Intu Properties shareholders benefit from UK recovery

Posted On Tuesday, 04 November 2014 11:43 Published by
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Shareholders in the UK's biggest mall owner, Intu Properties, have been rewarded on the capital growth front this year.

David Fischel

Formerly Liberty International‚ the company was founded by South African insurance tycoon Donald Gordon in the 1980s. The share price of the rand hedge property stock is up 22% from its April lows. That follows a two-year period of muted investor sentiment‚ no doubt on the weak UK retail sales environment.

On Monday the company said in an interim management statement that the UK economy continued to show signs of improvement and that consumer confidence was steadily on the rise. Intu Properties CE David Fischel said in the past four months 71 new long-term leases had been signed at various shopping centres‚ which translates into additional rent of £13m a year.

That brings the total for the year to date to 169 leases producing £28m of new annual rent‚ 5% above previous passing rent. Average footfall at the group's centres were up 1% for the year to Monday while occupancy was marginally reduced from 96% in June to 95% now. "We are pleased to see continued improvement in retailer demand for space‚ particularly in centres where we have been undertaking or have plans for capital expenditure.

"Mr Fischel referred to Intu's £1.2bn upgrade and development pipeline which included recent extensions to the food court at intu Lakeside‚ a mall upgrade at intu Eldon Square and new restaurants and reconfigurations at intu Victoria Centre.

Mr Fischel said like-for-like nonfood sales in the UK have now shown positive growth for the past two years. "According to the IPD retail property index‚ this is now beginning to translate into an uplift in retail rental values‚ with the index showing rental value growth for the last four months‚ the first positive period of this length since 2008.''

Intu announced a proposed £350m bond issue to help settle the debt incurred for the two malls bought this year: intu Derby and intu Chapelfield. Intu's portfolio now stands at 16 centres. While the continuing recovery in the UK economy is positive for Intu‚ CoroCap fund manager Daniel Ross said investors should not expect too much from Intu in the short term.

"We can't see any immediate catalysts for a meaningful uplift of net asset value given the short-term outlook for anaemic rental growth‚ increasing vacancies and falling dividend forecasts."

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