Intu reports £1bn loss as portfolio value plummets

The retail business, which operates the Trafford Centre among a 20-strong estate, has reported a loss of £1.1bn after a torrid year for retail saw the value of its portfolio written down from from £10.5bn to £9.2bn.

Intu reported a £203.3m profit in 2017. Although the company’s share price dipped in early trading, the news comes as no surprise to a sector undergoing a series of blows as department store anchors and smaller format multiples alike struggle.

The company’s performance it itself has been far from disastrous, with like-for-like rental growth of 0.6% and only a small reduction in occupancy, from 97% to 96.7%. However, rental income as a whole dropped from £460m to £450.5m. Intu’s debt to assets ratio climbed over the 50% mark, rising from 45.2% to 53.3%. NAV per share has fallen from 411p to 312p per share.

North West powerhouse Peel, which along with its Saudi partner Olayan holds a 29.9% stake in Intu, launched a full takeover bid for the business last year, pulling the bid in November due to “uncertainty over macro-economic conditions”. Hammerson had also lodged a bid earlier in 2018.

In October, Intu announced its intention to promote development around its centres, with up to 470 acres potentially being released for residential and hotel development, a project that remains part of its plan.

Chairman John Strachan said: “intu has had a challenging year with a difficult retail and uncertain economic environment, together with responding to two abortive corporate offers for the company. However, our management team has produced a robust operational performance with increased like-for-like net rental income for the fourth consecutive year, 97 per cent occupancy and signed 248 new long-term leases.

“Our three core objectives for the year ahead are to continue to deliver strong underlying individual centre performance, continue our strategy of adapting to the changing retail environment and to make smart use of capital.

“We propose to reduce our debt to assets ratio over time back below 50 per cent by further disposals and part-disposals and retaining the cash generated by our activities rather than distributing it as dividend, to enable us to invest in our winning destinations.”

Intu’s portfolio comprises 17 retail centres in the UK and three in Spain, with other trophy assets including Lakeside and Gateshead’s Metrocentre. The business, which also co-operates Manchester Arndale with M&G, has eight of the top 20 performing shopping centres in the UK, accounting for 76% of intu’s portfolio by value.

David Fischel, intu chief executive, said: “intu has again delivered a resilient operational performance which demonstrates how our centres differentiate themselves as winning destinations. We own and manage many of the best shopping centres, in some of the strongest locations.

“Although sentiment in the retail sector is at an all-time low, the reality is that around 400m shoppers visit our centres each year. As some 85% of all retail transactions still touch a physical store, demand from major retailers continues to be positive.

“New tenants to our centres include Abercrombie & Fitch, Uniqlo, Bershka, and Monki, with established retailers such as Next, Primark, Zara and River Island all upsizing. Our tenants invested a record £144m in their stores over the year, a clear indication that these retailers see great physical space as a key part of a successful multichannel strategy.”

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