Europe’s retail landlords dash to preserve cash amid epidemic

Europe’s largest retail REITs this week all announced a number of measures to preserve and enlarge their cash positions as the sector braces for the impact of coronavirus.

Europe’s largest listed property group Unibail-Rodamco-Westfield (URW) said on Thursday that it has taken all precautionary measures needed to ensure its access to liquidity as restrictions imposed to prevent the spread of the virus currently limit its operations in several markets.

URW now has €10.2 bn in cash on hand and undrawn credit lines, which provides it with the liquidity needed to cover all expected funding needs even under an extreme ‘stress test’ scenario, the company noted.

In addition, the group has also implemented a programme to actively reduce non-staff expenses, defer non-essential capital expenditure and make use of any relevant facilities or arrangements provided by the various national authorities to assist companies through the crisis.

Similarly, CEE retail specialist Atrium said Thursday that it is ‘actively prioritising its capex programme to defer non-essential capital expenditure, and, in parallel, reducing its operational expenses in response to these new measures’.
 
With a net LTV of 35% and access to credit facilities, the company believes it has sufficient resources to manage its liquidity needs, it added.

In the UK, retail specialist NewRiver has suspended dividend payments and said its current focus is on ‘managing cash resources very carefully and maintaining liquidity in the business’. The company is also taking a prudent approach to preserving cashflow and reducing operational costs, including the suspension of all non-essential capital expenditure projects and the suspension of business rates and marketing in its shopping centres and pubs.

‘The Board considers this to be the most prudent course of action until the impact of COVID-19 becomes clearer,’ NewRiver said.

European retail specialist Klépierre said this week that it is in active discussions with its tenants regarding the challenges presented by Covid-19 and has initiated stringent cost cuts in order to pass on service charge savings to them. In addition, the group is actively reducing non-essential capital expenditures and non-staff operating expenses.

‘Despite this challenging environment and the current difficulty in estimating the impact on Klépierre’s full-year earnings, the group reaffirms it has a solid balance sheet and sufficient committed revolving credit facilities to cover its liquidity needs,’ Klépierre said.

Carmila, the owner of a €6.4 bn portfolio of shopping centres anchored by Carrefour hypermarkets in France, Spain and Italy, has postponed the payment of rents and charges to the end of April following the spread of coronavirus and restriction on opening stores. ‘These measures are intended to protect the cash flow of retailers while awaiting the implementation of announced public measures,’ said Carmila in a press release. The new measures apply to all 215 shopping centres in Carmila's portfolio.

The French REIT has a ‘strong financial position, undrawn credit lines and excess cash which will allow it to calmly face this health crisis, even if it was to last several months’, the company added. ‘Measures have been taken to postpone unnecessary investments and further strengthen the company's cash position.’

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