Intu claims rise in retail failures will hit rent
INTU has said rising retail insolvencies and waning demand for new shops are likely to dent its rental income this year, dealing a fresh blow to the struggling shopping centre owner.
The FTSE 250 firm, which includes Manchester’s Trafford Centre and Lakeside in Essex, said its like-for-like net rental income would fall by between 4pc and 6pc in 2019.
Traders have been hit by a slump in high street footfall over the past 18 months, as big chains close hundreds of shops through a controversial insolvency process known as a company voluntary arrangement (CVA).
Matthew Roberts, who took over as Intu chief executive this week, said: “We expect the remainder of 2019 to be challenging due to a higher than expected level of CVAS and a slowdown in new lettings as tenants delay their decisions due to the uncertainties in the current political and retail environments.” Shares in Intu, which had already
‘We expect the rest of 2019 to be challenging due to higher than expected CVAS and a slowdown in new lettings’
lost about half their value over the past year, fell another 8pc to 92p, erasing Thursday’s gains.
Mr Roberts said Intu had nonetheless seen “good letting activity” this year, signing deals with 53 long-term tenants with an average rent increase of 1pc. He has promised to reduce In- tu’s £4.8bn debt pile, partly by selling off stakes in its properties, as well as investing in centres to keep shoppers visiting. The firm pocketed £186m from selling 50pc of its Derby site to an investment firm backed by Kuwait’s sovereign wealth fund last month.
It is considering a refinancing of the Trafford Centre that would make it easier to sell a stake in the future. Mr Roberts replaced David Fischel who announced plans to step down after a £3.4bn takeover deal with rival Hammerson fell through last summer.
A second bid by a consortium including Intu’s own deputy chairman John Whittaker, worth £2.8bn, was aborted in November.
Intu’s stock market value has since fallen to about £1.3bn.