Intu posted a drop in adjusted net asset value (NAV) of 362p per share during the six months to 30 June, following a sharp fall in property values.
The shopping centre owner, which incurred exceptional administration expenses totalling £6.3m during the period in relation to Hammerson’s takeover bid in 2017, saw adjusted NAV per share fall 11.9%, from 411p on 31 December.
Its declining property values led to a revaluation deficit of £650.4m, marking a reduction of 5.6% on a like-for-like basis and down from a £17.7m surplus during the equivalent six months in 2017.
The company made a loss of £503.4m for the six months, against profit of £122.7m during the same timeframe in 2017.
Intu said the slump in values were driven by weakening sentiment in the UK retail property investment market.
“The valuers’ assumption is that investors will focus on and seek higher net initial yields,” it added.
During the six-month period, intu’s average net initial yield increased by 33 basis points to 4.69%.
Net rental income for the period was £223.1m, down from £226.2m in the six months to June 2017.
Like-for-like net rental income grew by 1.3% to £208.2m, driven by new lettings and rent reviews despite a 0.9% hit from retail failures including company voluntary arrangements and administrations.
Intu said it is targeting full-year growth in like-for-like net rental income at the lower end of the stated range of 1.5-2.5%, subject to no further material tenant failures. It is aiming for 2-3% growth per annum during the next three to five years.
Chief executive David Fischel said: “During a period of weakening sentiment in the retail market, which has impacted prime shopping centre valuations, intu has delivered a resilient operational performance in the first half of 2018.”
Fischel is set to leave intu once his successor is announced. He has worked at the company for 33 years and has led the retail REIT since 2001.
Occupancy levels stand at 97%, with aggregate lettings 6% ahead of previous rents.
Intu said it has made more than £1bn in disposals over the past four years, getting rid of non-core assets and bringing in joint venture partners on other centres.
This included a joint venture with LaSalle Investment Management on a 50% stake in intu Chapelfield, Norwich, for an initial net consideration of £148m, completed in January.
It added that is has “flexibility for further disposals or part disposals”, since around two-thirds of its portfolio is fully owned.
Intu will open its £180m Watford extension in October, followed by the £72m intu Lakeside leisure extension [pictured above] in the first half of next year.
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