INTUS SGS - comment

INTUS SGS reported its monthly figures for April, which continue to show improving footfall at the centres, with 87% on average across all four centres compared with 2019. More importantly, tenant sales were 89% of April 2019 levels, up from 84% recorded in March. Obviously, inflation is having a large impact on these numbers but it is encouraging to see sales levels increase with the footfall numbers. Excluding the travel category, where recovery is still muted post Covid, tenant sales ere 93% of April 2019 levels. Occupancy has improved to 84% across all four centres, and with M&S moving to the former Debenhams anchor site at Lakeside and H&M moving to a new store at Braehead on a 10 yr lease, SGS’s are gaining momentum in moving high performing retailers into the correct locations. Collections for Q2 rents are currently at 87%, in line with collections for Q1 2022 at a comparable moment in time and expectations are for collections to increase further in the coming weeks. Obviously, the April data is historic and consumer sentiment in the UK has deteriorated in recent weeks. BRC data show a drop of 1.1% in total retail sales in May versus May 2021. However, sales of clothing, footwear and accessories, including in fashion in beauty rose, segments which INTU SGS’s shopping centres are overly exposed to. This coupled with the overall trend at SGS of a slow recovery to pre-2019 levels is in line with our thesis. The improvement in rent collections, occupancy rates and the overall tenant sales levels all combine to support asset valuations.