As one of the first real estate funds in Europe, the Dutch Wereldhave recently decided to sell shopping centres. Despite the improving economy, largely lifted corona restrictions and increased consumption, these are still turbulent times for operators of international retail property. Since the outbreak of the pandemic, there has been less shoppers and rental income has fallen due to corona discounts and vacancy. This naturally leads to a decrease in the value of shopping centers. The result: an increased debt ratio.
Wereldhave invests in medium-sized shopping centers in the Netherlands, Belgium and France. It owns 26, with a combined valuation of now 2.4 billion euros. This makes it one of the smaller players on the market.
It is in France where the small cap fund is now making an exodus. Of the six shopping centers there, it recently sold four, in Le Havre and Strasbourg, among others. That happened for a total of 305 million euros. Wereldhave had to take a considerable loss: the selling price was about 40 percent below the book value.
According to investment bank Degroof Petercam, the divestments will result in a loss of at least 14.5 million euros. This led to strong criticism from activist shareholders, who find the proceeds too low.
Most investors had anticipated the sale of the loss-making French branch, says real estate analyst Jaap Kuin of investment bank Van Lanschot Kempen. “But the relief soon gave way to uncertainty whether this was the right price,” he says. But because few real estate investors have sold property yet, according to Kuin, there is no proof whether Wereldhave’s selling price was good. „Investors see the pros and cons, and are therefore not yet sure whether the heavy discount really needed.”
The sale fits in with the new strategy that Wereldhave announced just before the outbreak of the corona virus. For this, the company wants to raise a billion euros from the sale of shopping centers. There is now 479 million euros inside.
At the same time, the ratio between debt and real estate value (loan-to-value) will be reduced from now 46.1 percent, to the target of less than 40 percent. That will make it cheaper to take out loans in the future.
Wereldhave wants to invest in the renovation of shopping centers with the money raised in France. It is aiming for a different type of tenant: fewer smaller retailers, more office owners, supermarkets and fitness centers. The real estate company wants to reduce its dependence on fashion stores, due to the increased popularity of online shopping. Kuin does have questions: “Whether the possessions lend themselves to it, given their location. And whether the value of the properties is affected positively or negatively, and whether you are still on time.”
Like other commercial property managers, Wereldhave is faced with structural changes. Except for missed or reduced rents as a result of the corona crisis, this concerns the steady increase in online shopping, which now has about 15 to 20 percent market share. This development has been accelerated by the pandemic.
“Positive for logistics real estate, of course negative for retail real estate,” says ING analyst Robert de Jong. He expects that more shopping centers will eventually turn into a combination of shops, catering, sports and entertainment, or else into logistics real estate. “This does not mean that the shopping street will disappear,” he says. “There will always be people who enjoy walking and shopping for a day through the shopping streets. But the type of shops in the street may change a bit.”
A version of this article also appeared in NRC on the morning of October 11, 2021
As one of the first real estate funds in Europe, the Dutch Wereldhave recently decided to sell shopping centres. Despite the improving economy, largely lifted corona restrictions and increased consumption, these are still turbulent times for operators of international retail property. Since the outbreak of the pandemic, there has been less shoppers and rental income has fallen due to corona discounts and vacancy. This naturally leads to a decrease in the value of shopping centers. The result: an increased debt ratio.
Wereldhave invests in medium-sized shopping centers in the Netherlands, Belgium and France. It owns 26, with a combined valuation of now 2.4 billion euros. This makes it one of the smaller players on the market.
It is in France where the small cap fund is now making an exodus. Of the six shopping centers there, it recently sold four, in Le Havre and Strasbourg, among others. That happened for a total of 305 million euros. Wereldhave had to take a considerable loss: the selling price was about 40 percent below the book value.
According to investment bank Degroof Petercam, the divestments will result in a loss of at least 14.5 million euros. This led to strong criticism from activist shareholders, who find the proceeds too low.
Most investors had anticipated the sale of the loss-making French branch, says real estate analyst Jaap Kuin of investment bank Van Lanschot Kempen. “But the relief soon gave way to uncertainty whether this was the right price,” he says. But because few real estate investors have sold property yet, according to Kuin, there is no proof whether Wereldhave’s selling price was good. „Investors see the pros and cons, and are therefore not yet sure whether the heavy discount really needed.”
The sale fits in with the new strategy that Wereldhave announced just before the outbreak of the corona virus. For this, the company wants to raise a billion euros from the sale of shopping centers. There is now 479 million euros inside.
At the same time, the ratio between debt and real estate value (loan-to-value) will be reduced from now 46.1 percent, to the target of less than 40 percent. That will make it cheaper to take out loans in the future.
Wereldhave wants to invest in the renovation of shopping centers with the money raised in France. It is aiming for a different type of tenant: fewer smaller retailers, more office owners, supermarkets and fitness centers. The real estate company wants to reduce its dependence on fashion stores, due to the increased popularity of online shopping. Kuin does have questions: “Whether the possessions lend themselves to it, given their location. And whether the value of the properties is affected positively or negatively, and whether you are still on time.”
Like other commercial property managers, Wereldhave is faced with structural changes. Except for missed or reduced rents as a result of the corona crisis, this concerns the steady increase in online shopping, which now has about 15 to 20 percent market share. This development has been accelerated by the pandemic.
“Positive for logistics real estate, of course negative for retail real estate,” says ING analyst Robert de Jong. He expects that more shopping centers will eventually turn into a combination of shops, catering, sports and entertainment, or else into logistics real estate. “This does not mean that the shopping street will disappear,” he says. “There will always be people who enjoy walking and shopping for a day through the shopping streets. But the type of shops in the street may change a bit.”
A version of this article also appeared in NRC on the morning of October 11, 2021
As one of the first real estate funds in Europe, the Dutch Wereldhave recently decided to sell shopping centres. Despite the improving economy, largely lifted corona restrictions and increased consumption, these are still turbulent times for operators of international retail property. Since the outbreak of the pandemic, there has been less shoppers and rental income has fallen due to corona discounts and vacancy. This naturally leads to a decrease in the value of shopping centers. The result: an increased debt ratio.
Wereldhave invests in medium-sized shopping centers in the Netherlands, Belgium and France. It owns 26, with a combined valuation of now 2.4 billion euros. This makes it one of the smaller players on the market.
It is in France where the small cap fund is now making an exodus. Of the six shopping centers there, it recently sold four, in Le Havre and Strasbourg, among others. That happened for a total of 305 million euros. Wereldhave had to take a considerable loss: the selling price was about 40 percent below the book value.
According to investment bank Degroof Petercam, the divestments will result in a loss of at least 14.5 million euros. This led to strong criticism from activist shareholders, who find the proceeds too low.
Most investors had anticipated the sale of the loss-making French branch, says real estate analyst Jaap Kuin of investment bank Van Lanschot Kempen. “But the relief soon gave way to uncertainty whether this was the right price,” he says. But because few real estate investors have sold property yet, according to Kuin, there is no proof whether Wereldhave’s selling price was good. „Investors see the pros and cons, and are therefore not yet sure whether the heavy discount really needed.”
The sale fits in with the new strategy that Wereldhave announced just before the outbreak of the corona virus. For this, the company wants to raise a billion euros from the sale of shopping centers. There is now 479 million euros inside.
At the same time, the ratio between debt and real estate value (loan-to-value) will be reduced from now 46.1 percent, to the target of less than 40 percent. That will make it cheaper to take out loans in the future.
Wereldhave wants to invest in the renovation of shopping centers with the money raised in France. It is aiming for a different type of tenant: fewer smaller retailers, more office owners, supermarkets and fitness centers. The real estate company wants to reduce its dependence on fashion stores, due to the increased popularity of online shopping. Kuin does have questions: “Whether the possessions lend themselves to it, given their location. And whether the value of the properties is affected positively or negatively, and whether you are still on time.”
Like other commercial property managers, Wereldhave is faced with structural changes. Except for missed or reduced rents as a result of the corona crisis, this concerns the steady increase in online shopping, which now has about 15 to 20 percent market share. This development has been accelerated by the pandemic.
“Positive for logistics real estate, of course negative for retail real estate,” says ING analyst Robert de Jong. He expects that more shopping centers will eventually turn into a combination of shops, catering, sports and entertainment, or else into logistics real estate. “This does not mean that the shopping street will disappear,” he says. “There will always be people who enjoy walking and shopping for a day through the shopping streets. But the type of shops in the street may change a bit.”
A version of this article also appeared in NRC on the morning of October 11, 2021
As one of the first real estate funds in Europe, the Dutch Wereldhave recently decided to sell shopping centres. Despite the improving economy, largely lifted corona restrictions and increased consumption, these are still turbulent times for operators of international retail property. Since the outbreak of the pandemic, there has been less shoppers and rental income has fallen due to corona discounts and vacancy. This naturally leads to a decrease in the value of shopping centers. The result: an increased debt ratio.
Wereldhave invests in medium-sized shopping centers in the Netherlands, Belgium and France. It owns 26, with a combined valuation of now 2.4 billion euros. This makes it one of the smaller players on the market.
It is in France where the small cap fund is now making an exodus. Of the six shopping centers there, it recently sold four, in Le Havre and Strasbourg, among others. That happened for a total of 305 million euros. Wereldhave had to take a considerable loss: the selling price was about 40 percent below the book value.
According to investment bank Degroof Petercam, the divestments will result in a loss of at least 14.5 million euros. This led to strong criticism from activist shareholders, who find the proceeds too low.
Most investors had anticipated the sale of the loss-making French branch, says real estate analyst Jaap Kuin of investment bank Van Lanschot Kempen. “But the relief soon gave way to uncertainty whether this was the right price,” he says. But because few real estate investors have sold property yet, according to Kuin, there is no proof whether Wereldhave’s selling price was good. „Investors see the pros and cons, and are therefore not yet sure whether the heavy discount really needed.”
The sale fits in with the new strategy that Wereldhave announced just before the outbreak of the corona virus. For this, the company wants to raise a billion euros from the sale of shopping centers. There is now 479 million euros inside.
At the same time, the ratio between debt and real estate value (loan-to-value) will be reduced from now 46.1 percent, to the target of less than 40 percent. That will make it cheaper to take out loans in the future.
Wereldhave wants to invest in the renovation of shopping centers with the money raised in France. It is aiming for a different type of tenant: fewer smaller retailers, more office owners, supermarkets and fitness centers. The real estate company wants to reduce its dependence on fashion stores, due to the increased popularity of online shopping. Kuin does have questions: “Whether the possessions lend themselves to it, given their location. And whether the value of the properties is affected positively or negatively, and whether you are still on time.”
Like other commercial property managers, Wereldhave is faced with structural changes. Except for missed or reduced rents as a result of the corona crisis, this concerns the steady increase in online shopping, which now has about 15 to 20 percent market share. This development has been accelerated by the pandemic.
“Positive for logistics real estate, of course negative for retail real estate,” says ING analyst Robert de Jong. He expects that more shopping centers will eventually turn into a combination of shops, catering, sports and entertainment, or else into logistics real estate. “This does not mean that the shopping street will disappear,” he says. “There will always be people who enjoy walking and shopping for a day through the shopping streets. But the type of shops in the street may change a bit.”
A version of this article also appeared in NRC on the morning of October 11, 2021