Eurocommercial Properties N : Earnings Document

Annual Report

31 December 2023

Contents

Business review

1. 1 Key events and performance overview

1. 2 Eurocommercial Properties

1. 4 Board of Management review

1. 6 Strategy
   12 Financial review
   20 Property performance
   24 Be partners with our retailers
   36 Digital Transformation
   42 Be connected to our communities

Environmental, Social and Governance

1. Environmental, Social and Governance

1. Key Performance Indicators

Country focus

1. Belgium

1. France

1. Italy

1. Sweden

This document is the PDF version of the 2023 Annual Report of Eurocommercial Properties N.V. in the European single electronic reporting format (ESEF) and has been prepared for ease of use. The ESEF reporting package is available on our website. Please note that, in case of discrepancies between this PDF version and the ESEF reporting package, the latter prevails.

The front cover:

Valbo Shopping, Gävle, Sweden

Governance and risk management

1. Corporate Governance

1. Risk Management

1. Report of the Board of Supervisory Directors

Financials

Financial statements

1. Consolidated statement of profit or loss
2. Consolidated statement of comprehensive income
3. Consolidated statement of financial position
4. Consolidated statement of cash flow
5. Consolidated statement of changes in equity
6. Notes to the consolidated fiinancial statements

1. Company balance sheet
2. Company statement of profit or loss
3. Notes to the Company financial statements

Other information

1. Other information
2. Independent auditor's report

Supplementary information

1. Ten year fiinancial summary
2. Statement of consolidated direct, indirect and total investment results
3. Statement of adjusted net equity
4. EPRA performance measures

1. Glossary

1. Directory

Eurocommercial Properties N.V.	1
Report of the Board of Management 2023

2023

Key events and performance overview

Retail sales growth	Rent uplift on renewals and relettings
5.8%	2.8%
Rent collection	Rental growth
99% of invoiced rent	9.7%
Property valuations over calendar 2023	Proposed total dividend per share
-2.2%(12 months)	€1.70
IFRS loss
€26.9 million

Alternative performance measures

EPRA vacancies at year end	EPRA Net Tangible Asset (EPRA NTA)
1.5%	€39.59 per share
Loan to value (LTV) ratio	Green Star status
42.5%	four GRESB stars
Direct investment result	EPRA sBPR Gold Award for the tenth year in a row
€123.1 million	Gold Award
Direct investment result per share

€2.32

2	Eurocommercial Properties N.V.
Report of the Board of Management 2023

Eurocommercial Properties

We own and manage shopping centres in Belgium, France, Italy and Sweden with a total value of almost €3.8 billion.

Belgium France

€522.4m 1

Property value

Property

14%

of portfolio

€802.3m 8

Property value

Properties

21%

of portfolio

Read more in country report Belgium	p88	Read more in country report France	p96

Eurocommercial Properties N.V.	3
Report of the Board of Management 2023

We create, own and actively manage enjoyable spaces which serve as a focal point for their communities.

Italy		Sweden

€1,655.7m 8

Property value

Properties

44%

of portfolio

€791.3m 7

Property value

Properties

21%

of portfolio

Read more in country report Italy	p118	Read more in country report Sweden	p140

4	Eurocommercial Properties N.V.
Report of the Board of Management 2023

Board of Management review

2023 was a record year

for rental growth.

Evert Jan van Garderen

Chief Executive Officer

Consumer spending across our four markets continued to be very robust during 2023 despite increased living costs, particularly energy and food. Our retail operations saw a continuation of the growth reported last year, with retail sales and footfall in our 24 shopping centres increasing by 5.8% and by 3.4% respectively during 2023. All our markets and retail sectors reported positive sales growth, with the outstanding performers being services (15.4%), F&B (14.7%), sport (9.7%), health & beauty (9.4%) and home goods (7.1%). The important fashion and shoe sector also saw positive sales growth of 2.2%.

Rental growth for the 12 months to 31 December 2023 was 9.7%, due mainly to significantly higher rental indexation. 99% of rents have been collected for the full year 2023, indicating that there has been a full pass through of indexation to our tenants who are generally trading well from an affordable rental base and a low OCR, which still averages only 9.5%. Our leasing teams continued to report steady leasing momentum, negotiating 240 lease renewals and relettings during the 12-month period ended 31 December 2023. These lease transactions achieved an overall positive rental uplift of 2.8% on top of the high levels of rental indexation that was applied across the portfolio. Strong tenant demand and letting activity have also kept our overall vacancy level down at only 1.5%.

Our valuations decreased by 2.2% over the year and by 2% since June 2023 when the properties were last valued. Over six months, the largest decrease in value was Belgium (-7.6%), followed by Sweden (-1.6%), France (-1.5%) and Italy (-0.6%). Despite significantly higher net operating income, this decrease in value resulted from higher initial or exit yields and higher discount rates, with the overall EPRA net initial yield increasing from 5.5% to 5.8%. Higher yields were a reflection of an investment

market with relatively low transaction volumes and characterised by cautious investors, pricing uncertainty, increasing interest rates and rising borrowing costs.

During 2023, we completed the negotiations on several anchor stores at Woluwe Shopping, and during the spring Zara will open an enlarged unit of around 3,300m², which will be shortly followed by C&A, who are relocating to a unit of 1,455m².

INNO have also started the refurbishment on their 12,000m² flagship store, while Carrefour are taking over Woluwe's supermarket historically operated by Match. In Sweden, the final phase of the project at Valbo outside Gävle opened on 28 October 2023, providing a new entrance, external façades and an extension comprising seven new stores let to important Swedish retailers mainly in the F&B, fashion and consumer electronic sectors.

In 2023, the Company continued the implementation of its ESG strategy. During this year, we completed three solar panel installation projects at I Gigli, Carosello and Etrembières which are already contributing towards the electricity requirements of their common areas. Collectively, our shopping centres increased their energy production by 14% last year, while energy consumption decreased by 15%. Continuing with our decarbonisation targets, we achieved a reduction of 24% in our Scope 1 and 2 emissions, and after decommissioning several gas plants we reduced our gas consumption by 31%. Waste to landfill also decreased by 38%. All our properties have been assessed and are currently certified with BREEAM In-Use. In 2023, the Company increased the number of its green and sustainability loans. The Company completed a detailed climate change risk assessment for each property, providing the necessary data and information to prepare climate change risk mitigations plans. Eurocommercial is taking proactive steps having regard to European regulations, particularly the Corporate Sustainability Reporting Directive. As part of the preparations, the Company is undertaking a double materiality assessment which will be completed in the first half of 2024.

The Company has already secured the refinancing of all its long-term loans maturing in 2024. In February 2024, a new loan of €17.5 million (€8.8

Eurocommercial Properties N.V.	5
Report of the Board of Management 2023

million group share) was signed with Banco BPM to refinance the previous loan on the retail park of Fiordaliso in Italy. In March 2024, the Company closed three five-year sustainability linked loans for a total amount of €100 million with ABN AMRO Bank on the centres of I Portali and Il Castello in Italy. In April 2024, the Company also entrered into a five- year green loan with Skandinaviska Enskilda Banken AB for a total amount of SEK 700 million (circa €62.5 million) on the Hallarna shopping centre.

The average interest rate as per 31 December 2023 increased to 3.2% from 2.9% at 30 June 2023 and from 2.4% at 31 December 2022, as a result of the progressive increase in both the Stibor and Euribor rates, which impacted on the 19% unhedged part of the Company's loan portfolio.

Since its incorporation in 1991, the Company qualifies as a fiscal investment institution (fiscale beleggingsinstelling or FBI) under Dutch tax law. This implies that the Company is subject to corporate income tax at the rate of zero percent, provided

it distributes its taxable profit to its shareholders. These distributions are subject to a 15% Dutch dividend withholding tax. On 27 December 2023, the act to amend the FBI regime was published, which no longer allows an FBI to invest in Dutch real estate, unless through a subsidiary/subsidiaries that is/are subject to the regular Dutch corporate income tax rate. There is no limitation for the FBI to invest in foreign properties. The amendment will take effect as from 1 January 2025. Eurocommercial will not be affected by this change, as it has no Dutch real estate. The Company will continue to maintain its FBI status as there are no adverse tax consequences following this amendment of the FBI regime.

Having regard to the results of the Company for the financial year 2023, the Board of Management and the Supervisory Board propose to pay a total dividend of €1.70 per share, an increase of 6.25% compared to last year's dividend of €1.60 per share, subject to shareholders' approval at the 2024 Annual General Meeting. An interim dividend of €0.64

per share was already paid on 30 January 2024, representing 40% of the total dividend paid out the previous year (2022). The distribution date of the final dividend of €1.06 per share will be 5 July 2024. As was the case with the 2024 January interim

dividend, holders of shares will also be offered the option of taking new shares from the Company's share premium reserve, instead of the cash dividend payable. The price of these new shares will be announced on 7 June 2024.

The outlook for 2024 is linked to the evolution of the macro-economic environment. Increasing geopolitical tensions and a number of upcoming elections in several parts of the world may impact this evolution. The Company's rental growth will be slowed down by lower levels of indexation particularly in Italy, where the index applicable for 2024 is only 0.6% (down from 11.3% last year). However, this slow down should be partially compensated by the effects of our renewal and reletting programme and the expected reduction of market interest rates which will lower today's levels of interest expenses for the un-hedged part of the loan book. Assuming no major deterioration of the macro-economic environment, we expect the direct investment result for 2024 to range between €2.30 and €2.40 per share.

Evert Jan van Garderen Peter Mills

Roberto Fraticelli

Board of Management

From left to right:

Peter Mills, Chief Investment Officer

Evert Jan van Garderen, Chief Executive Officer Roberto Fraticelli, Chief Financial Officer

6	Eurocommercial Properties N.V.
Report of the Board of Management 2023

During 2023 we announced

and commenced the implementation of our updated strategy founded on three drivers to accelerate change: ESG, digitalisation and communities.

Evert Jan van Garderen

Chief Executive Officer

During 2023, the Board of Management began the implementation of its updated strategy founded on three drivers to accelerate change: ESG, digitalisation and communities. The strategy and the Company's Vision and Mission statements were presented to its stakeholders during the year.

Vision

Shopping centres are constantly evolving but remain essential for their retailers' brand building while delivering frictionless and omnichannel experiences for their local communities in a safe and inspiring meeting place, providing a wide range of retail products, services and leisure.

Mission

To create, own and actively manage enjoyable spaces which serve as a focal point for their communities. To protect and enhance long- term stakeholders' value through professional management, engagement, training, digitalisation and shared experiences provided responsibly within an increasingly sustainable framework.

Investment strategy

Eurocommercial has more than 30 years' experience in investing and managing shopping centres in Europe with a portfolio of around €3.8 billion comprising 24 prime assets in Italy, France, Sweden and Belgium. These countries have substantial depth to their markets providing portfolio diversity, while the reasons they were initially selected still stand: sound economic fundamentals, an established institutional property market, a broad retail tenant base, transparency, including tenant sales data and a reliable planning and legal framework. These countries also continue to provide opportunities for future expansion and growth so that our experienced country teams can leverage on the Company's historic market position, knowledge, contacts and professional reputation among retailers, service providers and other tenants, financing institutions and market operators.

A shopping centre specialist Eurocommercial employs a rigorous, research-ledapproach to its acquisitions which are focused on easily accessible, well-locatedretail properties that dominate their catchment areas. Our economic and research teams conduct detailed catchment studies concentrating on their current and prospective demographic and economic profiles. At the same time, care is taken to analyse and assess the current and future provision of retail space and competition in the catchment to ensure that the retail density is appropriate.

Each asset has been carefully and individually selected and purchased following rigorous investigations and research. Rental levels are carefully reviewed to check they match tenant sales turnover which is declared monthly in all our centres. This allows the acquisition team to verify that the occupancy cost ratio (OCR) is at a level that will enable tenants to be profitable thereby not only underwriting a centre's long-term, sustainable rental income, but also important in maintaining Eurocommercial's historically low vacancy levels.

Following the completion of its €200 million disposal programme during 2022, the Company has a very homogenous portfolio comprising 24 shopping centres in its four markets. The existing

Eurocommercial Properties N.V.	7
Report of the Board of Management 2023

portfolio provides sufficient geographical and asset diversification with its five flagships (approximately 45% of the portfolio), and with the remainder being suburban, hypermarket anchored shopping centres, with more than 60% of their floor space devoted to everyday and essential retail and providing an increasing range of services and amenities for their local communities.

Shopping centres should be enjoyable places and should deliver sufficient footfall to stay attractive to current and future tenants. In order to serve its community, a shopping centre should not only offer a complete retail experience but also a range of food & beverage facilities, leisure activities, services and health care, all provided in a safe and pleasant environment. The shopping centres should also support their tenants' integrated and omnichannel retail approach in order to provide a seamless customer journey. The collection and sharing of visitor data and the design of the retail space including storage, delivery and return points, supports the physical store which forms an increasingly important part of a retailer's brand building. Anchor stores are carefully identified and strategically located to drive footfall levels to support the whole shopping centre and its broad retail mix.

A diversified shopping centre portfolio Our existing property portfolio of 24 shopping centres reflects our approach to investment diversification. Our five "flagship" assets representing around 45% of the portfolio by value are located in three of our four countries:

• Woluwe Shopping, Brussels
• Passage du Havre, Paris
• Carosello, Milan
• Fiordaliso, Milan
• I Gigli, Florence

These five "flagships" are all well-known both nationally and internationally and are very well established regional shopping centres in their city catchments. They are also important destinations for an expanding international tenant base (e.g. Primark, Inditex, H&M, Apple, Nike) as well as the most important national brands (e.g. Fnac,

OVS, Inno). Fiordaliso and Carosello are two of the three regional centres that ring Milan, while I Gigli has been for many years one of Italy's largest shopping centres by footfall. Woluwe Shopping has been regarded as the benchmark for shopping centres in Belgium for over 50 years and remains the first calling point for new international brands establishing in that market. The flagships are all sufficiently large assets to accommodate joint venture partners providing capital diversification. Current examples are Passage du Havre (AXA) and Fiordaliso (Finiper).

The remainder of the portfolio (approximately 55%) are predominantly suburban hypermarket anchored shopping centres with more than 60% of their floor space devoted to everyday and essential retail providing consistent and regular footfall during the whole week. These centres are mainly located in important provincial cities in their countries and are characterised by their dense primary catchments and strategic road locations providing easy access, free parking and integrated public transport. They are sufficiently large to be well represented by national and regional tenants in most retail sectors. They also provide their more local communities with a safe and pleasant environment in which to enjoy an increasing range of services including restaurants, cafés, health care, dentistry, fitness, family recreation, co-working, hair and beauty salons etc.

Many of these centres were carefully sited and originally developed by the hypermarkets themselves, who then sold on the galleries to professional investors more experienced in shopping centre asset management. The hypermarkets still perform an important function, selling affordable daily goods, particularly groceries, to a socially diverse customer base. Their non-food function has now partly been replaced in our retail locations by an increasing range of destination, value retailers selling lower cost goods in most sectors.

8	Eurocommercial Properties N.V.
Report of the Board of Management 2023

Strategy (continued)

Selective growth and asset rotation Further growth and diversification of the property portfolio could be achieved through joint ventures with financial partners, which could be envisaged for specific assets. Extensions of shopping centres have to provide a minimum return reflecting the risks and strategic value of the projects.

Asset rotation could be triggered by the disposals of mature assets, where value has been maximised for our purposes and further growth potential maybe limited compared to alternative investment opportunities. Other asset rotation situations could arise where competition in the catchment of a shopping centre has, or is expected to, increase significantly or where local economic and demographic conditions are forecast to become less favourable.

Financial strategy

Real estate is a highly capital-intensive industry and having a stable and balanced financial structure in place is fundamental to the success of the Company. Our tailor made, asset backed financing structure has enabled us to remain largely unaffected by the volatility of the credit markets, helping us to keep a healthy balance sheet. We aim at maintaining this rigorous financial discipline and approach each investment decision accordingly. This includes disposing of more mature assets

to reinvest the proceeds in projects with higher expected returns. Overall, we aim to maintain a loan to value ratio (LTV) of around 40%.

Eurocommercial is financed exclusively through mortgage loans. This financing structure provides the right flexibility to raise finance secured against individual or groups of assets. The Company has no financing from the fixed income markets and therefore is not exposed to conditions therein such as market volatility or a potential rating downgrade. We have strong and long-standing lending relationships with a group of over 15 Belgian, Dutch, French, German, Italian and Swedish specialist real estate financing banks, ensuring diversity of access to finance between lenders and across different geographies, which support the financial robustness of the Company. Our long-term financing contracts are generally full recourse and

are secured by mortgages in favour of the respective financing bank. These mortgage agreements are entered into by the Company's local subsidiaries which own the properties in the various countries, under contracts governed by local law. Bank covenants for all long-term financing arrangements have been agreed also at the local asset level, which can be a loan to value ratio, interest cover ratio or a debt service ratio or a combination thereof, all related to the performance of the local property.

The average committed unexpired term of our bank loans is almost three years and the LTV ratio on the basis of the proportionally consolidated balance sheet of the Company as per 31 December 2023 was 42.5%, significantly below the bank covenant at group level agreed with banks, which is a LTV ratio for the group of 60%. The Company aims

at maintaining its rigorous financial discipline and introduced in 2021 a new dividend policy whereby a target of 75% of distributable profits has been set. The dividend policy also provides for an interim dividend payable in January and a final dividend payable in July, requiring cash flow discipline to be able to offer shareholders a stable income stream every six months.

Green Finance Framework

Eurocommercial has published a Green Finance Framework to support the Company's strategy and the transition to a low carbon economy. The Green Finance Framework has been reviewed by ISS Corporate Solutions to assess the alignment of the project categories financed with Eurocommercial's sustainability key objectives, the clarity of the description provided of those objectives and the rationale for issuing Green Finance Instruments. As a result of its review, ISS Corporate solutions issued a Second Party Opinion, which has been published on our corporate website together with the Green Finance Framework.