Westfield owner URW is cautiously optimistic as Europe bounces back

By

Sandra Halliday

Published
Jul 29, 2021

Shopping malls giant Unibail Rodamco Westfield has reported its first-half results and said it continued to see “significant Covid-19-related disruption” in the first six months of the year. But it also highlighted its ongoing “resilience in tough operating conditions”.

And with all of its centres now open and trading, it’s seeing an “encouraging recovery in footfall and sales data”.

Net rental income fell 26.2% to €785 million and its recurring net result fell 29.3% to €472 million. Recurring earnings per share fell by the same percentage to €3.41.

Its malls were shut for 68 days on average in the first half this year, which was actually longer than the 67 days of closures a year earlier.

It saw no US closures and the progressive reopening of European centres during April and May has seen shoppers returning, although June footfall was still only at 76% of 2019 levels.

Tenant sales during the month (when all centres were open) were at 86% of 2019 levels in Europe, but 100% in the US. Tenant sales clearly managed to outperform footfall trends and within that 86% European figure in June, Central Europe was at 92%, the Nordics at 91%, France at 90%, Austria at 87%, Germany at 86% and Spain at 85%, while the UK was only at 72%.

In terms of June category performance, Jewellery (+2.1%) performed well compared to 2019 levels. And while some other key categories dipped — such as Food Stores & Mass Merchandise (-2%), Sport (-2.5%), Home (-3.8%) and Health & Beauty (-5.9%) — they weren’t that far short of two years ago. That said, Fashion (-16.4%) continued to lag.

The company also said it managed to collect 89% of the rent due, better than it did in H1 2020, despite lower collections in France.

And it has seen an improvement in letting activity, with 1,218 deals signed, up 84% against H1 2020 and up 3% against H1 2019. That’s likely to have been helped by its “pragmatic approach to lease terms to navigate short-term challenges and protect long-term value”, with 56% the deals being leases between 12 and 36 months.

Its overall vacancy rate stabilised in Q2 at 8.9% (against 8.3% a year earlier). Vacancies were down in Continental Europe from 5.4% in Q1 to 5% for the first half as a whole. In the UK, they edged down from 12.6% to 12.2%.

URW added that the successful opening of Westfield Mall of the Netherlands in March 2021 saw it being 94% let, with around a million visits in both May and June.

And it has made further progress on European disposals with €1.7bn now agreed or completed out of the late-2022 €4bn target.

CEO Jean-Marie Tritant said that the return of shoppers to its malls has been better than the reopening period was last year and that widespread positive signs mean the firm is “cautiously optimistic”, although the pandemic situation “and potential government responses to it remain a source of uncertainty in terms of outlook”.