Retail CVAs to drag on income as new Intu chief outlines strategy

Shopping centre owner Intu said it is braced for a “challenging” 2019 amid a rise in company voluntary arrangements (CVA) among troubled retailers, as new chief Matthew Roberts set out his strategy to reduce debts.

The new boss said a “higher-than-expected level of CVAs” and a slowdown in new lettings amid Brexit uncertainty will have an impact on performance over the year.

Intu has reduced its guidance for rental income for 2019 as it predicts an increase in CVAs, with income expected to fall by between 4% and 6% during the year.

Roberts, who started his role this week following his promotion from finance chief, laid out Intu’s strategy to reduce debts, which includes retaining more cash generated within the business, disposals and part-disposals at sites in the UK and Spain, and a reduction in its investment pipeline.

The retail property business sold a 50% stake in its Intu Derby shopping centre for £186m, and has received interest regarding the sale of its Spanish centres, it said.

The company is also considering refinancing its legacy Trafford Centre debt, which would remove amortisation payments that are set to rise over the coming year, and increase the potential for a part-disposal of the shopping complex in the future.

Over the first three months of the year, Intu has secured 53 long-term leases, down from 60 over the same period last year.

Annual rent generated over the first quarter also declined, down to £6m from £10m during the same quarter last year.

Occupancy at the end of March 2019 was down to 95.6% compared with 96.1% in March 2018, due to CVAs and administrations, as well as the closure of some New Look Men and HMV stores.

Footfall for the year to date is “marginally ahead” of the same period last year, while Easter sales slipped -0.2% compared with Easter 2018.

Roberts said: “Our operational performance in the quarter has been stable.

“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.”