* Net rental income up 2.5 percent in first half
* Tenants' sales up 3.6 pct on stronger economy
* Net asset value down 2 pct, loan to value at 40 pct (Adds CEO quotes, details background)
By Leigh Thomas
PARIS, July 23 Unibail Rodamco SE, Europe's biggest real estate company, has confirmed its 2014 earnings forecast as a nascent economic recovery boosts tenants' sales at its shopping malls.
The Franco-Dutch shopping centre operator said on Wednesday it was on track to meet its target of recurring earnings per share growth of at least 5.5 percent for this year, after recurring EPS grew 6 percent in the first half to 5.52 euros.
Net rental income rose 2.5 percent on a like-for-like basis in the first half to 719 million euros ($967.9 million), driven by growth at large malls.
Unibail is refocusing its portfolio on big urban shopping centres that have better weathered the weak retail climate in Europe than smaller assets, which the company has been selling.
With the economy in the euro zone gradually improving, shoppers increased their spending in Unibail's malls, with tenants' sales up 3.6 percent through May, the company said.
"Does that mean the economy is getting better? There are some signs and the outlook we have for 2014 and beyond are rather more positive than what they were for 2013," Chief Executive Christophe Cuvillier said.
Retailers from outside the euro zone are increasingly looking to the bloc as they make expansion plans, Cuvillier told journalists on a conference call. "We spend a lot of time explaining to retailers that the economy is not too bad," he said.
The company is trying to generate more growth by attracting premium brands such as Michael Kors and Apple, or fast-growing discount fashion retailer Primark, part of Associated British Foods.
Drawing in strong brands with growing sales is important because it helps lift rental income above indexes linked to retailers sales, construction costs and inflation, which is particularly low in the euro zone.
With an average cost of debt at a record low 2.7 percent, the company issued 2.9 billion euros in debt in the first half, extending average maturities out to nearly six years.
That left the group with a loan-to-value ratio, a common measure of leverage at property companies, of 40 percent. Meanwhile, Unibail's net asset value fell 2.0 percent in the first half to 143.30 euros per share. ($1 = 0.7429 Euros) (Editing by Astrid Wendlandt and David Holmes)