Highlights for the period
- An active period with 73 long term leases agreed (63 in the UK and 10 in Spain) for £13 million of annual rent, 5 per cent above previous passing rent (year to date 6 per cent above) and in line with ERV and valuers’ assumptions
- We anticipate positive like-for-like net rental income for a third year in 2017, in line with earlier guidance, consolidating the growth achieved in 2015 and 2016
- Rent reviews in the period have been concluded at an average uplift of 15 per cent on the previous rents. Year to date, we have settled 164 rent reviews for new rent totalling £36 million, 10 per cent above previous rents
- Occupancy remains high at 96 per cent, unchanged from June 2017
- Footfall has shown encouraging strength in the second half year to date at
2 per cent ahead of the same period in 2016 bringing the overall figure for 2017 back in line with 2016 - We have commenced the £73 million leisure extension at intu Lakeside for opening at the end of next year, with all four leisure anchors now let and the overall project 85 per cent pre-let. Other extensions, including intu Watford and Barton Square at intu Trafford Centre, are progressing to plan
- Unprompted awareness of the intu brand increased to 26 per cent, a three-fold increase since 2015 when we started monitoring, and in-centre net promoter score, our measure of customer service, remains consistently high at 70
- Encouraging lettings and activity at the recently acquired Madrid Xanadú, including the Nickelodeon and aquarium developments, and strong year-on-year footfall growth of 8 per cent at intu Asturias following the opening of the redeveloped lower level
- Exchanged contracts to introduce a 50 per cent joint venture partner to intu Chapelfield for a net consideration of £148 million. This is in line with the 31 December 2016 valuation of £296 million (100 per cent) and a small discount to the 30 June 2017 valuation of £305 million (100 per cent). The transaction further advances our stated strategy of introducing partners to our assets and recycling capital into our UK development pipeline
- Cash and available facilities of £850 million at 30 September 2017 reduced by the repurchase of £140 million of the £300 million 2018 convertible bond at a price around par. Financial position further strengthened by the disposal of 50 per cent interest in intu Chapelfield
David Fischel, intu Chief Executive, commented:
“We have recorded another active quarter with strong tenant demand. 73 long term leases have been agreed which are ahead of a robust comparative period in 2016. We anticipate achieving a third year of positive like-for-like net rental income as we continue to attract well-known international and national brands.
intu’s nationwide portfolio allows international retailers opportunities to expand their UK coverage with brands such as Victoria’s Secret (US), Lovisa accessories (Australia) and Inglot cosmetics (Poland) having all taken further stores in the period. Other major flagship brands, such as Next, Primark, Decathlon, Footasylum and Nespresso, are optimising their store sizes in our must-have quality locations.
Our Spanish centres continue to perform well with occupancy levels remaining high and
10 long term leases have been signed in the quarter. Our recently acquired Madrid Xanadú shopping centre has benefited from our relationships with UK and Spanish retailers and since acquisition we have introduced Quiz, Vans, G-Star and TGB to the centre.
Although retailers continue to be selective with their expansion plans in the challenging consumer environment, our 20 prime centres are the first port of call because of their strong catchment, reliable footfall and differentiated leisure content. This leaves us well positioned to take advantage of this demand and we are confident of delivering further growth in like-for-like net rental income in 2018 and at a level of 2 to 3 per cent over the medium term.”