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Intu reveals massive loss as shopping centre valuations slashed

The shopping centre owner needs to refinance its £4.5bn of debt or it will go to the wall

Intu Properties PLC -
Intu's Trafford Centre in Manchester

Intu Properties PLC (LON:INTU) revealed losses for last year swelled to £2bn as the value of its shopping centres was marked down.

Losses mushroomed 72% as the former FTSE 100 and FTSE 250 group revalued its property portfolio down by £1.98bn, with a like-for-like reduction of 22.3% over the year and 33% from the peak in December 2017.

READ: Intu out of luck with funding talks as property valuations subside

This reflected a 13.4% markdown in like-for-like estimated rental values after the retail sector saw higher levels of administrations and CVAs and 95-basis point outward yield shift from weakening investor sentiment.

The market value of Intu’s investment and development property was calculated to be £6.6bn at the year-end, down from £9.2bn over the 12 months, while net debt stood at £4.5bn.

Last week, Intu said it was at risk of breaching debt covenants after it failed to drum up enough support for a £1-1.5bn rights issue.

Because of the risk of further valuation declines and the ability to refinance its debt pile, the company said: "A material uncertainty exists that may cast significant doubt on the group and company's ability to continue as a going concern."

Chief executive Matthew Roberts, who took over last April and soon launched a five-year strategy, argued the bricks-and-mortar part of the retail sector was struggling but not moribund, saying “the store is not dying, it is evolving” and that around 90% of all retail spend is still ‘influenced’ by a physical store.

Roberts stressed that while the initial funding plans had been abandoned, Intu has other options and a strategy that “addresses the challenges and will position us to take advantage of the opportunities”.

Intu shares were down 9% at 5.07p on Thursday afternoon.

Analysts at Peel Hunt said, "survival is now the key focus" and options now include "further disposals, alternative capital structures and seeking covenant waivers where appropriate".

They pointed out that the shares sit at around a 96% discount to NAV of 147p, with the market cap of circa £77mln dwarfed by the debt pile.

Quick facts: Intu Properties PLC

Price: 1.776 GBX

LSE:INTU
Market: LSE
Market Cap: £24.07 m
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