Intu cheers strength of Britain's commercial property sector
Shopping centre owner Intu has shrugged off the closure of BHS and cheered the strength of Britain's commercial property sector after securing a higher price for its Bromley site after the Brexit vote.
In its latest trading update, Intu maintained its growth targets after reporting occupancy rates above 95%. The company said like-for-like net rental income is set to reach 3% to 4% this year.
T hat is despite the collapse of BHS which resulted in the closure of 10 stores across Intu sites - representing about 1% of shopping centre rents. It said new letting had more than offset the impact.
UK footfall rose by 1.2% between July and October compared with a year earlier, while footfall and retail sales jumped between 2% and 3% at its Spanish locations.
The company also cheered a deal to sell its majority stake in the Intu Bromley shopping centre for £177.9 million, marking a 1.1% premium on the June 30 valuation of £175.9 million.
It comes despite fears that commercial property prices would gradually decline across the UK following the EU referendum.
"Sentiment in the overall UK property investment market since the vote would indicate a small decline in market values across many sectors including retail property," Intu said in its trading update.
"However, little transactional evidence is available for prime UK shopping centres, and our disposal of Intu Bromley at a consideration above the June 2016 market value is indicative of the continuing investment demand in this sector."
But investors appeared unimpressed, with shares falling 1.1% or 3.2p to 288p in early trade.
Intu said: "Overall, while the prospects for the UK economy are particularly unclear as the Brexit agenda is pursued, we continue to be positive about the performance of the Intu business with stable footfall, occupancy over 95%, good progress on lettings and rent reviews and strong momentum in our programme of active management and extensions."