INTU Debentures - comment

The issue with quarterly reports is they tend to be backwards-looking and Debentures is no different. All metrics have continued to improve; Occupancy rates, Rent and Service collection in the low 90%, footfall continuing to improve and headline rental values appear to have bottomed out and, in some cases, showing signs of growth. The overall shopping investment market has also improved with £1.2bn of volume in H1 ’22 versus £460m in H1 ’21. However, having dealt with the impact of Covid, focus has shifted to the economic headwinds ahead. Many retailers are remaining cautious as inflation and consumer confidence should lead to downward pressure on rents and higher tenancy failure.

So taken together, and given that rents have broadly rebased since Covid, those headwinds are likely to lead only to a slower recovery rather than further value destruction.