Merry Hill owner intu confirms £110m spending spree

Intu, which owns 19 UK and Spanish shopping centres including the Trafford Centre and Lakeside, bought the half of Merry Hill it did not already own for £410m last June.

Since then Sainsbury's has pulled out but intu says it will use the former supermarket space as part of its strategy of increasing the size of major stores at the centre. River Island and JD Sports have already taken up increased space. It is also working on improvements to the centre's bus station.

Reporting its 2016 figures to the City today the company said: "We believe the centre presents a significant opportunity to re-engineer and update the tenant mix. Encouraging large flagship formats and reducing the number of smaller units will make the centre more attractive to retailers and customers, and improve the rental tone. This strategy is similar to that which has been successfully implemented at intu Trafford Centre and intu Lakeside.

Intu added: "At intu Merry Hill we have several projects expected to cost around £110 million to deliver our strategy for the centre. These include right-sizing a number of anchors and major space users, which in turn will reduce the number of smaller units, and repositioning the catering and leisure offering."

"Owning 100 per cent of intu Merry Hill allows us to advance the many improvement opportunities more rapidly and due to its size the returns should be meaningful. The first steps are already underway through taking back the former Sainsbury's store to facilitate sizeable re-tenanting transactions."

Meanwhile intu saw net rental income across its shopping centres rise 3.6% last year to £447 million, but profits fell sharply to £172 million from £518 million the year before. This was because of a £60.8 million fall in the valuation of its portfolio, largely due to redevelopment work at some sites. In 2015 profits were boosted by a £351m valuation surplus.

Underlying income was up £13 million to £200 million, and the company has hailed it as a 'strong' set of results. The 'pulling power' of its centres saw key fashion chains like Next, Primark, Inditex, H&M and New Look investing and increasing the size of their stores

Chief executive David Fischel said: "In a year which will be remembered for its political turbulence, intu is pleased to have recorded a strong set of results with six per cent growth in underlying earnings per share, an increased dividend and stable property values.

"We ended the year with £922 million of cash and available facilities, well placed to pursue our pipeline of active management projects, development and acquisition opportunities both in the UK and Spain."

He added: "Major retailers including Zara and New Look have upsized and upgraded existing units and rolled out more of their exciting brands in our prime regional centres. We welcomed international brands such as Victoria's Secret together with the expansion of premium fashion and lifestyle brands such as Jack Wills, Cath Kidston and Joules. In all, our tenants invested around £100 million in new shops and refits over the year which is a significant commitment to our centres."

Looking ahead, Mr Fischel said: "While the environment for business this year is likely to be challenging as the full impact emerges of the UK's EU referendum vote, we are well positioned as we focus on top quality assets in prime locations with high occupancy and strong footfall."

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