Intu’s property empire loses £300m of value as retailers shut up shop
Intu took a £300m hit to its property valuation in its latest quarter, also cutting its rental growth forecast amid the UK’s high street decline, it revealed today.
The shopping centre chain is currently mulling a £2.9bn takeover offer from a consortium including British billionaire John Whittaker, Saudi investment group Olayan, and Brookfield Property Group.
Read more: Intu considers UK-Saudi takeover offer
But it told investors today that the value of its property empire has fallen from £9.83bn in June to £9.58bn in the three months to the end of September, reflecting “current negative sentiment towards UK retail property”.
That compounds an already bleak performance for Intu’s property, which fell 5.6 per cent in the first half of the year.
Intu also said failing high street businesses in 2018 are set to hit its like-for-like growth by 1.5 per cent, leaving full year growth either flat or at one per cent.
However, it signed 84 long-term leases during the quarter, compared to 73 over the same period in 2017, which gives it £15m in annual rent, while year-to-date lease agreements now number 200, compared to 176 at this point last year, delivering £32m of annual rent.
Meanwhile, Intu has increased occupancy by 0.4 per cent to 97 per cent, attracting fashion brands like Monki, Bershka and Ralph Lauren to its various locations.
David Fischel, intu chief executive, said: "Intu has continued to deliver a strong and resilient operational performance through a period which has been particularly challenging for UK retailers, demonstrating the clear differentiation between winning destinations such as Intu owns and the rest.
“The top twenty shopping centres in the UK account for some three per cent of UK shoppers' annual spend and we own eight of them, representing 76 per cent by value of our UK portfolio.”
He acknowledged the impact of a flurry of closures on Intu’s bottom line, but added: “We are however confident our business and assets are resilient and can weather the challenges we are currently seeing.”
Read more: Intu shares soar nearly 30 per cent on John Whittaker takeover rumours
High street shops have been closing at an alarming rate in recent months, with House of Fraser, Marks & Spencer and Homebase all shutting down stores.
However, Intu remains confident about its prospects amid the takeover talks, saying it has invested £147m in the year so far into its business, and opened a £180m extension of its Watford shopping centre.
Chancellor Philip Hammond is reportedly considering changing planning laws to allow vacant shops to be turned into homes, it emerged yesterday.