Intu has grand plans for its as­sets in Spain

The Star Early Edition - - COMPANIES - Roy Cokayne

LISTED intu Prop­er­ties ex­pects to com­mence con­struc­tion on its £470 mil­lion (R7.98 bil­lion) intu Costa del Sol shop­ping re­sort near Malaga in Spain, one of its largest ever de­vel­op­ments, in the sec­ond half of next year.

This de­vel­op­ment forms part of intu Prop­er­ties’ £514m near-term de­vel­op­ment pipe­line to 2020 in Spain.

Its equiv­a­lent UK de­vel­op­ment pipe­line amounts to £679m, but it has a fur­ther £1.3bn of op­por­tu­ni­ties over the next 10 years in the UK that will com­ple­ment the com­pany’s to­tal cur­rent prop­erty port­fo­lio of £10bn.

The to­tal cost of the planned 230 000m² intu Costa del Sol shop­ping re­sort is ex­pected to be about 750m, which in­cludes the 82m al­ready in­curred by intu Prop­er­ties.

David Fis­chel, the chief ex­ec­u­tive of intu Prop­er­ties, said yes­ter­day that the com­mence­ment of the Costa del Sol project had been de­layed by var­i­ous re­quired third party ap­provals, in­clud­ing fi­nal plan­ning ap­proval.

“But it’s not wasted time, be­cause it gives you more time to re­fine the de­sign and talk to po­ten­tial ten­ants about com­ing in. It’s ir­ri­tat­ing (the de­lays), but in­evitable with an as­set of this size,” he said.

Fis­chel said their Span­ish strat­egy was to cre­ate a busi­ness of scale through ac­qui­si­tions and its pipe­line of de­vel­op­ment pro­jects.

He said they were con­cen­trat­ing on the top 10 key catch­ment cen­tres in Spain, which ac­counted for more than 80 per­cent of con­sumer spend­ing in the coun­try.

Fis­chel said they be­lieved they would have achieved their strat­egy and es­tab­lished a busi­ness of scale in Spain when intu Prop­er­ties owned the best cen­tres in five or six of the 10 re­gions, which it ex­pected to achieve over the next five to seven years.

“We al­ready have three of the top 10 cen­tres and got the big de­vel­op­ment in Malaga, the Costa del Sol, which will mean we will have four of the top top 10 cen­tres.

“We have three de­vel­op­ment sites in Va­len­cia, Vigo and Ma­jorca. The most ad­vanced of these is Va­len­cia, which is the third big­gest city in Spain,” he said.

intu Prop­er­ties in March in­creased its pres­ence in Spain and strength­ened its su­per prime port­fo­lio through the ac­qui­si­tion of Madrid Xanadu for £453.5m.

In May, the com­pany an­nounced the for­ma­tion of a joint ven­ture with TH Real Es­tate in terms of which it would take own­er­ship of 50 per­cent of Madrid Xanadu based on the orig­i­nal pur­chase price.

intu Prop­er­ties said they were con­cen­trat­ing on the top 10 key catch­ment cen­tres in Spain.

Fis­chel said: “We’re for­tu­nate in the UK that we have got just un­der £7bn of as­sets that are 100 per­cent owned. But that is likely to change over time as we bring part­ners into as­sets to stretch our cap­i­tal re­sources. ”intu Prop­er­ties yes­ter­day re­ported a 1.5 per­cent de­crease in like-for-like rental in the six months to June. Net rental in­come in­creased by 3 per­cent to £226.2m from £219.4m.

A to­tal of 103 long-term leases were signed in the pe­riod, 80 in the UK and 23 in Spain, de­liv­er­ing £18m of an­nual rent at an av­er­age of 7 per­cent above the pre­vi­ous pass­ing rent.

Oc­cu­pancy was sta­ble at 95.9 per­cent com­pared to 96per­cent in De­cem­ber.

Un­der­ly­ing earn­ings a share de­clined by 2.6 per­cent to 7.3p from 7.5p.

An un­changed div­i­dend a share of 4.6p was pro­posed.

Shares in intu Prop­er­ties dropped 4.68 per­cent on the JSE yes­ter­day to close at R45.18.

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