Unibail-Rodamco plans “radical reduction” of regional malls
Firm said it already handed over keys to 4 Florida malls in default this year
Unibail-Rodamco-Westfield will look to sell its regional malls in the U.S. as it struggles to recover from the pandemic’s brutal impact on the retail sector.
The Paris-based mall giant and investment firm posted a $652.6 million companywide loss for the first half of the year, it said in an earnings call Wednesday. That total still marked a significant improvement from the $4.6 billion loss it suffered in the second half of 2020.
The firm’s coast to coast U.S. properties include 15 malls in California, and others in New York, Chicago, Miami and various locations.
The coronavirus continues to slam its bottom line: This year, Unibail-Rodamco handed over the keys to four Florida malls in foreclosure. They were Westfield Broward outside Miami, Westfield Sarasota in Sarasota, Westfield Citrus Park in Tampa, and Westfield Countryside in Clearwater.
The company will now look to “streamline” its U.S. portfolio for a “radical reduction” of its exposure to the U.S. market, CEO Jean-Marie Tritant said on the call. The firm is “in discussions” to dispose of its regional portfolio in the U.S., and would focus on its flagship locations, executives said.
Across its U.S. mall properties, Unibail-Rodamco reported $301 million in net rental income for the first half of 2021. That was down from $327 million in the first half of 2020.
Throughout its U.S. and European portfolio of malls, offices and other properties, it reported $734.9 million in net rental income for the first six months of the year. The pandemic’s impact on Unibail-Rodamco’s worldwide holdings are stark. In the first half of 2019, Unibail-Rodamco reported $1.2 billion in net rental income across its portfolio.
The firm said the total value of its portfolio has dropped to $65 billion as of June 30, compared to $66 billion at the end of 2020. Both figures are down more than 10 percent from end-of-year 2019 figures.
Unibail-Rodamco isn’t the only firm bailing on shopping centers.
Barry Sternlicht’s Starwood Capital Group has sold 22 of its malls in recent months, after it was once the fifth-largest mall landlord in the U.S.
Pandemic-related restrictions have crushed the retail sector, forcing mall owners and retail brands into bankruptcy.
At its Los Angeles properties, Unibail-Rodamco said it committed to leasing its flagship store locations and improving vacancy levels, but warned any new government-imposed restrictions would slow progress. Last September, the company filed a federal lawsuit challenging L.A. County’s order that shuttered all malls as part of its Covid restrictions.
The firm added that the permanent closure of L.A.-based ArcLight Cinemas — which operated screens at Unibail-Rodamco malls — increased vacancy levels across its portfolio by 0.4 percent. In June, AMC said it was looking to ink leases at shuttered Pacific Theatres and ArcLight locations.