Unibail-Rodamco-Westfield Shareholders Reject Plans for Rights Issue

PARIS — A consortium of Unibail-Rodamco-Westfield shareholders led by French billionaire Xavier Niel has scored a victory, landing board seats and scuppering company plans for a 3.5-billion-euro capital increase in a vote held remotely late Monday.

The French mall operator’s chairman and chief executive officer Christophe Cuvillier said the proposed capital increase failed to gather the required two-thirds majority. “We will have to review all possible alternatives to rapidly strengthen the group’s financial structure,” he said.

In a closed door shareholder meeting that was broadcast over the Internet Tuesday, the executive pledged to move forward with other parts of the company’s strategic plan to lower debt, which includes asset sales and lower dividends, and seized on news of progress on a global vaccine against COVID-19 as potentially having a significant positive impact on real estate holdings.

“Our level of debt is too high in a context of great uncertainty,” he said, noting competitors like Simon Property Group and Klepierre had better debt ratios to earnings.

URW’s plan, dubbed “Reset,” has come under fire from a group of activist shareholders that includes Niel and Léon Bressler, a former ceo of Unibail. The shareholders said a rights issue would be severely dilutive, and have called on the company to instead focus on its core European shopping centers and sell its U.S. holdings.

Niel and Bressler, along with independent nominee Susana Gallardo, gained board seats in the remote vote, which took place ahead of the shareholder meeting.

The mall operator has been hit hard by lockdowns and disruption to business from the coronavirus crisis. Rental income from shopping centers declined 12.3 percent on a like-for-like basis to 1.46 billion euros in the first nine months of the year, weighed down by lagging business in the U.S.

The real estate company had seen an improvement in foot traffic in European malls, which began to reopen in mid June following the coronavirus lockdowns. Improvement has been slower in the U.S., where some malls in California were only reopened in early October, Cuvillier noted.

Mall traffic in Europe in August and September reached around 75 percent of levels seen the previous year, but has slowed since the second wave of restrictions have come into effect in the region.

“In this constricting time of isolation and distancing, people need a physical space to meet up, to exchange and to live — and simply to be together. For me, this is one of the main lessons of the crisis,” said Cuvillier. While online purchases have increased, shopping centers that are attractive, welcoming and innovative have a future, he asserted.

URW was formed when the French real estate company purchased Westfield for nearly $25 billion in 2018. Mergers were considered a form of defense for mall operators struggling to cope with declining foot traffic as consumers shifted to digital means for shopping. But the ailing sector has been dealt a further blow by the coronavirus pandemic.

Since purchasing Westfield, and its properties in London, New York and San Francisco, Cuvillier has steered the company’s focus on choice locations, keeping them alive with new brands and a frequent renewal of tenants. He also has promoted mixed-use sites and consumer data — collecting it globally, in a bid to bring scale to the local mall business.

The company’s plan to draw down debt also includes selling around 4 billion euros’ worth of real estate in Europe — half retail and half office real estate — by the end of next year; it recently signed the 620 million euro sale of an office building that houses Nestlé headquarters in a Paris suburb.

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