Shopping centres owner intu expects its rental income to fall by between 4% and 6% this year in a further sign of troubles on the high street.
In a trading update, the company, whose sites include Lakeside, the Metrocentre and Trafford Centre, highlighted the growing use of an insolvency process, known as a Company Voluntary Arrangement (CVA), that allows retailers to renegotiate their rent with landlords and bring forward shop closures.
The procedure is controversial as it leaves the landlords to take the financial hit or end up with empty retail units that are difficult to re-let.
Debenhams, which accounts for 3% of intu’s rent roll, announced a CVA last week.
However, none of the 22 stores it plans to close are in intu centres.
Matthew Roberts, intu’s chief executive, said he expected “the remainder of 2019 to be challenging due to a higher than expected level of CVAs and a slowdown in new lettings as tenants delay their decisions due the uncertainties in the current political and retail environments”.
He added: “As such, we have revised our approach to how we guide towards our year-end like-for-like net rental income to factor in expected CVAs and have adjusted our 2019 guidance accordingly.”
Intu shares finished the day down by 5%.
Over the first three months of the year, intu has secured 53 long-term leases, down from 60 over the same period last year.
Annual rent generated over the first quarter also declined, down to £6m from £10m during the same quarter last year.
Retail occupancy at the end of March stood at 95.6%, slightly down on the 96.1% for the same month last year and a 1.1% reduction against December 2018.
The firm pointed to the impact of “previous CVAs and administrations, including the closure of some New Look Men and HMV stores, along with the seasonal reduction in the quarter as Christmas 2018 pop-ups closed”.
It also said occupancy had been affected by a “slow-down in completion of new lettings over the last few months as tenants delay decisions driven by a combination of continued Brexit uncertainty and awaiting the outcome of some high profile potential CVAs”.
Mr Roberts said: “Despite the current operating environment, I believe we have a very good business and am confident we can meet the challenges we are facing head-on.”