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Intu to sell stake in London mall at slim post-Brexit premium

(Adds CEO, analyst comments, details, share price)

By Esha Vaish

Oct (Shenzhen: 000069.SZ - news) 25 (Reuters) - Intu Properties (Other OTC: CCRGF - news) has agreed to sell its stake in a London mall for a slightly higher price than its value before Britain's vote to leave the European Union, and it said long-term lease demand by international retailers remained strong.

Britain's 900 billion pound ($1.1 trillion) commercial property market was one of the biggest victims of the turmoil that followed the June referendum, and at one point more than 18 billion pounds worth of commercial property funds were suspended.

Commercial property deal activity has since picked up as a steep drop in sterling has encouraged overseas buyers and investors.

Intu (Swiss: OXIGTU.SW - news) , owner of popular British shopping malls such as Manchester's Trafford Centre, said it agreed to sell its stake of a little more than 63 percent in a mall in London's Bromley district to state-owned Alaska Permanent Fund Corporation for 177.9 million pounds, 1.1 percent higher than its value in June.

Three analysts said it was a higher than expected price tag, and Intu said the figure indicated "continuing investment demand" for UK shopping centres.

"We don't really know how (Brexit) is quite going to pan out, but... what we've seen since the referendum is that we're carrying out business as usual," CEO David Fischel told Reuters.

He said international brands such Inditex (Amsterdam: IT6.AS - news) 's Zara and H&M, both existing customers, continued to expand their presence in Britain.

The company said it had signed 61 new UK long-term leases from July 1 to Oct 25 and reaffirmed its 2016 group like-for-like net rental income guidance of 3 to 4 percent growth.

But the process of re-letting 10 stores after department stores firm BHS collapsed could in part impact 2017 rental growth by 2-3 percent.

Intu shares fell about 2.5 percent on Tuesday.

"We ... see potential pressure from a lag to a worsening retailer backdrop, weak sales growth and high input costs impeding retailer returns," Liberum analysts, who have a sell rating on Intu, said.

Analysts said Intu seemed worse positioned to weather a sentiment decline than its closest rival Hammerson (Other OTC: HMSNF - news) due to its limited overseas exposure, stagnant yearly dividend and higher vacancy rate than the sector average.

Intu has been selling smaller malls that have struggled to combat online competition to focus on its better-performing 'destination centres' that have drawn in visitors with attractions such as food courts and cinemas. (Reporting by Esha Vaish in Bengaluru; Editing by David Goodman and Susan Thomas)