Company Reports

No-moat Unibail-Rodamco-Westfield secured only EUR 200 million of net debt reduction so far in 2024 via the sale of Equinoccio in Spain and an agreement signed for the disposal of Westfield Oakridge in the United States. Executing disposals at sufficient prices to pay off debt is critical for our URW valuation, and as such, we maintain a High Uncertainty Rating for this REIT. Nevertheless, URW has time up its sleeve, and news revealed in a strong March-quarter trading update supports our view. URW securities remain undervalued, trading 19% below our fair value estimate of EUR 95.50 per security (AUD 7.80 for the Australian-listed securities). However, after an 83% rally from the lows in October 2023, they aren’t as cheap as they were.

Unibail-Rodamco-Westfield was formed in 1968, acquiring several large malls through to 1995 and offices thereafter. In 2000 it launched a conventions and exhibitions business and is now a European leader in the sector. In 2007 Unibail merged with Rodamco, becoming the largest retail REIT in continental Europe.

No-moat Unibail-Rodamco-Westfield posted 2023 adjusted recurring EPS up 3.3% to EUR 9.62, driven mainly by the ongoing recovery in retail and office rents, and lower expenses. That growth was despite EUR 1 billion in asset disposals in 2023 (about 2% of URW’s asset portfolio). Our 2024 adjusted recurring EPS estimate of EUR 9.73 is at the midpoint of management’s guidance range of EUR 9.65 to EUR 9.80 per share, with earnings growth likely to once again be strong enough to offset asset disposals in 2024. Disposals may include EUR 1 billion of assets where management is in active discussions with buyers. URW remains committed to a “radical reduction” of exposure to the EUR 9.5 billion of U.S. assets, or about a fifth of its entire property portfolio.

Unibail-Rodamco-Westfield was formed in 1968, acquiring several large malls through to 1995 and offices thereafter. In 2000 it launched a conventions and exhibitions business and is now a European leader in the sector. In 2007 Unibail merged with Rodamco, becoming the largest retail REIT in continental Europe.

Unibail-Rodamco-Westfield was formed in 1968, acquiring several large malls through to 1995 and offices thereafter. In 2000 it launched a conventions and exhibitions business and is now a European leader in the sector. In 2007 Unibail merged with Rodamco, becoming the largest retail REIT in continental Europe.

A September-quarter trading update from no-moat Unibail-Rodamco-Westfield, or URW, supports our view that the REIT’s recovery is on track. Despite a 37% rally since late October, URW securities still screen as undervalued, versus our unchanged EUR 95.50 fair value estimate (AUD 7.80 per Australian-listed Chess depositary interest).