Unibail-Rodamco-Westfield says its real estate is worth 11% less than last year

Earnings report shows mall giant still grappling with rent delinquencies

National /
Nov.November 03, 2020 10:09 AM
Unibail-Rodamco-Westfield CEO Christophe Cuvillier, Westfield Century City in Los Angeles and Westfield World Trade Center in New York (Getty, iStock, Google Maps)

Unibail-Rodamco-Westfield CEO Christophe Cuvillier, Westfield Century City in Los Angeles and Westfield World Trade Center in New York (Getty, iStock, Google Maps)

Unibail-Rodamco-Westfield saw U.S. rental income tumble 39 percent year-over-year in the third quarter, the company disclosed Sunday.

The retail landlord and investor reported that rental income from U.S. operations, including from 39 Westfield-branded malls, fell to $464 million. Across its overall portfolio, which includes major retail holdings across Europe, the company’s rental income fell to $1.43 billion in the first nine months of 2020, 38 percent lower than the same period last year.

The company also reported that the current gross market value of its assets is $67.6 billion, down a whopping 11 percent from December 2019. Other giant mall operators are also grappling with declining asset values in the pandemic’s wake.

Factoring in the drop in asset values, URW reported that it’s operating at a $6.3 billion net loss.

“This is bad news for the company, worse news for management because it challenges their stewardship, and bad news for investors,” said James Cox, a securities law expert at Duke University.

“These changes in valuation do not occur that much,” Cox added, “But when they do occur it is sobering to see it happen as you know management is not enthusiastic about the change.”

URW CEO Christophe Cuvillier made some general remarks about the firm’s financials during its third-quarter earnings call Monday.

“In October, a worrying increase in Covid-19 infections has led to a return of government restrictions, including renewed lockdowns, hence adding further uncertainty,” Cuvillier said, alluding to both recent crackdowns in the U.S. and EU.

The changes in shopping center hours could disrupt URW’s main bright spot: Rent collections improved in the third quarter.

While the company does not break out quarter-to-quarter financials, Cuvillier said URW collected 79 percent of retail rents in the third quarter, compared to 52 percent in the second quarter.

The tenants who didn’t pay rent, the company noted, are largely in the U.S. Indoor malls did not reopen in L.A. County until Oct. 7, executives noted. Foot traffic and tenant sales “continued to recover through the third quarter” Cuvillier noted in prepared remarks, “except in California.”


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