Message from the Chairman of the Supervisory Board

The Group had another excellent year.

Our solid operational performance led to Adjusted Recurring Earnings Per Share of €12.37 that exceeded the 2019 guidance increased in July. At the same time, the Group continued its long-term policy of divestment of stable non-core assets, and investment in the development of our flagship centres, with significant growth potential.

The Group’s strategic development continued, with the ongoing integration of Westfield US and UK into URW. This has proceeded successfully, and according to the Management’s carefully prepared plan. The Supervisory Board continues to be impressed with the achievements in terms of cost and revenue synergies, and of our organisation and process alignment. In particular, we see clear progress in bringing the rigorous URW operating management approach to our US assets.

Westfield’s platform has expanded our market reach, and we are in an unique position to cross-fertilise new ideas and new retail concepts between the US and Europe. By December 31, 2019, the Group had captured €87.9 Mn of cost synergies, as well as the first €11.1 Mn of revenue synergies, through its Commercial Partnerships and International Leasing operations. This enhances Unibail-Rodamco-Westfield’s competitive edge in an environment where retail markets and our retail partners are working to adapt their business models to significant changes in consumer preferences.

The Supervisory Board and Management Board have been in constant dialogue with shareholders. Both are cognizant of shareholder concerns about leverage and have actively worked to address this point through increased disposals and reduced development pipeline to accelerate deleveraging.

We have expanded our programme of non-core asset sales to €6 Bn. €4.8 Bn have already been executed or signed in line with, or above, book values, including Majunga and Jumbo, and the sale of a portfolio of five French retail centres to a newly formed JV, which will complete in 2020. We also announced a further €2.5 Bn of disposals to be completed over the next few years.

The Group retains significant future growth prospects from existing flagship assets, and from the opportunities in our development pipeline. Although the latter has been scaled back to €8.3 Bn in the course of the year, to reflect cost developments and revenue prospects in our markets, the Group firmly believes there is significant value to be generated through its pipeline, especially in standing assets and the mixed-use development opportunities around them. These projects are on long timelines, which we can largely control to match our balance sheet strategy, and are spread across the best markets in two continents. In 2019 we delivered the Westfield Vélizy 2 leisure extension, the Westfield Parly 2 Cinema, Palisade at Westfield UTC (residential) and the Westfield Oakridge transformation. They will be enhancing our revenues from 2020, and we look forward to the openings of the extensions of Westfield Valley Fair and La Part-Dieu, as well as of the Westfield Mall of the Netherlands redevelopment, which will be delivering revenue growth from 2021.

The Supervisory Board would like to pay tribute to the exceptional work of our management teams on both sides of the Atlantic, as they successfully combine our legacy operations. At the same time they are executing market-leading work to adapt the mix of the offer in our shopping centres to match the changing needs of the consumer experience.

Meanwhile our critical long term sustainability agenda continued to advance.

“Better Places 2030” progress has been solid in the former Unibail-Rodamco assets, and our CSR programme has been rolled out in the US and the UK. We also improved our performance against the ISS-Oekom ESG index as a key measure in senior management long-term incentive compensation.

The Group’s digital agenda has also moved forward successfully, with 9.8 million consumers now registered into the Unibail-Rodamco-Westfield loyalty programmes, with whom we can communicate directly.

The long-term effectiveness of our management is being enhanced with our mobility policy, which encourages international transfers to build experience and share knowledge. This has already resulted in 67 employees benefitting from cross-border relocations in 2019.

On behalf of our Supervisory Board colleagues, I would like to warmly thank Mary Harris for her 12 years of service on the Supervisory Board of Unibail-Rodamco-Westfield and as a member, then Chair of the Remuneration Committee. She will be stepping down at the Annual General Meeting on May 15, 2020.

The Supervisory Board continues its commitment to strong corporate governance and oversight practices, with extensive and proactive consultation with shareholders. As part of this ongoing dialogue, shareholders are offered the opportunity to exchange views with myself or the Vice-Chairman as well as the Remuneration Committee Chair. The feedback from these meetings is shared with the Supervisory Board to better understand the questions and points of interests raised by shareholders, and to encourage informed dialogue.

Finally, I will thank our staff, customers, partners and shareholders for their continued engagement with Unibail-Rodamco-Westfield. We intend to ensure that the company continues to earn your loyalty in the coming year through its commitment to operational excellence, financial performance and successful business development.