INTU Debentures - comment

INTU Debentures, under their new Asset Manager, Pradera Lateral, presented their 3yr Business Plan. As a reminder, INTU Debentures Occupancy rates c.(80%) still lags pre-Covid period due to the voids from the former Debenhams stores at Eldon Square and Potteries, and vacant ski Slope operators at XSite. Business Pan envisages occupancy to remain in the 80% for FY23 and FY24, rising to 98% in FY25. Coupled with some rent free incentives, Net Operating Income is not expected to improve until FY25 & FY26, therefore leaving cashflow, after CAPEX, negative for FY23 and FY24. Cumulative CAPEX over the 3yr plan is c.£30m which could be categorised as maintenance or as described by the Company “protecting the assets’ income and capital profiles”. We would highlight that the CAPEX is likely to aid the marketing of the void spaces, it isn’t going to generate a step-change in the potential Gross Rent.