Braehead owner Intu braced for tough times in retail

Shopping centre giant Intu, the operator of Braehead, near Glasgow, is bracing itself for a “challenging” year amid a rise in company voluntary arrangements (CVAs) among embattled retailers.

New chief Matthew Roberts said a “higher-than-expected level of CVAs” and a slowdown in new lettings amid Brexit uncertainty will have an impact on performance in 2019.

The group has cut its guidance for rental income for 2019 as it predicts an increase in CVAs, with income expected to fall by between 4 per cent and 6 per cent during the year.

The firm has sold a 50 per cent stake in its Intu Derby shopping centre for £186 million, and has received interest regarding the sale of its Spanish centres. It is also considering refinancing its legacy Trafford Centre debt.

Roberts, who started his new role this week following his promotion from finance chief, told investors: “Our operational performance in the quarter has been stable. Despite the current operating environment, I believe we have a very good business and am confident we can meet the challenges we are facing head-on.”

Over the first three months of the year, Intu secured 53 long-term leases, down from 60 over the same period last year. Annual rent was £6m, down from £10m during the same quarter a year earlier.

Russ Mould, investment director at AJ Bell, said: “The amount of retailers undergoing CVAs is really hurting Intu, so too a slowdown in new lettings as companies remain cautious about the political and retail landscape. CVA is an insolvency process that allows financially challenged companies to renegotiate debts with creditors including landlords. It inevitably sees landlords having to accept lower rents to avoid vacant lots.

“Intu’s pains are far from over as many retail companies are still struggling to stay afloat. The company expects CVAs to run at a higher level than in 2018,” he added.