Intu (INTU) has raised expectations that it will carry out a rights issue to shore-up its balance sheet, as new rents continued to decline during the third quarter.
The retail landlord’s chief executive, Matthew Roberts, said raising equity was “likely to form part of the solution”, along with the disposal of assets, as it battles falling asset valuations across its estate of shopping centre properties.
At the time the group’s first-half results were released in August Intu said it was keeping all options under review, which included tapping investors for capital, after the portfolio’s loan-to-value ratio rose to an alarm-bell ringing 58 per cent. The group’s next material debt matures in early 2021 – Intu Milton Keynes and the SGS term loan. Net external debt declined by £210m during the third quarter, edging the loan-to-value ratio down to 57.7 per cent, based on June 2019 property valuations.
While management was keen to emphasise that footfall rose 1.2 per cent during the third quarter, new rents were agreed 3 per cent below previous passing rents. That meant new rents came in at just £5m, or £19m for the first nine months of the year, which is just under 60 per cent of the previous year’s figure. An occupancy rate of 95 per cent was also down on 97 per cent in September 2018.
“Intu’s balance sheet remains fraught with problems and its assets remain in structural decline, exacerbated by the lack of historic investment management in its centres and its inability to finance future investment,” said Numis analyst Robert Duncan.
