Intu Properties has rebuffed reports that Tony Buffin, the former chief operating officer of builders’ merchant Travis Perkins, is the “preferred candidate” to succeed David Fischel, incumbent chief executive at Intu Properties.
In a brief announcement on Monday, Intu simply confirmed that, as announced at the time of its annual results announcement on 20 February 2019, the search for a new CEO is ongoing and an announcement will be made in due course.
Fischel has been at the helm of Intu since 2001, and with the company in various roles since 1985. In July 2018 he announced his intention to leave, but said he would remain in the post and on the board until a successor was found.
Buffin was appointed as COO in 2017, and left Travis Perkins this February. Before that, he was chief financial officer of Australian grocery retailer Coles Group.
Intu Properties owns shopping centres across the UK, including Manchester’s Intu Trafford Centre, Intu Lakeside in Essex and Intu Potteries in Stoke-on-Trent.
RBC Capital has warned that Intu Properties PLC would likely be the worst hit of any of the UK’s shopping centre owners, should more retailers be forced to close stores.
Topshop and Miss Selfridge owner Arcadia is reportedly the latest to consider a CVA and should any more fail this year, RBC analysts think Intu, with its high leverage, will feel the pinch more than its rivals.
“Intu's higher financial gearing amplifies the near-term risks from potential retailer failures,” read a note to clients. “Any weakness in performance risks increasing negative investor sentiment towards its longer-term prospects in our view.”
Despite the near-term challenges, RBC is actually quite upbeat about the Lakeside and Trafford Centre owner.
“We expect Intu's centres to benefit from a polarisation in the market longer-term, making a 7.5% net initial rental yield implied by Intu's current share price attractive.”
RBC has kicked off its coverage with a ‘sector perform’ rating and a 105p target price, just below the current price of circa 108p.
RPA Perspective At the annual results in February Fischel said: "Intu has again delivered a resilient operational performance which demonstrates how our centres differentiate themselves as winning destinations for retailers with their variety and excitement. We own and manage many of the best shopping centres, in some of the strongest locations, in the UK and Spain.
“In a difficult year for the whole UK retail real estate sector and with very limited comparable transactional evidence, property valuations declined as sentiment weakened significantly. We reported a further 3% fall in valuations in the final quarter of 2018, additional to the 9% fall over the first nine months of the year.”
“Although the sentiment in the retail sector is at an all-time low, the reality is that around 400 million shoppers visit our centres each year and occupancy is at 97%. As some 85% of all retail transactions still touch a physical store, demand from major retailers continues to be positive for our centres."
Meanwhile, Canada’s biggest pension fund is poised to raise its stake in Intu Properties’ Spanish shopping centres.
Canada Pension Plan Investment Board is in talks with Intu over increasing its ownership of the shopping centres, which include Intu Asturias in Oviedo, northern Spain, and Puerto Venecia in Zaragoza, in the northeast. The pension fund already has a 50% stake. Intu also shares control of the Xanadú shopping centre in Madrid in a joint venture with Nuveen Real Estate.
Intu’s share of the three centres was valued at £630 million at its latest results. It is also developing a complex called Intu Costa del Sol, near Malaga, with shops, hotels and restaurants.
