Unibail-Rodamco-Westfield (ASX:URW) Onboards activist investors, Calm waters ahead?

  • November 13, 2020 03:50 PM AEDT
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Unibail-Rodamco-Westfield (ASX:URW) Onboards activist investors, Calm waters ahead?

Summary

  • French telecom billionaire Xavier Niel, who founded Iliad, is now on the URW Board along with former URW boss Leon Bressler.

  • Mr Niel had been vocal in asking shareholders to reject capital plans of URW. Now the capital raising proposal stands rejected. 

  • At the end of September 2020, Unibail-Rodamco-Westfield was carrying a total debt of €29.08 billion, including lease liabilities. 

Unibail-Rodamco-Westfield SE has been making headlines over the recent months as activist investors locked horns to block capital raising plans of the real estate giant. 

Europe’s largest property manager, URW, is battling high debt amid the pandemic, which forced the company to close shopping malls and similar public places. In light of this, the Board of URW have been eying a capital raise. 

However, at the Combined General Meeting held recently, activist investors dealt a severe blow to the firm’s capital raising plans.

Although the proposal received 61.62% votes in favour of the plans, it fell short of achieving a two-thirds majority.

Over the recent months, the French telecom billionaire Xavier Niel has been vocal about suggesting shareholders reject capital raising plans of URW. He has teamed up with former Unibail boss Leon Bressler to get things on track at the embattled property manager.

Now Mr Niel, Mr Bressler, and Mrs Susana Gallardo are appointed to the Supervisory Board of the property developer.

Group Chief Executive Officer Christophe Cuvillier has recently stated that the vaccine could have a significantly favourable outcome for the group.

He also noted that leverage remains high and was inclined to implement reset plans, including asset disposals, dividend and capital expenditure reduction.

Being a part of the Board, the activist investors will have detailed access to the inside information. This would also allow them to propose alternatives to the current strategy of the management.

Impact of Vaccine update

When Pfizer announced that the efficacy of its drug had depicted approximately 90% efficacy, URW CDIs listed on the ASX also surged drastically – reaching over $4/CDI on 11 November. 

As of 30 September 2020, the portfolio of URW was valued at €58.3 billion. Notably, 86% of its portfolio was in retail, 7% in office, 5% in convention and exhibition venues and 2% in services. 

Since the real estate developer is largely skewed towards retail properties, the market punished the stock as COVID-19 induced sell-offs gathered pace earlier during the year. 

Retail tenants had been forced to close shops as Governments had restricted people movement and close contact activities. To wade through these hard times, they have been asking for rental concessions and renewed lease agreements.

Loss of over €5 billion in 9 months

Earlier this month, the property group reported results for nine months ended September 2020. Net loss for the period was €5.45 billion after heavy losses on valuation movement, goodwill, equity interests. 

Share of losses from equity interest stood at €944.5 million, valuation movement on assets was negative $3.31 billion, and impairment to goodwill was €1.45 billion. 

At the end of September, total debt including lease liabilities was €29.08 billion, of which €4.68 billion is due next one year, €8.35 billion is due over next one to five years, and €16.04 billion is due after five years. 

On 13 November 2020, URW was trading at $3.705, down by5 % from the previous close (as at AEDT: 2:52PM).  

(Currency in AUD, unless or otherwise stated)

 

 


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