URW Expands Stake in German Retail Market with Strategic Acquisition

2 min read | December 05, 2024 02:12 PM AEDT | By Team Kalkine Media

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URW Expands Stake in German Retail Market with Strategic Acquisition — Image source: shutterstock

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Highlights

Stake Increase: URW raises its stake in URW Germany GmbH (URWG) from 51% to 89.9% via a €65 million deal with CPP Investments.

Asset Strengthening: The acquisition includes five shopping centers and €416 million in cash reserves.

Positive Market Response: URW shares rose over 1%, reaching €6.22 on December 5, 2024.

Unibail-Rodamco-Westfield (ASX:URW) has announced a strategic acquisition, increasing its stake in URW Germany GmbH (URWG) and related entities from 51% to 89.9%. The deal, executed in collaboration with its joint venture partner Canada Pension Plan Investment Board (CPP Investments), was conducted off-market and under the framework of an existing shareholders' agreement.

The remaining 10.1% stake held by CPP Investments is subject to an option allowing URW to acquire it in 2025 for a cash consideration of up to €65 million.

The acquisition is financed through the issuance of 3.254 million new stapled URW shares, accounting for approximately 2.2% of the company’s fully diluted share capital. CPP Investments will receive these shares as consideration for their 38.9% stake in URWG.

Expanding German Portfolio
URWG owns a portfolio of five premier shopping centers across Germany, including Minto (Mönchengladbach), Höfe am Brühl (Leipzig), Palais Vest (Recklinghausen), a 50% stake in Paunsdorf Center (Leipzig), and a 20% interest in Gropius Passagen (Berlin). Additionally, URWG holds €416 million in cash reserves, boosted by the recent €238 million net proceeds from the sale of Pasing Arcaden in Munich.

Beyond real estate holdings, URWG manages a fee business related to third-party assets in Germany, underscoring its diverse revenue streams.

Financial and Operational Impacts
URW emphasized that the transaction is neutral to its EPRA Net Tangible Assets (NTA) and will improve its pro forma International Financial Reporting Standards Loan-to-Value (IFRS LTV) ratio by approximately 20 basis points. The company also noted that its liquidity position has strengthened due to the transaction, enhancing its flexibility concerning its German assets.

Importantly, the acquisition does not affect URW's guidance for 2024 Adjusted Recurring Earnings Per Share (AREPS) or its other joint ventures and co-investments with CPP Investments. Assets such as Westfield Stratford City in the UK, Westfield Centro in Germany, and several properties in the United States remain unaffected.

Market Reaction
The announcement sparked a positive market response, with URW’s share price climbing over 1% to €6.22 at the time of writing on December 5, 2024. This increase reflects investor confidence in URW's strategic approach to consolidating and optimizing its German portfolio.

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