close to where it was in 2020? And my second question would be, again, on leverage, maybe just for record to reconfirm that the – that your covenants are based on your LTV, including transfer tax and let’s say, assuming that the negative trend in asset values is not broken, yes, where do you feel – how much time you basically have to find ways to manage your leverage before you get into uncomfortable territory?

Okay. So this, I will leave to Jean-Michel to make you more comfortable about our LTV. When it comes to rent collection, I'm sorry, I would love to give you more clarity on 2021. I'll take the risk to repeat myself. In 2020, when malls are reopened, the rent collection reached 93%. When the malls are closed, we have to make deals and the rent collection is lower all-in for two months of rent of closure. We have collected 84% of the rent for the whole year, okay? We have, as I said, taken the view for 2021 of similar pattern because we believe that when the shops are reopened, the malls are reopened, the rent collection is more or less slightly below a normal year but reach comfortable levels. The question mark is more on the level of rents you collect during the lockdown period. But – that's why I'm not going to break it down and itemize too much. I think you have from 2020 enough elements to make your calculations for 2021.

Okay. So I think the next one on the covenant. As you know, the covenant on our banking facilities, which represent a limited part of our €9 billion of debt, because most of refinancing are bonds, and they don't have a covenant, it's fixed at 60%. So consider that, as of today, we still have a very substantial rule of maneuver. And for us, the issue is not there. We – it was more a consideration of rating, but I just remember that when it comes to the bonds, we have a limit for being at 42% and equivalent LTV, I'm speaking of Klepierre, I'm not speaking of S&P. So in Klepierre, we are being correspond to 43% LTV. And for BBB+, which is a possibility, because you know that at BBB+ you still have a very good rating and a very deep and good access to the financing market, that should be at 48%. But I have to add to what Jean-Marc already mentioned before, we have managed to cover all our refinancing needs until May 2024. So that is to say that, for the time being, whatever the rating, we don't need to access to the market. So now we consider that we are not under pressure at all on this front.

Okay. So to range it, fine for me, I guess. Maybe just coming back to the previous question. So obviously, currently, the uptick in vacancy has not been that bad, considering what a terrible year 2020 was. Obviously, I think across Europe, bankruptcies have been at a low due to all the government support. I mean – and can you maybe share your expectations on what could happen when maybe that support comes to an end? And what your leasing discussions have been in kind of the early months of this year? So January, February. Do you see a change in tone or in the kind of the way tenants approach renewals?

Thank you. I think it's a very good and a fair question. The occupancy has decreased, not significantly in 2020, but by 25%, if I remember well. We have – we expect this to deteriorate a little bit more in 2021 because there is always a lagging effect of the crisis from 2020 to 2021. So we have taken assumptions, which are included in the guidance. And I don't want to detail more about that. When it comes to the retailer environment, unfortunately, we all get used to closing, reopening and negotiating and striking a deal. This is painful, but this is something we are now used to do. It takes a lot of time for the tenants and for us to go through the documentation and agree. But I would say it's not the first time. This is not the second time. This is not the third time. So I think everybody gets used. If we want to look at it positively. And if we look at the French market, only shopping malls above 20,000 square meters are closed. The high street is open, which is unfair to our opinion, and we don't understand it. But if we look from a tenant perspective, they are 50% to 60% of their shops open. So they are trading in much better conditions than in 2020 when everything was closed and 100% of their shops were closed. So depending how you look at life positively or negatively, I think there is no sign today that the environment has worsened. I think the – we have to be careful. We have to – we see when the lockdowns are lifted, our business will resume. But once more, based on 2020, the people come back to the malls. That's where they can shop, meet and connect. And footfall were 85%, sales were 91% compared to last year. So I think the tenants have also understood, the retailers have also understood that there is a curve of recovery quite fast after reopening. So the atmosphere is not fantastically positive positive, but not extremely negative, I would say.

Great. Thanks.

We have a question from the webcast. In regard to asset holdings in Turkey, given political and social turmoil, which may undermine economic growth in the country, is the company considering any measures to mitigate the potential impact of this?

That's a good question. Turkey is not core to us. This is something we have inherited from the merger with Corio. This is a tough country. And I think the most important element in – to take into consideration is the currency volatility. In fact, from a retail perspective, this is a very strong country. The population is growing fast, is young, and the middle class average revenue per capita is increasing on the medium and long term quite significantly. So the fundamental of the – is good, but the main issue we have here is the currency. And the currency is so volatile in euro and U.S. dollar terms. But when we look at it in euro terms, that's a little bit disappointing. So I would say we – this is not core to us. That's why I'm not going to say more on that. This represents 1% or 1.5% of our portfolio, 1%. It's still 1%, but it's not that big.

We do have another question on the line. It comes from Kai Klose from Berenberg. Kai, please go ahead. Your line is now unmuted.

Yes. Very good morning. I've got a quick question on Page 18 of the presentation regarding the retailers – retailer sales of open shops. Could you maybe give a bit more details why the range was so wide between countries by countries? Because there might be some obvious reasons because of low tourism. But if we now expect in 2021 the restriction to be lifted a bit more parallel, could we expect a bit more similar development in retailer sales in 2021? Or are there any material differences you would expect to remain?

Okay. Thank you for the question. So when we look at Page 18, I don't really look at it the way you look at it. I think the average, okay, is 90%. This is high. This is a high level. This is positive, okay? And 87%, that's high. So – but now to answer to your question and give you a little bit more color, okay, there are – the countries where it's a little bit lagging behind is Iberia. And this is mainly due to the government decision. There is – there are a lot of them in Spain, but there is a lot of restrictions when it comes to travel between cities and even between big cities. So the malls are open. They are trading at 78% compared to last year, but we have less footfall in Iberia due to the travel restriction. We think that this travel restriction will be lifted, and this will be more in line with the others, but this is my gut feeling. There is one specific shopping center in Spain where we are suffering a little bit more that's what we said, it's in Barcelona. As you know, Barcelona is very dependent on tourists. And clearly, the recovery of Barcelona shopping malls will be probably a little bit later in 2021 than the others. But once more, I think the numbers speak by themselves. The recovery is high everywhere. There are some discrepancies, but they are, I would say, not marginal, but they are – everything is quite consistent.

Understood. Thanks very much. And a quick second question on Page 13 of the presentation where you show the reduction of CapEx. Can we expect the postponed or, let's say, the reduced CapEx in 2020 to be strengthened in 2022 or later? Or would you expect an overall level of CapEx to pick up low for a little bit longer?

Well, I think the answer is on the development pipeline. We have roughly €2 billion pipeline, development pipeline. There are different projects in it. There are many extensions to our shopping malls. The size of each development pipeline project is rather limited. So we can face it quite well and contain the outflows. So the question will be how long – how many years will we develop this development pipeline. In the current circumstances, we have a slowdown and halted many projects, but they can be restarted when we'll have more visibility and probably a better understanding of the cash flow. So there is no normative level of CapEx every year. I think the main takeaway that the level of like-for-like CapEx and the development CapEx for a company of our size is pretty limited. But the year before was €300 million, which was the average historically of what we are spending every year in development and like-for-like CapEx.

Understood.

Our next question comes from the line of Marcus Phayre-Mudge from BMO Global Asset Management. Marcus, please go ahead. Your line is now unmated.

Thank you. Good morning gentlemen and thank you for your presentation. As a shareholder, clearly, the dividend news is crucial to us. I just want to be very clear on one point. If you are correct in your expectations for 2021, i.e., the lockdown is lifted and you see the same response as you saw at the end of the previous lockdowns, i.e. something you are quite positive about, is that the key determinant factor in terms of the dividend payment? Or is it actually regardless of how successfully the malls reopened? Because it's quite a small window. You'll just have Easter and maybe a bit of May before the Board make the decision. Or is it the fact that, as you've alluded to, you all want to keep your balance sheet management extremely tight even though you have no refinancing issues, as you've made very clear. I'm just trying to – it's crucial for shareholders, I think, to have as much clarity as possible as to what will drive the Board's decision. I can't quite work out given that you've given us the guidance for your EPS for 2021 under a set of circumstances. If those circumstances come to fruition quite quickly, April and May, are you then saying, yes, we will feel comfortable about a decent dividend payment. I'm sorry to try and push you on this, but it's – I know it feels prudent to leave investors in the dark, but it's something which we need more clarification, please.

Thank you, Marcus, for your question. I don't want to be offending. I think the decision has not been taken. We have the flexibility to pay a dividend, and the Board has decided to wait for the resumption of operations to make a proposal to the AGM. That's what it is. And I think providing a guidance based on certain assumptions that give more comfort to see what could be the outcome. But once more, the decision has not been taken. And I thought my role to make – to tell you about the decision that has not been taken. But we have always had the flexibility to pay a dividend. In 2020, we have been the only company in the universe of REIT in Continental Europe to pay a full dividend. That's what we have done. And most of them, they have eliminated or divided completely thereby three times or four times their dividend. In 2020, we have the flexibility to pay full dividend. That's the message. We have the flexibility. And that's made the big difference between, I would say, Klépierre and some other peers. And I'm sorry not to provide you more clarity, but that's where we are. You just have to wait until May. Sorry for that, if you can't wait, but that's probably the wiser decision in the current environment.

Okay. I understand that. What I was getting at was trying to understand the drivers behind it. But I think the fact of the matter is you're not able at this point to give me more color. So that's accepted, but I think it's just the – it's the – for us, it's understanding what is the motivation and what will drive a partial or full payout. But anyway, we'll leave it there. Thank you for the additional color, and yes, thank you.

Okay. Thank you, Marcus. But I think, in fact, in your questions, you have all the answers that are – all the ingredients to make a decision. And in your question, you have all the elements that the Board will take into consideration to make the wiser decision on the distribution.

Indeed. Thank you.

Okay. Thank you.

We have another question from the webcast. Could you please provide some color on the impairment or credit loss, how much is due to bankrupt tenants which could impact balance sheet versus tenants where you have not been able to agree on REIT.

That's a fair question. I won't itemize too much on that. I think the main takeaway is that both abatements and the credit losses they confirm a lockdown period when shops were closed. There is a little bit more on the credit loss for a period when stores were reopened, just because we said that when stores were reopened the rent collection was 93%. So we are missing a little bit compared to the standard of Klépierre, which, if you remember, the rent collection at Klépierre historically stands at 98.5% or even 99%, if I remember when in 2021. So there is a little bit of leakage in the opening period, okay, but the most of the each is regarding the closing period, and both are concentrated in Q1 and Q4 based on our negotiation with the tenants and our assessment of the credit of our retailers. And it's mainly concerning restaurants, fitness, cinemas, a little bit of bankrupt tenants and difficult tenants. So – and restaurants, probably I missed this one. So it's also very concentrated on certain categories of retailers that are not reopening or which are closed for much longer period of time.

Our next question comes from the line of Markus Kulessa from Bank of America. Markus, please go ahead. Your line is now unmated.

Hi, good morning. Sorry to come back very quickly on the dividend maybe a last time, and it's more a theoretical question, and I understand you haven't decided anything. Just to know on your REIT regime and any other regulation, would – can you until repay 100% dividend in sales?

I don't know if you were there at the beginning. So we have no obligation to pay a dividend as a REIT company for 2020, number one. We have the flexibility to pay a dividend. And if we decide, so we have the technical instrument to do it. I don't want to be too specific on that, but there is no issue there. Everything has been checked. And we have no constraints in a way to pay or not to pay. And it can be any form of dividend. But once more, this is a decision that has not been taken, and this will be done in due course, including the form of it.

Okay. Yes, understood.

And sorry for our drawback. So many questions about the dividend. So my answers are roughly the same. And I apologize for repeating myself.

Yes. It was just on the technicality. So I understood it was, yes. But another question. On the new leases you signed in 2020, I understand you have a 4% positive rent uplift. Does it include the Primark signings you did during the year?

No, no. No, the Primark on four hypermarkets, we bought specifically in Italy. So there was no base of comparison. So they are not included for the reversion calculation.

Thank you. And a bit forward-looking question. If we assume in 2022 we have – everything is reopened, we have all the bad debt provision behind us, where do you feel your rents on the like-for-like basis versus 2019?

So in the perspective we are working with is, as we say, the following

we expect the vaccination rollout to be effective by summer. And I think the – we believe that the lockdowns will be lifted at the end of Q1. This is our estimate today. It may be different, but that's our estimate. We are – we think that the pace of recovery will be steady in 2021. The real year where we will see the growth of the cash flows based on where we stand 2020 will be, I would say, the second half of 2021 and the first half of 2022. So this year of 12 months will be between two years. So I think once we were not expected is to have new lockdowns in Q1 2021, we thought initially that the recovery will be faster. And probably the starting point of the recovery will be after the Q1 2021. What will not be repeated in the future will be the abatements. The abatements are the deals we make with retailers on closing period. So we can reasonably expect that those abatements will gradually but very quickly not repeat. The – for the rent collection, probably moving from 92% to the standard will take some time, but here you can probably see what is in front of as we – the main takeaway that the rent abatements will not be repeated when the stores are reopened.

So if you start from a 100 basis in 2019, it means in 2022 a full year where everything is normal, you come back to 100? Or is there a rent reduction embedded already in all the agreement you have signed with your tenants?

Today, the – in reality, the deals we have signed in 2020, which is a specific year where we have to deal with lease renewals in 2020 and lease renewal in advance of 2021, the reversion is 4.5% average, okay? They are plus and minus, but the outcome is 4.5%. So the – what we are seeing – we have been very focused on is to make sure that we do the re-leasing and the renewals in 2020 and 2021 in the best conditions. And we have been, I would say, pretty successful so far. So we are – what will probably not repeat in the next years in the rent abatement, which is a significant portion of the decrease of the cash flow in 2021 – in 2020 and also first half of 2021.

Okay. Thank you.

Our next question comes from the line of Sander Bunck from Barclays. Sander, please go ahead, your line is now unmuted.

Hi team, good morning; and thanks very much. Two questions for me as well, please. The first one is on cost savings and CapEx. I see that you actually made really decent progress in terms of cost savings on the payroll and G&A line. So I was just wondering like how much of that is recurring? And how much do you expect is kind of one-off related to 2020? And aligned with that, and another question was asked earlier on CapEx, but I was mainly interested in like-for-like CapEx which is about €40 million lower. Is that basically a cancellation of some of it? Or is it a postponement? I appreciate that individually those items are not massive, but combined, it's like €80 million to €100 million of cash going out. So actually, maybe quite material. So a bit more color on that would be helpful. And I'll ask my other question after that.

Okay. So on the G&A, we have – we went through last year with a view to limit G&A and the number of employees. This has been a great challenge for the teams. That has been one of the worst year in terms of hard work to go through that crisis. They have been exceptional. They have been solid, resilient, and we have asked them to do a lot of savings. This will probably not repeat forever. But as long as the crisis stays, we will be very conservative and very, I will say, we will contain any outflows, including G&A and general expenses and FTE and try to limit the impact of the crisis on our financial statements. When it comes to the CapEx, I have not much to say compared to what I already said. I think the – what we have just demonstrated is that we have the flexibility on our development pipeline. It's a – it's not launching some projects. So part of the reduction is that we have not launched some projects. They will be restarted in due course if we made the decision to do so. We have not stopped projects which were under construction. We have slowed down some of them which were under construction, but it's a mix. But the most important effect is that we have always been able to only commit when we have a clear view on the cash flows. We don't do local guide, we don't commit first and look for the cash flow after. We look at the cash flow and we spend when we know.

Okay, that sounds good. So basically – yes, okay. So the cost is strengthening on the G&A is pretty much through a lot of furlough schemes. So over time, we'll probably increase again back to historical levels. And you're saying – I was not on the development CapEx, but on the like-for-like CapEx specifically. That has some – is there a catch-up mechanism there or not really?

On the like-for-like CapEx, it's mainly split between maintenance CapEx and leasing CapEx, as you know. Obviously, as our leasing activity has been slower than last, year. Obviously, we have spent less in CapEx, and it will be dependent on the recovery of our leasing activity and re-leasing activity. And on maintenance, it has been broadly flat because it's a lot of regulatory maintenance. So we have a limited buffer to decrease those regulatory amounts.

That’s very helpful. That’s great. The other question I had is actually on the – still on the FY 2020 FFO guidance. And just one thing I struggle to understand. Basically, if I look at the numbers, then your rent collection in H2 was better than it was in H1, yet your net cash flow contribution was significantly lower. How do I – how do we square that? How does that work? And what kind of – and how are we looking at that going forward?

I think we are – for this question, what I may recommend that we can do that off-line. I think the – if you remember, when we close the financial statements at the end of – or the end of June, most of the receivables were standing in the balance sheet of Klepierre and our peers waiting for IFRS 16, I would say, a decision, okay? And as long as these – we have not spoken, they have to be on our balance sheet. So I think there is no deterioration between H1 and H2 in terms of collection. The rent collection for per quarter is the final outcome, I think, comparing H1 to H2, it needs a little bit more exercise. And I recommend you to call us separately. We see that it is crystal clear. I think the main difference or GAAP comes from the way receivables were treated under IFRS 16 when we closed semiannual financial statements. And I think for the whole industry were at the same position at that time. And we have collected 84%, 84% of the rents contractually due. And we have abated €126 million, and we have provision for €109 million, if my collection is correct. And the percentages are very clear. And this is the outcome of the negotiation. And I think we started anyway second half of the year.

That's helpful color. And just to – and I will – the technicalities we can take off-line, but just to kind of clarify it a bit further. So if I look at the H2, then I think the cash flow contribution was around €0.70. Do you feel that it's a pretty accurate reflection of the underlying cash generation of the business? Is that the best way to look at it?

So, no. I think, once more, the – there is a nautical difficulty in comparing H1 and H2. So what I really hope to do that off-line. I think the way the provisions and the abatement have been distributed between H1 and H2 have been artificially, I would say, it's artificially misleading, okay, because of IFRS 16 treatment at the end of – so if you want to do that exercise, I would take the full year, I will divide it by two, and then you will have probably the answer. There is no acceleration of deterioration or whatever in H2. This is the outcome of the negotiation, okay? So – but let's take it offline.

So the entire – so the cash flow generation for the entire year, you feel, is an approximate – is good proxy for the overall cash generation? That's effectively the conclusion?

I don't know if it is a proxy. The cash flow for the year, are the cash flow for the year, that's what I can say. So when the question was, how does it split between H1 and H2, I wanted to highlight that there is an nautical difficulty to compare H1 to H2. That's what I just said. So I'm just saying that, if you want to have a semester of 2020, it's better to take the number and divide it by 2 to get a number for six months. I'm not saying it's a proxy of whatever in the future, [Technical Difficulty] but that's the way we want, about six months.

Yes. Okay. Now I think I just tried to understand like what the actual cash generation was for FY 2020, and I'll take that number reported. Thank you.

Yes. And I think just to finish on that, we have communicated €1.97 per share. The audit, okay, is taken in 2020, no IFRS 16 number that we also reported differently, so €1.97, which when everything which is abatement and provision is taken as it as a loss in the P&L.

Thanks very much.

Good. Okay. Thank you very much for attending, for your questions. We will end this call. We are at your disposals to answer further questions. And thank you very much, and have a good day.

Thank you very much for joining today's call. You may now disconnect your handsets.