Listed REITs Essential to Economic Growth in Europe

11/23/2010 | By Matt Bechard
Speaking at REITWorld 2010: NAREIT's Annual Convention For All Things REIT in New York, Guillaume Poitrinal, chairman and chief executive officer of Unibail-Rodamco, provided his outlook for the European commercial property market. Unibail-Rodamco is the leading listed European commercial property operator, investor and developer. In addition, Poitrinal is chairman of the European Public Real Estate Association (EPRA).

Unibail-Rodamco is active in three major business lines: shopping centers, offices and convention-exhibition-centers. Two-thirds of the company's focus is on shopping centers in major continental European cities. The focus of its office operations is in Paris.

"In all of these segments we are a developer and investor and an operator of the assets," Poitrinal said. "The outlook is quite favorable in so far as there is still a scarcity of large shopping malls in continental Europe."

Poitrinal said the key is turning the company's malls into outstanding places to shop, in part by re-tenanting, refurbishing and re-marketing.

In terms of asset sales and dispositions, Unibail-Rodamco will continue to be aggressive on both fronts, Poitrinal said.

"Every year we benchmark our assets and assets which cannot provide superior returns in terms of internal rates of return will be disposed of," Poitrinal said. "At the same time, we reinvest into fully finished buildings and are a very strong developer." He added that the company has a 6 billion euro pipeline for developing new facilities.

Poitrinal said because the company operates close to 100 assets, he said the portfolio is still small and manageable and there is ample room for growth throughout Europe.

"The business rationale behind that is proximity," he said. "We know everything that happens in one of our properties."

As a result, he does not envision a need for the company to expand into other countries outside of Europe.

"As long as we have opportunities next door why should we go overseas and have the risk attached to the fact that you don't know those markets as well in the end," Poitrinal said.

In an interview last year in Property Week, Poitrinal said investors buy into listed property companies because they believe management will provide superior returns and have the best ideas. Since then, he said he has only become a bigger fan of the REIT approach to real estate investment.

"(REIT) investors are responsible. They are accountable for whatever they do," he said, referring to the transparency that exists in the public market. "Looking at the future, I hope that we will have more listed real estate companies on all the stock exchanges in Europe. I hope the governments and European Commission will understand the importance of having a strong quoted sector for real estate."

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