Section Items

The comments on this page are some of the thoughts that I had when considering this company and not a recommendation to take an action or to refrain from taking an action.

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Commentaries tend to be created when I look at a share and decide if it is one that I want to buy either now or when I next have an unallocated pot.
As companies often report numbers in slightly different ways there are a number of entries to cover this and as these are rough notes there will usually be empty items.

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Commentary On Intu Properties

Title: INTU – No Real News, Just The Truth Hitting Home?
Company: INTU - Intu Properties
Share Price Then: 35p
Author: Ian Smith
Date: Wed 06 Nov 2019
Comments: Intu have just released a trading update with a set of numbers that are slightly down on the previous year, the main negative being the tenants who achieved rent reductions via CVAs have had slightly more effect than predicted.

Recently John Lewis made public statements about withholding service charge payments, how much of this was posturing and how much was real is unknown but I do wonder if service charges are seen to be increasing to cover some of the loss of rental income even if it is not true.

...our focus on efficiencies and cost savings relating to the centres has allowed us to deliver a benefit to our customers, with the 2020 service charge budget lower than 2019

2019 rent is predicted to be down by around 9 per cent, with more than half resulting on CVAs.

Even with this reduction it seems likely that the company will report something like a £200m underlying profit on about £400m of rental income for 2019, what the statutory profit will be will depend upon how much more the property value is adjusted downwards.

The real issue is that the company’s debt is increasing relative to the properties’s values and they haven’t been paying debt off fast enough, Interest payments are going to be something like £210m.

For me the underlying business is strong, with occupancy at Sept 2019 at 95.1% down from Sept 2018 of 97%, is still well above the high street average of 90%.

With nearly £5bn of debt and a market cap of a bit less than £0.5bn (at 34p) a share issue to make a meaning full dent in the debt could easily be a 4 for 1 issue.

It is looking to me like another business that will almost wipe out its current share holders simply because of debt.
ItemCurrent PeriodPrevious Period
Period6 Months6 Months
Adjusted Earnings£66m£98m
Adjusted EBITDA
Statutory Profit(£829m)(£486m)
Adjusted Profit
Total Debt
Net Debt£4714m£4867m
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