(AOF) – Unibail-Rodamco-Westfield (URW) has received a binding offer from Frey, a real estate company specializing in the development and operation of outdoor shopping centers in Europe, for the acquisition of Polygone Riviera for a price net sale of 272.3 million euros, with a discount of 4% compared to the last book value. The transaction is expected to be finalized during the fourth quarter of 2023.
With this transaction, URW has now secured €3.6 billion (or approximately 90%) of its €4 billion European asset disposal program; and 0.8 billion euros contribution to the reduction of net debt on an IFRS basis since January 2023 (1.1 billion euros on a proportional basis), which reduces the IFRS LTV, the equivalent of the rate debt, at 41.3% on a proforma basis.
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Key points
– European leader in commercial real estate born from the Unibail, Rodamco and Westfield mergers;
– Portfolio of €53 billion in assets and rents of €2.3 billion, 95% generated by the 78 shopping centers then by offices and conferences and exhibitions;
– Economic model of refocusing on Europe based on 3 pillars – concentration, differentiation and innovation;
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Open capital with a minority position of 5.43% held by Xavier Niel, Jacques Richier chairing the 10-member supervisory board and Jean-Marie Tritant the management board;
– Balance sheet still tight with leverage reduced to 9.6% at the end of March, but debt of $20.7 billion, covered against rising rates, cash of €13.7 billion securing financial maturities until beginning of 2026 and LTV ratio lowered to 41.2%.
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– 2024 strategy aiming to once again become a pure European player with operating income returned to 2019 levels and a solid balance sheet (LTV less than 40%) via:
– new sources of income: exploitation of data and maximization of asset value via mixed developments,
– total exit from the United States in 2023;
– Innovation orchestrated by the new director of customer strategy, to strengthen preference, impact (omnical platform) and agility (internet of things and cloud technologies);
– “Better places 2030” environmental strategy based on 3 pillars, the quality of buildings, connectivity and integration into the urban environment:
– halving of the carbon footprint compared to 2015 and recovery of waste in conjunction with local communities,
– energy sobriety plan in Europe by reducing lighting, air conditioning, etc.,
– launch of Green Financing Framework loans with reinforced ESG criteria;
– Benefits of diversifications:
– in the residential sector by exploiting the potential of $2.4 billion in m2 identified in the portfolio,
– in commercial partnerships via Westfield Rise, with high profitability;
– After the completion of more than 75% of the asset disposal program in Europe, towards a total withdrawal from the United States, i.e. 20% of the portfolio;
– Delivery of €3.1 billion in pipeline projects, including €2.4 billion committed.
Challenges
– Evolution of revalued net assets or ANR (€155.70), key data for the land sector to compare with the stock market price, and the vacancy rate of shopping centers (7.2%);
– 2023 expectations: return of net rents from shopping centers and Congress & Exhibitions activity to pre-pandemic level and office activity driven by recently delivered projects;
– After an increase of 7.8% in operating profit in the 1st quarter, 2023 target of net profit per share between €9.30 and €9.50;
– Probable resumption of dividend payments in 2024, for the 2023 financial year.
Learn more about the Real Estate sector
A demand crisis
According to data from the Federation of Real Estate Developers (FPI), the figures for the third quarter of 2022 continue to be alarming. Sales of new collective housing fell by 12.4% over one year, to 19,006 units. Over the first nine months of 2022, the drop reached 10.2%, to 72,670 units.
Reservations are also plummeting due to the collapse of block sales to social landlords and institutional investors. With interest rates rising, institutional investors are renegotiating or halting operations. First-time buyers are penalized by the rise in rates and the tightening of the Pinel system puts off certain private investors.
Due to the sharp rise in construction costs, the FPI estimates that one in six authorized operations is ultimately not carried out for economic reasons.
Faced with this, prices are still rising: the sales prices of new collective housing increased by 5.9% across France in the third quarter of 2022. Ile-de-France is an exception, with a decrease of 0. 9%.