In a rare rights issue rejection for a company on France's blue-chip index, the shareholder vote fell narrowly short of the two-thirds majority required to pass the resolution, with 62% in favour of the capital increase.
The stock soared 25% in early afternoon trading at the top of France's CAC 40 and Europe's STOXX 600, after losing about 60% of their value since January as the retail sector has taken a hammering from the coronavirus crisis.
The plan had met with intense opposition from a consortium led by French billionaire Xavier Niel and former Unibail CEO Leon Bressler, who have campaigned for Europe's biggest property owner to step up asset sales including some of the U.S. shopping centres it took on with its 2017 purchase of Westfield.
They blame Unibail's heavy debt on the Westfield acquisition, arguing that the group could meet its short-term debt obligations without a rights issue that they say would destroy the company's share value.
Chief Executive Christophe Cuvillier told reporters that the group would need to study "all possible alternatives" to strengthen its financial structure, adding that a possible coronavirus vaccine did not change the need to shore up the balance sheet.
Jefferies analysts suggested that alternatives could include Niel and Bressler's plan to sell of U.S. real estate, though finding buyers could take time.
"There is no liquidity problem for URW today or tomorrow," said Leon Bressler on a conference call, adding that the group needed time to reflect on how to tackle its long-term debt problems.
Niel said the consortium had continued to buy a small number of shares since disclosing a 5% stake in October.
Shareholders also approved three supervisory board appointments put forward by the rebel consortium - namely Niel, Bressler and Catalan businesswoman Susana Gallardo.
Both management and the new appointees said they intended to work together and expect the new supervisory board to meet within the next few days.
Niel and Bressler said they would pursue their strategy of refocusing on Europe, while Cuvillier said he still plans to implement the other aspects of Unibail's broader recovery plan.
(Reporting by Sarah Morland in Gdansk; Editing by Keith Weir, Louise Heavens and David Goodman)
By Sarah Morland