Shopping centre owner Intu has swung to an annual loss after suffering a collapse in the value of its properties in what it described as a “challenging” year.
The company, which owns Manchester’s Trafford Centre and Gateshead’s Metrocentre, had a torrid 2018 following two failed takeover attempts and amid tough trading conditions for retailers with a number seeking rescue deals with creditors or falling into administration.
Rival Hammerson abandoned a £3.4 billion takeover attempt last April, while a consortium led by John Whittaker’s Peel Group pulled out of £2.8 billion bid in November.
Outgoing chief executive David Fischel said that, in a “difficult year for the whole UK retail real estate sector and with very limited comparable transactional evidence, property valuations declined as sentiment weakened significantly”.
He said valuations fell 3% in the final quarter of 2018, in addition to the 9% decline over the first nine months of the year.
Intu made a £1.17 billion loss in 2018 compared with £227.2 million pre-tax profit the previous year.
This came as the company saw £1.4 billion wiped off the value of its property portfolio to £9.2 billion.
Revenue declined to £581.1 million from £616 million, while rental income fell to £398.5 million from £423.4 million.
The company did not recommend a final dividend for 2018 and said it will seek to reduce its debt by selling assets to shore up its cash reserves.
Shares tumbled 8.4% to 108.2p on the news.
Chairman John Strachan said: “Intu has had a challenging year with a difficult retail and uncertain economic environment, together with responding to two abortive corporate offers for the company.
“However, our management team has produced a robust operational performance with increased like-for-like net rental income for the fourth consecutive year, 97% occupancy and signed 248 new long-term leases.”
He added that the group’s “three core objectives for the year ahead are to continue to deliver strong underlying individual centre performance, continue our strategy of adapting to the changing retail environment, and to make smart use of capital”.