Page 30 - RLI May 2019

MARK FAITHFULL

folloWInG

ThE monEy

MARK FAITHFULL CRUNCHES THE NUMBERS AS HE LOOKS AT
ANALYSIS AND EXPANSION THAT REFLECTS CHANGING MARKETS

InTU sElls half shaRE In dERby UK REIT conTInUEs RETaIl dIvEsTmEnT
K-based intu, the shopping centre landlord, has
sold a 50 per cent stake in its Derby mall to
UKuwait-backed Cale Street Investments in an
attempt to reduce its debt.
The deal follows a difficult two years for intu,
marked by two failed takeover offers, a sharp drop in
its share price and sliding values across its portfolio
because of declining footfall in its stores and shrinking
demand for space.
The Derby shopping centre includes retailers M&S,
Debenhams, which recently fell into administration,
and Next. It was purchased by intu in 2014 for £390M.
Recently intu said the site received 22 million annual
visitors, and generated £25.2M of net rental income in ritish Land has exchanged on the sale of 12 assets which are not aligned to its strategy and
2018. The Trafford Centre landlord will receive £186.3M superstores from its joint venture with UK continues to “make good progress”.
in cash for the stake, in line with a December 2018 Bsupermarket group Sainsbury’s for £429M, The company stated: “We have a clear view of the
valuation, and follows several months of seeking a buyer. representing a net initial yield of 5 per cent, to value of our assets and despite the clear challenges
intu suffered a £1.4bn write-down on the value of its Realty Income Corporation. currently in the retail market, we remain opportunistic
properties in 2018 and recorded a £1.2bn loss, down Its share of the proceeds will be £193.5M, representing and proactive. As a result, we have exchanged or
from a £203M profit the year before. Net external debt a modest premium to September 2018 book value. completed on nearly £1bn of retail assets sales
stood at £4.87bn as of February’s annual report. This, said British Land, is the latest example of (£646M our share) since April 2018 at an average yield
Falling demand for retail space and the collapse of a how it is delivering against its long-term strategy to of 5.7 per cent on terms marginally ahead of book
number of major retailers such as House of Fraser were build an increasingly mixed-use business focused on value. This activity has included the sale of Debenham’s
cited as reasons for the sharp dip in its property portfolio. three core elements: campus focused London offices; Clapham and the Spirit pubs portfolio.
The company was the subject of two takeover bids last a smaller, refocused retail business and residential, “Once the transaction completes, which is
year, one from its rival Hammerson, as shares in the principally build to rent. As part of this, it expects expected at the end of May, our superstores
company traded at a hefty discount to its net asset value. retail to comprise circa 30-35 per cent of the assets exposure will fall to 1.3 per cent of our portfolio
Earlier in April it was announced that the company’s of its business, down from around half today. based on September 2018 valuations with 6
former chief finance officer Matthew Roberts will Alongside investment into its campuses and standalone stores remaining. Net proceeds to British
take over as chief executive, following an eight-month progressing development opportunities such as Land are expected to be circa £95M following the
search for a successor to David Fischel. Canada Water, it is focused on further sales of retail repayment of debt and associated break costs.”

Us dEpaRTmEnT sToREs To ExIT
udson’s Bay offshoot Saks Off 5th is closing its doors in Amsterdam and HBC CEO Helena Foulkes, who joined the company in February 2018, has been
Rotterdam at the end of June. The news follows mounting speculation that the hard at work shedding unprofitable parts of the business, including the flash sale site
Hcompany’s European expansion is in trouble. Gilt Groupe, its New York City Lord & Taylor flagship and a large part of its European
“After saying goodbye to Germany we are sad to announce that Saks OFF 5TH retail and real estate holdings. In December, it announced that it would close Saks Fifth
will be leaving the Netherlands as well towards the end of June! But there will be a Avenue’s downtown Manhattan location at Brookfield Place a little over two years after
big final sale,” the company said in a short statement. it opened, and in February, it said it would close up to 20 Saks Off Fifth stores as well as
Recently, German paper WirtschaftsWoche reported the parent company of Hudson’s its Home Outfitters chain in Canada, amid competition.
Bay’s European operations was considering closing shops in the Netherlands this year, or
letting the company go bankrupt. And at the end of last year, the Telegraaf reported that the
new owner – German retail group Karstadt – is ‘extremely concerned’ about the major
investments the company is making in the Netherlands and the disappointing earnings.
The paper based its claims on internal documents which show the company has lost
more than €80M in the Netherlands this year. At the end of 2017, the company changed
its strategy in the Netherlands to bring in cheaper product lines and last February plans
to open a total of 20 department stores were scrapped.
Hudson’s Bay currently operates 13 stores in the Netherlands. Many of these are
located in premises which were used by the V&D department store chain before it
went bust. The first store opened in September 2017.
Saks Fifth Avenue remains the golden child of Hudson’s Bay Co’s portfolio, as the retail
group recently reported falling revenues but improved profits for the fourth quarter.
50 RETAIL & LEISURE INTERNATIONAL NOVEMBER 2018