(Adds comments from conference call, CEO on rental
Sept 17 (Reuters) - Shopping mall owner
Unibail-Rodamco-Westfield plans to raise 3.5 billion
euros ($4.1 billion) to shore up its balance sheet and cut debt
to cope with the fallout from the COVID-19 pandemic, which has
hit the sector hard.
URW, which also owns office buildings, events centres and
commercial real estate in airports, has suffered drops in rental
income after retailers were forced to shut for several months
during lockdowns around the world.
The company's shares fell sharply after the announcement and
were down 7.3% at 0951 GMT, dragging down those of rival
Klepierre too. URW said it was raising the capital and limiting
dividends in cash to protect its investment grade rating, which
affects a company's cost of borrowing.
The restructuring comes only two years after URW, Europe's
largest property firm, finalised the $16 billion acquisition of
Australian shopping mall giant Westfield.
The deal was presented as a defensive move to create a
global leader in a sector already grappling with the challenge
of online shopping led by Amazon.
The group said it would now speed up a disposal plan, and
had identified an extra 2 billion euros of assets it could sell
off, on top of 4 billion euros previously outlined in July.
URW executives said there was strong appetite for some
shopping centre operations, which would see the group sell off
stakes and run some as joint ventures.
The company gave an upbeat outlook for the sector's gradual
recovery, though some U.S. malls are closed. Footfall is 80-90%
of last year's levels in most of Continental Europe, it said.
"The business update is quite encouraging for continental
Europe where sales are converging to last year levels in most
countries," analysts at brokers Degroof Petercam said in a note,
adding that the size of the capital hike "seems sufficient to
restore the balance sheet".
URW is also making headway in renegotiating rental contracts
with tenants, company executives said, with 61% of planned
discussions now settled.
However Chief Executive Christophe Cuvillier said the
group's business was lagging in the United Kingdom, where it had
struggled to enforce some rental payments.
"It's not acceptable that strong, healthy retailers - some
of which were allowed to stay open during the lockdown - are not
paying not only their Q2 but also their Q3 rents," Cuvillier
told an analyst conference call.
($1 = 0.8486 euros)
(Reporting by Sarah Morland in Gdansk and Sarah White in Paris;
Editing by Alexander Smith and Pravin Char)