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The SIIC regime

What is the SIIC regime?


SIIC stands for Sociétés d’Investissements Immobiliers Cotées.  This French tax regime was created in 2003 and Unibail-Rodamco-Westfield has opted for it since January 1, 2003.  The SIIC regime is based on the concept of tax transparency with rental income and capital gains from the disposal of real estate assets are not subject to tax at the level of French property entities but at the shareholder level.
Unibail-Rodamco-Westfield and its subsidiaries which opted for the SIIC regime have to comply to minimum distribution requirements:

95% of the Group's rental result,

60% of capital gains,

100% of dividends received from SIIC subsidiaries.

The SIIC tax exemption is limited to revenues derived from the French portfolio of
Unibail-Rodamco-Westfield. Some activities carried out in France are not eligible to the SIIC exemption. This mainly concerns the Group's Convention & Exhibition activities. Revenues from non-French properties do not benefit from the SIIC regime unless the local property company opted for a SIIC-equivalent tax regime (e.g. the SOCIMI regime in Spain).

How are dividends split between the SIIC and non-SIIC regime?

The "SIIC" regime is based on the concept of tax transparency.

The SIIC dividend corresponds to Unibail-Rodamco-Westfield’s minimum distribution obligation under the SIIC regime. Incremental dividend is paid out of non-SIIC earnings.  The dividend for the fiscal year of 2017 (paid in 2017) of €10.80 per share is made of a SIIC component of €4.15 (paid out of SIIC or SIIC-equivalent earnings) and a non-SIIC component of €6.65 (paid out of non-SIIC or non-SIIC equivalent earnings).

Is it possible to hold Unibail-Rodamco-Westfield shares in a French Share Savings Plan (PEA)?


After the French Budget law of 2012 was passed, investment in SIIC shares can no longer be made through a PEA (French Share Savings Plan) since October 21, 2011.
SIIC shares held prior to the change in legislation can be maintained in a PEA and therefore still benefit from the tax exemption on dividends and capital gain on the sale of shares.

Dividends

What is the payment schedule for dividends?

For the fiscal year of 2017 (paid in 2018), will be as follows:

An interim dividend of €5.40 will be paid on March 29, 2018 (ex-dividend date on March 27, 2018)

A final dividend of €5.40 per share, subject to approval of the AGM. The final dividend will be paid to Unibail-Rodamco shareholders of record prior to the closing of the Westfield acquisition.

How much dividend will be distributed in 2017?

The Group will pay (for the fiscal year 2017) €10.80 per share in 2018. This represents a pay-out ratio of 90%, in line with the Group’s distribution policy (85% - 95% of recurring EPS)

Taxation


What level of tax is applied in France to Unibail-Rodamco-Westfield's dividends?

The SIIC and non-SIIC dividends are subject to different tax regimes:

1. SIIC dividend for French residents:

Individuals: standard income tax without any basis rebate (pre-payment of income tax through a 21% tax withheld upon dividend payment) plus social security charges (15.5%).

Corporate shareholders: standard corporate income tax (33.33% plus surcharge if applicable) without any participation exemption benefit

Collective investment vehicles: 15% withholding tax.

2. Non-SIIC dividend for French residents:

Individuals: standard income tax with a 40% basis rebate (prepayment of income tax through a 21% tax withheld upon dividend payment) plus social security charges (15.5%).

Corporate shareholders: standard corporate income tax (33.33% plus surcharges if applicable) with a participation exemption benefit where applicable.

Collective investment vehicles:  no withholding tax.

Non-French residents:

Individuals: 30% French withholding tax or 21% if the recipient is EU or EEA-based, this is usually reduced to 15% under applicable tax treaties.

Non EU based corporate shareholders and collective investment vehicles: 30% French withholding tax usually reduced to 15% under applicable tax treaties.

Collective investment vehicles established in the EU: no withholding tax.

Is the dividend (SIIC/non-SIIC) received by non-resident shareholders subject to tax outside of France?

Dividend income is generally subject to income tax in the jurisdiction of the recipient  and double taxation is generally avoided through a tax credit or an exemption mechanism.

What taxation level is applicable to capital gains on the sale of shares?



For French residents:

Individuals: gain subject to standard income tax net of a 50% rebate basis after a two-year holding period or a 65% rebate after an eight-year holding period, plus social charges (15.5%).

Corporate: gain subject to standard corporate income tax (unless shares qualify as participation shares and are held for more than two years prior to disposal: in that case, a reduced 19% rate may apply).

For non-French resident: Gains subject to the applicable tax treaty.

General Meeting


How can I participate in the General Meeting?

If you hold registered shares, you should receive a Notice of Meeting a few weeks before the Annual General Meeting. On the reply form attached, tick the box “I wish to attend the Shareholder’s Meeting and request an admission card”  and send it duly completed to:


BNP Paribas Securities Services
Grands Moulins de Pantin – Investor Services
Relations Actionnaires Unibail Rodamco
9, rue du Débarcadère
93 761 Pantin Cedex
Tel: +33 (0) 1 57 43 02 30
Fax: +33 (0)1 55 77 34 17

If you hold bearer shares, you should directly contact the financial agent responsible for the management of your share account in order to receive a Notice of Meeting. Tick the box “I wish to attend the Shareholder’s Meeting and request an admission card” on the reply form attached to the Notice of Meetings and send it duly completed to the financial agent responsible for the management of your share account. At the same time, you should also request a certificate proving that you are a shareholder at the date of the request.

How can I vote if I cannot attend the General Assembly myself?

You need to fill in the reply form attached to the Notice of Meeting. You then have three options:

Appoint the Chairman of the General Meeting as your proxy,

Appoint a person of your choice as your proxy,

Vote by the post.

The form duly completed should be returned to:

1. BNP Paris bas Securities Services if you hold registered shares:


BNP Paribas Securities Services
Grands Moulins de Pantin – Investor Services
Relations Actionnaires Unibail Rodamco
9, rue du Débarcadère
93 761 Pantin Cedex
Tel: +33 (0) 1 57 43 02 30
Fax: +33 (0)1 55 77 34 17


2. The financial agent responsible for the management of your share account if you hold bearer shares:
If you haven’t received your Notice of Meeting, you can contact the financial agent responsible for the management of your share account.

Valuation

How is Unibail-Rodamco-Westfield’s portfolio valued?

Unibail-Rodamco-Westfield’s assets are valued twice a year by external and independent appraisers. The appraisers determine the fair market value based on the results of two methods: the discounted cash flow (DCF) methodology and/or the yield methodology. Furthermore, the resulting valuations are cross-checked against the initial yield, value per square meter and the fair market values established through current market transactions.

Unibail-Rodamco-Westfield’s assets are valued twice a year by external and independent appraisers.

Appraisers have been given access to all relavant information for valuations, such as the Group’s confidential rent rolls, including information on vacancies, break options, expiry dates, lease incentives, performance indicators (e.g., footfall and sales where available), letting evidence and the Group’s cash flow forecasts from detailed annual business plans for each asset. Appraisers make their independent assessments of current and forward looking cash flow profiles and usually reflect risk either in the cash flow forecasts (e.g. future rental levels, growth, investment requirements, void periods and incentives), in the applied required returns or discount rates and in the yield applied to capitalize the exit rent to determine an exit value.

The value of Unibail-Rodamco-Westfield’s portfolio is the addition of the value of each individual asset as determined by the Group’s appraisers. This approach does not include the “portfolio value”, which reflects the additional value of having a large group of unique assets in a single portfolio although it is definitely part of the appeal to the Group’s shareholders.

How are Unibail-Rodamco-Westfield’s development projects valued?

Projects in the development pipeline are valued at cost until a fair value valuation becomes reliable, or  one year before the construction is completed.