First half net rental income rose £8m year-on-year at Intu Properties, helping to lift underlying earnings from £68m to £72m as the letting market showed "encouraging signs of improvement".

During the six-month period, the market value of the shopping centre owner's investment properties increased 16% from £7,624m to £8,843m, while net asset value (NAV) per share climbed 7.5% from 346p to 372p, well ahead of forecasts of 344p.

The period saw Intu, which owns the Metrocentre in Gateshead, carry out several major transactions and a high level of investment, with interests acquired in two of the UK's top 20 shopping centres.

Chief executive David Fischel said: "The initial indications from the major centres we acquired in the period, now rebranded as intu Merry Hill and intu Derby, are very positive. The letting market is showing encouraging signs of improvement and we are gaining further momentum with our £1.2bn active management and development pipeline."

Footfall during the period was up 1%, while occupancy levels were at 96%, compared to a fall of 2% and 95%, respectively, in the same period in 2013.

Looking ahead, the group said it was encouraged by a continued improvement in consumer sentiment, driven by economic growth and a fall in unemployment levels.

Intu's organic development pipeline of £1.2bn includes projects across all of its centres and are aimed at increasing the overall draw of each centre. Of the 2.6m square foot planned, 1.8m square foot has planning consent.

The dividend for the year was maintained at 4.6p.

Broker Liberum Capital said the forecast beat looked to be driven by higher-than-anticipated yield compression of 45 basis points during the period, which it said came on the back of read-across from the recent sale of Bluewater shopping centre.

However, Liberum noted that long-term lettings were "were only in line with prevailing rental value assumptions and rental values increased by only 0.2% in the first half", which was below its expectations of 0.3%.

It said the increase in occupancy levels was only modest, adding that this "resulted in a 6% year-on-year decline in underlying EPS to 6.4p, which was also 5% below our forecast".

Shares had risen 1.47% to 325p by 09:47.

NR

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