8 MAY 2013
INTU PROPERTIES PLC
INTERIM MANAGEMENT STATEMENT FOR THE PERIOD FROM 1 JANUARY 2013 TO 8 MAY 2013
David Fischel, Chief Executive, commented:
"In the first quarter of 2013 we have launched the first UK nationwide prime shopping centre brand, acquired a major asset with considerable growth potential funded by an equity placing and refinanced a third of our debt to achieve a significantly extended maturity profile. Although the UK retail environment remains difficult we have strong momentum across the business, with the roll out of our digitally integrated customer experience and our £1 billion pipeline of development projects as we position each of our centres for medium term value creation." Trading update
The UK retail environment remains difficult with retailers continuing to be cautious in entering into store commitments. Intu's centres however continue to out-perform national benchmarks and attract new brands and flagship stores.
* Footfall in our centres during the period has been 1 per cent lower year to
date than 2012. This represents a significant out-performance of Experian's
measure of UK national retail footfall which declined 4 per cent reflecting
the weak economic background
* Occupancy across our centres remains high at 95 per cent, down 1 per cent
from 31 December 2012 due to expiry of seasonal lettings (31 March 2012 -
95 per cent). In aggregate units amounting to three per cent of rent are
currently being traded by administrators and are treated as occupied within
the 95 per cent
* 33 new long term leases were signed in the quarter, representing £8 million
of new passing rent, in aggregate 2 per cent above previous passing rent
and in line with valuation assumptions. These include:
*
+ £3 million of new lettings and renewals at Cribbs Causeway, Bristol, a
significant portion of the 2013 expiries at the centre and including
Arcadia and Aurora brands
+ Urban Outfitters are to open at intu Victoria Centre in Nottingham,
demonstrating confidence in recently announced refurbishment plans+ improving our catering mix, including introducing Wagamama at Cribbs
Causeway, Ed's Diner at intu Metrocentre and Circle 360 Champagne Bar
at intu Lakeside
* To date tenants have committed to investing around £30 million in 2013 into
new shopfits for stores in our centres
Midsummer Place acquisition
In March we acquired Midsummer Place, Milton Keynes, a key strategic asset for Intu. The £250 million acquisition was financed by an equity placing.
Midsummer Place is a high specification, well-let centre with a modern configuration of retail units. The centre opened in 2000 adjoining the town's original "thecentre:mk". Milton Keynes is a thriving location and one of the UK's leading regional shopping centre destinations. We are confident that the highly accessible centre in an affluent catchment will generate significant rental income growth in a three to five year timeframe with planned active management projects.
Financing
As announced in February, we have established a new debt funding platform by contributing £2.3 billion of assets into a flexible, ring-fenced security pool and raising £1.15 billion of bond and bank debt secured on it. The inaugural bond issue was highly successful with strong demand supporting upsizing to two tranches of 'A' rated debt totalling £800 million with the balance of £350 million provided by a five year bank loan. The transaction represents the first sterling multi-debt sourced real estate structured financing since 2007. Key benefits of the structure are:
* access to the bond markets and a range of other instruments diversifies our
sources of funding
* blended cost of 4.4 per cent, in line with previous funding cost of debt
secured on the four assets, whilst extending the weighted maturity on these
assets from 2 years to 10 years
* tranches of £450 million and £350 million maturing in 2023 and 2028
respectively significantly extend our overall debt maturity profile, from 6
years to 8 years
* in refinancing a third of the Group's debt, we have significantly de-risked
the 2015-2017 maturities and demonstrated that our prime assets can be
financed at around 50 per cent loan to value at competitive margins
Following the acquisition, the equity placing and the refinancing, net external debt was unchanged at £3.5 billion at 31 March 2013 and the debt to assets ratio (based on 31 December valuations) was 48 per cent. On a pro forma basis, were the 2.5 per cent convertible bonds 2018 to convert into equity, the net debt to assets ratio would reduce to 44 per cent.
Nationwide consumer-facing brand and transformed digital proposition
We announced in January the creation of intu, a nationwide consumer facing shopping centre brand, now the prefix for our shopping centres as well as the name of the company. Our aim is to generate stronger relationships with customers by providing them with a better experience in a dynamic, engaging and digitally-enabled retail environment.
As the traditional boundaries of online and offline shopping experiences are becoming more blurred, a key part of our plan is to integrate physical and digital retailing:
* we are the UK's first landlord to commit to large scale investment in
directly owned fibre optic networks in our shopping centres, giving direct
ownership of the WiFi technology and the subsequent data
* the roll out of this £8 million digital infrastructure plan has begun in
the period, with the launch of high quality free WiFi throughout the malls
of intu Trafford Centre and intu Lakeside, with intu Eldon Square and intu
Braehead to follow in the next few months
* we are also investing up to £10 million over three years in a
transactional, fashion focused, mobile enabled website. This will be
launched in summer 2013 to coincide with the provision of free WiFi to a
significant proportion of our shoppers and will launch with multi-channel
capability including click and collect services at our centres
* in addition, we have signed a partnership with Wireless Infrastructure
Group to install networks to support multiple mobile operators' 4G services
in what is thought to be the first for UK shopping centres
These innovations put us in a strong and flexible position to benefit from changing shopping habits.
In addition, since our announcement in January we have commenced the roll out of the new brand with considerable change taking place within our centres particularly in terms of signage and customer service and we have launched a number of nationwide marketing initiatives. The consumer roll out will continue for 18 months. Development activity
Our view is that for a shopping centre to thrive it needs to trade into the evening, providing the extended shopping hours which our customers want and a wider range of catering and entertainment options. Our £1 billion pipeline of organic developments over 10 years, including major extensions at intu Lakeside, intu Braehead and intu Victoria Centre, is focused on projects which position each of our centres as broader destinations, providing top retailers and iconic brands along with a mix of leisure. Significant progress in the period includes:
* Watford: we have acquired the Charter Place precinct adjacent to intu
Watford and are preparing a planning application for submission later this
year for its redevelopment and integration to create a 1.4 million sq ft
destination. The proposed cinema, restaurants, food store and large format
retail units will significantly enhance Watford's overall retail,
entertainment and leisure offer and will help in attracting additional
major brands to the town. Our plans to invest around £100 million from 2014
in the combined centre have already attracted significant retailer interest
in both the new space and the existing centre, including a new 32,000 sq ft
flagship store for Next to open by Christmas 2013
* Nottingham: we have released the designs of a major refurbishment of intu
Victoria Centre including impressive new entrances, reconfiguration of
space around the Central Square and new ceilings, flooring and lighting.
These have been well received both locally and by existing and potential
retailers, with several discussions now underway with brands not currently
represented in the City. Our planned redevelopment of Broadmarsh, focusing
on leisure and catering, followed by the extension of intu Victoria Centre
should see Nottingham reclaiming its rightful place in the UK retail
hierarchy
* Intu Eldon Square: work is progressing well on our refurbishment programme
and we are close to submitting a planning application for a cluster of 20
restaurants. These are attracting good operator interest and work could
commence in the first half of 2014
* Intu Trafford Centre: Next's expansion into adjacent units to create a40,000 sq ft flagship store is on plan, with the first phase successfully
opening in March. The £6 million investment by Sealife in an aquarium
attraction at Barton Square is on target for opening next month
We have established a joint venture in Spain (up to €5 million investment) with Eurofund, a local partner with a track record of successful retail development, for pre-development activity at two sites, in Valencia and Vigo, with potential for regional shopping centres. We are also working with Eurofund on the masterplan for the site of a potential major regional shopping centre in the province of Malaga over which Intu holds a purchase option until 2015.
Outlook
The pace of activity at Intu has accelerated in 2013 with significant progress in the first quarter. In addition, a range of initiatives is underway across the business which we believe will strengthen our national position as well as reinforce each of our assets in their individual catchments. Tenant failures, lease expiries and tenant caution over new store commitments remain risk factors likely to continue to impact short term earnings. However, we are driving medium term value creation by using our focus, scale and specialism to maximise the opportunities available to us in the changing marketplace.
Conference call
A conference call for analysts and investors will be held today at 9.00 BST.
A copy of this announcement is available for download from our website at intugroup.co.uk ENQUIRIES Intu Properties plc David Fischel Chief Executive +44 (0)20 7960 1207
Matthew Roberts Finance Director +44 (0)20 7960 1353
Kate Bowyer Head of Investor Relations +44 (0)20 7960 1250
Public relations
UK: Michael Sandler/Wendy Baker, Hudson +44 (0)20 7796 4133
Sandler
SA: Nick Williams/Vanessa Hillary, College +27 (0)11 447 3030
Hill
NOTES FOR EDITORS
Intu Properties plc (formerly Capital Shopping Centres PLC) owns and operates
some of the very best shopping centres, in the strongest locations right across
the country, including ten of the UK's top 25. You can find every one of the
UK's top 20 retailers in our shopping centres, alongside some of the world's
most iconic global brands.
With 16.6 million sq ft of retail space valued at over £7 billion as at 31
December 2012, our centres attract over 320 million customer visits a year and
two thirds of the UK population live within a 45 minute drive time of one of
our centres. Since 31 December 2012, Intu has acquired Midsummer Place in
Milton Keynes, adding over 400,000 sq ft of further space and 17 million annual
customer visits.
At the forefront of UK shopping centre evolution since the 1970s our focus is
on creating compelling destinations for consumers with added theatre. On 15
January this year, we announced the creation of a nationwide consumer facing
shopping centre brand - intu - and the transformation of our digital
proposition including a transactional website, to provide the UK's leading
shopping centre experience on and off-line.
We have an investment plan of £1 billion over the next ten years on active management projects and major extensions at most of our centres.
Over 80,000 people are employed at our centres across the UK and we are fully committed to supporting our local communities and the wider environment through meaningful and hands-on initiatives.
We changed our name from Capital Shopping Centres Group plc to Intu Properties plc on 18 February 2013.
For further information see www.intu.co.uk
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