Ik kan m gewoon lezen zonder abbo, maar bij deze (zonder de plaatjes)
Unibail-Rodamco-Westfield: A 10% Dividend Yield In 2024 Is Likely
Jan. 09, 2023 8:30 AM ETUnibail-Rodamco-Westfield SE (UNBLF), URMCY1 Comment
Summary
Unibail is making progress with its asset disposals. Assets are sold at smaller than expected discounts (and in some cases even a premium).
Despite a higher average interest rate, I expect Unibail to report earnings north of 6 EUR per share in 2024.
Perhaps even higher as Unibail will still be able to take advantage of a fully-hedged debt book and the higher interest rates come into play after 2026-2027.
By this time next year, I anticipate Unibail to be a 10% dividend payer while its balance sheet will have a LTV ratio of less than 30%.
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Westfield La Maquinista, shopping center, El Buen Pastor neighborhood of Barcelona"s San Andres district. owned by Unibail-Rodamco-Westfield.
Manuel Milan/iStock Editorial via Getty Images
Introduction
Unibail-Rodamco-Westfield (OTCPK:UNBLF) (OTC:URMCY) is one of the largest commercial real estate REITs in the world. While the REIT seemed to have bitten off more than it could chew with the pre-COVID acquisition of Westfield, an Australia-based commercial real estate REIT, it spent the past few years on getting itself sorted out. The management took the courageous but wise decision to cancel the dividend for a few years. This enables Unibail to retain hundreds of millions in cash to protect its balance sheet while it is also selling assets. It looks like the market has given up on Unibail due to the lack of a dividend, but I think the REIT could be in a stronger position than ever before by the end of this year.
Share Price Chart
Yahoo Finance
Unibail has its primary listing on Euronext Amsterdam where it's trading with URW as its ticker symbol. The average daily volume in Amsterdam is just under 700,000 shares, representing a monetary value of 35M EUR (and close to $40M). As Amsterdam offers the best liquidity to trade in Unibail’s shares, I would strongly recommend to use that exchange to trade in the company’s securities. I will use the Euro as base currency throughout this article.
Selling the US portfolio is slower than I had expected – but the prices are better
When I discussed Unibail in 2022, the REIT had just organized a capital markets date with an encouraging update and outlook for 2024. The REIT mentioned it planned to entirely exit the US market and focus on quality.
One of the most important slides presented during the capital markets day was this sensitivity analysis. Unibail provided investors with how the sale of the US portfolio would impact the LTV ratios of the REIT on post-deal basis. I was perhaps a bit surprised the REIT even provided the outcome of a scenario where the US assets would be sold at a 50% discount (!) to their respective book values but even in this scenario the LTV ratio would stay below 39% and even if one would include the hybrid bond (deeply subordinated debt which is actually added to the equity portion of the balance sheet due to its status), the LTV ratio would be a very manageable 43.6%.
LTV Sensitivity Capital Markets Day
Unibail Investor Relations
This actually was one of the main reasons why I started keeping close tabs on Unibail again. While the scenario of selling the US assets at a 50% discount sounded ridiculous, I would have been perfectly fine with the "minus 30% scenario" as in that scenario the LTV ratio would also be a very manageable 33%. So whatever happens to the US portfolio, Unibail will emerge as a stronger REIT. Sure there will be earnings implications but for a REIT whose existence was threatened during the COVID pandemic, strengthening the balance sheet is priority number one.
Subsequent to the capital markets day, Unibail announced the sale of two European assets. I admittedly scratched my head as I was expecting the US asset sales to be prioritized, but this doesn’t mean this was a bad move by Unibail. The 116M EUR sale of a German property was completed at a premium to book value while the sale of a Dutch mall was completed at book value. These two transactions already helped to rapidly reduce the gross debt and net debt on the balance sheet. And at the end of the third quarter, Unibail sold a French mall which allowed it to reach a total disposal value of 3.2B EUR of the 4B EUR it was eyeing to sell. The average sales price of those assets was a premium of approximately 5% to the book value.
I thought that was great, but the market didn’t care and in the weeks subsequent to the completion of the sale of the French mall, Unibail’s shares traded at a level we hadn’t seen since Q4 2020.