£39m profit rise for Merry Hill owner intu
Pre-tax profits for the owners of Merry Hill shopping centre rose by nearly £40 million last year.
Intu Properties, the owners of intu Merry Hill, saw its pre-tax profits rise by £38.9m from £188.3 million in 2016 to £227.2m.
The shopping centres group, which is in the midst of a merger with Hammerson, also reported revenue up from £594.3m to £616m and net rental income rising from £447m to £460m.
After tax profits were up from £172m to £203m helped by a £47m revaluation surplus on its estate.
Intu invested £184m in the UK in 2017 and has a significant improvement project underway at intu Merry Hill, which is valued at £931m.
In total it is investing £100m in the 1,671,000 sq ft centre, which has 217 stores, including £70m for improving the leisure provision to include a cinema and restaurants. It will be spending £70m of the £100m up to 2020.
Intu's asset management director Julian Wilkinson said the spending would also now include upgrading the exterior of the Brierley Hill shopping centre including re-cladding.
"We have also instructed architects to provide new internal refurbishment of the centre which is well advanced," he added.
David Fischel, Intu's chief executive, 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.
"We recorded a strong year of leasing activity, signing 217 long-term leases in the UK and Spain, at rents in aggregate seven per cent 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.
"During the year, major flagship brands upsized and optimised their presence, with the likes of Primark, Next and River Island taking additional space in our centres, and Inditex and H&M expanding their brand portfolios with us. Major international brands have also continued to recognise the attraction of our centres."
Mr Fischel said there had been a third successive year of like-for-like net rental income growth.
Following increases of 1.8 per cent in 2015 and 3.6 per cent in 2016, Intu delivered a 0.5 per cent increase for 2017 with a strong second half recovery with growth of 2.4 per cent.
Intu also has significant investment projects underway at intu Watford, intu Lakeside and a number of other centres. It plans to invest a further £562m over the next three years.
Mr Wilkinson, who initiated Intu's original interest in buying Merry Hill, said great progress had been made in 'right sizing' space for major retailers.
The former Sainsbury's store, which was dismantled to its steel shell before being re-built as a 76,000 sq ft flagship site for Next is just about to be handed over the the chain for fitting out and opening later this year.
Primark is taking over the ground floor of the former BHS store and a tenant for the upper part is soon to be announced.
The merger between Hammerson and intu is expected to complete later this year and the enlarged group will be using the intu name within its shopping centre business.
Intu's UK portfolio is made up of 17 centres, including 10 of the top 25, and in Spain its own three of the country's top 10 centres, with advanced plans to build a fourth.