Activist investors at Unibail-Rodamco-Westfield, Europe’s biggest shopping centre owner, have blocked the company’s plans for a €3.5bn capital increase and won seats on its board after a bruising battle.

The heavily-indebted owner of high-end shopping centres such as London Westfield and Carrousel du Louvre in Paris said on Tuesday that final tallies for the vote on the highly dilutive capital raise would be available later, but that the required two-thirds of shareholder votes had not been achieved.

“The majority was in favour but not the two-thirds,” said chief executive Christophe Cuvillier on a call with reporters. “A new period will begin now with the activists joining the board. I hope that we can work together in a calm and constructive way.”

The activists, telecoms billionaire Xavier Niel and real estate investor Leon Bressler, who led Unibail himself for 14 years until 2006, will join at the next board meeting to be called in the coming days.

The battle at Unibail has been a potent reminder of how the pandemic has upended the commercial property market, causing some tenants to stop paying rent and others to seek lower rates. That left Unibail one of the most shorted stocks in Europe with nearly 30 per cent of shares out on loan to investors betting against the company, according to IHS Markit data on Bloomberg.

Defeat on the planned capital raise cuts out one key plank of Unibail’s €9bn plan to shore up its balance sheet announced in September, which also included selling €4bn in retail and office properties in Europe, a dividend cut and further cost cuts. 

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The moves were intended to cut the company’s €24bn debt load, much of which was incurred in 2018 when it bought Australian mall operator Westfield for $24.7bn to create what was at the time the world’s second-biggest mall owner by market value. 

Mr Cuvillier said the company would now look for other ways to cut its debt pile, such as additional asset sales.

The vote on the capital raise comes a day after US drugmaker Pfizer and Germany’s BioNTech reported early positive results from their Covid-19 vaccine trials, sending shares in Unibail up nearly 25 per cent.

Mr Cuvillier said that “the potential progress towards a vaccine may give us more options to do divestments since it improves sentiment to the real estate market”, while cautioning that it was too early to draw firm conclusions.

Via Financial Times