Lakeside owner SGS reports 'strong performance' in 2022

Shopping centre owner SGS has released a financial update for the full-year ending 31 December 2022, revealing its strategic priorities for the next three years. 

The company continued to make "significant progress" against its core strategic objectives in 2022, including "the creation of a stable income profile and well-controlled cost base, as well as the transition of its shopping centres towards compelling retail and leisure destinations, ensuring their future viability".

Rent collections normalised and were close to 100% for each quarter in 2022. Net rental income at 31 December 2022 reached £68 million, over £3 million ahead of last year’s business plan, due to "successful leasing activity".

All four shopping centres, Lakeside, Atria Watford, Victoria Centre and Braehead, contributed to SGS's "strong performance" over the year.

SGS also agreed around 100 leases across 2022, with occupancy up 86% over the year. The company's footfall continued to be "strong", outperforming the Springboard benchmark every month in 2022.

Looking ahead, SGS hopes to deliver "significant" net rental income growth over the next three years. Its priorities include:

• Create a stable income profile to enable buyers to underwrite and capitalise income.
• Transition asset profiles towards the future allowing buyers to underwrite long-term asset viability.
• Maintain cost discipline to maintain affordability of space for tenants.
• Diversify return drivers to reduce the retail exposure and add alternative use opportunities.
• Enhance data and insights capabilities.
• Roll out ESG strategy that underpins portfolio value.

Steve Gray, Head of European Retail Asset Management at Global Mutual, said: “2022 performance was strong across the entire portfolio, despite pressures generated by rising interest rates and inflation.

"Footfall at the SGS centres outperformed the wider market, occupancy increased further, and we saw rent collection stabilise – providing us with a firm financial footing and a platform for growth. While some headwinds remain, we are confident in our outlook, and in the resilience of our market-leading assets.

"Looking forward, we remain focused on our core strategic priorities, and on creating retail assets that meet the needs of today’s consumers and tenants alike. This means a continued focus on attracting a diverse mix of retailers, as well as a compelling leisure and food & beverage offer. We look forward to progressing our plans further this year.”