Intu Properties (lon:intu)
INTU –Either A 10 For 1 Dilution Or A Double Your Money?

Intu Properties Financials

ItemCurrent PeriodPrevious Period
Period6 Months6 Months
Adjusted Earnings£66m£98m
Adjusted EBITDA
Statutory Profit(£829m)(£486m)
Adjusted Profit
Total Debt
Net Debt£4714m£4867m

Commentary History
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Intu Properties Share Price
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Title: INTU –Either A 10 For 1 Dilution Or A Double Your Money?
Company: INTU - Intu Properties
Share Price Then: 14.1p
Author: Ian Smith
Date: Tue 25 Feb 2020
Comments: INTU seems to be seeing a few spikes in share prices recently, albeit from a very low value to a still very low value and simply looking at the charts it seems to be interesting.

However retail seems to be one long stream of bad news, and my problem with INTU is that the management seems to have reacted to its debt too slowly.

On Friday INTU’s share price was around 13p giving it a market cap of around £170m yet the latest trading update, Nov 2019, had the company’s assets valued at a bit over £8bn and a Net Asset Value of around £3bn.

This was based on June 2019 property valuation taking into account a few sales with the debt repayment schedule being roughly

Amount Year Due
£100m 2020
£0.95bn 2021
£0.8bn 2022
£1bn 2023
£0.65bn 2024
£1.5bn s2025 Onwards

Totalling roughly £5bn and about 60% of the latest property valuation, so why is the market allowing a company to trade at roughly one twentieth of it asset value?

Part of the reason is that there has been a statement that an equity issue will be announced with the year end results in early April and INTU’s management have recently been selling off some assets such as overseas centres in order to reduce debt.

Clearly a property company selling its properties to pay off debt is simply shrinking its future.

intu Asturias Oviedo, Spain, €145.0 million, Intu Puerto Venecia Zaragoza, Spain, €237.7 million and Sprucefield Retail Park Lisburn, Northern Ireland, £40 million.

These are relatively small sums considering.

So what is the future, a £1bn fund raising, a £2bn fund raising or the company going private, or disastrously a sell off of some of the larger UK shopping centres?

Another possibility is that someone with a spare £5bn might offer £1bn for the shares that would be roughly 77p per share, throw £4bn at the debt and laugh all the way to the bank in a couple of years.

Buying now would be a disaster if there is a 5 for 1 or 10 for 1 non discounted issue to raise £1bn/£2bn but a five fold return if there is a buyer looking to take the group private.

For me it is important to differentiate between large shopping centres and town centres, I live in Worcester and its high street is becoming so short of shops that the reason for visiting it is getting less and less.

This lack of shops is forcing me to buy online or visit an out of town centre as a specific journey for a specific product.

There was some news that a retail park in London, Ravenside in Edmonton has been sold and it is planned to convert it to warehouses, the reality seems to be that it will be retail fulfilment centres to service the online retail market.

If you look at the location you will see that it is not a premium retail park so is almost of no relevance to INTU’s sites.
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