Owner of large shopping centres comes up with billions in emergency plan

The partly Dutch billion dollar company Unibail-Rodamco-Westfield (URW), which owns shopping centres all over the world, will come up with an emergency plan to tackle the company‘s financial problems. Altogether, it wants to save and raise an additional โ‚ฌ9 billion.

The consequences for the Dutch shopping centres it owns are not yet clear. The company itself has not yet explained the decision.

The investor and property developer is in trouble now that fewer shopkeepers want to rent space and those who already rent space are struggling to pay the rent. This, in turn, is due to the fact that there has been much less shopping in physical shops since the outbreak of the corona pandemic.

In short, it remains too quiet in the shopping centres. These include Carrousel du Louvre next to the museum of the same name in Paris, the Gropius Passagen in Berlin (the largest shopping centre in the German capital) and five shopping centres in Los Angeles. The latter have been closed for some time because of corona.

Also in the Netherlands

In the Netherlands, Stadshart Zoetermeer, Stadshart Amstelveen and City Mall Almere are owned by URW. The company is also still working on what is to become the largest shopping centre in the Netherlands: the Mall of the Netherlands in Leidschendam.

The construction of the latter shopping centre has been much to do since the announcement. In the meantime, the official opening has been postponed until the beginning of next year.

Rent not received

Much of the property developed by URW has been paid for, as is not uncommon, with borrowed money. The company’s high debts are now beginning to become a problem due to lower income. Many shopkeepers who got into trouble because of the corona crisis have not paid their rent.

Of all entrepreneurs worldwide who rent a property in one of URW‘s shopping centres, almost two-thirds did not pay the rent in the second quarter. In part because the landlord had made an arrangement with URW, but in the other part the company demanded the money properly.

URW is currently still negotiating rent payments with shopkeepers. Some tenants do not want to pay their overdue rent until the company makes an arrangement with them to accommodate them. However, URW says it only wants to make agreements about this after the tenants have paid all their current bills. In some cases the company has taken legal action.

Emergency plan

Although the shop visits are now attracting some attention, it is not as busy as before corona. According to a first estimate by the real estate company itself, there were still a quarter fewer visitors in European shops last month than last year. In the Dutch shops there were 23 percent fewer visitors.

In order to tackle the financial problems, the company has now announced an emergency plan. First of all, it wants to raise EUR 3.5 billion by issuing extra shares to pay off debts. In addition, investors will receive less profit, which should save EUR 1 billion.

With regard to the properties themselves, URW will delete part of the planned property plans, saving EUR 600 million. That is on top of the EUR 2.2 billion in development contracts that had to be cancelled earlier because of the problems.

Finally, the company intends to sell EUR 4 billion worth of real estate in the course of this year and next year. It is not clear which properties and shopping centres are all on the list to be sold, and whether they include Dutch shopping centres.

Market value plunged

The value of URW, which is listed on the Dutch stock exchange, has plummeted since the beginning of this year: up until last night’s announcement, more than 70% of its market value had already evaporated. Investors are not responding positively to the recovery plan today. Around noon, the share was 7% lower than yesterday.