19 June 2013 17:35:00> show graphic
WHERE WE COME FROM
Since 2000, Corio has grown from a Dutch mixed retail fund to a pan-European real estate company with a clear focus on retail. The company has a presence in the largest consumer markets in continental Europe, management is fully in-sourced and the business has a solid financial position. In the changing retail landscape Corio is now ready to enter the next phase and take advantage of future opportunities and dynamics in the industry.
In December of 2012, Corio announced its intentions to fully focus its portfolio on the Favourite Meeting Place concept. FMPs are places where people browse, buy, eat, drink and return to regularly, not because they need to, but because they want to. We are convinced that Favourite Meeting Places will generate greater economic activity, as reflected in rising footfall and conversion rates. Over time, these centres will deliver higher capital value and cash flow growth, driven by their greater appeal for tenants as well as their redevelopment and extension opportunities.
Despite being good performing centres, part of Corio’s portfolio will not be able to fully adapt to the FMP concept. These so-called Traditional Retail Centres (TRC) focus on daily needs, are pure convenience based and often, but not always, smaller assets. The decision to further specialise has triggered the disposal of this part of the portfolio. TRCs make up 17% of Corio’s total portfolio value and will be divested gradually over the next 3-4 years.
LOWER LEVERAGE AND GREATER EFFICIENCY
The proceeds of the divestments will enable Corio to finance the company at lower leverage levels. The focus on a smaller number of, on average, larger assets also means we can improve the efficiency of the organisation, lowering operational and administrative expenses.
All in all, the full focus on FMPs will lead to a superior quality shopping centre portfolio, enhanced growth opportunities and a more sound capital structure with lower leverage. This serves as a solid platform to drive future profitable growth.
The company will be more focused on the output than on the process, efficiency being the key word. The implementation of a new performance management system that is focused on execution and output is supportive in making this change. This translates into strict targets, stringent cost controls and benchmarking. Vigorous execution of our strategy is what it is all about. More agility and a cash flow driven mindset is key in making that happen.