Unibail-Rodamco-Westfield warns of ‘unprecedented’ retail challenges

Centres hit by a wave of store closures across Europe as governments scramble to contain the spread of the coronavirus.

The company said it was not currently possible to estimate the extent of the impact on the group’s earnings. Picture: Westfield

Unibail-Rodamco-Westfield, that bought the international Westfield mall empire for $32bn in 2018 in a deal orchestrated by Sir Frank Lowy, said it has been hit by a wave of store closures across Europe as governments scramble to contain the spread of the coronavirus.

The company has been smashed by heavy selling with the mall company’s secondary units, that are traded on the ASX, plunging by about 20 per cent in early on Friday.

Unibail-Rodamco-Westfield CDIs that are listed on the ASX fell by another 6.7 per cent to close at $5.96 on Monday, well below the $10.50 they had traded around in mid-February.

The Paris-headquartered company said the COVID-19 crisis “continues to evolve rapidly”, adding that in recent days several governments in the markets in which it operates had taken measures to contain the spread of the virus, which would impact on its operations.

European governments have required all non-essential stores to close in France, Spain, Poland, Austria, the Czech Republic and Slovakia.

This has meant the company’s shopping centres in these markets are substantially closed, while supermarkets, food stores, and pharmacies are typically open. Some limitations to trading hours also apply in Denmark.

Other shopping centres are trading as normal for now, albeit with reduced footfall, although the company expects other governments may adopt similar measures “in due course”.

The company’s convention and exhibition business is also seeing an impact, with the French government now restricting any events of more than 100 people.

The restrictions it is facing and the sharemarket savaging are a pointer to some of the challenges that local mall owners are likely to grapple with in coming weeks.

Unibail-Rodamco-Westfield said it was “too early” to determine the situation’s impact on the contractual obligations of its retailers and other partners or to estimate the effect of any case-by-case support measures it may decide on.

But it has started an “active dialogue” with its tenants on how to address what it termed unprecedented challenges.

The company said it was not currently possible to estimate the extent of the impact on the group’s earnings, but said that it had access to undrawn credit facilities to manage its liquidity needs.