Hier wat Kempen er van vindt:
Key points:
• Rent collection: URW reported 94% rent collection for Q1 and 38% for 2Q (20H1 average at 67%, Klépierre: ). The remainder for Q2 is: 3% relief, 20% deferred and 39% still to be collected. July/Q3 collection rate was at 50% end of July (47% in Europe vs 56% in the US, showing more aggressive rent collection and some calling in of guarantees). Klépierre reported collection at 40% for 2Q, Mercialys reports rent collection at 46% for Q 2 and 63% for 3Q. Wereldhave reported NL rent collection for 2Q at 72%, Belgium at 60% and in France at 34%.
• Cash recovery & negotiations: URW states its currently at c25% of negotiations with tenants it needs to work through, starting only in earnest in June when lockdowns were just lifted. URW stresses not to want to move to turnover based rents if it can avoid it. URW hopes to finalise the majority of discussions end Q3, with the remainder leading to spill over into 4Q, and/or legal proceedings. Rent write downs (doubtful debt) amount to c6% of the rent roll vs Klépierre at 2%, which likely corresponds to the higher exposure to UK & US. Straight-lined impact on GRI was just €16m (on €32m rent relief). FFO/sh (AREPS) is down 30% and is likely mostly ‘non-cash’ for well over half. The expectation of the company remains most unpaid rents will be accounted for after finalising agreements. The range for rents to remain unpaid indefinitely at year end remains wide and could be 10-25% still in our view (which would still be a decent result in our view). URW mentions that 64% of amounts due but not paid are covered by bank guarantees, and we feel URW will start playing more hardball in negotiations with well capitalised tenants holding out for deals.
• MGR uplift: URW still reports +3.5% MGR uplift in Europe on 350 leases signed in H1. The rental volume affected was €50m, or c2% of the rent roll. MGR uplift in the US was -8.1%, rental spreads were -1.2% on c300 leases on c1% of total rents.
• Guidance: URW does not reinstate guidance like other mall landlords, which given the amount of outstanding negotiation work seems sensible.
• NAV growth -15%: Asset valuations came at -5.2% for retail resulting in 8bps of net yield expansion (while +70bps in the UK, (-14% LFL value), -10bps in Nordics (-4%), about 10bps in France (-4%) and US -5% negative revaluation for H1. Klépierre reported -3% in France and overall, MERY: -3.1%, WHA: -6%. For URW this led to an EPRA NAV decline of 15% YoY to €183/sh (Kempen estimate). The EPRA NIY now stands at 4.2%
• Footfall recovery: Footfall in Europe was down 40% in H1, vs Klépierre down -25% in 2Q (Kempen estimate), MERY down -27% and Wereldhave in France at -37% vs -14% in NL and BE.
• Vacancies: in continental Europe vacancy was 3.9% from 2.5%, UK 8.6% from 7.7% and in the US vacancy was 10% from 9%. Overall a 6.8% from 5.4%. This compares against Klépierre at 3.8% (+80bps) Mercialys is at 3.4% and WHA at 6.2%. We believe the impact of covid will increasingly visible in 202H/21H1 vacancy rates
• Leverage and capital position: Reported LTV came in at 45% (proportionate, ex transfer tax) and while screening fairly high, no immediate actions are expected other than contined attempts to continue diposals. Including the €2bn hybrid, the LTV comes close to 49% and further adjustments on Net Debt and asset values would make the ‘equity holders’ LTV’ go over 50%, in our view. The cost of debt is now at 1.7% from 1.6%, likely affected somewhat by the cash stockpiling during 1H, since repaid. The CEO comments that all delevering options are on the table, while disposals remain the first option for the time being.
• Capex: the development pipe is scaled back further by €2bn now at €6bn from €10bn with committed projects of €3.6bn of which €1.6bn cash out remains.
• Admin cost: as URW stopped capitalising letting fees, corporate costs expensed actually went up (+€30m. Admin came in at €113m vs €85m reported last year, or stable when accounting for letting fees last year as well (€113m vs €117m last year). URW still guides for cost savings of c€40m in total in 2020.
• Valuation: URW trades at a 38% discount to 2-year forward NAV (spot at 73% discount, retail peers at -59%,) and an implied yield of 5.9% (retail mall peers at 6.3%). See ‘Real Estate Stats’ sheet attached to the Kempen Daily