Shopping centre giant Intu has warned rents from retailers will fall as the volume of company voluntary arrangements (CVA) is “slightly worse than expected”.
The owner of Manchester’s Trafford and Arndale centres, which has a portfolio of 20 shopping centres in the 海角视频 and Spain, said it expects like-for-like net rental income for 2019 to be down by around 9 per cent.
More than half of the reduction is coming from the impact of CVAs such as Arcadia and Monsoon, Intu said in trading update for the period from July 1 to November 5 today.
Letting activity was also slower than expected in Q3, which Intu attributed to political and economic uncertainty.
Intu reported new rent for the nine months to September 30 was at £19m, down from £32m for the same period the year before, having signed 156 long-term leases in the year to date.
Despite challenging market conditions, the shopping centre owner reported footfall increased 0.9 per cent from last year, with footfall up 0.4 per cent in the 海角视频.
Matthew Roberts, Intu chief executive, said: “In the last quarter, we have continued to face challenging market conditions along with the rest of the sector. In particular, CVAs were slightly worse than expected.
“In the face of these challenges, there is much that gives me confidence about Intu.”
Most Read
He added: “Our centres are busy with footfall and occupancy significantly above the industry benchmarks. We know we have the best centre in each city and region that we operate.”
In July, Intu introduced a five-year plan to fix its balance sheet after its latest financial report showed multi-million pound losses for the first half of 2019.
To deal with this, Intu said “self-help measures” include disposals and part-disposals of assets both in the 海角视频 and Spain, retaining cash generated from operations within the business and reduction in capital expenditure pipeline.
Mr Roberts added: “We continue to consider all options to put us in the best position to deal with both our short and medium term liquidity requirements as we approach our next material debt maturity in early 2021.
“These options include disposing of assets, where we are in the advanced stages of selling two of our Spanish assets, and through to raising equity, which is also likely to form part of the solution.”
Intu share prices this morning fell 13 per cent.
AJ Bell investment director Russ Mould said CVAs remain the "bane of shopping centre owners like Intu’s existence".
Don’t miss
He said: “These vehicles allow struggling retailers breathing space to sort out their problems, close underperforming stores and cut their rent bills but this comes at an obvious price for landlords.
“Despite efforts to sort out the business and a strained balance sheet, including the decision to cancel the dividend, the company continues to see rental income fall.”
He continued: “This is being driven by the difficult environment facing its tenants – reflected in a rising number of CVAs including at Arcadia and Monsoon. And amid all these swirling pressures the company has admitted it may need to go cap in hand to shareholders for more funds.
“At least the company is starting to see some improvement in footfall and letting activity. It will hope a fragile recovery here isn’t derailed by the timing of a 海角视频 General Election smack in the middle of the traditional festive shopping season.”
Intu's shopping centre portfolio also includes Lakeside in Essex, intu Eldon Square in Newcastle, and centres in Derby, Nottingham, Stoke, Watford and Norwich.