Unibail-Rodamco is poised to deliver in today’s tough markets
By Charles Keenan
Unibail-Rodamco (EPA: UL), Europe’s largest REIT, has weathered the tough economic climate better
than most of its peers and looks forward to capitalizing on the fallout from the global recession.
Unibail, with more than $31 million in assets as of Dec. 31, has assembled a portfolio consisting of high
quality retail shopping centers, offices and convention centers. The crown jewel is its retail portfolio, which
spans 12 European countries and delivered 73 percent of its rental income in 2008. Unibail’s office portfolio,
making up approximately 19 percent of income, is mainly in Paris, while its convention business represents
8 percent of income and is located throughout France.
“We offer investors an extremely specific positioning in a small number of very large, dominant assets,”
says Guillaume Poitrinal, chairman and chief executive officer of Unibail. “We use a full-scale approach of
property management, asset management and development.”
Girding itself for today’s leaner times, the company has shored up its balance sheet, positioning it well for
an environment of increasing pressure on rents, rising vacancy rates and tighter credit.
“One of the key strengths of the company is that it is shaped to face major adverse economic conditions,”
Poitrinal says. “The company has low indebtedness and a high-quality asset portfolio. There is limited
exposure to speculative development. All this gives us real serenity in the way we approach the question of
No doubt Unibail has held its own in a tough environment thus far. On the one hand, it has had to mark
to market its portfolio, causing it to dip in value by 9. 1 percent in 2008 and leading to an accounting loss for
the year of $1.4 billion. Yet, excluding the revaluation, recurring earnings per share rose to $10.74 in 2008,
up 8. 4 percent. Distributions rose to $9.45, up 7. 1 percent.
Those positives have helped Unibail’s stock price fare much better than its peers. During 2008, its stock
price fell 24 percent, versus 53 percent for the F TSE EPRA/NAREIT Europe Real Estate Index. This year
the stock had lost 6. 8 percent through Feb. 26, versus 22 percent for the Index.
19% of its income.
Sticking to HigH Quality
Unibail’s success relative to the rest of
the REIT market is also due to a few
key marketplace advantages. First, its
high quality assets have proven to be
more immune to the harsh economic
climate. In retail, for example, Unibail is
not immune to the economic recession,
but it is better insulated against retailer
retrenchment, says Rémi Antonini, the
sector head for real estate at Exane BNP
Paribas in London. “When retailers cut