Key Morningstar Metrics for Unibail-Rodamco-Westfield
- : EUR 104Fair Value Estimate
- : ★★★Morningstar Rating
- : NoneMorningstar Economic Moat Rating
- : LowMorningstar Uncertainty Rating
We’re initiating coverage of Unibail-Rodamco-Westfield URW, the shopping center REIT.
The bottom line: Our fair value estimate for URW is EUR 104 per share. At current levels, we believe investors are fairly pricing URW’s transition from a period of balance sheet repair to one of growth and distribution.
- URW had to dispose of around EUR 8.0 billion in assets to shore up its balance sheet following the 2018 Westfield acquisition.
Big picture: Physical retail faces ongoing structural disruption from e-commerce, especially traditional anchors and fashion brands. However, there have been very few new mall developments in Europe and the US over the past decade, which has created a supply-constrained dynamic.
- This has benefited high-quality incumbent retail destinations, which boast record high occupancy levels, as retailers rationalize their portfolios and concentrate on the limited number of flagship locations available.
- A few malls might individually earn an economic moat (such as Forum des Halles), but at the group level, URW’s ability to earn durable excess returns is undermined by structural retail disruption and heavy reinvestment needs.
