At the presentation of Unibail-Rodamco’s H1 2016 results, CFO Jaap L. Tonckens was out to prove one thing to investors.
‘There’s a lot of concern that yields are basically driving most of what’s actually going on in these markets,’ he said. ‘I’m here to show that the active management of our assets has created real value over the period since 2010.’
Tonckens added: ‘Investor appetite for large assets – like the kind of centres we hold - has driven down yields. Refurbishing, extending and upgrading many of our centres has shifted some of our assets from core to prime or even super prime, which also lowers yields.’
But – he was keen to impress - much of the work has been done in the company’s asset management divisions, where tenant rotation has proved a core strategy.
Earlier in the presentation, CEO Christophe Cuvillier went into detail on Unibail-Rodamco's impressive rent rises in H1. In the first half of the year, Europe's largest listed property company saw minimum guaranteed rent (MGR) uplifts of 20.6%, with a rise of 29.6% in France.
‘This reflects the reversionary potential of our assets and the excellent work of our leasing teams,’ Cuvillier stressed. ‘Some 795 leases were signed in the first half of the year across all our assets (compared to 676 in the same period last year). The company reached a 7.2% rotation rate which is comfortably within the annual objective of 10%.'
Focus on premium retailers
The emphasis has been on attracting international premium retailers, which made up 15% of new signings in the first six months of the year. New Balance opened its first-ever store in France during July in Forum des Halles, while Tesla signed another lease and opened two stores in the group’s centres in June. H1 2016 also saw the first Superdry open in Slovakia, the first Scotch & Soda launch in a mall in Germany (CentrO, Oberhausen), Mac debut in Sweden, the first-ever Nyx (L'Oreal group) open in Poland and another Nyx in Spain – debuting in a mall.
Refurbishments throughout the portfolio have added to the dynamism – tenant sales in Forum des Halles are up 21.8% since its new gold canopy was added in April.
Unibail-Rodamco’s commitment to super-prime shopping centres is also paying off, as the Mall of Scandinavia case-study proved. By 30 June, the 100,000 m2 Stockholm scheme had already welcomed 8.9 million visitors since opening just before Christmas.
‘As of last night, we were at 9,609,000 visitors, undoubtedly the best figures for any mall in Continental Europe in the 21st century,’ Cuvillier commented at the H1 2016 results presentation earlier this week. ‘By way of comparison, the population of Sweden is 9.9 million, so by the end of July, we will have welcomed the equivalent of the entire population of Sweden.’
Anoher new centre Polygone Riviera in Nice has already experienced a footfall of 5.3 million visitors since opening in October, with further changes to the tenant line-up planned. Primark launched there in March, Tesla in June, and FNAC recently signed a deal to open a new store in October.
Mall of the Netherlands
The Netherlands has been a market in transition for Unibail-Rodamco, with its net rental income for Hq 2016 trailing at -8.2% y-o-y following the sale of non-strategic assets.
However, this market is set to benefit from the launch of the super-prime centre, Mall of the Netherlands, now set to open in H1 2019. Definitive zoning approval in the first half has brought the scheme forward by six months, after Unibail-Rodamco saw off no less than 38 claims against it. ‘Mall of the Netherlands will be the first real world-class shopping centre in the Netherlands,’ Cuvillier predicted.
The comprehensive extension to Centrum Chodov in Prague is also on target for opening in October 2017 – currently 71% pre-let – while Phase I of Glòries in Barcelona is set to open H2 2016 and is already 100% pre-let.
