Intu Properties Share Discussion Threads

[zccax77] 20/2/2019 16:23

These impairments are primarily driven by Brexit and the lack of buyers as a result. The income producing nature of the asset has not been impaired and the cashflows remain the same, the only thing which has changed is the discount rate due to Brexit. I only see upside in this share, with very little downside.

[zccax77] 20/2/2019 16:20

You will not be paying 1.07 a share if this uncertainty did not exist. He would be paying upwards of 2.0. Once Brexit is out the way this will fly.

[riverman77] 20/2/2019 15:44

The interest payments are eating up around half of the rental income, and there are also risks over refinancing and/or a further fall in property values. Probably on balance a bit too risky for the time being but will keep an eye on it.

[spob] 20/2/2019 15:33

yes the reality check would be if further impairments triggerred some of their banking covenants

which is why i am thinking about possible fund rasings / shareholder dilution

i am just watching this at the moment

no position

[hugepants] 20/2/2019 15:19

Re the dividend, the trading update in November said "intu therefore intends to substantially reduce the payment of dividends in the short term, starting with the 2018 final dividend"

They've cancelled dividends completely and for the foreseeable future unless Ive missed something. Which makes it seem like there's been a reality check since end of November.

[andycapp1] 20/2/2019 14:07

I'm no expert on project financing shopping centres (good on project financing most anything else) but I wonder if the debt is secured at SPV level (so possibly non recourse to Group) or whether it is Group debt? Or whether there are any cross collateralisations if at SPV level? In any case I'm not so fussed about the debt as the asset cover is still fine and the cashflows are also okay (at least for now). So doesn't need fresh equity right now. I still think whilst the high street is obviously pretty bad, out of town centres will remain destinations. And here Intu is a prize asset....here talks someone long!!

[spob] 20/2/2019 14:04

you say assets not impaired

but they have been impaired by 25% in the last year

please correct me if wrong

[zccax77] 20/2/2019 14:03

No fundraising is not needed. The rental income is high enough to service any liabilities. Remember debt is held at individual asset level, hence can be serviced by rental income of individual assets.

[zccax77] 20/2/2019 13:59

You are overthinking it. The cashflows have remained broadly the same that alone would indicate that the assets are not impaired. It is just the market is weak due to Brexit resulting in few buyers and therefore firesale prices for the remaining buyers, this will resolve itself in the next year or two.

[spob] 20/2/2019 13:50

I mean if the debt/assets ratio deteriorates further and liquidating assets quickly in this environment becomes increasingly difficult

then their hand maybe forced

[spob] 20/2/2019 13:43

What chance a fund raising here ?

possible shareholder dilution ?

[kenny] 20/2/2019 13:33

I wonder if the company has a very tight cash situation even after cancelling dividends. They have committed capex of £238m on various projects. Therefore repaying debt down to 50% could be a multi year project - and that is assuming that property values do not continue down.

Looks like a pretty risky investment at this point in time.

[andycapp1] 20/2/2019 12:16

I think that is right. The debt to assets is probably okay and on an underlying basis I thought the results were broadly as expected, indeed perhaps a little better. The dividend is by the by although yes income funds will probably sell. So discount to NAV is probably too big, cashflow is still significant and at the moment doesn't seem under obvious threat despite the dire warnings about the high st. Few of their centres need capex and should easily be fundable from cashflow. think they need a new plan tho. Fischel has been there for too long and spent his first few years basking in the glory of ever rising rents and NAVs. Now it is tough it probably needs a new set of eyes.

[strathroyal] 20/2/2019 11:47

I agree that at this level, it's certainly worth a punt. Omitting the dividend rather than reducing it substantially has meant that income funds have had to sell out, hence the increased volume and volatility today.

A further issue is that the city has lost faith in the CEO. He obviously hadn't got a Plan B as could be seen from his earlier trading statement but Intu does have some good income producing assets that, for me, must attract another bidder in due course. Personally I would like to see them sell some if not all of the Spanish properties but such decisions are not ours to make.

I actually bought in following the withdrawal of the last bid in the low 120s.

[scburbs] 20/2/2019 11:03

The underlying earnings are stated as 14.4p so c.13% is the earnings yield.

[riverman77] 20/2/2019 10:52

This surely has to be worth a punt - the underlying performance seems ok, in terms of rental income and high occupancy, both broadly unchanged from last year. Ultimately that is what drives profits. If you divide the net rental income by the market cap you have a yield of around 30%.

[3dwd] 20/2/2019 09:05

Added to short

[catsick] 20/2/2019 08:15

Got some 104.5 could not wait for 100

[catsick] 20/2/2019 08:07

109 getting close ... my trigger finger is poised

[bookbroker] 20/2/2019 07:59

Problem is the property re-valuation, it is when values stop declining that is the problem. They have written down the values, and it hits the bottom line and the balance sheet against an already high debt. Asset sales help, but the whether rental income continues to diminish along with property values weakens the attraction still further. At some point it will stabilise, but has that point been reached, answer probably no, and so it will mark time for a long time, along with that yoke of a debt!

[andycapp1] 20/2/2019 07:54

Kittypuke I agree. Not sure they will get down to 100 but if they do I’m a keen buyer.

[catsick] 20/2/2019 07:50

Wrote downs pretty small and no div that means the ltv looks much better is probably a good investment, If these get down to 100 Then it gets very interesting, the eps of 14.4 means that the div they are earning but using to reduce debt is 12pct off current prices, a bunch of recent deals are getting done close to nav so it sounds like they sell all the spanish stuff and the gearing then looks ok

[hugepants] 20/2/2019 07:34

Results don't look great. Dividend cancelled and a further write-down in valuations.