Unibail to Raise Dividend 25% After Earnings Increase

Unibail (UL) Holding SA, France's largest real estate investment trust, increased its 2006 dividend by 25 percent, less than expected, after earnings increased 55 percent. Unibail shares closed at a record in Paris.

Unibail investors will receive a dividend of 2 euros a share in addition to the three 1-euro payments paid or already scheduled for 2006, the Paris-based company said today in a statement. The total 5-euro payout compares with the 4 euros in dividends paid to shareholders a year earlier.

Chief Executive Officer Guillaume Poitrinal indicated last year he would pay shareholders a special dividend if he didn't make any acquisitions, helping lift Unibail shares 59 percent in the past 12 months. Lehman Brothers analyst Bart Gysens was among those who had expected Unibail to make a special dividend payment of about 30 euros.

``We wanted to increase the regular dividend and still look for development opportunities,'' Poitrinal said in a telephone interview. Earnings per share will increase an average 10 percent annually over the next four years, he said.

Offices, Malls

Poitrinal is investing about 3.5 billion euros ($4.7 billion) in developing 850,000 square meters (9.15 million square feet) of space in offices and shopping malls, which he expects will generate 320 million euros in rental income.

Since July, when he raised the possibility of a special dividend, Poitrinal has committed an additional 1.7 billion euros to development projects. These include a skyscraper in Paris's La Defense business district that will become the tallest office building in the French capital. It will also open six malls around France.

``We had two choices and now we're concentrating on development,'' he said.

Unibail shares closed 1.6 euros higher, or 0.8 percent, to a record 195.1 in Paris. That lifted the value of the company to almost 9 billion euros.

Net income last year climbed to 2.14 billion euros, or 6.81 euros a share, from 1.39 billion euros, or 5.81 euros, in 2005. The median earnings estimate of 14 analysts surveyed by Bloomberg was 6.68 euros a share.

Net asset value, a key gauge for investors of a real estate company's performance, rose 21 percent from June 30 to 140.6 euros per share. Net recurring profit, which removes the effect of valuation gains, rose 18 percent last year to 313 million euros, Unibail said.

For 2007, Unibail will make three 1.25-euro dividend payments in October, January 2008 and April 2008.

Pickup in Demand?

Unibail has sold properties that are fully occupied and has 60,000 square meters of vacant office space for lease or up for lease renewal this year in anticipation that a pickup in demand will end four years of declining rents.

France's jobless rate declined in December to 8.6 percent, the lowest since June 2001, as faster growth has ensured the economy is adding jobs at its fastest pace in five years.

Vacancy rates for Unibail's offices, most of which are in or near Paris, dropped to 14 percent from 20 percent at the end of the first half.

For the company's shopping malls, Poitrinal predicts that rental income will increase as the company adds more space through new openings and extensions to existing outlets.

Rental income after expenses advanced 2.8 percent to 413 million euros, while valuation gains and profits from the sale of properties jumped almost 41 percent from a year earlier to 1.8 billion euros.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

To contact the editor responsible for this story: Rob Urban at robprag@bloomberg.net.

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