BUSINESS FOR THE YEAR Business activity by region 2 Retailer sales in CEE & Turkey continued to grow at a rapid pace A total of 91 leases were signed in the Czech Republic over the (+7.2%) thanks to improving consumptions conditions. All countries year. At Nový Smíchov (Prague), the acquisition of the first floor of contributed to this solid performance (Hungary: +10.9%; Turkey: +9.8%; the Tesco hypermarket was successfully completed in December, Czech Republic: +5.2%; Poland: +4.3%). By segment, food & beverage helping generate a large retail space of 7,000 sq.m. In June 2018, posted strong double-digit growth in all of the four countries, thanks Zara (3,300 sq.m.) and Bershka (1,020 sq.m.) will open enlarged stores to positive feedback following Destination Food® implementations. at that location, showcasing their latest concepts. In January 2018, Health & beauty also recorded solid results across the countries, with Sephora will also unveil its new concept store covering 1,000 sq.m. in sales in Turkey growing by 19%, Hungary by 12%, Poland by 7.5%, and the center. In addition, new brands such as Nespresso and Amazing Czech Republic by 6%. Lastly, improving consumer economics helped Jewelry were introduced to the center. At Plzeň Plaza (Plzeň), an fashion sales reach an average 7% growth rate in the region. ongoing renewal and re-leasing campaign ran with success: Calvin Against this backdrop, net rental income in CEE & Turkey increased Klein, Calzedonia, Guess, and Intimissimi renewed their leases, and by 3.1%, outperforming indexation by 200 bps. This rise encompassed Burger King signed for 140 sq.m. a very strong performance of Hungary (+14.7%) and Czech Republic In Hungary, 129 deals were signed, with 100 renewals and re-leasings (+12.9%), benefiting from strong reversion and vacancy reduction in at a high reversion rate. As a result, EPRA vacancy decreased Hungary (-220bps). In Poland, the net rental income decline (-1.9%) significantly, from 4.6% by the end of 2016 to 2.4% in December 2017. was mostly attributable to negative reversion following the renewal At Corvin Plaza (Budapest), Klépierre introduced a Flying Tiger store campaign at Lublin Plaza (Lublin), Rybnik Plaza (Rybnik), and from the popular Danish brand. At Duna plaza (Budapest), two main Sosnowiec Plaza (Sosnowiec), which more than offset the strong anchors, Media Markt (3,020 sq.m.) and the post office (430 sq.m.), increase in specialty leasing income. Lastly, in Turkey (-6.9%), the renewed their contracts; additionally, Costa Coffee was added to the depreciation of the local currency remains the main headwind, resulting center’s food & beverage offer and the largest regional shoe retailer in higher temporary discounts granted to tenants to soften the OCR. CCC took up a 1,090-sq.m. unit. Leasing activity remained solid in Poland, where 122 contracts were A total of 110 leases were signed in the Turkish portfolio over the signed over the year; among them 113 were renewals and re-leasings. 12 months of 2017, with 88 deals renewed or re-leased at a reversion LPP, the popular Polish retail group, signed 10 leases for a total of rate of 3.1%. The portfolio’s vacancy rate was reduced from 9.7% to 7.3% 3,400 sq.m. across the portfolio: House (three stores), Cropp (two thanks to active leasing. At Anatolium (Bursa), Adidas, Mediamarkt, stores), Sinsay (two stores), and Reserved (three stores). At Lublin Watsons and Flormar signed new leases, while Nike renewed its Plaza (Lublin), Reserved is expected to open a “rightsized” store presence at the center. The health & beauty offer remained strong (1,600 sq.m.) in the first half of 2018. At Sosnowiec Plaza (Sosnowiec), within the Turkish portfolio, with Watsons renewing six shops at the biggest electronic chain in Poland, Media Expert, signed its first different locations, and Sephora and Yves Rocher signing new leasing store in the Klépierre Polish portfolio for a 530-sq.m. unit, a deal which contracts. contributed to reducing vacancy by 5%. 2.2.6 The Netherlands (4.5% of net rental income) 3 NRI & EPRA VACANCY RATE IN THE NETHERLANDS Current-porfolio NRI Like-for-like portfolio NRI EPRA vacancy rate In €m 12/31/2017 12/31/2016 Change 12/31/2017 12/31/2016 Change 12/31/2017 12/31/2016 THE NETHERLANDS 49.3 45.5 8.4% 26.1 25.5 2.1% 6.0% 5.6% The Dutch economy proved solid with GDP growing by 3.3% year- On the leasing front, the Dutch portfolio recorded a strong on-year in 2017. Overall consumer confidence climbed and spending performance in 2017, with 106 contracts signed at a 13.5% reversion was up around 2% on a year-on-year basis. Unemployment declined rate for renewals and re-leasing. At Hoog Catharijne (Utrecht), to 4.9% from 6.0% in 2016, the biggest drop since September 2009. Klépierre’s leading mall in Utrecht, 66 leases were signed in 2017. The Wages and inflation picked up, with core inflation reaching 1.3% in 2017, food offer was complemented with Wagamama (330 sq.m.), popular compared to 0.1% in 2016. chain restaurant Vapiano (1,280 sq.m.), Seafood Bar (350 sq.m.), TGI Net rental income recorded a 2.1% like-for-like increase over 2017 Fridays (867 sq.m.), Five Guys (315 sq.m.), and Exki (235 sq.m.); these (indexation of 1.0%), showing a clear improvement compared to 2016 restaurants will open to public in March 2018. Dunkin Donuts, Douglas, (-5.3%). On top of a healthy reversion of 13.5%, net rental income was JD Sports, Hunkemoller Sport will also open to customers in the first boosted by the sharp decline in bad debt (from 3.1% to 1.2% in 2017), quarter of 2018. Popular cosmetic brands, including MAC and Lush, highlighting the gradually improved macro-economic environment were added to the center’s beauty offer and helped drive footfall. In and the successful re-leasing of local retailers. On a current basis, net September 2017, Nike opened its flagship store over a 1,200 sq.m. unit. rental income increased by 8.4%, through the successful opening of At Alexandrium (Rotterdam), new retail units were leased to Parfois Hoog Catharijne. (100 sq.m.), Pandora (60 sq.m.), and Five Guys (330 sq.m.). In addition, Zara renewed its lease at the center (1,540 sq.m.). KLÉPIERRE 2017 REGISTRATION DOCUMENT 51