Intu Properties plc (LON: INTU) have seen their share price crash after expectations for revenue income have fallen for financial 2019.
The retail property giant said that forecasts for 2019l like-for-like net rental income was likely to be down by roughly 9% compared to last year, alerting shareholders.
Additionally, half the reduction would come from the impact of controversial cost-cutting insolvencies known as company voluntary arrangements (CVA).
Retail giants including Sir Philip Green’s Arcadia and Monsoon have both embarked on CVAs to close stores and cut jobs amid an industry downturn.
New rent in the nine months to 30 September 2019 hit £19 million, falling from £32 million during the same period last year.
On a positive note for the property firm, footfall rose 0.9% “significantly outperforming Springboard footfall monitor for shopping centres which was down on average by 2.4 per cent”, the group said.
In their third quarter update, Intu reported that 7 long-term leases amounting to £5m in annual rent, compared with 84 leases equalling £15m in annual rent in the same period a year ago.
In the sector, competitors have been quick to move amidst slowing business revenues and tough market conditions.
Growthpoint (JSE: GRT) are close to formalizing a deal for UK based Capital and Regional (LON: CAL) in a reported £150 million deal.
“In the last quarter, we have continued to face challenging market conditions along with the rest of the sector. In particular, CVAs were slightly worse than expected,” said chief executive Matthew Roberts.
He added: “In the face of these challenges, there is much that gives me confidence about intu. Many of our top customers are global, well capitalised businesses and having visited 17 Intu centres in recent weeks, there is a very different feeling on the ground to the one we read about regularly.
“Our centres are busy with footfall and occupancy significantly above the industry benchmarks. We know we have the best centre in each city and region that we operate.”
“We have also seen a pick-up in letting activity in recent weeks which has seen Harrods take 23,000 sq ft at Intu Lakeside to launch its first standalone beauty store, H Beauty, and Zara sign for a new flagship store at St David’s, Cardiff,” Roberts said.
Shares of Intu have plummeted 19.21% after the forecast and are trading at 32p per share. 6/11/19 11:24BST.
