Intu Properties (lon:intu)
INTU – No Share Issue!

Intu Properties Financials

ItemCurrent PeriodPrevious Period
Period12 Months12 Months
Adjusted Earnings£127m£193m
Adjusted EBITDA
Statutory Profit(£1951m)(£1132m)
Adjusted Profit
Total Debt
Net Debt£4498m£4867m

Commentary History
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Intu Properties Share Price
Grade:No grade has been assigned to this company
Title: INTU – No Share Issue!
Company: INTU - Intu Properties
Share Price Then: 7.66p
Author: Ian Smith
Date: Wed 04 Mar 2020
Comments: In order to keep lenders happy it was expected that INTU would announce a share issue to raise around £1.3bn or possibly a bit more, today INTU have announced that is unable to proceed with an equity raise at this point.

The exact reason was not specified but the unaudited results for 2019 show a £2bn property revaluation down to £6.6bn which when added to the £1.4bn reduction made in 2018 have removed most of the once healthy headroom between property valuations and the company’s loans.

That is a total of £3.4bn over two years, could this be the worst of it?

Perhaps surprisingly, rather than a single centre being hammered the 2019 re valuation was a low to mid 20% reduction distributed fairly evenly across the entire estate.

The share price at 8p is so far off these net asset values because the net debt at £4.5bn is so much closer to the property valuations of £6.6bn in 2019 rather than £9.2bn in 2018.

This has given an overall debt to assets ratio of 68% rather than 53% in 2018 which is problematic in that loan to valuation covenants start to kick in at 65%.

Operationally interest cover was 1.67x earnings in 2019 and 1.91x earnings in 2018 which is positive, as is NAV per share of 147p in 2019 and 293p in 2018.

So the big problem is how do you get out the debt problem? Do you keep the biggest two centres, Trafford Centre (Manchester) and Lakeside (Essex) and sell the rest which would leave INTU with £2.7bn of property or do the opposite and keep around £4bn of smaller centres?

Of course selling shopping centres is not going to be quick or easy as full current carrying price is going to be required.

This may be INTU’s saving, nobody will want to force a fire-sale and will creditors really want to do a debt for equity swap forcing them into a retail shopping centre business that they will not be able to sell out of for quite a while?

Does this mean as raised in another commentary that INTU could be a 10 bagger if you buy in now and keep you nerve?
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