Shopping centre landlord Intu recorded an 18% year-on-year jump in profits in 2017 despite a slowdown in rental income growth.
Profits increased from £172m in 2016 to £203m last year, and were driven largely by a property revaluation surplus of £47m.
Intu’s net rental income growth slowed last year amid a tough retail environment. Net rental income increased 0.5% in 2017, compared to a 3.6% and 1.8% increase in 2016 and 2015 respectively.
Last year’s net rental income rallied in the second half of the year with growth of 2.4%.
Intu chief executive David Fischel said: “The underlying strengths of the Intu business were much in evidence in 2017 as we recorded a robust overall performance, confounding the external gloom and negativity in pre-Brexit UK about retail and retail property.”
Intu signed a total of 217 long-term leases in the UK and Spain during 2017.
Fischel said: “We recorded a strong year of leasing activity at rents in aggregate 7% ahead of previous rents, as retailers continue to focus on increasing their space in prime, high footfall retail and leisure destinations such as our shopping centres.”
Major flagship brands upsized their presence including Primark, Next and River Island taking additional space in Intu centres, and Inditex and H&M expanding their brand portfolios with the company.
Intu is currently undertaking a major investment programme. In the UK it spent £184m during the year and has plans to invest a further £562m over the next three years.
Significant projects underway include Intu Watford and Intu Lakeside. Last year Intu also concluded the disposal of its 50% interest in Intu Chapelfield for £148m.
Intu is still forecasting a 2-3% increase in like-for-like net rental income per annum for the next three to five years.
Intu’s merger with real estate developer Hammerson is expected to complete later this year. The enlarged group will use the Intu name.