Westfield owner boosts finances, says sales and footfall improve
French shopping centres giant Unibail-Rodamco-Westfield has updated on footfall, sales and rent collections, as well as announcing a plan called Reset to “strengthen its balance sheet and increase financial flexibility to execute its long-term strategy”.
The owner of the giant Westfield malls, among others, said footfall recovery is encouraging, with most Continental European regions now trending in the range of 80%-90% of last year’s footfall. The UK is in the 60%-70% range and “shows good week-on-week development as people are returning to offices following the lockdown and summer holidays”.
But footfall in its US centres “lags behind that in Europe as, for a number of shopping centres in Los Angeles, indoor operations remain restricted. In addition, mobility in the major US cities in which the group’s shopping centres operate is well below that of most Continental European cities”.
Meanwhile its tenants’ sales in Continental Europe are improving. They were down 26% in June, -16% in July, and -12% in August, “showing a more rapid recovery than footfall”.
As other shopping centre operators and retailers have reported, it seems that consumers who do venture into these locations are more likely to spend than the more casual shoppers who visited pre-pandemic.
As URW’s last shopping centres reopened during June, it said most remaining restrictions were lifted, and higher conversion rates and average baskets were recorded.
In France (representing 27% of URW’s retail portfolio), the preliminary August figures show tenant sales are down 5%, a strong improvement from -29% in June and -15% in July, with 44% of French tenants reporting August sales above 2019.
But UK tenant sales remain weaker with a 70% drop in June followed by -47% in July and -34% in August.
And when it comes to payment or rent and lease deals, the company said that the tenant negotiations “are making solid progress”. These negotiations are conducted on a case-by-case basis and “recognise the issues the group’s tenants faced and the need to provide relief”. But they’re “generally limited to the period of closure and based on the principle of a fair sharing of the burden, and entail concessions by tenants in exchange for such relief”.
The company stressed that it’s not interested in talks “about permanently changing lease structures or changing the basis for rent calculations”.
Rent collection continues to progress too. The July collection rate was 72%, driven by Continental Europe (81%). Collection for August amounted to 70% (Continental Europe 81%).
And the Reset plan also unveiled is a €9 billion+ strategy to strengthen its balance sheet and increase financial flexibility to help its long-term strategy. It consists of a fully underwritten €3.5 billion capital raise to be used to immediately reduce leverage, something that had been rumoured several months ago. It will also make nearly €2 billion in cash savings and target €4 billion of disposals, which are expected to be completed by year-end 2021.
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