Intu Properties PLC (LON:INTU) shares plunged to a new all-time low after the shopping centre owner was unable to drum up its hoped-for £1-1.5bn of new investment.
Having admitted in January was in rights issue talks with potential investors, the beleaguered property group said it has “concluded it is unable to proceed with an equity raise at this point”.
Intu said “a number” of existing shareholders and potential new investors were up for putting further money in, but management believes many more did not because of “the current uncertainty in the equity markets and retail property investment markets”.
Other options are being explored, including alternative capital structures and asset disposals, after “several expressions of interest”.
The board will widen discussions on these options, saying it hopes this will “demonstrate the equity value of the business” as well as providing further liquidity.
NAV halved as property values keep falling
Intu pushed back its full results announcement to next Thursday but provided a year-end update on trading, revealing that a 22% decline in property valuations has knocked 50% off EPRA net asset value per share to 147p.
Like-for-like net rental income for 2019 was down 9.1%, in line with the guidance given in November.
This year is expected to see a further decline but at a slower rate than 2019, but the company pointed out that it had seen a reduction in impact on its rent roll from CVAs and administrations over the second half of 2019.
It said underlying rental income “remains resilient” and noted that over the past five years there had been delivered underlying rental increases on new lettings and rent reviews, despite ongoing pressure from CVAs and administrations, with occupancy remaining high at 95% as at 31 December.
The shares fell 37% in early trade to below 7p for the first time, though after just over an hour on Tuesday were down 27% at 7.76p.
Broker Liberum slashed its target price to 5p from 14p as analysts said: "More cash is needed in the medium term, and this is not a good time to be a forced seller. Evidence tells us that only smaller shopping centres are transacting."
The analysts noted that July 2020 is the next "key testing date" for banking covenants; "if breached, we expect banks will start taking control with further negative implications on larger UK shopping centre values, unless mitigating actions can be taken".
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