The Motley Fool

The Intu Properties share price is taking off! But is it worth investing in?

Image source: Getty Images

The Intu Properties (LSE: INTU) share price is one of the worst-performing investments on the London market this year. Year-to-date, shares in the retail landlord have slumped a staggering 70%. They’ve underperformed the FTSE 100 by approximately 50%. 

However, this week, shares in the real estate investment trust (REIT) have started to recover some of their lost ground. They’re up more than 65% in the past five days. As such, the company’s recovery seems to be gaining traction. So, is it worth buying Intu Properties after this recent performance?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Intu Properties recovery 

Only a few weeks ago, it looks as if Intu Properties was heading for bankruptcy. The indebted landlord was already struggling before the coronavirus crisis. When the UK went into lockdown in March, its situation deteriorated significantly. 

The company reported it had received just 29% of quarterly rents due at the end of March, down from 77% in the prior-year period. 

But Intu’s been working flat out to try and win some breathing space from its lenders in the downturn. And, at the beginning of May, it succeeded. Lenders agreed to waive debt covenants on a £600m revolving credit facility until 26 June. While this deadline doesn’t give the company a tremendous amount of room, it’s helped the REIT get through the worst of the crisis.

In the next few weeks, more stores will be allowed to open throughout the UK, including one of Intu’s largest tenants, Primark. This should help the group generate some much-needed cash flow. The resumption of trading should help improve the company’s relationship with his creditors. 

Not out of the woods

That said, Intu Properties isn’t out of the woods just yet. The company still has a mountain of debt. The total stands at around £4.5bn. Most of this is secured against the REIT’s property portfolio. But with commercial property prices across the UK plunging, it’s difficult to say how much these are worth. 

Still, despite all of the company’s problems, there’s no denying the Intu Properties share price looks cheap. The stock is currently trading at a price-to-book (P/B) ratio of less than 0.1. This suggests that despite the uncertainties around and commercial property prices, the stock could offer a wide margin of safety at current levels

Therefore, now could be an excellent time for investors with a high-risk tolerance to snap up shares in this REIT. Intu Properties has the potential to deliver substantial gains from current levels if it can successfully navigate the next 12 months, or so.

However, there’s always going to be a risk that the group’s debt could overwhelm the business. As such, it may be sensible to own the stock as part of a well-diversified portfolio. That would allow investors to benefit from any upside potential while limiting downside risk.

If you're looking for other investments to add to your portfolio alongside Intu, we have some ideas.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.