Good evening. Welcome to Unibail Rodamco Wedseeds Full Year 2020 Results Presentation. It is a great pleasure to deliver to you today my first investor presentation since taking office about a month ago. I am honored and humbled to guide a company that I have been a part of for almost 25 years through this important chapter. Before I start, I would like to take a minute to acknowledge the efforts of our teams across our portfolio who have risen to the occasion with extraordinary commitment and tenacity.
It is the quality of our people as well as our assets that make the URW difference. ERW has demonstrated extraordinary resilience in the most extreme operating conditions seen across our geographies. We had a great start before the pandemic. And despite the operational constraints we faced, we have seen positive consumer demand whenever restrictions were eased or lifted. For 2020, our flagship destinations confirm their appeal to leading and emerging retail players.
We worked hand in hand with all of them to weather the storm and prepare for the rebound. The entire management board totally focused on the road ahead with a clear operational plan for 2021 and a firm commitment to deleveraging, which our CFO, Fabrice Mushen, will outline in more detail. We are confident Unibail Rodamco Westfield with its unrivaled portfolio quality, Its Westfield brand and its partnerships with world class retailers will emerge as a strong leader harnessing the market rebound. 2020 was globally a very tough year for all industrial sectors and especially ours. In our industry, the impact depends very much on where you are, whether you are indoor or open air, the size of your assets and your retail mix.
For UAW, 2020 was split into just 70 days of normal pre COVID operations, where we achieved traffic on sales above 2019 levels and an average of 93 days closed and the remainder of the day is operating under wide ranging restrictions. I may be stating the obvious, but the more stores we are able to open, the more traffic we recover. Since the initial reopening in Continental Europe, traffic steadily recovered week after week to reach 79% of 2019 levels in September In the context where globally work from home and shelter invest recommendations were still effective. The other striking point want to flag is what happens at the end of the year. As restrictions similar to the 1st wave return in November, You can see that traffic and sales levels held up better than they had earlier in the year.
This tells us that consumers have acclimatized to restrictions and are more at ease visiting our centers. This gives us confidence that pent up demand for physical experiences will benefit us even under partial restrictions and that when we can open stores without restrictions, our performance will recover. This also shows us that people are not buying everything online even at a time when restrictions will encourage that behavior. In store shopping is here to stay and Inditec's November earnings only confirmed that. In the somewhat normalized environment, store sales recovered strongly.
That is why Our teams are fully focused on ensuring there is no reason under our control that can prevent customers from coming to our centers. We partnered with Bureau Veritas to define industry leading air and safety protocols that have been applied to all our centers. Bureau Veritas has already audited around 90% of our centers and certified their compliance. We worked out Solutions to help our retailers operate with the restrictions: providing outdoor space to restaurants when indoor dining was restricted activating vacant space for events, offering virtual queuing to ease the customer journey and enabling curbside delivery for all retailers. That service, we think, will remain relevant after COVID.
We are doing everything in our hands to deliver a safe and convenient experience for our customers. But we cannot stop there. Not every retailer can call on a well developed online platform, especially independent ones. In that spirit, we established a partnership with Zalindo in Germany to give retailers extended reach beyond our centers. We are working together to develop These services are expanding to other countries.
We are working as well to offer 20 fourseven click and collect services. With FM Logistics, we are developing a self-service point for center retailers and other online sellers launching a proof of concept at our Velizy II center in France. COVID has accelerated the shift to omnichannel retail, a transformation we are enabling with technology and partnerships, which we will continue to further develop. The other piece of encouraging evidence is that people continue to seek unique experiences and meaningful social connections. We saw a very positive response to the events and activation organized throughout 2020, needless to say, in compliance with all health and social distancing protocols.
A great example was at VOQ Live the Centre, which hosted the final concert for a local jazz festival on its rooftop. While attendance was limited to a few 100 people, Tickets sold out well in advance. As well as generating additional revenue, our goal was to drive traffic back to Vorklavia and also support local community artists who had been even impacted by the pandemic. We didn't give up on our purpose reinventing together, we firmly believe that the social impact of the pandemic has made it even more relevant. Experiences are a key differentiator for our centers, driving traffic and loyal and customer loyalty.
A great example of creating unique experiences for our customers was what we achieved in partnership with Fitness Group Equinox at Century City, turning a rooftop parking deck into LA's hottest and most Instagramable outdoor fitness experience. This is the perfect illustration of our ambition to support our retail business and create amazing experiences. Now on to leasing activity. With other 1500 leases assigned in 2020, We closed the year 36% below what we achieved in 2019 and 28% below in terms of GLA. The first half of the year was deeply impacted by the overall shutdown of our geographies.
In the second half, we saw a rebound of the leasing activity as COVID-nineteen negotiations related to the 1st lockdown were generally advanced and store sales were recovering. Retailers during the 1st lockdown reviewed their store network and their development plans. Our level of leasing activity, both in terms of relating and renewals And in particular, the rebound seen in the second half confirms that our partnership approach, the quality of our operations and the strength of our assets make us the preferred business partner for our retailers. This is even more obvious when we look at emerging retail players We are very selective with their first locations as they look to acquire clients and boost their top line. This is what Lucid Motors, A cutting edge luxury electric carmaker launching its first model last September wanted to achieve.
Lucid opened 2 of their first 6 stores at Ballet Fair and Saint Suri City. It's interesting to note that innovative automotive is a developing category in shopping centers with brands such as Polestar opening with us in the U. S, the U. K, the Netherlands and Fiat developing pop up stores in 4 of our French shopping centers to launch the Flat 500 Electric. Digitally native vertical brands is a growing category and e gaming is becoming an increasingly attractive component in our leisure offer.
These are some of the categories our international leasing team are intensifying and developing through our portfolio. Our ability to deliver new retail space in 2020 at a high level of lating demonstrate that the trust our retail partners have in what we do and the bright future of flagship destinations. In March, 10 days before the lockdown, we opened the first phase of the Valleyfair extension in San Jose with the opening of Bloomingdale's. This was followed by, amongst others, the Gucci store in September and the Apple flagship store designed by Cerner and Foster in October. COVID slowed down but did not stop the store opening process.
The first Italy in Northern California is under construction and is expected to open in late 2021. In December, we delivered the first phase of La Pardue extension with 14 new stores and we will open the new cinema and the food hall on the roof of the mall in Q3. We are preparing the ground opening of Monro del Nederlands, which is already 90% pre debt as well as our first mixed use project Les Atolliguetet in Paris in the second half of twenty twenty one. This project includes 62 residential units, a Pullman hotel, 13,000 square meters of offices fully pre let and 33,700 square meters of retail at 84% pre let. Our partnership with retailers is also demonstrated by the way we approached the impact of COVID-nineteen on our businesses.
Our initial response was to offer flexible payment terms to give all parties the time to assess and address the situation. We based our negotiations on the fair burden sharing principle, taking into account small tenants as well as those most directly impacted, by which I mean food and beverage, entertainment and mainly fitness. We made sure as well to support retailers less equipped to access government support when available. Together with our partners, We granted around €400,000,000 of rent relief as of the end of 2020, which includes 1st lockdown agreements with 90% of our retailers California, where we have around 60% of our U. S.
GMV, has been one of the most COVID impacted stays with one of the longest lockdown periods. Fabrice will take you through the financial and accounting impact of the relief granted as well as the 80% rent collection for the full year, but we are certain of the long term benefit of partnering with our tenants to find mutually acceptable solutions. The support we give to our tenants is reflective of the commitment we have for the communities in which we operate. COVID-nineteen did not stop the development of our Better Places 2,030 strategy. The pandemic allowed us to stress test the Better Communities pillar, And it has proven to be extremely relevant with other 2 45 initiatives group wide.
We also made significant progress in our diversity and inclusion framework with the global rollout of our unexamined bias training. Our greenhouse gas emission reduction targets have been approved by the Science Based Targets initiative as consistent with levels required to meet the goals of the Paris Agreement. The Trinity Tower, delivered in November 2020, is one of our very first projects It's built based on the better species ambition. And I am proud to announce a great achievement. 70% of the concrete that has been used to build the tower is low carbon, which generates 30% less emissions during production.
I visited the building just a few weeks ago coming back from the U. S. And I can tell you that the natural light, the exceptional layout as well as the impressive outdoor terraces and loggias make Trinity, the very best available space in La Defense, and I am confident that we will be successful in letting this tower as we were with Majunga, which was fully lit 18 months after its delivery with no prelating and a vacancy in La Defense at the time of 12%. Our office teams are fully committed to this objective. As an organization, we have a clear focus on execution for the coming Operationally, we will concentrate our efforts and resources on our flagship destinations to accelerate our post COVID recovery.
We'll continue to further differentiate our flagships by bringing in new uses and evolving our retail mix. We'll gain market share of our competition by delivering unique customer experiences, which will ultimately strengthen the Westfield brand and its commercial partnership potential. And we will fully embrace the power of data and technology to inform and speed up decision making, deliver connected services to extend our reach, grow our digital media potential and generate new revenue streams. Financially, we are fully focused on deleveraging the company and doing so in a timely and orderly manner, which our ample liquidity and access to credit markets allows us to do. And Fabrice will provide further detail on our liquidity position and time frame.
We'll complete the €4,000,000,000 of European asset disposal before the end of 2022. And we are currently implementing a to significantly reduce our U. S. Footprint once the investment market reopens, which should happen with the economic rebound. Meanwhile, we continue to dispose of non core assets, which will not benefit as strongly from the rebound like we did with Meriden, Siesta Key and Sunrise in 2020.
Last but not least, we maintained tight control of our streamlined capital expenditure, focused on our flagship assets and committed development pipeline and we'll continue adapting our global cost structure. Once we have delivered on both operational and financial goals, UOW will reemerge as the most attractive retail focused listed real estate company. We own and operate a portfolio of unrivaled flagship mixed use destinations in the Westfield catchment areas that will benefit from a reshaped retail landscape where substandard retail GLA will have faded away. Our portfolio will enhance the way people shop, live, work and play by providing increasing opportunities to connect our customers, retailers, partners and community in a series of remarkable experiences and places. Our balance sheet will have been restored.
We'll be focused on Europe and we'll deliver solid performance, which will allow targeted investments to drive growth. These strong fundamentals will create the platform for sustainable growth that is driven by commercial tension underpinned by low vacancy and a connected retail offer that will generate superior sales labels technology and data enabled new revenue streams and by value added mixed use development. ERW has the right leadership team in place to deliver on these strategic priorities as well as capitalize on emerging opportunities. The management board now includes 3 additional roles that demonstrate our key areas of focus for the coming years. In particular, the introduction of the Chief Customer Officer is critical in ensuring UAW rapidly develops its digital and data capabilities to better understand consumer needs and harness future growth.
The recruitment for this role is ongoing, and I take advantage this presentation to thank again Michel Desola for helping us set up this new function. I will now hand over to our CFO, Fabrice Luchat.
Hi, everyone, and thank you, Jean Marie. My name is Fabrice Michel. I've been with the group for 20 years, joining Unibail in 2,001. And most recently, I was Chief Financial Officer for Europe. I look forward to connecting with you as part of our Results for shows and seeing you in person as soon as we're able to meet again.
Before I take you through the full year results and financial priorities in more detail, I wanted to start with a few words of context. 2020 has seen the toughest operating environment in living memory, and the impact continues Into 2021, as we speak, just 48% of our centers are operational and only 31% in Europe. I will cover these impacts for 2020 later on in the presentation. Despite these extraordinary conditions, we see a number of positive indicators that demonstrate the resilience of the group, As Jean Marie highlighted, these are strong tenant sales after reopening, improved collection rates after reopening, A recovery of leasing activity in the second half of twenty twenty and low vacancy levels in our core Continental Europe Portfolio. So how does this translate in the group's 2020 results?
The adjusted recurring earnings for 2020 stands at €7.28 per share compared to €12.37 per share for 2019. This 41% decline is more pronounced Than the 30% decrease in year to date Q3 as the majority of rent reliefs were booked in Q4. Despite this, The full year adjusted recurring earnings per share is in line with the guidance range of €7.20 to €7.80 per share given in November and includes the impact of the 2nd wave of COVID-nineteen, which affected the majority of the countries where the group operates in November December. To give you now a better sense Of the COVID-nineteen impact on our results, we have broken down the major components on Slide 20. The combined COVID-nineteen impact amounts to €4.57 per share, which represents 90% of the total €5.09 per share loss in AREPS between 2019 2020.
This figure is made of rent relief granted, signed and expected to be signed an increase in doubtful debtors Lower variable income from commercial partnership, sales based rents and parkings and a decrease in our convention exhibition operating income. 2020 also saw lower service income and the cost of carry of the additional liquidity that was raised during the year to face the crisis. In addition, the chart shows you 2 non COVID related factors. First is the impact of disposals and mainly the sale of the 5 French shopping centers in May 2020. And the second one Is the change in the accounting treatment of internal letting fees, which were capitalized and now are expensed.
This impact of EUR0.42 is a one off and will not recur. Moving now to like for like net rental income on Slide 21. The NRI for shopping centers on a like for like basis was down by 24% in 2020 compared to 2019. The majority of this decrease is from rent relief for minus 11.4% and doubtful letters For minus 6.4 percent, I. E, in total, close to 18%, corresponding to 74% of the like for like NRI decline.
The performance shows also different variations between geographies. NRI was down 19% in Continental Europe. It was down 28% in the U. S. And the impact of rent relief was lower in the U.
S. Due to the higher straightening effect, but was compensated by Higher debt provisions. In the U. K, the NRI was down 49%, because In addition to the impact of COVID-nineteen I've just mentioned, the U. K.
Suffered from specific factors, I. E, the impact of CVAs, Vacancy following bankruptcies and higher exposure to parking and commercial partnership revenues, which were, of course, affected by the restrictions. Let's look now at the major factors explaining the like for like performance, starting with the support For tenants on Slide 22. To expand on Jean Marie's comments earlier, together with our partners, we granted around €400,000,000 of rent relief in 2020, corresponding to €313,000,000 on a proportionate basis for URW. Negotiations and agreements with Stenant have progressed significantly and now stand at 90% for Europe and 87% in the U.
S. For the 1st wave. We've also granted relief in connection with the 2nd wave. This is why the full year cost of €330,000,000 is higher than the €250,000,000 to €290,000,000 announced in November, which only included the 1st wave. The accounting impact of €246,000,000 is lower than the cash impact as under IFRS 16, we have to straight line the rent relief over the duration of the lease whenever we receive concessions for the rent relief provided.
In total, Despite the strengthening impact, the majority of French relief granted in 2020 was taken in 2020 P and L. Moving now to the other major factor explaining 2020 NRI like for like, I. E, bad debt provisions. The increase in 2020 as rent collection was lower than usual. In total, full year 2020 rent recovery stands at 80% based on all rents invoiced, including those for which rent relief or deferrals were granted.
Q2 and Q4 were most affected by lockdowns, and this is reflected in rent collection for that period at, respectively, 61% 76%. A reassuring metric though is that when shopping centers reopen, The collection rate increased, standing for instance at 95% for Continental Europe versus in Q3 versus 67% in Q2. Now on the basis of the amount effectively due and after excluding the rent discounts we discussed earlier, The rent collection stands at 88% for the group, including 94% for Continental Europe. For the rest of these amounts effectively due, the group took a conservative approach to bad debt provisions. Bad debt provisions amounted to €203,000,000 for the group as a whole and €191,000,000 for shopping centers only.
This corresponds to an increase of €144,000,000 compared to last year and represents 8.4% of the gross Rental income of the shopping centers. Let's talk now about bankruptcies on Slide 24. 2020 store, of course, higher bankruptcies with 6.52 stores impacted, I. E, 46% more than last year. These 6.52 stores represent 5% of the group's total stores and 4.3% of the minimum guaranteed rents.
The level of bankruptcy is more pronounced in the U. K. And in the U. S. And in terms of sectors, the segments most affected were Fashion and Food and Beverage as they were more heavily impacted by restrictions.
Nevertheless, and thanks to the quality of our assets, Tenants remained in place or were replaced for 71% of the units affected. Take an example From France, we saw 3 major retailers, Andre Camayo and Nafnaf become bankrupt. And while they collectively had 35 stores with us, They decided to keep all of them. The combination of bankruptcies and lower leasing activity led To increase vacancy in 2020, up from 5.4% to 8.3% for the group. As you can see on Slide 25, there were clear differences between our regions.
Vacancies remained below 5% in Continental Europe, demonstrating the quality of our assets, while the U. S. And the U. K. Were impacted by tough market conditions.
In addition, we saw stabilization between Q3 and Q4 of the vacancy in Continental Europe and the U. K. This increase in vacancies was also due to the impact of COVID-nineteen on leasing activity as our teams focused on rent relief negotiations. In 2020, Unibail Rodamco Westfield signed 15 28 deals, down 36% year on year. As with other key metrics, Q2 was the weakest quarter due to the lockdown restrictions.
But as you can see on the chart on the right hand side, activity recovered well in Q3 and was better in Q4 and even higher than in Q1. As highlighted by Jean Marie, the group signed new leases or renewals with a number of premium retailers, including those in fast growing on emerging sectors such as electric coal car manufacturers and esports companies. Now looking at rental uplift On renewals and relating, they were minus 5.1 percent for the group with again differences across our regions. They were slightly up in Continental Europe, showing the resilience of the portfolio. They were flat in the U.
K. On a lower volume of activity. And they were negative in the U. S. By 20% as a result of short term deals to limit vacancies in particular at regional malls.
For leases longer than 3 years at our flagship centers, the uplift was minus 9%. Moving now to the Office segment on Slide 27. The NRI is down 17% due to the disposal of the Majunga Office And the Lyon Conference hotel with an impact of €15,000,000 On a like for like basis, the NRI was stable. And as Jean Marie mentioned, the Trinity Tower in La Defense was delivered at the end of 2020 and is currently vacant, leading to an increase in the office division vacancy rate from 8% to 27.4%. As mentioned by Jean Marie, this situation is not unusual And we are confident in our capacity to date this prime and sustainable asset.
Moving now on to a convention exhibition. Of course, the activity Has been on hold for the majority of the year. As you will recall, temporary restrictions came into force in March. They were lifted in July before being reintroduced at the end of in September for the remainder of the year. This is why the net operating income is down 92 Versus 2019.
While activity continues to be limited by current restrictions, there's more positive news coming from bookings for 2021 2022, which of course are subject to cancellations. This shows nevertheless that Organizers and exhibitors are keen to resume their activity as soon as restrictions are lifted. And we expect The activity to really restart at the end of 2021 or beginning of 2022 and be back to normal in 2023 ahead of the Paris Olympics. Moving now to valuations. 2020 saw a significant decline in portfolio value, Down €9,000,000,000 to €56,300,000,000 This €9,000,000,000 includes €6,000,000,000 of like for like revaluation, of which 90% or €5,400,000,000 is in the shopping center division.
For 2020, Like for like revaluation of the shopping centers stands at minus 11.3% and minus 13.1% over the last 2 years. As you can see, there are significant regional differences with the U. K. Being hardest hit. For 2020, the year Minus 11.3% decrease at group level is made of a yield impact of minus 7.8% and a rent impact of minus 3.6%.
And indeed, in view of the more uncertain environment and despite the decrease in interest rates, in particular in the U. K. And in the U. S, Appraisers increased their exit cap rate and the discount rate by 0.2% and 0.3%, respectively, across the board. In the U.
S, the minus 12.6 percent decrease in like for like relations was mainly due to a rent effect of Minus 9.4 percent and a yield impact of minus 3.2%. Indeed, in addition to the higher exit cap rate and discount rate, The appraisers review downward the cash flow projections and in particular the exit year NRI, which they have increased compared to the 2019 valuations by minus 10% for the U. S, minus 8% for the U. K. And minus 3.4% for Continental Europe.
Looking now at how this translates in terms of NAV on Slide 30. The EPRA NRV, so the net reinstatement value, stands at €166,800,000 per share at the end of 2020. This 70% sorry, 27% decrease Results mainly from the like for like revaluation of assets. The NAV was also impacted by an impairment of goodwill corresponding to the fee business and the other goodwill Relating to the Westfield acquisition. Beyond the like for like valuation and the goodwill, the NAV was also impacted by Non like for like valuation relating to development projects like Milan as well as intangible assets like the trademark and our airport business.
In addition to the NAV, the decrease in values had a Major impact on our loan to value. On an IFRS basis, the LTV increased from 38.6 To 44.7 percent based on a level of debt that remained unchanged at €24,200,000,000 and the decrease in portfolio value of €9,000,000,000 as I've mentioned earlier. Taking into account the sale of Shift already cashed in and the Les Village office disposals already signed and due to close in Q1, The LTV would stand at 44%. On a proportionate basis, the LTV stands at 46.3 percent 45.6 percent pro form a for the same office disposals versus 40.5% last year. Despite this, the group maintains significant headroom on its 60% LTV covenant.
Other credit metrics were impacted by lower EBITDA, which decreased by 32% in 2020 compared to 2019. This resulted in a decrease in interest coverage ratio from 5.7 times to 3.5 times. Despite these extraordinary circumstances, We remain well above our ICR covenant of 2 times. Likewise, the net debt over EBITDA ratio, which is not part Of the group's debt covenant package, it stands at 14.6 times versus 9.9 times last year. 2021 will also be impacted by COVID-nineteen, but EBITDA will recover in 2022 and beyond, leading to improvements in these ratios.
Beyond the improvement in EBITDA that I Just research to we'll also be actively working to deleverage the company. And to reinforce what Jean Marie said, this is a key priority, And we have a clearly defined time line for that. The various actions to achieve this are our €4,000,000,000 disposal program in Europe to be completed by 2022, of which €800,000,000 has already been signed Our program to reduce significantly our U. S. Exposure, the reduction of our development pipeline, The reduction of our cost base and the reduction of our dividend to 0 for fiscal years 2020, 2021 2022.
We are committed to delivering this process In the most orderly and efficient way. And this is possible thanks to our strong liquidity position and undrawn credit facilities, which covers the group's funding needs for the next 24 months, even in the absence of any disposals or any new financing. Starting now with the component with the most direct impact on the shoulders, I. E, the dividend. Given the uncertainty of the operating environment and its impact on UOW's results, the group has made a proactive decision Not to pay dividend for fiscal years 2020, 2021 and 2022.
Once the group has completed its deleveraging program, It will resume paying a dividend at a sustainable and significant payout ratio, growing in line with the performance of its reshaped portfolio, as described by Jean Marie. Given its statutory results in 2020, the group has no obligation to pay dividend in 2021 the fiscal year 2020 under the SiC regime and the other REIT regime it benefits from. It anticipates Not to have such an obligation for fiscal years 2021 2022 as well. Disposals are a key component of our deleveraging program. We are committed and confident in our capacity to deliver the €4,000,000,000 disposal program of European assets by the end of 2022, including the €800,000,000 already signed or cashed in with Shift and Evinage.
In 2020, we sold or agreed to sell €2,300,000,000 of assets, including offices, but also retail assets in France. These disposals were achieved at a 0.3 percent premium versus 2019 appraisals, demonstrating the relevance of the group's book value. We have identified the remaining assets for disposal and are confident that the quality of these assets will support this process. We will remain, of course, pragmatic in this approach and are open to sales to joint ventures as we've done for the French retail assets. Moving now to the development pipeline on Slide 36.
The pipeline has been reduced from €8,300,000,000 to €4,400,000,000 between December 2019 December 2020. This includes the removal of €2,600,000,000 in projects, including the Milan and the Croydon projects. Of the €4,400,000,000 development project, €2,900,000,000 are committed projects for which €1,700,000,000 has been invested To date €1,200,000,000 remains to be spent. This includes Mall of the Netherlands and Galarigete to be delivered in 2021 as well as Wesfield Hamburg to be delivered in 2023. The projects to be delivered in 2021 are 87% Prelet for the retail component and 100 percent prelet for the office and other parts.
The group intends to limit its CapEx To a maximum of €2,000,000,000 for the next 2 years, including amounts remaining to be spent on committed projects, maintenance CapEx or leasing CapEx. In addition, the group will pursue a further reduction of its cost base, having already reduced gross admin expenses by €80,000,000 between 2019 2020. Now as a result of these proactive actions, The LTV will decrease from 44.7 percent to 38.8% at the end of 2022 before factoring in any U. S. Disposals.
And this is based on CapEx being capped at €2,000,000,000 in total for 2021 And 2022. Retained profit of €2,000,000,000 over 2 years as an illustration based on the 2020 recurring results and this is obviously not a guidance. The completion of the €4,000,000,000 disposal of European assets and current valuations. And on the right hand side, we have projected The potential impact on LTV of U. S.
Disposals based on various discounts to current valuations. This will lead in all cases to a further decrease in LTV. And this reduction in LTV will give the group new flexibility to invest and resume its dividend policy. In parallel, the group will continue to work on its great facility and to raise funds an opportunistic basis, as we did in 2020. The group raised €4,100,000,000 of bonds last year at attractive conditions despite the very Challenging environment.
And this includes the €2,000,000,000 issuance completed last November on an opportunistic basis And which was a success being more than 3 times oversubscribed with a 1% average coupon and an average maturity of around 9 years. We've also started working on the extension of our €9,200,000,000 credit facilities. €2,750,000,000 of these lines mature in 2021, And we've already extended €250,000,000 of these lines. Now thanks to our strong credit, Thanks to our strong liquidity position, the group is able to carry out its disposal program In an orderly fashion, as I've mentioned, the group has €2,200,000,000 in cash and €9,200,000,000 of secured credit facilities. Even applying a worst case scenario, I.
E, no new disposals on top of those already signed, no new funding raised, No extension of the credit facilities, reducing from €9,200,000,000 to €3,200,000,000 at the end of 2020, the group would still have liquidity of €1,500,000,000 And when you compare the sources and uses of funds, including €4,800,000,000 of debt maturities and €2,000,000,000 of CapEx planned over the next 2 years, the group's financing needs are Fully covered for the next 24 months. And this puts the group in a position to execute its disposal program in the best conditions. That's all from me. And I will now hand back to Jean Marie for some concluding remarks.
Thank you, Fabrice. 2020 has been a difficult year. And in light of the restrictions still in place Today, 2021 will be very challenging as well. So we'll continue to weather the storm and prepare for the rebound, which we know will come as soon as global health vaccination is achieved. The rebound may start earlier in some regions like the U.
S. Where vaccination is progressing faster with more than 31,000,000 people already vaccinated and with strong federal aid programs. The council's view is that economic recovery in our geographies will start around Q3 2021 and could be as soon as lockdowns are lifted and will be accelerated by the further easing of restrictions. In that context until we have clearer visibility on stabilized operating conditions, we are not in a position to provide guidance for 2021. Nevertheless, we have great confidence in the URW story and the clear plan to restore attractive fundamentals, Capitalize on economic recovery and deliver sustainable growth.
Our immediate focus is on our flagship destinations on the operational side and on our comprehensive deleveraging program on the other. We have the right team and ample liquidity to execute on these goals. UOW is also best placed to benefit from the economic rebound and capture the pent up demand that months of restrictions have created. Household savings have never been higher in our geographies and our assets in the best locations are ready. And looking further ahead, our high quality assets will generate solid financial performance underpinned by rental growth, while market leading use of data in an innovative development will unlock exceptional value creation opportunities.
In short, URW should be seen as a total return play. Thank you. Now, Fabrice and myself, I'm pleased to answer any questions you may have.
Our first question comes from the name of Stuart MacLean from Macquarie. Good
evening. Two questions for me. I might ask Them separately. My first question is just rewinding back to the refocus presentation that was provided back in October By members of which are now on the Board, they were supportive of the scrip dividend. And now that's obviously being reassessed.
So part 1 is what's changed there? And also the second one, also in the refocus Plan, it's been pure play European or pan European landlord, whereas the commentary today has been more around Divesting a significant amount of the U. S. Asset. So I'm just wondering what's changed in the last couple of months in order to Alter the view on what needs to be divested in the U.
S. As well as what's changed in order for the dividend to go from They've been supportive of the old regime to no distributions now for 3 years.
So maybe I will start with your second question around The disposal plan and then I will hand over to Fabrice on the scrip dividend. What we said is that, First, we'll deliver through the disposals of our European assets that will initiate the program to dispose U. S. Assets starting in 2021. And by the way, we did it already in 2020 with small assets.
So we'll continue the disposals of the noncore Assets and we'll prepare all options to reduce significantly the U. S. Exposure such as we have fully delivered the company, which means at the end, it's a question of options where you can stay at the end with the brand that will be still on the And we will license the brand to the asset management on the leasing fees. What we say is that the company will be fully focused on Europe And then we'll be fully delivered. So that's what we'll do, but we give us all options and the time to do it as we have ample liquidity to prepare the plan and do it in an orderly manner.
Now on the scrip dividend.
So starting with, 1st, a technical point on the scrip dividend. As you know, it cannot be an obligation. And therefore, The investors still have the choice to take cash or the shares as part of the option that is offered by the company on the scrip dividend. And usually in order to generate some level of traction to take discrete part of the dividend, The company would have to offer a significant premium, which, of course, means dilution. What we've decided is, On the contrary, to suspend our dividend payment for fiscal years 2020, 2021 and 2022 as the priority Of the group is the deleveraging.
And as Jean Marie said, after this deleveraging, the shape of the company will be totally different in terms of asset base, but as well in terms of financial structure and then it will allow the company to resume again its dividend payment but as well its investments.
Yes. I appreciate the mechanics of the balance sheet. However, the plan brought forward by the refocus group We're supportive of the distribution. I'm just wondering what's changed between then and now.
We have set a plan, which is an extensive plan, which includes a variety of levels. And as part of this plan, the fact that we have a 0 dividend was a key component of this plan. And again, this allows to retain profit. And this is part of the overall balance to restore the balance sheet of the company.
Okay. And then sorry, I might just circle back to my question on the U. S. As well. So vacancy is now 13% in the market there, also to the URW assets.
Where do you think this can stabilize at? And what's an attractive level in order to see liquidity for the U. S. Business? What sort of stabilization needs to occur fundamentally And to have investors interested in the assets?
What we expect is a rebound of the construction very quickly. I think once the Health vaccination, at least in the U. S. Would have been obtained. There is a huge pent up demand in the U.
S. There would be a strong Support from the federal government as well. That is part of the Biden plan for the economy. So we expect that this will come back very soon, so the recovery. This would be a kind of V shape.
Once we will have this lift Sorry, easing of the restrictions, you will see traffic coming back even more than what we experienced during the re openings of our centers. And then the flagship destinations will demonstrate all their relevance, all their potential in terms of consumption, In terms of vacancy, that would be offset and then you will create lower vacancy, more commercial tension on these assets. There is a lot of space in the U. S. Retail GLA, that is B and C malls, that are really deeply impacted by the crisis.
These Retail GLA will disappear because retailers are leaving these assets. They will create additional traffic for the flagships and this is where the market will be able to see that or who are the assets or which are the assets that are the winners of this crisis. And we have confidence in the fact that Our flagship assets would be the most powerful in terms of recovery over time and especially in 2022 that will give additional confidence in investors to consider these assets on an investment basis.
So 2022, you're expecting vacancies start to reduce and normalize?
Yes.
Our next question comes from Jonathan Callender from Goldman Sachs. Please go ahead. Your line is now open.
Thank you. Good evening. Can you hear me well?
Yes. Yes.
Yes. Okay, great. Just to come back to your disposal plan, You have used very specific wording, and I'd like you to please clarify. You talk about
disposals in Europe,
And you talk about reducing financial exposure to the U. S. So these are 2 different things. Can you be a bit more specific about the Options that you are contemplating in the U. S.
But in particular to see Meaningful deleveraging impact, that would be my first question please.
Yes. Thank you for the question, Jonathan. Just maybe to make it clear, so we'll fully deliver the company through U. S. Asset disposals.
You know that we have JV partners in a lot of our assets. So we'll have also to deal with our partners, see how we sell some of these assets, what are the options that are in front of us. And at that stage, we are this is why, by the way, we said that we are implementing the program. We get rid of the non core assets And we are working on the different options. But at the end of the day, we'll deliver the company through proceeds coming from the U.
S. I hope this is
Clear? So by program, what does the program mean? Is it like a disposal program where you're going to sell assets 1 by 1 or group by group or?
But that's what we want you to look at that stage. So what are the different disposition strategies or what The relevant ones in a view to optimize the value, optimize the proceeds. That's why we and all everyone knows that the market is not open today, so we need to prepare for that and we'll be ready once the market reopen, meaning that hopefully in September for the Labour Day, we'll see the start of the recovery in consumption, in traffic. We'll see also the increase of the leasing pace over 2022. And then this is where we'd be able to assess what are the best options to again optimize the net proceeds.
Meanwhile, we continue to dispose non core assets that are less relevant whenever it comes to the Rebound of the economy, this is what we did with the Siesta Key, with Sunrise and Meriden, and we have others to do and that we have engaged so far.
Okay. Fair enough. Thanks. Just one additional question and a clarification, sorry. So the additional question, Can you just let us know, you talked about new revenue stream, you didn't quantify that.
Can you Please come back to the target that had been announced previously. I think it was €150,000,000 by 2025. Is there a target for you? Is it a realistic target? Or do you have a new one to announce?
And then sorry, the clarifications just on the REIT dividend that Doesn't the fact that you're not anticipating to pay, that's not going to breach your obligations? I think you said so, but just wanted to confirm.
So maybe I will take the part of the on the new streams. The new revenue streams, we still have the same targets. What has changed Compared to the last discussions that we had or presentation is the organization and the way we want to achieve that or The pace at which we want to secure, the fact that we'll be able to deliver these new streams and that's this organization that we decided to put in place with the new management Board to have Chief Customer Officer that would be a Board member. And again, Michel Desolins is helping me and the Board in setting up the foundation of this new function, Having someone that will come more from the tech world, the digital world, the online world and also someone that knows Who knows about the customers? And that's the way we'll accelerate on that plan to deliver new revenue streams.
I think that we can better monetize the audience that we have. We can qualify these agendas even better. We'll have tremendous qualitative data about consumers in the best locations where we are in the best trade catchment areas. And I strongly believe that we can deliver much more in terms of new revenue streams, But we need to have the right strategy and the right focus to be able to deliver it. We need to be much more onto Connected retail much more into digital and data.
And that's the reason why we are now recruiting someone that will join the Board to do that revolution in Univer Van Damco Westfield.
So the target was €150,000,000 by 2025. You're saying that it's going to be the €150,000,000 that is going to be delivered faster than 2025,000,000 is that what you're saying? So what should we think about 2022
or No, no, the 2022, we are already in February 2021. So and We are very demanding on the profile of the people that will join us. So we will secure our ability to deliver on these new revenue streams. And if we can do it at a higher pace, then we'll do it. But what we need is being sure that we have the right skill set and know how in house to be able to deliver on that objective.
Okay. And if you just confirm the dividend, please?
Yes. Jonathan, that's confirmed. So the fact that we don't pay a dividend is not In breach, we have the strict obligation because we have negative statutory results, which results from the impairment of the value of the Shares that we have at the Unibail ORAMCO SE level in our statutory accounts and in view of the reduction in value that we've just Mention regarding 2020, we have negative results and therefore no obligation to pay. But well, you're right is that the obligation arising from The SiC regime, so €212,500,000 for 2020 will be delayed until we have sufficient Results to meet this obligation. But until then, until we still have negative results, the obligation that we have we don't have any obligation to pay Any dividend and the obligation distribution is delayed until we have positive statutory results.
Okay. But does that mean
that you're going to accumulate over 2022 obligations to pay dividend and you will have to pay that once your statutory Result will allow it. That's how we need to think about it, I. E, you are going to accrue The dividend expense that you will have to pay at some point?
That's exactly
Our next question?
That would create an obligation over and beyond what you would have to pay for say, what, of 23 or whenever you're going to pursue dividend.
But of course, we'll Keep you posted on the obligation on a yearly basis. And of course, we will be in a position to track that. And When we get back to positive statutory results, this would also mean that, a, we'd have accumulated a certain level of capital gains And we can assume as well a recovery then of the values because, again, the statutory results has been highly impacted by the reduction in values, Which means that at that time, then the values in order for the statutory results to become positive would be higher.
Our next comes from Sander Bunck from Barclays.
Two questions for me as well, please. I mean, the first question I had is just on your leverage targets. And can I just confirm what the exact leverage targets are this moment in time because I couldn't actually find them in the presentation? And do those targets flex up and down as well Based on the revaluation results that we may see in 2021? That's the first question.
Regarding the LTV target, the last one that we had announced was 40%, and this was in line with the level that had been reached Over time, as you see, as of now, the LTV stands at 44.7%, which means that The deleveraging is really the priority. And as Jean Marie said, in order to achieve that, we have this plan. And The U. K. Disposal, so the significant reduction of our exposure in the U.
S. Will significantly contribute to this reduction in LTE.
Okay. And the 40% LTV, that's basically the target. And if value stand were to decline further, then I can assume that you would increase your disposal target as well. Is that fair to assume?
As you've seen, we have a clear plan and we have even given you some sensitivity analysis depending on the Discount at which we sell the U. S. Assets ranging from 0% to 50%. And this is The LTV that we would contemplate getting at over time. And one important element To keep in mind, and again, which is key in this plan is that we have the liquidity that allows us to carry out and complete this plan in The most orderly fashion and the most efficient way.
And this is an important element. And again, even in this Worst case scenario that was mentioned, I. E, no new debt being raised, no further disposals. We have 24 months ahead of us In terms of liquidity, which is, of course, a great target to achieve our plan.
Okay. That is partially understood. The second one question I had was on back On the dividend, I'm trying to kind of understand the differences between IFRS P and L and statutory accounts. And I was just wondering if you Could get some further insight in kind of what kind of numbers you are looking at versus what the numbers that We as an outsider are looking at and just kind of trying to because I think what we're trying to understand is basically, say, the Values were basically, what are you assuming in your assumptions that would imply that you don't have to pay A dividend for the next 2 years as well. Doesn't basically assume that there's much many more further write downs to be expected.
And yes, kind of just a bit more understanding of what goes in those statutory assumptions. And with that as well, Just to confirm that no current tax obligations arise from not paying a dividend even though you would then comply with the REIT regime, Is it true that there would be no tax implications at all if you were not to pay a dividend for the next 3 years?
So starting with your question on the statutory accounts. They are available and therefore, you can see what they are made of. Basically, to simplify, you have Unibail Rodamco ST, which has a number of subsidiaries and a few direct assets. As part of these subsidiaries, we have Rodamco Europe. We have subsidiaries holding the U.
S. Activity and we have subsidiaries holding the U. K. Activity. And those companies were entered in URST books at the time of the acquisition, meaning on the basis of the Values at the time of the acquisition 2.5 years ago, which means that in view of the decrease in value that I've just referred to and If you look at it, we have a decrease in value of around €1,000,000,000 in the U.
K, €1,500,000,000 in the U. S. Over this year. Last year, we already lost 8.5% on the U. K.
Activity. And therefore, we are talking about around €3,000,000,000 of losses on these holdings, Which are the negative statutory result of EUR SE. And this is why, on that basis, We consider that and in view of the positive operating results that will be generated on the asset and going up To URW SE as a company, taking into account the potential capital gains on the basis of the disposal plan, We should not be in a position to have positive results in 2021 2022, Explaining why we have given this time frame for 0 dividend. Explain why as well in terms of obligation. We have no obligation Under the SEK regime and therefore, no tax consequences attached to the absence of payment of a dividend over this period.
Okay. And just to make sure I understand because that's quite a comprehensive answer. Say that over the next 2 years, you were Have no value write downs across the portfolio and business kind of resumes as relatively normal. Would there be, in that case, An obligation to pay out a dividend? Or are you still in those circumstances not should you are you still in a position not potentially to Pay out a dividend because of disposals you would be making?
If we make some disposals, this will generate Capital gains. And so these capital gains would be positive results for URC. The question is twofold. A, They will be part of the distribution obligation of the group to the same extent as the €212,000,000 I've just referred to. But then they will, of course, be taken into account and will offset part of these close to €3,000,000,000 of loss.
And therefore, depending on the disposal price, The results of Unibail Rodamcohesy would improve if MREL is being called, but we don't expect it to become positive Before 2022 and therefore, again, this approach on the dividend over the last over the next 2 years and 4 fiscal
years 2020, 2021 and 2022.
The next question comes from Jaap Kuin from Kempen. Please go ahead. Your line is now open.
Hi, good evening. Thanks. I guess, 2 topics from me on first one on vacancy mostly and the other one on equity. So Starting with vacancy. There's a couple of questions because I see, for example, U.
S. Flagship vacancy now 12.5%, Which is significantly higher than one of your peers reported not long ago. I mean, I'm not sure, maybe you can elaborate on the vacancy level. What is your vacancy reduction target specifically for U. S.
Flagship And the accompanying sellability of the portfolio and also maybe you can frame that around your Feeling on what is a kind of level where a mall goes, it's maybe a nasty word there, the debt spiral of a mall, when does it really start at vacancy level? And then the kind of sub question, I see Nordic vacancy up to 9.3% from 3.3%. So If you could elaborate on specifically those two countries, that will be my first topic.
Yes. So Just on the U. S, just to remind you that the size of our portfolio globally in the U. S. Is 28 assets.
We have 14 assets that are considered as flagship and 14 that are regional, more community malls. On the flagship assets, we had to suffer from some department stores closures, which obviously are large boxes, which explain part of the increase of the vacancy. These assets, when it comes to this vacancy reduction, the question is for some of these assets, do we have too much retail GLA? And does it go for a change in use? And what kind of potential mix use densification projects you may have?
Can you change the year for medical offices? So that's part of the strategy that we are developing. So that explains the increase in the vacancy. We have as well delivered the extension of Valle Fer, which is obviously also a part of the vacancy as we just changed the Apple Store. Just to give you an example, moved the Apple store that was on the small relatively small size in the historical part to open the flagship store of Apple 3 miles away from their headquarter for large store in the extension.
So that creates additional back So that's the main of the explanation, so these moves and the department stores closures, plus obviously some Bankruptcies that we suffered from. We are now negotiating with retailers to open new spaces. We have new ways of retailers coming. Like we said I said it during the presentation with Lucid. So we see digital native vertical brands that are coming to our assets.
We see innovative automotive coming to our assets. So the target would be to be back to a kind of level of vacancy that was the historical level of see in the U. S. That we're closer to the 7% to 8%. And this is why you will start to create additional pressure because you will see that there is a recovery.
When it comes to the U. K, that was the question, right? It was about the U. K, the 9.3%. It's linked to mainly Westfield London, where we had these extensions and where we suffered the dividend disclosure.
We have more CVAs and the well, it was the Nordics, sorry. So the Nordics. So that's So on the Nordics, sorry, this is more of the MOLA Scandinavia. MOLA Scandinavia was opened 5 years ago, opened 5 years ago and we had some Linked to COVID-nineteen, some of the international brands that opened the market that decided to finally close the markets due to COVID. And we have Already negotiations with other international brands to take over some of these spaces.
So we expect to reduce that back and See in the course of 2021 and obviously beginning of 2022, taking into account the level of restrictions that we have today even in Sweden, Even if it is open, traffic people are doing self confinement, so you have less traffic in the centers.
Okay. That is helpful. And then maybe finally, just a few words on your The appetite for fresh equity. Obviously, I mean, I guess everyone on this call are fully aware of what happened last year. But also given the kind of volatility in your share price and let's say before you know the share price is up €10 again, At what level would you be tempted or would you be tempted ever to push the button for a sub-ten to kind of chip away at this leverage Given the fact that the disposals still are very much uncertain, especially with regards to timing?
We have, of course, this clear objective to deleverage the company. We have set a clear plan to do it, which include a number of Levers including disposals, including this 0 dividend, including the reduction of our CapEx. And we are fully committed to this plan. And we have importantly 2 years ahead of us in order to achieve this plan. We have the liquidity ahead of us, so we will do it.
We will not Rashid will do it in an organized way. And again, so as part of this plan, there's no equity raise part of this plan, again, Despite the interest of the company, again, to deleverage the company significantly, but no equity issue. And even I would say that as part of our dividend Decision, we even decided not to generate any dilution in connection with a potential scrip dividend.
Okay. Thanks.
The next question comes from the line of Marc Mazzi from Bank of America Merrill Lynch. Please go ahead.
Thank you. Very good evening, everyone. My first question will be about the leasing spread you've been able to achieve in 2020 To compare to previous rent? And linked to this one, How much of your stores, which are still trading, are related to bankrupt brands? And how much that could add to the current vacancy?
On to the rental spread of the leasing spreads. So we Especially in the U. S, we have a minus 20% that is mainly linked to These are below 3 years or in the range of 3 years or short term, this is in our exception linked to Major brands that filed Chapter 11 and that have not rejected their leases with us, but renegotiated these leases. So this has the effect. When you exclude these short so called short term deals, you will be the uplift or the done if would be more the flagships in the minus 9%.
When it comes to the U. K, there's few deals. Maybe I will leave the floor to Fabrice.
Yes. When you look at the Andrea, please on the rebates and renewals. In the U. K, it was 0.4%. But we acknowledge that it was on a limiting number of MGR being signed.
It was 62% Below the volume that had been achieved last year. So this is why we've mentioned this, still positive, but on the lower volume of activity. And to answer your question on the impact of vacancy of these on the bankruptcies, as I've mentioned, 71% of the units were either roulette or retailers remain in place. These 6.52 stores subject to bankruptcies represented 4.3% of the MGR of the company, which means that In total, this is around 1% of additional vacancy that was generated by the 30% of the space That was not related and that was vacated.
Okay. You had no leasing spread in Europe?
We have mentioned the leasing spread. It was still slightly positive. It was 1.2% or 3%. So we still had a positive rental uplift. In the MD and A, by the way, you have the details of these rental uplift.
It was, In particular, strong in Spain, strong in France and more negative in the Netherlands and in Germany. And in particular, in Germany, we had a negative impact of a big midsized unit that was related and for which We had a down list. But all in all, you have all the details in the MD and A. It was still positive at 1.2% or 3%.
Okay. My second question is about your the potential disposal of your U. S. Business. But I do understand that you can sell the business as an operational platform.
In that case, how much cost that will remove from Unibuy P and L. How much cost can you save from the disposal of your U. S. Business as an operational platform? And I would like to operational and financial, please.
How much cost would be in the 2nd, right?
Yes. I mean, on the NRI side, obviously, you have the information. In terms of cost, it's in total, out of this €200,000,000 of €215,000,000 Of admin, you may have something like €20,000,000 to €30,000,000 for the U. S. We will revert to you with the exact figure.
And how much on the financial side, if you have any
Yes. Here, I think you can find that In the documentation, because we mentioned to you the debt in USD, which is around €5,400,000,000 in total. And We mentioned as well the cost of debt in the U. S. Combined with the U.
K, but the majority of it is in the U. S. At a cost of debt of around 3.6%. And of course, we are talking about debt, which is more costly than the one that we have in Europe. And therefore, as a consequence, The cost of debt would be reduced following the sale of the U.
S. Portfolio.
The next question comes from Rob Jones from Exane BNP Paribas. Please go ahead.
Thank you. Good evening, everybody. My questions have largely been asked, but it was linked to the U. S. Again and full surround disposal.
There's been a number of times During the presentation where you commented and talked about a kind of worst case scenario, no asset disposals, no new debt In terms of refinancing in the near term and highlighting quite rightly so, on slide, I think it's 36, Sorry, not 36, but on one of your slides where you still have liquidity on a 2 year or a 24 month or 4 month view. I wonder if you could address My other concerns, which is more around where we get to from an LTV perspective ahead of that end of 2020 To date, I appreciate there's the liquidity there from a refi perspective. But on my numbers, certainly, if we see a 15.5% Portfolio capital value decline on average between now and the end of next year, which is obviously a Slower run rate than we've seen over the last 12 months, albeit they've been unprecedented times. So don't mind them as we get to a position where you'd be having a LTV in excess of 60% if you had no further asset sales. And I was wondering if you, in the context of that, Well, if you could give us a little bit of color around U.
S. Disposals. So on some numbers I'm looking at in front of my eyes right now, I can see in 2018, 2019, we saw less than $500,000,000 of U. S. Shopping mall disposals, that's excluding strip Etcetera, etcetera.
I was just wondering, do you to what extent do you have the confidence that we can, A, sell the U. S? And B, does it actually not need to come before the end of 2022 to end up in a position, if my base case, capital value declines are correct, We don't end up breaching covenants ahead of that date and therefore being forced to raise equity, which clearly is something you wish to avoid.
And our confidence in the fact that we'll be able to dispose U. S. Assets and especially when it comes to the flagships, There are we have a very small portfolio mainly based, by the way, at 60% of the GMV of the U. S. GMV is based in California, which is still one of the strongest economy in the world that will benefit from this rebound very quickly in 2021 and we have amongst the best assets.
So these assets, They are almost you cannot build them again. You cannot do it again. And they are strong on their catchment areas. And they would be stronger with the rebound looking at how weaker would be some of the competition. I think that the U.
S. Market has to go through this somehow cleaning process of the all these B and C modes that need to close. And I think that a lot of retailers I've already started to exit these assets at least because they go they signed only month to month contract And they prepare the fact that they will lease these assets. And our flagship destinations would be even more stronger because this is where they need to be to have access to the Customers, but not only to have access to the customers, but to develop their own online business because what we know is that with no offline business, there is a poor level of online business. That's what we see and this is the reason why, by the way, in DTX, He's explaining that they will continue to open flagship stores to develop and at the same time their online experience and their online business and our flagships.
There is no wonder why Lucid decided to sign with us. There is no wonder why Apple Store Apple decided to do its flagship store in Valle Ferre because these assets are the most powerful ones and the ones that are attracting the customers, are the ones that have an effect on your brand awareness and your brand image and on your global sales, meaning off line and online sales. So there is no doubt that once the rebound will come, which will come faster in the U. S. Than in other markets And where we are, that's you will have interest from potential investors to take over or take this invest in these assets.
I appreciate that. And just On that point around pent up demand, I appreciate at the moment, obviously, we've got a high household savings ratio. And obviously, in the U. S, in particular, there's been a number of Kind of payments effectively being made to households which can act as stimulus. But surely, from a potential investor So you might be looking to acquire some of your U.
S. Assets. Isn't that a one off that has a positive effect in, say, H2 2020 1, but they're not thereafter. It's not a recurring benefit from a consumer spend perspective It's driving some sort of thoughts around the resilience of cash flows from a retailer, is it? And then linked to that, I get your point as well around B&C malls, and I absolutely agree in terms of the over retailing point.
But Again, looking to those labels and looking to those best in class assets that can't be replicated, doesn't isn't also the point that Rents need to be sustainable from a retailer's perspective, hence, obviously, why you're seeing minus 20% re leasing spreads in the U. S. Retailers are happy to be in a particular location, but only at the right price. And that also affects, obviously, the future asset value Of your portfolio, both in the U. S.
And indeed Europe. So I'm still quite sure how those two components align, if that makes sense.
Yes. So again, on the so the retailers, when they come to us and When they look at some of our locations, here again, it's really the strengths. It's not only the offline business or the business that they can do with us that they consider when they consider some of the locations with us. This also the global impact of this store on their global sales label. I have a lot of example in the U.
S. Where we were having discussions with potential tenants And then the tenants that were, by the way, in the malls and where we are negotiating the rent levels and where When you are starting to push a little bit, you discover that, in fact, this store is much more important on the online business perspective than almost on the offline business perspective. And that's where it's important for Unibail Rodamco Westfield to be part of this global sales discussion. Hence, again, this decision that we made to create that function of the Chief Customer Officer to accelerate on the development of our connected retail offer and the data and the digital effort or online digital effort that we need to do to make our revolution within the company to be part of this global sales distribution. Because at the end of the day, it's really what it is about.
And a lot of retailers now are talking about their global sales, know more about their store sales. And that's the intent that we have for that plan that we presented to become part of this global sales discussion that will Create tension as well on the rent levels. So that's what we want to achieve.
Thank you very much. And I appreciate the detailed presentation
And just to come back on your question on the LTV bridge. There would be a bridge assuming a 25% Decrease in values on top of what we've seen already. And just as a reminder for the shopping center division, the Valuation decrease over the last 2 years has been 13%, including 34% for the U. K, including 14% for the U. S.
And around 10% for Europe. So this means that on top of this 13%, we would have to suffer an additional 25%, Assuming that we don't do anything in the meantime, in particular in terms of disposals.
We've got
a lot left to go in Europe than in terms of capital value declines.
Sorry? Could you say that again?
Are you saying you think we've got a lot less to go in Europe in terms of capital value declines?
I think and This is something that I just wanted to answer. When you look at the disposals that we have completed in 2020, and we are not talking And significant amount, we're talking about €2,300,000,000 They were done at a 0.3% premium compared to 2019 valuation, which As well shows some level of relevance of these valuations.
The next question comes from Florent Larrousse Hubert from ODDO BHF. Please go ahead.
Yes. Thank you for this detailed presentation. So actually, I would have two questions. So the first one on Your debt strategy. So is it possible to have maybe more color on what bond issuances you can contemplate In the near future, so would this be include only classic bond issues?
Or Could you also contemplate maybe issue of convertible bonds or bonds that can be reimbursed into Shares in
the future? No. In terms of financing, We'll obviously continue to look at plain vanilla products, including bonds. And again, as a reminder, we have €2,000,000,000 of bonds in November of last year at very attractive conditions, 1% coupon on average, 8.7 years maturity. We see a strong support from the Central Banks, which explains as well The well, I would say the level of secondary levels, this supports the secondary level.
And by the way, you can look at the difference between the CVS and the secondary levels, which shows you this difference in terms of impact and this impact of central banks on the debt market. And therefore, at this stage, what we have in mind is more to continue to have access to the bond market, again, on a very opportunistic basis, Leveraging on market windows as we've done in November, again at attractive conditions. And by the way, during this transaction, we a number of new investors coming in, being interested in the name, and this is what we're aiming at.
Okay. So thank you very much. And maybe a second question on your LTV ratio. So today, it is 44.7%. We can expect that the evaluation of your assets evolve negatively in 2021, so we are not sure of that, but maybe this can be A fair assumption.
Is there any level of LTV ratio before 60% From which you can, we think, adapt your strategy in terms of leverage?
No. We have a clear plan again over this 2 year period. We have the time in order to deliver And as part of the plans, all the levers have been mentioned. And there's no other element That would lead to any change in this respect.
The next question comes from Bruno Duclos from Invest Securities. Please go ahead.
In the press release, you are mentioning that there was no change in lease structure During the negotiation that you had with your tenants. But could you elaborate a little bit on The MGR decrease that you have granted?
So again, as we said In the press release, the COVID-nineteen lease amendments that we negotiated are not taking into account any change in the structure of the lease and the financial agreements that we have. What we obtained and what's This is what happened by the way in the U. S. Whereas you get concession from the tenants mainly around An extension of the lease for a few months to cover the part of the rent abatement that have been granted. Hence, this A gap in between what is the level of rent relief granted and the level that has been straight lined.
So that's what we did. And when it comes to the MGR Evolution is mainly when we do renewals or relating, but that are not connected to or correlated to the COVID-nineteen negotiations.
Thank you. Regarding the devaluation of the U. S. Assets, the discount rate That has been used by experts, has increased only by 30 basis points. This could look a little bit Small given the very low visibility on these assets.
Is it mainly due to the lack of transactions on the U. S. Market?
I think that what they not only increased the premium on the discount rate, but they revised as well the rents level Of the VAT C and the renegotiations and the renewals that we are taking into account in the plan, this is the reason why we see that part of the Evolution of the valuation is mainly driven by this review of the rent levels. So this is the rent effect. So in fact, they take assumptions around the leasing pace and the leasing levels that are lower than what they used to take. And on top of that, They put an additional premium, which you can consider as a risk premium on these assumptions.
And in addition to that, Bruno, and this is what I've as well referred to, you need to take into consideration that in the meantime, interest rates I've come down very significantly in the U. S. By 1% around, meaning that they've increased the discount rate At a time when the risk free rate had decreased significantly. So basically, this shows that as well they took a much higher risk premium.
Okay. Very clear. And during the presentation, I think you said that the EBITDA would be recovering Starting in 2022, I think it's a little bit different from the previous assumptions that were given to the market. Does it mean that you don't expect the EBITDA to recover in 2021?
As I said during the presentation, we have today currently today, we have 51% or close to 52% of our assets that are closed, So not operating. I think that's the first aspect. And we know that there would be delays on the Vaccination campaigns and that this will have an effect on our capacity to reopen and when we reopen and the level of restrictions that we will have in our operations, which will have an effect on our retailers. Just to give you a sense of the magnitude of what we are talking about, Here in France, with the shopping centers that are closed, this is 25,000 retail units that are closed, not only ours, but globally for all the malls that are above 25,000 square meters. So this has an effect.
We don't expect 2021 to be better than what we experienced in 2020. But With the recovery, that's something that is very important. We think in between the Q3 and the Q4, so in between Labor Day and On the first October, the start of the rebound will have achieved, I think, a certain level of global herd vaccination And that will give us the ability to be fully open, taking advantage of this recovery and the rebound of the traffic. Because as I demonstrated it in one of the first slides where you have this graph, what you see is that the traffic and the sales are recovering as you reopen stores. So that's the most important thing for us to be able to do is reopening stores and then you will see the traffic coming back and the sales coming back, The retailers recovering, the level what you saw as well is that when we reopen, the level of rent collection is much higher and goes up to 95%, I think, in Europe or in France during the Q3.
So that's the name of the game. But today, we have things that are out of our control, which is called COVID-nineteen and the way we can deal with that pandemic as of today.
Okay. One last question maybe. Regarding the situation in La Defense, Well, we hear about increase in vacancy and very low market rents. So have you changed your letting strategy For the Trinity Tower? And should we expect also a significantly lower yield on cost on this project?
Sorry, I didn't get the end of your question. Significantly what? Sorry.
Yes.
Okay. Sorry. So first, I think that our Trinity tour, that is the office space that is available today since we delivered it in November 2020. It's definitely the best location or the best space available in La Defense by far. I visited it again a few weeks ago when I moved back from the U.
S. When I visited it, I saw exactly what I was looking at when I was in charge of the Office division In 20122013, when we worked with Boullod D'Anjou on the Majunga tower, the level of vacancy when we delivered Majunga At La Defense at the time was 12%. We are not even yet at that level in La Defense, but this is the quality of the assets That makes the difference. We have been able at that time to sign in the €525,000,000 €550,000,000 a square meter. The market has not totally changed when it comes to the prime range in La Defense.
And this is still the range in which we are. And I think that we'll be able to achieve this. We, as usual, start from the bottom to the top of the tower. And I'm really confident that what we deliver today is exactly what the Companies and corporations needs to retain the people, create the space where they would be able to showcase their own culture, Share their DNA, do the induction program of the employees. So that's really my strong conviction.
And this is again here a question of quality of the space much more than the quantity of the space available that makes the difference. So 15%, I think it's 15% or 17% of the total vacancy in the offer is made of brand new buildings, So which means 85% to 83% of the space available today on the market and especially in the defense that is more secondhand, if That's 3rd generations.
You're still contemplating rents above €500 per square meter?
Yes.
Our next question comes from Rob Ferdy from Green Street Advisors. Please go ahead.
Good evening, gents. It's Rob Verdi from Green Street.
So a couple
of questions. First one, on the U. S. Assets. Do you believe there's an appetite for your flagship asset today at reported union?
Or do you think this will only happen in 2022 Once the U. S. Economy rebound, the vacancy improves and once G and A from the BC Morgs have come out.
So I have time to Here what you said, so I don't know if someone has the questions or I heard part of the question. So I don't know if sorry or if you can repeat because I hear you from
Of course, Lucas. I was asking, do you believe there is an appetite for your flagship U. S. Assets Today at reported yields. Or do you only think this is going to be the appetite in 2022 once the U.
S. Economy improves, Vacancy levels improve once GLA has reduced in the U. S?
Yes. The plan today is really to Prepare for the rebound, work on the with our flagships, work on really increasing the occupancy level, finalizing some of the operations that we have started even 1 year or 2 years ago when it comes to the repurposing of some space And then also obtaining because we have also densification potential in some of these assets, so we need to finalize the entitlement process, get the building permits obtained. And this is something that is ongoing. So the question for us is really being ready when there will be the economic rebound. And this is where there will be additional appetite for these assets.
Today, there is no investment market. So but we are confident that in between, I would say, the clarity around which are the assets that will Be the winning scheme on the U. S. Market and which are the ones that will disappear definitely. This is where there will be a huge gap that will or a gap that will be widening in between super qualitative assets and B and C malls.
So that's my expectation is that There you will see a huge difference, and the appetite would be obviously for the flagship's assets.
That's very clear. So the second question is on vacancy and bankruptcy. So I read the IMF says stimulus measures have meant There's a lot of zombie companies. I think in the FDA, they said there's something like 60% less bankruptcies in 2020 than they were in 2,009. And I see your vacancy is flat quarter on quarter about.
So are you penciling in a sharp rise in bankruptcies in 2021, Firstly. And then just following on from that, are tenants now demanding higher fit out costs or are It's our cost higher. I think I heard you say something about tenants want to report for a digital presence. And then finally on that part, how different is your EPRA vacancy from your physical vacancy at the moment?
Are you talking only about the U. S? Or are you talking about the global portfolio, sorry?
On The global portfolio, but let's talk about Europe mainly actually.
I don't have the GLA, so the physical pack I can see on top of my head, but usually it's pretty aligned in terms of percentages, at least in Continental Europe. I don't know if you have the figure, Fabrice.
I don't have the figures on the Sorry, Marco. No. On the for Continental Europe, we don't have that figure. We have it in the MD and A for the office For the U. S, because here we give you both the EPRA vacancy and the physical vacancy, which is available in the MD and A.
And so and by the way, we also give you the split between flagship and regional malls in this document. But here, we're talking about something like 90.5% or 91% occupancy compared to a vacancy of 13% On a EPRA basis for the U. S.
And then about Are you penciling in more bankruptcies in 2021? And are your tenants today, the new leasing negotiations that you're having, Do they want better specs to count?
Well, if we talk about, first, the U. S, The level of bankruptcies has been very high. I'm not expecting that there would be more vacancies in 2021 more vacancies, more bankruptcies. I expect that there will be bankruptcies and we have retailers on the watch list definitely. But The wave of bankruptcies and Chapter 11, it was almost 1 per day, if not 10 some days in the U.
S. And the level of closing of stores has been really high in the U. S. I think it's more than 25,000 stores that have been closed In the U. S, on top of my head, when usually the market was closer to the 12,000 to the 15,000 store closed, there's a huge increase.
What you see in the presentation that we did, and I think it's one of the stats that Fabrice shared with you, is that Finally, when you look at the number of bankruptcies or stores that were involved into bankruptcies, 652 globally That's in our portfolio, U. S, U. K, Europe or Continental Europe, we have 71 of these stores that are still occupied, whether by The Chapter 11 company or CVAs or by new latings, so I'm not expecting a huge increase of Bankruptcies, no huge increase of vacancy linked to closing of stores linked to these bankruptcies. And I think that this achievement that we have a testimony of the quality of our assets and the flagships. And I used to give an example, even if they are not everywhere where they are in our portfolio in the U.
S, But they are with us in our assets as, I would say, corners. But GCPenney, when Chapter 11 didn't close any store with us, not that they bring us a lot in these assets, but they are taking advantage of Our flagship destinations to maintain certain level of traffic that gives them the ability to do a certain level of sales that Finally, it's way higher the average of the performance of their portfolio. I don't know if you were a part of this Investor Day, we did was it 2 years ago where I did a presentation around our portfolio with GCP and E that was on the watch list. They closed only one store out of the 13 or 15 stores at that time, so with us which is again a testimony of the quality of our portfolio in the U. S, in the U.
K. As well as in
Europe. And in addition to that, for Europe, there's an important element as well to take into account, which is the support of the subsidy programs that have been Or are likely to be put in place by governments to support retailers, in particular when they suffered from the restrictions that were imposed by these governments. And you have on Page 101 of so 101 of the MD and A the list of the subsidies. And if you take, for instance, the Example of Czech Republic or Slovakia. The rents are supported 50% by the state, 50% by the landlord, which means that at the end of the day, they don't have to pay anything.
In Sweden, there was also a system under which A quarter of the rents was supported by the landlords, a quarter was supported by the state and the 50% by Lieutenant, even though the shopping centers and the stores were open in Sweden. So in addition to that in terms of vacancy, there's also To take into account in Europe the support provided by government and by the way in terms of rent collection, of course, we had the best performance in terms of rent collection In the regions where the subsidies were the strongest.
The next question comes from the line of Bart Raisens from Morgan Stanley.
Bart Geist here from Morgan Stanley. I mean, I appreciate there's been a lot of questions that have been asked about disposals. But Just want to understand. So until a couple of months ago, the stated line was we want to sell €4,000,000,000 of assets by the end of 2021. Now you're saying you're going to execute on that by the end of 2022.
Is that right?
Yes, this is right. Again, I think that when the objective was to sell before the end of 2021, it It was, I think, a perspective that COVID would be over in the range around May or June 20 2021 or that there would be also the vaccine will change things very, very quickly. And you know and that this is not the case and that again 51% of our assets So close today. This is somehow difficult to sell an asset that is closed. And that's the reason why what we said here is that We drifted a little bit the objective of 2021 to 2022, but we'll have realized this or achieved or completed this disposal program.
There is a remaining €3,200,000,000 that we do before the end of 2022.
And in order to achieve this program, But as already mentioned, we have the liquidity available that allows us to do it again in the best way possible And to ensure that we find the right buyer for those assets.
But Liquidity is one point, right? And again, I appreciate you've commented on that. But we see capital values, the decline accelerating. You're slowing down the rate of disposals And you're pointing to a reopening. But before COVID, markets weren't particularly liquid either, right?
So From a risk management perspective, how do you think about that, that's really well, you clearly think it's the right thing because You're betting on that. But what are you looking at to how often are you reevaluating that with the Board, But that's really still the right thing to do.
Maybe one element about the disposals that we did in Europe. And as mentioned by Fabrice is that we did this almost at the GMV, a little bit higher than the GMV of December 2019, and we achieved that in 2020. And you saw the evolution of the valuations in 2020, so which gives us confidence in our ability to achieve the disposal program at the right level over the next few months and beginning of 2022, so at least before the end of 'twenty 2.
Thank you very much.
The next question comes from Mohammed Is from Neukenbermann, Buman.
Hi, guys. Thank you for taking the time. I think The sort of questions I had have been mostly answered. I did have one though, if I could just follow-up, please. It's around your debt structure.
So you alluded to several times over the call that access to the bond market is very important and you've been able to refinance at very cheap rate. I'm looking at your slide deck. And on Page 39, you talk about €4,800,000,000 of maturities over the next 24 months. I'm assuming that does not include the 2023 first call hybrids of EUR 1,250,000,000 I believe it is. What's the thinking there?
Are you going to leave that and sort of extend that so it gives you a little bit more runway to execute on your plan? And what is the implication of that for For your access to sort of the bond market.
The €4,800,000,000 of debt maturing Was the debt maturing over the next 2 years? And so therefore, you don't have the hybrid as part of this because The €1,250,000,000 of the first tranche of the hybrid matures in September 2023. So This is not part of the debt that will have to be refinanced by then. And by 2022, of course, We'll see what needs to be done in this respect. But in view of the deleveraging that would have been achieved, we will review then The need are not to maintain a hybrid, but obviously, there's no plan to do any hybrid Between now and 2022.
And therefore, again, we will stick to our plan and raise, as I've mentioned, Plain vanilla debt, as we've done in the past. And by the way, I take advantage of this question again to congratulate the team that have worked On this in particular, the November issuance, which was a great issuance, and this is exactly what we intend to do going forward. So no hybrid.
Yes. And just my second part was, what do you sort of think the implications of that would be for your cost Of that going forward, if you don't call this and you need that extended? Thank you.
I mean, on the hybrid, we are talking about that debt that matures in 2023, so quite some time ago. Of course, the coupon was higher than what We raised today on the market. Again, we raised this 5 year money at 0.625 or along 6 years at 0 point 25%. So the hybrid that will mature at a coupon of around 2.125 percent for 5 years. So you see here The spread, I'm not even talking about the secondary levels of this hybrid.
So we'll see that in 20 2023, but in the meantime, no hybrid.
The last question comes from the line of Meike Lecky from PGIM.
CGIM, I had a follow-up on the hybrid actually. So you explained that you'll be looking at that in 2022 or later on. But what is your commitment to paying the hybrid coupons as that's usually linked to you paying the SIC dividend requirement?
This point on the coupon is effectively A question. At this stage and of course, we will review that. But at this stage, In our plan, we have maintained the payment of this coupon.
Okay. Thank you. And I just had one final question. I noticed that in the refocused plan presentation, you quoted a commitment to a strong BBB rating. Is this still the case?
And if not, what level would you be comfortable with?
We don't give any guidance in terms of rating because this is something that Beyond our control. And our plan again is to deleverage the company to go back to Levels of loan to value that would be lower as a result of the actions that I've just mentioned. And again, what can be noticed is that When you look at our capacity to access the bond market, it had been confirmed at the end of 2020. As I've mentioned Earlier as well, there's some appetite from Board investors, from investors to invest on Our type of activity and we'll continue to leverage on that. And as I've mentioned, you have as well some technical factors that are positive and hence again This difference between our secondary levels and the CDS, which shows that there's some level of support from investors, which Make us confident in our capacity to access the bond market.
Thank you.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation.