Intu’s newly installed chief executive Matthew Roberts has said the business has revised down its year-end like-for-like net rental income for 2019 by between 4% and 6%.
“We expect the remainder of 2019 to be challenging due to a higher than expected level of CVAs and a slowdown in new lettings as tenants delay their decisions due the uncertainties in the current political and retail environments,” Roberts said in a trading update.
Despite the worsening outlook, intu said its operational performance between 1 January and 2 May had been stable, with 53 new long-term leases signed, amounting to £6m of annual rent at an average of 1% above previous passing rent.
Since his promotion last month, Roberts has said his priority is the reduction of intu’s loan-to-value ratio to below 50%. Its LTV currently stands at 53.1%.
He is aiming to do this by retaining cash generated from operations within the business, with no final dividend paid for 2018, disposals and part-disposals of assets both in the UK and Spain, and a reduction in the business’s capital expenditure pipeline, with investment focused on winning destinations.
See also: Q&A with new intu chief executive Matthew Roberts
The sale of a 50% stake in intu Derby for £186m during the period to Cale Street Investments is expected to reduce intu’s LTV by 1% and the proceeds from disposal are to be used to repay some of its debt maturing in 2021.
Intu will also continue to explore disposal options for its Spanish shopping centres and reported that it was in discussions over the possible refinancing of the legacy intu Trafford Centre debt to reduce the cost of debt and remove amortisation payments, which it said would increase over the coming years.
Refinancing would increase the chances of being able to sell a stake in the shopping mall, the firm said.
Intu added that seven sites had been identified for hotel opportunities with potential for around 850 bedrooms.
Intu also reported 77 rent reviews in the period had been settled for new rents totalling £20m, an average uplift of 8% on the previous rents, while occupancy stood at 95.6% at 31 March, down 1.1% on the same time in 2018 due to CVAs and administrations, including the closure of some New Look and HMV stores and the closure of Christmas pop-ups.
The firm’s cash and available facilities stood at £539m at 31 March 2019.
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