Intu Properties plc Trading Update (7810E)

TIDMINTU

RNS Number : 7810E

Intu Properties plc

06 November 2015

6 NOVEMBER 2015

INTU PROPERTIES PLC

TRADING UPDATE FOR THE PERIOD FROM 1 JULY 2015 TO 6 NOVEMBER 2015

Highlights of the period:

-- On target for a return to like-for-like net rental income growth for the year as a whole (H1 2015: -1.0 per cent) through improved lettings and rising occupancy

-- Continued improvement in retailer demand with 84 new long term leases agreed for GBP18 million of new annual rent, 11 per cent above previous passing rent (year to date: 12 per cent above) and in line with valuation assumptions

   --     Occupancy increased by 40 basis points since 30 June 2015 to 95.5 per cent 

-- Year-on-year footfall to date is marginally up in the UK and up 5 per cent in Spain, both outperforming their respective Experian benchmarks

-- UK development pipeline on track with GBP60 million of developments completing at intu Victoria Centre and intu Potteries, where the cinema and restaurants are fitting out for their scheduled openings in December 2015. On site at intu Eldon Square, intu Metrocentre and intu Bromley with restaurant developments

-- Completed the introduction of CPPIB as our partner at Puerto Venecia, Zaragoza, extending our partnership to two of Spain's top ten shopping centres and releasing EUR113 million of funds for further projects

-- Way finding and offers app successfully trialled at the recent student nights before its national launch across all intu centres

-- Cash and available facilities of over GBP550 million and debt to asset ratio of 44 per cent at 30 September 2015

David Fischel, Chief Executive, commented:

"The economic recovery is now more obviously rippling out from London and the South East to other regions of the UK and our prime centres across the country are seeing strengthening underlying retailer sales performance.

As this translates into improved demand for space and rising occupancy, we look forward to a return to like-for-like net rental income growth for 2015 and are well positioned for a more meaningful uplift next year.

We have successfully completed development projects in Nottingham and Stoke-on-Trent in the period and our investment programme continues to gather momentum both in the UK and Spain."

Optimising the performance of existing assets

The Group's operating metrics are improving as we start to close out vacancy and bring our development pipeline on stream (see below). We are on target, assuming no material tenant failures, that like-for-like net rental income growth in the second half of 2015 will more than offset the shortfall in the first half delivering a return to like-for-like growth for the full year.

In terms of lettings, 84 new long term leases were signed in the quarter, representing GBP18 million of new passing rent, in aggregate 11 per cent above previous passing rent and in line with valuation assumptions. This brings the total for the year to date to 191 new leases producing GBP35 million of new annual rent, 12 per cent above previous passing rent. Signings in the period include:

-- Five new leases with Kiko, continuing their UK roll out. They now have seven stores in intu centres, around a third of their overall UK portfolio

-- Leases at intu Trafford Centre and intu Merry Hill with New Look Men, a new standalone menswear concept launched by New Look with a plan to open five stores nationally this year

-- International entrants continuing to expand through intu with David's Bridal signing its second UK store at intu Braehead and Victoria's Secret adding to its nine existing locations with a new store at intu Lakeside

-- 13 new restaurant lettings across the portfolio including Thaikhun at intu Metrocentre and intu Victoria Centre

We settled 27 rent reviews in the period for new rents totalling GBP5 million, an average uplift of 7 per cent on the previous rents. Year to date, we have settled 105 rent reviews with new rent totalling GBP24 million, an average uplift of 7 per cent on the previous rents.

Three units with a total rent of GBP0.1 million entered administration in the period. This is the lowest quarterly figure since before the start of the economic downturn some seven years ago.

Driving forward the UK investment programme

Our UK development pipeline is on track:

-- At intu Victoria Centre, the GBP42 million mall refreshment and catering development is complete. This has delivered new brands to the centre such as Superdry, River Island, Kiko and Office and the first restaurant is now open for trade with further openings imminent

-- At intu Potteries, the GBP19 million fully let cinema and restaurant extension opens in December, stimulating an improved letting pipeline in the main centre

-- Catering developments at intu Metrocentre, intu Eldon Square and intu Bromley are on site creating over 30 new restaurants. Excellent letting progress has been made at all sites with intu Metrocentre and intu Bromley scheduled to open fully let in Spring 2016, with the intu Eldon Square development due to open later in 2016

-- At intu Watford, we continue to see strong demand from both retail and leisure operators for the 400,000 square foot extension. With over 50 per cent of the project either exchanged or in solicitors' hands, we aim to commence site clearance and demolition before the end of the year

-- At intu Milton Keynes the council have resolved to approve our proposed 100,000 square foot enlargement of the existing centre bringing additional retail units, a boutique cinema and new restaurants. This project represents a great addition to our development pipeline and will significantly enhance the standing of the centre

Making the brand count

-- As an example of the increasing power of the intu brand, 130,000 students, representing an increase of over 20 per cent on the 2014 events, attended the recent student nights at 16 of our centres. Through our nationwide brand and presence we could offer discounts exclusive to intu and partner with the likes of O2 across all centres

-- In September we previewed before its national launch our new app which provides in-centre way finding, personalised special offers and centre information in one easy to use service. The app was developed by our in-house digital innovation team and takes advantage of our own high quality Wi-Fi infrastructure. It was successfully trialled at the recent student nights with all the discounts available through the app

-- A further example of our scale and brand power was securing a partnership with MasterCard for the Rugby World Cup 2015. In-centre we delivered match related events and attractions including match zones and on line launched a 'Kick the Ball' gaming app

Seizing the growth opportunity in Spain

-- The Malaga development project, intu Costa del Sol, remains on track for a start in 2016 with a number of design enhancements under evaluation

-- As previously announced, we completed the 50/50 joint venture of Puerto Venecia, Zaragoza with CPPIB, extending the partnership between Intu and CPPIB to include two of Spain's top ten shopping centres

-- Both our centres continued to perform well in the period with overall occupancy improving to 97 per cent. Footfall at both Puerto Venecia and intu Asturias is up year-on-year, and we have achieved quality new lettings at both centres at improved rental levels

Conference call

A conference call for analysts and investors will be held today at 08:00 GMT

A copy of this press release is available for download from our website at intugroup.co.uk

ENQUIRIES

 
 Intu Properties plc 
 David Fischel      Chief Executive                          [phone] 
 Matthew Roberts    Chief Financial Officer                  [phone] 
 Adrian Croft       Head of Investor Relations               [phone] 
 
 Public relations 
 UK:                Justin Griffiths, Powerscourt            [phone] 
                    Frédéric Cornet, Instinctif 
 SA:                 Partners                                 [phone] 
 

NOTES FOR EDITORS

Intu is the leading owner and manager of prime regional shopping centres in the UK.

A FTSE 100 company, Intu owns and operates many of the UK's biggest and most popular retail and leisure destinations, including nine of the top 20, incorporating super-regional centres such as intu Trafford Centre, intu Lakeside and intu Metrocentre, together with a number of city centre locations from Watford to Newcastle.

With over 23 million sq. ft. of space hosting top UK and international retailers from Apple to Zara, Intu centres attract some 400 million customer visits from over half of the UK's population every year.

Intu has a UK investment pipeline of GBP1.5 billion over the next ten years to add 2.6 million sq. ft. of new retail and leisure space, of which 1.7 million sq. ft. is already consented. Major projects due to be underway soon include the extension and refurbishment at intu Watford and the leisure expansion at intu Lakeside.

Intu also has a growing presence in the Spanish market, owning two of Spain's top 10 centres, intu Asturias in Oviedo, and Puerto Venecia in Zaragoza, a development site in Malaga with options on a further three sites in Valencia, Palma and Vigo.

intu creates a compelling experience for its customers, both on and offline, delivering on its brand promise to provide the most digitally connected shopping centres, world-class service and events with a difference. National initiatives include the annual 'Everyone's Invited' event which in 2014 increased footfall that weekend by an average of 13%. Our objective is for customers to come more often and stay for longer, in turn helping intu's retailers to flourish.

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November 06, 2015 02:00 ET (07:00 GMT)