URW NV Report 2024

Unibail-Rodamco-Westfield N.V. reports its 2024 annual results, highlighting operational performance in the U.S. and strategic decisions regarding its asset portfolio.

Summary

• Unibail-Rodamco-Westfield N.V. (URW NV) presents its 2024 annual report, detailing financial results and business activities.
• In 2024, footfall in US Flagship assets increased by 2.8% compared to 2023.
• Tenant sales in US Flagship assets increased by 6.6%, exceeding core inflation (3.4%) and the national sales index (2.5%).
• Rent collection in the US reached 96% of invoiced 2024 rents and service charges as of January 31, 2025.
• Bankruptcies decreased in 2024, with 56 stores affected compared to 72 in 2023.
• 645 leases were signed in 2024, representing 2,369,233 sq. ft. and $160.2 Mn of MGR.
• The average rents per sq. ft. of long-term deals signed in 2024 increased by +5.7%.
• Retail Media & other income revenue in 2024 amounted to $57.8 Mn, a -7.4% decrease compared to 2023.
• The total net change in NRI for URW NV amounted to -$36.0 Mn change compared to 2023.
• US like-for-like Shopping Centre NRI increased by +$15.9 Mn i.e. +4.0% mainly driven by net leasing revenue of +8.8%.
• As at December 31, 2024, the EPRA vacancy was 7.2% ($73.6 Mn), down by -130 bps from December 31, 2023.
• URW NV reported net operating results of 10.1 Mn (2023: -234.1 Mn) for the period ended December 31, 2024.
• The net result for the year ended December 31, 2024 is -333.0 Mn (2023: -692.4 Mn) of which -275.5 Mn (2023: -609.6 Mn) attributable to the shareholders of URW NV.
• In 2024, URW NV invested 110.5 Mn in capital expenditures in investment properties, compared to 166.2 Mn in 2023.
• On August 20, 2024 URW NV disposed of Westfield Annapolis (Maryland, US) for $160 Mn (at 100%, URW share 55%).
• As at December 31, 2024, the URW Groups liquidity position stood at 13.9 Bn including 5.3 Bn of cash on hand and 8.6 Bn of credit facilities.
• The Loan-to-Value (LTV) ratio was 41.7% (41.8%), and to 40.8% on a proforma basis.
• The Net debt/EBITDA ratio was 8.7x (9.3x).
• On July 9, 2024, URW SE made a share premium contribution towards URW NV of 2,000 Mn which was utilized to repay two intra-group loan facilities from URW SE for a total value of the same amount.
• URW SE will propose a cash distribution of 3.50/share to be paid on May 16, 2025.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there are improvements in some key metrics and strategic decisions to retain high-performing assets, the company still faces challenges related to negative NRI and overall net loss. The focus on sustainability and deleveraging is a positive sign for long-term value creation.

Positives

• US tenant sales growth exceeded inflation and the national sales index.
• Vacancy rates decreased, indicating improved occupancy.
• Like-for-like NRI increased, driven by net leasing revenue.
• Net operating results improved significantly year-over-year.
• The company successfully disposed of Westfield Annapolis.
• Strong liquidity position with significant cash on hand and available credit facilities.
• Key financial ratios (LTV, Net Debt/EBITDA) improved.
• Share premium contribution from URW SE strengthened the balance sheet.

Negatives

• Retail Media & other income revenue decreased by 7.4% compared to 2023.
• Total net change in NRI for URW NV amounted to -$36.0 Mn change compared to 2023.
• Westfield World Trade Center saw a significant NRI decrease due to higher vacancy and doubtful debtors as well as rent reduction.
• Net result for the year remained negative at -333.0 Mn.

Risks

• Changes in the retail environment could impact leasing and investment strategies.
• Inability to achieve satisfactory pricing terms for asset disposals could affect valuations.
• Delays or cancellations of refurbishment projects could impact rental income.
• Cyber threats could disrupt IT systems and compromise data.
• Financial market disruptions could limit access to capital.
• Failure to comply with REIT requirements could result in tax penalties.
• Inability to recruit and retain key talent could impact strategic capabilities.
• Sustainability risks related to climate change and regulations could affect asset values and operations.
• Terrorism and security incidents could impact safety and operations.
• Non-compliance with laws and regulations could result in legal and financial penalties.

Future Outlook

The URW Group will continue to increase the distribution according to operating performance, deleveraging progress and valuations evolution, with further details to be shared at the URW Groups Investor Day on May 14, 2025.

Industry Context

This announcement reflects the ongoing trends in the real estate industry, including the shift towards flagship destinations, the importance of sustainability, and the challenges of adapting to changing consumer preferences and economic conditions. The focus on deleveraging and improving operational performance aligns with broader industry efforts to enhance financial stability and shareholder value.

Comparison to Industry Standards

• Simon Property Group (SPG), a leading global retail real estate company, also focuses on high-quality properties and tenant relationships.
• SPG's occupancy rates and tenant sales growth are often used as benchmarks for assessing URW's performance.
• Brookfield Properties is another major player in the retail real estate sector, with a diverse portfolio and a focus on mixed-use developments.
• Comparing URW's LTV and debt/EBITDA ratios to those of its peers provides insights into its financial leverage and risk profile.
• General Growth Properties (GGP) was a major US mall operator before being acquired by Brookfield, and its historical performance can offer context for URW's US operations.
• The average cost of debt for URW at 2.0% is competitive compared to industry averages, but the split between Euro and USD/GBP debt costs highlights currency-specific factors.
• The URW Group's sustainability initiatives and ESG ratings are increasingly important for attracting investors and tenants, aligning with global trends in responsible investing.

Stakeholder Impact

• Shareholders: May see limited immediate returns due to the negative net result, but could benefit from improved operational performance and strategic decisions in the long term.
• Employees: May experience job security due to the company's commitment to retaining high-performing assets, but could also face pressure to meet performance targets.
• Customers: May benefit from improved shopping experiences and a focus on sustainability.
• Suppliers: May see continued business opportunities with URW, but could also face pressure to meet sustainability standards.
• Creditors: May see reduced risk due to the company's deleveraging efforts and strong liquidity position.

Next Steps

• URW SE will propose a cash distribution of 3.50/share at the annual general meeting (AGM) on April 29, 2025.
• Further details on the URW Group distribution policy will be shared as part of the URW Groups Investor Day on May 14, 2025.
• The 2024 Universal Registration Document will be released in March 2025.

Key Dates

Keywords

Unibail-Rodamco-Westfield, URW, Annual Report, Financial Results, Real Estate, Shopping Centers, Retail, Leasing, Investment Properties, Sustainability, Risk Management, United States