Unibail-Rodamco maintained its reputation as the bluest of Europe's blue-chip real-estate investment trusts with impressive rental growth for the six months to 30 June. Despite paying a year's worth of dividends during the half, the group's net assets remained flat at €143 per share, beating analysts' expectations.
This resilience can be explained by 1.5 per cent growth in property valuations, which in turn can be attributed to like-for-like rental growth of 5 per cent over the first half of last year. Unibail has been a net seller of assets, so actual rental growth was lower, at 2.3 per cent. But that gave recurring earnings growth of 4.2 per cent after factoring in lower interest costs - the company's average cost of debt fell to just 3.5 per cent, from 3.6 per cent at the end of last year. That's despite a higher level of gearing than has historically been normal for Unibail, following a €383m acquisition in Germany last month (although its 38 per cent loan-to-value ratio is still lower than most UK Reits).
Unibail manages to churn out rental growth year-on-year because it continues to attract more customers to its shopping centres. Amazingly, given the shrinking eurozone economy, tenants' sales in the group's centres were up 2.1 per cent in the period through May.
