Merry Hill owner intu suffers fall in value of its shopping centres

Intu says it is committed to investing £12 million into the shopping centre, including re-cladding, despite admitting to a difficult year.

Intu's chief finance officer Matthew Roberts said: "Merry Hill is very much a winning destination offer and we want to invest more in it.

"We may fund that through disposing of some of our other centres. We are long term holders for Merry Hill."

The shopping centre landlord, which wants to enhance the 'look and feel' of Merry Hill, swung to a loss for the full year as a challenging retail backdrop and Brexit uncertainty reduced property values.

For the 12 months to December 31, the company swung to a loss of £1.17 billion, compared with a profit of £203.3 million a year ago.

Intu reported net rental income fell 2.1 per cent to £450.5 million from a year earlier, while like-for-like net rental income increased 0.6 per cent.

Assets fell 13.3 per cent to £1.40 billion, driven by weakening sentiment in the UK retail property investment market.

The firm's occupancy rate was 96.7 per cent, down from 97 per cent the previous year. Footfall in its shopping centres fell 1.6 per cent, beating the average fall of 3.5 per cent seen across the country.

intu Merry Hill's market value is £777.2 million and it has annual property income of £41.3 million. It has 217 stores and has seven per cent of vacant shops.

Mr Roberts said: "Merry Hill is going well. The new Next opened in the autumn and that has traded very strongly – it has been one of the best performers in their estate in the last three to four months. A new Flannels has also opened and Primark has been expanded.

"We have owned Merry Hill for about four years and are very pleased with the progress that has been made.

"We still have plans to improve the leisure offering at some stage."

He said that while a few stores had been lost, replacements were being attracted.

"We have got some exciting conversations going on for new tenants," he added.

David Fischel, intu chief executive, said: "intu has again delivered a resilient operational performance which demonstrates how our centres differentiate themselves as winning destinations for retailers with their variety and excitement. We own and manage many of the best shopping centres, in some of the strongest locations, in the UK and Spain.

"In a difficult year for the whole UK retail real estate sector and with very limited comparable transactional evidence, property valuations declined as sentiment weakened significantly. We reported a further three per cent fall in valuations in the final quarter of 2018, additional to the nine per cent fall over the first nine months of the year.

"Although sentiment in the retail sector is at an all-time low, the reality is that around 400 million shoppers visit our centres each year and occupancy is at 97 per cent. As some 85 per cent of all retail transactions still touch a physical store, demand from major retailers continues to be positive for our centres.

"New tenants to our centres include Abercrombie & Fitch, Uniqlo, Bershka, and Monki, with established retailers such as Next, Primark, Zara and River Island all upsizing.

"Our tenants invested a record £144 million in their stores over the year, a clear indication that these retailers see great physical space as a key part of a successful multichannel strategy."

intu is behind 17 shopping centres across the UK, including the Trafford and Arndale Centres in Manchester, Lakeside in Essex and Metrocentre in Gateshead.

In 2018 the group was subject to takeover offers by rival Hammerson and by its largest shareholder, Peel Group, together with the Canadian group Brookfield, but both offers were eventually abandoned.