JSE-listed UK mall owner faces trouble as it fails to raise billions | Fin24
 
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JSE-listed UK mall owner faces trouble as it fails to raise billions

Mar 04 2020 11:55

UK mall owner Intu – which is listed on the JSE and has long been a favourite of South African investors wanting offshore exposure – is facing an uncertain future after it failed to raise £1 billion (R19 billion) and £1.5 billion (R29 billion) to stay afloat.

The company said that  after extensive discussions with  shareholders and potential new investors, it has concluded that it won’t be able to raise the capital.

Intu, which owns 17 of the largest shopping centres in the UK - including the giant Trafford Centre in Manchester - as well as a number of Spanish malls, has a £4.5bn (R88 billion) debt burden.

It warned on Wednesday that it may in breach of some of its loan conditions by July this year. This may trigger demands to repay some of its debts immediately. Apart from that risk, Intu also has £189.7 million of borrowings that are due to be repaid or refinanced in the next year.

Its share price plummeted by almost 30% to 149c by early trading on Wednesday.

Intu’s share price has now lost 93% of its value in the past year.

The company’s financial performance has been hit by Brexit uncertainty and a shift to online shopping in the UK. Some of its major UK tenants (including chains like New Look, Toys R Us, House of Fraser, Debenhams and HMV) have also either gone out of business, or negotiated lower leases as part of insolvency agreements.

Intu blamed current uncertainty in the markets and in the retail property industry for investors’ unwillingness to invest more in the business. It is now looking at “alternative capital structures and solutions” as well as selling more of its assets. Over the last year, intu disposed of nearly £600 million of assets, reduced its capital expenditure pipeline by £60 million and stopped paying dividends to improve liquidity.

The company issued a trading update for the past year on Wednesday, warning that net rental income will be around 9% lower than in the previous year. Occupancy has remained at 95% at the end of December.  Its results will be released on 12 March 2020.

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