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It's always the notes to the accounts that reveal the unvarnished truth; Go to the Income Statement, Para A, Net Rental Income and drop down to the last line, a single sentence paragraph:
"We anticipate full year net rental income to be down by a similar amount to that seen in the first half of 2019."
That's down another £17.9 million at 31st December, taking total NRI for the current half-year down to £187.3 million. Down almost 15% compared to the 31/12/18 number.
The next sting in the tail is found in the Balance Sheet, under Debt Measures, Debt Structure & Covenants. Another last line, reading;
"Our business depends on our ability to continue to access these sources of funding to refinance debt as it falls due."
A few more falls of £17.9 million every half-year will make that pretty difficult.
This news out today:
https://product.costar.com/home/news/shared/66467001?utm_source=costar&utm_medium=email&utm_campaign=costar-national-newsletter&utm_content=p1
For sale with a 9% initial yield.
Blackrock reducing? They still hold 8.5%., but the breakdown is different. The 21st RNS showed shares and a CFD. The 24th shows less shares, the same CFD and 'securities lending' equivalent to the drop in shares for a total 8.5%.
Securities Lending means they lent the stock to a shorter in return for a fat fee. Having presumably sold it, he will have to return it eventually.
I do agree with both of you though, that a clarification RNS, would be helpful, but maybe the board is cocky enough that the update in July/August will do that job for them. We shall see.
Blackrock today disclosed an increase in their position from 5.6% to 8.5% = +2.9% and it happened last Friday on the 21st. That's roughly 2.4 million shares, out of the 4 million you saw traded, Autonomy.
If Blackrock are happy to keep buying, then so am I. This tide will turn.
I'm loath to keep commenting here, lest you all think I'm a Jonah, or even worse, a deramper. I'm neither. Just a commercial surveyor with over 40 years experience un the UK, Europe and North America, before retirement. I keep coming back here because I would like long and medium-term committed holders of Intu to realise the enormous risks they are taking by holding onto their stock. This is no stock for widows and orphans. There are still plenty of speculators out there, who will take your stock off you for c. 78p today, and they know full well the risks they are taking, so I owe them nothing and wish them good luck. This stock might get taken out for £1.20, £2.00, no-one knows. It might also, like DEB, go to 5p. That's the risk you're taking. It's a crap-shoot, not a remotely gilt-edged investment.
As Sain rightly points out, a small movement in yield around the 3.5% to 5% mark, causes a much greater %age difference in capital value, than a yield change from 9% to 10% and this subtle point is often lost on investors. It's a geometric graph, not an arithmetic one. A steeply rising or falling curve, not a straight line. Marvellous on the way up. Terrible on the way down.
Unhelpful comments are being made here about valuers. They are about the straightest guys in the property business. Not the sort of people you'd invite out for an evening of conviviality in the West End. Far too sobersided. In a market like this, their ghoolies are on the line. What percent to apply when there's very few comparables? It calls for caution, especially in this litigious era, when the 2008 downturn saw many valuers sued hard by banks for being over-optimistic (the banks claimed) during the boom years. Real rental values are also difficult to gauge, when all manner of games are being played to keep the "Face Rent" up at a big number, while having to pay through the nose with fitting-out and ever-growing rent-free period inducements to get it on the lease. They wreck your immediate cash flow, in return for a larger cash number later. The question being; can the owner hang on until the money eventually comes in?
The valuers also want to keep their P. I. Insurance valid in the future, so they'll be very careful. Far better to be a touch pessimistic than optimistic. I recently put the Derby/Cale facts before a couple of pals, who worked for JLL in the institutional investment dept, a few years ago. Asked them what rate they'd put on Intu's 50% 'waterfall' share. Both said, given the potential liabilities to Cole and the very uncertain amount of the remaining "50%" income, they'd put a double figure number on it. One when pressed hard, said 11.5% on today's passing income. This is how dodgy the investment market for retail centres is today. This is not to say that Intu's valuers will come up with such an awful number on Derby. They have far more facts than we do. But it does show long-term holders the risks they are running. Be care
What a peculiar Sell Note. Full of vague objections; unspecified "worsening of website ranking data . . . is harming these brands reputations". Is that the only possible explanation and how big, or small, is the fall in website rankings? "Quality of earnings poor due to ongoing recurring charges" - all businesses have ongoing recurring charges, from rent through salaries. How does this affect the earnings quality?
Then, they cast a real nasturtium, "we believe historical reporting to have been overstated". Hang on Stockviews. Have you got any evidence that the girls are cooking the books, because that's what you're saying and you're claiming the dumb auditors have signed off on the cookery too. Let's have some facts. Precisely which numbers are cooked and how? Otherwise, I say you're just deramping and full of BS.
On the subject of which, clear visible facts amongst the trades so far today show that institutional and quasi institutional buying, defined by me as being lots traded in excess of 1,000 shares , has exceeded 200,000 shares before lunch. I gave up counting backwards, but take a look, for example, between 09.55 and 10.30 and see how many lots of 5,000 crossed. Serious buying whether in red or green. Several people with deep pockets have been buying hard, and on the principle of 'follow the money' I'm coming back for another small 1,000, either later this afternoon, or tomorrow morning, once the volatility settles down.
I agree with Blondeamon and Terrier and regard a price under £11 as a steal. Roll on the update in July or August.
Thanks, FastJezza, glad you enjoyed it. Meanwhile there's an interesting story on John Whittaker in today's Sunday Times. It's of particular relevance, I think, to anyone who imagines he's in a position to bail out Intu.
https://www.thetimes.co.uk/edition/business/trafford-centre-tycoon-john-whittaker-forced-to-shrink-empire-2cnsrnwrr
Indeed Owls and Mongoose, I like your comments about the negative correlation and complaints of 'MM's manipulation'. I got into SN, just over a year ago because it appears to be a very well run company, and it's risen just over £3, almost 20% since.
Whether it will go much higher is anyone's guess. For year's it has been an irregular tip for a takeover in the comics, although there's never been a sniff of that happening. Once it took off, I decided to place a mental trailing stop 75p below the weekly closing price. If it's hit, I can always get back in later for less and if it isn't, I'm along for the ride.
PS. 7 or 8 years ago, I came across Aminex (AEX) and O&G explorer in East Africa. Both fields I know quite well. So I punted in for a small amount, just into four figures, and spent the next while discovering that management deserved to be nominated for the Jeremy Corbyn Trophy as Most Incompetent Managers of the year. Once it became blindingly obvious that this particular Irishman had the IQ of a geranium, I bailed for a 25% loss. Since then management has changed, but isn't much smarter, the price is now 90% below my original purchase price, but once a month or so, I dip into the comments. Many old posters, some new ones, still hunting for that elusive '10 or 20 bagger', as they call it, and seemingly blind that the sp continues it's relentless march towards four-fifths of five-eighths of sweet tweet, taking their money with it. I find it quite entertaining in small doses and thought I'd commend it you both as a drop of light reading, should you have nothing better to pass the time over the weekend.
I've come to the conclusion that there's a bunch of people who just enjoy suffering and playing 'powerless' as they refuse to accept any responsibility for their mistakes, as they watch their cash go up in smoke. Perhaps being able to get their hands on a few hundred thousand shares for less than £5,000 has something to do with it too. Maybe makes them feel big and allows them to dream of the villa with pool in Portugal once it gets to £1 a share.
Sain, thank you for this hotlink. Bisnow also says that Peel is negotiating to refinance the Trafford Centre.
There is a forest of good info on this site, regarding retail real estate, and it appears to be paywall-free.
I'm not surprised that four hours after the RNS was posted, there isn't a single comment from PI's. I've been risking my money on the LSE since 1964 and this has to be the most complicated piece of gobbledegook imaginable.
I just want to lighten my holdings. I don't want a course in higher mathematics from some geeky quant, who wants to teach me all about VWAP's or some other incomprehensible concept.
Anyone know where Albert Einstein is buried? I think I need his help in working out what price to tender at.
ZC, you asked an interesting question yesterday about John Whittaker. Per Morningstar, he holds 27% personally and Peel Group, in which he holds 75%, owns another 27%, for over 54% of Intu to be effectively under his control.
He's been an enormously successful investor, but no-one is ever too big to fail. That was said of the Titanic and Lehman Brothers, and we all know the results. So I'm going to ask you a really tough question:
Assuming JW has the firepower to bail out INTU, and that's a very big assumption, why should he rescue you and every other outside investor? He only holds 54%. We know of the looming threat of possible LTV foreclosures, in the event that occupancies, rents and capital values continue to fall and, should that happen there'll be bankers, holding up to £7.5 billion of INTU debt, looking for buyers, to get them out for 100% of the debt, plus pennies for the equity holders.
For bankers, and I've been there before, it becomes a battle to preserve a well-secured performing loan (and thus their jobs), and the devil take the hindmost (read equity holders).
So, again on the assumption that JW has the cash required, why would he bail out INTU, to preserve your equity in the company, with him staying at 54% owner, when he could cut a deal with the bankers, probably for less money, and get 100% of the equity for himself, by buying the property out of foreclosure?
There is, of course, another big assumption in this, or any other rescue scenario, which is that any existing major investor actually wants to rescue their investment. We're already seeing examples of deep-pockets being forced to walk away, like Ashley burning £150 million on Debenhams. JW might conclude that bricks and mortar retailing seems to be slowly going the way of horse-driven-carriage makers and galleon builders, after the arrival of the internal combustion engine and iron-hulled ships, and therefore not worth saving, whatever the circumstances.
I should stress that I don't know the man from a hole in ground and have zero inside information. But I am a strategist, with a fair knowledge of commercial real-estate, who bases investment decisions on hard-headed realism, flavoured occasionally with a little cynicism. No-one gets rich by standing on street corners handing out £50 notes. No-one stays rich by bailing out equity "partners", who have little or nothing to contribute towards the problem.
So, my suggestion is this; If all that is keeping you in INTU is the emotional hope of a rescue from an investor-cum-philanthropist, take what's left of your cash and move elsewhere. There's also a very readable analysis of the UK and EU property markets in the TR Property Investment Trust (TRY) annual report, published yesterday. The manager is quite a character, possibly not to everyone's taste, but he sure knows his onions and he specifically comments on his reasons for selling out of INTU last December. Good Luck.
With respect ZC, the short interest in Intu has more than trebled in the past six months. Starting at 1.8% short on 23/11/2018, rising to 5.07% on 29/01/19 and peaking at the end of last week at 6.61%.
Just take a boo at the hotline provided by 'fat banker' below. The graph tells the story.
Yes, Slumberjay, you have erred. Oil Majors typically value proved and probable reserves at $3 a barrel. Based on your estimate of recoverable reserves and the number of issued shares, this equates to £2.95 per share.
A long way north of the current SP, which suggests there are some very good reasons why the share price is so low; I suggest that before you bet the farm, you have a really good look at political risk, the drilling, development and infrastructure costs required to get it to market, which are probably in the billions, and the company's management's ability to get this baby to fly.
You only have to take a look at Ophir, recently bought for a song by the Indonesians, to see that offshore elephants are worth pennies today. Ophir found wonderful oil and gas fields off the Tanzanian coast nearly ten years ago. So far, not one barrel has hit the shore.
Yes, zccax77, Intu have some interesting assets, but the assets have two big problems; first, the retail market has moved into a totally unforecastable field, where shoppers in the UK now make 20% of their purchases online, causing bricks&mortar tenants to go bust at a rate of knots, as footfall dries up. No-one has a clue where this percentage will stabilise - 30%, 40%, 50%? All we do know is the percentage has grown steadily for ten years and presently shows no sign of slowing down.
Problem assets are always difficult to sell, because they're falling in value due to diminishing tenant demand. The second possible black-mark for a commercial property is inappropriate finance. In the past it was high interest rates; owners in a downturn couldn't meet the interest bill. Today, even though rates are very low, the sheer total amount of debt on Intu's portfolio is approaching the point where it cannot be justified, when compared to the falling capital values.
Lenders don't want to get a property back through foreclosure, because by then it will be truly underwater and the asset worth less than the loan outstanding. They protect themselves though "Loan Covenants". The borrower gives the lender the right to walk in and take over a property, notwithstanding that the debt payments are current, if the loan outstanding, expressed as a percentage of the property's most recent valuation, reaches a target level specified in the loan. That enables the lender to deal with the property while it still has some equity to sell, and from the lender's perspective, to exit the loan with a clean nose and avoid taking a write-off.
So, Intu has two major hurdles to overcome. The assets are very difficult to sell and the company's borrowings are very onerous. This combination seems likely to prove very discouraging to another bidder, but you never know. Personally, I wouldn't bet on it. There are easier ways of making money in commercial property than taking on someone else's dogs breakfast.
Having lost a packet on Genel back in 2013/14, I revisit the gossip columns roughly annually just to see how life is unfolding.
After picking up on the general frustration of the PI's, I took a boo at the 5 year chart and was pleasantly surprised to see a "Cup & Handle" formation. A positive, buying signal. Now, I appreciate that many of you equate such matters as akin to visiting witch-doctors, but I have made good money from time to time using signals from Double-Bottoms and Head & Shoulders patterns.
Genel would appear to be breaking out positively, with a price target of 340 to 350p. Given the presence of mad Trump and the usual middle-east civil war factors, I need to do a lot of soul-searching before tossing good money after bad, but I thought I'd share this optimistic outlook with those of you, who are fed up with Genel's undervaluation. It might just brighten your day.
Probably not, Terrier, and your comment sent me to the share register. I thought Cannacord were the 2nd largest shareholder. In fact, they're by far the largest, because they control Hargreave Hale which did show as owners of 6.8%, but are now 9%, meaning they together speak for 20% of the equity.
They've always been aggressive traders in the 35+ years I've known them and have now sold c.1.7 million shares at prices between £8.45 and £10.50 since the start of the the month. I commend them for banking a boatload of profits for their clients and probably themselves too.
Their trades do tie with Blondeamon's mention of a potential takeover in a year or two. Cannacord started life in that famous bucket-shop - The notorious Vancouver Stock Exchange - in the 1970's as peddlers of dodgy British Columbian mining stocks. The ethos then was to bank the largest possible profits in the shortest possible time and while they've since successfully expanded to Calgary, Toronto and now London and got respectable in the process, I doubt the leopard has changed its spots much. To mix metaphors, I'm enjoying this ride on the back of the tiger!
So, if their sales are holding the momentum back slightly, then I see it as an opportunity to dump a few more underperforming holdings and put the cash in here.
Long Bailey is Labour's answer to Donald Trump - wouldn't recognise the truth if she woke up in bed beside it, tomorrow morning. The bonds they are threatening to give us for our shares will be worthless. See Zimbabwe for exact comparisons.
First you issue bonds that never remotely equate to market value, then you let inflation rip, followed by gross mismanagement of the asset, leaving no profits to pay the worthless interest, as a packet of fags then costs £1,000. Within ten years the country has brown-outs, followed by black-outs and the exchange rate to the dollar is £100 for 10 cents.
The blatant theft of shareholders assets is spelt out clearly in the papers describing Labour's plans for Energy and Water companies; Substantial discounts for "asset-stripping' since privatisations, for overpayment of profits thanks to weak targets by Ofgem, etc. In other words, all the usual valuation metrics are out the window, because "parliament will decide the compensation."
There will, imho, be blood on the streets, if these Stalinists attempt to strip everyone with savings of whatever wealth they have. Especially, the idea of a "Land Tax", whereby every house and flat owner will pay a "rent" of x%, or more, pa, to the treasury. John MacDonnell is an out-and-out revolutionary communist. I'm afraid your political party has gone bonkers under the saintly Jezza.