Highlights
Performance and business highlights
? 83% of tenants have agreed terms for closure periods.
? Rent collection is 89% for H1 2020 and 78% for Q2 after agreed terms.
? Sales turnover for June was 90% of 2019 levels.
? Strong tenant demand resulted in 9% rent uplifts on renewals and relettings, with
many deals signed during or after the lockdown period.
? Vacancies at end of June were 1.2% of annual rent.
? Independent property valuations at June 2020 were only down 2.9% on values at
December 2019.

Chief Executive’s commentary
Our priority during and after the COVID-19 lockdown periods has been to reach fair agreements with our tenants who have suffered significant losses of sales during their periods of closure, or in the case of Sweden, where stores remained open, but with COVID-19 restrictions.
We have now reached agreements for the closure periods with 83% of tenants overall. Depending on the country
and type of tenants, rent holidays varying from 50% to 100% of closure periods have been agreed and total approximating €21.7 million (or about 10% of annual rent). Our strategy has been to be generous to tenants for the lockdown periods but to insist that once the rent holiday period finishes, normal rent obligations under the leases will be met, as indeed the vast majority of our tenants have agreed. Rent collection has been solid with
at least 78% of the rent overall due for the second quarter paid (after agreed rent concessions and deferrals) and 93% for July.
These excellent results are due to the untiring efforts of our leasing and administration teams to whom we owe
a huge vote of thanks. Their work has allowed us to maintain our strong relationships with retailers and our
vacancies remain the lowest in the industry at 1.2% of rental income. Leases are being renewed and relet to show an average overall uplift of 9.2% for the twelve months ending June. It is important to note that 80 leases
have been renewed and relet since 1 April with an average uplift of 13% demonstrating that leasing activity
during and after the lockdown has remained strong. Turnover in June was on average 90% of the level for the same month in 2019.
Our independent property valuations at the end of June showed a reduction of just 2.9% compared with December 2019 and are supported by market sales evidence such as the sale of the Zurich Glatt shopping centre, the disposal of a major French shopping centre portfolio and the sale of the Farsta Centrum in Sweden. It is important to note that our valuations are carried out by the most important independent firms, all of whom are either UK or US headquartered.
It is now clear that notwithstanding the greatly increased use of online shopping during the lockdowns, people are returning to physical shops, particularly in provincial and suburban centres with strong grocery anchors.
We cannot emphasize enough the fundamental difference between our suburban hypermarket and supermarket anchored centres and the situation in the UK and the US where malls are only anchored by failing department stores. The vast majority of UK and US hypermarkets and supermarkets are in entirely separate locations so malls do not benefit from the resulting high footfall. Our centres are easily reached by car and have
plentiful free parking, a major attraction given the reluctance to travel in crowded public transport. The shift to home working is also benefitting our centres which are in wealthy residential areas.

Of course if there is a major second wave of the virus with universal lockdowns the consequences should not be
underestimated but a vaccine is expected to be available eventually and we believe our business is well positioned for a post COVID-19 world.

Financial & operational review
Direct investment result: €118.9 million (€2.41 per depositary receipt) -0.4%
The direct investment result for the twelve months to 30 June 2020 was €119 million, slightly lower compared with the same period in 2018/2019 due to discounts granted to retailers in Sweden for the COVID-19 restrictions
during the second quarter, which were partly offset by various cost savings. Cost savings were made by lower interest expenses, lower marketing, staff and travelling expenses as well as local taxes.
The rent concessions for the COVID-19 lockdown periods in Belgium, France and Italy (in total €19.7 million) will be amortized in accordance with IFRS 16 over the remaining terms of the leases or until the first tenant break option, so have no significant impact on the direct investment result for the period to 30 June 2020. Rent concessions granted in Sweden are included as a reduction of rental income for the fourth quarter of this reporting period. The direct investment result is defined as net property income less net interest expenses and company expenses after taxation. In the view of the Board this more accurately represents the underlying profitability of the Company than IFRS “profit after tax”, which must include unrealised capital gains and losses.
The direct investment result per depositary receipt decreased -0.4% to €2.41 at 30 June 2020, from €2.42 at 30 June 2019 despite a slight reduction in the average number of depositary receipts in issue over the 12-month period. The reduction stems from our share buy-back programme and was partly offset by the issuance of stock dividend in November 2019.

Net property income: €176.3 million -1.3%
Rental income, including joint ventures (based on proportional consolidation), for the twelve months to 30 June 2020, after deducting net service charges and direct and indirect property expenses (branch overheads),
decreased by 1.3% to €176.3 million compared to €178.6 million for the twelve months to 30 June 2019 (please refer to Note 2 on page 27). The decline is due to agreed rent concessions related to the COVID-19 pandemic.
Property expenses decreased as well due to lower centre marketing expenses, staff and travelling expenses as well as local taxes.
Adjusted net asset value: €42.73 per depositary receipt
Adjusted net asset value at 30 June 2020 was €42.73 per depositary receipt, compared to €43.89 at 31 December 2019, and €44.83 at 30 June 2019.
EPRA Net asset value per depositary receipt at 30 June 2020 was €42.62, compared to €43.71 at 31 December 2019, and €44.56 at 30 June 2019.

IFRS results
The IFRS net asset value, which, unlike the adjusted net asset value, includes the negative fair value of financial
derivatives (interest rate swaps) and contingent capital gains tax liabilities, was €35.41 per depositary receipt at
30 June 2020, compared with €37.80 at 31 December 2019 and €38.49 at 30 June 2019.
The IFRS profit after taxation for the twelve months to 30 June 2020 decreased to €4.4 million from €74.6 million for the same period in 2018/2019. This was largely due to a negative revaluation of the investment portfolio for
an amount of €109.0 million (2018/2019: only €8.7 million negative) despite a small negative unrealised movement in the fair value of derivatives for an amount of €7.8 million compared to a negative amount of €23.7 million as at 30 June 2019.

Rent collection
We entered into discussions early with our tenants to find mutually acceptable solutions for rent payments during the period of the closure of the centres or the period of significant reduced turnover for Sweden. Our offers of course excluded tenants like hypermarkets which continued to trade during the lockdown. These negotiations did not include service charges which are expected to be paid in full by our tenants.
Overall we have now reached agreements with 100% of tenants in Sweden, 96% in Belgium, 52% in France and 88% in Italy (all numbers by MGR). Depending on the country and type of tenants, rent holidays varying from 50% to 100% of closure periods have been agreed and total approximating €21.7 million (or about 10% of annual rent). In accordance with IFRS 16 the rent concessions for Belgium, France and Italy will be amortized over the remaining terms of the leases or until the first tenant break option. The results of our negotiations are summarised in the table below.
These concessions are mainly for Q2 with some spread over Q2 and Q3. Excluding rent concessions granted and rent deferred, our collection rate for Q2 amounts to 78%. A similar calculation for July reaches 93%.

Rent concessions granted Rent collected for H1* Rent collected for Q2* Rent collected for July 2020*
Belgium € 2.8 m 95% 92% 93%
France € 4.3 m 86% 68% 85%
Italy € 12.6 m 85% 72% 97%
Sweden € 2.0 m 98% 95% 96%
Total € 21.7 m 89% 78% 93%
* Collection rate as a percentage of due and collectable rent
In Belgium, we have negotiated agreements with 96% of our tenants. We offered most tenants 50% rent
reduction during the lockdown period and 100% for food & beverage tenants (restaurants). All of these rental
concessions represent a total amount of € 2.8 million (or 11% of the annual MGR). We have collected 92% of
the amount due for Q2 and 93% for July 2020.
In France, to support our tenants and facilitate rent collection, Eurocommercial offered three months rent free
to the very small tenantsin line with the recommendations of the French government, and 50 % rent free during
the lockdown period for the others. The total amount of rent reduction mentioned above is estimated at €4.3
million. 52% of tenants by MGR have already signed an agreement and 68% of the rent due and payable for the
second quarter has been collected. We expect no major default of payment for the third quarter rents, which
will be paid for the majority of our tenants, on a monthly basis.
In Italy, we entered into negotiations with our tenants soon after the immediate consequences of the COVID-19
emergency had become clearer. Our leasing and rent collection teams have been able to reach agreements with
over 88% (by MGR) of our tenants so far, with some more agreements expected to be reached soon after the
holiday period. Rent concessions were spread over Q2 and Q3. In H1 we have already collected 85% of the
invoiced rent (72% for Q2) with July figures at 97% as most tenants have been offered the possibility of paying
monthly in advance instead of quarterly in advance.
In Sweden, we offered assistance to tenants by reducing minimum trading hours thereby saving on staff costs,
and allowing monthly payments. Rents were negotiated on a case by case basis within the guidelines of the
government rent support initiative as agreed between the Landlords’ Association (Fastighetsägarna) and the
Retailers’ Association (Svensk Handel). This covered Q2 only and stated that if a landlord offered a qualifying tenant a rent discount of up to 50%, then within certain parameters the government would refund the landlord half the discount. Q2 rent collection is high at 95% of rents due and July rent collection equally high at 96%.

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tijd 09.07
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