Strong stores remain at the heart of the retail experience despite the rise of online shopping, said Intu chief executive David Fischel as the shopping centre owner reported steady occupancy but a fall in profits as the value of its properties fell.
Net rental income of £450.5m in the year to December 31 2018 was down from £460m last year, while it also turned in a loss of £1.2bn, from a profit of £203.3m last time. Underlying that fall in profits was a £1.4bn deficit in the value of its properties, contrasting with a surplus of £47.3m at the same time last year.
Tenant failures hit its net rental income by 1.9%, although like-for-like income was up by 0.6% as new lettings and rent reviews lifted overall rents. However, occupancy levels stayed constant at 96.7%, from 97% last time. Footfall was down by 1.6% over the year, although the company said that was better than the industry average fall (-3.5%) for the year.
Fischel said: “Although sentiment in the retail sector is at an all-time low, the reality is that around 400m shoppers visit our centres each year and occupancy is at 97%. As some of 85% of all retail transactions still touch a physical store, demand from major retailers continues to be positive for our centres.
He said tenants, who include new arrivals Abercrombie & Fitch and Uniqlo alongside Next, Primark and Zara, had invested £144m in Intu stores over the year. That, he said, was “a clear indication that these retailers see great physical space as a key part of a successful multichannel strategy.”
Intu chairman John Strachan said that despite a year in which two bids for the company had come to nothing, the company had seen like-for-like net rental income grow for the fourth year in a row, while occupancy was at 97% with 248 new long-term leases signed during the year.
“This outcome is testimony to our long-term strategy of investing in our centres and the into brand, making them different, attractive and exciting so retailers look to our centres as key trading locations," he said.
Intu owns and manages 17 shopping centres in the UK and three in Spain, and said that it provided “compelling experiences, in centre and online, that make our customers smile and help our retailers flourish.” The statement added: “We attract around 400m customer visits and 26m website visits a year offering a multichannel approach that truly supports retail strategies.”
Image courtesy of Intu