Shares in Intu Properties jumped on Monday after the company behind shopping centres including the Trafford Centre in Manchester and Lakeside in Essex confirmed it is in talks with investors over an emergency cash call.
The debt-laden firm said it was “engaged in constructive discussions with shareholders”, including its largest shareholder Peel Group, and new investors including the Hong Kong-based Link Real Estate Investment Trust.
Intu has previously confirmed that it will announce a cash call – expected to be worth at least £1bn – alongside its annual results later this month. Intu is struggling with £4.7bn of debt at a time when its retail tenants are closing stores in response to rising costs and as consumers shift to online spending. Its property portfolio is officially valued at £8bn but is now worth a lot less.
Shares rose 30% to 17p after the announcement, giving it a market value of about £234m.
Peel Group, which holds a 27% stake in the business, is run by the 77-year-old billionaire John Whittaker, who was behind the Trafford Centre development and sold it to Intu in 2011.
The group first said in January that it would attempt an equity raise to fix its balance sheet, although it did not specify a figure. Property analysts have estimated the company will need to raise between £1bn and £3bn to shore up its finances.
The company’s share price has plunged by 85% in the last year as some of its largest tenants such as Debenhams, House of Fraser and the Topshop owner, Arcadia, have undergone emergency restructurings, which have led to the closure of some stores and requests for rent reductions at others.
Intu operates 14 shopping centres across the UK, in cities from Nottingham to Norwich. It has been selling assets in an attempt to bring down its debt and since the beginning of the year it has sold two of its three Spanish shopping centres: Intu Asturias in Oviedo, which produced net proceeds of €85m (£72m), and Intu Puerto Venecia in Zaragoza, which brought in €115m.
The company has been investing money to add leisure facilities to some of its shopping centres, so it can offer visitors more than just shopping. However, as retail sales increasingly move online, the value of Intu’s malls is expected to fall further.
