Paris, Amsterdam, Feb 14, 2019 - (ACN Newswire) -
Unibail-Rodamco-Westfield, the Premier Developer and Operator of
Flagship Shopping Destinations, Reports Strong Results for 2018
Completion of the Westfield Transaction. Total proportionate
portfolio value of EUR65.2 Bn
Adjusted Recurring Earnings per Stapled Share ("AREPS") of
EUR12.92
- AREPS of EUR12.92 exceeds guidance of EUR12.75 - EUR12.90 and is
up by +7.2% from EUR12.05 in 2017
- Net Rental Income (NRI) like-for-like (Lfl) growth in Shopping
Centres in Continental Europe: +4.0%, +260 bps above indexation;
+3.4% in the UK; US comparable Net Operating Income (NOI) -1.6% and
-0.3% for Flagships
- Average cost of debt: 1.6%, with an average debt maturity of 7.5
years
- Cost synergies: annual run rate of EUR75 Mn achieved
- EPRA NAV: EUR221.80 / stapled share, up by +5.1%
- Development pipeline: EUR11.9 Bn
- Disposals: Closed on EUR2.0 Bn
- LTV: Declines to 37.0%
- Dividend: EUR10.80 / stapled share
- Deleveraging a strategic objective: Target LTV range lowered to
30-40%
- Disposal target raised to a total of EUR6 Bn
- Outlook reflects the acceleration of the disposal programme in
line with the Group's asset rotation discipline:
-- 2019 AREPS: EUR11.80 - EUR12.00, with strong underlying
operational growth of between +4% and +5%
-- Rebased for the disposals, 2019-2023 AREPS CAGR of between +5%
and +7%
"2018 was a historic year, marked by the creation on June 7 of
Unibail-Rodamco-Westfield, the premier global developer and
operator of Flagship shopping destinations. I warmly thank our
talented teams for the extraordinary work they have performed in
2018. In addition to closing the transaction and embarking on the
integration of the two platforms, URW delivered excellent results
against a challenging industry backdrop. Adjusted recurring
earnings per stapled share grew +7.2%, exceeding guidance.
Continental Europe achieved strong Lfl retail and office NRI(1)
growth of +4.0% and +4.5%, respectively. Occupancy in the US was up
by +130 bps since June. The Group successfully sold EUR2.0 Bn of
assets, mostly in Continental Europe, well ahead of schedule and
above book value. Going forward, URW has set itself the near-term
objectives of reducing leverage and integrating the business, while
building on solid underlying growth as revenue synergies are
realised. Consistent with these objectives, the Group plans to
dispose of EUR4 Bn of assets in the next several years, bringing
its total disposal target to EUR6 Bn. While dilutive in the
short-term, this will set the stage for a renewed earnings growth
phase as URW's portfolio is well positioned to thrive in a rapidly
changing retail environment." Christophe Cuvillier, Group Chief
Executive Officer
2018 AREPS OF EUR12.92, UP BY +7.2%
REPS grew by +9.1% from 2017 to EUR13.15. AREPS, adjusted for the
coupon on the deeply subordinated perpetual hybrid securities, was
EUR12.92 (+7.2% from 2017).
SOLID OPERATING PERFORMANCE IN A CHALLENGING MARKET
Shopping Centres Continental Europe
Tenants sales through November increased(2) by +3.0% for the Group
and by +3.8% for Flagship centres(3), outperforming national sales
indices(4) by +205 and +283 bps, respectively. France (+3.4%,
outperforming the IFLS index by +380 bps and the CNCC index by +520
bps), and Central Europe (+8.2%, outperforming the weighted average
regional sales indices by +544 bps) did especially well.
Lfl NRI grew by +4.0%, +260 bps above indexation, while that of the
Flagship centres increased by +5.0%. The Group signed 1,319 leases
with a Minimum Guaranteed Rent (MGR) uplift of +11.7%, and +14.4%
for Flagships, in line with its objective. The rotation rate
amounted to 11.5% and EPRA vacancy decreased by -20 bps to
2.4%.
Shopping Centres United States and United Kingdom
In the US, speciality sales productivity per square foot (psf)(5)
through December 31, 2018, increased by +10.9% (+12.0% for
Flagships). Luxury sales were strong, up by +15.2% psf. Average
letting spreads were +7.5% (+11.5% in Flagships) and average rent
for stores under 10k sq. ft was $87 psf(6), up +3.9%. As at
December 31, 2018, occupancy stood at 95.6% (96.2% in Flagships),
stable compared to December 2017 but up by +130 bps from June 30,
2018. NOI increased by +3.1%, mainly due to the deliveries of
Westfield Century City and Westfield UTC. Comparable NOI(7)
declined -1.6% or -0.3% for Flagships, improving from -3.0% and
-2.6%, respectively, for the 6-month period ended on June 30,
2018.
Footfall in the UK was up by +6.1% in 2018, driven by the opening
of Westfield London Phase 2, outperforming the UK shopping centre
index by +930 bps. Total tenant sales in the UK centres were up by
+2.8%. Average MGR uplift was strong at +19.8%. Occupancy stood at
95.2%, down from 97.7% as at June 30, 2018, due to the re-location
of tenants from Westfield London Phase 1 to the Phase 2 extension.
Lfl NRI increased by +3.4% compared to 2017.
Offices
Available supply in the Paris region dropped to 2.9 Mn sqm, the
lowest since 2008, while take-up remained high at 2.5 Mn sqm.
Vacancy in the Paris region decreased to 5.5%, from 6.5% in
2017.
The Group let 74,600 wsqm, including the entire Shift building
(43,300 sqm) to Nestle more than one year before its delivery. Lfl
NRI increased by +4.5% due to good leasing performance, while total
NRI decreased by -4.6% mainly due to disposals in 2017 and
2018.
Convention & Exhibition
Recurring NOI in 2018 benefited from the tri-annual Intermat show,
partly offset by the closure for refurbishment of the Pullman
Montparnasse hotel in Paris. Excluding the impact of these,
recurring NOI increased by +13.3% compared to 2017 and by +0.6%
compared to 2016, the last comparable period.
AT THE FOREFRONT OF THE RETAIL TRANSFORMATION
The Group provides a unique transatlantic platform, connecting the
best brands with over 1.2 billion customers each year in the
wealthiest catchment areas.
The URW portfolio is at the forefront of the changes of a rapidly
evolving retail environment. Exposure to fashion is being reduced
and replaced by exciting new formats of growing retail
segments:
- Entertainment: the Group signed or opened Virtual Reality spaces,
such as Dreamscape at Westfield Century City and The Void at
Westfield San Francisco Centre, new cinemas, including the
Showplace Icon Theatre at Westfield Valley Fair and the new Pathe
IMAX theatre at Carre Senart, and leisure concepts PuttShack and
AllStar Lanes at Westfield London;
- Dining: building on the successes of Eataly and Javier's, URW
opened the famous Din Tai Fung restaurant and Del Frisco's Double
Eagle Steakhouse at Westfield Century City. Ichiba, a Japanese food
hall, opened at Westfield London, and the Group signed a long term
lease with "The Food Society" for Les Ateliers Gaite development
project, which, with close to 4,800 sqm dedicated to dining, will
be the largest food hall in Europe;
- Health and Wellness: URW opened the Natura Bisse spa (voted
world's best spa brand) at the Village at Westfield London; and
- Digital Native Vertical Brands (DNVBs): in 2018, the Group signed
36 leases with DNVBs, bringing the total number in its portfolio to
100. A DNVB-dedicated precinct will be set up at Westfield Valley
Fair, with ready-to-operate units and specific services.
A FLEXIBLE PIPELINE TO REINVENT CITIES
The URW Expected Cost(8) of the development pipeline amounted to
EUR11.9 Bn, down from EUR13.0 Bn as at year-end 2017. The Group
retains significant flexibility, with committed projects of only
EUR2.9 Bn, of which EUR1.4 Bn already invested. The retail pipeline
is split between greenfield/brownfield projects (53%), which are
all in Europe, and extensions and renovations (47%) on both
continents. Significant progress has been made on the construction
of Trinity and Shift, scheduled to be delivered in H2-2019, as well
as on the extension of Westfield Valley Fair (H2-2019) and
Westfield Mall of the Netherlands (H1-2020).
As part of its annual portfolio review, the Group made the
strategic decision to significantly increase the densification of
its retail portfolio by adding office, residential, hotel and other
"mixed-use" projects where relevant. URW is already leveraging its
key strengths to reinvent city districts in London, Paris, Hamburg
and San Diego. The Group's unique know-how across retail, offices
and hotels, and flexible approach to funding models will allow it
to maximise value on its exceptional and highly connected retail
locations. In addition, the Group is reviewing several of its
projects in the pipeline and will join with strategic capital
partners on selected projects.
INTEGRATION OF WESTFIELD AND SYNERGIES
Since the closing of the acquisition of Westfield on June 7, 2018,
EUR75 Mn of annual run rate cost synergies have already been
realized. In the second-half of 2018, important steps in the
integration were made, including the implementation of the
organizational model and the Operating Management function in the
US and the UK, the completion of an initial 5-year business plan
process for the US and UK assets and the first joint management
convention.
The ground work for the EUR40 Mn run rate revenue synergies has
been laid out, with the creation of new Group-wide International
Leasing and Commercial Partnerships teams. 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.
NAV EVOLUTION
The Gross Market Value (GMV) of the Group's assets as at December
31, 2018, amounted to EUR65.2 Bn on a proportionate basis, up by
+49.9% from December 31, 2017, mainly due to the acquisition of
Westfield. The Continental European portfolio grew by +0.4% to
EUR43.7 Bn, +0.8% on a like-for-like basis.
Continental European Shopping Centre GMV grew by +2.5% in total and
by +0.8% on a like-for-like basis. Continental European Office GMV
came to EUR3.2 Bn, up by +5.1% on a like-for-like basis. GMV of the
Convention & Exhibition division decreased by -3.4% on a
like-for-like basis.
The inclusion of the Westfield portfolio resulted in an increase of
+EUR21.5 Bn in the Group's proportionate GMV, representing 33% of
the total. The average net initial yield of the retail portfolio
remained stable at 4.3%.
Going Concern NAV per stapled share increased to EUR233.90 as at
December 31, 2018, up +EUR14.70 (+6.7%) compared to December 31,
2017. This was the sum of (i) an increase of EUR23.18 per stapled
share, (ii) the impact of the -EUR10.80 dividend paid in 2018, and
(iii) the +EUR2.32 mark-to-market of the fixed-rate debt and
derivatives.
The acquisition of Westfield generated goodwill of EUR2,337 Mn
which was allocated to several Cash Generating Units. The goodwill
was tested for impairment as at December 31, 2018, and was found to
be justified.
DELEVERAGING: SUCCESSFUL DISPOSALS TO DATE. INCREASING DISPOSAL
TARGET TO EUR6 BN
URW has set itself a strategic objective of deleveraging and has
set a new Loan-to-Value ratio target through the cycle of between
30-40%, down from 35-45% previously.
In 2018, the Group disposed of EUR2.0 Bn of assets at an aggregate
NIY of 4.6%, representing a +8.9% premium to the June 30, 2018,
book values. With these transactions, the Group is well ahead of
schedule to reach its previously announced target of EUR3 Bn of
disposals over several years, with a number of disposal processes
on-going.
As part of its new 5-year business plan, URW plans to dispose of
almost EUR4 Bn of Continental European assets in the next couple of
years, in effect doubling the disposal target set in December
2017.
AVERAGE COST OF DEBT OF 1.6% AND AVERAGE MATURITY OF 7.5 YEARS
Loan-to-Value (LTV) ratio declined to 37.0% and the interest
coverage ratio was 6.1x. The average cost of debt of the Group
remained low at 1.6% and, following the long-term capital raised in
2018, average debt maturity as at December 31, 2018, was 7.5 years.
Undrawn available credit lines amounted to EUR8.4 Bn.
OUTLOOK(9)
URW's most important strategic objectives over the next two years
will be to:
- Reduce leverage
- Review several development projects to optimize capital and
returns
- Join with strategic capital partners on select development
projects
- Continue the critically important work of integrating the
Continental European, US and UK platforms
- Roll-out the Westfield brand in Continental Europe
- Improve its cost base further and realize revenue synergies
This means that the Group's 5-year business plan has two distinct
periods:
1. A capital consolidation phase with continued solid underlying
growth, during which most of the disposals are expected to be
made
2. In the period following the disposals, a renewed AREPS growth
phase
Guidance
The EUR2 Bn of disposals in 2018 and those planned for 2019 will
further increase the average portfolio quality and reduce leverage.
This is expected to have a short-term impact on the 2019 AREPS of
approximately -90 cents.
The full effect in 2019 of the consideration to fund the Westfield
Transaction, mainly the stapled shares issued, exceeds the benefit
of the full year contribution from Westfield. Factors driving the
weaker than anticipated contribution in 2019 are:
- Project delays which affect the timing of income;
- The current operating environment in the UK and the US
(particularly in the Regional mall portfolio); and
- Higher financial expenses (less capitalization) and taxes than
anticipated.
In all, this is estimated to have an impact of approximately -50
cents on the 2019 AREPS.
However, despite the challenging retail environment, the strong
underlying operating income growth for URW of between +4 and +5% in
2019 is expected to offset this impact.
As a result, the 2019 AREPS is expected to be in the range of
EUR11.80-EUR12.00.
Going forward and rebased for the planned disposals, building on
the strengths of its unique platform and portfolio, continued
growth of its operations and planned delivery of development
projects, URW expects the 2019-2023 compound annual growth rate of
its AREPS to be between +5% and +7%.
DIVIDEND
The Group will propose a cash dividend of EUR10.80 per stapled
share for the fiscal year 2018, subject to approval by the Annual
General Meetings of Unibail-Rodamco SE and WFD Unibail-Rodamco N.V.
(the AGMs). This represents a pay-out ratio of 94% of the Group's
adjusted net recurring result, composed of the net recurring result
of Unibail-Rodamco through May 31, 2018 and the adjusted net
recurring result of URW from June 1, 2018.
The planned payment schedule is:
- Payment of an interim dividend of EUR5.40 on March 29, 2019
(ex-dividend date March 27, 2019); and
- Subject to approval by the AGMs, payment of a final dividend of
EUR5.40 on July 5, 2019 (ex-dividend date July 3, 2019).
Going forward, the group expects to maintain its dividend at a
minimum of EUR10.80 per stapled share and grow it broadly in line
with the growth in AREPS.
FINANCIAL SCHEDULE
The next financial events on the Group's calendar will be:
March 29, 2019: Interim dividend
April 24, 2019: 2019 1st quarter results (after market close)
May 17, 2019: AGM Unibail-Rodamco SE
June 13 & 14, 2019: Investor Days (London)
July 5, 2019: Final dividend, subject to approval by the AGMs of
Unibail-Rodamco SE and WFD Unibail-Rodamco N.V.
July 31, 2019: 2019 Half-Year results
For further information, please contact:
Investor Relations
Samuel Warwood
Maarten Otte
+33 1 76 77 58 02
Maarten.otte@urw.com
Media Relations
Tiphaine Bannelier-Suderie
+33 1 76 77 57 94
Tiphaine.Bannelier-Suderie@urw.com
1. 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.
2. Tenant sales data do not include Jumbo and Zlote Tarasy as they
are not managed by UR. Tenant sales performance in UR'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 2018 reporting period, shopping centres excluded
due to delivery or ongoing works were Galerie Gaite, Les Boutiques
du Palais, La Part-Dieu, Wroclavia, CH Ursynow and Gropius
Passagen. Primark sales are based on estimates.
3. UR's Flagship assets are: Les Quatre Temps, Aeroville, Parly 2,
Velizy 2, Carre Senart, 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, Gl?ries, Donau Zentrum, Shopping City S?d, Centrum
Cerny Most, Centrum Chodov, Wroclavia, Galeria Mokotow, Zlote
Tarasy, Arkadia, Aupark, Jumbo, Fisketorvet, Mall of Scandinavia,
T?by Centrum, Stadshart Amstelveen, Leidsenhage, Ruhr Park, Gropius
Passagen, CentrO and Pasing Arcaden.
4. Based on latest national indices available (year-on-year
evolution) as at November 2018: France: Institut Fran?ais 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 October
2018), 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.
5. 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).
6. EUR815 / sqm.
7. 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.
8. URW Expected Cost equals 100% Expected Cost multiplied by URW
percentage of ownership of the project, plus specific own costs, if
any.
9. The outlook is derived from the annual business plan process for
URW's Continental European region and the initial exercise in the
US and the UK regions. This exercise results in annual growth rates
which vary from year to year. The key inputs in the Group's
business plan, which is built on an asset by asset basis and based
on economic conditions as at year- end 2018, are estimates and
assumptions relating to indexation, rental uplifts, disposals of
approximately EUR4 Bn over the next few years, timely delivery of
pipeline projects, cost of debt, currency movements and taxation.
Variations in these assumptions will also cause growth rates to
vary from one plan to the next. The Group's current business plan
does not assume any acquisitions.
About Unibail-Rodamco-Westfield
Unibail-Rodamco-Westfield is the premier global developer and
operator of flagship shopping destinations, with a portfolio valued
at EUR65.2 Bn as at December 31, 2018, of which 87% in retail, 6%
in offices, 5% in convention & exhibition venues and 2% in
services. Currently, the Group owns and operates 93 shopping
centres, including 56 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 13 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 the largest development pipeline in the
industry of EUR11.9 Bn in total.
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.com
Visit our Media Library at https://mediacentre.urw.com
Follow the Group updates on Twitter @urw_group, Linkedin
@Unibail-Rodamco-Westfield and Instagram @urw_group
20190213 URW - FY 2018 Results
http://hugin.info/136618/R/2234848/879593.pdf
Source: UNIBAIL-RODAMCO SE
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