£1.17bn loss is posted by mall owner
PROPERTY VALUE FALL BLAMED FOR FAILURE TO MAKE PROFIT
Business Writer THE owner of the Eldon Square and Metrocentre shopping centres has swung to a full-year loss of £1.17bn after suffering a collapse in the value of its properties in what it described as a “challenging” year.
Intu – which owns 17 centres across the UK and three in Spain – had a torrid 2018 following two failed takeover attempts amid tough trading conditions for retailers.
Rival Hammerson abandoned a £3.4bn takeover attempt last April, while a consortium led by John Whittaker’s Peel Group, owners of Durham Tees Valley Airport, pulled out of a £2.8bn bid in November.
Now figures for 2018 show the group’s 2017 operating profit of £408.6m was converted to a loss of £992.1m after a revaluation of its investment and development property. The revaluation led to a write-down of £1.332bn, leaving the firm with a loss for the financial year of £1.17bn, compared with the previous year’s overall profit of £203.3m.
The firm said intu’s valuations declined by 3% in the final quarter of 2018, on top of a previous decline of 9%, in what was a difficult year for the whole sector as sentiment weakened significantly. Eldon Square’s value dipped by 13% to £280.7m, while the Metrocentre’s value is now £841.8m, a drop of 10% – yet the two North East centres held up well compared to the Victoria Centre in Nottingham, which dropped in value by 28%. Despite the valuation hit, the firm said it had demonstrated a resilient operational performance in a challenging retail environment. Likefor-like net rental income increased by £2.3m – 0.6% up in the year – driven by rent reviews and new lettings partially offset by administrations and CVAs (company voluntary agreements). Revenue for the year was £581.1m – down from £616m.
The administrations and CVAs in the year related to around 6% of passing rent. The majority of these, 72%, had minimal impact, with retailers keeping their best-performing stores in Intu centres open on the existing rent. Of the remainder, 9% are trading on discounted rents, 14% have closed and 5% have been re-let.
Outgoing chief executive David Fischel described 2018 as an “eventful and challenging” year for the company.
He said: “The UK economy has struggled through a third year of pre-Brexit political uncertainty. Specific to intu, we had to overcome the disruption from two public company offers, neither of which, for reasons outside our control, ultimately concluded.
“Although sentiment in the retail sector is at an all-time low...as some 85% of all retail transactions still touch a physical store, demand from major retailers continues to be positive for our centres.”