Record low borrowing costs have boosted Unibail-Rodamco’s first half results, with the price of debt falling to an unprecedented 1.7%, according to the Paris-listed property company.
The decrease in the average cost of debt, plus 10.6% net rental growth in its shopping centres division, improved earnings per share (EPS) to €5.81. Net rental income (NRI) grew by 7.7% for the group as a whole.
In H1 2016, the group exploited the rally caused by the ECB's announcement of its corporate sector purchase programme to extend its debt maturity profile at attractive conditions. It issued a €500 mln bond with a 20-year maturity, the longest ever for a real-estate company in the euro market, at a 2.0% coupon, and two €500 mln bonds with 10- and 11-year maturities.
Unibail-Rodamco noted that despite the adverse effect of the terrorist attacks and threats, social unrest and unseasonal weather in France, tenant sales rose 1.4% through 31 May. New or recently renovated centres, such as Aeroville (+10.2%) and Toison d’Or (+6.2%) performed particularly well.
Tenant sales in the group’s shopping centres grew by 2.2% through June, after beating national sales indices in May with a rise of 2.1%. Germany, Central Europe and Spain were the principal drivers with growth of 4.2%, 3% and 2.7% respectively.
‘In spite of the impact of the terrorist attacks in Paris in 2015 and Brussels in 2016 and the subdued economic environment, our retail activity in France has proven very resilient, with like-for-like NRI growth of +5.0% over the period,’ commented Christophe Cuvillier, CEO and chairman of the management board.
He added: ‘The buoyant investment market in Paris enabled the group to dispose of the 2-8 Ancelle and So Ouest office buildings at compelling prices. The group also lowered its average cost of debt to an unprecedented level of 1.7%.’
