Intu expects a cashflow hit of around £3.9m this year from the ongoing restructurings of retailers New Look and Prezzo, as well as the collapse of Toys R Us.
The UK shopping centre owner said in a trading update that the anticipated cost was equivalent to 0.8% of its 2017 net rental income. This was, it said, prior to any cost saving actions being taken such as finding replacement tenants or a reduction in property expenses to mitigate the impact of the closures.
It added that the stores in its shopping centres were currently still trading.
Intu also reported a high occupancy of 96.1%, unchanged from 31 December 2017 and the signing of 60 long-term leases, of which 43 are in the UK and 17 in Spain, equating to £10m per year in rent.
Proposed takeover
In the trading update for the period 1 January 2018 to 17 April 2018 Intu made no mention of its proposed £3.4bn takeover by fellow shopping centre owner Hammerson, which had been put on hold while Hammerson defended itself from an unwanted takeover offer by French group Klépierre.
Both Hammerson and Intu’s shares rose slightly this morning to 487.7p and 209.4p respectively.
Growth in like-for like net rental income for this year continued to range between 1.5% to 2.5%. Subject to no further material tenant failures, rental income was expected to be stronger in the second half of the year, Intu said.
The company added that at 31 March it had cash and available facilities of £872m and a debt-to-asset ratio of 45.3%.
Intu also reported that it was also on target to open its £180m extension at Intu Watford in October, with 70% of the space exchanged and that its £72m Nickelodeon anchored leisure development at Intu Lakeside was progressing well, with 85% of the space exchanged.
The firm also said it planned to invest more than £560m over the next three years in its UK shopping centres.
Strong first quarter
David Fischel, chief executive at Intu, said: “Our prime shopping centres produced a strong first quarter with lettings at increased rents, high occupancy and footfall exceeding the comparable period last year, with footfall significantly and consistently outperforming the ShopperTrak national retail benchmark over the past five years.
“We continue to see growth opportunities for our £10bn UK portfolio,” he added.
“Our well-timed entry into the Spanish market continues to offer significant upside as the country’s economic recovery continues, both from the three top-10 centres we currently own and from our plan to begin construction in the next 12 months of a £600m world-class retail resort near Málaga.
“As a result of this strong performance, we reiterate our guidance for like-for-like net rental income growth both for the current financial year, subject to no further material tenant failures, and over the medium term.”
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