December 17, 2013 / 2:45 PM / in 4 years

Fitch: Carrefour's Klepierre Malls Acquisition is Positive; No Immediate Rating Impact

(The following statement was released by the rating agency) LONDON, December 17 (Fitch) Fitch Ratings says Carrefour SA's (BBB/Stable) announcement that it will purchase a significant share in 172 shopping centres through a new joint venture (JV) is positive as it will allow the group more influence over a large number of shopping centres adjoining its hypermarkets and supermarkets in France, Spain and Italy. However, there is no immediate rating impact. Under the proposed transaction Carrefour will part-own a JV with 172 shopping centres adjoining its existing hypermarkets and supermarkets. The JV structure will initially be low cost for Carrefour and could provide operational advantages to the hypermarket business. After a number of difficult years, Carrefour's French hypermarket division is beginning to show some signs of footfall and trading revival. The transaction will give Carrefour the opportunity to fully participate in the management, refurbishment and re-letting of shop and other units trading next to it. Carrefour will also be able to take a more holistic approach to managing its trading sites. Under the terms of the transaction, Carrefour will become a 42% shareholder in a new JV owning 127 shopping malls purchased from Klepierre SA and 45 contributed by Carrefour. The total value of the portfolio is estimated at EUR2.7bn. As a 42% shareholder, Carrefour will benefit from its share of the rental income derived after costs and interest. The new structure will see the remaining 58% shareholding owned by a group of institutional investors, and the JV intends to raise debt of EUR900m. Fitch estimates that the structure should be financially neutral for Carrefour, as the rents which were paid to Carrefour's 45 shopping malls by its tenants should now be broadly covered by dividends paid to the group as a shareholder by the new JV. The financial effect of the transaction also ties in with the group's cautious financial policy, reflected in reduced cash dividends in 2012 and 2013 and non-core asset disposals. Fitch recognises that for Carrefour the participation in the JV is positive in terms of the opportunities to actively manage the whole-sites, but also notes that there are execution and future letting risks involved with the transaction. In addition Carrefour has identified around EUR500m of maintenance and development capex to be spent on the sites in the next five years. The transaction, which is expected to be completed in the first half of 2014, is subject to final agreement between the parties and approval from the relevant regulatory authorities. Contact: Jean-Pierre Husband Director +44 20 3530 1155 Fitch Ratings Limited 30 North Colonnade London E14 5GN Anne Porte Associate Director +33 1 44 29 91 36 Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: Additional information is available on ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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