Intu Properties PLC - Trading Statement
A STRONG AND RESILIENT OPERATIONAL PERFORMANCE
David Fischel, intu Chief Executive, commented:
"intu has continued to deliver a strong and resilient operational performance through a period which has been particularly challenging for UK retailers, demonstrating the clear differentiation between winning destinations such as intu owns and the rest.
We agreed 84 long-term leases in the period at rental levels 8 per cent above previous passing rent and have increased occupancy by 0.4 per cent to 97 per cent. Key fashion retailers continue to be attracted to our winning locations, with names such as Monki, Bershka and Ralph Lauren signing up in the period.
In September, we opened the £180 million retail and leisure extension of intu Watford, 90 per cent let or in advanced negotiations, as we constantly innovate and invest to ensure our business anticipates and adapts to changing consumer trends.
The top twenty shopping centres in the UK1 account for some three per cent of UK shoppers' annual spend and we own eight of them, representing 76 per cent by value of our UK portfolio.
EPRA NNNAV2 per share amounts to 297p at 30 September 2018, reduced by 12p from 30 June, following a 3 per cent fall in like-for-like property valuations between 30 June and 30 September which reflects current negative investor sentiment towards UK retail property. We are however confident our business and assets are resilient and can weather the challenges we are currently seeing."
1. GlobalData Top 50 UK Shopping Centres, October 2018. Total UK annual shoppers' spend represents non-food retail, food services and leisure.
2. EPRA NNNAV adjusts NAV per share (diluted, adjusted) to reflect the fair value of borrowings, derivative financial instruments and deferred taxation on revaluation of investment and development property.
- continued tenant demand in period, signing 84 long-term leases (Q3 2017: 73 leases) delivering £15 million of annual rent at an average of 8 per cent above previous passing rent and in line with valuers' assumptions. Year to date, signed 200 long-term leases (2017 year to date: 176 leases) delivering £32 million of annual rent at an average of 7 per cent above previous rent, on both a headline and net effective basis
- rent reviews settled in the period on average 5 per cent above previous passing rent. Year to date, we have settled 102 rent reviews for new rent totalling £30 million, 8 per cent above previous passing rents
- expect a further year of like-for-like net rental income growth, with anticipated full year growth for 2018 to be in the range of 0 per cent to 1 per cent, impacted by some 1.5 per cent from tenant failures in 2018
- improved occupancy of 97.0 per cent, a 0.4 per cent increase since June 2018 and 0.4 per cent ahead of September 2017
- outperformed footfall benchmark by 170 basis points, with footfall down 1.3 per cent year to date
- year to date capital investment of £147 million. Successfully opened the £180 million extension of intu Watford, on time and on budget with over 90 per cent of the 380,000 sq ft project now let or in advanced negotiations. On site with projects to substantially enhance intu Lakeside, intu Trafford Centre, Madrid Xanadú and Manchester Arndale
- property revaluation deficit of £298 million (3.0 per cent) in the period, reflecting current negative sentiment towards UK retail property. Portfolio valued at £9,580 million at 30 September 2018
- NAVPS (diluted, adjusted) of 344 pence (30 June 2018: 362 pence), the decrease due to the property revaluation deficit. EPRA NNNAV per share of 297 pence (30 June 2018: 309 pence) with the property revaluation movement partially offset by an improvement in mark to market movement of borrowings and financial instruments
- net external borrowings of £4,847 million (30 June 2018: £4,792 million). Reflecting reduced property valuation, loan to value increased to 50.6 per cent from 48.7 per cent at 30 June 2018
- cash and available facilities of £665 million at 30 September 2018, has been reduced by the scheduled repayment of a £160 million bond in October 2018
- mixed use opportunities include the potential for 5,000 private rental sector residential units and around 600 hotel rooms