Intu Properties (lon:intu)
INTU – Are Large Landlords Days Over Or They Fighting Back?

Intu Properties Financials

ItemCurrent PeriodPrevious Period
Year20182017
Period12 Months12 Months
Revenue£581m£616m
Earnings£193m£201m
Adjusted Earnings
EBITDA
Adjusted EBITDA
Statutory Profit(£1173m)£203m
Adjusted Profit
Total Debt£5249m£5175m
Net Debt

Commentary History
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Intu Properties Share Price
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Title: INTU – Are Large Landlords Days Over Or They Fighting Back?
Company: INTU - Intu Properties
Share Price Then: 84p
Author: Ian Smith
Date: Fri 07 Jun 2019
Comments: Not too long ago INTU was involved in a serious take over at just over 200p per share, today it languishes at 84p?

Retail landlords are clearly under pressure as big chain after big chain seem to be failing British Land is at a 5 year low as is Capital & Regional.

It appears that during 2018 the service charge brought in £113million but cost £131million to provide!

This means a net rental income of £398m and finance costs of nearly £250m, if you take out the property revaluation of £1.3b then the group did make a profit of about £153m.

Current the group property is valued at £8b down from £9.2b and has £4.9b in debt, these leads to net asset value per share of 284p per share down from 378p. I am not sure if NAV is too useful at present as owning empty buildings that are not bringing in any rent means that the loans can’t be repaid!

There was a comment in the last annual report that says another 10% drop in asset value would mean that debt covenants would just be at the limits, but a 25% drop would see them exceeding them by £123m.

After all the bad retail new I was expecting that 2018 rents would be down in 2017 but they were up, not by much, but still up.

Centre 2018 2017
Name Rent(£m) Rent (£m)
intu Trafford Centre 94.7 93.7
intu Lakeside 55.8 53.2
intu Metrocentre 46.4 48.1
intu Merry Hill 41.3 42.4
intu Braehead 29 28.1
Manchester Arndale 22.2 21.3
intu Watford 18.7 15.8
intu Derby 27.9 28.9
intu Eldon Square 16.3 16.1
intu Victoria Centre 19 19.5
intu Milton Keynes 13.6 13.7
Cribbs Causeway 12.8 12.9
Total 397.7 393.7


The group has been looking at the use of land that is ground level parking or not in use and believes that there is the space for 5,000 residential units and 600 hotel beds.

As owned and rented out these developments show potential for ongoing income along with some strengthening of the shopping centres themselves.

For me the big worry is that the shopping centres are financed at about 53% of their current value and whilst there is only £127m worth of loans maturing in 2019/2020 there is about £3.5b over 2021/2024.

As most Intu centres are large, there is space within them for more than just shops, bowling alleys, cinemas etc and this is where that these centres have strength. Visitors can go as a family for a day out, rather than the town centres where the various types of businesses are spread over the town as a whole.

I am sure that we haven’t seen the trough yet for INTU and its like, but I am watching them closely as they do seem undervalued.

I am seeing the Arcadia CVA pushback by INTU as the end of landlords desperate to keep tenants at any cost.
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