Paris, Amsterdam, July 31, 2019
Press release
UNIBAIL-RODAMCO-WESTFIELD, THE PREMIER
GLOBAL DEVELOPER AND OPERATOR OF FLAGSHIP DESTINATIONS, REPORTS
SOLID RESULTS FOR H1-2019
Adjusted Recurring Earnings per Stapled
Share (“AREPS”) of €6.45
- Very strong tenant sales
growth in Flagship destinations: +5.7% in
Continental Europe, +7.1% in the UK, and
+4.9% in the US.
- Group Net Rental Income (NRI)
like-for-like (Lfl)(1) increased by +3.3%. Lfl
growth in Shopping Centres in Continental Europe was
+2.1%, in the UK -3.1%, and in
the US growth in comparable Net Operating Income (NOI)(2) was
+2.2%, of which +5.5% in
Flagships
- Continental European rental uplift
of +12.2%, of which +13.8% in
Flagships
- Average cost of debt:
1.6%, and average debt maturity extended to a
record 8.0
years(3)
- EPRA NAV: €216.10
/ stapled share (-2.6%)
- Development pipeline scaled back to
€10.3 Bn
- Disposals: €1.2 Bn agreed
or closed, bringing total completed disposals since June
7, 2018, to €3.2 Bn
- LTV: 37.5%
pro-forma for the Majunga disposal(4)
- Upgrading 2019 AREPS
guidance by €0.30 to €12.10 – €12.30
“Unibail-Rodamco-Westfield (URW) delivered solid results,
despite the challenging retail environment. With a unique
transatlantic platform, connecting the best brands with over 1.2
billion customer visits each year in the wealthiest catchment
areas, the URW portfolio is at the forefront of the changes in a
rapidly evolving retail environment. We are making significant
progress in executing on our strategic objectives of Concentration,
Differentiation, and Innovation, with very strong tenant sales
growth in Europe and the US, the disposal of €3.2 Bn of assets
above book value over the past 12 months, and multiple openings of
restaurants, leisure concepts and Digital Native Vertical Brands
across our portfolio.
Our transatlantic reach made possible by the creation of URW is
showing the first exciting results: the Group signed a
first-of-its-kind agreement with The VOID, a leading immersive
virtual reality experience operator, to roll out their concept in
over 25 of URW’s Flagship destinations in both the US and Europe.
More cross-border deals are expected to follow.
Our €10 Bn pipeline is well positioned for a mixed-use future,
now with 50% of the GLA in retail and the rest in dining &
leisure, offices, residential, and hotels. With our unique skills
this will continue to contribute to value creation.
Confident in URW’s performance, the outlook for the remainder of
the year, and favourable financing conditions, we are increasing
our 2019 AREPS guidance by +€0.30 to a range of between €12.10 and
€12.30.” Christophe Cuvillier, Group Chief Executive
Officer
|
H1-2019 |
H1-2018 |
Growth |
Like-for-like growth |
Net Rental Income (in € Mn) |
1,254 |
923 |
+35.9% |
+3.3% |
Shopping Centres |
1,137 |
798 |
+42.4% |
+2.1% |
France |
330 |
323 |
+2.2% |
+2.0% |
Central Europe |
113 |
108 |
+5.3% |
+4.1% |
Spain |
77 |
82 |
-6.3% |
+5.3% |
Nordics |
66 |
73 |
-10.2% |
-2.0% |
Austria |
56 |
54 |
+3.5% |
+2.1% |
Germany |
70 |
69 |
+0.9% |
+0.7% |
The Netherlands |
28 |
30 |
-5.1% |
+0.4% |
United States |
319 |
46 |
n.m. |
|
United Kingdom |
78 |
14 |
n.m. |
|
Offices & others |
62 |
76 |
-19.1% |
+9.4% |
Convention & Exhibition |
56 |
49 |
+14.7% |
+14.7% |
|
|
|
|
|
Recurring net result (in € Mn) |
916 |
703 |
+30.4% |
|
Recurring EPS (in €) |
6.63 |
6.61 |
+0.2% |
|
Adjusted Recurring EPS (in €) |
6.45 |
6.58 |
-1.9% |
|
|
|
|
|
|
|
June 30, 2019 |
Dec. 31, 2018 |
Growth |
Like-for-like growth |
Proportionate portfolio valuation (in € Mn) |
64,967 |
65,201 |
-0.4% |
-1.3% |
Going Concern Net Asset Value (in € per stapled
share) |
217.70 |
233.90 |
-6.9% |
|
EPRA Triple Net Asset Value (in € per stapled
share) |
199.00 |
210.80 |
-5.6% |
|
EPRA Net Asset Value (in € per stapled share) |
216.10 |
221.80 |
-2.6% |
|
Figures may not add up due to rounding
H1-2019 AREPS OF €6.45
Reported AREPS was €6.45 (-1.9%) as a result of
the disposals completed in 2018 and HY-2019 (€2.3 Bn), which impact
was partially offset by the robust operating performance and +€0.09
due to the implementation of IFRS 16. Rebased for these disposals,
the growth of AREPS would be +3.7%, despite the increase in the
number of shares issued as a result of the Westfield
acquisition.
SOLID OPERATING PERFORMANCE
Shopping Centres - Continental
EuropeThrough June 30, URW tenant sales grew by +5.3% and
by +5.7% in Flagship centres(6). Through May 31, tenant sales
increased(5) by +4.9%, outperforming national sales indices(7) by
+242 bps. In France, tenant sales increased by +4.6% (+5.4% through
June 30), outperforming the IFLS index by +270 bps and the CNCC
index by +470 bps. Central Europe also did especially well, up by
+4.6%, outperforming the national sales indices by +172 bps. The
Nordics, up by +13.8%, was boosted by the outstanding performance
of Tesla in its two flagship stores in URW’s Stockholm centres.
Lfl NRI grew by +2.1%, +50 bps above indexation
and ahead of the Group’s objectives for H1, of which +5.3% in Spain
and +4.1% in Central Europe. The Group signed 700 leases with a
Minimum Guaranteed Rent (MGR) uplift of +12.2%, and +13.8% for
Flagships. The rotation rate amounted to 5.3% and EPRA vacancy
increased by 40 bps to 2.8%, reflecting some tenant departures or
bankruptcies. Many retailers are carefully reviewing the
performance of existing stores and the opportunity to open new
ones; hence, some leasing negotiations are taking longer. URW’s
leasing strategy is to make no concessions on conditions in
Flagships and use a case-by-case approach for the other shopping
centres.
United KingdomFootfall was up
by +6.4% in H1-2019, outperforming the UK shopping centre index by
+770 bps. Tenant sales through June 30 increased by +7.1%, and
through May 31 by +7.9%, outperforming the national sales index by
+846 bps, particularly reflecting the strong growth of +13.8% at
Westfield London. The footfall and sales results benefit from the
opening of Phase 2 of Westfield London in March 2018, as well as
the continued growth of Westfield Stratford City. Average MGR
uplift was strong at +15.9%. EPRA vacancy stood at 8.7%, primarily
driven by some non-renewals, the impact of retailer bankruptcies,
and the delays in leasing at Westfield London Phase 1 as Brexit
uncertainty deters new market entrants. Consequently, Lfl NRI
decreased by -3.1% compared to H1-2018.
United States Tenant sales(8)
increased by +3.0% through June 30, of which +4.9% in Flagships.
Speciality sales productivity per square foot (psf)(9) increased by
+11.3% (+12.8% for Flagships). Average letting spreads were +5.2%
and +7.7% for Flagships. Average specialty store rent was $93 psf,
up +5.2%. As at June 30, 2019, occupancy stood at 93.4% (94.6% in
Flagships), -90 bps below June 30, 2018. Lease commitments of
vacant spaces as at June 30 amounted to an additional 1.9% of GLA.
Comparable NOI increased by +2.2% or +5.5% for Flagships, improving
from -3.0% and -2.6%, respectively, in H1-2018.
Offices Lfl NRI increased by
+9.4%, of which +13.8% in France, mainly due to an indemnity
received. The Group agreed the disposal of Tour Majunga for a net
disposal price of €850 Mn, reflecting a net initial yield of 4.16%,
and generating an unlevered 13-year Internal Rate of Return of 12%.
This transaction closed on July 3, 2019.
Convention &
ExhibitionRecurring NOI in H1-2019 was up by +13.8%
compared to H1-2017, and by +20.3% compared to H1-2018 (excluding
the impact of the triennial INTERMAT show held in H1-2018).
AT THE FOREFRONT OF THE RETAIL
TRANSFORMATION
The Group provides a unique transatlantic
platform, connecting the best brands with over 1.2 billion customer
visits each year in the wealthiest catchment areas.
The URW portfolio is at the forefront of the
changes in a rapidly evolving retail environment. Exposure to
fashion is being gradually reduced and replaced by exciting new
formats of growing retail segments.As online players seek a
physical presence, the Group continued to grow the number of DNVBs
in its portfolio, with six new leases signed in Continental Europe
and 15 in the US in H1-2019.The Group opened three fully let new
dining precincts, Täby Deli (Täby Centrum, Sweden), Les Tables de
Vélizy (Vélizy 2, France) and Les Tables du Carré (Carré Sénart,
France), strengthening the food offer and the appeal of these
centres. In addition, new cutting edge Cinema concepts were opened
at Carré Sénart, Velizy 2, Parly 2 and Westfield Valley Fair.
EXPANDING OUR CSR STRATEGY
URW’s CSR strategy, Better Places 2030, was
extended to the new regions of the Group (the UK and US). While
URW’s ambition to halve its carbon footprint by 2030 remains
central, Better Places 2030 now also tackles new environmental
challenges like responsible consumption and the circular
economy.
STARTING THE CAPTURE OF REVENUE
SYNERGIES
The new Group-wide Commercial Partnerships and
International Leasing teams started generating part of the
announced €40 Mn in run-rate revenue synergies. Commercial
Partnership revenues in Continental Europe grew by +12% to €15.4 Mn
and in the UK by +24% to £4.1 Mn.URW will further leverage the
world-famous Westfield brand by rebranding a number of its
Continental European Flagships, with the first ten centres
scheduled for September 2019.
The Group enhanced the cross-fertilization of
retailer relationships between the US and Continental Europe by
accelerating the development of US retailers such as Abercrombie
& Fitch and Polo Ralph Lauren. Aiming to introduce leading and
differentiating leisure offers in its centres, the Group levered
its transatlantic platform of Flagship destinations and entered
into a framework agreement with The Void (a fully immersive virtual
reality experience) to open over 25 locations across URW’s
portfolio, representing around 20,000 sqm. The first six leases for
locations in the US have already been signed.
A FLEXIBLE PIPELINE TO REINVENT
CITIES
The URW Total Investment Cost(10) of the
development pipeline amounted to €10.3 Bn, down from €11.9 Bn
as at year-end 2018. The Group retains significant flexibility,
with committed projects of only €2.9 Bn, of which €1.6 Bn has
already been invested. The pipeline GLA is split between retail
(50%), dining & leisure (16%), offices (14%), residential and
third party residential (15%)(11), and hotels (5%). Significant
progress was made on the construction of the Shift and Trinity
office buildings, scheduled to be delivered in H2-2019 and H1-2020,
respectively, as well as on the extension of Westfield Valley Fair
(H1-2020) and Westfield Mall of the Netherlands (H2-2020). In July,
the Group delivered ten floors of its first residential project,
Palisade at Westfield UTC. The remaining floors will be delivered
in August.
NAV EVOLUTION
The Gross Market Value (GMV) of the Group’s
assets as at June 30, 2019, amounted to €65.0 Bn on a proportionate
basis (€65.2 Bn as at December 31, 2018). The Shopping Centre GMV
was €55.7 Bn, down -1.2% on a like-for-like basis (-0.8% for
Flagships). The Office GMV came to €4.8 Bn, up by +4.1% on a
like-for-like basis. GMV of the Convention & Exhibition
division decreased by -6.2% on a like-for-like basis, driven by an
increase in the discount rate. The average net initial yield
(“NIY”) of the retail portfolio remained stable at 4.3%.
Going Concern NAV per stapled share came to
€217.70 as at June 30, 2019. Adjusted for the impact of the -€10.68
mark-to-market of the fixed-rate debt and derivatives and the
-€5.40 dividend paid in H1-2019, the Going Concern NAV was broadly
stable (down -€0.12) compared to December 31, 2018.
SUCCESSFUL DISPOSALS TO DATE
In the last 12 months, the Group disposed of
€3.2 Bn of office and retail assets(12). These were disposed at an
aggregate NIY of 4.2% and 5.4%, and a 6.2% and 8.4% premium to the
latest book values, respectively. With these transactions, the
Group exceeded its initial target of €3 Bn of disposals well ahead
of schedule. Following the Group’s annual 5Y Business Plan exercise
in 2018, the target was increased to €6 Bn, of which 53% has
already been achieved. A number of discussions are currently
on-going for further disposals.
AVERAGE COST OF DEBT OF 1.6% AND AVERAGE
MATURITY OF 8.0 YEARS
The average cost of debt of the Group remained
low at 1.6%, representing the blended average cost of debt on a
standalone basis of only 1.0% for Unibail-Rodamco, an all-time low,
and 3.5% for Westfield. Including the 30-year bond issued on July
1, 2019, and the consequent repayment of 80% of the 2014 ORNANE,
the average debt maturity came to a record 8.0 years. URW was the
first REIT ever to issue 30-year notes in the Euro bond market, at
a historic low coupon for a corporate issuer for this maturity. The
Loan-to-Value (LTV) ratio was 38.3%, and 37.5% pro-forma for the
receipt of the Majunga disposal proceeds on July 3, 2019. The
interest coverage ratio was 5.8x. Undrawn available credit lines
amounted to a record €9.2 Bn.
OUTLOOK AND GUIDANCE
URW’s performance through June 30 was solid
despite the challenging retail environment. The Group expects
Continental European Like-for-like NRI to grow by around +3% for
2019, and financing conditions have remained more favorable than
anticipated.
Consequently, the Group
increases its 2019 AREPS
guidance by +€0.30, of which approximately +€0.18
due to the implementation of IFRS 16 as of January 1, 2019, to a
range of between €12.10 and
€12.30 (€11.80 - €12.00 previously).
FINANCIAL SCHEDULE
The next financial events on the Group’s
calendar will be:October 28, 2019: 2019 3rd
quarter results (after market close)February 12,
2020: 2019 Full-Year results (after market
close)May 15, 2020: 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 meters and currency exchange rate differences in the
periods analysed.
- Comparable NOI is based on Net Operating Income before
management fees, termination/settlement income and straight-line
adjustments, and excluding one-offs. For comparability, recent
project deliveries or centres undergoing significant development
works are excluded.
- Pro-forma for the 30-year bond issued on July 1, 2019, and the
consequent repayment of 80% of the 2014 ORNANE.
- Pro-forma for receipt of the disposal proceeds of Majunga on
July 3, 2019. LTV as at June 30, 2019: 38.3%
- Tenant sales data include shopping centres accounted for using
the equity method (Rosny 2, CentrO, Paunsdorf and Metropole
Zlicin), except Zlote Tarasy as it is not managed by URW. 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 H1-2019
reporting period, shopping centres excluded due to delivery or
ongoing works were Galerie Gaité, La Part-Dieu, CH Ursynow, Garbera
and Gropius Passagen. Primark sales are based on estimates.
Boutiques du Palais is now included in the C&E segment.
- Continental European Flagship assets are: Les Quatre Temps,
Aéroville, Parly 2, Vélizy 2, Carré Sénart, Rosny 2, Le Forum des
Halles, Carrousel du Louvre, CNIT, Confluence, La Part-Dieu,
Villeneuve 2, Euralille, Polygone Riviera, La Vaguada, Parquesur,
Bonaire, Splau, La Maquinista, Glòries, Donau Zentrum, Shopping
City Süd, Centrum Cerny Most, Centrum Chodov, Wroclavia, Galeria
Mokotow, Zlote Tarasy, Arkadia, Aupark, Fisketorvet, Mall of
Scandinavia, Täby Centrum, Stadshart Amstelveen, Westfield Mall of
the Netherlands, Ruhr Park, Gropius Passagen, CentrO and Pasing
Arcaden.
- Based on latest national indices available (year-on-year
evolution) as at May 2019: France: Institut Français du Libre
Service (IFLS)-excluding food; Spain: Instituto Nacional de
Estadistica; Central Europe: Cesky statisticky urad (Czech
Republic), Polska Rada Centrow Handlowych (Poland) (as at April
2019), Eurostat (Slovakia); Austria: Eurostat; the Nordics: HUI
Research (Sweden), Danmarks Statistik (Denmark); Germany:
Destatis-Genesis, excluding online only operators and fuel sales
(Federal Statistical Office). Including online only sales for
France, Spain, Austria, the Czech Republic and Slovakia and
excluding online only sales for Germany, the Nordics and
Poland.
- Total tenant sales excluding department stores.
- Calculated on the basis of sales psf for specialty tenants,
being stores with <10K sq. ft (ca. 929 sqm). For centres in
operation and excluding new brownfield deliveries, acquired assets
and assets under heavy refurbishment (in line with the UR
methodology).
- 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 3rd party residential, not included in URW pipeline
disclosures.
- Including the Majunga disposal closed on July 3, 2019.
About Unibail-Rodamco-Westfield
Unibail-Rodamco-Westfield is the premier global
developer and operator of Flagship destinations, with a portfolio
valued at €65.0 Bn as at June 30, 2019, of which 86% in retail, 7%
in offices, 5% in convention & exhibition venues and 2% in
services. Currently, the Group owns and operates 92 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 2 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 3,700
professionals and an unparalleled track-record and know-how,
Unibail-Rodamco-Westfield is ideally positioned to generate
superior value and develop world-class projects. The Group has a
development pipeline of €10.3 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 A2 rating from Moody’s.
For more information, please visit
www.urw.comVisit our Media Library at
https://mediacentre.urw.comFollow the Group updates on Twitter
@urw_group, Linkedin @Unibail-Rodamco-Westfield and Instagram
@urw_groupAccess the URW 2018 report at
https://report.urw.com/2018/
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