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Jul 27, 2017
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Intu cuts full year guidance but CEO remains upbeat

Published
Jul 27, 2017

British shopping centre owner Intu is expecting to see no growth in like-for-like rental income this year after revealing a decline in its key revenue measure in the first six months amid a challenging retail environment.


Intu acquired Xanadú Madrid in March this year - Xanadú Madrid


The owner of prime shopping centres like Intu Trafford Centre, Intu Lakeside and Intu Merry Hill, said on Thursday that like-for-like net rental income decreased by 1.5% in the first six months of 2016, against a strong comparative of 7.5% for the first half of last year.

It signed 103 long-term leases at its UK and Spanish malls, delivering £18 million of annual rent at an average of 7% above previous passing rent. New tenants included Next, River Island, Hugo Boss, Gant, Paul Smith, Victoria’s Secret and Tesla.

Footfall at UK shopping centres dropped by 0.5%, compared to a 1.3% increase in the prior year’s period, but the fall was better than then national ShopperTrak retail average of 2.7% for the period. Estimated retailer sales were down 2.1% in the period. 

The company said its guidance for full year like-for-like net rental income is around 0%, at the bottom end of the previously announced range of 0-2%. Despite this, Intu chief executive David Fischel sent a message of strength and resilience to investors.

"Intu has performed robustly over the six month period in a UK retail environment which continues to be challenging. Retail brands are being selective in their expansion, looking at established locations such as our 17 prime shopping centres which are attracting high footfall through their differentiated offering and compelling customer experience,” he said in a press release.

He talked about “the resilience of the tenant market in our centres,” shown by the new lettings and upsizes, and highlighted the maintained high occupancy. Occupancy is 95.9% in the UK and 98% in Spanish malls.


Intu Watford's extension will add an additional 400,000 sq ft of retail space - Intu


The company is currently working on a £180 million extension at Intu Watford, scheduled to be completed by Autumn 2018. It will also start shortly work on the £71 million Intu Lakeside leisure extension which is over 90% let to tenants such as Nickelodeon, Hollywood Bowl and multiple restaurants.

During the first half of the year, Intu acquired d Madrid Xanadú, one of Spain’s top 10 shopping centres for f €530 million and announced formation of a joint venture with TH Real Estate for them to take ownership of 50%.

“We have a clear strategy to deliver long-term value to shareholders and, with cash and available facilities amounting to £920 million, we have significant flexibility to pursue opportunities as they arise in the UK and Spain," said Fischel.

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