Intu Properties upbeat as interim earnings rise

Posted On Tuesday, 02 August 2016 09:39 Published by
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Properties grows its earnings per share 10% in the six months to June, despite concerns over the strength of the British consumer and downward pressure on UK property prices.

 David_Fischel_Intu

UK shopping centre owner Intu Properties grew its earnings per share 10% in the six months to June, despite concerns over the strength of the British consumer and downward pressure on UK property prices.

“We are pleased to report a strong set of results for the first six months of 2016, with a 10% increase in underlying earnings per share driven by excellent growth in net rental income of 7.5% on a like-for-like basis. We have, therefore, raised our guidance for full year like-for-like net rental income growth to 3%- 4%,” CEO David Fischel said.

Intu’s share price has fallen about 23% year to date. The price dropped about 16% on the JSE on the morning of Friday June 24 after the Brexit referendum result was announced in favour the UK leaving the EU.

Fischel said he was confident that Intu was well-placed to perform strongly in the coming years, given that the average lease life of its properties was eight years. It also owned some of the best shopping centres in the UK and Spain.

“Footfall has not dropped at our shopping centres post the Brexit referendum. It was a vote. Nothing has been implemented yet and we continue to see consistent consumer spend at our centres,” Fischel said.

Since June 23, Intu’s footfall had been in line with the first six months of 2016. The company continued to engage with tenants on new space and signed leases, exchanging 27 leases. Letting activity was “very positive” during the reporting period. This led to an improved occupancy ratio of 96%.

“Our established retailers, such as Zara and Next, have been up-sizing space and we have welcomed new lifestyle brands and international retailers at a time when the supply of quality retail space is limited.”

Analysts said that Intu’s results were strong, but there were concerns about how Intu and the UK listed property market would fare in the second six months of 2016.

“Intu released a solid set of results, we view their asset management as performing well, but our concerns with the firm are more at the strategic level.

“We are primarily concerned by Intu’s overall debt level, and its very ambitious development pipeline,” said Garreth Elston of Alternative Real Estate Capital Management.

Grindrod Asset Management chief investment officer Ian Anderson said: “The results were very good, but the market is not looking backward, it wants to gauge the impact of Brexit on economic activity in the UK and Europe, specifically Spain in Intu’s case. According to initial surveys, retail sales have fallen in the immediate aftermath of Brexit and the outlook doesn’t appear to be improving. These negative reports are likely to weigh on investor sentiment in the short term.”

source: Business Day

Last modified on Saturday, 06 August 2016 22:10

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