February 23, 2017 / 9:32 AM / a year ago

UPDATE 2-Britain's Intu Properties hikes full-year dividend

(Adds company comments and details; updates shares)

By Esha Vaish and Justin George Varghese

Feb 23 (Reuters) - Britain’s Intu Properties Plc hiked its full-year dividend as values and demand for its large shopping centres held up well despite weakness in the broader UK property market following the Brexit vote.

Although UK retail property values fell 5 percent in 2016, according to CBRE, Intu’s adjusted net asset value per share was flat at 404 pence, helped by its strategy of owning better-performing ‘destination centres’ that have drawn visitors with attractions such as food courts.

The company, which has been selling smaller malls that have struggled to combat online competition, said life-for-like net rental income rose 3.6 percent in the year ended Dec. 31, in line with its forecast in July.

The company said it expected comparable rental income to be flat to up 2 percent in 2017, even though analysts have warned values and rental demand could fall this year due to uncertainty over Brexit.

“While the environment for business this year is likely to be challenging as the full impact emerges of the UK’s EU referendum vote, we are well positioned as we focus on top quality assets in prime locations,” Chief Executive David Fischel said in a statement.

The owner of popular British shopping malls such as Manchester’s Trafford Centre said 2016 dividend rose 2 percent to 14 pence per share, its first hike since 2007, when the company was called Liberty International before a demerger.

Shares in Intu were the top FTSE bluechip gainers by 0128 GMT, having gained 6.8 percent but still trading below their pre-Brexit level.

Rival Hammerson reported higher full-year NAV on Monday.

When asked about reports that landlords are providing higher incentives such as longer lease-free periods to lure tenants, Intu Chief Financial Officer Matthew Roberts said the company had not increased incentives.

“Incentives over the last few years have continued to reduce in quantum and in size... and we expect incentives in 2017 to be similar to be where they were in 2016,” Roberts told Reuters.

Leading retailers such as Zara-owner Inditex SA were opting to take larger space in Intu’s “top” malls after shuttering shops in smaller retail outlets that have seen lower visitor numbers, he added.

Intu signed 214 long-term leases over 2016, at rates 4 percent ahead of estimated rental values. (Reporting by Justin George Varghese and Esha Vaish in Bengaluru; Editing by Sunil Nair and Maju Samuel)

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