Unibail-Rodamco-Westfield SE Reports Strong Operational Performance in 2023

Unibail-Rodamco-Westfield SE (UNBLF) has reported a strong operational performance in 2023, demonstrating impressive results across all activities. The company’s success can be attributed to factors such as dynamic leasing activity and indexation in Continental Europe, which drove adjusted recurring earnings per share to €9.62, surpassing full-year guidance. Additionally, the company has focused on deleveraging and has secured 11 transactions worth €1 billion, while disposals since 2021 have contributed €5.1 billion to reducing net debt. Another significant achievement for Unibail-Rodamco-Westfield SE was the successful execution of an exchange of hybrid bonds, maintaining its credit rating and access to the bond market. Furthermore, the company plans to reinstate shareholder distributions with a proposed cash payment of €2.50 per share, indicating its strong financial position. Overall, Unibail-Rodamco-Westfield SE has demonstrated its commitment to strategic growth and sustainability, positioning itself as a leader in the industry.

Operational Performance

Dynamic leasing activity

Unibail-Rodamco-Westfield SE (UNBLF) achieved strong operational performance in 2023, driven by dynamic leasing activity. The company experienced a high volume of leasing deals across its portfolio, resulting in increased occupancy rates and rental income. This leasing activity was particularly notable in Continental Europe, where Unibail-Rodamco-Westfield SE successfully secured numerous long-term leases with reputable tenants. The company’s proactive approach to leasing and ability to attract high-quality tenants contributed to its overall operational success.

Indexation in Continental Europe

Indexation in Continental Europe played a significant role in Unibail-Rodamco-Westfield SE’s operational performance. The company leveraged the indexation clauses in its leases, allowing for rent increases in line with inflation and other economic factors. This strategy ensured that the company’s rental income kept pace with the cost of living and maintained its value over time. Indexation in Continental Europe not only contributed to the company’s financial performance but also strengthened its position as a leading real estate developer and operator in the region.

Adjusted recurring earnings per share

Unibail-Rodamco-Westfield SE’s adjusted recurring earnings per share for 2023 exceeded full-year guidance, reaching €9.62. This strong financial performance was driven by the company’s operational success, including dynamic leasing activity and indexation in Continental Europe. The ability to generate robust recurring earnings per share demonstrates Unibail-Rodamco-Westfield SE’s effective management of its real estate assets and its ability to maximize the value of its portfolio. This achievement highlights the company’s commitment to delivering consistent and sustainable financial results to its shareholders.

Exceeding full-year guidance

Unibail-Rodamco-Westfield SE surpassed its full-year guidance for 2023, achieving outstanding results across various key performance indicators. The company’s operational performance, including dynamic leasing activity and indexation in Continental Europe, played a significant role in surpassing these targets. This achievement is a testament to the company’s strong management, strategic vision, and ability to adapt to changing market conditions. By exceeding its full-year guidance, Unibail-Rodamco-Westfield SE demonstrated its commitment to delivering exceptional value and returns to its stakeholders.

Progress in deleveraging

Unibail-Rodamco-Westfield SE made significant progress in deleveraging its business in 2023. The company successfully secured 11 transactions worth €1 billion, which contributed to reducing its overall debt burden. This proactive approach to deleveraging demonstrates Unibail-Rodamco-Westfield SE’s strong financial management and commitment to maintaining a healthy balance sheet. The ability to reduce debt allows the company to strengthen its financial position and invest in future growth opportunities. Unibail-Rodamco-Westfield SE’s progress in deleveraging is a positive development for the company and its shareholders.

Securing 11 transactions worth €1 billion

Unibail-Rodamco-Westfield SE achieved significant success in securing 11 transactions worth a total of €1 billion. These transactions encompassed various aspects of the company’s business, including leasing deals, property acquisitions, and strategic partnerships. The ability to secure these transactions demonstrates Unibail-Rodamco-Westfield SE’s strong market position and its attractiveness to investors and partners. These transactions not only contribute to the company’s financial performance but also support its long-term growth strategy. Unibail-Rodamco-Westfield SE’s ability to secure these transactions is a testament to its expertise and reputation in the real estate industry.

Disposals contributing to debt reduction

Unibail-Rodamco-Westfield SE’s strategic focus on disposing of non-core assets has contributed significantly to the reduction of its net debt. Since 2021, the company has successfully completed disposals amounting to €5.1 billion, effectively reducing its debt burden. These disposals allow Unibail-Rodamco-Westfield SE to streamline its portfolio and focus on its core assets, which generate the highest returns. By divesting non-core assets, the company can allocate its resources more efficiently and improve its overall financial health. Unibail-Rodamco-Westfield SE’s disposals have been instrumental in reducing debt and enhancing its financial stability.

Exchange of hybrid bonds

Unibail-Rodamco-Westfield SE executed an exchange of hybrid bonds, which has positively impacted the company’s credit rating and maintained its access to the bond market. This strategic move demonstrates the company’s proactive approach to managing its capital structure and optimizing its debt profile. By exchanging hybrid bonds, Unibail-Rodamco-Westfield SE was able to enhance its financial flexibility and reduce interest expenses. The company’s ability to maintain its credit rating and bond market access strengthens its position in the financial markets and provides it with the necessary resources to pursue future growth opportunities.

Maintaining credit rating and bond market access

Unibail-Rodamco-Westfield SE has successfully maintained its credit rating and access to the bond market. This achievement reflects the company’s strong financial management, attractive portfolio of assets, and its ability to generate consistent earnings. Maintaining a favorable credit rating allows Unibail-Rodamco-Westfield SE to access debt financing at competitive interest rates, ensuring that it has the necessary capital to fund its operations and investments. Furthermore, maintaining bond market access provides the company with additional sources of funding and a diverse investor base. Unibail-Rodamco-Westfield SE’s ability to maintain its credit rating and bond market access is a testament to its financial strength and market reputation.

Reinstating shareholder distributions

Unibail-Rodamco-Westfield SE has announced its plans to reinstate shareholder distributions, with a proposed cash payment of €2.50 per share. This decision reflects the company’s strong financial performance and its commitment to delivering value to its shareholders. Reinstating shareholder distributions allows Unibail-Rodamco-Westfield SE to reward its investors for their trust and support. By providing cash payments to shareholders, the company enhances shareholder returns and demonstrates its confidence in its future prospects. Unibail-Rodamco-Westfield SE’s decision to reinstate shareholder distributions is a positive development for its shareholders and reinforces the company’s commitment to creating long-term value.

Financial Performance

Like-for-like group EBITDA growth

Unibail-Rodamco-Westfield SE achieved strong like-for-like group EBITDA growth in 2023, with a 6.7% increase compared to 2022. This growth indicates the company’s ability to generate higher operating profits from its existing portfolio of assets. Strong like-for-like group EBITDA growth is a testament to Unibail-Rodamco-Westfield SE’s effective management of its properties, successful leasing activities, and operational efficiency. This financial performance demonstrates the company’s ability to adapt to market conditions and optimize its profitability, contributing to its overall success.

Tenant sales growth

Tenant sales experienced significant growth in 2023, with a 6.4% increase compared to the previous year. This growth is a result of increased footfall and consumer spending within Unibail-Rodamco-Westfield SE’s properties. The company’s ability to attract high-quality tenants and provide a compelling retail experience has contributed to the growth in tenant sales. This financial performance indicates the strong demand for retail space within Unibail-Rodamco-Westfield SE’s portfolio and highlights the company’s ability to create vibrant and successful retail environments.

Footfall growth

Unibail-Rodamco-Westfield SE achieved robust footfall growth of almost 5% in 2023. This growth is a reflection of the company’s ability to attract and retain visitors within its properties. Unibail-Rodamco-Westfield SE’s focus on experience-led sectors, such as entertainment, fitness, and food and beverage, has resonated with consumers and led to increased footfall. The company’s commitment to creating vibrant and engaging spaces has contributed to its footfall growth and established its properties as premier destinations for shopping and entertainment.

Long-term leases and decreasing vacancy

Unibail-Rodamco-Westfield SE experienced positive leasing activity in 2023, with long-term leases representing 78% of the Modified Gross Rent (MGR) signed during the year. This indicates the company’s ability to secure stable and reliable rental income streams. The decreasing vacancy rate further highlights Unibail-Rodamco-Westfield SE’s success in attracting tenants and maintaining high occupancy levels. The combination of long-term leases and decreasing vacancy demonstrates the company’s effective leasing strategy and its ability to adapt to market conditions, ensuring the long-term success of its properties.

Focus on experience-led sectors

Unibail-Rodamco-Westfield SE has strategically focused on experience-led sectors, such as entertainment, fitness, and food and beverage. This strategic choice has driven the company’s financial performance and contributed to its success in attracting visitors and tenants. The focus on experience-led sectors aligns with evolving consumer preferences and creates vibrant and engaging environments within Unibail-Rodamco-Westfield SE’s properties. By creating unique and memorable experiences, the company differentiates itself in the market and establishes its properties as desirable destinations for both consumers and retailers.

Successful retail mix and demand

Unibail-Rodamco-Westfield SE has achieved a successful retail mix within its properties, driven by strong demand from both consumers and retailers. The company’s ability to curate a diverse tenant mix, with a blend of international brands and local businesses, has contributed to the overall success of its retail spaces. By offering a wide range of products and services, Unibail-Rodamco-Westfield SE attracts a broad customer base and captures spending across various segments. The successful retail mix highlights the company’s understanding of consumer preferences and its ability to meet market demand effectively.

Leasing strategy to mitigate COVID impact

Unibail-Rodamco-Westfield SE has implemented a robust leasing strategy to mitigate the impact of the COVID-19 pandemic on its properties. The company has proactively engaged with tenants and provided flexible leasing arrangements to support their operations during challenging times. By offering rent abatements, deferrals, and other incentives, Unibail-Rodamco-Westfield SE has been able to maintain high occupancy rates and minimize the financial impact of the pandemic. This leasing strategy demonstrates the company’s commitment to partnership with its tenants and its ability to adapt to changing market conditions.

Increase in new revenues in Retail Media

Unibail-Rodamco-Westfield SE has successfully increased its new revenues in Retail Media in 2023. The company achieved a 17% increase in net margin in Europe and a 10% increase in average revenue per visit. This growth is a result of the company’s ability to monetize its digital advertising space within its properties. By leveraging technology and data analytics, Unibail-Rodamco-Westfield SE has effectively capitalized on the growing demand for targeted advertising within retail environments. The increase in new revenues in Retail Media highlights the company’s innovation and ability to create value from its assets beyond traditional leasing income.

Future Developments

€2 billion worth of developments in 2024

Unibail-Rodamco-Westfield SE has ambitious plans to deliver developments worth €2 billion in 2024. These developments will include new projects, expansions, and renovations across the company’s portfolio of properties. By investing in these future developments, Unibail-Rodamco-Westfield SE aims to enhance its offerings and create additional value for its stakeholders. The €2 billion worth of developments is a testament to the company’s long-term vision, commitment to growth, and confidence in the future prospects of the real estate market.

High level of credibility in sustainability efforts

Unibail-Rodamco-Westfield SE has established a high level of credibility in its sustainability efforts. The company recognizes the importance of sustainable practices and has implemented various initiatives to reduce its environmental impact. These initiatives include energy efficiency programs, waste reduction measures, and the implementation of renewable energy sources. Unibail-Rodamco-Westfield SE’s commitment to sustainability not only aligns with global environmental goals but also positions the company as a responsible and forward-thinking real estate developer and operator.

Carbon emissions reduction

Unibail-Rodamco-Westfield SE has achieved significant progress in reducing its carbon emissions. The company has reduced its emissions by 43% and is on track to achieve a 50% reduction by 2030. This reduction is a result of the company’s focus on energy efficiency, renewable energy adoption, and the implementation of sustainable practices. Unibail-Rodamco-Westfield SE’s commitment to carbon emissions reduction demonstrates its dedication to environmental stewardship and its contribution towards mitigating climate change.

Recognition for sustainability efforts

Unibail-Rodamco-Westfield SE has received recognition for its sustainability efforts. The company has been ranked as one of the 100 most sustainable corporations worldwide and has achieved a CDP A rating. These accolades showcase Unibail-Rodamco-Westfield SE’s leadership and commitment to sustainability within the real estate industry. The recognition validates the company’s ongoing efforts to implement sustainable practices and its ability to integrate environmental, social, and governance considerations into its business operations. Unibail-Rodamco-Westfield SE’s sustainability efforts set it apart as a responsible and socially conscious organization.

In conclusion, Unibail-Rodamco-Westfield SE has demonstrated strong operational and financial performance in 2023. The company’s dynamic leasing activity, indexation in Continental Europe, and adjusted recurring earnings per share have exceeded expectations and contributed to its overall success. Unibail-Rodamco-Westfield SE’s progress in deleveraging, securing transactions, and reducing debt further strengthens its financial position. The company’s focus on experience-led sectors, successful retail mix, and leasing strategy have driven its financial performance and tenant sales growth. Unibail-Rodamco-Westfield SE’s commitment to sustainability, future developments, and recognition for its efforts solidify its position as a leader in the real estate industry. With a strong foundation and a clear vision for the future, Unibail-Rodamco-Westfield SE continues to deliver value to its stakeholders and maintain its position as a prominent player in the global market.