|Bid||34.53 x 0|
|Ask||34.64 x 0|
|Day's range||33.49 - 34.82|
|52-week range||30.20 - 122.15|
|Beta (3Y monthly)||0.01|
|PE ratio (TTM)||N/A|
|Earnings date||18 Feb 2020 - 24 Feb 2020|
|Forward dividend & yield||N/A (N/A)|
|1y target est||144.34|
(Bloomberg Opinion) -- As the e-commerce boom lays waste to bricks and mortar retailers, it was only a matter of time before Britain’s high street landlords were hobbled too. U.K. shopping center owner Intu Properties Plc is at the epicenter of this particular storm and is ill-equipped to cope because it has too much debt.A trading update this week confirmed that it’s in a very tight spot and raising equity is now considered “likely.” The stock dropped 24% over two trading sessions, swelling total losses over the past year to 84%. Hedge Fund Odey Asset Management and other short-sellers have made a killing here. Shareholders’ best hope of salvaging more value is that someone makes a takeover bid.Intu’s misfortunes stem from renting space to troubled retailers such as Arcadia and Monsoon, which entered so-called company voluntary arrangements (a mechanism to close stores and cut rent). The mall owner expects net rental income to drop about 9% this year and continue falling next year.That might not sound too dramatic, but it’s a huge problem for a company with 4.7 billion pounds ($6.1 billion) of net debt and hefty near-term refinancing needs. More than 900 million pounds of those borrowings fall due in 2021.Intu’s debts are equivalent to a whopping 58% of the dwindling market value of its properties, putting it uncomfortably close to breaking some of its debt covenants. The dividend has already been suspended — a drastic move for a real estate investment trust — but management hasn’t made much progress generating cash and reducing leverage.The company is talks to sell three Spanish sites, which should free up a few hundred million pounds of cash. U.K. asset sales are also under consideration. The trouble is that the market for British retail property transactions has ground to a halt and Intu will be viewed as a forced seller. So it’s hard to be optimistic about the proceeds. Brexit uncertainty and a pre-Christmas election won’t help Intu’s current or prospective tenants.The group’s 375 million pounds of 2.875% coupon convertible bonds due in 2022 now yield 13%. This is the credit world equivalent of the “sad face” emoji and a sign the company would have difficulty raising more unsecured borrowing.While raising equity looks unavoidable, Intu has waited too long. With a market capitalization of just 417 million pounds, a rights issue would probably be highly dilutive to existing shareholders and they’ll get a vote on whether it goes ahead. Anyone considering a takeover bid at a premium to the current share price would be taking a huge risk in view of Intu’s huge financial liabilities and waning capacity to meet them. Still, Intu attracted two failed offers last year when the share price was much higher. Now it trades at a massive 85% discount to what the company calculates its net assets are worth. Those asset values probably have further to fall but Intu’s malls have some high quality tenants, decent footfall and occupancy rates. Bid speculation gives faint hope to stockholders and might yet crimp Odey’s profit.To contact the author of this story: Chris Bryant at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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"Our number one priority is to fix the balance sheet... options include disposing of assets, where we are in the advanced stages of selling two of our Spanish assets, through to raising equity," Matthew Roberts, Intu's chief executive, said. Intu shares were down 14% at 0941 GMT after the owner of Manchester's Trafford Centre also said it expects annual like-for-like net rental income to be down by about 9% and predicted another decline in 2020, although at a slower rate. Shares in other British property groups, including Hammerson Plc , British Land and Land Securities , also weakend on the third quarter trading update from Intu, which has 20 shopping centres in Britain and Spain.
The FTSE 100 , which had been holding at a near one-month high this week, rose 0.1%, while the FTSE 250 dipped 0.4% as the pound weakened slightly ahead of a Bank of England's interest rate decision on Thursday. The drop in the currency, however, boosted exporters British American Tobacco , Unilever and Diageo , which were the best performers on the main bourse.
British shopping centre operator Intu Properties said on Wednesday it could raise equity, alongside asset sales, to tackle its debt burden, knocking nearly 18% off its share price. "Our number one priority is to fix the balance sheet ... options include disposing of assets, where we are in the advanced stages of selling two of our Spanish assets, through to raising equity," Matthew Roberts, Intu's chief executive, said. Intu shares were down 14% at 0941 GMT after the owner of Manchester's Trafford Centre also said it expects annual like-for-like net rental income to be down by about 9% and predicted another decline in 2020, although at a slower rate.
Ashley's business plan is pushing landlords into rent concessions – this isn'tnot good news for commercial property owners like Intu Properties.
Shares in Britain's Intu Properties surged as much as 22% on Monday on speculation a private equity group could buy out the shopping centre operator, which has been hit by high-profile retail failures and a hefty debt burden. The Sunday Times reported http://bit.ly/2HUdHxb that private equity firm Orion Capital Managers, founded by Aref Lahham, is in the early stages of finding partners for a buyout of Intu, which owns the Trafford Centre in Manchester. Intu declined to comment on the Sunday Times report.
The Sunday Times reported http://bit.ly/2HUdHxb that private equity firm Orion Capital Managers, founded by Aref Lahham, is in the early stages of finding partners for a buyout of Intu, which owns the Trafford Centre in Manchester. Intu declined to comment on the Sunday Times report. It was not immediately clear how much of Intu Lahham owns.
Intu, which scrapped its dividend earlier this year and changed management after two failed takeover bids, said it was adopting a new five-year strategy to reshape its business and focus on fixing its balance sheet. Intu forecast like-for-like net rental income down moderately in 2020, after a 7.7% fall in the six months ended June 30. European peers and real estate investment trusts (REITs) such as Hammerson , Uniball-Rodamco and Derwent London were all trading lower.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Faced with the choice of accepting rent cuts or hunting for new retailers to fill hundreds of stores, U.K. mall owners are swallowing their medicine.Some of Britain’s biggest commercial landlords including Hammerson Plc and British Land Co., voted in favor of a rescue plan for billionaire Philip Green’s Arcadia Group that meant having to accept dozens of store closures and rent cuts of at least 25% at almost 200 sites.But their approval for the so-called Company Voluntary Arrangement was grudging and highlights how much pressure they are under from the pain inflicted on retailers by consumers choosing to shop online rather than in department stores.Land Securities Group Plc, Standard Life Aberdeen Plc and the Crown Estate had intended to vote against Arcadia’s proposals and switched at the 11th hour, according to people familiar with their plans who asked not to be named discussing information that isn’t public. One landlord, Intu Properties Plc, voted against, calling the deal unfair to tenants that pay full rent.“It really is like being stuck between a rock and a hard place,” said Daniel Swimer, property litigation partner at law firm Joelson. “Landlords could have rent reductions forced upon them or, if the CVA doesn’t get passed, they’re left with a large retailer failing in the current retail climate.”Deal ApprovedThe fact the deal was approved is likely to put further pressure on mall rents and values, and raises the possibility that commercial property owners could be tipped into a crisis similar to that faced by the retailers who make up some of their biggest tenants.The cost of insuring Land Securities’ debt against default saw the biggest daily rise since December on the day after the Arcadia vote, according to ICE Data Services. Moody’s Investors Service warned of possible damage to the creditworthiness of retail property owners that already face “weak operating performance, with declining footfall and retail sales, and downward pressure on rents.”The landlords came under pressure from Arcadia to back the deal or put about 18,000 jobs at risk if the company was forced into administration, people with knowledge of the negotiations said. Several were told they would be shirking their social responsibilities and be blamed for job losses, an accusation they resented, some of the people said, asking not to be identified as the talks were private.Arcadia representatives declined to comment.Ultimately the decision to back the CVA came down to the best commercial interests of the landlords, given that they could be left with empty sites if Arcadia fell into administration, two of the people said.Spokesmen for Land Securities, the Crown Estate and Standard Life Aberdeen confirmed they had backed the plans but declined to comment on the detail of the negotiations. Representatives of Hammerson and British Land declined to comment.Smaller CutsWhile many companies have preceded Arcadia’s CVA, few have been so large and many secured less generous rent cuts. The risk is that following Arcadia, other retailers now demand the same, even those that have previously undertaken rent cuts.“There’s nothing to stop companies coming back for a second bite,” Andrew Hughes, head of European general retail at UBS said at a media briefing last month.Intu has previously highlighted the likely impact of Arcadia’s CVA, saying last month that store closures are worse than expected and it sees net rents falling 4% to 6% this year. The company, which owns eight of the top 20 malls in the U.K., is under pressure itself to sell assets to cut debt and CVAs are hampering those efforts.Falling ValueIntu said in February that a further 10% fall in the value of its properties would cost 1 million pounds in extra expenditures in order to avoid a breach of loan covenants. U.K. Retail property values fell 10.25 percent in the year through May, according to data compiled by broker CBRE Group Inc.Some landlords are pushing back on department store chain Debenhams’ outlet closures which won creditor approval in May. Sports Direct International Plc has grouped together with landlords to challenge the CVA and property investor M&G Investments has launched another challenge, a spokeswoman for the asset manager confirmed.But it will be hard for landlords to stop the trend. Consumers’ shift to online shopping shows little signs of abating and insolvencies have jumped by more than a fifth since 2016, with more than 1,200 retailers collapsing last year.“What is 100% certain is that retailers can’t carry on paying the rents they have historically,” said Richard Hyman, an independent retail consultant. “There’s less money in the pot to fund it and the pain has to be shared by the landlord as well as by the retailer.”\--With assistance from Antonio Vanuzzo.To contact the reporters on this story: Katie Linsell in London at email@example.com;Jack Sidders in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Vivianne Rodrigues at email@example.com, Chris Vellacott, Shelley RobinsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Sir Philip Green has told Sky News "a win is still a win" after his high street retail empire narrowly averted the prospect of collapse. Arcadia Group - whose brands include Topshop, Dorothy Perkins and Burton - needed to get 75% support in a series of rescue deal votes among creditors. The vote in the City was delayed by a week as landlords held out for improved terms on rent cuts they were also being asked to approve at 194 of the remaining sites.
Arcadia Group - the company behind the Topshop, Dorothy Perkins and Burton brands - needs the support of at least 75% of creditors in a series of ballots that were delayed last week because of significant opposition from landlords . After suspending last week's vote, Arcadia said it would reduce the severity of its proposed rent reductions in a bid to win enough support. Sky's City editor Mark Kleinman reported that Intu's voting rights were so great that every other major Arcadia landlord had to back the CVAs if they were to be carried.
Sir Philip Green's plan to save his high street empire from collapse edged closer to failure on Tuesday when its second-biggest landlord indicated it would oppose a last-gasp rescue deal. Sky News has learnt that Intu Properties, which owns the Lakeside and Trafford Centre shopping centres, has informed Arcadia Group that a compromise deal aimed at winning over sceptical property-owners had not persuaded it to support a proposed Company Voluntary Arrangement (CVA). The move inches Arcadia, which needs the support of 75% of creditors at a rescheduled vote on Wednesday, to the brink of administration, and casts renewed doubt over 18,000 high street jobs.
The future of Sir Philip Green's retail empire remains in the balance after a meeting to secure backing for a rescue plan was adjourned until 12 June. Arcadia was unable to gain support from enough of its landlords to push through an agreement for its restructuring plan. It needs approval from creditors in order to avoid administration or liquidation for its seven brands - Topshop, Topman, Burton Menswear, Dorothy Perkins, Evans, Miss Selfridge and Wallis.
"A key strategic objective for us is making smart use of capital ... Dushyant will be key in delivering disciplined capital allocation across the business," Chief Executive Matthew Roberts said. Since joining in 2010, Sangar has worked on deals worth over 5 billion pounds, including the acquisition of intu Trafford Centre, and played a key role in Intu's foray into Spain, the company said. Sangar previously held roles at MGPA, a private-equity real estate investment advisory company that was bought out by BlackRock, as well as in investment banking at UBS.
The FTSE 100 ended 0.4 percent higher, following three sessions of decline, and the FTSE 250 overturned earlier losses to close up 0.1 percent. HSBC was the biggest support to the main bourse, rising 2 percent to its highest level in over eight months as its profit surpassed analysts' expectations thanks to a surge in income from its core Asian business. Miners snapped a seven-day losing streak with a 1.1 percent jump as metal prices picked up with China and the United States set to resume trade talks next week.
Intu shares tumbled more than 8 percent to 91.90 pence at 0725 GMT, taking the stock to the bottom of the midcap index. The company, whose properties include the Trafford Centre in Manchester, now expects net rental income for the year to decline between 4 percent and 6 percent, compared with its previous view of a decline of 1 to 2 percent. "We expect the remainder of 2019 to be challenging due to a higher than expected level of CVAs and a slowdown in new lettings as tenants delay their decisions due the uncertainties in the current political and retail environments," said Matthew Roberts, who was installed as chief executive last month.