Intu Properties Share Discussion Threads

[hillofwad] 16/6/2019 17:06

Further bad news arriving in the shape of revised valuiations in the retail investment market. Yields pushing out

[zccax77] 16/6/2019 16:59

hxxps://www.propertyweek.com/news/orion-more-than-doubles-stake-in-intu-to-92/5103096.article

I expect the bad news is now out the way with the Arcadia CVA which is Intu's largest tenant by rent (not by floorspace).

[hillofwad] 16/6/2019 16:38

Could be assembling a warchest for another pop ,maybe with some new partners ? 12 months since the last offer is only a hop,.step and a jump away to come in with an offer with a huge haircut

Plenty of agents will have individual clients prepared to take out one or more of the individual shopping centres to help the cause. He is never going to get a better opportunity if he is able to get some liquidity over the next few months with more bad news expected

[propinv] 14/6/2019 14:36

Now monsoon announce CVA. This is starting to snowball

[zccax77] 13/6/2019 11:55

Best thing INTU can do is call in the leases, hope Arcadia have not spent much money on fitouts. Arcadia have some of the more profitable leases with INTU 70% of which are Topshops, asking for a 25-50% average discount is taking the pish. INTU are really to blame for the situation, they seem to be expanding their centres by adding more square footage when the universe of shops to fill them is getting smaller, they have a capital commitment of 450m over the next 3 years on projects returning 5-7% whilst their own WACC is moving north of 10%, any sane person would cancel those projects and conserve cash. Only good thing on the horizon I can see is them selling their Spanish portfolio for £850m and ploughing that back into debt repayments, they could possibly sell Trafford but will have to be below book.

The government will be too late in finding a solution, they usually close the stable door long after the horse has bolted. INTU will survive since they have some of the best locations after Westfield, in May they had a footfall increase of 1.1% compared to a 5% reduction in high streets which emboldened them to say no to the CVA.

One other positive is that based on some of the latest holding RNS’s a lot of II’s are topping up leaving less than 10% of float in the hands of smaller weaker holders. The shorts on this are between 7-10%, who might have a problem unravelling their position in a positive news situation.

[salpara111] 13/6/2019 10:58

Impossible situation here, they are damned regardless of the outcome.
I would imagine that what INTU will do is serve notice on the Arcadia stores in desirable locations where they feel they can easily replace them with higher paying tenants, if they dont they run the real risk of every other tenant in those units demanding similar rent reductions and hence the death spiral continues.
The real question is.....how does the government address the structural shift in retail. We have yet to hear anything about reform of business rates (it is a huge contributor to tax revenue so if it is cut something else big needs to be put in its place and I do feel that it should be levied against online retailers but I guess everyone will have a differing view)
The only thing that is certain is that we are not at then end of this vicious cycle which will continue to drag property asset values down.

[semper vigilans] 13/6/2019 08:13

Cynics might say that the board were looking for a fig leaf behind which to try and hide by voting against the Arcadia proposals: is that fair?

[aby1972] 13/6/2019 08:10

I really agree with exactly what you just saidTotally unbelievable

[propinv] 13/6/2019 08:07

Good news down. Bad news down. No news, down. There is a theme here.

[cc2014] 13/6/2019 07:49

Probably a decent outcome for INTU. They get to keep the stores open, collect some rent whilst making it clear to their other tenants they have been outvoted.

Still no idea how the share price will react if at all!

[cc2014] 12/6/2019 17:14

CVA Approved. No idea what it will do to the share price!

The CVA forces store closures and reduced rents of 25% to 50% across 194 of its 566 UK and Irish stores over a three-year period.

Lady Tina Green, Sir Philip Green's wife and Arcadia's majority shareholder, has agreed to invest £50m of equity into the group, in addition to the £50m of funding already provided in March.

[zccax77] 12/6/2019 15:55

Before the halfwits say the rents are too expensive. INTU rents are usually £12 psf for the anchors which is why none of the INTU Debenhams will close, £28 psf for the MSUs and £48 psf for everyone else.

[zccax77] 12/6/2019 15:53

NEXT R&A - A 4% annual compound decline seems ridiculous, however what I also found crazy is the costs required for change of use which basically renders that option a no go. Next have said they want to reduce their estate from 600 to 300 stores. However their focus will be on quality locations so the top 20 locations in the UK, of which INTU own 8 of those. INTU rent costs are 11.8% of store turnover, so I don’t think tenants will have a problem paying rent if turnover is materially higher due to being in those locations. INTU have the second best locations after Westfield, and their focus is to create ‘Destinations’. Arcadia are not the future, Inditex and H&M are, the sooner Arcadia go pop the better which is why INTU would prefer that.

[yump] 12/6/2019 15:04

Isn't one of the issues whether INTU still have an excess of space, once retailers have cut their shop numbers and retail has contracted to a stable base.

Closures don't just involve INTU centres, they're happening in other retail spaces which aren't premium so if you assume at some point that the viable retailers will have stopped chopping, started concentrating on their best locations and the centres will have more mixed and more stable/profitable businesses in occupancy, then the prospects for INTU should improve if demand for premium space starts to outstrip supply.

The current mantra is obviously that the internet is going to cause the death of physical retail - but as always with black/white arguments that theory will overshoot.

[buywell3] 12/6/2019 14:52

What stupid Institution/s pushed this back up to 200p ?

[frazboy] 12/6/2019 14:22

Propinv - I read that a while back. It's obviously aimed at the retail landlords in general but I found the material on change of use interesting (or inability to change the usage) - and that was more specific to Intu to my mind. If you take the Next report at face value then Intu are snookered - I just don't think there's enough retailers out there that are prepared to pay top dollar going forward for supposedly premium space

[cc2014] 12/6/2019 14:17

As a sort of bit of a conspiracty type statement it would not surprise me that even if the CVA goes through INTU start exercising the break clauses as soon as they are able even to their short term financial detriment.

I get the impresssion they've decided to make a stand on this one, which kind of makes sense when your landlord is worth hundreds of millions.

[semper vigilans] 12/6/2019 14:11

CC - good points - pensions are the tail wagging businesses now, not just onerous leases signed for under the watchful eyes of professional advisors!

[cc2014] 12/6/2019 14:02

I think the issue is that Arcadia want up to a 75% rent reduction on some stores. You might as well take it back and takes your chances at that sort of reduction. Or hope someone buys it out of receivership and you agree only a 30% reduction.

I also have the view that these "old" brands which haven't evolved and aren't at the leading edge of fashion need to go. They can't pay the rent as they've been outcompeted. They are also leading prices down and hurting everyone else.

Let them go and let those that can make money have the space or leave it empty.

Else Arcadia will be back in other 2 years time with another CVA solving nothing as it's their business model that's knackered and no amount of rent reduction is going to solve that.


All imho. I do feel for the staff who are caught up in this. I trust Philip Green will make good on their pensions if it goes belly up but I wouldnt' count on it.

[semper vigilans] 12/6/2019 13:26

I don’t think that there is a clear path to managing the decline of retail property, but whilst wanting to make stand against Arcadia, would it not be better to get some rent and service charges, as opposed to voids and associated costs?
Arcadia won’t be the last to go, if it does, and there aren’t many replacement tenants lining up to take space: those that may want space won’t anyway offer rent anywhere near current levels.

[cc2014] 12/6/2019 13:08

Last week it was INTU against the rest with all the other big players publically saying they would support the deal.

I suspect it will be the same this week. But that's just a guess. I see Arcadia have offered 20% of the company as part of the deal but only if they sell it. I think if they moved that to 20% regardless that might swing it, but I sense that part of the deal is just posturing. What's 20% of something losing money anyway.

I'm not sure what it will do for the share price but I think it's time to tell Philip Green to go away.

[propinv] 12/6/2019 12:51

You should read the annual report for NEXT. Every retailer in the U.K. has and they have gone into bat against landlords on the back of it

[montyhedge] 11/6/2019 20:22

If they agree surely all the other retail shops, would want a reduction in rent.