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Retail landlord Intu hikes dividend

As a show of confidence, the dividend has been increased for the first time in a decade.
February 24, 2017

Shares in shopping mall landlord Intu (INTU) increased 7 per cent after it delivered a better-than-expected performance in 2016. Rental income has now been rising for 18 months, and the dividend was increased for the first time in a decade.

IC TIP: Hold at 293.9p

The valuation of the like-for-like property portfolio was broadly flat, which represents a significant outperformance of the IPD monthly retail index which declined by 4.7 per cent. And excluding the rise in stamp duty the portfolio would haven risen in value by 1 per cent. Like-for-like net rental income grew by 3.6 per cent, boosted by development units coming back on stream, but the pace of growth is expected to slip back to between flat and 2 per cent in 2017. This assumes that there are no material tenant failures, and reflects the loss of income on units being held for redevelopment and the impact of BHS closures.

Even so, occupancy rates crept up to 96 per cent despite the BHS failure, reflecting a more proactive stance by management and increased tenant demand. A total of 214 long-term leases were negotiated, equating to £38m of annual rent.

Analysts at Peel Hunt are forecasting adjusted net asset value of 371p at the end of December 2017 (from 404p in 2016).

 

INTU PROPERTIES (INTU)
ORD PRICE:293.9pMARKET VALUE:£4.0bn
TOUCH:293.8-294p12-MONTH HIGH:324pLOW: 255p
DIVIDEND YIELD:4.8%TRADING PROPERTIES:nil
DISCOUNT TO NAV:21% 
INVESTMENT PROP:£9.8bn*NET DEBT:86%

Year to 31 DecNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201231615316.013.7
201333336334.513.7
201434759448.013.7
201537451339.313.7
201637118813.714
% change-1-63-65+2

Ex-div: 20 Apr

Payment: 25 May

*Includes joint ventures and development properties