The plummeting valuations of Intu’s (INTU) investment portfolio pushed up the retail landlord’s loan-to-value ratio to an alarm-bell ringing 58 per cent during the first half, up from 53 per cent the prior year. In a bid to shore up its balance sheet, the half-year dividend has been scrapped and management said it was considering an equity raise, in addition to further asset disposals.
Like-for-like net rental income fell 7.7 per cent – worse than guidance issued in May – due to rising administrations and company voluntary arrangements for retailers including House of Fraser and HMV. Not only did the number of lettings decline, but the rental uplift on new rents was just 1 per cent ahead of the passing rate, compared with 6 per cent the same time last year. The occupancy rate also declined to 95.1 per cent, from 96.6 per cent in the comparable prior year period.
After part-repaying a revolving credit facility in July, debt maturing in 2021 reduced to £926m, from £1.16bn. But borrowings remain a serious concern. A further 15 per cent fall in the portfolio’s valuation – which declined 9 per cent during the first half alone – would create a covenant shortfall of £83m.
Analysts at Peel Hunt are forecasting adjusted NAV of 272p a share for December 2019, down from 312p at the end of 2018.
| INTU PROPERTIES (INTU) | ||||
| ORD PRICE: | 37.81p | MARKET VALUE: | £512m | |
| TOUCH: | 37.73-37.84p | 12-MONTH HIGH: | 204p | LOW: 47p |
| DIVIDEND YIELD: | nil | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | -79% | NET DEBT: | £4.68bn | |
| INVESTMENT PROPERTIES: | £7.74bn* | |||
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 284 | -507 | -36.2 | 4.6 |
| 2019 | 223 | -856 | -61.7 | nil |
| % change | -21 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | na | |||
| *Includes investment in joint ventures | ||||
