Paris, Amsterdam, July 28, 2022 Press
release
UNIBAIL-RODAMCO-WESTFIELD REPORTS H1-2022
EARNINGS
Adjusted Recurring EPS of €4.95 – up +53.1%
driven by the continued recovery across all business
divisions
Q2 tenant sales exceeding pre-COVID
levels
Strong leasing demand and reduced vacancy, as
retailers continue to expand selectively at best locations, and
corporations select high quality and sustainable office
buildings
Further progress on comprehensive deleveraging
plan – €1.0 Bn pro-forma IFRS net debt reduction
EBITDA up +48% year-on-year, thanks to the
recovery of retail and C&E activity, resulting in a strong
improvement of credit metrics
Strong liquidity and hedging position
2022 AREPS guidance increased from €8.20 -
€8.40 to at least €8.90
H1-2022 in review:
-
Tenant sales exceeding 2019 levels in Q2 (105% of 2019 levels for
the Group) ahead of expectations, with overall sales for H1 at 99%
of 2019 levels, Continental Europe at 97%, UK at 91% and US at
106%
-
Continued retail vacancy reduction: 6.9% at Group level (FY-2021:
7.0%) including 9.7% in the UK (FY-2021: 10.6%), 10.4% in the US
(FY-2021: 11.0%) and 4.0% in Continental Europe (FY-2021:
4.0%)
-
1,201 letting deals signed with Minimum Guaranteed Rent (MGR)
uplift of +11.8% on longer term deals (>36 months) – longer term
deals represent 59% of deals signed (vs. 44% in H1-2021)
-
Rent collection at 96% (vs. 88% reported at FY-2021 and 73%
reported in H1-2021)
-
Refinancing needs for the next 36-months secured with €12.0 Bn of
cash and available facilities
-
Fully hedged1 against interest rate rises for the coming 5
years
-
80% of €4.0 Bn European disposal target now signed or completed at
a premium to last appraised values
-
Continued streamlining of US regional portfolio with the sale of
Promenade development parcel
-
H1-2022 pro-forma IFRS Net Financial Debt reduced by -€1.0 Bn to
€21.6 Bn, Net Debt to EBITDA improved from 16.6x in H1-2021 to
11.0x in H1-2022
-
130 bps reduction in IFRS LTV to 42.0%, and 180 bps or 41.5%
pro-forma for all signed disposals
-
Valuation increase thanks to positive FX impact and like-for-like
shopping centre revaluation in Continental Europe
-
Successful delivery of Gaîté Montparnasse Office (Paris) and
Westfield Topanga extension (Los Angeles region)
-
Launch of Lightwell office regeneration project (Paris region) with
80% pre-letting and 85% of construction cost secured
-
Improved 2022 AREPS guidance of at least €8.90 given the
operational recovery of retail and C&E assets in a challenging
macro-environment
Commenting on the results, Jean-Marie Tritant,
Chief Executive Officer said:
“Our operational performance in H1-2022 was very
strong, with tenant sales reaching pre-COVID levels earlier than
expected in Continental Europe. We are seeing strong leasing
demand, with retailers expanding with us, thanks to the quality of
our assets, which are located in the best catchment areas, and have
an affluent customer base. URW is well positioned to outperform and
gain market share, as retailers accelerate their “drive to store”
strategies. Against this backdrop, asset values have stabilised,
and our credit metrics have significantly improved, in particular
thanks to the net debt reduction and the increase in EBTIDA.In
Europe, we have now achieved 80% of our €4 billion disposal target.
In the US, we continued to streamline our regional asset portfolio
with the sale of the Promenade development parcel and are in active
discussions on other regional assets. Given the quality and strong
performance of our assets, we are confident in our ability to
delever the company by executing on the radical reduction of our
financial exposure to the US. We have maintained strict capital
allocation, while continuing to deliver major development projects,
and our hedging protects us against rising interest rates. In the
context of our operational recovery in this challenging
macro-environment, we are increasing our 2022 AREPS guidance from
€8.20 - €8.40 to at least €8.90.”
|
H1-2022 |
H1-2021 |
Growth |
Like-for-like growth2 |
Net Rental Income (in € Mn) |
1,139 |
785 |
+45.0% |
+43.8%3 |
Shopping Centres |
1,037 |
753 |
+37.7% |
+37.6%4 |
Offices & Others |
34 |
32 |
+6.5% |
+28.0% |
Convention & Exhibition |
68 |
0 |
n.m. |
n.m. |
EBITDA (in € Mn) |
1,139 |
770 |
+48.0% |
|
|
|
|
|
|
Recurring net result (in € Mn) |
711 |
472 |
+50.5% |
|
Recurring EPS (in €) |
5.12 |
3.41 |
+50.4% |
|
Adjusted Recurring EPS (in €) |
4.95 |
3.24 |
+53.1% |
|
|
|
|
|
|
|
June 30, 2022 |
Dec. 31, 2021 |
Growth |
Like-for-like growth |
Proportionate portfolio valuation (in € Mn) |
54,981 |
54,473 |
+0.9% |
-0.4% |
EPRA Net Reinstatement Value (in € per stapled share) |
163.40 |
159.60 |
+2.4% |
|
Figures may not add up due to rounding
H1-2022 AREPS: €4.95
Reported AREPS amounted to €4.95, up +53.1% from
H1-2021, an increase of +€1.71, mainly driven by the strong retail
operation performance (including the end of COVID-19 rent relief,
lower doubtful debtors with improved rent collection and higher
variable income), the strong recovery of the C&E division, and
project deliveries, partly offset by disposals. Rebasing both
periods for the COVID-19 rent relief, the AREPS would have
increased by +€0.80 per share (+18.1%).
OPERATING PERFORMANCE
Shopping Centres
Like-for-like shopping centre NRI was up
+37.6%5 for the Group, and +49.7% in Continental Europe, +14.7% in
the US and +34.8% in the UK. All regions benefitted from higher
variable income and lower doubtful debtors as a result of better
rent collection, and ongoing collection of 2021 rents. Performance
in Continental Europe was also driven by the end of COVID-19 rent
relief and indexation. The increase in the UK was driven by the end
of COVID-19 rent relief. Excluding the impact of COVID-19 rent
relief, the Group’s shopping centre like-for-like NRI growth would
be +12.8%.
Tenant sales6 and footfall7 continue to
perform well with sales levels for the Group exceeding 2019 levels
and continuing to outperform footfall, thanks to higher conversion
rates and longer dwell times. Q1-2022 figures remained impacted by
the restrictions in Europe, including a lockdown in The
Netherlands, and severe restrictions for non-vaccinated persons in
Austria and Germany. Q2 saw an improvement with footfall reaching
91% of 2019 levels for the Group, including 90% in Continental
Europe, 91% in the UK and 92% in the US. In total, in H1-2022,
footfall in Europe reached 85% of 2019 levels and 89% in the
US.
In Q1-2022, the Group’s European tenant sales
reached 89% of 2019 levels. During Q2, tenant sales improved
significantly and reached 102%, exceeding 2019 levels earlier than
expected, with all European regions except the UK and Austria above
2019 levels. Overall, H1-2022 tenant sales reached 96% of 2019
levels, with Continental Europe and the UK at 97% and 91%,
respectively. The performance of the main categories as a
percentage of 2019 levels was 107% for Health and Beauty, 106% for
Sports, 96% for F&B, 91% for Fashion and 85% for
Entertainment.
In the US, tenant sales had already reached 2019
levels during the second half of 2021, and continue to consistently
outperform pre-COVID levels. H1-2022 sales came to 106% of 2019
levels, driven by the performance of our Flagship8 assets at 114%.
The strong recovery in the US continued to be broad-based with
almost all categories performing above 2019 levels. Entertainment
remains impacted at 77% but showing improvement from 72% in Q1 to
80% in Q2.
The performance seen in H1-2022 gives the Group
a high degree of confidence that its Flagship destinations, which
are located in the most desirable locations, with the best
catchment areas and have an affluent customer base, are positioned
to outperform and gain market share.
Rent collection9 has improved since the
full year and reached 96% for H1-2022 (vs. 88% at FY-2021 and 73%
in H1-2021). It amounted to 96% in Continental Europe, 97% in the
UK and 94% in the US. During 2022, the Group also collected €210.9
Mn10 in rents related to 2021, improving its 2021 collection rate
from 88% to 92%, and leading to reversals of provisions in H1-2022
of €33.4 Mn.
URW signed 1,201 leases11 during H1-2022,
broadly in line with H1-2021 and H1-2019. The proportion of
long-term leases increased from 44% in H1-2021 to 59% in H1-2022 as
conditions improved. Overall, the MGR uplift on all deals was
+2.7%. For deals above 36 months MGR uplift came to +11.8% for the
Group showcasing asset strength, with Continental Europe at +12.1%,
the UK at +0.3% and the US at +23.1%.
The Group has benefitted from strong tenant
sales, as illustrated by the performance in shopping centre SBR12,
which increased from €28.0 Mn in H1-2021 (3.8% of NRI) to €55.5 Mn
in H1-2022 (5.4% of NRI). In the US, the increase in shopping
centre SBR was the largest from €16.0 Mn in H1-2021 (6.7% of NRI)
to €31.3 Mn in H1-2022 (10.7% of NRI).
Vacancy for shopping centres at a Group
level decreased to 6.9% at H1-2022, down from 8.9% at H1-2021 and
7.0% at FY-2021. In Continental Europe, vacancy was stable at 4.0%,
despite the seasonal uptick that had been recorded during Q1. In
the UK, vacancy also decreased from 10.6% at FY-2021 to 9.7% at
H1-2022. In the US, the vacancy reduced to 10.4% at H1-2022 from
11.0% at FY-2021, while in Flagships13, it decreased from 9.3% to
8.3%.
Commercial Partnerships income came to
€50.4 Mn in H1-2022, compared to €24.3 Mn in H1-2021 and
€50.0 Mn in H1-2019. Europe amounted to €25.2 Mn
(vs. €13.2 Mn in H1-2021 and €20.1 Mn in H1-2019) and the US to
€25.3 Mn (vs. €11.1 Mn in H1-2021 and €29.9 Mn in H1-2019). The
income of new Media, Brand & Data Partnerships division, which
is included in the Commercial Partnerships scope and is expected to
generate €75 Mn (at 100%) in annual net revenues by 2024 in Europe,
amounted to €17.0 Mn in H1-2022.
Offices & Others
NRI increased by +6.5%, primarily as a result of
the delivery of the Trinity office tower and the Gaîté Montparnasse
Hotel and Offices, partly offset by the disposal of Solna Centrum
and Les Villages 3, 4 and 6. On a like-for-like basis, it was
+28.0%, with +55.9% in France thanks to leasing of Trinity, but
-30.6% in the US due to the exposure to the San Francisco market
where tech companies have been slower in returning to the
office.
Following 2022 leasing activity, Trinity is
currently 74% let. During the first half, the Group also signed a
9-year lease with Arkema for 25,100 sqm in the Lightwell office
regeneration project, securing a pre-letting of 80% and 85%14 of
the cost of construction. Furthermore, URW signed a lease with
Shell on 8,023 sqm, representing 29% of the office buildings in
Westfield Hamburg to be delivered in 2024.
Convention & Exhibition
Recurring NOI amounted to €94.5 Mn compared to
-€1.5 Mn in H1-2021, and €80.6 Mn in H1-2018. In H1-2022, this
includes a €25 Mn contribution from the French State, to compensate
closure periods in earlier years.
In H1-2022, Viparis hosted 272 events (o/w 86
exhibitions, 33 congresses and 153 corporate events) vs. 69 events
at the same period in 2021. As at June 30, 2022, signed and
pre-booked events in Viparis venues for 2022 amounted to c. 103% of
its expected 2022 rental income, and 89% of 201815 pre-bookings
level for the year.
DELEVERAGING
In H1-2022, the Group continues to make
deleveraging progress through disposals, control on CAPEX
allocation and retaining earnings.
In Europe, URW completed in 2022 the disposal of
Solna Centrum (Stockholm region), 2 residential buildings at
Westfield Hamburg (Hamburg), a 45% interest in Westfield Carré
Sénart (Paris region), Gera Arcaden (Gera), Almere Centrum
(Amsterdam region) and Carré Sénart Shopping Parc (Paris
region).
Furthermore, URW’s partner in Aupark
(Bratislava) exercised its call option for the acquisition of an
additional 27% stake, which is expected to complete in August 2022.
The Group also signed on July 21, 2022, an agreement for the sale
of Villeneuve 2 (Lille region), which is expected to close in
September 2022.
The disposals completed or signed in 2022,
amounted to €1.2 Bn, representing an average NIY of 5.5% and a
premium to the last unaffected appraisal of +2.9%.
Upon the closing of these transactions, URW will
have completed €3.2 Bn, representing 80% of its €4.0 Bn European
disposal programme, at an average NIY of 4.9% and a premium to the
last unaffected appraisal of +5.1%. A number of discussions for
disposals are ongoing to secure the remainder of the European
disposal programme.
URW continued to streamline its US portfolio
during 2022, with the sale of the Promenade development parcel in
the San Fernando Valley of Los Angeles for a sale price of $150 Mn
(at 100%, URW share 55%), which reflected a +60% premium to the
latest appraisal. The company is in active discussions on other
regional assets.
Given the quality and strong performance of the
Group’s Flagship assets, we are confident in our ability to delever
the company by executing on the radical reduction of our financial
exposure to the US.
The Total Investment Cost (TIC)16 of URW’s
development pipeline has remained overall stable compared to
December 31, 2021, at €3.3 Bn, mainly as a result of H1-2021
successful deliveries, offset by cost increases and the addition of
the House of Fraser repurposing project at Westfield London, which
will turn the building into a premium coworking space by The
Ministry, including a multi-studio fitness offer, a rooftop bar and
restaurant.
Committed projects amount to €2.5 Bn, of which
€1.3 Bn has already been invested. The two main projects are mixed
used developments in Paris (Gaîté Montparnasse) and Hamburg
(Westfield Hamburg). Following the successful pre-letting of 80% of
the Lightwell office regeneration, and 85% of the construction
secured, the project has now moved from the controlled to the
committed pipeline.
DELIVERIES
In H1-2022, the Group delivered the Westfield
Topanga extension (Los Angeles region) which will open in phases
and the Gaîté Montparnasse office (Paris), representing a total of
c. 30,000 sqm and a TIC of €0.2 Bn. The average letting17 of these
deliveries stands at 88%.
In H2-2022, URW will deliver Les Ateliers Gaîté,
“Rue de la Boucle” project at Westfield Forum des Halles and Porte
de Paris at Westfield Les 4 Temps, representing a total of c.
31,000 sqm and TIC of €0.3 Bn. The average pre-letting18 of these
projects stands at 82%.
VALUATION
The proportionate Gross Market Value (GMV) of
the Group’s assets as at June 30, 2022, increased by +0.9% to €55.0
Bn from €54.5 Bn as at December 31, 2021, mainly as a result of
positive FX moves (+€0.9 Bn), CAPEX, acquisitions and transfers
(+€0.4 Bn), partly offset by disposals (-€0.4 Bn) and revaluation
of non like-for-like assets & shares (-€0.2 Bn). In H1-2022,
the like-for-like shopping centres valuation was slightly up for
Continental Europe (+0.8%), while the UK (-1.4%) and the US (-3.1%)
were down, resulting in -0.3% for the Group overall.
On the back of the slight increase in valuation,
the EPRA Net Reinstatement Value per share came to €163.40 as at
June 30, 2022, up +€3.80 (+2.4%) compared to December 31, 2021,
mainly driven by the retained recurring results and positive FX
moves, partly offset by negative revaluations. The EPRA Net
Disposal Value increased to €152.90 on the back of the
mark-to-market of the debt and financial instruments resulting from
the steep increase in rates and spreads in H1-2022.
FINANCING
Driven by the progress on disposals and the
retained cash flow, the IFRS net financial debt decreased from
€22.6 Bn to €22.1 Bn between December 31, 2021, and June 30, 2022.
Pro forma for the disposals of Gera Arcaden, Almere Centrum and
Carré Sénart Shopping Parc, which have been cashed-in, and the
signed disposals of an additional 27% interest in Aupark and
Villeneuve 2, this figure will decline further to €21.6 Bn. The
Loan-to-Value (LTV) ratio decreased from 43.3% to 42.0% (45.8%
including the hybrid), and 41.5% pro-forma (45.3% including the
hybrid) for the disposal already signed but not closed at June 30,
2022.
The Group’s average cost of debt remained stable
at 2.0%, representing a blended 1.5% for EUR19 debt and 3.8% for
USD and GBP debt.
The Group’s average debt maturity remained
roughly stable at 8.5 years. Following the operational recovery
seen in H1, URW’s credit metrics have improved. The Interest
Coverage Ratio (ICR) stood at 4.5x (vs. 2.9x at H1-2021), while the
Funds from Operations to Net Financial Debt (FFO / NFD) ratio came
to 7.5% (vs. 4.3% at H1-2021). The Net Debt to EBITDA came down
from 16.6x in H1-2021 to 11.0x in H1-2022.
With cash and available facilities of €12.0 Bn,
the Group has fully secured its refinancing needs for the 36
months. Taking into account the expected disposal proceeds of URW’s
deleveraging programme, the Group’s debt is fully hedged for the
coming 5 years, positioning URW well in the current rising interest
rate environment.
2022 GUIDANCE
Based on the operational recovery achieved in
H1-2022 notwithstanding a challenging macro-economic environment,
the one-offs received during the period, and hedging which will
limit the increase in URW’s financial expenses, the Group increases
its 2022 AREPS guidance from €8.20 - €8.40 to at least €8.90.
Tenant sales exceeding 2019 levels, significant
leasing demand for shopping centres and offices, and the recovery
of C&E activity, all demonstrate the appeal of the Group’s
assets.
Given the current macro-economic environment,
this updated guidance does not fully reflect the earlier than
expected sales recovery experienced in Q2-2022 for Continental
Europe and current level of US sales, or further improvements in
rent collection. The Group also assumes no major COVID-19 or
energy-related restrictions, nor major disruption to the
macro-economic environment.
FINANCIAL SCHEDULE
The next financial events on the Group’s
calendar will be:October 26, 2022: Q3 trading update
February 9, 2023: FY-2022 results
For further information, please
contact:
Investor Relations Maarten Otte+33 7 63 86 88
78maarten.otte@urw.com
Media Relations UK/Global: Cornelia Schnepf – Finelk
+44 7387 108 998Cornelia.Schnepf@finelk.eu
United States: Molly Morse – Kekst CNC + 1 212 521
4826molly.morse@kekstcnc.com
France: Nathalie Feld – Image7 +33 6 30 47 18
37nfeld@image7.fr
About Unibail-Rodamco-Westfield
Unibail-Rodamco-Westfield is a dynamic global
developer and operator of Flagship Destinations, with a portfolio
valued at €55.0 Bn as at June 30, 2022, of which 87% in retail, 6%
in offices, 5% in convention & exhibition venues and 2% in
services. Currently, the Group owns and operates 82 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 2,700
professionals and an unparalleled track-record and know-how,
Unibail-Rodamco-Westfield is ideally positioned to generate
superior value and develop world-class projects.
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 a BBB+ rating from Standard
& Poor’s and from a Baa2 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_group
1 Taking into account disposals proceeds of the communicated
deleveraging plan.
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 airports.4
Excluding airports.5 Excluding airports.
6 Tenant sales for all 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 (Ursynow, Westfield La
Part-Dieu, Les Ateliers Gaîté, CNIT, Gropius Passagen, Garbera and
Westfield Valley Fair). Excludes Zlote Tarasy as this centre is not
managed by URW. Excludes Carrousel du Louvre. Excludes Auto
category for Europe and Auto and Department Stores for the US.7
Footfall for all centres in operation, including extensions of
existing assets, but excluding deliveries of new brownfield
projects, newly acquired assets and assets under heavy
refurbishment (Ursynow, Westfield La Part-Dieu, Les Ateliers Gaîté,
CNIT, Gropius Passagen, Garbera, Westfield Mall of the Netherlands
and Westfield Valley Fair). Excludes Carrousel du Louvre. Excludes
Zlote Tarasy as this centre is not managed by URW. For the US,
footfall only includes the 23 centres for which at least one year
of comparable data is available.8 Excluding Central Business
District assets (Westfield San Francisco Centre and Westfield World
Trade Center).9 Retail only, assets at 100%. MGR + CAM in the US,
as at July 21.10 At 100%.11 All letting figures exclude deals
<12 months.12 Excluding airports.13 Excluding Central Business
District assets (Westfield San Francisco Centre and Westfield World
Trade Center).14 Refurbishment costs excluding fees &
contingencies.15 Last comparable year.
16 URW Total Investment Cost (TIC) equals 100%
TIC multiplied by URW's percentage stake in the project, adjusted
by specific own costs and income, 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. 17 GLA signed, all agreed to be signed and
financials agreed.18 GLA signed, all agreed to be signed and
financials agreed.19 Including SEK.
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