2001 Annual Report - Unibail-Rodamco

NET ASSET VALUE
The Shopping Center Portfolio
The value of Unibail’s shopping center portfolio is derived from the
combination of the individual assets and not as a single entity.
Accordingly, no value is placed on Unibail’s market share, even
though this notion has a value in this sector.
For each shopping center, the valuation methodology used by
Healey & Baker involves capitalizing rental income net of charges,
i.e. after taking into account a standard vacancy rate, management
fees, administration costs, non-refundable expenses, letting fees,
unpaid rents, litigation costs and provisions for maintenance works.
The valuation is based on the situation at year-end 2001.
The valuation also takes into account: i) any future rental gains
generated by the letting of vacant space (subject to a minimum
standard vacancy rate); ii) any increase in rental income due to step
rents; and iii) the renewal of leases due to expire in the near future.
At year-end 2001, Healey & Baker had valued 93% of Unibail’s
shopping center portfolio. The remaining 7% mainly comprises the
Carré Sénart shopping center and La Colline de La Défense, both at
their book value recorded in the accounts as at year-end 2001.
The value of these assets rose by as much as € 146m, or 9.1%, on a
like-for-like basis. Of this, 8.4% stems from the growth in annualized
rental income, while only 0.7% is due to the decline in initial yields.
The rental increase for signed leases stems from the combined
impact of rent indexation (2.8%) and letting activities (5.6%).
Valuation
of the Shopping Valuation capitalisation Initial
Center Portfolio (€m) rate (1) yield (2)
Paris and the Paris region (3) 1,248 6.10% 5.59%
Regional centers in provinces 843 6.70% 6.41%
Under construction 108 ns ns
Total 2,199 6.36% 6.00%
(1)
Rate used by independent valuer - (2) Annualized rent divided by valuation
(3)
Including Le Printemps de l'Homme. At year-end 2001, capitalization rates ranged from
5.75% for Vélizy 2 to 7.25% for Cité Europe.
Shopping centers under development at year-end 2001
Carré Sénart: the first foundation was laid in May 2000 and the
center is due for completion at the end of summer 2002. Unibail
had prelet over 85% of the space by year-end 2001, bringing it
ahead of its letting schedule. Although the expected return on
investment is higher than the yield required by investors for this
type of asset, no potential capital gains have been recorded as yet.
The center has been valued at its book cost recorded in the
accounts as at year-end 2001.
Strasbourg - Etoile : this development project obtained a permit
from the CDEC (French Retail Property Development Authorities)
on June 30, 2000. The building permit currently being applied for
should be obtained in 2002. No value has been assigned to the
project, but all amounts invested in the site have been 100%-
provisioned.
Based on the same prudent approach, the extension and restructuring
projects have not been assigned a value, despite the anticipated
high capital gains. These projects include the renovation and
extension works already started at Les Quatre Temps and works
scheduled for Cité Europe, BAB 2, Labège in Toulouse, Rosny 2, Ilot
Bonnac in Bordeaux, Marques Avenue facing Cité Europe in Calais-
Coquelles, and the Forum des Halles.
The Convention-Exhibition Center Portfolio
To enhance the analysis of its portfolio, Unibail has redefined the
scope of assets included in its convention-exhibition division. As a
result, this division is now confined solely to spaces used for
convention-exhibition activities. For example, this division includes
the exhibition space at the Cnit and Carrousel du Louvre; the total
area of Paris Expo-Porte de Versailles and Espace Champerret. Are
included in this division, the Sofitel at Cnit and Méridien-
Montparnasse hotels and the Cnit’s car parks. Unlike year-end
2000, the office space and the shops at Cnit and the office space in
the Méridien-Montparnasse complex have been reclassified into
their respective divisions.
Valuation of the Year-end
convention-exhibition- 2000 Year-end
portfolio (€m) (restated) 2001 Like-for-like change
Value Value Value %
Paris Expo-Porte de Versailles (1) 157 221 60 41.0%
Cnit Expo, Foyer de l’Arche,
Carrousel du Louvre,
Espace Champerret (2) 92 107 13 14.6%
Sofitel Cnit and Méridien
Montparnasse hotels (2) 163 158 -4 -2.5%
Total 412 486 69 17.2%
(1)
In accordance with accounting standards, the initial cost of Paris-Expo-Porte de Versailles
was finalized during 2001. This cost has been split between Unibail’s ‘Property investment’
and ‘Property services’ activities. Figures to end-December 2000 have been restated accordingly
such that this table only includes the property value. At year-end 2000, Unibail held
a 93.4% stake in Paris Expo, which was raised to 96.0% by year-end 2001.
(2)
After reclassifying the Cnit’s offices and shops, as well as the offices in the Méridien
Montparnasse complex.
The value of the convention-exhibition portfolio increased by
17.2% on a like-for-like basis in 2001. This rise mainly stems from
a higher asset value for Cnit Expo and Paris Expo-Porte de Versailles,
which was valued at its book cost at year-end 2000. Excluding
Porte de Versailles, the like-for-like increase amounts to 2.2%. The
value of the hotels have decreased slightly, reflecting the general
trend observed in this market.
If the valuations adopted by Unibail are compared to the 2001 net
rental income, an average initial yield of 12.8% is obtained. This
level reflects the prudent approach adopted by the independent
valuers for this type of very specific assets. Due to the steady
stream of high-quality cash flow generated by these assets, this
valuation offers upside potential.
Valuation 2001 Annualized
of the Convention- Net rental initial
Exhibition Portfolio (€m) Valuation income yield
Paris Expo-Porte de Versailles 221 28 12.7%
Cnit Expo, Foyer de l’Arche 62 9 14.5%
Carrousel du Louvre 33 3 9.1%
Espace Champerret 12 2 16.7%
Total 328 42 12.8%
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