Diversification of Tenant Mix helps Intu to Strong First Half

Posted on 1 August, 2014 by Kirsten Kennedy

As consumer confidence continues to grow, shopping centre owners are benefiting from a boom in spending and an increase in retail tenants looking to expand their store portfolios. This has seen Intu Properties enjoy a successful first half, with revenues and profits surging due to strong investment demand within its prime shopping centre properties.


Intu, which was previously known as Capital Shopping Centres, currently owns nine of the top 20 shopping centres in the UK, including the Trafford Centre and Arndale in Manchester. In total, the firm owns 18 shopping centres throughout the UK.

In the six months to June, Intu recorded a significant increase in pre-tax profit before joint ventures and associates, with the £567.8 million massively outperforming the £179.8 million achieved during the same period last year. Similarly, half year revenues climbed to £261.1 million, comparing strongly to the £250.3 million figure noted in the first half of 2013.

Intu believes that its investment into diversifying the tenant mix within its major shopping centres – placing a strong emphasis on the leisure offering – is one of the main reasons for this overwhelmingly positive result.

In a statement, it said; “Shopping is no longer just about buying things you need – today’s customers demand much more and their spend is very clearly linked to dwell time in our centres.

“Shopping centres are now expected to offer convenience, choice, great tenant mix, flagship stores, home delivery, click and collect, leisure activities, great dining options, entertainment, socialising, communicating and a place to meet with friends and family.”

All but three of the shopping centres in Intu’s portfolio increased in value during the first half of the year, but it has been the Trafford Centre which has proven to be the feather in the firm’s cap. This development is now valued at £2.2 billion, a strong increase from the £1.9 billion valuation taken during the first half of 2013 and further proof that the upturn in economic fortunes is having a beneficial impact upon players in the retail industry.

Yet it is not solely the revaluation of existing properties in its portfolio which have proved profitable for Intu. During the first half the firm completed two separate deals to acquire both the Westfield Derby shopping centre, now rebranded as Intu Derby, for £390 million and the Merry Hill shopping centre in Dudley.

Although Intu Merry Hill was doubtlessly a clever investment, it is Intu Derby which has truly shone. With 1.3 million square feet of commercial space, the development offers the 25 million consumers visiting per year 180 stores over two levels and a 12 screen cinema.

Chief executive of Intu Properties, David Fischel, says; “Intu has recorded a strong first half performance with a 7.6 per cent like for like valuation uplift, increasing net asset value per share to 372 pence and taking the overall market value of our prime UK shopping centres to £8.8 billion.

“The initial indications from the major centres we acquired in the period, now rebranded as Intu Merry Hill and Intu Derby, are very positive.

“The letting market is showing encouraging signs of improvement and we are gaining further momentum with our £1.2 billion active management and development pipeline.”

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