Shopping centre owner Intu hit by store slump

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Intu

The owner of the Lakeside and Trafford Centre shopping centres, Intu, has cut its forecast for rental income, blaming the retail downturn.

Intu said 2019 would be “challenging” due to a rise in rescue deals, as stores struggle to pay rent.

It added that retailers were also delaying signing new leases due to “political and retail” uncertainty.

Intu said its like-for-like rental income for the year would fall by between 4-6%.

In February, the company had said it expected rental income to drop by 1-2%.

Occupancy of Intu’s shopping centres fell 1.1% to 95.6% for the first three months of 2019, compared to the previous quarter, due to a rise in retailers going into administration or agreeing rescue deals, known as company voluntary agreements (CVA) with creditors.

CVAs allow retailers to renegotiate rents at stores that remain open.

Intu said it had been affected by the closure of some New Look Men and HMV stores.

However, the company said that it was seeing new types of tenants paying higher long-term rents, such as Metro Bank opening up in Manchester Arndale, and the introduction of a “Market Halls” food court at Lakeside featuring food and drink from smaller independent businesses.

“Despite the current operating environment, I believe we have a very good business and am confident we can meet the challenges we are facing head on,” said newly-appointed Intu chief executive Matthew Roberts.

Retail woes abound

Many High Street retailers have run into trouble over the past two years.

Last year, the House of Fraser department store chain fell into administration, before being bought by Mike Ashley’s Sports Direct.

In December, music chain HMV fell into administration for the second time in six years, blaming a “tsunami” of retail challenges, including business rate levels and the move to digital.

Last month, department store chain Debenhams announced a CVA and named 22 stores it planned to close next year as part of its plans to close 50 outlets.

A report in November by accountancy firm PwC found that about 14 shops were closing every day, with High Streets face their toughest trading climate in five years.

A net 1,123 stores disappeared from Britain’s top 500 High Streets in the first six months of 2018, PwC said. It found that fashion and electrical stores had suffered the most as customers switched to shopping online.