UNIBAIL-RODAMCO-WESTFIELD, THE PREMIER GLOBAL DEVELOPER AND
OPERATOR OF FLAGSHIP DESTINATIONS, REPORTS H1-2020 EARNINGS
Paris, Amsterdam, July 29, 2020
Press release
UNIBAIL-RODAMCO-WESTFIELD, THE PREMIER
GLOBAL DEVELOPER AND OPERATOR OF FLAGSHIP DESTINATIONS, REPORTS
H1-2020 EARNINGS
Adjusted Recurring Earnings per Stapled
Share (“AREPS”) of €4.65
- Encouraging footfall
recovery; regions open 11 to 12 weeks generally at 80 –
90% of LY
- Tenant sales: impacted
less than footfall in June, thanks to higher conversion
and average baskets
- Tenant negotiations: approximately
a quarter of the way through the process
- Collection rates: 94% in
Q1; 67% for H1-2020 overall
- Liquidity: €12.7
Bn of cash and undrawn lines
- Disposals: completed €2.0
Bn (at 100%) transaction for five French retail
assets
- Average cost of debt:
1.7%; average debt maturity extended to a
record 8.5
years
- Like-for-like portfolio
revaluation: -5.1%
- EPRA Net Reinstatement Value (“EPRA
NRV”): €197.00/stapled share
- Development pipeline scaled back to
€6.2 Bn (-€2.1 Bn vs. Dec. 31,
2019)
- LTV: 41.5%,
leaving ample headroom to covenants
“The first half of 2020 marked an unprecedented
time that has impacted URW, as it has everyone. URW was forced to
substantially close most of its shopping centres starting in March
for, on average, 67 days. During this period, the Group took steps
to support the communities in which it operates and prepare for a
safe reopening in line with the best health and safety guidelines.
After the reopening, the footfall and sales have been recovering
better than anticipated. This shows our centres continue to be
attractive destinations for people to visit and will see further
increases in activity as life returns to normal. During the crisis,
URW successfully focused on preserving liquidity, by raising funds
on the debt markets, deferring non-essential CAPEX, reducing the
pipeline, cancelling the final dividend and implementing cost
savings. The Group now has a record €12.7 Bn of cash and undrawn
credit facilities available. Despite the adverse conditions, the
Group successfully closed the disposal of a 54.2% stake in a
portfolio of five French centres. URW is committed to
de-leveraging, and reiterates its plans to dispose the remaining €4
Bn of its asset disposal programme over the next couple of years.
These accomplishments during such a difficult period prove the
resilience of URW and the extraordinary work of our teams, to which
I extend my admiration and gratitude.”Christophe Cuvillier,
Group Chief Executive Officer
|
H1-2020 |
H1-2019 |
Growth |
Like-for-like growth(1) |
Net Rental Income (in € Mn) |
1,065 |
1,254 |
-15.1% |
-14.2% |
Shopping Centres |
1,008 |
1,137 |
-11.4% |
-11.3% |
France |
310 |
330 |
-6.0% |
-2.7% |
Central Europe |
111 |
113 |
-1.7% |
-1.7% |
Spain |
73 |
77 |
-4.3% |
-2.1% |
Nordics |
55 |
66 |
-16.6% |
-13.0% |
Austria |
39 |
56 |
-29.5% |
-27.5% |
Germany |
65 |
70 |
-7.1% |
-9.4% |
The Netherlands |
26 |
28 |
-5.8% |
-9.7% |
United States |
277 |
319 |
-13.2% |
-15.3% |
United Kingdom |
50 |
78 |
-35.9% |
-34.1% |
Offices & Others |
42 |
62 |
-32.1% |
+0.4% |
Convention & Exhibition |
15 |
56 |
-73.2% |
-73.2% |
|
|
|
|
|
Recurring net result (in € Mn) |
667 |
916 |
-27.2% |
|
Recurring EPS (in €) |
4.82 |
6.63 |
-27.2% |
|
Adjusted Recurring EPS (in €) |
4.65 |
6.45 |
-28.0% |
|
|
|
|
|
|
|
June 30, 2020 |
Dec. 31, 2019 |
Growth |
Like-for-like growth |
Proportionate portfolio valuation (in € Mn) |
60,350 |
65,341 |
-7.6% |
-5.1% |
EPRA Net Reinstatement Value (in € per stapled
share) |
197.00 |
228.80 |
-13.9% |
|
EPRA Net Tangible Assets (in € per stapled
share) |
153.90 |
177.60 |
-13.3% |
|
EPRA Net Disposal Value (in € per stapled
share) |
145.50 |
159.50 |
-8.8% |
|
Figures may not add up due to rounding
H1-2020 AREPS OF €4.65
Reported AREPS amounted to €4.65, down -28.0%
from H1-2019, a decrease of -€1.80, split as follows:
- -€0.16 due to disposals made in 2019 and 2020;
- -€0.22 as a result of ending the capitalisation of letting
fees;
- -€1.45 due to the impact of COVID-19 on operations and
financing, of which:
- -€0.11 due to rent relief;
- -€0.57 due to increased doubtful debtors;
- -€0.25 due to lower variable revenue streams (e.g. Sales Based
Rent (“SBR”), parking, and Commercial Partnerships);
- -€0.21 due to lower net services income;
- -€0.24 reduction in net income from the Convention &
Exhibition business; and
- -€0.07 increase in financial expenses due to liquidity measures
taken in response to the crisis.
- +€0.03 of all other items.
OPERATING PERFORMANCE
Shopping CentresIn mid-March,
almost all URW centres were forced to close (excluding select
essential retailers, and The Netherlands and Sweden, where more
limited restrictions applied). On average, the centres were closed
for 67 days(2). Centres in Germany were the first ones to be
allowed to reopen, followed by Austria and Poland. Centres in
France resumed operations from May 11, except for a prolonged ban
on centres over 40,000 sqm in the Paris region and in Lyon, which
affected URW more than any other landlord given the Group’s
concentration on Flagship assets in these regions. In the US,
centres gradually reopened from May 15 in Florida. Stores in
enclosed parts of centres in California were ordered to close again
from July 13, with curbside pick-up permitted, while Westfield
World Trade Center still hasn’t been allowed to reopen. These
developments show that the risk of the pandemic has not fully
subsided.
As at June 30, 2020, 97% of the stores within
URW’s European centres were open, 1% were still restricted from
trading, while the remainder mainly relates to delayed reopening of
tenants in the UK. In the US, 77% of stores and 86% of GLA had
reopened as at June 30.
Footfall in the European centres has shown an
encouraging recovery so far. In regions that reopened 11 to 12
weeks ago, footfall is generally trending at 80 – 90% of the same
period in 2019. In France and Spain, where most of the Group’s
shopping centres reopened later, the Group sees a similar pattern.
In the UK, the lockdown only ended on June 15. With restrictions
still in place for leisure operators, and people strongly
encouraged not to return to offices or take public transport until
at least late July, footfall is now approaching 50% of 2019.
Tenant sales(3) through February 2020 had
performed well and were up by +2.2% for the Group(4). In centres in
Continental Europe that were open the entire month of June(5),
tenant sales for the month recovered to more than 80% of the same
period in 2019. Excluding F&B and entertainment, as well as
fashion categories(6), which are impacted particularly in France
due to the postponement of summer sales from June 24 to July 15,
tenant sales came to almost 92% of June last year. Sales are less
impacted than footfall due to higher conversion rates and average
baskets. Best performing categories were home (+5.6%),
culture/media and technology (+1.7%), food stores (-0.1%),
jewellery (-7.7%) and gifts (-8.3%). Considering the centre
closures, the sales data from March to May, and hence for H1-2020
overall, is not meaningful.
The rent collection for the shopping centre
division in H1 came to 67% (94% for Q1, 38% for Q2). 3% of the Q2
rents have been forgiven through rent relief, 20% has been
deferred, either by agreement or by application of law, and 39% is
overdue and to be recovered. As at July 24, collection for July
stood at 50%. The Group expects an improvement following completion
of ongoing tenant negotiations regarding COVID-19 assistance.
Such negotiations are conducted on a case by
case basis on the principle of a fair sharing of the burden, and
include a request for concessions from tenants (i.e., extension of
the firm period of the lease, increase of the SBR percentage,
waiver of co-tenancy provisions in the US, new landlord
break-options or signature of leases for new stores). The Group
estimates it is approximately a quarter of the way through this
process, which only started at the end of the lockdown in the
applicable regions.
Lfl shopping centre NRI was down -11.3% for the
Group, and -6.7% in Continental Europe, mainly driven by the impact
of COVID-19. This impact included higher doubtful debtors, lower
parking revenue, SBR and Commercial Partnerships income, and, to a
lesser extent, rent relief provided to tenants. Rent relief
amounted to €32.6 Mn in Europe, which had an accounting impact of
only €15.6 Mn in H1-2020 due to the application of IFRS 16, which
usually requires rent relief to be recognised on a straight-line
basis over the remaining fixed term of the lease.
Leasing activity was affected by the COVID-19
pandemic, with 661 leases signed Group-wide, down -44% compared to
H1-2019. Despite this, Spain (+29.0%), France (+15.4%) and Central
Europe (+14.1%) showed a strong MGR uplift, with +5.5% overall in
Continental Europe.
Despite an elevated level of tenant
bankruptcies, vacancy increased by only +140 bps for the Group to
6.8%. In Continental Europe, vacancy came to 3.9% (2.5% as at
December 31, 2019).
Offices & Others
The impact of the disposal of Majunga and the
Lyon Confluence hotel, as well as the transfer of Michelet-Galilée,
Village 5 and the San Francisco Centre offices to the
pipeline, was only partly offset by the delivery of Shift,
Versailles Chantiers and Palisade at Westfield UTC. Lfl NRI was up
+0.4%, while total NRI was down by -32.1%.
Convention & Exhibition
Recurring NOI was down -71.0% compared to 2018
(restated for the triennial INTERMAT show). 125 events had been
held prior to activities being ordered to stop on March 9. As at
July 29, 191 events scheduled to take place in 2020 have been
cancelled and 95 postponed, of which 26 to 2021. Activities will
resume on September 1.
FUTURE OF RETAIL AND URW’S CSR
STRATEGY
Although it is naturally much too early to draw
definitive conclusions, there was a significant uptick in
e-commerce penetration during the lockdown, as well as in local
shopping. Nevertheless, in many markets, brick & mortar sales
are now returning to more normal levels, although with some
differences between categories. As online only brands still
struggle with profitability despite the increase in turnover during
COVID-19, omni-channel retailers remain eager to reopen stores and
open new ones, albeit on a selective basis, as these are essential
to their strategy. URW is fully embracing the retail digitalisation
and has rolled-out a number of initiatives, like smart parking,
Line Pass, curbside pick-up, food delivery and a partnership with
Zalando, to enhance customers’ digital experience and enrich its
tenants omni-channel capabilities.
The current crisis has also accelerated changes
in consumer behavior like more local and carbon conscious shopping,
for which URW has been preparing through its ambitious Better
Places 2030 CSR strategy. URW’s leadership is widely recognized,
illustrated by the prime “B” ISS ESG rating received in the
period.
DEVELOPMENT PIPELINE FURTHER
REDUCED
In response to the COVID-19 crisis, URW deferred
from 2020 €500 Mn of development and operating CAPEX. URW also
removed an additional €1.6 Bn of projects from the pipeline in
H1-2020, displaying the flexibility of its pipeline to respond to
changing conditions. The Total Investment Cost (TIC)(7) of URW’s
development pipeline now stands at €6.2 Bn, down from €8.3 Bn
as at December 31, 2019 and from €10.3 Bn as at June 30, 2019.
The Group retains significant flexibility, with
committed projects of only €3.6 Bn, of which €2.0 Bn has already
been invested. The Group plans to deliver in H2-2020 five projects,
with a TIC of approximately €830 Mn, including the La Part-Dieu
extension and the Trinity office building. The opening of Westfield
Mall of the Netherlands was postponed to early 2021. The Group
delivered the €0.5 Bn (Group share) expansion of Westfield Valley
Fair.
CLEAR FOCUS ON COSTS
URW reduced general expenses through partial
employment and furlough schemes. As the development pipeline was
scaled back, an adjustment of the corresponding staff was made. In
a very difficult business environment, the Group also further
reduced headcount through its “Agility programme” in the US and the
UK. Non-staff costs were cut as well. Collectively, these steps are
expected to save about €40 Mn in gross admin expenses in 2020, and
€60 Mn on an annualised basis.
VALUATION
The Gross Market Value (GMV) of the Group’s
assets as at June 30, 2020, decreased by -7.6% to €60.4 Bn on a
proportionate basis, including a like-for-like portfolio
revaluation of -€2,768 Mn (-5.1%), a non-LFL revaluation of -€658
Mn, and the impact of disposals. The Shopping Centre GMV was €51.8
Bn, down -5.2% on a like-for-like basis. The average Net Initial
Yield (“NIY”) of the retail portfolio widened by 8bps to 4.4%. On a
like-for-like basis, the GMV of the Convention & Exhibition and
services business, both significantly impacted by COVID-19, were
down by -4.8% and -9.0%, respectively. The valuation of Offices
& Others was broadly stable on a like-for-like basis
(+0.2%).
The EPRA NRV per stapled share came to €197.00
as at June 30, 2020. Adjusted for the impact of the -€0.53
mark-to-market of financial assets and the -€5.40 dividend paid in
2020, the EPRA NRV was down by -€25.87 (-11.6%) compared to
December 31, 2019.
DISPOSALS
On May 29, 2020, the Group successfully closed,
as scheduled, the disposal of a portfolio of five French shopping
centres, with a price at 100% of €2.0 Bn and Net Disposal Proceeds
for URW of €1.5 Bn, to the entity formed by Crédit Agricole
Assurances and La Française (54.2%), and URW (45.8%).
The Group remains committed to reduce leverage,
and aims to dispose the remaining €4 Bn of its asset disposal
programme over the next couple of years, of which about 50% will be
retail.
STRONG LIQUIDITY POSITION WITH RECORD
DEBT MATURITY
Following the Group’s prudent capital
management, cash and undrawn available credit lines amounted to a
record €12.7 Bn as at June 30, 2020. URW accessed the debt
markets in April and June, issuing a total of €2.2 Bn of Euro
senior bonds with an average coupon of 2.27% and an average
maturity of 9.3 years. This extended the Group’s average debt
maturity to a record 8.5 years.
The average cost of debt for the Group increased
slightly to 1.7%, representing a blended 1.1% for EUR(8) debt and
3.6% for USD and GBP debt. The Loan-to-Value (LTV) ratio stood at
41.5%, with the interest coverage ratio (“ICR”) at 4.2x. The LTV
and ICR levels show ample headroom compared to the covenants of the
European corporate credit facilities, which are the strictest
corporate debt covenants of the Group, with a maximum LTV of 60%
and minimum ICR of 2x.
2020 OUTLOOK
URW believes the uncertainty regarding the
duration and impact of the COVID-19 pandemic on its operations and
financial results remains material and that it is too early to
provide new guidance on the outlook for 2020. The Group reiterates
its intention to provide an update of its guidance when it can
reliably estimate the duration, severity and consequences of the
current situation.
FINANCIAL SCHEDULE
The next financial events on the Group’s
calendar will be:October 28, 2020: 2020 Q3 results
(after market close)February 10, 2021: 2020
Full-Year resultsMay 12, 2021: AGM
Unibail-Rodamco-Westfield SE
For further information, please
contact:
Investor Relations Samuel WarwoodMaarten
Otte +33 1 76 77 58 02 Maarten.Otte@urw.com
Media Relations Tiphaine Bannelier-Sudérie
+33 1 76 77 57 94 Tiphaine.Bannelier-Suderie@urw.com
- Like-for-like NRI: Net Rental Income excluding acquisitions,
divestments, transfers to and from pipeline (extensions,
brownfields or redevelopment of an asset when operations are
stopped to enable works), all other changes resulting in any change
to square metres and currency exchange rate differences in the
periods analysed.
- Weighted average based on FY-2019 NRI.
- Tenant sales performance in URW’s shopping centres (except The
Netherlands) in operation, including extensions of existing assets,
but excluding deliveries of new brownfield projects, newly acquired
assets and assets under heavy refurbishment. For the H1-2020
reporting period, shopping centres excluded due to delivery or
ongoing works were Les Ateliers Gaité, La Part-Dieu, CH Ursynow,
Garbera, Westfield Valley Fair and Gropius Passagen. Primark sales
are based on estimates. Tenant sales data include shopping centres
accounted for using the equity method, but not Zlote Tarasy as it
is not managed by URW.
- Total tenant sales excluding Tesla.
- Excludes Westfield Forum des Halles, Carrousel du Louvre and
Westfield Les 4 Temps in France; Parquesur, La Vaguada, La
Maquinista, Glòries, Splau and Equinoccio in Spain.
- Including fashion, bags & footwear & accessories, and
department stores.
- URW Total Investment Cost (TIC) equals 100% TIC multiplied by
URW percentage of ownership of the project, plus specific own
costs, if any. 100% TIC is expressed in value at completion. It
equals the sum of: (i) all capital expenditures from the start of
the project to the completion date and includes: land costs,
construction costs, study costs, design costs, technical fees,
tenant fitting-out costs paid for by the Group, letting fees and
related costs, eviction costs and vacancy costs for renovations or
redevelopments of standing assets; and (ii) tenants’ lease
incentives and opening marketing expenses. It excludes: (i)
capitalized financial interests; (ii) overheads costs; (iii) early
or lost Net Rental Income; and (iv) IFRS adjustments.
- Including SEK.
About Unibail-Rodamco-Westfield
Unibail-Rodamco-Westfield is the premier global
developer and operator of Flagship destinations, with a portfolio
valued at €60.4 Bn as at June 30, 2020, of which 86% in retail, 7%
in offices, 5% in convention & exhibition venues and 2% in
services. Currently, the Group owns and operates 89 shopping
centres, including 55 Flagships in the most dynamic cities in
Europe and the United States. Its centres welcome 1.2 billion
visits per year. Present on two continents and in 12 countries,
Unibail-Rodamco-Westfield provides a unique platform for retailers
and brand events and offers an exceptional and constantly renewed
experience for customers. With the support of its 3,400
professionals and an unparalleled track-record and know-how,
Unibail-Rodamco-Westfield is ideally positioned to generate
superior value and develop world-class projects. As at June 30,
2020, the Group had a development pipeline of €6.2
Bn.Unibail-Rodamco-Westfield distinguishes itself by its Better
Places 2030 agenda, that sets its ambition to create better places
that respect the highest environmental standards and contribute to
better cities. Unibail-Rodamco-Westfield stapled shares are listed
on Euronext Amsterdam and Euronext Paris (Euronext ticker: URW),
with a secondary listing in Australia through Chess Depositary
Interests. The Group benefits from an A- rating from Standard &
Poor’s and from an A3 rating from Moody’s.
For more information, please visit
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