Nordics turn in strongest rental growth for Unibail-Rodamco

The Nordics turned in the strongest rental performance for listed European shopping centre giant Unibail-Rodamco in 2015 with a rise of 8.7% on a like-for-like basis. On an unadjusted basis, the rise came to 9.2% thanks to the addition of the 101,000 m2 Mall of Scandinavia.

Spain and CEE also turned in a strong like-for-like performance of 7.6% and 5.4% respectively. France likewise booked growth – of 2.6% - thanks partly to the addition of new shopping centres.

The terrorist attacks in Paris in January and November in Paris did, however, have a significant impact on footfall in Unibail-Rodamco’s Paris Region shopping centres. While footfall in France was up by +3.5% through October 2015 compared to the same period last year, footfall dropped by -4.3% and -4.6%, in November and December 2015, respectively, both compared to the same month in 2014.
Shopping centres outside of the Paris Region were less impacted.

The company’s Dutch operations turned in the weakest rental growth performance, partly due to recent disposals. But even on a like-for-like basis, the operations still turned in a decline of -1.7%. The Netherlands is the only market where rental income fell on a like-for-like basis.

All in all, rental income totalled €1.4 bn in 2015, with shopping centres generating the bulk of that figure or €1.1 bn. The increase in rental income helped propel earnings growth to €1.03 bn, or €10.46 per share, a rise of 8.3%. The growth was realized despite €1.6 bn of net disposal proceeds in 2015.

The overall growth of the shopping centre portfolio was fuelled by the addition of three new centres: Minto (Mönchengladbach), Polygone Riviera (Cagnes-sur-Mer) and Mall of Scandinavia (Stockholm). Altogether the group delivered €2 bn of projects in 2015. In Paris, the company delivered the fully-let So Ouest Plaza office tower (Levallois, Paris region), which includes a cinema and restaurant right next to the So Ouest shopping centre.

Commenting on the results, CEO Christophe Cuvillier said 2015 was ‘another successful year for Unibail-Rodamco’. In December 2015, the group signed a binding term sheet for a lease agreement with Deloitte for the remaining 19 floors in Majunga (La Défense) which was ratified and signed on January 18, 2016. Majunga is now fully let.

During 2015, Europe’s largest listed REIT added €1.4 bn of new projects to the pipeline, including the Triangle tower project in Paris following its approval by the Paris City Council on 30 June 2015. The total investment cost of the development pipeline amounts to €7.4 bn as at end-December 2015, compared to €8 bn as at end-December 2014.

The company also executed a number of successful financing firsts and asset-liability management exercises, further decreasing its average cost of debt to a record low of 2.2%. At end-2015, the value of the portfolio stood at €37.8 bn, a rise of 9.2% year-on-year.

For the coming year, the Paris-listed company is forecasting an underlying rate of growth to be in line with the +6% to +8% announced last year.