Unibail-Rodamco lifts H1 net profit, strengthens German activities

Europe’s largest listed property group Unibail-Rodamco said it boosted its recurring net profit by 8% in the first six months of 2014 on the back of strong rental growth and operating efficiencies.

Like-for-like net rental income of 2.6% propelled H1 recurring net profit to €539 mln, up from €499 mln in the year-earlier period. Recurring EPS was up 6% at €5.52, ahead of guidance.

Unibail-Rodamco strengthened its German platform in the first half by acquiring a 50% stake in the Centro mall in Oberhausen for €535 mln and by taking over the remaining 49% stake it did not yet own in German shopping centre operator Mfi from New York-based private equity firm Perella Weinberg Partners. Unibail-Rodamco acquired a 51% stake in the Essen-based holding company in 2012 and is now paying €317 mln for the remaining stake, bringing its total ownership in Mfi to 91.15%.

‘The first half of 2014 was characterised by a number of exciting developments such as the acquisition of a stake in Germany's best shopping centre, CentrO, the introduction of a number of UR Lab's innovations and the award to the Unibail-Rodamco-led consortium to develop the NEO 1 project, including the "Mall of Europe", in Brussels,’ said Unibail-Rodamco’s CEO Christophe Cuvillier.

Unibail-Rodamco continued its disposal programme, generating €384 mln in proceeds, including its 7.25% stake in Société Foncière Lyonnaise and a number of smaller retail and office assets for which it realised an aggregate 9.3% premium.

Unibail-Rodamco was also active on the capital raising front in H1. The group raised €2.86 bn of medium to long-term funds in the debt capital and bank markets and increased the average debt maturity to 5.7 years as at June 2014. It also reduced its average cost of debt to a historical low of 2.7% compared to 2.9% for full-year 2013.

Unibail-Rodamco scored two firsts for a European real estate company with the issue of a €750 mln, 10-year "green bond" with a 2.5% coupon, and a €500 mln, seven-year Ornane bond with a 0% coupon.

The group is working on a further expansion of the food offering across its shopping centres and will launch its first Fresh! concept at the El Mercat de Glòries centre in Barcelona in September. Inspired by downtown city markets, Fresh! will encompass a ‘high quality, diversified and regularly renewed food offer’.

Unibail-Rodamco confirmed its target of recurring EPS growth of at least +5.5% for full-year 2014, based on solid operating fundamentals, the contribution of the acquisition of the stake in CentrO and deliveries of extensions and brownfield projects in 2013.