31st Jul 2014 09:14
LONDON (Alliance News) - Shopping centre owner Intu Properties PLC saw its share rise Thursday after strong investment demand for prime shopping centres drove up property valuations, and it said the UK's economic recovery was encouraging retailers to let more space.
The company's net asset value per share rose to 372 pence on June 30, from 346 pence a year earlier, buoyed by a GBP573 million, or 44 pence a share, property valuation gain. That represented a 7.6% like-for-like valuation gain, ahead of the benchmark IPD monthly index, retail, which was up 3.5% on the year.
In March, Intu bought two UK shopping centres for a combined GBP868 million from Westfield shopping centres, one in Derby and the other in Birmingham. They have now been renamed Intu Derby and Intu Merry Hill, respectively. Its portfolio also includes the Trafford Centre in Manchester, Lakeside in Essex and Metrocentre in Gateshead.
The company Thursday said initial indications from the newly bought centres are "very positive".
It also said the broader shop letting market is showing encouraging signs of improvement as the UK economy recovers. It signed 98 long term leases during the first half of the year, for GBP15 million new annual rent. That was 4% above previous passing rent and in line with valuation assumptions, it said. It also has about 140 lettings in the hands of solicitors.
Its portfolio occupancy improved to 96% at the end of June, from 95% at the end of December, 2013, while shopper footfall in its centres was up 1% on the year.
"We are encouraged by the continuing improvement in consumer sentiment and gradual growth in national retail sales. Our pipeline of lettings is indicative of increased retailer appetite for a physical presence in the best shopping centres, particularly those where change and investment are under way," the company said.
Still, net rental income only rose to GBP189 million in the first half including its share from joint ventures, from GBP181 million a year earlier, which the company put down to it completing re-letting units from lease expiries and 2013 retailer failures as well as holding units for future development plans.
Its pretax profit rose to GBP567.8 million, from GBP179.9 million a year earlier, buoyed mainly by the property revaluation gain.
Intu kept its interim dividend unchanged at 4.6 pence a share.
Intu shares were up 1.6% at 325.40 pence Thursday morning, one of the biggest gains on the FTSE 100.
By Steve McGrath; [email protected]; @stevemcgrath1
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