February 22, 2018 / 8:36 AM / a year ago

UPDATE 1-British property firm Intu posts higher NAV in 2017

(Adds details, market context, analyst and CEO comment)

Feb 22 (Reuters) - British shopping centre landlord Intu Properties Plc reported a small rise in full-year NAV as tenant demand stood strong in a challenging retail backdrop.

The owner of popular shopping malls such as Manchester’s Trafford centre said adjusted diluted net asset value per share (NAV) rose to 411 pence for the year ended Dec. 31, from 404 pence a year ago.

Intu Properties reported a 0.5 percent rise in full-year like-for-like net rental income.

However, the growth was slower than the 3.6 percent rise in 2016 and a 1.8 percent growth recorded in 2015, Intu said.

UK retail REITs have been going through an increasingly rough period, with sluggish retail spending and an accelerating impact of e-commerce. However, occupancy remained stable at 96.1 pct during the year.

Intu said it continued to expect like-for-like net rental income growth in 2018 to be 1.5-2.5 percent and 2-3 percent growth per annum over the next three to five years.

In December, British shopping centres owner Hammerson Plc agreed to buy smaller rival Intu Properties for about 3.4 billion pounds ($4.56 billion) in a long-speculated deal to create a malls giant controlling 21 billion pounds of assets.

“We believe FY17 results are unlikely to materially change the probability of Hammerson’s acquisition proceeding,” Liberum analysts said in a client note.

“Shareholders can look forward to faster divestment activity and cost savings through FY18 on completion,” the note added.

“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,” CEO David Fischel said. (Reporting by Justin George Varghese and Radhika Rukmangadhan in Bengaluru; Editing by Gopakumar Warrier)

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