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Thank you for your thoughts, Umeed.
I am not as calm as you and I keep checking the SP every day:)
However I also believe that intu’s SP will increase and it is worth holding it for long time, because:
1. The bottom of the market should be close as: a/ the property values already fell more than 20%, b/ level of transactions is starting to increase, c/ Brexit uncertainty should be clearing in the next few months; d/ hopefully there will be some good news on business rates; e/ GBP Value should start rising soon, connected to Brexit uncertainty and conditions
2. Intu has really good shopping centers where football is stable and they are well invested. Intu is a good operator of the shopping centers
3. With imminent sale of Spanish shopping centers and probable equity raise, the balance sheet will look better and banks will refinance the debts
I am encouraged that in the last week intu’s SP found support even with no good news
VitaBella: I am not worried about share price going down. I buy shares and forget what price of that share is doing in the market. I wait and wait, until Company I bought Shares goes bust or give me good return. In between, whatever the share price does, is irrelevant as far as I am concerned. I avoid playing with my health and blood pressure worrying about intermediate SP between company going bust and me selling shares at profit (or keep taking dividend). I occasionally write here on the forum, just for passing time.
As for INTU is concerned. they are not short of cash. They have around £500 million cash facilities, mostly cash. Their rental income is such that they can service debt they have and still left with more than £200 million cash.
Only problem is LTV (Loan to Value) ratio, and I believe value of their assets has gone down considerably, still it is ~ £3 billion more than debt, so no problem. Worse problem is repayment of loan in 2021, but that problem is only real problematic if loan would not get renewed, and I believe lenders would renew it, as they know Intu can service their debt (there is no chance for default) and lenders also need borrowers, thus all this LTV shortfall in this uncertain market is just a cosmetic jargon. not to worry about. Regardless, Intu LTV would only become problem if retail property valuation goes down further 20 to 25 percent from present state.
Remember, Intu debt is still only 55 to 56 percent of present property value. In other words, Intu asset is around 44 to 45 percent of what they hold as properties. In UK, where many can take 100 percent mortgage, having 55 percent mortgage generating twice the financing cost in income is no big deal.
Problem is that, if LTV goes below 50 percent, INTU could pay dividend and save on Tax payments. Regardless, I do not mind if INTU do not pay dividend for next few years or until retail property value stabilises.
Umdeed,
I am in similar position to you, shareholder suffering paper losses.
I wouldn’t pay too much attention to the analysts SP targets. They move them to follow actual SP. The one for 118p is probably from analyst whose last update was long time ago.
For me, intu’s shares are risky because in falling market landers may not provide further financing to companies with high debts and high LTV ratio. This is the real risk and the SP reflects that. However, if shopping center prices stop falling and start rising , intu’s SP will increase much more than other retail REITs.
FT Share price forecast: 18 analysts offering 12 month price targets for Intu Properties PLC have a median target of 34.00, with a high estimate of 118.00 and a low estimate of 28.00. The median estimate represents a -9.77% decrease from the last price of 37.68.
So, even today, many analysts believe Intu in 12 months could be as high as 118 pence. I believe, once Briexit would be over, within a year of that date. Intu Share price would rocket to over 200 pence.