Intu profits buoyed by value of Manchester centres
The combined value of the Trafford and Arndale Centres increased by £55m in the first six months of this year, helping owner Intu Properties to increase profits in spite of a fall in rental income.
Intu Properties' interim report for the half-year ended 30 June reveals that the two Manchester shopping centres were among properties that appreciated in value significantly during the period, increasing the net value of its portfolio from £3bn to £3.4bn.
The Trafford Centre, which is now worth £47m more – or 2.6% – than it was at the start of the year, has "benefited from national evidence of stronger yields for the most prime assets as well as significant progress on renewing leases expiring in 2013", Intu said.
Manchester Arndale, which increased in value by £8m – or 2.1% – benefited from "national evidence of stronger yields".
Net rental income across the Intu estate was slightly down on the same period in 2012, falling from £182m to £181m.
The profit for the period increased from £78m to £200m, mainly due to "valuation items".
Intu is paying an interim dividend of 5p a share.
Intu said occupancy "remains firm" at 95% in spite of a fall from 96% occupancy as of 31 December 2012, with "the small reduction since the year end… the result of the expiry of seasonal lettings and tenant administrations".
Units amounting to 1% of rent across the Intu portfolio are currently being traded by administrators.
Intu, formerly called Capital Shopping Centres, said it was pleased with the progress of its rebranding exercise and had worked hard to mitigate the impact of a tough retail environment.
The company said: "We are delighted with the immediate impact of our bold decision to rebrand the company and centres as Intu.
"The initiative is driving significant cultural change throughout the organisation and customers are already experiencing our refreshing new style in the centres.
"The retail environment in the UK has continued to be testing, with earnings affected by failures in the last eighteen months of tenants representing annual rent of £35m (2013 to date – £13m).
"However, favorable letting activity, particularly at our larger centres, has limited the impact to a 2.9% reduction in like-for-like net rental income which was the main factor in the reduction in underlying earnings per share from 8.1p to 7.4p in the first half."
Intu also announced that the Manchester Arndale is among the locations which has let space to The White Company.
A £30m plan to add an additional 112,000 sq ft of retail space at the Trafford Centre's Barton Square development is on schedule to be completed during 2015.
The investment will further develop the courtyard enclosure and second floor retail offering in Barton Square.