REGISTRATION DOCUMENT 2018 CONTENTS 1 GROUP OVERVIEW 3 4 SUSTAINABLE DEVELOPMENT 157 1.1 Business environment, economic 4.1 Klépierre’s CSR strategy 158 model and strategy 4 4.2 Act for the Planet 162 1.2 Key figures 8 4.3 Act for Territories 179 1.3 Share ownership and stock information 12 4.4 Act for People 184 1.4 Background 12 4.5 Sustainability governance 200 1.5 Property portfolio as of December 31, 2018 14 4.6 Supplemental data, methodology 1.6 Simplified organization chart and concordance tables 203 as of December 31, 2018 25 1.7 Risk management 26 5 CORPORATE GOVERNANCE 219 BUSINESS FOR THE YEAR 35 5.1 Management and oversight of the Company 221 2 5.2 Compensation and benefits of executive 2.1 Business overview 36 corporate officers 244 2.2 Business activity by region 41 2.3 Net current cash flow 45 2.4 Investments, developments, and disposals 46 2.5 Parent company earnings and distribution 49 6 SHARE CAPITAL, SHARE 2.6 Portfolio valuation 49 OWNERSHIP, GENERAL 2.7 Financial policy 54 MEETING OF SHAREHOLDERS 267 2.8 EPRA performance indicators 57 2.9 Outlook 61 6.1 Share capital and share ownership 268 6.2 General Meeting of Shareholders 282 FINANCIAL STATEMENTS 63 3 ADDITIONAL INFORMATION 309 3.1 Consolidated financial statements 7 for the year ended December 31, 2018 64 7.1 General information 310 3.2 Statutory auditors’ report on the 7.2 Documents on display 312 consolidated financial statements 122 7.3 Statement by the person responsible for 3.3 Company financial statements for the year the registration document, which serves ended December 31, 2018 126 as the annual financial report 312 3.4 Statutory auditors’ report on the financial 7.4 Persons responsible for the statutory audit statements 150 and the financial information 313 3.5 Other information 153 7.5 Cross-reference tables 313 GLOSSARY 319 READ THE DIGITAL VERSION OF THE REGISTRATION DOCUMENT ON KLEPIERRE’S WEBSITE www.klepierre.com REGISTRATION DOCUMENT INCLUDING THE ANNUAL FINANCIAL REPORT 2018 This registration document was filed with the French financial markets authority (Autorité des marchés financiers – AMF) on March 6, 2019, in accordance with article 212-13 of the AMF’s General Regulations. It may be used in support of a financial transaction only if supplemented by an offering memorandum that has received approval from the AMF. This document has been prepared by the issuer and is binding upon its signatories. The English language version of this registration document is a free translation of the original, which was prepared in French. All possible care has been taken to ensure that the translation is an accurate presentation of the original. In all matters of interpretation, however, views or opinion expressed in the original language version of the document in French take precedence over the translation. 2 KLÉPIERRE 2018 REGISTRATION DOCUMENT 1 GROUP OVERVIEW 1.1 BUSINESS ENVIRONMENT, 1.5 PROPERTY PORTFOLIO ECONOMIC MODEL AS OF DECEMBER 31, 2018 14 AND STRATEGY 4 1.5.1 Shopping centers 14 1.1.1 Business environment 4 1.5.2 Other retail properties 23 1.1.2 Economic model 5 1.5.3 Overview of valuation reports 1.1.3 Strategy 6 prepared by Klépierre’s independent external appraisers 23 1.2 KEY FIGURES 8 1.6 SIMPLIFIED ORGANIZATION 1.2.1 Business key performance indicators 8 CHART AS OF 1.2.2 Non-financial key performance DECEMBER 31, 2018 25 indicators 9 1.2.3 Financial key performance indicators 10 1.7 RISK MANAGEMENT 26 1.2.4 Sectoral key performance indicators (EPRA format) 11 1.7.1 Objectives 26 1.7.2 Principles 26 1.3 SHARE OWNERSHIP 1.7.3 Organization 26 AND STOCK INFORMATION 12 1.7.4 Main risk factors 26 1.7.5 Details on certain controls 33 1.4 BACKGROUND 12 KLÉPIERRE 2018 REGISTRATION DOCUMENT 3 GROUP Overview 1 Business environment, economic model and strategy 1 1.1 BUSINESS ENVIRONMENT, ECONOMIC MODEL AND STRATEGY Klépierre is the owner and operator of the leading shopping center platform in Europe. The Group has a property portfolio of more than 100 leading shopping centers, attracting 1.1 billion visitors each year and valued at €24.4 billion as of December 31, 2018. 1.1.1 Business environment The retail property market in which Klépierre operates is a highly fragmented one. In the countries where Klépierre has operations, 74% of the retail space (in GLA; Gross Leasable Area) is located on the high street, 21% in shopping centers and 5% in other property segments (retail parks, outlets). 3 RETAIL PROPERTY MARKET BY TYPE OF PROPERTY IN 2018(1) 21% In an environment where online sales represent 6% of overall retailer Malls sales(2) and keep growing, retailers are adjusting their strategy to deploy an omnichannel offer to adapt to consumers who want to seamlessly shop over the two segments (instore and online). This 5% strategy has implications for the format and number of stores that 74% Others retailers are developing, with the aim of maximizing synergies between Hight street online and physical stores. Klépierre is the main landlord of Europe’s largest retailers such as Inditex (196 stores in Klépierre malls), Bestseller (81 stores) H&M (80 stores), Sephora (53 stores), McDonald’s (59 stores), Calzedonia (134 stores) and Primark (11 stores). 3 NUMBER OF STORES FOR A SAMPLE OF EUROPEAN RETAILERS AS OF DECEMBER 31, 2018 stores stores stores stores stores stores stores stores stores stores stores stores This unique exposure to retailers is a key competitive edge as it 3 VALUE OF THE PROPERTY PORTFOLIO OF MAIN LISTED provides Klépierre with in-depth knowledge of its customers’ business RETAIL REITS AT YEAR END 2018 models. Combined with the quality of its mall platform, Klépierre is able (in €m, Group share, including transfer taxes) to compete favorably with the high street segment and other listed mall URW owner companies, with distinctive retailers favoring Klépierre to extend 41,581 14,933 their store networks and implement their newest store concepts. This Klépierre 20,436 translates into the solid pace of growth registered by Klépierre over recent years (see section 1.2 on key figures). Hammerson 11,053 On the shopping center segment, Klépierre’s main listed competitors include Unibail Rodamco Westfield (operating in the US, the UK and Intu 10,196 Continental Europe), Hammerson (UK, Ireland and France), Intu (UK and Spain), Eurocommercial (France, Italy, Sweden, and Belgium), Carmila 6,344 Carmila (France, Italy, Spain), Wereldhave (France, Netherlands, Belgium) and Mercialys (France). Eurocommercial 4,313 Citycon 4,193 Mercialys 3,780 Wereldhave 3,280 Portfolio valuation (Europe) Portfolio valuation (outside Europe) Source: Company disclosures. For URW, retail portfolio only. (1) Source: PwC Strategy& study on shopping malls in Continental Europe, October 2018. (2) Average figures for the countries where Klépierre operates. Source: PwC Strategy& study on shopping malls in Continental Europe, October 2018. 4 KLÉPIERRE 2018 REGISTRATION DOCUMENT GROUP Overview 1 Business environment, economic model and strategy 1 1.1.2 Economic model 1. 2. 3. PUB LIC AUTHORITIES INFRASTRUCTURE CUSTOMERS E R P O O P L E ENERGY E R V A E T D O R ECONOMIC TALENTS EMPLOYEES PARTNERS FINANCIAL RESOURCES VAL D’EUROPE VAL D’EUROPE TECHNOLOGY RETAILERS I N VAL D’EUROPE VOLUNTARY V E S T O R SECTOR VAL D’EUROPE VAL D’EUROPE INNOVATION VAL D’EUROPE VAL D’EUROPE VAL D’EUROPE MALLS SHAREHOLDERS AND FINANCIAL SHOP PING PARTNERS CENTER SECTOR 1. 2. 3. INPUTS AND OUR UNIQUE VALUE RESOURCES APPROACH CREATION Infrastructure INVESTOR PRIMARY STAKEHOLDERS Transport infrastructure are essential to the By the end of 2018 the Group’s 1.1 billion visits success of shopping centers. As such, the portfolio consisted of more Value generated: Group depends on the good quality of said than 100 leading malls with a – Positive customer experience increasing visitor loyalty VAL D’EUROPE infrastructure and its maintenance in the combined gross asset value of and sustaining operational results urban areas where it operates. €24 billion. They are typically – Innovative services and leisure facilities that meet visitor located in urban areas that are Energy demand for new experiences sought-after destinations for 1,200+ employees In 2018, Klépierre used 469 GWh of energy, major retailers, and represent mostly from electricity and urban cooling the dominant assets in their Value generated: or heating, to run its shopping centers. catchment area. – Improved productivity and employee well-being – Increased human capital development VAL D’EUROPE Talents OPERATOR – Access to a diverse talent pool Recruitment, compensation and career growth Klépierre needs talented staff to operate a large In 2018 Klépierre managed more – portfolio of malls, find the right retail mix in each than 12,000 stores and attracted 12,000+ leases in place location, and invest in its properties. In 2018, more than 1.1 billion visitors to Value generated: the Group hired more than 200 new people its shopping centres. The Group – Strengthened relationships in various positions across Europe for a total offers compelling retail and leisure – Knowledge sharing and support to meet changing VAL D’EUROPE headcount of 1,213 as at year-end 2018. facilities for visitors and dynamic consumer expectations and adaptable space for retailers. – Reduced risks and operating costs through joint action Financial resources VAL D’EUROPE on social and environmental initiatives Property investment is a capital-intensive DEVELOPER €589 million in dividends distributed business. Klépierre, whose shares are publicly traded on the Paris stock market, had a market The development pipeline Value generated: capitalization of around €9 billion at the end represents approximately 10% of – Profit for shareholders VAL D’EUROPE of 2018.