2009 ANNUAL REPORT UNIBAIL-RODAMCO / 2009 ANNUAL REPORT 1 Profile 2 Message from the CEO 4 Message from the Chairman of the Supervisory Board 6 Strategy & key figures Stock market performance PROFILE 10 & shareholding structure 2009 Unibail-Rodamco is Europe’s leading listed commercial property company ANNUAL with a portfolio valued at €22.3 billion on December 31, 2009. REPORT A clear strategy The Group is the leading investor, operator and developer of large shopping centres in 14 An unprecedented climate Europe. Its 95 shopping centres, 47 of which receive more than 7 million visits per annum, 12 16 Expertise in retail operations are generally located in major continental European cities with superior purchasing power 18 Differentiation: the key to success and extensive catchment areas. The Group continuously reinforces the attractiveness of 22 An attractive development pipeline 24 Financial firepower for future growth its assets by upgrading the layout, renewing the tenant mix and enhancing the shopping 26 Talented, motivated teams experience. Present in 12 European Union countries, Unibail-Rodamco is a natural business partner for any retailer seeking to penetrate or expand in this market and for any public or Business private institution interested in developing large, integrated retail schemes. Overview A commitment to value creation The Group is also a key player in the Paris region office market, where it focuses on modern, efficient buildings of more than 10,000 m2. Finally, in joint venture with the Paris Chamber 32 Shopping Centres of Commerce and Industry, Unibail-Rodamco owns, operates and develops the major 30 34 France 36 Netherlands convention and exhibition centres of the Paris region. 38 Nordic Countries 40 Central Europe Financial strength and stability 42 Austria Unibail-Rodamco’s 1,700 employees create value for shareholders through an integrated 44 Spain approach which combines all aspects of property management, investment and development. 46 Offices Regional The Group’s commitment to environmental, economic and social sustainability has been 48 Convention & Exhibition Review recognised with listings in the DJSI (World) and FTSE4Good indexes. Unibail-Rodamco is listed on Euronext and is a member of the CAC 40, AEX and Dow Jones EURO STOXX 50 indexes. It is rated A/A3 by Standard & Poor’s and Moody’s. 50 Portfolio, Legal & Financial 52 Portfolio 64 Business Review & 2009 results Cnit / La Défense 90 Consolidated financial accounts 146 Legal information 186 Report of the Chairman of the Supervisory Board 198 Annual disclosure form UNIBAIL-RODAMCO / 2009 ANNUAL REPORT / MESSAGE FROM THE CEO MESSAGE FROM THE CEO 2009 has been an extraordinary year in many ways. In an Vallsur / Valladolid unpredictable economic environment characterised by dramatic changes of historical proportions, the stability of the recurring net result generated by Unibail-Rodamco’s high quality asset portfolio was a welcome exception. Recurring earnings per share grew by 7.1% in 2009, in line with expectations, to reach €9.19. With a 1.9% vacancy rate and stable footfall, the Group’s expanding retail portfolio has proved its resilience in the current crisis. These results are not a “miracle”, but a reflection of the quality of Unibail-Rodamco’s assets and the hard work undertaken by its dedicated employees to develop win-win partnerships with retailers and exceed customers’ expectations. In the current environment, the Group’s strong presence in key capital cities provides an appealing platform for international retailers seeking to launch European expansion programmes. These unique partnerships with exclusive, original retailers and top brands ensure that the Group’s centres stand out from the competition. Ongoing efforts are made to improve the physical look and feel of the centres, the range of services on offer, and the quality of the shopping experience. Rental levels for the office portfolio have come under pressure as a result of the economic climate. Although this affected the valuation of office assets, the Group reduced vacancy levels from 9.8% to 5.5% thanks to hard work by its teams and a clear focus on sought-after locations and assets. Total net rental income from the office portfolio sector contracted by 4.2% as a result of the divestment of mature assets in line with the Group’s capital recycling strategy, but net rental income was up by 9.1% on a like-for-like basis. The convention and exhibition business saw a slight downturn in activity as a result of the recession and the flu pandemic. Compared to 2007, the relevant year of comparison in this seasonal business, net operating income increased by 4.7%. VIPARIS made a healthy net contribution to the Group’s results, confirming the relevance of the 2008 merger. A strong balance sheet has enabled Unibail-Rodamco to secure its access to funding throughout the financial crisis. Having issued new bank debt and a convertible bond, as well as several regular bonds, the Group ended the year with a record €3.5 billion in undrawn funds. This provides ample room for manoeuvre in the future. As a result of exceptionally low or negative indexation, the aftermath of the economic crisis and the low level of deliveries achieved during 2009, it is expected that 2010 will be a transitory year, with 0 to 2% projected recurring earnings per share growth. The five-year outlook, however, remains very positive. The Group remains committed to sustainable development and plays an active role in the Docks Vauban / Le Havre industry associations that are developing new environmental standards and best practices for the commercial real estate sector. Detailed information on environmental and social issues is published in a separate Corporate Sustainability Report. “The Group ended 2009 with solid earnings growth in line with expectations, The Group’s talented professionals, top-quality assets and strong balance sheet provide an unparalleled foundation for continued growth and allow Unibail-Rodamco to look to the future despite a very adverse economic environment. The limited impact with confidence. of the crisis on Unibail-Rodamco’s results is primarily due to the high quality of the underlying asset base. The Group’s talented team also played a key role through their relentless efforts to turn every asset in the portfolio into Guillaume Poitrinal, CEO & Chairman of the Management Board a place that is attractive to both tenants and visitors.” 2 3 UNIBAIL-RODAMCO / 2009 ANNUAL REPORT / MESSAGE FROM THE CHAIRMAN OF THE SUPERVISORY BOARD MESSAGE FROM THE CHAIRMAN OF THE SUPERVISORY BOARD The financial turmoil of 2008 was followed by unparalleled uncertainty in 2009.E conomic collapse has, so far, been avoided through massive government support. These volatile economic conditions call for good governance, a solid strategy, dynamic management and operational excellence. Unibail-Rodamco SE, as its performance in 2009 attests, has all four. According to budget and in line with its strategy, Unibail-Rodamco successfully upgraded and reinforced its existing retail, office, convention and exhibition facilities and advanced a number of landmark investment and development projects. The Group prides itself on the quality of its assets, its relationships with stakeholders and its European identity, formalised in 2009 by the Company’s legal conversion to a European company (Societas Europaea). The Supervisory Board, via its Audit Committee, continuously monitored the Company’s funding requirements, cash flow generation and risk exposure in 2009. Through its Governance, Nomination and Remuneration Committee, the Supervisory Board studied the consequences for the Company’s Management Board remuneration under a variety of hypothetical scenarios and commissioned an external benchmark review of this remuneration against CAC 40, AEX 25 and international real estate peers. The Supervisory Board also supervised transitions in the Supervisory composition of the Management Board. Mid 2009, Mr. Willem Ledeboer, following a 23-year career with the Group and an active participation in the merger with Rodamco Europe NV in Board 2007, stepped down as Chief Investment Officer to pursue other interests. Later in the year,M r. Jaap Tonckens joined the Management Board as General Counsel to provide support to the CEO on strategically important Group activities and head the Group’s legal department. This year, the Supervisory Board conducted its regular annual self assessment in the format of a formal questionnaire. The results were positive, confirming satisfaction with theB oard’s functioning and performance and culminating in new ideas for further advancement. The Supervisory Board is committed to excellence in corporate governance and recognises the accentuated importance of its role in uncertain times. As a result, the Supervisory Board decided to increase its focus on various aspects of risk management and internal control. In addition, the Supervisory Board reconfirmed the importance of diversity in terms of gender, age and nationality, whilst recognising the efficiency of a small board, and agreed to formalise succession plans for the Supervisory and Management Boards. Finally, the Supervisory Board reviewed and approved various significant investment and project development proposals. Most notably, it approved the €715 million acquisition of the Simon Ivanhoe portfolio, announced by the Group on February 5, 2010, which should close in the first half of 2010. At the start of yet another challenging year, the Supervisory Board would like to express its appreciation for the hard work accomplished across all levels and in all countries where Unibail-Rodamco is active. The Group’s top class industry position, coupled with its highly focused employees, managers, Management Team and Management Board members, are the best guarantee for ongoing success in a challenging environment. From left to right: Mr. Yves Lyon-Caen; Mr. Jos W.B. Westerburgen; Mr. Frans J.G.M. Cremers (seated); Mr. Robert F.W. van Oordt (Chairman); Mr. Alec Pelmore; Mrs. Mary Harris; Mr. Robert ter Haar; Mr. Jacques Dermagne (seated); Mr. Jean-Louis Laurens; Mr.