Intu shares drop 2% on unchanged dividend

By Nick Hedley

Shares in Intu Properties (ITU) fell 2% on Thursday after the UK property company reported an unchanged 5p interim dividend per share for the six months ended June‚ while like-for-like net rental income declined 2.9%.

Intu CE David Fischel said momentum across the company — which owns some of the UK’s largest malls — “is significant”‚ with the acquisitions during the period of Midsummer Place in Milton Keynes and Charter Place in Watford.

Fischel said positive rental growth had been offset by the effect of tenant failures‚ many of which occurred in the first half of last year.

During the period‚ the London- and JSE-listed company changed its name from Capital Shopping Centres and announced the creation of a nationwide consumer-facing shopping centre brand “intu”. It also announced the creation of a single transactional website for its centres and the roll out of free wi-fi in its malls.

Fischel said the effect of the rebranding “has been more powerful than even we expected”. The changes were also creating operating efficiencies‚ including running one website instead of 16. The site was in a live testing phase.

Free wi-fi had been introduced in four centres‚ while the balance would be rolled out over the rest of the year. This was expected to “improve dwell time and be a powerful way for us to market ourselves in the future”.

The company had a number of extension and upgrade projects on the go and in the pipeline‚ as part of its £1bn investment pipeline across the portfolio over the next 10 years.

Justin Floor‚ investment analyst at Kagiso Asset Management‚ said the result “points to a weak operational performance‚ with tenant failure costs putting pressure on rental income and negating the progress made in achieving higher rentals”.

Floor said while Intu’s balance sheet remained highly indebted‚ “flexibility appears to have improved with a longer debt maturity profile”.

“The company still owns a large portfolio of mostly high-quality shopping centres in the UK with healthier vacancies and shopper footfall characteristics than the average market‚ which sets it up well for an improvement in the UK market‚” said Floor.

At the close of trade on Thursday the share was down 2% to R49.93.

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