Intu tries to diversify as portfolio value drops

In its latest trading statement, Intu said it was exploring the release of 470 acres of land around its out-of-town shopping centres, one of the largest of which is Manchester’s Trafford Centre, for mixed-use developments including 5,000 homes and 600 hotel bedrooms.

The update highlighted that in the last few months, the value of Intu’s portfolio had dropped by £298m after a revaluation, to £9.58bn, which Intu attributed to the uncertainty in the retail market.

The last few weeks have seen a consortium led by Peel chairman John Whittaker considering a £2.9bn bid to buy Intu. Whittaker is also deputy chairman of Intu following the company’s acquisition of the Trafford Centre in 2010. The potential takeover is the second this year; a £3bn deal with Hammerson fell through in January.

In the statement, Intu said: “Intu has extensive, available land. Our six major out of town centres comprise some 760-acres of land of which less than 40% has buildings, multi-storey car parks or distribution roads upon it, leaving 470-acres of surface car parks and other potentially developable land. The city centre locations also offer opportunities for intensification of uses.”

According to Intu, the potential for 5,000 residential units and hotels totalling 600 bedrooms have been identified.

Up to 1,700 PRS units could be delivered first, with the company aiming for a yield of around 5% on total development costs, excluding land, of £240m.

The update also outlined plans for site disposals: “We have identified 34 sites or buildings across the portfolio with negligible income which are valued at a total of around £65m. The list, for example, includes a city centre site, which was valued at £3m at 30 June 2018 and is currently under offer at a sale price of £7m, showing the substantial potential value within these sites.”

Within the same period, Intu started the building contract for the £72m works at Barton Square within the Trafford Centre, which will be anchored by Primark. According to Intu, pre-lets stand at 65%, with a further 11% in advanced negotiations. The project is expected to be completed in early 2020.