(Alliance News) - Intu Properties PLC on Wednesday said it experienced difficult trading conditions in the third quarter and warned that its like-for-like net rental income will fall in 2019.
Intu said leasing activity slowed in the period to September 30, with customers more reluctant to dig into their coffers due to prevailing political and economic uncertainty.
The firm has however seen an uptick in leasing activity with retailers. Intu said it struck deals with British luxury department store Harrods, Spanish retail chain Zara SA, and an Alibaba Group Holding Ltd subsidiary.
Intu said: "We have also seen a pick-up in letting activity in recent weeks which has seen Harrods take 23,000 square feet at intu Lakeside to launch its first standalone beauty store, H Beauty, and Zara sign for a new flagship store at St David's, Cardiff. In Spain, AliExpress opened their first European store at intu Xanadu, with footfall at the centre up 20% following the opening."
Elsewhere, Intu said it was hurt by company voluntary agreements of other retailers: UK-based Monsoon Accessorize and Topshop-owner Arcadia Group Ltd.
Intu explained: "We anticipate that like-for-like net rental income for 2019 will be down by around 9%, with more than half the reduction coming from the impact of CVAs such as Arcadia and Monsoon."
Intu footfall was up 1.2% year-on-year in the third quarter, and the company's rental income was lifted by 4% after 34 rent reviews during the period.
Intu added: "Year to date,we have settled 135 rent reviews for new rents totalling GBP40 million, an average uplift of 6% on the previous rents.
"Year to date footfall in our centres is 0.9% ahead of the same period in 2018. In the UK, footfall was up 0.4%, significantly outperforming Springboard footfall monitor for shopping centres which was down on average by 2.4%. The footfall growth in Spain has benefited from AliExpress at intu Xanadu, where footfall was up by 20% in the first six weeks of opening."
Intu also unveiled plans to "fix its balance sheet", as it eyes cost-cutting measures.
The firm said it is in talks to dispose of three Spanish shopping centre assets, intu Asturias and intu Puerto Venecia, and at intu Xanadu.
It is also reviewing its UK assets, which could be subject to disposals. The company recently sold 50% of its interest in its Derby site.
Turning to site developments, Intu said a GBP75 million project in Manchester's Trafford Centre will be completed by Spring 2020. The company said it handed 85,000 square feet of space to retailer Primark, owned by FTSE 100 firm Associated British Foods PLC.
A GBP72 million extension of the Lakeside centre in Essex was opened in the third quarter, and Intu said it has already delivered a 7% boost to footfall.
Intu shares were 6.1% lower at ZAR7.38 each in Johannesburg early on Wednesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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