2H18 Results URW 2H18 gross rental income was €1.22 billion, up 33.7% year over year. Adjusted recurring earnings per stapled share (AREPS) were €6.34, up 7.6%. FY18 Results URW reported FY18 gross rental income of €2.2 billion, up 21.3% year over year. Net rental income was €1.8 billion, up 16.3%. EPRA (based on recommendations from the European Public Real Estate Association) recurring EPS were €13.15, up 9.1%. EPRA net asset value (NAV) per stapled share was €221.8, up 5.1%. AREPS were €12.92, exceeding guidance of €12.75-12.90 and up 7.2%. For the year, the company plans to pay a dividend of €10.80, flat with the prior year and representing 94% of the adjusted recurring result. Details from the Quarter Shopping centers in Continental Europe:

• Tenant sales through November increased 3.0% for the group and 3.8% for flagship centers, outperforming national sales indices 205 and 283 bps, respectively. France grew 3.4% and central Europe grew 8.2%, outperforming their respective indices.

Shopping Centers in the US and the UK

• In the U.S., specialty sales productivity per square foot (psf) increased 10.9% (12.0% for flagship stores) through December 31, 2018. Luxury sales increased a strong 15.2% psf. Occupancy was 95.6% as of December 31, 2018 (96.2% in flagships), stable year over year.
• Traffic in the U.K. increased 6.1% in 2018, driven by the opening of Westfield London Phase 2, outperforming the U.K. shopping center index by 930 bps. Total tenant sales in U.K. centers increased 2.8%. Occupancy was 95.2%, down from 97.7% as of June 30, 2018, due to the re-location of tenants from Westfield London Phase 1 to the Phase 2 extension.

Offices Available supply in the Paris region declined to 2.9 million sq. m., the lowest since 2008, while take-up remained at the high level of at 2.5 million sq. m. The vacancy rate in the Paris region decreased from 6.5% in 2017 to 5.5%. Convention and Exhibition Recurring NOI in 2018 benefited from the tri-annual INTERMAT show (for the construction industry), partly offset by the closure of the Pullman Montparnasse hotel in Paris for renovation. Excluding these events, recurring NOI increased 13.3% versus 2017. Development Pipeline The expected cost of the development pipeline amounted to €11.9 billion, down from €13.0 billion at the end of 2017. Committed projects total €2.9 billion, of which €1.4 billion has already been invested. The retail pipeline is split between greenfield and brownfield projects at 53% (all in Europe), and extensions and renovations at 47%, in both Europe and North America. Management characterized progress on the construction of the Trinity and Shift as significant and scheduled to be delivered in 2H19, with the extension of Westfield Valley Fair in 2H19 and Westfield Mall in the Netherlands in 1H20. Outlook The company’s strategic objectives over the next two years include the following:

• Reduce leverage.
• Review development projects to optimize the use of capital and returns.
• Join with strategic partners on selected development projects.
• Continue to integrate the continental European, U.S. and U.K. platforms.
• Roll out the Westfield brand in continental Europe.
• Improve the cost base and realize synergies.

The five-year plan includes two distinct periods:

• A capital-consolidation phase with solid underlying growth, including most of the planned disposals.
• Following the disposals, a period of renewed growth in AREPS.

The €2 billion of disposals made in 2018 plus those planned for 2019 are expected to raise average portfolio quality and reduce leverage, however, they are expected to hurt 2019 AREPS by €0.90. In addition, the payment for the Westfield transaction is expected to exceed its contribution. Other factors expected to hurt earnings in 2019 include:

• Project delays, which in turn delay income.
• The current operating environment in the U.S. and U.K.
• Higher net financial expenses than previously anticipated.

For 2019, the company guided for AREPS of €11.80–€12.00, representing growth of 4%–5%. In 2019-2023, the company expects AREPS to grow at a CAGR of 5%–7%. Future dividends are expected to grow at the same rate as AREPS.