Embattled shopping centre owner Intu Properties has been dealt a body-blow in its efforts to raise £1bn of emergency cash, with Hong Kong’s Link REIT pulling out of discussions to participate in the fundraise.
It was reported over the weekend, and confirmed by Intu yesterday, that it was nearing a deal with Link REIT to become a cornerstone investor in the fundraise.
However, Intu has released a statement today stating: “Further to yesterday’s announcement, Link Real Estate Investment Trust has informed Intu of its intention to no longer participate in a recapitalisation of the company. Intu remains engaged with shareholders and potential new investors in relation to a proposed equity raise.”
It is a huge blow to Intu, which had previously said it would launch the cash call alongside its full-year results at the end of February.
In a November trading update, Intu said fixing its balance sheet had become its “number one priority” and also warned that it expected to report a sharp drop in rental income for 2019 following a higher-than-anticipated volume of insolvencies from its retailer tenants.
The group said that it was forecasting like-for-like net rental income for 2019 to be down by around 9% compared to last year, with more than half the reduction coming from the impact ofcost-cutting insolvencies known as company voluntary arrangements (CVAs).
Intu, which owns huge shopping centres across the UK including the Trafford Centre in Manchester and Intu Lakeside in Essex, has been the worst effected landlord by retailer failings. The drop off in rental income has resulted in the value of its malls plummeting. In its half-year results to the end of June 2019 its portfolio value fell by £872.1m to just under £8.4bn.
However, its share price has fallen dramatically and at yesterday’s close (10 February 2020) was 17.32p, giving it a market capitalisation of just £235m.
Following today’s announcement that Link REIT had pulled out of the fundraise, Intu’s share price has so far fallen 30%.
QuotedData published research on the retail property market that looked into the sector in detail. To read it click here.
INTU : Intu dealt body-blow as Link REIT pulls out of £1bn fundraise