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Why the Unibail (ASX:URW) share price gained 5% today

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The Unibail Rodamco Westfield (ASX:URW) share price closed up 4.69% today, after being up more than 6% in late afternoon trading. This follows today’s announcement on the company’s contested plan for a 3.5 billion-euro (AU$5.8 billion) capital raising.

It’s been a difficult year for Unibail. Its portfolio of retail and office complexes has suffered from the lockdowns and social distancing put into place to slow the spread of COVID-19.

After trading at $11.25 per share on 7 January, its been mostly downhill for the Unibail share price, which closed at $2.90 per share today. That represents a year-to-date loss of 74%.

What does Unibail Rodamco Westfield do?

Unibail is one of Europe’s largest commercial real estate companies, owning a portfolio of quality retail and office complexes. It has assets in Europe, the United Kingdom and the United States.

Unibail acquired Australian shopping centre operator Westfield Corporation, created by the split of Westfield Group, in 2018. This saw Unibail shares first listing on the ASX. The company makes up part of the S&P/ASX 200 Index (ASX: XJO).

What sent the Unibail share price higher?

In an announcement released to the ASX this morning, Unibail revealed that independent proxy advisory firm ISS has recommended Unibail shareholders vote to support its 3.5 billion euro capital raising. The vote will take place on 10 November at the company’s extraordinary general meeting.

The fully underwritten capital raising is part of the company’s broader 9 billion euro ‘reset plan‘, announced on 17 September. Unibail intends to immediately deploy the money from the capital raise to pay down its debt obligations.

Much of the reset plan – which includes 4 billion euros worth of asset disposals – was largely uncontested. However, the capital raising met with strong opposition from activist investors, led by French telco billionaire Xavier Niel, who together own 4.1% of Unibail’s shares.

Following the ISS support for the capital raising, Unibail reiterated today that it was “an essential element of the group’s RESET plan”. The company said it provided an “immediate solution to strengthen the group’s balance sheet in a volatile and uncertain environment, while preserving the group’s flexibility for the future”.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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