CAPE TOWN - Debt-laden UK shopping centre group intu Properties’ share price surged 30percent to R3.37 on the JSE yesterday after the firm announced that it was in talks with shareholders and possible new investors such as Hong Kong’s Link Reit, about a capital raise.
intu, with a portfolio worth £8.4billion (R162.72bn), is believed to be looking to raise £1bn in the emergency cash call. It said yesterday that it was holding “constructive discussions” with existing shareholders, as well as new investors, including Link Reit.
The date of the capital raise was anticipated to be by the end of this month. intu has debt of about £5bn.
Link Reit is Asia’s biggest real estate investment trust and holds a portfolio of 126 properties in Hong Kong and five properties in Mainland China.
intu has been struggling against competition from online retailing, which is hurting the viability of some of its key tenants, property devaluations caused by the uncertainty surrounding Brexit, and a tighter UK consumer trading environment, and its share price has plunged from R21.05 per share on the JSE 12 months ago.
This is in spite of it owning some of the UK’s best-rated shopping malls such as Lakeside in Essex and Manchester’s Trafford Centre.
In the six months to June 31, 2019, intu reported a £832million loss that had widened by 39percent from the £505m loss reported in the same period a year before. A PricewaterhouseCoopers UK report said that in the first six months of 2019, 2868 stores closed, or 16 a day, which represented a five-year high.
At the end of January, intu said: “intu properties plc continues to make progress in its strategy to fix the balance sheet Consistent with previous announcements, this now includes targeting an equity raise alongside its full year results at the end of February,” the company added. The equity offering follows intu’s sale last year of nearly £500m in assets, including its sale in January for 475m (R7.82bn) of the intu Puerto Venecia shopping centre in Spain’s Zaragoza province, and the sale for 290m of the intu Asturias shopping centre, also in Spain.
The Times reported that intu’s share sale was supported by UK property billionaire John Whittaker’s Peel Group, which owns a 27percent stake in the company, while London-based private equity firm Orion Capital Managers was reported by Reuters in September to be exploring a buyout of intu.
“The company will make further announcements in due course There can be no certainty that the equity raise will be implemented nor as to the terms on which any such implementation might occur,” intu’s directors said.
The share closed 24.03percent higher at R3.20 on the JSE yesterday.