Intu has reported falling net rental income in its half-year report, mainly due to retailer administrations and Company Voluntary Agreements (CVAs).

The shopping centre group stated that it expects like-for-like net rental income, which fell 7.7 per cent to £205.2 million in the six month period ending 30 June, to be at a similar level for the rest of the year.

It called the first six months of 2019 “a challenging” period, with property revaluation deficits widening to £872.1 million, compared to the £650.4 million deficit recorded during the same period last year.

The value of Intu’s shopping centre portfolio fell 8.8 per cent year-on-year to £8.36 billion, while footfall only rose 0.4 per cent in its UK shopping centres – which include Lakeside in Essex, Newcastle’s Metrocentre, Nottingham’s Victoria Centre and Manchester’s Trafford Centre.

However, the company used its trading update to launch a five-year “transformational” strategy aimed at improving rental income and asset values.

Intu said it would also look at “modernising the lease structure”, which could soon feature “store generated online sales” in rental agreements.

Around 10 per cent of management roles have been removed since the end of June, saving £5 million in cash annually, while investor dividends were also scrapped earlier this year.

The new strategy will look to drive efficiencies, improve customer service and experience, shore up balance sheets, refurbish shopping centres, and place a focus on residential, hotel and flexible working spaces, instead of just retail.

Chief executive officer Matthew Roberts admitted: “The first half of 2019 has been challenging for Intu – we have experienced further downward pressure on like-for-like net rental income and property values resulting from a higher level of administrations and CVAs, as some retailers struggle to remain relevant in a multichannel world.”

He continued: “We know radical transformation is required and have developed a new, ambitious five-year strategy to reshape our business and address the challenges we face, with a priority to fix our balance sheet.

“Regardless of current sentiment, one thing is clear: the physical store is not dying, it is evolving,” stated Roberts.

“The right store in the right location still plays a vital role in retailers’ multichannel strategies and we are starting to work with them as partners sharing the risks and rewards – our centres will also transform as we turn them into thriving communities – places where people want to live, work and have fun, as well as shop.”

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