Company did not factor in store closures by Debenhams and Arcadia in previous forecasts
The shopping centre landlord Intu has warned of a bigger drop in rental income this year as struggling retailers shut shops at a faster rate than expected.
The Trafford Centre owner said Brexit uncertainties were also having an impact on letting demand and that it would suffer from a further rise in company voluntary arrangements (CVA) – an insolvency process used by struggling firms to shut underperforming stores and cut rents.
Its shares dropped 8% to 92p. Two years ago they were changing hands at 279p, now they are worth less than 10% of their pre-financial crash peak.
It is understood that the company failed to factor in potential shop closures by Debenhams and Sir Philip Green’s Arcadia as part of its previous forecasts. Debenhams last week revealed plans to close 22 department stores. None on its current list are in Intu centres, the landlord said, but more are expected.
“We expect the remainder of 2019 to be challenging due to a higher than expected level of CVAs and a slowdown in new lettings as tenants delay their decisions due to the uncertainties in the current political and retail environments,” Intu’s chief executive, Matthew Roberts, said.
“As such, we have revised our approach to how we guide towards our year-end like-for-like net rental income to factor in expected CVAs and have adjusted our 2019 guidance accordingly to minus four to six per cent,” he added.