Shopping centre owner Intu has reported a 7.7% decrease in net rental income during a “challenging” first half of the year and said it expects a similar result for the rest of 2019.
During the first six months of the year ending 30 June its rental income fell to £205.2m and its property revaluation deficit increased to £872.1m, compared with £650.4m during the same period last year.
The owner of Manchester’s Trafford Centre and Essex’s Lakeside shopping centre also reported the value of its portfolio decreased by 8.8% to £8.36bn.
Intu attributed the fall in rental income and property value to the increase in the number of CVAs and administrations that occurred during the period.
The company revealed to face the challenges over the past nine months it has carried out the “most comprehensive review of the business that intu has ever undertaken”, and has launched a new “transformational strategy”.
The new strategy is designed with the priority of fixing Intu’s balance sheet and includes improving customer service and experience, refurbishing its portfolio and moving away from a sole retail focus to include residential, hotel and flexible working spaces in its offering.
Matthew Roberts, Intu chief executive, said: “We know radical transformation is required and have developed a new, ambitious five year strategy to reshape our business and address the challenges we face, with a priority to fix our balance sheet. With the people changes we have made, we now have the right leadership team in place with the appropriate skill sets to deliver this plan and drive the business forward.
“Regardless of current sentiment, one thing is clear: the physical store is not dying, it is evolving. The right store in the right location still plays a vital role in retailers’ multichannel strategies and we are starting to work with them as partners sharing the risks and rewards.”
He added: “Our centres will also transform as we turn them into thriving communities – places where people want to live, work and have fun, as well as shop. Change will not happen overnight, but I am confident we have the right plan in place and an energised, dynamic team to deliver it.”