Shopping centre owner Intu has launched what it has dubbed a “transformational” five-year strategy as it bids to arrest tumbling rental income and asset values.
The property giant plans to focus on four strategic priorities, including shoring up its balance sheet, driving efficiencies, sharpening its focus on customers and transforming its malls as it grapples to revive its fortunes.
In a bid to achieve the latter goal, Intu said it would place an “initial focus” on residential, hotel and flexible working spaces, rather than retail.
Intu will also set about “modernising the lease structure”, revealing plans to include “store generated online sales” in future rental agreements with retailers.
The shift comes after the business was hit by “a higher level of administrations and CVAs” in the retail and food and beverage sectors. It also lamented the impact of “political uncertainty in the UK and weak consumer confidence” on rents, property valuations and footfall.
In the six months to June 30, Intu’s net rental income slumped 17.9% to £205.2m. On a like-for-like basis, rents were down 7.7%.
That drove underlying earnings down 32.1% to £66.4m.
The value of Intu’s shopping centre portfolio, which includes Lakeside in Essex, Newcastle’s Metrocentre and the Victoria Centre in Nottingham, fell 8.8% year on year to £8.36bn.
Footfall edged up 0.4% in its UK destinations and grew at 3.5% in its Spanish malls.
Intu boss Matthew Roberts said the first half had been “challenging” for the business and admitted there were “no quick fixes” to the company’s problems. But he insisted he was “confident that we can address them head-on”.
He added: “Regardless of current sentiment, one thing is clear: the physical store is not dying, it is evolving. The right store in the right location still plays a vital role in retailers’ multichannel strategies and we are starting to work with them as partners sharing the risks and rewards.
“Our centres will also transform as we turn them into thriving communities – places where people want to live, work and have fun, as well as shop.
“Change will not happen overnight, but I am confident we have the right plan in place and an energised, dynamic team to deliver it.”
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