Consumer optimism to benefit intu’s malls

UK recovery improves appetite

PROPERTY firm intu Properties is encouraged by the continuing improvement in consumer sentiment and gradual growth in national retail sales in the UK.

Previously known as Capital Shopping Centres (CSC), intu now owns nine of the UK’s top 20 shopping centres.

CSC was the unbundled and separately listed mall business of Liberty International, which was founded by South African Donald Gordon.

David Fischel, the chief executive of intu Properties, said the group’s pipeline of lettings was indicative of increased retailer appetite for a physical presence in the best shopping centres, particularly those where change and investment was under way.

Fischel said the group would maintain its focus on four areas that it believed would deliver strong total returns over the medium term.

The objectives for the second half of the year included continuing to progress its profitable expansion through its £1.2 billion (R22bn) organic development pipeline in the UK and opportunities in Spain, and crystallising tenant interest in new developments into firm pre-letting commitments.

The company also planned to optimise the performance of its existing assets by implementing its centre-specific asset management objectives, including at intu Merry Hill and intu Derby.

The group acquired these two top 20 UK shopping centres in an £855 million transaction during the reporting period and rebranded them. The transaction was funded by a £500m rights issue and assetspecific debt facilities.

Fischel said the group would also continue to improve its flexibility and further distinguish intu for retailers and customers through the enlarged brand presence and from initiatives to enhance the customer experience, including upgraded digital activities to link with the physical malls.

Yesterday intu Properties reported a decline in underlying earnings a share to 6.4p for the six months to June from 6.8p in the first half of last year.

Fischel said like-for-like net rental income was affected by upcoming developments but partly offset by lower average finance costs. Net rental income increased by 4 percent to £189m from £181m.

Profit for the period more than tripled to £602m from £200m, largely because of a £573m property revaluation surplus in the reporting period from £70m a year earlier. Valuations increased 7.6 percent on a like-for-like basis, significantly higher than the 3.5 percent IPD monthly retail index.

An unchanged dividend of 4.6c a share was declared.

Fischel said there was a continuing improvement in demand for quality space with 98 long-term leases signed for £15m in new annual rental, which was 4 percent higher than the previous passing rent.

He added that encouraging progress stimulated by intu’s investment activity had resulted in 140 lettings in the hands of the group’s solicitors.

Occupancy improved to 96 percent from 95 percent at end-December and footfall was up by 1 percent year on year.

The shares gained 3.18 percent to R59.39 on the JSE.