Mall owner Intu expects boost after disappointing earning

INTU Properties, the JSE-listed owner of some of the UK’s largest malls located in prime parts of London and other parts of Britain, said yesterday although its earnings had taken a hit in the first half of this year, projects in place will boost the group.

Its net asset value (NAV) per share rose to £3.72, reflecting a £573m or 44p per share property valuation gain. This meant NAV rose 7.6% like-for-like, driven by strong investment demand for prime shopping centres.

Old Mutual Investment group’s property portfolio manager Evan Robins said the NAV growth was impressive, but earnings disappointed the market.

“Earnings, though, disappointed as they were weaker than expected and worse than last year, with like-on-like income growth down 3.6%.

“The company had guided weak earnings, but the market still did not expect this low. Some of the weakness is due to preparing for redevelopment activity in some centres,” he said.

Most offshore South African property companies have outperformed domestic ones this year.

But Intu has struggled to generate strong earnings. CEO David Fischel said that the group had made good acquisitions.

Intu bought the two regional malls and a retail park in the UK for a total £867.8m in March or about R15.7bn at exchange rates at the time, from Australian shopping centre giant Westfield.

The deal would give Intu access to Birmingham, England’s second-biggest city, where it has never had exposure before, and let it cement its position in Derby and Northern Ireland.

An improving UK economy, helped largely by consumer spending, boosted the performance of Intu’s shopping malls and placed it in a position to make the acquisitions.

The deal was worth more than the V&A Waterfront, a prime South African retail asset, at current exchange rates.

The V&A was recently valued at just over R11bn by joint owners Growthpoint Properties and the Public Investment Corporation.

Intu was optimistic that earnings would improve in 2015.

“We are encouraged by the continuing improvement in consumer sentiment and gradual growth in national retail sales. Our pipeline of lettings is indicative of increased retailer appetite for a presence in the best shopping centres, particularly those where change and investment are under way,” Mr Fischel said.

andersona@bdfm.co.za

Get commercial property news by email

Free alerts when we publish — pick a focus or get everything, unsubscribe in one click. Subscribe »