International property giant Unibail-Rodamco-Westfield (URW) has reported that its recurring net result for the first six months of 2020 fell by 27.2% to €667 mln, from €916 mln a year ago.
The global shopping centre owner and operator said that it had cut 5.1% off its portfolio valuation, as retail headwinds and the impact of the coronavirus pandemic continued to impact trading conditions. The gross market value of the group's assets was reported at €60.4 bn, a 7.6% decrease on a proportionate basis.
The firm has also made the decision to withhold its guidance for full-year 2020, citing Covid-19 uncertainty. It slashed its July dividend earlier this year over pandemic fears.
'The first half of 2020 marked an unprecedented time that has impacted URW, as it has everyone,' said group CEO Christophe Cuvillier in a statement.
'URW was forced to substantially close most of its shopping centres starting in March for, on average, 67 days. During this period, the group took steps to support the communities in which it operates and prepare for a safe reopening in line with the best health and safety guidelines. After the reopening, the footfall and sales have been recovering better than anticipated.'
Footfall in the firm's US and European centres is now at 80-90% on last year. 'This shows our centres continue to be attractive destinations for people to visit and will see further increases in actvity as life returns to normal,' Cuvillier added.
According to the firm's results, adjusted recurring earnings per share dropped to €4.65 from €6.45 last year, while net rental income declined 15.1% to €1.07 bn from €1.25 bn last year.
'During the crisis, URW successfully focused on preserving liquidity, by raising funds on the debt markets, deferring non-essential Capex, reducing the pipeline, cancelling the final dividend and implementing cost savings,' added Cuvillier.
The mall giant is pursuing a €4 bn asset disposal programme as it looks to deleverage and reduce its exposure to the weakest performing areas of its portfolio. The firm reported its latest Loan-to-Value (LTV) ratio at 41.5% and reminded investors that it recently closed the disposal of a 54.2% stake in a portfolio of five French centres.
While the portfolio writedown of 5.1% should in theory reassure investors, experts noted that the current EPRA share discount to NAV - running at around 80% - suggests that investors are not wholly convinced that sufficient depreciation has been factored in.
The firm's development pipeline has been scaled back to €6.2 bn, €2.1 bn less than 31 December, and more than €4 bn less than a year ago.
