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Intu asset values plummet

The retail landlord will attempt to secure covenant waivers after its loan-to-value ratio shot-up 10 percentage points
March 13, 2020

Intu (INTU) seems to be stuck in no-man’s land. After failing to gain enough investor support for a planned rights issue, the retail landlord said that it would attempt to gain covenant waivers and continue selling assets, after revealing a dismal set of figures for 2019. The value of the group’s shopping centre portfolio dropped more than a fifth on a like-for-like basis, forcing the loan-to-value ratio up to almost 68 per cent.

IC TIP: Sell at 4.3p

Net rental income declined by 9 per cent on a like-for-like basis, driven by tenants entering administration or company voluntary arrangements, as well as an increased vacancy rate. That in turn led to a 13 per cent reduction in estimated rental values (ERV). 

However, investors will likely take little succour from management’s assertion that the decline in asset values in the second half of 2019 suggested “an acceleration towards the point where we believe valuations should start to stabilise”, given how close the landlord is to the loan-to-value ceilings attached to some of its covenants. Yet analysts at Peel Hunt forecast a further 15 per cent valuation decline across the portfolio. 

Analysts at Peel Hunt forecast adjusted NAV of 80p a share at the December 2020 financial year-end. 

INTU PROPERTIES (INTU)    
ORD PRICE:4.3pMARKET VALUE:£ 58m
TOUCH:4.3-4.7p12-MONTH HIGH:113pLOW: 4p
DIVIDEND YIELD:NILTRADING PROP:£164m
DISCOUNT TO NAV:97%  
INVESTMENT PROP:£6.35bn*NET DEBT:£4.53bn
Year to 31 DecNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20153740.5139.313.7
20163710.1913.714.0
20173780.2316.114.0
2018284-1.18-84.34.6
20191412.02-145nil
% change-50---
Ex-div: na   
Payment: na   
*Includes investments in joint ventures