Slowing momentum in rents?

Although we do not have enough detail on the H1 23 figures to make a proper analysis of the Q3 23 alone, the operating performance seems to be improving at first glance. The FY 23 guidance has been raised slightly.

An upbeat Q2 23. At first glance.

Rental revenue accelerated in Q2 23 sequentially. However, there are still some grey areas in the Group’s reporting (notably the MGR uplift), with vacancy rates rising almost across the board in Europe. Debt levels remain high.

Occupancy losing steam in Q1 23

Q1 23 was marked by vacancy that was up sequentially but the top line embarked another tranche of catch-up yoy. The latter contribution should become neutral progressively, in our view.

Eroding NAV despite dividend holiday

When investigating the US operations deeper, it looks as if the picture isn’t as bright as we perceived it a few months ago. Consolidated indebtedness is still too high, in our view. As far as the short term is concerned, inflation could provide the stockmarket with more confidence in H1 23.

Guidance was revised upward. At first glance.

The guidance up 2% may well have benefited from positive one-offs in Q3 22 once again. We no longer anticipate a strong acceleration for the improvement in forward operational data. Disposing of the whole business in the US remains a key issue.

Doubling the number of existing shares

Despite its strong liquidity of €12.7bn of undrawn credit lines, URW announced a recap of €3.5bn (named the “Reset” plan), being the equivalent of 63% of its current market cap (based on 16 September 2020 share price) and 13% of its net debt. URW confessed that selling more assets reveals to be impossible and that hybrids were not appropriate in such difficult times. Please read our 24 June 2020 Idea Kicker ”Unibail… or sell”.

Prepare for landing

The 2018 performance is not in question, but the current disposal programme is twice as large as in last June. Unibail has chosen to reduce the risk. We consider this as a negative signal for sector.

Westfield is contributing revenues

URW posted good Q3 18 numbers. GRI from the US and UK reflects Westfield’s contribution (c. 15% of GRI from Shopping centers) since June 18.

Already accretive

The leader in shopping centres, URW reported good H1 results. Growth was mainly driven by rent uplifts for Continental European shopping centres and the new contribution from US and UK assets. The Westfield integration is on track. As foreseen, the less attractive part of the Westfield assets will impact the overall performance before being sold/dusted off.

Strong in a market which isn't

Unibail released its FY17 results. It recorded net rental income up by 3.5% yoy (lfl 4.2%), underpinned by the strong performance of shopping centres particularly in France. The year was characterised by successful deliveries and the acquisition of Westfield which was announced at the end of 2017 and is expected to be closed in April 2018.

Bigger may not make a strategy

We do not buy the purchase of Westfield as much more than the pursuit of scale in a declining industry: shopping malls. Unibail-Rodamco is strong but its market is not.

We remain positive after the Q3 figures

Unibail-Rodamco reported a 1.8% yoy increase in gross rental income to €1,527.7m for 9M 17. On the funding side, the group was active with its programme of share buybacks, which has been in place since 14 August 2017 and will end on 29 December 2017.

Highest Retail portfolio ever in Europe

Unibail posted its H1 figures. Rental income progressed by 1.7% to €794m yoy (3.7% lfl). Rents from retail shopping centres were up by 4.1% to €670m (3.4% lfl). EPRA NAV stood at €206.2 per share, up by 5.4% compared to FY16. Recurring EPS grew by 6%, to €6.16. Cost of debt was 1.4% in H1, an historic low level, with increasing maturity of 7.4 years against 7 years in H1 16. The portfolio’s value came in €42.5bn, climbing by 4.9% yoy (3.3% lfl). The group’s development pipeline is about €8.1bn

FY16 results - another look at Unibail

We have updated our model after Unibail’s FY16 numbers. We maintain a positive recommendation on the stock following the solid bottom line and positive asset revaluations. As a reminder, the numbers came in above our expectations with EPS at €11.20, standing ahead of the guided €11-11.20 and our expectations, and a triple net NAV at €183, in line with our expectations. Management proposed a dividend of €10.20 per share. The average cost of debt was lowered to 1.6%, the best-in-class in our prop

Positive H1 numbers, new target of €248

NRI stands at €781bn, gaining 7.7% yoy and 2.5% on an lfl basis, o/w 3.8% on shopping centres, which stands 350bp above indexation. The group’s GAV gained 3.5% lfl to €39.3bn, and the development pipeline is maintained stable at 20% of the group’s GAV, now at €7.9bn. EPRA NAV gained 5.7% yoy to €189.00, standing at a 17% discount to our old 18-months forward NAV. The financial position remains strong with cost of debt decreasing to a low 1.7% from 2.2%, the best in the sector, with average d

Morning Note – 22 April 2024

Benefits of scale set to materialise

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Morning Note – 29 February 2024

Jupiter Green

Hardman & Co Insight - Asset managers had a poor 2022

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