UK REIT Intu Properties signed 14 leases at its existing units in Spain at 14% above the previous passing rent in the first six months of this year.
This compares to an average 7% for the group as a whole, the company announced in its H1 earnings presentation. In total the company, which is primarily focused on the UK, concluded 23 leases at its Spanish malls, including nine for the recently completed development at Intu Asturias.
Spain accounts for roughly 10% of Intu's €10.5 bn portfolio, with the UK making up the remainder. The London-listed company owns and manage three shopping centres in Spain including Puerto Venecia in Zaragoza (pictured) and has four development sites in the country with the most advanced project being intu Costa del Sol, near Málaga.
Intu's Spanish operations also booked a better result in terms of vacancy levels: occupancy in the three Spanish centres stood at 98% at end-June with footfall and retailer sales both up by 1%. For the group as a whole, occupancy was flat at 95.9% while footfall decreased by 0.5%, the company said.
'Our Spanish business continues to perform well and Intu now owns three of the country's top 10 shopping centres,’ CEO David Fischer said. ‘During the period, we acquired Madrid Xanadú for €530 mln, a centre which has strong leisure attractions including an indoor ski slope, with an aquarium and Nickelodeon theme park attraction under construction.’
Earlier Intu announced the formation of a joint venture with TH Real Estate for them to take ownership of a 50% stake in Xanadú. The €8 mln redevelopment of its Intu Asturias mall opened in July 2017.
Fisher said Intu’s Spanish strategy was focused on creating a business of scale through acquisitions and a pipeline of development projects. ‘Concentrating on the top 10 key catchments, we aim to establish a market leading position in the country through ownership and management of prime shopping resorts.’
Planning approval for Costa del Sol
The company aims to develop a shopping resort of around 230,000 m2 at intu Costa del Sol, near Málaga, to target the three million residents and 10 million annual tourists to the region, Fisher said. 'We have received the required planning approval from the local (Torremolinos) town hall and the final approval from the regional government could be received by the end of the year. We have strong interest from potential tenants and would anticipate being on site in the second half of 2018.'
The total cost of the development is expected to be around €750 mln, including the €82 mln already incurred by Intu, with an expected stabilised initial yield of around 7%. Originally the company planned to introduce a partner to the project at an early stage, but the current plan is to develop alone and fund through bank and other finance, introducing a partner at a later stage.
Intu's £679 mln UK development programme is progressing on schedule with the £180 mln intu Watford extension on target to open in autumn 2018. The company expects to start shortly on the £71 mln intu Lakeside leisure extension which is over 90% let to tenants including Nickelodeon, Hollywood Bowl and multiple restaurants.
'We have a clear strategy to deliver long-term value to shareholders and, with cash and available facilities amounting to £920 mln, we have significant flexibility to pursue opportunities as they arise in the UK and Spain,' Fisher said.
Also see CPPIB injects €279m in Intu via subordinated loan and Acquisitions boost rental income at Intu
