Unibail Rodamco Westfield : URW 2022 Half-year Results

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Paris, Amsterdam, July 28, 2022

Press release

UNIBAIL-RODAMCO-WESTFIELD REPORTS H1-2022 EARNINGS

Adjusted Recurring EPS of €4.95 - up +53.1% driven by the continued recovery across all business divisions

Q2 tenant sales exceeding pre-COVID levels

Strong leasing demand and reduced vacancy, as retailers continue to expand selectively at best locations,

and corporations select high quality and sustainable office buildings

Further progress on comprehensive deleveraging plan - €1.0 Bn pro-forma IFRS net debt reduction

EBITDA up +48% year-on-year, thanks to the recovery of retail and C&E activity, resulting in a strong

improvement of credit metrics

Strong liquidity and hedging position

2022 AREPS guidance increased from €8.20 - €8.40 to at least €8.90

H1-2022 in review:

• Tenant sales exceeding 2019 levels in Q2 (105% of 2019 levels for the Group) ahead of expectations, with overall sales for H1 at 99% of 2019 levels, Continental Europe at 97%, UK at 91% and US at 106%
• Continued retail vacancy reduction: 6.9% at Group level (FY-2021: 7.0%) including 9.7% in the UK
  (FY-2021: 10.6%), 10.4% in the US (FY-2021: 11.0%) and 4.0% in Continental Europe (FY-2021: 4.0%)
• 1,201 letting deals signed with Minimum Guaranteed Rent (MGR) uplift of +11.8% on longer term deals (>36 months) - longer term deals represent 59% of deals signed (vs. 44% in H1-2021)
• Rent collection at 96% (vs. 88% reported at FY-2021 and 73% reported in H1-2021)
• Refinancing needs for the next 36-months secured with €12.0 Bn of cash and available facilities
• Fully hedged1 against interest rate rises for the coming 5 years
• 80% of €4.0 Bn European disposal target now signed or completed at a premium to last appraised values
• Continued streamlining of US regional portfolio with the sale of Promenade development parcel
• H1-2022pro-forma IFRS Net Financial Debt reduced by -€1.0 Bn to €21.6 Bn, Net Debt to EBITDA improved from 16.6x in H1-2021 to 11.0x in H1-2022
• 130 bps reduction in IFRS LTV to 42.0%, and 180 bps or 41.5% pro-forma for all signed disposals
• Valuation increase thanks to positive FX impact and like-for-like shopping centre revaluation in Continental Europe
• Successful delivery of Gaîté Montparnasse Office (Paris) and Westfield Topanga extension (Los Angeles region)
• Launch of Lightwell office regeneration project (Paris region) with 80% pre-letting and 85% of construction cost secured
• Improved 2022 AREPS guidance of at least €8.90 given the operational recovery of retail and C&E assets in a challenging macro-environment

1 Taking into account disposals proceeds of the communicated deleveraging plan.

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Commenting on the results, Jean-Marie Tritant, Chief Executive Officer said:

"Our operational performance in H1-2022 was very strong, with tenant sales reaching pre-COVID levels earlier than expected in Continental Europe. We are seeing strong leasing demand, with retailers expanding with us, thanks to the quality of our assets, which are located in the best catchment areas, and have an affluent customer base. URW is well positioned to outperform and gain market share, as retailers accelerate their "drive to store" strategies. Against this backdrop, asset values have stabilised, and our credit metrics have significantly improved, in particular thanks to the net debt reduction and the increase in EBTIDA.

In Europe, we have now achieved 80% of our €4 billion disposal target. In the US, we continued to streamline our regional asset portfolio with the sale of the Promenade development parcel and are in active discussions on other regional assets. Given the quality and strong performance of our assets, we are confident in our ability to delever the company by executing on the radical reduction of our financial exposure to the US. We have maintained strict capital allocation, while continuing to deliver major development projects, and our hedging protects us against rising interest rates.

In the context of our operational recovery in this challenging macro-environment, we are increasing our 2022 AREPS guidance from €8.20 - €8.40 to at least €8.90."

	H1-2022	H1-2021	Growth	Like-for-like
	growth2
Net Rental Income (in € Mn)	1,139	785	+45.0%	+43.8%3
Shopping Centres	1,037	753	+37.7%	+37.6%4
Offices & Others	34	32	+6.5%	+28.0%
Convention & Exhibition	68	0	n.m.	n.m.
EBITDA (in € Mn)	1,139	770	+48.0%
Recurring net result (in € Mn)	711	472	+50.5%
Recurring EPS (in €)	5.12	3.41	+50.4%
Adjusted Recurring EPS (in €)	4.95	3.24	+53.1%
	June 30,	Dec. 31,	Growth	Like-for-like
	2022	2021	growth
Proportionate portfolio valuation (in € Mn)	54,981	54,473	+0.9%	-0.4%
EPRA Net Reinstatement Value (in € per	163.40	159.60	+2.4%
stapled share)
Figures may not add up due to rounding

1. Like-for-likeNRI: Net Rental Income excluding acquisitions, divestments, transfers to and from pipeline (extensions, brownfields or redevelopment of an asset when operations are stopped to enable works), all other changes resulting in any change to square metres and currency exchange rate differences in the periods analysed.
2. Including airports.
3. Excluding airports.

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H1-2022 AREPS: €4.95

Reported AREPS amounted to €4.95, up +53.1% from H1-2021, an increase of +€1.71, mainly driven by the strong retail operation performance (including the end of COVID-19 rent relief, lower doubtful debtors with improved rent collection and higher variable income), the strong recovery of the C&E division, and project deliveries, partly offset by disposals. Rebasing both periods for the COVID-19 rent relief, the AREPS would have increased by +€0.80 per share (+18.1%).

OPERATING PERFORMANCE

Shopping Centres

Like-for-likeshopping centre NRI was up +37.6%5 for the Group, and +49.7% in Continental Europe, +14.7% in the US and +34.8% in the UK. All regions benefitted from higher variable income and lower doubtful debtors as a result of better rent collection, and ongoing collection of 2021 rents. Performance in Continental Europe was also driven by the end of COVID-19 rent relief and indexation. The increase in the UK was driven by the end of COVID-19 rent relief. Excluding the impact of COVID-19 rent relief, the Group's shopping centre like- for-like NRI growth would be +12.8%.

Tenant sales6 and footfall7 continue to perform well with sales levels for the Group exceeding 2019 levels and continuing to outperform footfall, thanks to higher conversion rates and longer dwell times. Q1-2022 figures remained impacted by the restrictions in Europe, including a lockdown in The Netherlands, and severe restrictions for non-vaccinated persons in Austria and Germany. Q2 saw an improvement with footfall reaching 91% of 2019 levels for the Group, including 90% in Continental Europe, 91% in the UK and 92% in the US. In total, in H1-2022, footfall in Europe reached 85% of 2019 levels and 89% in the US.

In Q1-2022, the Group's European tenant sales reached 89% of 2019 levels. During Q2, tenant sales improved significantly and reached 102%, exceeding 2019 levels earlier than expected, with all European regions except the UK and Austria above 2019 levels. Overall, H1-2022 tenant sales reached 96% of 2019 levels, with Continental Europe and the UK at 97% and 91%, respectively. The performance of the main categories as a percentage of 2019 levels was 107% for Health and Beauty, 106% for Sports, 96% for F&B, 91% for Fashion and 85% for Entertainment.

1. Excluding airports.
2. Tenant sales for all centres (except The Netherlands) in operation, including extensions of existing assets, but excluding deliveries of new brownfield projects, newly acquired assets and assets under heavy refurbishment (Ursynow, Westfield La Part-Dieu, Les Ateliers Gaîté, CNIT, Gropius Passagen, Garbera and Westfield Valley Fair). Excludes Zlote Tarasy as this centre is not managed by URW. Excludes Carrousel du Louvre. Excludes Auto category for Europe and Auto and Department Stores for the US.
3. Footfall for all centres in operation, including extensions of existing assets, but excluding deliveries of new brownfield projects, newly acquired assets and assets under heavy refurbishment (Ursynow, Westfield La Part-Dieu, Les Ateliers Gaîté, CNIT, Gropius Passagen, Garbera, Westfield Mall of the Netherlands and Westfield Valley Fair). Excludes Carrousel du Louvre. Excludes Zlote Tarasy as this centre is not managed by URW. For the US, footfall only includes the 23 centres for which at least one year of comparable data is available.

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In the US, tenant sales had already reached 2019 levels during the second half of 2021, and continue to consistently outperform pre-COVID levels. H1-2022 sales came to 106% of 2019 levels, driven by the performance of our Flagship8 assets at 114%. The strong recovery in the US continued to be broad-based with almost all categories performing above 2019 levels. Entertainment remains impacted at 77% but showing improvement from 72% in Q1 to 80% in Q2.

The performance seen in H1-2022 gives the Group a high degree of confidence that its Flagship destinations, which are located in the most desirable locations, with the best catchment areas and have an affluent customer base, are positioned to outperform and gain market share.

Rent collection9 has improved since the full year and reached 96% for H1-2022 (vs. 88% at FY-2021 and 73% in H1-2021). It amounted to 96% in Continental Europe, 97% in the UK and 94% in the US. During 2022, the Group also collected €210.9 Mn10 in rents related to 2021, improving its 2021 collection rate from 88% to 92%, and leading to reversals of provisions in H1-2022 of €33.4 Mn.

URW signed 1,201 leases11 during H1-2022, broadly in line with H1-2021 and H1-2019. The proportion of long- term leases increased from 44% in H1-2021 to 59% in H1-2022 as conditions improved. Overall, the MGR uplift on all deals was +2.7%. For deals above 36 months MGR uplift came to +11.8% for the Group showcasing asset strength, with Continental Europe at +12.1%, the UK at +0.3% and the US at +23.1%.

The Group has benefitted from strong tenant sales, as illustrated by the performance in shopping centre SBR12, which increased from €28.0 Mn in H1-2021 (3.8% of NRI) to €55.5 Mn in H1-2022 (5.4% of NRI). In the US, the increase in shopping centre SBR was the largest from €16.0 Mn in H1-2021 (6.7% of NRI) to €31.3 Mn in H1- 2022 (10.7% of NRI).

Vacancy for shopping centres at a Group level decreased to 6.9% at H1-2022, down from 8.9% at H1-2021 and 7.0% at FY-2021. In Continental Europe, vacancy was stable at 4.0%, despite the seasonal uptick that had been recorded during Q1. In the UK, vacancy also decreased from 10.6% at FY-2021 to 9.7% at H1-2022. In the US, the vacancy reduced to 10.4% at H1-2022 from 11.0% at FY-2021, while in Flagships13, it decreased from 9.3% to 8.3%.

Commercial Partnerships income came to €50.4 Mn in H1-2022, compared to €24.3 Mn in H1-2021 and €50.0 Mn in H1-2019. Europe amounted to €25.2 Mn (vs. €13.2 Mn in H1-2021 and €20.1 Mn in H1-2019) and the US to €25.3 Mn (vs. €11.1 Mn in H1-2021 and €29.9 Mn in H1-2019). The income of new Media, Brand & Data Partnerships division, which is included in the Commercial Partnerships scope and is expected to generate €75 Mn (at 100%) in annual net revenues by 2024 in Europe, amounted to €17.0 Mn in H1-2022.

1. Excluding Central Business District assets (Westfield San Francisco Centre and Westfield World Trade Center).
2. Retail only, assets at 100%. MGR + CAM in the US, as at July 21.
3. At 100%.
4. All letting figures exclude deals <12 months.
5. Excluding airports.
6. Excluding Central Business District assets (Westfield San Francisco Centre and Westfield World Trade Center).

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Offices & Others

NRI increased by +6.5%, primarily as a result of the delivery of the Trinity office tower and the Gaîté Montparnasse Hotel and Offices, partly offset by the disposal of Solna Centrum and Les Villages 3, 4 and 6. On a like-for-like basis, it was +28.0%, with +55.9% in France thanks to leasing of Trinity, but -30.6% in the US due to the exposure to the San Francisco market where tech companies have been slower in returning to the office.

Following 2022 leasing activity, Trinity is currently 74% let. During the first half, the Group also signed a 9-year lease with Arkema for 25,100 sqm in the Lightwell office regeneration project, securing a pre-letting of 80% and 85%14 of the cost of construction. Furthermore, URW signed a lease with Shell on 8,023 sqm, representing 29% of the office buildings in Westfield Hamburg to be delivered in 2024.

Convention & Exhibition

Recurring NOI amounted to €94.5 Mn compared to -€1.5 Mn in H1-2021, and €80.6 Mn in H1-2018. In H1- 2022, this includes a €25 Mn contribution from the French State, to compensate closure periods in earlier years.

In H1-2022, Viparis hosted 272 events (o/w 86 exhibitions, 33 congresses and 153 corporate events) vs. 69 events at the same period in 2021. As at June 30, 2022, signed and pre-booked events in Viparis venues for 2022 amounted to c. 103% of its expected 2022 rental income, and 89% of 201815 pre-bookings level for the year.

DELEVERAGING

In H1-2022, the Group continues to make deleveraging progress through disposals, control on CAPEX allocation and retaining earnings.

In Europe, URW completed in 2022 the disposal of Solna Centrum (Stockholm region), 2 residential buildings at Westfield Hamburg (Hamburg), a 45% interest in Westfield Carré Sénart (Paris region), Gera Arcaden (Gera), Almere Centrum (Amsterdam region) and Carré Sénart Shopping Parc (Paris region).

Furthermore, URW's partner in Aupark (Bratislava) exercised its call option for the acquisition of an additional 27% stake, which is expected to complete in August 2022. The Group also signed on July 21, 2022, an agreement for the sale of Villeneuve 2 (Lille region), which is expected to close in September 2022.

The disposals completed or signed in 2022, amounted to €1.2 Bn, representing an average NIY of 5.5% and a premium to the last unaffected appraisal of +2.9%.

1. Refurbishment costs excluding fees & contingencies.
2. Last comparable year.

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