Unibail-Rodamco-Westfield (URW) has announced its largest restructuring programme ever with plans to raise over €9 bn of fresh capital in a bid to strengthen its balance sheet and prepare itself for ‘uncertain times’ ahead.
As part of its so-called ‘Reset’ plan, URW will seek to complete €4 bn of property disposals by year-end 2021, carry out a fully underwritten €3.5 bn capital raise, reduce its development and non-essential operating capex by a further €800 mln and limit cash dividend payments, resulting in €1 bn of savings over the next two years
‘This plan is designed to enable the group to preserve the group’s strong investment grade credit rating and maintain a sustainable capital structure with an LTV(5) below 40%,’ the company said in a statement.
In terms of asset sales, the company has earmarked €2 bn of retail properties for sale and €2 bn of offices & others, particularly JV stakes in most liquid and mature assets.
Around €1 bn of disposals are well advanced, URW added.
Commenting on the announcement, Christophe Cuvillier, Group Chief Executive Officer, said: ‘URW’s immediate priority, as announced on July 29, is to deleverage, primarily through asset disposals. However, given the uncertainties around the duration of the Covid-19 pandemic and the recovery, we have decided, as a matter of prudent management, to substantially strengthen our balance sheet, in order to maintain a robust investment grade credit rating and to ensure flexibility in a world that is unpredictable and requires agility.’
The €9 bn+ “Reset” plan is designed to allow URW to ‘fully embrace the changing retail environment’, added Cuvillier. ‘On the operational front, we see continued improvement in footfall and tenant sales, and are making steady progress in our tenant negotiations. As the environment remains challenging, we believe today’s announcement, including the fully underwritten capital raise, is an important step to ensure URW is best positioned for the future.’
Following the capital raise, URW’s LTV would decrease to 35.7% from 41.5% as at June 2020. Pro forma for both the capital raise and the full €4 bn disposal programme, LTV would stand at 30.9%.
The capital raise is subject to approval by URW’s shareholders at the Extraordinary General Meeting to be convened, and expected to be held in Q4 2020. URW shares tumbled to a 52-week low below €38 apiece following the announcement.
Footfall and rent collection
URW said that footfall is recovering, with most Continental European regions trending in the range of 80 – 90% of last year’s footfall, with the UK in the 60 – 70% range. Footfall in the US centres lags behind that in Europe, as, for a number of shopping centres in Los Angeles, indoor operations remain restricted.
In terms of rent collection, the July collection rate stands at 72%, up from 50% as at July 24, driven by Continental Europe (81%). Collection for August amounted to 70% (Continental Europe: 81%).
