Shopping centre owner Unibail-Rodamco-Westfield has announced a €9bn (£8.2bn) programme of deals and disposals to boost its balance sheet during the Covid-19 pandemic.
The company said the deleveraging plan, which it has named “Reset”, will include a €3.5bn capital raising; €1bn of cash savings by limiting dividends; reducing development spending and non-essential capex by €800m; and selling €4bn-worth of assets between now and the end of 2021.
Chief executive Christophe Cuvillier said the plans will allow URW to “embrace the changing retail environment through our flagship destination strategy and capitalise on our unmatched portfolio quality’s mixed-use potential”.
He added: “URW’s immediate priority… is to deleverage, primarily through asset disposals. However, given the uncertainties around the duration of the Covid-19 pandemic and the recovery, we have decided, as a matter of prudent management, to substantially strengthen our balance sheet, in order to maintain a robust investment grade credit rating and to ensure flexibility in a world that is unpredictable and requires agility.”
The company expects to hit the market for fresh equity before the end of the year, in a deal underwritten by investment banks Bank of America, BNP Paribas, Crédit Agricole, Goldman Sachs, JP Morgan and Société Générale. Eastdil Secured, Kempen, Lazard and Rothschild are also advising URW on the transaction.
Of the €800m in reduced capex, €600m will come from development and €200m from operations. URW said its development pipeline has already been reduced by €2.2bn from 2019.
The company expects 50% of its €4bn disposal programme to be focused on retail properties, and 50% on offices and other asset classes. URW singled out its US regional mall portfolio as a part of the business it plans to shrink.
URW said its new strategy also aims to “capture the mixed-use potential embedded within the portfolio” and introduce new revenue streams to the business.
Encouraging footfall
Alongside details of the ‘Reset’ initiative, URW has given an update on footfall in its properties, describing the recovery as “encouraging”. Most of is sites in continental Europe are now at 80-90% of the footfall recorded a year ago, the company said, with the UK at 60-70% and showing “good week-on-week development as people are returning to offices following the lockdown and summer holidays”.
The company added: “Footfall in the US centres lags behind that in Europe, as, for a number of shopping centres in Los Angeles, indoor operations remain restricted.”
URW said negotiations with tenants around lease and rent collection have made “solid progress”.
“These negotiations are conducted on a case-by-case basis,” the company said. “They recognise the issues the group’s tenants faced due to administrative closures or trading restrictions and the need to provide relief, are generally limited to the period of closure and based on the principle of a fair sharing of the burden, and entail concessions by tenants in exchange for such relief.
“They are not about permanently changing lease structures or changing the basis for rent calculations.”
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