Merry Hill value drops by £69 million as Intu shares plunge by 20 per cent

Shares in Intu slumped by more than 20 per cent after the property company revealed the toll the retail crisis is taking on its business.

Rental income across its estate has fallen by 7.7 per cent in the six months to June 30, to £205.2 million.

Occupancy at Merry Hill remains at 93 per cent, but a revaluation of the property has downgraded its overall worth by nine per cent to £707.9m.

The centre in Brierley Hill was valued at £777.2 million when the company released its full-year figures in February.

It comes as retailers increasingly find themselves closing stores and facing administration.

Chains including LK Bennett, Bathstore, Select, and Pretty Green have entered administration this year, resulting in store closures.

Meanwhile, Topshop owner Arcadia, Monsoon Accessorize and Debenhams are among those to have sought a Company Voluntary Arrangement (CVA) allowing them to pay lower rents and shut unprofitable sites.

Intu's property portfolio took a hit to its valuation, declining by 8.8 per cent to just under £8.4 billion.

On a brighter note, an £11m project to "improve the look and feel" of Merry Hill is ongoing, and fashion brand Mango is planning to open a shop in the centre near Dudley.

New chief executive Matthew Roberts, who took over as chief executive in April, said: "We have experienced further downward pressure on like-for-like net rental income and property values resulting from a higher level of administrations and CVAs as some retailers struggle to remain relevant in a multichannel world."

He added that, following a review of the business, Intu has developed a five-year strategy to tackle changes in the industry.

"Regardless of current sentiment, one thing is clear: the physical store is not dying, it is evolving.

"The right store in the right location still plays a vital role in retailers' multichannel strategies and we are starting to work with them as partners sharing the risks and rewards," said Mr Roberts.

Investor spirits were low following the update, with Intu shares dropping 21.4 per cent in early trading.

Analysts at Liberum called it an "awful" first half and said: "With no sign retail pressure is easing and full disposals proving hard to achieve, there is little we believe management can do to ease pain in the near term."