UPDATE 1-Unibail-Rodamco keeps 2014 earnings growth target
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PARIS, April 22 (Reuters) - European real estate group Unibail-Rodamco confirmed its target for full-year recurring earnings per share growth of at least 5.5 percent on Tuesday after a "moderate pick-up" in the European economy helped drive first-quarter turnover higher.
Unibail is refocusing its portfolio on its biggest urban shopping centres where it can increase rents while selling off smaller assets that it sees as more vulnerable to consumer belt-tightening.
Quarterly revenue grew 7.7 percent to 463 million euros ($638.8 million), Unibail said in a statement. Gross rental income rose to 417 million from 383.7 million a year earlier, driven by "active leasing, deliveries of new shopping centres and renovations in France".
The first quarter "was characterized by a moderate pick-up in the European economy despite a decreasing inflation and continued high levels of unemployment," Unibail said.
Sluggish economic growth dents demand from retailers, creating the risk of lower occupancy rates and preventing property owners from increasing rents.
The year-on-year inflation rate in the 18 countries sharing the euro was 0.5 percent in March, suggesting limited room for the property group to boost revenue by raising rental prices.
Unibail said in February it expected recurring earnings per share to grow between 5 and 7 percent in the next five years, a cut from the 8 percent guidance given in early 2013 on the back of a new disposal programme and lower indexation expectations.
Indexation refers to regular reviews of minimum guaranteed rents, which are specific to each country and take into account volatility in consumer prices, retail trade sales value and cost of building construction.
Large shopping centres, which also serve as leisure destinations, have managed to weather the weak retailing climate better than others.
Unibail said revenue from tenants in its shopping centres rose 2.7 percent year-on-year in the first quarter of 2014, 3.5 percentage points higher than the national average.
The group plans to dispose of 1.5 billion to 2.0 billion euros of non-core shopping centre assets during the next five years.
Unibail plans to invest up to 535 million euros this year in a shopping mall in Germany with 25 million visitors per year. In Paris, it plans to deliver the Majunga office tower in the La Defense business district, extend and renovate the Forum des Halles shopping centre, and refurbish the Ancelle office building. ($1 = 0.7248 Euros) (Reporting by Maya Nikolaeva; Editing by James Regan)
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