Intu well placed in squeeze on retail space

Intu Properties reported like-for-like rental growth in the past year as it enjoyed rising demand and limited supply in the prime regional shopping centre market.

Intu owns the Trafford Centre owner and 48% of the Arndale Centre in Manchester, alongside M&G Real Estate.

Net rental income in the year to the end of December 2015 was £428m, up from £397m in 2014. The group portfolio of 21 centres was valued at £9.6bn, compared to just under £9bn in 2014. The occupancy rate was 96%. By far the largest asset was again the Trafford Centre, valued at £2.3bn, up 5% in 12 months. The Arndale was valued at £445m, a rise of 3%.

David Fischel, chief executive of Intu Properties, said: “We are pleased to report a strong set of results for 2015 with a 7% increase in underlying earnings per share and a 4% revaluation surplus taking investment properties to £9.6bn. Particularly encouraging was the return to like-for-like growth in net rental income, the result of quality lettings in aggregate 10 per cent ahead of previous passing rent, improved occupancy at 96% and benefits from our investment programme with projects successfully concluded in 2015 in Nottingham, Newcastle and Stoke-on-Trent.

“As economic recovery spreads out from London and the south east to the regions, consumer confidence is positive, driving improved retailer demand for space in our centres at a time when new supply of quality retail space is very limited. Investor interest for prime regional shopping centres remains keen.

“These factors provide a favourable background for our development programme as we look to introduce the next level of leisure concepts. We expect to undertake around £600m of mixed retail and leisure projects in the next three years in the UK, in particular the intu Watford extension, and commence our major Spanish shopping resort development, intu Costa del Sol.”

Shares in Intu were up 5p to 287p.