File picture: James White
CAPE TOWN – intu Properties and Cale Street Investments, an investment firm backed by the Kuwait Investment Office, have formed a 50/50 joint venture for the intu Derby shopping centre.

intu’s share price increased by 2.89 percent to R18.49 on the JSE after the transaction was announced, compared with a flat JSE All Property Index at the time, but intu’s share price remains far below its 52-week high of R38.04. The share closed 3.06 percent higher at R18.52 on Thursday.

Intu chief executive designate Matthew Roberts said the deal was in line with intu’s strategy, considering the challenging investment market, of reducing loan-to-value through disposals and part-disposals. The transaction was expected to reduce the group's loan-to-value by about one percent.

intu Derby is located in the centre of Derby and is a key retail and leisure destination in the East Midlands, with an annual footfall of 22 million.

The 1.3 million square foot centre was extended and redeveloped in 2007, and provides over 200 units and includes key retailers such as M&S, Debenhams, Next, H&M, Sainsbury’s, Zara and Hollywood Bowl.

intu would continue to manage the centre on behalf of the joint venture, and would use the net proceeds of the transaction to repay debt.

intu’s UK portfolio is made up of 17 centres, including eight of the top-20, and in Spain it owns three of the country’s top-10 centres, with advanced plans to build a fourth.

The share price has come under pressure in recent months due primarily to weak results and uncertainty in the UK property market over the outcome of the Brexit negotiations.

At the end of 2018, intu, which was formed out of a portion of Liberty International’s UK property assets a decade ago, reported that its diluted net asset value per share had fallen to 312 pence (R57.11) from 411 pence at the end of 2017.

BUSINESS REPORT