No panic, despite Unibail Rodamco profit warning

Unibail Rodamco warned investors that its profits were likely to be flat in 2010, despite 7.1% growth for 2009, and its CEO Guillaume Poitrinal says this will be a transition year. Low inflation will curb rental growth while the sale of some assets will also push downwards on revenues. But despite the negative view the short-term stock market took on the news, most analysts seem to feel the company’s strong balance sheet will mean it can pounce on opportunities as they arise. Its net loss of €1.5bn was the result of a 15% mark down on the value of its portfolio, which now sits at €128 per share and earnings rose 7.1% to €9.20 per share.

“Unibail has become a proxy for people wanting to buy into European retail property,” says John Lutzius, managing director of Green Street Advisors in Europe.

Unibail did more than just weather the economic storm. While the company reported a net loss of €1.5 billion in 2009, the loss was caused by the technical effect of writing down the value of its property. The value of its property portfolio was €128.20 a share at the end of December, down 15% compared with the same period a year earlier. But excluding asset write-downs, earnings rose 7.1% to €9.20 a share on a like-for-like basis. Net rental income from its shopping centers rose 3.9% to €942 million.

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