Liberum downgrades Intu Properties on 'awful' H1 capital value drop
Liberum downgraded Intu Properties to 'sell' from 'hold' and cut the price target to 145p from 200p on Thursday after the shopping centre owner said it swung to a first-half loss, caused by a fall in the value of its estate.
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"Following Intu's awful first-half capital value decline, we downgrade our NAV forecasts by over 14% and also lower our earnings to reflect expected future asset disposals," the brokerage said.
It now models a 9% decline in the portfolio asset value through FY18, versus 6% in the first half, and a further 3% drop in FY19. Liberum said this will continue to be exacerbated at NAV due to the group's above average financial gearing.
"Unfortunately, Intu has been slow to reduce its financial gearing through this cycle and into a period of weaker asset values this is now hurting. We now expect LTV to rise above 60% over the next couple of years as asset values fall and debt very slowly decreases (with disposals barely offsetting Intu's planned capex and dividend payments."
On the upside, however, Liberum noted that Intu's first half operational performance was good, with new lettings largely offsetting the impact of a difficult retailer backdrop of CVAs.
At 1610 BST, the shares were down 9.1% to 163.55p.