Intu Properties, formerly known as Capital Shopping Centres Group, posted a stable set of full year results on Wednesday while at the same time unveiling a placing to fund the acquisition of Midsummer Place in Milton Keynes.
During the 12 months ended December 31st the group's net rental income totalled £363m, down £1.0m compared to the previous year, as a result of rent foregone on vacancies arising from tenant administrations, while underlying earnings fell by the same amount to £138m.
Profit for the year came in at £159m, significantly higher than the £34m seen the previous year, mainly as a result of valuation and transaction-related items.
At the year-end, the net asset value (NAV) per share was 392p (2011: 391p), the debt to assets ration was 49.5% (2011: 48.5%), and the market value of investment properties was £7,073m (2011: £6,960m).
The period's property operating expense included £10m of direct costs in respect of the group's car park operations and an £8.0m contribution towards shopping centre marketing.
In a statement the group said: "We start 2013 with robust operating indicators and considerable momentum across the business from a range of attractive investment opportunities available to the company.
"Whilst tenant failures and lease expiries from 2012 and in the current year are risks which will impact 2013 earnings, our focus, scale and specialism enable us to manage these risks effectively. Other factors which will impact 2013 earnings are the outcome of the refinancing on which we are engaged and the rebranding exercise including start up costs relating to intu.co.uk."
The company paid a total dividend of 15p for the year, on par with that paid the previous year.
Placing to fund acquisition
The group also announced that it is placing up to 86m new ordinary shares
at 342.9p per share, equal to up to 9.9% of the company's issued share capital, to raise funds for the acquisition of Midsummer Place Shopping Centre in Milton Keynes. As much as 50% of the placing will be denominated in Rand.
The acquisition of Midsummer Place, which has an annual footfall of over 17m and current vacancy rate of 3.0%, will be made for a consideration is £250.50m.
Midsummer Place is located in Central Milton Keynes and was opened in 2000. It has more than 420,000 sq ft of space, providing 50 retail units, on a single-level mall. Approximately 91% of the income from the Centre is secured against national and international retailers. The weighted average unexpired lease term is in excess of six years.
The acquisition is expected to take place at the end of March this year. The transaction is expected to be neutral to underlying earnings.
David Fischel, Intu's Chief Executive, said: "We are delighted to have agreed terms to acquire this prime asset which addresses a gap in our UK regional coverage. As well as strong current operating metrics and good demographics, Midsummer Place offers considerable scope for rental growth. The acquisition fits well with our strategy of focusing on the best shopping centre destinations across the country."
Establishment of a new debt funding platform
Intu also announced the establishment of a new debt funding platform, a special purpose vehicle for issuing investment grade secured debt, which is intended to become a central source of financing for the group.
"The secured group structure (SGS) will enable us to access the medium and long dated bond and private placement markets on an ongoing basis alongside bank debt, thereby diversifying the group's sources of funds beyond the banking markets and lengthening its maturities.
"We will in 2013 absorb the costs of the launch of the platform, principally from early settlement of existing interest rate swap obligations."
The group will initially use the platform to refinance it centres at Lakeside, Braehead, Watford and Victoria Centre. The four centres will be contributed into the SGS which will issue bonds and raise bank debt secured against them.
The group's share price fell 2.07% to 335.80p by 09:40 on Wednesday.