Intu announces five year plan as shares plummet

Real estate investment trust company Intu Properties plc (LON: INTU) admitted today that something had to change in the Company’s strategy, with an on-year comparison of 2018 and 2019 first halves revealing a bleak downward trend in operational and financial performance.

Regarding its financials, the Company’s underlying earnings fell by a third from £98.5 million to £66.4 million. Additionally, its net rental income fell 7.7% on a year-on-year basis for the first half, down to £205.2 million from £223.1 million. The dividend paid per share also fell, from 4.60p per share for H1 2018, to a dividend not being paid to shareholders for the first half 2019.

In respect to Intu operational performance, the Group’s new leasing numbers were down from 116 to 109 for the first half, with new rent income dropping by £2 million on-year. Similarly, on an EPRA basis, occupancy rates dropped from 96.6% to 95.1%.

Intu Five Year Plan

In the Company’s statement, Company Chief Executive Matthew Roberts, commented,

“The first half of 2019 has been challenging for intu. We have experienced further downward pressure on like-for-like net rental income and property values resulting from a higher level of administrations and CVAs as some retailers struggle to remain relevant in a multichannel world.”

“These challenges, facing intu and the whole sector, have been well-documented and, while there are no quick fixes, I am confident that we can address them head on. Over the past nine months we have carried out the most comprehensive review of the business that intu has ever undertaken.”

“We know radical transformation is required and have developed a new, ambitious five year strategy to reshape our business and address the challenges we face, with a priority to fix our balance sheet. With the people changes we have made, we now have the right leadership team in place with the appropriate skill sets to deliver this plan and drive the business forward.”

“Regardless of current sentiment, one thing is clear: the physical store is not dying, it is evolving. The right store in the right location still plays a vital role in retailers’ multichannel strategies and we are starting to work with them as partners sharing the risks and rewards.”

“Our centres will also transform as we turn them into thriving communities – places where people want to live, work and have fun, as well as shop.”

“Change will not happen overnight, but I am confident we have the right plan in place and an energised, dynamic team to deliver it.”

Investor notes

After a modest recovery, the Company’s shares have continued their free fall, down 28.35% or 19.92p to 50.34p a share 31/07/19. Peel Hunt analysts have reiterated their ‘Hold’ rating, while Liberum Capital reiterated their ‘Sell’ stance on Intu Properties stock. The Group’s p/e ratio is currently 4.88 and their dividend yield is 9.03%.

Elsewhere in property development and estate agency news, there have been updates from; LSL Property Services plc (LON: LSL), Countryside Properties PLC (LON: CSP), Ashley House Plc (LON: ASH) and Persimmon plc (LON: PSN).

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.