Johannesburg - Intu Properties, a leading owner, manager and developer of major UK shopping centres with a growing presence in Spain, has admitted the vote for Brexit meant it would have to be extremely confident about a project before embarking on it.
“We would be fools not to account for the increased level of uncertainty,” Intu Properties’ chief executive David Fischel said yesterday. But Fischel stressed Intu Properties' capital expenditure plans were laid out and “essentially as before”.
“We’ve actually only got £200 million (R4 billion) of committed projects at the moment so we are not heavily exposed to development,” he said.
Intu Properties’ UK near-term development pipeline amounts to £529m till the end of 2019, with a further £187m in Spain.
Fischel said the UK was now in a period of uncertainty in relation to many factors that impacted the property investment and letting markets, which might result in a reduction in market activity and liquidity.
But Fischel stressed that with more than £500m of cash and available facilities, Intu Properties was in a strong financial position and well positioned to take advantage of opportunities when they arose.
He said it would fund its near-term pipeline from cash and available facilities and from recycling capital, such as the sale of its interest in Equity One in the US. Intu Properties disposed of its interest in Equity One for £202m in January to complete its exit from the US and realise a gain on disposal of £74m.
Fischel said the exit from the US would help them to focus on their core shopping centres.
He said further recycling potential lay in the introduction of partners into some of their shopping centres.
Fischel said it was “very early days” since the vote for Brexit and although the macroeconomic weakness had increased, it had not noted any discernible change in customer flow at its centres and had continued to sign deals with retailers for new space.
He said the markets investors were probably most concerned about since the referendum were the City of London office market and the high-end residential market. Fischel said shopping centres should be an asset class of low volatility.
Intu Properties yesterday reported a 10 percent increase in underlying earnings a share to 7.5 pence in the six months to June from 6.8p in the previous corresponding period.
Fischel said this was driven by excellent growth in net rental income of 7.5 percent to £219.4m on a like-for-like basis.
Intu Properties has raised its guidance for the full-year like-for-like rental income growth to 3 percent to 4 percent.
Occupancies improved to 96.1 percent from 95.1 percent.
An unchanged dividend of 4.6p was proposed.
Intu shares rose 0.78 percent yesterday to R55.40.
BUSINESS REPORT