The owner of the Lakeside and Trafford Centre shopping centres, Intu, has cut its predictions for rental income.
Intu said 2019 would be challenging due to a rise in rescue deals as stores are struggling to pay their rent. It added that retailers were also delaying signing any new leases due uncertainty in “political and retail”. Intu said the like-for-like rental income for the year would fall by 4-6%.
Tenancy of Intu’s shopping centres fell 1.1% to 95.6% in the first three months of 2019. Intu have secured 53 long-term leases which is down from 60 over the same period in 2018. This is due to the rise in retailer going into administration or agreeing rescue deals, company voluntary agreements (CVA), with creditors. CVAs allows retailers to renegotiate rents at stores that remain open.
The company said it was seeing new types of tenants paying higher long-term rents and the introduction of a “Market Halls” food court at Lakeside featuring food and drink from smaller independent businesses.
Debenhams which accounts for 3% of Intu’s rent roles announced a CVA last week however, none of its 22 stores plan to close in any Intu centres.
Newly-appointed Intu chief executive Matthew Roberts said: “Despite the current operating environment, I believe we have a very good business and am confident we can meet the challenges we are facing head on,”
Mr Roberts also said he expected “the remainder of 2019 to be challenging due to a higher than expected level of CVAs and a slowdown in new lettings as tenants delay their decisions due the uncertainties in the current political and retail environments”.
He added: “As such, we have revised our approach to how we guide towards our year-end like-for-like net rental income to factor in expected CVAs and have adjusted our 2019 guidance accordingly.”
Many high street retailers have run into trouble over the past two years. A report in November 2018 revealed that every day round 14 stores were closing as the high street suffers its toughest trading climate in five years. Figures by the Local Data Company showed a number of stores are empty and the number empty rose by more than 7,500 last year.
