Shopping centre landlord Intu Properties plc (LON:INTU) slumped after cutting its full year guidance, weighed down by weakness in the UK retail market.
Shares dropped 3.76% to 267.80p in morning trading as the company warned that like-for-like net rental income - its key revenue measure - is likely to be a the bottom of its previously estimated range for growth of zero and 2%.
The warning came as the real estate investment fund reported a 3% increase in first half net rental income, including its share of joint ventures, to £226.2mln but a 1.5% decline on a like-for-like basis.
Underlying earnings fell to £98.5mln from £99.5mln a year ago and earnings per share dropped to 7.3p from 7.5p.
While the group expects a recovery in the second half, it will likely only be enough to achieve flat growth in net rental income for the year.
Intu chief executive Davis Fischel said the UK retail environment has continued to be “challenging” as consumers become squeezed by rising inflation.
The company is also facing the hurdle of consumers shifting to online shopping, which has hurt owners of traditional retail spaces and boosted demand for warehouses.
In May Intu was relegated from the FTSE and replaced by Segro, the industrial property group that provides warehouses for online retailers.
“Retail brands are being selective in their expansion, looking at established locations such as our 17 prime shopping centres which are attracting high footfall through their differentiated offering and compelling customer experience,” Fischel said.
“The resilience of the tenant market in our centres is shown by our 103 lettings in the period at 7 per cent above previous passing rents, including brands such as Next, River Island, Hugo Boss, Gant, Paul Smith, Victoria's Secret and Tesla.”