Unibail-Rodamco sees 2010 as 'transition year' to renewed growth

Unibail-Rodamco reported on Monday that hefty declines in asset values pushed its losses for 2009 to EUR 1.46 bn from EUR 1.1 bn the year before. But the largest listed real estate group in Europe said 2010 would be a 'transition year' on the way to renewed growth.

'The group ends 2009 with solid earnings growth in line with expectations, despite a very adverse economic environment,' CEO Guillaume Poitrinal said during a conference call. 'The limited impact of the crisis on these results is primarily due to the high quality of the underlying asset base'.

Recurring earnings per share grew in line with expectation to EUR 9.19 per share, a 7.1% increase over 2008, due to rental income growth and the contained cost of debt. The board, Poitrinal said, would propose a EUR 8 distribution payment.

Net rental income was up 3.4% on 2008. But the firm's 2009 results were marked by a EUR 1.3 bn writedown in property values. This resulted in a 15% decline in net asset value to EUR 128 a share compared with EUR 151 a share in 2008.

Chief financial officer Peter van Rossum said asset values continued to drop considerably in 2009, especially in the first half of the year. This came on top of a sharp correction in 2008. The group recognised about 70 basis points of yield expansion in its portfolio. 'However the investment market gained momentum in the second half of 2009. We believe that that indicates that asset values have reached levels where buyers are starting to show renewed appetite,' Van Rossum said.

Unibail-Rodamco secured around EUR 2.1 bn in new debt in 2009 and at the end of the year had well over EUR 3 bn of undrawn funds. Last week, Unibail-Rodamco announced that it is acquiring the Simon Ivanhoe shopping centre portfolio in France and Poland for EUR 715 mln.

Stressing that Unibail-Rodamco would continue to 'jump on opportunities', Poitrinal revealed the group has also embarked on a programme to renovate and extend a large portion of its shopping centres. 'More than 50% of our jumbo assets will be involved in this project over the next five years,' Poitrinal said.