URW’s UK Malls Outperform Mainland Europe

Net rental income at Unibail-Rodamco-Westfield’s UK shopping centres outperformed continental Europe and the U.S. in 2024, up 8.7% on 2023.

Across the group, NRI was up 5.8%, with European growth slightly ahead at 6% and U.S. performance lagging at 4%, according to its full-year update.

In Europe, tenant sales were up 3.8% compared to 2023, above core inflation of 3.2% and national sales indices of 2.3%, while at U.S. flagships, tenant sales were up 6.6%.

Across the year, the group signed 2,123 leases for €465M of minimum guaranteed rent, leading to a vacancy reduction from 5.4% to 4.8%, its lowest level since 2017. That figure is at 3.2% in continental Europe, 5.8% in the UK and 7.2% in the U.S., but 6.2% for U.S. flagships.

The UK also outperformed mainland Europe MGR uplift for leases longer than 36 months at 8.9%, compared with 5.7%. In the U.S., MGR soared 29.9%.

However, UK footfall increases over 2023 at 1.1% lagged Europe's 2.8%, and a tenant sales uplift of 4.1% in Europe was ahead of the UK's 2.4%.

That led overall like-for-like shopping centre valuations to rise 0.2% for 2024, including 4.9% in the UK and 1.3% in continental Europe, while it was down 4.3% in the U.S. 

The company said 2025 would be a major year for deliveries, with the final part of Coppermaker Square, a residential scheme in Stratford, to be completed in the second half of the year and Village Offices, the repurposing of 111K SF in Westfield London, to be delivered by the end of 2025.

The retail opening of Westfield Hamburg-Überseequartier is scheduled for 8 April, followed by the first phase of offices and hotels in the second quarter and the Centrum Černý Most extension due to be delivered in the second half as well.

In the U.S., the group has sold or foreclosed on 17 assets for a total of $3.3B and reduced the vacancy level of its 10 flagship assets by 630 basis points. Having achieved this, URW said that it had decided to retain its high-performing flagship assets in the U.S. 

“We achieved €1.6B of disposals at book value, leading to a 100 basis point improvement in our loan to value ratio, which is now at its lowest level since 2019,” URW CEO Jean-Marie Tritant said in a statement. “Over the past four years, we have reshaped our portfolio through €6.4B of disposals in Europe and the U.S., made significant deleveraging progress, enhanced our operations and transformed the group’s risk profile.

“Having achieved this transformation, we have made the strategic decision to retain our high performing flagship assets in the U.S, which will deliver further growth and value creation. We will continue to deleverage through retained earnings, disciplined capital allocation and non-core disposals.”