Annual Report 2008 Report Annual 1 Unibail-Rodamco Annual Report 2008 Unibail-Rodamco 1 Profi le is the leading listed European commercial 3 Message from the CEO 4 Message from the Chairman property operator, investor and developer. of the Supervisory Board With a property portfolio valued at s24.6 billion at December 31, 2008, Unibail-Rodamco is active 6 Key fi gures in three major business lines: shopping centres, offi ces and convention-exhibition centres. 8 Stock market performance & shareholding structure 10 Financial strategy A clear focus 12 Investment strategy The Group has a clear focus on high quality assets in Europe which have a leading competitive edge in their respective p. 58 markets in terms of footfall, size, specifi cations, location and reputation.The Group targets segments of the real estate p. 28 market where demand exceeds supply. 28 Activities p. 44 58 Financial & legal information A value creation approach 30 France 61 Business review For each core business, Unibail-Rodamco aims to maximise shareholder value and return on investment through p. 14 32 Netherlands & 2008 results proactive management, a dynamic acquisition and disposal policy, and a high level of expertise in the management of major development and refurbishment projects. 34 Nordic Countries 44 Portfolio 87 Consolidated fi nancial 14 Group vision 36 Central Europe 46 France accounts 16 Leadership in Europe 38 Spain 52 Netherlands 145 Legal information 18 Operations 40 Offi ces 55 Nordic Countries 183 Report of the Chairman An independent group Unibail-Rodamco is one of Europe’s most liquid listed property investment stocks, is part of the French CAC 40, 42 Convention-Exhibition 56 Central Europe of the Supervisory Board 20 Unibail-Rodamco Development Euronext 100 and Dutch AEX Index, and benefi ts from an “A” rating from Standard & Poor’s. 22 Sustainability engagements 57 Spain 194 Annual disclosure form Profile Contents 2 31 Unibail-Rodamco Annual Report 2008 MESSAGE FROM THE CEO Message from the CEO The Group’s assets demonstrated their resilience in 2008 in an environment that suddenly became more difficult. This strength enabled Unibail-Rodamco to return results that exceeded its objectives. The first year of operations for VIPARIS, which brings together the Group’s convention-exhibition activities and those of the Paris Chamber of Commerce and Industry, proved the relevance of this strategic alliance. VIPARIS, which manages 10 world-class convention and exhibition venues in Paris, recorded a 6% increase in total visitor numbers in 2008 relative to 2006, the most recent comparable year. Over the course of the year, the opening of major new shopping centres and extensions, including Rivétoile in Strasbourg, Forum Unibail-Rodamco’s performance in 2008 is founded on the Nacka in Stockholm, and Arkády Pankrác in Prague, increased strength of its fundamental drivers: the Group’s retail capacity by 100,000 m2. All of these centres • A high quality asset base. The Group focuses on large were fully let at opening and have enjoyed immediate success shopping centres, 75% of which welcome more than seven with the public. million visits per annum. In these centres, footfall remains strong and vacant space is almost non-existent. In the current The Group retains a high degree of flexibility in its development climate, this is a major value proposition for retailers. pipeline, where spending and firm commitments account for • A conservative financial structure. A Loan to Value ratio of only s1.7 billion. only 30% and undrawn credit lines worth s1.6 billion at year end. In 2008, the Group increased its focus on sustainable development, • Hard working professionals. The Group’s highly skilled, issuing its first Corporate Sustainability Report (CSR) and entering dedicated international team operates across 12 countries the Dow Jones Sustainability World Index. We invite you to consult and thrives on the diverse challenges and opportunities the 2008 CSR for a detailed review of our activities and of our presented by the market. objectives for the coming years. In 2009, we will make further improvements to our environmental performance. An active investment/divestment programme in 2008 enabled the Group to bolster its financial strength in troubled times. Our high quality portfolio, strong balance sheet and committed During the year, Unibail-Rodamco sold s1.5 billion of assets, team allow us to remain confident as we look to the future. notably a large portfolio composed primarily of high street Board shops and small shopping centres in the Netherlands, with a Management premium to last appraisal value. In parallel, the Group acquired s1.2 billion of assets, including two assets which figure among continental Europe’s top 25 shopping centres by footfall. As a result of dynamic leasing activity in the Group’s shopping centres, vacancy rates at year end remained low. Leasing activity in the office division also remains strong due to a shortage of large, high quality office spaces, particularly in Paris and La Défense where the Group’s activities are concentrated. Almost all of the Group’s properties are fully leased and Guillaume Poitrinal, contributing healthy, annually-indexed cash flows. CEO & Chairman of the Management Board Willem Ledeboer Willem Officer Chief Investment Poitrinal Guillaume CEO & Chairman of Board the Management Dessolain Michel Chief Operating Officer Bertrand Julien-Laferrière Chief Officer Development Catherine Pourre Officer Chief Resources van Rossum Peter Chief Financial Officer 2 3 Unibail-Rodamco Annual Report 2008 MESSAGE FROM THE CHAIRMAN OF THE SUPERVISORY BOARD Message from the Chairman of the Supervisory Board 2008 will be remembered for the unprecedented fi nancial turmoil that affected markets and economies around the world. The Group’s excellent real estate portfolio and strong balance sheet provide a comforting degree of protection from this crisis, and astute management is further reducing its impact. Nevertheless, Unibail-Rodamco looks forward, like other companies, to a challenging year in 2009. The Group agreed to Mr. Joost Bomhoff’s request to focus exclusively on social responsibility, sustainability and the Unibail- Rodamco Academy during his remaining time with the Group. Consequently, he stepped down from the Management Board. At the same time, Mr. Bertrand Julien-Laferrière was appointed to the Management Board with responsibility for coordinating all of Unibail-Rodamco’s development activities. A strategic decision was taken to split the Central Europe region into two regions, Austria and Central Europe, effective 2009. The Supervisory Board worked closely with the management to In May, the Group relocated its Parisian headquarters to newly ensure that the Group was able to meet the challenges of the renovated offi ces at 7, place du Chancelier Adenauer and fi nancial crisis while maintaining its focus on long-term strategic regrouped its Dutch teams, both corporate and regional, at goals. The Board reinforced its ability to provide robust, independent the new operational headquarters in Schipol. guidance during this exceptional period by conducting an ad hoc study into the possible effects of the global crisis. The Supervisory Board continued to monitor and refi ne the Group’s corporate governance and compliance structure The fi ve-year plans used to manage each of Unibail-Rodamco’s during 2008. The Code of Ethics was updated and a new assets were, as always, reviewed and updated at the end of the compliance programme was implemented. The charters of the year. They were also discussed in depth during the Group’s fi rst Management Board and of the Governance, Nomination and off-site strategic retreat, which was attended by the members of Remuneration Committee were revised to clarify the respective Unibail-Rodamco’s Management and Supervisory Boards. roles and responsibilities of these bodies. These documents have been made public. During the year, the Supervisory Board reviewed the effectiveness Board of the 2007/2008 integration of Unibail and Rodamco’s In line with good corporate governance principles, the Group Supervisory operational and corporate activities. A comprehensive action appointed a dedicated Compliance Offi cer with Group-wide programme was carried out to strengthen and, where possible, responsibilities. From left to right: broaden the Group’s funding arrangements. Mr. Robert ter Haar Since January 1, 2009, Unibail-Rodamco is in full compliance The quality and breadth of Unibail-Rodamco’s asset base with all of the recommendations of the AFEP-MEDEF (the French Mr. Henri Moulard enabled the Group to generate solid results despite the diffi cult employers’ federation) regarding corporate governance and Mr. Bart R. Okkens economic context. Highlights of 2008 include the divestment remuneration. Mrs. Mary Harris of a large but non-strategic portion of the Dutch portfolio, Mr. Jean-Louis Laurens the planning of a complex development project to build the The Supervisory Board wishes to express its thanks to Unibail- 100,000 m² Mall of Scandinavia in Stockholm, and the Rodamco’s employees, managers, Management Team Mr. Jacques Dermagne acquisition of two major shopping centres: Shopping City Süd members and Management Board members. The Group’s Mr. Yves Lyon-Caen in Austria and La Maquinista in Spain. strong performance in 2008 is testimony to their hard work Mr. Alec Pelmore and unwavering dedication. Mr. Robert F.W. van Oordt (seated) The Group’s shareholders appointed two new members to the Supervisory