Merry Hill owner intu facing Brexit challenges this year

With 17 major shopping centres across the country, including Lakeside and the Trafford Centre, intu said it was in a good position to benefit from retailers putting a priority on expanding into 'established locations with strong footfall'.

In a trading update it said it had agreed 42 long-term leases worth £6m a year in rent and occupancy across its centres was at 95.8 per cent.

The company has previously said it will spend around £100 million on expansion and improvement of the Merry Hill centre, including a new restaurant quarter and fresh leisure attractions.

David Fischel, intu's chief executive, said: “Although retailers are being selective with their expansion plans, they are prioritising expansion to prime established locations with strong footfall. intu as the UK market leader with 17 prime centres is well positioned to take advantage of this demand.

"The environment for business this year is likely to be challenging with considerable uncertainty regarding the UK’s EU exit. However, it is our intention to deliver continuing growth in like-for-like net rental income.”

He added: “The active tenant demand of last year has continued into the current year with 42 long term leases signed in the first quarter representing £6 million of annual rent, 5 per cent above the previous passing rent. We have attracted a number of well-known international brands such as Hugo Boss, Guess, Tesla and Tag Heuer.

"We have made further progress with our development pipeline. We are particularly focussing on creating a differentiated leisure element and 90 per cent of the space in the intu Lakeside extension is either exchanged or in solicitors’ hands, well ahead of the opening at the end of 2018."

Meanwhile intu has continued its expansion in Spain, buying Madrid's Xanadu shopping centre for 530 million euros (£447m), giving it three of the country's top 10 centres.

Back in the UK, intu says rental growth this year is likely to be between zero and two per cent, down in the first half but up in the second due to units being held for redevelopment and the impact of the BHS closures last year.

Of the 10 BHS stores that closed in 2016, intu says it has now relet two units, is in advanced negotiations on four units and two form part of redevelopment projects at intu Broadmarsh and intu Watford. The remaining two units are at earlier stages of negotiations.

Among the highlights since January are Tag Heuer opening its first West Midlands store at Merry Hill, Tesla at intu Milton Keynes and Hugo Boss and Guess signing up at intu Metrocentre in Gateshead.