Unibail-Rodamco-Westfield, a major player in the shopping center industry, has recently made the difficult choice to reduce its dividend payments in response to the uncertain effects of the Covid-19 pandemic. The company’s operations have been severely restrained due to the implementation of restrictions in various markets, including France, Germany, the US, and the UK.
Initially, Unibail-Rodamco-Westfield had planned to distribute a dividend of €10.80 per share, reflecting its strong performance in the previous year. However, the rapidly evolving global crisis has compelled the company to reconsider its proposal. Instead, it will now distribute an interim cash dividend of €5.40 per share on March 26, fulfilling its obligations as a Real Estate Investment Trust (REIT). This decision aims to safeguard the company’s liquidity position, resulting in the cancellation of the final dividend of €5.40.
The company has expressed its intention to provide updated guidance once it has gained a better understanding of the duration, severity, and consequences of the current situation. With a cash reserve of €10.2 billion and access to unutilized credit lines, Unibail-Rodamco-Westfield is well-prepared to meet all anticipated funding requirements, even in the worst-case scenario.
In order to further fortify its resilience, the shopping center operator has implemented cost reduction measures for non-staff expenses and non-essential capital expenditure. This strategic move ensures that the company is equipped to face the challenges that lie ahead.
The retail sector, like many industries, has been deeply impacted by the Covid-19 pandemic, and Unibail-Rodamco-Westfield’s decision to decrease its dividend reflects the uncertainty and difficulties faced by the industry during these unprecedented times. As the situation continues to evolve, it becomes increasingly crucial for businesses to adapt and make tough choices in order to overcome the obstacles presented by this global crisis.