INTU PROPERTIES PLC
LEI: 213800JSNTERD5CJZO95
Regulated Information Classification: Additional regulated
information required to be disclosed under the laws of a Member
State of the EU.
2 NOVEMBER 2017
TRADING UPDATE FOR THE PERIOD FROM
1 JULY 2017 TO 2 NOVEMBER 2017
David
Fischel, intu Chief Executive, commented:
“We have recorded another active quarter with strong tenant
demand. 73 long term leases have been agreed which are ahead of a
robust comparative period in 2016. We anticipate achieving a third
year of positive like-for-like net rental income as we continue to
attract well-known international and national brands.
intu’s nationwide portfolio allows international retailers
opportunities to expand their UK coverage with brands such as
Victoria’s Secret (US), Lovisa accessories (Australia) and Inglot cosmetics (Poland) having all taken further stores in the
period. Other major flagship brands, such as Next, Primark,
Decathlon, Footasylum and Nespresso, are optimising their store
sizes in our must-have quality locations.
Our Spanish centres continue to perform well with occupancy
levels remaining high and
10 long term leases have been signed in the quarter. Our recently
acquired Madrid Xanadú shopping centre has benefited from our
relationships with UK and Spanish retailers and since acquisition
we have introduced Quiz, Vans, G-Star and TGB to the centre.
Although retailers continue to be selective with their expansion
plans in the challenging consumer environment, our 20 prime centres
are the first port of call because of their strong catchment,
reliable footfall and differentiated leisure content. This leaves
us well positioned to take advantage of this demand and we are
confident of delivering further growth in like-for-like net rental
income in 2018 and at a level of 2 to 3 per cent over the medium
term.”
Highlights for the period
- An active period with 73 long term leases agreed (63 in the
UK and 10 in Spain) for £13
million of annual rent, 5 per cent above previous passing rent
(year to date 6 per cent above) and in line with ERV and valuers’
assumptions
- We anticipate positive like-for-like net rental income for a
third year in 2017, in line with earlier guidance, consolidating
the growth achieved in 2015 and 2016
- Rent reviews in the period have been concluded at an average
uplift of 15 per cent on the previous rents. Year to date, we have
settled 164 rent reviews for new rent totalling £36 million, 10 per
cent above previous rents
- Occupancy remains high at 96 per cent, unchanged from
June 2017
- Footfall has shown encouraging strength in the second half
year to date at
2 per cent ahead of the same period in 2016 bringing the overall
figure for 2017 back in line with 2016
- We have commenced the £73 million leisure extension at intu
Lakeside for opening at the end of next year, with all four leisure
anchors now let and the overall project 85 per cent pre-let. Other
extensions, including intu Watford
and Barton Square at intu Trafford
Centre, are progressing to plan
- Unprompted awareness of the intu brand increased to 26 per
cent, a three-fold increase since 2015 when we started monitoring,
and in-centre net promoter score, our measure of customer service,
remains consistently high at 70
- Encouraging lettings and activity at the recently acquired
Madrid Xanadú, including the Nickelodeon and aquarium developments,
and strong year-on-year footfall growth of 8 per cent at intu
Asturias following the opening of the redeveloped lower
level
- Exchanged contracts to introduce a 50 per cent joint venture
partner to intu Chapelfield for a net consideration of £148
million. This is in line with the 31
December 2016 valuation of £296 million (100 per cent) and a
small discount to the 30 June 2017
valuation of £305 million (100 per cent). The transaction further
advances our stated strategy of introducing partners to our assets
and recycling capital into our UK development pipeline
- Cash and available facilities of £850 million at
30 September 2017 reduced by the
repurchase of £140 million of the £300 million 2018 convertible
bond at a price around par. Financial position further strengthened
by the disposal of 50 per cent interest in intu
Chapelfield
We have continued to make good progress with our four strategic
priorities for 2017:
-
optimising asset performance
-
delivering UK developments
-
making the brand count
-
seizing the growth opportunity in Spain
Optimising asset performance
We have had an active third quarter with 73 long term leases
signed in the period, representing £13 million of annual rent (Q3
2016: 67 leases; £13 million of new passing rent). In aggregate,
these were 5 per cent above previous passing rent and in line with
valuers’ assumptions. This brings the total for the year to date to
176 new leases (2016: 165) producing £31 million of new annual
rent, 6 per cent above previous passing rent.
Signings in the period include:
- international retailers continuing to use intu’s nationwide
portfolio to expand their UK coverage. Victoria’s Secret exchanged
on its fourth lease with intu at Manchester Arndale, Australian
accessories brand Lovisa signed three more leases and has around
one-third of its UK stores with intu and Polish cosmetics retailer
Inglot chose intu Eldon Square for
its first stand-alone store outside London
- key flagship brands ensuring they optimise their store size in
our must-have locations including Nespresso and Footasylum at
Manchester Arndale and Primark agreeing to take the former BHS unit
and additional space in Barton Square, at intu Trafford Centre, to
create an 88,000 sq ft flagship store
We expect to deliver modest growth in like-for-like net rental
income for the full year driven by new lettings at improved rents
and successful rent reviews, subject to no material tenant
failures.
Our unrelenting focus on operational excellence, both in the UK
and Spain, combined with the
quality of our centres has continued to deliver a robust set of key
performance indicators.
We settled 47 rent reviews in the period for new rents totalling
£9 million per annum, an average uplift of 15 per cent on the
previous rents. Year to date, we have settled 164 rent reviews with
rent totalling £36 million per annum, an average uplift of 10 per
cent on the previous rents.
Occupancy remains high at 96 per cent (June 2016: 96 per cent). intu Lakeside and intu
Merry Hill remain slightly lower as
we hold units for remodelling of significant space for key fashion
tenant flagship stores. These are in advanced negotiations and
should exchange shortly for openings in 2018.
We are continuing to capitalise on re-letting the former BHS
stores. Of the 10 stores that closed in 2016, we have new leases
signed on five units, improving the tenant mix with lettings to the
likes of Next, Primark and Decathlon. One store is held for
redevelopment and detailed discussions are on-going with the
remaining four stores. We expect the overall new rental levels to
be 15 per cent ahead of previous passing rent and the resultant
retail offer to be more attractive to our shoppers.
There were no tenant administrations at our centres in the
period.
Delivering UK developments
We continue to focus our capital expenditure programme on our
prime centres to ensure they evolve with consumer and retailer
trends. Key milestones in the period include:
- at intu Lakeside, we have signed the construction contract and
are on site with the 175,000 sq ft Nickelodeon anchored leisure
extension. The scheme has over 90 per cent of the space exchanged
or in solicitors’ hands. Including the recent lettings in the
period for the remaining two leisure anchors and TGI Friday’s, 85
per cent is now exchanged. The project is expected to cost £73
million and is due to open in late 2018
- at intu Trafford Centre, we have signed Primark to anchor the
expansion and transformation of Barton Square. The £74 million
project will enclose the courtyard, enhance the interiors, allow
trading from two levels and provide a fashion offer for the first
time at Barton Square. We are progressing the procurement of the
construction works and expect the project to be completed by
mid-2019
- at intu Watford, the £180
million retail and leisure extension continues on budget and on
target for opening in autumn 2018. The scheme is two-thirds
pre-let, including Debenhams and Odeon as anchors, and we are
making good progress on the remaining units
- at intu Merry Hill, we have
contracted on key site assembly transactions to enable us to pursue
a leisure extension in the next few years which will have a
transformational effect on the entire centre
Making the brand
count
As the role of the shopping centre operator becomes ever more
specialised, our scale, expertise and insight along with our
in-house teams ensure we offer the best customer service and
experience in an ever evolving multichannel world. In the
period:
- our net promoter score, a measure of customer service, remained
consistently high at 70
- brand recognition increased to its highest level, with
unprompted brand awareness measuring 26 per cent in the period, a
three-fold increase since 2015 when we started monitoring, and
prompted awareness at 72 per cent
- sales on our online shopping platform are running around 50 per
cent ahead of last year, with visits to our ‘Shop’ pages increasing
by a similar amount
- intu Accelerate, our incubator for new technologies and
services for the UK retail market, has identified seven start-ups
to pilot new concepts in-centres and online, including Europe’s
first customer service robot in a shopping centre
Seizing the growth opportunity in
Spain
Our three top-10 centres are performing well, benefitting from
our asset management initiatives and taking advantage of the
strengthening economy in the regions we operate:
- footfall remains strong, running 1.5 per cent ahead for the
year to date. At intu Asturias, following the opening of the new
lower level retail in July, footfall has increased by 8 per
cent
- new lettings in the period were driven by tenant demand at
Madrid Xanadú building on our relationships with retailers both in
the UK and Spain, introducing the
likes of Quiz, Vans, G-Star and TGB
- we completed our 50:50 joint venture partnership of Madrid
Xanadú with TH Real Estate in July
2017, on terms in line with our original acquisition in
March 2017
Corporate
responsibility
We worked with the National Autistic Society to create the first
UK-wide Autism Hour at the start of October. Retailers, restaurants
and leisure operators at all our centres reduced their lights,
music and other background noise for an hour to create a better
environment for autistic customers to visit our centres and raise
awareness of this issue.
With three years to go, we have met or almost met our 2020
environmental targets which were set against a 2010 base line. We
have reduced the intensity of carbon emissions by 47 per cent
(target 50 per cent), diverted 100 per cent of waste from landfill
of which 74 per cent is recycled (targets 99 per cent and 75 per
cent respectively) and reduced the water intensity by 14 per cent
(target 10 per cent).
Our people are at the heart of what we do and in 2017 we have
achieved the internationally recognised accreditation Investors in
People gold standard across all intu branded centres. This highly
regarded achievement defines what it takes to lead, support and
manage people well for sustainable results.
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 |
+44 (0)20 7960
1207 |
Matthew Roberts |
Chief Financial Officer |
+44 (0)20 7960
1353 |
Adrian Croft |
Head of Investor Relations |
+44 (0)20 7960
1212 |
|
Public
relations |
UK: |
Justin Griffiths, Powerscourt |
+44 (0)20 7250
1446 |
SA: |
Frédéric Cornet, Instinctif
Partners |
+27 (0)11 447
3030 |
NOTES FOR EDITORS
intu is the UK's leading owner, manager and developer of prime
regional shopping centres with a growing presence in Spain.
We are passionate about creating uniquely compelling
experiences, in centre and online, that attract customers,
delivering enhanced footfall, dwell time and loyalty. This helps
our retailers flourish, driving occupancy and income growth.
We own many of the UK's largest and most popular retail
destinations, with super-regional centres such as intu Trafford
Centre and intu Lakeside and vibrant city centre locations from
Newcastle to Watford.
We are focused on four strategic objectives: optimising the
performance of our assets to deliver attractive long-term total
property returns, progressing our UK development pipeline to add
value to our portfolio, leveraging the strength of our brand and
seizing the opportunity in Spain
to create a business of scale.
We are committed to our local communities, our centres support
over 120,000 jobs representing about 4 per cent of the total UK
retail workforce, and to operating with environmental
responsibility.
Our success creates value for our retailers, investors and the
communities we serve.