Shopping centre landlord Intu Properties (INTU) is within sight of fresh record lows, down 14.1% to 34.6p, as it says like-for-like net rental income will fall 9% in 2019.
To put the company’s current share price into context, the shares were trading at 200p a year ago. The company has been hit by a combination of big debts, a struggling retail sector and a slump in footfall as an increasing amount of shopping is done online.
This morning the group says it will move to sell assets and likely raise equity to repair its balance sheet amid a slump in leasing activity.
Chief executive Matthew Roberts said in a trading statement that the company’s ‘number one priority’ is fixing its balance sheet.
‘We continue to consider all options to put us in the best position to deal with both our short and medium term liquidity requirements as we approach our next material debt maturity in early 2021,’ he said.
WHAT OPTIONS DOES THE COMPANY HAVE?
‘These options include disposing of assets, where we are in the advanced stages of selling two of our Spanish assets, through to raising equity, which is also likely to form part of the solution.’
Intu says political and economic uncertainty is causing customers to delay new lettings, with letting activity in the third quarter slower than forecast and at a lower level than 2018.
The company is also seeing more Company Voluntary Arrangements (CVAs), which involve landlords taking a haircut on rents when tenants experience financial difficulties.
AJ Bell investment director Russ Mould says: ‘Company Voluntary Arrangements, or CVAs for short, remain the bane of shopping centre owners like Intu’s existence.
‘These vehicles allow struggling retailers breathing space to sort out their problems, close underperforming stores and cut their rent bills but this comes at an obvious price for landlords.
‘Never mind running to stand still, Intu is running to go backwards. Despite efforts to sort out the business and a strained balance sheet, including the decision to cancel the dividend, the company continues to see rental income fall.’
