RECOVERY ON TRACK
Intu on the rise after Brexit vote
CEO David Fischel says the first four months of 2017 show that the UK shopping centre owner is gaining momentum
UK shopping centre owner Intu Properties says it has experienced a recovery since the Brexit referendum held in June 2016.
CEO David Fischel said the first four months of 2017 showed that Intu was gaining momentum. "The active tenant demand of last year has continued into the current year with 42 long-term leases signed in the first quarter representing £6m of annual rent, 5% above the previous passing rent.
"We have attracted a number of well-known international brands such as Hugo Boss, Guess, Tesla and Tag Heuer.
"We have also made further progress with our development pipeline. We are particularly focusing on creating a differentiated leisure element and 90% of the space in the Intu Lakeside extension is either exchanged or in solicitors’ hands, well ahead of the opening at the end of 2018," said Fischel.
Intu’s share price is up 1.47% year to date. Its share price closed at R47.74 on Wednesday. Including share price and income growth Intu returned a negative 33.53% in 2016.
Metrics had started to improve in 2017 compared with a challenging period in 2016, Fischel said. The occupancy across Intu’s portfolio was 95.8%. The festive season had been reasonably good for the group, with year-on-year footfall to date being unchanged but continuing to outperform the UK ShopperTrak benchmark, which was down 2.5%.
Intu’s guidance for growth in like-for-like net rental income for the year was unchanged, lying in the range of 0% to 2%.
"As previously stated, this is expected to be down in the first half, against the strong 2016 comparative, and up in the second half of the year," he said.
Intu’s Spanish expansion had performed well in 2017 and 2016. "Occupancy continues to remain high in Spain with strong tenant demand. During the period we acquired Madrid Xanadú shopping centre for €530m, taking our ownership to three of the top 10 Spanish centres," Fischel said.
Commenting on the British market, Fischel said retailers were being selective with their expansion plans and were prioritising expansion to prime established locations.
"Intu, as the UK market leader with 17 prime centres, is well positioned to take advantage of this demand. The environment for business this year is likely to be challenging with considerable uncertainty regarding the UK’s EU exit. However, it is our intention to deliver continuing growth in like-for-like net rental income," he said.