Intu Properties Plc, the U.K.’s biggest shopping-mall owner, said first-half profit fell 2.9 percent as tenant failures crimped rental income.
Profit excluding changes to asset values and one-time items dropped to 68 million pounds ($103 million) from 70 million pounds a year earlier, the London-based real estate investment trust said in a statement today. Adjusted earnings per share declined to 7.4 pence from 8.1 pence.
Intu is spending 200 million pounds refurbishing its malls to draw more shoppers as the U.K. economy recovers. The London-based investor also plans to spend a further 800 million pounds in the next 10 years extending some of its malls and acquired Midsummer Place in Milton Keynes, England, for 250 million pounds in March.
Net rental income fell to 181 million pounds in the first half from 182 million pounds a year earlier, Intu said. Rental income may be hurt further by tenant failures, though an improving economy “should be helpful,” Chief Executive Officer David Fischel said on a conference call.
“We’ve done very well, despite tenant failures, to keep occupancy at the level that we have,” he said. “It’s frustrating really beause the underlying picture is quite sound.”
Intu is trying to attract more food and leisure tenants, whose share of total rent revenue increased from about 5 percent five years ago to 11 percent in the first half, Fischel said. That will probably reach about 15 percent within a few years, he said.
Intu opened a Sealife Aquarium next to the Legoland Discovery Center in Barton Square in the first half and the company plans to add a cinema and other entertainment spots as it extends a mall in Watford.