What’s the reason for investors’ high interest in Unibail-Rodamco-Westfield?

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Summary

  • ASX-listed CDIs of Unibail-Rodamco-Westfield remain volatile as reopening continues in the USA. Over the five months, the property manager has seen activist action and management overhaul, which sparked interest in the stock.
  • Investors had been concerned about the large debt piles of URW and compromised cash flows in the wake of the coronavirus pandemic. The firm has forged on an asset sale mode, among other measures, to provide liquidity and flexibility.

Since the start of the coronavirus pandemic and worldwide lockdowns, Unibail-Rodamco-Westfield has witnessed a greater business disruption because of its portfolio composition in Europe and North America, which have struggled to keep up reopening.

Source: MegapixlTM | © Lucidwaters

Unibail-Rodamco-Westfield holds many prime CBD properties across continents from New Zealand to California, USA. At the end of 2020, its portfolio was valued at €56,314 million.

Leadership overhaul

French telecom billionaire Xavier Niel onboarded Supervisory Board (SB) of the property manager in November last year. Incidentally, the appointment of three members, including Mr Niel, was made around the time of the vaccine breakthrough. URW shares and markets jumped on the vaccine news.

Over the last five months, Mr Niel has steered sweeping plans within the property group after blocking a heavy capital raising and making into the Supervisory Board. Among the three members who joined the SB, Leon Bressler is the former Chief Executive Officer of the group.

Similarly, URW shares have also gained significantly since November. The group has also taken concrete steps to implement its strategy. Although Xavier Niel led the dissent against heavy capital raising, he was inclined to implement reset plan formulated by the URW leadership.

Source: MegapixlTM | © Hcazenave

In November, Jean-Marie Tritant was also appointed the Chairman of Management Board (MB) and the Group Chief Executive. He took the role at the beginning of this year from Christopher Cuvillier. Earlier this year, URW said each region would be led by a Chief Operating Officer, who will report to the Group Chief Executive.

Regional leaders will emphasise on local markets and satisfying customers. The company gave more responsibility to the Chief Financial Officer. Michel Dessolain took over as the Chief Customer Officer to accelerate strategic marketing, innovation, new revenues, and data, etc.

Full-year earnings

Unibail-Rodamco-Westfield experienced only 70 days of normal operations in 2020. During the FY20, its net rental income fell around 28% to €1,790 million. At the end of FY20, the property manager’s proportionate portfolio valuation was €56,314 million, down 13.8% from €65,341 million.

The group said its tenant sales for the year had stood at 63% of 2019, and it collected 80% of billed rent. It was noted that the collection of rent accelerated in the third quarter. During the year, the group issued €4,150 million of bonds.

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Unibail-Rodamco-Westfield ended the year with a cash position of €2.1 billion and undrawn credit facilities of €9.2 billion. In 2020, five shopping centres were disposed by URW. It has closed sale of SHiFT in January 2021 and plans to complete €3.2 billion of European disposals.

It expects recovery in late 2021, but the recovery would be dependent on vaccines, government stimulus, and infections.

At the time of writing, URW shares are 4.6% higher at $5.67.


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