Losses have widened at Eldon Square despite rising revenues after the shopping and leisure centre’s value dropped by more than £16m in a year, new accounts show.
Accounts for Intu Eldon Square Limited covering 2022 have been published, showing how business picked up as Covid restrictions eased, retailers reopened and shoppers returned to city centres.
The company is a subsidiary of the Intu Debenture Plc group – formed in 2020 following the collapse of Eldon Square and the Metrocentre’s former owners, Intu – and owns 60% of the shopping and leisure complex, with Newcastle City Council owning the remaining 40%. The firm appointed MAPP to manage the running of the shopping centre in October 2022, while Pradera Lateral Limited has been manager of all of the Intu Debenture property assets since November 2022.
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The accounts show revenues rose from £20.4m to £25.9m, and operating profit from £2.4m to £2.7m, but the revaluation of Eldon Square saw its value drop from £94.9m to £78.2m. As a result, pre-tax losses widened from £11.2m to £14.8m. Net rental income was £5m, up from £4.8m, but net liabilities at December 31 2022 were £28.3m, up from £13.5m.
Notes highlight how the key driver of property valuations – which was carried out by real estate consultancy CBRE – is the terms of the leases it has with tenants at the valuation date. It adds: “These determine the majority of the cash flow profile of the property for a number of years and therefore form the basis of the valuation.”
The well-documented collapse of a number of retailers before, during and following the pandemic – including Top Shop, Monsoon, Dorothy Perkins, Paperchase and Debenhams – has affected shopping centre property valuations around the UK and Eldon Square managers recently revealed there is more than 200,000sqft of space now empty in the centre following high profile closures – a significant chunk of the overall space available to lease.
In a report, directors said: “The company’s results for the year reflect the ongoing challenges facing retail and retail property such as company voluntary arrangements (CVAs), administrations and renegotiations, as well as economic and political uncertainty. This, together with yield expansion driven by weak market sentiment, has affected the value of the company’s property, which has further decreased in 2022.
“Rent and service charge collections from tenants were significantly reduced across the group as a result of the enforced closures and reduced footfall. Management is in discussions with tenants in relation to the outstanding rents. While good progress is being made full recovery is unlikely.
“Whilst the easing of restrictions has resulted in a significant improvement in the collection of rent and service charge the directors expect there to be continued downward pressure on the group’s property valuations and net rental income as the long-term effects of the pandemic on the wider economy become clearer.”
Ahead of the publication of the accounts, Eldon Square bosses at MAPP unveiled a series of plans to revitalise empty areas of the shopping centre.
