Westfield owner reviews development pipeline amid 'challenging' times

By

Barbara Santamaria

Published
Feb 14, 2020

Shopping centre landlord Unibail-Rodamco-Westfield disposed of several retail assets and scaled back its development pipeline in 2019 after facing a “challenging” retail environment in the UK.

Like-for-like net rental income fell 4.2% in the UK last year, making it the worst performing region across the group.

Continental Europe delivered 3.1% growth in like-for-like net rental income, while comparable net operating income in the US was up 2.4%.

However, footfall and tenant sales increased in the UK, outperforming both the UK shopping centre index and the national sales benchmark. Footfall was up 2.8% in the year to December 31, and tenant sales increased by 4.7%.

In Continental Europe, footfall was up by 2.6%, while tenant sales grew by 5.2% and 5.5% at flagship destinations. By contrast, tenant sales increased by just 1.6% in the US.

On Thursday, the shopping centre giant announced that it had scaled back its development pipeline to €8.3 billion (£6.97bn), removing €3.2 billion (£2.6bn) of projects that require ‘major redefinition’ or no longer meet the group’s ROI requirements.

Additionally, an agreement has been reached with a consortium of leading French investors to sell a 54.2% stake in a portfolio of five French centres for €2 billion. To date, URW has raised €3.3 billion through disposals, and the transaction will take this number to €4.8 billion, or 80% of the €6 billion disposal target.

The company said the planned disposals “are a critical part of its strategy of concentration, differentiation and innovation”.

And despite the challenges facing global retail markets, URW remains confident in its five-year business plan.

CEO Christophe Cuvillier said: “The group remains soundly positioned for the future. We will continue the execution of our strategy of concentration, differentiation and innovation and a disciplined approach to the allocation of capital and deleveraging.”