Paris, Amsterdam, February 10, 2021
Press release
UNIBAIL-RODAMCO-WESTFIELD REPORTS FY-2020
EARNINGS
URW’s organisation has demonstrated resilience
in extreme operating conditions with positive consumer demand
whenever restrictions eased or lifted during 2020
Flagship destinations continue to attract
leading brands and emerging players – working together to
innovate in a rapidly evolving retail environment
Focused operational plan for 2021 and clear
commitment to deleveraging - URW will emerge as a
stronger business harnessing the market rebound
FY-2020 in Review
- Strong start to 2020 but only 70 days of normal operations,
most of the year subject to various restrictions and 93 days on
average “closed”(1)
- Like-for-like shopping centre Net Rental Income (“NRI”) down
-24%, driven by rent relief and doubtful debtors as URW was heavily
impacted due to central locations and F&B exposure
- Strong rebound whenever centres were open with sales
outperforming footfall, larger basket sizes and strong F&B
bounce - Continental Europe Q3-2020: 77% of 2019 footfall;
86% of 2019 sales
- Partnership approach to support tenants and innovative response
to restrictions ensured URW collected 88% of the total amount due
for FY-20 (80% of the billed rents); €401 Mn in total rent
relief at 100%
- Reinforcing trusted partnerships with established leading
brands and attracting emerging retail concepts in the innovative
Automotive, DNVB and Entertainment sectors; 1,528 new leases signed
in 2020 (-36% vs. 2019) with higher activity in H2
- IFRS LTV at 44.7% (44.0% pro-forma for the proceeds of the
SHiFT and Les Villages 3, 4 and 6 disposals)
- €2.3 Bn of disposals achieved including the sale of the SHiFT
and Les Villages 3, 4 and 6 office buildings, and a portfolio of
five French shopping centres
- URW will complete the remainder of the €4.0 Bn of European
disposals as well as implement a programme to significantly reduce
its financial exposure to the US
- €11.4 Bn in cash and available credit facilities at year
end
Commenting on the results, Jean-Marie Tritant,
Chief Executive Officer said:
“2020 has been a year like no other in URW’s
history and I want to thank our outstanding teams for showing true
resilience. They have worked tirelessly since March last year to
help our Group, our tenants and our communities to handle this
unprecedented situation. With restrictions in place across almost
all of our markets we have realistic expectations for 2021 but are
encouraged by the way footfall and sales bounced back strongly
whenever restrictions were eased or lifted last year.
There is clear pent-up consumer demand for high
quality shopping destinations, and leading and emerging brands are
choosing URW locations ahead of a market rebound. The retail
landscape is changing and our centres are proving to be attractive
for high potential sectors such as innovative automotive, digitally
native vertical brands and entertainment.
Operationally, we continue to deliver innovative
solutions for tenants and consumers, including the drive @
Westfield online purchase pick up programme, rolled out in all of
our US locations and 11 European centres. Mutually beneficial
partnerships with our tenants are key, and we have adopted a
“burden sharing” principle to negotiations in order to mitigate the
impact of the crisis and assist their rebound.
Deleveraging is a key priority and will be
achieved through a strict control of CAPEX, cost base and continued
disposals. We will complete the remaining €3.2 Bn of the €4 Bn
European disposals before the end of 2022. We are implementing a
programme to significantly reduce our financial exposure to the US
when the investment market reopens which should happen with the US
economy rebound in 2022. Our continued access to credit
markets and ample liquidity will allow us to complete our
deleveraging objectives in an effective and orderly
way.
Taking into account the current operating
environment and our commitment to deleveraging, the Group will
suspend the payment of a dividend for its fiscal years 2020,
2021 and 2022. We will resume the payment of a sustainable and
growing dividend once the deleveraging programme is completed.
Having delivered on our immediate operational and financial
priorities, URW will re-emerge as the most attractive retail
focused listed real estate company combining strong fundamentals
and outstanding growth potential.”
|
FY-2020 |
FY-2019 |
Change |
Like-for-like change(2) |
Net Rental Income (in € Mn) |
1,790 |
2,491 |
-28.1% |
-26.4% |
Shopping Centres |
1,699 |
2,293 |
-25.9% |
-24.0% |
Offices & Others |
85 |
103 |
-16.9% |
+0.1% |
Convention & Exhibition |
6 |
95 |
-93.6% |
-93.6% |
|
|
|
|
|
Recurring net result (in € Mn) |
1,057 |
1,760 |
-40.0% |
|
Recurring EPS (in €) |
7.63 |
12.72 |
-40.0% |
|
Adjusted Recurring EPS (in €) |
7.28 |
12.37 |
-41.1% |
|
|
|
|
|
|
|
Dec. 31, 2020 |
Dec. 31, 2019 |
Change |
Like-for-like change |
Proportionate portfolio valuation (in € Mn) |
56,314 |
65,341 |
-13.8% |
-11.2% |
EPRA Net Reinstatement Value (in € per stapled share) |
166.80 |
228.80 |
-27.1% |
|
Figures may not add up due to rounding
FY-2020 AREPS: €7.28
Reported AREPS amounted to €7.28, down -41.1%
from 2019, a decrease of -€5.09, split as follows:
- -€4.57 due to the impact of COVID-19 on operations and
financing (i.e. rent relief, doubtful debtors and lower variable
revenue streams);
- -€0.49 due to disposals made in 2019 and 2020;
- -€0.42 as a result of ending the capitalisation of letting
fees; and
- Partially offset by +€0.39 of other items(3).
OPERATING PERFORMANCE
Shopping CentresDuring the majority of
2020, governments implemented severe restrictions following the
outbreak of the COVID-19 pandemic, resulting in an unprecedented
interruption to operations in FY-20 with only ca. 70 normal trading
days and 93 days with the centres effectively closed(1).
The Group’s tenant sales(4) for the year overall
came to 63% of 2019, or 66% excluding F&B and Entertainment.
The best performing category in Europe was Food stores and Mass
Merchandise (97% of 2019). Most impacted sectors were Entertainment
(-68%) and Food & Beverage Services (-43%).
After reopening of the shopping centres closed
in Q2, footfall in Continental Europe in Q3 (the least disrupted
period) reached 77% of 2019 levels, with tenant sales outperforming
at 86% of 2019 levels, driven by higher basket size as customers
came to shop.
URW collected 80% of billed rents(5) in FY-2020
overall, with the remainder primarily either provided as part of
the rent relief or provisioned. The rent collection improved after
reopening to 85% in Q3, while Q2 at 61% and Q4 at 76% were impacted
by lockdowns and other restrictions. Adjusted for the rent relief
granted, the collection rate came to 88% of the total amount
due(6), with Continental Europe at 94%, reflecting the progress in
tenant negotiations and the efforts of URW’s teams.
Over 2020, the rent relief granted at the asset
level amounts to €401 Mn, which translates into €313 Mn for URW on
a proportionate basis, of which €246 Mn has been charged to the
2020 income statement. These negotiations are typically not about
permanently changing lease structures or changing the basis for
rent calculations (e.g., replacing Minimum Guaranteed Rent with
Sales Based Rent only leases), but rather focus on providing
appropriate rent relief to achieve a fair burden
sharing. Vacancy increased from 5.4% to 8.3% at year end 2020,
impacted by bankruptcies and lower leasing activity (1,528 leases
signed, -36% vs. 2019).
Lfl shopping centre NRI was down by -24.0% for
the Group, mainly driven by the impact of COVID-19 through rent
relief and higher bad debt provisioning. The Lfl NRI performance
was -19.1% in Continental Europe, -28.0% in the US and -49.3% in
the UK, which suffered in particular from a high level of CVAs and
bankruptcies.
The recovery seen during 2020 when centres
reopened, and when restrictions for F&B and Entertainment were
lifted, gives the Group a high degree of confidence that its
Flagship destinations will continue to be the preferred locations
for retailers and consumers.
Offices & Others
Lfl NRI was up by +0.1%, while total NRI was
down by -16.9%, primarily as a result of the disposals of the
Majunga office and the Novotel Lyon Confluence in 2019 and 2020,
respectively, and the transfer of Michelet Galilee to the pipeline,
partly offset by the delivery of SHiFT and Versailles Chantiers.
Convention & Exhibition
Recurring NOI was down by -92.3% compared to
2019, as most events were cancelled from March 9 as a result of
government restrictions. Currently the Group expects a restart of
activity in Q4-2021 / Q1-2022.
ADMINISTRATIVE EXPENSES
In 2020, URW implemented furlough plans and
partial activity schemes, reduced the non-staff costs, restructured
the US and UK organisation and downsized the development teams.
Collectively, these steps generated gross administrative savings of
€80 Mn in 2020 vs. 2019.
DELIVERIES
In 2020, the Group delivered the first phase of
the Westfield Valley Fair and La Part-Dieu retail extensions, two
restructuring projects at Westfield Les 4 Temps, and the Trinity
office tower. The average letting(7) of the retail deliveries
stands at 84%, as a result of phased deliveries.
In 2021, URW plans to deliver the Westfield Mall
of the Netherlands redevelopment in H1 (pre-letting(7): 90%), and
the Gaîté Montparnasse mixed-use project in H2 (pre-letting(7):
100% for Offices & Others, and 84% for Retail).
VALUATION
The proportionate Gross Market Value (GMV) of
the Group’s assets as at December 31, decreased by -13.8% to €56.3
Bn from December 31, 2019, mainly as a result of a like-for-like
portfolio revaluation of -€6,020 Mn (-11.2%), revaluation of non
like-for-like assets of -€1,141 Mn, FX impact and disposals, partly
offset by CAPEX.
The EPRA Net Reinstatement Value per share came
to €166.80 as at December 31, 2020, down -€62.00 (-27.1 %) compared
to December 31, 2019, and -€30.20 (-15.3%) compared to June 30,
2020.
STRONG LIQUIDITY POSITION WITH CONTINUED
ACCESS TO CREDIT MARKETS(8)
- Ample liquidity to cover financing needs for next 24
months
- Successfully issued €4,150 Mn of bonds in challenging
markets
The Group’s average cost of debt stood at 1.7%
for FY-2020 (vs. 1.6% in 2019), representing a blended 1.1% for
EUR(9) debt and 3.6% for USD and GBP debt. The LTV (Loan-to-Value)
ratio stood at 44.7% (44.0% pro-forma for the disposal of the SHiFT
and Les Villages 3, 4 and 6 office buildings). The ICR (Interest
Coverage Ratio) was 3.5x and the Net Debt / EBITDA was 14.6x due to
a strongly reduced EBITDA resulting from the COVID-19 crisis.
URW has good access to credit markets, as
illustrated by the €4,150 Mn of bonds issued during the year,
despite the adverse operational and market conditions. As a result,
the Group has a very strong liquidity position with €2.1 Bn of cash
and €9.2 Bn of undrawn credit facilities(10) as at December 31,
2020, covering its financing needs for the next 24 months, even
without any further funds being raised or disposals being
completed.
CONTINUED FOCUS ON DELEVERAGING
STRATEGY
- Deleveraging remains a key priority of URW
- This will be achieved via €4 Bn of European disposals(11)
and implementing a programme to significantly reduce financial
exposure to the US, strict control of CAPEX, and suspending the
dividend
URW remains strongly committed to deleveraging
through disposals, limiting CAPEX and temporarily suspending the
dividend.
In 2020, the Group completed the disposal of a
portfolio of five shopping centres in France to an entity formed by
Crédit Agricole Assurances, La Française and URW, in which the
Group holds a stake of 45.8%, generating Net Disposal Proceeds of
€1.5 Bn. URW also completed the disposal of several non-core assets
in Europe and the US.
In addition, URW announced the disposal of
SHiFT, which was closed on January 21, 2021, and of the Les
Villages 3, 4 and 6 office buildings, which are expected to close
during Q1-2021. With those disposals, the Group has completed €0.8
Bn of its €4 Bn European disposal target announced in September
2020.
URW intends to complete the remaining €3.2 Bn
European disposals by year end 2022 and will implement in 2021 /
2022 a programme to significantly reduce its financial exposure to
the US when the investment market reopens which should happen with
the expected US economy rebound in 2022. The Group’s strong
liquidity position allows it to do these disposals over time and in
an orderly fashion.
As a key part of the deleveraging plans, URW has
also reduced the development pipeline to €4.4 Bn(12), down from
€8.3 Bn(12) as at December 31, 2019. Committed projects
amount to €2.9 Bn, of which €1.7 Bn are already invested, leaving
only €1.2 Bn left to be spent. The Group will limit overall capital
expenditure for the next two years to €2 Bn in total.
NEW AND MORE AGILE ORGANIZATION
The newly constituted Management Board reflects
the strategic priorities of the Group in the current challenging
environment. A Chief Investment Officer has been appointed to
execute on URW’s disposal programme, while the Chief Customer
Officer will be fully focused on making the organisation more
customer centric and accelerating innovation and the use of digital
technology across the Group.
2021 GUIDANCE
- Realistic expectations for 2021
- First quarters of 2021: challenging conditions to remain in
place with operating restrictions
- Year end 2021: expected start of recovery varying by market,
depending on infection rate, vaccination roll out and government
stimulus programmes
As at the beginning of February, all countries
in which the Group is active continue to have some level of
restrictions in place which impact on the Group’s operations. As at
February 10, approximately 52% of URW’s shopping centres are
restricted from trading except for “essential” stores.
URW’s operational results will thus clearly
continue to be impacted by the pandemic in 2021. The impact is
likely to include further rent relief to tenants, further
disruption to variable revenue streams such as Sales Based Rent,
Parking or Commercial Partnerships, a longer than usual time needed
to re-lease vacant units, and the prospect of further tenant
bankruptcies. In addition, 2021 is likely to remain a challenging
year for the Group’s Convention & Exhibition and airports
businesses.
Given the uncertainty regarding the duration and
the severity of restrictions decided by governments and their
impact on the Group’s operations, URW is currently not providing
earnings guidance for 2021. Guidance will be provided when the
Group has clearer visibility on lifting of restrictions and the
subsequent economic recovery.
Looking forward, the Group sees good prospects
for a solid recovery starting at some point in the second half of
the year, as vaccination efforts achieve critical mass and
restrictions get lifted. Government support means that consumer
finances in the Group’s markets remain robust and the Group firmly
believes that people will again seek out the mix of top brands and
great experiences offered by URW’s Flagship destinations when they
are able to.
URW is very confident in the quality of its
assets and the enduring strength of its business and teams. The
Group, with its newly reconfigured management team, is taking all
necessary measures to address these challenges in the best possible
manner and strategically position URW for the future.
DIVIDEND POLICY
Given the impact of the pandemic on the Group’s
2020 results, the on-going uncertainty of the 2021 operating
environment and its impact on URW’s results, as well as the Group’s
commitment to deleverage, the Group has decided to suspend the
payment of a dividend for its fiscal years 2020, 2021 and 2022.
Once the Group has completed its deleveraging
programme, it will resume paying a dividend (at a significant and
sustainable payout ratio) which will grow in line with the
performance of its reshaped portfolio.
Given the statutory results of URW SE in 2020,
the Group has no obligation to pay a dividend in 2021 for the
fiscal year 2020 under the SIIC regime and other REIT regimes it
benefits from. It anticipates not to have such an obligation in
fiscal years 2021 and 2022 as well. Consequently, URW SE’s SIIC
distribution obligation, standing at €212.5 Mn as at December 31,
2020, will be delayed until URW SE has sufficient statutory results
to meet this obligation.
FINANCIAL SCHEDULE
The next financial events on the Group’s
calendar will be:April 28, 2021: Q1-2021 trading
updateMay 12, 2021: AGM Unibail-Rodamco-Westfield SEJuly
28, 2021: H1-2021 results
For further information, please
contact:
Investor Relations Samuel WarwoodMaarten
Otte +33 1 76 77 58 02 Maarten.Otte@urw.com
Media RelationsCéline van Steenbrugghe+33 6 71 89 73
08celine.vansteenbrugghe@urw.com
NB: All figures on a proportionate basis, unless otherwise
indicated
1. Normal operating days refer to the period pre-COVID. The
various restrictions include among others the closure of F&B or
other sectors, capacity restrictions. Centres counted as closed
when only “essential” stores were allowed to trade. Weighted by
shopping centres NRI in 2019.
2. 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.
3. Including minority interest in retail, taxes, contribution of
affiliates, FX impact, administrative expenses (excl. letting fees)
and others.
4. 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 2020
reporting period, shopping centres excluded due to delivery or
ongoing works were Les Ateliers Gaité, La Part-Dieu, CNIT (from
August 2020), 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 and Carrousel du Louvre.
5. For the Shopping Centre division, including service
charges.
6. Excluding deferrals and rent relief granted or under
process.
7. GLA signed, all agreed to be signed and financials
agreed.
8. On an IFRS basis.
9. Including SEK.
10. Subject to covenants.
11. Including €0.8 Bn of SHiFT and Les Villages 3, 4 and 6
already signed.
12. 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) opening marketing
expenses. It excludes: (i) step rents and rent-free periods; (ii)
capitalized financial interests; (iii) overhead costs; (iv) early
or lost Net Rental Income; and (v) IFRS adjustments.
About Unibail-Rodamco-Westfield
Unibail-Rodamco-Westfield is the premier global
developer and operator of Flagship Destinations, with a portfolio
valued at €56.3 Bn as at December 31, 2020, of which 85% in retail,
8% in offices, 5% in convention & exhibition venues and 2% in
services. Currently, the Group owns and operates 87 shopping
centres, including 53 Flagships in the most dynamic cities in
Europe and the United States. 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 3,100
professionals and an unparalleled track-record and know-how,
Unibail-Rodamco-Westfield is ideally positioned to generate
superior value and develop world-class projects.
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 a Baa1 rating from Moody’s.
For more information, please visit
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