URW cautiously upbeat as reopenings look good so far

By

Sandra Halliday

Published
Apr 29, 2021

Malls giant Unibail-Rodamco-Westfield delivered a Q1 update on Thursday and said that turnover in its widespread international operations “remained strongly impacted by ongoing Covid-19 restrictions” during the first three months of the year.

Total turnover fell 40.8% to €566.7 million on a ‘proportionate’ basis with the gross rental income (GRI) of the shopping centre division down 30.4% to €472.8 million on this basis. In the Nordics, Spain and the US, the figures were down 14.5%, 20.4% and 20.9% respectively as malls there were able to trade during Q1. Spain was also helped by the delivery of the Fashion Pavilion and Dining Experience in La Maquinista. 

GRI in France was hurt by the government-mandated closures of large shopping centres from the start of March, followed by a Paris region lockdown. It fell over 36%. But that wasn’t the worst figure with quarterly GRI in the UK down almost 60% and in Germany over 46%.

The company endured 42 days of enforced closures during the quarter. And while it’s seen the progressive lifting of non-essential retail restrictions in the UK, Slovakia, Denmark and The Netherlands during April, 51% of URW’s shopping centres are still effectively closed.

But it’s hopeful that when restrictions are lifted, trading will be able to recover. Already in March, tenant sales reached 87% of 2019 levels in the US, while Continental European countries where non-essential retail was allowed to trade reached between 76% and 81%. The company said tenant sales seem to be recovering where malls are operational and 11 of its shopping centres overall “even had tenant sales, pro rata for open stores and number of days in operation, above 2019 levels, demonstrating the pent-up consumer demand”.

And footfall looks good in some locations. UK footfall jumped to 75% of 2019 levels during the first week of reopening there, despite major restrictions still being in place. The Westfield London mall alone saw footfall running at 85%.

Also on the upside, it hailed the “successful delivery” of the Westfield Mall of the Netherlands during the quarter that was 92% pre-let at its opening. That location saw 70,000 visits during its first weekend, despite the closure of F&B and Entertainment and appointment-only access to non-essential retail.

But CEO Jean-Marie Tritant balanced optimism with caution. He said: “We anticipate 2021 to remain very challenging with tougher and longer restrictions impacting the group beyond Q1. While we saw encouraging leasing activity as brands continue to choose our locations in preparation for the post Covid-19 market rebound, our overall vacancy rate did increase slightly in Q1 as a result of the lagged impact of the pandemic on retailers. We continue to partner with our tenants to navigate this environment together. We see positive signs of a return to normality whenever restrictions are eased, thanks to pent-up consumer demand for our high quality shopping destinations.”