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Interim Management Statement for the Period from 1 January 2013 to 8 May 2013
INTU PROPERTIES PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: ITU
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:
o £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
o Urban Outfitters are to open at intu Victoria Centre in Nottingham,
demonstrating confidence in recently announced refurbishment plans
o 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 a 40,000 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 Sandler +44 (0)20 7796 4133
SA: Nick Williams/Vanessa Hillary, College Hill +27 (0)11 447 3030
Sponsor:
Merrill Lynch South Africa (Pty) Limited
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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