Intu scuppers dividend as values plummet

Shopping centre landlord intu has removed its final dividend for 2018 as the value of its assets plummeted on the back of “weakening sentiment” in the retail investment market. Its property valuation fell by 13.3% during the year to 31 December, with a total revaluation deficit of £1.4bn. Contained in this was a 6.2% valuation decline in the period to 30 June, and a further 3% in the quarter to 30 September. Intu scrapped the final dividend for 2018 as part of plans to de-lever to reduce its loan-to-value ratio, which was 53%, to below 50%. The REIT said it would retain cash from activities rather than distribute it as a dividend. It also plans to make “further or part disposals” in due course. EPRA NNNAV per share dropped by 22%, to 271p from 349p in the previous year. Diluted NAV per share was 312p, down by 24% from 411p. Intu made a loss of £1.2m for the year, increasing by £1.4m, which it blamed on the property revaluation deficit. Intu also confirmed it received a number of “unsolicited offers” for its Spanish business, which it is “evaluating”. Its stakes in its Spanish operations, comprising stakes in three shopping centres, were valued at £628.8m during the year. Net rental income growth across intu inched up to 0.6% (£2.3m), broadly similar to its 0.5% increase in 2017. However, the landlord expected the 2019 full-year change in like-for-like net rental income, including the impact of House of Fraser entering administration, to be down by 1%-2%, subject to no new material tenant failures. See also: What the future holds for intu John Strachan, chairman of intu, said: “Intu has had a challenging year with a difficult retail and uncertain economic environment, together with responding to two abortive corporate offers for the company. However, our management team has produced a robust operational performance with increased like-for-like net rental income for the fourth consecutive year, 97% occupancy and signed 248 new long-term leases. “Our three core objectives for the year ahead are to continue to deliver strong underlying individual centre performance, continue our strategy of adapting to the changing retail environment and to make smart use of capital. “We propose to reduce our debt-to-assets ratio over time back below 50% by further disposals and part-disposals and retaining the cash generated by our activities rather than distributing it as dividend, to enable us to invest in our winning destinations.” David Fischel, chief executive of intu, added: “In a difficult year for the whole UK retail real estate sector and with very limited comparable transactional evidence, property valuations declined as sentiment weakened significantly. “Our tenants invested a record £144m in their stores over the year, a clear indication that these retailers see great physical space as a key part of a successful multichannel strategy.” During the year intu refinanced or entered new facilities of over £500m, including development finance loans on intu Trafford Centre’s Barton Square and intu Broadmarsh. There have been two collapsed takeover bids for intu over the past 12 months. To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette