Intu pleased with rental progress, though Brexit risk looms

Shopping centre investor and operator Intu Properties posted a trading update for the period from 1 January to date on Wednesday, in preparation for the company’s annual general meeting, reporting continued active retailer demand with 42 long term leases agreed during the period.

The London-listed firm said 36 of those were in the UK and six were in Spain, for a total of £6m of annual rent - 5% above previous passing rent and in line with valuer assumptions.

Occupancy was 95.8%, marginally above 95.3% in March last year but reduced from 96.0% at 31 December 2016, which the board said reflected seasonal fluctuations since Christmas.

Year-on-year footfall to date was unchanged and continued to outperform the UK ShopperTrak benchmark, which was down by 2.5 per cent.

Intu left guidance for growth unchanged in like-for-like net rental income for the year in the range of 0%-2%.

“As previously stated, this is expected to be down in the first half, against the strong 2016 comparative, and up in the second half year and takes account of the impact of up to 2% from units being held for redevelopment and the full year impact of BHS closures,” Intu’s board explained in the update.

“The precise outcome will be particularly dependent on the timing of letting some of the larger units currently under active discussions.”

The company said the intu Lakeside leisure extension was on track with around 90% of lettings either exchanged or in solicitors’ hands, and it shortly expected to commit to the project .

Continued progress was also made on “digital initiatives”, including adding augmented reality technology to the firm’s in-centre app.

It completed the acquisition of Madrid Xanadú for €530m during the period, and was currently well advanced in discussions with a potential joint venture partner.

On site redevelopment of a previously underutilised space at intu Asturias was also progressing, and new lettings in Intu’s Spanish centres were ahead of previous rents.

Cash and available facilities stood at £694m with a debt-to-asset ratio of 46% at 31 March, which would reduce by 1% once the company introduced a partner to Madrid Xanadú.

“We have attracted a number of well-known international brands such as Hugo Boss, Guess, Tesla and Tag Heuer,” said Intu chief executive David Fischel on the company’s rental progress.

“Although retailers are being selective with their expansion plans, they are prioritising expansion to prime established locations with strong footfall. intu as the UK market leader with 17 prime centres is well positioned to take advantage of this demand.”

Fischel said the environment for business in the current year was likely to be challenging with considerable uncertainty regarding the UK’s EU exit.

“However, it is our intention to deliver continuing growth in like-for-like net rental income.”