Europe's largest listed retail REIT Unibail-Rodamco is planning five new deliveries for the second half of this year.
The five projects include the new 80,900 m2 Wroclavia shopping centre in Wroclaw; the 42,000 m2 extension of Centrum Chodov in Prague (pictured); the 29,900 m2 extension of Carré Sénart and the 7,600 m2 extension of Parly 2, both in the Paris region, and the 10,500 m2 extension and full redevelopment of Glòries in Barcelona. The average pre-letting of these projects stands at 94%.
Commenting on the company's €8.1 bn development pipeline, CFO Jaap Tonckens told a H1 earnings call this week that Unibail-Rodamco aimed to continue investing in the upgrading of the portfolio and disposing of non-core assets. By the end of the year, the Paris-listed company will have invested €6.2 bn in its shopping centres in the past five years, he added.
This includes both extensions and new deliveries. 'In order to thrive in a rapidly changing environment, retail landlords need to invest,' he said.
Unibail-Rodamco reported on Monday that net rental income rose 3.5% in the first six months of 2017 compared to the year-earlier period, despite a further decline of 4.8% at its Dutch shopping centres.
The Netherlands was the only country which did not contribute to the positive result, Europe's largest listed retail real estate specialist said in a press release.
Rising tenant sales
Through end-May, Unibail-Rodamco's tenant sales in all regions increased by 2.7% compared to the same period last year, 148 basis points (bps) higher than the aggregate national sales index. Sales were particularly strong in France where the company outperformed the national sales index by 374 bps. Euralille (+29%), Forum des Halles (+19%), Polygone Riviera (+14%), Carrousel du Louvre (+6%) and Vélizy 2 (+6%) performed especially well.
Thanks to the recovering European economy, the Paris-listed company booked a 'strong performance' across all its regions barring the Netherlands, Tonckens said during an interview with Bloomberg TV. 'Political stability has returned, which is what businesses like, and consumer confidence is up generally. Overall the macro-economic environment is pretty beneficial.'
Consumer confidence is also up in France following the recent election of Emmanuel Macron as president, Tonckens conceded. 'We're not a proxy for the macro-economic environment, but it is currently supportive,' he added.
GDP growth in 2017 for the European Union and the Eurozone is forecast to reach 1.9% and 1.7% respectively, the company noted in its first-half earnings report. This is broadly in line with the GDP growth reported in 2016. Unemployment levels as of May 2017 have fallen to 7.8% in the EU and 9.3% in the Eurozone - both 90 bps lower compared to the year-earlier period.
These are the lowest recorded rates since December 2008 for the EU and March 2009 for the Eurozone.
